Continued very strong performance of P&C, with a combined ratio of 86.9% in Q2 2024 (-1.6pts compared to Q2 2023) allowing for continued reserving discipline
L&H insurance service result1 of EUR -329 million in Q2 2024 (EUR -469 million compared to Q2 2023), driven by the best estimate view of the annual L&H assumptions review for EUR -509 million, partly offset by EUR +146 million impact mainly from portfolio actions
High Investments regular income yield of 3.6% in Q2 2024 (+0.5pts compared to Q2 2023) supported by elevated reinvestment rates
Group net loss of EUR -308 million in Q2 2024 (EUR -283 million adjusted2) resulting from the L&H assumptions review
Group Economic Value3 under IFRS 17 of EUR 8.4 billion as of 30 June 2024, down -5.2%4 (-7.3%4 at constant economics3,5) compared with 31 December 2023, implying an Economic Value per share of EUR 47 (vs. EUR 51 as of 31 December 2023)
Estimated Group solvency ratio of 201%6 as of 30 June 2024, within the optimal solvency range, impacted by the L&H assumptions review for -20 points
Annualized Return on Equity of -23.7% (-21.9% adjusted1) in Q2 2024 implying an annualized Return on Equity of -4.7% in H1 2024 (-4.5% adjusted1)
SCOR SE’s Board of Directors met on 29 July 2024, under the chairmanship of Fabrice Brégier, to approve the Group’s Q2 2024 financial statements.
Thierry Léger, Chief Executive Officer of SCOR, comments: “I am disappointed by the L&H H1 results. In response, we have launched an ambitious 3-step plan resulting in a series of determined actions aiming at restoring the profitability of the L&H business in a sustainable way. The still ongoing 2024 L&H assumption review, which will be completed by year-end, has led to a significant negative impact on our results in Q2 2024. We will present full details of an updated L&H business strategy and Forward 2026 assumptions and targets on 12 December 2024.
In P&C, with a combined ratio of 86.9%, we delivered very strong results while continuing our strategy of building reserve buffers. We are very satisfied with the latest round of renewals with a +24% premium growth at unchanged attractive margins in June and July, supported by diversified growth in our preferred lines, and market conditions which remain attractive. Investments continue to produce stable and elevated positive results, with a higher regular income yield in line with our longer-term targets.
SCOR actively manages its solvency position and is confident that its solvency ratio will remain in the optimal range of 185%-220% at year-end 2024.
Frieder Knüpling, CEO of SCOR L&H since 2021, has decided to pursue new professional opportunities and will leave the Group. Until further notice, I will take over the management of L&H. I would like to wish him every success in the next stage of his career.”
Group performance and context
Q2 2024 net income is EUR -308 million (EUR -283 million adjusted2), driven notably 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 combined ratio stands at 86.9% in Q2 2024 including a natural catastrophe claims ratio of 9.9%, in an active period with several mid-sized events. Over the first six months of 2024, the natural catastrophe ratio of 8.6% remains below the budget. The attritional loss and commission ratio stands at 77.6% in Q2 2024, reflecting a satisfactory underlying performance allowing for continued reserving discipline.
- In L&H reinsurance, the insurance service result1 stands at EUR -329 million in Q2 2024, mainly impacted by the best estimate view of the 2024 L&H assumption review (EUR -509 million), partly offset by a positive effect (EUR 143 million) mainly driven by portfolio actions. Therefore, the L&H ISR in 2024 is expected to be significantly less than the EUR 500m indicated during the Q1 2024 results presentation.
- In Investments, SCOR benefits from still-elevated reinvestment rates in Q2 2024 and records a strong regular income yield of 3.6% (+0.5pts vs. Q2 2023).
The annualized Return on Equity stands at -23.7% (-21.9% adjusted2) in Q2 2024 and the Group Economic Value over the first half of 2024 decreases by -7.3%4 at constant economics5, both impacted by the best estimate view of the 2024 L&H assumption review accounting for EUR -0.5 billion (pre-tax) in insurance service result and EUR -1.0 billion (pre-tax) in contractual service margin (CSM). Over the first half of 2024, SCOR reports a net loss of EUR -112 million (EUR -107 million adjusted2), implying an annualized Return on Equity of -4.7% (-4.5% adjusted2).
Group solvency ratio is estimated at 201% at the end of Q2 2024, within the optimal range of 185%-220%, and compared to 209% at year-end 2023. This is supported by strong operating capital generation from the P&C and Investments activities and negatively impacted by the 2024 L&H assumption review (-20 points).
Group Economic Value3 under IFRS 17 stands at EUR 8.4 billion as of Q2 2024, down -5.2%4 (-7.3%4 at constant economics5) driven by the 2024 L&H assumption review with a EUR -1.0 billion (post-tax) negative impact. As a result, the Group Economic Vale growth target at 9% per annum at constant economics is unlikely to be met in FY 2024.
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Footnotes:
1 Includes revenues on financial contracts reported under IFRS 9.
2 Adjusted by excluding the mark to market impact of the option on own shares.
3 Defined as the sum of the shareholders’ equity and the Contractual Service Margin (CSM), net of tax. 25% notional tax rate applied on CSM.
4 Not annualized. The starting point is adjusted for the future payment of dividend of EUR 1.8 per share (EUR 324 million in total) for the fiscal year 2023, paid in 2024.
5 Growth at constant economic assumptions as of 31 December 2023, and excluding the mark to market impact of the option on own shares.
6 Solvency ratio estimated after taking into account the dividend accrual for the first six months based on the dividend paid for the fiscal year 2023 (EUR1.8/share).
