Scor Renews Its Contingent Capital Facility for Three Years
Reinsurer Scor announced on December 18 the renewal of its contingent capital mechanism, a scheme that could provide up to 300 million euros of additional capital in the event of extreme occurrences. This solution is based on the issuance of share issuance warrants subscribed by J.P. Morgan SE, according to the group's press release.
Coverage and Conditions of the Contingent Capital Facility
According to the group, this contingent capital facility covers the period from January 1, 2026, to December 31, 2028. It aims to protect the reinsurer's equity and solvency in the event of natural disasters, events affecting mortality, or significant stock price declines. The mechanism is based on the issuance of 8,971,220 share issuance warrants in favor of J.P. Morgan SE, each warrant entitling the holder to two new shares up to 10% of the share capital. This is the fifth renewal of the facility, initially established in January 2011, the company indicates. If no triggering event occurs during this period, the warrants will not be exercised. The contract includes several options for early termination, notably on December 31 of each year starting from the end of 2026.
Conditions for Warrant Exercise
According to the press release, the warrants may be exercised if the definitive estimated net losses related to natural disasters reach certain predefined thresholds, or if the net amount of life insurance claims over two consecutive semesters between July 2025 and December 2028 exceeds contractual levels. Additionally, if the average weighted share price of Scor over three consecutive trading days falls below 10 euros between January 2026 and December 2028, a maximum amount of 150 million euros may be drawn. The new shares will be subscribed by J.P. Morgan SE at a price corresponding to the weighted average price over the three days preceding the exercise, with a 7.5% discount. The financial institution has committed to subscribing to the shares but does not intend to remain a shareholder and will sell them on the market, the reinsurer specifies.
Potential Dilution and Profit-Sharing Agreement
According to Scor, the dilution resulting from the possible exercise of the warrants shall not exceed 10% of the share capital at the date of issuance of the shares. For illustration, under current market conditions, with an issuance price of 25.56 euros per share, drawing the entire coverage would represent a maximum of 6.54% of the share capital. In a scenario where the share price falls to 10 euros per share, a draw of 150 million euros would represent 9.04% of the capital, the company indicates. A profit-sharing agreement stipulates that 75% of any potential profit made on the resale of the shares by J.P. Morgan SE will be returned to Scor. The total subscription price of the warrants amounts to 8,971.22 euros, equivalent to 0.001 euro per warrant. The company will pay J.P. Morgan SE an annual fee equal to a fixed percentage of the maximum amount that can be mobilized, adjusted based on amounts already drawn.
