Scor Se · EURONEXT:SCR
Scor — FY2019 Earnings Presentation
61 slides from Scor's earnings presentation, Feb 27, 2020
Slide 1: SCOR 2019 results
SCOR 2019 results February 27, 2020 SCOR in 2019: Profitable growth, strong capital generation, high solvency Net income of EUR 422 million and dividend of EUR 1.80 per share
Slide 2: Disclaimer
Disclaimer General: Numbers presented throughout this report may not add up precisely to the totals in the tables and text. Percentages and percent changes are calculated on complete figures (including decimals); therefore the presentation might contain immaterial differences in sums and percentages
Slide 3: Agenda: SCOR's FY 2019 results
Agenda: SCOR’s FY 2019 results A Delivering profitable growth in 2019 B Solid operating capital generation C Leveraging differentiated success factors 3
Slide 4: SCOR navigates 2019 with disciplined franchise expansion
SCOR navigates 2019 with disciplined franchise expansion, leveraging its balanced portfolio between Life and P&C, and demonstrating strong capital generation Controlled growth Resilient profitability Strong solvency (GWP in EUR m) (RoE in %) (Estimated solvency ratio in %) +4.1%1) (+7.1% at current
Slide 5: SCOR delivers solid performance in 2019
SCOR delivers solid performance in 2019 Premium growth Net combined ratio Premium growth +12.7%1) 99.0% +4.1%1) +15.8% at current FX -0.4 pts compared to 2018 +7.1% at current FX Net income EUR 422 million Premium growth Technical margin -1.8%1)2) 7.5% Return on Equity +1.2% at current FX +0.5 pts c
Slide 6: Strong book value increase to EUR 6.4 billion in 2019
SCOR records a strong book value increase to EUR 6.4 billion in 2019 Shareholders’ equity (in EUR m) Financial leverage1) 27.5% -1.1 pts 26.4% Book value per share2) € 31.53 +8.0% € 34.06 Debt callable Strong increase in in Q4 20206) book value per 2 409 share of 8.0% 2 277 +126 Shareholders’ +3
Slide 7: Strong operating cash flows and liquidity position
SCOR delivers strong positive operating cash flows of EUR 841 million, with a very strong liquidity position at EUR 1.5 billion (in EUR m) 2019 2018 Key comments Cash and cash equivalents at January 1 1 175 1 001 Net cash flows from operations, of which: 841 891 SCOR’s business model delivering st
Slide 8: SCOR Global P&C adds ~EUR 1.0 billion of GWP in 2019
SCOR Global P&C adds ~EUR 1.0 billion of GWP in 2019 whilst demonstrating technical profitability and absorbing a high level of natural catastrophes GWP Net Combined ratio (in EUR m) (in %) +15.8%1) With a resilient net combined ratio at 99.0% in (+12.7% at 99.4% 99.0% 2019, SCOR Global P&C absorb
Slide 9: SCOR Global P&C confirms the assumptions of Quantum Leap
SCOR Global P&C delivers profitable growth and confirms the assumptions of “Quantum Leap” Net Combined ratio GWP assumptions (in %) (in EUR bn) ~95-96% Selective management Very well positioned and actions to optimize +4-8% seizing opportunities in an underwriting technical p.a. evolving market
Slide 10: SCOR Global Life's profitable growth
SCOR Global Life’s profitable growth is driven by continued successful franchise expansion GWP Life Technical Margin2) (in EUR m) (in %) +1.2%1) (-1.8% at constant FX) 7.5% Impact from Financial 0.4% Solutions transactions Renewal in 2019 of 9 083 9 194 certain Financial Solutions Strong net tec
Slide 11: SCOR Global Investment delivers a strong ROIA of 3.0%
SCOR Global Investment delivers a strong ROIA of 3.0% in 2019, benefiting from capital gains, whilst pursuing a prudent asset management strategy Total invested assets: EUR 20.6 billion (at 31/12/2019) Return on invested assets (in %) Others 3% Liquidity 6% Real estate 3% Cash 6% Equities 2% Short-t
Slide 12: Capital management policy and dividend of EUR 1.80 per share
SCOR pursues its attractive capital management policy for its shareholders and proposes a strong dividend of EUR 1.801) per share for 2019 Dividend per share and pay-out ratio Optimized capital management process and dividend policy Hurricane Michael and Payout ratio Florence, Typhoons Jebi and Tram
Slide 13: Agenda: SCOR's FY 2019 results
Agenda: SCOR’s FY 2019 results A Delivering profitable growth in 2019 B Solid operating capital generation C Leveraging differentiated success factors 13
Slide 14: YE 2019 solvency ratio stands at 226%
SCOR’s YE 2019 solvency ratio stands at 226%, above the upper part of the optimal range driven by strong operating capital generation Solvency ratio evolution (in %) +31% +4% -2% Operating impact: -17% 220% -5% 226% -3% 223% Strong contribution to solvency driven by 215% -1% Optimal both new busin
Slide 15: Very strong operating capital generation close to ~EUR 1.0 bn
SCOR delivers very strong operating capital generation close to ~EUR 1.0 bn In EUR m (rounded) EOF1) Opening balance at YE 2019 9 062 Key comments Regulatory and other model changes +156 Strong Value of New Business (VNB) supported by positive contribution from both business units. Annual growth o
Slide 16: Well-balanced risk portfolio creates diversification benefit
SCOR’s well-balanced risk portfolio creates an excellent diversification benefit YE 2019 risk capital breakdown by risk category (in EUR millions, rounded) P&C Underwriting 3 578 SCOR’s balanced P&C and Life portfolio and business Life Underwriting 3 602 model strength translate into Market a very
Slide 17: All sensitivities for YE 2019 at upper end or above optimal range
All sensitivities for YE 2019 stand at the upper end or above the optimal range YE 2019 solvency ratio sensitivities Sensitivities in %pts Optimal range 226% 12 +50bps in IR-rates -11 -50bps in IR-rates -2 +10% in USD 3 -10% in USD -4 -25% in equity returns -3 +50 bps in credit spreads (corporate cr
Slide 18: Agenda: SCOR's FY 2019 results
Agenda: SCOR’s FY 2019 results A Delivering profitable growth in 2019 B Solid operating capital generation C Leveraging differentiated success factors 18
Slide 19: SCOR Global P&C has a limited exposure to social inflation
SCOR Global P&C has a limited exposure to social inflation Modest US Casualty overall portfolio : ~12% of P&C reserves; ~11% of P&C GWP Very limited or no appetite to lines most impacted by social inflation Limited exposure − No appetite for workers’ compensation − Very limited appetite for comm
Slide 20: No foreseen material impact on book from COVID-19
Based on current public and client information available as at present, SCOR does not foresee material impact on book from COVID-19, and continues to closely monitor At this point, no visible impacts on financials, and based on current public and client information available, SCOR does not foresee
Slide 21: Full economic value not recognized by accounting standards
SCOR’s full economic value – and notably of its Life book – is not properly recognized by the current accounting standards YE 2019 IFRS Shareholders Equity to Eligible Own Funds Reconciliation (in EUR m, rounded) -4 083 -974 2 540 7 269 -335 -453 -2 540 11 126 10 791 10 338 10 337 9 560 More than
Slide 22: Strong return on economic capital
SCOR creates future value and delivers a strong return on economic capital SCOR is well positioned on a Solvency II RoE basis 14.8% Own Funds Generation S2 RoE % = Unrestricted Tier 1 11.3% 9.8% 8.1% In EUR millions 2019 2018 Own Funds Generation (OFG)1) 996 785 Unrestricted Tier 1 – opening (UT1)2)
Slide 23: Quantum Leap accelerates delivery of large digital projects
In line with the “Quantum Leap” strategic plan, SCOR accelerates the delivery of ambitious large digital projects to enhance its value proposition • Investing in technology innovation to support business development • Generating efficiencies and optimize operations • Leveraging new technology (such
Slide 24: SCOR aims to create value for all stakeholders
SCOR aims to create value in its activities for all stakeholders Sustainability ambitions Strong ESG rating positions “Contribute to the welfare and resilience of Society by 1st quartile helping to protect insureds against the risk they face” 1st quartile Managing the transition, physical, and liabi
Slide 25: Investor Relations contacts and upcoming events
Investor Relations contacts and upcoming events FORTHCOMING SCHEDULED EVENTS April 29, 2020 July 7, 2020 July 23, 2020 October 22, 2020 — — — — SCOR Group SCOR Group SCOR Group SCOR Group Q1 2020 results Investor Day Q2 2020 results Q3 2020 results (Paris) SCOR IS SCHEDULED TO ATTEND THE FOLLOWING I
Slide 26: Appendices
A P&L B Balance sheet & Cash flow APPENDICES C Calculation of EPS, Book value per share and RoE D Expenses & cost ratio E SCOR Global P&C F SCOR Global Life G SCOR Global Investments H “Quantum Leap” targets and assumptions I Debt J Estimated sensitivities on net income and shareholders’ equity K So
Slide 27: Appendix A: SCOR Q4 2019 YTD financial details Group
Appendix A: SCOR Q4 2019 YTD financial details In EUR millions (rounded) 2019 2018 Variation Variation at current FX at constant FX Gross written premiums 16 341 15 258 7.1% 4.1% Net earned premiums 14 058 13 611 3.3% 0.4% Operating results 713 658 8.4% Net income 422 322 31.1% Group cost ratio 4.7%
Slide 28: Appendix A: Consolidated statement of income, FY 2019
Appendix A: Consolidated statement of income, FY 2019 In EUR millions (rounded) 2019 2018 Gross written premiums 16 341 15 258 Change in gross unearned premiums -446 -203 Revenues associated with life financial reinsurance contracts 19 11 Gross benefits and claims paid -11 792 -11 168 Gross commissi
Slide 29: Appendix A: Consolidated statement of income by segment, FY 2019
Appendix A: Consolidated statement of income by segment, FY 2019 In EUR millions (rounded) 2019 2018 Group Group Life P&C Total Life P&C Total Functions Functions Gross written premiums 9 194 7 147 16 341 9 083 6 175 15 258 Change in gross unearned premiums -11 -435 -446 -42 -161 -203 Revenues assoc
Slide 30: Appendix A: SCOR Q4 2019 QTD financial details Group
Appendix A: SCOR Q4 2019 QTD financial details In EUR millions (rounded) Q4 2019 Q4 2018 Variation at current FX Variation at constant FX Gross written premiums 4 286 3 922 9.3% 6.8% Net earned premiums 3 539 3 521 0.5% -1.9% Operating results 46 -7 n/a Net income 21 -20 n/a Group cost ratio 4.6% 4.
Slide 31: Appendix A: Consolidated statement of income, Q4 2019 QTD
Appendix A: Consolidated statement of income, Q4 2019 QTD In EUR millions (rounded) Q4 2019 Q4 2018 Gross written premiums 4 286 3 922 Change in gross unearned premiums -177 -3 Revenues associated with life financial reinsurance contracts 4 4 Gross benefits and claims paid -3 279 -3 255 Gross commis
Slide 32: Appendix A: Consolidated statement of income by segment Q4 2019 QTD
Appendix A: Consolidated statement of income by segment Q4 2019 QTD In EUR millions (rounded) Q4 2019 Q4 2018 Group Life P&C Group functions Total Life P&C Total functions Gross written premiums 2 403 1 883 4 286 2 340 1 582 3 922 Change in gross unearned premiums 1 -178 -177 2 -5 -3 Revenues associ
Slide 33: Appendix B: Consolidated balance sheet – Assets
Appendix B: Consolidated balance sheet – Assets In EUR millions (rounded) 2019 2018 Goodwill 788 788 Goodwill arising from non insurance activities 82 71 Value of business acquired 1 302 1 471 Insurance business investments 30 283 28 586 Real estate investments 661 685 Available-for-sale investments
Slide 34: Appendix B: Consolidated balance sheet – Liabilities & shareholders' equity
Appendix B: Consolidated balance sheet – Liabilities & shareholders’ equity In EUR millions (rounded) 2019 2018 Group shareholders’ equity 6 348 5 800 Non-controlling interest 26 28 Total shareholders’ equity 6 374 5 828 Financial debt 3 027 2 831 Subordinated debt 2 409 2 277 Real estate financing
Slide 35: Appendix B: Consolidated statements of cash flows
Appendix B: Consolidated statements of cash flows In EUR millions (rounded) 2019 2018 Cash and cash equivalents at the beginning of the period 1 175 1 001 Net cash flows in respect of operations 841 891 Cash flow in respect of changes in scope of consolidation -11 9 Cash flow in respect of acquisiti
Slide 36: Appendix B: Net contract liabilities by segment
Appendix B: Net contract liabilities by segment Net liabilities Life & P&C (in EUR millions, rounded) 29 009 28 113 48% 50% SCOR Global Life SCOR Global P&C 50% 52% Q4 2018 Q4 2019 36
Slide 37: Appendix C: Calculation of EPS, book value per share and RoE
Appendix C: Calculation of EPS, book value per share and RoE Earnings per share calculation Post-tax Return on Equity (RoE) 2019 2018 Group net income1) (A) 422 322 2019 2018 Average number of opening shares (1) 193 085 792 193 500 317 Group net income1) 422 322 Impact of new shares issued (2) -4 16
Slide 38: Appendix C: Calculation of the risk-free rate component of RoE target
Appendix C: Calculation of the risk-free rate component of “Quantum Leap” RoE target 3) 5-year daily spot rates 1) X Currency mix = Weighted average rates EUR 2) USD GBP X EUR USD GBP EUR USD GBP Total 1st of January 2015 0.01 1.65 1.17 51% 36% 13% 0.01 0.59 0.15 0.75 2nd of January 2015 0.00 1.61 1
Slide 39: Appendix D: Reconciliation of total expenses to cost ratio
Appendix D: Reconciliation of total expenses to cost ratio In EUR millions (rounded) 2019 2018 Total expenses as per Profit & Loss account -874 -831 ULAE (Unallocated Loss Adjustment Expenses) -63 -62 Total management expenses -937 -893 Investment management expenses 75 68 Total expense base -862 -8
Slide 40: Appendix E: Calculation of P&C net combined ratio
Appendix E: Calculation of P&C net combined ratio In EUR millions (rounded) 2019 2018 Gross earned premiums1) 6 712 6 014 Ceded earned premiums2) -991 -798 Net earned premiums (A) 5 721 5 216 Gross benefits and claims paid -4 576 -3 942 Ceded claims 682 472 Total net claims (B) -3 894 -3 470 Loss ra
Slide 41: Appendix E: Normalized net combined ratio
Appendix E: Normalized net combined ratio QTD YTD 1 2 3 4 5 1+2+3+5 1 2 3 4 5 1+2+3+5 Published net Normalized Published net Normalized Reserve Cat ratio delta Reserve Cat ratio delta combined One off Cat ratio net combined combined One off Cat ratio net combined release from budget1) release from b
Slide 42: Appendix F: Calculation of the Life technical margin
Appendix F: Calculation of the Life technical margin In € millions (rounded) 2019 2018 Gross earned premiums1) 9 183 9 041 Ceded earned premiums2) -846 -646 Net earned premiums (A) 8 337 8 395 Net technical result 472 444 Interest on deposits 152 145 Technical result (B) 624 589 Net technical margin
Slide 43: Appendix G: Investment portfolio asset allocation as of 31/12/2019
Appendix G: Investment portfolio asset allocation as of 31/12/2019 Tactical Asset Allocation (in %, rounded) ‘‘Quantum Leap’’ Strategic Asset Allocation (in % of invested assets) 2018 2019 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Min Max Cash 5% 5% 5% 5% 6% 7% 8% 6% 5.0%1) - Fixed Income 81% 81% 82% 82% 81% 79% 79%
Slide 44: Appendix G: Details of investment returns
Appendix G: Details of investment returns In EUR millions (rounded) Annualized returns: 2018 2019 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Total net investment income1) 134 145 146 190 615 156 153 187 175 671 Average investments 26 629 26 754 26 842 26 857 26 770 26 962 27 122 27 482 28 108 27 418 Return on In
Slide 45: Appendix G: Investment income development
Appendix G: Investment income development In EUR millions (rounded) 2018 2019 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Investment revenues on invested assets 101 115 120 127 463 131 124 124 132 511 Realized gains/losses on fixed income 1 0 -0 4 5 0 9 6 19 34 Realized gains/losses on loans 0 0 -0 0 0 0 0 0 0 0
Slide 46: Appendix G: Government bond portfolio as of 31/12/2019
Appendix G: Government bond portfolio as of 31/12/2019 By region (In %. Total € 5.6 billion) Top exposures (In %. Total € 5.6 billion) 2019 5% USA 46% China 13% 24% UK 6% EU (Non-UK) Canada 5% North America Australia 4% UK Republic of Korea 4% China Supranational1) 3% 13% 52% Other India 3% Singapor
Slide 47: Appendix G: Corporate bond portfolio as of 31/12/2019
Appendix G: Corporate bond portfolio as of 31/12/2019 By rating (In %. Total € 8.8 billion) By sector/type (In %. Total € 8.8 billion) 1% 2019 2% Financial1) 25% 5% Consumer, Non-cyclical 23% 13% AAA Industrial 11% Communications 11% AA Consumer, Cyclical 11% 32% A Technology 8% BBB Energy 5% Utilit
Slide 48: Appendix G: Banks corporate bond portfolio as of 31/12/2019
Appendix G: ‘‘Banks’’ corporate bond portfolio as of 31/12/2019 By rating (In %. Total € 1.7 billion) By sector/type (In %. Total € 1.7 billion) 1% 6% 13% 29% AA Senior A Subordinated Hybrid1) BBB 58% 93% By region (In %. Total € 1.7 billion) Top exposures (In %. Total € 1.7 billion) 2019 USA 39% 10
Slide 49: Appendix G: Structured & securitized product portfolio
Appendix G: Structured & securitized product portfolio as of 31/12/2019 By rating (In %. Total € 0.4 billion) By portfolio (In %. Total € 0.4 billion) 1% <1% 2% AAA 6% ABS AA 38% CLO A CDO BBB 57% MBS <BBB Other NR 1% 2% 2% 91% <1% 49
Slide 50: Appendix G: Loans, equity, real estate and other investment portfolios
Appendix G: Loans, equity, real estate and other investment portfolios as of 31/12/2019 Loans portfolio by underlying assets (In %. Total € 1.0 billion) Equity portfolio by underlying assets (In %. Total € 0.4 billion) 7% Infrastructure Common shares 28% loans 39% Convertible bonds Real estate loans
Slide 51: Appendix G: Reconciliation of IFRS asset classification to IR presentation
Appendix G: Reconciliation of IFRS asset classification to IR presentation as of 31/12/2019 In EUR millions (rounded) Total Funds withheld Total Fixed Other Total Accrued Technical Cash Loans Equities Real estate invested by cedants & IFRS income investments investments interest items1) assets other
Slide 52: Appendix G: Reconciliation of asset revaluation reserve
Appendix G: Reconciliation of asset revaluation reserve In EUR millions (rounded) 31/12/2018 31/12/2019 Variance YTD Fixed income URGL -357 310 667 Government bonds & assimilated1) -17 41 57 Covered & agency MBS -27 17 44 Corporate bonds -306 257 563 Structured products -7 -5 2 Loans URGL -4 -0 4 Eq
Slide 53: Appendix H: Quantum Leap targets and assumptions
Appendix H: “Quantum Leap” targets and assumptions Profitability (RoE) target Solvency target RoE above 800 bps over the 5-year Solvency ratio in the optimal risk-free rates across the cycle1) 185% to 220% range Underlying strategic assumptions across “Quantum Leap” (2019-2021) GWP annual growth GWP
Slide 54: Appendix I: Debt structure as of 31/12/2019
Appendix I: Debt structure as of 31/12/2019 1) Type Original amount issued Issue date Maturity Floating/ fixed rate Coupon + step-up Initial rate at 3.875% p.a. until October 1, 2025, Undated subordinated EUR 250 1 October Perpetual Fixed revised every 11 years notes PerpNC11 million 2014 at 11-year
Slide 55: Appendix J: Estimated sensitivity to interest rates and equity markets
Appendix J: Estimated sensitivity to interest rates and equity markets Estimated sensitivity to interest rate & equity market movements on net income and shareholders’ equity Shareholders’ Shareholders’ Net income2)3) 2019 Net income2)3) 2018 equity2)3) impact 2019 equity2)3) impact 2018 Interest ra
Slide 56: Appendix J: Estimated sensitivity to FX movements
Appendix J: Estimated sensitivity to FX movements Estimated sensitivity to FX movements on shareholders’ equity Shareholders’ Shareholders’ FX movements equity impact 2019 equity impact 2018 USD/EUR 10% 487 357 in % of shareholders’ equity 7.7% 6.2% USD/EUR -10% -487 -357 in % of shareholders’ equit
Slide 57: Appendix K: Solvency scale confirmed for Quantum Leap
Appendix K: Solvency scale well established and confirmed for “Quantum Leap” Possible management responses Escalation Over Action (examples) level capitalized Consider special dividends 300% SR1) Consider acquisitions Buyback shares / hybrid debt Redeploy capital Board/AGM Increase dividend
Slide 58: Appendix K: Glossary on solvency
Appendix K: Glossary on solvency Capital management Impact on Eligible Own Funds of dividends, share buy backs and changes to hybrid debt Diversification Diversification reduces accumulated risks whose occurrences are not fully dependent EBS (Economic Balance Sheet) Economic valuation of the balance
Slide 59: Appendix L: SCOR's Financial Strength Rating since 2003
Appendix L: SCOR’s Financial Strength Rating has improved dramatically since 2003 S&P rating Moody’s rating AA+ Aa1 strong strong Very Very AA+ Aa2 AA- Aa3 A+ + A1 + Secure Strong Secure Strong A+ + A2 + A- + A3 + BBB+ + AA- Baa1 + Aa3 Good Good BBB+ Stable Outlook Baa2 + Stable Outlook BBB- Baa3 20
Slide 60: Appendix M: SCOR's listing information
Appendix M: SCOR’s listing information Euronext Paris listing SIX Swiss Exchange listing ADR programme SCOR’s shares are publicly traded SCOR’s shares are publicly traded SCOR’s ADR shares trade on the on the Eurolist by the Euronext on the SIX Swiss Exchange OTC market Paris stock market Main infor
Slide 61: Appendix N: Strategy recognized by industry experts
Appendix N: The strength of the SCOR group’s strategy is recognized by industry experts 2016 2017 2018 2019 SCOR: ‘‘Latin SCOR: ‘‘Romanian SCOR: Reinsurer CRO of the year: American Reinsurer Reinsurer of the of the year Frieder Knüpling of the Year’’ Year’’ Chief Risk Officer SCOR Global Life: SCOR: