Reinsurer SCOR ‘delivers strong performance’ in 2019 H1 results, says Denis Kessler CEO and chair

The 2019 half year results for French reinsurer SCOR “deliver a strong performance”, according to Denis Kessler, company chairman and CEO.

Total gross written premiums (GWP) rose 6.3 percent to €8.01 billion in the first half of 2019, from €7.5 billion in the same period a year earlier at the current exchange rates (up 2.6 percent at constant exchange rates).

Group net income rose 9.2 percent to €286 million for H1 2019, up from €262 million in H1 2018. The reinsurer reported a return on equity of 9.8 percent, which “exceeds the ‘Vision in Action’ profitability target”, it said.

SCOR’s global P&C GWP increased 13.9 percent to €3.4 billion from €3.02 billion for the same period a year before at current exchange rates (up 10.4 percent at constant exchange rates).

Described as having “strong growth and technical profitability” the P&C results were driven by renewals in 2019 and the effect of strong renewals in the second half of 2018, particularly in the US.

“This growth is expected to normalise in H2 2019 and to return within the upper part of the ‘Vision in Action’ growth assumption range, revised in 2018 to between 5 percent and 8 percent.”

However, the combined ratio for P&C rose 2.3 percentage points to 93.7 percent from 91.4 percent for the same period a year before. But SCOR still described it as “excellent”, adding that it was ahead of the ‘Vision in Action’ assumption of between 95-96 percent.

It explained the higher combined ratio in H1 2019 was a result of nat cat losses of 5.2 percent, with events in Q2 2019 a major factor.

While there was a deterioration in Q2 2019 of 2018 events Typhoon Trami and Kuwait floods this cost was offset by "favorable developments" in the estimated cost for California wildfires. The company also highlighted losses in Q1 2019 as a factor in the H1 2019 combined ratio figure. These were primarily driven by 2018 developments of Japanese typhoons Jebi and Trami.

In its Life division, SCOR saw GWP increase to 1.2 percent to €4.564 billion from €4.511 billion in H1 2018 at current exchange rates (down 2.6 percent at constant exchange rates). It said this variation was “largely driven by the renewal of certain Financial Solutions deals as fee business (rather than as premiums) in H1 2019”. If these deals are excluded, Life GWP would have grown by 7.9 percent at current exchange rates (3.8 percent at constant exchange rates).

“SCOR delivers a strong performance in the first six months of 2019, achieving the solvency target and outperforming the profitability target set out in ‘Vision in Action’,” said Kessler.

“The group continues to expand its franchise, recording controlled growth in target geographical areas and lines of business, while delivering excellent technical profitability in both P&C and Life reinsurance.

“We are actively preparing our new strategic plan, which will be presented at the beginning of September. This plan – SCOR’s seventh since 2002 – will be an opportunity for the group to affirm its ambitions, set its objectives and detail the ways and means used to pursue its strong value-creating strategy over the coming years.”

Mark Kociancic, group chief financial officer, said the reinsurer had performed “very well” against its Vision in Action objectives “despite significant headwinds”.

“Our industry faced a very volatile nat cat environment plus regulatory and political shocks like the Ogden rate change in the UK and the US Tax reform Act,” he said.

But he added, the group had “successfully completed” its three year plan by delivering “a normalised return on equity of 9.9 percent on average from 2016 to 2019, as well as ensuring that the solvency ratio had “remained strong and in the upper part of the optimal range throughout the plan".

Kociancic said that hitting these two targets was a result of a “consistent application of strategic cornerstones" and showed the group had a “strong shock absorbing capacity”.

The company has expanded its franchise and estimates GWPs will be €16 billion for 2019, up from €13 billion in 2016.

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