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SCOR commits to value creation following Covéa offer

19th September 2018 - Author: Matt Sheehan

SCOR has reiterated its commitment to continue creating value for its long-term shareholders following an €8.2 billion (US $9.6 billion) acquisition offer from French insurance group Covéa, which was rejected unanimously by SCOR’s Board of Directors.

SCOR logoThe reinsurer recently came under fire from shareholders such as French investment fund CIAM, whose President, Catherine Berjal, penned a letter to SCOR CEO Denis Kessler asking how he proposed to boost the company’s share price above the €43 per share level offered by Covéa.

The company today released a statement reaffirming its rejection of the proposed deal, saying: “SCOR and its Board are committed to continue creating value for its long-term shareholders. SCOR has delivered an attractive total shareholder return of 266% over the last 10 years, with dividends reinvested.”

The statement added that “the proposal reflected neither the intrinsic value of SCOR nor its strategic value,” and suggested that such a deal would “ultimately jeopardise SCOR’s future development and value creation capacity as a Tier 1 global reinsurer.”

SCOR’s Financial Strength Rating of A+ (Superior) was also affirmed by A.M. Best following the offer, who said the decision reflected the company’s “balance sheet strength, which A.M. Best categorises as very strong, as well as its strong operating performance, very favourable business profile and very strong enterprise risk management.”

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Kessler also commented: “This rating affirmation by A.M. Best underscores our successful strategy as a Tier 1, independent, global reinsurer.”

“It proves the relevance of our “Vision in Action” strategic plan,” he added, “based on the depth of our franchise, a controlled risk appetite, high diversification by geography and by lines of business, a balanced business model between Life and P&C reinsurance, a robust capital shield, very strong financial flexibility and the development of modeling tools using cutting edge technology.”

Sources at Reuters also said today that Covéa, which already holds an 8.5% stake in SCOR, is continuing to examine new approaches to sway the company’s management, which may involve a higher bid and the possibility of keeping the firm listed following a takeover.

“Covea would keep Scor independent with floating capital of at least 20 percent,” one source told Reuters. “Covea is ready to refloat a stake on the market after a takeover.”

CIAM, which holds a 0.77% stake in SCOR, also claimed that SCOR may be legally obliged to continue to engage in talks with Covéa.

“I would not hesitate to hold you and the Board of Directors legally liable for a decision which would constitute gross management negligence,” Berjal told Kessler in the letter.

SCOR’s statement explained that its reviewal of the Covéa proposal had supported by “mandated external financial advisors and counsel” as well as the “independent directors from six nationalities with extensive and diverse expertise” that make up 70% of its Board.

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