Standard & Poor’s Ratings Services has raised its long-term counterparty credit and insurer financial strength ratings on French-based reinsurer SCOR SE and its core guaranteed subsidiaries (collectively SCOR or the group) to ‘A’ from ‘A-‘. The outlook on all of these entities is stable.
“The upgrade reflects our view of the continuing positive trend in SCOR’s non-life underwriting performance and recognizes the resilience of SCOR’s financial and business profile to major financial shocks,” explained credit analyst Mark Coleman.
S&P said it believes “SCOR has, over time, successfully restored its financial strength and has reduced and diversified its risk profile, and this appears evident amid the current financial turmoil. Added to this, the January reinsurance renewals indicate a positive trend in pricing adequacy, which we believe will provide further earnings momentum over the ratings horizon and will offset some of the decline in investment yields.”
Coleman added: “The ratings also reflect our view of SCOR’s strong competitive position, strong capitalization, strong liquidity and invested asset quality, and commitment to building a strong enterprise risk management program.”
He also indicated that the stable outlook on the ratings is based on S&P’s expectation that SCOR will “lower its combined ratio to below 99 percent, to earn a non-life return on revenue of at least 9 percent, and to maintain positive new business margins.”
S&P also expects the reinsurer’s capital adequacy “to remain at least in the ‘A’ range, and do not anticipate any capital raising needs except following a major catastrophic event or a series thereof. We do not expect any material aggregate reserve strengthening, and we expect SCOR to actively manage its proportional treaty portfolio should there be any increase in claims frequency or erosion of pricing adequacy in the primary markets.
“We do not anticipate any upward rating movement over the rating horizon. The ratings may be lowered if the resolution of the outstanding material litigation issues is significantly negative to SCOR’s capital position, or if there is a steep decline in the credit quality of SCOR’s fixed income portfolio.”
Source: Standard & Poor’s – www.standardandpoors.com
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