French reinsurer SCOR has drawn down €75m from the contingent capital facility provided to it by investment bank UBS.

The decision to draw down on the facility, which in place from December 2010 and active since January 1 this year, has been prompted by mounting losses from the Q1 2011 catastrophes. The contingent capital facility is designed to provide SCOR with a fresh capital injection once estimated net losses from natural catastrophes booked in a given year exceed a pre-set threshold.

SCOR said that, because of better information coming through about the Q1 2011 catastrophes, it expects its Q2 results to be hit by an additional €10m to €15m from these events. These additional losses would breach the threshold for activating the contingent capital.

Once triggered, the facility issues new SCOR shares, which are then sold to give SCOR the required level of additional capital. As the provider of the facility, UBS has to subscribe to the shares.

The new shares will be admitted to trading on the Euronext Paris stock exchange immediately following their issuance and will be fully fungible with the existing SCOR shares.

SCOR said it will reveal the number and price of the new shares once UBS has excersized the warrants required for the bank to issue and subscribe to the shares.

The company added that the impact of the natural catatsrophes that occurred in Q2 would be within the expected six points of combined ratio. It also does not expect further gross deterioration of the Q1 losses thanks to the retrocession it has in place.