Fitch Ratings has affirmed SCOR’s and its core operating subsidiaries’ Insurer Financial Strength (IFS) Ratings at ‘A+’ and Long-Term Issuer Default Rating (IDR) at ‘A’, with Stable Outlooks.
Fitch noted that the affirmation reflects SCOR’s improving earnings, well-designed strategic plan, and ‘Favourable’ business profile compared with that of all other reinsurance companies, showcasing a “very strong, diversified, global franchise.”
“Management has largely completed the repositioning of the business mix initiated in 2021, reducing natural catastrophe and US mortality risk exposures, among other remedial actions,” the rating agency explained.
Fitch also highlighted that SCOR has set “reasonably ambitious but achievable targets” under its new 2024-2026 strategic plan to build a more balanced and resilient earnings profile while enhancing its balance-sheet strength.
“The plan favours profitability over growth while leveraging on favourable market conditions and, in our view, does not involve material execution risk that could worsen SCOR’s credit profile,” Fitch said.
The rating agecny continued, “The combination of substantial remedial actions, reinsurance rate increase and higher reinvestment rates have started to be realised in 2023.
“This supports our expectations for a return to profitability levels in 2023 and 2024 that are commensurate with the rating.
“However, Fitch believes it will take time before SCOR sees sustained improvements in performance that would be consistent with our expectations at the ‘aa’ level.”
The French reinsurer reported Group net income of €147 million for the third quarter of 2023 and an improved P&C combined ratio of 90.2%, despite natural catastrophe losses coming in above budget and large man-made claims.
In its results, SCOR stated that while the attritional loss ratio is satisfactory for the quarter, the level of man-made claims was too high, and therefore SCOR continues efforts to improve the core performance of its P&C book.
All in all, SCOR reported a Q3 2023 cat ratio of 13.3%, including 4 points related to claims on the Hawaii wildfires.
For 9M 2023, the P&C combined ratio hit 88%, and SCOR anticipates it to come down to around 87% for full-year 2023.
