UBS has shifted its view on Scor, taking the reinsurer from a neutral stance to a sell recommendation and lowering its price target by 6% to €32.50 from €34.50. The broker cites two imminent corporate and industry events - the Monte Carlo Rendez-vous in September and Scor's capital markets day in December - as potential catalysts that could weigh on consensus forecasts and delay shareholder distributions.
Shares of the French reinsurer fell 2.3% as of 07:00 ET (11:00 GMT) following UBS's move. Scor has already delivered a strong year-to-date performance, rising 28%, a pace that UBS notes has outperformed peers even though UBS sees forward earnings-per-share changes as essentially flat.
Market pricing sits near the top of Scor's recent range. The stock closed at €34.68 on Aug. 17, which is effectively its 52-week high of €34.68 and comfortably above the 52-week low of €25.60.
Event risks and the broker's view
UBS expects the Monte Carlo Rendez-vous, scheduled to run Sept. 5-9, to act as a negative sector catalyst. The broker's view is that year-on-year risk-adjusted pricing declines are likely to be closer to the magnitude observed this year rather than the smaller deterioration currently implied by consensus estimates. In addition to pricing dynamics, UBS believes that terms and conditions will draw more scrutiny, adding an element of volatility that could compress valuation multiples across reinsurers.
On the company-specific front, UBS anticipates that Scor will raise its solvency target range at the Dec. 3 capital markets day to 200-240% from the current 185-220% range. UBS's analysts expect this re-rating of the solvency target to push back the timeline for any share buyback activity.
Under UBS's assumptions, a meaningful buyback is not expected before 2028. The first meaningful repurchase is modelled at €200 million. UBS does note one caveat: a prolonged period of benign catastrophe activity throughout the rest of 2026 and into 2027 could accelerate the timing of repurchases by roughly 12-18 months.
Earnings and valuation assumptions
UBS's earnings-per-share forecasts for Scor are below consensus across the next three years. The bank projects EPS of €4.04 for 2026, €4.23 for 2027 and €4.33 for 2028, compared with consensus figures of €4.32, €4.50 and €4.85, respectively. UBS attributes its more conservative stance to the expectation that investment income and the unwind of IFIE will weigh on results more than the market currently assumes.
Relative to Visible Alpha consensus, UBS sits 2.5% to 3.7% lower on group net earnings for 2027 and 2028. On a per-share basis the shortfall is slightly larger, at 2.6% to 4.3%, which UBS interprets as consensus embedding an earlier buyback than UBS expects.
Scor now trades at approximately 8.2 times UBS's 2027 estimated earnings, a level UBS describes as close to the company's 10-year peak relative to the sector.
Why UBS favors a discount
UBS continues to argue that Scor should trade at a discount to reinsurance peers. The reasons cited include lower solvency compared with some peers, higher debt leverage, weaker reserve resilience relative to German competitors, a track record that the broker finds less compelling, lower diversification and constraints on net income growth driven by balance-sheet building.
Putting its view into total-return terms, UBS forecasts a stock return of -0.4% for Scor. That estimate is composed of -6.3% in price appreciation offset by a 5.9% dividend yield. UBS uses a market return assumption of 7.8% and calculates an excess return for Scor of -8.2% versus that baseline.
Note: This analysis focuses on UBS's published stance, forecasts and the two events it identified as key near-term catalysts for Scor and the reinsurance sector.