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8th September 2019
SCOR presents new strategic plan-"Quantum Leap"
At its annual Investor Day in Paris, SCOR presented its new strategic plan, “Quantum Leap”. This is the seventh strategic plan SCOR has launched and implemented since 2002, after “Back on Track”, “Moving Forward”, “Dynamic Lift”, “Strong Momentum”, “Optimal Dynamics” and “Vision in Action”.
The plan runs from 1st July 2019 to until 31st December 2021 to coincide with the new IFRS 17 accounting standard that the Group will implement effective 1st January 2022.
The Group’s Board of Directors approved the “Quantum Leap” plan in July.
SCOR had to face a number of headwinds during its strategic plan “Vision in Action”, which was launched in July 2016. A high rate of cat events, a P&C cycle that only turned recently, a continued low yield environment, regulatory shocks such as the Ogden reform in the UK, the US tax reform and geopolitical uncertainties all have weighed on the reinsurance industry’s performance over the last three years.
SCOR delivered an impressive performance in this challenging environment thanks to its nimbleness and the strict application of its four cornerstones. These guiding principles–controlled risk appetite, high diversification, robust capital shield and strong franchise–are instrumental to the Group’s shock-absorbing capacity and superior long-term value creation.
The Group has successfully delivered on its “Vision in Action” profitability and solvency targets, recording across the course of this plan an average normalized Return on Equity of 9.5% or 876 bps over the risk-free rates, and an average solvency ratio of 219%, in the upper part of the optimal solvency range. Meanwhile, the Group has strongly expanded and deepened its franchise globally in target geographical areas and lines of business.
This strong performance bears witness to the depth of SCOR’s franchise and to the relevance of the strategy which the Group has consistently followed over the years.
The reinsurance industry is navigating through an increasingly complex environment that presents both challenges and opportunities.
SCOR firmly believes that reinsurance is an attractive industry benefiting from long-term growth drivers. The sector enjoys solid foundations and should benefit from positive dynamics:
-The risk universe is expanding increasingly rapidly. The sphere of insurable risks is increasing while the sphere of uninsurable risks is narrowing, resulting in a positive shift of the insurability frontier. In particular, emerging risks linked to new technologies are progressively becoming insurable.
-The demand for insurance and reinsurance cover is itself expanding and aversion to risk is increasing as nations become wealthier and governments are pushing insurance companies to increase their capacity through the reinsurance industry;
-There is a major protection gap, as demonstrated by the lower prevalence of insurance solutions in emerging markets –as well as in more industrialized markets-and closing this gap will support demand for insurance and reinsurance;
-The reinsurance industry benefits from the ongoing technological and financial revolution, which includes alternative capital as well as data-driven technology such as connected objects, big data, Artificial Intelligence, automation, and so on;
-The potential for innovation in the reinsurance industry remains strong and is supported by evolving needs from insurers, changing regulation, increased knowledge of risk and risk correlation, and better understanding by insurers of their own risk portfolios.
-Finally, the reinsurance industry, and more particularly the diversified global reinsurers, have proved their resilience to the most extreme events over the long term, in terms of both claims shocks and financial crises.
In this environment, SCOR, an independent Tier 1 global reinsurer, has strong potential for continued profitable growth and long-term value creation.
With the “Quantum Leap” plan, SCOR pursues strong growth of around 4 to 7% per year, and sets equally weighted profitability and solvency targets that are ambitious in the current financial and economic environment:
-A high return on equity above 800 basis points over the 5-year risk-free rates over the cycle;
-An optimal solvency ratio in the 185-220% range.
“Quantum Leap” aims to increase the Group’s efficiency and unlock value while transitioning SCOR towards IFRS 17, a more economic-based accounting framework than IFRS 4.
SCOR is transforming profoundly, accelerating its use of new technologies–such as artificial intelligence, robots, blockchain, big data, multi-cloud and satellite imagery–to innovate, expand its product and services offering and increase its efficiency, for the benefit of its clients throughout the world. All areas of the company are involved, from underwriting to asset management and from risk analysis to claims settlement. All of SCOR’s employees are committed to this ambitious and transformative plan.
SCOR is investing E250m in the implementation of “Quantum Leap”. The Group is focusing on three main pillars:
-Bringing added value to clients in their digital transformation: SCOR will bring more innovative reinsurance solutions to each key step of the reinsurance process by providing new products and value-added services, a seamless digital customer experience, improved underwriting and analytics, and robotic process automation for claims processing.
-Expanding profitable new business opportunities: In pursuing its deep digital transformation, SCOR will contribute to expanding insurability: SCOR Global P&C will develop new products and value-added services to help close insurance protection gaps and SCOR Global Life will expand the insurance safety net with insurance solutions at all stages of life.
-Strengthening digital capabilities around five key clusters: To provide scalability, increased agility and better integration of innovations, SCOR will focus on robotics, e-business, multi-cloud, big data and artificial intelligence.
SCOR Trends(303 articles)