SCOR Posts 38.7 Percent 1st Half Net Income Increase to $70 Million

August 26, 2004

France’s SCOR Group didn’t do quite as well as Swiss Re, but it’s come a long way from the dark days of 2001. The reinsurer’s “Back on Track” restructuring plan and the recently approved “Moving Forward ” Plan seem to have turned the company around.

SCOR reported first half consolidated net income of 58.1 million euros ($70 million) a 38.7 percent increase compared to the same period in 2003. Gross premiums written declined by 36.8 percent to 1.308 billion euros ($1.58 billion), for the period, as SCOR’s restructuring initiatives took effect.

Other highlights in the financial report presented to the Group’s Board of Directors yesterday included:
— Operating income of 70.6 million euros [$85.42 million] up 11.4 percent compared to first half 2003.
— Combined ratio for the Non-Life business of 98.9 percent, compared to 106.4 percent for the first half 2003.
— Overhead expense reduction of 9.3 percent for the first half 2004 compared to the first half 2003 (by 14.8 percent excluding rent on the headquarters building).
— Group shareholders’ equity of 1.410 billion [$1.71 billion] as of June 30, 2004 an increase of 12.6 percent compared to June 30, 2003.
— Approval by the Board of Directors of the “Moving Forward” plan
— Approval by the Board of Directors of Share Attribution Plans for all Group employees and officers

SCOR’s announcement explained that the sharp decrease in earned premium “is the normal consequence of the contraction in Group underwritings, particularly following the stop to certain underwritings in the United States and in Bermuda. Given the current drop in underwritings, payment of claims corresponding to past underwritings is made by utilizing reserves and realizing corresponding investments. The completion of commutations also contributes to the negative cash flow. The Life reinsurance business, which has seen a smaller drop in its underwritings, has maintained its positive operational cash flow.”

At the end of the Board meeting, Chairman and CEO Denis Kessler commented: “The first half results show that the Group is pursuing its turnaround. The technical results are better, which reflects the quality of recent underwriting and the prudence of the reserving policy carried out over the prior periods. Premium income, albeit in contraction, is in line with the forecasts at the beginning of the year. It clearly reflects the Group’s policy to right-size its business, to refocus on its core business and to reposition onto its targeted markets. Overheads are being reduced.

“The net combined ratio of the Non Life reinsurance business is improving. The contribution of the Life reinsurance business to results is significant. The success of the OCEANE issue is encouraging. The three-year ‘Moving Forward’ plan, approved by the Board, illustrates the SCOR Group’s will to do everything it can to provide to its clients the level of solvency which they expect and to its shareholders the level of profitability they want.”

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