French reinsurer Scor SE (SCR.FR) Thursday reported a 24% drop in first-half net profit on lower investment gains and high windstorm claims, but it said that demand for reinsurance cover was solid and that prices are likely to remain robust in the quarters ahead.

The Paris-based firm said net profit for the six-month period to the end of June fell to EUR184 million from EUR242 million a year earlier. The result beat forecasts of EUR165.2 million as stock and bond impairments were lower than feared and catastrophe claims were held in check by cost cuts.

Gross premium income increased 18% to EUR3.25 billion from EUR2.75 billion, also beating views as Scor was able to benefit from its strong market position and lift reinsurance contract prices in markets such as the U.S.

The solid set of figures and the bullish outlook eased analyst and investor concerns that reinsurers such as Scor, Munich Re (MUV2.XE) and Swiss Reinsurance Co. (RUKN.VX), which will report earnings later this month, will be unable to push through price increases during the recession. Reinsurance companies provide coverage to traditional insurance firms looking to spread out their risks to major claims.

At 0930 GMT, Scor were up were up EUR0.79, or 5.1%, to EUR16.38, extending the stock's 8.5% rise over the past 12 months. The strong figures also helped the Dow Jones Euro Stoxx 600 Insurance index gain 1.1%.

Reinsurers can often demand higher prices for reinsurance cover during times of financial and economic crisis. This is because insurance firms, which cede the riskiest policies to firms such as Scor, usually suffer from capital constraints and higher claims during economic downturns.

"We are confident that prices will remain strong over the next quarters and into 2010," Chairman and Chief Executive Denis Kessler said. He added that the market will have more clarity about the pricing trend during the Monte Carlo meeting in September, when industry leaders meet to discuss prices.

Scor said that during the July contract renewals it was able to increase prices for its global property and casualty business by 5.9%, contrary to growing market concerns that prices in the reinsurance business may even drop.

"Scor has produced another solid set of results," said Tim Dawson, insurance analyst at brokerage Helvea, adding that the firm's July renewals were "strong." Likewise, Dawson, who rates the stock at neutral, said that "the balance sheet remained very sound."

Shareholders equity, which is important for any insurer as the capital is needed to back premium growth, increased 6.4% to EUR3.6 billion even as Scor paid out dividends and suffered from investment write-downs.

The strong balance sheet and the company's high cash buffer of nearly EUR4 billion, analysts said, will provide Scor with enough ammunition to pursue growth organically and via acquisitions. Scor recently bought U.S.-based XL Re Life America Inc., a unit of XL Capital for about EUR32 million.

CEO Kessler said that the company will seek "pockets of growth" and pursue "gardening deals" such as the XL Re Life transaction to bolster its capital position. Scor, after its takeover of Switzerland-based peer Converium in 2007, belong to the five largest reinsurers of the world.

Company Web Site:http://www.scor.com

   -By Goran Mijuk, Dow Jones Newswires, +41 43 443 80 47; goran.mijuk@dowjones.com