France domiciled insurer and reinsurer, SCOR, made use of efficient retrocession protection to mitigate the impacts of high catastrophe losses in the third-quarter of 2017, however, the firm still recorded a pre-tax net loss of €598 million for the period.
Global insurers and reinsurers have started to reveal their third-quarter and nine-month 2017 financial results, in light of what’s expected to be the costliest quarter on record for catastrophe losses.
SCOR announced previously that it expects hurricanes Harvey, Irma and Maria, and the two Mexico earthquakes, to result in a combined loss of €430 million, after tax and net of retrocession (€598mn pre-tax and net of retrocession), which, has resulted in net loss of €267 million for the third-quarter, and net income of €25 million for the first nine months of 2017.
“The in-force retrocession programs have responded as expected, bearing witness to the Group’s efficient capital shield policy. After these events, SCOR still benefits from most of its retrocession capacities. The likelihood of the Contingent Capital facility being triggered in 2017 is extremely remote,” explains SCOR, in its Q3 results announcement.
The global re/insurer explains that it retained approximately 60%, so the €598mn, of the total gross loss from the three hurricanes and two earthquakes, which suggests its overall gross loss from the event was around €1 billion, pre-tax, with retrocession protection covering approximately €400 million.
Within its Q3 results presentation, SCOR says it hasn’t breached the upper limit of its retrocession protection, and has ample unused capacity that can be used in case of further substantial loss events.
Furthermore, no reinstatements have been triggered under its retrocession programme, and SCOR is confident that its €300 million contingent capital facility won’t be triggered in 2017, while recent events did not trigger the company’s $630 million in outstanding insurance-linked securities (ILS) transactions, which are Atlas IX Capital DAC (Series 2016-1), Atlas IX Capital Limited (Series 2015-1), and Atlas IX Capital Limited (Series 2013-1).
Following the active 2017 Atlantic hurricane season and subsequent events and losses, industry commentary has suggested that the retro market could take a substantial hit, and it will be interesting to see how the retro and broader re/insurance markets react at the upcoming January 1st, 2018 renewals season.
