Canadian Underwriter

Scor on watch following dismal results

October 31, 2002   by Canadian Underwriter

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Several ratings agencies have downgraded or placed Paris-based SCOR and its subsidiaries on watch following news the reinsurance giant would suffer big losses this year.
SCOR announced it expects to lose EUR 250 million (Cdn$386 million) this year due to investment woes, reserve deterioration, European flood losses this summer and credit underwriting losses. This comes despite a profit of EUR 21 million (Cdn$32 million) for the first half of the year.
The announcement comes in advance of the company’s third quarter results, to be released at an extraordinary shareholders’ meeting November 5. The company plans to make an additional provision of EUR 225 million to reserves, in part to cover workers compensation losses from its CRP subsidiary in Bermuda for 1999 and 2000.
A.M. Best has placed SCOR’s A (excellent) financial strength rating, and debt and commercial paper ratings, under review with negative implications. “The current rating, affirmed in September 2002, reflected both the expectation of substantially stronger performance in 2002 and a successful capital raising by the end of the first quarter 2003,” states A.M. Best.
Fitch has lowered SCOR’s financial strength rating from A to BBB and maintains a negative watch. Standard & Poor’s has lowered both the financial strength and counter party credit ratings of SCOR to A- from A and placed them on “credit watch” with negative implications. Moody’s has place SCOR’s ratings on review for possible downgrade.
SCOR is looking at a reorganization plan that includes cutting back on CRP’s underwriting, restructuring its internal audit and risk control departments, and calling for a rights issue “for an amount at least equal to the estimated loss” for 2002. Other plans including drastically reducing alternative risk transfer, credit & surety reinsurance, focussing on growth in the group’s profitable life reinsurance business and favoring short-tail risks in large corporate accounts.

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