Hurricane Ian drove nat cat losses of €517m in Q3; reinsurer boosted reserves in anticipation of inflationary impacts
SCOR’s challenging P&L performance reflects the highly volatile environment in the third quarter of the year, said the reinsurer.
SCOR P&C’s results reflect heavy nat cat claims (€517m in Q3 2022 contributing to a total of €907m for the first nine months of the year). Most notably, in Q3 2022, the reinsurer incurred €279m claims on Hurricane Ian.
The cost of convective storms and hailstorms in France in June increased to €166m (€113m on top of the cost booked in Q2 2022). Man-made claims activity has been increasing as well in Q3 2022.
Denis Kessler, chairman of SCOR, commented: “In light of the Group’s disappointing results, the Board of Directors asked the management team to accelerate the implementation of strong measures to strengthen SCOR’s technical profitability and improve its operational performance.
”The Board will ensure that these measures are implemented with determination. This will enable the Group to take full advantage of the positive development in the P&C reinsurance market in terms of rate increases and tightening of terms and conditions.”
Reserves boosted as inflation bites
In anticipation of the impact of inflation, the company has strengthened its P&C reserves by €485m (representing 2.3% of the €21.5 billion net P&C reserves) to take a prudent stance in a claims environment marked by high economic and social inflation.
SCOR’s solvency position remains strong at 217%, which the reinsurer intends to take advantage of given the acceleration of the hardening of the P&C market.
SCOR P&C gross written premiums are up 15.8% at constant exchange rates compared with the first nine months of 2021 (up 24.1% at current exchange rates).
SCOR is adopting a more selective approach in Treaty P&C Lines, and continues to grow its Treaty Global Lines and its Specialty insurance portfolios where market conditions are seen as attractive. The net combined ratio stands at 111%, including a 15.9% nat cat ratio.
Laurent Rousseau, chief executive officer of SCOR, commented: “The quarter has been difficult, and the results are significantly below the Group’s expectations. Our short-term priority is the restoration of our financial performance.
”The Group has already taken meaningful actions to improve its performance, reduce its exposure to Natural Catastrophes, and prudently reserve the combined effects of social and economic inflation. But these Q3 results demonstrate the need to go further and continue taking strong actions to remediate the group’s underwriting performance and restore its profitability.
”The hardening of the P&C market, the increasing demand for life reinsurance products and the increase in interest rates are drivers that should favour positive developments for reinsurers.”