PresseBox
Press release BoxID: 793227 (SCOR Global)
  • SCOR Global
  • Goebenstraße 1
  • 50672 Köln
  • http://www.scor.com/
  • Contact person
  • Marie-Laurence Bouchon
  • +33 (1) 584476-10

SCOR delivers excellent results with a net income of EUR 170 million and an annualized ROE of 11.2%

First quarter 2016 results

(PresseBox) (Köln, )
In the first quarter 2016, SCOR continues to deliver excellent results, with resilient technical profitability and strong net income generation, along the same lines as in 2015.
Gross written premiums reach EUR 3,283 million, up 5.1% at current exchange rates compared to 2015 (+5.0% at constant exchange rates), with:


- a strong contribution from SCOR Global Life, with gross written premiums reaching EUR 1,907 million over the quarter (+10.5% at current exchange rates and +9.9% at constant exchange rates);

- a 1.6% decrease in SCOR Global P&C gross written premiums at current exchange rates (-1.1% at constant exchange rates), which stand at EUR 1,376 million, affected by the cancellation of the division’s participation in a Lloyd’s syndicate as well as by lower activity on the Aviation book of business. Excluding these impacts, premium growth would have been 2.7%.


SCOR Global P&C records very strong technical profitability with a net combined ratio of 89.7% in the first quarter of 2016, in an environment of low natural catastrophe losses.
SCOR Global Life records a strong technical margin of 7.1% in the first three months of 2016, constantly delivering above the "Optimal Dynamics" assumption of 7.0%.
SCOR Global Life’s Market Consistent Embedded Value (MCEV) reaches EUR 5.6 billion at the end of 2015, up 17% compared to 2014.
SCOR Global Investments achieves a solid 3.3% return on invested assets, while maintaining its prudent portfolio management.
Group net income reaches EUR 170 million in Q1 2016, broadly stable with the Q1 2015 net income. The annualized return on equity (ROE) stands at 11.2% or 1,111 bps above the risk-free rate1.
Shareholders’ equity stands at EUR 6,358 million at 31 March 2016, compared to EUR 6,363 million at 31 December 2015. This translates into a book value per share of EUR 34.13 at 31 March 2016, compared to EUR 34.03 at 31 December 2015.
SCOR’s financial leverage stands at 27.6% as at 31 March 2016, temporarily above the range indicated in "Optimal Dynamics". This is the result of the successful placement of EUR 250 million dated subordinated debt, issued with a coupon set at 3.25% in June 2015, and the placement of the dated subordinated debt of EUR 600 million2 to refinance the undated subordinated debt of CHF 650 million callable in August 2016. The financial leverage adjusted for the intended calls of the two debts callable in Q3 2016 would stand at approximately 20.6%3.
SCOR’s estimated solvency ratio at 31 March 2016, adjusted for the intended calls of the two debts callable in Q3 2016, stands at 202%4, within the optimal solvency range of 185%-220% as defined in the "Optimal Dynamics" plan.


Denis Kessler, Chairman & CEO of SCOR, comments: "In the first quarter of 2016, SCOR continues to post excellent results, along the same lines as those recorded by the Group in 2015, benefiting from the full deployment of the initiatives launched under the "Optimal Dynamics" plan. SCOR’s footprint continues to expand in the first quarter, and both the Life and P&C divisions deliver strong technical profitability. SCOR Global Investments records a strong return on invested assets, demonstrating its capacity to actively manage the asset portfolio while remaining prudent in the current volatile environment. The reinsurance industry is facing economic, social and political uncertainties in 2016 in an increasingly competitive environment. Our teams are taking this fully into account in the preparation of the Group’s new strategic plan, which is due to be unveiled in September. Using our know-how, experience and expertise, SCOR is getting ready to meet the challenges of the future".

In the first quarter of 2016, SCOR Global P&C maintains very strong technical profitability, with a net combined ratio of 89.7%.

In the first quarter of 2016, SCOR Global P&C gross written premiums stand at EUR 1,376 million and include the impact of the cancellation of the division’s participation in a Lloyd’s syndicate, as well as lower activity on the Aviation book of business. At current exchange rates, year-on-year gross written premiums decrease by 1.6% (-1.1% at constant exchange rates). Excluding these particular effects, which are expected to have a much lower impact by year end, the premium growth at constant exchange rates stands at 2.7%.

In the first three months of 2016, SCOR Global P&C records very strong technical profitability with a net combined ratio of 89.7%, driven by:


the low level of Natural Catastrophe losses corresponding to 1.4 pts of net combined ratio, with the February Taiwan earthquake (estimated at EUR 8 million) being the only material event;
the net attritional and commission ratios adding up to 81.3%, which is fully consistent with the latest indications of our 2016 assumptions;
the P&C management expenses ratio increase, which is essentially driven by the structure of the business portfolio.


The normalized net combined ratio (with a natural catastrophe budget of 6%) stands at 94.3%, in line with the assumptions communicated in the Q4 2015 disclosure.

At its 1 April 2016 renewals5, SCOR Global P&C increases premiums by 4.7% at constant exchange rates. Pricing at the April renewals is nearly flat overall for SCOR Global P&C despite the pressure recorded on non-proportional accounts. The expected profitability of the business booked is in line with the Group’s target.

SCOR Global Life delivers strong growth in the first quarter of 2016

SCOR Global Life gross written premiums stand at EUR 1,907 million in the first quarter of 2016, up 10.5% at current exchange rates compared to the same period last year (+9.9% at constant exchange rates).

Full year 2016 premium growth is expected to normalize at approximately 4-5% versus 2015, in line with "Optimal Dynamics" assumptions of average gross written premium growth of 6% between 2013 and 2016.

SCOR Global Life records a strong technical margin of 7.1%, above the "Optimal Dynamics" assumption, thanks to the profitable new business conducted over the period - with Longevity representing an increased proportion of SCOR Global Life’s product mix - and to the healthy in-force portfolio, with mortality experience in line with expectations.

The new business pipeline continues to be healthy across all regions and products, with new business margins expected to meet the Group’s profitability targets.

2015 Market Consistent Embedded Value for SCOR Global Life increases by 17% to EUR 5.6 billion, which validates the long-term strength of the biometric portfolio. The value of new business stands at EUR 354 million in 2015 and the total cash repatriation from SCOR Global Life to the Group reaches EUR 236 million

SCOR Global Investments delivers a solid return on invested assets of 3.3% in the first quarter of 2016, in an extremely low yield and uncertain environment

Since June 2015, SCOR Global Investments has tactically and momentarily reinforced its prudent investment strategy to face the current headwinds and high level of market volatility. In the first quarter of 2016, liquidity has been increased to 14% of total invested assets, compared to 5% in the first quarter of 2015 and 11% at the end of 2015. During the period, the division proactively de-risked the investment portfolio, mainly on the financial, energy and metals & mining sectors. Finally, the duration of the fixed income portfolio was maintained at 3.9 years at 31 March 2016, unchanged compared to the 31 December 2015 level.

The stable average rating of AA- bears witness to the quality of the fixed income portfolio. Moreover, SCOR Global Investments continues to exclude any exposure to sovereign debt from the GIIPS countries6.

As at 31 March 2016, the expected financial cash flow over the next 24 months stands at EUR 6.8 billion (including cash, coupons and redemptions), which represents 37% of the invested assets.

In the first quarter of 2016, invested assets generate a financial contribution of EUR 147 million. The active asset management policy executed by SCOR Global Investments has enabled the Group to record capital gains of EUR 74 million over the period, coming mainly from the real estate portfolio and to a lesser extent from the fixed income portfolio.

The return on invested assets stands at 3.3% for the first quarter of 2016, compared to 3.5% in the first quarter of 2015. Taking account of funds withheld by cedants, the net rate of return on investments stands at 2.6% in the first quarter of 2016. The reinvestment yield stands at 2.0%7 at 31 March 2016.

Invested assets (excluding funds withheld by cedants) stand at EUR 18,184 million as at 31 March 2016, and are composed as follows: 11% cash, 75% fixed income (of which 3% are short-term investments), 4% loans, 3% equities, 4% real estate and 3% other investments. Total investments, including EUR 9,443 million of funds withheld, stand at EUR 27,627 million at 31 March 2016, compared to EUR 27,552 million at 31 December 2015.

[1] Three-month risk-free rates.

[2] See press releases of 2 June 2015 and 2 December 2015 respectively.

[3] Adjusted financial leverage ratio would be approximately 20.6% assuming the repayment of the CHF 650 million and EUR 257 million subordinated debts callable in Q3 2016, subject to the evolution of market conditions and supervisory approval.

[4] The estimated adjusted solvency ratio of 202% allows for the intended calls of the two debts callable in Q3 2016 (the 6.154% undated deeply subordinated EUR 257 million notes callable in July 2016 and the 5.375% fixed to floating rate undated subordinated CHF 650 million notes callable in August 2016), subject to the evolution of market conditions and supervisory approval. The estimated solvency ratio based on Solvency II requirements is 222% at 31 March 2016.

[5] See press release of 22 April 2016

[6]Greece, Ireland, Italy, Portugal, Spain.

[7] Corresponds to marginal reinvestment yields based on Q1 2016 asset allocation of yielding asset classes (i.e. fixed income, loans and real estate), according to current reinvestment duration assumptions and spreads. Yield curves as at 31/03/2016.