Scor (PAR) : 29.24 EUR (0.48%) 14/01/2022 17:35
"Quantum Leap" 2019-2021
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SCOR continues to grow in 2018, records a net income of EUR 322 million and proposes a dividend of EUR 1.75 per share
February 20, 2019 — 06:48
2018 Annual Results
During a second consecutive year of elevated natural catastrophe activity, SCOR manages to absorb the volatility and is executing its "Vision in Action" strategic plan. The Group is profitably growing its P&C and Life businesses worldwide while providing a strong solvency position. In line with its consistent capital management process and dividend policy, the Group is proposing a dividend of EUR 1.751 per share for 2018.
Gross written premiums of EUR 15,258 million in 2018, up 7.1% at constant exchange rates compared to 2017 (+3.2% at current exchange rates). This growth is well balanced between the Life division (+7.3% at constant exchange rates) and the P&C division (+6.7% at constant exchange rates).
SCOR Global P&C delivers strong and managed growth combined with positive technical results despite a high number of natural catastrophes, including several major ones such as Typhoons Jebi and Trami in Japan, Hurricanes Michael and Florence in the U.S., and the wildfires in California. Despite these natural catastrophes, the P&C division's net combined ratio stands at 99.4%.
SCOR Global Life delivers strong and profitable growth, driven by the successful development of the franchise in Asia-Pacific.
SCOR Global Investments delivers a return on invested assets of 2.8%, largely driven by a continuing increase in the income yield. SCOR Global Investments benefitted from realized gains of EUR 87 million from equity sales in Q4 2018.
The Group cost ratio is stable at 5.0% of gross written premiums, in line with the "Vision in Action" plan.
Group net income is EUR 322 million for 2018, despite the cost of the nat cat events that occurred in Q3 and Q4. The return on equity (ROE) for the year is 5.5%, or 472 bps above the risk-free rate2. The normalized3 return on equity for the year is 9.4%, above the target of 800 bps above the 5-year risk-free rate.
Net operating cash flows stand at EUR 891 million as of December 31, 2018, despite significant payments due to the U.S. Tax Reform. SCOR Global P&C provides robust cash flow in line with expectations, while SCOR Global Life provides strong cash flow partially offset in Q4 2018 by U.S. Tax Reform payments, with 2017 benefitting from elevated technical business cash flow from two Financial Solutions transactions.
Shareholders' equity stands at EUR 5.8 billion on December 31, 2018, after the net income contribution of EUR 322 million, the payment in May 2018 of EUR 312 million of cash dividends for the year 2017, a decrease of EUR 301 million from revaluation reserve4, and a decrease of EUR 194 million from the execution of the share buy-back program. This results in a book value per share of EUR 31.53 at December 31, 2018, compared to EUR 33.01 at December 31, 2017.
Financial leverage stands at 27.5% on December 31, 2018.
Estimated solvency ratio stands at 215%5 on December 31, 2018, in the upper part of the optimal solvency range of 185% - 220% as defined in the "Vision in Action" plan.
The Group announces that it has completed the EUR 200 million share buy-back program. Additionally, it has given a one-off bonus to employees in France and awarded performance shares to involve all its employees worldwide in the Group's success6.
The merger of the 3SEs is on track and is expected to be completed in Q1 2019. The solvency capital benefits of this merger are estimated to be around EUR 200 million.
Pursuing its active capital management process and consistent dividend policy, SCOR proposes to the Annual General Meeting a dividend of EUR 1.75 per share for 2018, up from EUR 1.65 in 2017, representing a payout ratio of 100%. The dividend will be subject to approval at the shareholders' Annual General Meeting on April 26, 2019.
Denis Kessler, Chairman & Chief Executive Officer of SCOR, comments: "In 2018 – a year once again marked by a high level of natural catastrophes - SCOR continues to grow: the Group delivers robust growth and solid recurring profitability, and provides a strong solvency position. For the first time the Group has recorded total gross premiums of more than EUR 15 billion. Alongside a robust solvency ratio, we completed a EUR 200 million share buyback program and awarded shares to all our employees worldwide, while avoiding any dilution for our shareholders. Our shareholder return remains attractive, with a proposed strong dividend of EUR 1.75 for 2018. With our financial rating reaffirmed by all four rating agencies, we are now actively preparing the Group's next strategic plan, which will be presented at the beginning of September. As an independent Tier 1 global reinsurer, SCOR will continue to create value and to be the master of its own destiny."
1 2018 dividend subject to approval of the shareholders' Annual General Meeting on April 26, 2019.
2 Based on a 5-year rolling average of 5-year risk-free rates.
3 Normalized for nat cat (6% budget cat ratio), reserve release and the impact of the U.S. Tax reform.
4 Variation of unrealized gains/losses on AFS securities, net of shadow accounting and taxes, see Appendix G of the earnings presentation.
5 Solvency ratio based on Solvency II requirements. The Group solvency final results are to be filed to supervisory authorities by May 2019 and the final Solvency ratio may differ from this estimate.
6 See press release dated January 29, 2019.
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