SCOR renews its contingent capital facility
Paris - SCOR has announced its renewal, for three years, of a contingent capital facility that would provide the Group with additional capital of up to EUR 300 million coverage in case of extreme events (natural catastrophe or life events impacting mortality) or a significant fall in the share price.
The global reinsurer said the facility aims to protect the Group’s share capital and therefore its solvency, and this was the fourth renewal of this innovative facility, which was introduced in January 2011.
The contingent capital facility rests on share subscription warrants, issued by SCOR and subscribed by J.P. Morgan, which will be exercised automatically in the scenarios set out in the agreement, it said, adding that the period covered by the renewed facility runs from January 1, 2023, to December 31, 2025, and 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.
SCOR said the exercise of the warrants could result in an increase in SCOR’s share capital of up to EUR 300 million (including issuance premium), with the dilution limited to a maximum of 10% of the share capital in accordance with the authorization granted by the 2022 General Meeting.
The facility offers a very cost-effective alternative to traditional retro and ILS, and enhances the resilience of SCOR's balance sheet.
Laurent Rousseau, Chief Executive Officer of SCOR, comments: “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.”
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