French reinsurer SCOR announced that its Chairman & CEO Denis Kessler will receive 30 percent less in his annual variable compensation for 2019, which is equal to €325,260 (US$354,333). In addition, the company has decided to cancel its 2019 dividend.
Kessler’s overall remuneration during 2019 was originally €6,700,700 (US$7,299,640), while his bonus originally totaled close to €1.1 million (US$1.2 million).
SCOR said these moves were made in response to statements issued in April by the French regulator Autorité de Contrôle Prudentiel et de Résolution (ACPR), which recommended that insurers and reinsurers curtail dividend distributions as a result of the economic uncertainties created by the coronavirus crisis.
In its release on April 3, the ACPR said that “insurance companies must…refrain from proposing the distribution of dividends.” The French regulator further urged insurers to “exercise restraint on variable compensation award policies.”
In light of these regulatory missives, SCOR’s board of directors decided on May 25 to propose for next month’s shareholders’ meeting that no dividend be distributed for the 2019 fiscal year and that the entire income for that year be allocated to distributable earnings.
The number of SCOR’s shares outstanding is 186 million, said the company’s website. At 1.8 euros per share, the amount allocated to distributable earnings as a result of the dividend cancellation should equal approximately €336 million (US$366.0 million).
“These statements by the supervisory authorities…are dictated by heightened prudence during this profound and unprecedented health crisis,” said SCOR in a statement.
The ACPR’s request that dividend distributions be canceled covers the period from April until Oct. 1, 2020, noted SCOR.
The shareholders’ meeting will be held virtually on June 16.
At the same time, SCOR said that the ACPR’s request prompted Kessler to propose to the SCOR Compensation and Nomination Committee that his annual variable compensation for the 2019 fiscal year be reduced by 30 percent.
SCOR pointed out that its estimated solvency ratio at March 31, 2020, is 210 percent, which is in the upper part of the optimal solvency range of 185-220 percent.
Over the past year, Kessler has faced criticism from activist shareholder CIAM for his “lavish” remuneration at the reinsurer, which he has run since 2002. At the time, SCOR was struggling. Kessler is widely credited for turning around the company.