SCOR renews its contingent capital program
Disclaimer:
SCOR (hereafter "SCOR" or the "Company") has implemented a contingent capital program in the form of share subscription warrants with J.P. Morgan SE, which upon exercise of these warrants after having received the issued shares is not intended to remain a shareholder of the Company.
The Company's ordinary shares, which would result from the exercise of the aforementioned share subscription warrants, will likely be sold on the market very shortly, which may create strong downward pressure on the Company's share price.
Shareholders may suffer a loss of their invested capital due to a significant decrease in the value of the Company's shares, as well as significant dilution due to the large number of the Company's ordinary shares which may be issued to the benefit of J.P. Morgan SE, as the sole subscriber of these share subscription warrants.
The investors are invited to remain cautious before deciding to invest in the Company's ordinary shares that are admitted to trading, especially when such dilutive transactions are carried out successively. The Company recalls that this dilutive financing transaction is not unprecedented, as it represents the fifth renewal of its contingent capital program, first implemented in January 2011.
Investors are specifically invited to review the risks associated with these transactions, as mentioned in the press release below. It should be noted, however, that the subscription of the warrants is reserved exclusively for J.P. Morgan SE.
SCOR announces the renewal, for 3 years, of its contingent capital program which may provide the Group with additional capital of up to EUR 300 million upon the occurrence of extreme events (natural disasters or events affecting mortality) or a significant fall in the share price of the Company's ordinary shares.
This solution aims to protect the equity and, consequently, the Group's solvency in such circumstances.
The contingent capital program is based upon the issuance by SCOR of share subscription warrants, subscribed by J.P. Morgan SE, which will be automatically exercised in the cases specified in the warrant agreement (the "2025 Warrants").
The coverage period for the contingent capital program starts from January 1, 2026, to December 31, 2028. In the absence of a triggering event during this period, the 2025 Warrants will not be exercised. The warrant agreement for the 2025 Warrants provides, among other things, for the benefit of the Company, an option for early termination of all or part of the 2025 Warrants in the event of a regulatory disqualification event, as well as an option for early termination of all 2025 Warrants on December 31 of each year, beginning on December 31, 2026.
The amount of the share capital increases resulting from the potential exercise of the 2025 Warrants could reach EUR 300,000,000 (including share premium), providing that the dilution shall not exceed 10% of the share capital on the date of issuance of the ordinary shares resulting from the exercise of the 2025 Warrants. It being specified that the exercise of all the 2025 Warrants assumes the absence of exercise of the share issuance warrants issued on December 16, 2022 which coverage period will expire on December 31, 2025 (the "2022 Warrants"), the total number of new ordinary shares to be issued upon exercise of the 2022 and 2025 Warrants not exceeding 10% of the share capital on the date of issuance of said shares.
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Key Features of the Share Subscription Warrants
The transaction will result in SCOR issuing 8,971,220 share subscription warrants to J.P. Morgan SE, each 2025 Warrant entitling J.P. Morgan SE to subscribe for two new SCOR ordinary shares up to a limit of 10% of the number of ordinary shares comprising the Company's share capital on the date of issue of said ordinary shares. The subscription price of each 2025 Warrant amounts to EUR 0.001, resulting in a total subscription price of EUR 8,971.22.
Under the terms of the warrant agreement for the 2025 Warrants, J.P. Morgan SE has undertaken, subject to certain conditions, to exercise for all or part of the 2025 Warrants following the occurrence of natural or non-natural catastrophe-type events likely to have a significant impact on the Group's profitability or solvency, or a significant fall in the share price of the Company's ordinary shares, as described in more detail below, for a maximum amount of EUR 300,000,000 (including share premium). Drawdowns under the contingent capital program may be carried out in one or more tranches.
Drawdowns under this program will only be available if:
(1) the amount of estimated final net losses1 (as verified by SCOR's auditors) that SCOR may incur as insurer or reinsurer following the occurrence, during a given year between January 1, 2026 to December 31, 2028 (inclusive), of one or more natural catastrophe-type events, reaches certain contractually predefined thresholds, including:
earthquake, seaquake, earthquake shock, seismic and/or volcanic disturbance/eruption;
hurricane, rainstorm, storm, tempest, tornado, cyclone, typhoon;
tidal wave, tsunami, flood;
hail, winter weather/freeze, ice storm, weight of snow, avalanche;
meteor/asteroid impact; or
landslip, landslide, mudslide, bush fire, forest fire and lightning,
or if
(2) the amount of net claims2 in the Group's life reinsurance business over two consecutive six-month periods during the period from July 1, 2025 to December 31, 2028 (inclusive) (as verified by SCOR's auditors) reaches certain predefined thresholds following the occurrence of, in particular, one or more of the following life events:
deviation of epidemic, pandemic or a similar incidence or wide spread of one or more medical condition deriving from any disease(s);
acts of war, acts of terrorism;
accidents due to non-natural cause(s); or
material deviation from forecast biometric trends (mortality, morbidity, disability or longevity) recorded by the life segment for any reason whatsoever (including as a result of the events mentioned in (1) above).
Furthermore, subject to no drawdown having already been implemented following the occurrence of a natural or non-natural disaster under this contingent capital program, if the volume-weighted average price (VWAP) of the Company's ordinary shares observed on the Euronext Paris regulated market during a period of three (3) consecutive trading days between January 1, 2026 and December 31, 2028 (inclusive) is less than EUR 10 (i.e. a price level close to the nominal value of the SCOR shares), a maximum amount of EUR 150 million, including share premium, will be drawn to ensure the availability of the financial cover (provided that the 2025 Warrants will not be exercised if the unit subscription price of the new ordinary shares issued upon exercise of the 2025 Warrants is below their par value) in the event of the occurrence of a natural or non-natural catastrophe-type events during the remaining period of the risk coverage period.
The 2025 Warrants will remain exercisable for three months after the end of the risk coverage period (subject to certain periods of postponement and/or extension, in particular for regulatory reasons).
In accordance with the authorization granted by the combined shareholders' meeting of SCOR dated April 29, 2025, the maximum number of new shares issued in the event of exercise of the 2025 Warrants may not exceed 10% of SCOR's share capital on the date of issue of said ordinary shares.
All new shares will be subscribed by J.P. Morgan SE at a price equal to the volume-weighted average price of SCOR shares on Euronext Paris during the three trading days preceding the exercise of the warrants. Given the automatic nature of the drawdowns resulting from this contingent share issuance facility and the guarantee that such automaticity provides the Company to access the proceeds of the corresponding issuance should it require hedging, a discount of 7.5% will be applied, provided that the 2025 Warrants will not be exercised if the unit subscription price of the new ordinary shares issued upon exercise of the 2025 Warrants is below their par value. This price will be rounded down to the nearest thousandth of a euro.
J.P. Morgan SE has committed to subscribe to the new shares issued upon exercise of the 2025 Warrants, but does not intend to become a long-term shareholder of SCOR and will sell its shares through private placements and/or market sales. In this regard, SCOR and J.P. Morgan SE have entered into a profit-sharing agreement, which provides that 75% of any profit will be shared with SCOR. If the sale of the new shares is completed immediately after the exercise of the 2025 Warrants in an off-market transaction, SCOR's share of the profit will be paid in the form of SCOR shares to limit the dilutive impact of the transaction on SCOR shareholders.
It is specified that from the date of notification of the occurrence ...
