A.M. Best Europe – Ratings Services Limited has upgraded the issuer credit ratings (ICR) to "a+" from "a" and affirmed the financial strength rating (FSR) of A (Excellent) of SCOR SE (SCOR) (France) and its main subsidiaries. Concurrently, A.M. Best has upgraded the subordinated debt ratings of SCOR. The outlook for all ratings is stable. (See below for a detailed list of the ratings.)
The upgrade of SCOR's ICRs reflects its resilient performance in challenging market conditions, demonstrating strong enterprise risk management, particularly pertaining to investment risk management and prudent capital management. SCOR's risk-adjusted capitalisation continues to remain resilient, with its balance between life and non-life reinsurance providing sound diversification and stability to earnings. Additionally, SCOR has further strengthened its global reinsurance presence during 2011, creating a sound platform to further expand its franchise.
SCOR has demonstrated resilient risk-adjusted capitalisation and prudent capital preservation in a challenging market environment. The use of insurance linked securities in the form of an event-driven guaranteed equity (contingent capital facility) and Atlas VI catastrophe bond have assisted in protecting and reducing volatility in the company's capital base during 2011.
SCOR continues to integrate the Transamerica Re (TARe) life portfolio into its operations, successfully raising debt to the amount of CHF 650 million to support the acquisition in 2011. TARe has further strengthened SCOR's worldwide franchise as a leading reinsurance company with the strength of a balanced profile between life and property and casualty, providing a well-diversified portfolio. Whilst SCOR maintained a strong position in European markets, the recent advances in the life reinsurance segment has made SCOR a prominent player in the United States. SCOR continues to implement its strategic plans, concentrating on core life biometric risks, with reduced exposure to investment-related products. In addition, property and casualty has shown promising developments following successful January and April renewals, with overall price increases, particularly for catastrophe-related business.
SCOR's underwriting results are very much dictated by its robust and solid track record on life reinsurance, where it has achieved an improved operating margin of 7.8%. Conversely, property and casualty results have suffered in 2011 as a result of catastrophe losses, mainly from the Japan earthquake and Thai floods, contributing 18.4% to the combined ratio of 105%. With improving attritional loss experience, catastrophe losses are likely to add volatility to prospective overall earnings.
SCOR has demonstrated strength in its risk management over recent years, utilising suitable insurance linked securities for capital preservation, in addition to prudently managing its investment portfolio, effectively de-risking from risky asset classes, as demonstrated by its minimal exposure to current eurozone government debt and diversified corporate bond portfolio.
Upward rating pressure could arise if there is a material strengthening of risk-adjusted capitalisation and operating performance remains robust through market cycles. Downward rating pressure could occur if there is a material reduction in risk-adjusted capitalisation or deterioration in operating performance.
The ICRs have been upgraded to "a+" from "a" and the FSR of A (Excellent) has been affirmed for SCOR SE and its following subsidiaries:
- SCOR Global Life SE
- SCOR Global P&C SE
- SCOR Switzerland AG
- SCOR UK Company Limited
- SCOR Reinsurance Asia-Pacific Pte Ltd
The FSR of A (Excellent) and ICR of "a" of SCOR Rueckversicherung (Deutschland) AG have been withdrawn following the integration into SCOR Global Life SE.
The following subordinated debt ratings have been upgraded:
-- to "a-" from "bbb+" on EUR 100 million subordinated step-up notes, due 2020
-- to "a-" from "bbb+" on USD 100 million subordinated step-up notes, due 2029
-- to "a-" from "bbb+" on EUR 350 million 6.154% undated deeply junior subordinated notes
-- to "a-" from "bbb+" on EUR 50 million subordinated step-up notes issued by Société d'Etudes et de Placements Financiers and guaranteed by SCOR, due 2049
-- to "a-" from "bbb+" on CHF 650 million 5.375% undated deeply subordinated notes
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Key criteria utilised include: "Understanding Universal BCAR"; "Understanding BCAR for Life/Health Insurers"; "Insurance Holding Company and Debt Ratings"; "Equity Credit for Hybrid Securities"; "Rating Members of Insurance Groups" and "A.M. Best's Perspective on Operating Leverage". Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.
A.M. Best Europe – Rating Services Limited is a subsidiary of A.M. Best Company.Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.
Contacts:
A.M. Best Company, Inc.
Mahesh Mistry
Assistant
Director
+(44) 20 7397 0325
mahesh.mistry@ambest.com
or
Stefan
Holzberger
Managing Director
+(44) 20 7397 0288
stefan.holzberger@ambest.com
or
Rachelle
Morrow
Senior Manager, Public Relations
+(1) 908
439 2200, ext. 5378
rachelle.morrow@ambest.com
or
Jim
Peavy
Assistant Vice President, Public Relations
+(1)
908 439 2200, ext. 5644
james.peavy@ambest.com
