SCOR launches criminal action against Covéa and CEO Derez

The acrimonious dispute between SCOR and Covéa, which started with failed takeover bid by the latter last year, has taken another remarkable twist that will likely see the clash played out in court.

French reinsurer SCOR has initiated criminal actions against both mutual insurance company Covéa and its chief executive Thierry Derez for an alleged "breach of trust and concealment of breach of trust" in relation to Covéa’s €8.2 billion offer to buy the reinsurer last year.

On Tuesday morning (January 29, 2019), Covea revealed it had dropped its plans to pursue an acquisition deal with SCOR. The reinsurer said it reacted with "great surprise and astonishment" as it claims it had not previously been informed of Covéa's change of position.

“Covea takes note of SCOR’s refusal to enter into any discussions in relation to Covea’s proposed friendly transaction offer addressed on 24 August 2018. The continued attacks and hostile tactics targeting Covea since then have intensified in the last few days. As a consequence, Covea states that a transaction with SCOR is no longer part of its strategic options,” Covea said in a statement on Jan. 29 according to Reuters.

SCOR said it strongly denies the claim by Covéa that there were "continued attacks and hostile tactics targeting Covéa".

The reinsurer further added that it has had serious doubts since last August about the intentions and behaviour of Derez and Covéa, which it claims have now been substantiated with facts and evidence brought to the attention of SCOR.

As a result, SCOR said it has decided to bring the matter to the attention of the Autorité des Marchés Financiers (AMF). The company has also initiated legal action against Derez, Covéa SGAM and Covéa Coopérations, Barclays (Covéa's financial advisor and financing bank) and Rothschild.

The legal actions consist of a criminal action before the Criminal Court of Paris against Derez for breach of trust; a criminal action against Covéa for concealment of breach of trust; a civil action against Rothschild in France and against Barclays before the High Court of Justice of London, for serious breach of confidence and trade secrets.

SCOR also intends to initiate civil actions against Derez for an alleged serious breach of his legal and fiduciary duties and obligations as a director of SCOR in his personal capacity (regarding in particular loyalty, conflicts of interest, and confidentiality) as well as SCOR's trade secrets, and against Covéa for allegedly having directly participated in and benefited from the serious breaches by Derez.

SCOR alleges this " unacceptable misconduct" was committed with the aim of wrongfully favouring the preparation and submission by Covéa of its unsolicited proposed combination with SCOR.

Covéa, which already owns about 8.5 percent of SCOR, offered in late August to pay €43 per SCOR share, valuing the company at about €8.2 billion, but the proposal was met with unanimous opposition from SCOR's executive committee. Later in September, SCOR CEO Denis Kessler sent a letter to Derez, asking him to resign from his position as a SCOR board member because of a conflict of interest.

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