Since the announcement by Covéa ( a mutual insurer/”mutualist”) of its proposition to the board of Scor to acquire the reinsurer for €43/share, the latter has gained 23%. The offer triggered interest in the hidden value of Scor (reinsurers of any description remain black boxes) just as did the determination of the mutualist to push for its plan that was challenged from day 1.

Covéa‘s proposal was subject to Scor’s board agreement which did not happen.

Since a weird governance move whereby the boss of Covéa stepped down from “participating” to the board, Covea may be free to pounce for real this time. We wonder however to what extent Covéa really has the proper resources to turn its bid into one that can fly.

Alternative suitors may emerge as well and may explain the sharp recent rise. We still see a 9% upside potential by stretching a bit our valuation envelope. A bidding war could see the share 20% higher.

This report adresses the following questions :

  • What are the forces at work at Scor’s board?
  • What defines Scor’s attractive operating performance?
  • What is Covéa anyway?
  • What can Covéa really afford to pay?

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