First quarter 2023 results under IFRS 17: SCOR generates a net
income of EUR 311 million and significantly increases its Economic
Value in Q1 2023
Press Release
12 May 2023 - N° 9
First quarter 2023 results
under IFRS 17
SCOR generates
a net income of
EUR 311 million
and significantly
increases its Economic Value1
in Q1 2023
-
Insurance revenue of EUR 3,926 million in Q1 2023,
down 4.2%2 compared with Q1 2022
-
Group net income
of EUR 311 million in Q1 2023, compared with a net loss of EUR -35
million in Q1 2022
- Group Economic
Value under IFRS 17 of EUR 9,784 million as of 31 March
2023, up 9.4%3 (+6.3%3 on a constant interest and exchange rate
basis) compared with 31 December 2022, implying an Economic
Value per share of EUR 54 (vs. EUR 50 as
of 31 December 2022)
-
Estimated Group solvency
ratio of 219%4 as of 31 March 2023, at the upper end of
the optimal solvency range
|
SCOR SE’s Board of Directors met on 11 May 2023,
under the chairmanship of Denis Kessler, to approve the Group’s Q1
2023 financial statements. These results are published under the
new IFRS 17 accounting standard.
Key
highlights
In Q1 2023, the reinsurance industry continues
to be driven by three favorable developments that have emerged and
accelerated in recent quarters on both the asset and liability
sides:
- First, the
positive phase of the P&C reinsurance cycle, marked by a strong
improvement in pricing conditions, is ongoing. SCOR records a 7%
average rate increase for its renewed P&C portfolio on 1 April
2023, which should lead to a significant improvement in technical
profitability. These favorable market conditions are expected to
remain in place at the June and July 2023 renewals. This is against
a backdrop of continued high natural catastrophe losses, including
a major earthquake in Turkey, tornadoes in the U.S. and floods in
New Zealand in Q1 2023.
- Second, in
L&H reinsurance, the excess mortality linked to the Covid-19
pandemic has been greatly reduced, meaning that, as expected, the
number of related claims continues to fall.
- Finally, on the
asset side, the rise in interest rates and consequently in
reinvestment rates will significantly increase the financial
contribution of investments to reinsurer results in general, and
will particularly increase those of the Group, which is taking full
advantage of the short duration of its investment portfolio.
In this context, SCOR records a very strong
performance, exceeding its value creation target and achieving its
solvency target presented on 12 April 20235, with:
- An Economic Value growth rate
measured under IFRS 17 between 31 December 2022 and 31 March 2023
of 9.4% (+6.3% on a constant interest and exchange rate basis). The
net income generated by the Group in Q1 2023 stands at EUR 311
million, corresponding to an annualized RoE of 29.7%;
- An estimated solvency ratio of 219%
as of 31 March 2023, at the top end of the optimal solvency range
of 185% - 220%.
This excellent performance is driven by the
Group’s business units (P&C, L&H and Investments), all of
which are reporting a strong profitability level.
-
Group insurance revenue stands at
EUR 3,926 million in Q1 2023, down 4.2% at constant exchange rates
(down 2.0% at current exchange rates) compared with Q1 2022.
Gross written premiums6 stand at EUR 4,744
million, down 0.7% at constant exchange rates (up 0.6% at current
exchange rates) compared with Q1 2022.
-
SCOR P&C (Property and Casualty) insurance
revenue is up 5.4% at constant exchange rates (up 7.7% at current
exchange rates) compared with Q1 2022. Gross written premiums6 are
down 3.1% at constant exchange rates (down 1.8% at current exchange
rates). The combined ratio stands at 85.2%. It includes a Nat Cat
ratio of 9.9%, in line with the 10% budget announced on 12 April
2023. New business CSM stands at EUR 588 million
in Q1 2023.
- SCOR
L&H (Life and Health) insurance revenue is down 11.0%
at constant exchange rates (down 9.0% at current exchange rates)
compared with Q1 2022. Gross written premiums6 are up 1.6% at
constant exchange rates (up 2.9% at current exchange rates). The
insurance service result7 stands at EUR 272 million and
new business CSM stands at EUR
192 million in Q1 2023.
-
SCOR Investments delivers a return on invested
assets of 2.9%8 and a regular income yield of 2.8%9 in Q1
2023.
-
The management expense
ratio stands at 6.7% of insurance revenue in Q1
2023, better than the assumption of 7.1% - 7.3% presented on 12
April 2023.
-
The Group net income stands at
EUR 311 million for Q1 2023, implying an annualized return on
equity of 29.7%.
-
The Group generates operating cash flows of EUR
281 million in Q1 2023, with a positive operating cash flow of EUR
316 million from SCOR P&C and a negative operating cash flow of
EUR 35 million from SCOR L&H.
-
The Group’s
Economic Value10
under IFRS 17 stands at 9,784 million as of 31 March 2023 (up 6.3%
on a constant interest and exchange rate basis compared with 31
December 2022), representing an Economic Value per share of EUR 54.
It can be broken down into EUR 4,966 million of
shareholders’ equity (up 14.1%
compared to 31 December 2022) and EUR 4,818 million of
CSM (net of tax) (up 4.8% compared to 31 December
2022).
-
The Group financial leverage, which stands at
20.1% as of 31 March 2023, is down 1.5 points compared to 31
December 2022 (when it stood at 21.6%).
-
The Group solvency ratio as of 31 March 2023 is
estimated at 219%11, at the upper end of the optimal solvency range
of 185% to 220%.
As announced on 2 March 2023, SCOR is proposing
a dividend of EUR 1.40 per share for the fiscal year 2022. This
dividend will be submitted for shareholders’ approval at the 2023
Annual General Meeting, to be held on 25 May 2023.
Other information disclosed under IFRS
17
SCOR has refined its estimate of its Economic
Value as of 31 December 2022 measured under IFRS 17: it stands at
EUR 8,947 million, consisting of EUR 6,128 million of CSM (EUR
4,596 million of CSM net of tax12) and EUR 4,351 million of
shareholders’ equity, which represents an Economic Value per share
of EUR 50 as of 31 December 2022.
Preparation of the new strategic
plan
The outline of the new strategic plan will be
presented at the Annual General Meeting on 25 May 2023. The Group's
strategic orientations will be presented in detail at SCOR's
Investor Day on 7 September 2023.
Denis Kessler, Chairman of SCOR,
comments: “SCOR has generated excellent results in Q1
2023. The Group is taking full advantage of the current favorable
environment. Our new CEO, Thierry Léger, is in charge of drawing up
a new three-year strategic plan under IFRS 17. This plan will
define the best ways and means for the Group to consolidate its
position as a leading global reinsurer, taking advantage of its
Tier 1 global underwriting platform and technical know-how. The
Board of Directors is confident in the Group's ability to actively
pursue its growth, with the twofold objective of solvency and value
creation."
Thierry Léger,
Chief Executive Officer of SCOR,
comments: “The Q1 results are very satisfactory. All
business units – P&C, L&H and Investments – have generated
positive results, and the Group's Economic Value has increased
significantly. In parallel, our Finance teams have successfully
managed the transition to the new IFRS 17 framework: we would like
to thank them for this achievement. I am now looking to the future:
the current market is very supportive, and all the teams are
mobilized to take advantage of this favorable environment. I look
forward to presenting the outline of the new strategic plan at the
Annual General Meeting."
*
*
*
SCOR Group
Q1 2023
key financial details
The IFRS 17 figures presented in this document
for 2022 (pro forma quarterly and yearly metrics) are communicated
for comparison purpose and are unaudited.
In EUR million (at current exchange rates) |
Q1 2023 |
Q1 2022 |
Variation |
Insurance revenue |
3,926 |
4,008 |
-2.0% |
Gross written premium1 |
4,744 |
4,715 |
+0.6% |
Insurance service result2 |
478 |
62 |
+671.0% |
Group management expense ratio |
6.7% |
6.4% |
+0.3pts |
Annualized ROE |
29.7% |
n.a. |
n.a. |
Net income3 |
311 |
-35 |
n.a. |
Economic Value4 |
9,784 |
11,214 |
-12.8% |
Shareholder’s Equity |
4,966 |
6,646 |
-25.3% |
Contractual Service Margin (CSM) 5 |
4,818 |
4,569 |
+5.5% |
1: Gross written premium is not a defined indicator under IFRS
17 (non-GAAP indicator). 2: Includes revenues on Financial
contracts reported under IFRS 9. 3: Consolidated net income, Group
share. 4: Defined as the sum of the shareholders’ equity and the
Contractual Service Margin (CSM), net of tax. 5: Net of tax
SCOR P&C is
actively pursuing the deployment of its capital in a supportive
market environment and records a
strong level of new business
CSM
In the first quarter of 2023, SCOR P&C's
insurance revenue stands at EUR 1,791 million, up 5.4% at constant
exchange rates (+7.7% at current exchange rates) compared to Q1
2022. There has been a strong increase in insurance revenue for
Specialty insurance (+21.5% at constant exchange rates), which now
represents 34% of SCOR P&C’s overall insurance revenue.
Market conditions remain favorable for
reinsurers, with regard to both pricing and terms and conditions.
SCOR is taking advantage of this supportive market to continue the
repositioning of its P&C risk portfolio.
New business CSM in Q1 2023 stands at EUR 588
million, benefiting from a high level of expected technical
profitability for the treaties underwritten at the January 2023
renewals.
SCOR P&C key figures:
In EUR million (at current exchange rates) |
Q1 2023 |
Q1 2022 |
Variation |
Insurance revenue |
1,791 |
1,663 |
7.7% |
Insurance service result |
207 |
31 |
+564.5% |
Combined ratio |
85.2% |
97.8% |
-12.6pts |
New business CSM |
588 |
n.a. |
n.a. |
SCOR P&C's combined ratio stands at 85.2% in
Q1 2023, compared to 97.8% in Q1 2022. This improvement in
technical profitability is due to (i) a Nat Cat ratio of 9.9% of
insurance revenue, in line with the 10% budget announced on 12
April 2023, and (ii) an attritional loss and commission ratio of
70.0%.
SCOR P&C's attributable expense ratio stands
at 6.0% of its insurance revenue in Q1 2023.
The P&C insurance service result is driven
by a CSM amortization of EUR 293 million and positive claims
experience variance, partly offset by retrocession and premium
effects. The retrocession effect is arising from i) limited
recovery (as one would expect in a strong underwriting quarter) and
ii) proportional retrocession impacts.
SCOR L&H's
insurance service result benefits from a
positive experience variance arising
from favorable
U.S.
claims developments and
a one-off item
Reminder: Insurance revenue is the sum of
expected claims and expenses (estimated at the beginning of each
quarter), CSM amortization, Risk Adjustment release and
amortization of existing onerous contracts. It is not the result of
a deduction applied to the gross written premium.
In the first quarter of 2023, SCOR L&H
insurance revenue amounts to EUR 2,135 million, down 11.0% at
constant exchange rates (down 9.0% at current exchange rates)
compared to Q1 2022. This notably reflects the significant decrease
in expected claims related to the Covid-19 pandemic between Q1 2022
and Q1 2023.
The new business CSM, which amounts to EUR 192
million in Q1 2023, reflects the quality of treaties underwritten
over the period.
SCOR L&H key figures:
In EUR million (at current exchange rates) |
Q1 2023 |
Q1 2022 |
Variation |
Insurance revenue |
2,135 |
2,345 |
-9.0% |
Insurance service result13 |
272 |
31 |
+775.7% |
New business CSM |
192 |
n.a. |
n.a. |
SCOR L&H’s insurance service result13
amounts to EUR 272 million in Q1 2023. For the same period in 2022,
the insurance service result was EUR 31 million.
SCOR L&H’s insurance service result is
supported by a positive experience variance, reflecting (i)
favorable developments in the U.S. including from Covid-19 claims,
and (ii) the impact of a one-off item which accounts for about half
of the experience variance.
SCOR
Investments
generates a return on invested assets
of
2.9%14,15,16
in the first quarter of
2023, and
benefits from a high reinvestment
rate of
4.6%
as of 31
March
2023
As of 31 March 2023, total invested assets
amount to EUR 22.4 billion. SCOR has a high-quality fixed income
portfolio with an average rating of A+ and a duration at 3.2 years.
SCOR’s asset mix is optimized, with 81% of the portfolio invested
in fixed income.
SCOR Investments key figures:
In EUR million (at current exchange rates) |
Q1 2023 |
Q1 2022 |
Variation |
Total invested assets |
22,399 |
22,226 |
+0.8% |
Regular income yield* |
2.8% |
1.9% |
+0.9pts |
Return on invested assets** |
2.9% |
1.8% |
+1.1pts |
(*) In Q1 2023, regular income yield and RoIA
include a negative impact of 13 bps mainly resulting from an
adjustment in the amortization trajectory of leveraged loans.
Excluding this impact, the Q1 2023 QTD regular income yield and the
RoIA stand at 2.9% and 3.0% respectively.(**) Annualized and
excluding funds withheld by cedants & other deposits. As at 31
March 2023, fair value through income on invested assets excludes
EUR 2 million related to the option on own shares granted to
SCOR.
Total investment income on invested assets
stands at EUR 157 million in Q1 2023.
The return on invested assets stands at 2.9
%14,15,16 in Q1 2023 (vs. 2.9% in Q4 2022 QTD).
The regular income yield stands at 2.8%15 in Q1
2023, (vs. 3.1% in Q4 2022 QTD).
The reinvestment rate stands at 4.6%17 as of 31
March 2023, compared to 4.9% at the end of 2022. The invested
assets portfolio remains highly liquid and financial cash flows of
EUR 9.3 billion are expected over the next 24 months18, enabling
SCOR to benefit faster from high reinvestment rates.
*
*
*APPENDIX
The IFRS 17 figures presented in this document
for 2022 (pro forma quarterly and yearly metrics) are communicated
for comparison purpose and are unaudited.
1 - P&L key figures Q1
2023
In EUR million (at current exchange rates) |
Q1 2023 |
Q1 2022 |
Variation |
FY22 |
Insurance revenue |
3,926 |
4,008 |
-2.0% |
15,910 |
|
1,791 |
1,663 |
+7.7% |
7,371 |
|
2,135 |
2,345 |
-9.0% |
8,539 |
Gross written premium1 |
4,744 |
4,715 |
+0.6% |
19,732 |
- P&C gross written premium
|
2,275 |
2,316 |
-1.8% |
10,017 |
- L&H gross written premium
|
2,469 |
2,399 |
+2.9% |
9,715 |
Investment income on invested
assets |
157 |
98 |
n.a. |
467 |
Operating result |
444 |
5 |
n.a. |
-1,567 |
Net income2 |
311 |
-35 |
n.a. |
-1,383 |
Earnings per share (EUR) |
1.73 |
-0.19 |
n.a. |
-1.69 |
Operating cash flow |
281 |
-116 |
n.a. |
500 |
1: Gross written premium is not a defined indicator under IFRS
17 (non-GAAP indicator); 2: Consolidated net income, Group
share.
2 - P&L key ratios Q1
2023
In EUR million (at current exchange rates) |
Q1 2023 |
Q1 2022 |
Variation |
FY22 |
Return on invested assets
1,2,3 |
2.9% |
1.8% |
+1.1pts |
2.1% |
P&C combined ratio 4 |
85.2% |
97.8% |
-12.6pts |
114.9% |
Group management expense ratio
5 |
6.7% |
6.4% |
+0.3pts |
6.7% |
Return on equity (ROE) |
29.7% |
n.a. |
n.a. |
n.a. |
Economic Value growth6 |
6.3% |
n.a. |
n.a. |
n.a. |
1: Annualized and calculated excluding funds
withheld by cedants according to IFRS 9 standard; 2: As at 31 March
2023, fair value through income on invested assets excludes EUR 2
million related to the option on own shares granted to SCOR; 3: In
Q1 2023, regular income yield and RoIA include a negative impact of
13 bps mainly resulting from an adjustment in the amortization
trajectory of leveraged loans. Excluding this impact, the Q1 2023
QTD regular income yield and the RoIA stand at 2.9% and 3.0%
respectively; 4: The net combined ratio is the sum of the total
claims, the total variables commissions, and the total P&C
management expenses, divided by the net insurance revenue for
P&C business; 5: The group management expense ratio is the
total management expenses divided by insurance revenue; 6: Growth
at constant economic assumptions of interest rates and exchange
rates as at 31 December 2022. Economic Value defined as the sum of
the shareholders’ equity and the Contractual Service Margin (CSM),
net of tax.
3 - Balance sheet key figures as
of 31 March
2023
In EUR million (at current exchange rates) |
As of31
March 2023 |
As of31
December
2022 |
Variation |
Total invested assets
1,2 |
22,399 |
22,179 |
+1.0% |
Technical reserves (gross)3 |
18,670 |
19,400 |
-3.8% |
Shareholders’ equity |
4,966 |
4,351 |
+14.1% |
Book value per share (EUR) |
28 |
24 |
+14.3%7 |
Economic
Value4 |
9,784 |
8,947 |
+9.4% |
Economic Value per share
(EUR)5 |
54 |
50 |
+9.4%7 |
Financial leverage ratio |
20.1% |
21.6% |
-1.5pts |
Total
liquidity6 |
2,208 |
2,791 |
-20.9% |
1: Total investment portfolio includes invested
assets, accrued interest, cat bonds, mortality bonds and FX
derivatives; 2: Excluding 3rd party net insurance business
investments; 3: Gross of retrocession and includes “accounts
payable on assumed insurance and reinsurance transactions” net
of “accounts receivable on assumed insurance and reinsurance
transactions”. 4: The Economic Value (defined as the sum of the
shareholders’ equity and the Contractual Service Margin (CSM), net
of tax) includes minority interests; 5: The Economic Value per
share excludes minority interests; 6: Includes cash and cash
equivalents and short-term investments classified as “other loans
and receivables”; 7: Growth rate calculated on the basis of
unrounded figures.
*
*
*Contact
details
Investor RelationsYves
Cormierycormier@scor.com
Media RelationsAlexandre
Garciamedia@scor.com www.scor.comLinkedIn: SCOR |
Twitter: @SCOR_SE
General
Numbers presented throughout this press release
may not add up precisely to the totals in the tables and text.
Percentages and percent changes are calculated on complete figures
(including decimals); therefore, the press release might contain
immaterial differences in sums and percentages due to rounding.
Unless otherwise specified, the sources for the business ranking
and market positions are internal.
Forward-looking statements
This press release includes forward-looking
statements, assumptions, and information about SCOR’s financial
condition, results, business, strategy, plans and objectives,
including in relation to SCOR’s current or future projects.
These statements are sometimes identified by the
use of the future tense or conditional mode, or terms such as
“estimate”, “believe”, “anticipate”, “expect”, “have the
objective”, “intend to”, “plan”, “result in”, “should”, and other
similar expressions.
It should be noted that the achievement of these
objectives, forward-looking statements, assumptions and information
is dependent on circumstances and facts that arise in the
future.
No guarantee can be given regarding the
achievement of these forward-looking statements, assumptions and
information. These forward-looking statements, assumptions and
information are not guarantees of future performance.
Forward-looking statements, assumptions and information (including
on objectives) may be impacted by known or unknown risks,
identified or unidentified uncertainties and other factors that may
significantly alter the future results, performance and
accomplishments planned or expected by SCOR.
In particular, it should be noted that the full
impact of the Covid-19 crisis on SCOR’s business and results cannot
be accurately assessed, in particular given the uncertainty related
to the evolution of the pandemic, to its effects on health and on
the economy, and to the possible effects of future governmental
actions or legal developments in this context.
In addition, the full impact of the Russian
invasion and war in Ukraine on SCOR’s business and results cannot
be accurately assessed at this stage, given the uncertainty related
both to the magnitude and duration of the conflict, and the
consequential impacts.
Therefore, any assessments, any assumptions and,
more generally, any figures presented in this press release will
necessarily be estimates based on evolving analyses, and encompass
a wide range of theoretical hypotheses, which are highly
evolutive.
These points of attention on forward-looking
statements are all the more essential that the adoption of IFRS 17,
which is a new accounting standard, results in significant
accounting changes for SCOR – the impact of which may not be fully
assessed ab initio (see below).
Information regarding risks and uncertainties
that may affect SCOR’s business is set forth in the 2022 Universal
Registration Document filed on 14 April 2023, under number
D.23-0287 with the French Autorité des marchés financiers (AMF)
posted on SCOR’s website www.scor.com.
In addition, such forward-looking statements,
assumptions and information are not “profit forecasts” within the
meaning of Article 1 of Commission Delegated Regulation (EU)
2019/980.
SCOR has no intention and does not undertake to
complete, update, revise or change these forward-looking
statements, assumptions and information, whether as a result of new
information, future events or otherwise.
Financial information
The Group’s financial information contained in
this press release is prepared on the basis of IFRS and
interpretations issued and approved by the European Union.
IFRS 17 is a new accounting standard applicable
to insurance and reinsurance contracts. IFRS 17 has replaced IFRS 4
since 1 January 2023. The adoption of IFRS 17 results in
significant accounting changes for SCOR. Any assessments,
assumptions, estimates or expectations under or relating to IFRS 17
in this press release reflect SCOR’s current view of the impact of
IFRS 17. No guarantee can be given regarding their accuracy: they
are subject to changes, which may be significant, in the course of
2023. Accordingly, no undue reliance should be placed on such
assessments, assumptions, estimates or expectations.
Unless otherwise specified, prior-year balance
sheet, income statement items and ratios have not been
reclassified.
The calculation of financial ratios (such as
Economic Value per share, return on investments, return on invested
assets, Group cost ratio, return on equity, net combined ratio and
life technical margin) is detailed in the Appendices of the
presentation of the financial results of Q1 2023 (see page 19).
The financial information for the first quarter
of 2023 included in this document is unaudited. Unless otherwise
specified, all figures are presented in Euros. All figures are at
constant exchange rates as of 31 December 2022, unless otherwise
specified. Any figures for a period subsequent to 31 March 2023
should not be taken as a forecast of the expected financials for
these periods.
1 Defined as the sum of the shareholders’ equity and the
Contractual Service Margin (CSM), net of tax.
2 At constant exchange rates.3 Not annualized.
Annualized Economic Value growth stands at +43.0% (+27.7% on a
constant interest and exchange rate basis compared with 31 December
2022).4 Solvency ratio estimated after taking into account a EUR
1.80 annual dividend per share, accrued for the first three months
of 2023.5 2023 targets and financial assumptions under IFRS 17 |
SCOR6 Gross written premium is not a defined indicator under IFRS
17 (non-GAAP indicator).7 Includes revenues on Financial contracts
reported under IFRS 9.8 In Q1 2023, fair value through income on
invested assets excludes EUR 2 million related to the option on own
shares granted to SCOR.9 In Q1 2023, regular income yield and RoIA
include a negative impact of 13 bps mainly resulting from an
adjustment in the amortization trajectory of leveraged loans.
Excluding this impact, the Q1 2023 QTD regular income yield and the
RoIA stand at 2.9% and 3.0% respectively.10 Defined as the sum of
the shareholders’ equity and the Contractual Service Margin (CSM),
net of tax.11 Solvency ratio estimated after taking into account a
EUR 1.80 annual dividend per share, accrued for the first three
months of 2023.12 A notional tax rate of 25% was applied to the CSM
to calculate Economic Value.13 Includes revenues on Financial
contracts reported under IFRS 9.14 In Q1 2023, fair value through
income on invested assets excludes EUR 2 million related to the
option on own shares granted to SCOR.15 In Q1 2023, regular income
yield and RoIA include a negative impact of 13 bps mainly resulting
from an adjustment in the amortization trajectory of leveraged
loans. Excluding this impact, the Q1 2023 QTD regular income yield
and the RoIA stand at 2.9% and 3.0% respectively.
16 Annualized, return on invested assets
excludes funds withheld by cedants and other deposits.17
Corresponds to theoretical reinvestment rates based on Q1 2023
asset allocation of asset yielding classes (i.e. fixed income,
loans and real estate), according to current reinvestment duration
assumptions and spreads, currencies, yield curves as of 31 March
2023.18 As of 31 March 2023. Investable cash includes current
cash balances, and future coupons and redemptions.
Grafico Azioni Scor (EU:SCR)
Storico
Da Apr 2024 a Mag 2024
Grafico Azioni Scor (EU:SCR)
Storico
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