AM Best Downgrades Credit Ratings of SCOR SE and Its Main Operating Subsidiaries

AM Best has downgraded the Financial Strength Rating (FSR) to A (Excellent) from A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a+” (Excellent) from “aa-” (Superior) of SCOR SE (SCOR) (France) and its main operating subsidiaries. Concurrently, AM Best has downgraded the Long-Term Issue Credit Ratings (Long-Term IRs) on SCOR’s outstanding rated instruments. The outlook of these Credit Ratings (ratings) has been revised to stable from negative. See below for a detailed listing of companies and ratings.

The ratings reflect SCOR’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, very favourable business profile and appropriate enterprise risk management (ERM).

The rating downgrades reflect the deterioration in SCOR’s operating performance, which is no longer considered supportive of AM Best’s previous strong assessment.

In 2022, SCOR reported a sizable net loss of EUR 301 million and a combined ratio of 113.2%, driven by above-budget natural catastrophe losses and reserve strengthening carried out in the third quarter of the year. SCOR’s five-year average (2018-2022) non-life combined ratio and return-on-equity ratio are 102.5% and 3.5%, respectively, as calculated by AM Best. The group’s earnings diversification between non-life and life segments somewhat moderates volatility in its overall technical results. Non-life technical losses, recorded in each of the past six years, have been offset by profits from SCOR’s life portfolio in five of the six years, despite elevated mortality driven by the COVID-19 pandemic. In 2022, the life result was positively impacted by active management of the in-force book and a sizable excess reserve release in the third quarter.

While the group’s management has implemented remedial actions to improve underwriting performance, such as reduction of its peak exposures (natural catastrophe risk and U.S. mortality risk), nonrenewal of unprofitable accounts, and streamlining the organisation to increase operational efficiencies, it will take time to improve the non-life technical profitability track record.

The poor underwriting performance in recent periods has highlighted weaknesses in the group’s underwriting and risk management capabilities. As a result, the ERM assessment is no longer considered supportive of the previous very strong assessment and has been revised to appropriate. The group’s risk management capabilities are in line with its risk profile.

AM Best expects SCOR’s risk-adjusted capitalisation to be maintained at the strongest level prospectively, as measured by Best’s Capital Adequacy Ratio (BCAR), supporting its very strong balance sheet strength assessment. The group benefits from a conservative investment portfolio and a robust retrocession programme designed to shield its capital base. A partially offsetting factor is SCOR’s reliance on soft capital components, which includes hybrid debt, value of in-force life business and a contingent capital facility.

SCOR continues to maintain its prominent position as one of the top five global reinsurers, with excellent product and geographic diversification. The group’s internationally recognised franchise, long-standing client relationships and technical expertise help SCOR manage local and global reinsurance market cycles. The group is expected to benefit from improved reinsurance market conditions, while executing on its stated objective to reduce earnings volatility.

The FSR has been downgraded to A (Excellent) from A+ (Superior) and the Long-Term ICRs downgraded to “a+” (Excellent) from “aa-” (Superior), with the outlooks revised to stable from negative, for SCOR SE and its following operating subsidiaries:

• SCOR UK Company Limited
• SCOR Reinsurance Asia-Pacific Pte Ltd
• SCOR Global Life USA Reinsurance Company
• SCOR Global Life Americas Reinsurance Company
• SCOR Global Life Reinsurance Company of Delaware
• SCOR Reinsurance Company
• SCOR Canada Reinsurance Company
• General Security National Insurance Company
• General Security Indemnity Company of Arizona

The following Long-Term IRs have been downgraded with the outlook revised to stable from negative:

SCOR SE—

-- to “a-” (Excellent) from “a” (Excellent) on EUR 500 million 3.625% subordinated notes, due 2048

-- to “a-” (Excellent) from “a” (Excellent) on EUR 600 million 3.00% subordinated notes, due 2046

-- to “a-” (Excellent) from “a” (Excellent) on EUR 250 million 3.875% perpetual subordinated notes

-- to “a-” (Excellent) from “a” (Excellent) on EUR 250 million 3.25% subordinated notes, due 2047

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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