Press Release
First Nine Months 2020 results
SCOR delivers solid results in the first nine months of 2020
SCOR continues to demonstrate its ability to absorb shocks, delivering positive results in the first nine months of 2020. On the P&C side, there has been no material change in the claims assessment of the Group’s exposure to the Covid-19 pandemic since the H1 2020 results presentation on
- Gross written premiums total
EUR 12,283 million in Q3 2020 YTD, up 2.3% at constant exchange rates compared with Q3 2019 YTD (up 1.9% at current exchange rates). - SCOR Global P&C gross written premiums are up 2.9% at constant exchange rates compared with Q3 2019 YTD (up 1.9% at current exchange rates). SCOR Global P&C’s Q3 2020 YTD technical profitability is impacted by Covid-19 and a series of natural catastrophes with a net combined ratio of 100.7%.
- SCOR Global Life gross written premiums are up 1.9% at constant exchange rates compared with Q3 2019 YTD (up 1.9% at current exchange rates). SCOR Global Life records a technical margin of 5.8% in Q3 2020 YTD, including the impact of the Covid-19 pandemic.
- SCOR Global Investments delivers a return on invested assets of 2.6% in Q3 2020 YTD
- The Group cost ratio, which stands at 4.4% of gross written premiums, is better than the “Quantum Leap” assumption of ~5.0%.
- The Group net income stands at
EUR 135 million for Q3 2020 YTD. The annualized return on equity (ROE) stands at 2.9%, 235 bps above the risk-free rate1. The normalized2 return on equity stands at 10.6%, 1 004 bps above the risk-free rate3. - The Group generates high cash flows with operating cash flows standing at
EUR 661 million in Q3 2020 YTD. The Group’s total liquidity is very strong, standing atEUR 2.4 billion atSeptember 30, 2020 . - The Group shareholders’ equity stands at
EUR 6,249 million atSeptember 30, 2020 , down byEUR 125 million compared withDecember 31, 2019 mainly due to the weakening of the USD. This results in a strong book value per share ofEUR 33.51 , compared toEUR 34.06 atDecember 31, 2019 . - The Group financial leverage stands at 29.0% on
September 30, 2020 , +2.6% points compared toDecember 31, 2019 . Allowing for the subordinated debt4 called onOctober 20, 2020 , the adjusted financial leverage ratio stands at 28.0%. - The estimated Group solvency ratio stands at 215% on
September 30, 2020 , in the upper part of the optimal solvency range of 185% - 220% defined in “Quantum Leap”. The increase compared toJune 30, 2020 when it stood at 205%, is mainly related to strong operating capital generation in the third quarter of 2020 and the successful placement of a Tier 2 subordinated note in the amount ofEUR 300 million 5.
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Update on the Covid-19 pandemic
The estimated cost of the Covid-19 pandemic booked in Q3 2020 YTD reaches
- On the P&C side, there has been no material change in the overall assessment of the Group’s exposure to the Covid-19 pandemic since the H1 2020 results presentation on
July 23, 2020 , which confirms SCOR’s prudent booking approach. As ofSeptember 30, 2020 , the actual claims received related to the pandemic stand at a total ofEUR 92 million , with onlyEUR 8 million paid at that date.- Contingency business (event cancelation): SCOR does not underwrite this line of business on a standalone basis. The Group’s exposure to this risk is very limited and comes from multi-line treaties. As a result, the impact of a “second wave” is also expected to be very limited;
- Credit, Surety & Political risks: Claims related to the Covid-19 pandemic are developing in line with expectations;
- Property Business Interruption (B.I.) risks: SCOR’s exposures to Property Business Interruption relate to a very small amount of affirmative pandemic coverage and non-damage Business Interruption, mostly in
Western Europe , with non-damage Business Interruption scarce in theU.S. and largely sub-limited in APAC. Several court decisions confirm strict adherence to clauses and contract wordings. Regarding theFinancial Conduct Authority (FCA) case in theUK , there is a limited impact from the decision taken by theUK High Court in favor of policyholders, due to SCOR’s limited exposure in that market
- On the Life side, the Covid-19 claims in the
U.S. continue to emerge better than expected and the assessment of SCOR Global Life’s exposure to the Covid-19 pandemic is unchanged:- The impact of Covid-19 on the portfolio reinsured by the Group continues to be significantly less severe than on the general population;
- In Q3 2020 YTD, the incurred Covid-19 claims received by the Group in the
U.S. portfolio continue to emerge at an amount lower than expected, with an actual over expected9 ratio of 67% (as atSeptember 30 , 2020); - The
U.S. Covid-19 mortality impact is projected to reduce significantly over 2021 as one or more vaccines are anticipated to become available; - The Technical Margin is expected to return to the “Quantum Leap” assumption range in H2 2021.
SCOR group nine months and Q3 2020 key financial details
YTD | QTD | |||||
In EUR millions (at current exchange rates) | Nine months 2020 | Nine months 2019 | Variation | Q3 2020 | Q3 2019 | Variation |
Gross written premiums | 12,283 | 12,055 | +1.9% | 4,088 | 4,045 | +1.1% |
Group cost ratio | 4.4% | 4.7% | -0.3 pts | 3.7% | 4.7% | -1.0 pts |
Annualized ROE | 2.9% | 8.8% | -5.9 pts | 7.1% | 7.5% | -0.4 pts |
Net income* | 135 | 401 | -66.3% | 109 | 115 | -5.2% |
Shareholders’ equity | 6,249 | 6,491 | -3.7% | 6,249 | 6,491 | -3.7% |
* Consolidated net income, Group share.
Despite the Covid-19 pandemic, SCOR Global P&C underlying fundamentals remain strong over 2020, in line with “Quantum Leap” assumptions
In Q3 2020 YTD, SCOR Global P&C delivers growth of 2.9% at constant exchange rates (+1.9% at current exchange rates) with gross written premiums reaching
SCOR Global P&C key figures:
YTD | QTD | |||||
In EUR millions (at current exchange rates) | Nine months 2020 | Nine months 2019 | Variation | Q3 2020 | Q3 2019 | Variation |
Gross written premiums | 5,365 | 5,264 | +1.9% | 1,847 | 1,818 | +1.5% |
Net combined ratio | 100.7% | 95.7% | +5.0 pts | 97.5% | 99.4% | -1.9 pts |
SCOR Global P&C delivers a combined ratio of 100.7% in Q3 2020 YTD, including an impact of 5.5% related to Covid-19 claims.
- The nat cat ratio stands at 6.5% in Q3 2020 YTD. This is below the 7% budget assumption despite high Q3 cat activity mainly in the
U.S. (Hurricane Laura, Midwest Derecho).
- The net attritional loss and commission ratio stands at 88.3% in Q3 2020 YTD. In addition to Covid-19 claims, the net attritional ratio was also impacted by the
Beirut port explosion (EUR 44 million net of retrocession). Excluding the impact of Covid-19-related claims, the net attritional loss and commission ratio would stand at 82.8% YTD, 1.5 points above 2019 which benefited from reserve releases ofEUR 60 million before tax (1.4 points)
- The management expense ratio stands at 5.9% in Q3 2020 YTD, down 0.9 point compared with last year (6.8%).
The normalized net combined ratio for nat cat and Covid-19-related impacts stands at 95.7%, in line with “Quantum Leap” assumptions12 and improving compared to Q3 2019 YTD when it stood at 96.2%.
SCOR Global Life absorbs the shock of Covid-19 and demonstrates the resilience of its business model
In Q3 2020 YTD, SCOR Global Life’s gross written premiums stand at
SCOR Global Life key figures:
YTD | QTD | |||||
In EUR millions (at current exchange rates) | Nine months 2020 | Nine months 2019 | Variation | Q3 2020 | Q3 2019 | Variation |
Gross written premiums | 6,918 | 6,791 | +1.9% | 2,241 | 2,227 | +0.6% |
Life technical margin | 5.8% | 7.2% | -1.4 pts | 6.7% | 7.3% | -0.6 pts |
The net technical result reaches
The Q3 2020 YTD booked Covid-19 claims (including IBNR13) stand at
EUR 233 million for booked and estimated incurred mortality claims in theU.S. ;EUR 18 million for claims in all other markets.
The current claims outlook for Q4 2020 is expected to translate into a technical margin estimated at between 5.5% and 6.0% for FY 2020
SCOR Global Investments delivers a return on invested assets of 2.6% in Q3 2020 YTD
Total investments reach
Following a freeze of its reinvestment between March and
The prudent asset allocation reflects the current environment and a cautious positioning of the fixed income portfolio:
- Liquidity stands at 11% (compared to 13% at Q2 2020) of total invested assets;
- Corporate bonds account for 43% (compared to 41% at Q2 2020) of total invested assets; and
- The fixed income portfolio is of very high quality, with an average rating of A+, and a duration of 3.4 years15.
The investment portfolio remains highly liquid, with financial cash flows16 of
SCOR Global Investments key figures:
YTD | QTD | |||||
In EUR millions (at current exchange rates) | Nine months 2020 | Nine months 2019 | Variation | Q3 2020 | Q3 2019 | Variation |
Total investments | 28,440 | 28,540 | -0.4% | 28,440 | 28,540 | -0.4% |
§ of which total invested assets | 20,414 | 20,347 | +0.3% | 20,414 | 20,347 | +0.3% |
§ of which total funds withheld by cedants and other deposits | 8,026 | 8,193 | -2.0% | 8,026 | 8,193 | -2.0% |
Return on investments* | 2.2% | 2.4% | -0.2 pts | 2.3% | 2.7% | -0.4 pts |
Return on invested assets** | 2.6% | 3.0% | -0.4 pts | 2.6% | 3.4% | -0.8 pts |
(*) Annualized, including interest on deposits (i.e. interest on funds withheld).
(**) Annualized, excluding interest on deposits (i.e. interest on funds withheld).
The investment income on invested assets stands at
The income yield stands at 2.1% in Q3 2020 YTD with limited impairments of -0.3%17.
The reinvestment yield stands at 1.4% at the end of Q3 2020 YTD18, reflecting the lower interest rate environment (notably in the
Based on the current market conditions, the return on invested assets is expected to reach ~2.3% for the full year 2020, including allowance for impairments.
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APPENDIX
1 - P&L key figures Q3 2020 YTD and Q3 2020 standalone
YTD | QTD | |||||
In EUR millions (rounded, at current exchange rates) | Nine months 2020 | Nine months 2019 | Variation | Q3 2020 | Q3 2019 | Variation |
Gross written premiums | 12,283 | 12,055 | +1.9% | 4,088 | 4,045 | +1.1% |
P&C gross written premiums | 5,365 | 5,264 | +1.9% | 1,847 | 1,818 | +1.5% |
Life gross written premiums | 6,918 | 6,791 | +1.9% | 2,241 | 2,227 | +0.6% |
Investment income | 462 | 496 | -6.9% | 160 | 187 | -14.4% |
Operating results | 308 | 667 | -53.8% | 180 | 186 | -3.2% |
Net income1 | 135 | 401 | -66.3% | 109 | 115 | -5.2% |
Earnings per share (EUR) | 0.73 | 2.16 | -66.3% | 0.59 | 0.62 | -4.7% |
Operating cash flow | 661 | 573 | +15.4% | 317 | 540 | -41.3% |
1: Consolidated net income, Group share.
2 - P&L key ratios 2020 YTD and Q3 2020 standalone
YTD | QTD | |||||
Nine months 2020 | Nine months 2019 | Variation | Q3 2020 | Q3 2019 | Variation | |
Return on investments 1 | 2.2% | 2.4% | -0.2 pts | 2.3% | 2.7% | -0.4 pts |
Return on invested assets 1,2 | 2.6% | 3.0% | -0.4 pts | 2.6% | 3.4% | -0.8 pts |
P&C net combined ratio 3 | 100.7% | 95.7% | +5.0 pts | 97.5% | 99.4% | -1.9 pts |
Life technical margin 4 | 5.8% | 7.2% | -1.4 pts | 6.7% | 7.3% | -0.6 pts |
Group cost ratio 5 | 4.4% | 4.7% | -0.3 pts | 3.7% | 4.7% | -1.0 pts |
Return on equity (ROE) | 2.9% | 8.8% | -5.9 pts | 7.1% | 7.5% | -0.4 pts |
1: Annualized; 2: Excluding funds withheld by cedants; 3: The net combined ratio is the sum of the total claims, the total commissions and the total P&C management expenses, divided by the net earned premiums of SCOR Global P&
3 - Balance sheet key figures as on
As on | As on | Variation | |
Total investments 1,2 | 28,440 | 28,854 | -1.4% |
Technical reserves (gross) | 30,430 | 31,236 | -2.6% |
Shareholders’ equity | 6,249 | 6,374 | -2.0% |
Book value per share (EUR) | 33.51 | 34.06 | -1.6% |
Financial leverage ratio | 29.0% | 26.4% | +2.6 pts |
Total liquidity3 | 2,404 | 1,532 | +56.9% |
1 Total investment portfolio includes both invested assets and funds withheld by cedants and other deposits, accrued interest, cat bonds, mortality bonds and FX derivatives; 2 Excluding 3rd party net insurance business investments; 3 Includes cash and cash equivalents.
4 - “Quantum Leap” targets
Targets | |
Profitability | ROE > 800 bps above 5-year risk-free rate1 across the cycle |
Solvency | Solvency ratio in the optimal 185% - 220% range |
1 Based on a 5-year rolling average of 5-year risk-free rates.
5 - “Quantum Leap” assumptions
Assumptions | ||
P&C | Gross written premium growth | ~4% to 8% annual growth |
Net combined ratio | ~95% to 96% | |
Value of New Business1 | ~6% to 9% annual growth | |
Life | Gross written premium growth | ~3% to 6% annual growth |
Net technical margin | ~7.2% to 7.4% | |
Value of New Business1 | ~6% to 9% annual growth | |
Investments | Annualized return on invested assets | ~2.4% to 2.9%2 |
Group | Gross written premium growth | ~4% to 7% annual growth |
Leverage | ~25% | |
Value of New Business1 | ~6% to 9% annual growth | |
Cost ratio | ~5.0% | |
Tax rate | ~20% to 24% |
- Value of New Business after risk margin and tax
- Annualized ROIA on average over “Quantum Leap” under Summer 2019 economic and financial environment
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Contact details
Media
+33 (0)1 58 44 76 62
media@scor.com
Investor Relations
+33 (0)1 58 44 86 12
oarmengaud@scor.com
www.scor.com
LinkedIn: SCOR | Twitter: @SCOR_SE
General
Numbers presented throughout this document may not add up precisely to the totals in the tables and text. Percentages and percent changes are calculated on complete figures (including decimals); therefore the document might contain immaterial differences in sums and percentages due to rounding. Unless otherwise specified, the sources for the business ranking and market positions are internal.
Forward-looking statements
This document includes forward-looking statements and information about the objectives of SCOR, in particular, relating to its current or future projects. These statements are sometimes identified by the use of the future tense or conditional mode, as well as terms such as “estimate”, “believe”, “have the objective of”, “intend to”, “expect”, “result in”, “should” and other similar expressions. It should be noted that the achievement of these objectives and forward-looking statements is dependent on the circumstances and facts that arise in the future.
Forward-looking statements and information about objectives may be impacted by known and unknown risks, uncertainties and other factors that may significantly alter the future results, performance and accomplishments planned or expected by SCOR, and in particular by the impact of the Covid-19 crisis which cannot be accurately assessed at this stage, given the uncertainty related to the magnitude and duration of the Covid-19 pandemic and to the possible effects of future governmental actions and/or legal developments.
Information regarding risks and uncertainties that may affect SCOR’s business is set forth in the 2019 universal registration document filed on
In addition, such forward-looking statements are not “profit forecasts” within the meaning of Article 1 of Commission Delegated Regulation (EU) 2019/980.
Financial information
The Group’s financial information contained in this document is prepared on the basis of IFRS and interpretations issued and approved by the
Unless otherwise specified, prior-year balance sheet, income statement items and ratios have not been reclassified.
The calculation of financial ratios (such as book value per share, return on investments, return on invested assets, Group cost ratio, return on equity, combined ratio and life technical margin) are detailed in the Appendices of the Q3 2020 presentation (see page 15).
The third quarter 2020 financial information included in this document is unaudited. Unless otherwise specified, all figures are presented in Euros. Any figures for a period subsequent to
1 Based on a 5-year rolling average of 5-year risk-free rates (54 bps in the third quarter of 2020)
2 Normalized for natural catastrophes (7% budget cat ratio) and the cost of Covid-19 (excluding equity impairments)
3 Based on a 5-year rolling average of 5-year risk-free rates (54 bps in the third quarter of 2020)
4
5 Press release of
6 Compared to
7 Compared to
8 Includes an estimate of Incurred but not reported (IBNR) claims for deaths prior to
9 The “actual over expected ratio” as of
10 The GWP have decreased by
11 See page 42 of the Q3 2020 Earnings Presentation for details
12 See page 42 of the Q3 2020 Earnings Presentation for details
13 Due to typical reporting delays with claims, this amount includes an estimate in respect of incurred-but-not-reported (IBNR) claims for US deaths prior to
14 Funds withheld & other deposits
15 Compared to a duration on the fixed income portfolio of 3.1 years in Q2 2020 (duration on total invested assets of 3.4 years vs. 3.2 years in Q2 2020)
16 As of
17 Impairment charge excluding regular IFRS amortization of real estate assets
18 Corresponds to theoretical reinvestment yields based on Q3 2020 asset allocation of asset yielding classes (i.e. fixed income, loans and real estate), according to current reinvestment duration assumptions and spreads, currencies, yield curves as of
Attachment
SCOR Press release
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