AM Best has affirmed the financial strength rating of B++ (Good) and the long-term issuer credit rating of “bbb” (Good) for Société Centrale de Réassurance (SCR), based in Morocco and the country’s national reinsurer.
These ratings are indicative of SCR’s solid balance sheet strength, which AM Best categorizes as strong. Additional factors contributing to the ratings include SCR’s consistent operating performance, its neutral business profile, and its effective enterprise risk management (ERM) practices.
A key component of SCR’s balance sheet strength is its risk-adjusted capitalization, rated at the strongest level by Best’s Capital Adequacy Ratio (BCAR). The company’s BCAR score benefits from its conservative approach to technical reserve margins.
However, its risk-adjusted capitalization is moderately impacted by high dividend distributions to its main shareholder, Caisse de Dépôt et de Gestion (CDG), a state-owned investment entity in Morocco, which limits the retention of earnings, it was stated. SCR also enjoys the backing of an explicit guarantee from the Moroccan state. The company’s asset concentration in Morocco, with over 95% of assets invested domestically, is a factor in the assessment of its balance sheet strength, affecting the quality of its assets.
Over the past five years (2018-2022), SCR has consistently shown strong financial results, with a weighted average return on equity of 12.0%. These earnings have been bolstered by robust investment returns, averaging 5.5% over the same period, and complemented by solid underwriting performance. SCR’s non-life combined ratio, averaging 91.8% during this time, demonstrates the profitability of its Moroccan portfolio and benefits from favorable reserve development from its legacy compulsory cessions business.
However, 2022 saw a dip in underwriting performance, with a non-life combined ratio of 101.2%. In 2023, SCR’s net exposure to earthquakes in Türkiye and Morocco was relatively low, thanks to an effective retrocession program. Looking ahead, AM Best anticipates SCR’s underwriting and investment returns to continue bolstering its strong operational performance.
In the Moroccan market, SCR holds a robust position, underlined by its established role as the national reinsurer. This dominant domestic position helps offset the company’s limited global reinsurance market presence. In 2022, SCR reported a gross written premium of MA$3.4 billion (approximately US$334 million), with 74% originating from domestic business. The company is actively expanding its international footprint, supported by the opening of strategically placed representative offices and forming new partnerships to access additional markets.
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