French reinsurance firm SCOR is now covered for further loss creep from Japanese typhoon Jebi, with the loss now having triggered its retrocessional protection.
SCOR had previously booked a lot of negative development in the first-quarter of the year for events like typhoon Jebi, as the event continued to push loss creep into the market
In reporting its results last week, the reinsurance firm did not reveal any additional major loss creep from the typhoon.
But that’s not because SCOR’s typhoon Jebi loss didn’t change at all during the quarter, rather it’s because SCOR is now into its retrocessional reinsurance for the typhoon loss and expects to pass on any future loss creep to its panel of retro providers as a result.
CEO of SCOR Global P&C Jean-Paul Conoscente explained during SCOR’s earnings call last week that SCOR had booked a gross loss from Jebi.
“We experienced further loss deterioration on Jebi for an additional €33 million gross loss to SCOR, taking the event as a market loss in between $12 billion and $15 billion,” he explained.
But the impact did not hit SCOR itself, as, “The loss is now into our retrocession protections and the net impact to SCOR is nil,” Conoscente continued.
SCOR has sufficient retrocession in place for a significant worsening of the industry loss from typhoon Jebi as well, given its broad protection from traditional retrocession, as well as catastrophe bonds and other insurance-linked securities (ILS).
Conoscente explained, “We estimate our retrocessional protection to be active up to a market loss for Jebi of about a $22 billion market loss.”
He also explained that SCOR experienced loss creep associated with Japanese typhoon Jebi in Q2 as well, but this was offset by improvements in the loss position for the California wildfires.
SCOR is not the only reinsurer to have reached its retrocession for typhoon Jebi, as we understand others now stand poised to pass on any further loss creep related to the event.
SCOR’s retrocession has proved robust over recent years, helping it to moderate the loss impact from both 2017 and 2018 catastrophe events.
In just the last few weeks SCOR’s capital markets retro protection responded to the ongoing loss creep from 2017’s U.S. hurricanes, as it is now set to receive an almost $26 million payout after aggregate losses from 2017 hurricanes Harvey, Irma and Maria triggered its $150 million Atlas IX Capital Limited (Series 2015-1) catastrophe bond.