SCOR SE : delivers a strong performance for the first half 2014 with net income of EUR 256 million, up 35% from H1 2013

Press Release                                                      
31 July 2014                                          

For more information, please contact:
Géraldine Fontaine                                         +33 (0) 1 58 44 75 58
Communications

Antonio Moretti                                               +33 (0) 1 58 44 77 15
Investor Relations Director

SCOR delivers a strong performance for the first half 2014
with net income of EUR 256 million, up 35% from H1 2013

In the first half 2014, SCOR delivers a solid performance that continues to combine growth, profitability and solvency:

• Gross written premiums reach EUR 5,427 million, up 12.5% at constant exchange rates (+8.9% at current exchange rates) compared to the first half 2013, driven by healthy SCOR Global P&C renewals and major new contracts signed by SCOR Global Life as well as last year's Generali US Life Re acquisition:
  • SCOR Global P&C gross written premiums increase by 4.7% at constant exchange rates to EUR 2,400 million;
  • SCOR Global Life gross written premiums reach EUR 3,027 million, up 19.5% at constant exchange rates (or 2.6% on a pro-forma basis).

• SCOR Global P&C delivers excellent technical profitability, with a net combined ratio of 90.9% in the first half 2014, compared to 94.3% in H1 2013. This solid ratio is driven by a further improvement in the attritional loss ratio and a low level of natural catastrophes during the first half.

• SCOR Global Life's technical margin reaches 7.2% in the first half 2014, compared to 7.4%^{[1]:
  #_ftn1} on a pro-forma basis in H1 2013, confirming the on-going evolution in the underlying mix.

• SCOR Global Investments achieves a 2.9% return on invested assets for the first half 2014, thanks to its prudent asset management strategy, and continues the rebalancing of its investment portfolio in line with "Optimal Dynamics".

• SCOR records positive shareholders' equity development, with book value per share increasing to EUR 27.39 at 30 June 2014 (versus EUR 26.64 at 31 December 2013), after distribution of a dividend of EUR 1.3 per share (+8% vs 2012) on 15 May 2014, for a total amount of EUR 243 million.

• Group net income^{[2]:
  #_ftn2} reaches EUR 256 million in the first half 2014, up 35% versus the
  EUR 189 million recorded in the first half 2013. SCOR delivers strong profitability with an annualised ROE of 10.3%.

• SCOR's financial leverage stands at 20.8% at 30 June 2014, well below the 25% ceiling indicated in the "Optimal Dynamics" plan.

• SCOR's capital position according to the Group Internal Model is very strong, with a solvency ratio of 231% in 2014, an increase versus the 2013 solvency ratio of 221%^{[3]:
  #_ftn3}.

SCOR Group H1 2014 key financial details:

(1) Consolidated net income, Group share (2) The technical result calculation method was adjusted to include revenues from Life reinsurance contracts that do not meet the risk transfer criteria (presented in the investment income line of the Interim condensed consolidated statements of income). The ratios previously reported were 7.3% both for the 2013 Registration document and 30 June 2013 interim financial report.

This first half 2014 has been rich in terms of business developments for the Group, including:

• the completion of the Generali US integration and repayment of the USD 228 million bridge loan; in P&C, the creation of a new business unit dedicated to the "Alternative Solutions" initiative, as set out in the "Optimal Dynamics" plan, and the strengthening of the Group's London market presence through the launch of a Lloyd's Managing Agency;
• the completion of several key Life transactions in the Longevity and Financial Solutions markets;
• the creation of a combined Cologne-Zurich hub, effective 1 October 2014, which enhances the Group's operational efficiency^{[4]:
  #_ftn4}.

The quality and performance of SCOR's business model and the effectiveness of its management have been recognized by industry professionals, who have presented the Group with a number of prestigious awards over the first half 2014. These include the "Prize for Best Financial Operation - M&A" from the Club des Trente for the Generali US acquisition, "Reinsurer of the Year" from the prestigious Reactions London Market Awards, and the Trading Risk "Life Transaction of the Year" Award for the Group's "Atlas IX" extreme mortality risk transfer contract.

Denis Kessler, Chairman & Chief Executive Officer of SCOR, comments: "Year after year, SCOR strengthens its position and footprint as a Tier 1 reinsurer, developing and providing high quality products and services and helping its clients to manage their risks in a challenging financial and regulatory environment. Almost a year after its launch, the "Optimal Dynamics" plan is firmly on track in terms of strategic initiatives. Financial performance is also strong, with the two "Optimal Dynamics" targets of profitability and solvency being achieved."

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In the first half 2014, SCOR Global P&C delivers excellent technical profitability, with a Net Combined Ratio of 90.9%

SCOR Global P&C key figures:

SCOR Global P&C records gross written premium growth of 4.7% at constant exchange rates to
EUR 2,400 million (+0.9% at current exchange rates). Q2 growth has accelerated, catching up on a seasonality effect in Q1 which had dampened growth. The assumption stated at the January 2014 renewals of approximately EUR 5.0 billion in gross written premiums for 2014 is reaffirmed.

SCOR Global P&C's excellent net combined ratio of 90.9% is driven by:

• an net attritional loss ratio of 56.9%, with a year-on-year improvement of 0.7 points (or a 2.2 point improvement after removing 1.5 points of reserve release impact from H1 2013), fully in line with "Optimal Dynamics" assumptions;
• a low level of nat cat losses in the first half 2014, amounting to 3.5 points of the net combined ratio, with the Q2 European Ela storm accounting for EUR 45 million (net retro, pre-tax).

Confirming its strong franchise, SCOR Global P&C delivers resilient June-July renewals. The June-July renewals represent approximately 10% of the total annual volume of SCOR Global P&C premiums, with renewals notably in the USA, Australia and the Latin American countries. An overall written premium volume increase of 4.6% has been achieved.

The main business line developments in the June-July 2014 renewals are as follows:

• for P&C Treaties: gross premiums increase by 5.1% at constant exchange rates, to
  EUR 290 million. This growth comes from the Americas and is mainly driven by new business with existing and new clients thanks to SCOR Global P&C's Tier 1 position;
• for Specialty Treaties: gross premiums increase by 3.5% at constant exchange rates, to EUR 126 million, mainly driven by positive business developments in Credit & Surety and Marine.

SCOR Global P&C benefits from its well diversified book of business, with around 60% of the premiums renewed in June-July 2014 relating to proportional business, which benefits from more favourable current primary insurance trends:

• the overall price decrease is 3.2% driven by a 7.3% price decrease on non-proportional business, partly compensated by quasi-stable proportional prices (-0.3%);
• excluding the price reductions affecting the non-proportional Property CAT segments, the overall price decrease would only be 0.8%;
• the expected technical performance measured in terms of underwriting ratio deteriorates by around 1 percentage point compared to July 2013, while return on risk-adjusted allocated capital deteriorates by 2.5 percentage points. The expected profitability of the overall book renewed in June-July remains nonetheless above SCOR Global P&C targets and contributes to improving the 2014 year-to-date profitability expectation.

SCOR Global Life delivers healthy growth and a strong technical performance in the first half 2014

SCOR Global Life key figures:

(1) The technical result calculation method was adjusted to include revenues from Life reinsurance contracts that do not meet the risk transfer criteria (presented in the investment income line of the Interim condensed consolidated statements of income). The ratios previously reported were 7.3% both for the 2013 Registration document and 30 June 2013 interim financial report.

SCOR Global Life gross written premiums of EUR 3,027 million represent growth of 2.6% at constant exchange rates in the first half 2014, compared to H1 2013 on a pro-forma basis. On a published basis, gross written premiums are up 19.5% at constant exchange rates (+16.2% at current exchange rates), driven by the Generali US acquisition.

The solid organic premium growth reflects a healthy new business production driven, among others, by Longevity in Europe and Financial Solutions in Europe and Asia, as illustrated by the Longevity transaction signed with Aviva and the VIF (Value-in-force) transaction entered into with Mediterráneo Vida. New business profitability continues to meet the Group's ROE target. The inforce book of business continues to perform strongly both in terms of premiums and results.

In the first half 2014, SCOR Global Life confirms a strong technical performance, with a technical margin of 7.2%. This is down from the 7.4% pro forma 2013 H1 margin, and is in-line with the "Optimal Dynamics" assumption of approximately 7%.

Furthermore the integration of the Generali US acquisition is essentially completed, and SCOR Global Life confirms its leading position in the US market.

SCOR Global Investments records a return on invested assets of 2.9% in the first half 2014

SCOR Global Investments key figures:

In a slightly improved economic and financial context, SCOR Global Investments continues its policy of progressively reducing its liquidity in the second quarter 2014, while selectively increasing the duration of the fixed income portfolio, in line with "Optimal Dynamics".

Cash and cash equivalents and short-term investments represent 12% of assets at 30 June 2014 (excluding funds withheld by cedants), down 1 point compared to 31 March 2014. The duration of the fixed income portfolio at 30 June 2014 is unchanged since 31 March 2014 at 3.8 years (excluding cash), and remains higher than the 31 December 2013 duration of 3.4 years. This increase in duration in the first half 2014 is mainly on GBP and USD-denominated portfolios. Given the fall in EUR rates in the second quarter 2014, the increase in the duration of the bond portfolio has been temporarily suspended.

The quality of the fixed income portfolio has been maintained with a stable average rating of AA-. At 30 June 2014, expected cash flow on the fixed income portfolio over the next 24 months stands at EUR 5.3 billion (including cash and short-term investments), facilitating dynamic management of the reinvestment policy.

During the first six months of 2014, invested assets generate a financial contribution of EUR 208 million. The active management policy employed by SCOR Global Investments has enabled the Group to record capital gains of EUR 55 million in the first half 2014.

The return on invested assets stands at 2.9% for the first six months of 2014. Taking account of funds withheld by cedants, the net rate of return on investments is 2.6 % over the period.

Invested assets (excluding funds withheld by cedants) stand at EUR 14,721 million at 30 June 2014, and are composed as follows: 9% cash, 77% fixed income (of which 2% are short-term investments), 3% loans, 3% equities, 5% real estate and 3% other investments. Total investments, including
EUR 8,233 million of funds withheld, stand at EUR 22,954 million at 30 June 2014, compared to EUR 22,732 million at 31 March 2014 and EUR 23,086 million at 31 December 2013.

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P&L Key figures H1 2014 (in EUR millions, at current exchange rates)

(1) Consolidated net income, Group share (2) H1 2014 operating cash flow has been impacted by several non-recurring items including anticipated Generali US acquisition payments, the Mediterráneo Vida financing commission and timing differences on P&C Cat payments and retro recoveries. Normalized operating cash flow for H1 2014 stands at approximately EUR 400 million.

P&L Key ratios H1 2014

1: Annualised; 2: Excluding funds withheld by cedants; 3: The combined ratio is the sum of the total claims, the total commissions and the total P&C management expenses, divided by the net earned premiums of SCOR Global P&C; 4: The technical margin for SCOR Global Life is the technical result divided by the net earned premiums of SCOR Global Life; 5: The cost ratio is the total management expenses divided by the gross written premiums; 6: Annualised; 7: The technical result calculation method was adjusted to include revenues from Life reinsurance contracts that do not meet the risk transfer criteria (presented in the investment income line of the Interim condensed consolidated statements of income). The ratios previously reported were 7.3% both for the 2013 Registration document and 30 June 2013 interim financial report.

Balance sheet Key figures H1 2014 (in EUR millions, at current exchange rates)

1: Total investment portfolio includes both invested assets and funds withheld by cedants, accrued interest, cat bonds, mortality bonds and FX derivatives; 2: Excluding 3rd party net insurance business investments.

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Forward-looking statements

SCOR does not communicate "profit forecasts" in the sense of Article 2 of (EC) Regulation n°809/2004 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 5 March 2014 under number D. 14-0117 (the "Document de référence"), for a description of certain important factors, risks and uncertainties that may affect the business of the SCOR Group. As a result of the extreme and unprecedented volatility and disruption of the current global financial crisis, SCOR is exposed to significant financial, capital market and other risks, including movements in interest rates, credit spreads, equity prices, and currency movements, changes in rating agency policies or practices, and the lowering or loss of financial strength or other ratings.
The Group's financial information is prepared on the basis of IFRS and interpretations issued and approved by the European Union. This financial information does not constitute a set of financial statements for an interim period as defined by IAS 34 "Interim Financial Reporting".