Press Release
February 27, 2020 - N° 4
2019 Annual Results
SCOR in 2019: profitable growth,
strong capital generation, high solvency
Net income of EUR 422 million and dividend of EUR 1.80 per share
SCOR navigates 2019 with disciplined and profitable franchise expansion, leveraging its balanced portfolio of risks between Life reinsurance and P&C reinsurance, and continues its strong value creation through delivering solid capital generation. In line with its consistent capital management process and dividend policy, the Group is proposing a dividend of EUR 1.801 per share for 2019.
Denis Kessler, Chairman & Chief Executive Officer of SCOR, comments: “In 2019, the third consecutive year marked by a high level of natural catastrophes and man-made claims, as well as the persistence of a low interest rate environment, SCOR demonstrates once again its capacity to absorb shocks. The Group continues its development and its strong value creation, recording sustainable growth, an increase in profitability, and further strengthening of solvency. Our shareholder return is attractive with a proposed dividend of EUR 1.80 for 2019 subject to the approval of the Annual General Assembly. SCOR as an independent global Tier one reinsurance company is fully mobilized to reach the targets of its “Quantum Leap” strategic plan.”
SCOR Group Full-Year and Q4 2019 key financial details:
YTD | QTD | |||||
In EUR millions (at current exchange rates) | 2019 | 2018 | Variation | Q4 2019 | Q4 2018 | Variation |
Gross written premiums | 16,341 | 15,258 | +7.1% | 4,286 | 3,922 | +9.3% |
Group cost ratio | 4.7% | 5.0% | -0.3 pts | 4.6% | 4.9% | -0.3 pts |
Annualized ROE | 7.0% | 5.5% | +1.5 pts | 1.3% | -1.3% | +2.6 pts |
Net income* | 422 | 322 | +31.1% | 21 | -20 | n/a |
Shareholders’ equity | 6,374 | 5,828 | +9.4% | 6,374 | 5,828 | +9.4% |
* Consolidated net income, Group share.
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SCOR Global P&C adds approximately EUR 1.0 billion of gross written premiums in 2019 whilst demonstrating technical profitability and absorbing a high level of natural catastrophes
In 2019, SCOR Global P&C delivers a strong growth of 12.7% at constant exchange rates (+15.8% at current exchange rates) with gross written premiums reaching EUR 7,147 million. The strong profitable growth is largely driven by robust successive renewals in H2 2018 and 2019 on U.S Treaty reinsurance as well as on Specialty insurance.
SCOR Global P&C key figures:
YTD | QTD | |||||
In EUR millions (at current exchange rates) | 2019 | 2018 | Variation | Q4 2019 | Q4 2018 | Variation |
Gross written premiums | 7,147 | 6,175 | +15.8% | 1,883 | 1,582 | +19.1% |
Net combined ratio | 99.0% | 99.4% | -0.4 pts | 108.8% | 115.9% | -7.1 pts |
SCOR Global P&C absorbs an elevated level of natural catastrophes activity whilst delivering technical profitability with a resilient net combined ratio of 99.0% in 2019:
The 2019 normalized net combined ratio stands at 96.1%8, slightly above the 95% to 96% assumption of “Quantum Leap”9 due to the elevated man-made claims.
SCOR Global P&C has limited exposure to social inflation
SCOR Global P&C has limited exposure to social inflation, with a modest and recently built U.S. casualty portfolio representing approximately 12% of reserves and 11% of gross written premiums. Furthermore, there is very limited or no appetite to those business lines most impacted by social inflation:
Of the casualty business written by SGP&C, the book is highly diversified across personal and professional lines and across sectors. The portfolio is largely proportional and so benefits directly from primary market price increases, with limited ‘edge-effect’ from excess of loss treaties.
The Group is confident in the secure reserving position, with a best estimate reserving evaluation that includes consideration of upward market loss trends.
SCOR Global Life’s profitable growth is driven by continued successful franchise expansion
In 2019, SCOR Global Life’s gross written premiums stand at EUR 9,194 million, slightly down 1.8% at constant exchange rates (up 1.2% at current exchange rates) compared to 2018. The renewal of certain Financial Solutions transactions as fee business (rather than premium business) in 2019 has mechanically reduced the gross written premiums growth, with no impact on profitability.
Excluding these transactions, gross written premiums have grown by 4.5%10 at constant exchange rates, driven by continued franchise development.
SCOR Global Life key figures:
YTD | QTD | |||||
In EUR millions (at current exchange rates) | 2019 | 2018 | Variation | Q4 2019 | Q4 2018 | Variation |
Gross written premiums | 9,194 | 9,083 | +1.2% | 2,403 | 2,340 | +2.7% |
Life technical margin | 7.5% | 7.0% | +0.5 pts | 8.3% | 7.0% | +1.3 pts |
The net technical result stands at EUR 624 million in 2019 (+6.0% at current FX).
The technical margin of 7.5% in 2019 stands broadly in line with “Quantum Leap” assumptions11 benefiting from:
SCOR Global Investments delivers a strong return on invested assets of 3.0 % in 2019, pursuing a prudent asset management strategy and benefitting from capital gains
Total investments reach EUR 28.9 billion, with total invested assets of EUR 20.6 billion and funds withheld14 of EUR 8.3 billion.
In the current financial environment, SCOR’s pursues a prudent asset allocation and adopts a more cautious positioning of its fixed income portfolio:
SCOR Global Investments key figures:
YTD | QTD | |||||
In EUR millions (at current exchange rates) | 2019 | 2018 | Variation | Q4 2019 | Q4 2018 | Variation |
Total investments | 28,854 | 27,254 | +5.9% | 28,854 | 27,254 | +5.9% |
§ of which total invested assets | 20,571 | 19,153 | +7.4% | 20,571 | 19,153 | +7.4% |
§ of which total funds withheld by cedants and other deposits | 8,283 | 8,101 | +2.2% | 8,283 | 8,101 | +2.2% |
Return on investments* | 2.4% | 2.3% | +0.1 pts | 2.5% | 2.9% | -0.4 pts |
Return on invested assets** | 3.0% | 2.8% | +0.2 pts | 3.1% | 3.8% | -0.7 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 portfolio remains highly liquid, with financial cash flows16 of EUR 7.8 billion expected over the next 24 months.
The investment income on invested assets stands at EUR 588 million in 2019, benefiting from strong performance of the real estate and fixed income portfolios, with realized gains of EUR 93 million, generating a return on invested assets of 3.0% in 2019.
This performance is also supported by a strong income yield, standing at 2.6% in Q4 2019 YTD.
The reinvestment yield stands at 2.0% at the end of Q4 201917.
In line with the “Quantum Leap” strategic plan, SCOR accelerates the delivery of ambitious large digital projects to enhance its value proposition
Within our strategic plan “Quantum Leap”, SCOR is committed to a profound transformation to design the reinsurance company of tomorrow. The Group accelerates the use of new technologies across the organization to innovate, broaden its product and service offering, and improve its efficiency. In 2019, SCOR delivered many ambitious large digital projects including:
SCOR actively integrates environmental, social and governance considerations across all its operations; its efforts are recognized through non-financial rating agency upgrades
SCOR actively integrates environmental, social and governance considerations across all its operations.
The priority driver of SCOR’s policy in this area is to contribute to mitigation of climate change and adapt its organization to its subsequent effects, as illustrated by the numerous commitments made during the last 10 years and further enhanced within the “Quantum Leap” strategic plan. In particular:
Beyond climate change, SCOR, through the strong integration of new technologies, participates to the creation of a more inclusive and healthier society by working with clients to develop life insurance products that incentivize a healthy lifestyle and create innovative solutions for people not able to access protection today.
This voluntary approach has been positively reflected in the non-financial ratings to which the Group is subject, with in particular two upgrades in 2019.
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APPENDIX
1 - P&L key figures 2019 and Q4 2019 standalone
YTD | QTD | |||||
In EUR millions (rounded, at current exchange rates) | 2019 | 2018 | Variation | Q4 2019 | Q4 2018 | Variation |
Gross written premiums | 16,341 | 15,258 | +7.1% | 4,286 | 3,922 | +9.3% |
P&C gross written premiums | 7,147 | 6,175 | +15.8% | 1,883 | 1,582 | +19.1% |
Life gross written premiums | 9,194 | 9,083 | +1.2% | 2,403 | 2,340 | +2.7% |
Investment income | 671 | 615 | +9.1% | 175 | 190 | -7.7% |
Operating results | 713 | 658 | +8.4% | 46 | -7 | n/a |
Net income1 | 422 | 322 | +31.1% | 21 | -20 | n/a |
Earnings per share (EUR) | 2.27 | 1.72 | +32.0% | 0.11 | -0.10 | n/a |
Operating cash flow | 841 | 891 | -5.6% | 268 | 80 | +235.0% |
1: Consolidated net income, Group share.
2 - P&L key ratios for 2019 and Q4 2019 standalone
YTD | QTD | |||||
2019 | 2018 | Variation | Q4 2019 | Q4 2018 | Variation | |
Return on investments 1 | 2.4% | 2.3% | +0.1 pts | 2.5% | 2.9% | -0.4 pts |
Return on invested assets 1,2 | 3.0% | 2.8% | +0.2 pts | 3.1% | 3.8% | -0.7 pts |
P&C net combined ratio 3 | 99.0% | 99.4% | -0.4 pts | 108.8% | 115.9% | -7.1 pts |
Life technical margin 4 | 7.5% | 7.0% | +0.5 pts | 8.3% | 7.0% | +1.3 pts |
Group cost ratio 5 | 4.7% | 5.0% | -0.3 pts | 4.6% | 4.9% | -0.3 pts |
Return on equity (ROE) | 7.0% | 5.5% | +1.5 pts | 1.3% | -1.3% | +2.6 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&C; 4: The technical margin for SCOR Global Life is the technical result divided by the net earned premiums of SCOR Global Life; 5: The cost ratio is the total management expenses divided by the gross written premiums.
3 - Balance sheet key figures as of December 31, 2019 (in EUR millions, at current exchange rates)
As of December 31, 2019 | As of December 31, 2018 | Variation | |
Total investments 1,2 | 28,854 | 27,254 | +5.9% |
Technical reserves (gross) | 31,236 | 30,253 | +3.2% |
Shareholders’ equity | 6,374 | 5,828 | +9.4% |
Book value per share (EUR) | 34.06 | 31.53 | +8.0% |
Financial leverage ratio | 26.4% | 27.5% | -1.1 pts |
Total liquidity3 | 1,532 | 1,214 | +26.2% |
1Total 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% |
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Contact details
Media
Anette Rey
+33 (0)1 58 44 82 82
arey@scor.com
Investor Relations
Ian Kelly
+44 (0)203 207 8561
ikelly@scor.com
www.scor.com
LinkedIn: SCOR | Twitter: @SCOR_SE
General
Numbers presented throughout this report 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 presentation 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 presentation 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 affected by known and unknown risks, uncertainties and other factors that may significantly alter the future results, performance and accomplishments planned or expected by SCOR. Information regarding risks and uncertainties that may affect SCOR’s business is set forth in the 2018 reference document filed on March 4, 2019, under number D.19-0092 with the French Autorité des marchés financiers (AMF) and in the 2019 Interim Financial report which are available on SCOR’s website www.scor.com.
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 presentation is prepared on the basis of IFRS and interpretations issued and approved by the European Union.
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 Q4 2019 Investor Relations presentation released on February 27, 2020.
The financial results for the full year 2019 included in the presentation have been audited by SCOR’s independent auditors.
Unless otherwise specified, all figures are presented in Euros.
Any figures for a period subsequent to December 31, 2019, should not be taken as a forecast of the expected financials for these periods.
The Group solvency final results are to be filed to supervisory authorities by May 2020, and may differ from the estimates expressed or implied in this report.
1 2019 dividend subject to approval of the 2020 shareholders’ Annual General Meeting, pursuant to the decision of the Board of Directors at its meeting of February 26, 2020, to adopt the Group’s accounts and consolidated financial statements as of December 31, 2019.
2 The 2018 GWP include EUR 547 million coming from Financial Solutions transactions which were renewed as fee business under deposit accounting (rather than premiums) in 2019
3 Based on a 5-year rolling average of 5-year risk-free rates (65 bps in Q4 2019)
4 Normalize for nat cat (7% budget cat ratio), reserve release and Ogden rate
5 CHF 125 million undated subordinated note lines, issued on October 20, 2014, and callable in October 2020
6 Solvency ratio based on Solvency II requirements. The Group solvency final results are to be filed to supervisory authorities by May 2020 and the final Solvency ratio may differ from this estimate
7 Reserve release of EUR 60 million in Q3 2019 QTD and EUR 50 million in Q4 2019 QTD, mostly generated from non-U.S. casualty and Decennial business lines
8 See page 41 of the Q4 2019 Earnings Presentation for the detailed calculation of normalized net combined ratio
9 See page 53 of the Q4 2019 Earnings Presentation for details
10 The 2018 GWP include EUR 547 million coming from Financial Solutions transactions which were renewed as fee business under deposit accounting (rather than premiums) in 2019
11 See page 53 of the Q4 2019 Earnings Presentation for details
12 See Appendix F, page 42 of the Q4 2019 Earnings Presentation for calculation of the impact of the fee business on the Life technical margin
13 Estimation after allowance for natural aging of the in-force, and allowance of new business on the book
14 Funds withheld & other deposits
15 Compared to 3.6 years in Q3 2019 on fixed income portfolio (3.6-year duration on total invested assets vs. 3.7 years in Q3 2019)
16 Investable cash includes current cash balances, and future coupons and redemptions
17 Corresponds to theoretical reinvestment yields based on Q4 2019 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 December 31, 2019
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