First Nine Months 2019 Results: SCOR delivers a solid performance with net income of EUR 401 million in the first nine months of 2019

  Press Release
October 24, 2019 – N° 33
First Nine Months 2019 ResultsSCOR delivers a solid performance with net income
of EUR 401 million in the first nine months of 2019
SCOR delivers a solid performance in the first nine months of 2019 and achieves both targets of the new strategic plan “Quantum Leap”, profitability and solvency, in spite of a third quarter marked by a series of natural catastrophes and man-made losses.Group net income stands at EUR 401 million in the first nine months of 2019, up 17.3% compared to the first nine months of 2018. The return on equity (ROE) is 8.8%, 816 bps above the risk-free rate1, exceeding the profitability target of the new plan “Quantum Leap”.Gross written premiums total EUR 12,055 million in the first nine months of 2019, up 3.2% at constant exchange rates (up 6.3% at current exchange rates). In P&C, gross written premiums are up 11.5% at constant exchange rates (up 14.6% at current exchange rates). In Life, gross written premiums are down 2.5% at constant exchange rates (up 0.7% at current exchange rates). This variation is largely driven by the renewal of certain Financial Solutions transactions as fee business (rather than as premiums) since the beginning of the year. Excluding these transactions, Life gross written premiums would have grown by 3.8% at constant exchange rates.SCOR Global P&C delivers strong growth and solid technical results, with a combined ratio of 95.7% for the first nine months of 2019 in spite of heavy loss activity in Q3 2019.SCOR Global Life continues to expand its franchise in Asia and delivers a strong level of technical profitability in the first nine months of 2019 and records a solid technical margin of 7.2%.SCOR Global Investments delivers a solid return on invested assets of 3.0% in the first nine months of 2019, supported by an income yield of 2.6% and benefiting from realized gains of EUR 43 million in Q3 2019 QTD largely from real estate sales.Group cost ratio (expressed as a percentage of the Group’s gross written premiums) stands at 4.7%2, running below the “Quantum Leap” assumption of ~5.0%.Group total cash flows stand at EUR 693 million in the first nine months of 2019 and net operating cash flows stand at EUR 573 million, with strong cash flows from SCOR Global P&C despite significant payments on 2017 and 2018 cat events. SCOR Global Life experienced lower cash flow as a result of the volatility on claims payment activity and seasonality of tax settlements. The Group’s total liquidity is very strong at EUR 2.1 billion at September 30, 2019.Shareholders’ equity stands at EUR 6.5 billion at September 30, 2019, up by EUR 0.7 billion in the first nine months of 2019, after the dividend payment of EUR 325 million in May 2019. This results in a strong book value per share of EUR 34.71, compared to EUR 31.53 at December 31, 2018.Financial leverage stands at 25.1% on September 30, 2019, improving by 2.4% points compared to December 31, 2018.Estimated solvency ratio stands at 203% on September 30, 2019, in the optimal solvency range of 185% – 220% as defined in the “Quantum Leap” strategic plan. The capital generation is positive. The reduction in solvency is notably driven by the decrease in interest rates since the beginning of the year.SCOR’s rating level of AA- was reaffirmed by AM Best and S&P3 during the third quarter of 2019.Denis Kessler, Chairman & Chief Executive Officer of SCOR, comments: “SCOR records a solid performance in the first nine months of 2019, achieving its solvency target and outperforming its profitability target of its new strategic plan “Quantum Leap”. SCOR demonstrates once again its capacity to successfully combine profitability and solvency, in spite of challenging conditions that the industry faced in the third quarter of 2019, marked by a series of natural catastrophes and man-made P&C claims, combined with historically low levels of interest rates. The Group continues to expand and deepen its franchise both on U.S. P&C, the largest market in the world, and on Life reinsurance in Asia-Pacific. The award granted to SCOR as “North American Reinsurer of the Year” is a testimony of both the quality and the development of the Group’s franchise in North America. The Group is fully mobilized to pursue value creation for the benefit of all stakeholders.”SCOR Group nine months and Q3 2019 key financial details:* Consolidated net income, Group share.**         * SCOR Global P&C delivers strong growth and good technical results in spite of heavy loss activity in Q3 2019SCOR Global P&C delivers YTD a strong growth of 11.5% at constant exchange rates (+14.6 % at current exchange rates) with gross written premiums reaching EUR 5,264 million. The growth arises from the strong 2019 successive renewals, but also benefits from the very robust H2 2018 renewals in particular in the U.S.The growth at constant exchange rates is expected to remain in the same range for FY 2019.SCOR Global P&C key figures:In spite of heavy loss activity, the net combined ratio remains robust at 95.7% in Q3 2019 YTD and includes:A nat cat impact of 12.0% in Q3 2019 QTD mainly coming from the Hurricane Dorian (EUR 92 million net of retrocession) and Typhoon Faxai (EUR 89 million net of retrocession), leading to a YTD cat ratio of 7.6%, slightly above the 7% budget assumption;A net attritional loss and commission ratio of 81.3% in Q3 2019 YTD, 2.1 pts above 2018 due to a higher level of man-made activity and the impact of the decision taken on the Ogden rate in the United Kingdom (EUR 13 million);A reserve release of EUR 60 million (pre-tax) in Q3, partially offsetting the impact of the high natural catastrophes and man-made losses; andAn expense ratio benefiting from increased premium.The Q3 2019 YTD normalized net combined ratio stands at 96.2%4, slightly above the 95% to 96% assumption of “Quantum Leap”5
SCOR Global Life combines franchise development in Asia and strong profitability in the first nine months of 2019
In Q3 2019 YTD, SCOR Global Life’s gross written premiums stand at EUR 6 791 million, down 2.5% at constant exchange rates (up 0.7% at current exchange rates) compared to Q3 2018 YTD. This variation is largely driven by the renewal of certain Financial Solutions transactions as fee business (rather than premiums) since the beginning of the year.Excluding these transactions, gross written premiums would have grown by 3.8% at constant exchange rates, driven by franchise development in Asia and North America.SCOR Global Life key figures:Premium growth is in line with the “Quantum Leap” assumption5 of ~3% to 6% over the cycle with 2019 expected normalized growth rate of 3% to 4%.The technical result stands at EUR 453 million in the first nine months of 2019.The technical margin of 7.2% in Q3 2019 YTD is strong and in line with “Quantum Leap” assumptions6 benefiting from:Positive impact of 0.4% from the above mentioned Financial Solutions transactions that renewed in Q3 2019 YTD as fee business7;Solid technical result from in-force business. U.S. claims are approximately EUR 110 million8 higher than in Q3 2018 YTD, balanced by active portfolio management and a strong reserve position; andProfitability of new business in line with the Group’s ROE target.SCOR Global Investments records a return on invested assets of 3.0% in the first nine months of 2019Total investments reach EUR 28.5 billion, with total invested assets of EUR 20.3 billion and funds withheld9 of EUR 8.2 billion.SCOR’s invested assets portfolio positioning reflects the current financial environment:Liquidity is at 9%;Corporate bonds is at 44% (stable vs. H1 2019); andThe fixed income portfolio is of very high quality, with an average rating of A+, and a duration at 3.6 years10.  
SCOR Global Investments key figures:
(*) 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 flows11 of EUR 7.1 billion expected over the next 24 months.The investment income on invested assets stands at EUR 434 million in Q3 2019 YTD, benefiting from realized gains of EUR 43 million in Q3 2019 QTD largely from real estate sales, generating a return on invested assets of 3.0% in the first nine months of 2019.This performance is also supported by an income yield which stands at 2.6% in Q3 2019 YTD
The reinvestment yield stands at 2.0% at the end of Q3 201912, reflecting the lower yield environment.
Under current market conditions, SCOR Global Investments expects an annualized return on invested assets in the 2.7%-3.0% range for FY 2019.**         *APPENDIX1 – P&L key figures 2019 YTD and Q3 2019 standalone (in EUR millions, at current exchange rates)1: Consolidated net income, Group share.2 – P&L key ratios for 2019 YTD and Q3 2019 standalone1: 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.  

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