SCOR signals all-clear on remediation; can go for rate at mid-year renewals

SCOR has sufficiently remediated its portfolio to date to plough forward and harvest hard rates at the mid-year renewals without any further major reconstructions or withdrawals, top officials have claimed.

“We are very happy with our portfolio repositioning,” the CEO of SCOR Property & Casualty Jean-Paul Conoscente told his company’s Q1 earnings call.

“We are looking to harvest the hard market conditions with capacities that are going to be flat or slightly up,” he said of the outlook for the June and July renewals.

Conoscente attributed SCOR’s performance at the April renewals to that very satisfaction with remediation to date. Remediation in 2022 had started from the April 2022 renewals, leaving “not so much” hard work for the April 2023 redux.

“At April there was not so much repositioning of the portfolio, but more extracting better terms and conditions, so most of the change at April [2023] has been rate-related and we expect the June-July renewals to be very much in line with that,” Conoscente said.

SCOR had claimed a 5% increase in gross written premium for the portfolio renewed at the April 1 renewal deadline on a 7% average increase in rate. But that apparent shrinkage in overall exposure came as SCOR continued to evacuate the agriculture segment. Excluding agro, SCOR put the premium gain at a much headier 17%.

SCOR claims a much more demanding stance on price and terms. Compared to the approach in 2022, SCOR is now more forward looking on inflation, more stern on climate change and more forward looking to terms for retro cover, Conoscente said.

“That makes our assumptions more conservative than maybe they were next year,” he said.

Management cited that conservatism in justifying a plan for circa EUR 750 million contribution from new business generation to the growth in the contractual service margin in 2023 after already having nailed down EUR 588 million in Q1. Contractual service margin is a core underlying component of the new IFRS17 regime – a risk-adjusted and additionally buffered estimated net present value of the full reinsurance portfolio.

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