General Insurance Article - Fitch Upgrades SCOR to 'A+'; Outlook Stable

 Fitch Ratings has upgraded SCOR's Long-term Issuer Default Ratings (IDRs) and Insurer Financial Strength (IFS) ratings to 'A'+ from 'A'. Fitch has simultaneously upgraded SCOR's junior subordinated debt to 'A-' from 'BBB+'. The Outlook on the IDRs and IFS ratings is stable. A full rating breakdown is at the end of this comment.
 The upgrades reflect SCOR's strong solvency and moderate debt in relation to its risk profile. SCOR's ratings are also supported by significant business and risk diversification. The ratings also take into account the group's consistent and comprehensive strategy, solid business position, and somewhat volatile profitability.
 SCOR has improved its capital adequacy over the past three years as a result of well-controlled underwriting practices and a cautious investment policy. Debt leverage has increased while remaining in line with expectations for the current ratings.

 
 Fitch notes SCOR's ability to successfully expand its business position via external growth and to swiftly integrate acquired operations. As a consequence, business position and diversification have significantly improved over the past five years. In addition, prices paid for acquisitions have usually been conservative, resulting in a manageable amount of intangible assets on the group's balance sheet.
 SCOR's profitability has been under pressure over the past three years, especially at the non-life division, as a consequence of material natural catastrophes having taken place. Fitch expects SCOR to promptly adjust policies terms and conditions in order to restore profitability. Fitch also notes the group's ambition to significantly reduce its costs has yet to deliver its full benefit.

 
 Although unlikely in the near future, a further rating upgrade could be triggered by a material and sustainable recovery of profitability, especially in the non-life segment (combined ratio sustainably below 100%), translating into significant capital accumulation or debt redemption. Conversely, rating triggers that could result in a revision of the Outlook, or a downgrade, include deterioration in Fitch assessment of capital adequacy or a deterioration in profitability (combined ratio persistently above 100% or life operating margin persistently below 6.5%).

 
 The rating actions are as follows:

 
 SCOR S.E.:

 
 Long-term IDR: upgraded to 'A+' from 'A'; Outlook Stable
 IFS rating: upgraded to 'A+' from 'A'; Outlook Stable
 Senior unsecured: upgraded to 'A+' from 'A'
 Junior subordinated debt: upgraded to 'A-' from 'BBB+'

  

 SCOR Switzerland AG
 Long-term IDR: upgraded to 'A+' from 'A'; Outlook Stable
 IFS rating: upgraded to 'A+' from 'A'; Outlook Stable

  

 SCOR Holding (Switzerland) AG
 Long-term IDR: upgraded to 'A+' from 'A'; Outlook Stable

  

 The following SCOR entities IFS ratings are upgraded to 'A+' from 'A' with a 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 (formerly SCOR Global Life US Re Insurance Co)
 SCOR Insurance (UK) Ltd

 
 Fitch has withdrawn SCOR Global P&C Ireland Ltd's IFS rating as the company does not operate anymore and transferred all its reinsurance obligations to SCOR UK Co Ltd. Fitch has also withdrawn SCOR Rueckversicherung (Deutschland) AG's rating as this entity no longer exists following its merger with SCOR Global Life S.E.

 
 The Short Term ratings of SCOR S.E. have also been withdrawn as the company cancelled its Commercial Paper programme after full repayment.