European Commission Approves French State’s Guarantee to CCR

October 11, 2016

The EC approved the guarantee to Caisse Centrale de Réassurance related to its reinsurance of natural disasters, putting an end to a multi-front battle.

On September 26, the European Commission announced its approval of the guarantee granted to Willkie client Caisse Centrale de Réassurance (CCR) covering its reinsurance of natural disasters. This State guarantee enables CCR to reinsure insurers, that are themselves legally obliged to fully compensate all damages caused in France by natural disasters (with no ability to select the risks).

Following a complaint from SCOR, the European Commission found that the guarantee constitutes a compatible State aid given that “the French natural disaster compensation system is proportionate” and that “it enables each household and business to be insured against these risks.”

This decision ends – though SCOR has announced that it will challenge the decision – the debate initiated in late 2012 before the Paris administrative tribunal, where SCOR asked for the termination of the guarantee agreement between the French State and CCR. SCOR contended, based on European and domestic law, that the State guarantee violated fundamental principles of competition and State aid law. In this context, SCOR referred to the French Constitutional Council a question prioritaire de constitutionnalité on the constitutionality of the legal provision that confers the State guarantee to CCR. In September 2013, the Council ruled for the validity of this provision, stressing its proportionality considering that CCR has to reinsure all insurers upon request. As a consequence, SCOR was left only with European law arguments before the Paris administrative tribunal and decided to file a complaint before the European Commission alleging that the guarantee was incompatible with State aid rules.

The Paris’ administrative tribunal ruled on July 12, 2016, that the guarantee constituted a State aid and ordered the French State to end the guarantee agreement with CCR within a year, unless it was notified to the European Commission. The Commission’s compatibility decision renders ineffective the administrative tribunal’s judgment and preserves the continuity of the reinsurance of natural disasters with the French State’s guarantee.

Created in 1946, CCR is wholly owned by the French State and ranks among the world's top 25 reinsurers.

The Willkie team was led by partners Jacques-Philippe Gunther and Thierry Laloum and included associates Dounia Ababou and Alice Guérin.