France’s SCOR Group posted a net loss of 314 million euros ($384 million) for 2003, a distinct improvement over the 455 million euros ($556 million) loss the group reported in 2002.
In addition the company reported net income of 45 million euros ($55 million) for the fourth quarter. The earnings announcement said this “reflected continuing cleanup of the Group’s portfolio and its withdrawal from non-core businesses.” It also noted that SCOR “decided, for prudential reasons,” to allocate 10 million euros ($12.23 million) to its equalization reserves in the 4th quarter.
Other earnings highlights were given as follows:
— Premium income totaled 3.691 million euros ($4.51 billion) down 26 percent. “At constant exchange rates and on a like-for-like basis, the decline was 7 percent.”
— SCOR’s profitability for the 2002-2003 underwriting years has been confirmed, with a net combined ratio of 96 percent in Non-Life reinsurance (property, large corporate accounts).
— Operating results for Life reinsurance rose to 50 million euros ($61.2 million), a strong increase compared to 2002 (+ 92 percent). “The margin on net premiums was 3.4 percent for 2003, above the target set in the ‘Back on Track plan.'”
— The adequate level of Group reserves was confirmed during the review conducted by both internal and external actuaries for the closing of the accounts. Group operating costs were reduced by 13 percent in 2003.
— SCOR Group continues to implement its recovery plan.
The plan, introduced at the end of 2002 is designed to reverse the heavy losses SCOR has experienced over the last two years. It suffered a setback at the end of October when third quarter losses resulted in ratings downgrades (S&P from ‘BBB+’ to ‘BBB-‘) and made increased funding an imperative. The company raised an additional 751 million euros ($918 million) in additional capital through a rights offering which closed in December.
It has also completed the sell off of most of its non-performing units, notably CRP, its Bermuda-based subsidiary, and has also sold off its Paris headquarters building as well as some investment properties.
SCOR’s problems are largely attributable to the need to increase reserves, mainly due to rising U.S. claims. The company said it added 297 million euros ($363 million) to its reserves for the 1997-2001 underwriting years in the U.S. “This underwriting concerned lines of business which have since been discontinued. Given accumulated losses in the past few years, tax deferrals booked by SCOR US generated by these losses have been written down in full as at September 30, 2003, representing a total charge of 192 million euros ($234.8 million) in the 2003 accounts,” said the announcement.
CEO Denis Kessler remained confident. At the conclusion of the Board of Directors Meeting, called to present the results, he stated: “The SCOR Group is implementing its recovery plan with vigor and determination The efforts made since November 2002 are producing results. New underwriting in Non-Life reinsurance is profitable, and the Group’s business has been profitable worldwide since 2002. Life and accident reinsurance, underwritten henceforth in its SCOR VIE subsidiary, is a business which produces high profits. With its solvency restored, adequate reserve levels, and a conservative asset management policy, the SCOR Group offers its customers a much enhanced level of security. I want to thank our shareholders for their decisive support in 2003. We are doing everything in our power to ensure that this recapitalization returns the Group to lasting profitability as soon as possible.”
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