AM Best Puts SCOR’s Credit Ratings Under Review After L&H Reserve Announcement

AM Best has placed the credit ratings of SCOR, the Paris-based reinsurer, under review with developing implications.

The ratings were placed under review as a result of SCOR’s July 15 publication of an update on its second-quarter 2024 and full-year 2024 results, when SCOR announced that it has decided to accelerate its life & health (L&H) reserving assumptions review subsequent to negative experience variance in first-quarter 2024.

SCOR’s said its L&H insurance service (ISR) result is expected to be a loss of €400 million (US$433.8 million) during the second quarter 2024, driven notably by updates on reserves and negative experience variance.

As a result, the L&H ISR for full-year 2024 is expected to be significantly below the €500 million (US$542.2 million) target previously communicated, AM Best said. “Reserving assumption changes will also impact the organisation’s pre-tax L&H contractual service margin (CSM), with a negative adjustment (at current yield curves) of €900 million as per second-quarter 2024,” it added.

AM Best said SCOR explained that the reserving review is ongoing and could lead to potential further negative adjustments to the ISR or CSM during the second half of 2024 in a worst-case scenario.

AM Best is reviewing SCOR’s Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings of “a+” (Excellent) of SCOR SE and its main operating subsidiaries. Ratings will remain under review until SCOR’s reserving review has been finalized, the new strategic plan for L&H business is disclosed in December 2024, and until AM Best completes its assessment of the impact on the rating fundamentals of SCOR.

In the July 15th announcement from SCOR, CEO Thierry Léger said: “Following the accelerated L&H reserving assumptions review, we have decided to launch the first of a series of determined actions aimed at restoring the profitability of our L&H business in a sustainable way. We will update the Forward 2026 plan to improve the margins and mix of our products with a strong focus on diversification. The new L&H business strategy and the Forward 2026 KPIs will be presented on 12 December 2024. Our P&C and Investment activities continue to deliver a very strong performance. We have full confidence in our L&H franchise and in our ability to produce higher quality and more stable results going forward.”

Source: AM Best

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