The first quarter 2011 was marked by a series of exceptionally serious natural catastrophes, with cyclones and floods in Australia, another earthquake in New Zealand in February, and the historic catastrophe in Japan on 11 March 2011.
SCOR’s strategy, which is notably based on a controlled risk appetite, balanced development between Life and Non-Life reinsurance, significant geographic and business diversification, highly efficient capital protection and a prudent asset management policy, has once again enabled the Group to demonstrate its ability to absorb major shocks.
During the first quarter 2011, SCOR has continued to execute its strategic plan “Strong Momentum”, obtaining a performance that largely compensates for the exceptional accumulation of natural catastrophes over the period:
- Gross written premiums stand at EUR 1,665 million, up 3.2% compared to the first quarter 2010 (+1.8% at constant exchange rates).
- Net income stands at EUR -80 million, the very high level of costs linked to natural catastrophes being largely offset by a strong technical performance from Non-Life business lines and by an improved operating margin on the Life side.
- Operating cash flow reaches EUR 201 million in the first quarter 2011 compared to EUR 104 million for the same period in 2010, representing an increase of 93%.
- SCOR Global P&C’s net combined ratio stands at 135.2%, of which 46.3 points are linked to natural catastrophes (representing a total pre-tax cost of EUR 367 million). The normalised net combined ratio (with a natural catastrophe budget of 6%) thus stands at 94.9% in the first quarter 2011.
- Gross written premiums for SCOR Global P&C stand at EUR 953 million, up 4.8% (3.2% at constant exchange rates). SCOR Global P&C’s objective of a 9% increase in business in 2011 is reaffirmed, notably due to very satisfactory January 2011 renewals (gross written premiums up by 13%), confirmed by an identical increase in the 1 April renewals (+13%).
- SCOR Global Life’s operating margin reaches 7.6%, up 1.3 points compared to the first quarter 2010.
- SCOR Global Life records gross written premiums of EUR 712 million in the first quarter 2011, up 1.1% compared to the first quarter 2010 (+2.6% excluding indexed annuity business). New business underwriting is up by 22% compared to the same period in the previous year.
- SCOR Global Investments has continued its rollover strategy whilst progressively repositioning the investment portfolio in accordance with the strategic allocation set out in the “Strong Momentum” plan. In the first quarter 2011, SCOR records a high return on invested assets of 4.3% (compared to 4.0% for the whole of 2010).
- Group shareholders’ equity stands at EUR 4.2 billion at the end of the first quarter 2011, a decrease of 4.3% compared to the end of December 2010 due to the combined effects of the first quarter net results and the negative impact of exchange rate developments. Book value per share thus stands at EUR 22.86 at 31 March 2011.
The implementation of the strategic plan “Strong Momentum” has also been cemented by major achievements since the beginning of the year, notably the start of underwriting by the new Lloyd’s syndicate Channel 2015, which is entirely financed by SCOR, the issuance of CHF 400 million of perpetual subordinated notes, increasing the Group’s financial leverage to 16%, which is still well below the average level for the industry as a whole, the Group’s reinforced organisational structure in Latin America and the opening of a new SCOR Global Life office in Mexico.
As part of its strategic orientation designed to focus the Group’s Life reinsurance business exclusively on biometric risks, on 16 February 2011 SCOR announced the sale of its fixed annuity subsidiary in the United States, Investors Insurance Corporation (IIC). The acquisition of Transamerica Re’s mortality business, announced on 26 April 2011, reinforces the focus on biometric risks and gives the Group a new dimension, increasing the volume of its Life reinsurance business by around 50%. Moreover this transaction meets all the profitability and solvency objectives of the “Strong Momentum” plan. It should begin to be accretive in 2011 and is being financed without the issue of new shares.
Denis Kessler, Chairman and Chief Executive Officer of SCOR, commented: “The unprecedented accumulation of exceptional natural catastrophes in the first quarter 2011 has had a significant impact on the entire reinsurance industry. In this context, the resilience of SCOR’s performance bears witness to the relevance of our strategy, which is based on significant geographical and business diversification, a moderate risk appetite, a highly efficient capital shield and a prudent asset management policy. SCOR has been very active in the implementation of its “Strong Momentum” plan since the beginning of the year. The acquisition of Transamerica Re’s mortality business is a major transaction that strengthens the Group’s strategic orientations, meets its targets in terms of profitability and solvency and reinforces its position among the world’s leading reinsurers”.