SCOR Se

Ian Kelly - Head, IR Mark Kociancic - CFO Victor Peignet - CEO, Global P&C Paolo De Martin - CEO, Global Life François de Varenne - CEO, Global Investments Frieder Knüpling - Chief Risk Officer

Guilhem Horvath - Exane BNP Paribas Vinit Malhotra - Mediobanca Securities Kamran Hossain - RBC Jonny Urwin - UBS Thomas Fossard - HSBC William Hawkins - KBW Frank Kopfinger - Deutsche Bank Vikram Gandhi - Societe Generale Xin Mei Wang - Morgan Stanley

Good morning everybody and welcome to the SCOR Group 2017 first quarter results call. I please ask you to consider the disclaimer on Page 2 of the presentation which indicates that the financial results for the first quarter 2017 included in the presentation are unaudited.

Before we start, Denis Kessler would like to pass on his apologies for not being able to attend today due to the SCOR Group board meeting taking place at present in advance of this morning’s Annual General Meeting. He is joined by Romain Launay.

The remainder of the Comex are here on this call. And with this I would like to give the floor to Mark Kociancic, Chief Financial Officer of the SCOR Group.

Mark?

Thank you, Ian, and good morning everyone. I have a very simple message for you all today.

At SCOR we see blue skies and the group is in excellent shape. SCOR delivers a strong start to the year and continues to pave the way through combining three key elements: growth, profitability and solvency.

Firstly, regarding the expansion of the franchise, we’ve been able to record excellent profitable growth. Gross written premiums of €3.7 billion in the first quarter of 2017, and that’s up 12.1% at constant foreign exchange rates compared to Q1 2016.

It’s fueled by both of our business engines SCOR Global P&C and SCOR Global Life. On the P&C side we continue to expand the franchise in the U.S.

market as per the strategy laid out in our Vision in Action plan. And in keeping with the strong January renewals already announced, the April renewals are consistent with selective growth and stable pricing.

In Life, we continue to deliver a strong track record of expanding Longevity reinsurance. In line with Vision in Action, we are further enhancing the franchise in Asia Pacific with the recent opening of a branch in Japan.

Secondly, regarding profitability, SCOR records a net income of a €140 million for the first quarter, which produced an 8.6% return on equity, in line with the Vision in Action profitability target. You are aware that -- of the change in the Ogden discount rate which is used to calculate lump sum payments in bodily injury cases.

This has affected UK long-tail business lines. As a result, SCOR has taken a charge in the first quarter of a €116 million on a pre-tax basis.

And this has been mitigated by the favorable natural catastrophe loss ratio in the first quarter and by a reserve release of €45 million. As you know, we use reserve releases in extreme cases, be it natural catastrophe or regulatory.

Take the combined ratio to a normal level of performance in the 94% to 95% range. The Ogden rate change has been a small cloud in our blue sky that has dissipated.

We’ve dealt with it all in the first quarter. Had the Ogden rate change not occurred, the net income would’ve reached a €197 million and the return on equity would’ve stood 12.2% well above the 800 basis points over the five year risk free rate profitability target.

Even so, for 2017 the group remains very much on track to reach its Vision in Action profitability target. Third, the solvency position of the group remains strong at 224% this quarter, above the optimal range and stable compared to the yearend position of 225%.

Excluding the negative impact of the change in the Ogden rate, amounting to approximately two points, our solvency position would be at the 226% level. SCOR continues to provide an attractive remuneration policy to its shareholders with a dividend of €1.65 per share and that’s an increase of 10% year-on-year, which will be proposed at the Annual General Meeting later on this morning.

Furthermore, I reaffirm the capital return message with regards to share buybacks that we announced with the fiscal 2016 yearend results that remains unchanged. Our operating fundamentals are solid and our solvency and rating capital positions are strong.

Moving on to Slide 4, I have mentioned the excellent growth from both divisions already. Further, both deliver strong technical profitability in Q1 as well.

And this is driving the strong core earnings of the group. The P&C combined ratio stands at 94.5% and the Life technical margin is at 7.2%.

SCOR Global investments is delivering a solid return on invested assets of 2.6% this quarter with continued rebalancing of the portfolio. Going to Page 6, shareholders equity increased by 2% over the first quarter to €6.8 billion, supported by the net income of a €140 million recorded in the quarter.

This corresponds to a book value of €36.35 per share a record since 2002. Financial leverage stands at 24%, decreasing by 40 basis points compared to the position as at the 31st of December.

Let’s move on to Page 7. SCOR generated operating cash flows of €22 million.

Normalized for non-recurring items this stands at approximately €200 million for the quarter and in line with our plan. SCOR Global Life operating cash flow reflects a delay in the settlement of retrocession recoverables and claims payment timing differences.

Cash flows are expected to start normalizing during the second quarter of 2017. On the SCOR Global P&C side, cash flows show some seasonality with the first quarter, usually lower due to retrocession premium settlements.

And Q1 2017 also reflects certain larger loss settlements. And the Q1 2016 cash flows were unseasonably high last year.

Timing differences in P&C will normalize by the first half of 2017. Total liquidity of the group reached €2.1 billion as at March 31st and reduced as planned from the yearend level of 2.3 billion through the rebalancing of the invested assets despite holding cash in preparation for the dividend payment in early May.

Let me now hand over the baton to Victor who will give you more details on the P&C results.

Good morning. We are pleased with the results of the quarter, which are more than in line with the targets and the assumptions of Vision in Action.

Picture that comes out of the two P&C slides that you have in the presentation is very much one of continuity and stability of excellent performances. It is also a picture of continuity and consistency in terms of handling exceptional events and absorbing shocks.

Starting with the exceptional event of this quarter, a change in the Ogden discount rate has essentially affected two of our UK portfolios; Non-Proportional Motor and the medical defense union Medical Malpractice run-off. It has caused a total impact of €116 million, 83 million for the Motor Non-Proportional and 33 million for the Medical Malpractice run-off.

As we have always done in the past when facing such large events which are generally more linked to natural catastrophe, we have used part of the margin above best estimate in our reserves and we’ve done a quantum of reserve releases to absorb part of the shock. This quantum combined with a low natural catastrophe ratio for the quarter brings us to a net combined ratio of 94.5%, which remains below the 95% to 96% range indicated for Vision in Action.

It’s worth noting that the normalized net combined ratio after neutralization of the Ogden impact and the related reserve release and considering a Net Cat budget of 6%, comes out at 94%, which is below the level of the past quarters and demonstrate that the quality of the book of business has been very well maintained. We continue to deliver excellent technical profitability, which has been unaffected by market conditions that remain very competitive, and we have managed to grow premiums as the steady base as shown by the progression under 1/1 and 1/4 renewals.

The fact that these renewals have been negotiated at almost stable pricing and with almost no deterioration of the expected technical profitability confirms that we are reaching a point of market stabilization, if not yet a point of market upturn. The 13.2% gross reported for the first quarter benefits from the return premium influx of the large proportional contracts that were underwritten in the second part of 2016.

You will recall that these contracts were mentioned when we commented our Q3 2016 results. As in the past, for example in 2009, this gross rate will adjust itself over the quarters and pending the results of the June-July renewals, we believe that the gross range indicated in Vision in Action remains valid.

On that I’ll pass on to Paolo for the Life results.

Thank you, Victor. I’m pleased to report that SCOR Global Life had a very good start of the year with strong results for both with regard to premium growth and profitability of the business.

The first quarter of 2017 we have recorded gross written premium of €2.2 billion representing an increase of 12% at constant exchange rate or 14.4% at current exchange rate. A strong quarterly growth follows an already strong fourth quarter in 2016 where we wrote a new Longevity business in the UK with premium contributing into 2017.

The growth has been well diversified both in terms of geographical spread and product lines. Beside the new premium from the in-force Longevity business we have also recorded new business flows particularly in the Americas and Asia-Pacific from protection and financial solutions affirming our strong franchise in those regions.

With the opening of a branch in Tokyo demonstrating the importance of Asia Pacific to our strategic plan we’ll continue to expand our franchise in this region and bring new and innovative solutions to our Japanese customers. For the full year 2017 we expect premium growth to normalize at around 5% to 6% in line with the Vision in Action annual premium growth assumption.

Technical results remain strong with a technical margin of 7.2%. We’ve been able to deliver these thanks to both the profitability of our new business and the retaining line with the group profitability target as well as the very healthy performance of the in-force portfolio.

I will now hand over to François for more details on our group investment strategy.

Thank you Paolo. SCOR’s total investment portfolio reaches €27.9 billion at the end of March with an invested asset portfolio of € 19.4 billion compared to € 19.2 billion at the end of December 2016.

[indiscernible]at the end of 2016 due to the political uncertainty SCOR Global Investments resumed the rebalancing of its invested assets portfolio towards Vision in Action asset allocation during the first quarter of 2017. Liquidity stands at 10%, one point lower compared to the end of 2016 level but temporarily including the upcoming dividend payment of the group scheduled in Q2 2017.

\Most significant change of the quarter is the significant reallocation from government bonds toward high-quality corporate bonds purchased at good market condition. Indeed we were able to invest € 1.1 billion in all our main currencies in high quality corporate bonds with an average rating of A and allowing to lock a high book yield of 2.85% on an average at an average duration of 6.8 years.

As a consequence our corporate bonds exposure stands at 44% up 6 points compared to the last quarter and in line with Vision in Action asset allocation. Meanwhile the duration of the fixed income portfolio was slightly increased from 4.5 years to 4.8 years.

Our fixed income portfolio remains of very high quality with an average rating of A+. At the end of March, expected financial cash flows from the fixed income portfolio over the next 24 months is then at € 6.1 billion which will facilitate the dynamic management of our investment policy.

SCOR Global Investments deliver a solid 2.6% return on invested assets in the first 3 months of 2017. It should be noted that in comparison with last year the Q1 2016 financial contribution was positively impacted by realized gains in real estate of € 52 million.

We confirmed a 2.7% to 3.2% estimated range for the full year 2017 according to current market conditions. Its return should benefit indeed from realized gains linked to the sale of a mature real estate building that should be done before the end of the year.

So global investment continues to reinforce its ESG policy and we announced today a full divestment from tobacco companies undertaking to make no new financial investment in such companies in the future. With this action as a responsible life and health venture we demonstrate the crucial positive role the investment community can play in the society.

With this I will hand it over to Ian Kelly for the conclusion of this presentation.

Thank you, Francois. On Page 12 you will find the next scheduled event starting on July 27th with the Q2 2017 results, and of course, on our Investor Day on September the 6th here in Paris as well as the conferences that we are planning to attend for the remainder of 2017.

So with this we can start the Q&A session, thank you.

I have actually three questions. So, I’ll ask them all and if you want to answer later, you -- sorry about that.

The first one is on the Life technical margin. So it’s improved and I thought that increasing Longevity business would deteriorate that actually, so you highlighted the in-force management and I wanted to understand how much it contributed to the technical margin there and excluding that would have been deteriorating, first question.

The second is on in terms of run-off in P&C and the run-off was made on long tail-lines and I wanted to understand what’s your view on potentially inflationary pressure on claims in these lines and do you feel very comfortable in releasing these reserves on long tail-lines. And the third one is on solvency capital generation and the fact that you, excluding Ogden you generated 1 point of solvency in Q1 compared to full year ‘16 and I wanted to understand if this is somehow a run rate for the coming quarters, and so should we expect something like 3 points of solvency during the remaining of the year, solvency capital generation?

Okay, Paolo on the first question, technical margin at 7.2%.

Yes, I think we got -- you guys use nicely with the steady 7%, I mean, the 20 basis points of over 8 billion book premiums is -- it would be normal volatility of a quarter. This quarter we had a particularly good performance of our in-force book, we had one-off transactions that bumped the margin up a little bit.

It will normalize down probably slightly higher than the Vision in Action interval by the end of the year, but that’s really normal, I would say normal business really there was nothing super exceptional in it

Victor, on the inflation expectations, given the reserve release of Ogden.

First of all the reserve releases are taken out of the margin above best estimate, that has got to be very clear. It’s only a very, very marginal fraction of the total reserves which are well in access of 11 billion and those 45 million have been spread across well, four different lines of business, motor, liability, aviation and marine across well, between five and 10 portfolios in Europe.

So I think we are totally comfortable with this sort of reserve release. As far as the inflationary pressures on claims, well, we are reviewing the situation on claims inflation every year.

And again we are totally up to speed on that.

Frieder, if you could say a few words on the solvency generation capacity.

Yes, we don’t really give forward looking guidance on solvency ratio movement at this point, but when it comes to Q1, there was nothing unusual which drove the Q1 numbers. We’ve had a slight uptick because of financial market movements, interest rate movements have added a bit more than a percentage point and then a few smaller other improvements.

And then on the business side, obviously the Ogden rate impact is quite significant, so this reduced the solvency ratio by a bit more than 2 points and then there was normal run rate capital generation in addition, but you should note that on a quarterly basis in our estimates we [accrued] the expected dividends on a pro rata basis, don’t think anybody, everybody is doing this. So this usually leads to relatively smooth solvency ratio movements during the quarter because we build up the expected dividends which obviously needs to be funded out of the capital which we generate quarter by quarter.

There is some seasonality on a quarterly basis. So the business growth dynamics are not equally spread out over the quarters, and also capital generation is a function of the business mix in the respective quarters.

So there is some volatility which is also caused by business mix and growth dynamics during the year.

Can I just remind everybody to stick to two questions each. We’ve got short time this morning and we can deal with other questions subsequent to the call.

Thanks.

So my two question. One is on the strong normalized combined ratio, Victor, could you point to any, would you say that there was anything very different because this is obviously much lower, much better than what we were expecting and what is in the target range, is there any one-off here or is it something that is just the effect of stabilization that you are seeing in the market, I mean, in pricing terms.

And the second question is just on the, it’s slightly vague, I apologize, from the U.S. proposals on tax, is there any rough estimates on what happens to solvency or DTAs or any such thought process from your side on these proposals?

Victor, on the 94% normalized combined ratio.

Well, we are on the third quarter of the Vision in Action plan and as for the previous two quarters, we have said that we have managed until now to continue much more on the dynamics of the optimal dynamics which was basically a combined ratio between 94% and 95% and as you will recall, we have been on normalized combined ratio around 94.3% to 94.5% for quite some time. It’s a bit better this quarter, we can only, there is nothing special into it, it’s just that the normal development of the business is positive which means that it reinforces our conviction that the underlying is very strong, but between 94% and 94.3%, the difference is not acute, but it shows a trend and what is important for us is that for the moment we continue to be able to manage the combined ratio around the 94% [indiscernible] and we are not yet in the metrics of Vision in Action which was more than 95%-96%.

And the second question with respect to the U.S. proposals on income tax reduction.

So, there is a wide range of tax rates that are being floated around as potential landing points in the U.S. Just give you a general proposal as to how it might affect existing DTAs that we have.

So roughly there’s between a €2 million and €3 million charge for each percentage point of decrease in the U.S. corporate income tax rate.

That’s a rough estimate. I think it is a net positive for us though because we have such an extensive operation in both the U.S.

Life and U.S. P&C organization, so there would be a net positive benefit in the long term with a lower income tax rate in the United States.

Hi, good morning everyone, two questions. The first one is, I guess, following the Ogden charge sheets at this quarter, can you maybe give an indication of what you expect to happen to prices especially in the UK Non-Proportional Motor reinsurance market, so that’s question one.

The second question, just coming back to mix of long-tail versus short-tail business in P&C, could you give an indication of what this looks like year-on-year and have we seen a substantive move towards long-tail as I know that was one of the things you indicated that would happen over the three year time period? Thank you.

As far as the market reaction to Ogden, I think it’s too early to really say. I think we know technically what is the impact on pricing of excess of loss reinsurance due to Ogden rate change.

But we are waiting for first the consultation and the outcome of it, I think as the rest of the market does probably and I think we will see that 17 renewals, that’s the first one, the consultation should be done by then. We will have a better feel about what’s going to be the market reaction, but it’s obvious that on the technical point, it makes a very, very substantial difference in pricing and higher the excess point is, well, the more that multiple increases.

Regarding the split between long-tail and mid-tail, because you need to divide more in three than in two, well, we have a bit of an increase on pure long-tail. So if you divide the portfolio in between short-tail, mid-tail, long-tail, short-tail is around 45%, the mid-tail is about a bit less than 35% and the long-tail is a bit above 20%, so that’s basically.

So now if we look year-on-year and we are increasing the long-tail, we were in the 20%, 21%, we are now in the 23%, 24%. But it’s like a packer tanker, it doesn’t move at very high speed, but it is significant, yes, in terms of movement.

Hello, good morning. Thanks for taking my questions.

Just two from me, so firstly just thinking ahead to the 1st of June, 1st of July renewals, I have read a bit in the industry journals that demand has been falling in the U.S. in particular from primaries and also due to a bit of model change from RMS.

So any comments there would be interesting. And secondly there’s been growing sort of criticism of broker practices and commission levels in Lloyd’s of London, in particular in recent weeks as well, so just any comments from you guys there would be appreciated.

That’s all.

Well, your question, the first question is very much focusing on pure cat business in the U.S. and again within that focusing on Florida which is not a big play for us.

So I think yes, what you say is right, but we are not going to be affected by this movement ourselves because of the portfolio structure, nature and clients and geography. Well, the second regarding the levels of commissions and brokers, well, I have read those comments, but I think that everyone has got his own view about that and personally I’m not willing to comment on this.

Two questions, the first one would be for Victor just to come back on the Ogden rate reserve strengthening. S just to better understand what was the starting point in terms of reserves you were holding on the UK Motor, just to put the 83 million into context and also to better understand, you’re talking of non-proportional book result strengthening, had you as well some proportional exposure here or is that insignificant or does not matter too much in light of the Ogden rate table.

And also the second question will be, I think that Paolo a kind of normalization of the premium growth over the full year, so moving from 12 to roughly five to six. Victor, could you also give us a bit of what is your current view regarding the full year premium income you are expecting at this stage following Q1 stronger performances?

Thank you.

Let me give you some facts on Ogden and demonstrate how transparent we are. We estimate our market share of proportional and non-proportional UK Motor at about 3.5%, we used to have a larger share on proportional, but considering market conditions, we have aligned basically to about 3.5% on both.

Now the deterioration we have taken in relation to Ogden have all been on 2011 and subsequent years. Reserves of the deterioration is on 2014 to 2017 where we had no paid losses, so that is where we are.

We would have been sufficiently reserved if the rate had gone down to 1%. We have always had a prudent reserving.

We did not foresee and anticipate a large reduction in the discount rate and certainly not it going to negative. So that’s where it gives you the picture of where we were.

As to gross for the entire year, as I said, you’ve seen our renewals, 1st of Jan, you’ve seen our renewals 1st of April even though the 1st of April is a bit impacted by two one-offs, but you can see that we are within the range of Vision in Action, we are around the 5% to 6% at the moment, but we are waiting for first, well, for June-July renewals to be a bit clearer on where we are going. I think it’s obvious that as market conditions are stabilizing, but still very competitive, and we are also extremely focused on the technical profitability, we have to take views on certain contracts which happen at 1/4, so we’ve got to see how the June-July renewals develop.

I think Victor you’ve actually just answered the heart of my question. I was going to ask about Ogden, why this has affected the P&L because I would’ve thought that such an event was covered by your bulk IBNR, but it sounds like in your answer to the previous question, you are saying that would have been the case if the rates had gone down to 1%, but the fact we’ve ended up with such a negative, that’s why it ends up affecting the P&L.

Just to confirm I have understood that correctly. And then what you didn’t answer from the previous question is what the reserves were before this charge was taken, that would be useful just to understand the scale of the impact for the portfolio affected.

Thank you.

Right, if it would have gone to 1%, we would have had no impact. Secondly, the reserves were a bit north of € 300 million before Ogden.

And this is for, we are talking here of motor non-proportional, right, so the 83.

Yes, he’s right.

Strengthening.

Yes, good morning everybody. I have also two questions.

My first question is on P&C, Victor, could you comment a little bit more on the reserve margin, how this developed after the reserve release, do you see it on the same level or how much did it affect the margin at the end of the day? And second question is for François, if I got you correct and you mentioned that there might be realized gains from property being ahead on the course of the year, should we expect the same magnitude that we had last year or what should be the expectation in this end?

We are talking of a magnitude of release which is very comparable to the one we did last year when we faced [indiscernible] fires and as we commented at the end of the year, we had been able to replenish the margin by the end of the year. So I think we are at this year in the same configuration, we have a hit on the margin in the first quarter, which is not massive and we are hoping that by the end of the year we will have replenished the margin.

So the second question on the investment returns for the full year. So yes, I confirm that we launched the SCR process of a mature building exactly in line with what we did in 2016 and you saw the impact in Q1.

So we expect the finalization of the SCR process by the end of the year probably and impact more you should expect it in [indiscernible]. The magnitude is in line with the expectation for the full year that I gave in the presentation of the Q4 result, so still an income yield between 2.1% and 2.3% and the contribution of realized gain that should be between 0.50.

Just one question from me. Can you please shed some more light on the U.S., the two large contracts that is mentioned on Slide 9, the reduction in premium from 93 to 49 million, what’s really driven that and that’s all from my side.

Well, I can’t say much more about that, I can tell you that one contract has disappeared because of consolidation by the client, the other contract is a voluntary cancellation from our part because the contract was not providing the expected profitability we were looking for. One is property, the other one is motor.

I have just one question, it was for François, I think you said on the 4Q conference call that you expect 2017 the return on invested assets to be in the upper half of the 2.7% to 3.2% range. Could you please comment on that in light of the 1Q return on invested assets and reinvestment yield, please?

What I said in Q4 and that I reiterate today is that our expectations for the full year 2017 return on invested assets would be in the high part of the range given for Vision in Action in September 2017, so 2.7% to 3.2%. And at this stage, again, what we are doing on the real estate portfolio and the SCR process, I’m pretty confident that we will be in this range.

It’s a little bit too early to say, to reduce the range today. I prefer to wait for the development of market environment for the full year.

I confirm just 2.7%, 3.2% which is the upper part of Vision in Action expectation.

Okay. Thanks very much for attending the conference call and please don’t hesitate to call us should you require any further information.

So thanks a lot and have a nice day.