MOODY'S RATES SCOR A1 (GOOD) FOR INSURANCE FINANCIAL STRENGTH
Moody's Investors Service today assigned an A1 (Good) insurance financial strength rating to SCOR and certain of its international reinsurance subsidiaries.
Moody's said that the rating is based on SCOR's position as one of the leading European reinsurers, its improved operating performance in recent years, the recent strengthening of its financial structure through restructuring and debt repayment and certain areas of acknowledged underwriting expertise. These strengths are tempered by a continued reliance on proportional business, a relatively high expense base and extremely competitive conditions in its major markets, particularly in facultative business.
SCOR is a global multi-lines reinsurer headquartered in Paris, France. After a complex evolution from its beginnings as a French state-owned company, SCOR is now a fully quoted company with no majority owner. It is the main operating and holding company for the SCOR Group. In 1997, the group underwent a major restructuring when its principal non-life and life reinsurance companies - SCOR Reassurance and SCOR Vie - were merged into the holding company, SCOR sa, to form the new SCOR. This company wrote 38% of the group's total net premium in 1997.
Aside from Europe, the group's other major market is the USA, where 31% of 1997 net premium was written. This proportion increased in 1996 when the group acquired the reinsurance portfolio of Allstate. The remainder of the group's business is written through a global network of subsidiaries, the majority of which carry the SCOR name. It is the stated policy of SCOR to make available the full financial resources of the group to its subsidiaries. It supports this commitment with explicit support in the form of guarantees extending from the parent company to the subsidiaries.
SCOR has improved its consolidated performance markedly in recent years in an environment of favourable claims experience and strong investment markets. It also strengthened its financial structure in 1997 / 98 both through the merger of its major subsidiaries and through the early redemption of approximately FF1.5 billion of convertible bonds. Financial leverage has therefore reduced. Moody's believes the group's investment mix and reserving to be sound with little exposure to potential long latent liability claims in the US.
SCOR's strategy in recent years has focused on expanding its life reinsurance business, although the acquisition of the Allstate book in 1996 reduced life business as a proportion of the whole in 1997. This strategy should add to stability of results going forward. The group's other acknowledged area of expertise is in facultative business where market conditions have been extremely competitive in most lines. SCOR has also been a vigorous participant in the restructuring of the credit insurance industry and now has a strong position in this potential growth industry through its stakes in Euler (14%) and Coface (45%).
Finally, Moody's noted that, although SCOR remains within the top ten global reinsurers when measured by premiums, its relative size has declined in view of the consolidation that has taken place around it in the reinsurance industry. As the largest global groups begin to impose their market power and dedicate their increased resources to new avenues of innovation, SCOR may find itself challenged to remain in a position of relative strength.
The following SCOR subsidiaries were also rated A1 for insurance financial strength by Moody's (the figures in parentheses represent their contribution to 1997 group net premium) :
SCOR Reinsurance Co (US) (31%)
SCOR Deutschland Ruckversicherungs AG (Germany) (8%)
SCOR UK Company Limited (4%)
SCOR Italia Riassicurazioni (Italy) (5%)
SCOR Canada Reinsurance Company (3%)
SCOR Group, headquartered in Paris, France, reported total consolidated assets of FF 41 billion and consolidated shareholders' funds of FF 8.4 billion at 31 December, 1997.
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