SCOR hits back at investor’s effort to oust Kessler as chairman

SCOR swiftly hit back at a call by activist investment group CIAM for the reinsurer's shareholders to remove Denis Kessler as chairman, oppose his pay package and not renew the term of board member Augustin de Romanet. CIAM has since branded SCOR's rebuttal nonsensical as the war of words hots up once more This follows the bitter and highly public takeover attempt by unlisted insurer Covéa for the French reinsurance group, which Mr Kessler has led since 2002. Covea had offered a 20% premium over Scor’s share price. Scor’s shares have lost more than 10% since Covéa gave up on its plan in late January. CIAM published a lengthy presentation that explained why it believes shareholders should act and force Mr Kessler to step down as chairman, take a pay cut and say goodbye to his long-term colleague Mr de Romanet. CIAM did not call for Mr Kessler to be removed as CEO of SCOR. Late on Monday night, SCOR published an equally lengthy explanation that refuted CIAM’s “seriously unfounded, inaccurate and misleading statements”, which it said were designed to destabilise the reinsurer. So, what did CIAM say to other SCOR shareholders ahead of the Paris-based reinsurer’s AGM on 26 April? First, it said “the dysfunctional governance of SCOR is obvious and increases risks for shareholders”. “Denis Kessler is a ubiquitous leader, without any opponent… He combines the chairman/CEO roles at SCOR. His ubiquitous presence on a low-tenured board appears to inhibit other directors from taking a legitimate stand against his omnipresent role,” stated CIAM of Mr Kessler’s leadership. It also criticised the way SCOR handled the bid from Covéa, which CIAM claims highlighted the company’s inadequate oversight practices. “The company did not set up an ad hoc committee of independent directors to assess the bid (though Articles 1.1 and 1.2 of the Internal Regulations of the Board provide for it) and the executive committee publicly refused to engage with Covéa representatives,” pointed out CIAM. “The hostile reaction towards its major shareholder did not seem appropriate. Publicly disclosing the subpoenas relevant to legal proceedings against Covéa only to withdraw them, shows how Denis Kessler wants SCOR to appear untouchable,” continued the investment group. Then, there is Mr Kessler’s salary and benefits, which CIAM claims are way too high compared with peers and unjustified. “The payout for Denis Kessler triggers questions. SCOR’s performance does not justify it, nor is it justified when compared with peers. Furthermore, based on SCOR’s public disclosures, the board does not appear to take into consideration the level of shareholder opposition [it has] encountered over the past three years,” stated CIAM. “Good governance is not optional: SCOR needs an independent chairman on the board to ensure the continuity of the work already achieved by the board,” it added. SCOR responded by stressing it “deeply regrets” that CIAM made public its draft resolution and call for a vote, seeking press coverage before entering any discussion with SCOR and thereby leaving no room for a “fair, contradictory” debate. “CIAM puts forward once again seriously unfounded, inaccurate and misleading statements with the purpose of destabilising SCOR. In this respect, SCOR reminds that, on several occasions in the past, it had already firmly condemned the statements and actions of the activist fund CIAM,” stated SCOR. The reinsurer said that during a meeting yesterday, its board unanimously decided to reiterate its full support for Mr Kessler and Mr de Romanet. It therefore recommends that SCOR’s shareholders vote against the draft resolution presented by CIAM, renew Mr de Romanet as director and approve Mr Kessler’s pay package. The board also said the idea that Mr Kessler should step down as chairman but remain as CEO does not make sense. “The dismissal of Denis Kessler as director would also entail the termination of his office as chief executive officer, with all the foreseeable consequences on the stability and management of the group,” stated SCOR. CIAM stated that “the evolution of SCOR's share market price appears poor compared to its peers”. SCOR said the facts clearly prove otherwise. The reinsurer noted that during the past ten years, the total return for SCOR shareholders, with dividends reinvested, has reached 301%. It added that since the launch of its most recent strategic plan, Vision in Action, in September 2016, SCOR has outperformed all its main Tier 1 reinsurance competitors. During this time, the reinsurer’s share price has risen by 42.4%, SCOR noted. Moreover, SCOR points out that during 2018, it paid €312m in dividends and completed share buybacks of €194m. This represents in aggregate more than €500m paid to its shareholders within a year. CIAM then defended its call for action against Mr Kessler and Mr de Romanet. It also poured scorn on SCOR’s accusations that its behaviour is an attempt to destabilise the reinsurer. CIAM said the second charge does not make sense given its investment in SCOR. “We have taken these steps to guard against the governance risks that we have rightly exposed, to challenge the omnipresence of Denis Kessler and to initiate arrangements for a succession plan which does not currently exist at SCOR,” CIAM added in the statement. It said SCOR’s statement was “alarmist, misleading and only aims to counter its resolution by trying to frighten shareholders”.

SCOR hits back at investor’s effort to oust Kessler as chairman

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