A.M. Best Co. has upgraded the issuer credit ratings to "a+" from "a" and affirmed the financial strength rating of A (Excellent) of the North American life operating subsidiaries of SCOR SE (SCOR) (France) (collectively referred to as SCOR U.S.): SCOR Global Life Americas Reinsurance Company (formerly known as SCOR Global Life U.S. Re Insurance Company) (Wilmington, DE) and SCOR Global Life Re Insurance Company of Texas (Plano, TX).
The outlook for all ratings is stable.
The upgrading of the ICRs for SCOR U.S. acknowledges its fully integrated role within SCOR and the synergies gained by common management and shared services. The ratings also consider SCOR U.S.' solid risk-adjusted capitalization and improved business profile following the recent acquisition of the life mortality business from Transamerica Re (TARe) by SCOR. This acquisition, once fully integrated, is expected to strengthen operating efficiencies and enable the U.S. subsidiaries to expand their focus on traditional life mortality business. Additionally, the acquisition has increased SCOR's profile within the North American life reinsurance market to a leading position.
The ratings of SCOR U.S. recognize the benefit from the implicit and explicit support of SCOR. This support includes the funding associated with Regulation XXX reserve requirements from the TARe acquisition, which have been reduced to a manageable level through an internal restructuring. Furthermore, A.M. Best notes the significantly reduced annuity-related interest rate risk given SCOR U.S' sale of Investors Insurance Corp. (IIC) to Athene Life Re in 2011.
Partially offsetting these positive rating factors includes the execution risk regarding completion of the TARe integration, competition in the North American life reinsurance market and historical volatility in SCOR U.S.' statutory operating results. Current year operating results reflect SCOR U.S.' decision to maintain liquidity during the recent eurozone sovereign debt crisis and the loss of investment income from the sale of IIC. Additionally, operating losses in 2011 reflect the statutory strain of acquiring the traditional life mortality business from TARe. Going forward, SCOR U.S. will need to successfully manage the reinvestment risk associated with re-deployment of this cash in an extended low interest rate environment.
The group is well positioned at its current rating level. Factors that could lead to future negative rating actions include a material decline in capital, a change in A.M. Best's view of the strategic value of SCOR U.S. to SCOR and an inability to realize anticipated benefits to SCOR's consolidated business and operating profile from the TARe acquisition.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: "Rating Members of Insurance Groups" and "Understanding BCAR for Life/Health Insurers." Best's Credit Rating Methodology can be found at ambest.com/ratings/methodology.
A.M. Best Company is an insurance rating and information source.
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