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French regulator urges Scor, Covea to end conflict

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Business conflict

(Reuters) — France’s banking and insurance regulator has urged reinsurer Scor SE and insurer Covea Mutual Insurance Group Co. to bury the hatchet for the sake of financial stability, a top official said Tuesday.

Months of conflict have destabilized two companies that play an important role in the French economy, with Scor being the country’s largest reinsurer and Covea one of its leading property and damage insurers.

“It seems obvious to us, the authority of prudential control, that this conflict (should be) sorted out via dialogue and an amicable agreement,” Bernard Delas, head of regulator ACPR, told reporters on Tuesday. “Nobody has interest in letting that row last eternally.”

Officials at Scor and Covea declined to comment.

Management of the two clashed last September when unlisted cooperative insurer Covea, which owns about 8% of Scor, made an offer that valued the reinsurer at more than €8.2 billion ($9.17 billion).

Scor’s management rebuffed the approach, and its CEO, Denis Kessler, dismissed Covea as a local player with a lack of international vision. Covea’s management responded in media interviews questioning Mr. Kessler’s legitimacy in speaking on behalf of Scor’s shareholders.

The conflict escalated in January when Scor sued Covea Chief Executive Thierry Derez, who used to sit on Scor’s board, of breach of trust.

Scor alleged Mr. Derez breached his legal and fiduciary duties as a company director, broke company secrets and used confidential documents.

Eventually, Covea abandoned its offer, and Mr. Derez later said he was seeking to acquire another reinsurer.

Mr. Kessler was challenged by about of quarter of shareholders during the company’s annual meeting and promised to disclose a successor later this year.

Mr. Delas said he was in touch with the two sides and wouldn’t comment on the conflict’s origins. He also didn’t discuss what kind of agreement he would see as a solution to the dispute.

French newspaper Le Monde said the regulator was talking to Scor board member Augustin de Romanet and lawyer Antoine Gosset-Grainville on Covea’s behalf.

Messrs. Gosset-Grainville and de Romanet didn’t return phone calls seeking comments.

 

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