SCOR also cites growth, including U.S. cat risks, buys more retro

SCOR is the latest of the major reinsurance firms to report that it grew its portfolio at the January 2018 renewals, with U.S. natural catastrophe risks one area that the company deployed more capacity, as its overall premiums recorded a 3.7% increase.

SCOR follows fellow reinsurance giants Munich Re and Hannover Re in reporting that it took advantage of improved market conditions at the renewals, in order to grow its book.

Like the others, SCOR reports that much of the growth was through larger participations on well-established treaty partners programs, but also some new business and other areas of growth were also seen.

Commenting on the renewals and the outlook for SCOR, Victor Peignet, CEO of SCOR Global P&C, said, “SCOR has a strong position in the 2018 renewals, resulting from the Group’s multiple recent rating upgrades, a client-by-client approach, and the expansion of our capabilities as described in our ‘Vision in Action’ plan.

“We negotiated to reduce, cancel or decline business that did not meet our hurdles without damaging our franchise. As a result, our portfolio renewed in January is both larger and more profitable while still being well-diversified.”

SCOR reported growth of its P&C reinsurance renewal premiums by 3.7% from EUR 3 billion to EUR 3.1 billion at January 1st 2018.

Driving the desire to grow the portfolio was the better pricing available, with SCOR reporting that risk-adjusted pricing improved 3% compared to January 2017.

Expected profitability of the business underwritten, both technical and based on capital return, rose by 2%.

SCOR said that, “Reinsurance pricing is broadly improved across nearly all lines of business and geographic markets. Loss-affected programs and layers show the greatest improvements, most notably catastrophe-exposed reinsurance in the United States and motor reinsurance in the United Kingdom.”

The company also said that improving primary insurance market conditions have helped, driving better terms for reinsurance to back them and through its own commercial and MGA arms.

SCOR said that it deployed more capital into clients non-proportional treaties which showed improved expected profitability, but reduced deployments where profitability was not as impressive, or where rates didn’t move sufficiently.

With 69% of SCOR’s P&C premiums renewing in January, the reinsurer said that despite the growth its P&C division’s risk appetite and profile have not changed substantially.

In treaty P&C SCOR reports 4.1% growth, with the main drivers being the U.S. and the UK. In specialty treaties, the reinsurer reports 2.6% growth, driven by surety, credit and U.S. natural catastrophe underwriting.

While growing the book, SCOR also grew its retrocession a little, but reports only paying a single-digit increase in rates for this, compared to its 2017 retro program.

SCOR said that it widened the scope of its retrocession coverage and increased its peak zone covers, to control and maintain a stable risk profile.

MGA specific coverage was restructured and optimised, the reinsurer said, while its overall retrocessionaire panel was expanded to add new capacity and also greater diversity to the coverage panel.

SCOR said that its long-term relationships with retro partners helped it to secure the coverage it needed at acceptable terms and also resulted in early commitments to the program.

There seems a “continuous market appetite for SCOR ceded exposures” the reinsurer said, adding that it had no issues securing retrocession capacity at reasonable pricing.

With the growth underway at the major reinsurers it stands to reason that their retrocession programs will grow as a result, as they look to control their peak zone and catastrophe risk exposures.

As we move through 2018 it will be interesting to see whether any of these larger reinsurers turn back to the catastrophe bond market, especially given the keen pricing witnessed there already this year.

Failing that, their third-party capital sidecar vehicles and other collateralized reinsurance facilities are all likely to see more risk this year, as they go for top-line growth while controlling their risk curves.

Also read:

– ILS fund-raising & growth a factor at renewals: Hannover Re.

– Munich Re bulks up at renewals, despite only slight price rises.