SCO
Copyright 2004 Business Wire, Inc.
Business Wire
April 1, 2004 Thursday 8:12 AM GMT
Business Editors
2564 words
SCOR 2003 Results:
PARIS, April 1, 2004
SCOR (SCO.N)(SCOR.PA)(SICOVAM:13030)-- 4th Quarter 2003 Net Income: EUR 35 million After Allocation to Equalization Reserves of EUR 10 million -- 2003 Group Net Loss: EUR -314 million After Allocation to Equalization Reserves in the 4th Quarter 2003 -- 2003 Premium Income: EUR 3,691 million 4th Quarter 2003 -- 4th quarter Group net income amounted to EUR 45 million before allocation to equalization reserves. This reflected continuing cleanup of the Group's portfolio and its withdrawal from non-core businesses. -- The SCOR Group decided, for prudential reasons, to allocate to its equalization reserves EUR 10 million in the 4th quarter of 2003. Fiscal Year 2003 -- The Group registered an annual net loss of EUR 314 million after allocation to its equalization reserves, resulting from additions to reserves for years prior to 2001 and the complete write-down of SCOR US tax credits for prudential reasons (EUR -192 million). -- Premium income totaled EUR 3,691 million, down 26%. At constant exchange rates and on a like-for-like basis, the decline was 7%. -- SCOR's profitability for the 2002-2003 underwriting years has been confirmed, with a net combined ratio of 96% in Non-Life reinsurance (property, large corporate accounts). -- Operating results for Life reinsurance rose to EUR 50 million, a strong increase compared to 2002 (+ 92%). The margin on net premiums was 3.4% for 2003, above the target set in the Back on Track plan. -- The adequate level of Group reserves was confirmed during the review conducted by both internal and external actuaries for the closing of the accounts. -- Group operating costs were reduced by 13% in 2003. -- SCOR Group continues to implement its recovery plan. The Board of Directors of SCOR met on March 31, 2004 under theChairmanship of Denis Kessler and closed the financial statements for2003. 1. 2003 Result -- 4th quarter Group net income totaled EUR 35 million after allocation to equalization reserves of EUR 10 million. This reflects the ongoing cleanup of the Group portfolio and its withdrawal from non-core businesses. The Group actively pursued its withdrawal from non-core businessesin the 4th quarter of 2003: -- the second commutation contract on the portfolio of CRP, SCOR's Bermuda-based subsidiary, signed on November 27, 2003, reduced CRP's exposure by 40%, at a cost of EUR 15 million. At December 31, 2003, 60% of the CRP portfolio had been commuted. Consequently, CRP's exposure at December 31, 2003 represented just 40% of the corresponding figure at December 31, 2002. -- On December 1, 2003, SCOR signed an agreement with Goldman Sachs International under which the Group withdrew fully from its credit derivatives exposures. The net accounting charge for this transaction, as well as a commutation transaction that took place at the beginning of the 4th quarter of 2003, taking into account reserves already established, amounts to EUR 45 million. -- In December 2003, SCOR completed its real estate divestiture program with the sale of its headquarters building for EUR 150 million, and the disposal of two residential buildings in Paris and an office building in Madrid. These real estate transactions generated a total pre-tax capital gain of EUR 80 million, of which EUR 70 million can be considered exceptional. -- Group net loss in 2003 amounted to EUR 314 million, after allocation to equalization reserves of EUR 10 million. This loss was due to additions to reserves for years prior to 2001, and to the complete write-down of SCOR US tax credits for prudential reasons (EUR -192 million). The loss for the first three quarters of 2003 amounted to EUR 349million. At September 30, 2003, in keeping with its commitment to bookbest estimates reserves each year, and after a detailed actuarialreview, SCOR decided to add EUR 297 million to its reserves for the1997-2001 underwriting years in the United States. This underwritingconcerned lines of business which have since been discontinued. Giventhe accumulated losses in the past few years, tax deferrals booked bySCOR US generated by these losses have been written down in full as atSeptember 30, 2003, representing a total charge of EUR 192 million inthe 2003 accounts. The Group's net loss for the year 2003 is EUR 314 million, aftertaking into account the 4th quarter 2003 allocation to equalizationreserves of EUR 10 million. -- The adequacy of the reserves has been confirmed The adequate level of Group reserves was confirmed during thereview conducted by both internal and external actuaries for theclosing of the accounts. -- The underwriting for the years 2002 and 2003 is profitable SCOR's profitability of its 2002-2003 underwriting years has beenconfirmed with a net combined ratio of 96% in Non-Life (property andlarge corporate accounts). Irish Reinsurance Partners (IRP), SCOR's Irish subsidiary formedat the end of 2001 to underwrite a 25% quota share of all new GroupNon-Life treaty and facultative business, reported a profit of EUR56.1 million after tax. This represents a 16.5% return on IRP'sequity. This subsidiary's performance demonstrates the profitablenature of SCOR's new underwriting policy. 2. 2003 Operational Review Gross premiums written by the SCOR Group in 2003 totaled EUR 3,691million, down 26% relative to 2002. The contraction is 7% at constant exchange rates and on alike-for-like basis (excluding Commercial Risk Partners, SCOR'sBermuda-based subsidiary, which ceased writing business in January2003, and excluding the impact of the withdrawal from certain lines ofbusiness in the United States). - Non-Life Reinsurance Premium Income (property, large corporateaccounts, and credit & surety) was down 27% (16% at constant exchangerates and excluding the impact of the withdrawal from certain lines ofbusiness in the United States) at EUR 2,229 million. The share ofshort and medium-tail business increased to 52% of total volumes in2003, versus 46% in 2002. Non-Life reinsurance registered an operatingloss of EUR -210 million, compared with EUR -386 million in 2002. - Life & Accident Reinsurance Premium Income totaled EUR 1,462million, down 4% relative to 2002 at current exchange rates, but up 4%at constant exchange rates. The net contribution to Group results wasEUR 50 million in 2003, compared to EUR 26 million in 2002.Nevertheless, the last quarter saw a negative result (EUR -6 million)due to the impact of exchange rate developments and an unusual claimspattern. The embedded value of SCOR VIE for 2003 will be publishedduring the second quarter of 2004. - Alternative Risk Transfer (CRP) registered no premium income in2003 having ceased writing business in January 2003. CRP's premiumincome amounted to EUR 426 million in 2002. CRP recorded an operatingloss of EUR -92 million in 2003, versus EUR -172 million in 2002. 3. Group Key Figures Consolidated Key Figures----------------------------------------------------------------------EUR million 12/31/2002 12/31/2003 Change----------------------------------------------------------------------Gross written premiums 5,016 3,691 -26%-------------------------------- ------------ ------------ --------Group net income -455 -314 n.m.-------------------------------- ------------ ------------ --------Net technical reserves 10,381 9,766(a) -6%-------------------------------- ------------ ------------ --------Investments (marked to market) 9,717 8,778 -10%-------------------------------- ------------ ------------ --------Group shareholders' equity 1,070 1,340(b) +25%---------------------------------------------------------------------- (a) This figure principally reflects CRP commutations (EUR 700 million) (b) Group shareholders' equity after the January 7, 2004 capital increase Given the reserve strengthening, the net Non-Life (property andlarge corporate accounts) combined ratio in 2003 was 119.2%, versus116.3% in 2002. It was 94.6% for the 4th quarter of 2003. The margin on Life & Accident reinsurance net premiums was 3.4% in2003 versus 2.5% in 2002. This is above the objective of 3% announcedin the Back on Track plan. 4. Financial Management in 2003 Interest rates continued to decline in 2003. The SCOR Group'stotal investment income rose 82% in 2003, operating cash flowexcluding the CRP commutation increased by 229%, debt was down 6%,while long-term capital grew by 5% after the capital increase. Total investment revenues increased from EUR 326 million in 2002to EUR 592 million in 2003, up 82%. This figure breaks down asfollows: -- Income from ordinary investing activities amounted to EUR 319 million, down 9% from EUR 350 million in 2002. -- Net capital gains on sales of securities amounting to EUR 95 million, compared with net losses of EUR 85 million on sales in 2002. -- Currency gains amounting to EUR 98 million in 2003, compared with EUR 61 million in 2002. -- Realized net capital gains on real estate sales of EUR 80 million. Aggregate unrealized capital gains totaled EUR 125 million atDecember 31, 2003, compared with EUR 303 million as at end 2002. AtDecember 31, 2003, the listed shares and equity holdings posted acapital gain of EUR 11 million, the bond portfolio a capital gain ofEUR 70 million, and the real estate portfolio a capital gain of EUR 44million. The investment portfolio, marked to market at December 31, 2003,totaled EUR 8,778 million versus EUR 9,717 million at end December2002, representing a decline of 10%, but up 7% at constant exchangerates and excluding the commutations of CRP. The main reason for thisdecline was the sizeable commutations which reduced CRP's technicalreserves and their related assets for an amount of approximately EUR700 million. Investments at December 31, 2003 are split between bonds (64%),cash and equivalents (21%), cash deposits (8%), equities (4%), andreal estate (3%). Operating cash flow, excluding CRP, increased from EUR 212 millionin 2002 to EUR 698 million in 2003. This amount was negativelyimpacted for an amount of EUR 712 million by the commutation of 60% ofthe portfolio of CRP during the year 2003. Group cash and equivalents totaled EUR 1,824 million at the end of2003, and EUR 2,545 million on January 7, 2004 after the capitalincrease, compared with EUR 1,788 at December 31, 2002. Group debt was down 6% (4% at constant exchange rates), from EUR892 million at December 31, 2002 to EUR 836 million at end 2003. Thisdecline was due to the partial repayment of commercial paper(negotiable medium-term notes) outstanding and to the repayment of theloans used to finance the buildings sold. Group long-term capital (adjusted shareholders' equity,quasi-equity and long-term borrowings) totaled EUR 2,319 million atJanuary 7, 2004 after the capital increase (EUR 1,598 million atDecember 31, 2003), versus EUR 2,210 million at end 2002. Management of currency positions led SCOR to be fully matched indollars as at March 31, 2004. Through the active management of itscurrency cover, the excess gap of dollar-denominated liabilitiesrelative to euro-denominated assets was closed to an insignificantamount during the month of February 2004. The management of this gapled to the booking, on account of the dollar's fall relative to theeuro, of a currency gain of EUR 98 million in the 2003 accounts. 5. Outlook The renewals took place in the context of SCOR's capital increaseand developments in the Group's rating. They confirmed that most ofthe ceding companies and customers with which SCOR has forgedlong-term relationships remain loyal to it. SCOR is pursuing its cost-cutting program: operating costs fell by13% in 2003 to EUR 197 million. The Group is pursuing this programwhich aims for a further 16% reduction in costs for 2004. Commutation of the CRP portfolio continues: 60% of CRP's portfolioin place at December 31, 2002 had been commuted at December 31, 2003.The remaining portfolio commitments at December 31, 2003 totaled USD534 million. A strong solvency margin: the combination of the EUR 751 millioncapital increase with lower premium levels in 2003 produces a solvencymargin on net premiums for SCOR of 68%. This has been bolstered by thevoluntary reduction in its risk profile via selective underwriting,commutation of 60% of the CRP portfolio, total withdrawal from thecredit risk on its credit derivatives, and the Group's improvedretrocession policy. At the end of the Board meeting, Denis Kessler, Group Chairman andChief Executive Officer, stated: "The SCOR Group is implementing its recovery plan with vigor and determination. The efforts made since November 2002 are producing results. New underwriting in Non-Life reinsurance is profitable, and the Group's business has been profitable worldwide since 2002. Life and accident reinsurance, underwritten henceforth in its SCOR VIE subsidiary, is a business which produces high profits. With its solvency restored, adequate reserve levels, and a conservative asset management policy, the SCOR Group offers its customers a much enhanced level of security. I want to thank our shareholders for their decisive support in 2003. We are doing everything in our power to ensure that this recapitalization returns the Group to lasting profitability as soon as possible." 2004 Timetable: -- General Meeting of Shareholders May 18, 2004 -- 2004 1st Quarter Results May 18, 2004 -- 2004 Half-Year Results August 26, 2004 -- 2004 3rd Quarter Results November 4, 2004 Certain statements contained in this press release relating toSCOR's plans, strategies and beliefs are forward-looking in nature andare based on management's assumptions and beliefs in light of theinformation currently available. The forward-looking statementsinvolve risks and uncertainties that could cause actual results,performance or events to differ materially from those in suchstatements. Additional information regarding risks and uncertaintiesis set forth in the current annual report of the company. |
