SCOR cuts mid-year renewal premiums by 9.8% in ongoing portfolio flip

Global reinsurance group  SCOR cut its gross reinsurance premiums by 9.8 percent at the June-July renewals to €729 million to get ahead of its targets for probable maximum loss (PML) reduction.

SCOR claims to have secured a 21 percent reduction in its 1 in 250-year PML for the 2022 underwriting year, “significantly ahead of our original 11 percent projection.”

“We are taking remediation actions proactively,” CEO Laurent Rousseau (pictured) said. Q2 climate-driven losses “confirm that our strategy to decrease our exposure to these events is the right one.”

Eschewing “favourable reinsurance pricing momentum” in the riskier property markets in North America and elsewhere,  SCOR booked its 2022 renewals at an average rate increase of 6.7 percent.

“Premiums reduction was driven by a more conservative view of climate-change and inflation risks,” management said of its “ongoing strategy to reduce its exposure to natural catastrophes and rebalance its book towards more profitable business lines.”

In North America, the portfolio of renewed business was cut by 24.3 percent, with a call-out to cuts in Florida, to take the continent down to 47 percent of the renewed portfolio versus 56 percent at the same point last year.

But growth was noted across remaining markets, albeit minor in the sum of the mid-year renewals. Excluding property,  SCOR claimed global renewed portfolio growth of 3.5 percent.

SCOR claimed 7.3 percent growth in its “fast growth markets,” chiefly South America, against net cat reductions in the Caribbean and Middle East.

In Europe,  SCOR claimed 15.6 percent growth, leveraging “strong growth and profitability” in lines including liability, motor, marine and energy against reduction in property cat.

Asia Pacific enjoyed 5.1 percent growth.

Portfolio remediation continues well beyond the mid-year renewals. Agro exposures continue to be slashed towards a target for 50 percent PML reduction.  SCOR remains hawkish on macro and climate threats.

“In this complex environment,  SCOR stays the course and expects to navigate the current headwinds and take advantage of upcoming tailwinds in a hardening market, relying on the combination of its initiatives to improve profitability and reduce volatility,” management said in comment to the Q2 earnings release.

SCOR currently plans to release a fresh strategic plan on November 9, 2022.

In the second quarter,  SCOR suffered a €159 million loss, in part as its P&C combined ratio shot up to an eye-opening 111.5 percent from 103.7 percent reported in the first quarter.

SCOR rattled off a series of nat cat losses including Brazilian drought and South African floods, but also admitted to a "sharp increase" in its attritional loss ratio.

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