French reinsurer Scor SE is planning to set up an external balance sheet backed by investors as it looks to expand the capacity it provides to insurers.
This is part of a wider initiative to use more alternative capital — money provided by capital markets investors rather than traditional insurers and reinsurers — as it looks to satisfy increasing demand for reinsurance.
Jean-Paul Conoscente, CEO of nonlife reinsurance division Scor Global P&C, told journalists at the annual reinsurance Rendez-vous in Monte Carlo on Sept. 8 that Scor was looking for long-term investment partners such as pension funds, "that would be interested to accept not just property business but other types of business." Using a separate balance sheet would be one way to do that, he said, adding that this was a longer-term ambition that would probably take place toward the end of Scor's new Quantum Leap strategic plan, which runs until through 2021.
Under the plan, Scor would underwrite business on behalf of the separate investor-backed vehicle, and would earn fees rather than an underwriting profit. Conoscente said insurers are expecting their lead reinsurers to take larger shares of their reinsurance programs and deploy more capacity.
"We have been providing this capacity on our own balance sheet," he said.
In addition to the external balance sheet, Conoscente said that for the next year, Scor wanted to work more closely with its asset management division, Scor Global Investments, "to develop a coordinated approach with some of the [insurance-linked securities] funds they manage" to transfer risk.
Scor unveiled its Quantum Leap plan, which replaces the previous Vision in Action strategy, on Sept. 4. It includes a €250 million investment in technology.
The company also said it was reviewing several business lines, including marine, aviation, engineering and the provision of capital to third-party Lloyd's of London syndicates, because price increases in those lines had not been sufficient to make sustainable profits in 2020 and 2021. If prices continue increasing, the company would support or potentially expand those lines of business, but otherwise may reduce them.
At the same time, the company is looking to grow in areas where profits are sustainable, including the U.S., where rates have been rising. Conoscente told journalists in Monte Carlo that he expected U.S. price rises to "continue at least in 2020."
Another reason the U.S. business is ripe for expansion, he added, is that "our position in the U.S. is much smaller than in other markets, so there is still a lot of opportunity for us to grow there."
