French reinsurer SCOR has reported a net loss of €239 million for the first half of 2022, driven by claims related to the drought in Brazil, flooding in Australia and other weather events, the war in Ukraine, and further losses related to the COVID-19 pandemic.
The net loss announced by SCOR this morning compares with net income of €380 million in H1 2021, and includes an impact of €193 million from the worst drought in Brazil in 91 years. In response, SCOR says that it has been reviewing its agriculture portfolio with a 50% reduction in PML targeted for 2023.
SCOR also experienced losses related to the COVID-19 pandemic of €254 million in H1 2022. Within its life and health (L&H) business, SCOR says that it is actively managing the portfolio and is diversifying away from pandemic risk to focus its growth on transactional lines of business such as longevity and financial solutions.
Additionally, says SCOR, the period was marked by heavy floods in South Africa and Australia, and storms in France.
During H1 2022, the reinsurer’s result was also impacted by the materialization of latent claims related to sexual molestation from the 1980s in the U.S., while the company’s provision related to potential claims consequent to the war in Ukraine, which was booked in the first quarter of 2022, is unchanged.
At the same time, SCOR’s performance in the period was impacted by two non-operating items: a €45 million tax charge provisioned following negative taxable results in certain jurisdictions, and a €30 million pre-tax impact related to the option on own shares granted to SCOR valued at fair value through income.
In terms of premiums, overall, SCOR has reported an 8.3% rise in gross written premiums (GWP) in H1 2022 to €9.7 billion, with growth in property and casualty (P&C) offsetting a decline in L&H.
Within P&C, SCOR has reported GWP growth of almost 21%. In this part of the business, the firm says that it is currently adopting a more selective approach in reinsurance P&C lines, but notes that H1 2022 GWP expansion is still benefitting from recent underwriting years.
The P&C combined ratio stands at 107.7% at the mid-year, including natural catastrophes equivalent to 10.5% of net earned premium.
At the June and July reinsurance renewals, SCOR reveals that it took further actions which contributed to a 21% decline in its 1-in-250-years PML for the 2022 underwriting year, which is someway ahead of its 11% projection. During the mid-year renewals, SCOR’s gross reinsurance premiums fell by 9.8%, driven by a substantial decline in the U.S., where SCOR has lowered its nat cat exposure, notably in Florida, somewhat offset by growth in Europe and other markets where the firm is seeing high demand.
Overall, SCOR achieved a pricing increase of 6.7%, which it says is a reflection of the hardening market in an inflationary environment.
Turning to its L&H division, and SCOR has announced that GWP fell by 1.8% in H1 2022 as it looks to rebalance its book towards more health and longevity products. During the first six months of 2022, the division has produced a technical margin of 6.3%.
On the asset side of the balance sheet, SCOR Investments produced a return on invested assets of 1.6% for H1 2022, which it says reflects the negative impact of change in expected credit losses.