A.M. Best Co. announced that it has affirmed the financial strength rating of A- (Excellent) of France’s SCOR and its guaranteed subsidiaries, removing them from “under review” status, and has assigned a “negative” outlook.
Best also affirmed its ratings on the Group’s debt and commercial paper. Last week Fitch also affirmed its ‘BBB’ ratings for the SCOR Group (See IJ Website Jan.2).
SCOR has successfully raised 381 million Euros ($397 million) through a rights issue, boosting its capitalization, which had been depleted by recent moves to strengthen its reserves. This has apparently convinced the rating agencies to reaffirm its essentially sound finances. Best also noted the group’s “more conservative underwriting plans for 2003 and a higher degree of prudence in reserves following third quarter reserve additions,” as further reasons for its ratings decision.
Expanding on the company’s “conservative underwriting plans,” Best explained that the group will decrease its net written premiums in 2003 by around 350 million Euros ($365 million), thereby reducing its “exposure to U.S. facultative liability business and alternative reinsurance.” It noted that “the company has confirmed that it will not recommence underwriting of credit derivatives, a market from which it withdrew in November 2001.”
“These changes have reduced SCOR’s risk profile, although exposure to certain risks will decline over an extended period. Credit derivatives were written with a maximum maturity of five years,” said Best.
It also stressed that, “As a result of third quarter additions, reserves at SCOR Reinsurance Company in the United States and Commercial Risk Partners in Bermuda have been raised to the best estimate level advised by independent consulting actuaries.”
Best indicated that it was basing the ratings on current conditions, including an estimated $400 million ($417.2 million) in losses for the third quarter, but that any higher loss figures “may trigger a rating downgrade.”
Topics AM Best
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