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Scor reviewing certain business lines after 2019 price increases disappoint

Scor SE is reviewing several lines of nonlife reinsurance business after 2019 price increases were not sufficient to make sustainable profits in the coming years, according to Scor Global P&C CEO Jean-Paul Conoscente.

Speaking to analysts at Scor's 2019 investor day Sept. 4, at which the reinsurer presented a new strategic plan, Conoscente said the lines under review included marine, aviation, engineering and the provision of capital to third-party Lloyd's of London syndicates. Price increases in 2019 in these lines have been positive, he said, "but have not been sufficient to make the profitability of the business sustainable in 2020 and 2021."

Conoscente said what the company did with the lines would depend how the market reacts at the Jan. 1, 2020, renewals and beyond. If further price increases are forthcoming, "We will continue supporting or potentially expand those lines of business," he said, but if the rises fail to reflect Scor's view of the risk it was taking on, "we will probably start reducing those risks and redeploy capital in better-value-creating segments."

Conoscente also said "we don't see any reason to go back" to the lines of business it exited at Lloyd's at the end of 2018, including financial lines, marine cargo and accident and health. However, he said there are opportunities to expand primary specialty business, mainly written through Lloyd's Syndicate 2015, in areas such as political and credit risk, environmental impairment liability and cyber.

Conoscente reiterated Scor group CEO Denis Kessler's view that reinsurance prices would continue to rise in 2020, given the "insufficient" increases in many areas in 2019. He also said he expected mergers and acquisitions "to continue to be very active" because the market remains very fragmented and "many reinsurers are racing to become global, diversified reinsurers as quickly as possible."

Scor announced that it is spending €250 million on implementing its new plan, called Quantum Leap, which runs from July 1, 2019, through to the end of 2021. The company has kept the core financial targets it had under its previous Vision in Action plan unchanged, aiming for a return on equity above 800 basis points over five-year risk-free rates and a solvency ratio in the 185% to 220% range. But it is planning to accelerate its digital transformation and its use of new technologies, such as artificial intelligence.