SCOR’s 2022 Annual Results
Gross written premiums of EUR 19,732 million in 2022, up 4.9%1 compared with 2021
Net loss of EUR -301 million in 2022, compared with EUR 456 million net income in 2021
Shareholders’ equity of EUR 5,133 million at the end of 2022, implying a book value per share of EUR 28.48, down -19.2% from December 2021 (EUR 35.26)
Estimated Group solvency ratio of 213%2 at the end of 2022, in the upper part of SCOR’s optimal range
Attractive dividend policy pursued, with a dividend of EUR 1.40 per share proposed for 2022
SCOR SE’s Board of Directors met on March 1, 2023, under the chairmanship of Denis Kessler, to approve the Group’s 2022 financial statements.
Key highlights:
2022 was the sixth consecutive year marked by a high frequency of natural catastrophes and other weather-related events, including floods in Australia, Hurricane Ian in the U.S., hailstorms in France and one of the worst droughts in Brazilian history. The beginning of the year was also marked by the continuation of the global pandemic as well as the start of the war in Ukraine, the largest military conflict Europe has seen in decades. On the macroeconomic front, strong inflationary pressures in Europe and the United States led central banks to raise interest rates, resulting in a sharp paradigm shift for investors and borrowers. These various developments have had a significant impact on reinsurers’ earnings in 2022 but have also resulted in a combination of higher prices and higher investment returns, both of which are expected to strongly support reinsurers’ performance in 2023.
In this challenging environment, SCOR continues to pursue its missions, once again demonstrating its ability to absorb the shocks of all kinds which the Group could be facing. The release of excess reserve margins in SCOR L&H enabled the Group to finance the increase in P&C technical reserves, to anticipate the impact of social and economic inflation. While the Group experienced significant claims from weather events and the Covid-19 pandemic, it remains very well capitalized with a Solvency ratio of 213%. SCOR ends 2022 with an accounting loss of EUR 301 million, which has been significantly reduced by the strong results in the fourth quarter. In Q4 2022, the Group generates a net income of EUR 208 million (equivalent to an annualized RoE of 16.8%), with each of the three business units delivering a positive result.
The Q4 2022 results, along with the January 1, 2023 renewal results (published by SCOR on February 7, 2023), show the tailwinds from which the Group is now benefiting:
In P&C reinsurance, the market continues to harden and SCOR records a 9% rate increase at the January 1, 2023 renewals, which should lead to a significant improvement in expected profitability.
In L&H reinsurance, the combination of a strong underlying performance and a now reduced number of Covid claims enables SCOR to generate a technical margin of 13.3% over the quarter, without releasing excess technical reserves.
The regular income yield on SCOR’s investment portfolio continues to increase, driven by the rapid reinvestment of SCOR’s portfolio, which benefits from a short duration and high reinvestment rates (4.9% at December 31, 2022).
The 2022 results reflect both the highly volatile operating environment and the Group’s strong performance in the fourth quarter.
Gross written premiums stand at EUR 19,732 million in 2022, up 4.9% at constant exchange rates compared with 2021 (up 12.1% at current exchange rates).
SCOR P&C (Property and Casualty) gross written premiums are up 13.5% at constant exchange rates compared with 2021 (up 21.7% at current exchange rates). The net combined ratio stands at 113.2%, marked by several exceptional developments. It includes a Nat Cat ratio of 12.4%, claims relating to the impact of the drought in Brazil accounting for 2.6%, and the reserve increase announced in Q3 2022 to anticipate the impact of the social and economic inflation accounting for 6.2%.
SCOR L&H (Life and Health) gross written premiums decline by 2.7% at constant exchange rates compared with 2021 (up 3.7% at current exchange rates). In 2022, SCOR L&H delivers a technical margin of 14.5%, benefiting from a strong underlying performance, active in-force management and the release of excess reserve margins (corresponding to EUR 460 million above an 8.3% normalized level of technical margin in the third quarter of 2022).
SCOR Investments delivers a return on invested assets of 2.1% for 20223 with a regular income yield at 2.4% (3.1%4 in Q4 2022).
The Group cost ratio stands at 4.5% of gross written premiums in 2022.
The Group net loss stands at EUR -301 million for 2022. It reflects the combined impact of Nat Cat claims and drought claims in Brazil (EUR -204 million) and the non-recognition of DTAs (EUR -164 million total annual amount), while the impact of the P&C reserve increase is broadly offset by the release of L&H excess margins in Q3 2022. This net loss is reduced compared to Q3 2022 thanks to the Group’s strong performance and net income of EUR 208 million in Q4 2022.
The Group generates operating cash flows of EUR 500 million in 2022, driven by a positive operating cash flow of EUR 1,232 million from SCOR P&C, while operating cash flow from SCOR L&H is negative at EUR -732 million. In Q4 2022, both P&C and L&H generated positive operating cash flows.
The Group shareholders’ equity stands at EUR 5,133 million as of December 31, 2022, down from EUR 6,402 million at the end of 2021, resulting in a book value per share of EUR 28.48 compared to EUR 35.26 as of December 31, 2021. The largest driver for this change is the revaluation reserves (assets measured at fair value through OCI) which vary by EUR -955 million over 2022. The current unrealized losses on the fixed income portfolio (EUR 1.4 billion as of December 31, 2022) will not materialize and will quickly and significantly decrease as the securities on the portfolio reach maturity (expected recapture of EUR 0.9 billion in shareholders’ equity over the next three years).
The Group financial leverage stands at 32.4% as of December 31, 2022, up 4.6 points compared to December 31, 2021 (27.8%), due to the decrease in shareholders’ equity. Adjusted for the negative impact of the revaluation reserves (assets measured at fair value through OCI) on the fixed income portfolio, the leverage ratio stands at 28.6% as of December 31, 2022.
The Group solvency ratio is estimated at 213%5 on December 31, 2022, in the upper part of the optimal solvency range of 185% – 220% defined in the last strategic plan. This solid capital base notably takes into account an impact of -26 points related to (i) the increase in P&C reserves in Q3 2022, and (ii) further resilience built within L&H assumptions in advance of IFRS17.
Attractive dividend policy pursued, with a dividend of EUR 1.40 per share proposed for 2022
The dividend policy remains unchanged: SCOR continues to favor dividends as a way to remunerate its shareholders and pursues the attractive dividend policy that it has implemented over the past years.Despite the significant accounting loss recorded in 2022, the Group’s capital position remains solid, its solvency ratio is in the upper part of the optimal range and SCOR is confident in its prospects. SCOR therefore proposes a dividend of EUR 1.40 per share for the fiscal year 2022. This dividend will be submitted for shareholders’ approval at the 2023 Annual General Meeting, to be held on May 25, 2023. The Board proposes to set the ex-dividend date at May 30, 2023, and the payment date at June 1, 2023.At the end of 2022, the Group’s solvency ratio is 219%. After taking the dividend into account, it stands at 213%, in the upper part of the optimal solvency range of 185% – 220%.
Acceleration of the one-year plan and preparation of the next Strategic Plan
As of Q1 2023, the Group will publish its financial results under the new IFRS 17 accounting standard. This transition will allow SCOR to disclose the full value of its portfolio through the introduction of the Contractual Service Margin (CSM), which reflects the present value of expected future profits based on strict rules. Together with the Group’s shareholders’ equity, the CSM is one of the two components of the Group’s Economic Value. At January 1, 2022, this Economic Value was at a point estimate of EUR 10.8 billion, within a range of EUR 10.5-11.1 billion6 (of which EUR 6.7-7.0 billion for shareholders’ equity and EUR 5.1-5.4 billion for CSM gross of tax).During a session dedicated to IFRS 17 on April 12, 2023, SCOR will publish its objectives and performance assumptions for 2023 under IFRS 17, along with an update of the Economic Value (and its main components) as at January 1, 2023.SCOR’s new Chief Executive Officer will take up his post on May 1, 2023, and the Board of Directors has asked him to develop a strategic plan under IFRS 17 that will enable the Group to take full advantage of the favorable market conditions. The outline of this strategic plan will be presented at the Annual General Meeting on May 25, 2023. SCOR’s Investor Day will be held on September 7, 2023, at which time details of the Group’s strategic direction, financial performance assumptions and new targets will be presented. The Group will continue to leverage its global underwriting platform and know-how to seize market opportunities, building on its status as a Tier 1 reinsurer, a recognized leading market position, a high-quality franchise, a very strong financial profile and recognized technical expertise.
Denis Kessler, Chairman of SCOR, comments: “The Group’s annual results are very disappointing despite a solid performance in the fourth quarter. A sustainable return to profitability is imperative. A new, highly experienced Chief Executive Officer, Mr Thierry Léger, will join the Group on May 1, 2023. He will present the broad outlines of his strategic plan at the Annual General Meeting on May 25, 2023, and will implement it without delay and with great determination after presenting it to the investors in September 2023. This will enable the Group to take full advantage of its global underwriting platform and technical expertise to seize the opportunities available in the L&H and P&C reinsurance markets, building on its status as a Tier 1 reinsurer. The Board of Directors is confident in the Group’s ability to return to growth, restore profitability, and reinforce its solvency. Consequently, it proposes a dividend of EUR 1.40 per share for 2022, which will be submitted for shareholders’ approval at the Annual General Meeting.”
François de Varenne, interim Chief Executive Officer of SCOR, comments: “2022 has been a difficult year for SCOR, even if the fourth quarter was better than the previous quarters. With the normalization of the pandemic, the L&H reinsurance business performed very well in 2022. The release of L&H excess reserve margins enabled the Group to finance the increase in P&C technical reserves. Along with P&C reinsurance, L&H is generating significant diversification benefits, and IFRS 17 will reveal the full value of its portfolio. The P&C renewals at January 1, 2023, confirm the continued hardening of the market. Reinvestment rates are expected to remain high, increasing the financial contribution of the investment portfolio. The teams are fully mobilized to accelerate the execution of the one-year plan to restore the Group’s profitability and to ensure the transition to the new IFRS 17 standard. We are ready to support the new CEO in the preparation and execution of a new, ambitious strategic plan.”
1 At constant exchange rates.2 Solvency ratio estimated after taking into account the proposed dividend of EUR 1.40 per share for the fiscal year 20223 In 2022, fair value through income on invested assets excludes EUR (22) million related to the option on own shares granted to SCOR. The 2022 RoIA at 2.1% is calculated based on IFRS 9 and includes the impact of expected credit losses (ECL) and change in fair value of invested assets measured at fair value through profit and loss. Excluding those impacts (which would not have been recorded under IAS39), the RoIA would have been at 2.2%.4 Regular income yield and RoIA include one-off positive impacts of 20bps mainly resulting from a change in scope in Q4 2022. Excluding the one-off impacts, the Q4 2022 QTD regular income yield and the RoIA stand at 2.9% and 2.7% respectively.5 Solvency ratio estimated after taking into account the proposed dividend of EUR 1.40 per share for the fiscal year 2022.6 Net of tax. A notional tax rate of 25% was applied to the CSM to calculate Economic Value.
Groupama’s 2021 Annual Results
Premium income of €15.5 billion (+7.5%)
▪ Sharp increase in life and health insurance, driven by the excellent performance of the individual savings & pensions segment in France, particularly in unit-linked policies (+47.1%)
▪ Sustained international business growth (+8.4%) both in life and health insurance and property and casualty insurance
Net income of €493 million (+178.5%)
▪ Increase in economic operational result to €461 million (+50.7%), driven by life insurance activity
▪ Non-life combined ratio of 98.3% in line with our objectives
Solvency ratio without transitional measure of 183%
▪ A solvency ratio of 271% with transitional measure
▪ IFRS shareholders’ equity of €10.7 billion
“In 2021, Groupama posted strong growth in all its business lines, in France and internationally, and our results, both operating and net, were high, exceeding their pre-health crisis level. We have also continued to strengthen the Group’s solvency and have demonstrated our financial flexibility, successfully issuing our first green bonds”, stated Thierry Martel, CEO of Groupama Assurances Mutuelles.
“The year 2021 once again demonstrated the strength of Groupama’s mutualism model, with very satisfactory annual results in a fluctuating environment. This year will also be remembered for the work carried out in conjunction with the French government, which has given a new dimension to agricultural weather insurance in France. The Group naturally remains mobilized and vigilant with regard to the situation in Ukraine and its global macroeconomic consequences” added Jean-Yves Dagès, Chairman of the Board of Directors of Groupama Assurances Mutuelles.
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SCOR reports 2021 Annual Results
Gross written premiums of EUR 17,600 million in 2021, up 9.8%1 compared with 2020
Net income of EUR 456 million in 2021, up 94.9% compared with 2020
Return on equity of 7.2% in 2021, 680 bps above the risk-free rate2
Shareholders’ equity of EUR 6,402 million at the end of December 2021, implying a book value per share of EUR 35.26, up +6.8% from 2020 (EUR 33.01)
Estimated solvency ratio of 226%3 at the end of December 2021, above the optimal solvency range of 185% – 220% as defined in the “Quantum Leap” strategic plan
Attractive dividend policy pursued, with a dividend of EUR 1.80 per share proposed for 2021
Completion of the announced EUR 200 million share buy-back on track for the end of March 2022, with EUR 164 million4 completed to date
SCOR SE’s Board of Directors met on February 23, 2022, under the chairmanship of Denis Kessler, to approve the Group’s 2021 financial statements.
Key highlights
2021 was marked by the continuation of the Covid-19 pandemic, with the emergence of new variants and the prolongation of government policies introduced to prevent the virus from spreading. For the fifth year in a row, a high frequency of natural catastrophes was also observed. At the same time, the year was marked by the rise of inflation across both Europe and the United States, increasing the pressure on central banks to raise interest rates.
In this challenging context, SCOR continued to accomplish its mission, honoring all its commitments to its clients and demonstrating its shock-absorbing capacity. The Group is very well capitalized with a 226% solvency ratio, and profitability has significantly improved with a net income of EUR 456 million, resulting in a return on equity (ROE) of 7.2%. These solid results were achieved against a backdrop of heavy cat activity (EUR 838 million of claims net of retrocession and before tax) and the ongoing impact of Covid-19 (EUR 575 million net of retrocession and before tax for the Group for 2021 alone).
In 2022, several encouraging signs of improvement can however be observed:
The rapid deployment of Covid-19 vaccination programs around the world should enable Covid-19 related mortality to significantly decrease (even though the virus could remain endemic);
Although we are carefully monitoring the effects of climate change – which led SCOR to increase its cat budget from 7% to 8% of its P&C premiums –the frequency of natural catastrophe claims in the last few years remains historically exceptional;
After years of very low interest rates, their likely increase will have a positive effect on the Group’s return on invested assets.
This perspective of a more favorable environment should enable SCOR to successfully pursue the implementation of its strategic plan “Quantum Leap”, launched in September 2019 and extended until December 31, 2022, and to look ahead with new ambitions, which will be unveiled in the course of the year. The Group will thus continue to build on its global platform and expertise to seize market opportunities, leveraging its strong Tier 1 credentials based upon the consistent execution of a clear and proven strategy, a recognized market leading position with a high-quality franchise, a very strong financial profile, and recognized technical expertise.
Gross written premiums of EUR 17,600 million in 2021 are up 9.8% at constant exchange rates compared with 2020 (up 7.5% at current exchange rates)
SCOR P&C (Property and Casualty) gross written premiums are up 17.6% at constant exchange rates compared with 2020 (up 14.9% at current exchange rates), following strong 2021 renewals in Reinsurance and Specialty Insurance. The net combined ratio stands at 100.6%, including 12.8% of natural catastrophes, well above the cat budget
SCOR L&H (Life and Health) gross written premiums are up 3.6% at constant exchange rates compared with 2020 (up 1.8% at current exchange rates). Over the period, SCOR L&H delivers a technical margin of 10.3%, driven by the Life in-force transaction executed in H1 2021
SCOR Investments delivers a return on invested assets of 2.3%5 6 in 2021
The Group cost ratio, which stands at 4.4% of gross written premiums in 2021, is more favorable than the “Quantum Leap” assumption of ~5.0%
The Group net income stands at EUR 456 million in 2021. The return on equity (ROE) stands at 7.2%, 680 bps above the risk-free rate7
The Group generates high operating cash flows of EUR 2,406 million in 2021, of which EUR 860 million relate to the Life in-force transaction. The Group’s total liquidity is very strong, standing at EUR 2.3 billion as of December 31, 2021
The Group shareholders’ equity stands at EUR 6,402 million as of December 31, 2021. This results in a book value per share of EUR 35.26, compared to EUR 33.01 as of December 31, 2020
The Group financial leverage stands at 27.8% as of December 31, 2021, down 0.7% points compared to December 31, 2020
The Group solvency ratio is estimated at 226%8 on December 31, 2021, above the optimal solvency range of 185% – 220% as defined in the “Quantum Leap” strategic plan
Well-defined and attractive dividend policy pursued, with a dividend of EUR 1.80 per share proposed for 2021
SCOR’s dividend policy is unchanged: SCOR continues to favor dividends as a way to remunerate its shareholders and pursues the attractive dividend policy that it has implemented over the past years.
With its strong capital position, SCOR is proposing a dividend of EUR 1.80 per share for the fiscal year 2021. This dividend will be submitted to the approval of the shareholders at the 2022 Annual General Meeting, to be held on May 18, 2022. The board recommends to set the coupon date at May 20, 2022 and the payment date at May 24, 2022.
This comes on top of the EUR 200 million share buyback announced in October – decided on the basis of the Group’s high solvency ratio – of which EUR 164 million is already completed9 and which will be fully executed by the end of March 2022. The buyback and the proposed dividend imply a combined capital return to shareholders of EUR 523 million.
At the end of 2021, the solvency ratio stands at 226%, above the upper end of the optimal solvency range. Prior to capital return initiatives (dividend and buyback), the solvency ratio stands at 237%. The main drivers for the change in solvency at the end of 2021 compared to the end of 2020 include: i) Life in-force retrocession transaction (+27% pts), ii) operating capital generation excluding Covid-19 (+8% pts), capital deployment (-8% pts), Covid-19 impact (-17% pts), market variances (+18% pts) and other movements (-11% pts).
Denis Kessler, Chairman of SCOR, comments: “By executing the “Quantum Leap” strategic plan, SCOR has successfully demonstrated its shock-absorbing capacity throughout the Covid-19 crisis. The Life in-force retrocession transaction concluded at the end of H1 2021 also allowed the Group to demonstrate the value of its Life reinsurance portfolio, providing strong optionality to optimally allocate its capital. Although 2021 was quite a challenging year, SCOR delivered a strong profitability and its solvency position is now more robust than it was a year ago, even after taking into account the EUR 200 million share buyback to be fully executed by the end of March 2022, and the strong dividend of EUR 1.80 per share that will be proposed at the Annual General Meeting for 2021. This bears witness to the Group’s very strong financials and its ability to create value, even in a challenging environment.”
Laurent Rousseau, Chief Executive Officer of SCOR, comments: “In a year marked by a high level of natural catastrophes and Covid-19, SCOR has demonstrated its ability to create value for clients, communities, and shareholders. Our objectives are clear: reducing volatility, increasing profitability, growing the franchise, optimally allocating capital and embarking on the transformation of the Group. These strong results are testimony to the hard work of our teams whom I would like to thank. We are now actively preparing the next phase of our strategy and will provide an update on our situation and outlook to shareholders on March 29th, 2022. This should further highlight SCOR’s efforts to support sustainable and profitable growth while reinforcing its franchise and capital position.”
1. At constant exchange rates2. Based on a 5-year rolling average of 5-year risk-free rates (42 bps in the last quarter of 2021)3. Solvency ratio estimated after EUR 200 million share buy-back launched in October 2021 and after the proposed dividend of EUR 1.80 per share for the fiscal year 20214. As of February 18th, 2022 5. Return on invested assets excludes the EUR 89 million capital gain realized in Q3 2021 on the Doma transaction, which is a venture investment not held for investment purposes6. As of December 31, 2021, fair value through income on invested assets excludes EUR 41 million related to the option on own shares granted to SCOR7. Based on a 5-year rolling average of 5-year risk-free rates (42 bps in the last quarter of 2021)8. Solvency ratio estimated after EUR 200 million share buy-back launched in October 2021 and after the proposed dividend of EUR 1.80 per share for the fiscal year 2021 9. As of February 18th, 2022
Atradius 2020 Annual Results
Atradius N.V. announced a profit of EUR 44.2 million in 2020, down from EUR 227.7 million in 2019. The profit represents a solid result during a year full of uncertainties that substantially drove up risk. Major factors affecting the market included a trade war between the US and China, Brexit negotiations, a price war in the oil and gas market and most notably the Covid-19 pandemic, which caused business lockdowns around the world.By working together with customers to ensure the best possible cover in this environment Atradius maintained stable revenues despite the reduced value of business transactions and managed claims expenses ensuring customer claims were efficiently and expediently reimbursed.
Financial highlights
Insurance premium revenue decreased by 1.8% (0.8% at constant foreign exchange rates)
Result for the year of EUR 44.2 million
Gross combined ratio 94.3%
Insurance and service result at EUR 79.2 million, down by 75.7%
Shareholders’ equity and subordinated debt position reduced by 4.1%.
Solid solvency ratio exceeds 200% (1)
Customer retention of 92.7%, a reflection of Atradius’ commitment to its customers and continued pursuit of excellence even in the most challenging of times.
(1)Subject to finalisation of any audit procedures.Insurance revenueAtradius’ insurance premium revenue decreased by 1.8% to EUR 1,727.4 million in 2020 from EUR 1,759.5 million in 2019 (0.8% at constant exchange rates), reflecting a decline in insurable business transactions due primarily to lockdowns globally. Nonetheless, customer retention is at a very strong level of 92.7%.ClaimsThe Atradius claims ratio for 2020 reached 58.6%. Loss reserves were increased in anticipation of potentially higher claims due to the lockdowns in relation with the Covid-19 outbreak, while still maintaining balanced risk acceptance and providing comprehensive coverage to our customers.
ExpensesThe expense ratio improved from 35.9% in 2019 to 35.7%, due mainly to savings measures taken when lockdowns commenced, while continuing with our innovative company-wide multi-year programme to modernise our IT systems including a range of measures to further support customers.
Insurance and service resultThe Atradius insurance and service result saw a reduction of 75.7% to EUR 79.2 million from EUR 325.4 million in 2019, driven mainly by lower revenue as a result of decreased insurable business combined with the increased loss reserves for potentially adverse developments in the more uncertain risk environment.
Investment resultAtradius’ conservative investment portfolio contributed EUR 14.3 million in a difficult environment with extremely low interest rates and volatile equity markets.
Result after taxFollowing the Covid-19 outbreak and the subsequent reserve strengthening reflecting the economic fallout, the result after tax decreased by 80.6% to EUR 44.2 million from EUR 227.7 million.
Solvency ratioBolstered by profitable growth in the business, stable investment returns and prudent risk underwriting, the Atradius solvency ratio at the end of 2020 again exceeded 200% (1).
(1)Subject to finalisation of any audit procedures.
While 2020 was a year in which we knew our profits would be under pressure, our first priority was people. Ensuring our people were safe and well taken care so that they could take good care of our customers. I am proud of the way they have risen to the challenges so that our customers, brokers and agents could rise to their own challenges. This commitment is reflected in our retention rate and our overall result.
David CapdevilaChief Executive Officer of Atradius N.V.
Business OutlookWhile it will take years to fully recover from the pandemic, the global economy is expected to begin improving in 2021. Emerging markets, led by China, are forecast to bounce back faster, with Latin America and Eastern Europe expected to grow slightly slower. Advanced economies are projected to grow 3.9%, with the recovery in Western Europe taking longer due to extended lockdowns. As the governmental support in the economy will continue in 2021 and some countries will extend their governmental reinsurance schemes, we are confident that our risk management actions will continue to be balanced and customer focussed.
CNP Assurances – 2020 Annual Results: Attributable net profit of €1,350 million, SCR coverage ratio of 208%, Recommended dividend of €1.57 per share
Premium income(2) of €27.0 billion, down 17.3% as reported (down -11.5% at constant exchange rates(3))- Strong commercial momentum in the second half, across all geographies- 51.8% of Savings/Pensions premiums represented by unit-linked contracts- €5.9 billion net inflow to unit-linked contracts and €7.2 billion net outflow from traditional products at Group level
EBIT of €2,614 million, down 14.0% as reported (down 5.7% at constant exchange rates)
Attributable net profit of €1,350 million, down 4.4% as reported (down 2.1% at constant exchange rates)
APE margin of 12.2%
Consolidated SCR coverage ratio of 208%
The Board of Directors recommends paying a dividend of €1.57 per share, comprising an ordinary dividend of €0.77 and a special dividend of €0.80, representing a 40% payout ratio for the years 2019 and 2020.
Antoine Lissowski, CNP Assurances’ Chief Executive Officer, said:
“In spite of the Covid-19 health crisis which affected Life insurance sales in France in the first half of the year, CNP Assurances began transforming its business and in-force portfolio in response to the negative interest rate environment. Written premiums were particularly strong in Italy and Brazil, where activity is heavily weighted towards unit-linked products.The Group’s financial results and solvency ratio were robust despite the effects of the economic slowdown.Now an integral part of La Banque Postale group, CNP Assurances is fully engaged in the process to reshape its business model.”
(1) Recommended at the Annual General Meeting of 16 April 2021(2) 2019 premium income has been restated to exclude the top line contribution of Fourgous and Eurocroissance transfers for a total of €914 million. (3) Average exchange rates:At 31 December 2020: Brazil: €1 = BRL 5.89; Argentina: €1 = ARS 81.04 At 31 December 2019: Brazil: €1 = BRL 4.41; Argentina: €1 = ARS 53.88
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Annual results 2019: Hannover Re delivers double-digit earnings and premium growth and increases dividend
– Group net income rises by 21.2% to EUR 1.28 billion – Gross premium grows by 15.2% adjusted for exchange rate effects – Proposed dividend of EUR 5.50 (previous year: EUR 5.25) per share – Book value per share increases to EUR 87.30 – Return on equity climbs to 13.3% (12.2%) – Major loss expenditure higher than anticipated – Guidance for 2020 confirmed – Group net income of around EUR 1.2 billion
Hannover Re boosted its Group net income by 21.2% in the 2019 financial year and is proposing another dividend increase. In addition, a special dividend is to be paid for the sixth year in succession.”We have achieved a record result and thereby once again demonstrated our profitability, even though 2019 was another year of relatively high losses,” Hannover Re Chief Executive Officer Jean-Jacques Henchoz said. “We are again able to offer our shareholders the prospect of an attractive dividend including a special distribution, but we are also retaining the necessary flexibility to invest further in our profitable growth.”
In view of the good business development, the Executive Board and Supervisory Board will propose to the Annual General Meeting an increase of the dividend for 2019 to EUR 5.50 per share (EUR 5.25 per share). This consists of an increased ordinary dividend of EUR 4.00 (EUR 3.75) per share and an unchanged special dividend of EUR 1.50 per share.
Profit growth outpaces increase in premium
Thanks to its positioning as one of the largest and financially strongest reinsurers in the world, Hannover Re was again able to act on attractive business opportunities despite a continued challenging market climate. Against this backdrop, the gross premium volume increased sharply by 17.8% to EUR 22.6 billion (EUR 19.2 billion); it would have grown by 15.2% adjusted for exchange rate effects. The level of retained premium decreased slightly to 90.0% (90.7%). Net premium earned grew by 14.1% to EUR 19.7 billion (EUR 17.3 billion). Growth of 11.8% would have been booked at unchanged exchange rates.
The operating profit (EBIT) improved by 16.1% to EUR 1,853.2 million (EUR 1,596.6 million). This was supported by further improvement in the investment income as well as the good underlying quality of the portfolio in both property & casualty and life & health reinsurance. Group net income increased by 21.2% year-on-year to reach EUR 1,284.2 million (EUR 1,059.5 million). Hannover Re thus once again slightly outperformed its guided Group net income, which it had raised in the third quarter from the originally anticipated level of around EUR 1.1 billion to more than EUR 1.25 billion. Earnings per share amounted to EUR 10.65 (EUR 8.79).
Property and casualty reinsurance: Result reduced by large losses
Worldwide property and casualty reinsurance remained intensely competitive in the financial year just ended. Sufficient capacity for the coverage of insurance risks was available from both traditional reinsurers and alternative capital providers.
In the various rounds of treaty renewals held during the year Hannover Re was able to discern a more broad-based improvement in prices and conditions for reinsurance protection and the company acted on profitable business opportunities.
The gross premium volume in property and casualty reinsurance rose by 23.4% to EUR 14.8 billion (EUR 12.0 billion). At constant exchange rates the increase would have been 20.4%. This growth was significantly above expectations. Net premium earned climbed by 18.5% to EUR 12.8 billion (EUR 10.8 billion); growth would have reached 15.8% adjusted for exchange rate effects.
Following the heavy losses of 2017 and 2018, Hannover Re incurred further significant major losses in the 2019 financial year. The largest loss was hurricane “Dorian” at a net cost of EUR 194.7 million. Typhoons “Hagibis” and “Faxai” caused further expenditure of EUR 183.8 million and EUR 83.8 million respectively.
An amount of EUR 85.7 million was set aside for the insolvency of UK travel operator Thomas Cook. Total net major loss expenditure in 2019 came to EUR 956.1 million (EUR 849.8 million) and hence exceeded the large loss budget of EUR 875 million for the full year. The underwriting result including interest on funds withheld and contract deposits fell to EUR 235.4 million (EUR 372.8 million).
The combined ratio deteriorated to 98.2% (96.5%) and was thus higher than the targeted level of no more than 97%. The primary factors here were the high losses incurred in the financial year and delayed claim notifications for prior-year losses, especially for Typhoon “Jebi”. The operating profit (EBIT) declined by 2.8% to EUR 1,285.8 million (EUR 1,322.6 million). The net profit in property and casualty reinsurance contracted by 6.2% to EUR 871.7 million (EUR 929.1 million).
Life and health reinsurance: Very pleasing profit increase
“We can look back on an excellent development in our life and health reinsurance portfolio. As announced, we generated a significantly improved result,” Henchoz said. “At the same time we are benefiting from additional business opportunities available to financially strong reinsurers – including in the area of financial solutions, where we offer our clients tailor-made reinsurance solutions designed to improve their solvency, liquidity and capital position.”
The gross premium volume in life and health reinsurance was 8.6% higher than in the previous year at EUR 7.8 billion (EUR 7.2 billion). The increase would have been 6.7% at constant exchange rates. Net premium earned rose by 6.9% to EUR 6.9 billion (EUR 6.5 billion); growth would have reached 5.1% at constant exchange rates.
Boosted by non-recurring income from investments and the elimination of one-time charges in the in-force US mortality portfolio, the operating result (EBIT) improved to EUR 569.9 million (EUR 275.9 million). The net profit in life and health reinsurance more than doubled to reach EUR 471.6 million (EUR 185.9 million).
Investments: Return targets outperformed
In 2019 interest rates fell sharply again in numerous currency areas, resulting in a sizeable increase in the hidden reserves on fixed-income securities. Combined with a positive operating cash flow and issuance of a subordinated bond, this caused Hannover Re’s portfolio of assets under own management to grow by 12.9% to EUR 47.6 billion (EUR 42.2 billion).
Supported by the release of hidden reserves in connection with the restructuring of a participating interest and the sale of two individual properties, income from investments under own management grew by 17.3% to EUR 1,550.6 million (EUR 1,322.0 million). The resulting average return (excluding effects from ModCo derivatives) was 3.4%. This exceeded the target return on investment, which had been raised in November from the original level of at least 2.8% to at least 3.2%. Investment income including interest on funds withheld and contract deposits improved by 14.8% to EUR 1,757.1 million (EUR 1,530.0 million).Shareholders’ equity: Return climbs to 13.3 %
Hannover Re further expanded its very robust equity position in the financial year just ended. The shareholders’ equity of Hannover Rück SE increased by 20.0% as at 31 December 2019 to EUR 10.5 billion (EUR 8.8 billion). The book value per share reached EUR 87.30 (EUR 72.78). Given that the increase in Group net income was stronger than the appreciable rise in shareholders’ equity, the return on equity improved to 13.3% (12.2%) and thus comfortably surpassed the minimum target of 9.3%. For the eleventh consecutive year Hannover Re thus recorded a return on equity in the double digits. The total policyholders’ surplus (including non-controlling interests and hybrid capital) amounted to EUR 13.6 billion (EUR 11.0 billion).
Guidance 2020: Group net income of around EUR 1.2 billion
“The positive momentum from the 1 January treaty renewals should accelerate over the course of the year,” Henchoz said. “This will be reflected in further improvement in prices and conditions for strongly capitalised reinsurers, which gives me confidence that we shall achieve our goals for the current financial year.”
For 2020 Hannover Re expects to grow its gross premium in total business by around 5% based on constant exchange rates. Group net income should reach a level of around EUR 1.2 billion. This is conditional on major loss expenditure not significantly exceeding the budgeted level of EUR 975 million and assumes that there are no exceptional distortions on capital markets.
The asset portfolios should grow – assuming constant exchange rates – in view of the anticipated positive cash flow and the return on investment should reach around 2.7%.
In terms of the ordinary dividend for the current financial year, Hannover Re envisages an unchanged payout ratio in the range of 35% to 45% of its IFRS Group net income. The ordinary dividend will be supplemented by payment of a special dividend subject to a continued comfortable level of capitalisation and Group net income within the expected bounds.
ABN AMRO publishes Integrated Annual Review 2018 and Annual Report 2018
Today, ABN AMRO published its 2018 Integrated Annual Review, Annual Report of ABN AMRO Group N.V. and ABN AMRO Bank N.V., and additional disclosures.
Kees van Dijkhuizen, CEO of ABN AMRO: “In 2018, ABN AMRO launched a refreshed strategy built around our purpose ‘Banking for better, for generations to come’. This means supporting our clients in their transition to sustainability, reinventing the customer experience and building a future-proof bank. Our financial performance, growing client demand and the support of our colleagues to help build a more sustainable society and our investments in digitalisation are all examples of Banking for better.”
In the Integrated Annual Review 2018, ABN AMRO provides a broad audience a concise view of the bank’s environment, strategy, results achieved in 2018 and the way the bank creates value for its stakeholders. For this Review, ABN AMRO used the International Integrated Reporting Framework. The Annual Report Group and Bank and Annual Financial Statements provide information about the bank’s financial and non-financial performance in compliance with regulatory requirements.
For more information, please go to www.abnamro.com/annual-report
HSBC Holdings plc Annual Results 2018
John Flint, Group Chief Executive, said:“These are good results that demonstrate progress against the plan that I outlined in June 2018. Profits and revenue were both up despite a challenging fourth quarter, and our return on tangible equity is significantly higher than in 2017. This is an encouraging first step towards meeting our return on tangible equity target of more than 11% by 2020.”
Key highlights
– Progress made against our eight strategic priorities, including accelerated growth from Asia and our international network, growth in our UK customer base, delivery of more sustainable finance, improved capital efficiency and investments in technology.
– Reported profit before tax of $19.9bn in 2018 was 16% higher than in 2017, reflecting revenue growth in all of our global businesses. Adjusted profit before tax of $21.7bn in 2018 was 3% higher than in 2017, excluding the effects of foreign currency translation differences and movements in significant items.
– Reported revenue of $53.8bn was 5% higher, notably driven by a rise in deposit revenue across our global businesses, primarily in Asia, as we benefited from wider margins and grew our balances. These increases were partly offset by lower revenue in Corporate Centre. Adjusted revenue of $53.9bn was 4% higher, excluding the effects of foreign currency translation differences and movements in significant items.
– Reported operating expenses of $34.7bn were 1% lower, as higher costs, including investments made to grow the business and enhance our digital capabilities were more than offset by net favourable movements in significant items, mainly the non-recurrence of costs to achieve expenditure in 2017. Adjusted operating expenses of $33.0bn were 6% higher, excluding the effects of foreign currency translation differences and movements in significant items.
– Adjusted jaws for 2018 was negative 1.2%, due to lower adjusted revenue in 4Q18 (down 8% on 3Q18), from weakness in markets. Operating expenses were higher from investments in business growth. We reiterate our commitment to the discipline of positive adjusted jaws.
– Return on average tangible equity rose to 8.6% from 6.8%, up 1.8 percentage points.
– Reported loans and advances to customers increased by $32bn. Excluding foreign currency translation differences, loans and advances grew by $66bn or 7% from 1 January 2018.
– Common equity tier 1 (‘CET1’) ratio of 14.0% and CRD IV leverage ratio of 5.5%.
– Maintained the dividend at $0.51 per ordinary share; total dividends in respect of the year of $10.2bn; confident of maintaining at this level.