Denis Kessler, Chairman and Chief Executive Officer (CEO) of SCOR, has responded to a letter from activist investor CIAM, which urged the company’s management to continue negotiations with French insurance group Covéa following SCOR’s rejection of a €8.2 billion (US $9.6 billion) acquisition offer.
Catherine Berjal, President of CIAM, suggested in her letter that Kessler and the SCOR Board of Directors could be held “legally liable for a decision which would constitute gross management negligence,” for rejecting the offer, which represented a share price of €43 per share.
However, Kessler has dismissed these accusations as “baseless, false and misleading,” and has reiterated that he does not consider the rejected bid to reflect either the “intrinsic nor the strategic value of SCOR.”
“We do not claim this. We are certain of it and have seen it proved,” said Kessler, adding that “share price does not necessarily reflect the intrinsic or the strategic value of the company. No takeover transaction has ever been completed at the original share price of the company being targeted.”
SCOR said that it rejected Covéa’s offer on the grounds that it was “fundamentally incompatible with SCOR’s strategy of independence” and would “jeopardize the Group’s strong value-creating strategy.”
In her letter, Berjal also asked Kessler to detail his proposals to boost the share price of SCOR, which stood at €38.39 following the Covéa bid, above the €43 per share price offered by the deal.
“All the actions taken by SCOR’s management, under the responsibility of the Board of Directors, aim to create value, with two targets: high profitability and optimal solvency,” Kessler explained. “These targets have been achieved. SCOR is the highest rated financial-sector company in France, at AA-.”
The reinsurer issued a statement last week reiterating its commitment to continue creating value for its long-term shareholders, and had its Financial Strength Rating of A+ (Superior) affirmed by A.M. Best.
Kessler also claimed that the market would reflect both the intrinsic and strategic value of SCOR over the long term, and said that, since 29 August, seven analysts have revised the standalone SCOR share target price upwards, with three of them putting it at €42.
Additionally, he noted that SCOR’s dividend has increased constantly since 2006, rising from €0.80 to €1.65 in 2017, with total dividends paid standing at €2.6 billion and representing a return of 266% for investors
Finally, Kessler dismissed the claim that all member of SCOR’s Executive Committee would have committed to resign in the event that Covéa’s offer were accepted as being “based on unauthenticated information.”
“We consider this accusation to be defamatory. It is prejudicial to the good repute and respectability of SCOR’s management,” Kessler stated.
Sources at Reuters said last week that Covéa is currently exploring new options to convince SCOR’s Board to accept an acquisition deal, which may include a higher bid and an offer to keep the firm listed.