International reinsurance company SCOR has once again shown the worth of its robust retrocession program, as these security arrangements relatively assisted to offset some of the disaster declares burden experienced throughout the last quarter.This morning SCOR has reported an underwriting loss for its SCOR Global P&C underwriting department, both for the third-quarter and the very first nine-months of the year, with disaster loss activity the primary chauffeur.
The reinsurance business has reported a 112% combined ratio for Q3 2021 and a 102.7% combined ratio for the first nine-months, with 14.8% of disaster losses and 2.3% of COVID declares contributing to that.
For the very first nine-months catastrophe claims were EUR 708 million after retrocession, with hurricane Ida and the European floods totaling up to EUR 343 million pre-tax and after retro in Q3.
SCORs net catastrophe claims figures are lower than its peers, but its accounting shows a significant favorable take advantage of retrocessional reinsurance throughout the quarter and year-to-date, which has assisted to balance out the disaster claims concern for the reinsurance firm.
SCORs outcomes show that retrocession had a positive benefit of EUR 474 million in Q3, EUR 417 million of which was on the P&C side and so mainly related to the catastrophe loss activity of cyclone Ida and the European floods, we expect.
The positive net effect of retrocession was larger in Q3 than over the nine-months, when on the P&C side it was reported as EUR 271 million.
It does seem SCOR had quite a substantial positive retrocessional advantage from its life retrocession during the year so far, amounting to a favorable net outcome of retro of EUR 1.429 billion over the nine-months to September 30th 2021.
This all demonstrates the value of retrocession in decreasing volatility for the reinsurer, as the combined ratios would have been substantially even worse without this buffering source of defense.
SCOR continued to grow its residential or commercial property and casualty reinsurance service through Q3, with gross premiums composed increasing by 21.5% for the quarter and having actually increased 12.1% for the year so far, at existing exchange rates.
This ongoing growth has actually meant expanding the retrocessional reinsurance program over current years and this is prepared for to continue for SCOR, while the company likewise continues to share and cede some P&C premium to the SCOR Investment Partners insurance-linked securities (ILS) funds.
Throughout the group for the first nine-months of the year, SCOR today reported favorable net earnings of EUR 339 million, up 151.1% on the prior year duration.
The annualised return on equity rose for the group to 7.3% for the nine-months, however was unfavorable at -2.6% for Q3 2021.
Still, despite a difficult quarter due to international catastrophe events, that would have been far more tough without retrocession, SCOR today also revealed another return of capital in the type of a share buyback, demonstrating its continued capital strength.
Denis Kessler, Chairman of SCOR, commented, “Given the recent lift of the regulatory restraints against capital circulation, the Board of Directors has chosen to introduce a EUR 200 million share buy- back program, thinking about on the one hand the extremely strong solvency position of the Group after taking account of the level of capital needed by the company to pursue its lucrative development in 2022, and on the other the high net property worth per share, that makes such an operation highly useful to SCOR shareholders. The Board has reaffirmed the appealing dividend policy actively pursued by the Group over the past few years.”
Laurent Rousseau, Chief Executive Officer of SCOR, included, “This is SCORs core objective as a Tier 1 reinsurer: to help its customers and partners be more resilient in a highly volatile environment. Thanks to the rigorous application of our tactical foundations, SCOR soaks up shocks and continues to handle development, enhance success and decrease revenues volatility. In this context, SCOR deploys its capital proactively to create long term worth to its investors. The share buy-back program that we are announcing today is a presentation of the self-confidence we have in our solvency position and our capability to continue to grow successfully. In the wake of its capital management actions, SCOR keeps its robust capital shield in a market environment that remains unpredictable, and where financial strength is a crucial differentiator. SCOR is poised to enjoy the advantages of its strong franchise, and to seize the attractive long-term growth chances emerging from the quickly changing danger environment.”
Experts have called SCORs quarterly and nine-month results “much better than anticipated” today and the advantages from retrocessional reinsurance belong to this.
Its challenging to know exactly what healings have actually been made, provided the accounting methodology, however it seems substantial take advantage of retro were realised for Q3, helping to considerably moderate the effects of claims from typhoon Ida and the Euro floods.
Laurent Rousseau, Chief Executive Officer of SCOR, included, “This is SCORs core mission as a Tier 1 reinsurer: to assist its partners and customers be more resistant in an extremely unstable environment. In this context, SCOR releases its capital proactively to create long term value to its investors. In the wake of its capital management actions, SCOR keeps its robust capital shield in a market environment that stays volatile, and where monetary strength is a crucial differentiator. SCOR is poised to reap the benefits of its strong franchise, and to take the appealing long-lasting development opportunities emerging from the rapidly altering threat environment.”