The Board of Directors of French reinsurer SCOR met on Tuesday, Aug. 26, 2003 to approve the financial statements for the first half of 2003. The meeting, chaired by CEO Denis Kessler, formalized the results announced Aug. 12 (See IJ Web site Aug. 13).
SCOR gave the following highlights for the period:
– Gross written premiums for the first half of 2003 totaled EUR 2,069 million [$2.25 billion]. This is a decline of 18% compared to the first half of 2002. At constant exchange rates, this decline would have been 11%, and is in large part due to the cessation of underwriting activity in the Bermudan subsidiary CRP.
– Technical operating income for the first half of 2003 came to EUR 63 million [$68.5 million].
– Income before tax and goodwill amortization amounted to EUR 82 million [$89.2 million] for the first half of 2003.
– The Group’s operating cashflow for the first half of 2003 came to EUR 292 million [$317.6 million], a big increase compared to the first half of 2002 (EUR 58 million) [$63.1 million].
– First-half results were affected by the May 2003 tornadoes in the United States, with a net cost after retrocession of EUR 37.6 million [$41 million], and by a foreign exchange gain of EUR 86 million [$93.5 million]. In mid-June the Group strengthened its asset and liability currency matching.
In discussing the outlook for the rest of the year, the announcement said: “The SCOR Group is implementing its Back on Track plan launched in November of 2002. The decline in gross written premiums was due both to the strict and selective underwriting policy centered on risk control, as established by the Group under the Back on Track plan, as well as to exchange rate fluctuations.
“The Group is focussing on Short-Tail lines rather than Long-Tail lines. Short-Tail lines represented 52% of P&C Reinsurance business for the first half of 2003, as against 50% for the first half of 2002. The Group has also rebalanced its geographical mix of business. North American premiums have declined 42% between the first half of 2002 and the first half of 2003. The Group has also stopped its alternative risk transfer business by ceasing the underwriting activity of CRP, which is now in the midst of both a commutation program as well as negotiations for its sale. The Group has also increased its Life Reinsurance business.”
It also noted that the “Gross combined ratios for Non-Life business written in 2002 (86.1%) and 2003 (96.5%) are of good quality, confirming that the Group’s technical recovery is well under way.
The negative loss developments in the United States for the 1998, 1999 and 2000 underwriting years continue to weigh on the results of the Group. In addition, the Group continues to be subject to high retrocession costs.”
Addressing the Board at the end of the meeting, Kessler made the following observations: “First-half results show an improvement in the fundamentals of the SCOR Group. They are confirmation that the corporate turnaround measures taken for the SCOR Group are starting to produce results. SCOR is doing everything possible to restore in a lasting way the Group’s profitability and to rapidly reinforce solvency levels.
“With this in mind, the Group has introduced prudent underwriting and investment policies. It is refocusing on markets and business lines in which it has acknowledged expertise. The Group’s withdrawal from CRP will reduce volatility and its plans to bring other partners into its newly created Life reinsurance subsidiary will strengthen the Group’s capital base.
“The goal of the SCOR Group is to provide customers with risk coverage and management capability together with high value-added services, in the optimal security conditions they expect from it.”