SCOR Profits Soar to $338 Million

April 6, 2007

France’s SCOR Group announced a 92 percent increase in net income for 2006 to €252 million ($338 million) before, what the report termed, “badwill” linked to the acquisition of Revios.

Essentially the German life reinsurer, which SCOR bought last year, was actually worth €54 million ($72.5 million) more than SCOR paid for it. If those figures are added to the total net income, SCOR’s profits rose 134 percent to € 306 million ($410.6 million).

Other earnings highlights included the following:
– Gross written premiums: €2.935 billion [$3.94billion) (+ 22 percent compared to 2005)
– Non-Life gross written premiums: €1.754 billion [$2.35 billion] (+27 percent)
– Life gross written premiums before taking into account pro rata Revios business, €1.040 billion [$1.395 billion] (+2 percent)
– Life gross written premiums after taking into account pro rata Revios business, €1.181 billion [$1.584 billion] (+15 percent)
– Operating income: €409 million [$548.8 million) (+ 69 percent)
– Return on Weighted Average Equity (RoE) for 2006: 14.1 percent before ‘badwill’ linked to the acquisition of Revios, 16.9 percent after ‘badwill’ linked to the acquisition of Revios, compared to 8.6 percent in 2005.
– Proposed dividend of €0.80 [$1.07) per share, subject to approval by the General Shareholders’ Meeting, representing a dividend distribution rate before ‘badwill’ linked to the acquisition of Revios of 37.5 percent (36.5 percent).
– Net income per new share: €2.59 [$3.475) (+ 73 percent) before ‘badwill’ linked to the acquisition of Revios and €3.17 [$4.253] (+ 114 percent) after ‘badwill’ linked to the acquisition of Revios.
– Book value per new share: €19.42 [$26.06] (+ 8 percent)

Chairman and CEO Denis Kessler commented: “The Group had an excellent year in 2006. The Group’s 2006 annual results have exceeded €300 million [$402.5 million] and Return on Equity has reached 16.9 percent. All of the Group’s business units have contributed to these results, thanks to their operational performance. Non-Life reinsurance has seen a year marked by strong growth in underwriting (+27 percent) and a combined ratio of 96.4 percent, demonstrated both the quality of the underwriting involved and the mildness of the year in natural catastrophe terms.

“Life reinsurance has seen significant growth outside the United States of around 4 percent, but has decreased in the United States due to the late revision of our rating. Life reinsurance business shows a global increased profit on utilized capital, with the margin on net earned premiums reaching 7.5 percent. Finally, the acquisition of Revios – which took effect on 21 November 2006 – has resulted in ‘badwill’ net of taxes in the sum of €54 million [$72.5 million].”

In addition to announcing the results, SCOR’s Press Release also pitched the value the Group sees from combining its activities with Swiss reinsurer Converium (See IJ web site).

After noting the success it’s “refocused, restructured and reinvigorated” plan has achieved, SCOR stated: The combination of SCOR and Converium rests on the conviction that such a project represents a unique strategic opportunity to create the fifth largest multi-line reinsurer in the world. This combination is based on very solid industrial, economic and financial foundations, working in the best interests of the shareholders, clients and employees of the two companies. This project will be pursued with determination and a spirit of openness.

“A new plan covering the period from mid 2007 to mid 2010, called “Dynamic Lift”, has been launched. This plan demonstrates the full commitment of SCOR’s management, supported by the Board of Directors, to create more shareholder value whilst strictly adhering to the prudent principles used in both Group underwriting and asset management”.

Converium’s management came back with an immediate rebuttal, indicating that SCOR’s presentation “included information which could lead Converium’s shareholders to false conclusions” (See following article).

The full 2006 results and the analysts’ presentation may be obtained on the Group’s web site at:

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