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SCOR predicts loss, announces turnaround plan

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PARIS--Flood claims, poor investment returns and losses at its Bermuda unit will push SCOR S.A. into the red by about 250 million euros ($244.1 million) for 2002, the reinsurer warned.

The expected loss follows a 278 million euro ($271.5 million) loss for 2001.

Results this year have been hurt by claims totaling 70 million euros ($68.4 million) from floods in Germany and Central Europe, 38 million euros ($37.1 million) of claims related to its credit insurance operations and a 230 million euro ($224.6 million) provision for depreciation and capital losses on its equity investments.

In addition, SCOR expects its Bermuda subsidiary, Commercial Risk Partners Ltd., to post a 100 million euro ($97.7 million) loss for 2002, due mainly to U.S. workers compensation business.

As a result of the Commercial Risk losses, SCOR plans to add an additional 225 million euros ($219.7 million) to its technical reserves. It also plans to restructure the management of the unit, "shift the orientation of its activities and drastically cut back on its underwriting activities, which be will subject to tougher checks," a SCOR statement said.

SCOR also plans a "drastic" reduction in its alternative risk transfer business and credit and surety reinsurance, and a significant reduction in its operating costs over the next two years.

SCOR will hold an extraordinary general meeting Nov. 5 where management will propose a rights issue to raise at the least the amount of its 2002 losses, the SCOR statement said.