Scor SE is expecting double-digit percentage price increases on loss-affected U.S. catastrophe business at the upcoming June 1 and July 1 reinsurance renewals, according to Scor Global P&C CEO Jean-Paul Conoscente.
Conoscente also told analysts on an April 26 conference call that the reinsurer expects industrywide claims from 2018 Japanese typhoons Jebi and Trami to increase to $11 billion from $7 billion after worse-than-expected claims hit the French reinsurer's first-quarter 2019 earnings.
US price hikes
Reinsurers are widely expecting catastrophe excess-of-loss reinsurance prices to rise at the June 1 and July 1 renewals, which are dominated by U.S. business, in response to the heavy loss activity in 2018. This included Hurricane Michael in Florida and wildfires in California.
Conoscente told analysts that, excluding the contribution from catastrophe excess-of-loss business, he expected U.S. prices to go up on average by 6%. Factoring in double-digit increases for loss-affected business, he said this would equate to overall premium-weighted, risk-adjusted price increases across the U.S. in the high-single-digit to low-double-digit range.
He noted that on the U.S. catastrophe excess of loss business that renewed at April 1, most of which was not loss-affected, Scor achieved rate increases of between 2% and 3%.
Japan loss creep
Scor's first-quarter 2019 combined ratio increased to 94.6% from 91.8% a year earlier after claims deterioration from the Japanese typhoons added 3.8 percentage points to the ratio. Scor revised Jebi claims up by €36 million and Trami claims up by €17 million.
Conoscente said the worsening of expected claims from the 2018 Japanese typhoons was caused by "the unusual level of claims as well as the unusual average payment per claim." He added that any further worsening of Jebi claims in particular would have a "very limited impact" on Scor because most of any additional loss would be picked up by the reinsurer's retrocession coverage.
As previously announced, Scor achieved 15% rate increases for Japanese business at the April 1 renewals. Conoscente said that within this, wind-exposed catastrophe excess-of-loss business had seen rate increases of between 20% and 28%.
'Fragmented' market
Conoscente also noted that there was now a "much more fragmented reinsurance market" with regards to pricing response after large events, with loss-affected business receiving large rate increases, and business unaffected by the losses remaining relatively flat.
"It is very difficult today to impose price increases in a region that has not been affected by losses," he said, pointing out that reinsurers had tried to push through across-the-board price increases in 2018, following the 2017 catastrophes, but faced "a very strong pushback on regions outside the U.S. and the Caribbean."
As a result, he said, reinsurers had taken "a much more prudent approach" in 2019. He added: "This includes some of the very large global players that had the same difficulties as we had."