Reinsurer SCOR renews €300mn contingent capital facility

Global reinsurance company SCOR has renewed its €300mn contingent capital facility for another three years.

The capital will provide coverage in case of extreme events such as natural catastrophe or life events impacting mortality, or a significant fall in the share price. The facility is designed to protect the group’s share capital and its solvency. It is the fourth renewal the group has undertaken of the contingent capital facility, which was first introduced in 2011.

The contingent capital facility rests on share subscription warrants, issued by SCOR and subscribed by J.P. Morgan, which will be exercised automatically in any of the scenarios set out in the agreement. The renewed facility will now be effective until the end of 2025.

SCOR says the facility offers a cost-effective alternative to traditional retro and ILS, and enhances the resilience of its balance sheet.

SCOR ‘maintaining a robust capital shield’

Laurent Rousseau, Chief Executive Officer of SCOR, says: “In a fast-changing environment driven by a number of paradigm shifts, SCOR has issued a new contingent capital facility and sticks to its strategic cornerstone of maintaining a robust capital shield.

“The renewal of this contingent capital facility is an essential part of our active capital management and balance sheet protection policy, which helps to protect the group’s solvency and resilience at a low cost. We are building from a sound base to take advantage of market tailwinds such as the hardening of the P&C market, the increasing demand for life reinsurance products, and the increase in interest rates.”

Companies across the global economy are having to wrestle with difficult trading conditions, including high interest rates and spiralling inflation. As household and corporate budgets come under pressure, there is concern that consumers may choose to deprioritise insurance cover. Indeed, Forrester expects to see more customers pushing back against rising premiums and for policy lapses to rise next year, perhaps by as much as 20%.