Weak first-quarter 2003 leads to SCOR downgrade

Paris-based SCOR and its subsidiaries have lost their “A” rating from Standard & Poor’s (S&P) on the back of poor first-quarter 2003 results, says the rating agency. SCOR has dropped to BBB+ from A- in its financial strength and long-term counterparty credit ratings, and placed on “credit watch developing”.”The downgrade reflects SCOR’s disappointing absolute and relative first-quarter 2003 results, indications of a weakened although still strong business position, and the potential Standard & Poor’s sees for reported capital to be materially affected by further reserve strengthening,” says S&P credit analyst Marcus Rivaldi. The company’s credit derivatives and Commercial Risk Partners operations were also cited as weaknesses. However, SCOR was moved off “credit watch negative” on the hope that the company’s balancesheet will improve by yearend, in which case, S&P says the ratings will be moved back up to the “A” range.Responding to the news, SCOR said it regrets S&P’s decision and that it does not reflect balancesheet strengthening that occurred at the end of 2002, and the company’s program for a return to profitability. It adds that the Commercial Risk has ceased writing business, as has its credit derivatives. SCOR also announced plans to spin-off its life reinsurance business into a separate entity, which may be opened up to outside investors.