Activist investor CIAM has renewed its attacks against SCOR’s management, once again calling on the reinsurer to provide clarity on its succession plans and to separate the roles of Chairman and CEO, both of which are currently held by Denis Kessler.
This time, a letter penned by CIAM CEO Catherine Berjal has targeted Kessler’s age, noting that the SCOR leader will be 69 years old when his term of office as Company Director comes to an end at the 2021 AGM.
SCOR’s company statute requires the Chairman and the CEO to step down at the AGM following their 70th birthday, and Berjal thus argues that shareholders are entitled to greater transparency regarding succession plans.
CIAM has been engaged in a prolonged spat with SCOR following the reinsurer’s rejection of an €8.2 billion takeover bid from Covea in 2018.
Berjal has been very vocal in her criticism of Kessler’s governance practices, and has previously led a call to have him removed from his combined Chair/CEO position, as well as lowering his pay.
The investor’s ambitions were realised in part earlier this year, when SCOR cancelled its dividend for the 2019 fiscal years and reduced Kessler’s compensation by 30%.
But CIAM insists SCOR must go further by pledging to separate the roles of CEO and Chairman, which Berjal suggests is an “obsolete practice” no longer maintained by any other reinsurers.
In addition, the letter argues that SCOR’s performance has been more impacted by the COVID-19 pandemic than other reinsurers, possibly due to the company’s lower flexibility in relation to its Solvency II objective, its weak balance sheet and high debt ratio, and by its management of its cash reserves.
As such, it urged the board to appoint an independent bank with no conflicts of interest to undertake a strategic review and help establish a new strategy for growth, which should not rule out a merger with another major market player.
“In the context of a global pandemic that exposes everyone’s weaknesses but also offers opportunities, it is vital to take stock and draw conclusions,” Berjal wrote.
“We believe that continuing to use the same approach will result in the same outcomes and therefore we think that you, as the Board of Directors of SCOR, should consider a strategic review that would allow the company to review all of its options to become a business capable of weathering all crises, whatever they may be.”