SCOR reports €456m Covid-19 hit, retro assists

French global reinsurance company SCOR has reported an estimated EUR 456 million of losses due to the Covid-19 pandemic booked in the second-quarter of 2020, with retrocession support helping the company in managing the burden, particularly on the P&C side of its business.

In reporting its first-half results this morning, SCOR said it has undertaken a thorough assessment of its exposures to the coronavirus pandemic for the second-quarter of the year, saying it currently pegs them at EUR 248 million in its P&C business, EUR 194 million in Life and EUR 14 million on the investment side.

Hence, the total estimated cost of Covid-19 for SCOR is estimated at EUR 456 million after accounting for any retrocessional reinsurance recoveries, net of reinstatement premiums and before tax, all fully booked in the second quarter of 2020.

For Q1, SCOR had said the hit from Covid-19 had been immaterial to its P&C business, but that it was monitoring the business interruption issue closely.

Now, it has reported that for Q2 the total impacts from the pandemic come from Credit, Surety & Political risks and from Property Business Interruption.

Actual Covid-19 claims received remain relatively limited, standing at a total of EUR 74 million, SCOR said.

But the reinsurer has estimated the “ultimate” cost of the pandemic to its P&C underwriting business at EUR 248 million, net of retrocession and reinstatement premium, and before tax, a figure that has been fully booked in this Q2 accounts.

Specifically on the Property Business Interruption side of the reinsurance companies business, SCOR said it has estimated that its book holds “a very small amount of affirmative pandemic coverage and non-damage Business Interruption, mostly in Western Europe, with non-damage Business Interruption scarce in the U.S. and largely sub-limited in APAC.”

The company said that confirmation of these estimates for business interruption will have to wait until H2 2020, as uncertainty exists over how precisely they will aggregate.

SCOR’s gross premiums written rose 1% to EUR 8.195 billion in the first-half of the year, the company said today, with EUR 3.518 billion in P&C.

But a 102.3% combined ratio in the SCOR P&C reinsurance business means that underwriting was unprofitable, largely driven by the significant Covid-19 estimated impacts, with overall net income reported at just EUR 26 million for the period as a result.

Unpacking the combined ratio, the pandemic related claims amount to 8.2% in the P&C business, while natural catastrophe losses added another 5.1% for the first-half, largely from tornadoes in the U.S., storms in Italy, hailstorms in New South Wales (Australia) and cyclone Amphan in India.

Normalised, the combined ratio for the SCOR P&C business would be 96%, which remains within the range of its targeted strategy.

Retrocessional reinsurance protection has assisted SCOR in the first-half, with the company reporting a EUR 146 million benefit from retro for the first-half.

The P&C business saw a EUR 149 million benefit, while Life saw a negative retrocession impact of EUR 3 million.

For Q2 the retro benefit was EUR 101 million, EUR 91 million of which was in the P&C book.

The figures suggest SCOR has called on its retrocessionaires for support with some of the catastrophe claims of the quarter, but also for some of the Covid-19 claims.

Where and how those retro recoveries fell is not clear, but it is possible some may have fallen to quota shares or certain third-party capital backed support.

SCOR’s announcement of the EUR 456 million of Covid-19 pandemic losses comes on the heels of Swiss Re’s announcement last night of a US $2.5 billion hit for the first-half of the year.