AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of "aa-" (Superior) of SCOR SE (SCOR) (France) and its main operating subsidiaries. Concurrently, AM Best has revised the outlooks to negative from stable and affirmed the Long-Term Issue Credit Ratings (Long-Term IRs) on SCOR's outstanding rated instruments. See below for a detailed listing of companies and ratings.
The Credit Ratings (ratings) reflect SCOR's balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, very favourable business profile and very strong enterprise risk management.
The negative outlooks reflect pressure on SCOR's operating performance assessment, following elevated losses in recent periods affecting the non-life and life books of business. The group is currently implementing remedial actions to improve underwriting performance, which AM Best will continue to monitor. Should the underlying performance not improve in the short-to-medium term, a further negative rating action is likely.
The group reported a net loss of EUR 239 million for the first half of 2022, driven by exposure to a number of natural catastrophe and man-made events, as well as continued COVID-19 mortality losses, especially in the first quarter of the year. SCOR has a track record of strong operating performance over the business cycle, with a 10-year (2012-2021) weighted average return-on-equity ratio of 7.6% (as calculated by AM Best). Earnings diversification between non-life and life segments somewhat moderates volatility in overall technical results. Non-life technical losses, recorded in each of the past five years, have been offset by profits from the life portfolio, despite elevated mortality driven by the COVID-19 pandemic. The life result was positively impacted in 2021 by the execution of SCOR's retrocession contract with Covéa, which contributed EUR 311 million to the group's net income of EUR 456 million for the year. Ongoing remedial actions undertaken by the group, including portfolio optimisation, active management of its in-force book and streamlining the organisation to improve operational efficiencies, will support an improvement in prospective technical profitability.
SCOR's balance sheet strength is underpinned by risk-adjusted capitalisation that exceeds the level required to support the strongest assessment, as measured by Best's Capital Adequacy Ratio (BCAR). AM Best expects SCOR's risk-adjusted capitalisation to be maintained at the strongest level prospectively, supported by its conservative investment portfolio and robust retrocession programme designed to shield its capital base. A partially offsetting factor is SCOR's reliance on soft capital components, which include hybrid debt, value of in-force life business and a contingent capital facility.
SCOR continues to maintain its prominent position as one of the top five global reinsurers, with excellent product and geographic diversification. The group's internationally recognised franchise, long-standing client relationships and technical expertise help SCOR manage local and global reinsurance market cycles. The group is well-positioned to benefit from improved reinsurance market conditions, while executing on its stated objective to reduce earnings volatility.
The FSR of A+ (Superior) and Long-Term ICRs of "aa-" (Superior) have been affirmed, with the outlooks revised to negative from stable, for SCOR SE and its following operating subsidiaries:
- SCOR UK Company Limited
- SCOR Reinsurance Asia-Pacific Pte Ltd
- SCOR Global Life USA Reinsurance Company
- SCOR Global Life Americas Reinsurance Company
- SCOR Global Life Reinsurance Company of Delaware
- SCOR Reinsurance Company
- SCOR Canada Reinsurance Company
- General Security National Insurance Company
- General Security Indemnity Company of Arizona
The following Long-Term IRs have been affirmed with the outlooks revised to negative from stable:
SCOR SE-
-- "a" (Excellent) on EUR 500 million 3.625% subordinated notes, due 2048
-- "a" (Excellent) on EUR 600 million 3.00% subordinated notes, due 2046
-- "a" (Excellent) on EUR 250 million 3.875% perpetual subordinated notes
-- "a" (Excellent) on EUR 250 million 3.25% subordinated notes, due 2047
This press release relates to Credit Ratings that have been published on AM Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best's Credit Ratings, Best's Performance Assessments, Best's Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best's Ratings Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
Copyright 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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