The combined ratio for the P&C unit stands at 113.2% as Kessler acknowledges it was a “disappointing” year
SCOR has reported a €301m net loss for 2022, reflecting the combined impact of nat cat claims and drought claims in Brazil (a total loss of €204m).
The net combined ratio within the reinsurer’s P&C unit stands at 113.2%, marked by several exceptional developments. It includes a nat cat ratio of 12.4%, claims relating to the impact of the drought in Brazil accounting for 2.6%, and the reserve increase announced in Q3 2022 to anticipate the impact of the social and economic inflation accounting for 6.2%.
The impact of the P&C reserve increase is offset by the release of L&H excess margins in Q3 2022. This net loss is reduced compared to Q3 2022 thanks to the Group’s strong performance and net income of €208m in Q4 2022.
CEO departure and rating actions
In January, SCOR announced that Thierry Léger would be taking up the post of CEO of SCOR with effect from 1 May 2023. He was most recently the chief underwriting officer of Swiss Re.
Laurent Rousseau, who succeeded Denis Kessler as CEO in June 2021, resigned from his position as CEO and on the Board.
It follows rating action from all four major rating agencies. Most recently, Moody’s Investor Services downgraded the IFS rating of SCOR to A1 from Aa3 and changed the outlook to stable from negative.
Commenting on the annual results, Denis Kessler, chairman of SCOR, acknowledged they were disappointing. “A sustainable return to profitability is imperative,” he said. “A new, highly experienced Chief Executive Officer, Mr Thierry Léger, will join the Group on May 1, 2023. He will present the broad outlines of his strategic plan at the Annual General Meeting on May 25, 2023, and will implement it without delay and with great determination after presenting it to the investors in September 2023.
“This will enable the Group to take full advantage of its global underwriting platform and technical expertise to seize the opportunities available in the L&H and P&C reinsurance markets, building on its status as a Tier 1 reinsurer.”
Another year of major losses
2022 was the sixth consecutive year marked by a high frequency of natural catastrophes and other weather-related events, including floods in Australia, Hurricane Ian in the US, hailstorms in France and one of the worst droughts in Brazilian history.
The beginning of the year was also marked by the continuation of the global pandemic as well as the start of the war in Ukraine, the largest military conflict Europe has seen in decades.
On the macroeconomic front, strong inflationary pressures in Europe and the United States led central banks to raise interest rates, resulting in a sharp paradigm shift for investors and borrowers.
These various developments have had a significant impact on reinsurers’ earnings in 2022 but have also resulted in a combination of higher prices and higher investment returns, both of which are expected to strongly support reinsurers’ performance in 2023.
François de Varenne, interim chief executive of SCOR, said it had been a difficult year for the reinsurer, ”even if the fourth quarter was better than the previous quarters”.
“The P&C renewals at January 1, 2023, confirm the continued hardening of the market. Reinvestment rates are expected to remain high, increasing the financial contribution of the investment portfolio,” he continued.
“The teams are fully mobilised to accelerate the execution of the one-year plan to restore the Group’s profitability and to ensure the transition to the new IFRS 17 standard. We are ready to support the new CEO in the preparation and execution of a new, ambitious strategic plan.”