A new era for SCOR - interview with Jean-Paul Conoscente

For two decades, global reinsurer SCOR and its legendary former chairman and CEO Denis Kessler were almost synonymous. Kessler built SCOR into one of the reinsurance market’s leading players, and presided over its recovery in the years following the global financial crisis and its growth in the years since then. Kessler withdrew from the CEO role in June 2021 but stayed on as chairman. He passed away on 9 June 2023, aged 71.

“I think Denis’s legacy is in the strength of the SCOR brand and in bringing SCOR into the lead of European reinsurers,” Jean-Paul Conoscente, chief executive officer of SCOR Global P&C, and member of SCOR’s executive committee, tells GR.

“SCOR is a company that clients want to work with, and have trust in to pay claims. To be one of the big reinsurers but still for its people to be approachable. Clients are keen to work with us and to grow with us in the areas we’re interested in,” Conoscente adds.

SCOR’s new CEO

Thierry Léger took up his post as CEO of SCOR with effect from May 1 2023, joining from rival reinsurer Swiss Re. Laurent Rousseau, who succeeded Denis Kessler as CEO in 2021, resigned and has since taken up a senior role within reinsurance broker Guy Carpenter.

Léger brings a different perspective to SCOR as overall group CEO, with Conoscente running the global P&C side. At Swiss Re, Léger led its newly-created “globals division” to pioneer a “client focused approach” across both P&C and life business, before moving on to take up CEO roles for life and health.

He also brings an underwriter’s focus on the portfolio, having previously served as Swiss Re’s group chief underwriting officer before joining SCOR. This year marks his first Rendezvous-de-Septembre, a key date in SCOR’s calendar, and an opportunity to outline Léger’s plans for the group.

“What Thierry brings is a deep knowledge of reinsurance, both P&C and life,” Conoscente says. “One of the key messages he’s shared with us and with the board is that he believes in a well-diversified portfolio without any oversized exposures by line of business. That’s his main focus and that’s how you build a sustainable portfolio, by having lots of different risk pools, none of them to a size that will disrupt the whole the whole balance.

This year’s market turn comes after a challenging period of underwriting results for SCOR, providing Leger and Conoscente with opportunities to reposition the reinsurer’s portfolio.

“So far, it’s more tweaking and adjusting, rather than large-scale change,” Conoscente reveals. “SCOR was already a fair way along this diversification journey, with some oversize exposures relative to our size, such as agriculture business in Brazil, for example, where we’re the second largest agro-insurer, but last year there was a serious drought.”

Retro tower

SCOR’s retrocessional tower is traditionally seen as a bellwether for the market. Last year, the retro-led hard market resulted in everything happening much later than usual in the run-up to 1/1. Conoscente provides some insight into that process and what we can expect this time around.

“The renewal last year was very late. Typically we complete our cat programme by Thanksgiving; last year, we didn’t have a quote by Thanksgiving. So it was a very late renewal,” he says.

“All the signs we have so far are for this renewal to be more back to normal. I do not think the market is not going to be easy. We still expect firming of the market. The number of retrocessionaires still remains limited, but I think the results this year should be good – knock on wood!

“I think the renewal process this year will be similar to what we’ve experienced in the past, with the aim of completing our cat placement by the end of November or early December. We’re in discussions with some of the leaders to discuss structure. So the structure is not set [as of the last week in August], but I think we’re looking for something similar,” Conoscente adds.

Hard market momentum

He dismisses any suggestions that the hard market might be running out of steam or have reached equilibrium, regardless of what hurricane season brings in the next couple of months.

“There’s still an imbalance today between supply and demand, not as acute as it was at the end of last year, but the imbalance will carry on into 2024; there’s still a lot more demand than supply on the cat side in particular,” he says.

“There were two things that were really important on the cat side: one is the rise of retentions; and the other is the increase in pricing and the terms and conditions. Pricing and terms and conditions are getting most of the press. But honestly, when you have a programme that’s totalled, whether you paid 30% more, or 50% more, it’s still a total loss for the reinsurer,” Conoscente continues.

“Retention is the really important part of the story, and why, if you see the results for the first half of 2023, reinsurers are doing pretty well in terms of their cat budget, and insurance companies are not, because they’re now retaining a lot of these losses that are receding previously.

“I think that’s going to continue going forward. Retentions are going to remain high, and that’s an important aspect for reinsurers, to keep a sustainable, profitable portfolio. I think pricing will still have to continue to increase because we’re seeing the cat activity has not led up, and also the climate change inflation of claims is real, it’s there, and it’s not going away,” he adds.

There is limited capital entering the reinsurance industry from outside, and investors ill be highly selective in which underwriters they choose to partner with, Conoscente suggests. He notes that the cat activity up until August this year has itself not been insubstantial, from the Turkish earthquake through to the Maui wildfire.

“Whether the rate increases we’re seeing today are sufficient or not, investors want to see at least one year of good results, before they truly believe it,” he says. “And honestly, if the hurricane season is active, and a large hurricane makes landfall, then it’s unlikely the reinsurance market will be positive.”

Market opportunities

Property catastrophe US business is also now attractively priced, he noted. Conoscente also thinks specialty contains some attractive areas of business for SCOR, underwriting engineering, marine, decennial and inherent defect insurance covers, for example.

“We view those segments are still quite attractive, not to be capital consumers and showing price adequacy. Those are areas in which we feel there’s room for additional growth,” he says.

He is “moderately optimistic” about growth opportunities in the hard market, but still has some areas of concern where pricing has still not reached a sufficient level for the risks.

“As a market, we still have issues, such as for cyber risks, and we still have issues with social inflation in the US. Civil unrest is another area that we see risk rising that is not very well priced,” Conoscente says.

Strikes, Riots and Civil Commotion (SRCC) has traditionally sat within property reinsurance programmes, but it’s a risk that’s “practically been given away for free”, he complains. While some territories beset by political violence (PV) in recent years have spawned standalone business, across many borders the covers are still hidden within property books.

“In 2019 and 2020, there were the Chilean protests, which created a big market loss, and this year riots in Paris and across France have been a big wake up call. This type of event can result in a $500m to $1bn overall insurance market loss. Therefore, I think SRCC will be an area of increased focus at upcoming renewals,” he says.

“Another area of concern is subsidence, in the context of all the wildfires we’ve seen, in some countries, such as France, the UK and US. We want to make sure that if it attaches to a reinsurance programme that it’s equitably priced – and I believe it’s not,” he adds.