First nine months 2022 outcomes: SCOR takes action to

Press Release

November 9, 2022 – N° 17

First nine months 2022 outcomes

SCOR takes action to restore profitability in a difficult surroundings

SCOR SE’s Board of Directors met on November 8, 2022, below the chairmanship of Denis Kessler, to approve the Group’s first nine months 2022 monetary statements².

Okey highlights:

In the third quarter of 2022, the reinsurance trade continues to face a difficult surroundings. The massive and quite a few pure catastrophes comparable to Hurricane Ian in Florida, Typhoon Nanmadol in Japan and Hurricane Fiona in Canada are additional fueling an already hardening reinsurance market the place capability is scarce. The macro-economic surroundings can also be unstable, with central banks climbing rates of interest to battle towards inflation.

SCOR’s difficult P&L efficiency displays the extremely unstable surroundings:

• SCOR P&C’s outcomes mirror heavy Nat Cat claims (EUR 517 million in Q3 2022 contributing to a complete of EUR 907 million for the primary nine months of the yr). Most notably, in Q3 2022, SCOR incurred EUR 279 million claims on Hurricane Ian. The price of convective storms and hailstorms in France in June will increase to EUR 166 million (EUR 113 million on prime of the fee booked in Q2 2022). Man-made claims exercise has been growing as effectively in Q3 2022.
• SCOR L&H’s outcomes profit from constructive underlying tendencies (together with lowering Covid-19 deaths in Q3 2022).
• Investment return advantages from the rise in rates of interest with a 1.9% Return on Invested Assets for the primary nine months of 2022 (2.3% Return on Invested Assets in Q3 2022) and can proceed to see an uplift as rates of interest proceed to enhance: reinvestment yield stands at 5.1% as of 30^th September 2022, versus 2.1% as of 31^st December 2021.

SCOR has additionally taken significant actions on its stability sheet:

• SCOR strengthens its P&C reserves by EUR 485 million (representing 2.3% of the EUR 21.5bn internet P&C reserves) to take a prudent stance in a claims surroundings marked by excessive financial and social inflation.
• The launch of IFRS 4 extra L&H reserves margin ends in a technical revenue EUR 460 million larger than the 8.3% normalized technical margin degree in Q3 2022.
• SCOR takes a prudent stance on the tax assumptions on its stability sheet, by means of provision and non-recognition of Deferred Tax Assets (“DTAs”) main to an extra EUR 94 million cost in Q3 2022, leading to a EUR 139 million cost YTD. The losses not acknowledged for DTA functions will be absolutely activated at a future date if applicable. Going ahead, SCOR expects to give you the chance to take up the DTA utilization and discount in recoverability interval.

SCOR’s solvency place stays very robust, at 217%, within the higher a part of its optimum solvency vary. This robust capital base will allow SCOR to make the most of the acceleration of the hardening of the P&C market.

The mixed impact of those developments ends in a internet lack of EUR -509 million for the primary nine months of 2022 (EUR -270 million in Q3). The Group is at present targeted on short-term remediation actions. Longer time period commitments and targets can be unveiled to the market in 2023, below the brand new IFRS 17 accounting framework considering each the brand new macroeconomic context and the 2022 monetary yr outcomes.

• Gross written premiums stand at EUR 14,827 million within the first nine months of 2022, up 6.2% at fixed change charges in contrast with the primary nine months of 2021 (up 13.6% at present change charges).
• SCOR P&C (Property and Casualty) gross written premiums are up 15.8% at fixed change charges in contrast with the primary nine months of 2021 (up 24.1% at present change charges). SCOR is adopting a extra selective strategy in Treaty P&C Lines³, and continues to develop its Treaty Global Lines⁴ and its Specialty insurance portfolios the place market circumstances are seen as enticing. The internet mixed ratio stands at 111.0%, together with a 15.9% Nat Cat ratio. On prime of this, SCOR P&C strengthens its reserves by EUR 485 million, equal to 8.5% of the online earned premium for the primary nine months of 2022, implying a complete mixed ratio of 119.5% for the primary nine months 2022.
• SCOR L&H (Life and Health) gross written premiums decline by 2.0% at fixed change charges, in contrast with the primary nine months of 2021 (up 4.7% at present change charges) because the Group rebalances the portfolio in the direction of extra well being and longevity services in a post-Covid world. Over the interval, SCOR L&H delivers a technical results of EUR 863 million, benefitting from a launch of extra prudent margin in L&H reserves (delivering most notably EUR 460m above an 8.3% normalized degree of technical margin for the only real third quarter). Following the discharge of extra margin, L&H reserves are enough.
• SCOR Investments delivers a return on invested belongings of 1.9% for the primary nine months of 2022⁵ and an funding revenue of EUR 305 million, with the common revenue yield at 2.2% for the primary nine months of 2022.
• The Group price ratio accounts for 4.5% of gross written premiums within the first nine months of 2022.
• The Group internet loss stands at EUR -509 million for the primary nine months of 2022, reflecting primarily the impacts of Nat Cat claims (EUR -907 million) and the non-recognition of DTAs (EUR
  -139 million), whereas the affect of the P&C reserves strengthening is broadly offset by the discharge of L&H extra margin within the third quarter. 

• The Group generates constructive working money flows of EUR 54 million for the primary nine months of 2022, pushed by a constructive EUR 867 million working money circulation from SCOR P&C, whereas SCOR L&H working money flows are destructive at EUR -813 million, notably impacted by the fee of Covid-19 claims (together with from prior years), regardless that Covid-19 deaths are actually declining. The Group’s whole liquidity is robust, standing at EUR 2.3 billion as at September 30, 2022.
• The Group shareholders’ fairness stands at EUR 5,430 million as of September 30, 2022, down from EUR 6,402 million on the finish of 2021, leading to a guide worth per share of EUR 30.39, in contrast to EUR 35.26 as of December 31, 2021. The largest driver for the change is the revaluation (belongings measured at honest worth by means of OCI) of EUR -1,117 million over the primary nine months of 2022.

The present unrealized losses on the mounted revenue portfolio (EUR 1,595 million as of 30^th September 2022) is not going to materialize and can rapidly and considerably lower because the securities which might be a part of it attain maturity (anticipated recapture of EUR 1,128 million in shareholders’ fairness over the subsequent 3 years). 

• The Group monetary leverage stands at 31.0% as at September 30, 2022, up 3.2 factors in contrast to December 31, 2021 (27.8%), as a consequence of the lower in shareholders’ fairness. Adjusted for the destructive affect of revaluation (belongings measured at honest worth by means of OCI) on the mounted revenue portfolio, the leverage ratio stands at 27.0% as of September 30, 2022.
• The Group solvency ratio is estimated at 217% on September 30, 2022, on the excessive finish of the optimum solvency vary of 185% – 220% as outlined within the “Quantum Leap” strategic plan.

Update on SCOR’s technique: focusing on a 1–yr plan

SCOR is at present working in a fast-changing surroundings pushed by various paradigm shifts: the mixture of upper rates of interest and a return of inflation, along with heavy pure catastrophes exercise and the pandemic have profound impacts on the reinsurance trade. SCOR has subsequently been adapting its technique to this new surroundings by constructing its resilience, specializing in a 1-year action plan to greatest place the Group within the new regime, and ship a sustainable efficiency.

SCOR stays targeted on restoring profitability and decreasing volatility

The Group has already taken significant remediation actions in 2022:

• In the course of 2022, SCOR decreased its peak exposures (Nat Cat and US mortality). These actions have already began displaying advantages.

• SCOR tightened P&C underwriting self-discipline and exposures. The Group reviewed its pricing assumptions forward of 2023 renewals to mirror notably the brand new inflationary surroundings.
• SCOR took a prudent strategy to its stability sheet resilience, by reviewing totally its P&C reserves and constructing prudence in a extremely inflationary surroundings.

The Group will keep the course in 2023 and has identified three strategic priorities:

1. Restore profitability: the Group manages proactively its underwriting portfolios to enhance profitability and cut back volatility. In parallel to ongoing underwriting and pricing actions, the Group acts to include the affect of inflation on its price base, constructing a nimble and lean group will allow to ship EUR 125 million yearly effectivity good points by 2025.
2. Maximize the advantages of market tailwinds: thanks to its robust stability sheet, SCOR is poised to profit from the favorable market tendencies each in P&C, by means of the constructive growth of the reinsurance cycle, and in L&H, by capturing post-pandemic market alternatives. SCOR’s funding portfolio will profit rapidly from the upper reinvestment charges thanks to a brief invested belongings’ length.
3. Build on a resilient stability sheet: SCOR will keep a resilient stability sheet to ship the best degree of safety to its shoppers and stakeholders. SCOR affords a AA-level of capital safety to its shoppers.

SCOR sees interesting strategic orientations for each its companies.

In L&H, SCOR will construct on strategic continuity to reveal the total worth of its main franchise. The Group will leverage additional its US mortality management place, whereas diversifying its portfolio

• geographically in APAC and Europe
• by deepening its longevity franchise

In P&C, SCOR will strengthen its reinsurance franchise. To ship a sustainable efficiency throughout the cycle, SCOR will profit from the hardening reinsurance market, after the profitable build-up of its Specialty Insurance platform. To take up shocks in an more and more unstable surroundings, SCOR will construct a resilient portfolio by leveraging its Tier 1 place in Europe and in Treaty Global traces.

One strategic crucial for reinsurers can be to supply a differentiated worth proposition throughout each L&H and P&C companies. SCOR will put together for the long run by accelerating the event of knowledge and knowledge-driven options with shoppers and by fostering technological partnerships and investments to entry chosen dangers and shoppers of tomorrow.

SCOR will full its IFRS 17-based financial efficiency framework in 2023.

SCOR is on monitor for the implementation of IFRS 17. SCOR strongly believes will probably be a internet beneficiary of IFRS 17, as the worth of its L&H portfolio can be higher mirrored sooner or later accounting framework. Q1 2023 outcomes can be offered below IFRS 17. Key efficiency indicators below IFRS 17 have been recognized and want to be additional calibrated and stabilized contemplating the present market volatility. The translation of SCOR’s technique into IFRS17 targets will subsequently be offered in 2023.

This proactive stance to business administration will assist SCOR ship a sustainable efficiency for the advantage of all stakeholders, creating long-term financial worth for its shareholders, bringing worth to shoppers by providing a differentiated and sustainable worth proposition.

Denis Kessler, Chairman of SCOR, feedback: “In light of the Group’s disappointing results, the Board of Directors asked the management team to accelerate the implementation of strong measures to strengthen SCOR’s technical profitability and improve its operational performance. The Board will ensure that these measures are implemented with determination. This will enable the Group to take full advantage of the positive development in the P&C reinsurance market in terms of rate increases and tightening of terms and conditions.”

Laurent Rousseau, Chief Executive Officer of SCOR, feedback: “The quarter has been difficult, and the results are significantly below the Group’s expectations. Our short-term priority is the restoration of our financial performance. The Group has already taken meaningful actions to improve its performance, reduce its exposure to Natural Catastrophes, and prudently reserve the combined effects of social and economic inflation. But these Q3 results demonstrate the need to go further and continue taking strong actions to remediate the Group’s underwriting performance and restore its profitability.

The hardening of the P&C market, the increasing demand for life reinsurance products and the increase in interest rates are drivers that should favor positive developments for reinsurers. I am confident that we are building from a sound base to navigate in the new environment and take advantage of market tailwinds.

We will communicate in 2023 the KPIs under the upcoming IFRS 17 norm, which will reveal SCOR’s economic value”.

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SCOR Group 9M 2022 and Q3 2022 key monetary particulars

* Consolidated internet revenue, Group share.

SCOR P&C’s profitability displays reserves strengthening and vital Nat Cat exercise, whereas additionally highlighting the advantage of the Nat Cat publicity discount technique

In the primary nine months of 2022, SCOR P&C’s GWP are up 15.8% at fixed change charges (24.1% at present change charges) vs the primary nine months of 2021, amounting to EUR 7,463 million. This displays the strengthening of USD vs. EUR. SCOR continues to profit from enticing market circumstances, enabling the Group to speed up the repositioning of its P&C portfolio. Growth is robust in Specialty Insurance (+24.7% at fixed FX), which now accounts for 29% of SCOR P&C’s gross written premiums. The Treaty Global Lines⁶ revenues enhance by +25.9% at fixed FX, pushed by new contracts and profit from supportive reinsurance market dynamics. SCOR is at present adopting a extra selective underwriting strategy for Treaty P&C Lines⁷, with GWP up by solely +7.9% at fixed FX.

SCOR P&C key figures:

*Excluding SCOR’s P&C reserves strengthening of EUR 485 million in Q3, the online mixed ratio would have been 111.0% within the first nine months of 2022 and 117.2% within the third quarter 2022.

SCOR P&C’s internet mixed ratio stands at 119.5% within the first nine months of 2022, in contrast to 102.7% for the primary nine months of 2021. The deterioration is defined by i) a excessive Nat Cat ratio at 15.9%, together with 4.9 pts attributable to Hurricane Ian, in contrast to a 14.8% Nat Cat ratio in 9M 2021; and ii) a better attritional loss and fee ratio, which stands at 97.5% in contrast with 81.6% within the first nine months of 2021, pushed by larger man-made losses.

The Nat Cat ratio consists of, inter alia, the affect of the next Q3 gadgets:

• The internet claims associated to the Hurricane Ian at EUR 279 million, assuming a USD 70 billion trade loss
• Additional data acquired on the late June French storm permitting an up to date estimate of EUR 166 million on associated claims (of which an extra EUR 113 million was booked within the third quarter)
• Other local weather occasions comparable to Typhoon Nanmadol and Hurricane Fiona

On prime of those and in anticipation of future inflationary and claims developments, SCOR additionally accelerated its reserves evaluation course of within the third quarter and determined to additional strengthen its stability sheet by including EUR 485 million to its P&C reserves. The EUR 485 million strengthening corresponds principally to an upward evaluation of financial inflation assumption to ranges persistently above historic noticed claims inflation throughout the guide and the evaluation of key latent exposures.

The bills ratio for SCOR P&C stays broadly steady at 6.1%.

SCOR’s L&H technical margin profits from utilization of extra margin in L&H reserves

For the primary nine months of 2022, SCOR’s L&H gross written premiums stand at EUR 7,364 million, down 2.0% at fixed change charges (up 4.7% at present change charges) in contrast to the primary nine months of 2021. The underlying efficiency in gross written premiums displays the continuing efforts to rationalize the portfolio and develop in the direction of extra worthwhile traces of business and in strategic geographies.

SCOR L&H key figures:

The L&H technical consequence stands at EUR 863 million for the primary nine months of 2022 with a technical margin of 14.9%, (for the third quarter the technical margin advantages from the discharge of extra margin in L&H reserves enabling a technical lead to extra of EUR 460 million above a normalized 8.3% degree). For the identical interval final yr, the technical consequence amounted to EUR 622 million and the technical margin stood at 11.3%. Following the discharge of extra margin, L&H reserves are enough.

For the primary nine months of 2022, the overall price of Covid-19 deaths quantities to
EUR 288 million, of which EUR 256 million (internet of retrocession, earlier than tax) from the U.S. portfolio. 
  

SCOR Investments generates a return on invested belongings of 1.9%⁸ in the first nine months of 2022, and the reinvestment yield rises to 5.1% on the finish of September 2022

As at September 30, 2022, whole investments quantity to EUR 31.3 billion, with whole invested belongings of
EUR 22.2 billion and funds withheld and different deposits of EUR 9.2 billion.

SCOR has a high-quality mounted revenue portfolio with a median ranking of A+, and a length at 3.3 years⁹. SCOR’s asset combine is optimized with 81% of the portfolio invested in mounted revenue.

SCOR Investments key figures:

^(*) Annualized and excluding funds withheld by cedants & different deposits. As at September 30, 2022, honest worth by means of revenue on invested belongings excludes EUR (38) million associated to the choice on personal shares granted to SCOR (EUR (8) million in Q3 2022).

Total funding revenue on invested belongings stands at EUR 305 million within the first nine months of 2022.

The return on invested belongings stands at 1.9 %^10,11 within the first nine months of 2022. Under the IAS 39 commonplace, the return on invested belongings would have been 2.1%.

The common revenue yield stands at 2.2% within the first nine months of 2022, up from 2.0% in H1 2022, because the portfolio is reinvested in a extra favorable rate of interest surroundings.

The reinvestment yield stands at 5.1%¹² on the finish of September 2022, up from 2.1% on the finish of 2021, and 4.1% at finish June 2022. The invested belongings portfolio is very liquid and monetary money flows of EUR 8.9 billion are anticipated over the subsequent 24 months¹³ enabling SCOR to profit from growing reinvestment charges.

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APPENDIX

1 – P&L key figures 9M 2022 and Q3 2022

1: 9M 2022 calculated in accordance to IFRS 9 commonplace
2: SCOR has elected not to restate 2021 comparative figures in accordance with the choice given by IFRS 9. The presentation of the consolidated assertion of revenue displays the IFRS 9 line gadgets. 9M 2021 IAS 39 figures have been mapped to the brand new line gadgets, with none restatement. Certain immaterial reclassifications have been made so as to enhance alignment with the presentation used for the present yr. These modifications are unaudited.
3: Consolidated internet revenue, Group share

2 – P&L key ratios 9M 2022 and Q3 2022

1: Annualized and calculated excluding funds withheld by cedants in accordance to IFRS 9 commonplace; 2: As at 30 September 2022, honest worth by means of revenue on invested belongings excludes EUR (38)m associated to the choice on personal shares granted to SCOR (EUR (8)m in Q3 2022). The 9M 2022 RoIA at 1.9% is calculated primarily based on IFRS 9 and consists of the affect of anticipated credit score losses (ECL) and alter in honest worth of invested belongings measured at honest worth by means of revenue and loss. Excluding these impacts (which might not have been recorded below IAS39), the RoIA would have been at 2.1%; 3: The internet mixed ratio is the sum of the overall claims, the overall commissions and the overall P&C administration bills, divided by the online earned premiums for P&C business; 4: The technical margin for L&H is the technical consequence divided by the online earned premiums for L&H business; 5: The price ratio is the overall administration bills divided by the gross written premiums.

  
3 – Balance sheet key figures as of September 30, 2022

1: Total funding portfolio consists of each invested belongings and funds withheld by cedants and different deposits, accrued curiosity, cat bonds, mortality bonds and FX derivatives; 2: Excluding third celebration internet insurance business investments; 3: Includes money and money equivalents.

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Contact particulars

Investor Relations
Yves Cormier
[email protected]

Media Relations
Nathalie Mikaeloff and Alexandre Garcia
[email protected]

www.scor.com
LinkedIn: SCOR | Twitter: @SCOR_SE

General
Numbers offered all through this doc might not add up exactly to the totals within the tables and textual content. Percentages and p.c modifications are calculated on full figures (together with decimals); subsequently the doc may include immaterial variations in sums and percentages due to rounding. Unless in any other case specified, the sources for the business rating and market positions are inside.

Forward-looking statements
This doc consists of forward-looking statements and details about SCOR’s monetary situation, outcomes, business, technique, plans and goals, specifically, relating to SCOR’s present or future initiatives.
These statements are typically recognized by way of the long run tense or conditional mode, or phrases comparable to “estimate”, “believe”, “anticipate”, “expect”, “have the objective”, “intend to”, “plan”, “result in”, “should”, and different related expressions.
It ought to be famous that the achievement of those goals and forward-looking statements and data depends on circumstances and details that come up sooner or later.
No assure will be given relating to the achievement of those forward-looking statements and data. These forward-looking statements and data should not ensures of future efficiency. Forward-looking statements and data and details about goals could also be impacted by recognized or unknown dangers, recognized or unidentified uncertainties and different elements which will considerably alter the long run outcomes, efficiency and accomplishments deliberate or anticipated by SCOR.
In explicit, it ought to be famous that the total affect of the Covid-19 disaster on SCOR’s business and outcomes can’t be precisely assessed, specifically given the uncertainty associated to the evolution of the pandemic, to its results on well being and on the economy, and to the doable results of future governmental actions or authorized developments on this context.
In addition, the total affect of the Russian invasion and conflict in Ukraine on SCOR’s business and outcomes can’t be precisely assessed at this stage, given the uncertainty associated each to the magnitude and length of the battle, and the consequential impacts.
Therefore, any assessments and any figures offered on this doc will essentially be estimates primarily based on evolving analyses, and embody a variety of theoretical hypotheses, that are extremely evolutive.
Information relating to dangers and uncertainties which will have an effect on SCOR’s business is about forth within the 2021 Universal Registration Document filed on March 3, 2022, below quantity D.22-0067 with the French Autorité des marchés financiers (AMF) posted on SCOR’s web site www.scor.com.
In addition, such forward-looking statements should not “profit forecasts” inside the that means of Article 1 of Commission Delegated Regulation (EU) 2019/980.
SCOR has no intention and doesn’t undertake to full, replace, revise or change these forward-looking statements and data, whether or not on account of new data, future occasions or in any other case.

Financial data
The Group’s monetary data contained on this doc is ready on the idea of IFRS and interpretations issued and authorized by the European Union.
Unless in any other case specified, prior-year stability sheet, revenue assertion gadgets and ratios haven’t been reclassified.
The calculation of economic ratios (comparable to guide worth per share, return on investments, return on invested belongings, Group price ratio, return on fairness, internet mixed ratio and life technical margin) is detailed within the Appendices of the 9M 2022 presentation (see pages 77 to 112).
The 9M 2022 monetary data included on this doc is unaudited.
Unless in any other case specified, all figures are offered in Euros. Any figures for a interval subsequent to September 30, 2022, shouldn’t be taken as a forecast of the anticipated financials for these intervals.
The solvency ratio will not be audited by the Company’s statutory auditors.

¹ At fixed change charges.
² The first nine months of 2022 monetary data will not be audited by the Company’s statutory auditors.
³ Treaty P&C Lines embody: Property, Property Cat, Casualty, Motor, and different associated traces (Personal Insurance, Nuclear, Terrorism, Special Risks, Motor Extended Warranty, and Inwards Retrocession).
⁴ Treaty Global Lines embody: Agriculture, Aviation, Credit & Surety, Inherent Defects Insurance, Engineering, Marine and Offshore, Space, and Cyber.  
⁵ In 9M 2022, honest worth by means of revenue on invested belongings excludes EUR (38) million associated to the choice on personal shares granted to SCOR. The 9M 2022 RoIA at 1.9% is calculated primarily based on IFRS 9 and consists of the affect of anticipated credit score losses (ECL) and alter in honest worth of invested belongings measured at honest worth by means of revenue and loss. Excluding these impacts (which might not have been recorded below IAS39), the RoIA would have been at 2.1%.
⁶ Treaty Global Lines embody: Agriculture, Aviation, Credit & Surety, Inherent Defects Insurance, Engineering, Marine and Offshore, Space, and Cyber.  
⁷ Treaty P&C Lines embody: Property, Property Cat, Casualty, Motor, and different associated traces (Personal Insurance, Nuclear, Terrorism, Special Risks, Motor Extended Warranty, and Inwards Retrocession).
⁸ In 9M 2022, honest worth by means of revenue on invested belongings excludes EUR (38) million associated to the choice on personal shares granted to SCOR. The 9M 2022 RoIA at 1.9% is calculated primarily based on IFRS 9 and consists of the affect of anticipated credit score losses (ECL) and alter in honest worth of invested belongings measured at honest worth by means of revenue and loss. Excluding these impacts (which might not have been recorded below IAS39), the RoIA would have been at 2.1%.

⁹ Compared to a length on the mounted revenue portfolio of three.5 years in Q2 2022 (length on whole invested belongings of three.4 years vs. 3.4 years in Q2 2022).
¹⁰ Return on invested belongings excludes funds withheld by cedants and different deposits.

¹¹ In 9M 2022, honest worth by means of revenue on invested belongings excludes EUR (38) million associated to the choice on personal shares granted to SCOR. The 9M 2022 RoIA at 1.9% is calculated primarily based on IFRS 9 and consists of the affect of anticipated credit score losses (ECL) and alter in honest worth of invested belongings measured at honest worth by means of revenue and loss. Excluding these impacts (which might not have been recorded below IAS39), the Q3 QTD RoIA would have been at 2.1%.
¹² Corresponds to theoretical reinvestment yields primarily based on Q3 2022 asset allocation of asset yielding lessons (i.e. mounted revenue, loans and actual property), in accordance to present reinvestment length assumptions and spreads, currencies, yield curves as of September 30, 2022.
¹³   As of September 30, 2022. Investable money consists of present money balances, and future coupons and redemptions.