SCOR’s MutRé acquisition drives results
SCOR’s MutRé acquisition has resulted in a mark-up of the value of the investment by €26 million in the first quarter of 2018, allowing the reinsurer to beat the analysts’ consensus by 24 percent, according to a Jefferies analyst note.
SCOR has completed the increase of its stake in domestic life & health mutual MutRé to 100 percent in January, 2018, strengthening the life & health reinsurance offering to the French mutual insurance industry.
SCOR has a history of buying life books below book value, the analysts noted, pointing to the 2011 Transamerica Re deal and the 2013 Generali transaction.
The French reinsurer holds significant redundant life reserve which allow the company to manage volatility in mortality earnings to a far greater extent than peers such as Hannover Re, which will face considerable earnings volatility in the second and third quarters of 2018, the analysts noted.
SCOR already provided retrocession capacity to MutRé, potentially by €60 million, according to the Jefferies note. Consequently, although SCOR acquired premium, it lost retrocession premium through the acquisition. As it’s possible that the retrocession was written at 1/1 and the annual premium may have equalled MutRé's first quarter premiums, this may have reduced the impact on SCOR's first quarter growth, the analysts noted.
French reinsurer SCOR beat analysts’ consensus in the first quarter of 2018 as net income increased 18.6 percent year on year to €166 million. The group grew gross written premiums at 0.9 percent year on year to €3.77 billion over the period.
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