SCOR shunned large proportional deals at renewals
SCOR declined opportunities to grow in proportional reinsurance at the January renewals because it perceived rates as inadequate. This is in contrast with some of its competitors including Munich Re, which have signed some large proportional deals.
The French reinsurer said it has shifted the emphasis of its book of business from proportional to non-proportional reinsurance business because there is better pricing and conditions in the latter.
“The move from proportional to non-proportional is a function of how the market operates,” said SCOR Global P&C CEO Victor Peignet during a Feb. 8 presentation.
SCOR walked away from large proportional deals which could have added an additional 10 percent premium growth, Peignet said.
Some of the contracts were interesting but negotiations did not lead to the terms and conditions SCOR was expecting, he added.
“We are confident that the business will be shown to us next year,” Peignet noted.
Overall, SCOR increased its property/casualty (P&C) reinsurance renewal premiums by 3.7 percent at constant exchange rates at the January 2018 renewals to €3.1 billion.
In contrast, Munich Re, said in a recent presentation that it did seize various opportunities in proportional casualty and property business, including a few very large transactions.
As a result, the German reinsurer increased the volume of business written at Jan. 1 by 19 percent to around €9.9 billion, due partly to new large volume treaties in the US and Australia.
SCOR said it instead focused on taking advantage of improvements in non-proportional longer tail lines. Rates in motor have improved, not least as a result of the Ogden discount rate in the UK. SCOR grew its gross premiums in motor by 19 percent to €140 million at January renewals.
Total UK motor has moved up by around €20 million to €50 million, Peignet said. “Our UK motor non-prop is now higher than our French non-prop motor,” he noted.
The profitability of SCOR’s P&C reinsurance portfolio has improved due to a shift towards better-priced non-proportional treaties, according to the presentation. Risk-adjusted price is up 3 percent overall.
At the same time, Munich Re achieved price increases of around 0.8 percent in the January renewals, according to that reinsurer’s presentation.
SCOR is confident that the rest of the year will offer further deal opportunities as half of the US catastrophe business will renew later in the year, the company said.
“We have a lot of cat exposure that renews over the course of the year,” Peignet said, noting that margins usually improve gradually throughout the year.
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