S&P Global Ratings Inc. on Thursday downgraded the financial strength of Scor SE and its core subsidiary and guaranteed units to ‘A+’ from ‘AA-‘ with a stable outlook.
Scors’ operating results have not met expectations or been in line with “AA-” rated peers, with the trend accelerating in the first nine months of 2022, partly due to the challenging price environment in the P/C business ahead of 2022, elevated natural disasters, volatile technical margins from the life reinsurance business and lower investment income, S&P said.
The rating agency added that Scor reported a net loss of 509 million euros for the first nine months of 2022, making it a “negative outlier relative to peers such as Munich Re and Hannover Re, which have better results in terms of meeting our revenue expectations .”
The stable outlook reflects expectations that management̵7;s actions are likely to return the group to underwriting and overall profitability by 2023, S&P said.
Management actions to improve weaker performance include reducing exposure to natural disasters, which will decrease by approximately 20% in late 2022 compared to 2021, and US real estate. SCOR has also “desensitized” itself to inflation by strengthening its P/C reserves by 485 million euros, S&P said.
“We expect Scor’s underwriting performance to improve in 2023-2024 due to the benefits from tighter reinsurance pricing, with a combined ratio (loss and expense) of 95%-98% including a natural catastrophe load of eight percentage points,” S&P said.