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In 1941, the San Francisco office of a British insurer resold coverage of the Panama Canal -- the US Navy's link between the Pacific and Atlantic theaters -- to two Japanese firms. (1939 Globe file photo)

Economic comeback fueled by 'reinsurance'

Germany had pulled itself out of the rubble of World War I and global depression by specializing in ''reinsurance,'' the selling of insurance to insurance companies. Just before the start of World War II, the global leader in reinsurance was Switzerland's Swiss Re, followed by Germany's Munich Re. Intelligence records show that as the Reich conquered Europe in the first half of the war, its insurance revenue actually grew.

Not only were Axis insurance companies in effect operating in the United States by sharing risks, they were using the business as a source of foreign exchange. Germany and Italy, in particular, camouflaged their stake in the industry by forming reinsurance pools in Brazil, Chile, Argentina, and other South American countries.

So essential was the insurance industry that the Reich enlisted a Hamburg brokerage house to dispatch insurance ''penetration agents'' to travel with German troops into France, the Balkans, and Soviet Union.

The Insurance Intelligence Unit's predictions of the Nazis' moves were eerily accurate. It forecast and then followed the way German and Italian insurance strategists sought to circumvent Allied blacklists of their global business through the shadow agreements in neutral countries, starting with Spain and then spreading to Latin America.

The files include detailed charts that show how Allied and Axis businesses intermingled, often with a German on every board. Three executives of companies controlled by Munich Re, for example, were on the boards of 12 other Argentine companies, and those companies, in turn, were linked to management of dozens of other firms.

''As we're seeing with the insurance [disputes] of the World Trade Center, the reinsurance business was a very international business and most people don't realize how involved these companies are with each other,'' said Gerald D. Feldman, a historian at the University of California at Berkeley.

''There is so much common business that they can't imagine living without each other,'' said Feldman, author of ''Allianz and the German Insurance Business,'' a new book that examines links between German insurance giant Allianz and Swiss companies.