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SCOR enters €300M contingent capital facility with BNP Paribas

SCOR SE has entered into a three-year facility with BNP Paribas SA to provide it with additional capital in the event of an extreme natural catastrophe or life events impacting mortality.

The contingent capital facility takes effect Jan. 1, 2017, and replaces an earlier one that was worth €200 million. SCOR will issue about 9.6 million warrants to BNP Paribas, which the French bank committed to trigger if SCOR experiences aggregate annual losses or claims above a certain threshold, which was not disclosed.

Each warrant entitles BNP Paribas to subscribe for 2 new SCOR shares, subject to a 10% ownership threshold. If the facility were activated, the bank would exercise the number of warrants necessary to generate €300 million worth of share subscriptions.

"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," said SCOR Chairman and CEO Denis Kessler.

The bank would not aim to be a long-term shareholder in SCOR and would seek to resell the shares by private placement or on the open market. Three-quarters of the profit of any onward sale would go to SCOR, with the payment settled in shares if the resale occurs immediately through an off-market transaction.

The probability of events triggering the facility remains less than 2%, SCOR said.