Global insurer SCOR has taken steps to move away from US risks during the mid-year renewal period, and its total US underwritten premiums fell 24%.
In announcing its results for the first half of 2022, SCOR has reported a loss of EUR -239 million during this period, as large and significant losses affected its business in all directions.
EUR -159 million net losses were incurred in the second quarter of the year.
At the same time, while the loss of work around the world affected the reinsurance company and it returned to natural risks while trying to protect its business from climate change, SCOR continued to grow further, increasing its written income by 8.3% for the first time. -half of this year.
SCOR cites global economic conditions as a drag, including the war in Ukraine, and weather disasters such as floods in South Africa, hurricanes in France, floods in Australia and severe drought in Brazil.
The drought hit SCOR hard, and a financial loss of USD 9.2 billion hit SCOR with a EUR -193 million impact on its technical results, most of which came in the second quarter.
“Consequently, and in line with its ambitions to reduce exposure to climate-related events, SCOR has been thoroughly reviewing its agricultural operations with a 50% exposure reduction (PML) planned for 2023,” the reinsurer explained.
The targets for COVID-19 reached EUR 254 million in the first half, while EUR 195 million were incurred in the first quarter.
The P&C’s combined reinsurance ratio reached 107.7% in the first half, up from the previous year’s 97.2%. But premium growth of 28.1% at constant exchange rates shows that SCOR is growing strongly in P&C in a tough insurance market, even as it bounces back from natural disasters.
This, from the misfortunes and events related to the weather, did not help SCOR to recover in the first half, while its return to profits comes from the loss of COVID-19.
However, SCOR had slightly positive results for its retro program in Q2 P&C, indicating that the drought and other losses saw it offset its defense costs a bit.
SCOR is taking steps to reduce the cat’s exposure and minimize exposure to the weather.
During the mid-year June and July P&C insurance renewals, SCOR reduced its total insurance premiums written by 9.8%.
The main driver was a significant decrease (-24%) in the US, where SCOR said it has “significantly reduced exposure to natural disasters, especially in Florida.”
At the same time SCOR grew in Europe (+ 16%), Mature APAC (+5%) and Fast Growth markets (+7%), where SCOR sees a great need for its insurance.
The reinsurer said it saw a 6.7% increase in premiums across its mid-year insurance renewal book, “reflecting a growing market in a high-price environment.”
Overall, with the results of the mid-year renewal, SCOR reports that this has contributed to a 21% reduction in its 1 in 250 year PML in 2022, which is well ahead of its original 11%.
Analysts this morning expressed surprise at the level of losses reported by SCOR and it appears that they were not expecting the huge losses to be reported in the first half.
But with a company that minimizes exposure to cats and avoids climate-related events, that uncertainty can slow progress.
Denis Kessler, Chairman of SCOR, commented on the results, “Recent events have shown that uncertainty and instability of all kinds are increasing: the Covid-19 pandemic continues, armed groups are causing unrest around the world, inflation is reaching a decade high, the economy is shrinking, fear The global recession is growing, the frequency and severity of natural disasters is increasing – a change that is linked to global warming… In this difficult environment, risk aversion, and the need for protection, will continue to rise. The increase in uncertainty and risk is more evident than ever. the important role of the reinsurance industry to be the cornerstone and guarantee of the strength of the global economy. I am convinced that SCOR, as the 1st global insurance provider, is well equipped to deal with these challenges and to act while creating value, expanding its international capabilities, its recognized technical expertise, its financial strength, the expertise of its teams and its operations. control of new technologies.”
Laurent Rousseau, Chief Executive Officer of SCOR, added, “H1 2022 has been characterized by exceptional events in L&H and P&C, which have disrupted our financial performance. Most notably, many events driven by climate change (natural disasters, drought, etc.) etc.) have affected the profitability of our P&C business, confirming that our strategy to reduce our exposure to these events is appropriate. Despite the loss of funds, SCOR’s position remains stable and strong with a solvency ratio of 240%.
“The changing environment brings both challenges and opportunities and our goals remain the same: reduce volatility, increase profitability, expand franchise, better distribute revenue and accelerate the Group’s transformation. We are focusing on the preparation of the new strategy that will be revealed in November together with our results of Q3. In the stable world, we are taking proactive measures to reform, while taking advantage of the environment where security is increasing, following strong pricing regulations. SCOR is increasing its flexibility and taking advantage of the opportunities that arise from the vulnerable environment.”