French reinsurer Scor has come a step closer to ridding itself of liability from Commercial Risk Partners, paying out nearly $18 million for the second part of the business deal.

In January Scor said it wanted to sell Commercial Risk Partners after its Bermuda subsidiary continued to cut into profits stating it expected to complete a deal by June 30.

It did not name the interested parties when it made the announcement and it is not known if the deal has fallen through.

But Scor said it had now “commuted” 60 percent of the company's business (commutation involves ending obligations under policies via cash settlements).

Commercial Risk posted large operating losses of nearly $100 million in 2002 and its parent company, Scor, said in August its business had fallen from 2.5 billion euros ($2.72 billion) in gross premiums written in the first six months of 2002 to 2 billion euros ($2.17 billion) during the same period this year and this was mainly due to Commercial Risk.

Scor chairman Denis Kessler reportedly told company directors this year that Commercial Risk results had clouded what could have been a bright period of performance for Scor.

A.M. Best in October downgraded Commercial Risk, stating the negative outlook reflected the uncertainty arising from the run-off of liabilities and “commutations of the companies' business following the adverse development of reserves registered in 2002”.

In a release issued yesterday, Scor said it had reached a second deal on the commutation of reserves linked Commercial Risk, bringing total commuted technical reserves at the unit to nearly 60 percent. “The group will actively pursue this policy of disengaging from Commercial Risk,” Scor said in a statement.

It added that the deal, with one of its main cedants, was “reducing its portfolio by 20 percent relative to its level at the end of 2002. A second commutation contract was signed on Nevember 27 which will further reduce Commercial Risk's portfolio by an additional 40 percent relative to the level at the end of 2002.”

Scor said this second commutation would cost it about 15 million euros ($18 million) before taxes.

Scor's shareholders yesterday backed a plan that would lift the size of its capital increase to 750 million euros ($900 million) from 600 million euros and give the French reinsurer cash to rebuild its balance sheet. Scor said the resolution to raise more money through the issue of a maximum of 800 million shares was backed by 91 percent of votes at a special shareholders meeting. The company had said just before the meeting it would raise the size of the planned capital increase.

Scor is struggling to shore up a balance sheet knocked by earlier underwriting losses in the United States and elsewhere. The capital increase would be Scor's second in about a year. Several debt rating agencies have also cut their ratings on the company, damaging its business prospects. The reinsurer is reducing the amount of business it writes by ten percent, or 600 million euros, this year to focus on more profitable life and accident reinsurance, large corporate and short-term property and casualty contracts.

Scor also said yesterday it has agreed to sell its headquarters in La Defense to an unidentified institutional investor for about 150 million euros. The company will rent the building from the buyer.

Scor has also sold two residential buildings in Paris and an office building in Madrid. The company's pre-tax profit on the property sales is 80 million euros, Scor said.