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Activist investor CIAM condemns “destructive” governance at SCOR

27th September 2019 - Author: Matt Sheehan

Activist investor CIAM has addressed a new letter to the management at SCOR, accusing it of ignoring shareholder interests by pursuing “destructive” governance strategies in its negotiations with Covéa last year.

SCORCatherine Berjal, CEO of CIAM, renewed her public condemnation of Denis Kessler’s conduct today in an appeal to Augustin de Romanet, Lead Director of the Board at SCOR.

She asked him to act as a mediator in the case between Kessler and Covéa CEO Thierry Derez, who SCOR took legal action against following the rejection of an €8.2 billion takeover bid in 2018.

Berjal argued that Kessler demanded an “inadmissible” condition that Covéa, SCOR’s largest shareholder, should renounce the principle to buy back SCOR beyond a three-year period.

“This further illustrates the fact that Mr Denis Kessler behaves as if he were the owner of Scor, disregarding the interests of its shareholders,” the letter stated.

“It is not acceptable for a company representative to prevent by ‘principle’ his largest shareholder from making a public offer to the company,” Berjal continued.

“This opposition appears to be influenced by personal motives that are incompatible with sound corporate governance. But above all, it is clearly destructive for Scor, as was the decision to sue Covéa and Mr Thierry Derez and, before that, the decision to reject any discussion relating to a public offer by Covéa.”

CIAM, which holds a 1.34% stake in SCOR, has previously exchanged a series of increasingly confrontational letters with Kessler and the French reinsurance company’s management.

Tensions culminated in March 2019, when CIAM called on SCOR investors to use the annual general meeting to remove both Kessler and de Romanet from their Board positions, citing issues such as potential conflicts of interest and unacceptable levels of remuneration.

Shareholders later approved the reappointment of both individuals, in a move that SCOR said rejected the “destabilising” resolutions proposed by CIAM.

In her newest letter, Berjal also pointed her ire at the current share value of SCOR, which stands at €38 per share. Kessler previously rejected the offer from Covéa, which valued shares at €43, partly on the grounds that the true value of SCOR was closer to €50 per share.

SCOR’s performance is also not acceptable, she alleged, given that competitors such as Munich Re, Swiss Re and Hannover Re achieved stock market increases of 28.3%, 20.2% and 36.1%, respectively, over 2019.

Acknowledging SCOR’s new ‘Quantum Leap’ plan, Berjal denounced it as an “arrogant name” that “poorly conceals content which is similar to the previous plan.”

“I urge you, and the other members of the Board of Directors, to take the necessary steps to ensure that, from now on, the essential principles of good corporate governance should be respected,” she concluded.

SCOR has previously dismissed the CIAM’s criticisms as “unfounded” and claims that the firm’s interest in its governance is merely “speculative and short term,” based on the observation that CIAM took its minor 0.94% stake in SCOR immediately after Covéa first announced its intentions to acquire the reinsurer.

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