PARIS, March 7, 2002 (PRIMEZONE) -- SCOR (NYSE:SCO) today announced earnings for 2001. Jacques Blondeau, Chairman and Chief Executive Officer, said: "The year 2001 was a bleak one for the entire industry. SCOR, however, significantly boosted its standing as a key international player in the reinsurance market.
"SCOR rode the cyclical upswing to register significant market share gains while maintaining a well-balanced portfolio. Our Property & Casualty (P&C) business successfully integrated Sorema. We registered substantial developments in Life reinsurance in the United States. In Specialty reinsurance, meanwhile, we achieved especially robust growth in Large Corporate Accounts.
"With the return to highly favorable market conditions, the Group can pursue its growth from a position of strength thanks to the capital increase accompanying the Sorema acquisition, increased underwriting capacity following the formation of Irish Reinsurance Partners, and a lower catastrophe risk profile with the Atlas Re II Cat Bond placement."
Recent acquisitions bolster strong organic growth
Group premium income for 2001 totaled EUR 4,890 million, up 41% relative to 2000. On a comparable basis (i.e. after restatement for first-time consolidation of SCOR Life Re in July 2000 and Sorema on July 1, 2001), premium income was up 34%.
Property & Casualty premium income advanced 54% relative to 2000 (43% on a comparable basis) to EUR 1,931 million.
Life, A&H business continued to grow, with a rise of 41% (37% on an adjusted basis) to EUR 1,503 million.
In Specialty reinsurance, premium income totaled EUR 1,456 million, a 21% increase on a comparable basis.
Pro-active management of our portfolio
SCOR Group manages its portfolio of business very pro-actively, expanding in sectors with strong upside potential and, when needed, pulling out of insufficiently profitable markets. This policy applies to all three of its business areas, with the following results in 2001:
P&C
After deliberately restraining growth in this sector between 1998 and 2000 due to adverse market conditions, SCOR stepped up its underwriting activities in 2001 to take advantage of the cyclical recovery (i.e. improving rates and underwriting conditions) and to boost its market shares significantly. Meanwhile, the Group decided to exit totally from Program Business in the United States, a source of heavy losses in the past two years.
Life, A&H
After averaging 22% a year since 1996, growth in this sector actually accelerated in 2001. In addition to the impact of our strategic acquisition in the United States, SCOR gained further market shares especially in Individual and Group Life. The decision to withdraw from writing Health business in the United States has been extended to other countries.
Specialties
Growth in this sector is being driven mainly by Large Corporate Accounts business, which surged 51% in 2001. Alternative Risk Transfer (ART) business, which chiefly concerns the American market, grew by 19%. Credit & Surety business was down 20% overall on an adjusted basis. The Group confirmed its selective withdrawal from the Surety market in the US, but continues to play an active role in Credit reinsurance in Europe.
Consolidated key figures
In EUR millions 12/31/2000* 12/31/2001 Change Gross written premiums 3,458 4,890 + 41 % Group net income 59 -278 N.S Net technical reserves 8,303 10,438 + 26 % Investments 7,871 9,301 + 18 % Group shareholder's equity 1,288 1,318 + 2 % In EUR Diluted net earnings per share 1.7 - 7.1 N.S Diluted nete asset value (NAV) 50.7 38.3 - 24 % Intrisic value 83 76 - 8 %
* Adjusted for changes in accounting regulations
Results which reflect exceptionally difficult conditions for all reinsurers in 2001
Deteriorating underwriting conditions in recent years, combined with rising loss experience in P&C reinsurance and Large Corporate Accounts, have entailed a worsening of the combined ratio. This was still very high at the end of 2001: 124% compared with 121% at the end of 2000. (Excluding the impact of the WTC and discontinued business, the combined ratio would have been down to 116%.)
Given the prevailing economic recession and depressed stock markets, SCOR booked a EUR 69 million allowance for impairment of its European and US investment portfolios at the end of 2001. Realized capital gains, meanwhile, totaled EUR 78 million, compared with EUR 413 million in 2000.
Technical reserves rose 26% overall to EUR 10,438 million.
The Group's investments increased by 18% to EUR 9,295 million (marked to market), with a heavy weighting in cash and equivalents.
Income from ongoing investing activities grew sharply to EUR 433 million, up from EUR 314 million in 2000. The main factor behind this growth was the full-year consolidation of SCOR Life Re, together with cash flow provided by technical operations.
Due to the conjunction of the 2001 adverse factors, the Group registered a technical operating result of EUR - 622 million, compared with EUR - 83 million for 2000, adjusted for changes in accounting regulations. Overall, the Group reported a net loss of EUR 278 million, compared with a profit of EUR 59 million in respect of 2000, adjusted for changes in accounting regulations. Excluding discontinued business the loss would have been reduced to EUR - 208 million.
Consistent with the Group's policy of maintaining a regular dividend stream, and despite negative results for 2001, the Board of Directors will propose that the Shareowners' Meeting called for in April, 2002 declare a dividend of EUR 0.30.
Outlook: very robust earnings recovery in sight
The insurance and reinsurance market has changed radically in recent months. Reinsurance capacity has shrunk, as has the number of players in the market, while demand is growing fast, structurally. Technical underwriting and rating conditions have improved distinctly as a direct consequence of these changes, as explained by SCOR on February 15 of this year.
With its targeted sales strategy, proven management systems, acknowledged technical expertise, and above all experienced, motivated teams, SCOR Group is justly confident in a lasting upturn in the reinsurance cycle and in its capacity to generate sustained growth over the coming years, combined with strong earnings starting in 2002.
Certain statements contained in this press release are forward-looking statements that are based on risks and uncertainties that could cause actual results, performance or events to differ materially from those in such statements. Additional information regarding risks and uncertainties is set forth in the current annual report of the company.