“Dysfunctional governance”: Activist hedge fund CIAM attacks French reinsurer SCOR’s succession plans

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CIAM, the London- and Paris-based activist hedge fund, has launched a fierce attack on reinsurance firm SCOR SE’s corporate governance and management succession plans, and is calling for shareholders to vote against the re-election of chairman Denis Kessler and board directors and to oppose proposed remuneration policies at the company’s AGM later this month.

The activist hedge fund, which wrote to SCOR last year to address “significant corporate governance deficiencies”, has welcomed the separation of the roles of chairman and CEO following the departure of Kessler as CEO.

But in a letter addressed to SCOR’s board of directors and Augustin de Romanet, chairman of its compensation and nomination committee, CIAM CEO Catherine Berjal blasted the succession plans, which involve Kessler staying on for a period as chairman, and reiterated long-running concerns over governance failures and underperformance at the reinsurer.

While CIAM has been calling for a “rapid separation of powers” in order to help reverse SCOR’s disappointing performance, Berjal poured scorn on the “precipitous change” in the company’s governance, with Laurent Rousseau due to replace Kessler as CEO, but Kessler remain as chairman.

That reshuffle resulted in the departure of Benoît Ribadeau-Dumas, who had earlier been picked by the board of directors as future CEO.

Such “severe consequences” raise questions over the control exercised by Kessler over the board, according to Berjal, who has requested SCOR now “formally commit that Denis Kessler will serve as chairman for a transitional period only” until the 2022 AGM.

“We are rather circumspect as to the sufficiently pressing reasons that could have forced Denis Kessler to step down as CEO and disrupt the succession plan decided by the Board, but which do not pose an obstacle to him exercising Chairmanship,” she wrote.

“It would appear preposterous in our view that this upheaval in the succession plan caused by Denis Kessler should allow him to remain, for an extended period of time, Chairman of the company, which will now be headed by a candidate trained by him and whose profile had not been initially supported by the Board of Directors.”

CIAM was also left “speechless” by “muddled” remuneration policies which form part of the succession process, the letter added.

The activist hedge fund is now encouraging SCOR shareholders “to oppose, at the next Annual General Meeting on 30th June, the re-election of the directors responsible for this unexplained disruption of an already dysfunctional governance, and to oppose the resolutions relating to the remuneration policies.”

The letter is the latest step in CIAM’s ongoing activist campaign against SCOR. In the past, the firm has highlighted the reinsurer’s stock market underperformance, which has lagged industry peers, and has believes defective governance and disorderly succession plans have damaged the company’s value. CIAM favours the removal of Kessler and instead supports the election of Rousseau, with a view to strengthening corporate governance and improving its performance outlook.

Co-founded in 2010 by Catherine Berjal and Anne-Sophie d’Andlau, CIAM’s investment strategy involves taking global equity positions in companies based on a range of corporate events, focusing on special situations and merger arbitrage, to generate returns and unlock shareholder value.

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Hugh Leask
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