SCOR Global P&C sees 5% gross premium growth at January renewals

SCOR Global P&C grew gross premiums 5% to 3.4 billion euros during the January 2014 renewals, results that contribute to the company’s belief that it is well-positioned for the “tiering” of the reinsurance market.

“The January 2014 renewals confirm our analysis of the ongoing ‘bifurcation’ of the reinsurance market and reinforce our conviction that SCOR Global P&C is set to be among the beneficiaries of this ‘tiering’ of the industry,” Victor Peignet, CEO of SCOR Global P&C, says in a statement issued Wednesday.

“In this context, size and diversification combined with the capabilities to cover all lines and offer global approaches to cedants are key competitive advantages,” Peignet continues.

An associated presentation, available on SCOR’s website, notes that “larger players benefited from an increasing competitive advantage provided by their improved fit with clients’ demands in terms of security, line sizes, global offering and network of local presence and support.”

The 3.4 billion euros mark was reached having booked 8% gross written premium growth – at constant exchange rates – for the full year 2013 to 4.85 billion euros, notes SCOR Global P&C’s statement. (The 4.85 billion euros figure represents unaudited and at constant exchange rates used for accounting-year reporting. Growth at current exchange rates is 4%.)

SCOR Global P&C’s continued footprint expansion has been achieved while maintaining expected net technical profitability stable as a result of the company’s highly diversified portfolio, the press release states. Key performance indicators include the following:

• quasi-stable prices, at -0.2% on average, with variations in primary insurance prices largely compensating those of reinsurance prices;
• a stable expected return on risk-adjusted allocated capital; and
• better than expected conditions on the retrocession market, generating savings representing a 0.6% positive impact on the combined ratio with a slightly improved cat coverage.

SCOR Global P&C’s main business line developments at the January 2014 renewals are that gross premiums for P&C Treaties increased by 6% – at constant exchange rates – to 1.927 billion euros, of which 4 percentage points relate to the renewal of the large quota share deals in Asia; and gross premiums for Specialty Treaties increased by 4% – at constant exchange rates – to 724 million euros, of which 2 percentage points relate to the renewal of the large quota-share deals in Asia.

Looking at Treaty P&C renewals by region, the presentation shows that for Europe, Middle East and Africa, January renewals made up 88% while rest of the year renewals accounted for 12%; for the Americas, it was 52% and 48%, respectively; and for Asia-Pacific, it was 61% and 39%, respectively.

For Specialty Lines, January renewals compared to rest of the year renewals were as follows: IDI (inherent defects insurance) – 96% and 4%; credit & surety – 82% and 18%; engineering – 64% and 36%; marine – 76% and 24%; aviation & space – 83% and 17%; and agriculture – 25% and 75%.

SCOR Global P&C continues to diversify its P&C Treaties portfolio towards Asia with the region now representing 19% of the portfolio, the press release notes. The presentation adds the strong growth of 32% for Asia is supported by the renewal of the quota-share deals; for the Americas, it cites growth in the United States with continuous active portfolio management and repositioning in higher cat layers and reduced shares in Liability treaties in Canada.

In Specialty Treaties, some segments have benefited from relatively better market conditions, leading to premium increases of 6% in marine & energy and 4% in engineering. The U.S. cat segment “represents only 2% of the overall P&C book to be renewed, and has witnessed 6% growth thanks to increased shares with large national, multi-national and global insurers, more than compensating the reductions on the regional book where pricing and general conditions have often been viewed as unsatisfactory.”

A graph in the presentation – Contrasting price trends by line of business – notes the following with regard to the company’s cat business:

• competitive conditions in all regions;
• largest price drops observed in the U.S. and the United Kingdom, while Canada and Northern European countries witnessed price increase; and
• in the U.S., the underweighting of Florida wind risks and the rebalancing of the overall book towards large national and multi-national insurers, away from regional players, has contained the price decrease.