For Q3 2024, SCOR's completion of the L&H internal assumption review led to the following outcome:
-- A negative impact of EUR -0.2 billion included in the L&H ISR driven by
an increase in the loss component on onerous contracts, mainly from
Israel (EUR -0.1 billion) and the internal reallocation of a provision
(EUR -0.1 billion) with a neutral impact on the Group Economic Value.
-- In addition, the pre-tax L&H contractual service margin $(CSM.AU)$ at
locked-in rate is adjusted by EUR +0.2 billion, mainly driven by a
positive PVFCF adjustment in the US protection portfolio for EUR +0.1
billion and by the internal reallocation of a provision for EUR +0.1
billion.
On a year-to-date basis, the SCOR 2024 L&H assumption review led to a cumulative impact of EUR
-0.7 billion in terms of ISR and EUR -0.8 billion on pre-tax CSM.
As a result, at Q2 SCOR announced an ambitious 3-step plan to restore the profitability of L&H. This plan focuses on reserves, in-force management and new business.
The new L&H business strategy and the updated Forward 2026 targets and assumptions will be presented on 12 December 2024.
In addition to the regular Actuarial Function Holder review, to demonstrate SCOR's confidence in its L&H reserves, an external peer review of the L&H reserves is currently being performed by Milliman, with an opinion to be shared at the Investor Day in December.
L&H reinsurance key figures:
In EUR million (at current exchange Q3 rates) 2024 Q3 2023 Variation 9M 2024 9M 2023 Variation --------------------- ------ ------- --------- ------- ------- --------- L&H insurance revenue 2,102 2,338 -10.1% 6,432 6,534 -1.6% --------------------- ------ ------- --------- ------- ------- --------- L&H insurance service result(1) -210 113 n.a. -467 525 n.a. --------------------- ------ ------- --------- ------- ------- --------- L&H new business CSM(9) 116 89 +29.5% 373 376 -1.0% --------------------- ------ ------- --------- ------- ------- ---------
In Q3 2024, L&H insurance revenue amounts to EUR 2,102 million, down -10.3% at constant exchange rates (-10.1% at current exchange rates) compared to Q3 2023. SCOR continues to build its L&H CSM through new business generation (EUR 116 million new business CSM(9) in Q3 2024), notably from Financial Solutions and from Protection.
As a consequence of the 2024 L&H assumption review, the L&H insurance service result(1) amounts to EUR -210 million in Q3 2024. It includes:
-- A CSM amortization of EUR 77 million, which reflects the negative impact
of the 2024 L&H assumption review
-- An experience variance of EUR -27 million, driven by underlying claims
experience.
-- The additional 2024 L&H assumption review impact for EUR -163 million
driven by an increase in the loss component on onerous contracts, mainly
from Israel and following the internal reallocation of a provision with a
neutral impact on the Economic Value.
-- The one-off true up adjustment on identified arbitration positions for
EUR -128 million.
Investments delivering strong results with a regular income yield of 3.5% in Q3 2024
As of 30 September 2024, total invested assets amount to EUR 23.3 billion. SCOR's asset mix is optimized, with 79% of the portfolio invested in fixed income. SCOR has a high-quality fixed income portfolio with an average rating of A+ and a duration of 3.5 years (3.0 at year-end 2023)
Investments key figures:
In EUR million (at current exchange Q3 rates) 2024 Q3 2023 Variation 9M 2024 9M 2023 Variation --------------------- ------ ------- --------- ------- ------- --------- Total invested assets 23,319 22,005 +6.0% 23,319 22,005 +6.0% --------------------- ------ ------- --------- ------- ------- --------- Regular income yield* 3.5% 3.4% +0.2pts 3.5% 3.1% +0.4pts --------------------- ------ ------- --------- ------- ------- --------- Return on invested assets*, ** 4.0% 3.4% +0.6pts 3.5% 3.1% +0.4pts --------------------- ------ ------- --------- ------- ------- ---------
(*) Annualized.
(**) Fair value through income on invested assets excludes EUR +1 million in Q3 2024 and EUR -6m in 9M 2024 related to the pre-tax mark to market impact of the fair value of the option on own shares granted to SCOR.
Total investment income on invested assets stands at EUR 229(10) million in Q3 2024. The return on invested assets stands at 4.0%(10) (vs. 3.3% in Q2 2024) and the regular income yield at 3.5% (vs. 3.6% in Q2 2024).
The reinvestment rate stands at 4.1%(11) as of 30 September 2024, compared to 4.8% as of 30 June 2024. The invested assets portfolio remains highly liquid and financial cash flows of EUR 9.6 billion are expected over the next 24 months(12) , enabling SCOR to benefit from elevated reinvestment rates.
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APPENDIX
1 -- SCOR Group Q3 2024 key financial details
In EUR million (at current exchange Q3 rates) 2024 Q3 2023 Variation 9M 2024 9M 2023 Variation --------------------- ------ ------- --------- ------- ------- --------- Insurance revenue 3,944 4,235 -6.9% 12,142 12,090 +0.4% --------------------- ------ ------- --------- ------- ------- --------- Gross written premiums(1) 4,985 4,870 +2.4% 15,015 14,444 +3.9% --------------------- ------ ------- --------- ------- ------- --------- Insurance Service Result(2) -51 265 n.a. 75 1,069 -93.0% --------------------- ------ ------- --------- ------- ------- --------- Management expenses -291 -294 +0.9% -903 -835 -8.2% --------------------- ------ ------- --------- ------- ------- --------- Annualized ROE(3) -10.2% 13.7% n.a. -6.7% 20.2% n.a. --------------------- ------ ------- --------- ------- ------- --------- Annualized ROE excluding the mark to market impact of the option on own shares from Q3 2024 -10.3% 12.5% n.a. -6.6% 18.8% n.a. --------------------- ------ ------- --------- ------- ------- --------- Net income(3,4) -117 147 n.a. -229 650 n.a. --------------------- ------ ------- --------- ------- ------- --------- Net income(4) excluding the mark to market impact of the option on own shares from Q3 2024 -117 135 n.a. -224 602 n.a. --------------------- ------ ------- --------- ------- ------- --------- Economic value(5,6) 8,399 9,157 -8.3% 8,399 9,157 -8.3% --------------------- ------ ------- --------- ------- ------- --------- Shareholders' equity 4,322 4,459 -3.1% 4,322 4,459 -3.1% --------------------- ------ ------- --------- ------- ------- --------- Contractual Service Margin $(CSM)$(6) 4,076 4,699 -13.2% 4,076 4,699 -13.2% --------------------- ------ ------- --------- ------- ------- ---------
1: GWP is not a metric defined under the IFRS 17 accounting framework (non-GAAP metric); 2: Including revenues on financial contracts reported under IFRS 9; 3: Taking into account the mark to market impact of the option on own shares. Q3 2024 impact of EUR+1 million before tax, 9M 2024 impact of EUR -6 million before tax. 4: Consolidated net income, Group share; 5. Defined as the sum of the shareholder's equity and the Contractual Service Margin (CSM); 6: Net of tax. A notional tax rate of 25% is applied to the CSM.
2 - P&L key figures Q3 2024
In EUR million Q3 Q3 (at current exchange rates) 2024 2023 Variation 9M 2024 9M 2023 Variation --------------------------------- ----- ----- --------- ------- ------- --------- Insurance revenue 3,944 4,235 -6.9% 12,142 12,090 +0.4% --------------------------------- ----- ----- --------- ------- ------- --------- -- P&C insurance revenue 1,842 1,897 -2.9% 5,710 5,557 +2.8% --------------------------------- ----- ----- --------- ------- ------- --------- -- L&H insurance revenue 2,102 2,338 -10.1% 6,432 6,534 -1.6% --------------------------------- ----- ----- --------- ------- ------- --------- Gross written premiums(1) 4,985 4,870 +2.4% 15,015 14,444 +3.9% --------------------------------- ----- ----- --------- ------- ------- --------- -- P&C gross written premiums 2,495 2,476 +0.8% 7,360 7,090 +3.8% --------------------------------- ----- ----- --------- ------- ------- --------- -- L&H gross written premiums 2,490 2,394 +4.0% 7,654 7,355 +4.1% --------------------------------- ----- ----- --------- ------- ------- --------- Investment income on invested assets 229 185 +23.4% 605 505 +19.9% --------------------------------- ----- ----- --------- ------- ------- --------- Operating results -53 257 n.a. 7 1,016 -99.3% --------------------------------- ----- ----- --------- ------- ------- --------- Net income(2,3) -117 147 n.a. -229 650 n.a. --------------------------------- ----- ----- --------- ------- ------- --------- Net income(2) excluding the mark to market impact of the option on own shares from Q3 2024 -117 135 n.a. -224 602 n.a. --------------------------------- ----- ----- --------- ------- ------- ---------
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