A.M. Best has affirmed the financial strength rating of ‘A+ (Superior)’ and its long-term issuer credit rating of “aa-” of SCOR SE (France), a global reinsurance company, and its main operating subsidiaries.
It has also affirmed the long-term issuer credit ratings on SCOR’s outstanding rated instruments. The outlook of these credit ratings is stable.
The ratings reflect SCOR’s balance sheet strength, which A.M. Best categorises as very strong, as well as its strong operating performance, very favourable business profile and very strong enterprise risk management.
SCOR’s balance sheet strength is underpinned by risk-adjusted capitalisation that exceeds the level required to support the strongest assessment.
A.M. Best said it expected 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.
According to the rating firm, a partially offsetting factor is SCOR’s reliance on soft capital components, which include hybrid debt, the value of in-force life business and a contingent capital facility.
SCOR’s operating performance was calculated as strong, which A.M. Best said was demonstrated by a 10-year weighted average return on equity of 8.4 percent.
A.M. Best outlined that in 2019, SCOR delivered a net profit of €422 million, despite exposure to significant natural catastrophe events. For Q1 Of 2020, the group reported a net profit of €26 million.
A.M. Best said that the decline is mainly attributed to the €456 million of COVID-19-related losses booked by SCOR in the Q2.
“In 2019 and half year 2020, profits from SCOR’s life reinsurance business partly offset losses in property/casualty reinsurance, demonstrating the benefit of the group’s good balance of earnings. Additionally, healthy investment income contributes to operating profitability”, A.M. Best noted.
Commenting on the ratings, Denis Kessler, chairman and CEO of SCOR, commented: “We welcome A.M. Best’s decision to affirm SCOR’s ratings. This decision further testifies to the soundness of our strategy as a tier one global reinsurer and the resilience of our business model to shocks. We are entering the renewal season with confidence.”
“SCOR is well-positioned to accelerate its growth in a supportive market environment, benefiting from positive pricing dynamics and improving terms and conditions in property and casualty reinsurance while consolidating its position in the top tier of the life reinsurance market,” A.M. Best added.