Scor investors’ bad year can still get worse
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
By Aimee Donnellan
LONDON, July 16 (Reuters Breakingviews) -Scor SCOR.PA investors must be wishing they had access to a time machine. It’s six years since the 3.5 billion euro French reinsurer fought off a hostile takeover from its domestic rival Covéa, which valued the company at 43 euros per share. In 2024 problems in its life and health unit, revealed on Tuesday, mean it’s now worth less than half that. And there could be further strife to come.
Covéa and Scor’s arm wrestle began in 2018 when Scor rejected a takeover from the French mutual insurer. In 2019 lawsuits alleged that while Covéa CEO Thierry Derez was sitting on Scor’s board, he used confidential information to advance his own bid. Covéa denied wrongdoing but said the “continued attacks and hostile tactics” made it drop its plans. Eventually, in 2021, Covéa agreed to sell its stake in Scor and vowed not to buy any of its former target’s shares for seven years.
That pact now looks unfortunate, given Scor’s headaches. On Tuesday, the company’s shares collapsed 26% to just 19 euros a share after CEO Thierry Léger flagged that it may have to book a 500 million euro net loss in the health unit. More worryingly, Scor said the dent to its life and health business will impact the company’s solvency which will now merely be above 200% of regulatory minimum requirements, compared to 209% at the end of last year.
Investors should have two concerns. One is that the life insurance goof – partly down to mistaken assumptions that slow Covid-era claims rates would persist – could have been avoided. The other is that Scor’s property and casualty division, which pays out claims on damage from hurricanes and other natural disasters and accounts for around half of Scor’s 19.4 billion euros of premiums, may also drain capital. After all, the tropical storm season is just beginning and could lead to big payouts. The risk is Scor’s solvency sinks below the foot of its targeted 185% to 220% range.
If so, Scor might have to raise equity to bolster its reserves. That sort of uncertainty means potential suitors like domestic giant Axa AXAF.PA or private equity firms may not fancy lobbing in an opportunistic bid to take advantage of the company’s share implosion – and Covéa can’t. How Scor investors must pine for 2018.
Follow @aimeedonnellan on X
CONTEXT NEWS
Shares in Scor fell 26% on July 16 after the French reinsurer cut guidance for its life and health (L&H) unit.
The unit’s second-quarter insurance service result (ISR), a measure of profitability, is expected to fall to a loss of about 400 million euros and the full-year ISR is expected to be significantly less than the 500 million euros guided before, Scor says.
As of 0956 GMT, Scor shares were trading at 19.8 euros, down 24%.
Graphic: Scor’s share price has fallen far below Covéa’s 2018 offer https://reut.rs/3Y08eNl
Editing by George Hay and Oliver Taslic
면책조항: XM Group 회사는 체결 전용 서비스와 온라인 거래 플랫폼에 대한 접근을 제공하여, 개인이 웹사이트에서 또는 웹사이트를 통해 이용 가능한 콘텐츠를 보거나 사용할 수 있도록 허용합니다. 이에 대해 변경하거나 확장할 의도는 없습니다. 이러한 접근 및 사용에는 다음 사항이 항상 적용됩니다: (i) 이용 약관, (ii) 위험 경고, (iii) 완전 면책조항. 따라서, 이러한 콘텐츠는 일반적인 정보에 불과합니다. 특히, 온라인 거래 플랫폼의 콘텐츠는 금융 시장에서의 거래에 대한 권유나 제안이 아닙니다. 금융 시장에서의 거래는 자본에 상당한 위험을 수반합니다.
온라인 거래 플랫폼에 공개된 모든 자료는 교육/정보 목적으로만 제공되며, 금융, 투자세 또는 거래 조언 및 권고, 거래 가격 기록, 금융 상품 또는 원치 않는 금융 프로모션의 거래 제안 또는 권유를 포함하지 않으며, 포함해서도 안됩니다.
이 웹사이트에 포함된 모든 의견, 뉴스, 리서치, 분석, 가격, 기타 정보 또는 제3자 사이트에 대한 링크와 같이 XM이 준비하는 콘텐츠 뿐만 아니라, 제3자 콘텐츠는 일반 시장 논평으로서 "현재" 기준으로 제공되며, 투자 조언으로 여겨지지 않습니다. 모든 콘텐츠가 투자 리서치로 해석되는 경우, 투자 리서치의 독립성을 촉진하기 위해 고안된 법적 요건에 따라 콘텐츠가 의도되지 않았으며, 준비되지 않았다는 점을 인지하고 동의해야 합니다. 따라서, 관련 법률 및 규정에 따른 마케팅 커뮤니케이션이라고 간주됩니다. 여기에서 접근할 수 있는 앞서 언급한 정보에 대한 비독립 투자 리서치 및 위험 경고 알림을 읽고, 이해하시기 바랍니다.