SCOR losses balloon: Q3 combined ratio at 141% on nat cat & fresh reserves
Global reinsurance group SCOR suffered a 29-point increase in its third quarter P&C net combined ratio to an eye-opening 141.4% on a one-two punch from heavy natural catastrophe plus significant reserve building as the group sunk to a €270 million Q3 net loss.
“The quarter has been difficult, and the results are significantly below the Group’s expectations,” CEO Laurent Rousseau commented. “Our short-term priority is the restoration of our financial performance.”
Natural catastrophe continues to dog the French group despite the heavy portfolio remediation taken to date. SCOR claimed €517 million in Q3 nat cat, including €279 million on Hurricane Ian, an additional €113 million booked against Q2's French hail storms and unspecified sums on Typhoon Nanmadol and Hurricane Fiona. The 9M nat cat total is up to €907 million, a 15.9% nat cat loss ratio.
SCOR went on to add €485 million or 2.3% to its P&C reserves “to take a prudent stance in a claims environment marked by high economic and social inflation,” management said.
Efforts to restore profitability and reduce volatility will continue, it noted.
“These Q3 results demonstrate the need to go further and continue taking strong actions to remediate the Group’s underwriting performance and restore its profitability,” Rousseau said.
“SCOR will make the most of the hardening reinsurance market, after the successful build-up of its Specialty Insurance platform,” management said in its statement. Pricing assumptions for the 2023 renewals are under review “to reflect notably the new inflationary environment.”
A cost reduction plan should enable delivery of €125 million yearly efficiency gains by 2025.
In the P&C reinsurance segment, gross written premium rose 17.5% year on year in constant currency and management bragged that strong market conditions were enabling its shift away from property cat and into specialty.
Speaking to 9M YTD figures, management claimed gross written premium growth of 24.7% y/y in specialty, which now accounts for 29% of new GWP. GWP growth was held to 7.9% in the treaty P&C lines segment where SCOR groups property, property cat, casualty, motor and related lines.
To take the edge off of the P&C losses, SCOR released €460 million in reserves in life & health to put the life technical margin back on track. Investments made a €305 million contribution.
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