AM Best Affirms Credit Ratings of Société Centrale de Réassurance

AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of "bbb" (Good) of Société Centrale de Réassurance (SCR) (Morocco). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect SCR's balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).

SCR's balance sheet strength is underpinned by risk-adjusted capitalisation at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR). SCR's BCAR scores benefit from the company's prudent technical reserve margins. The assessment factors in SCR's high earnings distributions, in the form of dividends to its main shareholder, Caisse de Dépôt et de Gestion (CDG), a state-owned investment vehicle for the Kingdom of Morocco, and as remuneration of the explicit guarantee provided by the Moroccan state, which partially restricts earnings retention. The balance sheet strength assessment also considers SCR's significant asset concentration to Morocco, where it holds over 95% of its investments.

SCR's strong operating performance is illustrated by a five-year (2019-2023) weighted average return on equity of 11.0%. The company's earnings have been driven by solid investment returns, with a five-year (2019-2023) weighted average investment yield (including gains) of 5.8%, and supported by good underwriting performance. SCR's weighted average non-life combined ratio of 91.3% over the last five years (2019-2023) reflects the profitability of the domestic Moroccan portfolio and the favourable reserve development stemming from SCR's legacy compulsory cessions business. In recent years, the company has faced major claims, with exposure to earthquakes in Turkiye and Morocco, as well as floods in the United Arab Emirates; however, the impact to SCR on a net basis has been mitigated through an appropriate retrocession programme. Prospectively, AM Best expects SCR's underwriting and investment returns to support a strong operating performance.

SCR has a solid market position in Morocco, reflecting its established role as the leading national reinsurer. This strong domestic position partially mitigates the company's limited presence in the global reinsurance market. In 2023, SCR reported gross written premium of MAD 3.7 billion (USD 376 million), of which two-thirds was generated domestically. SCR continues to develop its international presence, with its expansion supported by a broadening of distribution networks through the opening of strategically located representative offices and new partnerships.

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.

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