CCR, 2017: solidity of the public reinsurance mechanism confirmed in a challenging year
The main weather events affecting thye CCR's portfolio were the drought on mainland France, and above all Hurricane Irma, the costliest event since inception of the Natural Disaster scheme. "This disaster underscored CCR's public service mission of protecting the people and territories of France vulnerable to these risks who benefited from an immediate assessment of the full extent of their losses, the assurance that their affordable insurance coverage will be maintained, strict control of the compensation process and the payment of a major portion of losses alongside local insurers", a CCR press release states.
Total losses for 2017 amount to nearly EUR 2.2 billion. They were amortized to a great extent by liquidation surpluses relating to prior years and to a greater extent by the transfer of EUR 1.1 billion from the equalization reserve booked to this effect. Resultantly, considering the underwriting results from terrorism risk and specialty lines reinsurance as well as the financial income generated by the investment portfolio, income before tax for all public reinsurance activities amounts to EUR 204 million compared to EUR 275 million in 2016.
Beyond this result, the public reinsurance balance sheet remains solid as CCR is capable, at present, of covering a natural disaster market loss of EUR 4.5 billion without resorting to the use of the State guarantee.
CCR Re's 2017 results, which improved over 2016, are a testimony to its prudent management
CCR Re completed its first financial year meeting its operational, underwriting and solvency objectives over one year in advance with EUR 396 million in premium income, an improved loss ratio of 73% and a solvency ratio of 190%.
It was relatively unaffected by the natural disasters and the consequences of the new Ogden regulation in the United Kingdom, in particular, thanks to the diversification of its activity and a prudent underwriting policy.
In the same manner, modernization efforts enabled the company to reduce its general expenses and improve current returns from its investment portfolio thereby contributing to an increase in income before tax of EUR 26 million compared to EUR 21 million the previous year.
At the same time, the CCR Re balance sheet was strengthened by an increase in unrealized capital gains of EUR 21 million and a transfer to the equalization reserve of EUR 6 million.
CCR Group: a pertinent business model
Coming out of 2017, a year marked by several natural disasters in France and internationally, CCR Group posts a consolidated income before tax figure of EUR 228 million compared to EUR 295 million in 2016. Net consolidated income for 2017 amounts to EUR 45 million due to an exceptional tax expense.
The Group's balance sheet remains solid due to a smart investment policy and the positive performance of the financial markets. In particular, unrealized capital gains increased by EUR 50 billion for a total assets under management of EUR 10,212 billion.
**Ratio of management expenses net of investment charges and tax to written premiums gross of retrocession.