Reinsurance News

SCOR continued expansion in 2017, but catastrophes eroded profit

22nd February 2018 - Author: Steve Evans

Global reinsurance firm SCOR reported positive results for 2017, although dented by the impacts of severe catastrophes, a year in which the reinsurer continued the expansion of its underwriting book.

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SCOR reported that for the full-year 2017 its group net income came in at €286 million, down from €603 million in 2016, despite the impacts of the catastrophe losses throughout the year.

This resulted in a return on equity of 4.5% for SCOR, although on its normalised basis it reports this at 10.1% which remains above its 8% above the risk-free rate target.

The property & casualty reinsurance unit suffered a combined ratio of 103.7% for the year, down from 93.1% in 2016, due to the impacts of major losses.

But SCOR said that the impacts of third-quarter 2017 hurricanes and earthquakes had declined slightly, falling to €591 million after retrocession and before tax. The California wildfires drove another €91 million of losses in Q4, while the Ogden Rate change drove a negative impact of €71 million, which has fallen by €45 million after a year-end actuarial review.

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On a normalised basis, SCOR reports the P&C reinsurance combined ratio as 94.3%, which is below its strategic assumptions, the firm said.

In the life reinsurance business a technical margin of 7.1% was just slightly up on the prior years 7%, with new business driving profitable growth, but U.S. mortality experience coming in a little higher than expected.

Denis Kessler, Chairman & Chief Executive Officer of SCOR, commented on the results, “2017 was marked by an exceptional series of major natural catastrophes. SCOR successfully passed this real-life stress test, once again demonstrating the resilience of its business model and its shock-absorbing capacity. This confirms the relevance of our strategy based on a controlled risk appetite, an optimized risk composition, a balanced business model between Life and P&C reinsurance, and a robust capital shield through retrocession and ILS.

“SCOR accomplished its mission in 2017, honoring all its commitments to its clients and contributing to the protection of hundreds of thousands of people severely affected by catastrophes, while managing to deliver a good set of results. SCOR is pursuing its active shareholder remuneration policy, with a dividend of EUR 1.65 per share, to be approved by the Annual General Meeting. The Group is fully mobilized to reach the strategic targets set out in “Vision in Action”.”

The reinsurance firm continues to grow its book, which has been an aim in recent years, reporting nearly €14.8 billion of gross premiums underwritten in 2017, up 8.6% at constant exchange rates from the prior year.

The life reinsurance division delivered 8.5% premium growth in the year, expanding in the Asia-Pacific region and in Financial Solutions lines, while the P&C reinsurance division delivered 8.8%, with continued growth in the United States the main driver of this book.

SCOR continued its quest for growth at the January 2018 reinsurance renewals, with premium growth largely driven by the United States and the United Kingdom, and some growth seen in U.S. catastrophe business.

SCOR benefited from its retrocession program in 2017, which helped to cushion the reinsurer from the losses

You can read SCOR’s full results statement here.

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