OREANDA-NEWS. Fitch Ratings has affirmed SCOR's Insurer Financial Strength (IFS) rating at 'AA-' and Long-Term Issuer Default Rating (IDR) at 'A+'. Fitch has also affirmed the ratings of SCOR's core operating subsidiaries. The Outlooks are Stable. A full list of rating actions is at the end of this release.

KEY RATING DRIVERS

The affirmation reflects SCOR's very strong financial profile and reinsurance franchise. SCOR's P&C reinsurance business has steadily grown into a well-diversified portfolio, both geographically and by line of business. The division is the major contributor to group operating earnings and achieved a FY15 combined ratio of 89.8% (FY14: 90.2%).

We note that SCOR's normalised combined ratio was 95.9% at FY15, reflecting the effects of a protracted soft market. This increases the sensitivity of future underwriting profitability to even a modest rise in major loss claims. In the medium term, the development and defence of SCOR's market position will be dependent upon the reinsurer's ability to increase its share of key markets and reinsurance lines, in our opinion.

SCOR issued EUR600m and EUR500m subordinated notes in December 2015 and May 2016 respectively, pre-financing two calls in 2016. Fitch-calculated financial leverage will remain above 25% through most of 2016, but we expect it will return to a level commensurate with SCOR's rating category by the end of 2016.

The agency regards SCOR's capitalisation as very strong. The reinsurer scored 'extremely strong' on the agency's Prism FBM based on year-end 2015 financial data, unchanged from 2014. A qualitative offset to the overall score achieved is the high proportion of 'softer' forms of capital present within the assessment. SCOR reported strong coverage of the Solvency II (SII) SCR at 1 January 2016, with a level of 211% sitting within the reinsurer's stated optimal range.

Fitch recognises that the current operating environment remains challenging for SCOR and the wider (re)insurance industry. Persistently low interest rates and increasingly intense competition, especially in non-life reinsurance, continue to drive price softening across certain major reinsurance classes. The agency expects SCOR's diversified business profile and prudent underwriting policy to provide resilience to a protracted period of price softening, should this occur.

RATING SENSITIVITIES

Fitch considers an upgrade as unlikely in the near term, but it could be achieved over the longer term if financial performance (including a run-rate combined ratio remaining below 93%) improves further, SCOR's market position continues to develop relative to peers, and the quality of SCOR's capitalisation improves, as assessed within Fitch's Prism FBM.

A downgrade may occur if financial leverage were to rise and remain over 25% or if the overall capitalisation assessment deteriorated to 'strong'. A combined ratio consistently above 100% could also lead to a downgrade.

FULL LIST OF RATING ACTIONS

SCOR S. E.:

IFS rating: affirmed at 'AA-'; Outlook stable

Long-Term IDR: affirmed at 'A+'; Outlook Stable

Senior unsecured debt: affirmed at 'A+'

Subordinated debt: affirmed at 'A-'

Junior subordinated debt: affirmed at 'BBB+'

SCOR Switzerland AG

IFS rating: affirmed at 'AA-'; Outlook stable

Long-Term IDR: affirmed at 'A+'; Outlook Stable

SCOR Holding (Switzerland) AG

Long-Term IDR: affirmed at 'A+'; Outlook Stable

The following SCOR entities' IFS ratings have been affirmed at 'AA-' with Stable Outlook:

SCOR Global P&C S. E.

SCOR Global Life S. E.

SCOR Canada Reinsurance Co

SCOR UK Co Ltd

SCOR Reinsurance Co (US)

General Security Indemnity Co of Arizona

SCOR Reinsurance Co Asia Ltd

SCOR Reinsurance Asia Pacific Pte Ltd

SCOR Global Life Americas Re Insurance Co

SCOR Insurance (UK) Ltd

SCOR Global Life Reinsurance Ireland Limited