SCOR forecasts “persistent underwriting discipline” at June and July renewals

France-headquartered global reinsurance firm SCOR is forecasting that the market will maintain its discipline at the upcoming June and July renewals, as the company continued to take advantage of market conditions to grow so far this year.

At the April reinsurance renewals, SCOR said that it grew its book of renewed premiums by 17%, while rates continued to improve for the company, especially in its non-proportional reinsurance book.

In announcing its first-quarter 2024 results this morning, SCOR said that its group net income rose to EUR 196 million for the period, while insurance revenue rose 6% to EUR 4.113 billion and the P&C reinsurance combined ratio was attractive at 87.1%.

Thierry Léger, Chief Executive Officer of SCOR, said, “For the first quarter of the Forward 2026 strategic plan, SCOR publishes a strong net income of EUR 196 million. In P&C, we are reaping the benefits of the very attractive market conditions with a combined ratio of 87.1% and we remain determined on building reserve buffers. In L&H, we are impacted by an adverse experience variance, mainly driven by US mortality and claims reporting effects. In Investments, SCOR benefits from elevated regular income yield and reinvestment rates. Overall, we are starting the year with a high ROE of 17.3% and an improved solvency ratio of 215% supported by strong operating capital generation driven by P&C January renewals.”

Like all the other major reinsurance firms, the profitability achieved at renewals flows through into strong cash generation across the year and with prices still rising each year at renewals, these effects are not yet ready to tail off.

P&C re/insurance was assisted by a low natural catastrophe loss ratio of 7.2%, despite SCOR (like others) raising its estimate for last year’s Italian severe weather and hailstorm, which the industry has raised estimates for.

At the recent April 1 reinsurance renewals, SCOR said it continued to grow in preferred lines.

Notably, SCOR maintained the terms and conditions on renewal business, as well as the improved profitability being seen.

Estimated gross premiums written increased by 17% at April 1, with SCOR’s Alternative Solutions book almost doubling and specialty lines business increasing by almost 23%.

SCOR said that the pricing trend observed in January was maintained in April, with a +3.2% price change overall.

On a technical basis, SCOR says rate will drive an improvement of -1.5% to the underwriting ratio.

“In this very positive environment, SCOR anticipates continued underwriting discipline for the upcoming June and July renewals,” the company said.

This has been the view of the big four reinsurance firms in their Q1 2024 reporting, that market conditions have eased, but there has been no change in the levels of attachment, the strength of terms, or in the rates being paid.

We just aren’t seeing the rapid acceleration in rates that were seen before, but at these high levels reinsurance remains an extremely profitable business, while major losses remain absent from the market.

SCOR said it has not changed its approach to natural catastrophe business at the recent April renewals, resulting in a reduced relative size of that segment in its renewed portfolio after 4/1.

With more opportunities to grow at the June and July reinsurance renewals, it’s expected SCOR will continue to deploy more capacity to build its book of premiums further, while market conditions remain so conducive to do so.