SCOR expects Q1 Ukraine losses in the high double-digit millions

France-headquartered global reinsurance company SCOR has said it expects the conflict in Ukraine and other natural catastrophe events will cause it to report a loss for the first-quarter of 2022, with a high double-digit million Euro charge expected to hit its results.

SCOR said it has been “closely monitoring the unfolding of events” since Russia’s invasion and the war in Ukraine began, as it tries to assess the potential impact of the conflict and related sanctions on its business.

The reinsurance firm said that SCOR PO, a Russian subsidiary owned by SCOR, has been directly impacted and as a result has stopped underwriting new business.

More generally and on the underwriting impact or loss side, SCOR said the conflict will affect lines of business including Political Risks, Credit and Surety, and Aviation.

“SCOR expects a Q1 2022 charge in the high double-digit EUR million range for potential claims related to the conflict across both treaty reinsurance and specialty insurance,” the reinsurer said.

Adding that, “As the conflict continues, this estimate will evolve.”

Taking the Ukraine conflict impacts and charges alongside natural catastrophe and severe weather losses from the first-quarter of 2022, SCOR said it anticipates reporting a loss for the period.

As well as natural catastrophe losses, from events such as floods in Australia, European windstorms and a drought in Brazil, SCOR is also anticipating mortality impacts from the COVID-19 pandemic, which appear predominantly to affect the companies US life reinsurance business.

“These developments will have an adverse impact on SCOR P&C’s combined ratio and on SCOR L&H’s technical margin and are expected to result in a quarterly loss,” the reinsurer said.

It’s uncertain at this stage whether SCOR will be able to recover any of these first-quarter impacts from its retrocessional reinsurance arrangements, or whether any of its quota share sidecars could respond on the natural catastrophe side.

SCOR’s sidecar and insurance-linked securities (ILS) arrangements appear largely to cover natural catastrophe risks only.

Elsewhere in its retro arrangement, SCOR is likely to have coverage for the specialty lines side of its business, so if the costs related to the war escalate that could see counterparties to any retro arrangements put on watch for possible losses related to the Ukraine conflict, we’d imagine.

As we wrote earlier today, PCS has provided us with some data on its early thinking related to the possible industry loss from the Ukraine conflict, saying the overall impact will largely be to specialty lines and could exceed $20 billion.