Moody’s downgrades SCOR’s IFSR to A1

Moody’s Investor Services has downgraded the Insurance Financial Strength Rating of SCOR SE and its key operating entities to A1 from Aa3 and changed the outlook to stable from negative.

Moody’s changed the outlook to negative from stable on the Group’s ratings on 13 October 2022, following a weakening in the Group’s performance in the first six months of the year, which continued in the third quarter.

On 26 January, SCOR announced the replacement of its CEO, stressing the need to develop and implement a new comprehensive strategic plan, which has been a key strength of the Group in the past.

In Moody’s view, the turnover in SCOR’s CEO role highlights challenges in the implementation of the Group’s succession plan.

The downgrade reflects the recent weakening of the Group’s profitability and Moody’s expectation that the Group’s senior management will likely be faced with a high level of scrutiny from both external stakeholders, namely clients and investors, and internal stakeholders, which will increase execution risk in implementing a new strategic plan.

As concerns profitability, the results for the third quarter of 2022 showed a further weakening of the Group’s earnings, reflected in a net loss of €509m for the first nine months of the year.

The Group’s Solvency remained on very strong levels, at 217% and thus at the upper end of what the Group defines as its optimal range, but Moody’s notes that positive market movements strengthened the ratio by 43 percentage points over the first nine months.

Whereas Moody’s notes positively that the board took proactive action, Moody’s expects that it will take time for the senior management to rebuild the Group’s track record.