PARIS -- 02/13/08 --
Press Release
13 February 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 of Investor Relations
SCOR records excellent 2008 January
Non-Life renewals, demonstrating the successful integration of
Converium
SCOR reached its objective of successfully consolidating two
strong independent reinsurance groups into one leading franchise
at this year's January renewals. The January 2008 treaty renewals
for SCOR Global P&C (SCOR's Non-Life division), at which 78% of
the total Non-Life treaty premiums were up for renewal, confirmed
SCOR's strong market position around the globe, enabling the Group
to renew business with minimum attrition and to fulfil its targets
as set out in its strategic three-year plan "Dynamic Lift V2" in
terms of volume and expected profitability.
The highlights of the renewals are as follows:
- Highly efficient integration of SCOR and Converium portfolios
- Enhancement of market positions and extended leadership on
reinsurance programmes
- EUR 1.742 billion of Non-Life treaty business renewed against
EUR 1.755 billion up for renewal at constant exchange rates
- Terms and conditions of renewed and new business in line with
the net technical ratio objective for 2008 as set forth in
"Dynamic Lift V2"
- Estimated 2008 Gross Premium Income of EUR 3.1 billion in Non-
Life and EUR 5.9 billion for the Group, at current exchange rates
- Strong pro-forma 2007 business volume of an estimated EUR 5.85
billion for the Group
In a post-merger environment, the main underlying reasons for such
outstanding renewals were:
- Two very strong complementary reinsurers combining forces
- A highly efficient and swift integration process with regard to
teams and systems
- Access to new business with existing clients and enlargement of
client base
- Strict underwriting discipline and tight controls applied
throughout the renewals; 12% of the Non-Life treaty business up
for renewal cancelled and successfully replaced by new business
Denis Kessler, Chairman and Chief Executive Officer of SCOR, said:
"In today's challenging market environment, it is an outstanding
achievement that SCOR has managed to integrate Converium and
combine the portfolios for the January renewals with such limited
attrition, whilst having fully followed its underwriting policy in
terms of selectivity and profitability. The success of this year's
renewals is a clear demonstration that the SCOR client franchise
is re-affirmed and has been strengthened by the integration of
Converium. With our improved diversification stemming from Treaty,
Specialty and Joint-Venture and Partnership business, SCOR is well
positioned to achieve the objectives set out in the "Dynamic Lift
V2" plan."
Client franchise affirmed in P&C Treaties, Specialty Treaties and
Joint-venture business
In a competitive market environment, where reinsurance volumes and
prices sustained a general contained decline due to increased
cedant retention levels and a move towards non-proportional cover,
SCOR experienced a very limited decrease of 1% in its Non-Life
treaty reinsurance volume. The total volume of treaty premiums
renewed at January 2008 stands at around EUR 1,742 million (P&C
Treaties and Specialty Treaties) plus around EUR 450 million from
Joint-Ventures and Partnerships.
P&C Treaties: 79% of P&C treaty business was up for renewal. The
total volume of premiums renewed at 1 January 2008 stands at
around EUR 1,313 million, compared to
EUR 1,325 million of premiums up for renewal. 12% or EUR 165
million of P&C treaty business up for renewal was cancelled and
successfully replaced by new business, both with existing clients
to the value of around EUR 96 million and with new clients to the
value of around EUR 49 million. Attrition was in line with
"Dynamic Lift V2": at around EUR 60 million on 79% of P&C
treaties up for renewal in January 2008 versus EUR 80 million
projected for the full year.
Specialty Treaties: 76% of the Specialty treaty business was up
for renewal. This segment showed a solid performance. The volume
of business renewed is globally stable, reaching EUR 429 million
compared to EUR 430 million at 1/1/2007.
Joint Ventures & Partnerships: SCOR successfully secured business
continuity with the three Converium joint-ventures and
partnerships, i.e. Lloyd's, GAUM (Global Aerospace Underwriting
Managers Limited) and MDU (Medical Defence Union). For 2008, SCOR
estimates that gross written premiums from this segment will
amount to EUR 454 million.
Stable development in all major P&C treaty markets
SCOR records a stable premium volume in Europe, the Middle East
and Africa, where the clients' response to SCOR's willingness to
aggregate the portfolios was particularly positive.
Stability in terms of volume also defines the picture in the
Americas, where SCOR's growth in small and medium-sized US
regional company business outweighed the premium decline due to
the move from proportional to non-proportional business in this
market. This growth is particularly meaningful as it occurs in the
P&C treaty segment of choice for SCOR in the US mainland market.
It was, however, offset by slightly reduced volumes in Canada,
because of changes in reinsurance purchase practices by major
players and due to mergers and acquisitions. In the Caribbean,
Mexico and Latin America, premium income decreased by around 7%,
in line with SCOR's reduction of its catastrophe capacity
allocation to this region.
In Asia, only around 30% of Global P&C treaties were up for
renewal on 1 January 2008, as Japan, Korea and India will renew
their programmes on 1 April 2008.
SCOR expects some favourable business developments in the South
African and Australian markets, having recently opened a
representative office in Johannesburg and re-opened its branch
office in Sydney.
Selective underwriting policy in P&C Treaties by line of business
Business volume in the largest P&C treaty block, i.e. the
proportional property business that makes up 37% of SCOR's total
P&C treaty volume, remained stable. SCOR recorded stable premium
income due to a strong market presence in Europe and the Middle
East, despite a continued move from proportional to non-
proportional cover in some markets such as Eastern Europe, Austria
and Canada. In this segment reinsurance commissions increased by
around 1% to 2% on average.
The catastrophe-related property book, which constitutes 11% of
SCOR's P&C treaty volume, saw rate increases on treaties affected
by last year's winter storm Kyrill, which ravaged parts of
Northern Europe and Germany. Generally, however, a downward trend
was observed in non-proportional property catastrophe rates: in
the range of -5% in Europe and -10% in the Americas and Asia
respectively. The overall market remained disciplined, which meant
that the available capacity was commensurate with risk and price.
SCOR's strong motor book, constituting 32% of total P&C treaty
volume, saw premium increases with regard to proportional treaties
in a limited number of countries such as the UK and Italy, where
the primary rates are increasing or holding firm. Reinsurance
commissions were generally stable. As far as motor non-
proportional business is concerned, premium income is mainly
driven by the French market, where rates were up by an average of
10%.
Casualty volume decreased due to a general move from proportional
to non-proportional. SCOR also decided to reduce its exposure in
markets where heavy casualty is predominant, mostly in industrial
risks. In the casualty segments where SCOR is involved, it
experienced rate stability in Europe and a reduction of 6% on
average in North America.
Active and prudent cycle management in Specialty Treaties
In a pricing environment that is traditionally more reactive and
fluctuating, SCOR exercised strong cycle management with regard to
Specialty Treaties.
Profiting from booming construction activities and from the fact
that construction insurance and reinsurance pricings have stood
firm in developing economies and emerging markets, SCOR increased
its engineering volume by 22%. Engineering represents 21% of total
Specialty treaty business.
Among the four other main Specialty treaty business lines,
Transportation & Marine (16% of total volume) and Agriculture
(18%) grew by 5% and 11% respectively, whilst Credit & Surety (23%
of total volume) and Decennial (18%) were down by 5% and 21%
respectively.
In Credit & Surety, reinsurance premiums contracted due to the
impact of the economic slowdown on direct insurance premiums and
due to increased retentions by lead primary carriers, who have
enjoyed technical profits for the past few years. Decennial
reinsurance business, in which SCOR is historically a lead
underwriter, was affected by a major shift from proportional to
non-proportional cover in Spain, along with a real estate slow
down. In Aviation and Space, Specialties rate reductions were less
severe than in previous years, leading to a decline in business of
5%.
SCOR secures Joint Ventures and Partnerships
Besides P&C and Specialty Treaties, SCOR counts on Joint-ventures
and Partnerships as a major business contributor. EUR 454 million
in premium income is expected from this segment in 2008.
The largest block of business in this segment stems from
partnerships held with Lloyd's syndicates. For 2008, business was
renewed with 9 major syndicates focusing on property and special
casualty lines. At this year's renewals, SCOR estimates an
expected income of EUR 245 million.
SCOR has reached an agreement with GAUM partners to secure
business continuity over the next three years. Participation in
the business, however, has been reduced from 27.25% to 22.5%,
leading to an anticipated premium of EUR 105 million in 2008.
SCOR secured a new ten-year agreement to provide professional
indemnity insurance to the members of the MDU in the United
Kingdom and Ireland. SCOR will now take on 75% of the exposure,
resulting in an estimated premium income of EUR 104 million for
2008.
Strong 2007 pro-forma business volume reaching EUR 5.9 billion
Year-to-date, consolidating Converium since January 2007, gross
premiums written by SCOR Group reach EUR 5,853 million on a pro-
forma basis, of which EUR 3,240 million stems from Non-Life
reinsurance and EUR 2,613 million from Life reinsurance.
2007 published turnover, which takes into account 145 days of
consolidation - the SCOR Group acquired Converium on 8 August 2007
- is EUR 4,761 million, an increase of 62% vis-à-vis 2006 (EUR
2,935).
Gross written premiums of EUR 5.9 billion expected for the whole
Group in 2008
The 2008 renewals campaign highlights the development
opportunities arising from the combination of SCOR and Converium,
as anticipated in Dynamic Lift V2. This is further testament to
the efficiency of the integration process and the strength of the
new combined franchise.
Barring any further exchange rate impacts in 2008, SCOR expects
total gross premium income for the Group to reach EUR 5.9
billion, with Global P&C contributing EUR 3.1 billion and Global
Life contributing EUR 2.8 billion in accordance with SCOR's
"Dynamic Lift V2" plan. The Non-Life net technical ratio is
expected to be in line with the objectives set out in "Dynamic
Lift V2", i.e. in the range of 91% to 92% in the absence of any
major events.
Note: All figures are provided and all comparisons drawn at
exchange rates as at December 31, 2007
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
April 10, 2007 under number D.07-0294 (as updated by the seconde
note complémentaire registered with the AMF on June 12, 2007 under
registration number 07-183, the "Document de Référence"), for a
description of certain important factors, risks and uncertainties
that may affect the business of the SCOR Group, and to SCOR's
prospectus d'admission registered with the AMF on April 10, 2007
under registration number 07-0115, as updated by the first note
complémentaire registered with the AMF on April 23, 2007 under
registration number 07-0131 and the seconde note complémentaire
registered with the AMF on June 12, 2007 under registration number
07-183, for a description of certain important risks and
uncertainties that relate to the Offer for and combination with
Converium.
This information is provided by HUGIN
