Scor Closes a Difficult Year With a Better Outlook

Scor SCR has closed out what appears to be quite a dismal 2022, reporting a net loss of EUR 301 million versus our net loss estimate of EUR 432 million. The key problem area for the business last year was its growth within the natural catastrophe line of business. Over the full year Scor property and casualty reported a combined ratio of 113.2%. That was versus our estimate of 111.2%. Within Scor’s results, natural catastrophe losses accounted for 12.4 percentage points within that full-year combined ratio. Another 5.9% can be attributed to a strengthening of reserves as a result of their current weakness. This EUR 485 million has been transferred from life and health releases. This is available due to an accounting difference. Overall, results within life and health look excellent. Though some of this will be due to investment earnings, there is also a contribution from in-force management. The technical result and margin are EUR 756 million and 14.5% respectively. That is substantially better than our EUR 506 million and 7.4% respectively. While we think this profitability is unsustainable, management appears to be guiding to better ongoing numbers.

Thierry Leger takes over as CEO on May 1. He joins from Swiss Re, where he has held the position of group chief underwriting officer for almost three years. Leger has a background in engineering. On the back of Scor’s loss the business announced a EUR 1.4 dividend. That is down from EUR 1.8 per share last year. It reflects the net loss this year and is not a rebasing of the dividend. Solvency is 213% after this distribution, within the 185%-220% targeted range. That solvency is mostly supported by market moves. In January 2023 renewals Scor recorded 9% rate increases. The business continues to orientate away from natural catastrophe and back toward specialty lines of business.

We maintain our EUR 26.90 fair value estimate and no moat rating for Scor.