AM Best places credit ratings of SCOR under review following L&H update

AM Best has placed the credit ratings of SCOR and its main subsidiaries under review with developing implications following the French reinsurer’s publication of an update on its Q2 2024 and full-year 2024 results.

In the update, SCOR announced that it has decided to accelerate its life & health (L&H) reserving assumptions review after negative experience variance in Q1 of 2024. SCOR’s L&H insurance service result (ISR) is expected at €-400 million for Q2 2024, driven notably by updates on reserves and negative experience variance. As a result, the L&H ISR for the full-year 2024 is expected to be significantly below the €500 million target previously communicated.

As AM Best notes, reserving assumption changes will also impact SCOR’s pre-tax L&H contractual service margin (CSM), with a negative adjustment (at current yield curves) of €900 million as per Q2 2024.

“SCOR’s announcement notes 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,” the rating agency added.

AM Best thus anticipates the ratings to remain under review until SCOR’s reserving review has been finalised, the new strategic plan for L&H business is disclosed in December 2024, and until the rating agency completes its assessment of the impact on the rating fundamentals of SCOR.

In related news, despite the above profit warning and a drop in capitalisation, S&P Global recently has affirmed its ‘A+’ long-term insurer financial strength and issuer credit ratings on SCOR and related core subsidiaries, with the outlook remaining stable.

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