As the US mid-year cat reinsurance renewals draw closer, there will be close scrutiny of how French reinsurer Scor chooses to play the season.
Broking sources suggest Scor is looking to scale up its Florida P&C book at the forthcoming 1.6 renewals, taking advantage of potentially hardening rates as loss impacted accounts come to market.
And it could be judicious timing after the French reinsurer scaled back its exposures in 2017 amidst another year of declining cat rates, ahead of Hurricane Irma which struck the state in September last year.
As a consequence, the tier one reinsurer emerged relatively well from Hurricanes Harvey, Irma and Maria, with a EUR430mn ($519mn) post-tax claims bill for the third quarter 2017.
The carrier’s long-serving CEO Denis Kessler said that contributing to its lower-than-average losses was the company’s decision to more than halve its Florida cat exposures at the 1.6 renewals, a crucial date for the state reinsurance market.
Scor also avoided the worst of the fourth quarter losses that stemmed from wildfires in California.
In contrast, its European rivals Munich Re, Swiss Re and Hannover Re posted cat losses in 2017 of EUR4.3bn, EUR4.7bn and EUR1.13bn respectively.
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However, there remains deep scepticism about how successful reinsurers will be in successfully pushing for rate increases despite the $17.2bn (PCS) estimated Florida Irma losses.
Despite the storm, Florida is the jewel in the crown of the global cat reinsurance market, providing around $4.5bn of traditionally high-margin premium to reinsurers.
But this draws stiff competition, in particular from ILS funds and alternative reinsurers who have a particular affinity with US wind peril and a market share in the state which some estimate at over 40 percent.
Whether rate movement will only be witnessed by heavily loss-hit accounts or spill over to loss-free business will be determined next month as brokers complete firm order terms for treaty renewals.
In a note published yesterday (30 April), Jefferies analyst Philip Kett said that Scor had a “highly positive” first quarter, with the P&C division being “especially profitable”.
Whether or not Scor can carry this momentum forward into the crucial summer renewal months is yet to be seen, but market observers will be closely monitoring how the reinsurer fares in Florida next month…