SCOR estimates EUR430m catastrophe hit after retrocession

Reinsurance company SCOR has announced that it expects its net losses from recent catastrophes will total EUR 430 million, after tax and retrocession, and that it sees the chances of its contingent capital facility being triggered as “extremely remote.”

France headquartered global reinsurer SCOR said that its own risk modelling shows that the private insurance industry loss for the combined impacts of hurricanes Harvey, Irma and Maria, as well as the two Mexico earthquakes, will be around US $95 billion.

Based on that level of market-wide loss, an analysis of the its exposures and preliminary information from ceding companies, SCOR believes that the cost to it of third-quarter major catastrophes will be EUR 430 million, around US $505 million.

That’s below some analysts expectations of SCOR’s eventual loss from recent catastrophes, which could suggest a greater ability to call on retrocession than had been expected.

Retrocession arrangements of major reinsurers are often relatively lacking in transparency, so it is difficult to know how much SCOR could have claimed back from its protection providers, but it is likely to be significant, perhaps even as much as the net loss again, or greater.

There is likely to have been some third-party capital and ILS fund, or collateralized reinsurance, participation in SCOR’s retrocession arrangements, meaning some of its loss could have fallen to the capital markets to pay for.

SCOR also has two in-force Atlas retrocession catastrophe bonds, both aggregate in nature, which are exposed to recent events and one of these could potentially come into play to support its recovery of losses, should the industry loss estimates of recent events rise significantly.

SCOR said that based on this estimate it now feels that the chances of its contingent capital facility being triggered in 2017 is considered to be “extremely remote.” This EUR 300 million contingent equity line can be triggered by losses from natural catastrophe events and significant mortality losses, and is calibrated to protect SCOR against adverse solvency movements after such losses.

The reinsurer believes that it remains on target for its strategic goals in 2017, despite recent loss events.

Update: SCOR’s two aggregate retro catastrophe bonds are both considered at risk of loss, with one in particularl considered very likely to face a loss by at least one pricing broker.