French reinsurer SCOR Group announced a 26 percent drop in premium income for 2003 to 3.691 billion euros ($4.735 billion), compared to 5.016 billion ($6.435 billion) in 2002, following its decision to exit unprofitable lines.
The company’s announcement indicated the “decline would have been 7 percent at constant exchange rates and on a like-for-like basis (excluding Commercial Risk Partners, SCOR’s Bermuda-based subsidiary which stopped writing business in January 2003, and excluding the impact of withdrawal from certain business lines in the United States).”
SCOR stressed that its “premium income was significantly impacted by currency movements, the reorientation of the underwriting policy in the United States and the cessation of business at CRP (Bermuda).”
In the non-Life reinsurance sector (property, large corporate accounts and credit & surety business), SCOR’s premium income totaled 2.229 billion ($2.86 billion), down 27 percent from 2002. “This decline stems mainly from the effects of currency movements and the withdrawal in 2003 from certain lines of business in the United States,” said the announcement. “At constant exchange rates, and excluding these effects, premium income in Non-Life reinsurance was down 16 percent.”
In Life & Accident reinsurance, premium income totaled 1.462 billion ($1.875 billion), down 4 percent compared to 2002 at current exchange rates, but up 4 percent at constant exchange rates.
SCOR said it continued “to rebalance the geographic mix of its activities. North America’s share of business fell from 43 percent in 2002 to 27 percent. Europe’s share rose from 42 percent in 2002 to 52 percent, and that of Asia-Pacific from 7 percent in 2002 to 9 percent. The share of business written in the rest of the world grew from 8 percent in 2002 to 12 percent.” It also noted that it had focused increasingly on short-tail business in 2003 over long-tail business. “Short-tail business represented 52 percent of Non-Life reinsurance writings (property, large corporate accounts, and credit & surety) in 2003 compared with 46 percent in 2002,” said the bulletin.
Denis Kessler, Group Chairman and Chief Executive Officer, stated: “In 2003, the SCOR Group reduced the volatility of its commitments, by bolstering its reserves, commuting 60 percent of the CRP portfolio and terminating its exposure to credit derivatives risk. Thanks to its EUR 751 million ($963.5 million at current rates) capital increase, SCOR has the means to pursue its underwriting strategy based on achieving a sustainable return to profitability. This policy of risk selection and business reorientation has entailed not underwriting certain contracts and canceling some treaties in order to boost underwriting profitability.”
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