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Moody’s Verifies SCOR’s Ratings, Moves Outlook To Negative

Moody’s Verifies SCOR’s Ratings, Moves Outlook To Negative

Moody’s Verifies SCOR’s Ratings, Moves Outlook To Negative

Moody’s Verifies SCOR’s Ratings, Moves Outlook To Negative

A P&C and Life reinsurance provider, SCOR SE, and its main operating entities have had their Insurance Financial Strength Rating (IFSR) confirmed by Moody’s at Aa3. According to Moody’s, the outlook has also been altered from stable to negative.

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The rating agency claims that SCOR’s ratings have been confirmed because of its well-diversified business profile, extremely strong brand, and dominant market position in Life and P&C reinsurance.

While at the same time reflecting SCOR’s poor profitability, the outlook moves to negative shows Moody’s projection of continued earnings challenges brought on by claim inflation and elevated natural disaster claims.

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SCOR reported an overall net loss of €239 million in the first half of 2022. Its P&C business was negatively impacted mainly due to natural catastrophes and large claims related to Brazilian droughts and the Russia/Ukraine military conflict, including some losses related to past casualty cases in the United States.

Moody’s Verifies SCOR’s Ratings, Moves Outlook To Negative

The heightened levels of COVID-19 losses also continued to put pressure on technical results in Life reinsurance in H1 2022. Despite this, Moody believes that SCOR’s Life reinsurance business, when excluding Covid-19 claims, continues to perform well and should support stronger earnings if pandemic-related mortality continues to decrease.

Additionally, the negative outlook also reflects the execution risk related to the SCOR’s recent initiatives to rebalance the reinsurance portfolio, which resulted in uncertainty around the ultimate impact of these measures on the firm’s earnings and market franchise.

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The rating agency said: “Moody’s also believes that further earnings headwinds could materialize, namely from claims inflation and elevated natural catastrophe claims, including the current hurricane season. Claims inflation is rising and could put pressure both on the current level of claims as well on SCOR’s reserving levels, where reported prior-year developments have been largely flat since 2020, after several years of consistent positive reserve development.

“As concerns possible losses from Hurricane Ian, SCOR has not yet disclosed any estimate but current industry loss estimates are material, ranging from $31-74 billion. Positively, SCOR had reduced its net exposure to North Atlantic Hurricane, and specifically to Florida, during recent renewals.”

Moody’s Verifies SCOR’s Ratings, Moves Outlook To Negative

According to Moody’s, the rebalancing of the reinsurer’s portfolio could have positive results in the future, the agency said: “The rebalancing of the portfolio – which SCOR has actively been pursuing since the second half of 2021 – reduces SCOR’s exposure to modeled natural catastrophe losses and should reduce the volatility in its P&C Reinsurance underwriting results going forward.

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“Pricing momentum continues to be positive and SCOR aims to increasingly grow specialty lines business, which it considers more attractive from a risk-return perspective. However, ultimately the impact of these remedial actions on SCOR’s market-leading franchise and its earnings power going forward remains to be seen. SCOR will announce updated profitability targets as part of presenting its new strategic plan in November 2022.”


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