SCOR renews €300m nat cat and mortality contingent capital facility
Global reinsurer SCOR has renewed its multi-year contingent capital facility that provides coverage in case of extreme loss events at €300 million with JP Morgan for the fourth time.
The renewed three-year facility will provide the group with additional capital in the event of an extreme natural catastrophe or life events impacting mortality or a significant fall in the share price.
The facility aims to protect the group’s share capital and therefore its solvency.
This is the fourth renewal of the innovative facility, which was introduced in January 2011.
The contingent capital facility rests on share subscription warrants, issued by SCOR and subscribed by JP Morgan, which will be exercised automatically in the scenarios set out in the agreement.
The period covered by the renewed facility runs from January 1, 2023, to December 31, 2025. In the absence of any triggering event during this period, no shares will be exercised. SCOR has the option to terminate the agreement on December 31 of each year.
The exercise of the warrants could result in an increase in SCOR’s share capital of up to €300 million (including issuance premium), with the dilution limited to a maximum of 10% of the share capital in accordance with the authorisation granted by the 2022 General Meeting.
SCOR said the facility offers a “very cost-effective alternative to traditional retro and ILS”, and enhances the resilience of its balance sheet.
Laurent Rousseau, chief executive officer of SCOR, said: “In a fast-changing environment driven by a number of paradigm shifts, SCOR has issued a new contingent capital facility and sticks to its strategic cornerstone of maintaining a robust capital shield.
“The renewal of this contingent capital facility is an essential part of our active capital management and balance sheet protection policy, which helps to protect the Group’s solvency and resilience at a low cost. We are building from a sound base to take advantage of market tailwinds such as the hardening of the P&C market, the increasing demand for life reinsurance products, and the increase in interest rates.”
