A.M. Best Affirms Ratings of SCOR and Its Core Subsidiaries
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CONTACTS: Public Relations
Jim Peavy
+(1) 908 439 2200, ext. 5644
james.peavy@ambest.com
Rachelle Striegel
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Analyst(s)
Miles Trotter
+(44) 20 7626 6264
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Jose Sanchez-Crespo
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FOR IMMEDIATE RELEASE
OLDWICK, N.J., APRIL 01, 2004
A.M. Best Co. has affirmed the financial strength rating of B++ (Very Good) of SCOR (Paris) and its core subsidiaries and the ratings on debt instruments issued or guaranteed by SCOR. (See link below for a full list of financial strength and debt ratings). This action removes the under review status of the ratings assigned on September 10, 2003. The outlook for all ratings is stable.
The rating reflects SCOR's very good prospective capitalisation, improving trends in underlying performance, actions taken to mitigate the risks associated with Commercial Risks Partners Limited (CRP) (Bermuda) and the company's credit derivatives portfolio, as well as strong support from its core clients in continental European markets. Offsetting factors are recent volatility in reserves and the impact that the company's recent performance has had on its profile in certain markets.
Very good prospective capitalisation--A.M. Best expects SCOR to maintain risk-adjusted capitalisation at a very good level in 2004, following completion of its EUR 750 million (USD 949 million) rights issue in January 2004. Stability in the company's risk-adjusted capitalisation will be further supported by an anticipated reduction in net premiums written of approximately 20% to less than EUR 2,750 million (USD 3,384 million) in 2004.
Improving underlying performance--SCOR has re-established profitability in its main non-life lines (excluding the impact of discontinued and non-core lines) and has maintained the profitability of its life reinsurance business. Reserve deterioration of EUR 297 million (USD 344 million) in the third quarter of 2003 resulted from SCOR's steps to re-establish reserves at the best estimate level advised by external actuarial consultants. With the impact of these legacy issues likely to reduce in 2004, A.M. Best believes SCOR's performance is likely to improve.
Risk mitigation--SCOR has taken effective action to address certain key areas of risk to the company. A reduction in CRP's reserves of approximately 60% was recorded at year-end 2003 relative to the position a year earlier, incorporating commutations with two major clients in the course of the year. To address risk from the company's credit derivatives portfolio, the company has entered into an agreement that hedges its credit exposure.
Support from core clients--A.M. Best believes that SCOR continues to have a very good profile in its core markets in continental Europe and Asia. Poor performance in 2002 and 2003 has had some impact on its prospects in certain markets, particularly the United States and the United Kingdom, although A.M. Best believes the EUR 750 million (USD 949 million) rights issue has helped to restore confidence.
For a complete list of SCOR's financial strength and debt ratings, please visit SCOR.
For a list of A.M. Best's debt ratings, please visit Best's Debt Rating Center.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. |
