S&P Raises SCOR’s Outlook to Positive

September 4, 2008

Standard & Poor’s Ratings Services has revised its outlook on French reinsurer SCOR SE and its guaranteed subsidiaries (collectively SCOR or the group), to positive from stable. SCOR regained an ‘A-‘ rating from S&P in Sept. 2007, following completion of its merger with Converium [See IJ web site – https://www.insurancejournal.com/news/international/2007/09/10/83306.htm].

S&P also affirmed its long-term counterparty credit and insurer financial strength ratings and short-term local currency ratings on these operating subsidiaries, as well as those on SCOR Switzerland AG (formerly Converium AG) and its guaranteed subsidiaries SCOR R├╝ckversicherung (Deutschland) AG and SCOR Insurance (U.K.) Ltd. The outlook on these entities is also positive, reflecting their core status to SCOR SE.

“The outlook revision reflects the positive momentum in SCOR’s financial and business profile,” explained credit analyst Mark Coleman. “The acquisition of Revios and Converium has significantly improved SCOR’s earnings and risk profile which, combined with the group’s restored strong capitalization, reduced exposure to prior-year legacies, and commitment to building a strong risk management program, has improved the group’s position within a more difficult underwriting and financial climate.”

S&P also noted: “The ratings continue to reflect SCOR’s strong competitive position, strong capitalization, and adequate enterprise risk management with a positive trend.

“These positive factors are partially offset by more challenging prospective market conditions, which will test SCOR’s ability to produce, and sustain, strong earnings within its non-life division, which historically has underperformed.”

S&P said it could “raise the ratings over the next 12-24 months. This will principally remain dependent on the group’s ability to sustain the improvement in non-life profitability in a weakening underwriting climate, especially as it looks to exploit the market position it has regained from its recent acquisitions.

“We think it will be challenging for the group to achieve a combined ratio below 98 percent in 2008 and 2009, but provided SCOR can achieve a return on reported equity of about 13 percent, a combined ratio of below 100 percent, and a non-life ROR of above 10 percent, as well as maintain capital adequacy in the high ‘A’ range, we would expect to raise the rating. Failure to meet these objectives, however, could see the outlook revised to stable.”

Source: Standard & Poor’s – www.standardandpoors.com

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