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Fitch Affirms SCOR's IFS at 'AA-'; Outlook Stable
December 8, 2016 / 4:20 PM / a year ago

Fitch Affirms SCOR's IFS at 'AA-'; Outlook Stable

(The following statement was released by the rating agency) LONDON, December 08 (Fitch) Fitch Ratings has affirmed SCOR SE's Insurer Financial Strength (IFS) rating at 'AA-' and Long-Term Issuer Default Rating (IDR) at 'A+'. Fitch has also affirmed the ratings of SCOR's core operating subsidiaries. The Outlooks are Stable. A full list of rating actions is at the end of this release. KEY RATING DRIVERS The affirmation reflects SCOR's very strong financial profile and reinsurance franchise. SCOR's P&C reinsurance business has steadily grown into a well-diversified portfolio, both geographically and by line of business. The division is the major contributor to group operating earnings and achieved a 9M16 combined ratio of 93% (9M15: 90.8%). The deterioration in the combined ratio was a result of increased natural catastrophe losses and marginally increased commission expenses, partly offset by reduced attritional losses. SCOR completed the calls of two issues of hybrid debt in 3Q16 with its EUR350m subordinated notes redeemed on 28 July and its CHF650m subordinated notes redeemed on 2 August 2016. The redemptions were pre-financed by the issuance of two subordinated notes in October 2014 and December 2015. The agency regards SCOR's capitalisation as very strong. The reinsurer scored 'Extremely Strong' on the agency's Prism Factor-Based Model (FBM) based on year-end 2015 financial data. A qualitative offset to the overall score is the high proportion of 'softer' forms of capital present within the assessment. SCOR reported strong coverage of the Solvency II capital ratio at end-3Q16, with a level of 212%, which sits within the reinsurer's stated optimal range of 185%-220%. Fitch recognises that the current operating environment remains challenging for SCOR and the wider (re)insurance industry. Persistently low interest rates and increasingly intense competition, especially in non-life reinsurance, continue to drive price softening across certain major reinsurance classes. The agency expects SCOR's diversified business profile and prudent underwriting policy to provide resilience to a protracted period of price softening, should this occur. RATING SENSITIVITIES Fitch considers an upgrade as unlikely in the near term, but it could be achieved over the longer term if financial performance (including a run-rate combined ratio remaining below 93%) improves further, SCOR's market position continues to develop relative to peers, and the quality of its capitalisation improves, as assessed by Fitch's Prism FBM. A downgrade may occur if financial leverage were to rise and remain over 25% or if the overall capitalisation assessment deteriorated to 'strong'. A combined ratio consistently above 100% could also lead to a downgrade. FULL LIST OF RATING ACTIONS SCOR S.E.: IFS rating: affirmed at 'AA-'; Outlook stable Long-Term IDR: affirmed at 'A+'; Outlook Stable Senior unsecured debt: affirmed at 'A+' Subordinated debt: affirmed at 'A-' Junior subordinated debt: affirmed at 'BBB+' SCOR Switzerland AG IFS rating: affirmed at 'AA-'; Outlook stable Long-Term IDR: affirmed at 'A+'; Outlook Stable SCOR Holding (Switzerland) AG Long-Term IDR: affirmed at 'A+'; Outlook Stable The following SCOR entities' IFS ratings have been affirmed at 'AA-' with Stable Outlook: SCOR Global P&C S.E. SCOR Global Life S.E. SCOR Canada Reinsurance Co SCOR UK Co Ltd SCOR Reinsurance Co (US) General Security Indemnity Co of Arizona SCOR Reinsurance Co Asia Ltd SCOR Reinsurance Asia Pacific Pte Ltd SCOR Global Life Americas Re Insurance Co SCOR Insurance (UK) Ltd SCOR Global Life Reinsurance Ireland Limited Contact: Primary Analyst Graham Coutts Director +44 20 3530 1654 Fitch Ratings Limited 30 North Colonnade London E14 5GN Secondary Analyst Harish Gohil Managing Director +44 20 3530 1257 Committee Chairperson Chris Waterman Managing Director +44 20 3530 1168 Media Relations: Athos Larkou, London, Tel: +44 203 530 1549, Email: Additional information is available on Applicable Criteria Insurance Rating Methodology (pub. 15 Sep 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here _id=1016128 Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. 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