SCOR’s Kessler looks ahead to challenges for new Quantum Leap strategy

As SCOR chair and chief executive Denis Kessler detailed the reinsurer’s new ‘Quantum Leap’ strategy for 2019/21, launched last week, he said the company is facing “more challenges in the next two-and-a-half years than in the past three”.

His comments came as he addressed a press conference in the SCOR lounge in Monte Carlo during the Rendez Vous.

The new strategy builds on the firm’s ‘Vision in Action’ strategy, which Kessler said had delivered what it said it would three years ago “despite having to face significant headwinds” including a soft P&C cycle, a low yield environment and a volatile cat load among other challenges.

Kessler said the profitability and solvency targets SCOR has set in the Quantum Leap strategy are “ambitious in the current economic and financial environment”.

For profitability, the target is to get return on equity above 800 bps over the five-year risk-free rates over the cycle which, Kessler said, would be challenging because interest rates are low and, although P&C is firming up, it has some way to go.

SCOR plans its solvency ratio to be in the optimal range of 185 percent to 220 percent. But Kessler added that if interest rates are negative in the long term, certain players will be affected.

Looking ahead, Kessler said the risk universe was expanding and transforming at an increasingly fast pace as he pointed to emerging risks that will be “highly critical” in terms of a potential impact for SCOR.

These included cyber risk which had a “high” likelihood of occurrence in the next 10 years.

Risks rated as potentially “critical” in terms of an impact on the reinsurer with a high likelihood of occurrence in the next 10 years were air pollution, evolving terrorism, blockchain and legal and regulatory uncertainty.

Other “highly critical” potential risks for SCOR, but which are rated “low” for the likelihood of occurrence in the next 10 years, included antibiotic resistance, emerging infectious diseases and non-controlled bio-experiments.

Kessler said the company wants to be a “tech re” a reinsurer of the future as tech developments are redefining how data is accessed, processed and shared.

To do this, the company plans to accelerate its digital transformation and generalised use of new technologies to enhance value creation.