EUR 850.00 For Business Accounts Only

Morningstar | Mediocre 2018 for Scor

Scor reported a mediocre set of 2018 results. While the operating result for the full year came in at EUR 660 million versus EUR 490 million a year prior, net income was EUR 320 million. Gross premiums were up 7%. We maintain our EUR 38 fair value estimate and narrow moat rating.

What we are not liking is the focus on U.S. treaty business, though we like specialty. The natural catastrophe ratio for the year was again quite high at 12.5%, made up of typhoons Jebi and Trami in Japan as well as U.S. hurricanes and wildfires. This is twice the annual budget of 6 percentage points of the net combined ratio for natural catastrophe losses. In terms of January renewals, Scor increased property and casualty premiums by just under 10% including risk-adjusted pricing of 1.3%. The greatest renewal growth was in the United States, and given the pricing and natural catastrophe environment, we are sceptical of this. Pricing remains stable, and Scor expect some hardening. The high frequency and lower severity of recent losses is taking away a strong catalyst for this.

The life business was also average, with strong premium growth driven by Asia-Pacific and protection. The technical margin came in 10 basis points lower at 7.0%.