Reinsurance News

Speculation returns that Covéa could bid again for SCOR

13th May 2020 - Author: Luke Gallin

Following French insurer Covéa’s decision to pull out of its previously-agreed deal to purchase PartnerRe from Exor, speculation around a potential renewed bid for SCOR has resurfaced.

scor-and-covea-logosAs we reported earlier today, the acquisition of reinsurer PartnerRe by Covéa has been cancelled, after owner EXOR declined to renegotiate the price in the context of the COVID-19 pandemic.

The agreement over a $9 billion deal between Covéa and EXOR for PartnerRe was announced in early March, 2020, but prior to negotiations, Covéa had been involved in a back and forth with SCOR after the re/insurer turned down an acquisition offer.

After SCOR rejected a proposal from Covéa, which already holds an 8.4% stake in the re/insurer, to take out the rest of the firm in a €43 per share transaction, rumours and hostility increased, leading to the temporary, and then permanent resignation of Covéa’s CEO from SCOR’s board.

Soon after this resignation, Covéa decided against pursuing its acquisition of SCOR, and as hostility increased again, accusations were made from both sides, leading the French regulator to call for the pair to reconcile their differences.

Then came the announcement that Covéa had reached a deal with EXOR to purchase global reinsurer PartnerRe, seemingly putting an end to the saga with SCOR.

However, this could all be about to change after news that Covéa’s PartnerRe takeover has been cancelled resulted in a 2.8% rise in SCOR’s shares on Wednesday, as speculation over a renewed bid from Covéa returned.

According to Reuters, a fund manager in Paris has said that a decision by Covéa would revive speculation of a bid for SCOR.

Of course, this is all just speculation at the moment and currently, it doesn’t appear that either company has commented on the potential for a renewed bid.

SCOR announced its first-quarter 2020 results recently, recording a 23.7% rise in net income to €162 million and a P&C combined ratio of 94.5%.

In its results announcement the French insurer and reinsurer noted a limited impact from the COVID-19 pandemic during the period. Although, this wasn’t enough to stop Moody’s revising it outlook to negative from stable owing to a view that SCOR is more vulnerable than other Aa3 peers in a stress scenario of higher mortality claims arising from the pandemic.

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