NOVEMBER 27, 2019 09:00 AM (EST)

AM Best Affirms Credit Ratings of Société Centrale de Réassurance

 Charlotte Vigier
Senior Financial Analyst
+44 20 7397 0270

Ghislain Le Cam, CFA, FRM
Director, Analytics
+44 20 7397 0268

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


LONDON - NOVEMBER 27, 2019 09:00 AM (EST)
AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of Société Centrale de Réassurance (SCR) (Morocco). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect SCR’s balance sheet strength, which AM Best categorises as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

SCR’s balance sheet strength is underpinned by risk-adjusted capitalisation, which was at the very strong level at year-end 2018, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by relatively low underwriting leverage and significant unrealised investment gains. The company benefits from an explicit guarantee provided by the Moroccan state. However, this has resulted in an onerous dividend policy to the company’s main shareholder, state-owned Caisse de Dépôt et de Gestion, which limits its ability to generate capital organically. Further offsetting factors in the balance sheet strength assessment include the high level of debtors and the company’s significant exposure to the high economic, political and financial system risks of Morocco, as over 95% of its assets are invested domestically.

Despite a challenging market environment, SCR’s operating performance has remained strong over the past five years, supported by a solid technical profitability and good investment returns. The company’s five-year (2014-2018) weighted average combined ratio of 89.1% has benefited from regular reserve releases stemming from the legacy compulsory cession book of business, which has been in run off since 2014. SCR’s profit before tax fell by 39% to MAD 399 million in 2018 from MAD 656 million, largely due to lower realised investment income following significant realised investment gains in 2017. Conversely, the company’s non-life technical performance improved marginally, with a combined ratio of 93.2% in 2018 (94.9% in 2017).

Although SCR’s business mix has been changing since the phasing-out of the compulsory cession business, which was completed at the end of 2013, the company retains a good market position in Morocco, reflecting its established role as the national reinsurer. The introduction of new compulsory direct lines of business in the domestic market, such as natural catastrophe insurance, and the development of a specialty business segment are expected to help support growth in coming years. SCR also has been developing its international book of business, with the establishment of representation offices in Egypt, Rwanda and the Ivory Coast over the past three years.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data provider specialising in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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