Fitch says SCOR's COVID-19 losses 'manageable' and capital 'very strong'

Analysts at Fitch believe that SCOR, the world's fourth largest reinsurer, has shown resilience and robust capital strength, supported by "manageable" COVID-19 losses, during the ongoing global crisis.

SCOR chief executive Denis Kessler highlighted that the company's overall strategy and business model testifies to its resilience during these unprecedented circumstances.

Having assessed the impact of the coronavirus pandemic, including its economic impact, under a set of rating assumptions, Fitch affirmed the SCOR Group's financial strength rating of ‘AA-‘ (Very Strong) and a stable outlook.

Fitch assesses “SCOR’s capitalisation and leverage as very strong”, both in their “rating and stress cases and versus the last two years. Fitch does not foresee a material weakening of SCOR’s capital strength in the medium-term, assuming a normal level of catastrophe losses.”

The agency concluded that it “expects the assumed pro-forma COVID-19 related losses to be one-off and manageable for SCOR; we expect the resulting weaker profitability to recover to a normalised ROE of around 8% by end-2021.”

Kessler commented: “We welcome Fitch’s decision to affirm SCOR’s Financial Ratings. This decision, which clearly demonstrates the soundness of our strategy as a Tier 1 global reinsurer, testifies to the resilience of the Group’s business model in the current pandemic crisis.”

SCOR is exposed to pandemic risk primarily through its mortality reinsurance business, which accounted for 58 percent of its life portfolio, based on gross written premium (GWP). Life reinsurance represented 56 percent of the group's GWP and around half of its total operating result at end-2019.