SCOR heads back to growth path, must grab hard market value: Léger
Global reinsurance group SCOR is back in the growth game, eager to capture value stemming from strong market conditions while continuing to improve portfolio diversification amid strong solvency readings, newly appointed CEO Thierry Léger (pictured) told shareholders of his vision for the firm.
“SCOR is in a strong position to take advantage of this buoyant market and to grasp the opportunities available to us and to significantly grow the group’s economic value,” Léger told shareholders. “We have every possible asset to be successful.”
“The environment is very conducive to reinsurance,” Léger said. “The market has reacted and I believe that these positive terms will continue throughout the term of this strategic plan.”
Growth may prove most easily achievable in P&C reinsurance, albeit continually tempered in natural catastrophe exposures, with a tilt towards capital-light structures where possible, and with respect for the group’s needs to hit a high level of diversification, he said.
“The goal is to grasp the opportunities made available by the very favourable phase of the cycle,” Léger said. Limits will be “strictly applied” as the group seeks both “economic attractiveness, but also continuation of diversification of the portfolio.”
Nat cat will remain underweight in the portfolio, Léger said amongst few specifics in his first strategy indications. “We’ll maintain a relative underweight exposure for the duration of our strategic plan, particular on exposure to global warming,” he said.
To make it work, Léger sees a handful of levers he can pull, notably including increased reliance on third party capital.
Léger imagines “more centralised risk partnerships” and “long-term partnerships with a stable investor base” as a means to manage the SCOR group balance sheet, but also to generate “significant additional fee income.”
Also in the action plan, Léger will plot a path towards improved management with “more granular and faster” decisions on capital allocation, often as the group veers towards a less capital intensive portfolio. Centralised data, platforms and models with an ever-greater data pile and touches of AI will be core to that. The view to economic value inherent in IFRS17 will be leveraged.
Life and health reinsurance should benefit from a structural gain in demand, leveraging the ageing of the population for the protection side and higher interest rates for the saving side.
Léger likes SCOR’s current balance between life reinsurance and P&C reinsurance as a key element of diversification. “This is an essential source of value creation,” Léger said. “My intention is to maintain this balance.”
SCOR will likewise continue its foray into specialty insurance, which “dovetails” with the core business and hedges volatility. “SCOR will continue to develop specialty insurance,” Léger said. “WE believe in specialty insurance.”
Léger took his post at SCOR just over three weeks ago at the start of May and the strategy outline had been promised for the end-May AGM ahead of a detailed view due for a September investors day presentation.
In January, SCOR ousted its CEO of less than two years in a move heralding a major revision of strategy for the loss-strapped reinsurer, looking to the Swiss Re chief underwriting officer Thierry Léger to take the reins.
Strategy had clearly been a matter of contention within the group: SCOR’s last official strategy expired at the end-2021. A March 2022 date had been set for an unveiling, then delayed with reference to rising uncertainties. By mid-year, leadership could reference rising losses. After Q3, with its spike in loss-making provisions, management spoke more to short-term triage than longer-term directions.
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