COVID-19 expected to boost reinsurance growth despite losses faced by reinsurers

Paris headquartered SCOR says that COVID-19 is helping to create the conditions for stronger reinsurance growth along with a positive pricing dynamic, even though the pandemic cost the global reinsurance company EUR640m ($777m) in 2020.

In a statement issued in connection with the release of its financial results for 2020, SCOR says that COVID-19 is driving a general increase in risk aversion which in turn is driving higher demand for risk coverage throughout the world. On the P&C side, COVID-19 reinforces the general market hardening observed across all lines and all regions with the low yield environment an additional catalyst.

SCOR says it took full advantage of these favourable conditions and the depth of its franchise to produce an excellent outcome in the January 2021 renewals. COVID-19 is also creating the conditions for an epochal transformation of Life reinsurance based not only on higher awareness of the importance of Life & Health coverage, but also upon the acceleration of its use of new technologies, from underwriting to claims management.

SCOR recorded a net income of EUR234m ($284m) in 2020. Last year was marked by the historic global shock of COVID-19, as well as by a series of natural catastrophes and large man-made losses.

The reinsurer's 2020 full-year financial results are summarised as follows:

*Consolidated net income, Group share.

2021

SCOR says that the COVID-19 crisis is still ongoing and continues to present significant uncertainties for 2021. SCOR’s solvency ratio at the end of 2020, which takes into account projected COVID-19 claims across 2021, stands at 220%, at the upper end of the optimal solvency range. Furthermore, the Group maintains a very strong level of liquidity standing at almost EUR2.0bn. With its very strong capital position, SCOR is proposing a dividend of EUR1.802 per share for the 2020 financial year.

SCOR continues to actively implement its strategic plan “Quantum Leap”, focused on the twofold targets of profitability and solvency, accelerating its use of new technologies while continuing its actions in terms of sustainable development and social responsibility.

COVID-19 costs SCOR EUR640m in 2020

Mr Denis Kessler, chairman & CEO of SCOR, said, “COVID-19 is a historic shock. Pandemic risk is obviously well known to reinsurers. Infectious diseases figure prominently in the risk maps SCOR draws up each year. The study and modelling of risk was an integral part of our risk management when COVID-19 struck.

“With hindsight, we underestimated the truly global reach of such a phenomenon, as well as the critical impact of the various – unmodelable – decisions taken by governments to contain the spread of the virus, which ultimately had a major impact on the (re)insurance industry’s exposure to this crisis. The measures taken to contain COVID-19, particularly lockdowns, have affected all areas of economic and social life. This has become a multi-faceted crisis – health-related, social, economic, financial and even geopolitical. It has therefore impacted reinsurers, in terms of both assets and liabilities, on both the Life and P&C sides.

“The Group has successfully passed this real-life stress test by absorbing this major shock. SCOR ended 2020 profitably and solvently. The Group’s fundamentals remain very strong, as demonstrated by the excellent results we would have recorded in the absence of COVID-19 – which cost the Group EUR640m in 2020 – as well as by the level of solvency achieved at the end of December. This enables the Group to pursue its active shareholder remuneration policy, with a dividend of EUR1.80 per share for 2020 to be proposed at the Annual General Assembly.”

Source: Asia Insurance Review