SCOR SE’s Board of Directors met on February 23, 2022, under the chairmanship of Denis Kessler, to approve the Group’s 2021 financial statements.
2021 was marked by the continuation of the Covid-19 pandemic, with the emergence of new variants and the prolongation of government policies introduced to prevent the virus from spreading. For the fifth year in a row, a high frequency of natural catastrophes was also observed. At the same time, the year was marked by the rise of inflation across both Europe and the United States, increasing the pressure on central banks to raise interest rates.
In this challenging context, SCOR continued to accomplish its mission, honoring all its commitments to its clients and demonstrating its shock-absorbing capacity. The Group is very well capitalized with a 226% solvency ratio, and profitability has significantly improved with a net income of EUR 456 million, resulting in a return on equity (ROE) of 7.2%. These solid results were achieved against a backdrop of heavy cat activity (EUR 838 million of claims net of retrocession and before tax) and the ongoing impact of Covid-19 (EUR 575 million net of retrocession and before tax for the Group for 2021 alone).
In 2022, several encouraging signs of improvement can however be observed:
- The rapid deployment of Covid-19 vaccination programs around the world should enable Covid-19 related mortality to significantly decrease (even though the virus could remain endemic);
- Although we are carefully monitoring the effects of climate change – which led SCOR to increase its cat budget from 7% to 8% of its P&C premiums –the frequency of natural catastrophe claims in the last few years remains historically exceptional;
- After years of very low interest rates, their likely increase will have a positive effect on the Group’s return on invested assets.
This perspective of a more favorable environment should enable SCOR to successfully pursue the implementation of its strategic plan “Quantum Leap”, launched in September 2019 and extended until December 31, 2022, and to look ahead with new ambitions, which will be unveiled in the course of the year. The Group will thus continue to build on its global platform and expertise to seize market opportunities, leveraging its strong Tier 1 credentials based upon the consistent execution of a clear and proven strategy, a recognized market leading position with a high-quality franchise, a very strong financial profile, and recognized technical expertise.
- Gross written premiums of EUR 17,600 million in 2021 are up 9.8% at constant exchange rates compared with 2020 (up 7.5% at current exchange rates)
- SCOR P&C (Property and Casualty) gross written premiums are up 17.6% at constant exchange rates compared with 2020 (up 14.9% at current exchange rates), following strong 2021 renewals in Reinsurance and Specialty Insurance. The net combined ratio stands at 100.6%, including 12.8% of natural catastrophes, well above the cat budget
- SCOR L&H (Life and Health) gross written premiums are up 3.6% at constant exchange rates compared with 2020 (up 1.8% at current exchange rates). Over the period, SCOR L&H delivers a technical margin of 10.3%, driven by the Life in-force transaction executed in H1 2021
- SCOR Investments delivers a return on invested assets of 2.3%5 6 in 2021
- The Group cost ratio, which stands at 4.4% of gross written premiums in 2021, is more favorable than the “Quantum Leap” assumption of ~5.0%
- The Group net income stands at EUR 456 million in 2021. The return on equity (ROE) stands at 7.2%, 680 bps above the risk-free rate7
- The Group generates high operating cash flows of EUR 2,406 million in 2021, of which EUR 860 million relate to the Life in-force transaction. The Group’s total liquidity is very strong, standing at EUR 2.3 billion as of December 31, 2021
- The Group shareholders’ equity stands at EUR 6,402 million as of December 31, 2021. This results in a book value per share of EUR 35.26, compared to EUR 33.01 as of December 31, 2020
- The Group financial leverage stands at 27.8% as of December 31, 2021, down 0.7% points compared to December 31, 2020
- The Group solvency ratio is estimated at 226%8 on December 31, 2021, above the optimal solvency range of 185% - 220% as defined in the “Quantum Leap” strategic plan
Well-defined and attractive dividend policy pursued, with a dividend of EUR 1.80 per share proposed for 2021
SCOR’s dividend policy is unchanged: SCOR continues to favor dividends as a way to remunerate its shareholders and pursues the attractive dividend policy that it has implemented over the past years.
With its strong capital position, SCOR is proposing a dividend of EUR 1.80 per share for the fiscal year 2021. This dividend will be submitted to the approval of the shareholders at the 2022 Annual General Meeting, to be held on May 18, 2022. The board recommends to set the coupon date at May 20, 2022 and the payment date at May 24, 2022.
This comes on top of the EUR 200 million share buyback announced in October – decided on the basis of the Group’s high solvency ratio – of which EUR 164 million is already completed9 and which will be fully executed by the end of March 2022. The buyback and the proposed dividend imply a combined capital return to shareholders of EUR 523 million.
At the end of 2021, the solvency ratio stands at 226%, above the upper end of the optimal solvency range. Prior to capital return initiatives (dividend and buyback), the solvency ratio stands at 237%. The main drivers for the change in solvency at the end of 2021 compared to the end of 2020 include: i) Life in-force retrocession transaction (+27% pts), ii) operating capital generation excluding Covid-19 (+8% pts), capital deployment (-8% pts), Covid-19 impact (-17% pts), market variances (+18% pts) and other movements (-11% pts).
Denis Kessler, Chairman of SCOR, comments: “By executing the “Quantum Leap” strategic plan, SCOR has successfully demonstrated its shock-absorbing capacity throughout the Covid-19 crisis. The Life in-force retrocession transaction concluded at the end of H1 2021 also allowed the Group to demonstrate the value of its Life reinsurance portfolio, providing strong optionality to optimally allocate its capital. Although 2021 was quite a challenging year, SCOR delivered a strong profitability and its solvency position is now more robust than it was a year ago, even after taking into account the EUR 200 million share buyback to be fully executed by the end of March 2022, and the strong dividend of EUR 1.80 per share that will be proposed at the Annual General Meeting for 2021. This bears witness to the Group’s very strong financials and its ability to create value, even in a challenging environment.”
Laurent Rousseau, Chief Executive Officer of SCOR, comments: “In a year marked by a high level of natural catastrophes and Covid-19, SCOR has demonstrated its ability to create value for clients, communities, and shareholders. Our objectives are clear: reducing volatility, increasing profitability, growing the franchise, optimally allocating capital and embarking on the transformation of the Group. These strong results are testimony to the hard work of our teams whom I would like to thank. We are now actively preparing the next phase of our strategy and will provide an update on our situation and outlook to shareholders on March 29th, 2022. This should further highlight SCOR’s efforts to support sustainable and profitable growth while reinforcing its franchise and capital position.”
1. At constant exchange rates
2. Based on a 5-year rolling average of 5-year risk-free rates (42 bps in the last quarter of 2021)
3. Solvency ratio estimated after EUR 200 million share buy-back launched in October 2021 and after the proposed dividend of EUR 1.80 per share for the fiscal year 2021
4. As of February 18th, 2022
5. Return on invested assets excludes the EUR 89 million capital gain realized in Q3 2021 on the Doma transaction, which is a venture investment not held for investment purposes
6. As of December 31, 2021, fair value through income on invested assets excludes EUR 41 million related to the option on own shares granted to SCOR
7. Based on a 5-year rolling average of 5-year risk-free rates (42 bps in the last quarter of 2021)
8. Solvency ratio estimated after EUR 200 million share buy-back launched in October 2021 and after the proposed dividend of EUR 1.80 per share for the fiscal year 2021
9. As of February 18th, 2022