SCOR Confirms Renewal of Letters of Credit

France’s SCOR Group has confirmed that it has signed a “definitive agreement” with its banking syndicate setting out the principal terms and conditions for the renewal, “for the year 2003, of a program for the issuance of letters of credit, for an amount of up to $900 million, and of a short-term credit facility, for an amount of up to 100 million Euros [$99.4 million].”

The announcement indicated that “These arrangements require SCOR to provide certain collateral and other security, as described in the note d’opération filed with the COB” [the French stock market regulatory authority]. “Prior to the implementation of this program, holders of the notes that SCOR issued in June, 2002, with a principal amount of 200 million Euros [$198.75 million], will be called to a meeting in order to modify certain provisions of these notes. The holders of a majority of the principal amount of these notes have agreed in principle to these modifications,” it continued.

SCOR’s new CEO Denis Kessler announced a number of measures aimed at cutting the losses France’s biggest reinsurer has been suffering (See IJ Website Nov.18). These include a new rights offering aimed at raising around $380 million in fresh capital, cutting unprofitable lines by reducing the company’s underwriting activity by up to 10 percent (around $600 million) next year, and a more selective approach to underwriting. Extending its current credit line is an integral part of that plan.