SCOR rebuilds P&C margin Q4 on eased nat cats & IFRS discount gains
Global reinsurance group SCOR confirmed its 2023 return to profits in P&C reinsurance in the fourth quarter, taking a heady 22.4 points off of its combined ratio to 75.6%.
Management put the gain in P&C profitability to a nat cat load at 1.5 ratio points thanks to positive prior period development of 7.2 points. Even the current period nat cat load of 8.7% in Q4 and 9.0% in FY2023 bat the 10% budget.
Also helping, a “satisfactory” attritional loss and commission ratio of 79.3% and a strong favourable impact from IFRS17 discounting put at 11.3 ratio points on reallocation of reserves.
P&C re/insurance revenue, the margin-inclusive IFRS17 top-line measure, was up 0.7% year on year in Q4 at constant FX rates (down 3.9% reported). Management said only that slower growth reflected more market hardening already baked into the prior periods.
New business contract service margin, the IFRS17 measure for contract value added to the total portfolio, adjusted to remove IFRS17 bean-counting tricks in the interim, came in a mere €77 million thanks to new sales in unspecified specialty lines. That left the group some 5% shy of its FY target.
The Q4 P&C insurance service result of €353 million, IFRS17's approximation of underwriting earnings, included €252 million of earn-in of embedded contract margins, a risk adjustment release of €49 million, and a positive adjustment on experienced margins at €64 million on the prior period nat cat developments.
“Looking ahead, our objective is to continue to grow in selected lines of business, as we did at the 1.1.2024 renewals,” CEO Thierry Léger said.
The L&H segment added €64 million in Q4 insurance service results, a strong swing from prior year period losses. Management cited a negative impact from changes in the CSM amortisation pattern on a full year basis, and by an onerous contract impact of €-50 million with a negligible contribution from new business.
Total investment income of €206 million in Q4 2023 was also up 27% from the prior year period to further bolster the P&L.
By the bottom line, group net income of €162 million in Q4 was a handy swing from a €356 million prior year period loss and helped drive SCOR to a full-year net profit of $812 million.
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