2 weeks ago
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France headquartered global reinsurance firm SCOR said today that it has added three new risk partners in 2024 so far, as it continues to expand its third-party capital relationships and activities under Risk Partnerships, while seeing its 2026 target for fee income growth from this business as on track.
SCOR raised new third-party capital from risk partners in January 2024, while it also expanded the capacity arrangements it has with existing risk partners by 20%.
The reinsurance company utilises third-party investor capital within its retrocession arrangements and as a way to share in the risk and reward of its underwriting with partners, generating fee income to support its income.
SCOR’s latest strategic plan included an ambition to further expand its insurance-linked securities (ILS) asset management activities, while seeking increased fee income from these retrocession partnerships.
In addition, further formalising these activities at SCOR, the company made longstanding retrocession and third-party capital partnerships executive Benoît Liot its first Head of Risk Partnerships, to lead on activities with third-party investors, as well as retrocession.
The goal for SCOR remains to expand on and develop additional risk partnerships with third-party investors and retrocession partners.
While also monetising its franchise and expertise, to deliver a 60% increase in fee income from risk partnerships by 2026.
Rebased, SCOR indicates that its risk partnerships fee income reached approximately EUR 82 million in 2023, so a 60% increase would see that taken to around EUR 132 million, a meaningful contribution to the reinsurers insurance service result.
The company said today that it believes it is “well on track” with its ambitions for Risk Partnerships.
Achievements this year include the recently revealed capital markets retrocession agreement with a Tier 1 bank that provides SCOR with three-years of stop-loss protection, across P&C and life risks.
Further to that, SCOR said that it has added 3 new risk partners in 2024, adding to its roster of third-party capital relationships.
Additional fee income is now being generated, while these activities are helping SCOR manage its exposure as well.
The company sees continues opportunities to expand its retrocession partnerships, as well as its investment related partnerships through sidecars.
In fact, here SCOR reveals an ambition to expand these sidecar activities, with other lines of business potentially in scope, beyond catastrophe risks, such as multi-line and casualty risk reinsurance sidecar opportunities.
Retro commissions, profit commissions and tail risk fees, are all sources of earnings generated from the Risk Partnerships business activities for SCOR.
As well as increasing its risk partnerships fee income by 60%, SCOR also has a goal to increase the capacity running through these third-party capital and retro arrangements by 50% by 2026.
SCOR has a clear opportunity to expand its activities in the third-party capital space and with reinsurance returns deemed as attractive by investors still, the SCOR platform could provide opportunities for partners to come in and support differentiated areas of risk, through aligned and retro type structures going forwards.
It’s a further signal of the recognition by major reinsurers that income that can be earned through these partnerships can be meaningful, while the efficient capital delivered through partnerships can also be additive to the business model, in moderating exposures and expanding their own balance-sheet capabilities.
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