Scor targets marine, intl casualty and engineering reinsurance as its cuts back agriculture and commits to cat

Scor has provided a bullish outlook for a continuation of the hard market through the three-year period covered by its new strategic plan, with the Paris-based reinsurer planning to maintain its treaty cat XL position as it looks to take advantage of the hardening conditions.

Newly arrived CEO Thierry Léger hailed the “best market conditions over the last two decades” as he unveiled the group’s Forward 2026 strategy ahead of this year’s Rendez-Vous.

The strategy and investor day – which was well-received by insurance analysts – targets P&C insurance revenue compound annual growth of 4-6 percent during the 2024 to 2026 period, while maintaining its nat cat ratio at 10 percent of net insurance revenue.

Scor also said it was targeting a net combined ratio of below 87 percent over the three-year period – a ratio that few would have thought achievable a few years ago.

In its investor day presentation, the reinsurer highlighted the recent emergence of a $65bn supply/demand imbalance for property cat, with excess demand outstripping supply for the first time in the current underwriting cycle.

Scor said its strategy will also see continued portfolio diversification in its reinsurance business, while maintaining a “prudent approach” on business exposed to climate change, primarily agriculture (where Scor has experienced recent heavy losses in locations such as Brazil) and property cat.

Part of this approach has seen it undertake a significant portfolio remediation for property cat, with its current balance being one it intends to maintain.

“Following the significant portfolio remediation done over the past two years, we are today underweight in property cat compared to our peers, with a good balance between US and non-US exposures,” said Jean-Paul Conoscente, CEO of Scor P&C.

However, Léger underlined that climate change and nat cat are not entirely synonymous.

He noted that lower layer claims, often associated with heat, rain and flooding, are affected by climate change and have been avoided.

Higher layer claims, such as hurricanes and earthquakes, were not dramatically impacted by climate change, with demographics a more important factor.

Another area where Scor capped its capital allocation was US casualty, largely a result of what it saw as a “volatile litigious environment in the US”.

Conoscente said it would achieve its actions across property cat and US casualty through its third-party capital-supported risk partnership platform, which it plans to expand during its strategic plan.

Scor also plans to expand across four main segments: engineering, marine, international casualty and inherent defects insurance.

“In total, we want to increase the premium on these four lines of business by roughly 8 percent per year over the plan while maintaining stable capacities,” Conoscente added.

The group also revealed plans to grow diversifying lines in specialty reinsurance, as well as leveraging its strong position in construction and energy to meet the world’s infrastructure and transition needs.

Scor’s share price closed up last week following the investor day and is now up 35 percent year to date and trading at around 1.1x book. 2022 saw its share price dive on heavy losses and unexpected back year reserving.

KBW analyst Darius Satkauskas commented: “We came away from the investor day feeling that Scor has turned the corner”.