SCOR hails success in COVID-19 stress test with strong topline growth but profits plunge 44% in 2020
SCOR’s 2020 results show that the global reinsurer has so far coped well with the "historic shock" of COVID-19 crisis, even though its profitability has been dented significantly year on year. The company's chief executive Denis Kessler has predicted stronger reinsurance growth along with a positive pricing dynamic, insisting that SCOR is "very well positioned" to scale its global platform and seize market opportunities in 2021.
France-based SCOR reported a full-year net profit of €234 million for 2020, reflecting a 44.5 percent decline from the previous year when it generated a net profit of €422 million.
However, in the fourth quarter of 2020, the reinsurer increased its profit by more than 371 percent to €99 million, compared with €21 million in Q4 2019.
Its gross written premiums increased slightly to €16.4 billion in 2020, from €16.34 billion in 2019. But for Q4 2020, the GWP declined by 4.7 percent to €4.085 billion, compared with€4.29 billion in Q4 2019.
SCOR Global P&C delivered a growth of 2.4 percent at constant exchange rates with gross written premiums of €7.160 billion, but its combined ratio deteriorated to 100.2 percent in 2020, from 99 percent in the prior year period.
Both its property/casualty and life business segments absorbed losses resulting from the pandemic and a series of natural catastrophes.
In SCOR Global Life, gross written premiums were up 1.4 percent at constant exchange rates compared with 2019.
SCOR Global's total investments reach €28.6 billion, with total invested assets of €20.5 billion and funds withheld of €8.1 billion.
The company highlighted resilience of its business model in a year marked by the "historic global shock" of COVID-19, while noting that it will continue to actively implement its strategic plan “Quantum Leap”, focused on the two-fold targets of profitability and solvency.
Kessler, chairman and chief executive officer of SCOR, said the group has successfully passed the real-life stress test by absorbing the "historic shock" of COVID-19.
"SCOR ended 2020 profitably and solvently," he said. "The Group’s fundamentals remain very strong, as demonstrated by the excellent results we would have recorded in the absence of Covid-19 – which cost the Group €640 million in 2020 – as well as by the level of solvency achieved at the end of December.
"This enables the Group to pursue its active shareholder remuneration policy, with a dividend of €1.80 per share for 2020 to be proposed at the Annual General Assembly.2
Kessler added that "SCOR is very well positioned to benefit from the general market hardening in P&C reinsurance, as demonstrated by the excellent renewals recorded at January 1, 2021. Similarly, the Group is pursuing its development in Life reinsurance, particularly in Asia. SCOR continues to implement its “Quantum Leap” strategic plan with determination."
According to Moody’s analyst Christian Badorff, SCOR’s strong topline growth and increases achieved at the recent renewals should support its earnings in 2021.
"In P&C, SCOR reported only moderate additional claims in the fourth quarter and indicated the remaining risk for 2021 is limited due to the extensive introduction of pandemic exclusion clauses. Furthermore SCOR has reported strong topline growth and high single digit rate increases for the recent renewals, which should be supportive of earnings in 2021," said Badorff.
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