Scor earnings fall one-fifth but life business blossoms

Mar 08, 2012 by Adrian Hönig in  Baden-Baden Meeting

French reinsurer Scor recorded a 21.1% drop in net earnings in 2011 to €330m ($437.1m), as last year’s string of natural catastrophes took its toll on the profitability of the group’s property/casualty (p/c) business.

Scor Global P&C’s combined ratio deteriorated to 104.5% from 98.7% a year earlier, with natural events accounting for 18.5 points of combined ratio, compared with 9.6 points in 2010, including a €138m hit from Thailand floods in the fourth quarter of 2011.

The company indicated catastrophe losses had been partly offset by €70m in reserve releases from aviation, credit and surety and facultative casualty lines, where the group enjoyed sustained positive prior-year developments.

The head of Scor Global P&C, Victor Peignet, emphasised during a conference call Scor had been “significantly less affected than most reinsurance companies” by last year’s catastrophes, which he attributed to the group’s enterprise risk management-based underwriting policy.

“The fact we entered 2012 with our underwriting capacity and capital shield protection renewed, when not improved, is confirmation of our ability to deliver business continuity,” he said.

Meanwhile, on the life side, Scor Global Life’s technical margin increased to 8.1% from 5.4% a year earlier, as the company shifted its business toward biometric risks, following the disposal of its US annuity business. The acquisition last summer of Transamerica Re’s biometric portfolio contributed a gain on purchase of €114m and an operating profit of €17m.

In terms of top-line performance, Scor’s overall turnover increased 13.6% to €7.6bn. Non-life gross written premiums increased 8.8% (11.6% at constant exchange rates) to €3.9bn, which the company attributed to its “Strong Momentum” strategic initiatives, as well as the launch of Lloyd’s syndicate 2015 and the development of private deals.

In Scor’s life business, premium growth was boosted by the Transamerica Re acquisition, with a 19.3% year-on-year increase (22.3% at constant exchange rates) to €3.6bn. The newly acquired unit accounted for €677m of the total amount.

More generally, Scor Global Life’s new business production grew 11%, driven by France and the Middle East, partially offsetting a reduction of in-force business affecting the German and US (pre-Transamerica Re) markets.

The group’s net investment income declined 9.6% to €624m, with a return on invested assets of 3.7%, down from 4% in 2010.

Scor indicated it had “no exposure at year-end 2011 to the sovereign debts of Greece, Ireland, Italy, Portugal and Spain or to the debts issued by US states and municipalities”.

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