S&P Raises SCOR’s Ratings to ‘BBB+’ – Best Changes Outlook

December 3, 2003

Both A.M. Best Co. and Standard & Poor’s Ratings Services reacted positively to the news from France’s SCOR Group that it plans to raise an additional 750 million euros ($896 million) through a rights offering (See IJ Web site Dec.1)

S&P announced that it has raised its long-term counterparty credit and insurer financial strength ratings on SCOR and subsidiaries by two notches, to ‘BBB+’ from ‘BBB-‘. It also raised its short-term counterparty credit and commercial paper ratings on SCOR to ‘A-2’ from ‘A-3’ and has removed all the ratings from CreditWatch, where they were placed last June. S&P added that the outlook on all group entities is stable.

Best announced that it has “changed the implications of the under review status to developing from negative of the B++ (Very Good) financial strength rating” on SCOR and its core subsidiaries, as well as the ratings on debt instruments issued or guaranteed by SCOR. Best expressed satisfaction that SCOR had increased the amount it intends to raise by 150 million euros ($179 million).

When SCOR originally announced the rights issue last month, Best had indicated that the amount would be, in its view, “insufficient for consideration of an upgrade given the level of losses sustained in the third quarter.” In its current bulletin the rating agency said, “following SCOR’s announcements today, A.M. Best is re-assessing the company’s ratings and is in discussion with SCOR management with a view to resolving the under review status.”

Both rating agencies also reacted favorably to SCOR’s announcement that it had signed a commutation contract that will result in a 40 percent reduction in the portfolio of its Bermluda operation Commercial Risk Partners Limited (CRP) relative to the year-end 2002 level. S& P said it “expects that SCOR will continue to endeavor to commute portfolios at its CRP subgroup and significantly reduce its exposure to its substantial credit derivatives run-off portfolio.”

S&P noted that SCOR reported net premium income of 2.8 billion euros ($3.35 billion) for the first nine months of 2003, and indicated that the stable outlook “reflects Standard & Poor’s expectation that SCOR’s business position will remain robust within its core markets, although the aggregate level of group premium income underwritten in 2004 will materially decline as SCOR withdraws from noncore markets. Furthermore, SCOR’s good prospective capital adequacy position will remain resilient to further reserve developments.”

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