Scor and Covéa ink truce bringing bitter feud to an end

Signing a contract

Covéa and Scor have signed a settlement agreement that will see all legal action between the two dropped.

The French businesses had been at loggerheads since Covéa’s failed September 2018 bid to buy the reinsurer.

In a joint press release, dated 10 June, the (re)insurers confirmed that an agreement was approved by both sides on 9 June.

The deal comes shortly before Scor CEO Denis Kessler will be succeeded by Laurent Rousseau on 30 June, with Kessler, who is currently in a dual role, set to stay on as chairman.

They set out: “Covéa and Scor wish to restore peaceful relations, based on professionalism and in keeping with their respective independence. These two major players in the insurance and reinsurance industry in France have decided to renew the relationship based on trust and mutual support that they enjoyed for many years.”

The agreement contains no admission of liability from either side and was drawn up under the “aegis” of Jean-Paul Faugère, The French Prudential Supervision and Resolution Authority (ACPR) vice-chairman.

The businesses added: “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.”

Orderly exit

The agreement sees Covéa, an 8.5% stakeholder in Scor, agree to an “orderly exit” from the reinsurer.

It will grant Scor a call option on its shares at an exercise price of €28 (£24) per share over five years. While holding shares, Covéa will continue to benefit from dividends.

Covéa will be barred from buying Scor shares in any capacity for seven years without the express request from Scor’s board of directors. It will also be unable to make a takeover offer for Scor for the next seven years, be it “formal or informal, official or unofficial, public or private, direct or indirect” without Scor directors’ prior request.

While a shareholder, for the next seven years it must vote in favour of Scor’s board of directors’ resolutions and against those put forward by shareholders but not approved by the board.

Legal action

Covéa will pay Scor an indemnity of €20m as part of the deal, which sees all legal action connected to the failed takeover bid dropped.

Covéa and its chairman Thierry Derez were fined a total of €20m by the Paris Courts last November, with the court ruling Dierrez had committed a “breach of contract”, with Covéa and Covéa Cooperations “complicit third parties”.

Derez and Covéa had vowed to contest the verdict.

Criminal actions against Derez and Covéa had been mooted in July, while civil action had also been planned by Scor against Barclays and Rothschild.

The businesses have now agreed a reciprocal non-disparagement obligation, lasting seven years, concerning “any disparagement, act, comment or initiative of a nature to harm the image, honour, reputation, name or interests of the parties and their affiliates and their executive officers and corporate officers”.

Reinsurance

Reinsurance relations are set to resume between the businesses.

Quota share retrocession treaties will be implemented, with Covéa to underwrite and Scor to cede 30% of its in force Irish Life entities’ business as of 31 December 2020, for which Covéa will pay $1.01bn

The businesses updated: “Scor will transfer, as of 1 January 2021, 30% of all future premiums, commissions, claims and expenses in respect of this business to Covéa till expiry of the underlying reinsurance treaties (as per contract boundaries in the Best Estimate Liability calculation).”

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