SCOR reports strong P&C growth & price renewals, but adds COVID BI losses

France headquartered global reinsurance firm SCOR has continued to rapidly expand its property and casualty book in improved pricing conditions over the second-quarter and into the mid-year renewal season.

However, showing that the impacts of the COVID-19 pandemic are not behind the reinsurance sector, SCOR has revealed an additional EUR 109 million of COVID-related losses, largely from property business interruption claims.

This morning SCOR has reported 9.1% of gross premium growth across its business, as well as strong profits with net income of EUR 380 million for the first-half of 2021.

EUR 335 million of the net income came during Q2, which was a far more benign period for the reinsurance company.

In the firms SCOR Global P&C unit, gross written premiums rose 14.3% at constant exchange rates year-on-year for the first-half, as SCOR sought to benefit from the improved rate environment.

The P&C combined ratio came out at 97.4% for the half-year, with 9.4% of catastrophe losses largely due to the US winter weather event in Q1, which was an above budget (7%) period for SCOR, and European severe storms in June as Q2 was less impactful on the catastrophe front with the cat load falling to 6.1%.

Denis Kessler, Non-Executive Chairman of SCOR, commented on the results, “The agreement reached with Covéa marks an important milestone for the Group. It enables SCOR to rebuild a working relationship with this leading insurer. It unlocks the value of SCOR’s Life reinsurance portfolio, while giving the Group additional degrees of freedom to manage its capital and pursue its development. All the conditions are in place to pursue profitable and solvent growth.”

Laurent Rousseau, the new Chief Executive Officer of SCOR, also said, “In the first six months of 2021, SCOR once again demonstrates the strength of its business model and the relevance of its strategy. The Group continues to expand its franchise, in both Life and P&C, and delivers a robust underlying performance despite natural catastrophes, the on-going Covid-19 pandemic and the low-yield environment. SCOR is very well positioned to capture profitable growth opportunities, in particular in the P&C (re)insurance market where pricing and terms & conditions are increasingly attractive.”

Premium growth in P&C reinsurance was even more impressive in Q2, as on at current exchange rates the 14.3% growth drops to 7.1% for the first-half. But in Q2 the current exchange rate gross premiums written expanded by 11.5%, while the Q2 only combined ratio was just 97.4%.

During Q2 2021, SCOR has booked the additional EUR 109 million of COVID-19 pandemic related losses in the P&C business, having not booked any P&C pandemic claims in Q1 this year.

These came due to, “an increase in direct gross costs incurred by cedents with adverse court decisions in France and the UK, and cedents filing claims for two separate events corresponding to the March & October 2020 lockdowns.”

This shows that pandemic related property business interruption claims from 2020 are still flowing and could be lifting ultimates for cedents to the ILS market as well, suggesting those providing reinsurance and retrocession are not yet out of the woods, when it comes to COVID-related loss creep.

SCOR said that its P&C business also expanded considerably at both the June and July 1st mid-year reinsurance renewals, when the company took advantage of further price increases.

Underwritten premiums grew by +7.8% at constant exchange rates, from EUR 735 million to EUR 792 million (using exchange rates as at December 31st 2020), the reinsurer said.

At the same time, SCOR’s renewal book saw a +7.9% price increase overall for treaties renewing in June and July, taking its year-to-date renewal price improvement to 8.0%.

SCOR said that, the “dynamics remain positive across all regions, with firming conditions across the board.”

In the United States and Canada, SCOR noted that the reinsurer “recorded significant price increases”, while remaining selective and focused on profitability, given there was “abundant market capacity”.

In other regions SCOR said it also achieved strong growth at improved terms at the renewals.

Now, after the mid-year renewals, SCOR has 95% of its reinsurance book for 2021 renewed, almost all of which will be at more profitable rates, that should earn out over the next year and drive improved results, as major losses allow.