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 premiums⁶stand 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 result⁷stands 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%⁸and a regular income yield of 2.8%⁹in 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 Value¹⁰under 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." 

Footnotes:

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 | SCOR

⁵ 2023 targets and financial assumptions under IFRS 17 | SCOR

⁶ 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.