EUR 850.00 For Business Accounts Only

Morningstar | SCRYY Updated Forecasts and Estimates from 20 May 2019

Scor's underlying core technical underwriting ability is similar to that of its peers. We believe the business benefits from a narrow moat due to a higher proportion of life reinsurance, which we view as structurally moaty. Scor's latest optimisation plan, Vision in Action, targets return on equity at or above 800 basis points over a five-year risk-free rate. Operationally, Scor is focusing on an under-represented U.S. property and casualty market and emerging markets within life and health.Life insurance markets vary significantly, and the impact of a potentially adverse trend risk or large pandemic means primary insurers require a strong offering of value-added services. The sector has consolidated, with around 80% of global life reinsurance market served by the top six companies, and Scor is number one in the U.S.Within the U.S. property and casualty market, Scor has a top-five position. However, its ranking in Florida is significantly lower and results in overall less than 5% market share in a 50% global premium market. Scor's strategy is to enter where contracts are opening up. The headwind will be competitors who have stayed with primary insurers through rough times and thus will experience more favourable treatment.Within life and health, the focus is on emerging markets. This is a highly fragmented market, with low cession rates and an underdeveloped insurance sector. Demographics are favourable, with the Chinese emerging middle class estimated to have quintupled in the past 10 years. The life insurance market in China is far more oriented toward living benefits, and consequently Scor is placing increased emphasis on health insurance. The weak public and primary care infrastructure will make health insurance a priority as soon as it becomes affordable.