France’s SCOR Group announced that Henry Klecan Jr. has been appointed President & CEO of SCOR US at a Board of Directors’ meeting held on November 18, 2003. The company also took issue with yesterday’s announcement by Fitch Ratings that it has lowered SCOR’s insurer financial strength rating to ‘BB+.’
Klecan Jr. has been President and CEO of SCOR CANADA since July 2000, and will continue to serve in that position. He replaces Jerome Faure, the current President and CEO of SCOR US and Managing Director of the Non-Life Treaties Division, who has decided to leave the SCOR Group at the end of this year.
Klecan Jr., 52, is a lawyer, who has held executive positions in Canada’s leading specialty lines insurance companies and insurance brokerage operations. He most recently served as Vice President Principal of Citadel Assurance Company, and from 1989 to 1998 he was Vice President Principal and co-founder of London Guarantee Insurance Company. SCOR said his “assignment is to continue restoring the profitability of the US business, while restructuring the old portfolio.”
The company also named Christophe Le Bars as SCOR Group Senior Vice-President — Human Resources to succeed Helene Chazot who is retiring after working for 13 years for the SCOR Group.
Concerning the ratings SCOR said that it “formally contests Fitch’s decision to issue such an opinion with less than two weeks remaining for its capital increase, the principle of which was unanimously approved by the Company’s Board of Directors and which already has firm shareholder commitments for more than 50 percent of the issue. In addition, SCOR has not obtained any coherent justification from Fitch as to the basis for such a rating. As a result, SCOR considers that Fitch’s decision is unfounded, ill-timed and causes serious damage to the Company.”
Fitch had expressed concerns over reprovisioning needs in the accounts of SCOR’s U.S. and Bermudan subsidiaries as well as the erosion in its business position with clients. It also asserted that SCOR’s business outlook for 2004 has been seriously degraded by the Group’s recent quarterly results announcement.
The reinsurer responded by noting: “the reprovisioning level of SCOR US and CRP as a function of the work done by independent and world-class actuaries fixing a ‘best estimates’ for the reserves; the very principle of these reserves for future charges sets as its objective the ability to cover potential adverse risk development. SCOR therefore cannot, unless it calls into question the quality of the work of the independent actuaries — some of the most highly recognized in the profession — consider Fitch’s line of reasoning well-founded.”
It also stressed that the problems stem from business it accepted between 1997 and 2001, which it no longer underwrites. It charged Fitch with wanting “to impose on SCOR a level of reserving which does not correspond to market practice; this measure is therefore discriminatory and unacceptable.”
It also challenged Fitch’s assertion that its business outlook has been eroded, indicating this “is not SCOR’s current experience since it is witnessing the loyalty of its clients in a large number of countries. These clients are especially basing their confidence on the success of the upcoming capital increase. In addition, SCOR confirms the redirection of its underwriting implemented in 2002 with a total focus on profitability; the positive results of the 2002 and 2003 underwriting years demonstrate the relevance of this new direction for the 2004 underwriting year.”
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