View this article online: https://www.insurancejournal.com/news/international/2005/06/23/56531.htm
France’s SCOR Group plans to issue 130 million new shares, raising around 201.5 million euros ($243.6 million) in new capital, primarily to fund the purchase of the outstanding shares of Irish Reinsurance Partners (IRP) that it does not already own.
After some lengthy discussions, SCOR will purchase the 46.6 percent stake currently held by Boston-based Highfields Capital Management (See IJ Web site May 12). IRP is an Irish company formed in 2001 for the purpose of reinsuring part of SCOR’s worldwide non-life insurance business. SCOR will pay 183.1 million euros ($221.4 million) for the minority interest. Any remaining funds will be used for general corporate purposes.
A.M. Best issued a statement indicating that its ratings on SCOR would “remain unchanged” following the share issue. “The potential net positive balance after refinancing IRP will have a modest positive impact on risk-adjusted capitalisation,” Best added. “SCOR’s ratings continue to reflect its very good risk-adjusted capitalisation, improving earnings and the potential for volatility in its reserves.”
The new share issue initially increased SCOR’s capitalization by 15.87 percent. The company subsequently announced that “following the large success of the capital increase, BNP Paribas, the lead manager and bookrunner, had elected to exercise in full the over allotment option of 15 percent granted to it by the Company.”
This increases the new share issue by 19,500,000 at an initial offering price of 1.56 euros ($1.886) per share. The total number of shares issued by SCOR in this transaction amounts to 149,500,000, representing 18.25 percent of the share capital and 18.36 percent of the voting rights. The gross proceeds of the offering, after exercise of the over-allotment option, amount to 233.22 million euros ($282 million), including the issue premium. Share sales are limited to the French market. Institutional investors began accepting the offer yesterday, June 22; individual investors may begin taking up the offer on Friday, June 24.
In a press release SCOR noted: “This issue will allow the Company, on the one hand, to refinance the acquisition of the remaining shares of IRP Holdings Limited (“IRP”) that it does not currently hold and, on the other hand, to strengthen the financial position of the SCOR Group, in particular with a view to revising its financial rating.”
SCOR has been implementing a “Moving Forward” plan under CEO Denis Kessler, following a spate of severe financial reverses, caused mainly be increased losses in the U.S. market. It lost its “A” rating from Best and S&P as a result, and one of Kessler’s primary goals has been to regain that status. Both rating agencies currently have a “positive outlook” on the ratings, which indicates they’re considering the possibility of raising them.
Following the successful issue, Kessler commented: “On behalf of SCOR, I would like to thank all of our shareholders, both old and new, who through their participation in the capital increase contributed to the success of this transaction. The success of the transaction demonstrates the confidence of the market in the outlook of the group which was presented in the Moving Forward plan as far as underwriting is concerned and in the New Scor project as far as organization is concerned.”