CIAM calls for Scor outsider as chair after “chaotic” succession planning

In an interview with The Insurer, CIAM’s leadership team – CEO Catherine Berjal, deputy CEO Anne-Sophie d’Andlau and head of corporate governance Véronique Bresson – discuss what they claim to be the “chaotic” succession planning at Scor.

The team were speaking to this publication shortly after activist investor CIAM wrote to Scor’s board of directors calling for the initiation of succession planning for the carrier’s chairmanship and for an independent chair to be elected.

They said it was “crucial” that Kessler – who after serving as chairman and chief executive for 19 years is stepping down from the latter role at the end of the month – is replaced as chair as soon as possible, pointing to newly appointed CEO Laurent Rousseau’s “conflicts of interests” between Kessler and his duties regarding the company’s corporate interest.

“We cannot have Rousseau as CEO and Denis Kessler as chairman or even on the board – it risks a serious conflict of interest between him [Rousseau] and his mentor for the past 11 years,” d’Andlau said.

“Rousseau needs space so the recovery can start. You can’t have a company that trades at such a discount to its peers for so many years without any consequences”

CIAM deputy CEO Anne-Sophie d’Andlau

In May, Scor made a sudden shift in its leadership succession planning by announcing that Rousseau, deputy CEO of Scor Global P&C and chairman of Scor Europe, would take over from Kessler as CEO from 30 June, with heir apparent and industry outsider Benoît Ribadeau-Dumas exiting the reinsurer.

D’Andlau added that Rousseau needed “leeway” and “room to manoeuvre” as CEO, which CIAM said would be impossible with Kessler remaining “in the shadows” on the board.

“Rousseau needs space so the recovery can start. You can’t have a company that trades at such a discount to its peers for so many years without any consequences,” she said.

The executives would not be drawn on who they thought the ideal candidate would be for the chairman role, but said CIAM had a “few ideas” of who should be Scor’s next chair.

“We can’t give you names but there are a number of individuals from the insurance industry who have the knowledge and experience,” d’Andlau said.

In addition to concerns about the “operational autonomy” of Rousseau as Kessler’s successor, the CIAM team looked to dispel comments made by Kessler on a recent episode of The Insurer TV.

In the proxy contest presentation circulated alongside its letter to Scor’s board, CIAM cited Kessler’s interview with The Insurer TV, and said comments made in relation to Covéa’s 2018 takeover approach were “simply dishonest” and dismissed claims it had “an alternative strategy” to facilitate any M&A activity.

“It’s an easy defence for Scor linking us with Covéa, but this is simply not the case,” d’Andlau said.

The CIAM leadership team stressed that they have “no relationship” with Covéa, acknowledging that they had met with the mutual once.

“We’re not working for Covéa! We want better governance – it’s simple,” d’Andlau said, “[M&A] is not the object of our campaign, better governance is.”

Paris-headquartered CIAM began its campaign against Scor shortly after French mutual Covéa first made public its €8.3bn takeover bid for the reinsurer in September 2018.

The move was forcefully rejected by Kessler, who accused the mutual of “significantly disrupting the functioning” of its business with a “hostile and unfriendly” takeover bid.

In the months that followed CIAM accused Kessler of putting his own interests above those of shareholders. The firm also put pressure on Scor by lobbying the reinsurer’s shareholders to remove Kessler from being chairman as well as CEO of the carrier and arguing that his remuneration was too high.

Remuneration is also central to its latest campaign on Scor, which comes ahead of the reinsurer’s 2021 annual general meeting on 30 June.

CIAM highlights the “disparity” between the remuneration of the incoming and exiting CEOs, with Rousseau’s remuneration being lower than that of Kessler. CIAM also points to a 42 percent drop in equity-based compensation compared to Kessler and a fixed annual fee of 33 percent less, which it says represents “a proof of the validity of our criticism of excessive remuneration paid during all these years at the expense of Scor’s shareholders”.

The activist investor highlighted that Rousseau’s starting variable annual compensation of €800,000 is a third less than his predecessor’s €1,200,000 fixed remuneration.

In addition, Rousseau’s 70,000 performance shares and 60,000 stock options compare to Kessler’s 125,000 and 100,000, respectively.