During 2013, Standard & Poor’s raised the outlook on the “A+” rating of SCOR SE and its main subsidiaries to “positive” as, according to their statement, “capital and earnings are expected to rise due to very strong ERM” (3). In 2012, the rating agencies upgraded SCOR’s financial strength rating to “A+” or equivalent, and A.M. Best upgraded the Issuer Credit Ratings (ICR) of SCOR SE and its main subsidiaries from “A” to “A+”.
4.1 Risk related to the business environment 21 4.2 Risk related to Financial Markets 33 4.6 Insurance of specific operational risks (excluding reinsurance activity) 41 4.7 Risk and litigation: Reserving
As a result, future terrorist acts, whether in the US or elsewhere, could cause SCOR significant claims payments, and could have a significant effect on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
As a result of this imprecision and uncertainty, SCOR cannot exclude the possibility that it could be exposed to significant environmental and asbestos claims, or have to increase its reserving level, which could have an adverse effect on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
The result of all the above-mentioned items is that a rating downgrade could have a material adverse effect on the Group’s business, present and future revenues, net income, cash flows, financial position, and potentially, its share price.
In its activities, Life and P&C, the Group receives confidential data from the cedents (e.g. industrial or commercial data), in particular through its subsidiaries (Telemed, etc.). Necessary to its activities, as to its cedents’ and partners, this data may be protected either legally or contractually. SCOR is exposed to the risk that this data is copied by a non-authorized or rogue third party. This could have an impact on SCOR’s reputation. SCOR is also exposed to risks related to communication from its directors and staff on media and social networks (e.g. identity theft, sensitivity of information communicated on social networks, etc.).
SCOR needs liquidity to pay claims, its operating expenses, interest on its debt and declared dividends on its share capital, and replace certain maturing liabilities. Without sufficient liquidity, the Group may be forced to curtail its operations, and business will suffer. The principal internal sources of the Group’s liquidity are reinsurance premiums, cash flows from its investment portfolio and other assets, consisting mainly of cash or assets that are readily convertible into cash.
The disruption of financial markets could affect SCOR’s business, present and future revenues, net income, cash flows, financial position, and potentially, its share price.
The main provisions are:  French companies, whose exclusive business is reinsurance, can only practice after having obtained an administrative license, issued by the Autorité de Contrôle Prudentiel et de Résolution (ACPR - Prudential Supervision and Resolution Authority) and published in the Official Journal. The licenses for SCOR SE, SCOR Global Life SE and SCOR Global P&C SE were validated by virtue of the decision of the President of the Comité des Entreprises d'Assurances (Committee for Insurance Companies, now merged into the Autorité de Contrôle Prudentiel et de Résolution - ACPR), dated 15 July 2008;  the authorized reinsurers in France can thus operate in the EEA relying on the freedom to provide services and/or on establishment (branches);  European reinsurance companies are under an obligation to meet the defined regulatory solvency demand, to establish a guarantee fund and to put a permanent internal control policy in place;  the obligation imposed upon reinsurers, to establish an adequate solvency margin, aims to protect the insurance companies, and hence, the consumers, in order to ensure that in the event of a decline in business or in investment income, the reinsurance companies have additional reserves, protecting those interests and consequently, the policy holders, while providing both executives and oversight and regulatory authorities with sufficient time to resolve the problems that have arisen;  reinsurers authorized in France and their branches are monitored by the ACPR. The role of this body is to ensure that at any point, these entities are able to conform to the commitments that they have entered into with reinsurance companies and that they fulfill the regulatory solvency margin demands; and
SCOR offers Life and Property and Casualty coverage within the Asia Pacific region through a network of subsidiaries, branches, and service companies. It operates in Singapore, Hong Kong and Australia through subsidiaries. The Group also operates in Australia, China, India, New Zealand, Malaysia, Taiwan, Japan and Korea through branches, representative offices or service companies. In the region, each entity is subject to local supervision regardless of their legal form. The Asia/Pacific region is made up of a number of widely differing and independent markets. Each has its own regulatory structures and SCOR complies with the local regulation in each of the countries in which it operates. Industry regulation across the region typically focuses on financial stability and the basis for calculating solvency, reserves and policyholder liabilities. In many of the markets across the region, regulators have the power to revoke operating licenses, regulate shareholder structures and the participation in and the payment of dividends. Markets within the region are developing quickly with an increasing focus on governance and conduct of business.
For more information on the Hub structure, see “Section 7.1.1.5 - The “Hub” Structure. On 7 January 2008, SCOR Holding (Switzerland), the former Converium, delisted its American Depositary Shares from the NYSE. SCOR Holding (Switzerland) then requested the deregistration of its securities with the SEC. The deregistration of the securities of SCOR Holding (Switzerland) took place on 4 September 2008. Moreover, at the request of SCOR Holding (Switzerland), the SWX Swiss Exchange (which later became the SIX Swiss Exchange), by order dated 14 November 2007, delisted SCOR Holding (Switzerland)’s shares as from 30 May 2008.
On 1 September 2014, SCOR announced the creation of a local entity in Brazil, SCOR Brasil Resseguros SA (SCOR Brasil Re), following the license to operate as a Local Reinsurer granted by the Brazilian insurance authority SUSEP on 26 August 2014.
One year after its launch, SCOR is on track with the execution of its “Optimal Dynamics” strategic plan, combining growth, solvency and profitability. The Group also affirmed its consistent shareholder remuneration policy.
“Footprint” scenarios Footprint scenarios are an innovative and complementary risk management tool. Whereas risk drivers and extreme scenarios are probability-based, the footprint approach consists in carrying out an impact assessment on the Group under a deterministic scenario. This approach is complementary to a probability-based view. Taking into account SCOR’s current exposure and all risk mitigation instruments, footprint scenarios provide the impact assessment of past events on the Group’s actual solvency ratio, liquidity, and own operations. SCOR regularly produces and evaluates footprint scenarios, providing comfort that the impact of such events on the Group’s current solvency would be limited.
Excess of loss reinsurance is often written in layers. One or a group of reinsurers accepts a tranche or layer of risk above the ceding company’s retention up to a specified amount, at which point another reinsurer or a group of reinsurers accepts the next layer of liability. Stacking layers protecting the same underlying portfolio are called a program, and after protection from the top layer is exhausted liability reverts to the ceding company. The reinsurer taking on the risk just above the ceding company’s retention layer is said to write primary or working layer or low layer excess of loss
SCOR entered a joint-venture agreement with GAUM (Global Aerospace Underwriting Managers) and MDU (Medical Defence Union). The latter ended on the 31 March 2013. The Group also participates in insurance and reinsurance pools, the main of which are: La Réunion Aérienne, La Réunion Spatiale, Assuratome and Assurpol.
SCOR Global Life division underwrites Life reinsurance business in the following business areas (1):  Protection  Financial Solutions
Life Accumulations of risk particularly exposed to catastrophes or other significant events in the Life business are regularly assessed in group-wide extreme scenarios. Every year, limits for the acceptance of specific catastrophe covers by market are reviewed taking into account the capacities obtained by the retrocession coverage purchased by the Group.
Retrocession procedures are centralized in the retrocession function of the Non-Life and Life divisions. The level of retrocession is selected each year to ensure that SCOR's retained risk profile respects the specific Group risk tolerance limits, to help achieve its return on capital and solvency objectives. The Group utilizes a variety of retrocession agreements with non-affiliated retrocessionaires to control its exposures to large property losses. In particular, it has implemented an overall program set in place on an annual basis that provides coverage for a series of major catastrophic events within one occurrence year. A major event is likely to be a natural catastrophe such as an earthquake, a flood, a windstorm, a hurricane or a typhoon in a region where SCOR has major aggregate exposures stemming from the business written.
The Group has a prudent investment policy and put great importance on several selection criteria including internal assessments, the rating provided by the rating agencies to the issuer and the liquidity of the securities purchased.
On 15 March 2012, Fitch Ratings upgraded SCOR's Insurer Financial Strength (IFS) ratings and Long-term Issuer Default Ratings (IDRs) from “A” to “A+”.
In the Financial Solutions business area, SCOR Global Life has built a recognized position on capital and solvency management with important transactions in Europe, the US and Asia. SCOR Global Life underwrote new deals in 2014 in the US, Asia and Latin America. At the beginning of the year, SCOR Global Life successfully monetized a portfolio (Value of In-Force) belonging to Mediterráneo Vida, a Spanish insurance company fully owned by Banco Sabadell. This transaction, effective 1 January 2014, reinsures a portfolio of life policies, covering mortality and permanent disability risks, written by Mediterráneo Vida up to 31 December 2013.
Each of the Hubs has local, regional (1) and Group responsibilities, with the heads of each Hub reporting to the Group Chief Operating Officer. Each Hub typically includes the following functions: a Legal and Compliance Officer, a Head of Information Systems, a Head of Finance, a Head of Human Resources and a Risk Manager. This organization enables:  SCOR’s operational structures and support functions to be optimized by creating service entities in charge of managing pooled resources, including information systems, human resources, legal and others in the Group’s main locations;  several Group functions to be carried out in a geographical location other than Paris in order to benefit fully from the competencies within different locations. The Hubs are not responsible for underwriting or claims management. The local underwriting and claims management teams have direct reporting lines within the respective Non-Life and Life divisions. Hub shared service costs are allocated to the divisions based on a headcount allocation key; and
Net investment income (1) (2) for the year ended 31 December 2014 amounted to EUR 576 million as compared to EUR 509 million and EUR 564 million for the years ended 31 December 2013 and 2012, respectively. The net return on investments in 2014 was 2.5% compared to 2.4% in 2013 and 2.7% in 2012. The increase in investment income from 2013 to 2014 is mainly due to SCOR Global Investments initiatives, increased portfolio size due to Generali U.S. acquisition, slightly higher realized gains on fixed income and lower investment impairments. With 2014 markets characterized by high volatility and erratic behavior, SCOR decided to continue its rollover strategy with a relatively short duration fixed income portfolio and a high liquidity level. The net return on invested assets in 2014 was 2.9% as compared to 2.6% in 2013 and 2.9% in 2012 (3).
(3) The return on invested assets’ calculation method was adjusted to exclude revenues from Life reinsurance contracts that do no transfer significant reinsurance risk (presented in the investment income line of the 2013 Registration Document). The ratios previously reported in the 2013 Registration Document were 2.6% and 3.0% for the years ended December 31, 2013 and 2012, respectively.
On 1 October 2013 SCOR finalized the acquisition of 100% of Generali U.S. Holdings, Inc. (“Generali U.S.”), the holding company of Generali's U.S. life reinsurance operations. The combination of SCOR Global Life Americas and Generali U.S. created the market leader in the US life reinsurance market. SCOR immediately started a project to integrate the business and the operations of the acquired entities into its existing Americas structures.
In 2014, SCOR Global Life’s gross written premiums increased at constant and current exchange rates by 18.1% to EUR 6,381 million compared to EUR 5,405 million in 2013 (EUR 4,864 million in 2012).
For a detailed calculation of book value per share, refer to the table below: In EUR million 2014 2013 2012 Group shareholders' equity 5,694 4,940 4,800
Shares issued as at 31 December 192,691,479 192,757,911 192,384,219 Treasury shares as at 31 December (6,593,132) (7,343,237) (8,930,686) Basic number of shares 186,098,347 185,414,674 183,453,533 BASIC BOOK VALUE PER SHARE 30.60 26.64 26.16
(1) Pro-rata of 50%: linear acquisition throughout the period in 2012 and 2014, Generali U.S. impact pro-rata temporis in 2013 (2) Considers time weighted transactions based on transactions dates (3) The ROE calculation method was adjusted to take into account material foreign exchange rates movements that do not occur evenly through the reporting period. A daily weighted average is applied for the currency or currencies that experienced such movements and simple weighted average is applied for the other currencies. The ratios previously reported in the 2013 Registration document were 11.5% and 9.1% for 2013 and 2012, respectively.
For a detailed calculation of the life technical margin refer to the table below: As at 31 December
Longevity As compared to Protection business, Longevity is still a relatively small line for the life reinsurance market. SCOR Global Life announced its entry into the Longevity business with the finalization of its first transaction in November 2011. SCOR Global Life has since completed several transactions in the UK and the rest of Europe and has been actively participating in the North American market.
Out of France: Director and ViceChairman: - Bipiemme Assicurazoni S.p.A. - Bipiemme Vita S.p.A.
Out of France: Director: - Savills plc* (UK) - Ballarpur International Graphic Paper Holdings - CDC Group Plc (and Chairman of the Development Committee) (UK)
Thierry Derez, a French citizen, was a lawyer practicing in Paris, before joining the insurance group AM-GMF in 1995, first as Deputy Chief Executive Officer of GMF and then as Chairman and Chief Executive Officer of Assurances Mutuelles de France and of GMF in 2001 and as Chairman and Chief Executive Officer of the group AZUR-GMF in September 2003. He is currently Chairman of the Board of Directors of Assurances Mutuelles de France, of GMF Assurances and Chairman and Chief Executive Officer of Garantie Mutuelle des Fonctionnaires (GMF). He was appointed as director of MAAF Assurances in November 2004, became its Chairman and Chief Executive Officer in June 2005 and Chairman of MAAF Assurances SA. Since June 2007, he has been the Chairman of the Board of Directors of MMA IARD Assurances Mutuelles, MMA IARD, MMA Vie Assurances Mutuelles, MMA Vie, MMA Coopérations (which became Covéa Coopérations in 2012). Since 2008, he has been Chairman and Chief Executive Officer of Covéa.
The following table sets forth the executive officers who comprise the Executive Committee at the date of the Reference Document or who comprised the Executive Committee in 2014, their ages, their positions with SCOR and the first dates as at which they served as executive officers.
2004 Chairman of the Board of Directors: SCOR Reinsurance Asia-Pacific Pte Ltd (Singapore)
The Shareholders’ Meeting of the Company held on 6 May 2014 resolved that the annual maximum aggregate amount of Directors fees shall not exceed EUR 1,152,000. Upon the proposal of the Compensation and Nomination Committee held on 10 February 2011 and within the limit of this amount, the meeting of the Board of Directors held on 7 March 2011 sets the terms and conditions of the allocation to encourage the attendance of the Directors. It was decided to allocate the directors fees, which are payable to each director, partly in one fixed sum of EUR 28,000 on a quarterly basis payable in fourths and partly based on the effective presence of the relevant directors at the meetings of the Board of Directors and at its Committees, in an amount equal to EUR 2,000 per Board or per Committee meeting at which they are present, except for the Chairman of the Audit Committee who receives an amount equal to EUR 4,000 as special fees for his function. The payment of the directors’ fees is made at the end of each quarter. Moreover, the individual independent members of the Board received on 19 January 2015, for 2014, the single sum of EUR 10,000 in Company’s shares, that the director commits to keep until the end of his/her appointment. The paid amounts have been properly used to that effect.
Valuation of shares as per method used in the consolidated accounts In EUR
January 2014 (5) This amount includes a payroll adjustment of CHF 12,000 (EUR 9,963) for the years 2011 and 2010 (6) Deputy CEO of SCOR Global Life SE since 10 November 2014. The compensation is paid in GBP, the exchange rate used is: 1 EUR = 0,7903 GBP
Directors and Officers Number of shares as at 31/12/2014 Mr. Denis Kessler 821,040 Mr. Gérard Andreck 2,185 Mr. Andreas Brandstetter 400 Mr. Thierry Derez 400 Mr. Peter Eckert 1,991 Mr. Charles Gave 1,565 Mr. Kevin J. Knoer 5,700 Malakoff Médéric Group, represented by Guillaume Sarkozy 5,875,506 Mrs. Guylaine Saucier 1,565 Mrs. Kory Sorenson 1,000 Mr. Claude Tendil 3,675 Mr. Daniel Valot 6,343 Mrs. Fields Wicker-Miurin 400 Total 6,721,770
The conditions of the plan are similar to those previously settled on by SCOR (notably with regards to the presence condition), with a vesting period of two years for the tax residents in France (and an obligation to retain shares for a period of two years after the end of the vesting period), and of four years for beneficiaries not tax resident in France.
Requirement of presence at the company as at shares included No holding period 24 190,000
Source of shares to be allocated included No holding period 706 2,100
In March 2015, SCOR has been informed of the signing of a purchase agreement by Sompo Japan Nipponkoa Holdings, Inc. (SOMPO), a Japanese insurance company, concerning the entire holding of Patinex AG in SCOR (i.e. 7.78% of SCOR’s capital and 8.06% of its voting rights). SOMPO has declared that it wishes to increase this holding to 15%, subject to the receipt of the required regulatory approvals. Distribution of capital (number of shares, % of capital and voting rights) – (i) shareholders having more than 2.5% of the registered capital and/or voting rights and (ii) shareholders members of the Board of Directors (on the basis of a study of identifiable share bearers ("Titres aux Porteurs Identifiables" – "TPI") conducted by the Company as at 31 December 2013): As at 31 December 2013 Number of shares % of capital % voting rights .(1) Patinex AG 15,000,000 7.78% 8.09% Alecta Kapitalförvaltning AB 8,000,000 4.15% 4.31% Generali Investments France S.A. 5,903,651 3.06% 3.18% Groupe Malakoff(2) 5,875,506 3.05% 3.17% Treasury Shares 7,343,237 3.81% - Employees(3) 7,879,839 4.09% 4.25% Others 142,755,678 74.06% 77.00% TOTAL 192,757,911 100.00% 100.00%
Distribution of capital (number of shares, % of capital and voting rights) – (i) shareholders having more than 2.5% of the registered capital and/or voting rights and (ii) shareholders members of the Board of Directors (on the basis of a study of identifiable share bearers ("Titres aux Porteurs Identifiables" – "TPI") conducted by the Company as at 31 December 2012): As at 31 December 2012 Number of share % of capital % voting rights .(1) Patinex AG 15,000,000 7.80% 8.18% Alecta Kapitalförvaltning AB 8,690,000 4.52% 4.74% Generali Investments France S.A. 5,903,700 3.07% 3.22% Groupe Malakoff (2) 5,875,500 3.05% 3.20% BNP Paribas Asset Management (France) 4,049,000 2.10% 2.21% BNP Paribas Investment Partners Belgium SA 3,691,300 1.92% 2.01% Treasury Shares 8,930,686 4.64% - Employees (3) 6,189,679 3.22% 3.37% Others 134,054,354 69,68% 73,07% TOTAL 192,384,219 100.00% 100.00%
To SCOR’s knowledge, the percentage of share capital and voting rights held by its Directors and Officers was 3.83% as at 31 December 2014 (31 December 2013: 3.99%).
On 24 November 2014, Amundi Asset Management declared that it had fallen below the registered threshold of 2.5% of the capital and voting rights in SCOR and that it held 4,696,943 shares or 2.43% of the capital and 4,696,943 voting rights or 2.43% of the voting rights in SCOR.
Mr. Denis Kessler as Chairman and Chief Executive Officer of SCOR SE. Mr. Patrick Thourot as member of the Board of Directors of SCOR SE (Mr. Patrick Thourot ceased his duties as member of the Board of Directors of SCOR SE on 15 April 2009).
On 30 October 2012, the Board of Directors of SCOR SE authorized the signature by SCOR SE of the amendment #4 to the Facility Agreement concluded on 23 December 2008 with BNP Paribas in order to subrogate SCOR Global Life Reinsurance Ireland PLC to the rights and obligations of SCOR International Reinsurance Ireland PLC resulting from the merger of these two companies taking effect on 1 January 2013. Amendment #4 to the Facility Agreement was signed on 20 December 2012.
Mutual funds and real estate entities are fully consolidated or recorded using the equity method in accordance with the afore-mentioned rules. The non-controlling interests in fully consolidated mutual funds are presented in other liabilities as the third party holders have an unconditional right to sell their holdings to SCOR.
Where the functional currency of an entity is not the same as the reporting currency used to present the Group’s consolidated financial statements, assets and liabilities of the entity are translated using the exchange rate at the balance sheet date and the statement of income is translated using the average exchange rate for the period. Translation differences are recognized directly in shareholders’ equity. Refer to Note 1 (C) for the foreign exchange rates used for this purpose. Transactions denominated in foreign currencies (currencies other than the functional currency) are translated into the functional currency at the rate of exchange at the date of the transaction (for practical purposes, an average rate is used). These rates may differ from the rates used to translate functional currency into the reporting currency as mentioned above. At each period end, the entity must translate the items on its balance sheet which are denominated in a foreign currency into the functional currency, using the following procedures:  monetary items and non-monetary items classified as fair value through income are translated at end of period exchange rates and the resulting gains and losses are recorded in the statement of income;
 a duration of decline of more than 24 months. For certain investments, in addition to the above impairment guidelines, SCOR takes into consideration other important factors such as:  the fact that the asset is specifically excluded from any actively traded portfolio;  its ability and intent to continue to hold the investment for a significantly longer period than a normal investment;  its business relationship with the investee; and
 additional disclosure if they relate to conditions which did not exist at the balance sheet date, and if relevant and material.
Assumed and ceded reinsurance transactions are those contracts that transfer significant reinsurance risk at the inception of the contract. Reinsurance risk is transferred when the Group agrees to compensate a cedent if a specified uncertain future event (other than a change in financial variable) adversely affects the cedent. Any contracts not meeting the definition of a reinsurance contract under IFRS 4 - Insurance Contracts, are classified as investment contracts or derivative contracts as appropriate. Assumed and ceded reinsurance transactions that do not transfer significant reinsurance risk are recognized in the accounts in accordance with IAS 39 - Financial Instruments: Recognition and Measurement, which means that amounts collected are not recognized as premiums, reserves and deferred acquisition expenses recorded as assets or liabilities on the balance sheet but are reclassified as “financial contract liabilities” and “financial contract assets”. These deposits are assessed only on the basis of financial flows and no longer on the basis of estimated ultimate results as required by accounting principles applicable to insurance transactions. Income from these transactions is equal to SCOR’s net fee or spread and is recorded under “other operating income” on the statement of income.
Reinsurance reserves are presented gross excluding shares retroceded to SCOR’s reinsurers and measured on the level of individual reinsurance contracts or homogeneous segments of contracts. Retroceded reserves are estimated under the same methods and assumptions and presented as assets.
For the purpose of presenting pro forma information, acquisition related debt interest expenses that have been incurred by SCOR to finance the Generali U.S. acquisition have been assumed to be recorded beginning on 1 January 2013. They amounted to EUR (10) million.
On 29 May 2013, SCOR acquired 59.9% of the capital and the voting rights of MRM S.A., a French Real Estate Investment Trust holding a mixed portfolio of retail properties and offices. With this investment, SCOR is strengthening and diversifying its real estate investment portfolio. The acquisition has been made with a view to refocusing MRM S.A.’s activity towards a portfolio of similar retail assets.
In EUR million Fixed assets Gross value at 31 December 2012 612 Foreign exchange rate movements (5) Additions 26 Reclassification - Disposal (2) Change in scope of consolidation 3 Other (1) Gross value at 31 December 2013 633 Foreign exchange rate movements 9 Additions 17 Reclassification - Disposal (14) Change in scope of consolidation - Other - Gross value at 31 December 2014 645 Cumulative depreciation and impairment at 31 December 2012 (72) Depreciation for the period (19) Impairment for the period - Reclassification - Disposal 2 Cumulative depreciation and impairment at 31 December 2013 (89) Depreciation for the period (23) Impairment for the period - Reclassification - Disposal 9 Cumulative depreciation and impairment at 31 December 2014 (103) Carrying value as at 31 December 2012 540 Carrying value as at 31 December 2013 544 Carrying value as at 31 December 2014 542
(2013: EUR 37 million). Mutual funds that the Group manages and controls, which are also open to external clients are either fully consolidated (as described in Note 1 (C) – Basis of consolidation) or consolidated in accordance with a “short cut method” and treated as investments at fair value through income when certain conditions are met. Under this method, the assets under management for third parties are excluded from SCOR’s consolidated balance sheet.
The Group analyzes its unrealized gains / (losses) on equity securities as follows (amounts are stated net of impairment): In EUR million
Short-term investments are carried at fair value for EUR 93 million and EUR 606 million at 31 December 2014 and 2013 respectively. Other loans and receivables are carried at cost which approximates their fair value at 31 December 2014 and 2013.
In EUR million 2014 2013 2014 2013 2014 2013 2014 2013 Atlas VI 2 37 - - (35) (43) - - Atlas IX 17 22 - - (5) (2) - - Interest rate swaps - - 30 26 - 1 (4) 9 Cross currency swaps 16 3 - - 17 (5) (4) (1) Other 16 32 48 11 (29) 16 (17) 4 TOTAL 51 94 78 37 (52) (33) (25) 12
Maturity Net book value Fair value Net book value Fair value Subordinated debt
In EUR million 2014 2013 Gross claims reserves and claims estimates as at 1 January 10,691 10,857 Ceded claims reserves and claims estimates as at 1 January (629) (690) Net claims reserves and claims estimates as at 1 January 10,062 10,167 Revaluation of opening balance at current year end exchange rates 397 (386) Net claims reserves and claims estimates as at 1 January – revalued 10,459 9,781 Net claims incurred relating to the current calendar year 1,729 1,803 Net claims incurred for prior calendar years 892 927 Total net claims incurred 2,621 2,730 Net claims payments for the current calendar year (75) (74) Net claims payments for prior calendar years (2,530) (2,369) Total net claims payments (2,605) (2,443) Reclassifications 3 - Effect of other foreign exchange rate movements (9) (6) Net claim reserves and claims estimates as at 31 December 10,469 10,062 Ceded claims reserves and claims estimates as at 31 December (619) (629) Gross claims reserves and claims estimates as at 31 December 11,088 10,691
(2) The total collateral from retrocessionaires is related to the contract liabilities recorded in the balance sheet and also to potential losses that have not yet occurred.
Asset ceiling limitation - - - - 1 1 - - 4 4 - - Accrued / (prepaid) 149 101 19 29 118 78 18 22 113 73 22 18 Analysis of funded status Funded or partially funded obligation as at 31 December
In EUR million 2014 2013 2012 2014 2013 2012 Deferred tax liabilities Deferred acquisition costs (102) (87) (37) (14) 38 (24) Unrealized revaluations and temporary differences on investments (170) (127) (117) 16 (44) (5) Equalization reserves (118) (109) (101) (9) (11) (9) Value of business acquired (274) (264) (190) 25 (17) 7 Financial instruments (36) (13) (22) (7) 5 (20) Claims reserves (124) (96) (110) (43) 12 (14) Other temporary differences (103) (134) (179) (2) (13) 10 Elimination of internal capital gains - - (7) - - (13) TOTAL DEFERRED TAX LIABILITIES (927) (830) (763) (34) (30) (68) Deferred tax assets Unrealized revaluations and temporary differences on investments 51 36 44 25 (34) 4 Retirement scheme 28 17 6 1 4 (6) Net operating losses for carry forward 671 651 639 20 12 (7) Financial instruments 40 25 5 9 7 (2) Claims reserves 180 116 59 14 27 5 Shadow accounting 10 - 10 - - - Other temporary differences 384 432 350 (31) 64 104 Elimination of internal capital gains - - 8 - - - TOTAL DEFERRED TAX ASSETS 1,364 1,277 1,121 38 80 98
As at 31 December 2014, the operating tax losses available for carry-forward expire as follows: In EUR million Available tax losses carried forward
(1) Statutory audit and certification of local and consolidated financial statements (2) Other specific audit assignment related to statutory audit (3) Other services, rendered by the Auditors to the fully-consolidated companies and due diligence
No retirement benefits (or commitments) have been paid to key management personnel during the past three years.
 Where his departure is imposed or a dismissal resulting from the event of a hostile takeover bid leading to a change in control situation of the SCOR group, the Chairman and Chief Executive Officer will benefit from a cash payment equal to the amount of fixed and variable compensations paid to him by the Group for the two financial years prior to his departure. This payment is subject to the satisfaction of the performance condition (C_n) as defined below for at least two out of the three years preceding the date of his departure. Furthermore, the performance shares and stock options which have been granted prior to his departure will be subject, in their entirety, only to performance conditions of each plan as approved by the Board of Directors at the time of the grant. The criteria of the conditions of performance are available in the management report of the Board of Directors.
In addition, the Group could also be exposed to so-called emerging risks, which are risks considered to be new or subject to constant evolution, and thus particularly uncertain in their impact. Examples of such risks are electromagnetic fields, nanotechnology, cyber-risks, climate change, solar storms and anti -microbial resistance.
SCOR’s Credit & Surety business does not cover either credit default swaps (CDS) or real estate loans, notably in the US, nor is it exposed to the various US credit “monoline insurers”.
Insurance receivables 3,922 237 63 10 49 4,281 Taxes receivables 121 2 6 - - 129 Other assets 190 - - - - 190 Cash and cash equivalents 1,514 - - - - 1,514 TOTAL 28,298 239 69 10 49 28,665
Financial assets have been categorized within the above aging analysis according to their original due date. The due date for each of these instruments may vary depending on the nature of the asset. Reinsurance assets and insurance receivables business credit terms are typically based on normal terms of trade, as specified within contracts. Insurance receivables include estimates, which are presented as current. The available-for-sale investments and fair value through
Refer to section 4.3 – Liquidity risk, for a detailed description of SCOR’s liquidity requirements and related risks. Information on the Group’s liquid assets is included in Note 6 – Insurance Business Investments. With respect to full collateralization for certain letters of credit SCOR makes best efforts to limit collateral requirements related to the Group’s financial strength rating into its letters of credit facilities. Additional information on SCOR’s letter of credit facilities and on the timing of repayments is included in Note 25 – Commitments Received and Granted. Additional information on the timing of repayments is included in this note.
Currency risk is the risk that the fair value or future cash flows of a financial instrument or balance sheet amount will fluctuate because of changes in foreign exchange rates. For a detailed description of currency transaction and translation risks see section 4.2.4 SCOR is Exposed to Foreign Currency Exchange Rate Fluctuations.
There are no material amounts of discounted reserves in the Non-Life portfolio which would result in interest sensitivities. Additionally, for lines of business where there are interest sensitivities at the level of the ceding company and for which no direct information on these sensitivities is submitted to SCOR level (e.g., the bodily injury portion of automobile), SCOR considers that the information provided by the ceding company is not necessarily representative of the evolution in interest rates. The IBNR calculations performed by SCOR using methods other than the loss ratio method do not represent a material portion of the recorded reserves and therefore the sensitivity is not considered material.
SCOR is also exposed to equity price risk. A widespread and sustained decline in the equity markets could result in an impairment of its equity portfolio. Such an impairment would affect its net income. The Group’s exposure to the equity market results from direct purchases or investments in convex equity strategies such as convertible bonds or mean variance strategies, and through certain (re)insurance products including GMDB business. See “Section 4.1.4 – SCOR could be subject to increased reserves from business that it does not actively underwrite.”
SCOR has a balance sheet hedging approach whereby there is an objective to match monetary assets and liabilities in each foreign currency so that the fluctuation in the exchange rate has no material impact to the reported net income. The policy is to closely monitor the net monetary currency positions and, where appropriate, execute either cash arbitrages or forward hedges.
Comisión Nacional de la Competencia: On 12 November 2009, and following an administrative sanctioning procedure, the Spanish competition authority (Comisión Nacional de la Competencia, or the “CNC”) sanctioned SCOR Global P&C SE Ibérica Sucursal, a branch of SCOR Global P&C, and a number of other insurance and reinsurance companies for an alleged infringement of Article 1 of Law 15/2007, of 3 July 2007, on Competition (the “Competition Act” which prohibits agreements and concerted practices that may have as an object or effect the restriction of competition in the market). The infraction would have consisted in an agreement to set the minimum price and other commercial conditions applied to customers in the market for decennial insurance for construction in Spain. Pursuant to such decision, SCOR was required to pay a fine of EUR 18.6 million. Other insurers and reinsurers were also fined in relation to the same matter.
Litigation matters give rise to an accrual when they meet the recognition requirements of a provision under IAS 37 provision, contingent liabilities and contingent assets. See note 15 – Contingency reserves for the detail of accruals booked. In certain instances, in accordance with IAS 37.92, some required information, in particular the amount of accruals, is not disclosed as they are expected to prejudice seriously the position of SCOR in a dispute with other parties.
These assessments were made as part of our audit of the consolidated financial statements taken as a whole and therefore contributed to the opinion we formed which is expressed in the first part of this report.
According to the decisions of the Extraordinary Shareholders General Meetings of the Company dated (i) 15 May 2003 in its second resolution, (ii) 18 May 2004, in its fourth resolution, (iii) 31 May 2005 in its sixth resolution, (iv) 16 May 2006 in its fifth resolution, (v) 24 May 2007 in its 21st resolution, (vi) 7 May 2008 in its 19th resolution and (vii) 15 April 2009 in its 22nd resolution to authorize the Board to grant to officers and employees options to subscribe for or purchase of shares and to acknowledge, if necessary, at its first meeting following the year end of the Company, the number and amount of new shares issued during that period following the exercise of options, the Board of Directors of SCOR SE acknowledged, on 25 April 2013, the capital increase of EUR 2,479,072.23 by creation of 314,724 shares with a nominal value of EUR 7.8769723 each.
According to the decisions of the Extraordinary Shareholders General Meetings of the Company dated (i) 18 May 2004, in its fourth resolution, (ii) 31 May 2005 in its sixth resolution, (iii) 16 May 2006 in its fifth resolution, (iv) 24 May 2007 in its 21st resolution, (v) 7 May 2008 in its 19th resolution and (vi) 15 April 2009 in its 22nd resolution to authorize the Board to grant to officers and employees options to subscribe for or purchase of shares and to acknowledge, if necessary, at its first meeting following the year end of the Company, the number and amount of new shares issued during that period following the exercise of options, the Board of Directors of SCOR SE acknowledged, on 4 March 2014, the capital increase of EUR 6,123,983.62 by creation of 777,454 shares with a nominal value of EUR 7.8769723 each. According to the decision of the Shareholders General Meeting of the Company dated 25 April 2013 in its 21st resolution, the Board of Directors of the Company decided on 4 March 2014 the share capital reduction of EUR 6,123,983.62 by cancellation of 777,454 treasury shares to reduce the share capital from EUR 1,518,348,725,55 to EUR 1,512,224,741.93, divided by 191,980,457 ordinary shares. The reason for such decision of capital reduction is to avoid any dilutive effect of the exercise of stock options upon the share capital.
Administrative and Management bodies;  Section 17.3 – Plans providing employee participation in Company;  Appendix A – 1.5 – Notes to the corporate financial statements, Note 12 – Stock Options;  Appendix A – 1.5 – Notes to the corporate financial statements, Note 5 – Shareholders’ Equity;  Section 20.1.6 – Notes to the consolidated financial statements, Note 13 - Information on share capital, capital management, regulatory framework and shareholders' equity;  Section 20.1.6 – Notes to the consolidated financial statements, Note 17 – Provisions for employee benefits;  Section 20.1.6 – Notes to the consolidated financial statements, Note 18 – Stock options and share awards;  Section 21.1.1 – Amount of issued capital and additional information, and;  Section 21.1.4 – Amount of convertible securities, exchangeable securities or securities with subscription warrants.
minimum number of shares needed to meet the requirements of article 1832 of the French civil code or articles L. 225-1 and L. 226-1 of the French commercial code.
Under current French law, there is no limitation on the right of non-resident individuals or entities governed by foreign law to own securities of a French reinsurance company or to exercise the voting rights attached to such securities. Under current French foreign direct investment regulations, a notice (“déclaration administrative”) must be filed, however, with the French Ministry of the Economy, including in connection with (i) the acquisition by any non-resident individual or entity governed by foreign law acting alone or in concert if such acquisition results in the ownership by the acquirer(s) of more than 33.33% of the share capital or voting rights of a French reinsurance company or (ii) the acquisition by a French company in respect of which more than 33.33% of its shares or its voting rights are held by one or more nonresident individuals or one or more entities governed by foreign law if such acquisition results in the ownership by the foreign controlled French company of more than 33.33% of the share capital or voting rights of a French reinsurance company.
Company 11625 Rosewood Street -Suite # 300 - Leawood, KS -
Rate swaps - - - - Rate and currency swaps (cross-currency swaps) - 1,011 1,011 995 Foreign currency forward purchases 151 344 495 329 Letters of credit - 461 461 580 Endorsements and sureties - - - - Parental guarantees 2,260 - 2,260 -
In May 2014, SCOR SE set up the company SCOR BRAZIL RESSEGUROS SA in which it holds 100% of shares for the amount of EUR 33.5 million. During 2014, SCOR SE acquired 100% of Editions Belin and a majority interest in P.U.F.
The balance includes EUR 31 million accrued interests (as at 31 December 2013: EUR 28 million) Long-term financial debt includes: (a) Other capital base
The maturity of debt at 31 December 2014 is as follows: In EUR million Less than 1 year 1-5 years +5 years Total
In EUR million 2014 2013 Commissions - assumed 373 350 Commissions - retroceded - - TOTAL 373 350
Cross-currency swaps 1,011 995 973 973 Currency forward purchases/sales 495 329 490 333 TOTAL 1,506 1,324 1,463 1,306
A table displaying the fees allocated individually to each Director can be found in Section 15.1.1 of the Registration Document.
Moreover, during its meeting held on 4 March 2015, the Board of Directors of the Company limited the powers of the Chairman and Chief Executive Officer by stipulating in the Board’s Internal Charter the need for prior Board approval for the following operations: - Organic growth investments and major internal structuring operations; - Any significant operation falling outside of the strategy announced by the Group; - Any project regarding a sale or acquisition, merger or asset contribution higher than one hundred million euros.
Following the authorization by the Shareholders' Meeting on 25 April 2013 in its twenty-second resolution, the Company's Board of Directors of 4 March 2014, on the proposal of the Compensation and Nominations Committee of 25 February 2014, decided to allocate on 20 March 2014 stock options to the Chairman and Chief Executive Officer, to the other members of the Executive Committee and to the highest levels of Partners (Executive Global Partners and Senior Global Partners). The Company's Board of Directors of 4 March 2014, on the proposal of the Compensation and Nominations Committee of 25 February 2014, decided to allocate 100,000 stock options to the Chairman and Chief Executive Officer. These options are subjected to 100% performance conditions. The performance conditions will be deemed satisfied if, in addition to the mandatory condition (5) below, at least three out of the four other conditions listed below are met: (1) The solvency ratio at the end of each quarter must not be lower than 150% for the years 2014 and 2015; (2) SCOR Global P&C’s combined ratio must be less than 100% on average in 2014 and 2015; (3) SCOR Global Life’s technical margin must be higher than or equal to 3% on average in 2014 and 2015; (4) The SCOR Group’s ROE for the financial years ending 31 December 2014 and 31 December 2015 must be higher than 1,000 points above the risk-free rate on average. (5) Absolute compliance with the Group’s ethical principles as described in the Code of Conduct of the SCOR Group. These principles, which are designed to protect the interests of clients, are the pillars of SCOR’s sustainable development and therefore of its performance.
Section 17 – Employees 17.3 – Plans providing employee participation in Company 17.3.1 – Stock option plans 17.3.2 – Free share allocation plans
As the Company representative, the Chairman and Chief Executive Officer is granted with a company car with a shared driver. The insurance, maintenance, fuel and all costs related to the driver are paid by the Company. Moreover, the Chairman and Chief Executive Officer benefits from a health insurance policy under the terms of a contract dated 16 September 1988. Moreover, in accordance with the decision taken by the Board of Directors on 21 March 2006, repeated on 12 December 2008, 4 May 2011 and 30 July 2014, the Chairman and Chief Executive Officer benefits from specific life insurance to cover the risks inherent in the duties of Chairman and Chief Executive Officer of the Company, in an amount equivalent to three years of fixed and variable compensation; the insurance is obtained by the Company.
II. Internal control and risk management procedures This report was prepared with the contribution of the Group Risk Control Department, the risk management departments of the operating companies, the Group Internal Audit Department, the General Secretary’s Department and the Finance Department. It was presented to the Audit Committee on 3 March 2015 and approved by the Board of Directors of SCOR SE (“the Company”) on 4 March 2015.
Fu nc tio na l d ep ar tm en ts
The Group Risk Management Department is supported in these tasks by the departments in charge of Risk Management at SCOR Global P&C, SCOR Global Life and SCOR Global Investments. In addition the Hub risk managers are involved in these tasks at a local level. Compliance to local regulations and constraints is ensured by Hub compliance officers.
 Business opportunities going beyond the stipulations of the guidelines thus defined are subject to special referral procedures at two key levels: (1) by the Underwriting Management and Retrocession Department; and if need be by the Group Legal Department, (2) and for cases which may have a significant impact on the balance sheet (thresholds and/or conditions defined in a procedure or specific guidelines) by the Group Risk Management Department.
The Group’s central functions, different from the finance and communication functions dealt with in parts (D) and (F) hereafter, comprise Risk Management, Treasury, Budget & Forecasting and functions relating to legal and tax issues, information systems, human resources and general service departments. These include:  The Group Risk Management Department’s primary focus is to develop and manage ERM mechanisms, promote ERM concepts throughout the Group and perform a second-level control over reinsurance underwriting as mentioned above.
 The budgetary control system for general expenses is organized and managed by the Group Cost Control & Budget Department.
Concerning SCOR Global P&C: The calculation of technical reserves (including IBNR - Incurred But Not Reported) having a significant impact on the balance sheet and income statement, is largely based on contractual and accounting data, the relevance of which is verified upstream. This calculation of technical reserves inventories is subject to the following successive controls:  by the actuaries in charge of reserving through control reports for which the proper implementation is verified by the Actuarial Department of the Division and of the Group;  by the Chief Actuary, particularly for methods, tools and results; Concerning SCOR Global Life: The recognition and measurement of technical reserves (in particular mathematical reserves) and related intangible assets and related deferred acquisition costs are largely based on contractual and settlement data and subject to the following controls:  the reinsurance treaties are either reviewed individually or are pooled within an affiliation treaty based on certain criteria defined in advance;  the treaties are then subject to reserving estimates, which are reviewed at each quarterly closing either by the actuaries or at meetings attended by underwriters, technical assistants and actuaries;  a quarterly liability adequacy test performed for portfolios that are subject to broadly similar risks and managed together as a single portfolio.
On the basis of our work, we have no matters to report on the information relating to the company's internal control and risk management procedures relating to the preparation and processing of the accounting and financial information contained in the report prepared by the Chairman of the Board of Directors in accordance with article L. 225-37 of the French Commercial Code “code de commerce”.
DERIVATIVE FINANCIAL INSTRUMENT A financial instrument or other contract with the three following characteristics: a) value changes in response to a change in the underlying (e.g. interest rate, price, foreign exchange rate); b) requires no or minimal net investment, and c) is settled at a future date.
UNIT-LINKED CONTRACT Life insurance contract or capitalization certificate for which the amount guaranteed and bonus amounts are expressed, not in a specific Euro amount, but by reference to one or more units of account such as mutual fund units or real estate investment trust units. Contractual guarantees are directly linked to upward or downward variations in a security listed on a regulated market or in the value of a real estate asset.
Pursuant to the provisions of Article L. 441-6-1 of the French Commercial Code, specific situations excepted (as, notably, litigations on invoices received), the suppliers’ invoices are paid upon receipt or 30-days from the end of the month.
(3) SCOR Global Life SE controls 100% of the capital of ReMark. Due to its specific activity, its business model and its organization, ReMark’s human resources are managed independently from the Group.
Permanent Contract 2,380 2,286 2,134 Fixed-Term Contract 37 29 16 TOTAL 2,417 2,315 2,150 Trainees (1) 74 78 66 TOTAL including trainees 2,491 2,393 2,216
Less than 31 years 213 206 192 31-40 years 559 527 500 41-50 years 512 480 447 51-60 years 349 348 340 More than 60 years 59 47 43 TOTAL 1,692 1,608 1,522
Due to its geographical locations and applicable local laws, SCOR complies with all the provisions of the International Organization. The themes related to "Elimination of discrimination in respect of employment and occupation" and "Freedom of association and the effective recognition of the right to collective bargaining" are especially described in the section 3.3.5 " Diversity and equal opportunities" and in the section 3.3.2 "Social Relations". The social climate within the Group can be considered as good. A good social dialogue exists in each hub and at the European level.
Most of the locations surveyed in 2014 reported on "paper waste" and to a lesser extent on other waste (IT & electronic, bulbs, toner, batteries, others).
Main steps taken at Group level to improve energy efficiency are described in the section “Group’s environmental policy: general organization and main areas”. These global initiatives are supplemented by local initiatives, in particular on the premises for which local teams have undergone a process of certification.
In anticipation of the next European regulation, SCOR has appointed a Data Protection Officer (DPO), in charge of personal data protection. The Group’s four Societas Europae (SCOR SE, SCOR Global P&C SE, SCOR Global Life SE and SCOR Global Investments SE), have designated this DPO as an expert correspondent, both for the management team of SCOR in terms of its contact with the French Data Protection Authority (Commission nationale de l’informatique et des libertés or CNIL) and for those responsible for implementing data processing within the Group. The DPO independently monitors compliance with the law and is responsible:  for updating a list of processed data and the accessibility of this list;  for spreading a culture of data protection;  for providing information to, advising and making recommendations to those responsible for data processing;  for sounding any alarms as necessary;  for mediation and coordination in terms of informing people of their rights regarding access, rectification and opposition.
(2 ) Decree of 13 May 2013 establishing the methodology according to which the independent third party conducts its mission
(3) ISAE 3000 – Assurance engagements other than audits or reviews of historical information