SCOR Renews its 300 Million Euro Contingent Capital Mechanism for Three Years
SCOR has announced the renewal of its contingent capital mechanism for a three-year period, according to a press release published on December 18. Underwritten by J.P. Morgan SE, this mechanism could mobilize up to 300 million euros in the event of natural disasters, mortality-related events, or significant stock price declines.
Details of the Issued Warrants
The reinsurer has issued 8,971,220 warrants subscribed by J.P. Morgan SE, each warrant entitling the holder to two new shares up to 10% of the share capital, the group indicates. The coverage period extends from January 1, 2026, to December 31, 2028. Priced at 0.001 euro each, the warrants will only be automatically exercised in the event of predefined triggering occurrences. The contract includes an early termination option for SCOR in the event of a regulatory disqualification, as well as a termination possibility on December 31 of each year starting from December 31, 2026. If no triggering event occurs during the period, the warrants will not be exercised, the press release specifies.
Conditions for Drawing on the Mechanism
According to the company, draws can be made if the estimated definitive net losses related to natural disasters occurring between January 1, 2026, and December 31, 2028, reach certain contractual thresholds. Covered events notably include earthquakes, hurricanes, tsunamis, wildfires, and meteorite impacts. The mechanism may also be activated if net claims in the life reinsurance branch over two consecutive semesters, from July 1, 2025, to December 31, 2028, reach predefined thresholds following a pandemic, acts of war or terrorism, or significant biometric deviations. Moreover, if the volume-weighted average price of SCOR shares observed over three consecutive trading days falls below 10 euros, a maximum amount of 150 million euros can be drawn, provided that no draw related to a disaster has already been made, the press release indicates.
Terms of Subscription and Profit Sharing
The new shares will be subscribed by J.P. Morgan SE at a price equal to the volume-weighted average price over three trading days preceding the exercise, with a discount of 7.5%, SCOR specifies. The financial services group has committed not to become a long-term shareholder and will dispose of its shares through private placements or on the market. A profit-sharing agreement stipulates that 75% of any potential profit will return to SCOR, potentially in the form of shares to limit dilution. Under current market conditions, with an issue price of 25.56 euros per share, drawing the entire coverage would represent a maximum of 6.54% of the share capital, according to the reinsurer’s calculations. SCOR will pay J.P. Morgan SE an annual fee equal to a fixed percentage of the maximum amount that can be drawn, adjusted at the start of each year based on the amounts already drawn. This is the fifth renewal of this mechanism, initially set up in January 2011, the company recalls.
