SCOR launches its new strategic plan: “Forward 2026”
Press Release
7 September 2023 - N° 17
SCOR launches its new
strategic plan
“Forward
2026”
Driving value creation. Shaping the reinsurer of
tomorrow.
At its 2023 Investor Day in Paris, SCOR presents
its new strategic plan for 2024-2026, Forward
2026.
SCOR takes a step
forward to fully benefit
from the most
supportive market
environment in the
past two decades
As the world continues to undergo fundamental
changes, risks are multiplying, and intensifying, creating
unprecedented challenges for societies. This rapidly evolving risk
landscape has led to a growing demand for protection, and to
favorable market conditions for reinsurers. At the same time, the
increase in both P&C reinsurance rates and interest rates is
expected to support reinsurers’ margins.
In such an environment, SCOR is well placed to
seize market opportunities, benefiting from its leading global
franchise, strong balance sheet, and differentiating in-house
expertise. Forward 2026 will combine the art and
science of risk to protect societies, while firmly maintaining
sustainability at the heart of the Group’s raison d’être.
SCOR is set to
accelerate value creation over the
next three years
Forward 2026 sets two ambitious
and equally weighted targets over the duration of the plan:
- A financial target: an Economic
Value growth rate of 9% per annum, at constant interest and foreign
exchange rates1.
- A solvency target: a solvency ratio
in the optimal 185% to 220% range. The Group aims to maintain a
AA-level of security for its clients.
With Forward 2026, SCOR will
drive value creation for its shareholders, clients, employees, and
for society as a whole. The Group maintains a controlled risk
appetite and disciplined underwriting as it acts on business
opportunities created by the supportive market conditions, fueling
growth on its diversified and equally weighted P&C and L&H
portfolios.
All three businesses contribute to growth and
value creation:
- In Life
& Health (L&H)
reinsurance, SCOR leverages the
full potential of its leading platform to grow its Contractual
Service Margin (CSM) through (i) further growth of the Protection
portfolio across geographies, (ii) diversification of the Longevity
franchise globally, (iii) increased revenues from Financial
Solutions, and (iv) further deployment of digital services to
differentiate its product offering. L&H actively manages its
portfolio to ensure the translation of profits into cash flows.
SCOR aims to deliver a L&H insurance service result between EUR
500 million and EUR 600 million per annum over 2024-2026. Improved
operating cash flows should reach between EUR 0.2 billion and EUR
0.4 billion by 2026.
- In
Property & Casualty
(P&C)
(re)insurance,
SCOR expects the hard market to continue, which should enable the
Group to grow in selected attractive lines while building a
balanced and resilient portfolio. In Reinsurance, SCOR enhances
portfolio diversification, maintains a prudent approach on business
exposed to climate change and accelerates the development of
Alternative Solutions. In Specialty Insurance, SCOR grows
diversifying lines whilst considering their respective cycles,
leverages leading position in Construction and Energy to meet the
world’s infrastructure and transition needs, and actively manages
volatility. SCOR aims to deliver a P&C insurance revenue CAGR
of 4% to 6% between 2023 and 2026. It targets a P&C net
combined ratio of below 87% over 2024-2026. The Nat Cat ratio is
maintained at 10% of the net insurance revenue.
- In Investments,
SCOR maintains its prudent and sustainable investment strategy,
capitalizes on its relatively short portfolio duration, and
benefits from a high reinvestment rate environment to increase its
regular income yield to between 3.4% and 3.8% by 2026. SCOR
continues to expand its third-party asset management at SCOR
Investment Partners, offering differentiated value propositions
through strategies focused on recurring returns, with limited
downside risk and sustainable offerings.
- Based on the assumptions above, the
return on equity is expected to be in excess of
12% per annum2 over 2024-2026.
SCOR is
shaping the reinsurer of
tomorrow
The Group is enhancing the platform to be
future-ready, through four value-creation levers:
- Capital allocation and performance,
by steering capital allocation at a more granular level to drive
disciplined cycle management, and by progressively growing a
balanced and diversified portfolio with a lower capital intensity
that maximizes value creation;
- Risk partnerships with both
existing and new partners, enabling SCOR to monetize its franchise
and expertise, and doubling related fee income3;
- Asset and Liability management
(ALM), by adopting a more granular framework, with a refined view
on liabilities duration and cash flow projections to improve the
stability of cash flows and secure the balance sheet against market
volatility;
- Tech and Data, by enhancing the use
of data through a unique data platform and holistic governance, as
a single source of truth, in order to improve capital allocation
and performance, and promote the development of new models,
products and services.
SCOR continues its transformation and
simplification, which will allow the Group to maintain flat total
management expenses4 between 2023 and 2026, thanks to cost savings
of EUR 150 million5 by the end of 2026.
Maintaining sustainability at the heart of its
raison d’être, SCOR announces additional targets today, on top of
those announced during the 2023 General Meeting. These include:
- Multiplying insurance and
facultative reinsurance coverage for low carbon energy by 3.5 by
20306. This measure complements the ambition previously announced
at the 2022 General Assembly of doubling such coverage by
2025;
- Engaging with clients representing
at least 30% of SCOR Specialty Insurance Single Risk premium
regarding their ESG commitments and their transition strategy, over
the course of the new strategic plan;
- Reaching net zero emissions on
SCOR’s operations by 2030.
Through this strategic plan, SCOR will
strengthen its global leadership and become a dynamic, data-driven
manager of risk, capital, and resources.
SCOR introduces a new
attractive capital management
framework
SCOR introduces an attractive capital management
framework for its shareholders, that favors cash dividends and may
also include share buybacks or special dividends. The new capital
management framework follows a four-step process:
- Ensure the Solvency Ratio,
accounting for future growth or potential management actions,
remains in the optimal range (185-220%);
- Consider the Economic Value growth
and analyze its drivers;
- Set the regular dividend for the
current year at a level at least equal to the level of the regular
dividend of the previous year;
- Complement the regular dividend
with share buybacks or special dividends on an optional basis.
SCOR intends, through this capital management
framework, to distribute to its shareholders a significant portion
of the Economic Value growth and to offer a resilient and
predictable dividend.
The calibration of the regular dividend for the
financial year 2023 and any potential share buyback or special
dividend amount will be announced together with the FY 2023 results
in March 2024.
The Group’s Board of Directors approved the
Forward 2026 plan on 6 September 2023.
Fabrice Brégier, Chairman of SCOR,
comments: “Thierry Léger and his team have built an
ambitious strategic plan for SCOR for the next three years. This
plan defines the best ways and means for the Group to consolidate
its position as a global reinsurer, taking advantage of its global
underwriting platform and technical know-how. The Board of
Directors is confident in the Group's ability to actively pursue
its development, with the twofold objective of solvency and value
creation. The new attractive capital management framework which we
have adopted bears testimony to this.”
Thierry Léger, Chief
Executive Officer of SCOR, comments: “I am pleased
to share SCOR’s new three-year strategic plan today. We are
benefiting from the best market conditions seen in the last two
decades, and we have a very strong franchise: I am confident that
SCOR will thrive in this environment, growing in attractive
segments, delivering on its financial and solvency targets, and
creating significant value for its shareholders. Over the course of
the next three years, we will also be building the SCOR of
tomorrow: a dynamic, adaptable and reliable reinsurer, committed to
protecting societies and supporting the energy transition. I very
much look forward to embarking on this exciting journey with all
our shareholders, clients, partners and colleagues.”
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Contact details
Investor RelationsYves
Cormierycormier@scor.com
Media RelationsAlexandre
Garciamedia@scor.com
www.scor.com
LinkedIn: SCOR | Twitter: @SCOR_SE
Disclaimer
This press release includes forward-looking
statements, assumptions, and information about SCOR’s financial
condition, results, business, strategy, plans and objectives,
including in relation to SCOR’s current or future projects.
These statements are sometimes identified by the
use of the future tense or conditional mode, or terms such as
“estimate”, “believe”, “anticipate”, “expect”, “have the
objective”, “intend to”, “plan”, “result in”, “should”, and other
similar expressions.
It should be noted that the achievement of these
objectives, forward-looking statements, assumptions and information
is dependent on circumstances and facts that arise in the
future.
Although SCOR considers reasonable the
forward-looking statements, assumptions, and information provided
in this press release at the date hereof, no guarantee can be given
regarding their achievement. These forward-looking statements,
assumptions and information are not guarantees of future
performance. Forward-looking statements, assumptions and
information (including on objectives) may be impacted by known or
unknown risks, identified or unidentified uncertainties and other
factors that may significantly alter the future results,
performance and accomplishments planned or expected by SCOR.
In particular, it should be noted that the full
impact of the inflation and geopolitical risks including but not
limited to the Russian invasion and war in Ukraine on SCOR’s
business and results cannot be accurately assessed.
Therefore, any assessments, any assumptions and,
more generally, any figures presented in this press release will
necessarily be estimates based on evolving analyses, and encompass
a wide range of theoretical hypotheses, which are highly evolutive.
At this stage, none of these scenarios, assessments, impact
analyses or figures can be considered as certain or definitive.
These points of attention are all the more
essential that the adoption of IFRS 17, which is a new accounting
standard, results in significant accounting changes for SCOR.
Information regarding risks and uncertainties
that may affect SCOR’s business is set forth in the 2022 Universal
Registration Document filed on 14 April 2023, under number
D.23-0287 with the French Autorité des marchés financiers (AMF)
posted on SCOR’s website www.scor.com.
In addition, such forward-looking statements,
assumptions and information are not “profit forecasts” within the
meaning of Article 1 of Commission Delegated Regulation (EU)
2019/980.
The forward-looking statements, assumptions, and
information provided in this press release are only valid at the
date hereof and SCOR has no intention and does not undertake to
complete, update, revise or change these forward-looking
statements, assumptions and information, whether as a result of new
information, future events or otherwise.
This press release does not constitute an offer
to purchase or exchange, nor a solicitation of an offer to sell or
exchange SCOR’s shares or other securities.
1 Annual growth at constant economics (the starting point of
each year being adjusted for the dividend for the preceding year)2
Assuming a 30% corporate income tax rate for the plan period3
Compared to the 2023E fee income. Gross fee income from risk
partnerships (~EUR 50 million in 2023E), services to clients and
investments for third parties. This does not include fee income
from Financial Solutions. This fee income is included in the
insurance service result4 “Other income and expenses excl. revenues
associated with financial reinsurance contracts”, “Other operating
income and expenses” (for reference, they accounted for
respectively EUR+20m and EUR-50m in 2022, under IFRS 17) as well as
financing expenses are excluded from the management expenses5 Total
savings program started in 2022; updated savings amount is higher
than EUR 125m initially announced in 20226 Using SCOR’s Estimated
Gross Premium Income (“EGPI”) for 2020 as the baseline
Scor (TG:SDRC)
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De May 2024 a Jun 2024
Scor (TG:SDRC)
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De Jun 2023 a Jun 2024