Reinsurance News

Société Centrale de Réassurance’s expansion cited as rating affirmed

3rd August 2022 - Author: Kane Wells

Fitch Ratings has affirmed Morocco-based Société Centrale de Réassurance (SCR) National Insurance Financial Strength (IFS) Rating at ‘AAA(mar)’, the outlook is stable.

scr-morocco-societe-centrale-reassurance-logoSCR has gradually increased its international diversification, as reflected in the share of the gross premiums written outside Morocco of 25% in 2021, up from 22% in 2018.

Fitch has stated that it believes the increasing international presence does not result in a substantial weakening of the credit profile of the reinsurer.

SCR’s rating benefits from the unlimited guarantee issued by the Moroccan state (BB+/Stable) on the company’s domestic business, which is a credit positive for the company’s profile assessment, compared with local peers.

Fitch has assessed SCR’s exposure to investment and asset risk as high, reflected in a risky asset-to-capital ratio of 283% at end-2021 (end-2020: 288%). Fitch has stated it views SCR’s investment strategy as prudent versus its domestic peers.

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SCR scored ‘Very Strong’ at the end of 2021 under Fitch’s Prism Factor-Based Model, which was similar to the 2020 score. Fitch observed that SCR is compliant with regulatory solvency requirements in Morocco, as reflected in a regulatory Solvency-I type ratio of 214% (2020: 209%, 2019: 227%), including unrealised capital gains. SCR’s Solvency 2 (S2) capital ratio, which is internally calculated and certified by an internal actuarial firm, strengthened to 202% in 2021 from 189% in 2020.

Fitch ranked SCR’s company profile as ‘most favourable’ compared with other Moroccan insurers and reinsurers.

Fitch stated that it views SCR’s reserving practices as prudent. This view is based on a long record and strong expertise in the key markets where SCR operates, its adequate reserving methodology and the accuracy of its initial estimates. SCR commissions yearly independent actuarial reviews of its reserving levels from independent international actuarial firms.

Fitch observes SCR’s reinsurance, risk management and catastrophe risk management as robust and supportive of the rating, writing, “SCR has a strong credit-quality retrocession panel, as Moroccan regulation requires the retrocession counterparties to be rated ‘A-‘ and higher. Fitch views SCR’s longstanding lies with good-quality retrocession partners as important for the company’s credit profile.”

SCR is a leading reinsurer in Morocco and also the second-largest Africa-based reinsurer.

The company underwrites proportional and non-proportional reinsurance treaties and facultative contracts – mainly in traditional insurance lines, such as motor and property, but also in speciality lines, such as marine, aviation and engineering.

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