REPORT ON CORPORATE GOVERNANCE 41 2.1. Corporate Governance principles, Shareholders’ Meetings, Board of Directors, Executive Committee, employees, and information required by Article L. 22-10-11 of the French Commercial Code 42 2.2. Board of Directors and Executive Committee member compensation, and share ownership 81 2.3. Related party transactions 118 2.4. Additional Information 120 2.5. Audit report on the corporate governance report 120
The use of new technologies will accelerate SCOR’s proven cornerstones, and ideally position the Group to create even greater value for all its stakeholders.
This structure is designed to facilitate access to local markets through a network of local subsidiaries, branches and representative offices, to better identify profit centers in each major reinsurance market, obtain a deeper understanding of the specific features of local risks and develop local management and underwriting expertise, and thereby improve customer service and maintain proximity relationships with ceding companies.
1.2.5.3. LIFE REINSURANCE SCOR’s Global Life segment underwrites Life reinsurance business in the following product lines: • Protection; • Financial Solutions; and • Longevity.
01SCOR GROUP Market and financial review 1.3. MARKET AND FINANCIAL REVIEW
SCOR has partnered with AgroBrasil for 15 years: initially as a reinsurer, and since 2013 as an insurer through its Brazilian insurance company, ESSOR Seguros, fully owned by SCOR since 2018.
(1) By Unaffiliated Gross Written Premium in 2019 (USD millions), source: “AM Best Special Report Global Reinsurance 2020”.
(9) Income/(expenses) on technical items include (1), (2), (3), (4) and (5) amongst other technical items.
TOTAL INSURANCE BUSINESS INVESTMENTS AND CASH AND CASH EQUIVALENTS 1,435 16,926 2,292 466 749 1,221 23,090 8,283 31,373 137 208 31,718
01 SCOR GROUP Market and financial review 1.3.6. FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES SCOR continues to demonstrate its ability to absorb major shocks since the beginning of the year, including the Covid-19 pandemic. The strength of the 2020 results and balance sheet proves the effectiveness of SCOR’s strategy, which is based on extensive business and geographical diversification, focusing on traditional reinsurance activity with reinsurance liabilities with very limited exposure to economic activity risks, and no material off balance sheet exposure.
For more information on regulatory restrictions on the use of capital, see Section 1.2.1 – Introduction, and Section 4.6 – Notes to the consolidated financial statements, Note 13 – Information on share capital, capital management, regulatory framework and consolidated reserves.
On September 10, 2020, SCOR issued a dated subordinated Tier 2 notes in the amount of EUR 300 million. SCOR intends to use the proceeds of the issuance for general corporate purposes. The coupon has been set to 1.375% until September 17, 2031, and resets every 10 years at the prevailing 10-year EUR mid-swap rate +2.6%. The EUR 300 million subordinated Tier 2 notes mature on
First appointed: Term of office expires: 2023 British – Age: 52 SCOR SE 5, avenue Kléber 75116 Paris, FranceIndependent: Yes Board meeting attendance rate: 100%
Kory Sorenson, a British citizen, was born in the United States. She speaks fluent French and has a post-graduate (DESS) degree from l'Institut d’études politiques de Paris, a master’s degree in applied economics from the University of Paris-Dauphine, a bachelor’s degree in econometrics and political science from the American University in Washington, D.C. and has completed governance programs with Harvard Executive Education, INSEAD and the Stanford Graduate School of Business. Kory Sorenson has over 28 years of experience in financial services, particularly in capital and risk management within insurance and banking institutions. She was Managing Director, Head of Insurance Capital Markets of Barclays Capital and also held senior positions in the insurance capital markets and debt capital markets divisions of Credit Suisse, Lehman Brothers and Morgan Stanley. She began her career in finance in the treasury department of Total SA in Paris. Kory Sorenson is currently a non-executive director of several major companies.
68 Male French 1,639,790 2 No November 4, 2021 18 years • Chairman of the Strategic Committee
Independence of directors The Internal Charter of the Board of Directors of SCOR provided, until February 26, 2020, the possibility for a director holding a position in a Group subsidiary to be deemed independent provided that he or she abstained from participating in the decisions of the Board of Directors of SCOR SE in the event of a conflict of interest with the subsidiary in which he/she held his/her position. The Board of Directors' meeting held on February 26, 2020 removed this possibility, in order to align the independence criteria of SCOR's directors with those of the AFEP-MEDEF corporate governance code, thereby taking into account the opinions expressed by the shareholders during active discussions.
2 Shall not have received compensation of any form from SCOR, except for compensation received as director, in excess of EUR 100,000 over the previous five years.
They have been directors of the Company for more than twelve years.
Lastly, in accordance with the applicable procedure, directors are required to notify SCOR and the AMF of all transactions carried out in its securities, directly or by an intermediary, on their behalf or on behalf of a third party, by their spouse, or by a third party holding a power of attorney. The notification also applies to transactions carried out by persons closely associated with the directors, as defined by applicable laws and regulations.
(1) The SCOR SE directors concerned resigned from their positions in consolidated companies before April 15, 2020, in accordance with the Internal Charter of the Board of Directors and Committees of SCOR SE.
The Chairman and Chief Executive Officer attends Compensation and Nomination Committee meetings and puts forward proposals relating to appointments and compensation for SCOR employees. He does not participate in discussions related to his own situation.
• Review of the free share allocation and stock-option plans • Review of the Chairman and Chief Executive Officer’s compensation for 2019 • Determination of the Chairman and Chief Executive Officer’s compensation for 2020 • Review of the Executive Committee members and of the four key function holders’ compensation • Review of the directors’ compensation • Human Resources review and outlook • Review of the cost of the governance within the Group • Review and development of the Group's compensation policy
In accordance with the recommendations of the AFEP-MEDEF corporate governance code (Section 24.3) and pursuant to its implementation guide, the compensation components due or awarded to the executive corporate officer for the financial year ended December 31, 2020 are presented below.
SCOR also published its report on sustainable investment on May 14, 2020, incorporating the results of its studies on the impact of global warming on its investment portfolio, based in particular on the scenarios of the Dutch central bank (see "risk and risk management: Case study | Using public and free tools to assess climate change"). Several aspects of the report were highlighted as good practice by the French financial markets authority (Autorité des marchés financiers – AMF) in its December 2020 report, “TCFD climate reporting in the financial sector”.
(2) Director appointed by the Shareholders’ Meeting of June 16, 2020 or director whose term of office began at the close of the Shareholders” Meeting of
As part of the preparation of the compensation policy for the Chairman and Chief Executive Officer for 2021, the Compensation and Nomination Committee and the Board of Directors paid particular attention to taking into account the votes of the shareholders on the compensation policy at the Shareholders’ Meeting of June 16, 2020 as well as the opinions expressed by certain shareholders as part of the active shareholder dialogue with them.
The performance condition based on solvency is consistent with the Group's risk appetite and notably avoids encouraging excessive risk-taking.
and the personal objectives (capped at a maximum of 150% of the target) attached to the annual variable compensation of the Chairman and Chief Executive Officer in the event of outperformance, increasing the ceiling on the variable annual compensation of the Chairman and Chief Executive Officer to 140% of his target variable annual compensation.
For 40% of the allocation: • Achievement over the performance measurement period (three years) of an average solvency ratio that is at least equal to the average of
Governance The structure of the compensation of the Executive Committee members is mainly composed of cash compensation, including a fixed portion and a variable annual portion, as well as variable long-term compensation in the form of stock options and performance shares.
2.2.3.4. EMPLOYEE PROFIT SHARING PLANS See Section 4.6 – Notes to the consolidated financial statements, Note 15 – Employee benefits and other provisions and Appendix B – 5 – Notes to the corporate financial statements, Section 5.3.6 – Employee share ownership plans.
20% of the options will be exercisable depending on SCOR’s ranking within a panel of peers (2) based on the average Total Shareholder Return (TSR) (3) of each company over three years (from January 1, 2020 to December 31, 2022).
It should be noted that it is not possible to exercise the stock options during the 30 days before the publication of the annual, half-year or quarterly financial statements, or during the 15 days before the publication of SCOR’s quarterly financial information.
Number of stock options allocated during the financial year by the issuer and by any company included in the scope of allocation of the options to the ten employees of the issuer and of any company included in such scope, who received the highest number of stock options (aggregate information) 309,900 21.61
Free share allocation plans Pursuant to the provisions of Article L. 225-197-4 of the French Commercial Code, the information provided in this section constitutes the special report of the Board of Directors on the allocation of existing free shares in order to inform the Shareholders’ Meeting of transactions completed under the provisions of Articles L. 22-10-59 to L. 22-10-60 of the same code.
Moreover, the resolutions provide that each performance share allocation should have a neutral impact in terms of dilution. Accordingly, the performance shares allocated under the plans are existing shares held in treasury by the Company as part of its share buy-back program, and not newly created shares. Thus, there is no capital dilution due to the allocation of performance shares.
Related party agreements In accordance with Article L. 22-10-10 of the French Commercial Code, no agreements were entered into during 2020 either directly or through a third party between, on the one hand, the Chief Executive Officer of SCOR SE, one of its directors or one of its shareholders holding a fraction of the voting rights greater than 10% and, on the other hand, another company directly or indirectly controlled by SCOR SE within the meaning of Article L. 233-3 of the French Commercial Code, unless such agreements were entered into in the ordinary course of business at arm’s length conditions.
See Appendix B – Unconsolidated corporate financial statements of SCOR SE – Section 6 – Certification of audit of historical financial information.
3.1. MAIN RISKS 122 3.1.1. Strategic risks 125 3.1.2. Underwriting risks related to the P&C and Life reinsurance businesses 129 3.1.3. Market risks 133 3.1.4. Credit risks 135 3.1.5. Liquidity risks 136 3.1.6. Operational risks 138 3.2. MANAGEMENT OF MAIN RISKS 140 3.2.1. Management of strategic risks 140 3.2.2. Management of underwriting risks related to the P&C and Life businesses 141 3.2.3. Retrocession and other risk mitigation techniques 145 3.2.4. Management of market risks 145 3.2.5. Management of credit risks 147 3.2.6. Management of liquidity risks 149 3.2.7. Management of operational risks 149 3.3. INTERNAL CONTROL AND RISK MANAGEMENT PROCEDURES 151 3.3.1. Internal environment 152 3.3.2. Setting of objectives 154 3.3.3. Identification and assessment of risks 154 3.3.4. Main control activities 155 and communication 157 3.3.6. Monitoring of the internal control and risk management system 157 3.3.7. Financial reporting 158 3.3.8. Conclusion on the control procedures implemented 159
SCOR’s ERM framework is further described in Section 3.3 – Internal control and risk management procedures which contains a description of the Group risk management procedures as well as the role and function of each administrative and management body and team involved in risk management and related control functions.
SCOR’s assets are also exposed to increased inflation or inflationary expectations, accompanied by a rise in the yield curve with a subsequent reduction in the market value of its fixed income portfolios. Increased inflation could also have a negative impact on the solvency of bond issuers; a widening of credit spreads would lead to a loss of value for the issuers’ bonds. Finally, depending on the macroeconomic environment, an increase in inflation could also reduce the value of SCOR’s equity portfolio. Any negative fluctuations in equity values or increase in the cost of claims would lead to a similar decrease in shareholders’ equity.
3.1.1.2. RISKS RELATED TO LEGAL AND REGULATORY DEVELOPMENTS SCOR is subject to comprehensive and detailed regulations and to the supervision of the insurance and reinsurance competent authorities in all countries in which it operates. Some of these authorities are considering or may in the future consider enhanced or new regulatory requirements. Such reinforced measures of control and higher capital requirements, intended to further strengthen the protection of policyholders and/or financial stability, could affect the calculation of the local solvency ratio and have a material adverse impact on the Group, including a restriction of underwriting capacity. Insurance and reinsurance supervisory authorities have broad administrative power over many aspects of the reinsurance industry and SCOR cannot predict the timing or form of any future regulatory initiatives.
Regulatory uncertainties stem from Brexit, future implementation of the US and EU Covered Agreement and protectionist trends as well as ongoing Solvency II reviews. As the Covid-19 crisis unfolds, other regulatory uncertainties also stem from the potential set-up of public/private “pandemic pools” for business interruption coverage.
Additionally, SCOR’s strategy might be impacted by future legal or regulatory developments related to climate change. Tighter regulatory controls and/or government legislation to significantly curb carbon emissions may place restrictions on the business that SCOR can underwrite (e.g. carbon intensive industries such as the coal industry in the first instance, but possibly extending to other non-renewable energy sectors over time).
Act (“TRIPRA”) which was recently renewed until 2027 with no material changes in terms of scope and guarantees. Terrorism exposures are monitored on a worldwide basis as a fully integrated part of the Underwriting Management Framework. Underwriting guidelines stipulate the rules and procedures for terrorism risk for Reinsurance and Specialty Insurance. SCOR monitors this risk using a very conservative approach.
P&C and Life reinsurance activities take place in two different market environments. The two business units are subject to a range of external constraints and benefit from a high diversification effect. The overall balance between the two business areas within the Group therefore provides stability. However, in some cases, changes in the P&C and Life activities are linked to each other as well as to those of the financial markets. This exposes SCOR to possible accumulation of risks between its lines of business and/or asset classes.
For information on the debt securities portfolio, see Section 4.6 – Notes to the consolidated financial statements, Note 8 – Insurance business investment. For information on the impacts of Covid-19 on SCOR’s invested assets, see Section 3.1.3. – Market Risks.
SCOR having authorized access to SCOR’s offices or systems taking advantage of SCOR's assets for personal gain e.g. through misappropriation of assets, intentional mismarking of positions or bribery; • intentional damage to SCOR's assets (including data) required to perform its operations by internal or external staff, which could lead to significant remediation costs (including these released to rebuilding databases or systems); • the failure to attract or retain key personnel or the loss of crucial information/skills concentrated in a single person, or of a whole team.
3.1.6.3. RISKS RELATED TO PROCESSES SCOR’s risk management policies, procedures and controls may not be appropriate or sufficient. In particular, any additional workload to the planned activities could reduce the effectiveness of some processes and controls. For example, the creation of a new entity, the development of a new Line of Business, or any other project, may lead to an accumulation of operational risks.
Since SCOR remains responsible for commitments or services contracted, including for outsourced activities, an inappropriate client relationship management or inadequate level of service and/ or product quality provided by SCOR to its clients or breach of contract may lead to a loss of profitable business relationships.
03 RISK FACTORS AND RISK MANAGEMENT MECHANISMS Management of main risks 3.2. MANAGEMENT OF MAIN RISKS
Valuation risks related to SCOR’s intangible assets and deferred tax assets are managed through robust processes and controls throughout the Group.
For information on the Atlas Special Purpose Vehicles, used as capital markets solutions and alternative risk transfer solutions in the capital shield policy, see Section 4.6 – Notes to the consolidated financial statements, Note 3 – Scope of consolidation. For information on the contingent capital used in the capital shield policy, see Section 4.6 – Notes to the consolidated financial statements, Note 13 – Information on share capital, capital management, regulatory framework and consolidated reserves.
03RISK FACTORS AND RISK MANAGEMENT MECHANISMS Internal control and risk management procedures 3.3. INTERNAL CONTROL AND RISK MANAGEMENT PROCEDURES
• The Group Project Office monitors the Group project portfolio and defines standard project management methodology. It regularly provides reports to the management detailing key indicators and recommendations on the project portfolio for effective management. On the Executive Committee’s request, it can also manage strategic projects.
Group; • limited and automatized mappings between systems; • extended capabilities for reporting (including drilldown from financial to source system data); • enhanced audit trail.
03 RISK FACTORS AND RISK MANAGEMENT MECHANISMS Internal control and risk management procedures 160 UNIVERSAL REGISTRATION DOCUMENT SCOR 2020
Accounts payable on assumed insurance and reinsurance transactions Note 9 710 910
Effect of changes in foreign exchange rates - - - 126 - - - - 126
— to the extent that any gains or losses arise, these are directly recorded in shareholders’ equity. In particular this affects foreign exchange differences for available for sale equity securities and exchange differences resulting from the conversion of these items which are also directly recorded in shareholders’ equity; • the gains and losses resulting from the translation of net foreign investment hedges are recorded in other comprehensive income. They are recognized in the statement of income upon the disposal of the net investment.
SCOR is currently assessing the impacts of the Interest Rate Benchmark Reform on its reinsurance contracts, financial assets and liabilities, lease contracts and existing hedging relationships and has at this stage not identified major impacts on its accounts. This assessment will continue throughout the year 2021 when the existing benchmark rates will be discontinued and the impact of changes reported at interim periods until the transition is complete.
SCOR Global Life Americas Reinsurance Co. (SGLA) US 100 100 100 100 Full
On July 18, 2017, SCOR Global P&C SE acquired the remaining 51% share of M&S Brazil Participações Ltda (“M&S Brazil”), holding company of Essor Seguros S.A (“ESSOR”, a direct insurance company in Brazil) held by La Mutuelle des Architectes Français Assurances (“MAF”) and the single share of ESSOR also held by MAF.
SCOR Global Investments is the asset management business unit of the Group. Its role is complementary to the two reportable operating segments as it manages SCOR Global P&C’s and SCOR Global Life’s investment assets associated with their contract liabilities. SCOR Global Investments also manages thirdparty assets, however this activity is currently considered not material. Therefore, SCOR Global Investments is not considered a separate reportable operating segment for the purposes of IFRS 8 – Operating segments. Investment income and expenses are allocated to the SCOR Global Life and SCOR Global P&C segments based on the allocation of the assets.
Contract liabilities and share of retrocessionaires in contract liabilities for SCOR Global Life, allocated on the same basis as gross written premiums, are as follows: In EUR millions
VOBA relates to Life reinsurance portfolios acquired in a business combination. VOBA is capitalized as the present value of the stream of expected future cash flows for the assumed and the retroceded reinsurance business using estimates of expected profits from future technical results and future investment income, generated by the investments to cover the reinsurance reserves, less deductions for future portfolio administration expenses. The present value calculations of future profits reflect assumptions on mortality, morbidity, policyholder behavior, discount rates and margins for risk relevant at the date of acquisition.
Investments at fair value through income 1,351 252 1,099 - -
Cumulative depreciation and impairment at December 31, 2018 (145) - (145)
In 2020, increase in real estate investments related to the costs of existing buildings currently under construction and renovation work for a total of EUR 25 million. Disposals related to the sale of one building, resulting in a total gain on sale of EUR 47 million.
As at December 31, 2020, the net unrealized gain (loss) on debt securities included EUR 566 million of unrealized gains and EUR 67 million of unrealized losses (as at December 31, 2019: EUR 355 million of unrealized gains and EUR 54 million of unrealized losses).
Intangible assets with indefinite useful lives are tested for impairment at least annually. An additional test is performed in the event of an indication of loss of value. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether the indefinite life assumption remains appropriate. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis.
Under IFRS 16 – Leases, right-of-use assets are assets that represents a SCOR’s rights as lessee to use an underlying asset for the term of the respective lease contracts, determined as the non-cancellable period of a lease under consideration of extension and termination options in when their exercise is reasonably certain. Right-of-use assets are included in the balance sheet line item Miscellaneaous Assets and are measured at the amount of the related lease liability, considering up-front payments made, lease incentives received and initial direct costs where applicable. Subsequently, right-of-use assets are measured at cost, less accumulated depreciation and impairment, if any. Depreciation is determined in accordance with IAS 16 and recognized in the income statement.
SCOR Services Switzerland entered into an agreement in July 2016 to rent a new building in Zurich. The minimum duration has been fixed to 10 years representing a total commitment of EUR 76 million (CHF 83 million). The expected starting date is May 2020. The right-of-use asset and the corresponding lease liability is recognized at this date.
The number of shares held as treasury shares by the Group and/or its subsidiaries at December 31, 2020 amounted to 259,567 shares compared to 668,058 shares at the end of 2019. These treasury shares are not entitled to dividends.
The primary source of capital used by the Group is shareholders’ equity and subordinated debt. The leverage ratio as at December 31, 2020 is 28.5%. For a description of the leverage ratio, see Universal Registration Document, Section 1.3.6 – Financial position, liquidity and capital resources.
Provisions amounted to EUR 194 million and EUR 237 million at December 31, 2020 and 2019 respectively, and include postemployment benefits related to pension plans of EUR 189 million (2019: EUR 233 million) and provisions for other long-term benefits of EUR 5 million (2019: EUR 4 million).
An analysis of the share of retrocessionaires in the Group’s contract liabilities by rating of the retrocessionaires and collateral from retrocessionaires in favor of SCOR at December 31, 2020 and 2019 is as follows: In EUR millions AAA AA A BBB < BBB Not rated Total as at
Vesting period 3 years 3 years 6 years 3 years 3 years 6 years
Deferred tax assets and liabilities are offset, if a legally enforceable right exists to set off current tax assets and liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.
Other income (including from cash and cash equivalents) (32) (9) (18)
Date of the Shareholders’ Meeting called to approve the financial statements for the financial year ended
We conducted our audit engagement in compliance with independence requirements of the French Commercial Code (code de commerce) and in the French Code of Ethics (code de déontologie) for statutory auditors for the period from January 1, 2020 to the date of our report, and specifically we did not provide any prohibited non-audit services referred to in Article 5(1) of Regulation (EU) N° 537/2014.
The gross insurance and investment contract liabilities amount to EUR 30 501 million as at December 31, 2020. These liabilities are established to cover the Group's commitments and the payment of benefits relating to reported events or events incurred but not yet reported.
We examined the methodology used by management to determine whether the potential impairment of the CGUs has been properly applied: We evaluated the models and calculations of the Group company in: • comparing multiples and discount rates used per country with our internal databases; • comparing the expected turnover growth with the economic data of the reinsurance sector; • analyzing the process of preparing and approving budgets and forecasts established by management and approved by the Board of Directors; • analyzing the consistency of information and assumptions used in these models: on the one hand, with the budgets and forecasts abovementioned, on the other hand, with our knowledge of the sector, during the review of the strategic plan, through interviews with members of the executive committee and during studies of the Group's budget process.
The related party agreements executed in 2020 or continued during 2020, as defined by Articles L. 225-38 et seq of the French Commercial Code are the subject of a specific report by the Statutory Auditors in Section 2.3.3.
The SBF 120 index consists of the 120 most actively traded French stocks. The SBF TOP 80 EW is an equal weighted index that reflects the performance of the 80 French stocks which are the most traded of the continuous segments not included in the CAC 40 index. The CAC Next 20 index includes the most representative stocks in terms of free float-adjusted capitalization and share turnover not included in the CAC 40 index. The CAC Large 60 index is composed of the constituents of the CAC 40 and CAC Next 20 indices. The CAC Large 60 EW is an equal weighted index that reflects the performance of the 60 largest and most actively traded shares listed on Euronext Paris. The CAC All-Shares index is composed of all the stocks listed on Euronext Paris with an annual velocity ratio of over 5%. The CAC All Tradable index includes all the stocks of the Euronext Paris market with a free float of at least 20%. The CAC Financials index is composed of the stocks included in the CAC All Tradable index belonging to the financial sector. The Euronext FAS IAS index is composed of the stocks included in the CAC All Tradable index that fulfill the following conditions: at least 3% of the capital is controlled by employees, a minimum of 25% of the workforce in France shall own shares of the company and a minimum of 15% of the overall workforce shall own shares of the company. The Next 150 index reflects the performance of Eurozone stocks ranked from 151 to 300 by market capitalization. The Euronext France Next 40 EW is composed of companies ranked from 41 to 80 in the SBF 120 index in terms of free float market capitalization. . The ESI Europe indices universe is composed of companies included in the Russell Developed Europe Index that display the best performance in the field of Corporate Social Responsibility. The Ethibel family (ESI) consists of two variants: one regular and one “Multiplier” version whereby a factor between 0.5 and 1.5 is applied in order to align the sector weights of the ESI Europe index with the sector distribution of the Russell Developed Europe. Inclusion in the regular ESI Europe index means automatic inclusion in the ‘Multiplier’ version. The CAC® Large 60 Responsible Investment SW consists of all the companies that are expected to be included in the CAC Large 60, whereby the weighting is based on the Responsible Investment score as provided by Mirova/ISS-oekom. The Euronext Europe 500 tracks the performance of a portfolio of 500 stocks in Europe, ranked by the highest free float in value as a percentage of market capitalization. The Euronext Europe 300 tracks the performance of a portfolio of 300 stocks in Eurozone, ranked by the highest free float in value as a percentage of market capitalization. The Euronext Core Europe 100 ESG EW is an equal weighted index that reflects the performance of the top 100 stocks, based on Vigeo ESG score, from Belgium, France, Germany, Luxembourg, and the Netherlands.
On August 11, 2020, Norges Bank declared that its shareholding fell below the threshold of 5.0% of the capital and voting rights in SCOR SE and that it held 9,255,602 shares or 4.96% of the capital and 9,255,602 voting rights or 4.96% of the voting rights in SCOR SE.
The maximum purchase price would be EUR 60 (excluding acquisition fees). Based on the shares representing the Company’s share capital on December 31, 2020 as established by the Board of Directors on February 23, 2021 (without taking into account the number of treasury shares held by the Company), the theoretical maximum number of shares which may be acquired amounts to 18,673,007 and the theoretical maximum amount allocated to the share buy-back program pursuant to this resolution amounts to EUR 1,120,380,420 (excluding acquisition fees).
5.2.8.4. AGREEMENT THAT ARE SUBJECT TO TERMINATION IN THE EVENT OF A CHANGE OF CONTROL
Pursuant to Article 13 of the Company’s bylaws, the directors receive a remuneration, the maximum aggregate amount of which, determined by the shareholders acting at an annual Ordinary Shareholders’ Meeting, remains in effect until a new decision is made.
05SCOR SHARES, SHARE CAPITAL AND GENERAL INFORMATION General information 5.3.2.3. RIGHTS, PRIVILEGES AND RESTRICTIONS ATTACHED TO EXISTING SHARES
In addition to the above mentioned legal requirements, the Company’s bylaws provide that any natural person or legal entity, acting alone or in concert, that comes to hold or ceases to hold, including through a registered intermediate within the meaning of Article L. 228-1 of the French Commercial Code, directly or indirectly, a fraction of the share capital or of the voting rights of the Company equal to or greater than 2.5%, must inform the Company by registered letter, return receipt requested, addressed to the registered office, within five trading days of the date of the crossing of such threshold, of the total number of shares and securities giving access to share capital and corresponding voting rights held. For the application of this statutory obligation, the participation thresholds are calculated according to the same rules as for legal thresholds, notably by taking into account the securities treated as equivalent within the meaning of Article L. 233-9 of the French Commercial Code. The failure to comply with this statutory requirement is sanctioned, upon request of one or more shareholders holding at least 2.5% of our share capital, noted in the minutes of the Shareholders’ Meeting, by the suspension of voting rights, decided by the bureau of the General Meeting, from all shares in excess of the non-declared fraction for any Shareholders’ Meeting that may take place during a period of two years following the date notice is served.
6.1. BUSINESS MODEL 278 6.1.1. Brief description of the group’s business activities 278 6.1.2. Research and risk management 279 6.1.3. Governance system for social and environmental issues and risks 279 6.2. SOCIAL IMPACT OF SCOR’S ACTIVITY 283 6.2.1. Human capital as a key success factor for the Group 283 6.2.2. Social indicators and note on methodology 291 6.3. BUSINESS CONDUCT AND COMPLIANCE 294 6.3.1. Code of conduct and compliance policy 294 6.3.2. Data privacy and protection 295 6.3.3. Ethics and artificial intelligence 295 6.3.4. Anti-corruption 295 6.3.5. Sanctions and embargoes 296 6.3.6. Anti-money laundering, financing of terrorism and KYC 296 6.3.7. Insider trading 296 6.4. CONSIDERATIONS OF ENVIRONMENTAL AND SOCIAL ISSUES IN THE GROUP’S BUSINESS ACTIVITIES 297 6.4.1. Investment activities 297 6.4.2. Insurance and reinsurance activities 300 6.4.3. The Group’s operations 302 6.5. ADAPTATION TO THE DIGITAL ECONOMY 304 6.5.1. Supporting the digitalization of the economy and reducing the protection gap 304 6.5.2. Cyber security, a priority in the digital age 304 6.5.3. Supporting the digital transformation amongst employees 305 6.6. NOTE ON METHODOLOGY 306 6.6.1. Scope and correspondence table 306 6.6.2. Social data: methodology 306 6.6.3. Environmental data: methodology 307 6.7. REPORT BY THE INDEPENDENT THIRD PARTY, ON THE CONSOLIDATED NON-FINANCIAL STATEMENT INCLUDED IN THE MANAGEMENT REPORT 308
In the face of the Covid-19 pandemic, SCOR has once again demonstrated the strength and resilience of its business model as well as its ability to absorb major shocks. The Group continues to implement its strategic plan, “Quantum Leap”, combining growth, profitability and solvency, without changing its risk appetite, protection policy, or capital management policy (see Sections 1.1 and 1.3.5 of the Universal Registration Document).
The identification of significant issues and risks as defined in Article 225-102-1 and Article L. 22-10-36 of the French Commercial Code, led by the department in charge of corporate social responsibility, follows an analysis of non-financial risks based on the information categories established in this article and their first-level breakdown in Article R. 225-105 of the French Commercial Code. These categories have been supplemented by the analysis grids traditionally used by non-financial rating agencies and a materiality analysis conducted using a questionnaire that aims to identify the ESG integration areas (e.g. ethics and transparency, the integration of ESG in investments, the integration of ESG in underwriting activities, the development of (re)insurance solutions aligned with the needs of society, responsible purchasing, diversity etc.) that are most relevant, from the perspective of both stakeholders, including the Group’s employees, and the Group’s supervisory and management bodies. The expectations of external stakeholders have been identified in consultation with the Group’s internal teams responsible for developing and maintaining relationships with them as well as via a questionnaire answered by a certain number of external stakeholders.
Base salaries are set according to criteria that consider a variety of factors, such as conditions on the local labor market, education and professional experience before joining SCOR, expertise acquired, and the current position and responsibilities of the employee.
The Diversity and Inclusion policy focuses on issues such as diversity, particularly regarding equal treatment between men and women, and on the principles supporting the Group's approach in the balanced representation of men and women within governing bodies and senior positions.
SCOR is one of the companies that believes in the benefits of gender balance within its governing bodies. Numerous gender balance measures are already in place or are being implemented and are working towards increasing the number of women in governing bodies. The aforementioned three-year action plan lists measures to promote women's access to senior positions. Several levers have been identified, in particular: 1. Developing women's talents; 2. Strengthen the visibility of female talent; 3. Strengthen awareness of gender equality; 4. Strengthen the action of the internal network SIGN (SCOR International Gender Network) to communicate and raise awareness on diversity; 5. Encourage young graduates to join the reinsurance industry; 6. Achieve salary equity between men and women within the Group; 7. Act in favor of corporate social responsibility.
In addition to meeting the objectives set in the framework of the updated AFEP-MEDEF corporate governance code on January 29, 2020, recommending the implementation and publication of a specific gender diversity policy for governing bodies, SCOR aims to implement a particularly ambitious and proactive women's development policy, in order to effectively support and develop gender diversity and inclusion within these bodies.
• Evaluating, nominating and promoting: based on the observation that the percentage of women within the Partners program was a necessary condition to increasing the percentage of women in higher responsibility positions, the Group is careful to ensure a balanced representation of employees participating in the program. In early 2020, women represented 52% of the new nominations in this program, and 42% of the promotions. In the Partners program, SCOR strives to maintain a female promotion rate that is at least equal to the representation of women within the Partnership.
• Mobilizing employees and promoting role models: in addition to the support from the Group and its Management to continue SIGN network activities globally and locally, that now see more than 300 employees participate, SCOR also involves its teams, particularly through their contribution to promoting role models in positions and fields in which the female pool is traditionally underrepresented (science, technology, engineering and mathematics). In light of this, the Group showcased the career paths of women on its intranet, including personal career insights as part of the Women In Tech initiative in order to combat a number of stereotypes and promote potential careers within this type of industry.
• Roll out of Speexx, a virtual language learning solution available to all employees in five languages. In 2020, 320 licenses were activated.
The Group Compliance Policy, together with other compliancerelated policies and guidelines, establishes minimum standards applicable throughout the Group. These standards are published in a central repository available to all employees and include, inter alia, the following policies and guidelines: • Group data protection policy and its related guidelines on data breach response; • Group policy on anti-bribery and its appendix on corruption risk mapping; • Group guidelines on sanctions and embargoes and its related guidelines on sanctions screening; • Group guidelines on anti-money laundering, combating the financing of terrorism and Know-Your-Customer; • Group guidelines on the management of inside information and trading in SCOR’s securities; • Group policy on conflict of interest; • Group fit & proper policy; • Group policy on outsourcing; • Group anti-trust policy.
In order to ensure proper dissemination of the compliance requirements among SCOR employees, and to keep them informed about the latest development on those issues, training sessions for the underwriting, claims handling and accounting departments are regularly held across Hubs. In addition to e-learning modules such as the one mentioned above, 2020 compliance training activities included 12 training sessions in the Asia-Pacific region, 10 training sessions in the Americas, 20 training sessions in the EMEA region and one training done via the release of a video recording.
As a responsible investor, SCOR applies ESG screening to its investment universe. This may be negative screening as a mitigation action against potential risks (negative financial or non-financial impact), or to avoid the negative impact of investments. It may be also positive screening to support its sustainable investment strategy.
Through the Net-Zero Asset Owner Alliance, targets will be set in early 2021 on engagement to better support the transition to carbon neutrality by 2050.
06 NON-FINANCIAL PERFORMANCE STATEMENT Considerations of environmental and social issues in the Group’s business activities 6.4.1.6. SUPPORTING CLIMATE AWARENESS BY PARTICIPATING IN PUBLIC DEBATE AND COLLECTIVE INITIATIVES
To do so, the Group focuses on the following areas: • environmental quality and certification of offices; • energy consumption management, and renewable energy use; • greenhouse gas emissions and voluntary offsetting.
The notable difference in related greenhouse gas emissions between 2019 and 2020 can be notably explained in particular by the significant decrease in business travel by air due to the Covid-19 pandemic.
6.5.1. SUPPORTING THE DIGITALIZATION OF THE ECONOMY AND REDUCING THE PROTECTION GAP
The SCOR Group Information Security Policy sets minimum requirements that may be adjusted if further and/or more stringent requirements must be observed due to local applicable laws or regulations. This policy is based on three key principles: • support the Group and its development; • defend the Group; • promote responsible information security behavior.
Group”, with the exception of the ReMark group (149 employees), MRM (5 employees), ESSOR (84 employees), Château Mondot SAS (21 employees), Les Belles Perdrix de Troplong Mondot (11 employees), Coriolis (7 employees), Telemed (45 employees) and AgroBrasil (34 employees). These companies are excluded because of the specific nature of their activities, or their organization, or the recent integration into the scope of consolidation. Associates and affiliates are excluded from the scope (see Section 4.6.2.2 – Notes to the consolidated financial statements and Note 23 – Related party transactions).
This is a free translation into English of the independent third party’s report issued in French and is provided solely for the convenience of English-speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.
On November 2, 2020, the debt of EUR 159 million between SCOR SE and SCOR Switzerland Asset Services AG has expired. This debt has been replaced by the issuance of a new debt for the same amount. The coupon was set at 1%. The term is fixed on
Various financial institutions provide sureties for SCOR SE in the form of letters of credit to collateralize SCOR SE’s technical liabilities. The total amount that benefits to cedents, not included in the table above, is EUR 697 million as at December 31, 2020 (EUR 755 million in 2019).
Cat bonds amortization stands at USD 42 million (EUR 46 million including annual amortization converted as well as foreign exchange impact on opening balance) in 2020 compared to USD 45 million (EUR 38 million including annual amortization converted as well as foreign exchange impact on opening balance) in 2019.
Level 33, O’ Connell Street NSW, Sydney NSW 2000, Australia AUD 145 - 100.00% 100 100 - 43 183 267 (12) - • SCOR SWITZERLAND AG
Due and accrued interests on rental income 42 41 - -
The breakdown of other accruals mainly consists of, as at December 31, 2020: • foreign exchange derivative instruments for EUR 94 million and premium/discount for EUR 10 million as assets; • foreign exchange derivative instruments for EUR 87 million, premium/discount for EUR 33 million and cross-currency swaps for EUR 2 million as liabilities.
Employee profit-sharing Under these agreements, employees of SCOR SE and certain subsidiaries are entitled to invest the amounts due to them under the profitsharing plan in a corporate mutual fund entirely invested in SCOR SE shares.
These estimates include significant uncertainties and require a significant degree of judgement from management. In this context, we considered the measurement of technical reserves related to reinsurance contracts as a key audit matter.
To cover the risk related to the measurement of investments in affiliates, our audit approach was as follows: • we examined the estimate of the reference values determined by management and analyzed the valuation method and the data used, based on the information provided to us; • we compared, on a sample basis, the data used in the impairment tests of investments in affiliates to source data per entity as well as results of work on these affiliates, if appropriate; • we examined, on a sample basis, the calculation of recoverable values used by the company.
This glossary is a list of selected reinsurance terms. It is not a complete list of terms used in this Universal Registration Document in the insurance or reinsurance industry.
GUARANTEED MINIMUM DEATH BENEFIT (GMDB) The GMDB guarantees investors in a variable annuity that if the owner passes away while the market value is low, they would never get back less than their original principal.
INCURRED BUT NOT REPORTED (IBNR) Provision for claims which have already occurred but have not been reported yet to the insurer at the reporting date.
REINSURANCE COMMISSION Percentage of premiums paid by the reinsurer to the insurer in quota-share or facultative treaties as a contribution to the acquisition and administrative costs relating to the business ceded.
RISK-FREE (INTEREST) RATE The rate of interest that remunerates assets with no counterparty risk. Usually, the weighted five-year daily interest rates of treasury bills (T-bills) in Germany, the US, and Great Britain averaged over the period under consideration are used as proxies for the risk-free (interest) rate. The weighted average used for this calculation is based on the percentage of reserves denominated in the currency of each such reserve.
VALUE OF IN-FORCE BUSINESS (VIF) Present value of expected future income flows from the portfolio of in-force business, discounted by a currency-specific risk discount rate and determined in accordance with local accounting principles.
IV. Salaries c) Amount of paid employees benefits (Healthy contribution, others benefits, etc.) 47 80 34 33 29
• Notice of holding more than 10% of the share capital of another joint-stock company – Disposal of cross shareholdings
Total remuneration and advantages of any kind paid or granted in respect of the mandate during the financial year by the Company, the controlled companies or the company controlling it (L. 233-16 of the French Commercial Code), distinguishing between fixed, variable and exceptional items, including in the form of equity securities, debt securities or securities giving access to the capital or entitling the holder to the grant of debt securities of the Company, as well as the main conditions for exercising rights, in particular the price and date of exercise and any change in these conditions
Summary table of the delegations in course of validity granted by the Shareholders’ Meeting for increasing the share capital
Agreements between the shareholders of which the Company is aware likely to trigger restrictions to the transfer of shares and the exercise of voting rights
5.1 Primary activities 1.2.5 Business overview 11 to 18 5.2 Principal markets
Known trends, uncertainties, demands, commitments and events reasonably likely to have a material effect on the issuer’s prospects
18.1 Historical financial information 4 Financial statements 161 to 252 18.2 Interim and other financial information N/A N/A N/A