A.M. Best Affirms Ratings of SCOR.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR (Free System Resource) In Windows 3.x, the amount of unused memory in various 64K blocks reserved for managing current applications. Every open window takes some space in this area. See Windows memory limitation. ) of B++ (Very Good) and issuer credit rating (ICR (Intelligent Character Recognition or Image Character Recognition) The machine recognition of hand-printed characters as well as machine printing that is difficult to recognize. ) of 'bbb+' of SCOR SCOR Scientific Committee on Oceanic Research SCOR Supply Chain Operations Reference model SCOR Small Corporate Offering Registration SCOR Specialized Center of Research (White Plains, NY) SCOR Second Cousin Once Removed (Paris) and its main subsidiaries (collectively referred to as SCOR Group). The ratings on senior and subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". instruments issued or guaranteed by SCOR and the company's commercial paper programme have also been affirmed. (See a full list of ratings below.) The outlook for all these ratings remains positive. Concurrently, A.M. Best has affirmed the FSR of B++ (Very Good) and the ICR of 'bbb+' of Investors Insurance Corporation (IIC See infranet. ). A.M. Best believes that as a direct annuity operation, IIC's business model is not aligned with the life reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. operations of its parent company. Accordingly, IIC's ratings reflect a stand-alone analysis of the company's financial strength. The outlook for IIC's ratings has been changed from positive to stable. The ratings of SCOR reflect its very good prospective risk-adjusted capitalisation, continuing improvement in non-life profitability, stable life operating profitability and the company's strong business profile in continental Europe Continental Europe, also referred to as mainland Europe or simply the Continent, is the continent of Europe, explicitly excluding European islands and, at times, peninsulas. . A partially offsetting factor is the need for further stability in loss reserve development, which has recently been favourable following a prolonged period of adverse development. A.M. Best believes that SCOR is likely to maintain adequate capitalisation to support its current rating, with improvement expected in 2005 and 2006, reflecting steady improvement in retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. . Shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. of EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 1,680 million (USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 2,016 million) in 2005 after nine months reflects strengthening of 27% since year-end 2004 as a result of solid retained earnings as well as additional capital from the EUR 233 million (USD 280 million) rights issue in June 2005. EUR 183 million (USD 220 million) were used to buy out the minority interests in Irish Reinsurance Partners Limited. Although A.M. Best believes the risk of reserve volatility has reduced as a result of reserve strengthening since 2002 of approximately USD 1.2 billion, given the historical loss reserve development and the length of the tail of current loss reserves, additional stability is needed before the risk of further adverse development is viewed as minimal. The ratio of net non-life technical reserves to net premiums written is high--525% at year-end 2004--despite the company's continuing programme of commutations (USD 1.1 billion reduction in reserves in the US and Bermuda since 2002). A.M. Best anticipates that SCOR's non-life combined ratio will be close to 100% in 2005, down from 106% in 2004. This is likely to result in net income above EUR 110 million (USD 132 million), up from EUR 69 million (USD 94 million) in 2004. The anticipated improvement is a consequence of a reduction in likely reserve strengthening, a relatively modest exposure to recent catastrophe events and an increasingly disciplined underwriting approach. In addition, A.M. Best believes that Project New SCOR, launched in 2005, is likely to systematically address the operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. issues that have arisen as a result of reductions in the volume of business written. Total net written premium reduced by 29% in 2004. A gradual reduction in the company's non-life operating expense ratio to approximately 30% by 2007 is anticipated, down from a high of 36.5% in 2004. The company's performance is also likely to continue to be supported by stable earnings from its life and accident reinsurance underwriting. In 2005 A.M. Best believes that SCOR's business volume will remain stable at a comparable level to 2004 when gross premiums written When a non-life insurance company closes a contract to provide insurance against loss, the revenues (premiums) expected to be received over the life of the contract are called gross premiums written. were EUR 2,528 million (USD 3,449 million), reflecting consolidation of SCOR's business position with its existing clients. The company continues to benefit from a very good business position in continental Europe and, to a lesser extent, in Asia. SCOR has maintained its relationship with the majority of its significant clients in these areas, despite reductions in its participation on some major programmes. The financial strength rating of B++ (Very Good) and issuer credit rating (ICR) of 'bbb+' have been affirmed for the following members of the SCOR Group: --SCOR --SCOR Canada Reinsurance Company --SCOR Deutschland Ruckversicherungs AG --SCOR Italia Riassicurazioni S.p.A --SCOR Reinsurance Asia-Pacific Pte Ltd --SCOR UK Company Ltd --SCOR Reinsurance Company --General Security National Insurance Company --General Security Indemnity Company of Arizona --SCOR Vie --SCOR Life US Re Insurance Company --SCOR Life Insurance Company The following senior, subordinated and short-term debt Short-term debt Debt obligations, recorded as current liabilities, requiring payment within the year. ratings have been affirmed: SCOR-- --'bbb' on EUR 200 million 4.125% convertible bonds, due 2010 --'bbb' on 5.25% senior unsecured EUR medium term note program, due 2007 --'bbb-' on EUR 100 million subordinated step-up notes, due 2020 --'bbb-' on USD 100 million subordinated step-up notes, due 2029 --'bbb-' on EUR 50 million subordinated perpetual step-up notes issued by Societe d'Etudes et de Placements Financiers and guaranteed by SCOR --AMB-2 on EUR commercial paper program For Best's Debt Ratings, all other Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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