PARIS -- 06/04/08 --
Press Release
04 June 2008
For further information, please contact:
Beat Werder +33 (0)1 46 98 71 39
Chief Communications Officer
Marco Circelli +33 (0)1 46 98 72 17
Head Investor Relations
SCOR Global Life Embedded Value rises to EUR 1.64 billion; strong business
outlook
SCOR Global Life is the 5th largest life reinsurer in the world, with
leading positions in Europe and in many Asian markets. SCOR has reached a
critical size in North America and has further strengthened its market
positions in Latin America, Asia, the Commonwealth of Independent States
(CIS) and the Middle East. SCOR Global Life generated pro-forma gross
written premiums of EUR 2.613 billion in 2007, with over 75% of its book
consisting of traditional mortality and financing business. SCOR's European
Embedded Value (EEV) figures demonstrate the long-term value-creation
capacity of SCOR Global Life as well as its ability to generate cash:
- Strong increase of SCOR Global Life's EEV in 2007 to EUR 1.64 billion,
giving an EEV per share of EUR 9, which underlines the significant value
contribution of SCOR Global Life to the Group;
- SCOR Global Life's ability to create long-term value is demonstrated by a
strong EEV increase to EUR 1.72 billion on a comparable basis (excluding
Converium, foreign exchange rate impact and capital movements);
- Value added by new business of EUR 59.7 million is up 16.4% compared to
2006, testifying to positive underlying business trends and the strong
market position of SCOR Global Life;
- Strong improvement of EEV operating profit (up 16.1% to EUR 188.3
million) and of EEV earnings (up 5% to EUR 202.7 million) with a return on
EEV of 13.4% (excluding Converium, capital movements and foreign exchange
rate impact);
- Significant increase of EUR 68 million for EEV not recognised in IFRS
equity, to EUR 263.5 million;
- SCOR Global Life's strong capacity to generate cash is demonstrated by a
reduction in deployed capital of EUR 114.4 million (capital movements);
Denis Kessler, Chairman and Chief Executive Officer of SCOR, comments:
"SCOR Global Life continues to deliver consistent and solid earnings,
whilst strongly contributing to the Group's overall diversification. We are
very satisfied with the way Life is developing and will continue to enhance
our industry-leading expertise in long-term care, critical illness and
substandard risks, providing an important way to strategically diversify
and balance the Life book portfolio. In today's reinsurance market
environment, the low volatility of the Life business, with its high-entry
barriers favouring established players, is a strong shareholder value
contributor."
Gilles Meyer, Chief Executive Officer of SCOR Global Life, comments: "The
higher Embedded Value generated in 2007 demonstrates SCOR Global Life's
ongoing commercial dynamism and long-term capacity for value creation. Our
business model responds perfectly to the specificities of a Life
reinsurance market based on long-term committed relationships with clients
and providing innovative, tailor-made solutions. SCOR Global Life is well
on track to meet its 2010 targets, with an average premium growth rate of
8.2% and a Life operating margin of 6.8%, as laid out in the 'Dynamic Lift'
strategic plan."
Strong underlying value of the Life engine
In 2007, SCOR generates substantial economic value from its Life
operations. The 2007 EEV operating profit reaches EUR 188 million, up 16.1%
from EUR 162 million in 2006. The most important component of this solid
operating profit is the value added by new business of EUR 59.7 million, an
increase of 16% on 2006. This growth is mainly due to an increase in
mortality and morbidity business in various European markets and
demonstrates the strength of the SCOR Global Life franchise. Business in-
force at the start of 2007 generated an EEV operating profit of EUR 128.6
million, also 16% up on 2006, and well above expected returns of EUR 98.5
million. Total EEV earnings, taking changes in economic assumptions and
investment variances into account, increase by 5% in 2007 to EUR 202.7
million (compared to EUR 193.1 million in 2006).
As a result of this strong underlying profitability, SCOR's EEV reaches EUR
1.638 billion, including Converium and capital movements and taking into
account a negative exchange rate impact of EUR 52.6 million. On a like-for-
like basis, excluding Converium, exchange rate effects and capital
movements, EEV shows a strong 13% increase to EUR 1.716 billion. The
reduction in deployed capital of EUR 114.4 million highlights SCOR Global
Life's capacity to generate cash for the Group. The ability of the existing
book of business to generate distributable cash flow is expected to remain
very strong. The steady and substantial profits from in-force business
enables SCOR Global Life to fund new business growth and to upstream
capital to the Group. The adjusted net asset value moves from EUR 676.3
million in 2006 to EUR 733.3 million in 2007. The present value of future
profits increases from EUR 964.8 million in 2006 to EUR 1 063.3 million in
2007.
The EEV not recognised in IFRS equity rises to EUR 263.5 million,
representing an increase of EUR 68.1 million compared to 2006. The return
on EEV ( < > = EEV earnings divided by the opening EEV) reaches 13.4%,
excluding Converium, capital movements and foreign exchange rate impact.
The EEV per share stands at EUR 9 (or 45% of a total book value per share
of EUR 20) at the end of 2007. The traditional mortality and financing
business, which makes up 76% of the total Life business, reduces the
volatility of the entire business portfolio.
Focused growth strategy in high-value lines of business
SCOR Global Life will continue to strengthen its franchise by seeking a
local presence in such markets as Russia, Israel, Brazil and a number of
Asian countries in which SCOR has recently created dedicated teams. In
Russia and Brazil, SCOR Global Life is well positioned as a result of its
longstanding Non-Life presence in these markets. In Asia, the Life arm of
SCOR can build upon its already very strong local presence thanks to its
seven Asian offices, as well as benefiting from existing successful
partnerships and joint projects. The cooperation agreement with China Life
Re and the opening of a Takaful branch in Labuan, Malaysia, should
particularly drive growth momentum. In Israel and the Middle East, where
SCOR has greatly benefited from Converium's Life book, further strong
market efforts are planned to leverage the Group's Top 5 market position.
Today, SCOR Global Life is one of the top five Life reinsurers in the
world. It has a strong presence in the traditional European markets, with
two-thirds of its premium written in Europe. It is the number one Life
reinsurer in France and Sweden and the number two in Italy, Spain and
Belgium. As a result of significant investments in a wide range of high
value-added services such as product development and actuarial support,
tailor-made solutions and research centres, and with the help of ReMark, a
global player in the field of direct Life and individual accident insurance
sales to financial institutions, SCOR Global Life has further gained a
strong foothold in the United Kingdom and the Asian markets. In the US, the
acquisition of Revios has enabled SCOR Global Life to achieve the necessary
critical size and presence on which it can continue to build. Today SCOR
writes 25% of its Life business in the US. Its current network of 25
subsidiaries, branches and local offices around the world ensure that SCOR
Global Life remains in close proximity to all of its clients. Globally,
SCOR has a market share of approximately 8%. In Europe, 14% of all ceded
life premiums go to SCOR.
Details of the European Embedded Value approach used by SCOR Global Life,
including analysis of Embedded Value from 2006 to 2007, as well as details
of the methodology used, analysis of sensitivities to certain key
parameters and reconciliation of the Embedded Value to the IFRS equity of
SCOR, can be found in the document entitled "SCOR Global Life European
Embedded Value 2007 - Supplementary information" and the "SCOR Global Life"
slide show presentation, both of which are available at www.scor.com.
The Embedded Value has been calculated in accordance with the European
Embedded Value Principles published in May 2004 by the CFO Forum.
B&W Deloitte, consulting actuaries, have been engaged to review the
methodology and assumptions used and the calculations made by SCOR to
determine the European Embedded Values. The scope of their review and
opinion is presented in "2007 European Embedded Value - Supplementary
Information". This EEV disclosure should not be viewed as a substitute for
SCOR's primary financial statements.
Next disclosure dates:
2 July 2008: SCOR Investors' Day
27 August 2008: SCOR H1 2008 results presentation
Forward looking statements
SCOR does not communicate "profit forecasts" in the sense of Article 2 of
(EC) Regulation n degrees809/2004 of the European Commission. Thus, any
forward looking statements, contained in this communication, should not be
held as corresponding to such profit forecasts. Information in this
communication may include "forward-looking statements", including but not
limited to statements that are predictions of or indicate future events,
trends, plans or objectives, based on certain assumptions and include any
statement which does not directly relate to a historical fact or current
fact. Forward-looking statements are typically identified by words or
phrases such as, without limitation, "anticipate", "assume", "believe",
"continue", "estimate", "expect", "foresee", "intend", "may increase" and
"may fluctuate" and similar expressions or by future or conditional verbs
such as, without limitations, "will", "should", "would" and "could." Undue
reliance should not be placed on such statements, because, by their nature,
they are subject to known and unknown risks, uncertainties and other
factors, which may cause actual results, on the one hand, to differ from
any results expressed or implied by the present communication, on the other
hand.
Please refer to SCOR's document de référence filed with the AMF on March
28, 2008 under number D.08-0154 (the "Document de Référence"), for a
description of certain important factors, risks and uncertainties that may
affect the business of the SCOR Group.
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