SCOR’s overall portfolio pricing is “now almost back at the 2014 level” in terms of technical ratio, and at the 2015 level for the return on risk-adjusted capital, according to Victor Peignet, Chief Executive Officer (CEO) of SCOR Global P&C.
Speaking in an interview with Reinsurance News, Peignet said that SCOR had performed well so far in 2018, turning in a net combined ratio of 91.4% over H1 (95.1% normalised) and benefitting from a solid pricing trend of +2.9% at renewals this year.
The company also grew 4.9% on an accounting year basis over H1, and expects growth over the entire year to be in the upper half of the 3% to 8% range, in accordance with its ‘Vision in Action’ strategy.
“Going forward, it remains a difficult market with plentiful capacity and many sub-scale reinsurers competing on price,” said Peignet. “There are still many opportunities for reinsurers who can use their technical capabilities, global networks and deep relationships with clients to structure and lead programmes and complex solutions.”
He explained that, while all of SCOR’s markets are competitive to some degree, the most pressured markets are those with high insurance-linked securities (ILS) penetration, as ILS managers have proved capable of reloading quickly and deploying more capital in 2018.
“Investors appeared not to discriminate between managers. In turn, managers appear not to be discriminating amongst risks,” said Peignet. “This is particularly evident among Florida specialists, where SCOR has never been willing to be a meaningful player.”
“We have always selectively supported only a limited number of companies, and our underwriters reduced SCOR’s participation both last year and again this year as prices continued to fall,” he added.
In terms of the company’s approach to reinsurance buying, Peignet told Reinsurance News that there had been very little change to SCOR’s retrocession strategy despite the prevailing market conditions.
“SCOR’s retrocession program performed as expected in 2017, and left SCOR with ample coverage had the events been much larger (e.g. Irma) and/or more numerous,” he said. “We paid a bit more for coverage in 2018, but SCOR’s long and steady buying history meant that price increases were contained to single digits.”
SCOR also issued its new $300 million Atlas Capital UK 2018 catastrophe bond earlier this year, which will protect it from named storms in the U.S., earthquakes in the U.S. and Canada, and windstorms in Europe.
The four-year Atlas bond was issued through the new UK ILS scheme, which Peignet said SCOR played a critical role in supporting, in line with the company’s “history of innovation in insurance capital markets.”
“SCOR is one of the world’s largest buyers of retrocession,” Peignet continued. “About half of the main Cat program is provided by alternative market participants, a figure that has held steady for a few years now. We’re happy with the participation on our program by most of the world’s leading retrocessionaires, and we see no need to change it materially.”