In the first nine months of 2021, Covid-19 claims continued to be manageable, standing on the Life side at EUR 299 million(net of retrocession and before tax), of which EUR 241 million (net of retrocession and before tax) comes from the U.S. mortality portfolio, and increasing by EUR 75 million (net of retrocession and before tax) in the third quarter of 2021.
On the P&C side, Covid-19 claims have been stable since June 30, 2021 standing at a total of EUR 109 million in the first nine months of 2021 (net of retrocession and before tax). In addition, SCOR benefited from a positive one-off revaluation impact of EUR 64 million related to the IPO of Doma Holdings, demonstrating the Group's successful investment strategy in new ventures focusing on Insurtech-driven underwriting companies.
- Gross written premiums of EUR 13,047 million in the first nine months of 2021 are up 10.1% at constant exchange rates compared with the first nine months of 2020 (up 6.2% at current exchange rates).
- SCOR Global P&C gross written premiums are up 16.7% at constant exchange rates compared with the first nine months of 2020 (up 12.1% at current exchange rates), benefiting from a strong market environment both in reinsurance and insurance markets. The net combined ratio for the first nine months stands at 102.7%, including 14.8% of natural catastrophes and 2.3% of Covid-19 related claims.
- SCOR Global Life gross written premiums are up 5.0% at constant exchange rates compared with the first nine months of 2020 (up 1.7% at current exchange rates). Over the period, SCOR Global Life delivers a technical margin of 11.3%, driven by the recent Life in-force transaction.
- SCOR Global Investments delivers a return on invested assets of 2.3%8 in the first nine months of 2021.
- The Group cost ratio, which stands at 4.3% of gross written premiums in the first nine months of 2021, is more favorable than the "Quantum Leap" assumption of ~5.0%.
- The Group net income stands at EUR 339 million in the first nine months of 2021. The annualized return on equity (ROE) stands at 7.3%, 683 bps above the risk-free rate9.
- The Group generates high operating cash flows of EUR 2,018 million in the first nine months of 2021 of which EUR 860 million relate to the recent Life in-force transaction. The Group's total liquidity is very strong, standing at EUR 3.3 billion as of September 30, 2021.
- The Group shareholders' equity stands at EUR 6,315 million10 as of September 30, 2021. This results in a book value per share of EUR 34.13, compared to EUR 33.01 as of December 31, 2020.
- The Group financial leverage stands at 28.0% as of September 30, 2021, down 0.5% points compared to December 31, 2020.
- The Group solvency ratio is estimated at 225%11 on September 30, 2021, above the optimal solvency range of 185% - 220% as defined in the "Quantum Leap" strategic plan.
A share buyback is an accretive way to deploy capital and deliver further value to SCOR's shareholders.
The recent Life retrocession in-force transaction, which closed on the last day of the second quarter, unlocked significant value, generating USD 1 billion in cashflows while increasing the Group's degrees of freedom for value-accretive capital management. As at the end of Q2 2021, SCOR's estimated solvency position was extremely strong, as demonstrated by a solvency ratio of 245%, significantly above the upper end of its optimal solvency range of 185%-220%.
SCOR has assessed the various options to optimally deploy capital, to create long-term value for SCOR's shareholders and revert to the upper end of the 185-220% optimal solvency range. As presented at the September 8th Investor Day, SCOR will continue to proactively deploy capital, to:
- Seize profitable growth opportunities in the continuously hardening P&C market, and re-balance its exposure towards P&C business, while shifting its portfolio mix away from Natural Catastrophes business volatility, and leveraging retrocession to protect earnings;
- Actively pursue diversification of its investment portfolio into value-creation assets to target 10% exposure by the end of 2022, as well as by deploying its excess liquidity into corporate bond (the reinvestment of excess liquidity program is on track, and will be finalized by Q4 2021), and maintaining a largely matched duration as it has over the last few years.
In view of this capital position, noting that the U.S. hurricane season is coming to an end and that the regulatory constraints against capital distribution (dividends and share buy-backs) were lifted on October 1, 2021 by the ACPR (Prudential Control and Resolution Authority), SCOR launches a share buy-back program of EUR 200 million that will start on October 28, 2021, and will be fully executed in the market at the latest by the end of March 2022. Execution of the share buy-back will be subject to market conditions. This share buy-back program is expected to impact the Group's solvency ratio by c. -4 ppts, to 225%. SCOR intends to allocate the repurchased shares to cancellation.
Denis KESSLER, Chairman of SCOR, commented: "Given the recent lift of the regulatory constraints against capital distribution, the Board of Directors has decided to launch a EUR 200 million share buy-back program, considering on the one hand the very strong solvency position of the Group after taking account of the level of capital required by the company to pursue its profitable growth in 2022, and on the other the high net asset value per share, which makes such an operation highly beneficial to SCOR shareholders. Furthermore, the Board has reaffirmed the attractive dividend policy actively pursued by the Group over the past few years."