MOODY'S CHANGES ITS RATING OUTLOOK ON SCOR AND ITS SUBSIDIARIES TO POSITIVE FROM STABLE
New York, February 15, 2001 -- Moody's Investors Service has today changed its insurance financial strength rating outlook on SCOR to positive from stable. Moody's currently rates SCOR A1 for insurance financial strength. (A rating outlook is an indication, based on currently available information, about the likely direction of a company's rating in the near term.)
Moody's stated that SCOR, the largest French reinsurer, has a strong franchise in this specialised industry, ranking among the ten largest life and non-life reinsurers in the world. As the industry continues to consolidate, Moody's would expect the competitive position of the largest groups to improve.
SCOR operates globally through a number of companies, the most important at this stage being those of the parent company - SCOR (formerly SCOR sa), SCOR U.S. Corporation, Commercial Risk Partners in Bermuda, SCOR Deutschland and SCOR Italia - which in aggregate wrote over 90% of the group's premiums in 1999. The American market is the most important for SCOR in terms of premiums and, because of the weight of these operations, improvement of operating results in this market is crucial to improve the group's results.
Moody's added that in recent years SCOR's strategy has been focused on three main business segments: property and casualty (P&C), life and health and specialty business. The P&C and life and health business units are mostly traditional business written on a proportional, excess of loss and facultative basis. The specialty business includes credit, alternative risk transfer and large industrial business. As the life and health and specialty units have recorded high growth rates in recent years and as management has been pruning the property and casualty portfolio, the profile of the group's business is evolving.
SCOR maintains a strategic holding in the leading credit insurers, Euler and Coface, and hence benefits from, and conversely is exposed to, this sector on both sides of the balance sheet. The IPO of these companies has helped to make the stakes more valuable and liquid, and some of the gains have helped to offset unusually large catastrophe losses.
Moody's said that SCOR has managed to grow, diversify and strengthen its franchise through the most difficult phase of the underwriting cycle and a period of exceptional loss in Europe, without showing signs of stress or adding excessive leverage to its capital base. On the contrary, leverage at SCOR declined for several consecutive years before rising slightly in the last two. The group's companies should benefit from this moderately leveraged condition as rates begin to harden in various lines and territories, and as efforts made in recent years to improve the performance of the property and casualty portfolio start having an impact. The balance between growth and capitalisation will be a key factor that will be monitored by Moody's in the coming year.
Moody's changed its rating outlook to positive from stable at the following companies:
SCOR
SCOR Reinsurance Company (US)
SCOR Deutschland Rückversicherungs AG
SCOR Italia Riassicurazioni S.p.A.
SCOR Canada Reinsurance Company
SCOR UK Company Limited
Headquartered in Paris, SCOR is the largest French reinsurer, writing annual gross premiums of Euro 3.4 billion in 2000. At the end of June 2000, SCOR reported shareholders' equity of approximately Euro 1.8 billion.
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