Munich Re to fund buyouts

German giant reinsurer Munich Re has said it could to help insurers that want to make acquisitions by freeing up capital through reinsurance contracts, Tony Kuczinski, the chief of its US operations has told Dow Jones.

"We have made it known we could be available to provide capacity" for a company that is planning to acquire either an insurance company or a book of business, he said.

By writing a reinsurance contract that would free up capital to do a deal Kuczinski offered to help well-financed insurers solve the capital availability problem. He refused to name any companies Munich Re has made the offer to.

Munich Re is tipped to buy AIG's Asian life insurance operations and Kuczinski said that the company could other parts of AIG but could also make some of its capital available to its customers, at a price.

Dow Jones said the help might come in the form of a reinsurance contract that covers a portion of a client insurer's book of business, or part of a business it acquires, freeing up capital it could use to make an acquisition. Reinsurance has been used for such deals "for years and years," Kuczinski said.

He predicted funding insurance buyouts will help Munich Re weather the current financial crisis and stand "substantially stronger compared to its peers."