SCOR streamlining – but what impact has that had on its credit ratings?

SCOR streamlining – but what impact has that had on its credit ratings? | Insurance Business New Zealand

Reinsurance

SCOR streamlining – but what impact has that had on its credit ratings?

Considerations revolve around less traditional forms of capital

Reinsurance

By
Kenneth Araullo

AM Best has reaffirmed the financial strength rating (FSR) of A (Excellent) and the long-term issuer credit ratings (Long-Term ICR) of “a+” (Excellent) for SCOR and its key operating affiliates, despite the company’s recent announcement of a strategic overhaul. The credit ratings agency has also assigned a stable outlook to these ratings.

AM Best evaluates the reinsurer’s balance sheet as exceptionally strong, coupled with a satisfactory operational performance, highly positive business profile, and well-structured enterprise risk management practices.

The maintenance of a high level of risk-adjusted capitalization is expected, bolstered by a conservative approach to investments and a sturdy retrocession strategy. However, AM Best noted SCOR’s dependence on less traditional forms of capital, such as hybrid debt, the intrinsic value of in-force life insurance business, and a contingent capital facility, as a counterbalancing consideration.

The company’s operational performance was considered adequate, propelled by enhanced underwriting outcomes in 2023 and a robust return on investment activities over the cycle. In 2023, SCOR reported a net profit of €812 million under the new IFRS 17 standards, a rebound from a €301 million loss recorded in 2022 under the IFRS 4 standards, which was affected by higher-than-expected natural disaster-related losses and reserve fortifications in the third quarter of that year.

The 2023 fiscal year’s improved technical results were attributed to corrective measures initiated in 2022, including reduced exposure to peak risks and favorable pricing dynamics across various global reinsurance market segments.

The reaffirmed excellent and stable ratings also extend to its operational subsidiaries, including SCOR UK Company Limited, SCOR Reinsurance Asia-Pacific Pte Ltd, and several SCOR Global Life and SCOR Reinsurance entities across North America and other regions.

Recently, the global reinsurer announced a strategic overhaul of its organizational structure aimed at streamlining operations.

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