French regulator tells insurers to split chair and CEO roles

The French financial regulator has told the country’s biggest insurers to split the roles of chairman and chief executive in a move that takes aim at two of the sector’s best known executives — Scor’s Denis Kessler and Covéa’s Thierry Derez.

French companies are under increasing pressure to improve their governance by splitting the top two roles, with investors arguing more oversight can reduce risks.

Utility Engie, carmaker Renault, food group Danone and aerospace supplier Safran are among the large French companies to have split the roles in recent years. Emmanuel Macron has appeared to support the push, both in his role as economy minister and, since his election in 2017, as president.

In a report published on Wednesday, the ACPR, which regulates French insurers, said that splitting the roles was “a good governance practice increasingly widespread in large companies”.

It added that it expected the split “to become standard in listed companies and large insurance groups”.

France’s largest insurer, Axa, has already split the roles, but they are still combined at Scor and Covéa where Mr Kessler and Mr Derez, respectively, hold both positions. The two executives have already faced questions about the degree of influence they wield over their organisations.

Scor and Covéa did not immediately respond to a request for comment.

Scor has faced pressure for more than a year from CIAM, an activist investor, to split Mr Kessler’s two roles.

In a letter to the Scor board last month ahead of the company’s annual meeting, CIAM’s Catherine Berjal said: “The combination of the roles, which only Scor has maintained among SBF 120 financial companies and in the reinsurance sector, is an obsolete practice and carries risk.”

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CIAM, which is demanding a separation, said Scor was the last financial company in the SBF 120, a broad French stock market index, to still combine the chief and chairman role.

Mutually owned Covéa, meanwhile, has faced questions from the ACPR itself about whether its governance model gives Mr Derez too much power. 

In March Covéa agreed to buy Partner Re, a reinsurer, from Italy’s Exor for $9bn. However, the deal collapsed just two months later with Covéa saying that it would not go ahead “on the terms originally envisaged” because of economic uncertainty.



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