SCOR pins hopes on new CEO and hard market after ‘very disappointing’ 2022 loss

Denis Kessler, chairman of  SCOR, bemoaned “very disappointing” annual results as the global reinsurance giant plunged to a net loss despite turning a profit in the fourth quarter, blaming the impact of nat cats, Ukraine war and an overall highly challenging operating environment. The company’s hopes for a turnaround now lies with its  new chief executive officer Thierry Léger, who will join SCOR on May 1, as well as “favourable” conditions in the hardening market.

Léger, who is making a move from rival Swiss Re, has been asked by SCOR’s board of directors to craft a strategic plan under IFRS 17 that will enable the group’s “sustainable return to profitability”.

The French reinsurer suffered a €301 million net loss in full year 2022, despite making a net profit of €208 million in the fourth quarter of the year. The net loss, which includes the impacts of nat cat claims and drought claims in Brazil, compares with the €456 million net profit generated in FY2021.

SCOR’s gross written premiums stood at €19.73 billion in 2022, up 4.9% at constant exchange rates compared with a year earlier.

Meanwhile, SCOR P&C (property and casualty) gross written premiums were up 13.5% at constant exchange rates compared with 2021.

The net combined ratio was 113.2%, marked by “several exceptional developments”, management claimed. It includes a nat cat ratio of 12.4%, claims relating to the impact of the drought in Brazil accounting for 2.6%, and the reserve increase announced in Q3 2022 to anticipate the impact of the social and economic inflation accounting for 6.2%.

The reinsurer noted that the P&C market continues to harden following its 9% rate increase at the January 1, 2023 renewals, which should lead to a "significant improvement" in expected profitability.

In SCOR L&H (life and health) gross written premiums decline by 2.7% at constant exchange rates compared with 2021.

Kessler said: “The Group’s annual results are very disappointing despite a solid performance in the fourth quarter. A sustainable return to profitability is imperative. A new, highly experienced Chief Executive Officer, Mr Thierry Léger, will join the Group on May 1, 2023. He will present the broad outlines of his strategic plan at the Annual General Meeting on May 25, 2023, and will implement it without delay and with great determination after presenting it to the investors in September 2023.

"This will enable the Group to take full advantage of its global underwriting platform and technical expertise to seize the opportunities available in the L&H and P&C reinsurance markets, building on its status as a Tier 1 reinsurer. The Board of Directors is confident in the Group's ability to return to growth, restore profitability, and reinforce its solvency. Consequently, it proposes a dividend of EUR 1.40 per share for 2022, which will be submitted for shareholders’ approval at the Annual General Meeting."

François de Varenne, interim CEO of SCOR, commented: “2022 has been a difficult year for SCOR, even if the fourth quarter was better than the previous quarters. With the normalisation of the pandemic, the L&H reinsurance business performed very well in 2022. The release of L&H excess reserve margins enabled the Group to finance the increase in P&C technical reserves. Along with P&C reinsurance, L&H is generating significant diversification benefits, and IFRS 17 will reveal the full value of its portfolio.

“The P&C renewals at January 1, 2023, confirm the continued hardening of the market. Reinvestment rates are expected to remain high, increasing the financial contribution of the investment portfolio. The teams are fully mobilized to accelerate the execution of the one-year plan to restore the Group's profitability and to ensure the transition to the new IFRS 17 standard. We are ready to support the new CEO in the preparation and execution of a new, ambitious strategic plan."

To read more on SCOR, click on the following links:

SCOR warned of ‘high level of scrutiny’ with downgrade on ‘weakening profitability’

Rousseau vs Léger: why their stance on nat cat could be the difference

SCOR cut P&C treaty 20% at 1.1 in accelerated slash of cat risks

SCOR can leverage hard market in ’23 renewals for better book

SCOR hands reins to top Swiss Re leader after ‘difficult’ period; CEO exits

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