Heavy catastrophe losses through 2021 have driven SCOR’s P&C reinsurance combined ratio above 100 for the full-year, as the firm’s nat cat ratio rose to 12.8% and the company said it is carefully monitoring the effects of climate change.
While the SCOR P&C combined ratio came out at 100.6%, overall the reinsurance company has reported stellar earnings, with an almost 95% rise in net income for 2021 to €456 million, as our sister publication Reinsurance News reported earlier this morning.
On top of the income earned in 2021, SCOR underwrote over EUR 17.6 billion in premium for 2021, which represents almost 10% growth over the prior year.
At the same time, SCOR’s attritional loss ratio has improved and underlying earnings look stronger ex-cat, which has given analysts a positive tone in reviewing the reinsurance firms results this morning.
SCOR P&C, the property and casualty reinsurance segment, has delivered very strong growth through 2021, with premiums rising 17.6% at constant exchange rates.
SCOR said that the significant increase in premiums comes on the back of successful renewals for its reinsurance and specialty insurance divisions in 2021, a trend that continued in January 2022 as well.
While the P&C combined ratio worsened very slightly to 100.6% and SCOR P&C fell to a technical underwriting loss for the second year in a row, the 12.8% of catastrophe losses was the main driver of this, 8.3% of which came from the European floods and hurricane Ida.
But management actions have moderated the attritional loss ratio and the underlying now positions SCOR with a much larger reinsurance book for 2022 and better retrocession protection thanks to its third-party capital strategy and expanded $300 million sidecar partnerships as well.
Across the group, SCOR’s catastrophe claims came to EUR 838 million net of retrocession and before tax, while COVID-19 losses came to EUR 575 million net of retrocession and before tax.
The company hopes COVID-related impacts will diminish, now the vaccine roll-out has expanded globally and mortality is expected to decrease somewhat.
On natural catastrophe claims, SCOR said that it is “carefully monitoring the effects of climate change.”
It is climate change that has driven SCOR to increase its catastrophe budget for 2022, to 8% of P&C premiums, up from 7%.
However, although climate change is being monitored closely, SCOR notes that “the frequency of natural catastrophe claims in the last few years remains historically exceptional.”
Retrocession played a role for the SCOR P&C business through 2021, with a positive result of EUR 189 million recorded across the full-year from its retro arrangements, as almost EUR 1.1 billion of claims were ceded by the reinsurer through 2021.
On the life side, retrocession played a significant role in moderating SCOR’s COVID related losses in 2021, with a positive result of retro of EUR 1.67 billion for the full-year.
SCOR said it intends to continue to “seize market opportunities” in 2022, with further growth anticipated.
Denis Kessler, Chairman of SCOR, commented, “By executing the “Quantum Leap” strategic plan, SCOR has successfully demonstrated its shock-absorbing capacity throughout the Covid-19 crisis. The Life in-force retrocession transaction concluded at the end of H1 2021 also allowed the Group to demonstrate the value of its Life reinsurance portfolio, providing strong optionality to optimally allocate its capital. Although 2021 was quite a challenging year, SCOR delivered a strong profitability and its solvency position is now more robust than it was a year ago, even after taking into account the EUR 200 million share buyback to be fully executed by the end of March 2022, and the strong dividend of EUR 1.80 per share that will be proposed at the Annual General Meeting for 2021. This bears witness to the Group’s very strong financials and its ability to create value, even in a challenging environment.”
Laurent Rousseau, Chief Executive Officer of SCOR, added, “In a year marked by a high level of natural catastrophes and Covid-19, SCOR has demonstrated its ability to create value for clients, communities, and shareholders. Our objectives are clear: reducing volatility, increasing profitability, growing the franchise, optimally allocating capital and embarking on the transformation of the Group. These strong results are testimony to the hard work of our teams whom I would like to thank. We are now actively preparing the next phase of our strategy and will provide an update on our situation and outlook to shareholders on March 29th, 2022. This should further highlight SCOR’s efforts to support sustainable and profitable growth while reinforcing its franchise and capital position.”