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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            ------------------------

                                   FORM 10-K
                                ---------------

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                            COMMISSION FILE #1-11688

                            ------------------------

                            AMERICAN RE CORPORATION
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                            <C>
                  DELAWARE                                      13-3672116
        (State or other jurisdiction                         (I.R.S. Employer
      of incorporation or organization)                     Identification No.)
</TABLE>

                             555 COLLEGE ROAD EAST
                          PRINCETON, NEW JERSEY 08543
                                 (609) 243-4200
    (Address including zip code, and telephone number, including area code,
                  of registrant's principle executive office)

                            ------------------------

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

<TABLE>
<CAPTION>
             TITLE OF EACH CLASS                 NAME OF EACH EXCHANGE ON WHICH REGISTERED
             -------------------                 -----------------------------------------
<S>                                            <C>
    American Re Capital--8.5% Cumulative                  New York Stock Exchange
 Quarterly Income Preferred Securities (and
the Guarantee by American Re Corporation with
              respect thereto)
</TABLE>

        SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

                            ------------------------

    Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/  No / /

    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /

    100% of the Company's voting stock is owned by Munich American Holding
Corporation. At March 29, 2001, the number of shares outstanding of the
registrant's common stock was 149.49712.

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<PAGE>
                            AMERICAN RE CORPORATION
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
ITEM                                                                     PAGE
----                                                                   --------
<C>      <S>                                                           <C>
PART I

     1.  Business....................................................      1

     2.  Properties..................................................     11

     3.  Legal Proceedings...........................................     11

     4.  Submission of Matters to a Vote of Security Holders.........     11

PART II

     5.  Market for the Company's Common Equity and Related
           Stockholder Matters.......................................     12

     6.  Selected Financial Information of the Company...............     12

     7.  Management's Discussion and Analysis of the Company's
           Results of Operations and Financial Condition.............     13

     8.  Financial Statements and Supplementary Data.................     21

     9.  Changes in and Disagreements with Accountants on Accounting
           and Financial Disclosure..................................     26

PART III

    10.  Directors and Executive Officers of the Registrant..........     27

    11.  Executive Compensation......................................     30

    12.  Security Ownership of Certain Beneficial Owners and
           Management................................................     34

    13.  Certain Relationships and Related Transactions..............     34

PART IV

    14.  Exhibits, Financial Statement Schedules, and Reports
           on Form 8-K...............................................     35
</TABLE>
<PAGE>
                                     PART I

    Unless indicated otherwise, all financial data presented herein are derived
from or based on the Company's consolidated financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America ("GAAP"). Statutory data, where specifically identified as such, are
presented on a combined basis for American Re-Insurance Company, American
Alternative Insurance Corporation and The Princeton Excess and Surplus Lines
Insurance Company. (These companies together are the "reinsurance/insurance
subsidiaries"). The statutory data are derived from statutory financial
statements. Such statutory financial statements are prepared in accordance with
statutory accounting principles, which differ from GAAP.

ITEM 1.  BUSINESS

THE COMPANY AND AMERICAN RE-INSURANCE

    American Re Corporation (the "Company" or "American Re"), is the holding
company for various reinsurance and insurance entities which provide treaty and
facultative reinsurance, insurance and related services to insurance companies,
other large businesses, government agencies, pools and other self-insurers in
the United States and worldwide. The Company's principal subsidiary, American
Re-Insurance Company, a Delaware insurance company founded in 1917 ("American
Re-Insurance"), primarily underwrites property and casualty reinsurance on a
direct basis in the United States and international markets. Based on statutory
net premiums written of $3,165.5 million in 2000, American Re-Insurance ranked
as the third largest property and casualty reinsurer in the United States,
according to the Reinsurance Association of America. The Company had total
assets of $14,942.8 million and stockholder's equity of $2,420.1 million at
December 31, 2000. The Company and its subsidiaries employed approximately 1,600
persons as of December 31, 2000.

    The Company is a wholly-owned subsidiary of Munich-American Holding
Corporation, a Delaware holding company ("MAHC"), which in turn is wholly-owned
owned by Munchener Ruckversicherungs-Gesellschaft Aktiengesellschaft in Munchen
("Munich Re"), a company organized under the laws of Germany. Effective
September 30, 2000, Munich Re contributed the outstanding stock of American Re
to MAHC. Munich Re is the world's largest reinsurance company, based on 1999 net
premiums written, according to STANDARD & POOR'S. The Munich Re Group, including
American Re, includes reinsurance subsidiaries, branches, service companies and
liaison offices in more than 60 locations worldwide serving insurers in 150
countries.

OVERVIEW OF THE REINSURANCE INDUSTRY

    Reinsurance is a form of insurance in which a reinsurer indemnifies a
primary insurer against part or all of the liability assumed by the primary
insurer under one or more insurance policies. Reinsurance provides a primary
insurer with several major benefits, including a reduction in net liability on
individual risks, protection against catastrophic losses and assistance in
maintaining acceptable financial ratios. Reinsurance also provides a primary
insurer with additional underwriting capacity, in that the primary insurer can
accept larger risks and can expand the book of business it underwrites at a
faster rate than would be possible, while maintaining acceptable financial
ratios without a corresponding increase in its capital and surplus position.

    There are two basic types of reinsurance agreements: treaty contracts and
facultative certificates. A treaty is an agreement between a primary insurer and
a reinsurer under which the primary insurer is required to cede and the
reinsurer is required to assume a specified portion of a type or category of
risks insured by the primary insurer under designated types of policies issued
during the term of the treaty contract. Under a facultative certificate, the
primary insurer cedes and the reinsurer assumes all or part of the risks insured
under a single primary insurance policy. A facultative certificate is separately
negotiated for each risk or group of risks ceded. Facultative reinsurance is
normally purchased by insurance

                                       1
<PAGE>
companies for individual risks not covered by their reinsurance treaties, for
limits in excess of those provided in their reinsurance treaties, and for
unusual risks.

    Reinsurers indemnify primary insurers in treaties and facultative
certificates on either a pro rata or excess of loss basis. In the case of pro
rata reinsurance, the reinsurer, in return for a predetermined portion or share
of the insurance premium charged by the primary insurer, indemnifies the primary
insurer against a predetermined portion of the losses and loss adjustment
expenses ("LAE") of the primary insurer under the covered primary policy or
policies. In the case of excess of loss reinsurance, the reinsurer indemnifies
the primary insurer against all or a specific portion of losses on underlying
insurance policies in excess of a specified dollar amount, known as the
"retention" or "attachment point," most often subject to a negotiated limit.
Premiums payable to the reinsurer by the primary insurer for excess of loss
coverage are not directly proportional to the premiums the primary insurer
receives because the reinsurer does not assume a proportionate risk.

BUSINESS OPERATIONS AND STRATEGY

    The Company's products include the full range of property and casualty
coverages, including worker's compensation, auto liability and physical damage,
surety, marine, construction, errors and omissions, accident and health,
non-standard auto, homeowners and commercial multi peril. American Re markets
domestically to insurance companies through Domestic Insurance Company
Operations ("DICO"), to the alternative market through Munich-American
RiskPartners, Inc. ("RiskPartners") and internationally, through International
Operations. Risk management services for the health care marketplace are offered
through American Re HealthCare ("HealthCare"), and credit enhancement,
enterprise risk management and entertainment finance products are marketed
through American Re Financial Products ("ARFP"). For financial information about
Segments, see Note 18 to the consolidated financial statements, "Segment
Reporting" included in this report.

    DOMESTIC INSURANCE COMPANY OPERATIONS

    The principal business of DICO is treaty and facultative reinsurance
underwritten on a direct basis throughout the United States. The majority of
DICO's business is written on a treaty basis. DICO markets treaty products to
small to medium sized regional property and casualty insurers and to an
increasing variety of differing insurance concerns, including large account
specialists, national multiline insurers, personal lines companies, excess and
specialty writers and professional line specialties. DICO's facultative business
is marketed to both large primary insurers that comprise the largest segment of
the commercial insurance market and small regional primary insurers whose
commercial insurance risks are more limited to volume and scope.

    In 2000, and prior years, an immaterial portion of DICO's business was
written through reinsurance intermediaries. This business has recently been
established as a separate unit entitled the American Re-Insurance Brokered Group
beginning in 2001.

    MUNICH-AMERICAN RISKPARTNERS

    RiskPartners insurance and reinsurance marketing efforts in the alternative
market focus on large commercial insurance buyers, such as major corporations
and governmental entities, seeking alternatives to the primary insurance
companies that traditionally service these insurance buyers. These large
commercial enterprises, which retain or self-insure risks (through captives,
risk retention groups or other means) as an alternative to procuring traditional
insurance, have developed the same financial concerns and administrative
characteristics as insurance companies as they retain increasing levels of risk.
The majority of RiskPartners business is written on a facultative basis.
RiskPartners works with insurance brokers, ultimate insureds and their captives
or risk retention groups to provide specialized reinsurance/ insurance coverages
to fit their particular needs. To assist in its reinsurance marketing efforts,
RiskPartners

                                       2
<PAGE>
utilizes the services of an affiliated primary insurance company, American
Alternative Insurance Corporation ("AAIC"), which primarily serves alternative
market clients.

    INTERNATIONAL OPERATIONS

    International Operations markets both treaty and facultative reinsurance
outside the United States. International Operations maintains offices in sixteen
major international cities: Beijing, Bogota, Brussels, Buenos Aires, Cairo,
London, Melbourne, Mexico City, Montreal, Moscow, Santiago, Sao Paulo,
Singapore, Sydney, Tokyo and Toronto. In 2000, International Operations
primarily wrote business in the form of reinsurance treaties. The geographic
diversity of the international market for reinsurance requires decentralized
operations. To maintain quality performance under these circumstances,
International Operations has staffed its offices with experienced local
personnel.

    The following table presents International Operations net premiums written
by region for the periods indicated:

<TABLE>
<CAPTION>
                                               YEAR ENDED DECEMBER 31,
                                ------------------------------------------------------
REGION                               2000                1999                1998
------                          --------------      --------------      --------------
                                                (DOLLARS IN MILLIONS)
<S>                             <C>      <C>        <C>      <C>        <C>      <C>
Australia.....................  $ 58.4     9.9%     $ 45.3     8.9%     $ 34.4     7.6%
Canada........................     5.7     1.0         7.0     1.4         1.2     0.3
Europe........................   170.8    29.0       161.3    31.5        93.9    20.7
Far East......................    22.4     3.8        22.3     4.3        18.0     4.0
Latin America.................    77.8    13.2       113.3    22.1       102.7    22.7
Middle East...................    55.0     9.4        26.2     5.1        32.4     7.2
Southeast Asia................    29.1     5.0        29.0     5.7        19.3     4.3
Ocean Marine/Other(1).........   168.8    28.7       107.4    21.0       150.5    33.2
                                ------   -----      ------   -----      ------   -----
Regions total.................  $588.0   100.0%     $511.8   100.0%     $452.4   100.0%
                                ======   =====      ======   =====      ======   =====
</TABLE>

------------------------

(1) Includes net premiums written from ocean marine, international home office,
    and corporate retrocessional charges.

    AMERICAN RE HEALTHCARE

    HealthCare provides risk management services and innovative health care
solutions that use reinsurance and other risk related products and services in
the healthcare marketplace. These products and services span traditional risk
transfer products on a quota share or excess of loss basis offered to insurers
and other risk bearing organizations such as healthcare providers, health
maintenance organizations and self-insured employer groups. HealthCare has also
established business relationships with a select group of health care providers
that offer catastrophic care management services.

    AMERICAN RE FINANCIAL PRODUCTS

    ARFP specializes in three areas of reinsurance, Credit Enhancement,
Entertainment Finance and Enterprise Risk Management. Credit Enhancement
primarily focuses on providing reinsurance to mono-line bond insurers. These
companies insure against the risk of default as to principal and interest by
issuers, mainly on municipal and asset-backed securities. Entertainment Finance
focuses on providing reinsurance support for a variety of intellectual property
assets such as film library revenues, music royalties, or television licensing
fees. Its target markets include the large film studios and media companies.
Enterprise Risk Management is defining and developing strategic alliances within
the utility and energy industries to help client companies with managing and
insuring risks related to weather, electricity, natural gas and other fuels,
demand management and development of additional generation.

                                       3
<PAGE>
FEE-BASED SERVICES

    In addition to its core reinsurance business, the Company, through various
subsidiaries, offers a broad array of related services. These services include
risk management, underwriting management, actuarial analysis, financial
analysis, claims management, due diligence consulting for mergers and
acquisitions, reinsurance and insurance brokerage, captive and risk retention
group management services, and insurance risk securitizations. Such services
have generated fees from clients of $30.2 million, $29.3 million, and
$32.3 million in 2000, 1999, and 1998, respectively.

UNDERWRITING

    The Company underwrites its business on a worldwide basis for many different
clients and for many lines of property/casualty business. The Company provides a
broad array of products and coverages, individually evaluated and tailored to
meet each client's needs. Many factors are considered in evaluating the nature
of the risk to the Company. These include the client's underlying exposures, its
line of products, its underwriting controls, its pricing philosophy and its
geographical territory of operation. The Company strives to manage its net
income by monitoring and controlling its overall portfolio of business as to
line of business and geographical spread of risk. Taking all of these factors
into account, the Company is not materially dependent on a single customer,
small group of customers, line of business or geographical area. The Company
believes the loss of any single customer would not have a material adverse
effect on its financial condition or earnings.

    Through underwriting procedures, treaty reinsurance products are screened
for compliance with general standards for ceding insurers and risks to be
assumed and are then priced based on actuarial models the Company has developed.
The actuarial models are tailored in each case to the risk exposures underlying
the specific treaty and the loss experience for the risk covered thereunder. The
Company determines whether to write or renew a particular treaty by considering
many factors, including its past experience with the client, the types of risks
to be covered, total exposure to risks underwritten by the client or to the type
of risk to be assumed, and its evaluation of the client's financial strength,
claims handling ability, and the overall underwriting capability.

    The Company's facultative risks are assumed on either a "program" basis or
an "individual risk" basis. Under the program approach, which encompasses treaty
concepts, such risks are automatically assumed subject to the pre-determined
guidelines or after-the-fact review. Those risks that are covered on an
"individual risk" basis are individually evaluated and priced.

    Corporate underwriting guidelines and procedures generally govern all
underwriting evaluations in the Company including International Operations,
subject, at times, to further refinement in the divisional underwriting
guidelines due to applicable local political, economic, and other factors.
Underwriting authorities are delegated by the CEO and the Corporate Chief
Underwriting Officer to each division. Underwriting opportunities which exceed
these delegated authorities are referred to the appropriate underwriter,
including, at times, the Corporate Chief Underwriting Officer, with the
requisite authority for evaluation prior to commitment.

CLAIMS

    Specific claims are reviewed and monitored by the Claims Division. The
Claims Division is centralized in the home office. Claims are also handled
regionally by various claims personnel in certain domestic and international
offices, namely Chicago, Columbus, and San Francisco (domestically) and
Brussels, London, Munich, Santiago, Singapore, Sydney, and Toronto
(internationally). Claims administration includes reviewing initial loss
reports, monitoring claims handling activities of clients, requesting additional
information where appropriate, recommending proper reinsurance and insurance
case reserves and approving payment of individual claims. In addition to
reviewing claims and discussing claims issues with ceding companies, the Claims
Division conducts periodic reviews of both specific claims and overall claims

                                       4
<PAGE>
handling procedures at the offices of client companies. The Company relies upon
its ability to monitor effectively the claims handling and claims reserving
practices of ceding companies in order to establish the proper reinsurance
premium for reinsurance agreements and to establish proper loss reserves.

RISK MANAGEMENT AND RETROCESSION ARRANGEMENTS

    The Company purchases reinsurance to manage its own risk exposures. The
insurance or indemnification of reinsurance is called a retrocession, and a
reinsurer of a reinsurer is called a retrocessionaire. Reinsurance companies
enter into retrocessional agreements for reasons similar to those that cause
primary insurers to purchase reinsurance, namely to reduce net liability on
individual risks, to protect against catastrophic losses, to stabilize their
financial ratios and to obtain additional underwriting capacity. Generally,
retrocessional agreements are contracts that are renewable on an annual basis,
but that may be terminated by either party upon notice stated in the agreement.
A retrocessionaire that does not renew a retrocession with a reinsurer is not
discharged from existing liabilities to the reinsurer under the contract. A
retrocession does not discharge a reinsurer from liability to its clients.

    The retrocessional coverages purchased by the Company include (i) routine
coverage for its property and casualty business, (ii) property and casualty
clash coverage for potential accumulation of liability from treaties and
facultative agreements covering losses arising from the same event or
occurrence, (iii) catastrophe retrocessions for its property business,
(iv) quota share treaties that enhance underwriting capacity, and (v) stop loss
protection (excess of loss reinsurance that indemnifies the company against
losses that exceed a specific retention).

    The Company records an uncollectible reserve when it believes that it is
probable that it will not be able to collect a receivable from a
retrocessionaire. At December 31, 2000 the Company maintained a reserve for
uncollectible reinsurance and premiums and other receivables of $106.3 million.

    The Company adheres to specified limits on the amount of exposure to single
risks that it will accept and purchases retrocessions to reduce its per risk
exposure. Generally, for treaty and facultative casualty, the per-risk limit
accepted is up to $50.0 million. For property business, the per-risk limit
accepted for treaty business is up to $50.0 million and for facultative business
up to $200.0 million. After retrocessions, and prior to co-participation, if
any, for its property and casualty business, $25.0 million net is retained per
risk for both treaty and facultative. The Company will consider expanding both
its maximum per risk acceptance, and its net retentions for both property and
casualty business, on a selected basis, dependent upon a specific client's
needs.

    Currently, the Company maintains retrocessional coverage for property and
casualty clash events for treaty and facultative business, where treaty or
facultative agreements are exposed to a loss from two or more products and/or
reinsureds involved in a common occurrence. For property and casualty business,
treaty and facultative agreements are covered in excess of $25.0 million each
and every occurrence.

    The Company has in place a corporate quota share retrocessional program
whereby the Company cedes 1.662% of all of its consolidated net premiums written
to the quota share participants. In return, the Company receives commission
offset as well as certain catastrophe reinsurance protection (described in the
next paragraph).

    The Company purchases catastrophe retrocessions for both its treaty and
facultative property business. Property catastrophe retrocessions cover the
potential accumulation of all property exposures that may be involved in the
same catastrophe, such as an earthquake or hurricane. Catastrophe retrocessions
provide $201.1 million of coverage for a catastrophic event in excess of
$100.0 million of retained losses. Thus, if a $500.0 million domestic
catastrophe loss were reported, the Company would retain $298.9 million of
catastrophe losses (prior to recovery of $5.0 million from the quota share
retrocessional program described above). Upon payment of additional premiums,
the coverage may be reinstated.

                                       5
<PAGE>
    American Re Capital Markets, Inc., a subsidiary of the Company ("ARCM"), is
a party to certain index-based catastrophe related swaps ("Catastrophe Swaps")
with Gold Eagle Capital Limited ("Gold Eagle"), a special purpose Bermuda
company. Under the terms of the catastrophe swaps, ARCM may receive
approximately $182.0 million of potential payments from Gold Eagle in the event
of three types of certain catastrophic events: California earthquakes, Midwest
earthquakes, or Eastern and Gulf Coast windstorms, all as specifically defined
under the Catastrophe Swaps. Payment amounts under the Catastrophe Swaps will be
determined based upon an index of modeled insurance industry losses from
specified types of catastrophic events, not by the actual losses incurred by the
Company. The Catastrophe Swaps are intended to effectively provide certain
financial protection in excess of $500 million. See "Item 7. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF THE COMPANY'S RESULTS OF OPERATIONS AND FINANCIAL
CONDITION--Market and Interest Rate Risk."

    Changing domestic and international reinsurance markets impact the
retrocessional capacity available to all companies. The Company has successfully
managed its exposure to changing retrocessional capacity levels in the past by
diversifying its selection of retrocessionaires and expects to continue to
minimize risks associated with fluctuation in the underwriting cycle. In
accordance with the Company's underwriting guidelines, diversified
retrocessional capacity is obtained through Munich Re and its affiliated
companies, through existing trading relationships with retrocessional markets
accessed on a direct basis or through the Company's reinsurance intermediary,
Am-Re Brokers, Inc., and through additional potential retrocessional markets.

    Historically, the Company believes that it has minimized the credit risk
with respect to its retrocessions by monitoring its retrocessionaires,
diversifying its retrocessions and collateralizing obligations from foreign
retrocessionaires. Potential deterioration of the financial condition of
retrocessional markets is carefully monitored and appropriate actions are taken
to eliminate or minimize exposures.

    As of December 31, 2000, the reinsurance/insurance subsidiaries had in place
retrocessional arrangements with approximately 955 retrocessionaires, and
$3,198.0 million of accrued retrocessional recoverables on paid and unpaid
losses and LAE (including IBNR). In structuring their retrocessional programs,
the reinsurance/insurance subsidiaries have placements with certain
retrocessionaires that result in sizable reinsurance recoverable obligations to
the reinsurance/insurance subsidiaries. Certain select retrocessionaires
participate in many of the reinsurance/insurance subsidiaries' retrocessionaire
coverages including quota share, working layer excess of loss, catastrophe, and
stop loss programs as well as specific cessions of assumed business. Cessions of
significant amounts to a single retrocessionaire are contemplated only when
excellent financial strength and/or the ability to collateralize obligations are
clearly demonstrated. As of December 31, 2000, a total of $593.2 million of
accrued retrocessional recoverables on paid and unpaid losses (18.5% of total
retrocessional recoverables) were attributable to Munich Re (which had an A.M.
Best rating of "A++ (Superior)" at December 31, 2000), $446.9 million (14.0% of
total retrocessional recoverables) were attributable to National Indemnity
Company (which had an A.M. Best rating of "A++ (Superior)" at December 31,
2000), and $416.5 million (13.0% of total retrocessional recoverables) were
attributable to Travelers Property Casualty Corp. ("Travelers") (which had
an A.M. Best rating of "A++(Superior)" at December 31, 2000). Except as
described above, recoverable amounts attributable to any one or related groups
of retrocessionaires did not in the aggregate exceed 10% of the reinsurance
recoverables on paid and unpaid losses.

                                       6
<PAGE>
COMPETITION

    The property and casualty reinsurance business is highly competitive.
Competition with respect to the types of reinsurance in which the Company is
engaged is based on many factors, including the perceived overall financial
strength of the reinsurer, ratings of the reinsurer, underwriting expertise,
premiums charged, contract terms and conditions, services offered, speed of
claims payment, reputation and experience. The Company competes in the United
States and international reinsurance markets with independent reinsurance
companies, subsidiaries or affiliates of established worldwide insurance
companies, reinsurance departments of primary insurance companies and
underwriting syndicates from the United States and abroad, some of which have
greater financial resources than the Company. The Company also competes with
providers of alternative forms of risk transfer such as investment banks, which
offer capital market mechanisms such as the securitization of insurance and
reinsurance risks, for primary insurers to transfer such risks directly to
investors.

REGULATORY MATTERS

    The Company is subject to regulation under the insurance statutes, including
insurance holding company statutes, of various states, including Delaware, the
domiciliary state of American Re-Insurance, AAIC, and The Princeton Excess and
Surplus Lines Insurance Company ("Princeton E & S").

    GENERAL.  U.S. domestic property and casualty insurers, including
reinsurers, are subject to regulation by their states of domicile and by those
states in which they are licensed. In general, the rates and policy terms of
primary insurance policies and insurance company operations and practices with
respect to policyholders are closely regulated by state insurance departments.
By contrast, reinsurance agreements generally are not subject to regulation by
any governmental authority with respect to rates or policy terms although
reinsurers are required to maintain a certain financial condition in order to
provide accredited reinsurance to authorized insurers in the states. As a
practical matter, however, the rates charged by primary insurers do have an
effect on the rates that can be charged by reinsurers.

    AMERICAN RE-INSURANCE.  The regulation and supervision to which reinsurance
companies are subject relate primarily to the standards of solvency that must be
met and maintained (either through a process of becoming licensed or accredited
in a state) and their financial condition generally, including regulations on
the nature of and limitations on investments, restrictions on the size of risks
which may be insured, deposits of securities for the benefit of ceding
companies, methods of accounting, periodic examinations of the financial
condition and affairs of reinsurers, the form and content of financial
statements required to be filed with state insurance regulators, and reserves
for unearned premiums, losses and other purposes. In general, such regulation is
for the protection of the ceding companies and ultimately, their policyholders,
rather than security holders. American Re's management believes that American
Re-Insurance is in material compliance with all applicable laws and regulations
pertaining to its business and operations.

    American Re-Insurance is licensed to transact insurance or reinsurance
business in all fifty states, the District of Columbia, Puerto Rico, Canada
(including the provinces of Ontario and Quebec), Australia, Singapore and the
United Kingdom. American Re-Insurance Company (Chile) S.A. is a licensed
reinsurer in Chile. In addition, American Re-Insurance and/or one or more of its
subsidiaries or affiliates is licensed, registered to transact business or
represented in Argentina, Australia, Belgium, Bermuda, Bolivia, Brazil, Canada,
Chile, China, Colombia, Ecuador, Egypt, Japan, Mauritius, Mexico, New Zealand,
Paraguay, Peru, Russia, Singapore, South Africa, the United Kingdom, Uruguay and
Venezuela.

    AAIC.  In order to write primary insurance business primarily for the
alternative market, AAIC must comply with substantial regulatory requirements in
each state where it does business. In addition to the rate and policy form
requirements mentioned above, depending upon the nature of the primary business
being written and the production sources for the business, these regulatory
requirements include, but are not limited to, requirements with regard to
licensing, coverages offered, claims processing operations, relations with
producers, and mandatory participation in residual markets. This regulation is
primarily designed for the protection of policyholders. The Company's management
believes that AAIC is in material compliance with all applicable laws and
regulations pertaining to its business and operations.

                                       7
<PAGE>
AAIC is licensed to transact insurance or reinsurance business in all fifty
states and the District of Columbia.

    PRINCETON E & S.  Princeton E & S, a Delaware insurance company, was formed
to provide insurance coverage on a non-admitted basis in the United States.
Princeton E & S is licensed as an admitted insurer in its domicile state,
Delaware, and to date has been authorized as eligible to write excess and
surplus lines insurance in seven states on a non-admitted basis.

    INVESTMENT LIMITATIONS.  The Insurance Code of Delaware contains rules
governing the types and amounts of investments that are permissible for the
reinsurance/insurance subsidiaries. These rules are designed to ensure the
safety and liquidity of the insurer's investment portfolio.

    In general, these rules only permit insurers to purchase investments that
are interest bearing, interest accruing, entitled to dividends or otherwise
income earning and not then in default in any respect, and the insurer must be
entitled to receive for its exclusive account and benefit the interest or income
accruing thereon. No security or investment is eligible for purchase at a price
above its fair value or market value. In addition, these rules require
investments to be diversified.

    Subject to the restrictions described above, insurers generally may only
invest in certain types of investments, including certain U.S., state and
municipal government obligations, secured and unsecured debt instruments and
preferred and common stocks of solvent U.S. and certain foreign corporations
(including insurers), limited partnership interests, insured savings accounts,
collaterized mortgage obligations and real estate. In addition to specifically
permitted types of investments, insurers generally may make other loans or
investments in an aggregate amount not exceeding a fixed percentage of their
assets, provided that any such loan or investment is not expressly prohibited
under the Insurance Codes.

    TRIENNIAL EXAMINATIONS.  Insurance Departments usually conduct examinations
of domiciled insurers and reinsurers every three years, and may do so at such
other times as are deemed advisable by the Insurance Commissioners. The most
recent examination of the reinsurance/insurance subsidiaries by the Delaware
Insurance Department covered the period January 1, 1995 (October 1, 1997 for
Princeton E & S) to December 31, 1998. The Insurance Department's reports were
issued in 2000 and contained no material adverse findings.

    RISK BASED CAPITAL.  The NAIC has adopted a risk based capital ("RBC")
standard for property and casualty insurance (and reinsurance) companies which
measures the amount of capital appropriate for a property and casualty insurance
company to support its overall business operations in light of its size and risk
profile. At December 31, 2000, American Re-Insurance's total adjusted capital
was $1,649.7 million, or 1.93 times the authorized control level RBC total of
$856.5 million. Because this ratio is less than 2.00 times, American
Re-Insurance must submit a comprehensive financial plan to the Insurance
Department of the State of Delaware which will address American Re-Insurance's
plans for attaining the required levels of RBC. Achievement of the comprehensive
financial plan depends on future events and circumstances, the outcome of which
cannot be assured.

    AAIC's total adjusted capital in 2000 of $98.6 million is in excess of the
authorized control level RBC total of $14.4 million. Princeton E & S's total
adjusted capital in 2000 of $25.7 million is in excess of the authorized control
level RBC total of $0.1 million.

    INSURANCE HOLDING COMPANY REGULATIONS.  The insurance holding company laws
and regulations vary from state to state, but generally require an insurance
holding company to register with the state regulatory authorities and file
certain reports that include current information concerning the capital
structure, ownership, management, financial condition and general business
operations of the insurance holding company and its subsidiary insurers which
are licensed in the state. State holding company laws and regulations with
respect to domestic insurers also require prior notice or regulatory approval of
changes in control of an insurer or its holding company and of material
inter-affiliate transactions within the holding company structure. See
"DIVIDENDS."

                                       8
<PAGE>
    DIVIDENDS.  Because the operations of the Company are conducted primarily
through its reinsurance/ insurance subsidiaries, the Company is dependent upon
dividends and tax allocation payments primarily from American Re-Insurance to
meet its debt and other obligations and to pay dividends in the future if the
Company's Board of Directors so determines. The payment of dividends to the
Company by American Re-Insurance is subject to limitations imposed by the
Delaware Insurance Code.

    Under the Delaware Insurance Code, no Delaware insurer may pay any
(i) dividend or distribution without 10 days' prior notice to the Delaware
Insurance Department or (ii) "extraordinary" dividend or distribution until
(a) 30 days after the Delaware Insurance Commissioner has received notice of the
declaration thereof and has not within such period disapproved such payment or
(b) the Delaware Insurance Commissioner has approved such payment within the
30-day period. Under the Delaware Insurance Code, an "extraordinary" dividend
for a property and casualty insurer is a dividend, the amount of which, when
taken together with all other dividends made in the preceding twelve months,
exceeds the greater of (i) 10% of an insurer's statutory surplus as of the end
of the prior calendar year or (ii) the insurer's statutory net income, not
including realized capital gains, for the prior calendar year. Under this
definition, as of December 31, 2000 the maximum amount available for the payment
of dividends by American Re-Insurance during 2001 without prior approval of
regulatory authorities is $216.5 million. No prediction can be made as to
whether any legislative proposals relating to dividend rules in Delaware will be
made, whether any such legislative proposal will be adopted in the future, or
the effect, if any, any such proposal would have on the Company or American
Re-Insurance.

    LEGISLATIVE AND REGULATORY PROPOSALS.  From time to time, various regulatory
and legislative changes have been proposed in the insurance and reinsurance
industry, which may have an effect on reinsurers. The Gramm-Leach-Bliley Act,
also known as the Financial Modernization Act, and corresponding regulatory
proposals in the various states, contain a number of privacy provisions which
are applicable to the Company. In general, the provisions require us to inform
consumers of (i) the Company's information sharing practices with both
affiliated and non-affiliated third parties, (ii) the consumers right, subject
to certain exceptions, to opt out of such information sharing practices, and
(iii) what type of security is provided by the Company for the consumer
information. The deadline for compliance with these federal and state privacy
regulations is July 1, 2001. In addition to the privacy provisions under
Gramm-Leach, Congress has also adopted the Health Insurance Portability and
Accountability Act ("HIPAA"). HIPAA, among other things, requires certain
entities to adopt and enforce particular standards and procedures to protect the
privacy and confidentiality of patient health care information. By reason of
American Re-Insurance's HealthCare operation the Company will need to assess the
extent, if any, to which it may be required to comply with the new privacy laws
pertaining to health related information.

    The Company is unable to predict whether any of these laws or regulations
would be adopted in the various states, the form in which any such laws and
regulations would be adopted in such states, or the effect, if any, these
developments will have on the operations and financial condition of the Company
or any of its subsidiaries.

    HOLOCAUST VICTIMS INSURANCE LAWS.  Several states (including California,
Maryland, Minnesota, New York, and Washington) have enacted legislation
pertaining to insurance policies that were issued in Europe to Holocaust victims
during the period 1920 through 1945, and legislation on this subject matter is
under consideration in other states (including New Jersey). Insurance regulators
in some of these states have taken actions or threatened to take actions to
sanction insurance companies licensed in such states for alleged failure to
comply with such laws. Most state insurance regulators have subscribed to a
private, non-governmental, voluntary organization named the International
Commission on Holocaust Era Insurance Claims ("Holocaust Commission") that is
dedicated to identifying and resolving outstanding insurance claims from the
Holocaust era for its members. Under some of the recently enacted state laws, an
insurer's participation in the Holocaust Commission confers certain statutory
benefits.

    CALIFORNIA.  California has two Holocaust era insurance related statutes.
The first purports to permit the suspension of an insurer's license if it or any
of its affiliates has failed to pay any claim of Holocaust victims proven to be
valid and unpaid. This statute also authorizes the Commissioner to include

                                       9
<PAGE>
consideration of whether an insurer is participating in the Holocaust Commission
in deciding whether to suspend the insurer's license. In July, 1999, the
California Insurance Department ("CID") initiated an examination and hearing
involving the Company's California licensed insurers and Munich Re in order to
investigate whether these companies or affiliated companies in Europe had
outstanding Holocaust era insurance claims. While the licensees named in the
examination and hearing process either were not in existence or did not do
business in Europe during the Holocaust era, and Munich Re, as a reinsurer,
never issued any insurance policies, the CID sought information on Holocaust era
insurance from European insurers in which Munich Re has an indirect investment
interest. While the hearing and examination are pending, there are no regulatory
actions currently in progress against any of the Company's licensed insurers or
Munich Re.

    The second California statute is the Holocaust Victim Insurance Relief Act
of 1999 ("California Registry Law") designed to create a publicly accessible
registry of Holocaust era policyholder information. The California Registry Law
requires California licensed insurers to report Holocaust era policyholder
information in their possession or in the possession of their "related
companies," as that term is defined in the California Registry Law. The CID
interprets this statute to require information even from companies that are not
controlled by the licensed insurers or their parent companies. In March, 2000,
American Re-Insurance and the American Insurance Association, an insurance trade
association, many of whose members are California licensed insurers, initiated
litigation in California challenging the validity of the California Registry Law
on constitutional and other grounds. In June, 2000, the U.S. District Court for
the Eastern District of California issued a preliminary injunction against the
CID from enforcing the California Registry Law. Upon appeal by the CID of that
decision, the United States Court of Appeals for the Ninth Circuit, in February,
2001, affirmed the preliminary injunction, but rejected the constitutional basis
presented in support of the injunction and remanded the case to the District
Court for consideration of the constitutional issue of due process as the basis
for injunction. That litigation is pending.

    FLORIDA.  Florida has enacted a statute ("Florida Holocaust Law") that seeks
reports of information on Holocaust era insurance. The Florida Holocaust Law
requires Florida licensed insurers to report certain information on insurance
policies issued in Europe during the Holocaust era by such licensees and their
affiliates. American Re-Insurance and AAIC have no information to report because
they did not issue insurance policies in Europe during the relevant time period.
However, the companies have timely filed reports disclosing information
voluntarily provided by European insurers in which Munich Re has an investment
interest. The Florida Insurance Department has issued subpoenas to American
Re-Insurance, AAIC, and approximately 40 other insurance companies seeking
policyholder information in connection with the Florida Holocaust Law. In
November 1999, an unaffiliated company initiated litigation against the Florida
Insurance Department challenging the validity of the subpoenas and the
constitutionality of the Florida Holocaust Law. In November 2000, the U.S.
District Court for the Northern District of Florida held that Florida has no
jurisdiction over the matters pertaining to Holocaust era insurance policies
issued in Europe, and the Court enjoined Florida from enforcing the Florida
Holocaust Law. Florida has appealed the District Court ruling. That appeal is
pending.

    NEW YORK.  New York has enacted a statute ("New York Holocaust Law") similar
to the Florida Holocaust Law. American Re-Insurance and AAIC timely filed
reports responsive to the New York Holocaust Law disclosing information
voluntarily provided by European insurers in which Munich Re has an investment
interest. The New York Insurance Department subsequently requested additional
information in connection with Holocaust era insurance, and American Re promptly
forwarded these requests to the European insurers which responded directly to
the Department. Notwithstanding this, in March, 2000 the Department threatened
to attempt to fine American Re up to $1,000 per day for alleged reporting
violations unless Munich Re joins the Holocaust Commission, or agrees to pay
alleged Holocaust claims involving companies that Munich Re does not control, or
contributes to a humanitarian fund for the benefit of Holocaust survivors, and
in April 2000, American Re-Insurance received a letter from the Department's
Disciplinary Unit that disciplinary action against American Re-Insurance and/or
its officers is being considered. However, no formal action has been taken by
the Department to date.

                                       10
<PAGE>
    WASHINGTON.  Washington has enacted a statute similar to the California
Registry Law. American Re-Insurance and AAIC have reported to the Washington
Insurance Department that they have nothing to report under the statute. The
Department has asserted that the companies' report is not in compliance with the
law and has indicated that it may initiate enforcement action against American
Re, although no action has been commenced to date.

                                 *  *  *  *  *

    American Re believes that it has fully complied with the requirements of
these statutes or in the alternative, that such statutes are unconstitutional.
However, there can be no assurance that insurance regulators will not initiate
administrative or other actions against American Re under these laws or that
such statutes shall ultimately be found to be unconstitutional. American Re does
not believe that the ultimate resolution of these matters will have a material
adverse effect on the business, financial condition or results of operations of
American Re and its subsidiaries taken as a whole.

ITEM 2.  PROPERTIES

    The Company owns approximately 413,541 square feet of space in four
contiguous executive office properties in Princeton, New Jersey, on land owned
by Princeton University and subject to long-term ground leases. In 2000,
American Re-Insurance purchased a 10 acre parcel of land which is contiguous
with the executive office properties for potential future expansion. The Company
also owns properties for its foreign subsidiaries and representative offices
totaling 20,305 square feet in Mexico City, Cairo, Santiago, Bogota and Buenos
Aires.

    The Company also rents office space totaling approximately 344,872 square
feet in Atlanta, Boston, Burlington (VT), Chicago, Columbus (OH), Dallas,
Florham Park (NJ), Hartford, Honolulu, Kansas City (KS), Los Angeles,
Minneapolis, New York, Philadelphia, San Francisco, Seattle, Woodland Hills
(CA), Beijing, Bermuda, Brussels, Johannesburg, London, Melbourne, Montreal,
Moscow, Sao Paulo, Singapore, Sydney, Tokyo, and Toronto.

    The Company believes that its office space is adequate for its current needs
and will enter into new leases to meet future needs as such needs arise and as
general market conditions permit.

    The Company has invested significant amounts in computer resources,
including electronic data processing equipment and the development of
proprietary software to support its business. As part of the Company's disaster
control strategy, all key data is backed up regularly for off site storage.

ITEM 3.  LEGAL PROCEEDINGS.

    The Company is involved in claims related litigation, arbitrations and other
adversarial proceedings in the ordinary course of business. The Company is also
involved in non-claim litigation incidental to its business principally related
to insurance company insolvencies or liquidation proceedings relating to
companies with whom it does business.

    The Company does not believe that any of the pending legal proceedings will
have a material adverse effect on the consolidated financial condition or
results of operations of American Re and its subsidiaries. However, no assurance
can be given as to the ultimate outcome of any such legal proceedings.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE SECURITY HOLDERS

    None.

                                       11
<PAGE>
                                    PART II

ITEM 5.  MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    (a) There is no established public trading market for the Company's equity.

    (b) 100% of the Company's Common Stock is owned by MAHC.

    (c) It is the Company's understanding that Munich Re intends to further
strengthen the capital position of the Company by allowing net income to be
retained; therefore, at this time no cash dividends on the Common Stock are
anticipated. The dividend capacity of the reinsurance/insurance subsidiaries is
discussed in Part I, Item 1. BUSINESS--Regulatory Matters-- DIVIDENDS.

ITEM 6.  SELECTED FINANCIAL INFORMATION OF THE COMPANY

    Set forth below are five years of selected financial information derived
from the audited consolidated financial statements and related notes of the
Company. The statutory data have been derived from statutory financial
statements. Such statutory financial statements are prepared in accordance with
statutory accounting principles, which differ from GAAP. For additional
information, see the Consolidated Financial Statements of the Company, and the
related notes thereto included elsewhere in this report.

<TABLE>
<CAPTION>
                                                 2000       1999       1998       1997       1996
                                               --------   --------   --------   --------   --------
                                                              (DOLLARS IN MILLIONS)
<S>                                            <C>        <C>        <C>        <C>        <C>
OPERATING DATA:
  Net premiums written.......................  $3,211.7   $2,905.7   $2,406.8   $2,497.7   $1,902.4
  Net premiums earned........................   3,240.2    2,927.5    2,418.9    2,486.1    1,796.7
  Losses and LAE(1)..........................   2,812.9    2,654.4    1,682.4    1,716.3    1,167.8
  Underwriting expenses......................     990.4      870.7      816.4      838.4      533.5
  Underwriting gain (loss)...................    (563.1)    (597.6)     (79.9)     (68.6)      95.4
  Net investment income......................     464.9      415.1      417.5      427.5      248.2
  Net realized capital gains.................     104.9       82.9       92.8       87.7        4.8
  Interest expense...........................      42.8       41.9       42.2       42.8       54.1
  Income (loss) before income taxes..........     (98.8)    (178.0)     321.5      224.3      232.6
  Income taxes (benefit).....................     (47.5)     (90.1)      82.4       (3.4)      73.8
  Income (loss) before minority interest,
    distributions on preferred securities of
    subsidiary trust and extraordinary
    loss.....................................     (51.3)     (87.9)     239.1      227.7      158.8
  Minority interest..........................        --         --         --        6.8         --
  Distributions on preferred securities of
    subsidiary trust.........................     (13.1)     (13.1)     (13.1)     (13.1)     (13.1)
  Income (loss) before extraordinary loss....     (64.4)    (101.0)     226.0      221.4      145.7
  Extraordinary loss, net of applicable
    income tax effect........................        --         --         --         --      (34.0)
  Net income (loss) available to common
    shareholders.............................     (64.4)    (101.0)     226.0      221.4      111.7

OTHER GAAP OPERATING DATA(2):
  Loss and LAE ratio.........................      86.8%      90.7%      69.6%      69.0%      65.0%
  Underwriting expense ratio.................      30.6       29.7       33.7       33.8       29.7
                                               --------   --------   --------   --------   --------
  Combined ratio.............................     117.4%     120.4%     103.3%     102.8%      94.7%

STATUTORY DATA(3):
  Ratio of net premiums written to surplus...      1.46x      1.31x      0.87x      1.07x      1.21x
  Policyholders' surplus.....................  $2,177.1   $2,166.0   $2,631.1   $2,323.4   $2,178.1
  Loss and LAE ratio.........................      85.9%      86.3%      68.2%      68.8%      67.5%
  Underwriting expense ratio.................      31.1       28.9       35.5       35.1       31.0
                                               --------   --------   --------   --------   --------
  Combined ratio.............................     117.0%     115.2%     103.7%     103.9%      98.5%
</TABLE>

                                       12
<PAGE>

<TABLE>
<CAPTION>
                                            2000        1999        1998        1997        1996
                                          ---------   ---------   ---------   ---------   ---------
                                                            (DOLLARS IN MILLIONS)
<S>                                       <C>         <C>         <C>         <C>         <C>
BALANCE SHEET DATA (AT END OF PERIOD):
  Total investments and cash............  $ 7,893.8   $ 7,439.9   $ 7,801.3   $ 7,673.4   $ 7,007.3
  Total assets..........................   14,942.8    14,278.8    13,544.0    13,216.9    12,114.7
  Loss and LAE reserves.................    8,882.2     8,369.0     7,334.1     7,469.3     7,178.3
  Loan from parent......................       80.1          --          --          --          --
  Senior bank debt......................         --        75.0        75.0        75.0        75.0
  Senior notes..........................      498.5       498.5       498.5       498.5       498.4
  Company-obligated mandatorily
    redeemable preferred securities of
    subsidiary trust holding as all its
    assets Junior Subordinated
    Debentures..........................      237.5       237.5       237.5       237.5       237.5
  Stockholder's equity..................  $ 2,420.1   $ 2,489.0   $ 2,853.1   $ 2,586.4   $ 1,792.5
</TABLE>

------------------------

(1)  "LAE" means loss adjustment expenses.

(2) GAAP loss and LAE ratio represents the sum of losses and LAE as a percentage
    of net premiums earned. GAAP underwriting expense ratio represents
    underwriting expenses as a percentage of net premiums earned. GAAP combined
    ratio represents the sum of the GAAP loss and LAE ratio and GAAP
    underwriting expense ratio. See "Management's Discussion and Analysis of the
    Company's Results of Operations and Financial Condition."

(3) Represents statutory data for the applicable period. Ratio of net premiums
    written to surplus represents statutory net premiums written for the period
    over statutory policyholders' surplus at the end of such period. Statutory
    loss and LAE ratio represents the sum of statutory losses and LAE as a
    percentage of statutory net premiums earned. Statutory underwriting expense
    ratio represents statutory underwriting expenses as a percentage of
    statutory net premiums written. Statutory combined ratio represents the sum
    of the statutory loss and LAE ratio and the statutory underwriting expense
    ratio. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE COMPANY'S RESULTS OF
    OPERATIONS AND FINANCIAL CONDITION."

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE COMPANY'S RESULTS OF
         OPERATIONS AND FINANCIAL CONDITION

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2000, COMPARED WITH YEAR ENDED DECEMBER 31, 1999

    The Company incurred a net loss to common stockholder of $64.4 million for
the year ended December 31, 2000 compared to a net loss of $101.0 million in
1999.

    The Company's net premiums written increased 10.5% to $3,211.7 million for
the year ended December 31, 2000, from $2,905.7 million in 1999. RiskPartners
experienced a 18.8% increase in net premiums written to $589.2 million for the
year ended December 31, 2000, from $495.8 million for the same period in 1999.
This increase was primarily attributable to a $35.0 million increase in
RiskPartners' treaty business, a $45.4 million increase in its facultative
business, and a $55.3 million increase in its direct business, offset by a
$42.3 million decrease in its finite risk writings. HealthCare experienced an
increase in treaty net premiums written to $329.1 million for the year ended
December 31, 2000, from $123.1 million for the same period in 1999.
International Operations experienced a 14.9% increase in net premiums written to
$588.0 million for the year ended December 31, 2000, from $511.9 million for the
same period in 1999. This increase was primarily attributable to a
$109.5 million increase in International Operation's treaty business, partially
offset by a $29.9 million decrease in its finite risk writings. These increases
were partially offset by a 5.6% decrease in net premiums written in DICO to
$1,640.3 million for the year ended December 31, 2000, from $1,737.6 million for
the same period in 1999. This decrease was attributable to a $192.4 million
decrease in DICO's finite risk business and a $89.3 million decrease in its
treaty business, partially offset by a $167.3 million increase in facultative
writings.

                                       13
<PAGE>
    The Company's net premiums earned increased 10.7% to $3,240.2 million for
the year ended December 31, 2000, from $2,927.5 million in 1999. The increase in
premiums earned was primarily attributable to the increase in net premiums
written and the timing of premiums earned on business in force.

    Net losses and LAE incurred increased 6.0% to $2,812.9 million for the year
ended December 31, 2000, from $2,654.4 million in 1999. This increase is
primarily attributable to the increase in net premiums earned. Both the 2000 and
1999 periods include provisions for increased losses for the recent accident
years to reflect adverse market conditions. The 1999 period also included a loss
in connection with the settlement of a dispute concerning a finite risk
agreement. In addition, the Company incurred $62.4 million of catastrophe losses
during the year ended December 31, 2000, in contrast to $122.5 million during
the year ended December 31, 1999.

    Underwriting expense, which consists of commission expense plus operating
expense, increased 13.7% to $990.4 million for the year ended December 31, 2000,
from $870.7 million in 1999. This increase included a 26.2% increase in
commission expense to $751.4 million for the year ended December 31, 2000 from
$595.3 million in 1999. This increase was primarily attributable to the increase
in net premiums earned, in addition to a lower commission ratio on several
large, retrospectively rated contracts in the 1999 period. Operating expenses
decreased 13.2% to $239.0 million for the year ended December 31, 2000 from
$275.4 million for 1999, primarily due to a decrease in overhead costs.

    The Company experienced an underwriting loss (net premiums earned minus
losses and LAE incurred and underwriting expenses) of $563.1 million for the
year ended December 31, 2000, compared to an underwriting loss of
$597.6 million in 1999. The Company's loss ratio decreased to 86.8% for the year
ended December 31, 2000 from 90.7% in 1999, while the underwriting expense ratio
increased to 30.6% in 1999 from 29.7% in 1999. The combined ratio for the year
ended December 31, 2000, decreased to 117.4% from 120.4% in 1999.

    Pre-tax net investment income increased 12.0% to $464.9 million for the year
ended December 31, 2000, from $415.1 million in 1999. This increase is the
result of an increase in the Company's invested asset base and the repositioning
of the investment portfolio into higher yielding taxable securities.

    The Company realized net capital gains of $104.9 million for the year ended
December 31, 2000, compared to net capital gains of $82.9 million in 1999. The
2000 period included net capital gains of $86.4 million on the sale of common
stock, and $23.6 million on the sale of bonds. The 1999 period included net
capital gains of $87.9 million on the sale of common stock, offset by net
capital losses of $3.8 million on the sale of bonds.

    Other income decreased 5.5% to $26.0 million for the year ended
December 31, 2000, from $27.5 million in 1999. Other expenses increased 38.6% to
$88.7 million for the year ended December 31, 2000 from $64.0 million in 1999.
This increase was primarily attributable to the reversal of an expense accrual
related to the Company's long term incentive compensation program during the
1999 period.

    The Company experienced a loss before income taxes and distributions on
preferred securities of subsidiary trust of $98.8 million for the year ended
December 31, 2000, compared to a loss of $178.0 million in 1999.

YEAR ENDED DECEMBER 31, 1999, COMPARED WITH YEAR ENDED DECEMBER 31, 1998

    The Company incurred a net loss to common stockholder of $101.0 million for
the year ended December 31, 1999 compared to net income of $226.0 million in
1998.

    The Company's net premiums written increased 20.7% to $2,905.7 million for
the year ended December 31, 1999, from $2,406.8 million in 1998. The Company
experienced increases in both treaty and facultative net premiums written.
Treaty net premium writings increased 22.9% to $1,952.4 million for the

                                       14
<PAGE>
year ended December 31, 1999, from $1,588.8 million for the same period in 1998.
This increase was primarily attributable to DICO, which increased treaty net
written premiums 22.4% to $1,277.8 million for the year ended December 31, 1999,
from $1,044.1 million for the same period in 1998, as a result of retrospective
premium adjustments on several reinsurance contracts. The Company's two other
major business segments, RiskPartners, the Company's alternative market
operation, and International Operations, also had increased treaty net premium
writings: RiskPartners increased treaty net written premiums 62.8% to
$207.4 million for the year ended December 31, 1999, from $127.4 million for the
same period in 1998, and International Operations increased treaty net written
premiums 11.9% to $467.0 million for 1999, from $417.3 million for 1998.

    Facultative net premiums written increased 16.5% to $953.3 million for the
year ended December 31, 1999, from $818.0 million for the same period in 1998.
This increase was partially due to a change in the Company's facultative
retrocessional program to retain more of this business. Net facultative premiums
written changes included: (i) an 18.5% increase in DICO facultative net premiums
written to $561.3 million for the year ended December 31, 1999, from
$473.8 million for the same period in 1998; (ii) a 12.3% increase in
RiskPartners' facultative net premiums written to $347.2 million for 1999, from
$309.1 million for 1998; and (iii) a 27.6% increase in International Operations'
facultative net premiums written to $44.8 million for 1999, from $35.1 million
for 1998.

    Included in the results described above were increased net premiums written
resulting from changes in the Company's retrocessional programs and
retrospective premium adjustments under several reinsurance contracts under
which higher losses were also ceded to the Company. In addition, the Company's
initiative with healthcare providers yielded $123.1 million of net premiums
written for the year ended December 31, 1999, compared to $45.2 million for the
same period in 1998.

    The Company's net premiums earned increased 21.0% to $2,927.5 million for
the year ended December 31, 1999, from $2,418.9 million in 1998. The increase in
premiums earned was primarily attributable to the increase in net premiums
written.

    Net losses and LAE incurred increased 57.8% to $2,654.4 million for the year
ended December 31, 1999, from $1,682.4 million in 1998. The 1999 period includes
provisions for increased losses for the current and recent accident years to
reflect adverse market conditions and a loss in connection with the settlement
of a dispute concerning a finite reinsurance agreement. In addition, the Company
incurred $122.5 million of catastrophe losses during the year ended
December 31, 1999, compared to $65.5 million during the year ended December 31,
1998.

    During 1999, the Company undertook a study to reevaluate its reserves for
asbestos, environmental-related and other latent liabilities ("latent liability
exposures"). This was a result of the Company's assessment of its reported
claims activity, which reflected continued emergence of newly reported claims in
each of these areas and recent insurance industry efforts to accelerate the
settlement of outstanding latent liability claims. As a result of this
reevaluation, during the fourth quarter of 1999, the Company increased its gross
incurred but not reported ("IBNR") loss reserves for latent liability exposures.
This charge was partially offset by reserves in other accident years and by the
utilization of the remaining limit under the Company's Adverse Loss Agreement
with Travelers, covering losses for accident years 1991 and prior. See "Item 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA--Reserves for Unpaid Losses and Loss
Adjustment Expenses--ASBESTOS, ENVIRONMENTAL-RELATED AND OTHER LATENT LIABILITY
CLAIMS".

    Underwriting expense, consisting of commission expense plus operating
expense, increased 6.7% to $870.7 million for the year ended December 31, 1999,
from $816.4 million in 1998. This increase included a 1.9% increase in
commission expense to $595.3 million for the year ended December 31, 1999 from
$584.3 million in 1998. Operating expenses increased 18.7% to $275.4 million for
the year ended December 31, 1999 from $232.1 million for 1998. This increase is
primarily due to a decrease in the capitalization of deferred acquisition costs
and an increase in pension costs.

                                       15
<PAGE>
    The Company experienced an underwriting loss (net premiums earned minus
losses and LAE incurred and underwriting expenses) of $597.6 million for the
year ended December 31, 1999, compared to an underwriting loss of $79.9 million
in 1998. The Company's loss ratio increased to 90.7% for the year ended
December 31, 1999 from 69.6% in 1998, while the underwriting expense ratio
decreased to 29.7% in 1998 from 33.7% in 1998. The combined ratio for the year
ended December 31, 1999, increased to 120.4% from 103.3% in 1998.

    Pre-tax net investment income decreased slightly to $415.1 million for the
year ended December 31, 1999, from $417.5 million in 1998. This decrease is the
result of a decrease in the Company's invested asset base, offset in part by
higher portfolio yields.

    The Company realized net capital gains of $82.9 million for the year ended
December 31, 1999, compared to net capital gains of $92.8 million in 1998. The
1999 period included net capital gains of $87.9 million on the sale of common
stock, offset by net capital losses of $3.8 million on the sale of bonds. The
1998 period included net capital gains of $103.0 million on the sale of bonds
and $5.0 million on the sale of common stock, offset by the $15.7 million
write-down of common stock and other invested asset holdings, as the decline in
fair value of these securities is considered to be other than temporary.

    Other income decreased 13.5% to $27.5 million for the year ended
December 31, 1999, from $31.8 million in 1998. The decrease in the 1999 period
was attributable to a decrease in fee subsidiary revenue of $3.0 million. Other
expenses decreased 35.0% to $64.0 million for the year ended December 31, 1999
from $98.5 million in 1998. This decrease was primarily attributable to the
reversal of an expense accrual related to the Company's long term incentive
compensation program.

    The Company incurred a loss before income taxes, minority interest and
distributions on preferred securities of subsidiary trust of $178.0 million for
the year ended December 31, 1999, compared to income of $321.5 million in 1998.

FINANCIAL CONDITION

    The Company is a holding company, which includes its principal subsidiary,
American Re-Insurance. Based on statutory net premiums written of
$3,165.5 million in 2000, American Re-Insurance ranked as the third largest
property and casualty reinsurer in the U.S., according to Reinsurance
Association of America statistics.

    Total consolidated assets increased by 4.7% to $14,942.8 million at
December 31, 2000, from $14,278.8 million at December 31, 1999. This increase
was primarily due to increases in investments and cash of $453.9 million and
reinsurance recoverables on paid and unpaid losses of $163.1 million. Total
consolidated liabilities increased by 6.3% to $12,285.2 million at December 31,
2000, from $11,552.3 million at December 31, 1999. This increase was primarily
due to increases in loss and loss adjustment expense reserves of
$513.2 million, and funds held under reinsurance treaties of $108.7 million.

    In December, 2000, the Company entered into a three-year revolving credit
agreement ("Euro Loan") with Munich Re, which allows the Company to borrow up to
Euro E200.0 million. Outstanding amounts under the Euro Loan bear interest
annually at a rate equal to the Eurocurrency Base Rate plus 0.1%. At that time,
the Company borrowed Euro E85.0 million under the Euro Loan, which was used to
repay the $75.0 million outstanding under the revolving credit agreement with
Bank of America, N.A. The Euro Loan is recorded at its original cost, adjusted
for changes in foreign exchange rate. Those adjustments in value are recognized
through income as foreign exchange gain or loss. At December 31, 2000,
$80.1 million was outstanding under the Euro Loan.

    At the time of the borrowing, the Company entered into a Cross-Currency
Interest Rate Swap agreement ("Euro Swap") with Chase Manhattan Bank as an
economic hedge, for other than trading purposes, against the foreign exchange
risk related to the Euro Loan. Under the terms of the Euro Swap, the Company
received $75.6 million on conversion of the Euro E85.0 million borrowed from
Munich Re.

                                       16
<PAGE>
At the termination date, the Company will return $76.3 million to Chase
Manhattan Bank in exchange for Euro E85.0 million for the purposes of paying off
the Euro Loan. The Euro Swap bears interest on a notional amount of
$76.3 million at an adjustable rate equal to the three month U.S. Dollar London
InterBank Offered Rate ("USD LIBOR") plus 0.1%. The Euro Swap is recorded at its
fair value with changes in that value recognized through investment income.

    Common stockholder's equity decreased to $2,420.1 million at December 31,
2000, from $2,489.0 million at December 31, 1999. This decrease was primarily
attributable to the net loss of $64.4 million for the year ended December 31,
2000.

    The Company's reinsurance/insurance subsidiaries' statutory surplus
increased to $2,177.1 million at December 31, 2000, from $2,166.0 million at
December 31, 1999. During 2000, the Company contributed $250.0 million to the
statutory surplus of American Re-Insurance. Operating leverage, as measured by
the reinsurance/insurance subsidiaries' premiums-to-surplus ratio, on an
annualized basis was 1.46 to 1 and 1.31 to 1 at December 31, 2000, and
December 31, 1999, respectively.

    INVESTMENTS

    The total financial statement value of investments and cash increased to
$7,893.8 million at December 31, 2000, from $7,439.9 million at December 31,
1999, primarily due to increases in cash flows from operating activities, and an
increase in the fair value adjustment of investments held. The financial
statement value of the investment portfolio at December 31, 2000, included a net
decrease from amortized cost to fair value of $49.9 million for debt and equity
investments, compared to a net decrease of $161.2 million at December 31, 1999.
At December 31, 2000, the Company recognized a cumulative unrealized loss of
$32.4 million due to the net adjustment to fair value on debt and equity
investments, after applicable income tax effects, which was reflected as a
component of accumulated other comprehensive income. This represents a net
increase to stockholder's equity of $72.4 million from the cumulative unrealized
loss on debt and equity securities of $104.8 million recognized at December 31,
1999.

    The Company follows an investment strategy that emphasizes maintaining a
high-quality investment portfolio and maximizing after-tax current income. The
composition of the Company's investment portfolio, on a fair value basis, for
the periods ending December 31, was as follows:

<TABLE>
<CAPTION>
                                                  2000                  1999
                                           -------------------   -------------------
                                            AMOUNT    PERCENT     AMOUNT    PERCENT
                                           --------   --------   --------   --------
                                                     (DOLLARS IN MILLIONS)
<S>                                        <C>        <C>        <C>        <C>
Fixed maturities:
  U.S. Government and government agency
    bonds................................  $  922.0     11.7%    $  730.8      9.8%
  Municipal bonds........................   1,096.2     13.9      2,070.3     27.8
  Mortgage backed securities.............   1,400.3     17.7      1,106.8     14.9
  Domestic corporate bonds...............   2,549.5     32.3      1,637.8     22.0
  Foreign bonds..........................     729.2      9.3        769.5     10.4
  Redeemable preferred stock.............      72.4      0.9         84.6      1.2
Equity securities........................     500.5      6.3        402.1      5.4
Other investments........................      16.4      0.2         40.5      0.5
Cash and cash equivalents................     607.3      7.7        597.5      8.0
                                           --------    -----     --------    -----
    Total fair value.....................  $7,893.8    100.0%    $7,439.9    100.0%
                                           ========    =====     ========    =====
</TABLE>

    The net increase in the financial statement value of investments and cash
reflects underwriting results, reinvestment of investment income received,
interest expense, income tax payments, and fair value adjustments on bonds and
equity securities classified as available for sale. There were $6,697.2 million
and

                                       17
<PAGE>
$6,315.2 million of bonds carried at fair value as available for sale securities
at December 31, 2000 and 1999, respectively.

    The following table indicates the composition of the Company's bond
portfolio, on a fair value basis, by rating as assigned by Standard & Poor's at
December 31:

<TABLE>
<CAPTION>
                                                  2000                  1999
                                           -------------------   -------------------
                                            AMOUNT    PERCENT     AMOUNT    PERCENT
                                           --------   --------   --------   --------
                                                     (DOLLARS IN MILLIONS)
<S>                                        <C>        <C>        <C>        <C>
AAA......................................  $4,096.8     61.2%    $3,912.8     62.0%
AA.......................................   1,008.5     15.1      1,324.8     21.0
A........................................   1,106.3     16.5        712.7     11.3
BBB......................................     330.7      4.9        210.4      3.3
BB and below and not rated...............     154.9      2.3        154.5      2.4
                                           --------    -----     --------    -----
    Total fair value.....................  $6,697.2    100.0%    $6,315.2    100.0%
                                           ========    =====     ========    =====
</TABLE>

    The Company continues to seek opportunities to enhance investment yield
primarily through a fixed maturity investment strategy, while investigating
various nontraditional investment opportunities. The Company also monitors
investment and liability duration to ensure optimal investment performance. In
addition, the Company continues to invest at a range of maturities to ensure a
consistent maturity profile, thereby minimizing the need for security sales to
raise liquidity levels. The modified duration of the Company's bond portfolio
was estimated at 4.82 and 4.62 years at December 31, 2000, and 1999,
respectively. The Company continually tracks the allocation of the bond
portfolio invested in tax-advantaged securities based on tax planning
considerations and their value relative to taxable investments.

    In 2000, American Re-Insurance entered into two securities lending
agreements. The first, with State Street Bank and Trust Company involved
predominately U.S. Treasury securities, which had a fair value of
$218.5 million at December 31, 2000. Under the second agreement with Merrill
Lynch, the securities loaned were comprised predominately of tax-exempt
municipal securities, which had a fair value of $904.4 million at December 31,
2000. Income from the securities loaned under the agreement with Merrill Lynch
is deemed to be taxable in nature, during the time the securities are on loan.
Under both agreements, collateral must be maintained at 102% of the loaned
securities and must have a weighted average credit rating of at least AA- by
Standard and Poors Corporation ("S&P") or Aa3 by Moody's Investors Services
("Moody's"). Income from securities lending totaled $9.3 million for the fiscal
year ended December 31, 2000.

LIQUIDITY AND CAPITAL RESOURCES

    The Company's only material investment is the capital stock of American
Re-Insurance. The Company is dependent on dividends and tax allocation payments,
primarily from American Re-Insurance, to meet its short- and long-term liquidity
requirements, including its debt service obligations. It is the Company's
understanding that it is Munich Re's intention to further strengthen the capital
position of the Company by allowing net income to be retained; therefore, at
this time, no cash dividends on the Company's common stock are anticipated.

    The Company is required to apply a portion of its operating cash flow to the
servicing and repayment of its debt obligations. The payment of dividends to the
Company by American Re-Insurance is subject to limitations imposed by the
Delaware Insurance Code. Based upon these restrictions and 2000 operating
results, the maximum amount available for payment of dividends to the Company by
American Re-Insurance in 2001 without approval of regulatory authorities is
$216.5 million.

                                       18
<PAGE>
    The Company's cash flow from operations may be influenced by a variety of
other factors, including cyclical changes in the property and casualty
reinsurance market, insurance regulatory initiatives, and changes in general
economic conditions. Liquidity requirements are met on both a short- and
long-term basis by funds provided by operations and from the maturity and sale
of investments. Cash provided by operations primarily consists of premiums
collected, investment income, and reinsurance recoverable balances collected,
less paid claims, retrocession payments, underwriting and interest expenses,
QUIPS distributions, and income tax payments. Cash flows provided by operations
for the Company were $291.6 million for 2000; cash flows used in operations were
$38.5 million for 1999; and cash flows provided by operations were
$202.7 million for 1998. The increase in 2000, as compared to 1999, is
attributable to increased net premiums collected, in addition to increased net
investment income received. The decrease in 1999 is primarily attributable to
higher paid losses during the period. The decrease in the 1998 period is
attributable to several factors, including the Company's lower level of premium
writings in the soft market, a higher level of paid losses from its book of
proportional business, and payments related to catastrophes.

    Total cash proceeds in 2000 from sales of investments were $3,656.6 million
compared to $3,321.3 million in 1999 and $6,164.7 million in 1998. The increased
activity in 2000 was due to the Company's investment strategy to restructure
certain segments of the investment portfolio and increase common equity
holdings. The decreased activity in 1999 was the result of an abnormally high
level of activity during 1998. Cash and cash equivalents were $607.3 million,
$597.5 million, and $274.9 million, at December 31, 2000, 1999, and 1998,
respectively. Cash and short-term investments are maintained for liquidity
purposes and represented 7.7%, 8.0% and 3.5%, respectively, of total financial
statement investments and cash on such dates.

CREDIT RATINGS

    In December, 2000, A.M. Best affirmed its rating of American Re-Insurance of
"A++ (Superior)", the highest of A.M. Best's 15 qualitative ratings. "A++
(Superior)" is assigned by A.M. Best to those companies which, in its opinion,
have demonstrated superior overall performance when compared to the standards
established by A.M. Best and have demonstrated a very strong, ability to meet
their policyholder and other contractual obligations over a long period of time.
According to A.M. Best, the objectives of its rating system are to evaluate the
factors affecting overall performance of an insurance or reinsurance company and
to provide A.M. Best's opinion of the company's relative financial strength and
ability to meet its obligation to policyholders currently and in the future.

    In March, 2001, S&P affirmed American Re-Insurance's claims paying ability
rating of "AAA." The "AAA" rating represents the highest of S&P's ratings. A
rating of "AAA" is assigned by S&P to those companies which, in its opinion,
have superior financial security on an absolute and relative basis and their
capacity to meet policyholder obligations is overwhelming under a variety of
economic and underwriting conditions. At the same time, S&P affirmed its "AA"
counterparty credit and senior unsecured debt ratings of the Company.

    In December 2000, Moody's affirmed the Company's and American Re-Insurance's
financial strength rating of "Aaa." The "Aaa" rating represents the highest of
Moody's 19 qualitative ratings. A rating of "Aaa" is assigned by Moody's to
those companies which, in Moody's opinion, offer exceptional financial security.

    There can be no assurance that the Company or American Re-Insurance will
continue to maintain the ratings.

MARKET AND INTEREST RATE RISK

    The Company is subject to market risk arising from the potential change in
the value of its various financial instruments. These changes may be due to
fluctuations in interest and foreign exchange rate and

                                       19
<PAGE>
equity prices. The major components of market risk affecting the Company are
interest rate, foreign currency and equity risk.

    The Company has both fixed and variable (including mortgage backed
securities and collateralized mortgage obligations) income investments with a
value of $6,769.6 million at December 31, 2000 that are subject to changes in
value due to market interest rates. In addition to interest rate and foreign
exchange risk, the Company's common equity portfolio of $500.5 million at
December 31, 2000 is subject to changes in value based on changes in equity
prices, predominately in the United States. The Company also has a loan from
Munich Re of $80.1 million, Senior Notes of $498.5 million, and QUIPS of
$237.5 million. The Munich Re loan is a variable rate instrument, while the
Senior Notes and QUIPS are fixed rate instruments.

    The Company has exposure to movements in various currencies around the
world, particularly the British pound, the Euro, and the Australian dollar.
Changes in currency exchange rates primarily affect the international components
of the Company's balance sheet, income statement, and statement of cash flows.
This exposure is somewhat offset because the Company's reinsurance premiums and
invested assets are partially offset by losses incurred and loss reserves,
respectively, generally denominated in the same currency.

    ARCM is a party to certain index-based Catastrophe Swaps with Gold Eagle, a
special purpose Bermuda company. Under the terms of the catastrophe swaps, ARCM
may receive approximately $182 million of potential payments from Gold Eagle in
the event of three types of certain catastrophic events: California earthquakes,
Midwest earthquakes, or Eastern and Gulf Coast windstorms, all as specifically
defined under the Catastrophe Swaps ("Catastrophes"). Payment amounts under the
catastrophe swaps will be determined based upon an index of modeled insurance
industry losses from Catastrophes as calculated by Risk Management
Solutions, Inc. American Re Securities Corporation, a subsidiary of the Company,
acted as placement agent for Gold Eagle in the placement of catastrophe related
securities, called Modeled Index Linked Securities(SM) (ModILS SM), intended to
collateralize any potential payments by Gold Eagle to ARCM under the catastrophe
swaps. The ModILS(SM) securities, are different from other forms of
catastrophe-related securities in that the protection they provide is triggered
by the size of an index of modeled insurance industry losses from specified
types of catastrophic events, not by the actual losses incurred by the Company.

    The Company adjusts the catastrophe swaps to fair value using a model
pricing based upon interest rate spreads above comparable U.S. Treasury
investments, applied to a notional value outstanding of $182.1 million. The fair
value adjustment was $0.7 and $0.6 at December 31, 2000 and 1999, respectively.

SENSITIVITY ANALYSIS OF MARKET RISK AND DISCLOSURES ABOUT MODEL

    Interest rate sensitivity analysis is used to measure the Company's interest
rate price risk by computing estimated changes in fair value of fixed and
variable rate assets and liabilities in the event of a range of assumed changes
in market interest rates. This analysis assesses the risk of loss in market risk
sensitive instruments in the event of a sudden and sustained 100 to 200 basis
point increase or decrease in the mark interest rates. The following table
presents the Company's projected change in fair value of the Company's financial
instruments at December 31, 2000. All market sensitive instruments presented in
this table are available for sale. The Company has no significant trading
securities.

    The calculation of fair value is based on the net present value of estimated
discounted cash flows expected over the life of the market rate sensitive
instruments, using market prepayment assumptions and

                                       20
<PAGE>
market rates of interest provided by independent broker quotations and other
public sources as of December 31, 2000, with adjustments made to reflect the
shift in the Treasury yield curve as appropriate.

<TABLE>
<CAPTION>
                                      FAIR VALUE OF TOTAL                     PERCENTAGE
                                     INVESTMENTS, EXCLUDING   HYPOTHETICAL   HYPOTHETICAL
PERCENT CHANGE IN INTEREST RATES        COMMON EQUITIES          CHANGE         CHANGE
--------------------------------     ----------------------   ------------   ------------
                                                    (DOLLARS IN MILLIONS)
<S>                                  <C>                      <C>            <C>
200 basis point rise...............         $6,857.4            $(535.9)         (7.3)%
100 basis point rise...............          7,119.7             (273.6)         (3.7)
Base Scenario......................          7,393.3                 --            --
100 basis point decline............          7,666.1              272.8           3.7
200 basis point decline............          7,932.3              539.0           7.3
</TABLE>

<TABLE>
<CAPTION>
                                       FAIR VALUE OF LOAN                    PERCENTAGE
                                       FROM PARENT, SENIOR   HYPOTHETICAL   HYPOTHETICAL
PERCENT CHANGE IN INTEREST RATES         NOTES AND QUIPS        CHANGE         CHANGE
--------------------------------       -------------------   ------------   ------------
                                                     (DOLLARS IN MILLIONS)
<S>                                    <C>                   <C>            <C>
200 basis point rise.................        $680.5            $(119.2)         (14.9)%
100 basis point rise.................         739.2              (60.5)          (7.6)
Base Scenario........................         799.7                 --             --
100 basis point decline..............         863.6               63.9            8.0
200 basis point decline..............         935.0              135.3           16.9
</TABLE>

    The preceding tables indicate that at December 31, 2000, in the event of a
sudden and sustained increase in prevailing market interest rates, the fair
value of the Company's investment and debt instruments would be expected to
decrease, and that in the event of a sudden and sustained decrease in prevailing
market interest rates, the fair value of the Company's fixed maturity
investments and debt instruments would be expected to increase.

DISCLOSURES ABOUT LIMITATIONS OF SENSITIVITY ANALYSIS

    Computations of prospective effects of hypothetical interest rate changes
are based on numerous assumptions, including relative levels of market interest
rates and loan prepayments, and should not be relied on as indicative of future
results.

    Certain shortcomings are inherent in the method of analysis presented in the
computation of the fair value of fixed rate instruments. Actual values may
differ from those projections presented should market conditions vary from
assumptions used in the calculation of the fair value. In the event of a change
in interest rates, prepayment and early withdrawal levels could deviate
significantly from those assumed in the calculation of fair value. Finally, the
desire of many borrowers to repay their fixed-rate mortgage loans may decrease
in the event of interest rate increases.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    Reference is made to the items included in Item 14(a) of this report.

RESERVES FOR UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES

    GENERAL.  The reinsurance/insurance subsidiaries are required to maintain
reserves to cover their estimated ultimate liability for losses and LAE with
respect to reported and unreported claims incurred as of the end of each
accounting period (net of estimated related salvage and subrogation claims).
These reserves are estimates that involve actuarial and statistical projections
of the expected cost of the ultimate settlement and administration of claims
based on facts and circumstances then known, predictions of future events,
estimates of future trends in claims severity and other variable factors. The
inherent uncertainties of estimating loss reserves are exacerbated for
reinsurers by the significant periods of time

                                       21
<PAGE>
that often elapse between the occurrence of an insured loss, the reporting of
the loss to the primary insurer and, ultimately, to the reinsurer, and the
primary insurer's payment of that loss and subsequent indemnification by the
reinsurer (the "tail"). As a consequence, actual losses and LAE paid may
deviate, perhaps substantially, from estimates reflected in the
reinsurance/insurance subsidiaries' reserves in their financial statements. If
actual net losses and LAE paid exceed the reinsurance/insurance subsidiaries'
net reserves; the Company's net income will be reduced in the year determined.

    When a claim is reported to a ceding company, its claims personnel establish
a "case reserve" for the estimated amount of the ultimate payment. The estimate
reflects the informed judgment of such personnel based on general insurance
reserving practices and on the experience and knowledge of such personnel
regarding the nature and value of the specific type of claim. The Company, in
turn, typically establishes a case reserve when it receives notice of a claim
from the ceding company. Such reserves are based on an independent evaluation by
the Claims Division, taking into consideration coverage, liability, severity of
injury or damage, jurisdiction, an assessment of the ceding company's ability to
evaluate and handle the claim and the amount of reserves recommended by the
ceding company. Case reserves are adjusted periodically by the Claims Division
based on subsequent developments and audits of ceding companies.

    In accordance with industry practice, the Company establishes IBNR reserves
to provide for future case reserves and loss payments on incurred claims that
have not yet been reported to an insurer or reinsurer. In calculating its IBNR
reserves, the reinsurance/insurance companies use generally accepted actuarial
reserving techniques that take into account quantitative loss experience data,
together, where appropriate, with qualitative factors. IBNR reserves are based
on loss experience and are grouped both by class of business and by accident
year. IBNR reserves are also adjusted to take into account certain factors such
as changes in the volume of business written, reinsurance contract terms and
conditions, the type of business, claims processing and other variable factors
that can be expected to affect the Company's liability for losses over time.

    CHANGES IN HISTORICAL RESERVES.  The following table shows the year-end
reserves from 1990 through 2000, and the subsequent changes in those reserves,
presented on a combined basis for the reinsurance/ insurance subsidiaries. The
following data is not accident year data, but a display of 1990 through
2000 year-end reserves and the subsequent changes in those reserves. For
instance, the "Redundancy (Deficiency)" shown in the table for each year
represents the aggregate amount by which original estimates of reserves at that
year-end have changed in subsequent years. Accordingly, the cumulative
deficiency for a year relates only to reserves at that year-end and such amounts
are not additive. For example, the initial year-end 1990 reserves have developed
a $424 million deficiency through December 31, 2000.

                                       22
<PAGE>
            CHANGES IN HISTORICAL RESERVES FOR UNPAID LOSSES AND LAE
           FOR THE LAST TEN YEARS--GAAP BASIS AS OF DECEMBER 31, 2000
<TABLE>
<CAPTION>
                                                                            DECEMBER 31,
                                  ------------------------------------------------------------------------------------------------
                                    1990       1991       1992       1993       1994       1995       1996       1997       1998
                                  --------   --------   --------   --------   --------   --------   --------   --------   --------
<S>                               <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Net liability for unpaid losses
  and LAE.......................   $3,203     $3,267     $3,254     $3,573     $3,922     $4,501     $4,849     $5,103     $5,065
Paid (cumulative) as of:
One year later..................      811        864        739        889      1,076      1,124      1,295      1,509      1,986
Two years later.................    1,423      1,318      1,316      1,566      1,787      1,895      2,230      2,809      3,339
Three years later...............    1,755      1,667      1,791      2,058      2,303      2,517      3,104      3,670
Four years later................    2,004      1,985      2,137      2,421      2,744      3,097      3,651
Five years later................    2,243      2,252      2,414      2,748      3,159      3,441
Six years later.................    2,463      2,483      2,671      3,060      3,425
Seven years later...............    2,669      2,689      2,936      3,279
Eight years later...............    2,858      2,922      3,137
Nine years later................    3,079      3,109
Ten years later.................    3,258

Net liability re-estimated as
  of:
End of year.....................   $3,203     $3,267     $3,254     $3,573     $3,922     $4,501     $4,849     $5,103     $5,065
One year later..................    3,258      3,194      3,317      3,640      4,369      4,512      4,920      5,165      5,635
Two years later.................    3,183      3,224      3,363      3,986      4,397      4,610      4,863      5,533      5,903
Three years later...............    3,216      3,244      3,666      4,017      4,347      4,555      5,039      5,434
Four years later................    3,225      3,474      3,686      4,009      4,297      4,756      4,869
Five years later................    3,472      3,493      3,705      3,986      4,463      4,488
Six years later.................    3,489      3,558      3,698      4,117      4,287
Seven years later...............    3,600      3,580      3,820      3,944
Eight years later...............    3,623      3,651      3,672
Nine years later................    3,699      3,537
Ten years later.................    3,627

Redundancy (Deficiency).........     (424)      (270)      (418)      (371)      (365)        13        (20)      (331)      (838)

<CAPTION>
                                     DECEMBER 31,
                                  -------------------
                                    1999       2000
                                  --------   --------
<S>                               <C>        <C>
Net liability for unpaid losses
  and LAE.......................   $5,480     $5,811
Paid (cumulative) as of:
One year later..................    2,174
Two years later.................
Three years later...............
Four years later................
Five years later................
Six years later.................
Seven years later...............
Eight years later...............
Nine years later................
Ten years later.................
Net liability re-estimated as
  of:
End of year.....................   $5,480     $5,811
One year later..................    6,430
Two years later.................
Three years later...............
Four years later................
Five years later................
Six years later.................
Seven years later...............
Eight years later...............
Nine years later................
Ten years later.................
Redundancy (Deficiency).........     (950)
</TABLE>

<TABLE>
<CAPTION>
                                                       1996       1997       1998       1999       2000
                                                     --------   --------   --------   --------   --------
<S>                                                  <C>        <C>        <C>        <C>        <C>
Gross liability--end of year.......................   $7,178     $7,469    $ 7,334    $ 8,369     $8,882
Reinsurance recoverables on unpaid losses..........    2,329      2,366      2,269      2,889      3,071
                                                      ------     ------    -------    -------     ------
Net liability--end of year.........................    4,849      5,103      5,065      5,480      5,811
Gross re-estimated liability--latest...............   $7,596     $8,271    $ 8,917    $ 9,597
Re-estimated reinsurance recoverables on latest
  unpaid losses....................................    2,727      2,837      3,014      3,167
                                                      ------     ------    -------    -------
Net re-estimated liability--latest.................    4,869      5,434      5,903      6,430
Gross cumulative redundancy (deficiency)...........   $ (418)    $ (802)   $(1,583)   $(1,228)
</TABLE>

                                       23
<PAGE>
    The reconciliation between statutory basis and GAAP basis reserves for each
of the three years in the period ended December 31, 2000, is shown below:

              RECONCILIATION OF RESERVES FOR UNPAID LOSSES AND LAE
                       FROM STATUTORY BASIS TO GAAP BASIS

<TABLE>
<CAPTION>
                                                                       DECEMBER 31,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
                                                                  (DOLLARS IN MILLIONS)
<S>                                                           <C>        <C>        <C>
Statutory reserves..........................................  $5,642.1   $5,346.7   $5,064.7
Adjustments to a GAAP basis(1)..............................     169.1      133.0        0.2
Reinsurance recoverables on unpaid losses...................   3,071.0    2,889.3    2,269.2
                                                              --------   --------   --------
Reserves on a GAAP basis....................................  $8,882.2   $8,369.0   $7,334.1
                                                              ========   ========   ========
</TABLE>

------------------------

(1)  Consists primarily of the application of risk transfer and retroactive
     accounting rules of Financial Accounting Statement No. 113 ("FAS
     No. 113"), "Accounting and Reporting for Reinsurance of Short-Duration and
     Long-Duration Contracts", and the inclusion of loss reserves for Princeton
     Eagle West Insurance Company, a Bermuda Insurance Company.

              RECONCILIATION OF RESERVES FOR UNPAID LOSSES AND LAE
                                  (GAAP BASIS)

<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31,
                                                              ---------------------------------
                                                                2000        1999        1998
                                                              ---------   ---------   ---------
                                                                    (DOLLARS IN MILLIONS)
<S>                                                           <C>         <C>         <C>
Reserves at beginning of period.............................  $ 8,369.0   $ 7,334.1   $ 7,469.3
Reinsurance recoverable on unpaid losses....................   (2,889.3)   (2,269.2)   (2,366.5)
                                                              ---------   ---------   ---------
Net reserves at beginning of period.........................    5,479.7     5,064.9     5,102.8
Net incurred related to:
  Current period............................................    1,864.3     2,084.0     1,620.4
  Prior periods.............................................      948.6       570.4        62.0
                                                              ---------   ---------   ---------
Total net incurred..........................................    2,812.9     2,654.4     1,682.4
Net paid related to:
  Current period............................................      307.5       253.6       207.2
  Prior periods.............................................    2,173.9     1,986.0     1,513.1
                                                              ---------   ---------   ---------
Total net paid..............................................    2,481.4     2,239.6     1,720.3
                                                              ---------   ---------   ---------
Net reserves at end of period...............................    5,811.2     5,479.7     5,064.9
Reinsurance recoverables on unpaid losses...................   (3,071.0)   (2,889.3)   (2,269.2)
                                                              ---------   ---------   ---------
Reserves at end of year.....................................  $ 8,882.2   $ 8,369.0   $ 7,334.1
                                                              =========   =========   =========
</TABLE>

    ASBESTOS, ENVIRONMENTAL-RELATED AND OTHER LATENT LIABILITY CLAIMS.  American
Re-Insurance's underwriting results have been adversely affected by claims
developing from latent liability exposures. Reserves established by American
Re-Insurance for latent liability exposures necessarily have reflected the
uncertainty inherent in estimating the ultimate future claim amounts arising
from these types of exposures and the lack of credible actuarial methods to
measure and quantify these exposures. American Re-Insurance's difficulty in
accurately quantifying these exposures was attributable to the need for latent
liability exposures to be first quantified by the insured party and then the
primary insurer before the information was made available to the reinsurer.

                                       24
<PAGE>
    During 1999, the Company undertook a study to reevaluate its reserves for
latent liability exposures. This was a result of the Company's assessment of its
reported claims activity, which reflected continued emergence of newly reported
claims in each of these areas and recent insurance industry efforts to
accelerate the settlement of outstanding latent liability claims. Each of the
Company's related exposures was evaluated individually to determine its expected
ultimate liability for losses and LAE. As a result of this reevaluation, during
the fourth quarter of 1999, the Company increased its IBNR loss reserves for
such exposures. This charge was partially offset by favorable development on
reserves in other accident years and by the utilization of the remaining limit
under the Company's Adverse Loss Agreement with Travelers.

    Travelers provides indemnification in the form of an Adverse Loss Agreement
(the "Cover") for adverse development of losses and allocated loss adjustment
expenses of $500.0 million representing an 80% pro rata share (American
Re-Insurance retains the remaining 20%) of up to $625.0 million of losses in
excess of $2,700.0 million incurred on or prior to December 31, 1991. At
December 31, 2000, the Company has utilized the full limit of the Cover.

    The Company had reserves for latent liability exposures, prior to cession to
the Cover, at December 31, as follows:

<TABLE>
<CAPTION>
                                                  2000                  1999
                                           -------------------   -------------------
                                            GROSS       NET       GROSS       NET
                                           --------   --------   --------   --------
                                                     (DOLLARS IN MILLIONS)
<S>                                        <C>        <C>        <C>        <C>
Asbestos.................................  $  679.9    $410.8    $  786.6    $470.9
Environmental-related and other latent
  liability..............................     574.4     426.5       646.2     466.7
                                           --------    ------    --------    ------
Total....................................  $1,254.3    $837.3    $1,432.8    $937.6
                                           ========    ======    ========    ======
</TABLE>

    Loss reserves for latent liability exposures at December 31, 2000 and 1999,
represent best estimates drawn from a range of possible outcomes based upon
currently known facts, projected forward for additional claimants using
assumptions and methodologies considered reasonable. There can be no assurance
that future losses resulting from these exposures will not materially adversely
affect future earnings.

    The following table presents three calendar years of development of losses
and LAE reserves associated with latent liability exposures, including case and
IBNR reserves. The application of reinsurance recoveries to calculate net
incurred and net paid losses, and the reinsurance recoverables on unpaid losses,
are based on specific reinsurance contracts only, before the application of any
adverse loss coverage for 1992 and prior years, which are not allocated to
specific causative events.

                                       25
<PAGE>
                             THREE YEAR DEVELOPMENT
                              ASBESTOS LIABILITIES

<TABLE>
<CAPTION>
                                                         YEAR ENDED DECEMBER 31,
                                                      ------------------------------
                                                        2000       1999       1998
                                                      --------   --------   --------
                                                          (DOLLARS IN MILLIONS)
<S>                                                   <C>        <C>        <C>
Gross Basis:
  Beginning reserve balance.........................   $786.6     $399.9     $457.7
  Incurred loss and LAE.............................     13.4      483.9         --
  Loss and LAE paid.................................    120.1       97.2       57.8
                                                       ------     ------     ------
  Ending reserve balance............................   $679.9     $786.6     $399.9
                                                       ======     ======     ======
Net Basis:
  Beginning reserve balance.........................   $470.9     $258.5     $297.1
  Incurred loss and LAE.............................     22.3      277.9         --
  Loss and LAE paid.................................     82.4       65.5       38.6
                                                       ------     ------     ------
  Ending reserve balance............................   $410.8     $470.9     $258.5
                                                       ======     ======     ======
</TABLE>

                           ENVIRONMENTAL-RELATED AND
                            OTHER LATENT LIABILITIES

<TABLE>
<CAPTION>
                                                         YEAR ENDED DECEMBER 31,
                                                      ------------------------------
                                                        2000       1999       1998
                                                      --------   --------   --------
                                                          (DOLLARS IN MILLIONS)
<S>                                                   <C>        <C>        <C>
Gross Basis:
  Beginning reserve balance.........................   $646.2     $237.3     $327.9
  Incurred loss and LAE.............................     36.6      538.4         --
  Loss and LAE paid.................................    108.4      129.5       90.6
                                                       ------     ------     ------
  Ending reserve balance............................   $574.4     $646.2     $237.3
                                                       ======     ======     ======
Net Basis:
  Beginning reserve balance.........................   $466.7     $150.1     $218.6
  Incurred loss and LAE.............................     39.6      411.9         --
  Loss and LAE paid.................................     79.8       95.3       68.5
                                                       ------     ------     ------
  Ending reserve balance............................   $426.5     $466.7     $150.1
                                                       ======     ======     ======
</TABLE>

SAFE HARBOR DISCLOSURE

    The Company has disclosed certain forward-looking statements concerning its
operations, economic performance and financial condition, including, in
particular the likelihood of the Company's success in developing and expanding
its business and the risks related thereto. These statements are based upon a
number of assumptions and estimates that are inherently subject to significant
uncertainties and contingencies, many of which are beyond the control of the
Company, and reflect future business decisions that are subject to change. Some
of these assumptions inevitably will not materialize, and unanticipated events
will occur which will affect the Company's results. Such statements may include,
but are not limited to, projections of premium revenue, investment income, other
revenue, losses, expenses, earnings, cash flows, plans for future operations,
common stockholder's equity, investments, capital plans, dividends, plans
relating to products or services of American Re, estimates concerning the
effects of litigation or other disputes, adverse state or federal legislation or
regulation, adverse publicity or news coverage or changes in general economic
factors as well as the assumptions for any of the foregoing and are generally
expressed with words, such as "believes," "estimates," "expects," "anticipates,"
"plans," "projects," "forecasts," "goals," "could have," "may have" and similar
expressions.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE

    None.

                                       26
<PAGE>
                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

DIRECTORS

    EDWARD J. NOONAN, age 42, has served as President, Chief Executive Officer
and a Director of the Company and Chairman, President and Chief Executive
Officer of American Re-Insurance since March 1997. From February 1997 to
March 1997, Mr. Noonan served as Executive Vice President of both the Company
and American Re-Insurance. From September 1994 to March 1997, Mr. Noonan was
President, Domestic Insurance Company Operations of American Re-Insurance.
Mr. Noonan served as Senior Vice President of American Re-Insurance from
July 1991 to February 1997, Senior Vice President, Treaty Division from
April 1990 to July 1991, and as Vice President, Treaty Division from May 1988 to
April 1990. Mr. Noonan has served as a Director of American Re-Insurance since
September 1992. Mr. Noonan is also a member of the Company's Board of
Management.

    DR. JUR. HANS-JURGEN SCHINZLER, age 60, has served as a Director of the
Company since November 1996 and Chairman of the Company since March 1997.
Dr. Schinzler has been a member of the Board of Management of Munich Re since
1981 and has served as Chairman of the Board of Management of Munich Re since
1993. Dr. Schinzler currently holds positions on the Supervisory Boards of
various subsidiaries within the Munich Re holding company system. Dr. Schinzler
serves as Chairman of the Supervisory Board of ERGO Versicherungsgruppe AG,
Dusseldorf, MR Beteiligungen AG, Grafelfing, and MRE Beteiligungen AG, Munich.
Dr. Schinzler is also Deputy Chairman of the Supervisory Board of Allianz
Lebensversicherungs-Aktiengesellschaft, Stuttgart, as well as a member of the
Supervisory Board of Dresdner Bank Aktiengesellschaft, Frankfurt, MAN
Aktiengesellschaft, Munich and Aventis S.A., Strasburg, France. He currently
serves as a member of the Board of Directors of Munich-American Holding
Corporation, Delaware and Dresdner Kleinwort-Wasserstein, New York.

    KARL WITTMAN, age 56, has served as a Director of the Company since
December 1998 as well as a member of the Board of Management of Munich Re since
January 1998 responsible for Asia and Australasia, United Kingdom, Ireland and,
since January 1999, North America. From 1985 to 1995 Mr. Wittmann served as a
member of the Executive Management, Fire Treaty Underwriting, Munich Re, and
from 1995 to 1997 as a member of the Executive Management, Head of Operational
Division Asia and Australasia, Munich Re. Mr. Wittmann is currently Chairman of
Munichre General Services Ltd., London, Munichre Life Services Ltd., London,
Munichre Services Ltd., London, The Great Lakes Reinsurance (UK) Plc., London,
and serves as a Director of Munich-American Holding Corporation, Delaware, and
various Munich Re affiliates.

    DR. JUR. HEINER HASFORD, age 53, has served as a Director of the Company
since July 2000 and as a member of the Board of Management of Munich Re since
March 1993. Dr. Hasford is currently Chairman of the Supervisory Board of
Europaische Reiseversicherung AG, Munich, as well as Deputy Chairman of the
Supervisory Boards of Mercur Assistance AG Holding, Munich, MR Beteiligungen AG,
Grafelfing, and MRE Beteiligungen AG, Munich. He serves as a member of the
Supervisory Board of D.A.S., Munich, ERGO Versicherungsgruppe AG, Dusseldorf,
BHS tabletop AG, Selb, Karlsruher Rendite, Karlsruhe, MAN Nutzfahrzeuge AG,
Munich, VICTORIA Lebensversicherung AG and VICTORIA Versicherung AG, Dusseldorf,
and WMF, Geislingen/Steige, Germany. Dr. Hasford is also Joint Chairman of
Munich London Investment Management Ltd., London, Munich and Director of
Munich-American Holding Corporation, Delaware, and various Munich Re affiliates.

                                       27
<PAGE>
EXECUTIVE OFFICERS

    In addition to Mr. Noonan, the executive officers of the Company are as
follows:

    MAHMOUD M. ABDALLAH--Mr. Abdallah, age 52, has served as Executive Vice
President of the Company, and Executive Vice President of American Re-Insurance
since February 1997. He has served as President, International Operations of
American Re-Insurance since September 1994, and Chairman and CEO of the Munich
American Global Services Group since July 1998 where his responsibilities
include oversight of its member companies, Am-Re Brokers, Inc., ARB
International, Ltd., Am-Re Consultants, Inc., and the Becher+Carlson Companies.
In addition, Mr. Abdallah has oversight responsibility for the Information
Technology Division of American Re-Insurance. Mr. Abdallah has been a member of
the Board of Directors of American Re-Insurance since September 1992.
Mr. Abdallah is also a member of the Company's Board of Management.

    ALBERT J. BEER--Mr. Beer, age 50, has served as Executive Vice President
since March 1997. Mr. Beer has served as President of DICO since July, 2000.
Prior to assuming his present responsibilities, Mr. Beer served as President of
RiskPartners from December 1997 to July, 2000 and as President of DICO from
March 1997 to December 1997. Mr. Beer joined the Company in December 1992 as
Senior Vice President--Branch Operations of American Re-Insurance. Mr. Beer has
been a Director of American Re-Insurance since December 1992. Prior to joining
the Company, Mr. Beer was Chief Actuary for Skandia America. Mr. Beer is also a
member of the Company's Board of Management.

    ROBERT K. BURGESS--Mr. Burgess, age 52, has been Executive Vice President,
General Counsel and Secretary of both the Company and American Re-Insurance
since February 1997 and has been a Director of American Re-Insurance since
May 1995. Upon joining the Company in April 1995 until February 1997,
Mr. Burgess served as Senior Vice President, General Counsel and Secretary of
both companies. Mr. Burgess has oversight responsibility for Human Resources,
Claims, American Re University, Investor Relations and Corporate Communications
and Internal Audit. Prior to joining the Company, Mr. Burgess was a Partner in
the law firm of Latham & Watkins, in Chicago, Illinois. Mr. Burgess is also a
member of the Company's Board of Management.

    WOLFGANG ENGSHUBER--Mr. Engshuber, age 44, has served as Executive Vice
President and as a Director of American Re-Insurance since October 1998.
Mr. Engshuber is responsible for American Re Financial Products. Before joining
the Company in October 1998, Mr. Engshuber served as a member of the Executive
Management of Munich Reinsurance Company in Munich, Germany since October 1986.
Mr. Engshuber is also a member of the Company's Board of Management.

    GEORGE T. O'SHAUGHNESSY, JR.--Mr. O'Shaughnessy, age 45, serves as Executive
Vice President and Chief Financial and Accounting Officer of both the Company
and American Re-Insurance. From April 1997 to April 1998, Mr. O'Shaughnessy
served as Senior Vice President, Chief Financial and Accounting Officer of both
Companies. Mr. O'Shaughnessy became a Director of American Re-Insurance in
December 1997. From January 1995 to April 1997, Mr. O'Shaughnessy served as Vice
President and Controller of both Companies. Mr. O'Shaughnessy joined the Company
in April 1989 and is a member of the Company's Board of Management.

    EDWARD E. DUESS--Mr. Duess, age 49, serves as Senior Vice President and
Chief Underwriting Officer for American Re-Insurance. Mr. Duess'
responsibilities include management of the Company's underwriting process on a
worldwide basis, as well as oversight of American Re's Underwriting Management
Services, Home Office Contracts, and Account Services departments. Prior to
assuming his current duties in July 1996, Mr. Duess held various management
positions including Vice President and Chief Underwriting Officer for the
Domestic Insurance Company Operations Division. Mr. Duess joined the Company in
1975.

                                       28
<PAGE>
    ROBERT E. HUMES--Mr. Humes, age 57, has served as Senior Vice
President--Human Resources Division of American Re-Insurance since
September 1994. Mr. Humes served as Vice President--Human Resources from
July 1993 to September 1994. Prior to joining the Company in July 1993,
Mr. Humes served as Senior Vice President of Corporate Resources for
Bristol-Myers Squibb Company and its predecessor, Squibb Corporation, in various
management positions in Human Resources, including Senior Vice President of
Human Resources.

    WILLIAM J. MOLL--Mr. Moll, age 45, has served as Senior Vice President of
American Re-Insurance since February 1997 and President of RiskPartners since
July 2000. Prior to assuming his present responsibilities, Mr. Moll served as
Executive Vice President of RiskPartners from February 1997 to July 2000.
Mr. Moll joined American Re-Insurance and Risk Partners in May 1990 as Vice
President. Prior to joining American Re, Mr. Moll was the manager of Sedgwick
James Captive Development Division and the casualty manager for Heddington
Insurance, Ltd., a wholly-owned captive insurance subsidiary of Texaco.

    JOHN W. RODGERS--Mr. Rodgers, age 49, has served as Senior Vice
President--Claims of American Re-Insurance since August 1999. Prior to assuming
his current responsibilities, Mr. Rodgers held a number of management positions
in the Claims Division, including Vice President--Branch Claims Operations from
March 1994 to August 1999. Mr. Rodgers joined the Company in February 1989,
holds the CPCU, ARM and ARe designations, and is a member of the Chartered
Property and Casualty Society.

    PHILIP ROEPER--Mr. Roeper, age 40, has served as Senior Vice President and
Chief Information Officer of American Re-Insurance since January, 1999. Prior to
Mr. Roeper assuming his current responsibilities, he worked as Vice President of
Infrastructure and Operations. Before joining American Re-Insurance in
September 1996, Mr. Roeper held various positions with DHL Systems, Inc., in
Burlingame, CA., from August 1990 to September 1996 most recently as Director of
Global Network Services.

    THOMAS E. SMITH--Mr. Smith, age 48, has served as President of Am-Re
University since August 1999. Am-Re University is the Company's initiative to
create a learning organization. Prior to Mr. Smith assuming his current
responsibilities he served as Senior Vice President--Claims of American
Re-Insurance from July 1996 to August 1999. Prior to joining American
Re-Insurance in July 1996, Mr. Smith worked with the Commercial Division of the
Farmers Insurance Group for over 20 years in various management positions
including Vice President and Senior Claim Officer. Mr. Smith is both a Chartered
Property & Casualty Underwriter and a Chartered Life Underwriter.

    JOHN H. SNYDER--Mr. Snyder, age 40, has served as Senior Vice President of
American Re-Insurance since joining the Company in January 2001. Mr. Snyder has
oversight responsibilities for Strategic Planning and Strategic Investments.
Prior to joining the Company, Mr. Snyder held various positions with A.M. Best
Company since 1990, most recently as Executive Vice President and Chief Ratings
Officer. Prior to joining A.M. Best, Mr. Snyder was an insurance equity analyst
with Firemark Consultants and Smith Barney. Mr. Snyder also served as an
underwriter with General Re.

    DAVID SPIEGLER--Mr. Spiegler, age 40, has served as Senior Vice President &
Chief Actuary of American Re-Insurance since February 2000. Mr. Spiegler joined
the Company in August 1987 and has held various managerial positions including
Chief Underwriting Officer of American Re Financial Products (from
December 1998 to February 2000); Senior Vice President & Chief Pricing Actuary
of American Re-Insurance (from April 1998 to December 1998); Vice President &
Chief Pricing Actuary of American Re-Insurance (from July 1997 to April 1998);
Vice President & Treaty Underwriting Manager in the Western Region of Domestic
Insurance Company Operations of American Re-Insurance (from January 1996 to
July 1997); and Vice President and Department Head of Domestic Insurance Company
Operations' Actuarial Services Department (from July 1991 to January 1996).

                                       29
<PAGE>
    ROBERT W. TRAINER--Mr. Trainer, age 51, has served as President of American
Re HealthCare since July 2000 and as Executive Vice President of HealthCare
prior thereto since June 1999. Mr. Trainer previously served as Executive Vice
President of DICO where he managed its marketing activities from December 1997
to June 1999. Prior to joining American Re as a Senior Vice President of DICO in
1995, he held various financial and underwriting positions at The Hartford Steam
Boiler Inspection and Insurance Company, including Senior Vice President,
Underwriting and Special Risks, and Senior Vice President, Treasurer and Chief
Financial Officer. Mr. Trainer is a Chartered Financial Analyst and a member of
the Association for Investment Management & Research.

ITEM 11.  EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

    The following table sets forth for the Chief Executive Officer of the
Company, and the four other executive officers of the Company who were the most
highly compensated executive officers of the Company for the year ended
December 31, 2000 (the "named executive officers"), information concerning
compensation earned in 2000, 1999, and 1998 by such persons for services with
the Company and its subsidiaries.

<TABLE>
<CAPTION>
                                                                                        LONG-TERM COMPENSATION
                                                                                ---------------------------------------
                                                                                  AWARDS              PAYOUTS
                                           ANNUAL COMPENSATION                  ----------   --------------------------
                             ------------------------------------------------   SECURITIES
                                                               OTHER ANNUAL     UNDERLYING     LTIP        ALL OTHER
NAME AND PRINCIPAL POSITION    YEAR      SALARY     BONUS     COMPENSATION(1)    OPTIONS     PAYOUTS    COMPENSATION(2)
---------------------------  --------   --------   --------   ---------------   ----------   --------   ---------------
<S>                          <C>        <C>        <C>        <C>               <C>          <C>        <C>
Edward J. Noonan ........      2000     $615,000   $      0          0               0          0           $572,554
  President and Chief          1999      611,250          0          0               0          0            545,731
  Executive Officer            1998      575,000    500,000          0               0          0            520,094

Mahmoud M. Abdallah .          2000     $455,000   $410,000          0               0          0           $452,554
  Executive Vice President     1999      451,250    410,000          0               0          0            431,798
                               1998      430,000    425,000          0               0          0            411,588

Albert J. Beer ..........      2000     $415,000   $400,000          0               0          0           $136,240
  Executive Vice President     1999      411,250    225,000          0               0          0            130,581
                               1998      387,500    400,000          0               0          0            124,894

Robert K. Burgess .......      2000     $455,000   $400,000          0               0          0           $270,693
  Executive Vice President,    1999      451,250    250,000          0               0          0            258,754
  General Counsel and          1998      430,000    400,000          0               0          0            246,908
  Secretary

Wolfgang Engshuber ......      2000     $349,000   $400,000          0               0          0           $ 21,894
  Executive Vice President     1999      321,250    225,000          0               0          0             21,175
                               1998       77,500    112,500          0               0          0              4,161
</TABLE>

------------------------

(1) During each of the three years ended December 31, 2000, 1999 and 1998,
    perquisites for each individual named in the Summary Compensation Table
    aggregated less than 10% of the total annual salary and bonus reported for
    such individual in such table, or $50,000, if lower.

(2) Includes (i) accrued above market or preferential interest earned on
    deferred option proceeds under the Company's Senior Executive Special
    Deferred Compensation Plan as follows: Mr. Noonan, $535,923 in 2000,
    $509,943 in 1999, and $485,224 in 1998; Mr. Abdallah, $424,229 in 2000,
    $403,664 in 1999, and $384,097 in 1998; Mr. Beer, $110,187 in 2000, $104,845
    in 1999, and $99,763 in 1998; and Mr. Burgess, $242,369 in 2000, $230,620 in
    1999, and $219,441 in 1998; (ii) employer contributions under the American
    Re-Insurance Company Savings Plan, a 401(k) plan, of $8,500 in 2000, $8,000
    in 1999, and $8,000 in 1998 for Mr. Noonan; of $6,563 in 2000, $6,250 in
    1999, and $6,250 in 1998, for Mr. Abdallah; of $8,500 in 2000, $8,000 in
    1999, and

                                       30
<PAGE>
    $8,000 in 1998 for Mr. Beer; of $8,500 in 2000, $8,615 in 1999, and $6,250
    in 1998 for Mr. Burgess; of $6,563 in 2000, $6,215 in 1999, and $2,980 in
    1998 for Mr. Engshuber; (iii) employer contributions under the American
    Re-Insurance Supplemental Savings Plan, a deferred compensation plan
    designed to supplement the 401(k) plan, of which 100% is vested as of
    December 31, 2000, of $22,077 in 2000, $21,596 in 1999, and $20,884 in 1998
    for Mr. Noonan; of $16,014 in 2000, $16,038 in 1999, and $15,788 in 1998 for
    Mr. Abdallah; of $12,077 in 2000, $12,173 in 1999, and $12,000 in 1998 for
    Mr. Beer; of $14,076 in 2000, $13,673 in 1999, and $15,763 in 1998 for
    Mr. Burgess; of $11,004 in 2000 and $10,000 in 1999 for Mr. Engshuber; and
    (iv) employer contributions for group term life, accidental death and
    dismemberment and disability insurance of $6,054 in 2000, $6,192 in 1999,
    and $5,986 in 1998 for Mr. Noonan; of $5,748 in 2000, $5,846 in 1999, and
    $5,453 in 1998 for Mr. Abdallah; of $5,475 in 2000, $5,563 in 1999, and
    $5,131 in 1998 for Mr. Beer; of $5,748 in 2000, $5,846 in 1999, and $5,454
    in 1998 for Mr. Burgess; and $4,327 in 2000, $4,925 in 1999, and $1,181 in
    1998 for Mr. Engshuber.

MUNICH RE LONG-TERM INCENTIVE PLAN

    The following table sets forth for the Chief Executive Officer of the
Company, and the four named executive officers information concerning stock
appreciation rights ("SAR's") awarded by Munich Re in 2000 under the Munich Re
Long-Term Incentive Plan.

<TABLE>
<CAPTION>
                                       % OF TOTAL
                                         SAR'S                                          POTENTIAL REALIZABLE VALUE AT
                                       GRANTED TO      INDIVIDUAL                    ASSUMED ANNUAL RATES OF STOCK PRICE
                                       EMPLOYEES         GRANTS                             APPRECIATION FOR TERM
                            SAR'S      IN FISCAL        EXERCISE       EXPIRATION   -------------------------------------
NAME                      GRANTED(1)    YEAR(2)         PRICE(3)        DATE(4)            5%                  10%
----                      ----------   ----------   ----------------   ----------   -----------------   -----------------
<S>                       <C>          <C>          <C>                <C>          <C>                 <C>
Edward J. Noonan........     1,188         24%      EUR E319.34          7/30/07    EUR E154,444        EUR E359,920

Mahmoud M. Abdallah.....       879         18%      EUR E319.34          7/30/07    EUR E114,273        EUR E266,305

Albert J. Beer..........       801         16%      EUR E319.34          7/30/07    EUR E104,133        EUR E242,674

Robert K. Burgess.......       879         18%      EUR E319.34          7/30/07    EUR E114,273        EUR E266,305

Wolfgang Engshuber......       676         14%      EUR E319.34          7/30/07    EUR E 87,882        EUR E204,803
</TABLE>

------------------------

(1)  The Munich Re Long-Term Incentive Plan is a SAR plan which provides to
     eligible participants in the Munich Re Group organization SAR's linked to
     the performance of Munich Re stock. Each right entitles the holder, after a
     two year vesting period, to draw in cash up to certain limits, the
     difference between the share price applicable at the time of the award and
     that at the time when the right is exercised.

(2) Individual percentage totals represent the percentage of total SAR's granted
    to American Re employees.

(3) The initial stock price is calculated from the average of the closing prices
    for Munich Re shares of stock in Frankfurt Xetra trading over the three
    months prior to July 1, 2000. That amount was equivalent to EUR 319.34. The
    exchange rate into US dollars will be the rate applicable on the exercise
    date.

(4) The SAR's may be exercised at any time after a two-year vesting period.
    SAR's may only be exercised if the price of Munich Re shares has
    (i) increased by at least 20% compared to the initial share price and
    (ii) outperformed the Dow Jones Eurostoxx 50, an index of 50 publicly traded
    German corporations, for a specified period of time.

                                       31
<PAGE>
AGGREGATED SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END SAR VALUES

    The following table sets forth certain information concerning unexercised
SAR's held at December 31, 2000 by the named executive officers.

<TABLE>
<CAPTION>
                                                          NUMBER OF SECURITIES        VALUE OF UNEXERCISED
                                                         UNDERLYING UNEXERCISED           IN-THE-MONEY
                              SHARES                     SAR'S AT 2000 FY-END(#)     SAR'S AT 2000 FY-END($)
                            ACQUIRED ON      VALUE      -------------------------   -------------------------
NAME                        EXERCISE(#)   REALIZED($)   EXERCISABLE/UNEXERCISABLE   EXERCISABLE/UNEXERCISABLE
----                        -----------   -----------   -------------------------   -------------------------
<S>                         <C>           <C>           <C>                         <C>
Edward J. Noonan..........       0             0                 0/2,958            E0/E424,597

Mahmoud M. Abdallah.......       0             0                 0/2,189            E0/E314,235

Albert J. Beer............       0             0                 0/2,001            E0/E287,590

Robert K. Burgess.........       0             0                 0/2,189            E0/E314,235

Wolfgang Engshuber........       0             0                 0/1,616            E0/E228,275
</TABLE>

LONG TERM INCENTIVE PLAN

    The following table sets forth for the Chief Executive Officer of the
Company, and the four named executive officers information concerning long-term
incentive compensation awards made in 2000 under the Company's Long-Term
Incentive Plan.

<TABLE>
<CAPTION>
                           LONG-TERM INCENTIVE PLAN--AWARDS IN LAST FISCAL YEAR
-----------------------------------------------------------------------------------------------------------
                                                                             ESTIMATED FUTURE PAYOUTS
                                                                        UNDER NON-STOCK PRICE-BASED PLANS
                                                                       ------------------------------------
          (A)                   (B)                    (C)                (D)          (E)          (F)
                             NUMBER OF           PERFORMANCE OR
                          SHARES, UNITS OR     OTHER PERIOD UNTIL      THRESHOLD      TARGET      MAXIMUM
NAME                      OTHER RIGHTS(#)    MATURITIES OR PAYOUT(1)    ($ OR #)     ($ OR #)     ($ OR #)
----                      ----------------   -----------------------   ----------   ----------   ----------
<S>                       <C>                <C>                       <C>          <C>          <C>
Edward J. Noonan........                              2002                 0        $1,200,000   $2,400,000
Mahmoud M. Abdallah.....                              2002                 0        $  900,000   $1,800,000
Albert J. Beer..........                              2002                 0        $  900,000   $1,800,000
Robert K. Burgess.......                              2002                 0        $  900,000   $1,800,000
Wolfgang Engshuber......                              2002                 0        $  900,000   $1,800,000
</TABLE>

------------------------

(1)  Under the Company's Long-Term Incentive Plan, performance goals are
     established by the Company's Executive Committee for which performance
     targets are chosen. These performance targets are applicable to a
     performance period consisting of three fiscal years, 2000-2002. The
     performance goals selected by the Committee for the performance period are
     Net Income and Combined Ratio (Statutory) each as defined in the Plan. The
     incentive amounts to be earned by each participant are 100% at risk and
     will vary from 0% to 200% of the individual target award based upon the
     achievement of the applicable performance targets within the performance
     period. Up to 100% of one-sixth of the participant's total Target Award
     (one-twelfth for each performance measure) may be earned if certain
     thresholds are met for the year 2000. Up to 100% of an additional one third
     of the Participant's total Target Award (one-sixth for each performance
     measure) may be earned if certain thresholds are met for the years
     2000-2001 on a combined basis.

COMPENSATION OF DIRECTORS

    Directors receive no additional compensation for their Board or Committee
service.

EMPLOYMENT AGREEMENTS

    American Re-Insurance has Employment Agreements (the "Agreements"), with
Messrs. Noonan, Abdallah, Beer, Burgess and Engshuber pursuant to which each
such executive has agreed to serve in his position indicated in the Summary
Compensation Table for a period of five years (three years for Mr. Engshuber)
and the Company agreed to provide certain compensation and severance benefits as
provided therein. Under the Agreements, each executive's cash compensation,
which consists of the

                                       32
<PAGE>
executive's annual rate of base salary and the annual incentive compensation
award or such other bonus payment, is determined by American Re-Insurance from
time to time, but shall not be less than a minimum guaranteed amount equal to
the executive's annual rate of pay in effect as of April 1998 plus the bonus
amount paid such executive for the 1997 calendar year (or in the case of
Mr. Engshuber, the annual rate of pay in effect as of October 2000, plus an
estimate of the bonus amount to be paid to Mr. Engshuber for the 2000 calendar
year). To the extent the bonus amounts set forth in the Summary Compensation
Table for any of such persons are less than they would have been entitled to
under their Agreements for 1999 or 2000, such executives voluntarily waived such
contractual amounts.

    Under the Agreements, American Re-Insurance has also agreed to pay a
severance benefit to such executive if the executive's employment with American
Re-Insurance or an affiliate is terminated during the term of the Agreement by
the Company not for "Cause" or by the executive upon a "Constructive Discharge"
(as such terms are defined in the Agreements). Upon either such termination, the
executive would be entitled to receive, for a period commencing on the date of
termination and ending on the earlier of the second anniversary thereof or the
date of the executive's reemployment, severance benefits consisting of
(i) continued salary and bonus (based on the salary in effect on the date of
termination and the most recent bonus paid); (ii) amounts under the Company's
Long-Term Incentive Plan equal to the payments the executive would otherwise
have been entitled to receive had the executive remained employed for the entire
performance cycle, prorated based on the number of months the executive was
employed during the performance period; and (iii) continued participation in all
other benefit programs available from the Company as in effect as of the date of
termination.

    During the employment period and any severance period and, in the event the
executive is terminated by American Re-Insurance for Cause or by the executive
other than by reason of Constructive Discharge, for an additional period of six
months following the date of termination, the executive is subject to a covenant
not to compete with American Re-Insurance or any affiliate thereof.

RETIREMENT PLAN

    American Re-Insurance provides for its employees a noncontributory, defined
benefits pension plan (the "American Re Pension Plan") and a nonqualified
supplemental excess pension plan (the "Supplemental Pension Plan"). The table
below shows the combined estimated maximum annual retirement benefits payable
under both plans, at selected earnings levels and after selected periods of
credited service to employees who retire at age 65. The benefits as presented do
not take into account any reduction for joint and survivorship payments or any
offset for Social Security benefits to be received by the employee. The table
shows benefits computed as in a straight life annuity.

MAXIMUM RETIREMENT BENEFITS PAYABLE

<TABLE>
<CAPTION>
                                                              YEARS OF SERVICE
                                            ----------------------------------------------------
REMUNERATION                                   15         20         25         30         35
------------                                --------   --------   --------   --------   --------
<S>                                         <C>        <C>        <C>        <C>        <C>
$ 300,000.................................  $ 78,750   $105,000   $131,250   $157,500   $183,750
  400,000.................................   105,000    140,000    175,000    210,000    245,000
  500,000.................................   131,250    175,000    218,750    262,500    306,250
  600,000.................................   157,500    210,000    262,500    315,000    367,500
  700,000.................................   183,750    245,000    306,250    367,500    428,750
  800,000.................................   210,000    280,000    350,000    420,000    490,000
  900,000.................................   236,250    315,000    393,750    472,500    551,250
 1,000,000................................   262,500    350,000    437,500    525,000    612,500
 1,100,000................................   288,750    385,000    481,250    577,500    673,750
 1,200,000................................   315,000    420,000    525,000    630,000    735,000
</TABLE>

                                       33
<PAGE>
    Compensation covered by the American Re-Insurance Pension Plan, together
with the Supplemental Pension Plan for the named executive officers, corresponds
with the compensation set forth in the annual compensation columns of the
Summary Compensation Table. The credited years of service on December 31, 2000
for the persons named in the Summary Compensation Table are as follows:
Mr. Noonan, 16.2 years; Mr. Abdallah, 18 years; Mr. Beer, 8 years; Mr. Burgess,
5.6 years; and Mr. Engshuber, 2.25 years.

    To be eligible to participate in the American Re-Insurance Pension Plan, an
employee must have completed one year of service and attained age 21, or
attained age 45. Retirement benefits are computed by multiplying the average of
an employee's highest five years' base salary by 1.75% and multiplying by the
number of years of covered service, not in excess of 35, with American
Re-Insurance. Base Salary does not include overtime earnings, service awards and
American Re Savings Plan match awards (supplemental and non-supplemental).
Normal retirement age is 65. A participant is 100% vested after five years of
service.

    The American Re-Insurance Pension Plan provides for reduced benefits upon
early retirement prior to age 62. Early retirement is available to participants
age 55 to 64 with at least ten years of service. Upon the death of a vested
participant before retirement, the American Re-Insurance Pension Plan provides
for a survivor annuity benefit to the participant's spouse of approximately 50%
of the employee's accrued benefit at the time of death beginning on the date of
the participant's earliest eligibility for retirement. The same benefits are
payable to minor children if there is no surviving spouse.

    The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
limits the maximum annual benefit that may be accrued under and paid from a
tax-qualified plan. As a result, and as contemplated by ERISA, American
Re-Insurance has established a supplemental plan to provide benefits (included
in the foregoing table) which would exceed the ERISA limit. The Supplemental
Pension Plan also is used to pay other pension benefits not otherwise payable
under the American Re-Insurance Pension Plan, including benefits attributable to
the Annual Incentive Compensation Plan, and covered compensation in excess of
that permitted under the American Re-Insurance Pension Plan.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    Munich American Holding Corporation owns 100% of the outstanding Common
Stock of the Company.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    In March, 2000, Mr. William J. Moll, an Executive Officer of the Company,
borrowed $250,000 from an affiliate of the Company. The loan was in the form of
a non-interest bearing promissory note which, under its terms, must be repaid no
later than November 25, 2001, at the time of a payment due Mr. Moll under the
Company's Senior Executive Special Deferred Compensation Plan.

                                       34
<PAGE>
                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) Documents

    1.  The financial statements listed in the accompanying Index to Financial
Statements are filed as part of this report. The Schedules to Financial
Statements listed in the accompanying Index to Schedules to Financial Statements
are filed as part of this report.

    2.  The accompanying Exhibit Index is hereby incorporated herein by this
reference. The exhibits listed in the accompanying Index to Exhibit are filed or
incorporated by reference as part of this report.

(b) Reports on Form 8-K:

    None.

                                       35
<PAGE>
                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly authorized, in the
Township of Plainsboro, State of New Jersey, on March 28, 2001.

<TABLE>
<S>                                                    <C>  <C>
                                                       AMERICAN RE CORPORATION

                                                       By:       /s/ GEORGE T. O'SHAUGHNESSY, JR.
                                                            -----------------------------------------
                                                                   George T. O'Shaughnessy, Jr.
                                                                   EXECUTIVE VICE PRESIDENT AND
                                                              CHIEF FINANCIAL AND ACCOUNTING OFFICER
</TABLE>

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons in the capacities and on the
dates indicated.

<TABLE>
<CAPTION>
                  SIGNATURE                                    TITLE                       DATE
                  ---------                                    -----                       ----
<C>                                            <S>                                    <C>
            /s/ EDWARD J. NOONAN               President, Chief Executive Officer     March 28, 2001
    ------------------------------------         and Director
              Edward J. Noonan

          /s/ HANS JURGEN SCHINZLER            Chairman of the Board and Director     March 28, 2001
    ------------------------------------
            Hans Jurgen Schinzler

              /s/ KARL WITTMANN                Director                               March 28, 2001
    ------------------------------------
                Karl Wittmann

             /s/ HEINER HASFORD                Director                               March 28, 2001
    ------------------------------------
               Heiner Hasford
</TABLE>

                                       36
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES
                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S>                                                           <C>
Independent Auditors' Report................................  F-2
Consolidated Balance Sheets--December 31, 2000 and 1999.....  F-3
Consolidated Statements of Income--Years ended December 31,
  2000, 1999, and 1998......................................  F-4
Consolidated Statements of Stockholder's Equity--Years ended
  December 31, 2000, 1999, and 1998.........................  F-5
Consolidated Statements of Cash Flows--Years ended
  December 31, 2000, 1999, and 1998.........................  F-6
Notes to Consolidated Financial Statements--December 31,
  2000......................................................  F-7
</TABLE>

                   INDEX TO SCHEDULES TO FINANCIAL STATEMENTS

<TABLE>
<S>                                                           <C>
Summary of Investments Other Than Investments in Related
  Parties--December 31, 2000................................  S-1
Condensed Financial Information of Registrant (Parent
  Company only):
  Condensed Balance Sheets--December 31, 2000 and 1999......  S-2
  Condensed Statements of Operations and Retained
    Earnings--Years ended December 31, 2000, 1999, and
    1998....................................................  S-3
  Condensed Statements of Cash Flows--Years ended
    December 31, 2000, 1999, and 1998.......................  S-4
  Notes to Condensed Financial Information--December 31,
    2000....................................................  S-5
Supplemental Insurance Information--Years ended December 31,
  2000, 1999, and 1998......................................  S-6
Reinsurance--Years ended December 31, 2000, 1999, and
  1998......................................................  S-7
Supplemental Information (for Property-Casualty Insurance
  Underwriters)--Years ended December 31, 2000, 1999, and
  1998......................................................  S-8
</TABLE>

                                      F-1
<PAGE>
                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholder of
American Re Corporation

    We have audited the accompanying consolidated balance sheets of American Re
Corporation and subsidiaries as of December 31, 2000 and 1999, and the related
consolidated statements of income, stockholder's equity and cash flows for each
of the years in the three-year period ended December 31, 2000. In connection
with our audits of the consolidated financial statements, we also have audited
the financial statement schedules as listed in the accompanying index. These
consolidated financial statements and financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedules based on our audits.

    We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of American Re
Corporation and subsidiaries as of December 31, 2000 and 1999, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States of America. Also in our opinion, the
related financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.

                                          KPMG LLP

New York, New York
March 8, 2001

                                      F-2
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 2000 AND 1999

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                              DECEMBER 31,   DECEMBER 31,
                                                                  2000           1999
                                                              ------------   ------------
<S>                                                           <C>            <C>
ASSETS
Investments
  Fixed maturities
    Bonds available for sale, at fair value (amortized cost:
      December 31, 2000 and 1999--$6,669.4 and $6,511.6,
      respectively).........................................    $ 6,697.2      $ 6,315.2
    Preferred stock available for sale, at fair value
      (amortized cost: December 31, 2000 and 1999--$72.3 and
      $84.4, respectively)..................................         72.4           84.6
  Equity securities available for sale, at fair value (cost:
    December 31, 2000 and 1999--$578.3 and $367.1,
    respectively)...........................................        500.5          402.1
  Other invested assets.....................................         16.4           40.5
Cash and cash equivalents...................................        607.3          597.5
                                                                ---------      ---------
      Total investments and cash............................      7,893.8        7,439.9
Accrued investment income...................................         86.5           83.5
Premiums and other receivables..............................      1,232.2        1,181.2
Deferred policy acquisition costs...........................        323.8          324.5
Reinsurance recoverables on paid and unpaid losses..........      3,198.0        3,034.9
Funds held by ceding companies..............................        622.4          609.7
Prepaid reinsurance premiums................................        113.9          138.8
Deferred federal income taxes...............................        384.2          376.0
Other assets................................................      1,088.0        1,090.3
                                                                ---------      ---------
      Total assets..........................................    $14,942.8      $14,278.8
                                                                =========      =========
LIABILITIES
Loss and loss adjustment expense reserves...................    $ 8,882.2      $ 8,369.0
Unearned premium reserve....................................      1,180.5        1,223.4
                                                                ---------      ---------
      Total insurance reserves..............................     10,062.7        9,592.4
Loss balances payable.......................................        414.8          421.3
Funds held under reinsurance treaties.......................        431.3          322.6
Loan from parent............................................         80.1             --
Senior bank debt............................................           --           75.0
Senior notes................................................        498.5          498.5
Other liabilities...........................................        797.8          642.5
                                                                ---------      ---------
      Total liabilities.....................................     12,285.2       11,552.3
Commitments and contingent liabilities (Note 15)
Company-obligated mandatorily redeemable preferred
  securities of subsidiary trust holding as all of its
  assets Junior Subordinated Debentures.....................        237.5          237.5
                                                                ---------      ---------
STOCKHOLDER'S EQUITY
Common stock, par value: $0.01 per share; authorized: 1,000
  shares; issued and outstanding: 149.49712 shares at
  December 31, 2000, and 1999...............................           --             --
Additional paid-in capital..................................      1,332.4        1,332.4
Retained earnings...........................................      1,232.2        1,296.6
Accumulated other comprehensive income (loss)...............       (144.5)        (140.0)
                                                                ---------      ---------
      Total stockholder's equity............................      2,420.1        2,489.0
                                                                ---------      ---------
      Total liabilities, Company-obligated mandatorily
        redeemable preferred securities of subsidiary trust,
        and stockholder's equity............................    $14,942.8      $14,278.8
                                                                =========      =========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-3
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF INCOME

                 YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

                             (DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
REVENUE
  Premiums written..........................................  $3,211.7   $2,905.7   $2,406.8
  Change in unearned premium reserve........................      28.5       21.8       12.1
                                                              --------   --------   --------
    Premiums earned.........................................   3,240.2    2,927.5    2,418.9
  Net investment income.....................................     464.9      415.1      417.5
  Net realized capital gains................................     104.9       82.9       92.8
  Other income..............................................      26.0       27.5       31.8
                                                              --------   --------   --------
      Total revenue.........................................   3,836.0    3,453.0    2,961.0
                                                              --------   --------   --------

LOSSES AND EXPENSES
  Losses and loss adjustment expenses.......................   2,812.9    2,654.4    1,682.4
  Commission expense........................................     751.4      595.3      584.3
  Operating expense.........................................     239.0      275.4      232.1
  Interest expense..........................................      42.8       41.9       42.2
  Other expenses............................................      88.7       64.0       98.5
                                                              --------   --------   --------
      Total losses and expenses.............................   3,934.8    3,631.0    2,639.5
                                                              --------   --------   --------
  Income (loss) before income taxes and distributions on
    preferred securities of subsidiary trust................     (98.8)    (178.0)     321.5
  Federal and foreign income taxes..........................     (47.5)     (90.1)      82.4
                                                              --------   --------   --------
  Income (loss) before distributions on preferred securities
    of subsidiary trust.....................................     (51.3)     (87.9)     239.1
  Distributions on preferred securities of subsidiary trust,
    net of applicable income tax of $7.1....................     (13.1)     (13.1)     (13.1)
                                                              --------   --------   --------
      Net income (loss) to common stockholder...............  $  (64.4)  $ (101.0)  $  226.0
                                                              ========   ========   ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY

                 YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

                             (DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
                                                                                   ACCUMULATED
                                                          ADDITIONAL                  OTHER
                                               COMMON      PAID IN     RETAINED   COMPREHENSIVE
                                                STOCK      CAPITAL     EARNINGS   INCOME (LOSS)    TOTAL
                                              ---------   ----------   --------   -------------   --------
<S>                                           <C>         <C>          <C>        <C>             <C>
Balance at January 1, 1998.................   $     --     $1,332.4    $1,171.6      $  82.4      $2,586.4
Comprehensive income:
  Net income...............................                               226.0
  Net change in unrealized loss on foreign
    exchange...............................                                             (0.2)
  Net change in unrealized appreciation of
    investments............................                                             40.9
Total comprehensive income.................                                                          266.7
                                              ---------    --------    --------      -------      --------
Balance at December 31, 1998...............         --      1,332.4     1,397.6        123.1       2,853.1
Comprehensive income (loss):
  Net loss.................................                              (101.0)
  Net change in unrealized loss on foreign
    exchange...............................                                              0.6
  Net change in unrealized appreciation of
    investments............................                                           (263.7)
Total comprehensive loss...................                                                         (364.1)
                                              ---------    --------    --------      -------      --------
Balance at December 31, 1999...............   $     --     $1,332.4    $1,296.6      $(140.0)     $2,489.0
Comprehensive income (loss):
  Net loss.................................                               (64.4)
  Net change in unrealized loss on foreign
    exchange...............................                                            (76.9)
  Net change in unrealized depreciation of
    investments............................                                             72.4
Total comprehensive loss...................                                                          (68.9)
                                              ---------    --------    --------      -------      --------
Balance at December 31, 2000...............   $     --     $1,332.4    $1,232.2      $(144.5)     $2,420.1
                                              =========    ========    ========      =======      ========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-5
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                 YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998

                             (DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss).........................................  $  (64.4)  $ (101.0)  $  226.0
  Adjustments to reconcile net income to net cash provided
    by operating activities:
    Decrease (increase) in accrued investment income........      (3.0)       1.9        8.5
    Decrease (increase) in premiums and other receivables...     (51.0)     134.3     (231.9)
    Decrease (increase) in deferred policy acquisition
      costs.................................................       0.7       33.2       (1.0)
    Decrease (increase) in reinsurance recoverable on paid
      and unpaid losses.....................................    (163.1)    (691.8)     105.8
    Increase (decrease) in insurance reserves...............     470.3      977.8     (124.6)
    Decrease (increase) in current and deferred federal and
      foreign income tax assets.............................     (14.1)    (154.8)      (5.0)
    Change in other assets and liabilities..................     244.0     (171.7)     266.1
    Depreciation expense on property and equipment..........      10.5       10.0        7.2
    Net realized capital gains..............................    (104.9)     (82.9)     (92.8)
    Change in other, net....................................     (33.4)       6.5       44.4
                                                              --------   --------   --------
      Net cash provided by (used in) operating activities...     291.6      (38.5)     202.7
                                                              --------   --------   --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Investments available for sale
    Purchases...............................................  (4,378.4)  (3,262.8)  (7,130.2)
    Maturities..............................................     426.7      321.0      429.7
    Sales...................................................   3,656.6    3,321.3    6,164.7
  Other investments
    Purchases...............................................      (4.9)     (23.0)     (12.6)
    Sales...................................................      28.3       16.0        0.1
  Costs of additions to property and equipment..............     (12.6)     (10.7)     (18.2)
                                                              --------   --------   --------
      Net cash provided by (used in) investing activities...    (284.3)     361.8     (566.5)
                                                              --------   --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Loan from parent company..................................      75.6         --         --
  Repayment of senior bank debt.............................     (75.0)        --         --
                                                              --------   --------   --------
      Net cash provided by financing activities.............       0.6         --         --
                                                              --------   --------   --------
  Effect of exchange rate changes on cash and cash
    equivalents.............................................       1.9       (0.7)      (2.9)
                                                              --------   --------   --------
      Net increase (decrease) in cash and cash
        equivalents.........................................       9.8      322.6     (366.7)
  Cash and cash equivalents, beginning of period............     597.5      274.9      641.6
                                                              --------   --------   --------
  Cash and cash equivalents, end of period..................  $  607.3   $  597.5   $  274.9
                                                              ========   ========   ========
SUPPLEMENTAL CASH FLOW INFORMATION:
  Income taxes refunded, net................................  $  (46.1)  $  (11.3)  $  (59.3)
  Interest paid and distributions on preferred securities of
    subsidiary trust........................................  $   63.0   $   62.1   $   62.4
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-6
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

1. NATURE OF OPERATIONS

    American Re Corporation (the "Company" or "American Re") primarily acts as
the holding company for American Re-Insurance Company ("American Re-Insurance").
American Re-Insurance underwrites property and casualty reinsurance on a direct
basis in both the domestic and international markets. To assist in its
reinsurance business, American Re operates primarily in the alternative market
through a primary insurance company, American Alternative Insurance Corporation
("AAIC"). (American Re-Insurance, AAIC, and The Princeton Excess and Surplus
Lines Insurance Company together are the "reinsurance/insurance subsidiaries.")
American Re conducts its business through 14 domestic and 16 international
offices.

    The Company is a wholly-owned subsidiary of Munich-American Holding
Corporation, a Delaware holding company ("MAHC"), which in turn is wholly-owned
by Munchener Ruckversicherungs-Gesellschaft Aktiengesellschaft in Munchen
("Munich Re"), a company organized under the laws of Germany. Effective
September 30, 2000, Munich Re contributed the outstanding stock of American Re
to MAHC.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A.  BASIS OF PRESENTATION

    The Company's primary business is reinsuring property-casualty risks of
domestic and foreign insurance organizations under excess of loss and pro rata
reinsurance contracts. The Company and American Re-Insurance operate on a
calendar year basis.

    The consolidated financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America
("GAAP") and include the accounts of the Company and its subsidiaries.
Intercompany accounts and transactions have been eliminated. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

B.  FINANCIAL STATEMENT PRESENTATION

    Certain 1999 and 1998 financial statement presentations have been
reclassified to conform with the 2000 presentation.

C.  CASH AND CASH EQUIVALENTS

    Cash and cash equivalents include cash on hand, money market instruments and
other debt issues purchased with a maturity of ninety days or less when
purchased.

D.  INVESTMENTS

    All debt and equity securities are classified as available for sale and
reported at fair value, with unrealized gains and losses excluded from earnings
and reflected in stockholder's equity as a component of other comprehensive
income, net of related income taxes. Realized gains and losses on the sale or
maturity

                                      F-7
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
of investments are determined on the basis of the specific identification method
and are included in net income. Purchases and sales are recorded on a trade date
basis.

    If a decline in fair value of an invested asset is considered to be other
than temporary, or if the asset is deemed to be permanently impaired, the
investment is reduced to its net realizable value and the reduction is accounted
for as a realized investment loss.

    The cost for mortgage-backed securities is adjusted for unamortized premiums
and discounts, which are amortized or accreted using the interest method over
the estimated remaining term of the securities, adjusted for anticipated
prepayments.

    In 2000, American Re-Insurance entered into two securities lending
agreements. The first, with State Street Bank and Trust Company involved
predominately U.S. Treasury securities, which had a fair value of $218.5 at
December 31, 2000. Under the second agreement with Merrill Lynch, the securities
on loan are comprised predominately of tax-exempt municipal securities, which
had a fair value of $904.4 at December 31, 2000. Income from the securities
loaned under the agreement with Merrill Lynch is deemed to be taxable in nature,
during the time they are on loan. Under both agreements, collateral must be
maintained at 102% of the loaned securities and must have a weighted average
credit rating of at least AA- by Standard and Poors Corporation ("S&P") or Aa3
by Moody's Investors Services ("Moody's"). Income from securities lending
totaled $9.3 for the year ended December 31, 2000.

E.  DEFERRED POLICY ACQUISITION COSTS

    Deferred policy acquisition costs represent acquisition costs, primarily
commissions and certain operating expenses. These costs are deferred and limited
to their estimated realizable value based on the related unearned premiums,
anticipated claims and claims expenses and anticipated investment income. These
costs are amortized ratably over the terms of the related contracts, which are
generally a year in duration.

F.  DEFERRED FINANCING FEES

    Financing, underwriting, attorneys and accountants fees related to the
issuance of the Senior Notes (see Note 12) and the Cumulative Quarterly Income
Preferred Securities (see Note 13) have been deferred. Such costs are being
amortized over the remainder of their respective lives, using the interest-rate
method.

    The amortization of deferred financing fees was $0.3 for each of the years
ended December 31, 2000, 1999, and 1998.

G.  PROPERTY AND EQUIPMENT

    The Company uses straight-line depreciation for all of its depreciable
assets, with the useful lives varying depending on the type of asset.
Accumulated depreciation was $71.9 and $63.0 at December 31, 2000, and 1999,
respectively.

                                      F-8
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
H. GOODWILL

    Goodwill represents the cost in excess of net assets acquired in the
acquisitions of American Re-Insurance in 1992 and the minority interests in
Munich American Reinsurance Company ("MARC") in 1997. The goodwill, which is
amortized over 40 years, was $244.3 and $251.3 at December 31, 2000 and 1999,
respectively. The amortization of goodwill was $7.0 for each of the years ended
December 31, 2000, 1999, and 1998.

    The Company regularly evaluates the recoverability of goodwill and other
acquired intangible assets. The carrying value of such assets would be reduced
through a direct write-off if, in management's judgment, it was probable that
projected future operating income, before amortization of goodwill, would not be
sufficient on an undiscounted basis to recover the carrying value.

I.  LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES

    The reserve for losses and loss adjustment expenses ("LAE") is based upon
reports received from other insurers supplemented with the Company's own case
reserve estimates provided by the Company's claims department. Loss and LAE
reserves also include estimates of incurred but not reported losses based on
past experience modified for current trends, and estimates of expenses for
investigating and settling claims, reduced for anticipated salvage and
subrogation. Generally, it is the Company's policy to discount all workers'
compensation claims on reported and unreported losses using an interest rate of
4.5%. Such discount resulted in a reduction in gross loss reserves of
approximately $832.6 and $670.4 at December 31, 2000, and 1999, respectively.

    Management believes that the reserves for losses and LAE as of December 31,
2000 are adequate to cover the ultimate gross cost of losses and LAE incurred
through December 31, 2000. The reserves are based on estimates of losses and LAE
incurred and, therefore, the amount ultimately paid may be more or less than
such estimates. The inherent uncertainties of estimating loss reserves are
exacerbated for reinsurers by the significant periods of time that often elapse
between the occurrence of an insured loss, the reporting of the loss to the
primary insurer and, ultimately, to the reinsurer, and the primary insurer's
payment of that loss and subsequent indemnification by the reinsurer. As a
consequence, actual losses and LAE paid may deviate, perhaps substantially, from
estimates reflected in the reinsurance/insurance companies' reserves in their
financial statements. Any adjustments of these estimates or differences between
estimates and amounts subsequently paid or collected are reflected in income as
they occur.

J.  REINSURANCE RECOVERABLES ON UNPAID LOSSES

    Reinsurance recoverables on unpaid losses were $3,071.0 and $2,889.3 at
December 31, 2000, and 1999, respectively. These recoverables were based upon
the application of estimates of unpaid loss and LAE reserves in conjunction with
terms specified under individual retrocessional contracts. The amounts
ultimately collected may be more or less than such estimates. Any adjustments of
these estimates or differences between estimates and amounts subsequently
collected are reflected in income as they occur.

K. INCOME TAXES

    The Company and its subsidiaries file a consolidated U.S. income tax return
and separate foreign income tax returns as required. The Company uses the
liability method of accounting for income taxes,

                                      F-9
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
whereby deferred tax assets and liabilities are determined based on differences
between the financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws. The Company is required to
establish a "valuation allowance" for any portion of the deferred tax asset that
management believes will not be realized.

L.  FOREIGN CURRENCY TRANSLATION

    Foreign currency revenue and expenses are translated at average exchange
rates during the year. Assets and liabilities are translated at the rate of
exchange in effect at the close of the respective year-end. Translation gains
and losses are recorded in accumulated other comprehensive income, net of tax,
while transaction gains and losses are included in other expenses.

M. PREMIUMS AND UNEARNED PREMIUMS

    Premiums are recognized as revenue ratably over the terms of the contracts.
Unearned premiums are computed using the monthly pro rata method on a gross of
reinsurance premiums ceded basis for balance sheet purposes, and on a net of
reinsurance premiums ceded basis for income statement purposes. On
retrospectively rated contracts, estimated additional or return premiums are
accrued.

    Assumed reinsurance and retrocessional contracts that do not both transfer
significant insurance risk and result in the reasonable possibility that the
Company or its retrocessionaires may realize a significant loss from the
insurance risk assumed are required to be accounted for as deposits. These
contract deposits are included in other assets and other liabilities in the
Consolidated Balance Sheets and are accounted for as financing transactions with
interest income or expense credited or charged to the contract deposits.

N.  FAIR VALUES OF FINANCIAL INSTRUMENTS

    The estimated fair value of financial instruments has been determined by the
Company using available market information and appropriate valuation
methodologies. However, considerable judgment is necessarily required in
interpreting market data to develop the estimates of fair value. Accordingly,
the Company's estimates of fair value are not necessarily indicative of the
amounts that the Company could realize in a current market exchange. The use of
different market assumptions and/or estimation methodologies may have a material
effect on the estimated fair value amounts. Furthermore, fair value estimates
disclosed are based on pertinent information available to the Company at
December 31, 2000, and 1999. Although the Company is not aware of any factors
that would significantly affect the estimated fair value amounts, such amounts
have not been comprehensively revalued for purposes of these financial
statements since that date; therefore, current estimates of fair value may
differ significantly from the amounts disclosed in the financial statements.

    The following methods and assumptions were used by the Company in estimating
its fair value disclosures (as presented in Note 17--"Fair Value of Financial
Instruments"):

    BONDS.  Fair values for bonds were based on quoted market prices, where
available. If quoted market prices were not available, fair values were based on
quoted market prices of comparable instruments or were determined by dealers or
a pricing service.

                                      F-10
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    PREFERRED STOCK.  The fair value of these instruments was based on quoted
market price, where available. Where market values were unavailable, the Company
used discounted cash flow models, using discount rates of securities of similar
maturities and credit characteristics.

    EQUITY SECURITIES.  The fair value of these securities was based on quoted
market price, where available. Securities accounted for on the equity method
represent the Company's ownership portion of respective securities'
stockholder's equity.

    OTHER INVESTED ASSETS.  Generally, the carrying amounts of these financial
instruments were a reasonable estimate of their fair value.

    EURO SWAP.  The fair value of this instrument was based on a quoted market
price obtained from a major financial institution.

    WEATHER DERIVATIVES.  The value of weather derivatives is determined under
an alternative approach model pricing. The determination of this value considers
various factors, including: time value and volatility factors underlying the
derivatives, including the degree day data received from the National Climatic
Data Center used to calculate 10-year averages and 30-year volatility; price
activity for equivalent or synthetic instruments in markets located in similar
geographic locations; and counterparty credit quality.

    CASH AND CASH EQUIVALENTS.  The carrying amounts of these financial
instruments were a reasonable estimate of their fair value.

    LOAN FROM PARENT.  The fair value of this obligation was based on the
outstanding principle of the loan converted at the foreign exchange rate in
effect at the financial statement date.

    SENIOR BANK DEBT.  Given the fluctuating rate on the senior bank debt, the
carrying amounts for these financial instruments were a reasonable estimate of
their fair value.

    SENIOR NOTES.  The fair value of this obligation was based on a quoted
market price.

    CUMULATIVE QUARTERLY INCOME PREFERRED SECURITIES.  The fair value of this
obligation was based on a quoted market price.

                                      F-11
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

3. INVESTMENTS

    Investments in fixed maturities at December 31, were as follows:

<TABLE>
<CAPTION>
                                                                            2000
                                                       ----------------------------------------------
                                                                     GROSS        GROSS
                                                       AMORTIZED   UNREALIZED   UNREALIZED     FAIR
                                                         COST        GAINS        LOSSES      VALUE
                                                       ---------   ----------   ----------   --------
<S>                                                    <C>         <C>          <C>          <C>
Bonds available for sale:
  U.S. Treasury securities and obligations of U.S.
    government agencies and corporations.............  $  911.7       $14.5        $ 4.3     $  921.9
  Obligations of states and political subdivisions...   1,087.8        13.4          5.1      1,096.1
  Corporate securities...............................   3,280.1        41.4         42.7      3,278.8
  Mortgage backed securities.........................   1,389.8        19.4          8.8      1,400.4
                                                       --------       -----        -----     --------
    Total bonds available for sale...................   6,669.4        88.7         60.9      6,697.2

Preferred stock......................................      72.3         0.2          0.1         72.4
                                                       --------       -----        -----     --------
    Total fixed maturities...........................  $6,741.7       $88.9        $61.0     $6,769.6
                                                       ========       =====        =====     ========
</TABLE>

<TABLE>
<CAPTION>
                                                                            1999
                                                       ----------------------------------------------
                                                                     GROSS        GROSS
                                                       AMORTIZED   UNREALIZED   UNREALIZED     FAIR
                                                         COST        GAINS        LOSSES      VALUE
                                                       ---------   ----------   ----------   --------
<S>                                                    <C>         <C>          <C>          <C>
Bonds available for sale:
  U.S. Treasury securities and obligations of U.S.
    government agencies and corporations.............  $  754.1       $ 2.5       $ 25.8     $  730.8
  Obligations of states and political subdivisions...   2,123.1        10.1         62.9      2,070.3
  Corporate securities...............................   2,484.7         4.6         82.0      2,407.3
  Mortgage backed securities.........................   1,149.7         2.1         45.0      1,106.8
                                                       --------       -----       ------     --------
    Total bonds available for sale...................   6,511.6        19.3        215.7      6,315.2

Preferred stock......................................      84.4         0.2           --         84.6
                                                       --------       -----       ------     --------
    Total fixed maturities...........................  $6,596.0       $19.5       $215.7     $6,399.8
                                                       ========       =====       ======     ========
</TABLE>

                                      F-12
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

3. INVESTMENTS (CONTINUED)
    The amortized cost and fair value of fixed maturities at December 31, 2000,
are shown below by contractual maturity. Actual maturities may differ from
contractual maturities because securities may be called or prepaid with or
without call or prepayment penalties.

<TABLE>
<CAPTION>
                                                                  2000
                                                       ---------------------------
                                                       AMORTIZED COST   FAIR VALUE
                                                       --------------   ----------
<S>                                                    <C>              <C>
Due to mature:
  One year or less...................................     $  270.4       $  268.8
  After one year through five years..................      1,972.0        1,986.3
  After five years through ten years.................      2,166.8        2,176.9
  After ten years....................................        942.7          937.3
  Mortgage backed securities.........................      1,389.8        1,400.3
                                                          --------       --------
    Total fixed maturities...........................     $6,741.7       $6,769.6
                                                          ========       ========
</TABLE>

    Proceeds from sales of investments available for sale and the related gains
and losses realized on those sales were as follows:

<TABLE>
<CAPTION>
                                                    YEAR ENDED DECEMBER 31,
                                                 ------------------------------
                                                   2000       1999       1998
                                                 --------   --------   --------
<S>                                              <C>        <C>        <C>
Proceeds from sales............................  $3,656.6   $3,321.3   $6,164.7
Gross gains realized...........................     147.5      154.0      156.8
Gross losses realized..........................      42.6       71.1       64.0
</TABLE>

    Net unrealized appreciation (depreciation) on investments included within
accumulated other comprehensive income was as follows:

<TABLE>
<CAPTION>
                                                                YEAR ENDED
                                                               DECEMBER 31,
                                                            -------------------
                                                              2000       1999
                                                            --------   --------
<S>                                                         <C>        <C>
Change in unrealized appreciation (depreciation)
  Fixed maturities........................................  $ 224.2    $(384.2)
  Equity securities.......................................   (112.8)     (21.5)
                                                            -------    -------
    Subtotal..............................................    111.4     (405.7)
Income tax effect.........................................     39.0     (142.0)
                                                            -------    -------
Net change in unrealized appreciation.....................     72.4     (263.7)
Balance, beginning of year................................   (104.8)     158.9
                                                            -------    -------
Balance, end of year......................................  $ (32.4)   $(104.8)
                                                            =======    =======
</TABLE>

    At December 31, 2000, and 1999, the Company's investments in bonds on a
financial statement basis were $6,697.2 or 84.8% and $6,315.2 or 84.9%,
respectively, of total investments and cash. The bond portfolio is diversified
within various industry segments.

                                      F-13
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

3. INVESTMENTS (CONTINUED)
    Bond investment by market sector at December 31, were as follows:

<TABLE>
<CAPTION>
                                                                2000                   1999
                                                        --------------------   --------------------
                                                        AMORTIZED     FAIR     AMORTIZED     FAIR
                                                          COST       VALUE       COST       VALUE
                                                        ---------   --------   ---------   --------
<S>                                                     <C>         <C>        <C>         <C>
U.S. government.......................................  $  911.7    $  922.0   $  754.1    $  730.8
Foreign government....................................     328.8       329.6      357.1       349.7
State and municipal...................................   1,087.8     1,096.2    2,123.1     2,070.3
Mortgage backed securities............................   1,389.8     1,400.3    1,149.7     1,106.8
Financial.............................................   1,040.8     1,039.5      692.9       666.2
Utilities.............................................     210.9       205.4      117.4       112.1
Transportation........................................      47.9        48.8        7.6         6.8
Health care...........................................      24.9        24.6       24.9        22.7
Natural resources.....................................      30.1        30.8       10.2         9.9
Other corporate securities............................   1,596.7     1,600.0    1,274.6     1,239.9
                                                        --------    --------   --------    --------
  Total...............................................  $6,669.4    $6,697.2   $6,511.6    $6,315.2
                                                        ========    ========   ========    ========
</TABLE>

    Sources of net investment income were as follows:

<TABLE>
<CAPTION>
                                                         YEAR ENDED DECEMBER 31,
                                                      ------------------------------
                                                        2000       1999       1998
                                                      --------   --------   --------
<S>                                                   <C>        <C>        <C>
Fixed maturities....................................   $400.8     $383.6     $392.2
Short-term investments..............................     42.6       16.8       22.0
Other...............................................     48.7       35.6       28.9
                                                       ------     ------     ------
  Gross investment income...........................    492.1      436.0      443.1
Investment expenses.................................    (27.2)     (20.9)     (25.6)
                                                       ------     ------     ------
  Net investment income.............................   $464.9     $415.1     $417.5
                                                       ======     ======     ======
</TABLE>

    Net realized capital investment gains (losses) were as follows:

<TABLE>
<CAPTION>
                                                          YEAR ENDED DECEMBER 31,
                                                       ------------------------------
                                                         2000       1999       1998
                                                       --------   --------   --------
<S>                                                    <C>        <C>        <C>
Fixed maturities.....................................   $ 22.3     $(3.8)     $102.3
Equity securities....................................     86.4      87.9        (3.8)
Other................................................     (3.8)     (1.2)       (5.7)
                                                        ------     -----      ------
  Net capital gains..................................   $104.9     $82.9      $ 92.8
                                                        ======     =====      ======
</TABLE>

    At December 31, 2000, and 1999, securities in the amount of $641.3 and
$493.5 (par value), respectively, were on deposit with governmental authorities
as required by law.

                                      F-14
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

4. ACCUMULATED OTHER COMPREHENSIVE INCOME

    The components of accumulated other comprehensive income (loss) are as
follows:

<TABLE>
<CAPTION>
                                                            NET UNREALIZED
                                                             APPRECIATION    NET UNREALIZED
                                                            (DEPRECIATION)   LOSS ON FOREIGN
                                                            OF INVESTMENTS      EXCHANGE        TOTAL
                                                            --------------   ---------------   --------
<S>                                                         <C>              <C>               <C>
Balance at January 1, 1998................................     $ 118.0           $ (35.6)      $  82.4
  Period change...........................................       155.7              (0.3)        155.4
    Tax effect............................................       (54.5)              0.1         (54.4)
  Reclassification adjustment for gain included in net
    income................................................       (92.8)               --         (92.8)
    Tax effect............................................        32.5                --          32.5
                                                               -------           -------       -------
Balance at December 31, 1998..............................       158.9             (35.8)        123.1

  Period change...........................................      (322.8)              0.9        (321.9)
    Tax effect............................................       113.0              (0.3)        112.7
  Reclassification adjustment for gain included in net
    income................................................       (82.9)               --         (82.9)
    Tax effect............................................        29.0                --          29.0
                                                               -------           -------       -------
Balance at December 31, 1999..............................      (104.8)            (35.2)       (140.0)

  Period change...........................................       216.3            (118.3)         98.0
    Tax effect............................................       (75.7)             41.4         (34.3)
  Reclassification adjustment for gain included in net
    income................................................      (104.9)               --        (104.9)
    Tax effect............................................        36.7                --          36.7
                                                               -------           -------       -------
Balance at December 31, 2000..............................     $ (32.4)          $(112.1)      $(144.5)
                                                               =======           =======       =======
</TABLE>

                                      F-15
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

5. LOSS AND LOSS ADJUSTMENT EXPENSE RESERVES

    The reconciliation of loss and loss adjustment expense reserves for the
years ended December 31, 2000, 1999, and 1998 is shown below:

<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31,
                                                              ---------------------------------
                                                                2000        1999        1998
                                                              ---------   ---------   ---------
<S>                                                           <C>         <C>         <C>
Loss and LAE reserves at beginning of period................  $ 8,369.0   $ 7,334.1   $ 7,469.3
Reinsurance recoverables on unpaid losses...................   (2,889.3)   (2,269.2)   (2,366.5)
                                                              ---------   ---------   ---------
Net reserves at beginning of period.........................    5,479.7     5,064.9     5,102.8
Net incurred related to:
  Current period............................................    1,864.3     2,084.0     1,620.4
  Prior periods.............................................      948.6       570.4        62.0
                                                              ---------   ---------   ---------
    Total net incurred......................................    2,812.9     2,654.4     1,682.4
Net paid related to:
  Current period............................................      307.5       253.6       207.2
  Prior periods.............................................    2,173.9     1,986.0     1,513.1
                                                              ---------   ---------   ---------
    Total net paid..........................................    2,481.4     2,239.6     1,720.3
                                                              ---------   ---------   ---------
Net reserves at end of period...............................    5,811.2     5,479.7     5,064.9
Reinsurance recoverables on unpaid losses...................   (3,071.0)   (2,889.3)   (2,269.2)
                                                              ---------   ---------   ---------
Loss and LAE reserves at end of period......................  $ 8,882.2   $ 8,369.0   $ 7,334.1
                                                              =========   =========   =========
</TABLE>

    As a result of changes in estimates of insured events in prior years, the
losses and LAE incurred (net of reinsurance recoveries of $594.8, $1,024.2 and
$252.1 for the years ended December 31, 2000, 1999, and 1998, respectively)
increased by $948.6 in 2000, $570.4 in 1999, and $62.0 in 1998. The adverse
development in 2000 is primarily due to increased losses in recent accident
years reflecting adverse market conditions, in addition to losses associated
with contracts which incepted prior to 2000, such as proportional treaties under
which premiums are earned over multiple accident years but losses are reflected
in the initial accident year. The increase during 1999 is primarily due to
increased losses in recent accident years to reflect adverse market conditions,
in addition to an increase in the Company's loss reserves associated with
asbestos and environmental-related claims. (See Note 16D).

6. REINSURANCE

    The Company purchases reinsurance (retrocessional agreements) for certain
risks. Reinsurance companies enter into retrocessional agreements for reasons
similar to those that cause primary insurers to purchase reinsurance, namely to
reduce net liability on individual risks, to protect against catastrophic
losses, to stabilize their financial ratios and to obtain additional
underwriting capacity.

    The retrocessional coverages purchased by the Company include (i) routine
coverage for its property and casualty business, (ii) property and casualty
clash coverage for potential accumulation of liability from treaties and
facultative agreements covering losses arising from the same event or
occurrence, (iii) catastrophe retrocessions for its property business,
(iv) quota share treaties that enhance underwriting capacity, and (v) stop loss
protection (excess of loss reinsurance that indemnifies the company against
losses that exceed a specific retention).

                                      F-16
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

6. REINSURANCE (CONTINUED)
    The Company believes that it has minimized the credit risk with respect to
its retrocessions by monitoring its retrocessionaires, diversifying its
retrocessions and collateralizing obligations from foreign retrocessionaires.
Potential deterioration of the financial condition of retrocessional markets is
carefully monitored and appropriate actions are taken to eliminate or minimize
exposures. As a general rule, the Company requires that unpaid losses and LAE
(including IBNR) for certain admitted and non-admitted reinsurers (unregulated
by United States insurance regulatory authorities) be collateralized by letters
of credit, funds withheld or pledged trust agreements. In certain cases, the
full limit ceded to non-admitted reinsurers is required to be collateralized
regardless of actual claim activity. Actions such as drawdowns of letters of
credit provided as collateral, cessation of relationships and commutations may
be taken to reduce or eliminate exposure when necessary.

    Although reinsurance agreements contractually obligate the Company's
reinsurers to reimburse it for the agreed-upon portion of its gross paid losses,
they do not discharge the primary liability of the Company. The income statement
amounts for premiums written, premiums earned, and losses and loss adjustment
expenses are net of reinsurance. Direct, assumed, ceded and net amounts for
these items are as follows:

<TABLE>
<CAPTION>
                                                     YEAR ENDED DECEMBER 31,
                                                 -------------------------------
                                                   2000       1999        1998
                                                 --------   ---------   --------
<S>                                              <C>        <C>         <C>
Premiums written
  Direct.......................................  $  335.2   $   277.6   $  208.6
  Assumed......................................   3,335.7     3,259.5    2,908.9
  Ceded........................................    (459.2)     (631.4)    (710.7)
                                                 --------   ---------   --------
  Net..........................................   3,211.7     2,905.7    2,406.8
                                                 ========   =========   ========
Premiums earned
  Direct.......................................     304.9       263.5      194.1
  Assumed......................................   3,399.9     3,325.0    2,914.8
  Ceded........................................    (464.6)     (661.0)    (690.0)
                                                 --------   ---------   --------
  Net..........................................   3,240.2     2,927.5    2,418.9
                                                 ========   =========   ========
Losses incurred
  Direct.......................................     323.0       266.4      136.4
  Assumed......................................   3,084.7     3,412.2    1,798.1
  Ceded........................................    (594.8)   (1,024.2)    (252.1)
                                                 --------   ---------   --------
  Net..........................................  $2,812.9   $ 2,654.4   $1,682.4
                                                 ========   =========   ========
</TABLE>

    The Company maintains an allowance for doubtful accounts for amounts due
from companies in receivership or believed to be in financial difficulty. The
total allowance reflected in both reinsurance recoverables on paid and unpaid
losses, and premiums and other receivables was $106.3 and $104.0 at
December 31, 2000 and 1999, respectively. There can be no assurance future
charges for uncollectible reinsurance will not materially adversely affect
results of operations in any future period, although any such charges would not
be expected to have a material adverse effect on the Company's liquidity or
financial condition.

                                      F-17
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

6. REINSURANCE (CONTINUED)
    Munich Re (which had an A.M. Best rating of "A++" at December 31, 2000)
accounted for approximately 18.5% and 16.9% of the reinsurance recoverables on
paid and unpaid losses at December 31, 2000, and 1999, respectively. National
Indemnity Company (which had an A.M. Best rating of "A++" at December 31, 2000),
a subsidiary of Berkshire Hathaway, Inc., accounted for approximately 14.0% and
17.5% of the reinsurance recoverables on paid and unpaid losses at December 31,
2000, and 1999, respectively. Travelers Property Casualty Corp. (which had
an A.M. Best rating of "A++" at December 31, 2000), accounted for approximately
13.0% and 13.3% of the reinsurance recoverables on paid and unpaid losses at
December 31, 2000, and 1999, respectively.

7. DEPOSIT ACCOUNTING

    Insurance and reinsurance contracts that do not transfer insurance risk are
subject to deposit accounting. Deposit accounting is applied to contracts that,
1) transfer only significant timing risk, 2) transfer only significant
underwriting risk, 3) transfer neither significant timing nor underwriting risk,
or 4) those contracts with indeterminate risk.

    The deposit asset of $239.5 and $223.1 at December 31, 2000 and 1999,
respectively, was primarily comprised of adverse loss development covers and
certain retroactive reinsurance agreements which do not meet risk transfer
guidelines. The increase in the deposit asset is the result of new agreements
totaling $9.7 and interest accretion of $10.5, offset by payments of $3.9 during
2000.

    The deposit liability of $384.5 and $241.3 at December 31, 2000 and 1999,
respectively, was primarily comprised of adverse loss development covers and
certain retroactive reinsurance agreements which do not meet risk transfer
guidelines. The increase in the deposit liability is primarily attributable to
the commutation of a reinsurance agreement, with a net liability of $144.1,
payable in 2003. In addition to the commutation, the increase in deposit
liability is the result of $17.1 of new agreements and $27.2 of interest
accretion, offset by $45.3 of payments.

                                      F-18
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

8. FEDERAL AND FOREIGN INCOME TAXES

    The net deferred tax asset recorded at December 31, 2000, and 1999,
represents the net temporary differences between the tax basis of assets and
liabilities and their amounts for financial reporting. The components of the net
deferred tax asset, based on a tax rate of 35% at December 31, were as follows:

<TABLE>
<CAPTION>
                                                                2000       1999
                                                              --------   --------
<S>                                                           <C>        <C>
Loss reserves...............................................   $256.1     $261.8
Deferred compensation.......................................     79.5       85.5
Unearned premiums...........................................     74.5       77.2
Investment losses...........................................     29.3       59.7
Alternative minimum tax ("AMT") credit carryforward.........     73.2       55.5
Other deferred tax assets...................................      4.6       23.6
                                                               ------     ------
  Deferred tax asset........................................    517.2      563.3
                                                               ------     ------

Deferred policy acquisition costs...........................    113.5      113.7
Other deferred liabilities..................................     19.5       73.6
                                                               ------     ------
  Deferred tax liability....................................    133.0      187.3
                                                               ------     ------

  Net deferred tax asset....................................   $384.2     $376.0
                                                               ======     ======
</TABLE>

    A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax asset will not be realized. At December 31, 2000,
the Company believes it is more likely than not that the deferred tax asset is
fully realizable. Realization of the net deferred tax asset is dependent on
generating sufficient taxable income in future periods. The amount of the
deferred tax asset considered realizable could be reduced, however, if estimates
of future taxable income are reduced.

    Income tax expense (benefit) was as follows:

<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31, 2000
                                                     ------------------------------
                                                     CURRENT    DEFERRED    TOTAL
                                                     --------   --------   --------
<S>                                                  <C>        <C>        <C>
Income--federal and foreign tax benefit............   $(44.3)    $(40.0)   $ (84.3)
Federal tax expense (benefit) on net realized
  capital gains....................................     39.9       (3.1)      36.8
                                                      ------     ------    -------
  Total federal and foreign tax benefit............   $ (4.4)    $(43.1)   $ (47.5)
                                                      ======     ======    =======
</TABLE>

<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31, 1999
                                                     ------------------------------
                                                     CURRENT    DEFERRED    TOTAL
                                                     --------   --------   --------
<S>                                                  <C>        <C>        <C>
Income--federal and foreign tax benefit............   $(24.7)    $(94.4)   $(119.1)
Federal tax expense (benefit) on net realized
  capital gains....................................     29.9       (0.9)      29.0
                                                      ------     ------    -------
  Total federal and foreign tax expense
    (benefit)......................................   $  5.2     $(95.3)   $ (90.1)
                                                      ======     ======    =======
</TABLE>

                                      F-19
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

8. FEDERAL AND FOREIGN INCOME TAXES (CONTINUED)

<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31, 1998
                                                     ------------------------------
                                                     CURRENT    DEFERRED    TOTAL
                                                     --------   --------   --------
<S>                                                  <C>        <C>        <C>
Income--federal and foreign tax expense............   $ 23.0     $ 26.9    $  49.9
Federal tax expense (benefit) on net realized
  capital gains....................................     40.6       (8.1)      32.5
                                                      ------     ------    -------
  Total federal and foreign tax expense............   $ 63.6     $ 18.8    $  82.4
                                                      ======     ======    =======
</TABLE>

    Reconciliations of the differences between income taxes computed at the
federal statutory tax rate and consolidated provisions for income taxes were as
follows:

<TABLE>
<CAPTION>
                                                        YEAR ENDED DECEMBER 31,
                                                     ------------------------------
                                                       2000       1999       1998
                                                     --------   --------   --------
<S>                                                  <C>        <C>        <C>
Income (loss) before taxes.........................   $(98.8)   $(178.0)    $321.5
Income tax rate....................................       35%        35%        35%
                                                      ------    -------     ------
  Tax expense (benefit) at federal statutory income
    tax rate.......................................    (34.6)     (62.3)     112.5

Tax effect of:
  Tax-exempt investment income.....................    (12.7)     (32.6)     (31.0)
  Goodwill.........................................      2.5        2.5        2.5
  Other, net.......................................     (2.7)       2.3       (1.6)
                                                      ------    -------     ------
    Federal and foreign income tax expense
      (benefit)....................................   $(47.5)   $ (90.1)    $ 82.4
                                                      ======    =======     ======
</TABLE>

9. BENEFIT PLANS

    The Company has several qualified and nonqualified pension plans and other
post retirement benefit plans for its employees. The Company has a
non-contributory defined benefit pension plan covering substantially all of its
employees. Benefits are based on years of service and the employee's final
compensation. Accrued costs represent estimates based upon current information.
Those estimates are subject to change due to changes in the underlying
information supporting such estimates in the future. The Company's policy is to
fund pension costs as required, subject to the amounts that are currently
deductible for tax reporting purposes. Vested benefits are fully funded.

    The Company also provides post retirement health care benefits to
individuals eligible to receive a normal or early retirement benefit under the
Company's non-contributory defined benefit pension plan and who are covered
under a Company medical insurance plan at retirement. The Company funds its
obligation currently and no contributions are required by retirees.

                                      F-20
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

9. BENEFIT PLANS (CONTINUED)
    The following table provides a reconciliation of the changes in the plans'
benefit obligations and fair value of assets over the years ended December 31,
2000 and 1999, and a statement of the funded status at December 31:

<TABLE>
<CAPTION>
                                                               PENSION BENEFITS       OTHER BENEFITS
                                                              -------------------   -------------------
                                                                2000       1999       2000       1999
                                                              --------   --------   --------   --------
<S>                                                           <C>        <C>        <C>        <C>
RECONCILIATION OF BENEFIT OBLIGATION
Obligation at January 1.....................................   $181.2     $194.2     $ 29.9     $ 31.3
  Service cost..............................................     12.5       14.9        2.4        2.8
  Interest cost.............................................     13.3       12.7        2.3        2.1
  Plan amendments...........................................       --         --         --       (0.2)
  Actuarial (gain) loss.....................................      9.5      (34.9)       2.7       (6.1)
  Benefit payments..........................................     (9.2)      (5.7)      (0.7)        --
                                                               ------     ------     ------     ------
Obligation at December 31...................................   $207.3     $181.2     $ 36.6     $ 29.9
                                                               ------     ------     ------     ------
RECONCILIATION OF FAIR VALUE OF PLAN ASSETS
Fair value of plan assets at January 1......................   $122.7     $114.6     $   --     $   --
  Actual return on plan assets..............................      0.3       13.7         --         --
  Employer contributions....................................       --         --        0.7        0.5
  Benefit payments..........................................     (7.1)      (5.6)      (0.7)      (0.5)
                                                               ------     ------     ------     ------
Fair value of plan assets at December 31....................   $115.9     $122.7     $   --     $   --
                                                               ------     ------     ------     ------
FUNDED STATUS
Funded status at December 31................................   $(91.4)    $(58.5)    $(36.6)    $(29.9)
Unrecognized prior service cost.............................      0.8        0.8        2.3        2.4
Unrecognized (gain) loss....................................     13.5       (7.7)       1.2       (1.4)
                                                               ------     ------     ------     ------
Net amount recognized in other liabilities..................   $(77.1)    $(65.4)    $(33.1)    $(28.9)
                                                               ======     ======     ======     ======
</TABLE>

    The Company's nonqualified pension plan was the only pension plan with an
accumulated benefit obligation in excess of plan assets. The plan's accumulated
benefit obligation was $12.3 and $11.0 at December 31, 2000 and 1999,
respectively. There are no plan assets in the nonqualified plan due to the
nature of the plan. The Company's plans for post retirement benefits other than
pensions also have no plan assets. The aggregate benefit obligation for those
plans is $36.6 and $29.9 at December 31, 2000 and 1999, respectively.

                                      F-21
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

9. BENEFIT PLANS (CONTINUED)
    Net periodic benefit cost for the years ended December 31, included the
following components:

<TABLE>
<CAPTION>
                                                              PENSION BENEFITS                  OTHER BENEFITS
                                                       ------------------------------   ------------------------------
                                                         2000       1999       1998       2000       1999       1998
                                                       --------   --------   --------   --------   --------   --------
<S>                                                    <C>        <C>        <C>        <C>        <C>        <C>
Service cost.........................................   $12.5      $14.9      $11.6       $2.4       $2.8       $2.1
Interest cost........................................    13.2       12.7       10.8        2.3        2.1        1.7
Expected return on plan assets.......................   (12.1)     (10.8)      (9.7)        --         --         --
Amortization of prior service cost...................     0.1        0.1        0.1        0.1        0.2        0.2
Amortization of net loss.............................      --        1.0        0.1         --        0.1         --
                                                        -----      -----      -----       ----       ----       ----
  Net periodic benefit cost..........................   $13.7      $17.9      $12.9       $4.8       $5.2       $4.0
                                                        =====      =====      =====       ====       ====       ====
</TABLE>

    The prior service costs are amortized on a straight-line basis over the
average remaining service period of active participants. Gains and losses in
excess of 10% of the greater of the benefit obligation and the market-related
value of assets are amortized over the average remaining service period of
active participants.

    The assumptions used in the measurement of the Company's benefit obligation
are shown in the following table:

<TABLE>
<CAPTION>
                                                        PENSION BENEFITS                              OTHER BENEFITS
                                             --------------------------------------       --------------------------------------
                                               2000           1999           1998           2000           1999           1998
                                             --------       --------       --------       --------       --------       --------
<S>                                          <C>            <C>            <C>            <C>            <C>            <C>
Discount rate..............................    7.25%          7.50%          6.50%         7.25%          7.50%          6.50%
Expected return on plan assets.............   10.00%          9.50%          9.00%          N/A            N/A            N/A
Rate of compensation expense...............    5.50%          5.50%          5.50%          N/A            N/A            N/A
</TABLE>

    For measurement purposes, a 6.8% annual rate of increase in the per capita
cost of covered health care benefits was assumed for 2001. The rate was assumed
to decrease gradually over 16 years, to a rate of 5.0% and remain at that level
thereafter.

    Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. A 1% change in assumed health care
cost trend rates would have the following effects:

<TABLE>
<CAPTION>
                                                              1% INCREASE   1% DECREASE
                                                              -----------   -----------
<S>                                                           <C>           <C>
Effect on total of service and interest cost components of
  net periodic postretirement health care benefit cost......      $1.1         $(0.9)
Effect on the health care component of the accumulated
  postretirement benefit obligation.........................      $7.9         $(6.4)
</TABLE>

    Substantially all employees are eligible to participate in a savings plan
under which designated contributions, which are invested in various investment
programs, are matched, up to 5% of compensation, by the Company. The costs of
the Company's matching contributions were $6.0, $5.3, and $5.0 for the years
ended December 31, 2000, 1999, and 1998, respectively.

    Key employees are eligible for plans that provide compensation incentives
based upon operating results and that reward specific individuals for
performance and contribution to the success of the

                                      F-22
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

9. BENEFIT PLANS (CONTINUED)
Company. Charges to operations for such incentives were $13.7, $17.1 and $21.6
for the years ended December 31, 2000, 1999, and 1998, respectively.

    American Re-Insurance has Employment Agreements (the "Agreements"), with
Messrs. Noonan, Abdallah, Beer, Burgess and Engshuber pursuant to which each
such executive has agreed to serve in his position indicated in the Summary
Compensation Table for a period of five years (three years for Mr. Engshuber)
and the Company agreed to provide certain compensation and severance benefits as
provided therein. Under the Agreements, each executive's cash compensation,
which consists of the executive's annual rate of base salary and the annual
incentive compensation award or such other bonus payment, is determined by
American Re-Insurance from time to time, but shall not be less than a minimum
guaranteed amount equal to the executive's annual rate of pay in effect as of
April 1998, plus the bonus amount paid such executive for the 1997 calendar year
(or in the case of Mr. Engshuber, the annual rate of pay in effect as of October
2000, plus an estimate of the bonus amount to be paid to Mr. Engshuber for the
2000 calendar year). To the extent the bonus amounts set forth in the Summary
Compensation Table for any of such persons are less than they would have been
entitled to under their Agreements for 1999 or 2000, such executives voluntarily
waived such contractual amounts.

    Under the Agreements, American Re-Insurance has also agreed to pay a
severance benefit to such executive if the executive's employment with American
Re-Insurance or an affiliate is terminated during the term of the Agreement by
the Company not for "Cause" or by the executive upon a "Constructive Discharge"
(as such terms are defined in the Agreements). Upon either such termination, the
executive would be entitled to receive, for a period commencing on the date of
termination and ending on the earlier of the second anniversary thereof or the
date of the executive's reemployment, severance benefits consisting of
(i) continued salary and bonus (based on the salary in effect on the date of
termination and the most recent bonus paid); (ii) amounts under the Company's
Long-Term Incentive Plan equal to the payments the executive would otherwise
have been entitled to receive had the executive remained employed for the entire
performance cycle, prorated based on the number of months the executive was
employed during the performance period; and (iii) continued participation in all
other benefit programs available from the Company as in effect as of the date of
termination.

    During the employment period and any severance period and, in the event the
executive is terminated by American Re-Insurance for Cause or by the executive
other than by reason of Constructive Discharge, for an additional period of six
months following the date of termination, the executive is subject to a covenant
not to compete with American Re-Insurance or any affiliate thereof.

    At the time of the acquisition by Munich Re, the Company established the
Senior Executive Special Deferred Compensation Plan. Participants in the plan
were provided the opportunity to defer, for five years, up to 100% of the option
proceeds which they otherwise were eligible to receive from the cancellation of
their options in accordance with the terms of the acquisition. Participants
elected to defer an aggregate of $79.9 of option proceeds which the Company used
to establish and fund a trust, the assets of which will be dedicated to the
payment of such future obligations in the absence of insolvency by the Company.
At the direction of the participants, the trust proceeds were invested by the
Company in one or more of two index-related investment vehicles and a fixed rate
investment vehicle. In addition thereto, participants are eligible to receive an
additional return from the Company in the amount of 5% of the participant's
original deferred principal provided certain conditions are met. At
December 31, 2000, and

                                      F-23
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

9. BENEFIT PLANS (CONTINUED)
1999, the Company's consolidated balance sheets reflected $152.4 and $115.2,
respectively, of deferred option proceeds, which is reflected in other
liabilities.

10. LOAN FROM PARENT

    On December 28, 2000, the Company borrowed Euro E85.0 million under a new
three-year revolving credit agreement ("Euro Loan") with Munich Re, which allows
the Company to borrow up to Euro E200.0 million. Outstanding amounts under the
revolving credit agreement bear interest annually at a rate equal to the
Eurocurrency Base Rate plus 0.1%. The proceeds of the Euro Loan were used to
repay the $75.0 outstanding under the revolving credit agreement with Bank of
America, N.A. (See Note 11). The Euro Loan is recorded at its original cost,
adjusted for changes in foreign exchange rate. Those adjustments in value are
recognized through income as foreign exchange gain or loss. At December 31,
2000, $80.1 was outstanding under the Euro Loan.

    At the time of the borrowing, the Company entered into a Cross-Currency
Interest Rate Swap agreement ("Euro Swap") with Chase Manhattan Bank as an
economic hedge, for other than trading purposes, against the foreign exchange
risk related to the Euro Loan. As part of the Euro Swap, the Company received
$75.6 on conversion of the Euro E85.0 million from Munich Re. At the termination
date, the Company will return $76.3 to Chase Manhattan Bank in exchange for Euro
E85.0 million for the purposes of paying off the Euro Loan. The Euro Swap bears
interest on a notional amount of $76.3 at an adjustable rate equal to the three
month U.S. Dollar London InterBank Offered Rate ("USD LIBOR") plus 0.1%. The
Euro Swap is recorded at its fair value with changes in that value recognized
through investment income.

11. SENIOR BANK DEBT

    In 1995, the Company borrowed $75.0 from Bank of America, N.A., in
anticipation and as part of a new unsecured bank revolving credit agreement
established on January 29, 1996, which allows the Company to borrow an aggregate
amount up to $150.0. Outstanding amounts under the revolving credit agreement
bear interest, at the election of the Company, currently at (i) the Bank of
America Base Rate (that is a fluctuating rate equal to the greater of (x) Bank
of America's announced rate of interest, identified as its "reference rate" or
(y) the sum of the federal funds rate plus 0.5%), (ii) a Eurodollar reserve
adjusted InterBank Offered Rate ("IBOR"), or (iii) a competitive bid rate as
determined by the participating banks. Any amount not paid when due will bear
interest at a rate of 2.00% in excess of the rate otherwise applicable. The
revolving credit agreement has a term of five years and, except with respect to
amounts outstanding under IBOR or bid loans, may be prepaid at any time at the
option of the Company. The revolving credit agreement contains certain covenants
relating to, among other things, restrictions on debt, liens, disposition of
assets, consolidations, mergers, use of proceeds, changes in business and
minimum statutory surplus. In December 2000, the Company repaid the $75.0 of
borrowings under the revolving credit agreement with the proceeds of the Euro
Loan.

    In 1998, the Company guaranteed the repayment of principal, interest and
other fees and expenses under a Credit Agreement between American Re Capital
Markets, Inc., a wholly owned subsidiary of the Company ("ARCM") and Bank of
America, N.A. The agreement currently permits ARCM to borrow funds or obtain
letters of credit in an aggregate amount up to $50.0. ARCM shall use the
proceeds of these loans and the letters of credit to cover losses incurred under
derivatives contracts, to support certain of its

                                      F-24
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

11. SENIOR BANK DEBT (CONTINUED)
obligations under such derivatives contracts, and for other general corporate
purposes. At December 31, 2000 ARCM had no outstanding indebtedness under the
agreement.

12. SENIOR NOTES

    In 1996, the Company sold $500.0 aggregate principal amount of its Senior
Notes due December 15, 2026 (the "Notes"). The Notes bear interest at a rate of
7.45% annually, payable on June 15 and December 15 each year. The offering price
of the notes was 99.687% of the aggregate principal amount, resulting in a yield
to maturity of 7.476%.

    The Notes are redeemable in whole or in part, at the option of the Company
at any time, at a redemption price equal to the greater of (i) 100% of the
principal amount of such notes and (ii) the sum of the present values of the
remaining scheduled payments of principal and interest thereon discounted, on a
semiannual basis, at the rate per annum equal to the yield to maturity of the
United States Treasury securities issue with comparable maturities to the
remaining term of the Notes, plus 15 basis points, together with accrued
interest to the date of redemption. The Indenture contains certain covenants,
including, but not limited to, covenants imposing limitations on liens, and
restrictions on mergers and sale of assets.

    The Notes were not registered under the Federal Securities Act of 1933 or
registered or qualified under the securities laws of the various states.
Pursuant to the terms of the Senior Notes, the Company agreed to make an offer
to exchange the Notes for a new issue of debt securities of the Company which
would be registered under the Securities Act of 1933, with terms substantially
similar to the Notes (the "Exchange Offer"). The Exchange Offer was completed on
March 14, 1997, with 100% of the holders of the $500.0 aggregate principal
amount of the Notes accepting the Exchange Offer.

13. CUMULATIVE QUARTERLY INCOME PREFERRED SECURITIES

    In 1995, American Re Capital, a Delaware business trust formed and wholly
owned by the Company, completed the sale of 9,500,000 Cumulative Quarterly
Income Preferred Securities ("QUIPS") ($237.5 aggregate principal amount), due
in 2025.

    The net proceeds from the offering were used by American Re Capital to
purchase a like amount of $244.8 principal amount of 8.5% Junior Subordinated
Debentures of the Company. The $244.8 principal amount of 8.5% Junior
Subordinated Debentures due September 30, 2025, represent all of the assets of
the subsidiary trust. The Company used the proceeds from the sale of the
Debentures to retire the Company's revolving bank credit facility with Chase
Manhattan Bank, N.A. at the time of offering and to contribute $50.0 to the
capital and surplus of American Re-Insurance Company. The remaining net proceeds
from the sale were used for general corporate purposes. The Junior Subordinated
Debentures and related income statement effects are eliminated in the Company's
consolidated financial statements.

    The QUIPS accrue and pay distributions quarterly at a rate of 8.5% per annum
of the stated liquidation value of $25 per preferred security. The Company has,
through a guarantee agreement, a trust agreement, the Junior Subordinated
Debentures and an expense agreement, taken together, fully and unconditionally
guaranteed, on a subordinated basis, the Trust's obligation under the preferred
securities to the extent that funds are available therefore, and as more fully
set forth in such agreements.

                                      F-25
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

13. CUMULATIVE QUARTERLY INCOME PREFERRED SECURITIES (CONTINUED)

    The QUIPS are mandatorily redeemable upon the maturity of the Junior
Subordinated Debentures, on September 30, 2025 or upon earlier redemption as
provided in the Indenture. The Company has the right to redeem the Junior
Subordinated Debentures, in whole or in part, on or after September 30, 2000, at
a redemption price of $25 per preferred security plus any accrued but unpaid
interest to the redemption date.

14. CAPITAL AND SURPLUS AND STOCKHOLDER DIVIDEND RESTRICTIONS

    Statutory surplus for the reinsurance/insurance subsidiaries on a combined
basis at December 31, 2000, and 1999, were $2,177.1 and $2,166.0, respectively.
During 2000, the Company contributed $250.0 to the statutory surplus of American
Re-Insurance. Statutory net income (loss) for the years ended December 31, 2000,
1999, and 1998, on a combined basis was $(96.1), $(183.3) and $319.9,
respectively. Dividends declared and paid by American Re-Insurance to the
Company were $0.0, $260.8 and $35.0 in 2000, 1999, and 1998, respectively.

    In 1999, the National Association of Insurance Commissioners ("NAIC")
adopted the Accounting Practices Manual, which includes Statements of Statutory
Accounting Principles. The codification of Statutory Accounting Principles,
which is effective January 1, 2001, prescribes statutory accounting practices
which may differ from individual state "prescribed or permitted" practices.
Where there is a difference, individual state "prescribed or permitted" practice
will take precedence over codified statutory accounting practices. The Company
expects that the effect of implementing codification will be an increase to the
statutory surplus of the reinsurance/insurance subsidiaries.

    The Company is dependent upon dividends received from its
reinsurance/insurance subsidiaries to meet its debt and other obligations.
Dividend payments by the reinsurance/insurance subsidiaries are restricted by
the insurance laws of the State of Delaware. At December 31, 2000, American
Re-Insurance could declare dividends of approximately $216.5 during 2001 without
approval of the Commissioner of Insurance of the State of Delaware.

    The NAIC has adopted a risk based capital ("RBC") standard for property and
casualty insurance (and reinsurance) companies which measures the amount of
capital appropriate for a property and casualty insurance company to support its
overall business operations in light of its size and risk profile. American
Re-Insurance's 2000 adjusted surplus to policyholders was $1,649.7, or 1.93
times the authorized control level RBC total of $856.5. Because this ratio is
less than 2.00 times, American Re-Insurance must submit a comprehensive
financial plan to the Insurance Department of the state of Delaware, which will
address American Re-Insurance's plans for attaining the required levels of RBC.
Achievement of the comprehensive financial plan depends on future events and
circumstances, the outcome of which cannot be assured.

    AAIC's 2000 adjusted surplus to policyholders of $98.6 is in excess of the
authorized control level RBC total of $14.4. Princeton E & S's 2000 adjusted
surplus to policyholders of $25.7 is in excess of the authorized control level
RBC total of $0.1.

15. PERMITTED STATUTORY ACCOUNTING PRACTICES

    American Re-Insurance prepares its statutory financial statements in
accordance with accounting practices prescribed or permitted by the Insurance
Department of the State of Delaware. Prescribed

                                      F-26
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

15. PERMITTED STATUTORY ACCOUNTING PRACTICES (CONTINUED)
statutory accounting practices include a variety of publications of the National
Association of Insurance Commissioners, as well as state laws, regulations, and
general administrative rules. Permitted statutory accounting practices encompass
all rules not so prescribed.

    American Re-Insurance received written approval from the Insurance
Department of the State of Delaware to discount all workers' compensation
reserves for losses at a rate of 4.5% for statutory accounting purposes.
Delaware statutes allow discounting of certain types of reserves at various
discount rates.

16. COMMITMENTS AND CONTINGENT LIABILITIES

A.  DERIVATIVES AND OFF-BALANCE SHEET FINANCIAL INSTRUMENTS

FINANCIAL GUARANTEES

    In 1998, the Company recommenced writing financial guarantee programs. In
addition, the Company has principal and interest guarantees outstanding from
programs written prior to December 31, 1986. The aggregate principal and
interest amounts of these guarantees outstanding were $1,992.5 and $593.7 at
December 31, 2000 and 1999, respectively. The aggregate principal and interest
amount reflects the Company's extent of involvement in financial guarantees.

DERIVATIVES

    In December, 2000, the Company entered into a three-year revolving credit
agreement with Munich Re which allows the Company to borrow up to Euro
E200.0 million. At the time the Company established the credit facility it
borrowed Euro E85.0 million. At the same time, the Company entered into a Cross-
Currency Interest Rate Swap agreement with Chase Manhattan Bank as an economic
hedge, for other than trading purposes, against the foreign exchange risk
related to the Euro Loan. (See Note 10.)

    American Re Capital Markets, Inc. ("ARCM"), a subsidiary of the Company, is
a party to certain index-based catastrophe related swaps ("catastrophe swaps")
with Gold Eagle Capital Limited, a special purpose Bermuda company ("Gold
Eagle"). Under the terms of the catastrophe swaps, ARCM may receive
approximately $182.0 of potential payments from Gold Eagle in the event of three
types of certain catastrophic events: California earthquakes, Midwest
earthquakes, or Eastern and Gulf Coast windstorms, all as specifically defined
under the Catastrophe Swaps ("Catastrophes"). Payment amounts under the
catastrophe swaps will be determined based upon on index of modeled insurance
industry losses from Catastrophes as calculated by Risk Management
Solutions, Inc. American Re Securities Corporation, a subsidiary of the Company,
acted as placement agent for Gold Eagle in the placement of catastrophe related
securities, called Modeled Index Linked Securities(SM) (ModILS(SM)), intended to
collateralize any potential payments by Gold Eagle to ARCM under the catastrophe
swaps.

    The Company adjusts the catastrophe swaps to fair value using a model
pricing based upon interest rate spreads above comparable U.S. Treasury
investments, applied to the notional value outstanding of $182.1. The fair value
adjustment was $0.7 and $0.6 at December 31, 2000 and 1999, respectively.

    During 1999, ARCM was engaged primarily in the weather derivative business,
which exposed the Company to losses/gains based on movements in temperature at
certain U.S. weather stations. At December 31, 1999, ARCM had entered into 78
such weather derivative contracts with a notional value of

                                      F-27
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

16. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
$139.3. At December 31, 1999, the maximum payment amount of such contracts was
$85.7, and the maximum receivable amount was $111.4. At December 31, 2000, ARCM
had no weather derivative contracts outstanding.

B.  RELATED PARTY TRANSACTIONS

    Gross premiums assumed from Munich Re and its affiliated companies were
$66.7, $48.4, and $10.5 for the years ended December 31, 2000, 1999, and 1998,
respectively. Munich Re and its affiliated companies also participate on several
of the Company's existing retrocessional programs. Total premiums ceded to
Munich Re and its affiliated companies relating to such programs were
approximately $67.7, $159.2, and $174.4 for the years ended December 31, 2000,
1999, and 1998, respectively. Total losses and LAE ceded to Munich Re and its
affiliated companies were $116.8, $252.8, and $(12.9) for the years ending
December 31, 2000, 1999, and 1998, respectively. Total insurance reserves
outstanding with Munich Re and its affiliated companies were $600.6 and $493.2
at December 31, 2000 and 1999, respectively.

    Munich Re Capital Management, an affiliated registered investment advisor,
is responsible for the management of the fixed income portion of the Company's
investment portfolio. Fees paid to Munich Re Capital Management were $3.6, $2.6,
and $2.1 for the years ended December 31, 2000, 1999, and 1998, respectively.

C.  LEASES

    The Company has operating leases for certain of its furniture, fixtures, and
computer equipment, and office space used by its branch office and subsidiary
locations. Lease expense was $16.6, $22.8, and $20.3, for the years ended
December 31, 2000, 1999, and 1998. Future net minimum payments under
non-cancelable leases at December 31, 1999, were estimated to be as follows:

<TABLE>
<CAPTION>
                                                     2006 AND
2001      2002       2003       2004       2005     THEREAFTER
-----   --------   --------   --------   --------   ----------
<S>     <C>        <C>        <C>        <C>        <C>
$16.1    $12.0       $8.7       $5.2       $3.6        $6.4
=====    =====       ====       ====       ====        ====
</TABLE>

D.  ASBESTOS, ENVIRONMENTAL-RELATED AND OTHER LATENT LIABILITY CLAIMS

    American Re's underwriting results have been adversely affected by claims
developing from asbestos, environmental-related and other latent liability
coverage exposures ("latent liability exposures"). Reserves established by
American Re for latent liability exposures necessarily have reflected the
uncertainty inherent in estimating the ultimate future claim amounts arising
from these types of exposures and the lack of credible actuarial methods to
measure and quantify these exposures. The Company's difficulty in accurately
quantifying these exposures was attributable to the need for latent liability
exposures to be first quantified by the insured party and then the primary
insurer before the information was made available to the reinsurer.

    During 1999, the Company undertook a study to reevaluate its reserves for
latent liability exposures. This was a result of the Company's assessment of its
reported claims activity, which reflected continued emergence of newly reported
claims in each of these areas and recent insurance industry efforts to
accelerate the settlement of outstanding latent liability claims. Each of the
Company's related exposures

                                      F-28
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

16. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
was evaluated individually to determine its expected ultimate liability for
losses and LAE. As a result of this reevaluation, during the fourth quarter of
1999, the Company increased its gross incurred but not reported ("IBNR") loss
reserves for latent liability exposures.

    The Company had latent liability exposure loss reserves as follows at
December 31:

<TABLE>
<CAPTION>
                                                  2000                  1999
                                           -------------------   -------------------
                                            GROSS       NET       GROSS       NET
                                           --------   --------   --------   --------
<S>                                        <C>        <C>        <C>        <C>
Asbestos.................................  $  679.9    $410.8    $  786.6    $470.9
Environmental-related and other latent
  liability..............................     574.4     426.5       646.2     466.7
                                           --------    ------    --------    ------
Total....................................  $1,254.3    $837.3    $1,432.8    $937.6
                                           ========    ======    ========    ======
</TABLE>

    Loss reserves for latent liability exposures at December 31, 2000, and 1999,
represent best estimates drawn from a range of possible outcomes based on
currently known facts, projected forward using assumptions and methodologies
considered reasonable. Notwithstanding these loss reserves, there can be no
assurance that future losses resulting from these exposures will not materially
adversely affect future earnings.

E.  LITIGATION

    The Company is involved in claims related litigation, arbitrations and other
adversarial proceedings in the ordinary course of business. The Company is also
involved in non-claim litigation incidental to its business principally related
to insurance company insolvencies or liquidation proceedings relating to
companies with whom it does business.

    The Company does not believe that any of the pending legal proceedings will
have a material adverse effect on the consolidated financial condition or
results of operations of American Re and its subsidiaries. However, no assurance
can be given as to the ultimate outcome of any such legal proceedings.

    HOLOCAUST VICTIMS INSURANCE LAWS.  Several states (including California,
Maryland, Minnesota, New York, and Washington) have enacted legislation
pertaining to insurance policies that were issued in Europe to Holocaust victims
during the period 1920 through 1945, and legislation on this subject matter is
under consideration in other states (including New Jersey). Insurance regulators
in some of these states have taken actions or threatened to take actions to
sanction insurance companies licensed in such states for alleged failure to
comply with such laws. Most state insurance regulators have subscribed to a
private, non-governmental, voluntary organization named the International
Commission on Holocaust Era Insurance Claims ("Holocaust Commission") that is
dedicated to identifying and resolving outstanding insurance claims from the
Holocaust era for its members. Under some of the recently enacted state laws, an
insurer's participation in the Holocaust Commission confers certain statutory
benefits.

    CALIFORNIA.  California has two Holocaust era insurance related statutes.
The first purports to permit the suspension of an insurer's license if it or any
of its affiliates has failed to pay any claim of Holocaust victims proven to be
valid and unpaid. This statute also authorizes the Commissioner to include
consideration of whether an insurer is participating in the Holocaust Commission
in deciding whether to

                                      F-29
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

16. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
suspend the insurer's license. In July, 1999, the California Insurance
Department ("CID") initiated an examination and hearing involving the Company's
California licensed insurers and Munich Re in order to investigate whether these
companies or affiliated companies in Europe had outstanding Holocaust era
insurance claims. While the licensees named in the examination and hearing
process either were not in existence or did not do business in Europe during the
Holocaust era, and Munich Re, as a reinsurer, never issued any insurance
policies, the CID sought information on Holocaust era insurance from European
insurers in which Munich Re has an indirect investment interest. While the
hearing and examination are pending, there are no regulatory actions currently
in progress against any of the Company's licensed insurers or Munich Re.

    The second California statute is the Holocaust Victim Insurance Relief Act
of 1999 ("California Registry Law") designed to create a publicly accessible
registry of Holocaust era policyholder information. The California Registry Law
requires California licensed insurers to report Holocaust era policyholder
information in their possession or in the possession of their "related
companies," as that term is defined in the California Registry Law. The CID
interprets this statute to require information even from companies that are not
controlled by the licensed insurers or their parent companies. In March, 2000,
American Re-Insurance and the American Insurance Association, an insurance trade
association, many of whose members are California licensed insurers, initiated
litigation in California challenging the validity of the California Registry Law
on constitutional and other grounds. In June, 2000, the U.S. District Court for
the Eastern District of California issued a preliminary injunction against the
CID from enforcing the California Registry Law. Upon appeal by the CID of that
decision, the United States Court of Appeals for the Ninth Circuit, in February,
2001, affirmed the preliminary injunction, but rejected the constitutional basis
presented in support of the injunction and remanded the case to the District
Court for consideration of the constitutional issue of due process as the basis
for injunction. That litigation is pending.

    FLORIDA.  Florida has enacted a statute ("Florida Holocaust Law") that seeks
reports of information on Holocaust era insurance. The Florida Holocaust Law
requires Florida licensed insurers to report certain information on insurance
policies issued in Europe during the Holocaust era by such licensees and their
affiliates. American Re-Insurance and AAIC have no information to report because
they did not issue insurance policies in Europe during the relevant time period.
However, the companies have timely filed reports disclosing information
voluntarily provided by European insurers in which Munich Re has an investment
interest. The Florida Insurance Department has issued subpoenas to American
Re-Insurance, AAIC, and approximately 40 other insurance companies seeking
policyholder information in connection with the Florida Holocaust Law. In
November 1999, an unaffiliated company initiated litigation against the Florida
Insurance Department challenging the validity of the subpoenas and the
constitutionality of the Florida Holocaust Law. In November 2000, the U.S.
District Court for the Northern District of Florida held that Florida has no
jurisdiction over the matters pertaining to Holocaust era insurance policies
issued in Europe, and the Court enjoined Florida from enforcing the Florida
Holocaust Law. Florida has appealed the District Court ruling. That appeal is
pending.

    NEW YORK.  New York has enacted a statute ("New York Holocaust Law") similar
to the Florida Holocaust Law. American Re-Insurance and AAIC timely filed
reports responsive to the New York Holocaust Law disclosing information
voluntarily provided by European insurers in which Munich Re has an investment
interest. The New York Insurance Department subsequently requested additional
information in connection with Holocaust era insurance, and American Re promptly
forwarded these

                                      F-30
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

16. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
requests to the European insurers which responded directly to the Department.
Notwithstanding this, in March, 2000 the Department threatened to attempt to
fine American Re up to $1,000 per day for alleged reporting violations unless
Munich Re joins the Holocaust Commission, or agrees to pay alleged Holocaust
claims involving companies that Munich Re does not control, or contributes to a
humanitarian fund for the benefit of Holocaust survivors, and in April, 2000
American Re-Insurance received a letter from the Department's Disciplinary Unit
that disciplinary action against American Re-Insurance and/or its officers is
being considered. However, no formal action has been taken by the Department to
date.

    WASHINGTON.  Washington has enacted a statute similar to the California
Registry Law. American Re-Insurance and AAIC have reported to the Washington
Insurance Department that they have nothing to report under the statute. The
Department has asserted that the companies' report is not in compliance with the
law and has indicated that it may initiate enforcement action against American
Re, although no action has been commenced to date.

                                   * * * * *

    American Re believes that it has fully complied with the requirements of
these statutes or in the alternative, that such statutes are unconstitutional.
However, there can be no assurance that insurance regulators will not initiate
administrative or other actions against American Re under these laws or that
such statutes shall ultimately be found to be unconstitutional. American Re does
not believe that the ultimate resolution of these matters will have a material
adverse effect on the business, financial condition or results of operations of
American Re and its subsidiaries taken as a whole.

17. FAIR VALUE OF FINANCIAL INSTRUMENTS

    The fair value of financial instruments at December 31, 2000, and 1999, were
as follows:

<TABLE>
<CAPTION>
                                                               2000                  1999
                                                        -------------------   -------------------
                                                        CARRYING     FAIR     CARRYING     FAIR
                                                         VALUE      VALUE      VALUE      VALUE
                                                        --------   --------   --------   --------
<S>                                                     <C>        <C>        <C>        <C>
Assets:
  Bonds available for sale............................  $6,697.2   $6,697.2   $6,315.2   $6,315.2
  Preferred stock.....................................      72.4       72.4       84.6       84.6
  Equity securities...................................     500.5      500.5      402.1      402.1
  Other invested assets...............................      16.4       16.4       40.5       40.5
                                                        --------   --------   --------   --------
    Total investments.................................   7,286.5    7,286.5    6,842.4    6,842.4

  Cash and cash equivalents...........................     607.3      607.3      597.5      597.5

Liabilities:
  Senior bank debt....................................        --         --       75.0       75.0
  Loan from parent....................................      80.1       80.1         --         --
  Senior Notes........................................     498.5      482.7      498.5      474.0
  QUIPS...............................................     237.5      236.9      237.5      228.0
</TABLE>

                                      F-31
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

17. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
    It is not practicable to estimate a fair value for the Company's financial
guarantees, as there is no quoted market price for such contracts, and it is not
possible to reliably estimate the timing and amount of all future cash flows due
to the unique nature of each of these contracts.

18. SEGMENT REPORTING

    American Re's Domestic Insurance Company Operations ("DICO") serves U.S.
insurance companies by providing them with customized, integrated treaty,
facultative and finite risk reinsurance programs on a direct basis. American
Re's alternative market strategic business unit, Munich-American RiskPartners
("RiskPartners") provides customized risk transfer, risk sharing, and risk
management solutions to self-insured clients worldwide. International Operations
("International") provides treaty, facultative and finite risk reinsurance along
with a range of other customized products and services to insurance companies
and other entities worldwide. American Re HealthCare ("HealthCare") integrates
risk transfer products and specialized services to help insurance companies and
self-insureds predict, prevent, and manage catastrophic medical events. American
Re Financial Products ("ARFP") provides clients with an array of highly
customized financial risk management products and services, including credit
enhancement and integrated risk management. In addition to its core reinsurance
business, American Re, through various subsidiaries, offers a broad array of
related services including actuarial and financial analysis, due diligence
consulting for mergers and acquisitions, rent-a-captive facilities, and
reinsurance and insurance brokerage. The financial results of these subsidiaries
have been aggregated along with holding company operations for presentation of
segment results. Segment information for the year ended December 31, 1999, has
been restated to reflect management's increased focus on the Company's ARFP and
HealthCare segments during that period. Segment information has not been
restated for the year ended December 31, 1998, as the operations of Healthcare
and ARFP were not segregated during that period and it is considered by
management to be impracticable to do so.

                                      F-32
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

18. SEGMENT REPORTING (CONTINUED)
<TABLE>
<CAPTION>
                                                                                                           TOTAL
                                                                                                        REINSURANCE/    HOLDING
                                                                                                         INSURANCE      COMPANY
YEAR ENDED DECEMBER 31, 2000           DICO     RISKPARTNERS   INTERNATIONAL   HEALTHCARE      ARFP      OPERATIONS     & OTHER
----------------------------         --------   ------------   -------------   -----------   --------   ------------   ---------
<S>                                  <C>        <C>            <C>             <C>           <C>        <C>            <C>
REVENUES
GROSS PREMIUMS WRITTEN.............  $1,783.7      $812.1         $650.8         $342.0       $82.0       $3,670.6      $  0.3
                                     --------      ------         ------         ------       -----       --------      ------
NET PREMIUMS WRITTEN...............   1,640.3       589.2          588.0          329.1        64.8        3,211.4         0.3
                                     --------      ------         ------         ------       -----       --------      ------
PREMIUMS EARNED....................   1,786.3       535.5          557.7          330.1        30.2        3,239.8         0.4
Net investment income..............                                                                          436.8        28.1
Net realized capital gains.........                                                                          105.0        (0.1)
Other income.......................                                                                           (4.2)       30.2
                                                                                                          --------      ------
  Total revenue....................                                                                        3,777.4        58.6
                                                                                                          --------      ------
LOSSES AND EXPENSES
LOSSES AND LAE.....................   1,569.6       485.1          496.4          250.0        11.8        2,812.9          --
UNDERWRITING EXPENSE...............     561.4       159.4          163.4           97.4         8.4          990.0         0.4
Interest expense...................                                                                             --        42.8
Other expense......................                                                                           21.6        67.1
                                                                                                          --------      ------
  Total losses and expenses........                                                                        3,824.5       110.3
                                                                                                          --------      ------
  Loss before income taxes.........
  UNDERWRITING GAIN (LOSS).........  $ (344.7)     $(109.0)       $(102.1)       $(17.3)      $10.0       $ (563.1)     $  0.0
                                     ========      ======         ======         ======       =====       ========      ======
LOSS AND LAE RATIO.................      87.9%       90.6%          89.0%          75.7%       39.1%          86.8%        N/M
UNDERWRITING EXPENSE RATIO.........      31.4        29.8           29.3           29.5        27.8           30.6         N/M
                                     --------      ------         ------         ------       -----       --------      ------
COMBINED RATIO.....................     119.3%      120.4%         118.3%         105.2%       66.9%         117.4%        N/M
                                     ========      ======         ======         ======       =====       ========      ======

<CAPTION>

YEAR ENDED DECEMBER 31, 2000          TOTAL
----------------------------         --------
<S>                                  <C>
REVENUES
GROSS PREMIUMS WRITTEN.............  $3,670.9
                                     --------
NET PREMIUMS WRITTEN...............   3,211.7
                                     --------
PREMIUMS EARNED....................   3,240.2
Net investment income..............     464.9
Net realized capital gains.........     104.9
Other income.......................      26.0
                                     --------
  Total revenue....................   3,836.0
                                     --------
LOSSES AND EXPENSES
LOSSES AND LAE.....................   2,812.9
UNDERWRITING EXPENSE...............     990.4
Interest expense...................      42.8
Other expense......................      88.7
                                     --------
  Total losses and expenses........   3,934.8
                                     --------
  Loss before income taxes.........  $  (98.8)
                                     ========
  UNDERWRITING GAIN (LOSS).........  $ (563.1)
                                     ========
LOSS AND LAE RATIO.................      86.8%
UNDERWRITING EXPENSE RATIO.........      30.6
                                     --------
COMBINED RATIO.....................     117.4%
                                     ========
</TABLE>

                                      F-33
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

18. SEGMENT REPORTING (CONTINUED)
<TABLE>
<CAPTION>
                                                                                                           TOTAL
                                                                                                        REINSURANCE/    HOLDING
                                                                                                         INSURANCE      COMPANY
YEAR ENDED DECEMBER 31, 1999           DICO     RISKPARTNERS   INTERNATIONAL   HEALTHCARE      ARFP      OPERATIONS     & OTHER
----------------------------         --------   ------------   -------------   -----------   --------   ------------   ---------
<S>                                  <C>        <C>            <C>             <C>           <C>        <C>            <C>
REVENUES
GROSS PREMIUMS WRITTEN.............  $2,035.9      $739.0         $587.6         $130.5       $43.9       $3,536.9       $ 0.2
                                     --------      ------         ------         ------       -----       --------       -----
NET PREMIUMS WRITTEN...............   1,737.6       495.8          511.9          123.1        37.1        2,905.5         0.2
                                     --------      ------         ------         ------       -----       --------       -----
PREMIUMS EARNED....................   1,739.9       508.2          517.0          148.8        13.4        2,927.3         0.2
Net investment income..............                                                                          400.7        14.4
Net realized capital gains.........                                                                           83.0        (0.1)
Other income.......................                                                                           (1.8)       29.3
                                                                                                          --------       -----
  Total revenue....................                                                                        3,409.2        43.8
                                                                                                          --------       -----
LOSSES AND EXPENSES
LOSSES AND LAE.....................   1,672.2       426.8          443.9          107.6         3.9        2,654.4          --
UNDERWRITING EXPENSE...............     512.4       149.7          164.3           35.6         8.4          870.4         0.3
Interest expense...................                                                                             --        41.9
Other expense......................                                                                           28.3        35.7
                                                                                                          --------       -----
  Total losses and expenses........                                                                        3,553.1        77.9
                                                                                                          --------       -----
  Loss before income taxes.........
  UNDERWRITING GAIN (LOSS).........  $ (444.7)     $(68.3)        $(91.2)        $  5.6       $ 1.1       $ (597.5)      $(0.1)
                                     ========      ======         ======         ======       =====       ========       =====
LOSS AND LAE RATIO.................      96.1%       84.0%          85.9%          72.3%       29.3%          90.7%        N/M
UNDERWRITING EXPENSE RATIO.........      29.4        29.5           31.8           23.9        62.2           29.7         N/M
                                     --------      ------         ------         ------       -----       --------       -----
COMBINED RATIO.....................     125.5%      113.5%         117.7%          96.2%       91.5%         120.4%        N/M
                                     ========      ======         ======         ======       =====       ========       =====

<CAPTION>

YEAR ENDED DECEMBER 31, 1999          TOTAL
----------------------------         --------
<S>                                  <C>
REVENUES
GROSS PREMIUMS WRITTEN.............  $3,537.1
                                     --------
NET PREMIUMS WRITTEN...............   2,905.7
                                     --------
PREMIUMS EARNED....................   2,927.5
Net investment income..............     415.1
Net realized capital gains.........      82.9
Other income.......................      27.5
                                     --------
  Total revenue....................   3,453.0
                                     --------
LOSSES AND EXPENSES
LOSSES AND LAE.....................   2,654.4
UNDERWRITING EXPENSE...............     870.7
Interest expense...................      41.9
Other expense......................      64.0
                                     --------
  Total losses and expenses........   3,631.0
                                     --------
  Loss before income taxes.........  $ (178.0)
                                     ========
  UNDERWRITING GAIN (LOSS).........  $ (597.6)
                                     ========
LOSS AND LAE RATIO.................      90.7%
UNDERWRITING EXPENSE RATIO.........      29.7
                                     --------
COMBINED RATIO.....................     120.4%
                                     ========
</TABLE>

                                      F-34
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

18. SEGMENT REPORTING (CONTINUED)

<TABLE>
<CAPTION>
                                                                                              TOTAL
                                                                                           REINSURANCE/
                                                                                            INSURANCE     HOLDING CO.
YEAR ENDED DECEMBER 31, 1998                       DICO     RISKPARTNERS   INTERNATIONAL    OPERATIONS      & OTHER      TOTAL
----------------------------                     --------   ------------   -------------   ------------   -----------   --------
<S>                                              <C>        <C>            <C>             <C>            <C>           <C>
REVENUES
GROSS PREMIUMS WRITTEN.........................  $1,888.5      $670.1         $558.9         $3,117.5           --      $3,117.5
                                                 --------      ------         ------         --------        -----      --------
NET PREMIUMS WRITTEN...........................   1,517.9       436.5          452.4          2,406.8           --       2,406.8
                                                 --------      ------         ------         --------        -----      --------
PREMIUMS EARNED................................   1,573.3       392.1          453.5          2,418.9           --       2,418.9
Net investment income..........................        --          --             --            420.7         (3.2)        417.5
Net realized capital gains.....................        --          --             --             92.8           --          92.8
Other income...................................        --          --             --             (0.5)        32.3          31.8
                                                 --------      ------         ------         --------        -----      --------
  Total revenue................................                                               2,931.9         29.1       2,961.0
                                                                                             --------        -----      --------
LOSSES AND EXPENSES
LOSSES AND LAE.................................   1,073.8       273.2          335.4          1,682.4           --       1,682.4
UNDERWRITING EXPENSES..........................     561.3       132.6          122.5            816.4           --         816.4
Interest expense...............................        --          --             --               --         42.2          42.2
Other expense..................................        --          --             --             18.7         79.8          98.5
                                                 --------      ------         ------         --------        -----      --------
  Total losses and expenses....................                                               2,517.5        122.0       2,639.5
                                                                                             --------        -----      --------
  Income before income taxes...................                                                                         $  321.5
                                                                                                                        ========
  UNDERWRITING GAIN (LOSS).....................  $  (61.8)     $(13.7)        $ (4.4)        $  (79.9)
                                                 ========      ======         ======         ========
LOSS AND LAE RATIO.............................      68.2%       69.7%          74.0%            69.6%
UNDERWRITING EXPENSE RATIO.....................      35.7        33.8           27.0             33.7
                                                 --------      ------         ------         --------
COMBINED RATIO.................................     103.9%      103.5%         101.0%           103.3%
                                                 ========      ======         ======         ========
</TABLE>

    Elements of underwriting result are BOLD.

    The Company does not allocate certain items of revenues and expenses, nor
are they included in the assessment of the segment results as reviewed by the
Company's management. The assets and liabilities of the Company are generally
not maintained on a segment or geographical basis. An allocation of such assets
and liabilities is considered by the Company to be impracticable.

                                      F-35
<PAGE>
                    AMERICAN RE CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                  (DOLLARS IN MILLIONS, EXCEPT SHARE AMOUNTS)

19. UNAUDITED QUARTERLY FINANCIAL DATA

    Summarized quarterly financial data were as follows:

<TABLE>
<CAPTION>
                                                               2000
                                             -----------------------------------------
                                              FIRST      SECOND     THIRD      FOURTH
                                             --------   --------   --------   --------
<S>                                          <C>        <C>        <C>        <C>
Operating Data
  Premiums written.........................  $ 747.7     $770.4     $815.7    $ 877.9
  Premiums earned..........................    750.5      761.0      801.3      927.4
  Losses and LAE...........................    686.3      600.6      626.4      899.6
  Underwriting expenses....................    257.9      232.8      248.0      251.7
  Underwriting loss........................   (193.7)     (72.4)     (73.1)    (223.9)
  Net investment income....................    107.3      111.4      117.7      128.5
  Interest expense.........................     10.6       10.7       10.6       10.9
  Net income (loss) to common
    stockholder............................    (58.9)      22.2       14.0      (41.7)
  Comprehensive income (loss)..............    (29.3)      11.8       80.0     (131.4)
</TABLE>

<TABLE>
<CAPTION>
                                                               1999
                                             -----------------------------------------
                                              FIRST      SECOND     THIRD      FOURTH
                                             --------   --------   --------   --------
<S>                                          <C>        <C>        <C>        <C>
Operating Data
  Premiums written.........................   $757.5     $667.2     $757.7    $  723.3
  Premiums earned..........................    579.8      676.8      792.9       878.0
  Losses and LAE...........................    396.7      511.3      677.3     1,069.1
  Underwriting expenses....................    210.1      214.0      209.8       236.8
  Underwriting loss........................    (27.0)     (48.5)     (94.2)     (427.9)
  Net investment income....................    107.0      101.7      104.7       101.7
  Interest expense.........................     10.5       10.0       10.8        10.6
  Net income (loss) to common
    stockholder............................     57.0       45.7        4.4      (208.1)
  Comprehensive loss.......................    (20.7)     (45.7)     (52.2)     (245.5)
</TABLE>

                                      F-36
<PAGE>
                                                                      SCHEDULE I

                            AMERICAN RE CORPORATION

                             SUMMARY OF INVESTMENTS
                   OTHER THAN INVESTMENTS IN RELATED PARTIES

                               DECEMBER 31, 2000

                             (DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
                                                                                       AMOUNT AT
                                                                                      WHICH SHOWN
                                                              AMORTIZED     FAIR        IN THE
TYPE OF INVESTMENT                                              COST       VALUE     BALANCE SHEET
------------------                                            ---------   --------   -------------
<S>                                                           <C>         <C>        <C>
FIXED MATURITIES:
  Bonds available for sale:
    U.S. Government and government agencies.................  $  911.7    $  922.0      $  922.0
    States, municipalities and political subdivisions.......   1,087.8     1,096.2       1,096.2
    Mortgage backed securities..............................   1,389.8     1,400.3       1,400.3
    Foreign governments.....................................     328.8       329.6         329.6
    Public utilities........................................     210.9       205.4         205.4
    Corporate bonds.........................................   2,740.4     2,743.7       2,743.7
                                                              --------    --------      --------
      Total bonds available for sale........................   6,669.4     6,697.2       6,697.2
                                                              --------    --------      --------
    Preferred securities....................................      72.3        72.4          72.4
                                                              --------    --------      --------
      Total fixed maturities................................   6,741.7     6,769.6       6,769.6
                                                              --------    --------      --------

EQUITY SECURITIES:
  Common stock:
    Public utilities........................................      11.6        11.9          11.9
    Banks, trust and insurance companies....................      41.6        38.6          38.6
    Industrial and miscellaneous and all other..............     525.1       450.0         450.0
                                                              --------    --------      --------
      Total equity securities...............................     578.3       500.5         500.5
                                                              --------    --------      --------
  Other investments.........................................      16.4        16.4          16.4
                                                              --------    --------      --------
      Total investments.....................................  $7,336.4    $7,286.5      $7,286.5
                                                              ========    ========      ========
</TABLE>

                                      S-1
<PAGE>
                                                                     SCHEDULE II

                            AMERICAN RE CORPORATION

                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                             (PARENT COMPANY ONLY)

                            CONDENSED BALANCE SHEET

                             (DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
                                                              DECEMBER 31, 2000   DECEMBER 31, 1999
                                                              -----------------   -----------------
<S>                                                           <C>                 <C>
ASSETS
  Investment in subsidiaries................................      $3,171.1            $3,004.5
  Bonds available for sale, at fair value (amortized cost:
    December 31, 2000 and 1999--$13.6 and $116.8,
    respectively)...........................................          13.7               117.3
  Cash......................................................           0.3               121.4
  Deferred financing fees...................................          24.5                25.3
  Current federal income taxes recoverable..................          59.9                55.2
  Other assets..............................................         143.6               111.8
                                                                  --------            --------
    Total assets............................................      $3,413.1            $3,435.5
                                                                  ========            ========

LIABILITIES
  Interest payable..........................................      $    0.8            $    0.9
  Loan from parent..........................................          80.1                  --
  Bank debt--term loan......................................            --                75.0
  Senior notes..............................................         498.5               498.5
  Junior subordinated debt..................................         244.8               244.8
  Other liabilities.........................................         168.8               127.3
                                                                  --------            --------
    Total liabilities.......................................         993.0               946.5
                                                                  --------            --------

STOCKHOLDER'S EQUITY
  Common stock..............................................            --                  --
  Additional paid in capital................................       1,332.4             1,332.4
  Retained earnings.........................................       1,232.2             1,296.6
  Accumulated other comprehensive income (loss).............        (144.5)             (140.0)
                                                                  --------            --------
    Total stockholder's equity..............................       2,420.1             2,489.0
                                                                  --------            --------
    Total liabilities and stockholder's equity..............      $3,413.1            $3,435.5
                                                                  ========            ========
</TABLE>

                                      S-2
<PAGE>
                                                                     SCHEDULE II

                            AMERICAN RE CORPORATION

                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                             (PARENT COMPANY ONLY)

            CONDENSED STATEMENT OF OPERATIONS AND RETAINED EARNINGS

                             (DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
REVENUE
  Net investment income.....................................  $   22.6   $    8.6   $    1.4
  Other income..............................................      22.6       25.1       20.5
                                                              --------   --------   --------
    Total...................................................      45.2       33.7       21.9
                                                              --------   --------   --------
EXPENSES
  Interest expense..........................................      63.6       62.7       63.0
  Operating expenses........................................      27.0      (25.9)      27.5
                                                              --------   --------   --------
    Total expenses..........................................      90.6       36.8       90.5
                                                              --------   --------   --------
    Operating loss before federal income taxes..............     (45.4)      (3.1)     (68.6)
Federal income taxes........................................     (15.5)      (0.7)     (23.6)
                                                              --------   --------   --------
    Loss before equity in undistributed net income of
      subsidiaries..........................................     (29.9)      (2.4)     (45.0)
Equity in undistributed net income (loss) of subsidiaries...     (34.5)     (98.6)     271.0
                                                              --------   --------   --------
    Net income (loss) to common stockholder.................     (64.4)    (101.0)     226.0
Retained earnings at beginning of period....................   1,296.6    1,397.6    1,171.6
                                                              --------   --------   --------
Retained earnings at end of period..........................  $1,232.2   $1,296.6   $1,397.6
                                                              ========   ========   ========
</TABLE>

                                      S-3
<PAGE>
                                                                     SCHEDULE II

                            AMERICAN RE CORPORATION

                 CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                             (PARENT COMPANY ONLY)

                       CONDENSED STATEMENT OF CASH FLOWS

                             (DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss) to common stockholder...................  $ (64.4)   $(101.0)   $ 226.0
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH PROVIDED BY
  OPERATING ACTIVITIES:
  Equity in undistributed net loss (income) of
    subsidiaries............................................     34.5       98.6     (271.0)
  Increase (decrease) in interest payable...................     (0.1)      (0.3)       0.3
  Increase (decrease) in intercompany payables..............      6.3      (22.1)     (19.3)
  Decrease (increase) in current and deferred federal income
    tax asset...............................................     (4.2)      10.5       35.6
  Increase (decrease) in other, net.........................     52.1      (34.8)      14.9
                                                              -------    -------    -------
    Net cash provided by (used in) operating activities.....     24.2      (49.1)     (13.5)

CASH FLOWS FROM INVESTING ACTIVITIES:
  Investments available for sale
    Purchases...............................................   (220.3)    (158.8)        --
    Maturities..............................................    117.9         --         --
    Sales...................................................    206.7       41.0         --
                                                              -------    -------    -------
    Net cash provided by (used in) investing activities.....    104.3     (117.8)        --

CASH FLOWS FROM FINANCING ACTIVITIES:
  Dividend received from subsidiary.........................       --      260.8       35.0
  Loan from parent..........................................     75.4         --         --
  Repayments of senior bank debt............................    (75.0)        --         --
  Investment in subsidiary..................................   (250.0)        --         --
                                                              -------    -------    -------
    Net cash provided by financing activities...............   (249.6)     260.8       35.0
                                                              -------    -------    -------
    Net increase (decrease) in cash.........................   (121.1)      93.9       21.5
Cash and cash equivalents, beginning of period..............    121.4       27.5        6.0
                                                              -------    -------    -------
Cash and cash equivalents, end of period....................  $   0.3    $ 121.4    $  27.5
                                                              =======    =======    =======

SUPPLEMENTAL CASH FLOW INFORMATION:
  Income taxes paid (refunded), net.........................  $ (47.7)   $ (11.3)   $ (59.3)
  Interest paid.............................................  $  63.6    $  62.7    $  63.0
</TABLE>

                                      S-4
<PAGE>
           SCHEDULE II--CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                    AMERICAN RE CORPORATION (PARENT COMPANY)

                    NOTES TO CONDENSED FINANCIAL INFORMATION

    The condensed financial information of American Re Corporation for the years
ended December 31, 2000, 1999, and 1998, should be read in conjunction with the
consolidated financial statements of American Re Corporation and subsidiaries
and the notes thereto. Investment in subsidiaries is accounted for using the
equity method of accounting.

                                      S-5
<PAGE>
                                                                    SCHEDULE III

                              AMERICAN RE CORPORATION
                       SUPPLEMENTAL INSURANCE INFORMATION
                             (DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
                                                      NET
                                                   BENEFITS,
                                      DEFERRED      LOSSES,                                            CLAIMS
                                       POLICY      CLAIMS AND                              NET       AND CLAIM     AMORTIZATION OF
                                     ACQUISITION      LOSS      UNEARNED     EARNED     INVESTMENT   ADJUSTMENT    DEFERRED POLICY
SEGMENT                                 COSTS       EXPENSES    PREMIUMS    PREMIUMS    INCOME(1)     EXPENSE     ACQUISITION COSTS
-------                              -----------   ----------   ---------   ---------   ----------   ----------   -----------------
<S>                                  <C>           <C>          <C>         <C>         <C>          <C>          <C>
YEAR ENDED DECEMBER 31, 2000
  DICO.............................    $183.3       $3,775.3    $  596.9    $1,786.3           --     $1,569.6          $221.9
  RiskPartners.....................      67.4          908.7       179.7       535.5           --        485.1            48.1
  International....................      54.7          955.5       331.6       557.7           --        496.4            47.6
  HealthCare.......................       0.2          151.3        70.7       330.1           --        250.0             0.8
  ARFP.............................      18.2           15.0         1.0        30.2           --         11.8             6.1
  Other............................        --            5.4         0.6         0.4           --           --              --
                                       ------       --------    --------    --------                  --------          ------
  Total............................    $323.8       $5,811.2    $1,180.5    $3,240.2           --     $2,812.9          $324.5
                                       ======       ========    ========    ========                  ========          ======
YEAR ENDED DECEMBER 31, 1999
  DICO.............................    $221.9       $3,822.7    $  748.1    $1,739.9           --     $1,672.2          $235.7
  RiskPartners.....................      48.1          773.1       290.1       508.2           --        426.8            69.9
  International....................      47.6          807.4       157.6       517.0           --        443.9            52.1
  HealthCare.......................       0.8           67.8         2.0       148.8           --        107.6              --
  ARFP.............................       6.1            3.3        24.9        13.4           --          3.9              --
  Other............................        --            5.4         0.7         0.2           --           --              --
                                       ------       --------    --------    --------                  --------          ------
  Total............................    $324.5       $5,479.7    $1,223.4    $2,927.5           --     $2,654.4          $357.7
                                       ======       ========    ========    ========                  ========          ======
YEAR ENDED DECEMBER 31, 1998
  DICO.............................    $235.7       $3,636.4    $  782.6    $1,573.3           --     $1,073.8          $254.1
  RiskPartners.....................      69.9          667.7       325.9       392.1           --        273.2            56.7
  International....................      52.1          760.8       172.0       453.5           --        335.4            45.9
                                       ------       --------    --------    --------                  --------          ------
  Total............................    $357.7       $5,064.9    $1,280.5    $2,418.9           --     $1,682.4          $356.7
                                       ======       ========    ========    ========                  ========          ======

<CAPTION>

                                     UNDERWRITING   PREMIUMS
SEGMENT                                EXPENSES      WRITTEN
-------                              ------------   ---------
<S>                                  <C>            <C>
YEAR ENDED DECEMBER 31, 2000
  DICO.............................     $561.4      $1,640.3
  RiskPartners.....................      159.4         589.2
  International....................      163.4         588.0
  HealthCare.......................       97.4         329.1
  ARFP.............................        8.4          64.8
  Other............................        0.4           0.3
                                        ------      --------
  Total............................     $990.4      $3,211.7
                                        ======      ========
YEAR ENDED DECEMBER 31, 1999
  DICO.............................     $512.9      $1,737.6
  RiskPartners.....................      150.7         495.8
  International....................      162.8         511.9
  HealthCare.......................       35.6         123.1
  ARFP.............................        8.4          37.1
  Other............................        0.3           0.2
                                        ------      --------
  Total............................     $870.7      $2,905.7
                                        ======      ========
YEAR ENDED DECEMBER 31, 1998
  DICO.............................     $561.3      $1,517.9
  RiskPartners.....................      132.6         436.5
  International....................      122.5         452.4
                                        ------      --------
  Total............................     $816.4      $2,406.8
                                        ======      ========
</TABLE>

------------------------------

(1) The Company does not allocate net investment income by reportable segment,
    as it is not included in the assessment of the segment results as reviewed
    by the Company's management.

                                      S-6
<PAGE>
                                                                     SCHEDULE IV

                    AMERICAN RE CORPORATION AND SUBSIDIARIES

                                  REINSURANCE

                   (DOLLARS IN MILLIONS, EXCEPT PERCENTAGES)

<TABLE>
<CAPTION>
                                                       CEDED TO     ASSUMED                  PERCENTAGE
                                             GROSS       OTHER     FROM OTHER     NET        OF AMOUNT
                                             AMOUNT    COMPANIES   COMPANIES     AMOUNT    ASSUMED TO NET
                                            --------   ---------   ----------   --------   --------------
<S>                                         <C>        <C>         <C>          <C>        <C>
YEAR ENDED DECEMBER 31, 2000:
  Life insurance in force.................   $   --     $   --      $     --    $     --
                                             ======     ======      ========    ========
PREMIUMS:
  Life insurance..........................   $   --     $   --      $     --    $     --          --%
  Accident and health insurance...........       --         --            --          --          --
  Property-liability insurance............    304.9      464.6       3,399.9     3,240.2       104.9
  Title insurance.........................       --         --            --          --          --
                                             ------     ------      --------    --------       -----
    Total Premiums........................   $304.9     $464.6      $3,399.9    $3,240.2       104.9%
                                             ======     ======      ========    ========       =====
</TABLE>

<TABLE>
<CAPTION>
                                                       CEDED TO     ASSUMED                  PERCENTAGE
                                             GROSS       OTHER     FROM OTHER     NET        OF AMOUNT
                                             AMOUNT    COMPANIES   COMPANIES     AMOUNT    ASSUMED TO NET
                                            --------   ---------   ----------   --------   --------------
<S>                                         <C>        <C>         <C>          <C>        <C>
YEAR ENDED DECEMBER 31, 1999:
  Life insurance in force.................   $   --     $   --      $     --    $     --
                                             ======     ======      ========    ========
PREMIUMS:
  Life insurance..........................   $   --     $   --      $     --    $     --          --%
  Accident and health insurance...........       --         --            --          --          --
  Property-liability insurance............    263.5      661.0       3,325.0     2,927.5       113.6
  Title insurance.........................       --         --            --          --          --
                                             ------     ------      --------    --------       -----
    Total Premiums........................   $263.5     $661.0      $3,325.0    $2,927.5       113.6%
                                             ======     ======      ========    ========       =====
</TABLE>

<TABLE>
<CAPTION>
                                                       CEDED TO     ASSUMED                  PERCENTAGE
                                             GROSS       OTHER     FROM OTHER     NET        OF AMOUNT
                                             AMOUNT    COMPANIES   COMPANIES     AMOUNT    ASSUMED TO NET
                                            --------   ---------   ----------   --------   --------------
<S>                                         <C>        <C>         <C>          <C>        <C>
YEAR ENDED DECEMBER 31, 1998:
  Life insurance in force.................   $   --     $   --      $     --    $     --
                                             ======     ======      ========    ========
PREMIUMS:
  Life insurance..........................   $   --     $   --      $     --    $     --          --%
  Accident and health insurance...........       --         --            --          --          --
  Property-liability insurance............    194.1      690.0       2,914.8     2,418.9       120.5
  Title insurance.........................       --         --            --          --          --
                                             ------     ------      --------    --------       -----
    Total Premiums........................   $194.1     $690.0      $2,914.8    $2,418.9       120.5%
                                             ======     ======      ========    ========       =====
</TABLE>

                                      S-7
<PAGE>
                                                                     SCHEDULE VI

                      AMERICAN RE CORPORATION AND SUBSIDIARIES
    SUPPLEMENTAL INFORMATION (FOR PROPERTY-CASUALTY INSURANCE UNDERWRITERS)
                             (DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>

                                                    RESERVES FOR     DISCOUNT,
                                       DEFERRED     UNPAID CLAIMS     IF ANY
                                        POLICY       AND CLAIMS      DEDUCTED                                NET
                                      ACQUISITION    ADJUSTMENT     IN PREVIOUS   UNEARNED     EARNED     INVESTMENT
AFFILIATION WITH REGISTRANT              COSTS        EXPENSES        COLUMN      PREMIUMS    PREMIUMS      INCOME
---------------------------           -----------   -------------   -----------   ---------   ---------   ----------
<S>                                   <C>           <C>             <C>           <C>         <C>         <C>
YEAR ENDED DECEMBER 31, 2000
(a) Consolidated property-casualty
    insurance entities..............    $323.8        $8,882.2      Note (1  )    $1,180.5    $3,240.2      $464.9
(b) Unconsolidated property-casualty
    insurance entities..............
                                        ------        --------        -------     --------    --------      ------

YEAR ENDED DECEMBER 31, 1999
(a) Consolidated property-casualty
    insurance entities..............    $324.5        $8,369.0      Note (1  )    $1,223.4    $2,927.5      $415.1
(b) Unconsolidated property-casualty
    insurance entities..............
                                        ------        --------        -------     --------    --------      ------

YEAR ENDED DECEMBER 31, 1998
(a) Consolidated property-casualty
    insurance entities..............    $357.7        $7,334.1      Note (1  )    $1,280.5    $2,418.9      $417.5
(b) Unconsolidated property-casualty
    insurance entities..............
                                        ------        --------        -------     --------    --------      ------

<CAPTION>
                                          CLAIMS AND
                                             CLAIM
                                          ADJUSTMENT
                                           EXPENSES
                                           INCURRED         AMORTIZATION
                                          RELATED TO:       OF DEFERRED    PAID CLAIMS
                                      -------------------      POLICY      AND CLAIMS
                                      CURRENT     PRIOR     ACQUISITION    ADJUSTMENT    PREMIUMS
AFFILIATION WITH REGISTRANT             YEAR       YEAR        COSTS        EXPENSES      WRITTEN
---------------------------           --------   --------   ------------   -----------   ---------
<S>                                   <C>        <C>        <C>            <C>           <C>
YEAR ENDED DECEMBER 31, 2000
(a) Consolidated property-casualty
    insurance entities..............  $1,864.3    $948.6       $324.5       $2,481.4     $3,211.7
(b) Unconsolidated property-casualty
    insurance entities..............
                                      --------    ------       ------       --------     --------
YEAR ENDED DECEMBER 31, 1999
(a) Consolidated property-casualty
    insurance entities..............  $2,084.0    $570.4       $357.7       $2,239.6     $2,905.7
(b) Unconsolidated property-casualty
    insurance entities..............
                                      --------    ------       ------       --------     --------
YEAR ENDED DECEMBER 31, 1998
(a) Consolidated property-casualty
    insurance entities..............  $1,620.4    $ 62.0       $356.7       $1,720.3     $2,406.8
(b) Unconsolidated property-casualty
    insurance entities..............
                                      --------    ------       ------       --------     --------
</TABLE>

------------------------------

(1) Workers' compensation reserves are discounted at 4.5%. The estimated amount
    of discount is $832.6, $670.4, and $645.0 as of December 31, 2000, 1999, and
    1998, respectively.

                                      S-8
<PAGE>
                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
                                                                                       PAGE NUMBER IN
                                                                                         SEQUENTIAL
                                                                                         NUMBERING
EXHIBIT NO.                                     DESCRIPTION                                SYSTEM
-----------             ------------------------------------------------------------  ----------------
<C>                     <S>                                                           <C>
             3.1        Restated Certificate of Incorporation of the Company is
                        incorporated by reference from the Company's Form S-1,
                        Registration Statement No. 33-49110, Exhibit 3.1, as filed
                        with the Securities and Exchange Commission on July 1, 1992.

             3.2        Certificate of Amendment to the Restated Certificate of
                        Incorporation of the Company is incorporated by reference
                        from Amendment No. 2 to the Company's Form S-1, Registration
                        Statement No. 33-54938, Exhibit 3.3, as filed with the
                        Securities and Exchange Commission on January 25, 1993.

             3.3        By-laws of the Company, adopted on November 25, 1996 are
                        incorporated by reference from the Company's Form S-4,
                        Registration No. 333-20663, Exhibit 3.2, as filed with the
                        Securities and Exchange Commission on January 29, 1997.

             4.1        Indenture, dated as of December 24, 1996, among the Company
                        and State Street Bank and Trust Company, as Trustee,
                        relating to the 7.45% Senior Notes, Due 2026 is incorporated
                        by reference from the Company's Form S-4, Registration No.
                        333-20663, Exhibit 4.1, as filed with the Securities and
                        Exchange Commission on January 29, 1997.

             4.2        Form of Amended and Restated Trust Agreement Between the
                        Company and The Bank of New York, as Property Trustee, The
                        Bank of New York (Delaware) as Delaware Trustee, and the
                        Administrative Trustees named therein, relating to the
                        8 1/2% Cumulative Quarterly Preferred Securities due 2025
                        (including the form of Preferred Securities), is
                        incorporated by reference from Amendment No. 1 to the
                        Company's Form S-3, Registration Statement No. 33-94558,
                        Exhibit 4.2, as filed with the Securities and Exchange
                        Commission on August 21, 1995.

             4.3        Form of Indenture between the Company and The Bank of New
                        York, as Debenture Trustee, relating to the 8 1/2%
                        Cumulative Quarterly Preferred Securities due 2025
                        (including the form of Junior Subordinated Debentures), is
                        incorporated by reference from Amendment No. 1 to the
                        Company's Form S-3, Registration Statement No. 33-94558,
                        Exhibit 4.3, as filed with the Securities and Exchange
                        Commission on August 21, 1995.

             4.4        Form of Guarantee Agreement between the Company and The Bank
                        of New York, as Guarantee Trustee, relating to the 8 1/2%
                        Cumulative Quarterly Preferred Securities due 2025, is
                        incorporated by reference from Amendment No. 1 to the
                        Company's Form S-3, Registration Statement No. 33-94558,
                        Exhibit 4.6, as file with the Securities and Exchange
                        Commission on August 21, 1995.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                                       PAGE NUMBER IN
                                                                                         SEQUENTIAL
                                                                                         NUMBERING
EXHIBIT NO.                                     DESCRIPTION                                SYSTEM
-----------             ------------------------------------------------------------  ----------------
<C>                     <S>                                                           <C>
           +10.1        American Re-Insurance Company Supplemental Employees Pension
                        Plan for certain employees of American Re-Insurance Company
                        effective January 1, 1985 and as amended and restated as of
                        January 1, 1992 is incorporated by reference from Amendment
                        No. 2 to the Company's Form S-1, Registration Statement No.
                        33-49110, Exhibit 10.4, as filed with the Securities and
                        Exchange Commission on August 28, 1992.

           +10.2        American Re-Insurance Company Incentive Compensation Plan
                        for officers and other key employees as amended and in
                        effect October 26, 1990 is incorporated by reference from
                        Amendment No. 2 to the Company's Form S-1, Registration
                        Statement No. 33-49110, Exhibit 10.5, as filed with the
                        Securities and Exchange Commission on August 28, 1992.

           +10.3        American Re-Insurance Company Supplemental Incentive Savings
                        Plan for certain employees of American Re-Insurance Company
                        as adopted January 29, 1988 is incorporated by reference
                        from Amendment No. 2 to the Company's Form S-1, Registration
                        Statement No. 33-49110, Exhibit 10.8, as filed with the
                        Securities and Exchange Commission on August 28, 1992.

           +10.4        American Re-Insurance Company Savings Plan for certain
                        employees of American Re-Insurance Company effective October
                        1, 1992 is incorporated by reference from the Company's Form
                        S-1 Registration Statement, No. 33-54938, Exhibit 10.7, as
                        filed with the Securities and Exchange Commission on
                        November 24, 1992.

           +10.5        Amended and Restated American Re-Insurance Company Group
                        Incentive Compensation Plan for officers and other key
                        employees; renamed the American Re-Insurance Company Group
                        Senior Executive Compensation Plan, effective as of January
                        1, 1993, is incorporated by reference from the Company's
                        Form 10-Q, Exhibit 10.89, as filed with the Securities and
                        Exchange Commission on November 15, 1993.

           +10.6        American Re-Insurance Company Group Executive Incentive
                        Compensation Plan, effective as of January 1, 1993, is
                        incorporated by reference from the Company's Form 10-Q
                        Exhibit 10.9, as filed with the Securities and Exchange
                        Commission on November 15, 1993.

           +10.7        Amendment of the American Re-Insurance Company Savings Plan,
                        dated November 18, 1993, is incorporated by referenced from
                        the Company's form S-8, Registration Statement No. 33-76374,
                        Exhibit 4.22, as filed with the Securities and Exchange
                        Commission on March 11,1994.

           +10.8        Amendment of the American Re-Insurance Company Savings Plan
                        dated March 9, 1994 is incorporated by reference from the
                        Company's Form S-8, Registration Statement No. 33-76374,
                        Exhibit 4.23, as filed with the Securities and Exchange
                        Commission on March 11, 1994.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                                                                       PAGE NUMBER IN
                                                                                         SEQUENTIAL
                                                                                         NUMBERING
EXHIBIT NO.                                     DESCRIPTION                                SYSTEM
-----------             ------------------------------------------------------------  ----------------
<C>                     <S>                                                           <C>
           +10.9        American Re-Insurance Company Savings Plan as amended and
                        restated effective as of January 1, 1994 is incorporated by
                        reference from the Company's Form 10-K, Exhibit 10.36, as
                        filed with the Securities and Exchange Commission on March
                        31, 1995.

           +10.10       American Re-Insurance Company Employees Pension Plan as
                        amended and restated effective as of January 1, 1994 is
                        incorporated by reference from the Company's Form 10-K,
                        Exhibit 10.37, as filed with the Securities and Exchange
                        Commission on March 31, 1995.

           +10.11       Form of Employment Agreement between the Company and certain
                        executive officers of the Company is incorporated by
                        reference from the Company's 10-K, Exhibit 10.16, as filed
                        with the Securities and Exchange Commission on March 30,
                        1999.

           +10.12       Senior Executive Special Deferred Compensation Plan is
                        incorporated by reference from the Company's 10-K, Exhibit
                        10.20, as filed with the Securities and Exchange Commission
                        on March 27, 1997.

           +10.13       Long Term Incentive Plan for Executive and Key Employees of
                        the Company is incorporated by reference from the Company's
                        10-K, Exhibit 10.19, as filed with the Securities and
                        Exchange Commission on March 30, 1998.

           +10.14       Long Term Incentive Plan for Board Members and top
                        Executives of Munich Re and it's International Organization.

           *21          Subsidiaries of the Company.
</TABLE>

------------------------

*   Filed herewith

+   Management contract or compensation plan or arrangement