SCOR loss widens on reserves, stock market woes

Prior-year reserving and the stock market downturn have combined to drag SCOR Group into the red even deeper than predicted for 2002. The French insurer is posting a loss of EUR 455 million (Cdn$730 million), higher than the EUR 400 million (Cdn$640 million) forecast late in 2002, and worse than the loss of EUR 278 million (Cdn$445 million) suffered in 2001.
Among the reasons given for the larger than expected loss is a EUR 18 million (Cdn$29 million) write-down of goodwill on Bermuda subsidiary Commercial Risk Partners, plus EUR 51 million (Cdn$82 million) added to that subsidiary’s reserves. Early this year the company decided to dispose of this subsidiary.
On a bright note, overall premium income was up 2.6% to EUR 5.02 billion (Cdn$8.05 billion), and p&c reinsurance writings were up 7% over 2001 to EUR 2.07 billion (Cdn$3.3 billion). The p&c segment saw an operating loss of EUR 271 million (Cdn$435 million) versus EUR 440 million (Cdn$705 million) in 2001. The combined ratio for this segment was 117.7%, significantly lower than the 131.7% posted in 2001. The company is focusing its p&c writings on short to mid-term classes, which now represent almost half of its book of business.
Overall, the group’s combined ratio for 2002 was down to 118.3% versus 123.9% the year prior. However, Investment income was hard hit, dropping 28% to EUR 326 million (Cdn$523 million) last year from EUR 450 million (Cdn$722 million) in 2001. However, the company did increase its long-term capital to EUR 2.2 billion (Cdn$3.5 billion) at the end of 2002 from EUR 2.1 billion (Cdn$3.4 billion) at the end of 2001.
The group says 2003 renewals were “satisfactory”, with benefits from rate increases at the same time the group is restricting underwriting. “It [SCOR] is re-balancing its portfolio toward Europe, short-tail risks, and life and accident reinsurance,” states a company press release.
SCOR Group ought to be in a position to start profiting in 2003 both from improving prices in the reinsurance market and from the results of recovery measures already implemented, thanks to a combination of the Group’s recapitalization, the adoption of a rigorous underwriting plan implemented from the start of the renewals, a very conservative investment policy, a radical reorganization from top to bottom, which has left the Group free to refocus on its profitable businesses,” says chairman and CEO Denis Kessler.
Amongst the changes this year is an attempt to add a more global mix to board members, with Canada’s Yvon Lamontagne, former chairman of Boreal Assurance, joining its ranks.