Scor P&C delivers 98.7% Q4 CR with 2020 Covid losses pegged at €284m

Scor P&C delivered a respectable combined ratio of 100.2% last year despite posting Covid-19 losses of €284m, as its parent group saw net income fall 45% to €234m after an improvement of 370% in Q4 to €99m. The P&C business saw its combined ratio improve fall by just over ten percentage points to 98.7% in the fourth quarter. Its yearly figure of 100.2% was only slightly worse than the 99% in 2019. Some 4.7 percentage points of the 2020 P&C combined ratio came from Covid-19 losses of €284m. The losses were mainly in credit, surety and political risk, and property business interruption lines. Excluding Covid-19, the net combined ratio would have been 95.7%, which Scor said is in line with its ‘Quantum Leap’ targets for profitability and solvency, and above last year’s normalised combined ratio of 96.1%. The P&C nat cat ratio stands at 6.8%, slightly below the budget of 7%. Scor said this is despite high cat activity in the second half of 2020, especially in the US with Hurricanes Laura and Sally, and the midwest Derecho. Scor expects pandemic life claims of €314m in 2020, with total costs, including any hit to investments, of €640m. Scor P&C’s gross written premiums fell 4.7% in the fourth quarter to €1.8bn, but were flat at €7.16bn for the year. Specialty premiums were up to €1.88bn from €1.74bn, with reinsurance accounting for the rest. Scor Group also saw gross written premiums fall 4.7% to €4.09bn in the fourth quarter and remain flat for the year at €16.37bn. Scor said January 2021 reinsurance renewals led to a “clarification” of terms and conditions that saw Covid-19 excluded from covers. It said its exposure to pandemic losses is limited in 2021. The company added that the pandemic is creating conditions for stronger reinsurance growth and a “positive pricing dynamic”, as it drives “a general increase in risk aversion, which in turn is driving higher demand for risk coverage throughout the world”. Scor said Covid-19 is also reinforcing the general P&C market hardening observed across all lines and regions. It said it took “full advantage of these favourable conditions and the depth of its franchise to produce an excellent outcome in the January 2021 renewals”. Denis Kessler, Scor’s chairman and CEO, said with hindsight the reinsurance industry “underestimated the truly global reach” of the pandemic, as well as “the critical impact of the various – unmodellable – decisions taken by governments to contain the spread of the virus”. But Scor said it “successfully passed this real-life stress test”. “The group accomplished its mission, honouring all its commitments to its clients and contributing to the protection of the people and property affected by these losses, while delivering a good set of results,” it added. Moody’s analyst Christian Badorff said Scor’s 2020 results confirm it has so far coped well with Covid-19 and looks to have derisked further for this year. “In P&C, SCOR reported only moderate additional claims in the fourth quarter and indicated the remaining risk for 2021 is limited, due to the extensive introduction of pandemic exclusion clauses. Furthermore, SCOR has reported strong top-line growth and high single-digit rate increases for the recent renewals, which should be supportive of earnings in 2021,” said Mr Badorff.

Scor P&C delivers 98.7% Q4 CR with 2020 Covid losses pegged at €284m

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