French reinsurance company SCOR warned that it anticipates booking a first-quarter charge in the “high double-digit EUR million range” for potential losses related to the Ukraine – Russia conflict and that its result for Q1 2022 may be a loss.
SCOR is the first of the major global reinsurance firms to give an idea of the costs to its business of the Ukraine conflict so far.
Others have said they expect the industry loss from the Ukraine and Russia conflict will be the equivalent to a mid-sized catastrophe loss event, suggesting an industry toll in the $15 billion to $30 billion range.
But with multiple lines of business exposed and great uncertainty remaining, with Russia’s invasion continuing, it’s incredibly difficult to put a figure on losses still at this time.
But SCOR clearly wants to get out ahead of its first-quarter 2022 results announcement to give shareholders and the market an idea of what to expect.
At the Q1 2022 results reporting season, we expect there will be a wide-range of charges related to the Ukraine – Russia conflict announced, with some re/insurers choosing to book as much as possible as early as possible, while others may wait for losses to be realised.
SCOR said it has been monitoring the war in Ukraine closely, to assess the potential impact from the conflict itself and the international sanctions to its global reinsurance business.
The company highlighted that its SCOR PO, a subsidiary owned by SCOR in Russia, is directly impacted by the conflict and has stopped underwriting new business.
More generally, SCOR says losses are anticipated in lines of business including Political Risks, Credit and Surety, and Aviation.
As a result, SCOR said that it “expects a Q1 2022 charge in the high double-digit EUR million range for potential claims related to the conflict across both treaty reinsurance and specialty insurance.”
This figure is likely to evolve, the reinsurer cautions.
The company also noted that the costs from Russia’s invasion of and war in Ukraine will be added to other first-quarter 2022 charges, such as natural catastrophes (including floods in Australia, European windstorms and a drought in Brazil) and the continuation of the COVID-19 pandemic in the United States (suggesting a chance mortality losses are elevated again).
“These developments will have an adverse impact on SCOR P&C’s combined ratio and on SCOR L&H’s technical margin and are expected to result in a quarterly loss,” the company said.
SCOR also said it is very well-capitalised and its solvency ratio at the end of Q1 is expected to be “significantly above the 226% position reported at the end of Q4 2021.”