Covéa and SCOR bury the hatchet after acrimonious failed takeover dispute

Covéa and  SCOR have agreed to bury the hatchet and resume cordial relations, which it is hoped will bring to an end a period of hostility between the two groups that has existed since Covéa’s failed €8.2 billion takeover attempt in late 2018.

The boards of directors SCOR, the French re/insurance giant, and Covéa, its largest shareholder, met on June 8 and 9 and approved the key points of a settlement agreement. The agreement was signed by both groups in the presence of Jean-Paul Faugère, the vice-chairman of the French Prudential Supervision and Resolution Authority (ACPR).

Faugère had called for the dialogue between Covéa and SCOR to be formalised in a binding settlement agreement, which implies no admission of liability on either side.

The settlement grants SCOR a call option on shares held by Covéa at an exercise price of €28 per share for five years. It committed not to purchase SCOR shares for seven years, or exercise its voting rights on its existing shares in that time, or to attempt a takeover of its co-signatory. Covéa will also pay SCOR €20 million before tax as an indemnity settlement.

Both parties agreed to immediately abandon all legal actions and claims, and waived all future legal actions or claims, related to Covéa’s takeover bid, and committed to resume reinsurance relations between them.

The parties also implemented a quota share retrocession agreement that will see Covéa underwrite, and SCOR cede, 30 percent of all in force business carried by SCOR’s Irish life entities as of December 31, 2020, in exchange for a purchase price that will be paid by Covéa upfront.

SCOR will transfer, as of January 1, 2021, 30 percent of all future premiums, commissions, claims and expenses in respect of this business to Covéa until the expiry of the underlying reinsurance treaties for just over $1 billion.

SCOR has had a fractious relationship with Covéa since the failed takeover attempt. The two groups said they wished to “restore peaceful relations, based on professionalism and in keeping with their respective independence.”

“ 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,” the groups said in a statement.

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