SCOR SE’s Q1 2025 Results: A Balancing Act of Profitability and Prudence

SCOR SE (SZCRF) delivered a Q1 2025 earnings report that underscored its ability to navigate a challenging insurance landscape with discipline and resilience. While the company’s financial metrics reflected strong profitability and solvency, it also highlighted strategic trade-offs in growth and risk management. Let’s dissect the key takeaways and what they mean for investors.

Financial Highlights: Profitability Amid Prudence

SCOR’s adjusted net income of EUR 195 million and an annualized ROE of 18.3% showcase its operational strength. The Group solvency ratio rose to 212%, a 2-point increase from year-end 2024, signaling robust capital adequacy. The standout performer was the P&C segment, which delivered a combined ratio of 85.0%—well below its 2026 target of under 87%. This achievement was notable given the absorption of losses from the Los Angeles wildfires and added prudence buffers, reflecting management’s conservative risk approach.

Meanwhile, the L&H segment contributed EUR 118 million in service results, bolstered by neutral experience variance and controlled CSM amortization. Investments also played a role, with a 3.5% regular income yield and a 3.8% return on assets, benefiting from higher reinvestment rates.

The Group Economic Value (EV) under IFRS 17 grew by 6.8% at constant economics to EUR 9.0 billion, driven by strong operational performance and capital generation. This metric is critical for investors, as it reflects the company’s capacity to generate long-term value.

Strategic Underwriting Discipline

Management emphasized selectivity over scale in underwriting, particularly in P&C. The 9% year-on-year increase in new business CSM highlights improved risk-adjusted profitability. However, this discipline came at a cost: P&C insurance revenue dipped 0.7%, and US Casualty premiums fell 12%, as SCOR exited unprofitable contracts. CEO Denis Kessler framed this as a “strategic portfolio optimization”, prioritizing technical profitability over top-line growth.

Growth Challenges: Navigating Sector Headwinds

The company’s 4-6% CAGR growth target faces hurdles. Q1’s revenue shortfall in P&C and the US Casualty pullback raised concerns about achieving full-year growth. Executives acknowledged these headwinds but pointed to H2 renewal dynamics and disciplined underwriting as levers to drive results. The P&C combined ratio of 85.0% was achieved through “excellent underlying performance” and intentional buffer building—though management avoided quantifying the buffer size, leaving some ambiguity.

Risks and Concerns

Despite the positives, risks loom large. Market competition, especially in casualty lines, threatens pricing adequacy, while macroeconomic uncertainties—like inflation or geopolitical volatility—could disrupt growth. GuruFocus flagged six warnings, including declining premiums and geopolitical risks, which investors should monitor.

The financial leverage dipped to 23.6%, a positive sign of capital efficiency, but the EV growth target of 9% annually remains ambitious. The CFO noted Q1’s 6.8% growth was seasonally muted, with hopes for stronger H2 performance to meet the full-year goal.

Conclusion: A Prudent Play for Patient Investors

SCOR SE’s Q1 results paint a picture of a company balancing profitability with strategic restraint. Its 18.3% ROE and 212% solvency ratio provide a strong foundation, while the 85.0% P&C combined ratio and EUR 9.0 billion EV underscore operational excellence. However, investors must weigh these positives against growth headwinds in key segments and sector-wide risks.

The 12% drop in US Casualty premiums and the 0.7% P&C revenue decline are red flags, but they reflect a deliberate shift toward quality over quantity—a move that could pay dividends in the long term. If SCOR can sustain its ROE and meet its 9% EV growth target, it could outperform peers in a consolidating insurance market.

For now, the stock appears priced for patience. With a P/B ratio of 0.85 (vs. industry averages) and a dividend yield of 2.1%, it offers value to investors willing to ride out near-term volatility. The 3.8% return on investments and strong solvency further insulate it from shocks.

In conclusion, SCOR SE remains a capital-light, profitability-focused insurer with a solid track record. While growth challenges persist, its disciplined approach and robust balance sheet position it well to weather sector headwinds—and reward investors who stay the course.