Press release
14 November 2024 - N° 17
Third quarter 2024 results
2024 L&H assumption review completed,
Group solvency ratio of 203%
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Thierry Léger, Chief Executive Officer of SCOR, comments: "We are pleased to announce today the completion of the 2024 L&H assumptions review, with an outcome close to our best estimate view of H1 2024. The very comprehensive review allows us to draw a line and move forward with confidence. The underlying L&H performance shows a positive trend, and we have made significant progress in the implementation of our 3-step L&H remedial strategy which will be presented in full at our Investor Day on 12 December 2024, in London. P&C is doing very well, and we are taking strides towards our strategic journey of diversified and profitable growth while continuing to build reserve buffers. We expect the P&C reinsurance market conditions to remain attractive in 2025 and look ahead with confidence. Investments continue to benefit from high reinvestment rates, with a higher regular income yield in line with our long-term targets. Last but not least, the 203% Group solvency ratio at Q3 2024 demonstrates the resilience of our balance sheet and the effectiveness of our management actions.”.
Group performance and context
Q3 2024 net income is EUR -117 million (EUR -117 million adjusted4), driven by a negative insurance service result (ISR) in L&H reinsurance, partially offset by very strong P&C and Investments performances:
- In P&C (re)insurance, the Q3 2024 combined ratio stands at 88.3% in Q3 2024 including a natural catastrophe claims ratio of 13.2%, in an active period with several mid to large sized events. Over the first nine months of 2024, the natural catastrophe ratio of 10.1% remains in line with the budget. The attritional loss and commission ratio stands at 76.5% in Q3 2024, reflecting a very satisfactory underlying performance allowing for continued reserving discipline.
- In L&H reinsurance, the insurance service result1 stands at EUR -210 million in Q3 2024, mainly impacted by the completion of the L&H assumption review8 (EUR -163 million), and by a one-off negative true up adjustment on identified arbitration positions (EUR -128 million). Adjusted for those one-offs, the Q3 2024 L&H insurance service result stands at EUR 81 million.
- In Investments, SCOR benefits from elevated reinvestment rates in Q3 2024 and records a strong regular income yield of 3.5% (+0.1pt vs. Q3 2023).
Group solvency ratio is estimated at 203% at the end of Q3 2024, within the optimal range of 185%-220%, compared to 209% at year-end 2023 and to 201% as of 30 June 2024. In line with its current approach, SCOR continued to accrue a portion of the FY dividend during the quarter.
Group Economic Value5 under IFRS 17 stands at EUR 8.4 billion as of Q3 2024, down -7.0%6 at constant economics7 compared with 31 December 2023, driven by the 2024 L&H assumption review with a EUR -1.1 billion (post-tax) impact. As a result, the Group Economic Value growth target at 9% per annum at constant economics is unlikely to be met in FY 2024.
On-going very strong P&C underlying performance
In Q3 2024, P&C insurance revenue stands at EUR 1,842 million, down -2.5% at constant exchange rates (down -2.9% at current exchange rates) compared to Q3 2023, driven by the effect of a large multiyear contract not renewed this year and by a reduction in the SCOR Business Solutions (SBS) insurance revenue as part of the implementation of dynamic cycle management measures.
New business CSM in Q3 2024 stands at EUR 175 million, benefiting from the July renewals growth, partly offset by additional reinsurance retrocession incepted in Q3 2024.
P&C (re)insurance key figures:
| In EUR million (at current exchange rates) | Q3 2024 | Q3 2023 | Variation | 9M 2024 | 9M 2023 | Variation |
| P&C insurance revenue | 1,842 | 1,897 | -2.9% | 5,710 | 5,557 | +2.8% |
| P&C insurance service result | 159 | 152 | +4.5% | 542 | 544 | -0.5% |
| Combined ratio | 88.3% | 90.2% | -1.9pts | 87.4% | 88.0% | -0.6pts |
| P&C new business CSM | 175 | 169 | +3.8% | 1,067 | 875 | +21.9% |
The P&C combined ratio stands at 88.3% in Q3 2024, compared to 90.2% in Q3 2023. It includes:
- A Nat Cat ratio of 13.2%, mainly impacted by the losses related to central European floodings (4.0 pts), Hurricanes Helene (3.6 pts), Debby (3.4 pts) and Beryl (2.2 pts).
- An attritional loss and commission ratio of 76.5%, reflecting a very satisfactory underlying performance and continued reserving discipline.
- A discount effect of -7.7% within the assumed range of -7.5% to -8.5% for FY 2024.
- An attributable expense ratio of 6.7% of net insurance revenue.
EUR 272 million, a risk adjustment release of EUR 49 million, a negative experience variance of
EUR -151 million and an impact of onerous contract of EUR -11 million. The negative experience variance reflects the Nat Cat losses in Q3 2023 and continued prudence building.
The impact of Hurricane Milton, which made landfall on the west coast of the US state of Florida in early October, is currently expected to be in the mid to high double-digit million euro range in Q4 2024, pre-tax and net of retrocession.
Completion of the 2024 L&H assumption review in Q3 2024
At the start of this year, SCOR launched a comprehensive L&H assumption review with deep dives covering the US, Canada, South Korea and Israel. Today, SCOR reports that the L&H assumption review has been completed8.
The additional Q3 2024 impacts are EUR -0.2 billion in terms of ISR and EUR +0.2 billion of CSM, both on a pre-tax basis.
The Q3 2024 Economic Value impact of EUR -0.1 billion is within the best estimate range of EUR +/- 0.5 billion pre-tax at 30 June yield curve, as previously indicated for H2 2024.
To ensure faster delivery and the completion of the L&H assumption review in Q3 2024, SCOR contracted with three different actuarial firms to provide bandwidth, a benchmark of assumptions and documentation support.
For Q3 2024, SCOR's completion of the L&H internal assumption review led to the following outcome:
- A negative impact of EUR -0.2 billion included in the L&H ISR driven by an increase in the loss component on onerous contracts, mainly from Israel (EUR -0.1 billion) and the internal reallocation of a provision (EUR -0.1 billion) with a neutral impact on the Group Economic Value.
- In addition, the pre-tax L&H contractual service margin (CSM) at locked-in rate is adjusted by EUR +0.2 billion, mainly driven by a positive PVFCF adjustment in the US protection portfolio for EUR +0.1 billion and by the internal reallocation of a provision for EUR +0.1 billion.
-0.7 billion in terms of ISR and EUR -0.8 billion on pre-tax CSM.
As a result, at Q2 SCOR announced an ambitious 3-step plan to restore the profitability of L&H. This plan focuses on reserves, in-force management and new business.
The new L&H business strategy and the updated Forward 2026 targets and assumptions will be presented on 12 December 2024.
In addition to the regular Actuarial Function Holder review, to demonstrate SCOR's confidence in its L&H reserves, an external peer review of the L&H reserves is currently being performed by Milliman, with an opinion to be shared at the Investor Day in December.
L&H reinsurance key figures:
| In EUR million (at current exchange rates) | Q3 2024 | Q3 2023 | Variation | 9M 2024 | 9M 2023 | Variation |
| L&H insurance revenue | 2,102 | 2,338 | -10.1% | 6,432 | 6,534 | -1.6% |
| L&H insurance service result1 | -210 | 113 | n.a. | -467 | 525 | n.a. |
| L&H new business CSM9 | 116 | 89 | +29.5% | 373 | 376 | -1.0% |
As a consequence of the 2024 L&H assumption review, the L&H insurance service result1 amounts to EUR -210 million in Q3 2024. It includes:
- A CSM amortization of EUR 77 million, which reflects the negative impact of the 2024 L&H assumption review
- An experience variance of EUR -27 million, driven by underlying claims experience.
- The additional 2024 L&H assumption review impact for EUR -163 million driven by an increase in the loss component on onerous contracts, mainly from Israel and following the internal reallocation of a provision with a neutral impact on the Economic Value.
- The one-off true up adjustment on identified arbitration positions for EUR -128 million.
As of 30 September 2024, total invested assets amount to EUR 23.3 billion. SCOR's asset mix is optimized, with 79% of the portfolio invested in fixed income. SCOR has a high-quality fixed income portfolio with an average rating of A+ and a duration of 3.5 years (3.0 at year-end 2023)
Investments key figures:
| In EUR million (at current exchange rates) | Q3 2024 | Q3 2023 | Variation | 9M 2024 | 9M 2023 | Variation |
| Total invested assets | 23,319 | 22,005 | +6.0% | 23,319 | 22,005 | +6.0% |
| Regular income yield* | 3.5% | 3.4% | +0.2pts | 3.5% | 3.1% | +0.4pts |
| Return on invested assets*, ** | 4.0% | 3.4% | +0.6pts | 3.5% | 3.1% | +0.4pts |
(**) Fair value through income on invested assets excludes EUR +1 million in Q3 2024 and EUR -6m in 9M 2024 related to the pre-tax mark to market impact of the fair value of the option on own shares granted to SCOR.
Total investment income on invested assets stands at EUR 22910 million in Q3 2024. The return on invested assets stands at 4.0%10 (vs. 3.3% in Q2 2024) and the regular income yield at 3.5% (vs. 3.6% in Q2 2024).
The reinvestment rate stands at 4.1%11 as of 30 September 2024, compared to 4.8% as of 30 June 2024. The invested assets portfolio remains highly liquid and financial cash flows of EUR 9.6 billion are expected over the next 24 months12, enabling SCOR to benefit from elevated reinvestment rates.
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APPENDIX
1 - SCOR Group Q3 2024 key financial details
| In EUR million (at current exchange rates) | Q3 2024 | Q3 2023 | Variation | 9M 2024 | 9M 2023 | Variation |
| Insurance revenue | 3,944 | 4,235 | -6.9% | 12,142 | 12,090 | +0.4% |
| Gross written premiums1 | 4,985 | 4,870 | +2.4% | 15,015 | 14,444 | +3.9% |
| Insurance Service Result2 | -51 | 265 | n.a. | 75 | 1,069 | -93.0% |
| Management expenses | -291 | -294 | +0.9% | -903 | -835 | -8.2% |
| Annualized ROE3 | -10.2% | 13.7% | n.a. | -6.7% | 20.2% | n.a. |
| Annualized ROE excluding the mark to market impact of the option on own shares from Q3 2024 | -10.3% | 12.5% | n.a. | -6.6% | 18.8% | n.a. |
| Net income3,4 | -117 | 147 | n.a. | -229 | 650 | n.a. |
| Net income4 excluding the mark to market impact of the option on own shares from Q3 2024 | -117 | 135 | n.a. | -224 | 602 | n.a. |
| Economic value5,6 | 8,399 | 9,157 | -8.3% | 8,399 | 9,157 | -8.3% |
| Shareholders' equity | 4,322 | 4,459 | -3.1% | 4,322 | 4,459 | -3.1% |
| Contractual Service Margin (CSM)6 | 4,076 | 4,699 | -13.2% | 4,076 | 4,699 | -13.2% |
2 - P&L key figures Q3 2024
| In EUR million (at current exchange rates) | Q3 2024 | Q3 2023 | Variation | 9M 2024 | 9M 2023 | Variation |
| Insurance revenue | 3,944 | 4,235 | -6.9% | 12,142 | 12,090 | +0.4% |
| 1,842 | 1,897 | -2.9% | 5,710 | 5,557 | +2.8% |
| 2,102 | 2,338 | -10.1% | 6,432 | 6,534 | -1.6% |
| Gross written premiums1 | 4,985 | 4,870 | +2.4% | 15,015 | 14,444 | +3.9% |
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