French reinsurer SCOR Group returned to profitability in 2004 posting net income of 68.7 million euros ($89.4 million) on gross written premiums of 2.528 billion euros ($3.29 billion). The group posted a 314 million euro ($408.5 million) loss in 2003.
SCOR presented its 2004 results at a Board meeting held yesterday, March 23, chaired by Chairman and CEO Denis Kessler. Following the meeting, he stated: “SCOR was back in profit in 2004. This return to profitability was achieved despite a year marked by the exceptionally high number of natural events and claims in North America and Asia. These satisfactory results include additional reserves following the unfavorable legal decision that we are disputing on the World Trade Center claim.”
Other earnings highlights for the Group included the following:
— Operating income: 106 million euros ($138 million), compared to a 252 million euro ($328 million) loss in 2003.
— Adequate Group reserves confirmed by internal and external actuarial review.
— Group Net Asset Value 1.424 billion euros ($1.853 billion) at the end of 2004, a 102 percent increase compared to the end of 2003.
— Overall investment income of 305 million euros ($396.8 million), compared to 592 million euros ($770 million) in 2003.
Highlights in the non-life sector were given as follows:
— Gross written premiums: 1.321 billion euros ($1.719 billion).
— Operating income: 88 million euros ($114.5 million), compared to a 211 million euro ($274.5 million) loss in 2003.
— Combined ratio for Non-Life business: 100.1 percent, compared to 121.3 percent in 2003.
— Exceptional climatic events in 2004 amounted to 76 million euros ($99 million).
— Additional reserves of 20 million euros ($26 million) established net of retrocession on the WTC, following the verdict rendered on 6 December 2004. (Also announced in a separate bulletin).
“We are pleased that the Group’s results are based on a significant gross and net technical surplus in Non-Life reinsurance and on a very positive operating income in Life & Accident reinsurance,” Kessler continued. “This regained technical profitability demonstrates the quality of the Group’s underwriting over the past financial years, and translates into a satisfactory level of reserves on previous years.
“The Group’s results have been achieved along with a significant contraction in investment income, primarily resulting from the policy of currency hedging now in place and the absence of significant capital gains. SCOR has restored its credibility with its clients. SCOR has restored its solvency thanks to the support of its shareholders. SCOR has restored its profitability thanks to the quality of its underwriting. We are resolutely continuing to implement the Moving Forward Plan.”
While the results were certainly an improvement over 2003, they don’t appear to be enough to affect the Group’s credit ratings. Standard & Poor’s Ratings Services said that its ratings and outlook on SCOR and its guaranteed subsidiaries – currently “BBB+” / Positive – “are unaffected by today’s earnings announcement for the financial year ended Dec. 31, 2004. Although these results are satisfactory, they are in line with our expectations” (See following article).
SCOR has become leaner and meaner, but at a price. Gross written premiums declined by 32 percent from 3.691 billion euros ($4.8 billion) in 2003 to 2.528 billion euros ($3.29 billion) in 2004, while net earned premiums went from 3.697 billion euros ($4.81 billion) to 2.511 billion euros ($3.267 billion).
Topics Profit Loss
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