Bermuda insurer Commercial Risk Partners Ltd. is set to be restructured by its parent company after losing an estimated 100 million euros or $99.7 million in 2002.

French reinsurer Scor said yesterday that it would be adding 225 million euros to its loss reserves to cover workers compensation claims underwritten in the US in 1999 and 2000.

In a statement, Scor said: "The additional provisions stem, in part, from the situation of SCOR's Bermudian subsidiary CRP for the 1999 and 2000 underwriting years, the impact of which was highlighted by the actuarial review whose results have just been made known.

"They concern a limited number of contracts covering Workers Compensation in the United States.

"These contracts have been subject to an unusually high level of accumulated claims during the year, leading to a net loss for this subsidiary, estimated at 100 million euros for the 2002 financial year."

Scor added: "CRP will shift the orientation of its activities and drastically cut back on its underwriting activities, which will be subject to tougher checks.

"The management of this subsidiary will be restructured."

"For SCOR US, these additional provisions concern underwriting years prior to 2001, and mainly Program Business, which ceased to be underwritten at the end of 2001, but which continues to show unusual deteriorations. "All of these factors will lead to the restructuring and reinforcement of the risk control department and the group internal audit department."

In a news conference, Scor chairman Jacques Blondeau admitted "mistakes in underwriting" had been made by Commercial Risk Partners.

The news came as Scor announced that it would lose 250 million euros in 2002, a surprise announcement which sent its shares tumbling 29 percent.

The warning sparked fears that Scor could struggle to pull off a planned 400 million euro ($394 million) capital increase, seen as crucial for shoring up the firm's capital base.

"This is an absolute disaster for Scor," Frank Stoffel, analyst at WestLB Panmure in Duesseldorf, told Reuters. "Nobody expected it."

Shares in the company, which were halted from trading because of excessive losses for much of the morning, closed down some 29 percent at 7.5 euros against an insurance sector index that was up some three percent.

Scor's results were also hit by 70 million euros in claims from European flooding and a 100 million writedown of its investment in troubled Swiss insurer Swiss Life.

Scor chairman Jacques Blondeau, who previously said it was planning a 400 million euro ($394 million) capital increase, told analysts in a conference call it could seek to issue up to 100 million new shares, which could raise as much as 700 million euros at current share prices.

However, the actual figure it could raise is likely to be much less as it will be forced to offer a deep discount to woo its disillusioned shareholders.

But analysts said this latest earnings blow could make it difficult for the company to even raise the 250 million euros it needs to plug the gap in its balance sheet created by the loss.

Blondeau said yesterday a new senior management position would be created to oversee the level of risk and reserves within the group to prevent further surprise losses.

Recent sharp falls in equity markets - in which many insurers have invested heavily - have put firms under intense pressure, leaving many strapped for cash. Reinsurers have been further hit by additional reserve charges that have dragged down their already weakened earnings.

Rating agency Standard & Poor's cut Scor and its subsidiaries' financial strength rating to A- from A, citing its declining capital adequacy, marginal operating performance and questions about management control over certain underwriting areas.

"Standard & Poor's earnings expectations for Scor have been frequently reassessed in light of surprising results not in line with expectations. Today's announcement continues this unfortunate trend," the agency said in a statement.

President and chief executive officer of Commercial Risk Partners, Graham Pewter, spoke to The Royal Gazette on Wednesday and commented: "The Scor statement referred to a redirection of Commercial Risk's underwriting activities, plans for which have been in development over recent weeks and these plans will be finalised shortly."

He also said that as a wholly owned subsidiary of Scor, there was no possibility Commercial Risk Partners would go it alone and as for the press conference statement about management restructuring, he said: "Any decisions as to the organisational structure here and in the US will be made in due course."