Provides up to €300m coverage in case of extreme events or a significant fall in the share price
SCOR has announced the renewal, for three years, of a contingent capital facility that would provide the Group with additional capital of up to €300m coverage in case of extreme events (natural catastrophe or life events impacting mortality) or a significant fall in the share price.
The facility aims to protect the Group’s share capital and therefore its solvency. This is 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 JP Morgan, which will be exercised automatically in the scenarios set out in the agreement.
Laurent Rousseau, Chief Executive Officer of SCOR, comments: “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.”
The period covered by the renewed facility runs from January 1, 2023, to December 31, 2025. 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.
The facility offers a very cost-effective alternative to traditional retro and ILS, and enhances the resilience of SCOR’s balance sheet, according to the reinsurer.