SCOR’s Review Status, Debt Ratings Downgraded

A.M. Best Co. has changed the under-review status of Paris-based SCOR’s financial strength rating of “B++” (very good) to negative from developing, which also applies to its core subsidiaries. Best also downgraded and placed under review negative the ratings on debt instruments issued or guaranteed by SCOR.

These actions follows SCOR’s decision not to divest its soon to be established new life subsidiary, the reported $398 million loss in its consolidated third-quarter results and the announcement that it plans to raise at least $684 million through a rights issue. Best said it believes that the proposed rights issue is likely to restore SCOR’s prospective consolidated capital to a level commensurate with a “B++” (very good) rating despite a substantial expected net loss in the region of $342 million for the full year, as a result of underwriting losses and reserve strengthening.

However, Best said believes that this prospective positive impact on capital will be somewhat offset by reduced financial flexibility. In addition, commutation negotiations at Commercial Risks Partners Limited (CRP), Bermuda have proven more protracted than anticipated, and negotiations remain open. Best is in discussions with SCOR management regarding the time-frame of this rights issue and new commutation proposals for CRP. Best said it aims to resolve this under review status upon completion of the proposed rights issue. A significant delay or unsuccessful completion will most likely trigger a downgrade.

Best’s actions apply to the following property/casualty companies:

— SCOR Canada Reinsurance Co.
— SCOR Deutschland Rueckversicherungs AG
— SCOR Italia Riassicurazioni S.p.A
— SCOR Reinsurance Asia-Pacific Pte Ltd.
— SCOR Reinsurance Company*
— SCOR UK Co. Ltd.
— General Security Indemnity Co. of Arizona
— General Security National Insurance Co.
— Investors Insurance Corp.