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SCOR & Covéa reach settlement agreement

11th June 2021 - Author: Luke Gallin

Global insurer and reinsurer SCOR and the company’s largest shareholder, Covéa Group, have elected to renew their relationship based on trust and mutual support after failed takeover talks led to a string of accusations and investigations.

scor-and-covea-logosThe ACPR has called on the pair to re-establish dialogue, leading to a binding agreement formalised by the signature of a settlement agreement.

Ultimately, the purpose of this settlement, which implies no admission of liability on either side, is to establish the conditions for a return to a mutually beneficial relationship.

The saga between SCOR and Covéa has been ongoing for quite some time. Most recently, Covéa filed on behalf of SCOR a complaint against its Chief Executive Officer (CEO), Denis Kessler, with the Parquet National Financier, which SCOR had refuted and condemned.

“Covéa and SCOR firmly believe that this course of action will open up a new period of trust, in the interests of both parties, their stakeholders, and more generally the insurance sector in France and the Paris marketplace,” says a statement on the settlement.

The key points of a settlement agreement have been approved by the Boards of Directors of Covéa and SCOR, which met on June 9th and 8th, 2021, respectively. The agreement was signed today between Covéa SGAM, Covéa Coopérations and SCOR SE in the presence of the vice-chairman of the ACPR, Jean-Paul Faugère.

The key points of the settlement agreement include: Implementation of an orderly exit by Covéa from the share capital of SCOR; Restore peaceful relations in order to move forward; Enable SCOR to redeploy its capital towards P&C (re)insurance and Covéa to accelerate its development strategy towards Life reinsurance, through SCOR’s retrocession of reinsurance portfolios; Settlement Agreement; and Communication.

On the first point, Covéa says that it irrevocably undertakes a number of factors, including granting SCOR a call option on the shares it holds. Additionally, Covéa will not purchase, directly or indirectly, alone or in concert, for a period of 7 years, SCOR shares. At the same time, Covéa will renounce, for a period of 7 years, any submission of an offer, formal or informal, official or unofficial, public or private, direct or indirect, relating to a takeover of SCOR.

On the second point, Covéa will pay to SCOR a sum of €20 million, before tax. Furthermore, both parties will immediately abandon, with regard to all persons concerned, all legal actions and claims linked to the combination proposal made by Covéa in 2018. The agreement also calls for the resumption of reinsurance relations between Covéa and SCOR.

Another key point of the agreement sees the implementation of quota share retrocession treaties whereby Covéa will underwrite, and SCOR will cede, 30% of all in force business carried by SCOR’s Irish Life entities as of December 31st, 2020, in exchange for a purchase price that will be paid by Covéa upfront.

As of Jan 1st, 2021, SCOR will transfer 30% of all future premiums, commissions, claims and expenses in respect of this business to Covéa till expiry of the underlying reinsurance treaties. This is for a purchase price of €1.014 billion.

The settlement agreement applies to current managers of Covéa and SCOR as well as to their future managers during the coming 7-year period.

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