France’s SCOR Group announced that it has broken off talks with Germany’s Gerling Group to acquire its life reinsurance operations, and certain non-life activities, “due to current capital market conditions.”
The companies began discussions on September 4, but the financial markets did not welcome the news. SCOR’s shares have dropped by around 40 percent in the last two weeks, as investors sold in anticipation that the company would have to prepare a costly new rights issue to finance any deal with Gerling.
SCOR’s Chairman Jacques Blondeau had indicated from the beginning that his company would only go through with any deal if it would immediately enhance earnings, but the cost, estimated at around £750 million ($735 million) was apparently too high.
SCOR’s announcement leaves financially troubled Gerling, the world’s sixth largest reinsurer according to Standard & Poor’s, looking for a new buyer.
According to a report from Dow Jones Newswires, Hannover Re may be interested in reopening talks with Gerling, which were broken off after the announcement of its deal with SCOR. The article quoted a company spokeswoman as stating that Hannover “is interested further, but only in the European life reinsurance business.”