Scor reported a net loss of €117 million for Q3 2024, down from a profit of €147 million the previous year, largely due to significant losses in the life and health reinsurance sector. Despite this, the company’s share price rose 8.89% to €22.32, driven by a strong solvency ratio of 203%. Revenue from property and casualty reinsurance fell slightly, while preparations for recovery strategies and impacts from Hurricane Milton were also outlined.
Scor’s Strong Performance Amidst Quarterly Loss
In a notable development, Scor has emerged as the top performer in the SBF 120, experiencing a remarkable surge of 8.89%, bringing its share price to €22.32. Investors appear to be overlooking an unexpected quarterly net loss, instead choosing to focus on the company’s better-than-anticipated solvency ratio and the recent conclusion of the 2024 review of life and health reinsurance assumptions (L&H). This particular segment has been at the heart of the recent quarterly downturn and the cautionary statements made in mid-July. Jefferies analysts believe that the solvency ratio is robust enough for the reinsurer to sustain its dividend.
Financial Performance and Strategic Outlook
During the third quarter of 2024, Scor reported a net loss of €117 million, a stark contrast to the €147 million net profit from the previous year, aligning closely with market expectations. The decline in financial performance is attributed to significant losses within the life and health reinsurance sector, which faced a staggering loss of €210 million, compared to a profit of €113 million a year prior. Key factors contributing to this downturn included the completion of the 2024 review of L&H assumptions, which resulted in a loss of €163 million, alongside a one-time adjustment of €128 million related to identified arbitrages.
CEO Thierry Léger highlighted the completion of the 2024 L&H assumptions review, noting that it produced results that closely matched the initial estimates shared in the first half of the year. This review encompassed regions such as the United States, Canada, South Korea, and Israel, resulting in a cumulative negative impact of €700 million on the insurance activities since the start of 2024. Léger also mentioned the significant strides made in executing their recovery strategy, which will be elaborated upon during the investor day scheduled for December 12, 2024, in London. This strategy is focused on reserve management, existing policy oversight, and the acquisition of new business.
In terms of property and casualty reinsurance (P&C), Scor’s revenues dipped by 2.9% to €1.84 billion, but the results from insurance activities improved by 4.5%, reaching €159 million. The combined ratio also showed positive movement, decreasing by 1.9 points to 88.3%, indicating enhanced profitability since ratios below 100 signify better performance.
Looking ahead, the group anticipates that the financial impact of Hurricane Milton, which struck the West Coast of Florida in early October, will range between €50 million and €100 million before taxes and net of retrocession.
As of September 30, 2024, Scor’s economic value stood at €8.4 billion, reflecting a 7% decline at constant economic assumptions compared to December 31, 2023. On a per-share basis, this is equivalent to €47, down from €51 at the end of 2023. The economic value is calculated as the sum of equity and the contractual service margin (CSM), representing the present value of expected future profits.
At the close of the third quarter, the group’s solvency ratio is estimated at 203%, comfortably within the optimal range of 185% to 220%, and surpassing expectations by 12 points. This figure compares favorably to 209% at the end of 2023 and 201% as of June 30, 2024. Throughout the quarter, Scor maintained its provisions for part of the dividend for the fiscal year.