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Scor looks to accelerate P&C growth as it declares portfolio cuts 'over'

French reinsurer SCOR SE's global nonlife business is aiming to boost growth after a slump in 2020, according to the unit's deputy CEO, Laurent Rousseau.

"We really think it is time to accelerate on the growth side," Rousseau told analysts at Scor's investor day Sept. 9. Scor said in its presentation for the investor day that its estimated gross premium income for 2020 will be €6.9 billion, down from €7.1 billion in 2019. But the reinsurer is expecting this figure to grow 15% to €7.9 billion in 2021, which translates into gross written premium growth of 11%, beating the annual gross written premium growth target of between 4% and 8% set out in its Quantum Leap strategic plan.

Rousseau said Scor Global P&C's 2020 growth had been stunted by a combination of the coronavirus pandemic, which has "slowed down if not brought to a halt major parts of the economy," and cutbacks to the portfolio over the past 12 months aimed at improving profitability. These included reducing some large quota share transactions in the U.S. and China, cutting the number of third-party Lloyd's of London Ltd. syndicates it backs and reducing business at its own Lloyd's operation, Channel Syndicate 2015.

"Within a couple of years we have actually taken €100 million out of that business to really improve the bottom line and turn around that operation, and we have done so successfully," Rousseau said. Now, however, "That portfolio pruning is over."

Growth would also be driven by the hardening of insurance and reinsurance prices, he said. Scor benefits from increasing primary insurance rates because two-thirds of its nonlife reinsurance business is proportional, meaning the reinsurer is paid a percentage of the original primary premium, and also is boosted through its own specialty insurance operations.

Rousseau said in the commercial insurance and facultative reinsurance division of the specialty operations, in particular, the company had "kept its head low" when prices were soft and is accelerating growth now rates are improving. He added: "A number of our competitors are in total disarray and this is good for us."

Scor expects the hardening market "to improve our bottom line and our combined ratio to trend towards 95% if not lower," Rousseau added.

Upbeat message

The return to growth and expected profitability improvement in nonlife is one of several upbeat statements Scor made at its investor day. The reinsurer also said coronavirus-related life reinsurance claims were coming in lower than it had forecast in the second quarter, and it is predicting a "long-lasting" hardening of the nonlife reinsurance market. Scor's share price closed up more than 11% in Sept. 9 trading.

The company also received some "positive news" on the nonlife claims side over the summer, according to Scor Global P&C CEO Jean-Paul Conoscente. He told analysts that the company's main credit and surety clients had reported "major exposure reductions and a lower claims activity to date than we had anticipated."

He added: "Although these are early trends that still need to be further confirmed in the quarters to come, this should have a positive effect on our credit and surety portfolio."

He also said that in other nonlife lines, claims information received has not affected Scor's assessment, and the company believes €248 million it set aside in the second quarter for nonlife coronavirus claims "remains prudent," Conoscente said. The company had paid €3 million in nonlife coronavirus claims as of Aug. 28.