French reinsurer SCOR Global P&C has announced that it secured an increase in reinsurance underwriting profitability at the January 1st, 2020 renewals, which reflects a 2.8% increase in pricing.
SCOR notes that trends witnessed at the important January 2020 renewals were consistent with those seen during 2019, with the firm securing an increase in reinsurance underwriting profitability of circa 1 percentage points.
Overall, SCOR’s reinsurance segment top line did reduce voluntarily at the renewals by 4.7% of premiums up for renewal at constant exchange rates.
According to SCOR, reinsurance markets showed limited response to increasing loss trends, and as such, the reinsurer took actions to improve the profitability of its reinsurance book, mostly reducing in selected large quota share arrangements.
In specialty insurance, the reinsurer notes that it witnessed positive momentum, with rate increases averaging circa 15% for 2019, which enabled the firm to take advantage of opportunities and to continue its profitable growth trend.
Discussing the renewals in more detail, and SCOR notes that one of the main differences in 2020 has been an increase in loss trends for which reinsurance prices only partially compensated. The firm adds that demand for reinsurance protection remains strong after the recent catastrophe experience, but warns that pricing gaps do still exist as capacity remains plentiful and emerging exposures are yet to be fully priced into the reinsurance market.
By segment, and SCOR renewed €2.7 billion of P&C gross premiums at the January 2020 renewals, a decline of 6.4%. For Global lines, €881 million of gross premiums renewed at 1/1, leading to overall gross premiums renewed of €3.2 billion, which id down 4.7%.
Looking forward to the mid-year renewals and SCOR says that it expects the market to remain firm, noting the possibility of further rate hardening as loss affected business come up for renewal in Japan and the U.S. The reinsurer notes that it is well placed to make the most of rate improvements and market changes that present themselves at the upcoming U.S. renewals.
For the full year 2019, the French reinsurer experienced strong gross written premiums growth of almost 16% to €7.1 billion. This was driven by 16.2% growth in reinsurance and 14.4% growth in specialty insurance. According to SCOR, the growth here is a reflection of the strong renewals throughout 2019 and the very robust H2 2018 renewals in the U.S.
The reinsurer also provides an update on its catastrophe losses, stating that it estimates natural catastrophe losses in the fourth-quarter of 2019 to total €343 million, after retrocession and before tax. Typhoon Hagibis is expected to account for as much as €227 million of the Q4 loss total, assuming a market loss of USD 8 billion.
For the full year 2019, SCOR expects catastrophe losses, which includes an upward market loss revision for Typhoon Faxai in Japan and the impacts of other events, to reach €665 million, after retrocession and before tax.
For 2019 and including the impact of catastrophe losses, SCOR has said that it expects to record an actual net combined ratio of below 100%.
Jean-Paul Conoscente, SCOR Global P&C’s Chief Executive Officer (CEO), commented: “As the reinsurance market did not fully react to loss perspectives as we had initially anticipated, SCOR maintains a disciplined underwriting approach as evidenced during the January 2020 renewals. Despite plentiful reinsurance capacity, persistently low interest rates and upward expected losses, SCOR significantly improves its P&C profitability, while accompanying the growth of its key reinsurance clients.
“Thanks to its Specialty Insurance arm, SCOR leverages further the hardening witnessed in commercial lines, expected to continue throughout the year. Given that the January 2020 renewals are focused on EMEA with benign loss experience, we expect more pronounced favorable market conditions through the spring/summer 2020 renewals and maintain our “Quantum Leap” assumptions for the duration of the plan.”
