SCOR Forces Board Resignation of CEO of Covéa (Biggest Shareholder, Spurned Suitor)

November 14, 2018 by L.S. Howard

French reinsurer SCOR forced one of its board members — Thierry Derez, the CEO of Covéa — to resign this week. It was the culmination of a boardroom squabble that began in September when SCOR rebuffed an 8.3-billion-euro ($9.3 billion) takeover offer from Covéa, a Paris-based mutual insurer that is SCOR’s biggest shareholder with a 10 percent stake.

Although the offer was not welcomed by SCOR, Covéa at the time said it was still interested in pursuing a “friendly transaction.” Nevertheless, SCOR executives were not happy about the continued participation of Derez on the board — the CEO of a company pursuing what they perceived as a hostile takeover.

SCOR said Derez’s board membership was a conflict of interest and had disrupted “the proper functioning of the group,” which led the reinsurer to ask him “to resign as a director on several occasions.”

Derez finally decided to resign from SCOR’s board on Nov. 13, following an opinion issued by Haut Comité de Gouvernement d’Entreprise (HCGE), which is a commission that oversees French corporate governance.

“Given Thierry Derez’s refusal to face the full consequences of this situation, SCOR’s lead independent director referred the matter to the [HCGE] on Oct. 12,” explained SCOR. On Oct. 30, HCGE supported SCOR’s position, issuing an opinion that Derez could no longer occupy the post “and must give up his mandate,” said the reinsurer.

Covéa subsequently commented on HCGE’s decision, saying on Nov. 13 that it had made continuous attempts to soothe relationships with SCOR.

“Covéa acknowledges SCOR’s constant refusal to hold any discussion with its largest shareholder, which, from now on, will no longer be represented on the board of directors of SCOR,” said Covéa in a press release. (Covéa did not pursue a legal challenge in the French courts. Representatives were not available to comment on the Derez’s resignation).

In an initial attempt to pour oil on troubled waters, Covéa on Sept. 27 announced that Derez would “temporarily withdraw” from the board until SCOR’s annual shareholders’ meeting in 2019, “in the interest of appeasement.”

But SCOR opposed this “unilateral decision,” which it said violated SCOR’s bylaws, the internal regulations of the board of directors and therefore had no legal grounding, explained the reinsurer in its Nov. 13 statement.

“The procedure and the methods used by Thierry Derez and Covéa to prepare, submit and make public the [acquisition] proposal of Aug. 24, 2018, as well as their renewed expressions of interest, can only be considered as hostile and unfriendly, and are significantly disrupting the functioning of the company,” said SCOR in comments issued on Sept. 27.

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