SCOR-Covéa dispute reignited as Kessler accused of wrongdoing

The  bitter feud and war of words between French reinsurer SCOR and Covéa Group, its largest shareholder, has been reignited – two and a half years after Covéa’s  failed €8.2 billion takeover of SCOR, the catalyst for the dispute.

Covéa Group yesterday (March 24) filed a complaint against SCOR’s chief executive officer Denis Kessler with France’s National Financial Prosecutor’s Office, alleging market manipulation and the misuse of corporate assets.

In fact, Covéa filed the complaint on behalf of SCOR, which has today (March 25) responded in colourful fashion condemning the move as “deceitful and groundless” and saying it was “astonished” Covéa had filed the complaint "on behalf of SCOR".

Covéa’s accusations relate to actions taken between September 2018 and January 2019 including a large share buyback of roughly 4.6 million SCOR shares for €195 million. Covéa alleges this was done to artificially inflate the share price.

It also highlights €16 million in advisory expenses incurred to counter its proposed takeover. It alleges that these were unnecessary as withdrew its “friendly proposition” on September 4, 2018.

In a statement, SCOR said: “SCOR wonders what led Covéa to file this complaint, more than two years after it became aware of the facts it pretends to report.

“The facts mentioned by Covéa, namely the expenses that SCOR was obliged to incur to defend itself against Covéa's unsolicited takeover attempt on SCOR in 2018, as well as the extra costs incurred by SCOR in connection with the implementation of its share buy-back programme, are perfectly justified and legitimate, and are in no way new revelations.”

SCOR said that these were brought forward by SCOR in the proceedings initiated in 2019 against Thierry Derez and Covéa, as elements of the financial prejudice for which SCOR seeks compensation.

On November 10, 2020, the Paris Commercial Court ordered Thierry Derez and Covéa to pay the sum of €19.6 million plus interest, corresponding to an indemnification of SCOR for part of this injury.

SCOR added: “Covéa is therefore complaining about the consequences of its own misconduct and that of Thierry Derez.

“SCOR points out that its board of directors unanimously decided not to proceed with this unsolicited proposal and that it approved all the decisions related to it.

“The allegation of market manipulation is just as surprising. SCOR’s share buy-back programme, of €200 million over two years, was announced to the market by SCOR on July 27, 2017, at a time when Thierry Derez was still a director of SCOR, more than one year before the takeover attempt.

“It is therefore absolutely groundless and deceitful to suggest that it was initiated as a result of Covéa's offer. It was Covéa which, through its press release of September 4, 2018, and its second ambiguous press release of September 27, 2018 "reiterating its interest" in SCOR, caused a strong increase in SCOR's share price, as clearly established by the Paris commercial court in its decision of November 10, 2020, which raised Covéa’s "malicious intent".

“This complaint clearly seems to have one single goal: to divert attention from the serious misconduct of Thierry Derez and Covéa in connection with the preparation and implementation of Covéa’s unsolicited takeover bid for SCOR in 2018.”

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