Scor slumps after warning from life & health business

Investing.com - Scor (EPA:SCOR) stock slumped Tuesday after the French reinsurer issued a profit warning due to actions taken in its life&health business.

At 09:15 ET (13:15 GMT), Scor shares fell 25% to €19.45, dropping to its lowest levels this year. 

“Following the negative experience variance in the first quarter of 2024, Scor has decided to accelerate the annual L&H reserving assumptions review, and to include a best estimate view in the Q2 2024 results,” the company said in a press release.

Scor added that the second quarter L&H insurance service result is expected at around -€0.4 billion.

“Today’s communication is consistent with Scor’s proactive and transparent communication policy. Following the accelerated L&H reserving assumptions review, we have decided to launch the first of a series of determined actions aimed at restoring the profitability of our L&H business in a sustainable way,” said CEO Thierry Leger.

The good news is that the group's solvency remains >200% and therefore within the target range (180%-220%), said analysts at Jefferies, in a note.

“Moreover, liquidity is unimpacted, and future earnings volatility is potentially mitigated. The only reference to P&C is that "they continue to deliver a very strong performance", which bodes well for underlying margins,” Jefferies added. “In this regard though, we remain concerned that the catastrophe loss ratio will exceed the 2Q budget and thus be in line for 1H (after a benign 1Q).”

Jefferies maintained a ‘hold’ rating, and a €27 price target.

“The added risk now is that an active U.S. hurricane season, could adversely impact the Solvency position further. While Scor states there is no impact to liquidity or dividend policy in today's release, that will likely be little consolation at this stage of the hurricane season in our view,” UBS added, in a note.

UBS maintained a ‘buy’ rating, with a 12-month price target of €33.70.