The facility enables the Group to protect its solvency in case of catastrophe events and is consistent with the "Quantum Leap" strategic plan. This is the fourth contingent capital facility launched by SCOR - its first, pioneering solution was launched on January 1, 2011. This new solution is consistent with the previous facilities.
Denis KESSLER, Chairman & Chief Executive Officer of SCOR, commented:
"Our new strategic plan "Quantum Leap" sets out ambitious profitability and solvency targets given the current financial and economic environment. This new contingent capital facility is an essential part of the active capital management policy that is at the heart of our strategy. This facility protects SCOR's solvency, at a very low cost for our shareholders, against events such as a global pandemic or a natural catastrophe of historic proportions."
As part of the authorization granted by the General Meeting of SCOR shareholders in April 2019, SCOR has arranged a new contingent capital equity line with J.P. Morgan. This equity line facility will replace, as of January 1, 2020, the current contingent capital facility which comes to an end on December 31, 2019.
Under the new facility, a drawdown may result in an aggregate increase in the share capital of SCOR up to EUR 300 million (including issuance premium), in respect of which SCOR has entered into a firm subscription commitment with J.P. Morgan.
The issuance of the shares would be triggered when SCOR has experienced total annual aggregated losses or claims from natural catastrophes or extreme events impacting mortality claims above a certain threshold, which is not made public, between January 1, 2020, and December 31, 2022.
The probability that the events triggering the contingent capital facility will occur remains very low and is similar to the last contingent capital mechanism, which minimizes the probability-weighted costs for SCOR and its shareholders. It is highly likely that this facility will reach its term without any dilutive impact for the shareholders.