French reinsurance company SCOR has delivered another strong result this morning despite the softened state of the reinsurance market, reporting EUR 603 million of net income and a return on equity of 9.5% for 2016.
Those figures are down slightly on 2015, but that is to be expected given the state of the marketplace and also the increased incidence of catastrophe losses during 2016. Due to the result SCOR’s shareholders equity rose again and the reinsurer is proposing more capital returns, in the form of larger dividends and potential share buybacks.
The company remains positive on its ability to leverage its growing cash pile and put it to work profitably, which suggests further expansion into new markets and the U.S. could be ahead for the reinsurer.
SCOR has benefited from being able to target the U.S. as a market where it had been historically underweight just a few years back, offering it a chance to diversify into a market where, despite the softening, rates remained more attractive than some diversifying regions of the world.
Thanks to its diversification, SCOR says it is “ready to leverage on the positive prospects that the reinsurance market offers, both in P&C and Life.” Targeting growth through selective opportunities that meet its profit targets has helped SCOR’s performance in recent years.
Denis Kessler, Chairman & Chief Executive Officer of SCOR, commented on today’s results announcement; “In 2016, SCOR delivers a strong set of results, in line with the profitability and solvency targets of its new plan “Vision in Action”. SCOR has also enhanced its franchise, notably with the expansion of its Life footprint in Asia and the gain of additional market shares on the P&C side in the United States. In the meantime, the Group is pursuing innovative initiatives and developing new tools to improve its underwriting and management. SCOR is well on track to reach its strategic targets for “Vision in Action”. SCOR is actively pursuing its shareholder remuneration policy, raising its dividend to EUR 1.65, and now envisages share buy-backs.”
SCOR’s Global P&C unit delivered a strong technical result with a combined ratio of 93.1% for 2016, slightly up on the prior year and this unit “benefited from the progressive strengthening of its positions in the US.”
The large losses experienced in 2016 only added 5.5% to the combined ratio, due to the impacts of the Fort McMurray wildfires in Canada, Hurricane Matthew in the US and the Kumamoto earthquake in Japan.
Gross written premiums only shrank by -1.5% in 2016, which is not significant and offset by other areas of the reinsurers business.
The SCOR Global Life business delivered a slightly lower technical margin at 7% for 2016, but with gross premium growth of 6.4% SCOR continues to expand this side of its business, adding to its overall diversity.
SCOR will have pleased the equity analysts with its results this morning, with nothing in the results to scare shareholders and the prospects of increased dividends the company is likely to see strong support in the markets.