Global reinsurance company SCOR said that its property and casualty underwriting business SCOR Global P&C is not materially exposed to the Covid-19 pandemic, but that the company is monitoring developments around business interruption closely.
In announcing its first-quarter 2020 results this morning, France headquartered reinsurance group SCOR revealed little in the way of actual numbers on its expected losses due to the Covid-19 coronavirus pandemic, saying the outbreak had a limited impact in Q1 of 2020.
In fact, SCOR has reported a good result, with a 23.7% rise in net income for the first-quarter to €162 million, helped by a lower P&C combined ratio of 94.5%.
The underlying result is a little less impressive, as the loss ratio actually increased during the period due to higher man-made claims, but catastrophe loss experience at SCOR fell a little and a lower commission expense and other expense factors helped the reinsurer to the overall combined ratio improvement during Q1.
In fact, SCOR’s natural catastrophe loss ratio was below budget at just 5.4% for the quarter, with tornadoes in the United States the largest event (at EUR 14m after retrocession and pre-tax), followed by the hailstorms in Australia (EUR 13m after retrocession and pre-tax) and European windstorms Chiara and Sabine (EUR 12m after retrocession and pre-tax).
In addition, there was some further loss creep related to typhoons Hagibis and Faxai in Q1 2020, but this only amounted to EUR 4 million after retrocession and pre-tax.
SCOR’s P&C business saw slightly more benefits of its retrocessional reinsurance coverage in Q1 2020, compared to the prior year.
The company reported a EUR 58 million net result of its retrocession for the period in P&C, up on the prior years EUR 50 million.
That’s likely a result of the enhanced and strengthened retrocession program that SCOR has been putting in place over recent years, to counter the growth in risk from its underwriting expansion.
On Covid-19 impacts in Q1, SCOR said that, “SCOR Global P&C has received no material related claims for the period.”
On the P&C impacts of Covid-19, SCOR said, “Many LOBs are simply not loss impacted or have minimal loss exposure even if they may be affected in terms of volume due to the nature of their coverage.”
Adding that, “SCOR Global P&C is not involved or has incidental and immaterial exposure in many of the LOBs most affected by the pandemic and the ensuing financial and economic crises, such as event cancellation or contingency business.”
However, the reinsurance firm is clearly aware of the risk of business interruption claims from the pandemic falling to its property book and the company explained that, “The Business Interruption development is being closely monitored, in all relevant jurisdictions.”
More broadly in property and casualty business, SCOR said that expected lines of business that may face Covid-19 claims are its Trade Credit, Surety and Political Risks portfolio, but that this would be limited to around 7% of the SCOR Global P&C premium base.
On the life reinsurance side, SCOR said that it does have exposure to Covid-19, explaining, “The key exposure relates to mortality business, primarily in the U.S., where SCOR has a diversified portfolio predominantly exposed to younger age and higher socio- economic groups.
“There is limited exposure to lines of business impacted by economic downturn, for example disability in France and Australia.
“There are some potential positive offsetting impacts over time from our longevity and long-term care (France) portfolios.”
Denis Kessler, Chairman & Chief Executive Officer of SCOR, commented, “The Covid-19 pandemic is a shock of historic severity. It has become a multifaceted crisis which is profoundly impacting the lives of billions of people worldwide. In this context, SCOR has been proactive in taking immediate actions to help stop the spread of the pandemic and to contribute more generally to the wellbeing and resilience of society, for the benefit of all its stakeholders. Our top priority has been to actively protect the health and safety of our employees, to continue operating efficiently and supporting our clients through this disruptive period, to share our knowledge on the evolution of the pandemic and to emphasize the importance of preventative and protective actions to help contain the virus.
“The current crisis is an ordeal for all of us. The Group is fully mobilized to anticipate, measure and manage the impacts of this major shock, just as it has done for other disasters in the past. We wish each and every one of you the best of health and safety during this very difficult period.”