S&P Affirms SCOR Ratings, Off CreditWatch – Assigns Alea ‘BBB’ Rating

Standard & Poor’s affirmed its ratings on French reinsurer SCOR and its subsidiaries and removed them from CreditWatch. It also assigned a triple-‘B’-minus counterparty credit rating to Alea Group Holdings AG (AGH), the Switzerland-based holding company of the Alea group.

The announcement follows a review of the SCOR group’s prospective risk-adjusted capitalization in light of the World Trade Center losses and subsequent industrial claims — including the explosion of the AZF chemical plant in Toulouse. S&P affirmed its double-‘A’-minus long-term insurer financial strength and counterparty credit ratings for SCOR and its subsidiaries and its ‘A-1’-plus short-term counterparty credit rating on the parent company, and removed them from CreditWatch, where they had been placed with negative implications on Sept. 20, 2001. The outlook remains negative.

In its analysis S& P stated that, it had “also looked at measures taken by management to make the most of next year’s significant rate increases in traditional property-casualty and industrial risk reinsurance, while maintaining capital at a level consistent with a rating in the ‘AA’ category.”

The Alea Group is supported by its largest shareholder, Kohlberg, Kravis Roberts & Co., the investment partnership who originally organized it as Rhine Re following a management buyout.

S&P explained its action as follows: “The ratings are a function of the implicit subordination of the debt to policyholders of the Alea group’s insurance operating subsidiaries as well as Alea group’s financial strength. The debt is being raised by AGH, a pure holding company, and downstreamed to the operating companies as equity. As such the debt obligation is considered to be subordinated to the obligations of policyholders of Alea group’s main insurance operating subsidiaries. In these instances a standard “gap” of one full rating category is applied. In addition, Alea group is expected to receive equity credit on Standard & Poor’s risk-based capital adequacy model, subject to tolerances.”

It confirmed that the Alea group’s main insurance operating subsidiaries carry insurer financial ratings of ‘A-/Stable/–‘, based on their strong prospective capitalization, strong management with a coherent strategy, good business position, and continuing support from KKR, but noted that, “These positive factors are offset by weak historic operating performance and the continuing challenges presented to management by the historical and future planned growth of the group.”|”snp, affirms, scor, ratings,, off, creditwatch, -, assigns, alea, ‘bbb’, rating