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SCOR legacy resolution leads to Fitch upgrade

SCOR has had its Insurer Financial Strength (IFS) rating upgraded a notch to A by Fitch Ratings as the agency said the French reinsurer’s past legacies are unlikely to return to haunt it.

Fitch added that the upgrade reflected the successful integration of its Converium acquisition, and its “materially reduced leverage”.

The ratings agency also upgraded the company’s Long Term Issuer Default Rating (IDR) to A from A- and its Junior Subordinated Debt to BBB+ from BBB-.

In a statement, Fitch said: “The upgrade reflects Fitch’s view that SCOR’s financial strength is unlikely to be materially affected by past legacies following their successful resolution or limited ongoing exposure.”

Fitch added: “It also reflects the group’s materially reduced leverage and continued strong capital adequacy. The ratings take into account SCOR's strong business and risk diversification, solid business position and recovering profitability.”

The rating agency said the upgrade also reflected SCOR’s strengthened capital position after the acquisition of Converium and the successful integration of the two companies.

SCOR said it welcomed the decision by Fitch to upgrade the group.

However, Fitch noted that competitive underwriting conditions and possible “minor” adverse reserve developments “could challenge the group's ability to achieve significant earnings improvement in the short term”.

It also highlighted execution risks in the reinsurer’s restructuring plan.

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