
Thomas
Fossard
Investor Relations
SCOR absorbs the combined impact of potential claims related to the conflict in Ukraine, a series of natural catastrophes and the continuation of the pandemic in the United States
SCOR SE’s Board of Directors met on May 5, 2022, under the chairmanship of Denis Kessler, to approve the Group’s Q1 2022 financial statements.
Key highlights:
Q1 2022 was marked by a combination of exceptional events that have impacted the global economy in general and the reinsurance industry in particular. Most notably, Russia’s invasion of Ukraine has led to global geopolitical instability with wide ranging macroeconomic consequences, from energy prices and inflation to stock market volatility, interest rates and economic growth. The level of natural catastrophes remains very high with windstorms in Europe, floods in Australia and an earthquake in Japan. The industry has also been affected by other extraordinary events such as a severe drought in Brazil. At the same time, the Covid-19 pandemic continues with the spread of the Omicron variant and has led to significant excess mortality, especially in the United States.
In this challenging context, SCOR continued to accomplish its mission, honoring all its commitments to its clients and demonstrating its shock-absorbing capacity, while fully complying with international sanctions relating to the conflict in Ukraine. The combination of these events led to a quarterly net loss of EUR 80 million driven by the EUR 85 million provisioned by SCOR with respect to the conflict in Ukraine. Despite these negative developments, the Group remains well capitalized with a 240% solvency ratio estimated at the end of Q1 2022. SCOR PO (the subsidiary owned by SCOR in Russia) has stopped underwriting new business.
In Q1 2022, several signs of improvement can however be observed:
Building on this and as the market environment evolves, under “Quantum Leap”, SCOR has an action plan to reduce volatility and improve profitability in 2022, selectively focusing its growth on profitable lines, while proactively optimizing its retrocession strategy and working on other de-risking initiatives. These actions, combined with the ongoing transformation of the Group, should result in increased efficiency and support a return to a more robust and a more sustainable profitability level.
The EUR 200 million share buy-back announced in October 2021 was completed on March 3, 2022.
As per its communication released on February 24, 2022, SCOR is proposing a dividend of EUR 1.80 per share for the fiscal year 2021. This dividend will be submitted for the approval of the shareholders at the 2022 Annual General Meeting, to be held on May 18, 2022.
The Group is actively preparing for IFRS 17. The project is on track to be able to deliver our financial reporting under IFRS 17 in 2023. The standard more appropriately recognizes the economic value of the Group, and in particular the value of the Group’s life reinsurance portfolio. Based on our current assessment, the expected economic value of the Group, defined as shareholders’ equity plus contractual service margin (CSM) net of tax, would exceed EUR 9 billion(4) as at 1 January 2022.
SCOR will provide an update on the environment and its strategic ambitions on 28 July 2022 together with its Q2 results, and its full strategic plan including under the IFRS 17 framework, on November 9th, together with its Q3 results (Investor Day).
Denis Kessler, Chairman of SCOR, comments: “Uncertainties and instabilities are multiplying: the pandemic is ongoing, global refragmentation is accelerating, inflation is back, economic growth is slowing down and the world is being hit by natural catastrophes… Our environment seems increasingly stochastic and random, and global predictability seems to be shrinking. Indeed, the (re)insurance industry appears to be facing increasingly frequent shocks and multifaceted and widespread threats. In this respect, we are living in a time of ‘great change’. In this environment of major transformation, where risks are multiplying, reinsurance is increasingly necessary to provide security to all economic agents. To accomplish their fundamental mission, reinsurers need to transform themselves and adapt all aspects of their risk management policies. As ultimate risk carriers, their Solvency is critically important. SCOR is ready to meet all these challenges, building on its franchise, its recognized technical expertise, the talent of its teams and its command of new technology. I am convinced that SCOR, with its proven good governance and proactive management, will steadfastly pursue the best ways and means to enable the Group to continue its value creating journey.”
Laurent Rousseau, Chief Executive Officer of SCOR, comments: “Q1 2022 has been marked by a series of exceptional events both in L&H and in P&C, which have negatively impacted our financial performance. Amongst these, we have been especially focused on managing the impact of the conflict in Ukraine - from a financial, operational and human standpoint.
We are also continuously focused on our main objectives: reducing volatility, increasing profitability, growing the franchise, optimally allocating capital and embarking on the transformation of the Group. Our January 1 and April 1 P&C treaty reinsurance renewals have been strong, and we have a clear action plan in place across the entire organization to improve the Group’s financial performance in 2022. Despite an accounting loss, SCOR’s solvency position remains robust, with a solvency ratio of 240%.”
(1) At constant exchange rates.
(2) PML (probable maximum loss) as measured by the net Aggregate Exceedance Probability-250.
(3) As at 31 March 2022, fair value through income on invested assets excludes EUR 18m related to the option on own shares granted to SCOR. The Q1 2022 RoIA at 1.8% is calculated based on IFRS 9 and includes the impact of expected credit losses (ECL) and change in fair value of invested assets measured at fair value through profit and loss. Excluding those impacts (which would not have been recorded under IAS39), the RoIA would have been at 2.1%
(4) Unaudited figures