CONFIDENTIAL SCOR U.S. Corporation Presentation to the Special Committee of the Board of Directors November 2, 1995 Dillon, Read & Co. Inc. Confidential TABLE OF CONTENTS Tab --- Overview . . . . . . . . . . . . . . . . . . . . . . . . . . A Overview of SCOR U.S. Corporation . . . . . . . . . . . . . . B SCOR U.S. Valuation Indicators . . . . . . . . . . . . . . . C Exhibits -------- Analysis of Comparable Trading Companies . . . . . . . . . . 1 Analysis of Comparable Acquisitions . . . . . . . . . . . . . 2 Premiums Paid in Minority "Close Outs" . . . . . . . . . . . 3 Discounted Cash Flow Analysis . . . . . . . . . . . . . . . . 4 Weighted Average Cost of Capital Analysis . . . . . . . . . . 5 Dillon, Read & Co. Inc. SCOR U.S. Corporation OVERVIEW Confidential SUMMARY OF THE OFFER - Shareholders of SCOR U.S. Corporation ("SCOR") other than SCOR S.A. will receive $15.25 per share in cash - SCOR S.A. currently owns 80% of the outstanding shares of common stock of SCOR - Including the assumption of SCOR debt, the implied valuation of the offer is as follows: (Dollars in Millions) Implied SCOR Cash Offer Valuation --------- ------------ Equity Value $55.4(a) $277.0(a) Convertible Subordinated Debentures 76.0 Notes Payable 25.0 Commercial Paper 20.6 ------------ Total Asset Valuation $398.6 ============ - -------------------- (a) Assumes the acquisition of 20% of SCOR, or 3,632,924 common shares. Excludes 1,576,951 stock options outstanding at option price per share ranges of $8.00 - $17.00. Dillon, Read & Co. Inc. A - 1 SCOR U.S. Corporation Confidential PROPOSAL MULTIPLES Sensitivity Analysis Offer Offer Price $14.00 $15.00 $15.25 $16.00 ---------- ---------- ---------- ---------- Total Equity Value ($MM) $254.3 $272.5 $277.0 $290.6 P/E: SCOR Statistic - ------------------------------------- ---------------- 1995E E.P.S.(a) $0.92 15.2x 16.3x 16.6x 17.4x 1996E E.P.S.(a) 0.97 14.4 15.5 15.7 16.5 1995E E.P.S.(b) $1.01 13.9x 14.9x 15.1 15.8x 1996E E.P.S.(b) 1.19 11.8 12.6 12.8 13.4 Price as a Multiple of: - ------------------------------------- Book Value (9/30/95) (Primary)(c) $15.27 0.91x 0.98x 1.00x 1.05x (F-D)(c) 15.03 0.93 0.99 1.01 1.06 Surplus (9/30/95) (Primary)(c) 14.13 0.99 1.06 1.08 1.13 (F-D)(c) 13.96 1.00 1.07 1.09 1.14 Premium Over Market: - ------------------------------------- Day before Offer $11.125 25.8% 34.8% 37.1% 43.8% 52-Week High, Pre-Offer 11.625 20.4 29.0 31.2 37.6 52-Week Low, Pre-Offer 7.500 86.7 100.0 103.3 126.7 - -------------------- (a) Source: I/B/E/S. (b) Based on management October projections. (c) Based on primary book value of $277.4MM, surplus of $256.8MM, options of 1,066,789 (under $15.25) and exercise proceeds of $11.849MM. Dillon, Read & Co. Inc. A - 2 SCOR U.S. Corporation OVERVIEW OF SCOR U.S. Confidential REINSURANCE INDUSTRY - Primary insurance companies continue to direct business towards financially secure reinsurers who are perceived to be long-term players. - Increasing consolidation is evident - Ceding companies flight to quality is also evident - Since 1987, increasing global competition, including from Bermuda based reinsurers (established after Hurricane Andrew in 1992) together with increasing retention by primary insurance companies, has resulted in generally soft market conditions across many lines of business. - Supply of reinsurance is directly related to levels of surplus in the industry, which was expanded in the early 1990's as a response to many catastrophes - Cyclicality in the reinsurance industry is now experienced in different lines and regions at different times - The Bermuda companies may become more broad - based competitors for all reinsurers (including casualty) depending on a number of competitive factors. - To the extent the Bermudians become more broad - based, the increased competition could intensify market competition and create pricing pressure Dillon, Read & Co. Inc. B - 1 SCOR U.S. Corporation Confidential COMPETITIVE POSITION 1994 6/30 Premiums 1995 Combined Ratio -------------- Broker Market Earned Surplus 1994 1995 - ------------------------------------- --------- ---------- -------- -------- Transatlantic Re/Putnam Re $851,183 $668,494 105.7% 103.1% Zurich Reinsurance Centre 221,814 645,621 114.6 108.0 Prudential Reins. 722,454 639,693 118.4 107.2 Kemper Reinsurance 317,399 451,627 108.8 104.5 NAC Reins. 375,870 435,607 105.7 103.9 Underwriters Reins 182,282 409,038 107.0 102.4 TIG Reinsurance 394,458 402,246 104.4 103.3 Skandia Ameriaca Reins. 164,026 347,093 124.6 124.4 Constitution Reins. 466,103 290,413 101.0 104.2 SCOR U.S. 229,904 251,890 118.7 105.7 Trenwick America Reins. 132,683 243,739 103.1 96.9 Signet Star Reins. 182,976 224,221 113.8 103.1 Winterthur Reins. 207,880 222,919 109.1 106.7 Gerling Global 92,772 141,597 112.8 105.4 Folksamerica Group 154,070 117,252 109.2 103.8 Chartwell 101,632 115,101 105.7 104.4 Frankona 111,424 114,481 103.3 104.3 Christiania General 140,592 113,550 111.7 104.8 Generali 110,391 105,375 114.7 107.9 Reinsurance Corp. of N.Y. 129,372 97,379 120.4 109.7 Direct-Writer Market - ------------------------------------ General Re $2,417,071 $4,227,923 101.2% 99.3% Employers Reins. 2,100,119 2,808,540 104.6 102.7 American Re 1,442,571 1,120,108 103.8 99.4 Swiss Re NA 831,014 NA NA Munich Re Group 666,908 783,999 116.7 105.2 National Reins. 333,123 386,374 98.4 98.1 Dillon, Read & Co. Inc. B - 2 SCOR U.S. Corporation Confidential RELATIONSHIP WITH BROKERS - SCOR's relationship with the intermediaries appears well diversified and balanced 1991 to July 1995 Written Premiums -------------------------------------------------------------- Broker Treaty % of Total Facultative % of Total - ----------------------------- --------- ---------- ----------- ----------- Blanch $154,085 15.9% -- -- John P. Woods 118,480 12.2 -- -- Guy Carpenter 114,996 11.8% $3,352 4.5% Sedgwick Re 83,259 8.6% 11,270 15.1% Bails 73,271 7.5% 58 0.1% Alexander Re 62,159 6.4% 3,584 4.8% Intere 44,523 4.6% 59 0.1% Aon 43,859 4.5% 6,614 8.9% Wilcox 35,977 3.7% 3 0.0% Towers Perrin 31,869 3.3% -- -- Marsh & McLennan -- -- 11,077 14.9% RFC Intermediaries Inc. -- -- 6,581 8.8% Willis Corroon Corporation -- -- 5,132 6.9% Alexander Howden -- -- 3,603 4.8% Willis Faber 18,516 1.9% 3,289 4.4% Alexander & Alexander -- -- 2,703 3.6% Dillon, Read & Co. Inc. B - 3 SCOR U.S. Corporation Confidential CEDING COMPANY BUSINESS - SCOR U.S. has a number of large ceding company relationships which account for a relatively large percentage of its business 1992 1993 1994 1995 Through July 1 ------------------------------ -------------------------- --------------------------- --------------------------- N $25,120 19.3% N $27,000 16.5% A $26,896 16.4% A $31,014 25.8% A 15,238 11.7% A 17,285 10.5% K 18,001 11.0% B 15,375 12.8% Q 14,079 10.8% K 17,241 10.5% C 18,000 11.0% C 10,000 8.3% B 9,550 7.3% O 16,425 10.0% B 17,375 10.6% D 8,893 7.4% R 6,191 4.8% M 10,000 6.1% L 10,341 6.3% E 8,145 6.8% O 5,734 4.4% B 8,526 5.2% D 9,329 5.7% F 5,308 4.4% F 5,703 4.4% D 8,078 4.9% E 8,495 5.2% G 4,669 3.9% G 5,391 4.1% E 7,641 4.7% M 5,327 3.3% H 4,275 3.6% K 5,098 3.9% P 5,390 3.3% F 5,209 3.2% I 3,900 3.3% S 5,000 3.8% G 5,277 3.2% H 5,200 3.2% J 3,761 3.1% Other 32,874 25.3% Other 41,256 25.1% Other 39,515 24.1% Other 24,642 20.5% -------- ------ -------- ------ -------- ------ -------- ------ Total $129,978 100.0% Total $164,119 100.0% Total $163,689 100.0% Total $119,981 100.0% ======== ====== ======== ====== ======== ====== ======== ====== Dillon, Read & Co. Inc. B - 4 SCOR U.S. Corporation Confidential RECENT DEVELOPMENTS Date Event - ------- ------------------------------------------------------------- 9/26/95 Offer by SCOR to acquire 20% of SCOR U.S. Corporation that it doesn't already own at $14/share 3/10/95 SCOR U.S. reduces regular quarterly dividend from $0.36 to $0.20 annually 3/09/95 SCOR S.A. postpones capital reorganization 1/30/95 SCOR U.S. management sale of stock to SCOR S.A. 8/94 SCOR S.A. CEO resigns Dillon, Read & Co. Inc. B - 5 SCOR U.S. Corporation Confidential SCOR PRINCIPAL OPERATING UNITS Audit SCOR U.S. Committee | of the Board | | | | | | ------------------------------------------|----------------------------------------Reserving | | Committee | | | | | | | | | SUPPORT | UNDERWRITING | ----------------------------------------------------------------------------------------------------------- | | | | | | | | | | | | Chief | Underwriting | Facultative/ | | General Chief Info Financial | Services Treaty Alt. Risk Bonds | Counsel Officer Officer | SCOR Re SCOR Re SCOR Re SCOR Re | | | | | -Law -Information -Finance | -Actuarial -Treaty Prop/Cas -Facultative Prop/Cas -Surety & Fidelity | -Human Services -Accounting | -Claims -Treaty Catastrophe -Alternative Risk | Resources -Investments| -Retro -Insurance | & Administration | Management | -Investor | -Underwriting | Relations | Stds | --------|--------- Communications/ | | Risk Morgard, SCOR Re Management Inc. California Re Dillon, Read & Co. Inc. B - 6 SCOR U.S. Corporation Confidential NET PREMIUMS EARNED (Dollars in 000s) Year Ended December 31, Nine Months Ended ----------------------- ------------------- 1993 1994 1994 1995 TREATY - ------ Property Pro Rata NA NA $47,366 $41,351 Property per Risk NA NA 4,226 3,072 Property Catastrophe NA NA 9,233 4,580 Non-Standard Auto $33,944 $40,107 27,005 32,694 Casualty NA NA 38,643 40,651 Other NA NA 17,995 21,559 FACULTATIVE - ----------- Property 29,240 32,878 8,935 10,740 Casualty 29,549 30,300 16,139 20,764 Other NA NA 920 1,562 OTHER NA NA 2,747 5,364 - ----- TOTAL $236,051 $228,244 $173,209 $182,337 ----- Dillon, Read & Co. Inc. B - 7 SCOR U.S. Corporation Confidential NET LOSS RATIO (Dollars in 000s) Year Ended December 31, Nine Months Ended ----------------------- ------------------ 1993 1994 1994 1995 ---------- ----------- --------- -------- TREATY - ------ Property Pro Rata NA NA 125.4% 77.4% Property per Risk NA NA 54.2 31.4 Property Catastrophe NA NA 70.7 14.8 Non-Standard Auto 64.4% 83.9% 78.1 72.1 Casualty NA NA 89.9 62.0 Other NA NA 63.5 61.9 FACULTATIVE - ----------- Property 38.8% 65.0% 44.5% 53.0% Casualty 70.9 70.0 50.4 48.4 Other NA NA 177.8 126.4 OTHER NA NA 120.5% 157.9% - ----- TOTAL 66.2% 83.8% 88.1% 66.9% ----- Dillon, Read & Co. Inc. B - 8 SCOR U.S. Corporation Confidential NET COMBINED RATIO (Dollars in 000s) Year Ended December 31, Nine Months Ended ----------------------- --------------------- 1993 1994 1994 1995 --------- --------- -------- ---------- TREATY - ------ Property Pro Rata NA NA 164.5% 120.6% Property per Risk NA NA 35.7 93.5 Property Catastrophe NA NA 84.3 94.1 Non-Standard Auto 97.7% 120.4% 118.4 107.1 Casualty NA NA 127.9 90.4 Other NA NA 99.8 103.4 FACULTATIVE - ----------- Property 66.4% 94.0% 89.4% 98.8% Casualty 97.7 98.8 84.5 79.9 Other NA NA 191.6 149.9 OTHER NA NA 166.3% 194.0% - ----- TOTAL 105.1% 123.0% 123.3% 103.9% ----- Dillon, Read & Co. Inc. B - 9 SCOR U.S. Corporation Confidential PROPERTY PRO RATA - The Company totally readjusted its strategy with regard to this market - Historically, Property pro rata been responsible for largest share of CAT losses - Competitors are not writing new proportional business - SCOR reduced its exposure over 50% and will continue to reallocate volume - Reduce CAT exposures dramatically and capped most treaties (Dollars in 000s) Year Ended Nine Months December 31, Ended Projected -------------- ----------------------- ---------------------------------- 1993 1994 1994 1995 1995 1996 1997 ----- ----- ----------- ---------- --------- --------- ---------- Premiums Earned NA NA $47,366 $41,351 $78,199 $52,430 $41,369 Expense Ratio NA NA 125.4% 77.4% 57.0% 64.0% 63.1% Combined Ratio NA NA 164.5 120.6 92.5 100.2 99.9 Dillon, Read & Co. Inc. B - 10 SCOR U.S. Corporation Confidential PROPERTY PER RISK - Highly competitive market due to excess capacity in broker and direct market and Bermuda and London. - Ceding companies having trouble in the pro rata market have increased reinsurance opportunities in excess market - SCOR has small and profitable niche here - Difficult to expand due to expanding direct writers (Dollars in 000s) Year Ended Nine Months December 31, Ended Projected -------------- ------------------- ---------------------------------- 1993 1994 1994 1995 1995 1996 1997 Premiums Earned NA NA $4,226 $3,072 $7,510 $11,671 $15,916 Expense Ratio NA NA 54.2% 31.4% 82.2% 85.6% 85.3% Combined Ratio NA NA 35.7 93.5 124.1 123.1 97.0 Dillon, Read & Co. Inc. B - 11 SCOR U.S. Corporation Confidential PROPERTY CATASTROPHE - Lower rates on line renewals will be evident this renewal season due to increased capital and competition - Bermuda continues to increase its involvement on programs - Bermuda capital appears likely to remain in place - Business is still adequately priced and SCOR appears able to manage its CAT exposure (Dollars in 000s) Year Ended Nine Months December 31, Ended Projected 1993 1994 1994 1995 1995 1996 1997 Premiums Earned NA NA $9,233 $4,580 $7,987 $7,987 $7,987 Expense Ratio NA NA 70.7% 14.8% 59.8% 59.9% 59.9% Combined Ratio NA NA 84.3 94.1 92.6 90.1 88.1 Dillon, Read & Co. Inc. B - 12 SCOR U.S. Corporation Confidential NON STANDARD AUTO - - Increased primary and reinsurer competition have resulted in pricing pressure recently - SCOR has developed this line well but profitability has attracted competition - Construction Re has lion's share of market while Hartford and Gerling Global have become active (Dollars in 000s) Year Ended Nine Months December 31, Ended Projected -------------------- ------------------- ----------------------------------- 1993 1994 1994 1995 1995 1996 1997 Premiums Earned $33,944 $40,107 $27,005 $32,694 $64,984 $84,098 $105,984 Expense Ratio 64.4% 83.9% 78.1% 72.1% 66.3% 65.7% 65.2% Combined Ratio 97.7 120.4 118.4 107.1 101.3 100.3 99.2 Dillon, Read & Co. Inc. B - 13 SCOR U.S. Corporation Confidential CASUALTY ALL OTHER - - SCOR's desire to balance its casualty and property books requires greater participation in this line of business - Casualty is currently underpriced and highly competitive - Competitive conditions will limit growth opportunities in commercial and private auto and excess liability covers - More MGA proposals and programs being written and SCOR is expected to participate (Dollars in 000s) Year Ended Nine Months December 31, Ended Projected ------------- -------------------- --------------------------------- 1993 1994 1994 1995 1995 1996 1997 ----- ----- ------- -------- -------- ------- ------- Premiums Earned NA NA $38,643 $40,651 $46,006 $51,035 $55,379 Expense Ratio NA NA 89.9% 62.0% 81.6% 71.2% 68.0% Combined Ratio NA NA 127.9 90.4 112.1 100.3 95.3 Dillon, Read & Co. Inc. B - 14 SCOR U.S. Corporation Confidential PROPERTY FACULTATIVE - - Considered SCOR's core business; the Company has an excellent record focusing on energy, petrochemicals and chemicals - Excellent historical loss ratio - Recent downward pressure on rates due to increased retentions and more capacity - General property market may be reaching bottom - SCOR plans a steady expansion of the facultative franchise (Dollars in 000s) Year Ended Nine Months December 31, Ended Projected --------------------- -------------------- -------------------------------- 1993 1994 1994 1995 1995 1996 1997 -------- -------- -------- ------- -------- -------- -------- Premiums Earned $29,240 $32,878 $8,935 $10,740 $17,818 $21,911 $25,502 Expense Ratio 38.8% 65.0% 44.5% 53.0% 56.5% 55.5% 55.4% Combined Ratio 66.4 94.0 89.4 98.8 107.2 101.5 97.9 Dillon, Read & Co. Inc. B - 15 SCOR U.S. Corporation Confidential CASUALTY FACULTATIVE - - Extremely heavy competition has limited growth - Pricing improvement not evident in this line of business - Company will concentrate on smaller lines of buffer layer business in the automobile or general liability lines - Intent to focus on developing niches of expertise; will achieve better spread of risk and less volatility (Dollars in 000s) Year Ended Nine Months December 31, Ended Projected --------------------- -------------------- -------------------------------- 1993 1994 1994 1995 1995 1996 1997 -------- -------- -------- ------- -------- -------- -------- Premiums Earned $29,549 $30,300 $16,139 $20,764 $25,969 $29,739 $35,819 Expense Ratio 70.9% 70.0% 50.4% 48.4% 87.0% 83.6% 85.0% Combined Ratio 97.7 98.8 84.5 79.9 123.7 115.9 114.3 Dillon, Read & Co. Inc. B - 16 SCOR U.S. Corporation Confidential EXPENSE RATIO (GAAP)(a) YEAR EXPENSE RATIO WRITTEN PREMIUMS PER EMPLOYEE ---- ------------- ----------------------------- 1990	 40.5% $1.3 MM 1991	 38.9	 1.3 1992	 43.8	 1.7 1993	 38.9	 1.8 1994	 38.6	 1.9 1995E	 36.7	 2.0 --------- a) U/W year; includes commission ratio Dillon, Read & Co. Inc. B - 17 SCOR U.S. Corporation Confidential INCOME STATEMENT Year Ended December 31, LTM Ended --------------------------------------------- Sept 30, (Dollars in 000s, except per share data) 1992 1993 1994 1995 --------- -------- -------- --------- Revenues: Net Premiums Earned $192,050 $236,051 $228,244 $237,374 Net Investment Income 42,880 42,044 40,990 42,378 Net Realized Investment Gains/(Losses) 15,048 12,930 984 638 --------- -------- -------- --------- Net Revenues 249,978 291,025 270,218 280,390 Losses and Expenses: Losses and Expenses, net 160,545 156,292 191,270 160,664 Commissions, net 55,960 61,324 59,434 60,311 Other Operating Expenses 23,918 26,420 26,009 27,206 Other 4,346 4,073 4,039 2,014 --------- -------- -------- --------- Interest Expense 4,579 8,005 8,920 8,844 Pretax Income 630 34,911 (19,454) 21,351 Income Taxes (Benefit) (3,771) 6,983 (11,262) 4,674 --------- -------- -------- --------- Net Income from Continuing Operations $4,401 $27,928 ($8,192) $16,677 ========= ======== ======== ========= Extraordinary Items -- -- 351 903 Cumulative Effect of Accounting Change 2,848 (2,600) -- -- --------- -------- -------- --------- Net Income $7,249 $25,328 ($7,841) $17,580 ========= ======== ======== ========= Average Shares Outstanding (000s) 18,256 18,395 18,166 18,248 Fully Diluted E.P.S. from Continuing Operations $0.25 $1.45 ($0.45) $0.91 Fully Diluted E.P.S. 0.40 1.33 (0.43) 0.96 GAAP Operating Ratios: Loss Ratio 83.6% 66.2% 83.8% 67.7% Commissions Ratio 29.1% 26.0% 26.0% 25.4% Expense Ratio 14.7% 12.9% 13.2% 12.3% --------- -------- -------- --------- Combined Ratio 127.5% 105.1% 123.0% 105.4% Return on Average Equity 1.7% 10.0% -3.1% Dillon, Read & Co. Inc. B - 18 SCOR U.S. Corporation Confidential NET ASSETS (Dollars in 000s) As of December 31, As of ------------------------ Sept 30, ASSETS 1993 1994 1995 -------- ---------- -------- Investments: Fixed Maturities: Available for Sale at Fair Value $581,104 $563,656 $563,515 Held to Maturity at Amortized Cost 24,876 22,871 22,155 Equity Securities at Fair Value 18,951 1,738 204 Short-term Investments at Cost 90,642 83,303 122,794 Other Long Term Investments 1,081 1,225 1,374 ---------- ---------- ---------- Total Investments 716,654 672,793 710,042 Cash 17,096 4,763 13,318 Reinsurance Recoverable on Unpaid Losses 221,843 222,672 226,544 Reinsurance Recoverable on Paid Losses 36,827 23,755 19,939 Premiums Receivable 80,319 72,019 80,996 Investment in Affiliates 10,789 11,532 12,360 Other Assets 110,583 136,181 117,973 ---------- ---------- ---------- Total Assets $1,194,111 $1,143,715 $1,181,172 ========== ========== ========== LIABILITIES OTHER THAN DEBT Reserves for Losses and Loss Expenses $562,209 $604,787 $618,738 Unearned Premiums 114,376 110,082 99,955 Funds Held Under Reinsurance Treaties 39,602 20,758 18,571 Reinsurance Balances Payable 60,233 43,685 27,000 Other Liabilities 10,031 11,348 17,933 ---------- ---------- ---------- Total Liabilities Other than Debt 786,451 790,660 782,197 ---------- ---------- ---------- TOTAL NET ASSETS $407,660 $353,055 $398,975 ========== ========== ========== Dillon, Read & Co. Inc. B - 19 SCOR U.S. Corporation Confidential CAPITALIZATION (Dollars in 000s) As of December 31, As of ----------------------- Sept 30, CAPITALIZATION 1993 1994 1995 ------- ------- ------- Debt: Convertible Subordinated Debentures $86,250 $82,350 $75,950 Notes Payable 20,000 20,000 25,000 Commercial Paper 10,721 11,310 20,639 ------- ------- ------- Total Debt 116,971 113,660 121,589 Stockholders' Equity Common Stock 5,490 5,507 5,507 Additional Paid in Capital 112,670 114,556 114,669 Unrealized Appreciation/(Depreciation) of Investments, Net of Deferred Tax Effect 16,634 (21,640) 4,752 Foreign Currency Translation Adjustments 12 (414) (252) Retained Earnings 157,532 143,153 154,482 Treasury Stock (1,649) (1,767) (1,774) ------- ------- ------- Total Stockholders' Equity 290,689 239,395 277,386 ------- ------- ------- TOTAL CAPITALIZATION $407,660 $353,055 $398,975 -------- -------- -------- Total Debt to Capitalization 28.7% 32.2% 30.5% Net Debt to Capitalization 24.5 30.8 27.1 Dillon, Read & Co. Inc. B - 20 SCOR U.S. Corporation Confidential LOSS RESERVES - THE COMPANY HAS TAKEN A CONSERVATIVE APPROACH TOWARD ESTABLISHING PROVISIONS FOR LOSS RESERVES. THE MAJORITY OF SCOR'S BUSINESS IS GENERALLY "SHORTER TAIL" PROPERTY, AND THEREFORE, IT IS GENERALLY EASIER TO DETERMINE LOSS AMOUNTS ON A TIMELY BASIS ($ in millions) Year ended December 31, ________________________________________________________________________________________________________________________________ 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 ________________________________________________________________________________________________________________________________ Initial Reserves For Losses and loss expenses $87 $104 $138 $192 $241 $289 $319 $324 $341 $340 $382 Re-estimated as of: One Year Later $89 $116 $139 $192 $239 $301 $326 $319 $337 $338 Two Years Later 98 115 132 183 234 297 318 302 335 Three Years Later 101 115 123 185 225 292 300 302 Four Years Later 106 120 133 180 223 274 298 Five Years Later 108 137 134 178 213 275 Six Years Later 123 137 131 171 212 Seven Years Later 119 135 127 173 Eight Years Later 118 131 129 Nine Years Later 118 133 Ten Years Later 117 Cumlative amount of liability paid through: One Year Later $33 $33 $30 $42 $59 $62 $85 $92 $121 $94 Two Years Later 48 53 48 73 89 113 139 145 161 Three Years Later 62 66 65 93 115 149 176 159 Four Years Later 71 80 79 106 139 174 180 Five Years Later 81 92 88 123 151 173 Six Years Later 87 100 98 131 143 Seven Years Later 93 107 104 118 Eight Years Later 97 111 91 Nine Years Later 100 101 Ten Years Later 92 Cumulative ($30) ($29) $9 $19 $29 $14 $21 $22 $6 $2 Redemption (Deficiency) -35% -28% 6% 10% 12% 5% 7% 7% 2% 1% Percentage _________________________________________________________________________________________________________________________________ Dillon, Read & Co. Inc. B - 21 SCOR U.S. Corporation Confidential LOSS RESERVES (CONT'D) - - As of 12/31/94, SCOR U.S. studied its IBNR (only facultative casualty and treaty) using alternative methods of analysis (Alternative Method Study) - SCOR typically utilizes Incurred Loss Development method to estimate reserves - The Alternative Method Study utilized the Bornheutter-Ferguson Method Gross IBNR ---------- 12/31/94 (Dollars in Millions) Alt. Method IBNR Type Estimated Actual Difference - ------------------------------------ ----------- --------- ---------- Property Pro-Rata excl. Catastrophes $11.8 $14.5 $2.7 Property per Risk Excl. Catastrophes 0.9 2.4 1.4 Property Catastrophe 11.1 11.1 0.0 Non-Standard Auto 12.7 12.1 (0.7) Standard Auto 22.1 18.8 (3.3) General Liability 63.7 52.3 (11.3) Professional Liability 10.7 9.3 (1.4) Workers' Compensation 9.1 10.1 1.0 Bonds; Fidelity & Surety 3.2 4.0 0.8 Marine 2.7 0.0 (2.7) Inherent Defect Insurance 0.5 0.0 (0.5) Agricultural 0.1 0.0 (0.1) Facultative Casualty 85.7 80.7 (5.0) ------ ------ ------- Total $243.3 $215.2 ($19.1) ====== ====== ======= Dillon, Read & Co. Inc. B - 22 SCOR U.S. Corporation Confidential LOSS RESERVES (CONT'D) - - KPMG Peat Marwick has periodically reviewed the Loss and Loss Adjustment Expense Reserve - - The last review was December 31, 1993 (no rating agency need in 1994) and resulted in the following analysis: ($ in millions) Low Selected High -------- ---------- -------- Case Reserves $170.4 $170.4 $170.4 IBNR 137.6 154.6 173.6 ----- ----- ----- Total 308.0 325.0 344.0 Covered Reserves 340.4 Differential $32.4 $15.4 $(3.6) ===== ===== ====== Dillon, Read & Co. Inc. B - 23 SCOR U.S. Corporation Confidential RETROCESSION ($ in millions) - - SCOR U.S.'s retrocession program appears adequate in relation to its surplus capacity, gross line capacity and changing market conditions - Record of recovery is excellent - Pricing is independent of SCOR S.A. Treaty Facultative Catastrophe --------------------------- --------------------------- --------------------- Property $3 SCOR S.A. $13.0 SCOR S.A. (Prop.) - (Proportional) 4.0 X/S 3.0 Non-Affiliate 2.0 X/S 4.0 SCOR S.A. Casualty - $2.5 X/S 2.5 SCOR S.A. - 1.5 X/S 1.0 SCOR S.A. (experience rated) Prop. CAT $6 SCOR S.A. - $6X/S $20 Pre (Lead) (Proportional) 6X/S 26 Lloyds 6X/S 32 Lasalle 10X/S 38 Non-Affiliate 12X/S 48 PXRE 8X/S 60 Zurich (Sale) Dillon, Read & Co. Inc. B - 24 SCOR U.S. Corporation Confidential EXPOSURE MANAGEMENT - - SCOR U.S. monitors its total exposure to various catastrophic events quarterly - Company has continued to reduce its estimated exposures primarily through a reduction in its property pro-rata book - Company diversifying its aggregate exposures - - Estimated exposures are in line with SCOR U.S.'s surplus capacity (net of CAT) ($ in Millions) Wind (25 Year Event) Earthquake ($80b Event) -------------------- ----------------------- 1/1/94 $28.6 MM $118.0 MM 7/1/95 21.8 MM 112.5 MM Dillon, Read & Co. Inc. B - 25 SCOR U.S. Corporation Confidential INVESTMENT PORTFOLIO (Dollars in 000s) As of 9/30/95 ------------------------------ Amount % Total ----------- ------------ Taxable Bonds $341,997 48% Tax-Exempt Bonds 210,184 30 ----------- ------------ Total Bonds $552,181 78% Preferred Stock 33,521 5 Common Stock 170 0 Short-Term Investments 122,794 17 Other 1,374 0 ----------- ------------ Total Investments $710,040 100% =========== ============ Average Maturity 4.81 Average Rating Aaa Yield: - ------ Bond Portfolio 6.2% Equity Portfolio 5.3 Dillon, Read & Co. Inc. B - 26 SCOR U.S. Corporation Confidential INVESTMENT PORTFOLIO (CONT'D) - - As of December 1994, the ratings of SCOR's bond portfolio were as follows: (Dollars in 000s) Carrying % Total Bond Portfolio Value Portfolio ------------------------------------------ ---------- ---------- U.S. Treasuries and Agencies $158,571 28.6% Foreign Government and Agencies 14,636 2.6% Aaa 202,626 36.5% Aa 89,607 16.2% A 86,346 15.6% Baa 2,787 0.5% ---------- -------- Total $554,573 100% Dillon, Read & Co. Inc. B - 27 SCOR U.S. Corporation Confidential PRINCIPAL SHAREHOLDERS (a) Shares Held Institution as of 6/95 % of Outstanding - --------------------------------------- ----------- ---------------- Tweedy Browne 949,533 5.2% Dimensional Fund 611,700 3.4 Prudential 213,900 1.2 Wilshire Associates 204,100 1.1 Wells Fargo 184,429 1.0 Sanford Bernstein 106,600 0.5 J.P. Morgan 56,000 0.3 Brandywine Asset Management 53,900 0.3 Mellon Bank 53,621 0.3 California State 51,463 0.3 ---- 13.7% ===== - ------------- (a) Source: Technimetrics, Inc. Dillon, Read & Co. Inc. B - 28 SCOR U.S. Corporation SCOR U.S. VALUATION INDICATORS Confidential VALUATION APPROACH Valuation Approach Proxy - - Comparable Trading Analysis - Trading multiples of comparable reinsurance companies - Correlation of price-to-book trading multiples to ROE for reinsurance comparables - - Comparable Merger Analysis - Multiples and premiums paid for acquisitions in the reinsurance industry - - Economic Book Value Analysis - Adjustments to reported book value - - Discounted Cash Flow Analysis - Based on 1995 - 2000 projections of cash flows - - Premium Analysis - Premiums paid in comparable minority "close out" transactions Dillon, Read & Co. Inc. C - 1 SCOR U.S. Corporation Confidential SCOR U.S. ONE YEAR PRICE AND VOLUME HISTORY DAILY STOCK PRICE JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC $ 8.50 $ 8.00 $ 8.00 $ 7.50 $ 8.00 $ 9.00 $ 9.00 $ 9.00 $11.00 $11.50 $11.50 $15.50 DAILY VOLUME 1/2/95 0 1/18/95 18,000 2/3/95 5,000 2/21/95 2,500 3/9/95 2,000 3/27/95 2,000 4/12/95 1,500 4/28/95 1,500 5/16/95 1,500 6/1/95 1,500 6/19/95 1,500 7/5/95 1,500 7/21/95 1,500 8/8/95 1,500 8/24/95 1,500 9/11/95 1,500 9/27/95 180,000 10/13/95 1,500 11/1/95 1,500 Dillon, Read & Co. Inc. C - 2 SCOR U.S. Corporation Confidential TRADING VOLUME SINCE ANNOUNCEMENT OF TRANSACTION Rolling Average since Date SUR Volume Announcement ---------- ---------- --------------------- 11/1 2,900 16,646 10/31 13,700 17,156 10/31 13,700 17,288 10/30 5,400 17,432 10/27 800 17,933 10/26 5,100 18,678 10/25 2,600 19,295 10/24 6,700 20,090 10/23 600 20,760 10/20 0 21,821 10/19 11,600 24,388 10/18 4,000 25,188 10/17 11,200 26,600 10/13 1,000 27,700 10/12 1,500 29,754 10/11 4,000 32,108 10/10 14,000 34,664 10/9 5,000 36,730 10/6 4,900 40,256 10/5 1,500 44,675 10/4 2,600 50,843 10/3 3,000 58,883 10/2 13,900 70,060 9/29 44,900 84,100 9/28 34,300 97,167 9/27 73,000 128,600 9/26 184,200 184,200 ----------- Total 466,100 Dillon, Read & Co. Inc. C - 3 SCOR U.S. Corporation Confidential STOCK PRICE PERFORMANCE OF COMPARABLE COMPANIES Pricing Date	 American Re Corp	General Re Corp	 NAC Re Corp	 S&P 500 S&P Financial	Transatlantic Hldgs Inc	 SCOR	 PXRE 8/31/90		100%	100%	100%	100%	100%	100%		100%	100% 9/28/90		100%	93%	95%	87%	96%	92%		99%	69% 10/31/90	102%	102%	94%	79%	95%	108%		97%	72% 11/30/90	121%	114%	100%	93%	123%	115%		130%	82% 12/31/90	126%	117%	102%	98%	124%	127%		139%	86% 1/31/91		122%	123%	107%	105%	127%	129%		138%	94% 2/28/91		131%	131%	114%	116%	141%	144%		154%	103% 3/29/91		134%	134%	116%	123%	163%	147%		162%	97% 4/30/91		122%	143%	116%	124%	167%	160%		161%	104% 5/31/91		128%	141%	121%	130%	169%	144%		159%	106% 6/28/91		129%	130%	115%	121%	155%	155%		141%	104% 7/31/91		128%	142%	120%	128%	157%	152%		151%	94% 8/30/91		120%	133%	123%	133%	157%	146%		154%	106% 9/30/91		119%	122%	120%	132%	151%	145%		177%	106% 10/31/91	128%	135%	122%	133%	155%	136%		175%	100% 11/29/91	121%	129%	116%	124%	155%	145%		173%	100% 12/31/91	138%	167%	129%	142%	177%	156%		173%	117% 1/31/92		123%	157%	127%	140%	176%	161%	100%	196%	119% 2/28/92		128%	159%	128%	145%	169%	162%	100%	204%	104% 3/31/92		126%	150%	125%	142%	163%	158%	82%	200%	119% 4/30/92		110%	138%	129%	143%	149%	151%	80%	182%	106% 5/29/92		110%	138%	129%	146%	151%	145%	81%	185%	124% 6/30/92		115%	137%	127%	149%	149%	152%	80%	190%	128% 7/31/92		118%	153%	132%	153%	167%	160%	84%	185%	133% 8/31/92		123%	157%	128%	145%	163%	160%	87%	168%	111% 9/30/92		140%	178%	130%	150%	205%	190%	104%	182%	139% 10/30/92	150%	210%	130%	154%	234%	221%	125%	214%	142% 11/30/92	150%	208%	134%	164%	234%	214%	122%	203%	147% 12/31/92	156%	215%	135%	170%	255%	223%	127%	197%	175% 1/29/93	 100%	162%	228%	136%	176%	249%	245%	156%	210%	221% 2/26/93	 100%	158%	218%	138%	179%	241%	247%	152%	225%	286% 3/31/93	 105%	158%	223%	140%	186%	245%	258%	145%	223%	275% 4/30/93	 104%	156%	210%	137%	180%	226%	256%	170%	213%	339% 5/31/93	 94%	154%	193%	140%	179%	226%	232%	153%	199%	325% 6/30/93	 93%	154%	189%	140%	188%	251%	232%	141%	189%	339% 7/30/93	 99%	164%	179%	139%	192%	247%	242%	147%	187%	325% 8/31/93	 98%	178%	189%	144%	196%	272%	238%	159%	177%	386% 9/30/93	 95%	166%	191%	142%	200%	259%	260%	142%	189%	386% 10/29/93 78%	156%	163%	145%	188%	240%	230%	144%	172%	381% 11/30/93 73%	149%	150%	143%	181%	234%	220%	137%	159%	333% 12/31/93 77%	145%	158%	145%	185%	238%	214%	133%	146%	303% 1/31/94	 80%	154%	167%	149%	194%	242%	201%	125%	132%	286% 2/28/94	 70%	143%	158%	145%	183%	213%	182%	123%	127%	278% 3/31/94	 72%	145%	138%	138%	175%	210%	188%	120%	117%	231% 4/29/94	 76%	151%	143%	140%	181%	210%	199%	118%	138%	261% 5/31/94	 92%	162%	155%	142%	190%	248%	229%	126%	127%	292% 6/30/94	 85%	147%	157%	138%	184%	238%	218%	111%	124%	292% 7/29/94	 76%	156%	149%	142%	188%	254%	214%	113%	132%	292% 8/31/94	 79%	151%	141%	147%	194%	245%	216%	109%	131%	294% 9/30/94	 82%	143%	135%	143%	180%	229%	203%	109%	127%	322% 10/31/94 79%	151%	137%	146%	182%	231%	200%	105%	125%	274% 11/30/94 70%	159%	134%	141%	171%	237%	204%	102%	100%	289% 12/30/94 87%	167%	178%	142%	173%	254%	232%	113%	94%	314% 1/31/95	 83%	175%	175%	146%	183%	250%	237%	119%	96%	272% 2/28/95	 92%	176%	177%	151%	193%	261%	241%	131%	94%	261% 3/31/95	 95%	178%	161%	155%	193%	278%	229%	126%	89%	268% 4/28/95	 103%	172%	175%	160%	200%	289%	244%	130%	90%	269% 5/31/95	 101%	183%	156%	165%	214%	289%	238%	132%	101%	240% 6/30/95	 101%	181%	165%	169%	215%	296%	233%	144%	101%	261% 7/31/95	 102%	179%	195%	174%	221%	300%	255%	146%	114%	288% 8/31/95	 108%	201%	194%	174%	247%	318%	290%	134%	124%	279% 9/30/95	 104%	204%	193%	181%	233%	306%	259%	153%	175%	303% 10/31/95 103%	196%	187%	180%	240%	306%	254% 160% 173%	283% Dillon, Read & Co. Inc. C - 4 SCOR U.S. Corporation Confidential PRICE-TO-BOOK VALUE RATIOS FOR COMPARABLE COMPANIES(a) Date	 American Re General Re	 NAC Re Transatlantic	 PXRE	 SCOR 12/31/89	NA	 2.67	 NA	 NA	 1.05	 1.22 3/31/90	 NA	 2.63	 1.85 NA	 0.86	 1.03 6/30/90	 NA	 2.51	 1.84	 1.59	 0.85	 0.83 9/30/90	 NA	 2.18	 1.38	 1.19	 0.48	 0.72 12/31/90	NA	 2.6	 1.7	 1.48	 0.58	 0.98 3/31/91	 NA	 2.48	 1.84	 1.86	 0.65	 1.1 6/30/91	 NA	 2.33	 1.72	 1.7	 0.68	 0.94 9/30/91	 NA	 2.07	 1.55	 1.59	 0.7	 1.13 12/31/91	NA	 2.26	 2.01	 1.78	 0.79	 1.07 3/31/92	 NA	 2.01	 1.62	 1.59	 0.79	 1.19 6/30/92	 NA	 1.82	 1.45	 1.41	 0.57	 1.11 9/30/92	 NA	 2.16	 1.94	 1.91	 0.66	 1.09 12/31/92	NA	 2.32	 2.33	 2.28	 0.87	 1.19 3/31/93	 2.64	 2.28	 2.31	 1.95	 1.3	 1.29 6/30/93	 2.23	 2.16	 1.9	 1.93	 1.54	 1.07 9/30/93	 2.14	 2.22	 1.87	 1.92	 1.74	 1.04 12/31/93	1.67	 1.88	 1.41	 1.55	 1.24	 0.81 3/31/94	 1.59	 1.86	 1.3	 1.43	 0.96	 0.74 6/30/94	 1.85	 1.9	 1.49	 1.61	 1.15	 0.81 9/30/94	 1.8	 1.79	 1.32	 1.51	 1.19	 0.83 12/31/94	1.92	 2.08	 1.84	 1.68	 1.13	 0.64 3/31/95	 1.89	 2.06	 1.45	 1.69	 0.94	 0.55 6/30/95	 1.84	 1.92	 1.12	 1.67	 1.07	 0.61 11/1/95	 1.89	 2.1	 1.56	 1.74	 1.14	 1.02 - ------------ (a) Source: Compustat Industrial. Dillon, Read & Co. Inc. C - 5 SCOR U.S. Corporation Confidential ONE-YEAR FORWARD P/E RATIOS FOR COMPARABLE COMPANIES (a) (FY + 1 P/E) 12/31/89 3/31/90 6/30/90 9/30/90 12/31/90 3/31/91 6/30/91 9/30/91 12/31/91 3/31/92 6/30/92 9/30/92 -------- ------- ------- ------- -------- ------- ------- ------- -------- ------- ------- ------- General Re 15x 12.5x 13.5x 12x 14x 14x 13x 14x 15x 13.5x 13.5x 15x NAC Re 17 12.5 15 11 14 14 14 13 15 15 12.5 14.5 Transatlantic 8 12 13 13 13 14 12 9 11.5 SCOR 17 8 8 7 9 9 7.5 7.5 8 10 9 7.5 PXRE 13 7.5 25 35 30 20 8 9 19 9 9.5 12 12/31/92 3/31/93 6/30/93 9/30/93 12/31/93 3/31/94 6/30/94 9/30/94 12/31/94 3/31/95 6/30/95 9/30/95 11/1/95 -------- ------- ------- ------- -------- ------- ------- ------- -------- ------- ------- ------- ------- General Re 21x 17x 16x 19x 17x 14.5x 17x 15x 17x 15x 15x 16x 15.5x NAC Re 16 18 17 20 18 13.5 15 14 14 14 14 13.5 15 Transatlantic 19 14 14 16 14.5 12 14 13.5 13 12.5 13 12.5 13 SCOR 36 12 9.5 11.5 12 8 21 16 13 9 9.5 17.5 16.5 PXRE 12 19 14.5 15 12.5 7.5 5.5 6.5 6 5 5 5 5 - ------------ (a) One year forward P/E ratios taken from IBES database (based on median EPS estimates). Dillon, Read & Co. Inc. C - 6 SCOR U.S. Corporation Confidential COMPARABLE COMPANIES - OBSERVATIONS - - Public market valuations of U.S. reinsurers are analyzed on forward price/earnings multiples and on price/book value multiples - Reasonably good correlation between return on equity and price-to-book multiples - Book value multiples distorted due to possible under-reserving by the sector in general and FASB115 - - Historically, significant movements in stock prices have been the result of several factors - Perceived change in industry fundamentals, i.e., an expected turn in P/C pricing - Secular interest rate movements/expectations - Earnings surprises - - Trading multiples suggest that the stronger reinsurers with certain characteristics have achieved premium valuation relative to their peers - Direct reinsurers more profitable than broker reinsurers - Property reinsurers have more volatility in earnings and therefore lower relative P/E - Larger casualty companies with greater market share, and to some extent greater pricing power, more profitable than smaller companies - Non-proportional reinsurers have been more profitable than proportional reinsurers Dillon, Read & Co. Inc. C - 7 SCOR U.S. Corporation Confidential CURRENT 1995E P/E MULTIPLES 	Prudential	NAC Re	Transatlantic	Trenwick	PXRE	General	 American	National 1995E P/E(a)	 15.7x	 14.7x	 13.2x	 13.1x	 5.2x	 15.8x	 12.8x	 12.0x Broker Average 14.2x(b) Direct Average 13.5x - ------------- (a) E.P.S. estimates based on I/B/E/S, based on 11/1/95 Stock prices (b) Excludes PXRE Dillon, Read & Co. Inc. C - 8 SCOR U.S. Corporation Confidential CURRENT 1996E P/E MULTIPLES 	 NAC Re Trenwick Transatlantic Prudential PXRE General American National 1995E P/E(a)	 12.6x 11.8x 11.3x	 11.3x 5.0x 14.1x 10.7x 10.7x Broker Average 11.8x(b) Direct Average 11.8x - -------------- (a) E.P.S. estimates based on I/B/E/S, based on 11/1/95 Stock prices (b) Excludes PXRE Dillon, Read & Co. Inc. C - 9 SCOR U.S. Corporation Confidential CURRENT BOOK VALUE TRADING MULTIPLES 	 Transatlantic NAC Re Trenwick Prudential PXRE General American National Price-to-Book Multiple(a)	1.7x	 1.6x 1.5x 1.2x 1.1x 2.1x 1.9x	 1.6x Broker Average 1.4x(b) Direct Average 1.9x - -------------- (a) Based on 11/1/95 Stock price and latest book value Dillon, Read & Co. Inc. C - 10 SCOR U.S. Corporation Confidential COMPARISON OF CURRENT FINANCIAL STATISTICS ($ in millions) Broker Companies Direct Companies ----------------------------------------------------------- ---------------------------- SCOR U.S. NAC Re PXRE Prudential Transatlantic Trenwick American General National --------- ------ ---- ---------- ------------- -------- -------- ------- -------- PARENT Capitalization - --------------------- Total Debt $121.3 $218.0 $69.7 $19.3 $0.0 $103.5 $450.0 $156.0 $100.0 Preferred 0.0 0.0 0.0 0.0 0.0 0.0 225.0 0.0 0.0 Shareholders' Equity 272.7 405.8 192.4 877.4 894.1 218.8 953.1 5,708.0 346.0 ------- ------- ------ ------ ------ ------ -------- -------- ------ Total Capitalization $394.0 $623.8 $262.1 $896.7 $894.1 $322.3 $1,628.1 $5,864.0 $446.0 ======= ======= ====== ====== ====== ====== ======== ======== ====== Shareholders' Equity/ Total 69.2% 65.1% 73.4% 97.9% 100.0% 67.9% 72.4% 97.3% 77.6% Capitalization Business - -------- % of 1994 Property Business 53% 20% 100% 51% 35% 25% 35% 25% 26% INSURANCE Company - ----------------- Statutory Surplus @ 6/30/95 $243(a) $436 $212(a) $640 $591(a) $244 $1,120 $4,228(a) $386(a) 1994 Statutory Net Income (1) 27 34 3 86 20 130 511 41 LTM Premiums/Surplus(b) 1.0x 1.1x 0.5x 1.4x 1.6x 0.7x 1.5x 1.1x 0.8x LTM Premiums/Reserves 0.4 0.4 1.4 0.4 0.4 0.3 0.4 0.3 0.3 RATINGS - ------- Moody's Senior Debt Rating A3 Baa2 Ba2 NA NA Baa3 Baa2 Aa1+ Baa1 S&P Senior Debt Rating A+ A- BB- NA NA BBB(cvt.) BBB+(sub) AAA A+ S&P Claims-Paying Rating A+ AA- A- A NR A AA AAA NA - -------------------------------- (a) As of December 31, 1994. (b) As of most recent quarter. Dillon, Read & Co. Inc. C - 11 SCOR U.S. Corporation Confidential COMPARISON OF CURRENT TRADING LEVELS Broker Companies ---------------------------------------------------------------- SCOR U.S. NAC Re PXRE Prudential Transatlantic Trenwick ---------- -------- ------------ --------------- ---------- Current Price (11/1/95) $15.250 $36.000 $25.125 $20.375 $68.000 $49.500 Year High 15.750 39.000 29.750 20.750 70.375 53.000 % of Year High 96.8% 92.3% 84.5% 98.2% 96.6% 93.4% Equity Value(MM) $277.0 $632.3 $219.2 $1,018.8 $1,560.1 $321.3 Adjusted LTM P/E(a) 20.1x 16.4x 5.5x 16.5x 13.1x 11.9x 1995 E 16.6 14.7 5.2 15.7 13.2 13.1 1996 E 15.7 12.6 5.0 11.3 11.3 11.8 Projected 5 year EPS Growth NA 16.0% 15.0% NA 15.0% 14.0% Rate(b) Market/Book Value 1.0x 1.6x 1.1x 1.2x 1.7x 1.5x Market/Adjusted Book Value(c) 0.8 1.1 1.0 0.9 1.4 1.2 Market/Statutory Surplus 1.1 1.5 1.0 1.6 2.6 1.3 Dividend Yield 1.3% 0.4% 2.4% 0.6% 0.6% 2.3% ROAE 5.5% 12.1% 25.0% 2.9% 14.5% 13.2% Adjusted ROAE (a) 5.3% 10.2% 25.3% 2.5% 14.5% 13.2% Direct Companies ------------------------------- American General National ---------- --------- --------- Current Price (11/1/95) $38.375 $146.375 $33.625 Year High 43.125 153.250 35.375 % of Year High 89.0% 95.5% 95.1% Equity Value(MM) $1,805.5 $12,006.9 $567.1 Adjusted LTM P/E(a) 14.8x 16.3x 14.5x 1995 E 12.8 15.8 12.0 1996 E 10.7 14.1 10.7 Projected 5 year EPS Growth 15.0% 14.0% 13.0% Rate(b) Market/Book Value 1.9x 2.1 1.6x Market/Adjusted Book Value(c) 1.1 1.6 1.3 Market/Statutory Surplus 1.6 3.2 1.5 Dividend Yield 1.0% 1.3% 0.5% ROAE 14.2% 15.1% 7.9% Adjusted ROAE (a) 14.0% 14.0% 12.2% - -------------------------------- (a) Adjusted earnings exclude the after-tax effect of net investment gains. (b) Source: I/B/E/S. (c) Adjusted book value includes unearned premiums reserve net of after-tax deferred acquisition cost. Dillon, Read & Co. Inc. C - 12 SCOR U.S. Corporation Confidential PRICE-TO-BOOK VS. RETURN ON EQUITY 	Pretax tax return	Multiple of Book Value NRC	 14.60%	 1.6x ARN	 18.20%	 2 GRN	 18.50%	 2.1 TRH	 17.40%	 1.8 Trenwich	 12.90%	 1.58 SUR	 0.055	 1 Dillon, Read & Co. Inc. C - 13 SCOR U.S. Corporation Confidential VALUATION BASED ON TRADING COMPARABLES (Dollars in millions, except per share data) SCOR US Multiple Range Per Share Value Reference Figure Low High Low High - ------------------------- -------- ---- ---- ---- ---- 1996E E.P.S.(a) $1.19 11.0x 15.0x $13.09 $17.85 Latest Book Value(b) $15.03 1.0x 1.3x $15.03 $19.55 Latest Surplus(b) 13.96 1.1 1.4 15.35 19.54 Average $14.49 - $18.98 - -------------------------------- (a) Company projections. (b) Fully diluted, as of September 30, 1995. Dillon, Read & Co. Inc. C - 14 SCOR U.S. Corporation Confidential COMPARISON OF ACQUISITIONS Approach: - -------- - - Reviewed 32 mergers and acquisitions of property/casualty reinsurance companies in the U.S. and in Europe. - - Summarized financial ratios and statistics for 9 most comparable U.S. transactions and reviewed multiples of net income, multiples of book value and tangible book value. Limitations: - ----------- - - Declines in interest rates and other economic factors, including an upturn in the property/catastrophe cycle, fueled a strong market for insurance companies in 1992 and 1993 which didn't exist to the same extent in 1994 and 1995. - - Previous acquisitions generally occurred in different stock market, economic environments and property/casualty cycles. Dillon, Read & Co. Inc. C - 15 SCOR U.S. Corporation Confidential PREMIUMS PAID IN SELECTED U.S. REINSURANCE TRANSACTIONS ($ in millions) Price Paid as a multiple of Acquiree Announcement Aggregate Net Book Net Market ROAE of Date Acquiree/Acquiror Value Income Value Premiums Value Acquiree - ----------- ----------------------------------- --------- -------- ------- ---------- ------- --------- 08/07/95 Piedmont Management Company $85.4 24.6x 1.1x 0.6x 1.3x N.A. Inc./Chartwell Re Corporation 01/06/95 Re Capital/ 131.6 18.0 1.0 1.7 1.4 6.8% Zurich Centre Re 12/21/94 Constitution Re/ 400.0 N.A. 1.4 N.A. N.A. N.A. Exor America Inc. 07/29/93 Underwriters Reinsurance Co. 216.1(1) N.A. 1.4 N.A. N.A. 19.0 (Sub. of Underwriters Re Holding)/ Allegheny Corp. 03/22/93 Kemper Re/Lumbermens Mutual 610.2 N.M. 1.8 N.A. N.A. N.M. 06/09/92 American Re-Insurance Corp. (Aetna) 1,429.5(2) 9.6x 1.2 1.4 N.A. 17.2 American Re Corp. (Formed by KKR.) 03/20/92 Belvedere Corp./ 37.4(3) 18.1 0.8 1.4 1.6x 4.5 Christiana General Insurance (Sub. of UNI Storebrand AS) 01/10/92 Chartwell Re Corp. 71.0 8.9 1.1 N.A. N.A. N.A. (Sub. of NWNL Companies)/ Wand Partners/Michigan Mutual 08/29/89 National Reinsurance Corp./ 395.1 10.4 1.4 N.A. N.A. 13.4 Robert M. Bass & Acadia Notes: - -------------------------------- Notes: (1) Actual purchase is $201 MM for a 93% interest. Value is grossed up for multiple purposes. (2) GAAP financial data for multiples is as of 12/31/91. (3) Actual purchase is $16.9MM for remaining 45.2% interest. Value is grossed up for multiple purposes. Dillon, Read & Co. Inc. C - 16 SCOR U.S. Corporation Confidential SUMMARY OF SELECTED EUROPEAN REINSURANCE TRANSACTIONS (millions(1)) Implied Price Price/ --------------------------- Announcement % for Net Net Book Date Acquiree/Acquiror Deal Size Acquired 100% Premiums Income Value - ------------ ------------------------------------- ---------- -------- -------- -------- ------ ----- 09/23/94 Cologne Re/General Re DM 902 50.1% 1,800.4 0.4x 13.7x 2.6x 09/02/93 Francaise d'Assurance pour le FF 370.0 20.0% 1,850.0 2.8 12.9 1.0 Commerce Exterieur SA (COFACE)/ Societe Commerciale de Reassurance (SCOR) 25/11/91 Lincoln European Reinsurance USD 11.0 96.6% 11.4 0.7 --- 0.8 Company/ Mapfre SA 16/11/91 Nederlandse Reassurantie Groep DF 1,113 41.0% 276 0.3 9.9 0.8 (NRG)/ Internationale Nederlanden Groep (ING) 17/09/91 Pinnacle Reinsurance Co. Ltd/ USD 63.7 100.0% 63.7 -- 8.0 1.2 Zurich Versicherungs-Gesellschaft 16/05/91 Societe Anonyme Francaise de FF 463 100.0% 463 N.A. N.A. 0.7 Reassurance/ AGF Re 10/07/90 Legal & General (Victory Re)/NRG/ GBP 122 100.0% 122 0.7 N.A. N.A. Nationale Nederlanden 08/05/88 Skandia International Holding AB/ SEK3,600.0 54.0% 6,666.7 0.9 15.2 2.8 Skandia AB 04/01/88 Vittoria Riassicurazioni/ USD 121.2 100.0% 121.2 1.0 N.M. N.M. Societe Commerciale de Reassurance 02/10/87 Baltica Nordisk-Re/ DKR 1,200 100.0% 1,200 108 N.A. 1.6 Employers Re - --------------- (1) $ Values converted at historic exchange rate existing at time of transaction Dillon, Read & Co. Inc. C - 17 SCOR U.S. Corporation Confidential VALUATION BASED ON ACQUISITION COMPARABLES (Dollars in millions, except per share data) SCOR US Multiple Range Per Share Value Figure --------------- --------------- Reference Low High Low High LTM Net Premiums (a) $237.4 1.1x 1.5x $14.37 $19.60 Latest Book Value (a) $15.03 1.0x 1.4x $15.03 $21.05 Average $14.70 - $20.32 - -------------------------------- (a) Fully diluted, as of September 30, 1995. Dillon, Read & Co. Inc. C - 18 SCOR U.S. Corporation Confidential ECONOMIC BOOK VALUE ANALYSIS (Dollars in millions, except per share data) 9/30/95 ----------- GAAP Equity $277.4 MM Goodwill (6.0) Investment Portfolio 0.5 EDP System and Leasehold Improvements (11.0) Deferred Income Tax Benefit (22.5) Market Adjustment for Debt 7.6 Net Present Value of: Prepaid Reinsurance (3.0) - (2.0) Discount on Reserves 41.4 - 54.2 Imbedded Value of Unearned Prem. 18.0 - 19.6 Reserve Deficiency (20.0) - 0 ------------------ Estimated Economic Book Value $281.4 - 316.8 MM ================== Primary Per Share $15.49 - 17.43 ================== Fully Diluted Per Share $15.24 - 17.08 ================== Dillon, Read & Co. Inc. C - 19 SCOR U.S. Corporation Confidential DISCOUNTED CASH FLOW ANALYSIS - - We have also reviewed a valuation of SCOR based on a discounted cash flow analysis - Discounts cumulative stream of dividends to the present - Assumes a terminal value based on a multiple of earnings in the future - - The discounted cash flow analysis, however, has certain shortcomings relative to the other analyses we have reviewed - Difficulty in projecting earnings beyond one year in the insurance industry - The majority of the value resides in the terminal value - - The key assumptions utilized were as follows: Terminal Year: 2000 Premiums Earned Growth beyond 1997: 7% Investment Income Growth beyond 1997: 8% Discount Rate: 11% - 13% Terminal Multiple of Earnings: 10.5x - 12.5x SAP Tax Rate: 20% Dillon, Read & Co. Inc. C - 20 SCOR U.S. Corporation Confidential DISCOUNTED CASH FLOW VALUATION - PROJECTIONS (Dollars in millions) SCOR U.S. Projections Dillon Read Projections --------------------------------------------- ------------------------------------ 1995 1996 1997 1998 --- 2000 ---------- ----------- ---------- ----------- ----------- Net Premiums Earned $259.3 $279.5 $329.2 $352.2 $403.3 Net Investment Income 42.4 44.8 47.2 51.0 59.5 Pretax Income(a) 29.3 33.7 41.7 46.8 54.6 Net Income(b) 23.4 27.0 33.4 37.4 40.4 SAP Dividends 24.3 24.3 24.5 25.4 28.0 Growth in Net Premiums Earned 13.6% 7.8% 17.8% 7.0% 7.0% Growth in Investment Income 3.5 5.6 5.4 8.0 8.0 Loss Ratio 67.3 67.2 65.9 65.9 65.9 Commission Ratio 26.7 26.5 27.2 27.2 27.2 Expense Ratio 11.4 10.3 8.6 8.6 8.6 -------- -------- -------- -------- -------- Combined Ratio 105.3 104.0 101.7 101.7 101.7 Net Premiums/End of Year Surplus 1.1x 1.3x 1.3x 1.4x 1.4x - -------------------------------- (a) Excludes interest expense. (b) Assures a 20% SAP Fox rate Dillon, Read & Co. Inc. C - 21 SCOR U.S. Corporation Confidential DISCOUNTED CASH FLOW VALUATION (Dollars in millions) - - Per Share Valuation: Multiple of 2000 Earnings --------------------------------------------------------------------------- Discount Rate 10.5x 11.5x 12.5x ----------------- --------------------- ---------------------------- -------------------- 11.0% $15.88 $17.47 $19.05 12.0% 15.17 16.70 18.22 13.0% 14.48 15.95 17.43 - - Indicative Valuation Range: $14.48 - $19.05 per Share Dillon, Read & Co. Inc. C - 22 SCOR U.S. Corporation Confidential CLOSE OUT PREMIUM ANALYSIS Value Common Price of Shares % of Date Per Deal Aquired Shares Announced Target Name Acquiror Name Share ($mil) (mil) Acq. - --------- -------------------------- -------------------------- ------ ------- ------- ------- <s 12/28/94 Fleet Mortgage Group Inc Fleet Financial Group Inc $20.00 $188.1 9.4 19.0 % 09/08/94 Contel Cellular Inc GTE Corp 25.50 254.3 10.0 10.0 08/24/94 Castle & Cooke Homes Inc Dole Food Co Inc 15.75 81.5 5.6 17.0 07/28/94 Chemical Waste Management Inc WMX Technologies Inc 8.85 397.4 44.9 21.4 06/06/94 Ogden Projects Inc Ogden Corp 18.38 110.3 6.0 15.8 03/01/94 FoxMeyer Corp National Intergroup Inc 14.46 79.7 5.5 19.5 06/17/93 Hadson Energy Resources Corp Apache Corp 15.00 39.3 2.6 33.5 04/26/93 Southeastern Public Service Co DWG Corp 25.60 86.1 3.4 29.0 11/13/92 Brand Cos Inc Rust International Inc 18.75 185.0 9.9 44.0 08/17/92 PHLCORP Inc Leucadia National Corp 25.78 139.9 5.4 36.9 03/02/92 Grace Energy Corp WR Grace & Co 19.00 77.3 4.1 16.6 02/06/92 Spelling Entertainment Inc Charter Co(American Financial) 7.25 43.0 5.8 18.0 09/18/91 Arkla Exploration Co Arkla Inc 15.44 92.6 6.0 18.0 08/02/91 Envirosafe Services Inc EnviroSource Inc 11.69 16.8 1.4 37.4 07/28/91 Country Lake Foods Inc Land O' Lakes Inc 15.30 22.6 1.6 34.5 06/13/91 Weigh-Tronix Staveley Industries PLC 22.00 25.3 1.2 44.3 03/01/91 Metcalf & Eddy Cos Inc Air & Water Technologies Corp 19.25 51.0 2.7 18.0 01/25/91 Medical Management of America Investor Group 8.25 12.9 1.6 23.7 01/03/91 Ocean Drilling & Exploration Murphy Oil Corp 19.39 391.8 20.1 39.0 11/11/90 US WEST NewVector Group Inc US WEST Inc 45.03 437.5 9.7 19.0 10/23/90 ERC Environmental and Energy Ogden Corp 15.13 33.6 2.2 38.8 07/31/90 Freeport-McMoRan Oil and Gas Freeport McMoRan Inc 10.88 46.2 4.3 18.5 07/19/90 Caesars New Jersey Inc Ceasars World Inc 22.58 48.4 2.2 13.4 07/12/90 TVX Broadcast Group Inc Paramount Communications 9.50 61.4 6.5 21.0 07/06/90 Mack Trucks Inc Renault Vehicules Industriels 6.25 103.7 16.6 40.0 05/17/90 DST Systems Inc Kansas City Southern Inds Inc 15.85 39.1 2.2 11.5 05/08/90 ISS International Service Sys ISS International Service A/S 12.00 15.4 1.3 34.0 03/02/90 Shearson Lehman Brothers Hldgs American Express Co 12.90 360.0 27.9 39.0 01/24/90 Copperweld Corp Imetal SA 17.00 78.0 4.6 44.4 % Owned Premium Premium Premium After 1 Day 1 Week 4 Weeks Date Trans- Prior Prior Prior Announced action to Deal to Deal to Deal - --------- ------- -------- ------- ------- 12/28/94 100 % 19.4% 18.5% 18.5% 09/08/94 100 43.7% 37.8% 36.0% 08/24/94 100 35.4% 41.5% 55.5% 07/28/94 100 10.6% 8.9% 1.1% 06/06/94 100 5.8% 17.6% 20.5% 03/01/94 100 7.1% 9.1% 11.2% 06/17/93 100 26.3% 27.7% 25.0% 04/26/93 100 65.2% 63.8% 86.2% 11/13/92 100 4.9% 13.6% 4.9% 08/17/92 100 12.1% 15.2% 28.9% 03/02/92 100 24.6% 21.6% 7.8% 02/06/92 100 52.6% 45.0% 45.0% 09/18/91 100 8.4% 28.7% 30.0% 08/02/91 100 16.9% 11.3% -2.6% 07/25/91 100 39.1% 45.7% 53.0% 06/13/91 98 41.9% 41.9% 44.3% 03/01/91 100 22.2% 16.7% 24.2% 01/25/91 100 65.0% 65.0% 65.0% 01/03/91 100 14.1% 24.1% 9.2% 11/11/90 100 47.6% 58.0% 83.8% 10/23/90 100 37.5% 44.1% 44.1% 07/31/90 100 36.0% 42.6% 47.4% 07/19/90 100 40.0% 49.2% 44.5% 07/12/90 100 26.7% 90.0% 85.2% 07/06/90 100 19.0% 19.0% 21.8% 05/17/90 99 24.3% 40.9% 51.0% 05/08/90 100 54.8% 60.0% 60.0% 03/02/90 100 -0.8% 18.6% 7.5% 01/24/90 100 47.8% 41.7% 33.3% - ------------------------------------------------------- All Close outs: Average 29.2% 35.1% 35.9% Median 26.3% 37.8% 33.3% High 65.2% 90.0% 86.2% Low -0.8% 8.9% -2.6% - ------------------------------------------------------- Dillon, Read & Co. Inc. C-23 SCOR U.S. Corporation Confidential CLOSE OUT PREMIUM VALUATION SUR Implied Stock Applicable Offer Price Premium Price ----------- ---------------- ----------- 1 Day Prior to Transaction $11.125 29.2% $14.37 1 Week Prior to Transaction 11.500 35.1% 15.54 4 Weeks Prior to Transaction 11.500 35.9% 15.63 Valuation Based on Premium Analysis $14.37 - $15.63 Dillon, Read & Co. Inc. C - 24 SCOR U.S. Corporation Confidential SUMMARY OF VALUATION INDICATORS PRICE PER SHARE HIGH LOW Comparable Trading $18.98 $14.49 Comparable Acquisitions 20.32 14.70 Economic Book Value Analysis 17.08 15.24 Discounted Cash Flow 19.05 14.48 Premium Analysis 15.63 14.37 Dillon, Read & Co. Inc. C - 25 SCOR U.S. Corporation Dillon, Read & Co. Inc. SCOR U.S. Corporation Analysis of Comparable Companies CURRENT TRADING STATISTICS (Dollars in millions) Broker Companies ------------------------------------------------------------------------- SCOR U.S. NAC Re PXRE Corp. Prudential Re Transatlantic Trenwick ----------- ----------- ----------- ---------------- --------------- ---------- Current Price as of 11/01/95 $15.250 $36.000 $25.125 $20.375 $68.000 $49.500 52 week High 15.750 39.000 29.750 20.750 70.375 53.000 % of Year High 96.8% 92.3% 84.5% 98.2% 96.6% 93.4% % of 52 week spectrum 93.9% 79.7% 47.1% 83.3% 89.5% 79.1% Number of shares Outstanding MM 18.2 17.6 8.7 50.0 22.9 6.5 Equity Value $277.0 $632.3 $219.2 $1,018.8 $1,560.1 $321.3 ====== ====== ====== ======== ======== ====== - ------------------------------------------------------------------------------------------------------------------------------------ Market Value of Equity to: Adjusted P/E 20.1 x 16.4 x 5.1 x 16.5 x 13.1 x 11.9 x 1995 E 16.6 14.7 5.2 15.7 13.2 13.1 1996 E 15.7 12.6 5.0 11.3 11.3 11.8 - ------------------------------------------------------------------------------------------------------------------------------------ Projected 5 year EPS Growth Rate NA 16.0 % 15.0 % NA 15.0 % 14.0 % Dividend Yield 1.3% 0.4% 2.4% 0.6% 0.6% 2.3% ROAE 5.5% 12.1% 25.0% 2.9% 14.5% 13.2% Adjusted ROAE 5.3% 10.2% 25.3% 2.5% 14.5% 13.2% - ------------------------------------------------------------------------------------------------------------------------------------ Market/Book Value 1.0 x 1.6 x 1.1 x 1.2 x 1.7 x 1.5 x Market/Adjusted Book Value 0.8 1.1 1.0 0.9 1.4 1.2 Market/Statutory Surplus 1.1 1.5 1.0 1.6 2.6 1.3 - ------------------------------------------------------------------------------------------------------------------------------------ Direct Companies ----------------------------------------------- American Re General Re National Re ---------------- ------------- ------------- Current Price as of 11/01/95 $38.375 $146.375 $33.625 52 week High 43.125 153.250 35.375 % of Year High 89.0% 95.5% 95.1% % of 52 week spectrum 73.4% 84.9% 86.7% Number of shares Outstanding MM 47.1 82.0 16.9 Equity Value $1,805.5 $12,006.9 $567.1 ======== ========= ====== - ---------------------------------------------------------------------------------------------- Market Value of Equity to: Adjusted P/E 14.8 x 16.3 x 14.5 x 1995 E 12.8 15.8 12.0 1996 E 10.7 14.1 10.7 - ---------------------------------------------------------------------------------------------- Projected 5 year EPS Growth Rate 15.0 % 14.0 % 13.0 % Dividend Yield 1.0% 1.3% 0.5% ROAE 14.2% 15.1% 7.9% Adjusted ROAE 14.0% 14.2% 12.2% - ---------------------------------------------------------------------------------------------- Market/Book Value 1.9 x 2.1 x 1.6 x Market/Adjusted Book Value 1.1 1.6 1.3 Market/Statutory Surplus 1.6 3.2 1.5 - ---------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------------ Dillon, Read & Co. Inc. SCOR U.S. Corporation Analysis of Comparable Companies - ------------------------------------------------------------------------------------------------------------------------------------ Comparative Analysis (Dollars in millions) Broker Companies -------------------------------------------------------------------------------- SCOR U.S. NAC Re PXRE Corp. Prudential Re Transatlantic Trenwick ----------- ----------- --------------- --------------- --------------- ------------- Size: Total Assets $1,187.6 $2,138.8 $183.6 $4,363.6 $3,674.9 $796.7 Book Value of Common 272.7 405.8 192.4 877.4 894.1 218.8 LTM Total Revenues 282.1 544.3 126.1 1,035.8 1,101.5 192.7 - ------------------------------------------------------------------------------------------------------------------------------------ Performance: LTM Pretax Return on Average Equity 6.6% 14.6% 36.5% 2.8% 17.4% 16.4% LTM Pretax Margin 6.0% 10.1% 49.6% 6.6% 12.9% 17.3% Net Revenues 3 Year C.A.G.R. 4.0% 21.3% 53.9% -0.8% 28.6% 21.3% Pretax Income 3 Year C.A.G.R. NM 242.5% NM -67.5% 18.7% -47.8% Direct Companies ------------------------------------------------- American Re General Re National Re ----------------- -------------- ------------- Size: Total Assets $7,071.4 $34,810.0 $1,641.6 Book Value of Common 953.1 5,708.0 346.0 LTM Total Revenues 1,809.2 5,067.0 340.0 - ---------------------------------------------------------------------------------------- Performance: LTM Pretax Return on Average 18.2% 18.5% 10.9% LTM Pretax Margin 8.8% 19.0% 10.3% Net Revenues 3 Year C.A.G.R. NA 6.4% 4.8% Pretax Income 3 Year C.A.G.R. NA 4.9% -18.4% Credit Analysis (Dollars in millions) SCOR U.S. NAC Re PXRE Corp. Prudential Re Transatlantic Trenwick ----------- ----------- --------------- --------------- --------------- ------------ Total Assets $1,187.6 $2,138.8 $183.6 $4,363.6 $3,674.9 $796.7 LT Debt 101.0 200.0 69.7 19.3 0.0 103.5 Preferred Stock 0.0 0.0 0.0 0.0 0.0 0.0 Common Equity 272.7 405.8 192.4 877.4 894.1 218.8 ----- ----- ----- ----- ----- ----- Total capitalization $373.7 $605.8 $262.1 $896.7 $894.1 $322.3 ====== ====== ====== ====== ====== ====== LT Debt/Total capitalization 27.0% 33.0% 26.6% 2.2% 0.0% 32.1% - ------------------------------------------------------------------------------------------------------------------------------------ Net premiums/Statutory surplus 1.0 x 1.1 x 0.5 x 1.4 x 1.6 x 0.7 x Total assets/Common equity 4.4 x 5.3 x 1.0 x 5.0 x 4.1 x 3.6 x Total assets/Statutory surplus 4.9 4.9 0.9 6.8 6.2 3.3 - ------------------------------------------------------------------------------------------------------------------------------------ American Re General Re National Re ----------------- -------------- ------------- Total Assets $7,071.4 $34,810.0 $1,641.6 LT Debt 600.0 156.0 100.0 Preferred Stock 0.0 1.0 0.0 Common Equity 953.1 5,708.0 346.0 ----- ------- ----- Total capitalization $1,553.1 $5,865.0 $446.0 ======== ======== ====== LT Debt/Total capitalization 38.6% 2.7% 22.4% - ---------------------------------------------------------------------------------------- Net premiums/Statutory surplus 1.5 x 1.1 x 0.8 x Total assets/Common equity 7.4 x 6.1 x 4.7 x Total assets/Statutory surplus 6.3 9.2 4.2 - ---------------------------------------------------------------------------------------- Confidential PREMIUMS PAID IN SELECTED U.S. REINSURANCE TRANSACTIONS ($ in millions) Announcement Aggregate Date Acquiree/Acquiror Deal Description Value - ------------ ---------------------------- --------------------------------- --------- 08/07/95 Piedmont Management Company/ Chartwell announced it was $85.4 Chartwell Re Corp. acquiring RECO for $85.4MM from Piedmont after Piedmont completed its spin-off of Lexington, an asset-manager. 01/06/95 Re Capital/ Zurich Centre Re acquired 131.6 Zurich Centre Re publicly-traded Re Capital in a public auction. (John Deere owned a 40% stake) 12/21/94 Constitutional Re/ Xerox Corp. sold its reinsurance 400.0 Exor America Inc. unit, Constitution Re., to Exor American Inc. (an affiliate of IFI) 10/25/93 American Skandia Life Hartford Life acquired the life 19.1 Reinsurance/Hartford Life reinsurance business of Skandia (ITT Corporation) (Sweden), which specializes in risk analysis and financial reinsurance . 09/09/93 American Royal Reinsurance Australian insurer QBE Ins. 59.0 Co. Group acquired Royal (Sub. of Royal Insurance)/QBE Insurance's U.S. reinsurance Insurance subsidiary. American Royal Rewrites property (50%), casualty (30%), and accident and health (20%) through intermediaries on a treaty and facultative basis. Price Paid as a Multiple of Acquiree -------------------------------------------- GAAP/Statutory --------------------------------- Announcement Net Book Net Market ROAE of Date Income Value Premiums Value Acquiree - ------------ -------- ------- ---------- -------- --------- 08/07/95 24.6x 1.1x 0.6x 1.3x N.A. 01/06/95 18.0 1.0 1.7 1.4 6.8% 12/21/94 N.A. 1.35 N.A. N.A. N.A. 10/25/93 N.A. N.A. N.A. N.A. N.M. N.M. 1.2 0.7 09/09/93 N.A. N.A. N.A. N.A. N.A. N.M. 1.09 142.6 - ------------------------- (1) Actual purchase is $201 MM for a 93% interest. Value is grossed up for multiple purposes. Dillon, Read & Co. Inc. 2 - 1 SCOR U.S. Corporation Confidential PREMIUMS PAID IN SELECTED U.S. REINSURANCE TRANSACTIONS ($ in millions) Announcement Aggregate Date Acquiree/Acquiror Deal Description Value - ------------ ---------------------------- --------------------------------- --------- 07/29/93 Underwriters Reinsurance Co. Allegheny Corporation purchased 216.1(1) (Sub. of Underwriters Re the remaining 93% of Holding)/ Alleghany Corp. Underwriters Re, which had been in registration. Underwriters was owned by a consortium led by Goldman Sachs and Continental Corporation, and wrote multi- line insurance and specialized coverages. 03/22/93 Kemper Re/Lumbermens Mutual Kemper swapped Kemper Re and its 610.2 50% interest in a risk management company to Lumbermens in exchange for Lumbermens 35% stake in Kemper. 06/09/92 American Re-Insurance Corp. A KKR Fund purchased American 1,429.5(2) (Sub. of Aetna) Re, the third largest P&C American Re Corp. (Formed by Reinsurance Company in the U.S., KKR.) a direct writer, from Aetna. 05/14/93 Skandia America Reinsurance Centre Reinsurance Holdings, N.A. Corp/ Bermudan subsidiary of Zurich Zurich Versicherungs- Versicherungs-Gesellschaft, has Gesellschaft acquired the reinsurance business of Skandia America Reinsurance (SARC) of the US from Skandia. Terms were not disclosed. SARC conducts non life reinsurance business in the US, Canada and Bermuda. Price Paid as a Multiple of Acquiree -------------------------------------------- GAAP/Statutory --------------------------------- Announcement Net Book Net Market ROAE of Date Income Value Premiums Value Acquiree - ------------ -------- ------- ---------- -------- --------- 07/29/93 N.A. 1.41 N.A. N.A. 19.04 6.4x 1.20 153.2 03/22/93 N.M. 1.8 N.A. N.A. N.M. N.M. 1.4 N.A. 06/09/92 9.6 1.2 142.3 N.A. 17.15 9.1 1.9 169.6 05/14/93 N.A. N.A. N.A. N.A. N.A. - -------------------------------- (2) GAAP financial data for multiples is as of 12/31/91. Dillon, Read & Co. Inc. 2 - 2 SCOR U.S. Corporation Confidential PREMIUMS PAID IN SELECTED U.S. REINSURANCE TRANSACTIONS ($ in millions) Announcement Aggregate Date Acquiree/Acquiror Deal Description Value - ------------ ---------------------------- --------------------------------- --------- 03/20/92 Belvedere Corp./ Norwegian Unistorebrand 37.4(3) Christiana General Insurance purchased US treaty property & (Sub. of UNI Storebrand AS>) casualty reinsurer Belvedere Corp. 02/18/92 Global Insurance Company/ Lawrence acquired this reinsurer 8.9 Lawrence Insurance Group of small/medium sized insurance companies, which additionally has small primary operations. 01/10/92 Chartwell Re Corp. Chartwell, a property casualty 71.0 (Sub. of NWNL Companies)/ reinsurance subsidiary of NWNL, Wand Partners/Michigan Mutual was sold to an investor group led by Wand Partners, an SG Warburg affiliate, and Michigan Mutual. 09/17/91 Mony Re Inc./ Folksamgruppen has acquired Mony 21.0 Folksamgruppen Re, a US life reinsurer, from Mutual of NY. 05/17/90 Metropolitan Reinsurance Skandia, via its US subsidiary, 65.0 Company/ acquired the Reinsurance Skandia AB Business Unit from Metropolitan Reinsurance Company, subsidiary of Metropolitan Life Insurance. 08/29/89 National Reinsurance Corp./ National Re, a multi-line P&C 395.1 Robert M. Bass & Acadia treaty reinsurer, was sold to a management and Bass Acadia Fund partnership. National Re had been owned by Lincoln National. 08/03/88 General Reinsurance/Insurance General Re sold its life 300.0 Investment Associates reinsurance subsidiary to an investment group. Price Paid as a Multiple of Acquiree -------------------------------------------- GAAP/Statutory --------------------------------- Announcement Net Book Net Market ROAE of Date Income Value Premiums Value Acquiree - ------------ -------- ------- ---------- -------- --------- 03/20/92 18.1 0.79 136.2 1.58x 4.50 19.4 1.12 N.A. 02/18/92 N.A. 0.80 N.A. N.A. N.A. 9.6 0.67 39.8 01/10/92 8.9 1.08 N.A. N.A. N.A. 7.7 1.31 389.3 09/17/91 N.A. N.A. N.A. N.A. N.A. 05/17/90 N.A. N.A. N.A. N.A. N.A. 08/29/89 10.4 1.41 N.A. N.A. 13.4 11.7 1.98 140.6 16.9 08/03/88 11.0 0.9 N.A. N.A. 8.7 9.4 2.0 20.3 - -------------------------------- (3) Actual purchase is $16.9MM for remaining 45.2% interest. Value is grossed up for multiple purposes. Dillon, Read & Co. Inc. 2 - 3 SCOR U.S. Corporation Confidential SUMMARY OF SELECTED EUROPEAN REINSURANCE TRANSACTIONS (LCL/$MILLIONS, EXCEPT LIT BILLIONS (1)) Implied Announcement % Price for Net Net Book Date Acquiree/Acquiror Deal Description Deal Size Acquired 100% Premiums Income Value - ------------ ------------------- ------------------------------- --------- -------- --------- -------- ------ ----- 09/23/94 Cologne Re/General General Re and Colonia formed a DM 902 50.1% 1,800.0 $4,073 $131 $695 Re new company that acquired 75% of the common and 30% of the preferred shares (66% economic interest) in Cologne Re. General Re contributed $884MM for the class of shares of the new company while Colonia contributed the Cologne Re shares in exchange for the Class A shares. 09/02/93 Francaise SCOR has acquired a 20% stake FF 370.0 20.0% 1,850.0 665.6 143.0 1,798.3 d'Assurance pour in COFACE from UAP and Caisse USD 67.0 335.0 le Commerce des Depots et Consignations, Exterieur SA who hold 5% and 15%, (COFACE)/ respectively. Under the terms Societe of the deal, the sellers Commerciale de exchanged 3 of their shares for Reassurance (SCOR) every 31 SCOR shares, which were valued at FF 600. COFACE insures certain risks for the French Government including political, catastrophic and monetary risks, certain organized commercial risks, political risks in connection with overseas investment by exporters, and exchange guarantees. The company has an international spread. 25/11/91 Lincoln European Mapfre of Spain has agreed to USD 11.0 96.6% 11.4 17.1 (1.8) 14.0 Reinsurance buy 96.6% of Lincoln European BFR 359.1 371.8 611.0 (66.0) 499.0 Company/ Reinsurance Company, the Mapfre SA Brussels-based arm of Lincoln National Corporation of the US. The company underwrites property and casualty lines, the majority of which is proportional reinsurance. 16/11/91 Nederlandse ING has bid for the remaining DF 1,113 41.0% 276 1,085.0 27.8 353 Reassurantie Groep 41% of shares in NRG (leading ($62) ($150) ($592) (NRG)/ Dutch reinsurer) which it does Internationale not already own. ING will pay Nederlanden Groep DFl 113MM to minority (ING) shareholders and make a capital contribution to NRG of DFl 500MM. Price/ --------------------------- Announcement Net Net Book Date Premiums Income Value - ------------ -------- ------ ----- 09/23/94 0.4x 13.7x 2.6x 09/02/93 2.8 12.9 1.0 25/11/91 0.7 N.M. 0.8 16/11/91 0.25x 9.93x 0.78x _________ (1) $ Values converted at historic exchange rate existing at time of transaction. Dillon, Read & Co. Inc. 2 - 4 SCOR U.S. Corporation Confidential SUMMARY OF SELECTED EUROPEAN REINSURANCE TRANSACTIONS (LCL/$MILLIONS, EXCEPT LIT BILLIONS (1)) Implied Announcement % Price for Net Net Book Date Acquiree/Acquiror Deal Description Deal Size Acquired 100% Premiums Income Value - ------------ ------------------- ------------------------------- --------- -------- --------- -------- ------ ----- 17/09/91 Pinnacle CE Health has sold Pinnacle USD 63.7 100.0% 63.7 -- 8.0 53.7 Reinsurance Co. reinsurance to Centre STG 36.8 36.8 -- 4.6 31.0 Ltd/ Reinsurance, subsidiary of Zurich Zurich Insurance. To allow Versicherungs- Centre Re to buy Pinnacle's Gesellschaft business and not the whole company, Pinnacle was first sold to Vertex and then transferred to Centre Re. 16/05/91 Societe Anonyme AGF Re is to merge with SAFR, FF 463 100.0% 463 N.A. N.A. 629 Francaise de which is 27% controlled by AGR ($78) ($107) Reassurance/ Group, to form the second AGF Re largest reinsurance company in France. As the merger will not give AGF a majority stake in SAFR's capital, it will remain independent. The deal is to be carried out via a capital raising operation on the part of SAFR, which then absorbed AGF Re through a share swap. 17/01/91 Hamburger Hannover Ruckversicherungs, DM N.A. N.A. N.A. N.A. N.A. N.A. Internationale/ subsidiary of HDI, acquired the Haftlichtverbrand reinsurance business of der Deutschen Hamburger Internationale Industrie VAG Rucksversicherung, from Wolksfursoge Holding AG. Terms were not disclosed. 10/07/90 Legal & General Legal and General sold Victory GBP 122 100.0% 122 173.7 N.A. N.A. (Victory Re)/NRG/ Reinsurance to Netherlands USD ($227) ($227) Nationale Reinsurance Group (NRG) for Nederlanden B.P.122MM. The deal made NRG the 11th biggest reinsurer. This transaction comprises proceeds in cash of GBP 122MM for NGR and the release of GBP 18MM of further capital resources held within L&G subsidiary companies. Price/ --------------------------- Announcement Net Net Book Date Premiums Income Value - ------------ -------- ------ ----- 17/09/91 -- 8.0 1.2 16/05/91 N.A. N.A. .74 17/01/91 N.A. N.A. N.A. 10/07/90 0.70x N.A. N.A. _________ (1) $ Values converted at historic exchange rate existing at time of transaction. Dillon, Read & Co. Inc. 2 - 5 SCOR U.S. Corporation Confidential SUMMARY OF SELECTED EUROPEAN REINSURANCE TRANSACTIONS (LCL/$MILLIONS, EXCEPT LIT BILLIONS (1)) Implied Announcement % Price for Net Net Book Date Acquiree/Acquiror Deal Description Deal Size Acquired 100% Premiums Income Value - ------------ ------------------- ------------------------------- --------- -------- --------- -------- ------ ----- 22/01/90 Atersforsakerings/ Wasa AB has acquired SEK 34.0 100.0% 34.0 -- -- -- Wasa Forsakring AB Aterforsakrings AB, Swedish USD 5.6 5.6 reinsurance company, from Skandia, Trygg-Hansa and Folksam. 28/07/89 Societe SCOR is to merge with UAP FF -- 100.0% -- 5,857.4 238.1 2,761.5 Commerciale de Reassurance. The merger will Reassurance/ be executed through a paper bid Union des for SCOR & UAP Re from Assurances de Compagnie Generales de Paris Voitures, a shell listed company in which UAP and Assurances Generales de France each own 40%. 01/05/89 Deutsche Continental Corporation of the DEM -- 100.0% -- 198.8 2.6 63.5 Continental US has sold its German USD 111.7 1.5 35.7 Ruecksversi- subsidiary for an undisclosed cherung/ amount. Societe Commerciale de Reassurance 24/09/88 Copenhagen Re/ The acquisition was made by FFR 560.0 85.0% 658.8 85.5 (0.6) 100.4 Groupama creating a reinsurance holding USD 83.1 97.8 12.4 (0.1) 14.6 co in which Groupama has an 85% stake. The holding co will have capital of USD 100MM of which Copenhagen Re (parent company) will contribute USD 15MM. 26/06/88 Imperial Chemicals ICI has agreed to sell its STG 10.0 100.0% 10.0 12.0 2.0 -- Reinsurance/ reinsurance subsidiary to QBE. USD 17.3 17.3 20.8 3.4 -- QBE Insurance Group Price/ --------------------------- Announcement Net Net Book Date Premiums Income Value - ------------ -------- ------ ----- 22/01/90 -- -- -- 28/07/89 -- -- -- 01/05/89 -- -- -- 24/09/88 7.7 N.M. 6.6 26/06/88 0.8 5.1 -- _________ (1) $ Values converted at historic exchange rate existing at time of transaction. Dillon, Read & Co. Inc. 2 - 6 SCOR U.S. Corporation Confidential SUMMARY OF SELECTED EUROPEAN REINSURANCE TRANSACTIONS (LCL/$MILLIONS, EXCEPT LIT BILLIONS (1)) Implied Announcement % Price for Net Net Book Date Acquiree/Acquiror Deal Description Deal Size Acquired 100% Premiums Income Value - ------------ ------------------- ------------------------------- --------- -------- --------- -------- ------ ----- 08/05/88 Skandia Skandia acquired the SEK3,600.0 54.0% 6,666.7 7,609.0 438.0 2,342.0 International outstanding shares of Skandia USD 556.8 1,031.1 Holding AB/ International Holding Skandia AB reinsurance concern spun off 3 years ago. The offer to Skandia International shareholders is SEK 60 in cash and 1 Skandia Insurance share. The new shares issued will represent 22.4% of its expanded equity of 77.3MM shares. 04/01/88 Vittoria SCOR acquired practically the USD 121.2 100.0% 121.2 117.2 1.4 17.3 Riassicurazioni/ only large Italian reinsurer. Societe Through the sale the divestor Commerciale de Toro Assicurazioni recentered Reassurance its activities on direct insurance. 02/10/87 Baltica Nordisk- Baltica, a Danish insurance DKR 1,200 100.0% 1,200 $109 754 Re/ group, sold Baltica-Nordiske, ($173) ($173) ($109) N.A. ($109) Employers Re its reinsurance business, to Employers Re, a subsidiary of General Electric Company, based in Kansas. The acquisition does not include Baltica-Skandinavia (UK). Price/ --------------------------- Announcement Net Net Book Date Premiums Income Value - ------------ -------- ------ ----- 08/05/88 0.9 15.2 2.8 04/01/88 1.0 N.M. N.M. 02/10/87 108 N.A. 1.59 _________ (1) $ Values converted at historic exchange rate existing at time of transaction. Dillon, Read & Co. Inc. 2 - 7 SCOR U.S. Corporation - ------------------------------------------------------------------------------------------------------------------------------ Dillon, Read & Co., Inc. SCOR U.S CORP. Selected Minority Close Out Transactions - ------------------------------------------------------------------------------------------------------------------------------ Value Common % Owned Price of Shares % of After Date Per Deal Aquired Shares Trans- Announced Target Name Acquiror Name Share ($mil) (mil) Acq. action - --------- -------------------------- -------------------------- -------- ------- ------- ------ ------- 12/28/94 Fleet Mortgage Group Inc Fleet Financial Group Inc $20.00 $188.1 9.4 19.0 % 100 % 09/08/94 Contel Cellular Inc GTE Corp 25.50 254.3 10.0 10.0 100 08/24/94 Castle & Cooke Home Inc Dole Food Co Inc 15.75 81.5 5.6 17.0 100 07/28/94 Chemical Waste Management Inc WMX Technologies Inc 8.85 397.4 44.9 21.4 100 06/06/94 Ogden Projects Inc Ogden Corp 18.38 110.3 6.0 15.8 100 03/01/94 FoxMeyer Corp National Intergroup Inc 14.46 79.7 5.5 19.5 100 06/17/93 Hadson Energy Resources Corp Apache Corp 15.00 39.3 2.6 33.5 100 04/26/93 Southeastern Public Service Co DWG Corp 25.60 86.1 3.4 29.0 100 11/13/92 Brand Cos Inc Rust International Inc 18.75 185.0 9.9 44.0 100 08/17/92 PHLCORP Inc Leucadia National Corp 25.78 139.9 5.4 36.9 100 03/02/92 Grace Energy Corp WR Grace & Co 19.00 77.3 4.1 16.6 100 02/06/92 Spelling Entertainment Inc Charter Co(American Financial) 7.25 43.0 5.8 18.0 100 09/18/91 Arkla Exploration Co Arkla Inc 15.44 92.6 6.0 18.0 100 08/02/91 Envirosafe Services Inc EnviroSource Inc 11.69 16.8 1.4 37.4 100 07/25/91 Country Lake Food Inc Land O' Lakes Inc 15.30 22.6 1.6 34.5 100 06/13/91 Weigh-Tronix Staveley Industries PLC 22.00 25.3 1.2 44.3 98 03/01/91 Metcalf & Eddy Cos Inc Air & Water Technologies Corp 19.25 51.0 2.7 18.0 100 01/25/91 Medical Management of America Investor Group 8.25 12.9 1.6 23.7 100 01/03/91 Ocean Drilling & Exploration Murphy Oil Corp 19.39 391.8 20.1 39.0 100 11/11/90 US WEST NewVector Group Inc US West Inc 45.03 437.5 9.7 19.0 100 10/23/90 ERC Environmental and Energy Ogden Corp 15.13 33.6 2.2 38.8 100 07/31/90 Freeport-McMoRan Oil and Gas Freeport McMoRan Inc 10.88 46.2 4.3 18.5 100 07/19/90 Caesars New Jersey Inc Caesars World Inc 22.58 48.4 2.2 13.4 100 07/12/90 TVX Broadcast Group Inc Paramount Communications 9.50 61.4 6.5 21.0 100 07/06/90 Mack Trucks Inc Renault Vehicules Industriels 6.25 103.7 16.6 40.0 100 05/17/90 DST Systems Inc Kansas City Southern Inds Inc 15.85 39.1 2.2 11.5 99 05/08/90 ISS International Service Sys ISS International Service A/S 12.00 15.4 1.3 34.0 100 03/02/90 Shearson Lehman Brothers Hldgs American Express Co 12.90 360.0 27.9 39.0 100 01/24/90 Copperweld Corp Imetal SA 17.00 78.0 4.6 44.4 100 Premium Premium Premium 1 Day 1 Week 4 Weeks Date Prior Prior Prior Announced to Deal to Deal to Deal - --------- -------- ------- ------- 12/28/94 19.4% 18.5% 18.5% 09/28/94 43.7% 37.8% 36.0% 08/24/94 35.4% 41.5% 55.5% 07/28/94 10.6% 8.9% 1.1% 06/06/94 5.8% 17.6% 20.5% 03/01/94 7.1% 9.1% 11.2% 06/17/93 26.3% 27.7% 25.0% 04/26/93 65.2% 63.8% 86.2% 11/13/92 4.9% 13.6% 4.9% 08/17/92 12.1% 15.2% 28.9% 03/02/92 24.6% 21.6% 7.8% 02/06/92 52.6% 45.0% 45.0% 09/18/91 8.4% 28.7% 30.0% 08/02/91 16.9% 11.3% -2.6% 07/25/91 39.1% 45.7% 53.0% 06/13/91 41.9% 41.9% 44.3% 03/01/91 22.2% 16.7% 24.2% 01/25/91 65.0% 65.0% 65.0% 01/03/91 14.1% 24.1% 9.2% 11/11/90 47.6% 58.0% 83.8% 10/23/90 37.5% 44.1% 44.1% 07/31/90 36.0% 42.6% 47.4% 07/19/90 40.0% 49.2% 44.5% 07/12/90 26.7% 90.0% 85.2% 07/06/90 19.0% 19.0% 21.8% 05/17/90 24.3% 40.9% 51.0% 05/08/90 54.8% 60.0% 60.0% 03/02/90 -0.8% 18.6% 7.5% 01/24/90 47.8% 41.7% 33.3% - ------------------------------------------------------- All Close Outs: Average 29.2% 35.1% 35.9% Median 26.3% 37.8% 33.3% High 65.2% 90.0% 86.2% Low -0.8% 8.9% -2.6% - ------------------------------------------------------- - ------------------------------------------------------- Purchase 15-25% Average 27.8% 35.6% 38.1% Median 24.6% 28.7% 30.0% High 65.0% 90.0% 85.2% Low 5.8% 8.9% 1.1% - ------------------------------------------------------- DILLON, READ & CO. INC. 11/02/95 - --------------------------------------------------------------------------------------------------------------------- Preliminary & Confidential SCOR U.S. CORPORATION Discounted Cash Flow Analysis (Dollars in millions) - --------------------------------------------------------------------------------------------------------------------- Actual Company Projections ------ ------------------- INCOME PROJECTIONS 1992 1993 1994 1995 1996 1997 -------- -------- ------- -------- ------- ------- Revenues: Net Premiums Earned $192.1 $236.1 $228.2 $259.3 $279.5 $329.2 Net Investment Income 42.9 42.0 41.0 42.4 44.8 47.2 Net Investment Gains/(Losses) 15.0 12.9 1.0 0.7 -- -- -------- -------- ------- -------- ------- ------- Net Revenues 250.0 291.0 270.2 302.4 324.3 376.4 Losses and Expenses: Losses and Expenses, net 160.5 156.3 191.3 174.4 187.7 216.8 Commissions, net 56.0 61.3 59.4 69.1 74.1 89.5 Other Operating Expenses 23.9 26.4 26.0 29.0 29.0 30.0 Other 4.3 4.1 4.0 0.6 (0.2) (1.6) Interest Expense 4.6 8.0 8.9 -- -- -- -------- -------- ------- -------- ------- ------- Pretax Income 1995-2004 0.6 34.9 (19.5) 29.3 33.7 41.7 Income Taxes 20.0% (3.8) 7.0 (11.3) 5.9 6.7 8.3 -------- -------- ------- -------- ------- ------- Net Income from Continuing Ops. $4.4 $27.9 ($8.2) $23.4 $27.0 $33.4 ======== ======== ======= ======== ======= ======= Extraordinary Items -- -- 0.4 -- -- -- Cum. Effect of Accting Change 2.8 (2.6) -- -- -- -- -------- -------- ------- -------- ------- ------- Net Income $7.2 $25.3 ($7.8) $23.4 $27.0 $33.4 ======== ======== ======= ======== ======= ======= Annual Growth -87.5% 249.4% -131.0% -398.8% 15.1% 23.6% Less: Preferred Dividends -- -- -- -- -- -- Net Income to Common $7.2 $25.3 ($7.8) $23.4 $27.0 $33.4 ======== ======== ======= ======== ======= ======= - --------------------------------------------------------------------------------------------------------------------- Growth in Net Premiums Earned 22.91% -3.31% 13.61% 7.79% 17.77% Growth in Investment Income -1.95% -2.51% 3.51% 5.66% 5.35% Loss Ratio 83.6% 66.2% 83.8% 67.3% 67.2% 65.9% Commission Ratio 29.1% 26.0% 26.0% 26.7% 26.5% 27.2% Expense Ratio 14.7% 12.9% 13.2% 11.4% 10.3% 8.6% Combined Ratio 127.5% 105.1% 123.0% 105.3% 104.0% 101.7% Return on Average Equity 9.6% 11.1% 13.4% - --------------------------------------------------------------------------------------------------------------------- Dividends ($24.3) ($24.3) ($24.5) Dividend Payout Ratio 103.9% 89.9% 73.5% Retained Earnings ($0.9) $2.7 $8.8 Surplus: Beginning Statutory Surplus $243.4 $242.5 $245.2 Plus: Retained Earnings (0.9) 2.7 8.8 Other -- -- -- -------- ------- ------- Ending Statutory Surplus $242.5 $245.2 $254.1 ======== ======= ======= Average Surplus $243.0 $243.9 $249.7 10% of Beginning Surplus 24.3 24.3 24.5 Minimum EOY Surplus (Multiple of Net Premiums) 1.7 x $152.5 $164.4 $193.6 Total Dividends Allowable 105.1 85.0 Net Premiums/End of Year Surplus 1.1 x 1.3 x Projected --------- INCOME PROJECTIONS 1998 1999 2000 2001 2002 2003 2004 ------- ------- ------- --------- ------- ------- ------- Revenues: Net Premiums Earned $352.2 $376.9 $403.3 $431.5 $461.7 $494.0 $528.6 Net Investment Income 51.0 55.1 59.5 64.3 69.4 74.9 80.9 Net Investment Gains/(Losses) -- -- -- -- -- -- -- ------- ------- ------- --------- ------- ------- ------- Net Revenues 403.2 432.0 462.8 495.7 531.1 569.0 609.5 Losses and Expenses: Losses and Expenses, net 232.0 248.2 265.6 284.2 304.0 325.3 348.1 Commissions, net 95.8 102.5 109.7 117.3 125.5 134.3 143.7 Other Operating Expenses 30.4 32.6 34.8 37.3 39.9 42.7 45.7 Other (1.7) (1.8) (1.9) (2.1) (2.2) (2.4) (2.5) Interest Expense -- -- -- -- -- -- -- ------- ------- ------- --------- ------- ------- ------- Pretax Income 1995-2004 46.8 50.5 54.6 59.1 63.8 69.0 74.6 Income Taxes 20.0% 9.4 10.1 10.9 11.8 12.8 13.8 14.9 ------- ------- ------- --------- ------- ------- ------- Net Income from Continuing Ops. $37.4 $40.4 $43.7 $47.2 $51.1 $55.2 $59.7 ======= ======= ======= ========= ======= ======= ======= Extraordinary Items -- -- -- -- -- -- -- Cum. Effect of Accting Change -- -- -- -- -- -- -- ------- ------- ------- --------- ------- ------- ------- Net Income $37.4 $40.4 $43.7 $47.2 $51.1 $55.2 $59.7 ======= ======= ======= ========= ======= ======= ======= Annual Growth 12.2% 8.1% 8.1% 8.1% 8.1% 8.1% 8.1% Less: Preferred Dividends -- -- -- -- -- -- -- Net Income to Common $37.4 $40.4 $43.7 $47.2 $51.1 $55.2 $59.7 ======= ======= ======= ========= ======= ======= ======= - ---------------------------------------------------------------------------------------------------------------------------------- Growth in Net Premiums Earned 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% Growth in Investment Income 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% Loss Ratio 65.9% 65.9% 65.9% 65.9% 65.9% 65.9% 65.9% Commission Ratio 27.2% 27.2% 27.2% 27.2% 27.2% 27.2% 27.2% Expense Ratio 8.6% 8.6% 8.6% 8.6% 8.6% 8.6% 8.6% Combined Ratio 101.7% 101.7% 101.7% 101.7% 101.7% 101.7% 101.7% Return on Average Equity 14.4% 14.8% 15.2% 15.5% 15.8% 16.0% 16.3% - ---------------------------------------------------------------------------------------------------------------------------------- Dividends ($25.4) ($26.6) ($28.0) ($29.6) ($31.3) ($33.3) ($35.5) Dividend Payout Ratio 67.9% 65.8% 64.0% 62.6% 61.4% 60.3% 59.5% Retained Earnings $12.0 $13.8 $15.7 $17.7 $19.7 $21.9 $24.2 Surplus: Beginning Statutory Surplus $254.1 $266.1 $279.9 $295.6 $313.3 $333.0 $354.9 Plus: Retained Earnings 12.0 13.8 15.7 17.7 19.7 21.9 24.2 Other -- -- -- -- -- -- -- ------- ------- ------- --------- ------- ------- ------- Ending Statutory Surplus $266.1 $279.9 $295.6 $313.3 $333.0 $354.9 $379.1 ======= ======= ======= ========= ======= ======= ======= Average Surplus $260.1 $273.0 $287.8 $304.5 $323.2 $344.0 $367.0 10% of Beginning Surplus 25.4 26.6 28.0 29.6 31.3 33.3 35.5 Minimum EOY Surplus (Multiple of Net Premiums) $207.2 $221.7 $237.2 $253.8 $271.6 $290.6 $310.9 Total Dividends Allowable 84.3 84.8 86.4 89.1 92.8 97.6 103.7 Net Premiums/End of Year Surplus 1.3 x 1.3 x 1.4 x 1.4 x 1.4 x 1.4 x 1.4 x - ---------------------------------------------------------------------------------------------------------------------------------- DILLON, READ & CO. INC. - ----------------------------------------------------------------------------------------------------------------------------------- Preliminary & Confidential SCOR U.S. CORPORATION Discounted Cash Flow Analysis (Dollars in millions) - ----------------------------------------------------------------------------------------------------------------------------------- PRESENT VALUE OF DIVIDENDS - -------------------------- ------------------------------------------------------------ Discount 1996 1997 1998 1999 2000 NPV Value of Dividends Discounted to Rate ---------- ----------- --------- ---------- ------------ 1/1/96 at Equity Discount Rates of: -------- - ------------------------------------------ 11.0% $21.8 $19.9 $18.6 $17.5 $16.6 12.0% 21.7 19.6 18.1 16.9 15.9 13.0% 21.5 19.2 17.6 16.3 15.2 NPV Value of Cumulative Dividends Disc. 1/1/96 at Equity Discount Rates of: - ------------------------------------------ 11.0% $21.8 $41.8 $60.3 $77.9 $94.5 12.0% 21.7 41.2 59.3 76.2 92.1 13.0% 21.5 40.7 58.3 74.6 89.8 - ----------------------------------------------------------------------------------------------------------------------------------- NPV Value of Dividends and Equity Disc. Discount P/E 1996 1997 1998 1999 2000 to 1/1/96 at Equity Discount Rates of: Rate Multiple ---- ---- ---- ---- ---- - ------------------------------------------ --------- -------- 11.0% 10.5 x $305.1 $357.3 $379.2 $388.3 $396.8 11.0% 11.5 332.1 387.3 409.5 417.9 425.6 11.0% 12.5 359.1 417.4 439.9 447.5 454.4 UNLEVERED PRESENT VALUE 12.0% 10.5 x $305.0 $353.9 $372.4 $378.4 $383.8 - ----------------------- 12.0% 11.5 331.9 383.7 402.3 407.2 411.5 12.0% 12.5 358.9 413.5 432.1 436.0 439.3 13.0% 10.5 x $304.8 $350.6 $365.9 $368.9 $371.3 13.0% 11.5 331.7 380.1 395.2 396.9 398.1 13.0% 12.5 358.7 409.6 424.5 424.9 424.9 ---------------------------------------------------- NPV per Share of Dividends and Equity Disc. Discount P/E 1996 1997 1998 1999 2000 to 1/1/96 at Equity Discount Rates of: Rate Multiple ---- ---- ---- ---- ---- - ------------------------------------------ --------- -------- Net Debt (9/30/95) $108.3 11.0% 10.5 x $196.9 $249.0 $270.9 $280.1 $288.5 11.0% 11.5 223.9 279.1 301.2 309.6 317.3 11.0% 12.5 250.8 309.1 331.6 339.2 346.1 PRESENT VALUE OF EQUITY 12.0% 10.5 x $196.7 $245.6 $264.2 $270.2 $275.5 - ----------------------- 12.0% 11.5 223.7 275.4 294.0 298.9 303.3 12.0% 12.5 250.6 305.2 323.8 327.7 331.0 13.0% 10.5 x $196.5 $242.3 $257.6 $260.6 $263.0 13.0% 11.5 223.5 271.9 286.9 288.6 289.8 13.0% 12.5 250.4 301.4 316.2 316.6 316.6 NPV per Share of Dividends and Equity Disc. Discount P/E 1996 1997 1998 1999 2000 to 1/1/96 at Equity Discount Rates of: Rate Multiple ---- ---- ---- ---- ---- - ------------------------------------------- -------- -------- Shares (MM) 18.2 11.0% 10.5 x $10.84 $13.71 $14.91 $15.42 $15.88 11.0% 11.5 12.32 15.36 16.58 17.05 17.47 11.0% 12.5 13.81 17.02 18.26 18.67 19.05 PV PER SHARE 12.0% 10.5 x $10.83 $13.52 $14.54 $14.87 $15.17 - -------------------------------- 12.0% 11.5 12.31 15.16 16.19 16.46 16.70 12.0% 12.5 13.80 16.80 17.83 18.04 18.22 13.0% 10.5 x $10.82 $13.34 $14.18 $14.35 $14.48 13.0% 11.5 12.30 14.97 15.80 15.89 15.95 13.0% 12.5 13.79 16.59 17.41 17.43 17.43 PRESENT VALUE OF DIVIDENDS As of Year - -------------------------- Discount 2001 2002 2003 2004 NPV Value of Dividends Discounted to Rate ------------ ------------- ------------- ------------ 1/1/96 at Equity Discount Rates of: -------- - ------------------------------------------ 11.0% $15.8 $15.1 $14.5 $13.9 12.0% 15.0 14.2 13.5 12.8 13.0% 14.2 13.3 12.5 11.8 NPV Value of Cumulative Dividends Disc. 1/1/96 at Equity Discount Rates of: - ------------------------------------------ 11.0% $110.3 $125.4 $139.8 $153.7 12.0% 107.1 121.2 134.7 147.5 13.0% 104.0 117.3 129.8 141.6 - ----------------------------------------------------------------------------------------------------------------------------------- Assuming Sale at the End of --------------------------- NPV Value of Dividends and Equity Disc. Discount P/E 2001 2002 2003 2004 to 1/1/96 at Equity Discount Rates of: Rate Multiple ---- ---- ---- ---- - ------------------------------------------ --------- -------- 11.0% 10.5 x $404.7 $412.0 $419.0 $425.5 11.0% 11.5 432.7 439.3 445.6 451.4 11.0% 12.5 460.7 466.6 472.1 477.3 UNLEVERED PRESENT VALUE 12.0% 10.5 x $388.5 $392.9 $396.8 $400.5 - ----------------------- 12.0% 11.5 415.4 418.8 421.8 424.6 12.0% 12.5 442.2 444.6 446.6 448.7 13.0% 10.5 x $373.2 $374.9 $376.2 $377.3 13.0% 11.5 398.9 399.4 399.6 399.7 13.0% 12.5 424.5 423.9 423.1 422.2 Assuming Sale at the End of NPV per Share of Dividends and Equity Disc. Discount P/E 2001 2002 2003 2004 to 1/1/96 at Equity Discount Rates of: Rate Multiple - ------------------------------------------ --------- -------- Net Debt (9/30/95) $108.3 11.0% 10.5 x $296.4 $303.8 $310.7 $317.2 11.0% 11.5 324.4 331.1 337.3 343.1 11.0% 12.5 352.5 358.4 363.9 369.0 PRESENT VALUE OF EQUITY 12.0% 10.5 x $280.3 $284.6 $288.6 $292.2 - ----------------------- 12.0% 11.5 307.1 310.5 313.5 316.3 12.0% 12.5 333.9 336.4 338.5 340.4 13.0% 10.5 x $265.0 $266.6 $267.9 $269.0 13.0% 11.5 290.6 291.1 291.4 291.5 13.0% 12.5 316.3 315.6 314.8 313.9 Assuming Sale at the End of --------------------------- NPV per Share of Dividends and Equity Disc. Discount P/E 2001 2002 2003 2004 to 1/1/96 at Equity Discount Rates of: Rate Multiple ---- ---- ---- ---- - ------------------------------------------- -------- -------- Shares (MM) 18.2 11.0% 10.5 x $16.32 $16.72 $17.10 $17.47 11.0% 11.5 17.86 18.23 18.57 18.89 11.0% 12.5 19.40 19.73 20.03 20.32 PV PER SHARE 12.0% 10.5 x $15.43 $15.67 $15.89 $16.09 - --------------------------------- 12.0% 11.5 16.91 17.09 17.26 17.41 12.0% 12.5 18.38 18.52 18.64 18.74 13.0% 10.5 x $14.59 $14.68 $14.75 $14.81 13.0% 11.5 16.00 16.03 16.04 16.05 13.0% 12.5 17.41 17.38 17.33 17.28 Preliminary & Confidential 10:56 AM 02-Nov-95 SCOR U.S. CORPORATION Weighted Average Cost of Capital (Dollars in millions) Dillon, Read & Co. Inc. Estimation of Unlevered Asset Beta Company Equity Total Market Debt/ Ticker Beta (a) Debt Equity Capitalization Capitalization - ------------- ---------- -------- --------- -------------- -------------- SCOR U.S. 0.49 $121.3 $277.0 $398.3 30.4% NAC Re 0.79 200.0 632.3 832.3 24.0% PXRE Corp 1.04 69.7 219.2 288.9 24.1% Transatlantic 0.74 0.0 1,560.1 1,560.1 0.0% Trenwick 0.65 103.5 321.3 424.8 24.4% American Re 1.05 600.0 1,805.5 2,405.5 24.9% General Re 0.83 157.0 12,006.9 12,163.9 1.3% National Re 0.82 100.0 567.1 667.1 15.0% Company Equity/ Unlevered Ticker Capitalization Beta(b) - ------------- -------------- --------- SCOR U.S. 69.6% 0.39 NAC Re 76.0% 0.64 PXRE Corp 75.9% 0.83 Transatlantic 100.0% 0.74 Trenwick 75.6% 0.53 American Re 75.1% 0.83 General Re 98.7% 0.82 National Re 85.0% 0.72 Average Unlevered Asset Beta 0.73 ===== - -------------------------------------------------------------------------------------------------------------------------- Weighted Average Cost of Capital under Hypothetical Capital Structures (D+P)/(ME+D+P) 4.8% 8.8% 12.8% 16.8% (D+P)/ME 5.0% 9.6% 14.6% 20.1% D/(ME+D+P) 4.8% 8.8% 12.8% 16.8% ME/(ME+D+P) 95.3% 91.3% 87.3% 83.3% Equity Beta (b) 0.76 0.79 0.81 0.84 Cost of Equity Over Bills (c) 11.8% 12.1% 12.3% 12.6% Cost of Equity Over Bonds (d) 11.6% 11.8% 12.0% 12.2% Average Cost of Equity 11.7% 11.9% 12.1% 12.4% (D+P)/(BV+D+P) (g) 7.3% 13.2% 18.8% 24.2% Cost of Debt 6.8% 7.0% 7.1% 7.3% After-tax Cost of Debt (e) 4.4% 4.6% 4.6% 4.7% Weighted Average Cost of Capital Based on Bills 11.5% 11.4% 11.3% 11.2% Based on Bonds 11.2% 11.1% 11.0% 10.9% -------------------------------------------------------------------------------------------------------------- Average 11.36% 11.27 11.17% 11.08% -------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------ Weighted Average Cost of Capital under Hypothetical Capital Structures (D+P)/(ME+D+P) 20.8% 24.7% 28.8% 32.8% 36.7% (D+P)/ME 26.2% 32.9% 40.4% 48.7% 58.1% D/(ME+D+P) 20.8% 24.7% 28.8% 32.8% 36.7% ME/(ME+D+P) 79.3% 75.3% 71.3% 67.3% 63.3% Equity Beta (b) 0.88 0.92 0.96 1.00 1.06 Cost of Equity Over Bills (c) 12.8% 13.2% 13.5% 13.9% 14.3% Cost of Equity Over Bonds (d) 12.4% 12.7% 13.0% 13.3% 13.7% Average Cost of Equity 12.6% 12.9% 13.2% 13.6% 14.0% (D+P)/(BV+D+P) (g) 29.4% 34.3% 39.1% 43.6% 48.0% Cost of Debt 7.5% 8.0% 9.0% 11.0% 13.0% After-tax Cost of Debt (e) 4.9% 5.2% 5.9% 7.2% 8.5% Weighted Average Cost of Capital Based on Bills 11.2% 11.2% 11.3% 11.7% 12.2% Based on Bonds 10.9% 10.8% 10.9% 11.3% 11.8% ------------------------------------------------------------------------------------------------------------ Average 11.02% 11.01% 11.11% 11.49% 11.96% ------------------------------------------------------------------------------------------------------------ - -------------------- Notes (a) Source Bloomberg 11/2/95 calculated daily over two years over the S&P 500. (b) Assumes a debt beta of 0.17 as given by Reilly and Joehnk in the Journal of Finance, December, 1976. Unlevered asset beta calculated as: [((D+P)/(ME+D+P)) Debt Beta + (ME/Me+D+P)*Equity Beta]. Equity Beta under the hypothetical capital structures calculated as: [Asset Beta +((D+P)/ME) *(Asset Beta - Debt Beta)] (c) Cost of equity over bills calculated as: (Equity Beta*8.40%+5.46%) The 8.40% figure is the estimated historical arithmetic mean, from 1926 to 1994, returns over bills demanded by investors to invest in equities according to Ibbotson Associates. The 5.46% figure our proxy for the risk free rate, is the average yield on 3-Month Treasury Bills on November 2, 1995. (d) Cost of equity over bonds calculated as (Equity Beta*7.00%+6.27%). The 7.00% figure is the estimated historical arithmetic mean, from 1926 to 1994, rate over bonds demanded by investor to invest in equities according to Ibbotson Associates. The 6.27% figure our proxy for the risk free rate, is the average yield on 30 year Treasury Bond on November 2, 1995 (e) Using a tax rate of 35% which approximates that average combined federal and state tax rates. (f) Liquidation Value (g) (D+P)/(BV+D+P)=[(D+P)/(ME+D+P)]*[{MBV*(1+[(D+P)/(ME])}/{1+(MBV*[(D+P)/ME])} ] where MBV=trading multiple of book value