Scor results hammered by nat cats

A combination of the war in Ukraine, natural catastrophes and the severe drought in Brazil have hammered Scor’s profitability in the first half of this year, as the Paris-based reinsurer posted a net loss of €239m compared with a net profit of €380m in the first half of 2021. The continued firm primary insurance and reinsurance markets ensured, however, that Scor posted gross written premiums (GWP) of €9.9bn in the first half of this year, up 8.3% on the same period in 2021. The group said it achieved a pricing increase of 6.7% across its book, “reflecting a hardening market in an inflationary environment”. As with a number of other leading reinsurers, Scor is pulling capacity from natural catastrophe risk because of the rising volatility that it says is probably caused by climate change. “Shrinking capacity and the growing imbalance between supply and demand should support a hardening P&C cycle,” noted the reinsurer. The company said the global macroeconomic environment strongly deteriorated in the first half of this year, as tensions driven by the war in Ukraine and the related sanctions grew. “Many countries are now experiencing levels of inflation that had not been observed in decades. In H1 2022, the impact of climate change also continued to be felt. The second quarter was marked by heavy floods in South Africa and storms in France, which followed a first quarter that had already been impacted by severe floods in Australia and one of the worst droughts experienced in Brazilian history. In the first half of 2022, the Covid-19 pandemic also continued,” said Scor. “The combination of these events has significantly affected Scor’s results, leading to a net loss of €239m for the first half of 2022, of which €159m was incurred in the second quarter,” it added. Scor was hit particularly hard by claims from the drought that impacted corn and soy crops in southern Brazil. It was the worst drought in Brazil for 91 years and resulted in a $9.2bn economic loss. The drought had a €193m impact on Scor’s technical result, of which €35m was incurred in the first quarter. “As a consequence, and consistent with its ambitions to reduce its exposure to climate-sensitive events, Scor has been fully reviewing its agriculture portfolio with a 50% exposure reduction (PML) targeted for 2023,” the company explained. The reinsurer said it was also impacted by the materialisation of latent claims related to sexual molestation in the US in the 1980s. The total cost of Covid-19 claims amounted to €254m, of which €195m was incurred in the first quarter. The results were also significantly impacted by two non-operating items. These were: €45m of tax charges following negative taxable results in certain jurisdictions; and a €30m pre-tax impact related to an option on own shares granted to Scor valued at fair value through income. Scor’s P&C GWP was up 20.9% at constant exchange rates, compared with the first half of 2021. “Scor is currently adopting a more selective approach in reinsurance P&C lines, however the H1 2022 GWP growth is still benefiting from recent underwriting years. Scor continues to grow its reinsurance global lines and its specialty insurance portfolios, where market conditions are seen as attractive. The net combined ratio stands at 107.7% including natural catastrophes, equivalent to 10.5% of net earned premium,” explained the reinsurer.

Scor results hammered by nat cats

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