Good afternoon, ladies and gentlemen, and welcome to the SCOR Global P&C January 2022 Renewals conference call. Today's conference is being recorded. There will be an opportunity to ask questions after the presentation. In order to give all participants a chance to ask a question, we kindly ask you to limit the number of your questions to two. At this time, I would like to hand the call over to Mr. Yves Cormier, Head of Investor Relations. Please go ahead, sir.
Good afternoon, everybody, and welcome to SCOR Global P&C 2022 January Renewals. My name is Yves Cormier, Head of Investor Relations, and I'm joined on the call today by Jean-Paul Conoscente, Chief Executive Officer of SCOR Global P&C, and Romain Launay, Deputy Chief Executive Officer of SCOR Global P&C. Before we start, I would like to remind you that SCOR full- year 2021 results will be presented on February 24. When it comes to the Q&A session, we will only be able to refer to the renewals information that is provided in the press release or in the slides. With that, we can start. I hand over to you, Jean-Paul.
Thank you, Yves, and good afternoon, everyone. I'd like to share with you the progress made by SCOR with regards to the three targets we set out for P&C at our Investor Day in September. Reduce the climate sensitive volatility of our portfolio, expand our global lines treaty portfolio, and accelerate our specialty insurance development plan. Starting with the treaty portfolio, the January 1st, 2022 renewals took place as expected in a very favorable market for reinsurers. The market hardening continued across most lines of business and geographies, and demand for capacity exceeded supply in a number of lines of business such as property, aggregate, and cyber. Leveraging these market conditions, SCOR repositioned its portfolio to optimize the expected return on capital, resulting in an estimated 0.5 point improvement of the net price combined ratio and a 19% year-on-year premium growth.
We leverage our leadership positions in Europe and in fast growth markets to develop our portfolio in global lines, which have superior expected margins, and to receive payback on loss-affected cat programs. While overall property cat price increases average 13% across the portfolio, price increases obtained on loss-affected European programs range from 15%- 60%, while the increases on the U.S. programs average 9%. In North America and APAC mature markets, we actively manage our cat portfolio as the net margins were viewed as insufficient in respect to the expected volatility. U.S. casualty market conditions continued to improve, but we tempered the growth in this segment because of high ceding commissions required to write the business.
Finally, our ventures portfolio, made of Insurtech companies where SCOR is both an investor and a risk underwriter, was a strong contributor to the overall growth with a 77% year-on-year progression. The overall average price increase obtained on business up for renewal was 4.9%. However, the strong management actions taken to modify the portfolio mix were also a large contributor to the margin improvement on a risk-adjusted basis. We're overall extremely satisfied with the portfolio mix achieved, as it should provide a better sustainability of profits over time with less volatility. Overall actions taken in a year, in a year-on-year estimated improvement of the price net combined ratio of 0.5 percentage points on a risk-adjusted basis. You'll find more information in the slides and press release distributed earlier today.
In specialty insurance, the primary insurance rate adequacy continues to improve for large commercial risks. In 2021, we grew our large commercial single risk premium by 18.6% on the back of an average 12.6% rate increase across all geographies in all lines of business. As the profitability of longer tail lines has improved, we have started to grow this portion of our portfolio and expect this trend to continue in 2022. We also took the decision last year to exit U.S. primary wind exposed MGAs to allocate the relevant capital to other segments of specialty insurance with better returns. This decision will result in a roughly $100 million reduction of our MGA premium in 2022. Finally, the retrocession market was probably one of the most difficult segments of the market.
Having correctly anticipated this market environment, we restructured our program to compensate for the supply reduction of proportional and aggregate capacity by increasing our sidecar facility with a large Swedish pension fund. Price increases on capital and business did not lead to sufficient improvement on the net expected margins. This led us to reduce our net PML by 11% compared to 2021. As a consequence of all these actions, we are pleased to confirm the guidance we gave at the September 2021 Investor Day of gross written premium growth of 15%-18% and a net combined ratio trending to 95% and below. We believe SCOR remains well positioned to profit from the continued improving market conditions, both in specialty insurance and reinsurance.
In addition, we're confident that our current portfolio mix will provide a solid base upon which to build the next strategic plan. Romain and I will now take any questions you might have.
Thank you. We will now take our first question from Kamran Hossain from JP Morgan. Please go ahead.
Hi. My question is basically around, I guess, it's cat budget versus cat exposure. I guess you've increased the cat budget for this year following to make that kind of more forward-looking to 8%. You've reduced the cat exposure and I guess your PMLs have reduced pretty materially in the new renewals. Can you maybe just square off those two things? Thank you.
Yes. What we've done is we've modeled a cat portfolio on a forward-looking basis and calculate our cat budget for 2022 on a forward-looking basis. Taking into account, as you said, the reduction of our net PMLs, as well as the increases that we expect from climate change and other effects, especially on secondary perils, we're confirming our 8% budget for 2022.
Okay. That's fair. Thank you.
Our next question is from Vinit Malhotra from Mediobanca. Please go ahead.
Yes. Thank you. I hope you can hear me.
Yes.
Thank you. Just back on the reduction in net cat, Jean-Paul, are you able to give us some sense of how much was the result of higher pricing from retro, and so we are going to reduce the gross exposure or, and there is more climate change and increase in secondary perils, as you mentioned. I mean, is it roughly half of? Is it the bulk coming from climate change? Is the bulk coming from retro? Just to help us understand the driver behind this reduction in net cat, that'll be interesting. Second question is that, the increase in global lines has been flagged very well, though when I look at the pricing, the global lines, Marine and Aviation, they're not the ones which are really even above the average achieved.
I mean, they are roughly 3% from the slide. Could you just comment about your thinking about that? I think we're only allowed two questions, so I'll stick to that. I did have one on guidance, but I can come back later. Thank you.
Thank you. Thank you, Vinit. On the first question, what we see is the increase of the retro pricing, and you know, as we mentioned in the press release, we bought roughly the same limit as last year, basically is balanced out by the price increases we achieved on the cat portfolio. The net effect of, I'd say, of the retro is more or less zero. The increase we're seeing is really from our adjusted view of risk, you know, due to climate change and just our, I'd say, reevaluation of the risks overall. On your second question regarding global lines, you're correct that the price increases were much less on global lines than on some of the property cat, for example.
You know, what we look at is not price increases, is rate adequacy. The reason why those lines receive less rate increases than, for example, property cat, is that they were already well priced and already at a level of price adequacy. A good example is credit, trade credit and surety, which, you know, as COVID unfolded, many companies did a complete re-underwriting of their portfolio, shrinking limits, increasing pricing, and therefore the rate adequacy of that line of business is already very strong, and that's why it received the smallest price change. You know, when we look at how to position a portfolio, we're looking at actually the rate adequacy versus the volatility, and that's why we see the global line as very attractive.
Okay. Thank you very much. I'll come back for later. Thank you.
We will now take our next question from Andrew Ritchie from Autonomous. Please go ahead.
Oh, hi there. I wonder if you could just help us understand one of the aims when you were restructuring the retrocession, and you've put a big tick by it on slide three, is optimize retrocession purchase with the redesign towards more earnings protection. Can you help us out? This is a very stupid question, but having the sidecar and that being bigger, is there more ground up protection on your cat exposure as opposed to the structure before was very much focused on sort of extreme severity protection. I think this is a quota share sidecar, I'm not sure, but is there more ground up protection or how would you sell the case that there's more earnings protection rather than just severity protection?
I guess my only other question was within the combined ratio guidance. Can you tell us what the mix headwind has been within that? I'm assuming there is a mix headwind, because the books become slightly longer tail.
Thank you. On your first question, you're right that the sidecar that we grew is a proportional capacity. It does provide first dollar protection, which, you know, for I'd say small immediate sized losses provides, you know, better protection than excess of loss. The reduction of volatility though is not only through the retrocession, it's also through the underwriting actions. Exiting you know U.S. MGAs that were exposed to primary U.S. hurricane had a big effect on reducing the volatility. Exiting, you know, we basically cut in half the proportional treaty portfolio in property worldwide. That has another big effect on reducing the earnings volatility.
The way we track this, because it's not so easy to follow, is we model the 1 in 10 PML, and we normalize it to the expected profit for the year. That gives us a parameter that we compare to the portfolio that we had at the end of 2021 and the one we're projecting in 2022, and we see that the earnings protection improved about a little more than 10%, something like 12% year-on-year. You know
Sorry.
To answer your question on this. It's underwriting actions, it's retro, and it's something that we monitor actively through the renewal.
Is the sidecar related purely to cat business or is it across the whole book?
No, no.
It's purely CAT.
It's only related to CAT. Yes.
Okay. Fine. To understand your statistical earnings protection, what you mean is the attritional earnings cover the 1 in 10% more than they did.
Yeah. If you like, the 1 in 10 net PML over the expected profit has decreased in 2022 compared to 2021.
Yeah, understood.
On the guidance, you're right that there's a mixture. You know, as we see the. As I said, on the CAT side, despite the price increases, the net impact of CAT is fairly neutral, which is why we reduced the portfolio because the return is not better than it was last year. On the other lines of business, even though they're longer tail, there's less volatility as well. We're looking not just at the absolute profit, but also the risk return profile. It's trying to come up with the best profitability for the volatility, basically.
Sure. Within the combined ratio, it's a nominal combined ratio, so there's a headwind on mix. I'm just trying.
Yes, but though I'm not sure what answer you're looking for. Is it how much of it is due to
Yeah, yeah. What
Portfolio mix?
Yeah, exactly. Yeah.
It's not an easy question to answer.
Okay.
I'd say probably the improvement is maybe two-thirds due to portfolio mix.
Okay. I'll follow up offline. Thanks.
We will now take our next question from Thomas Fossard from SCOR. Please go ahead.
Oh, yes. Good afternoon, everyone. The first question is, Jean-Paul, I just wanted to come back to the volatility profile of your book, given the change in or slight change in the retro. I don't know if I'm right, but I mean, looking at the slide, where in fact you're talking PML down 11%, that's PML based on ONE in 200-year. What you just said that it was, it's down 11%, but what you just said, the 1 in 10 is I think down 12%. So for me it looks like the PML reduction is throughout the probability loss curve. While I thought that in fact you signaled the fact that potentially you will switch some severity protection to have better earnings protection.
I'm not sure to understand if my way of looking at things is right, but maybe you can restate how much compared to last year you have further improved or increased the earnings protection versus the previous years. The second point, coming back to the combined ratio mix change impact. I think the question was, you're increasing long tail and you're decreasing property CAT, so should have a negative impact on your combined ratio. You signal a big structured contract with a European account. Did it also impact on your combined ratio because if I guess this is a structured program, it's likely to come with maybe a higher 9.95% combined ratio.
Also here there could be a negative impact from this single contract. Can you put that every I would say back in order for us? Thank you.
Thank you. On your first question, you're right that what we communicate on Slide 5 is the 1 in 250 PML. That's on the severity side. On the earnings side, you know, we haven't communicated on this in the presentation, but it's something also we measure. You're correct that actually the reduction in the portfolio that's been achieved is across the distribution. So the earnings protection, you know, is, as I discussed on the retro side with some of the increase of the cat sidecar. But it's also a lot through the underwriting actions that were taken in reducing the portfolio that is exposed to secondary perils.
proportional, you know, first dollar, proportional treaties, MGA, portfolio. Also we dramatically reduced the aggregate cat portfolio that we write on behalf of our cedants. It's the combination of those actions that reduce the earnings volatility. It's not just the retro.
Okay. Sure. Jean-Paul, maybe if I can squeeze a question. Can you share with us if you had a rerun of what took place last year in 2021, and what would have been the impact on earnings, pro forma applying the new-
Of the recent-
The new retro structure?
I don't have that. It's difficult because as I said, it's not just the retro structure, it's the re-underwriting of the portfolio. I think if we took into account the re-underwriting of the portfolio as well as the new retro structure, we probably would have a better performance than we had last year. By how much, we haven't run that simulation.
Okay. Sure.
But it's-
On the combined ratio mix.
As I said, on the combined ratio mix you're right that having more longer tail lines increases the net combined ratio. However, this is why we try to quantify the overall because it's not so easy to look at the different parts. That's why we try to quantify based on the portfolio renewed at 1-1, how would that impact the net combined ratio. On a price basis, we see a slight improvement of 0.5. I think if we had focused only on longer tail lines, probably the improvement expected would have been larger, but also the volatility of the portfolio would have been larger. As I said before, what we're trying to optimize is the risk return profile of the portfolio.
We have less volatility and a better returns.
Okay. I will come back later on. Thank you.
We will now take our next question from Will Hardcastle from UBS. Please go ahead.
Oh, hi there. Thanks for taking the questions. Two from me. I guess what proportion of retro is now purchased by our non-traditional retro providers, and how has this changed year-on-year in terms of percentages? Then would credit rating prevent you from increasing this further, or do you think there's more scope for optimization potential? The second question, I don't mean to go back over what people are trying to ask, but I really think that a bridge from the 4.9% price to the half a point, you know, risk-adjusted combined ratio of benefit would be useful. I mean, I saw the moving parts of something like retro inflation mix, which people keep asking about, and perhaps model adjustment. Anything here just to sort of give ballpark figures would be really helpful.
All right. Thanks, Will. On the retro, I think today the amount of retro we place with the non-traditional players, including the cat bonds we have outstanding, is roughly 60% ILS, 40% traditional. I don't think credit rating has, you know. What we're trying to do is in terms of limit purchase, it's more 50/50. What I was mentioning is more premium based, but the limit purchase, it's roughly 50/50 between ILS and traditional. Going forward, that's the mix that we want to sort of keep. We don't necessarily want to have an overexposure to ILS markets.
We like long-term players on the traditional side with whom we've been renewing year-over-year. On your second question, I know this is what many of you are looking for. The difficulty is it's not easy to present this in a simple manner, the bridge between the price increases, the portfolio mix, the model change, the inclusion of inflation. This is why we try to give you our estimate of the outcomes of the 0.5. We can maybe try to have a separate session on how we get from price increases, portfolio mix to net combined ratio. It's honestly quite complicated.
No, I'm sure. Just to be clear on that Harvard point, that should all earn through in 2022 or that's over the next year as a business, it's a bit longer time period.
Yeah. It's the priced 2022 net combined ratio for P&C. It depends on the type of business that we write. I'd say typically for the portfolio we write in January 1, we expect roughly 50% of that to earn through in 2022, and the rest to earn through the following years. As we get to you know the later renewals, April, June, July, then the earning for 2022 will be less than that.
That's great. Thanks very much.
Our next question comes from Vikram Gandhi from Société Générale. Please go ahead.
Oh, hello. Good afternoon, everybody. I hope you can hear me all right. A couple of quick ones from my side. Firstly, it's good to see a net 0.5 percentage point combined improvement that you flagged despite all the actions. Can I just ask what should be the starting point to base that improvement off? Should we assume the starting point is, let's say, somewhere around 94.5%, so that, you know, after the improvement, we get to around 94%? How should we think about the base when we think about the 0.5 delta? That's question one. Secondly, how should we think about the expected manmade loss impact going forward now that the group has grown materially its large corporate single risk portfolio?
I know a lot of it is rate driven, so the exposure increase might be more limited, but any color there would be very helpful. Thank you.
Thank you, Vikram. On your first question, yeah, we don't disclose the priced net combined ratio. But I would say your assumption of something around 94% would be the way we see it. You know, as we present the results for the 2021 year, at the end of February, you'll be able to see the impact of CAT and the normalized net combined ratio. That should give you a good guidance of what the starting point is.
Okay. Jean-Paul, when you say 94%, that's the base you're referring to or that's after the 0.5% point?
No, no. That's the 94.5 would be roughly the priced net combined ratio we would estimate for the portfolio that was renewed at 11.
Okay. Okay. Understood. Thanks.
On the manmade loss, I think what's important is even though we have significant growth of the specialty insurance portfolio, especially on the single risk, it's at the same risk appetite. We're managing our capacities very carefully. You know, we will increase some of the lines that we deploy on some risks that we think are well priced. I don't expect a large impact on the manmade loss ratio. Those have you know been actually lower than the historical averages in 2021. I think part of it is due to that COVID effect. Part of it is also due to just the improved rate environment overall.
Our assumption would be the manmade loss ratio for 2022. We'd still, you know, assume something similar to historical averages.
Okay. Thank you. Thanks, Vikram.
As a reminder to ask a question, please press Star one on your telephone keypad. We will now take our next question from Darius Satkauskas from KBW. Please go ahead.
Hi. Thank you for taking my question. So last year you achieved a 7.8% headline rate increase, and you were guiding to roughly 1.5-2.5 percentage point combined ratio improvement, to be earned over 12-14 or 24 months. From this year's renewal, you're talking about 0.5 percentage point combined ratio benefit. If I look at how your normalized combined ratio guidance changed in a year, it was reduced from 90-96 to 95 and below. You could say that only 1 percentage point was earned from the guided 1.5-2.5. Are you still expecting some combined ratio benefit from previous years' renewal rates earning through, or has this now been eaten up by inflation? Thank you.
Yeah, thank you. I think last year when we looked at combined ratio, it was more on a gross basis than on a net basis, which is why this year we sort of revised the guidance and gave you a better guidance on a net basis. The improvement that we achieved in, you know, during the 2021 underwriting year, we expect to continue to earn in 2022. As I said, when we have the full- year results in 2021, I think you'll see improvement in the attritional loss ratio of the portfolio, that's from actions taken in 2020 and 2021.
As we go into the financial year 2022, you know, we'll continue to see the benefits flowing through the book of 2021 and part of the 2022 improvements.
Thank you.
We will now take a follow-up question from Vinit Malhotra from Mediobanca. Please go ahead.
Hi, thanks very much for this. Just one, if I can ask two, but one question definitely on the long tail lines slight shift seen. Is there any building up or thinking about inflationary concerns, which have been flagged by one of your peers a few days ago? I'm just curious if this shift has had any discussions internally about inflation risk. The second question is just to be clear, I mean, this 0.5 improvement is net basis, I understand, and it will take some time to earn through. Can we assume that the guidance on the combined ratio of 95 and below is a little bit stronger based on this renewals or would you rather call it unchanged? Thank you.
On your first question, inflation is definitely a concern that we look at when we price business. I think for the long tail lines, there are two parts. There is the pricing of the business, and then there is the reserving of the business. On the reserving of the business, you know, we include inflation as we do, let's say, for all exercises. You know, again, in the results for the full- year, that will be addressed. I'd say the inflation on the existing reserves is taken into account, and so that's on the in-force portfolio.
As we look at the portfolio that we write going forward, we assume, you know, I'd say high single-digit to low double-digit inflation rates, depending on the line of business and the geography. The way we price this is we assume this inflation to be constant throughout the life of the treaty. If you write a 5 year-10 year type of line of business, we would assume the same inflation applies throughout the life cycle of that contract to see if there's adequate pricing. I'd say it's something we take into account. We, you know.
It is why in some lines of business, like on U.S. casualty, we remain prudent because even though we see the underlying businesses being probably rate adequate, you know, the amount of commissions you need to pay on that business eat up a lot of the margin and don't leave a lot of room for volatility around, you know, worse inflation than expected or some shock losses that we're not expecting. I, you know, think we take a really differentiated approach to the different lines of business depending on what the case is.
Sorry. You said single to low for all of the portfolio or only short tail? Sorry, I missed that bit. The inflation assumption.
No, no. Yeah, the inflation assumption runs from single-digit to, you know, I'd say mid- to high- single-digit to low- double-digit assumptions for all lines of business.
All right. Thank you.
Not just for short term. The 0.5 net improvement. Yes, the 95 and below, is it strong? Right now we're confirming the guidance. It was also the guidance I'd say we gave part of Quantum Leap. The plan finishes by the end of 2022. You know, we'll present the new strategic plan at the end of March, and there we'll give further guidance on what to expect for the new plan for 2022. We're just confirming the guidance given in September.
Okay. Thank you very much.
We will now take a follow-up question from Thomas Fossard from HSBC. Please go ahead.
Oh, yes, sir. Just to come back on the 94.5%, that you just mentioned. If I understood it right, that's the expected combined ratio on the renewed book at 1/1. That's right?
Yes. That would be the priced net combined ratio of last year's book.
On last year's book or renewed book. That's where I'm a bit confused. Now, just because looking at the consensus that you just circulated a couple of days ago, the current consensus is expecting a 94.1 combined ratio financial year 2022. I was just wondering if you were flagging that earnings estimates currently are a bit optimistic or, I mean, the 94.5 you're talking about is compatible with the 94.1 currently expected by the market.
I was not commenting on the consensus. I was commenting on the expected profitability of the portfolio that we wrote last year at January first. As you know, as explained for the portfolio we wrote at this January, only part of that, the portfolio flowed through the financial year.
Okay. Okay.
You know, roughly 50%.
Okay. Yeah. Okay. Understood. Second question was on the, you know, on the property cat. Actually, you're complaining that the risk-adjusted pricing is not yet there and actually more is needed to make it sensible for you. Can you tell us how casualty versus property risk-adjusted returns are comparing at the present time? Because it looks to me that you're slightly increasing casualty and you're reducing or retrenching property cat. I can understand that you're managing the volatility of the book, but I mean, would you say that currently casualty lines risk-adjusted pricing is starting to be better than property cats?
I think, yeah, it depends what you mean by risk-adjusted. I would say on a gross basis, the expected profit you would get out of property would still be higher than on casualty. When you put this on a net basis, whether you buy a retro like we do or you buy reinsurance if you're an insurance company, I'd say, today, on an insurance basis, probably the casualty, US Casualty has a better risk-return profile than property. You know, the amount of capital required and then the return you get for the capital is slightly better on a net basis than it is for property.
As a reinsurer, that's where you have to be, you know, look further because it's not just about the underlying book, it's also the amount of commission you pay to access the business. There, it really depends on the conditions you're able to obtain. Today we see casualty as, I'd say, for reinsurance on par with property, from a risk return basis, slightly better depending on the conditions we obtain. On the insurance side, we see a much better risk return than we see on a reinsurance for casualty.
Maybe one last question for me on slide 18, looking at the evolution of the specialty insurance book. I mean, if I'm looking at the trend 2021 cumulative versus 2018, looks like, you know, the growth in premium has been mainly driven by rate changes, and it's been really steep in terms of rate changing. I was wondering why actually you've not decided to grow much more volumes. I mean, it seems to be that again, this year, you're growing volumes by 6%, but last year was on 7%. I mean, overall not big change. I mean, should we expect now you to accelerate on volumes on the specialty side in the upcoming renewals and maybe into 2023?
Yes. I think your comment is fair. Maybe I'll provide some comments and ask Romain to add to that. The reason why premium is very much aligned with the rate change for specialty insurance, as you should see on Slide 18, is because that on behind that, there's a lot of reunderwriting of the portfolio to position the portfolio differently than what we had historically, taking advantage of market hardening. So even though the premium increase is aligned with the rate change, there's still a lot of business that we shed and others that we grew to get to that to the overall result. I don't know, Romain, can you just pick up on this, please?
Sure. First, if you look at 2021, there's still a 6% excess in the premium change over the rate change. That's one thing. Second, as Jean-Paul mentioned, there was you know, an element of reunderwriting, lots of minuses and pluses. In the reunderwriting, for instance, in 2020, we paused credit risk, credit insurance, because you know, with COVID, we wanted to take a cautious approach. We've now restarted it in 2021.
As you also know, we did quite some work to turn around our syndicate at Lloyd's with you know good results because finally in 2020 the syndicate was rated top quartile. But that involved a number of reunderwriting in the syndicate. In terms of our ambitions, I think we were quite clear in September on the fact that you know specialty insurance and single risks in particular was an area where we wanted to grow because the compounding effect of the price increases that we've seen in the past years is making it we think very attractive. That's something that we'll come back on in March as we announce our new strategic plan.
Okay, thank you.
As a final reminder to ask a question, please press Star one. We will now take our next question from Derald Goh from RBC. Please go ahead.
Hi there. Afternoon, all. Just two questions, please. The first one, could you give any sense around the growth areas that you have for the remainder of the year? Things like, you know, structured transactions, if any more in the pipeline. How does the capital deployment at one, one track against the 10-15 points of firm order that you indicated at the last CMD? My second question is on cyber. Could you remind us what the size of your cyber book is in both primary and reinsurance? And also how you position there and any comments around it, please. Thank you.
Thank you. The growth areas for the rest of the year, again, on the insurance side, you know, there isn't a single renewal season, so I'd say, you know, specialty insurance remains a growth area for the rest of the year in 2022. Of course, both the single risk and the MGA part. I'll let Romain comment on this further. On the treaty side, really, it's the same strategy. The global lines, you know, we'll look at casualty, we'll look at property in terms of how the conditions, you know, are finalized.
You know, when we look at the upcoming April renewals, there's been a lot of re-underwriting of the Japanese book following the prior losses and rate adjustments. We think the rate adequacy in Japan is getting to a good point, and we're projecting some further book there. In the U.S., you know, we'll see exactly how the market pans out compared to 1/1. Our expectation is for it to be harder than one, one, but that remains to be seen. In terms of capital, I think we're in line with the plan currently after the 1/1. As I said, you know, the risk return of the portfolio is in line with what we had originally planned.
Now it's gonna be a question of to get exactly to plan. On cyber, the treaty book remains fairly small. Cyber-specific treaty business due to 1/1 about EUR 45 million, EUR 78 million. Maybe, Romain, you can give some figures on the specialty insurance side.
Sure. On the specialty insurance side, the cyber premium that we write is low to mid two digits. As mentioned in the slides, the rate increase that we've seen last year was on average +69%. But that's very high, that's pretty much in line with what you know other players have seen. Risk managers in large corporates have had a really hard time placing their cyber insurance covers. In terms of our approach to underwriting, we write single risk, and we select the companies to which we grant cover based on an analysis of their defenses risk per risk.
Yeah. Just very quickly, in terms of the outlook, are you planning to grow broadly in line with rates, or would you consider expanding some of your exposure as well?
I think overall we're looking to expand if the rate environment remains as is. One of the keys in cyber is capacity. You know, we're very careful in monitoring our aggregates across both insurance and reinsurance. You know, we have very strict guidance as to how much capacity we deploy per the treaty client, per individual treaty, and on a single risk per individual account. You know, we potentially will grow the portfolio, but it will also depend on the rate environment and how quickly we reach our maximum capacity.
Thank you all.
We will now take our final question from Ashik Musaddi from Morgan Stanley. Please go ahead.
Thank you and good afternoon. Just, I have very simple question. Like, you mentioned that you have retrenched from a bit on the exposure on the cat side. Would you be willing to just give some color as to what business lines in the which geographies or what specifically have you reduced exposure to? Just trying to get a bit more sense where things are a bit more tough at the moment and that you're not able to capture the inflation or maybe just like high exposure that you're working on. Thank you.
Yeah. The main lines of business where we reduced is property. As we said, you know, we viewed property proportional. That was both in the U.S., Europe and Australia, where we reduced. Property cat, where on the aggregate covers as well as I'd say the low layers where price increases were not sufficient, we reduced significantly. Some per risk as well on property where there was big cat exposure and not sufficient rate increases were reduced. The other lines of business, we didn't see any big reductions. On the contrary, we felt that the overall environment was probably better than last year.
you know, as I said before, depending on the risk return, we grew, just, you know, flat portfolios like growth, or big growth like in global lines, and then properties where we dramatically reduced our portfolio.
Okay. That's very clear. Thank you.
Ladies and gentlemen.
Thanks.
That concludes today's question and answer session. At this time, I would like to turn the call back to your speakers for any additional or closing remarks. Thank you.
Thank you very much, everybody. Just a reminder, we're available to answer any other additional questions. So if you'd like to get in touch with the team, then please do so. The next call will be on February 24th for the 2021 full- year group results. SCOR will hold an Investor Day on March 29th, 2022, during which its new strategic ambitions will be presented. Thank you very much, and enjoy the rest of your day.