SCOR delivers a strong performance for the first half of 2015 with a net income of EUR 327 million, up 28% from H1 2014
(Thomson Reuters ONE) -
Press Release
29 July 2015 - N° 21
Contact details
Marie-Laurence Bouchon
Group Head of Communications
+33 (0)1 58 44 76 10
mbouchon(at)scor.com
Bertrand Bougon
Head of Investor Relations
& Rating Agencies
+33 (0)1 58 44 71 68
bbougon(at)scor.com
www.scor.com
Twitter: (at)SCOR_SE
Half year 2015 results
SCOR delivers a strong performance for the first half
of 2015 with a net income of EUR 327 million,
up 28% from H1 2014
SCOR delivers strong half year results, thanks to the rigorous implementation of
its strategic plan "Optimal Dynamics" and the profitable development of its
franchise driven by both its Life and P&C business engines. SCOR is on track to
achieve the targets set out in its plan.
* Gross written premiums reach EUR 6,493 million, up 19.6% at current exchange
rates compared to H1 2014 (+5.3% at constant exchange rates). This
significant growth is driven by the contribution of the two business
engines:
* SCOR Global P&C gross written premiums increase by 19.1% at current
exchange rates (+5.9% at constant exchange rates) to EUR 2,859 million;
* SCOR Global Life gross written premiums reach EUR 3,634 million, up by
20.1% at current exchange rates (+4.9% at constant exchange rates).
* SCOR Global P&C delivers excellent H1 2015 technical profitability with a
net combined ratio of 90.9%, stable compared to H1 2014, in an environment
of low natural catastrophe losses but with an unusually high number of major
industrial losses.
* SCOR Global Life's technical margin stands at 7.2% for the first six months
of 2015, stable compared to the same period in 2014.
* SCOR Global Investments achieves a 3.4% return on invested assets thanks to
its active portfolio management.
* Group net income reaches EUR 327 million in the first half of 2015, an
increase of 27.7% compared to H1 2014. The annualized return on equity (ROE)
stands at 11.1%[1] or 1,112 bps above the risk-free rate[2].
* Shareholders' equity increases by 5.2% in the first six months of 2015 to
reach
EUR 6,026 million at 30 June 2015, compared to EUR 5,729 million at 31
December 2014, after the payment of EUR 260 million of dividends for the
year 2014. This translates into a book value per share of EUR 32.29 at 30
June 2015, compared to EUR 30.60 at 31 December 2014. This increase is
driven by a high net income contribution and strong foreign exchange impact
of EUR 280 million.
* SCOR's financial leverage stands at 24.1% at 30 June 2015, up from 23.1% at
31 December 2014 following the successful placement of EUR 250 million dated
subordinated debt issued with a coupon set at 3.25%. In addition, SCOR has
called two debts due in 2029 and 2020 respectively for EUR 10 million and
EUR 93 million. The latter will be accounted for in Q3 2015[3].
SCOR Group H1 and Q2 2015 key financial details:
+-------------------------+-------------------------+
| YTD | QTD |
| | |
In EUR millions | | |
(unaudited, rounded, at |H1 2015 H1 2014 Variation|Q2 2015 Q2 2014 Variation|
current exchange rates) | | |
+--------------------------+-------------------------+-------------------------+
|Gross written premiums | 6,493 5,427 19.6% | 3,369 2,758 22.2% |
+--------------------------+-------------------------+-------------------------+
|Group Cost Ratio | 5.1% 5.0% 0.1 pts | 5.1% 5.0% 0.1 pts |
+--------------------------+-------------------------+-------------------------+
|Net return on invested | 3.4% 2.9% 0.5 pts | 3.4% 3.1% 0.3 pts |
|assets | | |
+--------------------------+-------------------------+-------------------------+
| Annualized ROE(*) | 11.1% 10.3% 0.8 pts | 10.3% 9.8% 0.5 pts |
+--------------------------+-------------------------+-------------------------+
| Net income(**) | 327 256 27.7% | 152 121 25.6% |
+--------------------------+-------------------------+-------------------------+
| Shareholders' equity | 6,026 5,147 17.1% | 6,026 5,147 17.1% |
+--------------------------+-------------------------+-------------------------+
| P&C Combined ratio | 90.9% 90.9% 0.0 pts | 92.6% 92.8% -0.2 pts |
+--------------------------+-------------------------+-------------------------+
| Life technical margin | 7.2% 7.2% 0.0 pts | 7.2% 7.0% 0.2 pts |
+--------------------------+-------------------------+-------------------------+
(*)The ROE calculation method was adjusted to take into account material foreign
exchange rate movements that did not occur evenly through the reporting period.
A daily weighted average is applied for the currency or currencies that
experienced such movements and a simple weighted average is applied for the
other currencies. The ratio previously reported was 10.3% for H1 2014 (**)
Consolidated net income, Group share.
The first half of 2015 demonstrates the pertinence of the long-established
strategy put in place by SCOR and set out in the "Optimal Dynamics" plan. The
Group was able to deepen the franchise by leveraging on its diversified
portfolio and to enlarge its global presence, notably with the planned opening
of a branch in India and a representative office in Kenya.
The relevance of SCOR's strategy was affirmed by Fitch Ratings, which upgraded
SCOR's Insurer Financial Strength (IFS) rating to 'AA- stable outlook' from 'A+
positive outlook'. The rating agency notably mentioned having taken into account
"the development of SCOR's reinsurance franchise, the scale and diversity of
which have improved significantly through external growth and swift integration
of acquired operations, helping to generate a more stable level of
profitability". The rating agency also noted "the level of capitalisation that
Fitch considers to be very strong" as well as "a consistent and prudent
reserving philosophy".
Denis Kessler, Chairman & CEO of SCOR, comments: "In H1 2015, SCOR continues to
deploy its strategy based on the diversification of risks and deepening of the
franchise and to deliver high quality results. During the second quarter, the
Group has marked a significant milestone in terms of the preparations for
Solvency II, with the filing of its internal model to our primary regulator.
SCOR strengthens its positioning worldwide and is on track to meet its "Optimal
Dynamics" targets."
In the first six months of 2015, SCOR Global P&C delivers excellent technical
profitability, with a net combined ratio of 90.9%
SCOR Global P&C key figures:
+-------------------------+-------------------------+
In EUR millions | YTD | QTD |
(unaudited, rounded, at | | |
current exchange rates) |H1 2015 H1 2014 Variation|Q2 2015 Q2 2014 Variation|
+--------------------------+-------------------------+-------------------------+
|Gross written premiums | 2,859 2,400 19.1% | 1,461 1,198 22.0% |
+--------------------------+-------------------------+-------------------------+
|Combined ratio | 90.9% 90.9% 0.0 pts | 92.6% 92.8% -0.2 pts |
+--------------------------+-------------------------+-------------------------+
SCOR Global P&C posts gross written premium growth of +19.1% at current exchange
rates (+5.9% at constant exchange rates) to EUR 2,859 million in the first six
months of 2015, confirming the trends observed in the first quarter of 2015.
In the first half of 2015, SCOR Global P&C records excellent technical
profitability with a net combined ratio of 90.9%, driven by:
* a net attritional loss ratio of 57.5%, standing only marginally above the
57% assumption of the strategic plan[4] despite the unusually high number of
major industrial losses, notably an Offshore claim. This claim represents
2.3 percentage points of the 57.5% and accounts for EUR 55 million net
before tax;
* a low level of nat cat losses of 1.8% in the first six months of 2015;
* Commissions and Management Expenses in line with those of the first quarter
2015.
The normalized net combined ratio (with a natural catastrophe budget of 7%)
stands at 96.1% for the first half of 2015, impacted by the Offshore claim
mentioned above. The 94% normalized combined ratio assumption for 2015 remains
within reach.
SCOR Global P&C delivers strong renewals, achieving premium growth of 23.6% at
constant exchange rates with regard to the EUR 418 million of premiums up for
renewal in June and July 2015. The premiums up for renewal represent around 10%
of the total annual volume of SCOR Global P&C premiums. They are distributed
between P&C Treaties (69%) and Specialty Treaties (31%) in the three
geographical areas: Americas (59%), EMEA (32%), and Asia-Pacific (9%), with the
main countries renewing being the US (including nat cat cover), Australia, the
Middle East, South Africa and Latin America.
The main business line developments in the June-July 2015 renewals are as
follows:
* For P&C Treaties: gross premiums increase by 20% at constant exchange rates,
to
EUR 354 million. This growth comes from the US and to a lesser extent from
Asia-Pacific. It is mainly driven by new business with existing clients,
thanks to SCOR Global P&C's strategy based on proximity, listening to
clients' needs, and a global approach to client relationships across all of
their business lines;
* For Specialty Treaties: gross premiums increase by 32% at constant exchange
rates, to EUR 162 million. This growth is mainly driven by a large deal
secured in Aviation as part of a global insurer relationship. Excluding this
large deal, the growth would have been +4%.
SCOR Global P&C benefits from its well diversified franchise, with more than
60% of the premiums renewed in June-July 2015 relating to proportional business,
which is still favoured by more advantageous primary insurance trends:
- Overall price decrease of around -2.4%, mainly driven by non-proportional
business (in particular in EMEA). In the US cat market, the price decrease
slowed down thanks to a lower level of overcapacity, as demonstrated by the
decline and even disappearance of overplacements for a large number of
contracts.
- Price decrease contained at -1.0% on a year-to-date basis, demonstrating
SCOR Global P&C's ability to benefit from diversification and maintain the
quality of its portfolio.
SCOR Global Life expands global franchise in key markets, maintaining strong
technical performance
SCOR Global Life key figures:
+-------------------------+-------------------------+
In EUR millions | YTD | QTD |
(unaudited, rounded, at +-------------------------+-------------------------+
current exchange rates) |H1 2015 H1 2014 Variation|Q2 2015 Q2 2014 Variation|
+--------------------------+-------------------------+-------------------------+
|Gross written premiums | 3,634 3,027 20.1% | 1,908 1,560 22.3% |
+--------------------------+-------------------------+-------------------------+
|Life technical margin | 7.2% 7.2% 0.0 pts | 7.2% 7.0% 0.2 pts |
+--------------------------+-------------------------+-------------------------+
SCOR Global Life gross written premiums stand at EUR 3,634 million in the first
six months of 2015, up 20.1% at current exchange rates compared to the same
period last year (+4.9% at constant exchange rates), resulting from:
* Growth in all three business areas: Protection, Longevity and Financial
Solutions, with Longevity expected to meet the gross written premium
assumption for 2016 set out in "Optimal Dynamics" already in 2015;
* The successful execution of the business strategy in Asia-Pacific and
business underwritten in Latin America, providing a flow of new business
within Financial Solutions and Protection.
SCOR Global Life records a robust technical margin of 7.2%, thanks to:
* New business profitability, which continues to meet the Group ROE target of
1,000 bps above risk-free rate;
* The mortality experience of the in-force book of business, which is in line
with expectations.
SCOR Global Investments delivers a strong return on invested assets of 3.4%, in
a particularly low yield environment
SCOR Global Investments key figures:
+-------------------------+-------------------------+
In EUR millions | YTD | QTD |
(unaudited, rounded, at +-------------------------+-------------------------+
current exchange rates) H1 2014 H1 2014 Variation|Q2 2014 Q2 2014 Variation|
+--------------------------+-------------------------+-------------------------+
| Total investments |26,120 22,954 13.8% |26,120 22,954 13.8% |
| | | |
| * of which total |17,303 14,721 17.5% |17,303 14,721 17.5% |
| invested assets | | |
| | | |
| * of which total funds | 8,817 8,233 7.1% | 8,817 8,233 7.1% |
| withheld by cedants | | |
+--------------------------+-------------------------+-------------------------+
| Return on investments(*)| 2.9% 2.6% 0.3 pts | 2.9% 2.7% 0.2 pts |
+--------------------------+-------------------------+-------------------------+
| Return on invested | 3.4% 2.9% 0.5 pts | 3.4% 3.1% 0.3 pts |
|assets(**) | | |
+--------------------------+-------------------------+-------------------------+
((*)) Annualized, including interest on deposits (i.e. interest on funds
withheld).
((**)) Annualized, excluding interest on deposits (i.e. interest on funds
withheld).
In the current uncertain market environment, SCOR Global Investments momentarily
halts the rebalancing of the investment portfolio and increases liquidity by 4
percentage points to 9% of the invested assets portfolio, while maintaining the
fixed income portfolio duration (excluding cash) stable at 4.1 years at 30 June
2015.
SCOR Global Investments maintains its prudent investment strategy: the stable
average rating of AA- bears witness to the quality of the fixed income
portfolio. Moreover, SCOR Global Investments continues to have no exposure to
sovereign debt from the GIIPS countries[5].As at 30 June 2015, the expected cash
flow on the fixed income portfolio over the next 24 months stands at EUR 5.8
billion (including cash and short-term investments), facilitating dynamic
management of the reinvestment policy in view of a possible rise in interest
rates.
During the first half of 2015, invested assets generate a strong financial
contribution of EUR 297 million. The active management policy employed by SCOR
Global Investments has enabled the Group to record capital gains of EUR 128
million in H1 2015, coming mainly from the equity portfolio and to a lesser
extent from the fixed income portfolio.
The return on invested assets stands at 3.4% for the first six months of 2015,
compared to 2.9% for the same period last year. Taking account of funds withheld
by cedants, the net rate of return on investments stands at 2.9% for the first
half of 2015.
Invested assets (excluding funds withheld by cedants) stand at EUR 17,303
million as at 30 June 2015, and are composed as follows: 8% cash, 79% fixed
income (of which 1% are short-term investments), 3% loans, 3% equities, 5% real
estate and 2% other investments. Total investments, including EUR 8,817 million
of funds withheld, stand at EUR 26,120 million at 30 June 2015, compared to EUR
24,854 million at 31 December 2014.
*
* *
APPENDIX
1 - P&L Key figures H1 and Q2 2015
+-------------------------+-------------------------+
In EUR millions | YTD | QTD |
(unaudited, rounded, at | | |
current exchange rates) |H1 2015 H1 2014 Variation|Q2 2015 Q2 2014 Variation|
+--------------------------+-------------------------+-------------------------+
|Gross written premiums | 6,493 5,427 19.6% | 3,369 2,758 22.2% |
+--------------------------+-------------------------+-------------------------+
|P&C gross written premiums| 2,859 2,400 19.1% | 1,461 1,198 22.0% |
+--------------------------+-------------------------+-------------------------+
|Life gross written | 3,634 3,027 20.1% | 1,908 1,560 22.3% |
|premiums | | |
+--------------------------+-------------------------+-------------------------+
|Net investment income | 365 281 29.9% | 185 149 24.2% |
+--------------------------+-------------------------+-------------------------+
|Operating results | 540 403 34.0% | 253 193 31.1% |
+--------------------------+-------------------------+-------------------------+
|Net income(1) | 327 256 27.7% | 152 121 25.6% |
+--------------------------+-------------------------+-------------------------+
|Earnings per share (EUR) | 1.77 1.38 27.9% | 0.82 0.65 26.1% |
+--------------------------+-------------------------+-------------------------+
|Operating cash flow | 130 2 x 64 | 68 103 -34.0% |
+--------------------------+-------------------------+-------------------------+
1: Consolidated net income, Group share.
2 - P&L Key ratios H1 and Q2 2015
+-------------------------+-------------------------+
(Unaudited) | YTD | QTD |
| | |
|H1 2015 H1 2014 Variation|Q2 2015 Q2 2014 Variation|
+--------------------------+-------------------------+-------------------------+
|Return on investments( 1) | 2.9% 2.6% 0.3 pts | 2.9% 2.7% 0.2 pts |
+--------------------------+-------------------------+-------------------------+
|Return on invested assets | 3.4% 2.9% 0.5 pts | 3.4% 3.1% 0.3 pts |
|(1,2) | | |
+--------------------------+-------------------------+-------------------------+
|P&C net combined ratio( 3)| 90.9% 90.9% 0.0 pts | 92.6% 92.8% -0.2 pts |
+--------------------------+-------------------------+-------------------------+
|Life technical margin( 4) | 7.2% 7.2% 0.0 pts | 7.2% 7.0% 0.2 pts |
+--------------------------+-------------------------+-------------------------+
|Group cost ratio( 5) | 5.1% 5.0% 0.1 pts | 5.1% 5.0% 0.1 pts |
+--------------------------+-------------------------+-------------------------+
|Return on equity (ROE)(6) | 11.1% 10.3% 0.8 pts | 10.3% 9.8% 0.5 pts |
+--------------------------+-------------------------+-------------------------+
1: Annualized; 2: Excluding funds withheld by cedants; 3: The combined ratio is
the sum of the total claims, the total commissions and the total P&C management
expenses, divided by the net earned premiums of SCOR Global P&C; 4: The
technical margin for SCOR Global Life is the technical result divided by the net
earned premiums of SCOR Global Life; 5: The cost ratio is the total management
expenses divided by the gross written premiums; 6: Annualized. The ROE
calculation method was adjusted to take into account material foreign exchange
rate movements that did not occur evenly through the reporting period. A daily
weighted average is applied for the currency or currencies that experienced such
movements and a simple weighted average is applied for the other currencies. The
ratio previously reported was 10.3% for H1 2014.
3 - Balance sheet Key figures as at 30 June 2015
+--------------------------------------------------+
| Key Figures |
In EUR millions +--------------------------------------------------+
(unaudited, rounded, at |As at 30 June 2015 As at 31 December Variation|
current exchange rates) | 2014 |
+---------------------------+------------------+---------------------+---------+
|Total investments( 1,2) | 26,120 | 24,854 | 5.1% |
+---------------------------+------------------+---------------------+---------+
|Technical reserves (gross) | 27,162 | 25,839 | 5.1% |
+---------------------------+------------------+---------------------+---------+
|Shareholders' equity | 6,026 | 5,729 | 5.2% |
+---------------------------+------------------+---------------------+---------+
|Book value per share (EUR) | 32.29 | 30.60 | 5.5% |
+---------------------------+------------------+---------------------+---------+
|Financial leverage ratio | 24.1% | 23.1% | 1.0 pts |
+---------------------------+------------------+---------------------+---------+
|Total liquidity | 1,663 | 940 | 76.9% |
+---------------------------+------------------+---------------------+---------+
1: Total investment portfolio includes both invested assets and funds withheld
by cedants, accrued interest, cat bonds, mortality bonds and FX derivatives; 2:
Excluding 3rd party net insurance business investments.
*
* *
Forward-looking statements
SCOR does not communicate "profit forecasts" in the sense of Article 2 of (EC)
Regulation n°809/2004 of the European Commission. Thus, any forward-.looking
statements contained in this communication should not be held as corresponding
to such profit forecasts. Information in this communication may include
"forward-looking statements", including but not limited to statements that are
predictions of or indicate future events, trends, plans or objectives, based on
certain assumptions and include any statement which does not directly relate to
a historical fact or current fact. Forward-looking statements are typically
identified by words or phrases such as, without limitation, "anticipate",
"assume", "believe", "continue", "estimate", "expect", "foresee", "intend", "may
increase" and "may fluctuate" and similar expressions or by future or
conditional verbs such as, without limitations, "will", "should", "would" and
"could." Undue reliance should not be placed on such statements, because, by
their nature, they are subject to known and unknown risks, uncertainties and
other factors, which may cause actual results, on the one hand, to differ from
any results expressed or implied by the present communication, on the other
hand.
Please refer to SCOR's Document de référence filed with the AMF on 20 March
2015 under number D.15-0181 (the "Document de référence"), for a description of
certain important factors, risks and uncertainties that may affect the business
of the SCOR Group. As a result of the extreme and unprecedented volatility and
disruption of the current global financial crisis, SCOR is exposed to
significant financial, capital market and other risks, including movements in
interest rates, credit spreads, equity prices, and currency movements, changes
in rating agency policies or practices, and the lowering or loss of financial
strength or other ratings.
The Group's financial information is prepared on the basis of IFRS and
interpretations issued and approved by the European Union. This financial
information constitutes a set of financial statements for an interim period as
defined by IAS 34 "Interim Financial Reporting" which may not necessarily be
indicative of full year financial results.
--------------------------------------------------------------------------------
[1] The ROE calculation method was adjusted to take into account material
foreign exchange rate movements that did not occur evenly through the reporting
period. A daily weighted average is applied for the currency or currencies that
experienced such movements and a simple weighted average is applied for the
other currencies. The ratio previously reported was 10.3% for H1 2014.
[2] Three-month risk-free rates.
[3]The financial leverage would be 23.2% if the EUR 93 million debt was called
and accounted for in Q2 rather than in Q3.
[4] See page 46 of the 2014 Investor day presentation available on www.scor.com.
[5] Greece, Ireland, Italy, Portugal, Spain.
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[HUG#1941806]
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