Scor Earnings: Strong Start To 2023

Scor SCR has reported a strong start to the year with net income of EUR 311 million for the first quarter. We raise our fair value estimate to EUR 33 per share and maintain our no moat rating.

Its property and casualty division reported insurance revenue growth of 5.4% at constant currency versus the same quarter one year ago, 7.7% at actual, to EUR 1.79 billion. With an 85.2% combined ratio that includes 9.9 percentage points for natural catastrophes, the division has recorded a EUR 207 million insurance service result, akin to an operating profit. That has been supported by a EUR 293 million contractual service margin release with the unit generating EUR 588 million over the quarter, which versus a EUR 750 million target stands the business in good stead. In the life and health division the company reported a EUR 272 million insurance service result. EUR 192 million has been added to the CSM stock over the first quarter and that is versus a EUR 450 million target over the year. This is all good so far. Total investment income at the group is EUR 157 million for the first three months and that is versus our EUR 582 million full-year forecast.

The combined contractual service margin and shareholders’ equity supports a EUR 54 per-share economic value. Business economic value has grown by 9.4% and that is key for distributions to shareholders. We think numbers provided so far correspond with a 29.5% annualized return to shareholders. The 7% average April rate rise within the company’s property and casualty portfolio, as well as the shift back to speciality lines from natural catastrophes, have helped substantially. And it further highlights the upbeat phase of the reinsurance cycle.