Global insurer and reinsurer SCOR has reported its second-quarter and first-half 2018 results, which reveals a hit to its net income as a result of the U.S. tax reforms, as well as the continued deceleration in P&C pricing following the impacts of 2017 catastrophe events.
The French re/insurer today reported net income of €262 million for the first-half of the year, which includes a €62 million impact from the U.S. tax reform. Absent the tax reform impact, the firm’s H1 net income would have increased by 11% year-on-year, to €324 million.
SCOR’s combined ratio improved from 93.5% to 91.4% during the first-half of the year, while its H1 2018 normalised combined ratio hit 95.1%.
The firm continued to expand during H1, with gross written premiums up 8.2% at constant FX to €7.53 billion, which was supported by growth from both the life and P&C segments, which grew by 10.5% and 4.9%, respectively.
SCOR has announced that it grew its book in line with its “Vision in Action”, with year-to-date renewed premiums up 7.8%, while renewed premiums at the June / July renewals increased by 22.7%, to €605 million.
Following the impacts of 2017 catastrophe events, the company’s “Vision in Action” projected growth range of 3-8% assuming that pricing would improve moderately, which SCOR says has been observed, with its year-to-date price improvement at +2.9%, and June / July pricing up 2.3%.
The firm attributes some of the growth in renewed premiums to gaining increased shares in U.S. Treaty and Credit & Surety reinsurance, while adding that it remains “underweight on Florida specialist accounts,” as a result of weak pricing that has not materially improved in the aftermath of hurricanes Harvey, Irma, and Maria.
During the January renewals season, SCOR noted that risk-adjusted pricing was up by 3% when compared to January 2017, but for the June / July 2018 renewals the reinsurer said that pricing was up just 2.3%.
So, despite the impacts of 2017 catastrophe events clearly driving pricing improvements, it appears that momentum is fading with rate improvements showing a deceleration trend from the start of the year.
Chairman and Chief Executive Officer (CEO) of SCOR, Denis Kessler, commented: “SCOR delivers strong results in the first six months of 2018, outperforming both its profitability and solvency targets. The Group continues to deliver disciplined and profitable growth, with both the Life and P&C divisions expanding their footprints in targeted territories and business lines and delivering robust technical profitability.
“Through the execution of its share buy-back program, the Group reaffirms its confidence in the strength of its underlying fundamentals, excellent ratings and optimal debt leverage. As we progress through the year, our firm focus on the Group’s profitability and solvency targets ensures stability for our clients and lasting value for our shareholders.”
It will be interesting to see how companies react to the challenging and competitive landscape, with the abundance of capital and market conditions mitigating the type of rate increases witnessed following previous loss years, ultimately driving an increased need for discipline and efficiency in a flatter market cycle.
