SCOR sets sights high with aggressive growth targets
Chairman/CEO Denis Kessler also voices optimism about the industry’s return to Monte Carlo in 2021.
SCOR has increased its growth targets in anticipation of a rapidly hardening reinsurance market. “Lots of conditions are met to enter a new phase of the p/c cycle, which is a positive phase,” Chairman and CEO Denis Kessler stated during a virtual press briefing.
“We are going to increase more rapidly than we thought, and we believe the profitability of the new business we will book will be much better than the profitability of the old book,” Kessler said.
The company has raised its 2021 premium income forecast to 15%, as well as increased its estimated new business growth to 7%-10% from 6-9%, based on its confident outlook. “We enter the renewals season in 2021 in a very optimistic and positive mindset,” said Jean-Paul Conoscente, CEO of SCOR’s Global P&C business. “We expect high-single-digit to low-double-digit price increases in most markets.”
Conoscente predicted that increased demand for reinsurance, coupled with rising prices, would boost both SCOR’s top and bottom lines, with its net combined ratio now expected to fall to 95% or less in 2021.
COVID loss confidence
The company doesn’t expect to have to increase its loss of €456m from COVID-19 claims, which it booked in its half-year results. “We feel very comfortable with our estimates and are able now to tell clients that we have absorbed the COVID-19 crisis,” said Conoscente.
However, the pandemic’s effects would be felt in the re/insurance markets for far longer than other disasters, such as the World Trade Center attacks, Conoscente argued. “Its impact will be long-lasting and across all lines of business and global … with interest rates depressed globally, technical profitability needs to improve for both insurers and reinsurers. It can’t be short-lived.”
The wildfires raging on the West Coast of the U.S. won’t have a great deal of impact on reinsurers, said Laurent Rousseau, SCOR’s Global P&C Deputy CEO, who noted the company also has only limited exposure to the blast and subsequent fire in Beirut in August of this year.
Unlike in previous hard markets, there has been a stream rather than a flood of new capital, which shouldn’t water down higher prices being demanded by reinsurers. Most of the new capital has gone mainly to support established reinsurers, Conoscente argued. On 10 September, SCOR issued €300mn in hybrid debt (which Kessler said was heavily oversubscribed) to finance its growth and beef up its capital.
No word on new boss
Kessler brushed off speculation about his future. He didn’t answer a question about whether SCOR planned to separate the Chairman and CEO roles (as it had been urged to do by the French financial regulator and one of its own investors), and said there was no date set for when his successor would be named. Kessler has run the French reinsurer since November 2002.
What is certain is that the reinsurance industry will return to Monte Carlo in 2021, said Kessler, who is a member of the Rendez-Vous Association, the meeting’s board.
“People are free to come,” he said. “This is not mandatory. … We will see if there’s demand by checking [whether] people book their reservation over the coming months. If there’s any health issue, then we will of course postpone or cancel the Rendez-Vous.”
Kessler added the meeting still had a central role in the reinsurance calendar by setting the tone ahead of the end-of-year renewals. “After one or two days you set the trend for this industry … people share a lot of information about the forces shaping the industry. That’s unique.”
Simon Challis is a contributing editor to Reactions
