Denis Kessler, Chief Executive Officer (CEO) of French reinsurer SCOR, has reaffirmed that the company has never had discussions with Bermudian reinsurer PartnerRe regarding a potential merger scenario.
Rumours about a possible combination between the two companies have circulated since SCOR rejected an €8.2 billion takeover bid from Covéa last year on the grounds that it would be “fundamentally incompatible with SCOR’s strategy of independence.”
SCOR revealed that its strategic committee had discussed a scenario regarding a possible combination with PartnerRe as early as July 2018 but formally denied that it had been in discussions with any potential partner.
Speaking in an interview with French publication Les Echos, Kessler has now restated the company’s position.
“SCOR’s Strategy Committee explored a scenario based on a confidential document prepared by Citi,” Kessler explained. “To speak of a ‘project’ is an abuse of language. There were no discussions, direct or indirect, with Partner Re either before or after this committee.”
Kessler has been under pressure from investors to raise the value of SCOR’s shares (currently ~€38 per share) closer to the level offered by Covéa (€43), and analysts from firms such as Berenberg have previously suggested that a merger deal with PartnerRe would be an easy way to quickly boost prices.
More recently, researchers at AlphaValue said that a merger deal would make strategic sense for both SCOR and PartnerRe, and claimed that the combined entity could rank among the top-three global reinsurers.
Asked whether SCOR may consider a potential M&A deal with the right partner, Kessler told Les Echos: “I am a free marketer: I believe in market mechanisms.”
“If a project makes sense to continue to develop the group and create value, we will examine it carefully. But SCOR is a consolidator, not a prey.”
He also commented on SCOR’s case for rejecting the acquisition offer from Covéa, which turned sour after SCOR labelled it as “hostile and unfriendly” and later initiated criminal actions against the company and its CEO, Thierry Derez, for breach of trust.
“What would Covéa have brought us?” asked Kessler. “Technologies, methods, products? Nothing of the sort! On the contrary, we would have lost customers, skills, financial flexibility, substance, our rating.”
“Covéa is a French insurer, insuring the simple risks of individuals,” he continued. “Its development abroad – Italy, Ireland, United Kingdom, United States – is calamitous. SCOR is a global company, covering complex and important risks in more than 160 countries.
“The board of directors rejected this project unanimously, and several times, notably because it was contrary to the interest of SCOR and went against the interests of the shareholders. Covéa’s proposal does not correspond to the intrinsic value or the strategic value of SCOR.”
Kessler also explained that SCOR plans to appease investors with its next strategic plan, which will be presented in early September following the conclusion of its current Vision in Action initiative.
