SCOR's Kessler highlights 'milestone' Covéa deal as profit jumps in H1 2021

SCOR, the world's fourth largest reinsurer, delivered a solid profit in the first half of this year, after seeing it plunge significantly in the last few quarters. The second quarter brought robust growth at the reinsurer despite natural catastrophes, the on-going Covid-19 pandemic and the low-yield environment, but its former chief executive Denis Kessler (now non-exec chair) highlighted the  peace deal it reached with one-time bidder  Covéa for enabling greater flexibility to fuel growth.

Same time last year SCOR reported a meagre profit of €26 million, representing a 90.9 percent decline from €286 million in H1 2019. While its profit for the first quarter of 2021 was also quite low at €45 million, reflecting a 72.2 percent decline on the 2020 Q1 figure.

This decline was more than offset in the first half of 2021 as net profit soared to €380 million, on the back of favourable rate momentum in the property & casualty (P&C) re/insurance market.

SCOR's gross written premiums were also up in H1 2021 - increasing 3 percent to €8.44 billion, compared with €8.2 billion in the prior year period.

At the June-July renewals, SCOR Global P&C took advantage of the firming reinsurance market conditions and delivered a growth of 14.3 percent at constant exchange rates (7.1 percent at current exchange rates) with gross written premiums reaching €3.77 billion. The Global P&C net combined ratio also improved to 97.2 percent, from 102.3 percent in H1 2020.

The estimated Group solvency ratio stood at 245 percent on June 30, 2021, which is above the optimal solvency range of 185-220 percent as defined in the “Quantum Leap” strategic plan. It was driven by +27 percent points positive impact as of January 1, 2021 from the retrocession agreement with Covéa.

SCOR's long-serving CEO Kessler (pictured), who agreed to step down from the top role at the end of June while retaining his position as chairman, highlighted the settlement agreement reached with Covéa as an "important milestone" for the group.

“It enables SCOR to rebuild a working relationship with this leading insurer. It unlocks the value of SCOR’s Life reinsurance portfolio, while giving the Group additional degrees of freedom to manage its capital and pursue its development," he said. "All the conditions are in place to pursue profitable and solvent growth.”

Laurent Rousseau, the new chief executive officer of SCOR, commented: “In the first six months of 2021, SCOR once again demonstrates the strength of its business model and the relevance of its strategy. The Group continues to expand its franchise, in both Life and P&C, and delivers a robust underlying performance despite natural catastrophes, the on-going Covid-19 pandemic and the low-yield environment.

" SCOR is very well positioned to capture profitable growth opportunities, in particular in the P&C (re)insurance market where pricing and terms & conditions are increasingly attractive.”

Commenting on SCOR’s earnings report, Moody’s analyst Christian Badorff said: “ SCOR’s result for the first half of 2021, on an underlying basis, confirms the positive trajectory seen in the first quarter of the year although reserve strengthening highlights the inherent uncertainty related to the ultimate Covid-19 claims bill. The results benefit from a sizable one-off related to the life book transaction following the settlement agreement with Covéa, which strengthens the group’s Solvency and liquidity positions.

"In Life, underwriting and pandemic-related mortality developed roughly in line with Moody’s expectations. In P&C, the normalized combined ratio continues to benefit from strong pricing momentum, although underwriting performance is negatively affected by above average natural catastrophe activity and by reserve strengthening for prior-year Covid-19 claims.”

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