Reinsurance News

Investors question SCOR’s “aggressive” legal dispute with Covéa

4th February 2019 - Author: Matt Sheehan

French reinsurer SCOR has faced criticism from activist investors just days after the company announced it intends to initiate criminal actions against Covéa and its CEO, Thierry Derez, following the rejection of an €8.2 billion takeover bid last year.

SCORCatherine Berjal, CEO of investment management firm CIAM, penned a letter to SCOR CEO Dennis Kessler last week condemning SCOR’s “incredibly aggressive legal strategy” and questioning the motivation behind the move.

“The corporate interest for Scor to carry out these actions in such an overtly aggressive manner eludes me,” Berjal wrote, arguing that a potential deal with Covéa would benefit investors.

“The unusual opposition you have mounted to this takeover bid leads me to wonder if it may come from your desire to protect your position in the company and your personal interests, to the detriment of Scor shareholders,” she added.

SCOR intends to prosecute Derez and Covéa for breach of trust and concealment of breach of trust, respectively, as well as for breach of Derez’s legal and fiduciary duties and obligations as a Director of SCOR and revealing trade secrets.

Stratumn, by SIA Partners

Covéa has since rejected SCOR’s accusations as “groundless” and reaffirmed its unanimous support for Thierry Derez.

Derez was forced to step down from SCOR’s Board of Directors in November after tensions escalated over what SCOR deemed a “hostile and unfriendly” takeover attempt.

Berjal has previously criticised SCOR for its response to the original acquisition offer from Covéa, threatening to hold the company’s management legally liable for gross mismanagement in another letter to Kessler.

She subsequently accused the reinsurer of using its remuneration as an “anti-takeover policy” in a move that Kessler dismissed as “baseless, false and misleading.”

CIAM took a 0.77% stake in SCOR as the acquisition rumours circulated in September and has since increased its share to 0.94%. Kessler has suggested that the firm’s indignation has been “clearly driven by (very) short-term speculative interests.”

In her most recent letter, Berjal reiterated her request for Kessler to detail his proposals to boost the share price of SCOR – which currently stands at €37 – above the €43 per share price originally offered by Covéa.

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