Scor took €90m dividend from small IFSC firm

The French reinsurance group Scor took a €90 million dividend last year from an IFSC company that employed an average of only two staff, according to new accounts. Scor's dividend from IRP Holdings Ltd was three times higher than the €28 million dividend it received in 2004.

IRP Holdings was at the centre of a tussle last year between Scor and its former partner Highfields Capital Management, a Boston-based private equity group that held a minority stake in the business. Scor has had total control of IRP since June 2005, when an agreement to buy out Highfields valued IRP at €392 million.

To facilitate that transaction, Scor raised €202.8 million in June last year. Highfields initially opposed the transfer of its stake over Scor's alleged failure to provide financial information to it. Scor believed it was entitled to make the transfer under the terms of the 2001 agreement that set up the business.

IRP Holdings was established as a joint venture between Scor and Highfields to reinsure 25 per cent of non-life contracts at Scor, the biggest reinsurer in France. The contracts in question were managed by a subsidiary of IRP Holdings called Irish Reinsurance Partners.

The latest accounts for IRP Holdings indicate that the company's reinsurance activities were discontinued in January 2005, when all of its outstanding technical liabilities and assets transferred to Scor. Such contracts were written in 2002, 2003 and 2004. Following their transfer to Scor, the group received permission from the High Court to reduce IRP's share capital by €299.37 million.

In spite of all that, IRP Holdings still has the rights to significant income from its investment portfolio. Thanks to these investments, it turned a pretax profit of €15.55 million last year. The profit was down from €57.12 million in 2004, a year in which it was still active in reinsurance.

The company had investment income of €18.64 million and there was a deficit of €3.05 million on its technical account for discontinued non-life insurance business at the end of 2005.

Taxes of €4.17 million left a post-tax profit of €11.39 million. The €90 million dividend left a year-end deficit of €78.61 million. But with the business holding on to €101 million in retained profits at the start of 2005, the company finished the year with €22.4 million in its profit and loss account.