French reinsurer SCOR’s recently announced new strategic 2024-2026 plan is reasonably ambitious and could see the firm return to profitability levels in the medium term, according to Fitch Ratings.
In early September, SCOR revealed a new plan designed to enable it to benefit from a supportive market environment and develop a more balanced and resilient earnings profile.
According to Fitch, the three year plan does not have immediate rating implications as the guidance is consistent with the ratings agency’s prior expectations underpinning a stable credit profile over the next 12 to 24 months.
“Fitch believes the plan could return SCOR (Insurer Financial Strength rating: ‘A+’/Stable) to profitability levels in the medium term, consistent with higher-rated peers, while consolidating its very strong business profile and capitalisation. The strategy leverages on favourable market conditions and does not involve material execution risk that could worsen the group’s credit profile,” says the ratings agency.
Additionally, Fitch says it is positive about the planned management actions to build less volatile, more resilient earnings while building conservatism in reserves through an enhanced reserving framework.
The plan builds on SCOR’s remedial initiatives taken over the past two years which included a rebalancing of the business mix towards P&C, and efforts to cut exposure to both natural catastrophes and US mortality risk.
The combination of management actions, reinsurance rate increases, and higher reinvestment rates started to earn through this year, allow Fitch to predict a return to a profitability level commensurate with the rating in 2023.
