* The net combined ratio is calculated by taking the sum of incurred losses, commissions and management expenses net of retrocession, divided by earned premiums net of retrocession. The combined ratio calculation has been refined in 2017 to exclude some immaterial non-technical items that were previously included. Considering their potential growth, these items have been excluded to ensure they do not distort the combined ratio in the future. The impact on the previously reported ratio is +0.26%pts and +0.22%pts as at December 31, 2016 and December 31, 2015, respectively
The Group’s divisions’ business activities of insurance, reinsurance and asset management are subject to comprehensive regulation and supervision in each of the jurisdictions where the Group operates. Given that the Group is headquartered in Paris (France), this supervision is based, to a significant extent, on European Union directives and on the French regulatory system. The Group’s principal regulators in France are the financial markets authority (Autorité des marchés financiers – AMF), and the French insurance and reinsurance regulator (Autorité de contrôle prudentiel et de résolution – ACPR). While the extent and nature of regulation varies from country to country, most jurisdictions in which SCOR’s insurance and reinsurance subsidiaries operate have laws and regulations governing solvency standards, levels of reserves, permitted types and concentrations of investments, and business conduct to be respected by insurance and reinsurance companies. The supervisory authorities with jurisdiction over the Group’s operations may conduct regular or unexpected examinations of the insurers’/reinsurers’ or asset managers’ operations and accounts and request specific information from the insurer or reinsurer. Certain jurisdictions also require registration and periodic reporting by holding companies that control a licensed insurer or reinsurer. This holding company legislation typically requires periodic disclosure concerning the corporate entity that controls the licensed insurer and other affiliated companies, including prior approval of transactions between the insurer, the reinsurer and other affiliated companies such as intragroup asset transfers and dividend payments by the authorized insurer or reinsurer. In general, these regulations are designed to protect the interests of insureds rather than shareholders.
Following the 2011 acquisition of the mortality reinsurance business of Transamerica Re, SCOR Global Life reorganized its activities in the US and merged SCOR Global Life Reinsurance Company of America into SCOR Global Life U.S. Reinsurance Company. SCOR Global Life U.S. Reinsurance Company was renamed SCOR Global Life Americas Reinsurance Company (SGL Americas).
The proportion of brokered and direct business written by the Group’s subsidiaries varies according to market and cedent practices. For the year ended December 31, 2017, Non-Life wrote approximately 60% of gross written premiums through brokers and 40% through direct business, while Life wrote approximately 6% through brokers and approximately 94% through direct business.
For the year ended December 31, 2017, SCOR’s largest brokers for the Non-Life division were Aon Group with approximately 18% of the Group’s Non-Life gross written premiums, MMC with approximately 18% and Willis Group with approximately 11%. SCOR’s largest brokers for the Life division were Aon Group with approximately 1% of the Group’s Life gross written premiums and Willis Group with less than 1%.
SCOR owns an office building in Paris, with a surface area of more than 20,000 m2, located at 5, avenue Kléber. The building is held by its OPCI (French real estate UCIT) SCOR-Properties, and occupied at 85% by SCOR, the remaining area being rented to third parties. In November 2016, a second building at 50 rue La Pérouse with a surface area of 1,500 m2 was acquired. The building was delivered in January 2017 and SCOR employees moved in in May 2017. The Group is continuing to lease one floor of SCOR’s former headquarters (La Défense, Paris) for IT projects.
In Cologne, since 2012 SCOR fully occupies an office building with a surface area of more than 6,000 m² located at 10, Goebenstrasse, held by the German branch of SCOR SE “SCOR Rückversicherung Direktion für Deutschland, Niederlassung der SCOR SE”.
Environmental issues that may affect the utilization of property, plant and equipment
Non-Life reinsurance is a cyclical market estimated by various analysts at USD 160 to 170 billion of premium globally. The cycle appears to have reached a nadir in 2017, which was one of the largest years on record for reinsurance losses from natural disasters. The sector proved resilient and the losses have not greatly affected the nature of competition in Non-Life reinsurance, with both traditional and alternative sources of capital continuing to be present. Contract renewal negotiations conducted in late 2017 indicate that customers are prepared to pay more for reinsurance in 2018, particularly in the US as it is the peak risk zone globally and was most loss-affected. The sentiment existed in other markets but not to the same degree.
Direct real estate unrealized gains and losses (4) - - - - 272 - 272 - 272 - - -
On September 10, 2013, SCOR successfully placed perpetual subordinated notes on the Swiss Franc market, with a first call date on November 30, 2018, for an aggregate total amount of CHF 250 million.
SCOR uses real estate debts and other financial liabilities mainly to finance real estate investments and for general corporate purposes. Real estate debts are non-recourse, the debtors’ claims are limited to assets underlying the financing, and there is an asset and liability matching with little to no risk that the assets will be insufficient to service and settle the liabilities. They meet the conditions for operational leverage and can be classified as operational debts, and therefore excluded by the rating agencies from financial leverage calculations. As at December 31, 2017, real estate financing and other financial liabilities amounted to EUR 479 million and EUR 12 million, respectively (December 31, 2016: EUR 491 million and EUR 10 million, respectively). This includes the real estate debt of MRM (company acquired by SCOR on May 25, 2013) for the amount of EUR 74 million (EUR 75 million as at December 31, 2016).
The return on invested assets (ROIA) is used to assess the return on the Group’s invested assets excluding funds withheld by cedents. This percentage return is calculated by dividing the total investment income on invested assets by the average invested assets (calculated as the quarterly averages of the total invested assets).
●● Chairman of the Board of Directors and Chief Executive Officer of Garantie Mutuelle des Fonctionnaires (France) ●● Chairman of the Board of Directors and Chief Executive Officer of MAAF Assurances (France) ●● Chairman of the Board of Directors of Assurances Mutuelles de France (France) ●● Chairman of the Board of Directors of GMF Assurances (France) ●● Chairman of the Board of Directors of MAAF Assurances SA (France) ●● Chairman of the Board of Directors of MMA IARD (France) ●● Chairman of the Board of Directors of MMA IARD Assurances Mutuelles (France) ●● Chairman of the Board of Directors of MMA Vie (France) ●● Chairman of the Board of Directors of MMA Vie Assurances Mutuelles (France) ●● Chairman of the Board of Directors of Covéa Coopérations (France) ●● Director of Eurapco (European Alliance Partners Company AG) (Switzerland) ●● Other functions within foundations, endowment funds, and associations (France)
●● Director of Gottex Fund Management Holdings Limited (Guernsey) ●● Chairman of AWD Holding AG (Germany) ●● Vice-Chairman of the Swiss Insurance Association (Switzerland) ●● Advisor of the Foundation Avenir Suisse (Switzerland) ●● Director of the Swiss-American Chamber of Commerce (Switzerland)
(1) The attendance rate does not take into account the directors whose term ended on April 27, 2017.
2.2.1.2. APPROVAL OF THE COMPENSATION ITEMS ATTRIBUTABLE TO MR. DENIS KESSLER AS CHAIRMAN AND CHIEF EXECUTIVE OFFICER FOR THE FINANCIAL YEAR ENDED DECEMBER 31, 2017
(1) The variable annual compensation related to the 2017 financial year has been determined by the Board of Directors based on a percentage of achievement for the financial objective of 51.67% and a percentage of achievement for the personal objectives of 135%. This variable annual compensation amount is paid in one instalment, pending the approval of the Shareholders’ Meeting.
Compensation elements due or attributed for the financial year ended December 31, 2017
N/A The Group compensation policy does not provide for variable deferred compensation.
An ambitious climate policy, validated by the Board, has been published on the Group website There have been some significant actions in the fight against climate change: ●● At the institutional level: leadership role in international initiatives (Geneva Association, Insurance Development Forum), signing of a letter addressed to G7 and G20 leaders in June 2017, calling for the implementation of the Paris climate agreement, signing of the «Decarbonize Europe Manifesto» in March 2017
The variable compensation for year “Y” is paid during the year “Y+1”. Applying the applicable regulatory provision, the payment of the variable annual compensation will be subject, as of 2018 for the variable compensation relating to 2017, to the approval of the Shareholders’ Meeting.
At its February 21, 2018 meeting, the Board of Directors decided to grant the Chairman and Chief Executive Officer 125,000 performance shares and 100,000 stock options in 2018.
The Chairman and Chief Executive Officer, under the authority given by the Board of Directors’ meeting held on October 24, 2017 for the implementation of this plan, allocated on December 1, 2017, 145,410 stock options to 56 Partners (Executive and Senior Global Partners).
Those options can be exercised four years after the grant date at the earliest, if the presence condition (four years) is respected. The exercise price is calculated without a discount, based on a twenty-day average share price of SCOR SE’s shares before the grant date. The stock options can be exercised on one or more occasions from December 1, 2021 to December 1, 2027 inclusive. From this date, purchase rights shall expire.
At the same time, 461,744 performance shares were granted on December 1, 2017 to certain non-French tax resident Partners and specific Non-Partners of the Group (388 employees) under a non qualified plan.
The provisions of these plans provide for a vesting period of six years for all beneficiaries.
Sale of shares for a total amount of EUR 3,051,496.93 Acquisition of shares for a total amount of EUR 1,593,720 Subscription of shares for a total amount of EUR 3,723,276 Sale of shares resulting from the exercise of stock options for a total amount of EUR 7,456,226.51
Situation on March 31, 2015 acknowledged by the Board of Directors on April 30,
Reduction of the share capital by cancellation of self-owned shares to neutralize the dilutive effect resulting from the exercise of stock-options
In addition, we are required, where applicable, to inform you in accordance with article R. 225-31 of the French commercial code (Code de commerce) concerning the implementation, during the year, of the agreements and commitments already approved by the General Meeting of Shareholders.
AGREEMENTS AND COMMITMENTS SUBMITTED FOR APPROVAL TO THE GENERAL MEETING OF SHAREHOLDERS
Moreover, in the cases referred to in paragraphs (ii) and (iii) above and excluding the case referred to in paragraph (i), the rights to the performance shares and options that would have been granted to him prior to his departure would be maintained by remaining subject, in their entirety, to the performance conditions of each of the plans as validated by the Board of Directors at the time of the offer.
The Group’s liabilities are exposed to a significant increase in the rate of inflation (prices and salaries) which would require an increase in the value of reserves, in particular in respect of P&C long-tail business, e.g. general liability (medical among others) and motor bodily injury claims. In addition, SCOR is exposed to claims inflation over and above general inflation and in particular to the inflation of court awards in respect of general liability and bodily injury claims. For further information on P&C long-tail reserve deterioration, refer to Section 3.3.1 – P&C reinsurance.
Furthermore, the supervisory and regulatory authorities could develop new regulations with the objective of further strengthening the protection of policyholders and/or financial stability, especially in developing countries. These new regulations may then increase solvency margin obligations, thereby restricting SCOR’s underwriting capacity.
In the meantime, the International Association of Insurance Supervisors (IAIS) has been developing a common framework for internationally active insurance groups (IAIGs), the “ComFrame”. It is the IAIS’s intention to develop Insurance Capital Standards (ICSs) to be applied by all IAIGs with full implementation in 2025. This development could jeopardize the extent of recognition of diversification effects or the use of internal models and there is a risk that these rules could have an impact on capital management aspects. Moreover, these standards involve risks in terms of competition on a level playing field if they are not implemented simultaneously and consistently across different jurisdictions.
SCOR’s current ratings are at the highest levels within the reinsurance sector after Standard & Poor’s and Fitch upgraded the Group’s ratings to “AA-/Stable“ from “A+/Positive” in 2015, followed by a Moody’s upgrade to “Aa3/Stable“ in 2016 and the recent upgrade by AM Best to “A+/Stable“ in 2017. Therefore, a downgrade by one notch would have a limited impact on its future business development, its liquidity position or its capacity to raise funds. For further information on SCOR’s current rating, see Section 1.2.4 – Ratings information.
RISK FACTORS AND RISK MANAGEMENT MECHANISMS 03Underwriting risks related to the P&C and Life reinsurance businesses 3.3.1.2. NATURAL AND MAN-MADE CATASTROPHES
●● The P&C division’s Actuarial Pricing Department is responsible for the pricing of the reinsurance business which is done by individual treaty. Guidelines, methods and tools are set and maintained at the global level which are used by the pricing team across the SCOR offices. Delegation authorities specify criteria under which the underwriters may price certain contracts still subject to the use of the Pricing Guidelines and tools. Pricing results quantify expected underwriting statistics (such as loss and expense ratios), volatility measures, and profitability measures (such as NPV, Return on Risk Adjusted Capital (RORAC), and Profit Excess Targets). The results are also used as criteria for referrals within Underwriting Departments. Pricing actuaries, team up with underwriters and modelers by market or by line of business.
●● Adverse selection risks are mitigated through careful product design and a well-defined medical and financial underwriting selection process.
Business opportunities going beyond the stipulations of these guidelines and documents are subject to a special referral process in order to ensure that the business complies with established risk-adjusted return criteria and risk tolerance limits. These cases are examined at the Life division level by the Regional and Global Pricing and Risk Management Departments and, where applicable, the Finance Department. Cases which may have a significant impact on the balance sheet of the Group are additionally reviewed by the Group Risk Management. Thresholds or conditions for a referral to Group Risk Management are outlined in specific guidelines.
3.3.3.1. OVERVIEW OF THE MAIN INTERDEPENDENCE AND ACCUMULATION RISKS BETWEEN SCOR’S AREAS OF BUSINESS
In addition, depending on the frequency and nature of losses, the speed with which claims are made and the terms of the policies affected, it may be required to make large claim payments within a short period. SCOR may be forced to fund those obligations by liquidating investments in distressed market conditions, or by raising funds under unfavorable conditions. For further information on such risks, see Section 3.6 – Liquidity risks.
This analysis is performed by the Life division’s reserving actuaries and reviewed by the Group Actuarial Department which also performs its own full analysis. These analyses are recorded in an annual actuarial report; ●● regular external reviews of the Life division’s reserves adequacy are performed including those required by local regulators.
RISK FACTORS AND RISK MANAGEMENT MECHANISMS 03Underwriting risks related to the P&C and Life reinsurance businesses 3.3.5. RETROCESSION AND OTHER RISK MITIGATION TECHNIQUES
Credit risk is actively monitored and managed. The processes for managing the respective credit risks and the methods used to measure these risks are further described below.
Items that will not be reclassified subsequently to income 4 (30) (5)
Items that will be reclassified subsequently to income (496) 114 287
The other key currencies in which the Group conducts business and the exchange rates used for the preparation of the consolidated financial statements are as follows: EUR per foreign currency unit
SCOR Reinsurance Company (Asia) Ltd. Hong Kong 100 100 100 100 Full
OPERATING RESULT (BEFORE IMPACT OF ACQUISITIONS) 342 265 (116) 491 396 680 (125) 951 364 808 (124) 1,048
For SCOR Global P&C, contract liabilities, allocated on the same basis as gross written premiums, and share of retrocessionaires in contract liabilities, based on the location of the retrocessionaire, are as follows: As at December 31, 2017 As at December 31, 2016
Key balance sheet captions by operating segment, as reviewed by management, are broken down as follows: As at December 31, 2017 As at December 31, 2016
Share of retrocessionaires in insurance and investment contract liabilities 702 1,335 2,037 535 827 1,362
Cash flows, by segment, are presented as follows: For the year ended December 31
In EUR million Goodwill arising from insurance activities Goodwill arising from non insurance activities
The fair value of financial instruments that are traded in an active financial market is determined by reference to quoted market bid prices, at the close of business on the reporting date. If quoted market prices are not available, reference can also be made to broker or dealer price quotations. As the Group is responsible for determining the fair value of its investments, regular analysis is performed to assess whether prices received from third parties are reasonable estimates of fair value. The Group’s analysis includes: (i) a review of price changes made in the investment management systems; (ii) a regular review of pricing deviations between dates exceeding predefined pricing thresholds per investment category; and (iii) a review and approval of valuation changes made on an exceptional basis. The Group may conclude that the prices received from third parties are not reflective of current market conditions. In those instances, SCOR may request additional pricing quotes or apply internally developed valuations. Similarly, the Group may value certain derivative investments using internal valuation techniques based on observable market data.
Estimated premiums payable to retrocessionaires, net of commission (249) (205) (454) (250) (248) (498)
The increase in tangible assets in 2017 is related to improvements to own use properties for a total of EUR 24 million. These increases were partially offset by the disposal of fully amortized tangible assets (furniture and office equipment) for EUR 10 million.
The resolution to be presented to the Annual Shareholders’ Meeting called to approve, during the first half of 2018, the financial statements for the financial year 2017, sets out the distribution of a dividend of EUR 1.65 per share for the financial year 2017.
The maturity profile of financial debt is included in the Registration Document, in Section 3.6.4 – Financial debt.
The actual returns on plan assets were EUR 17 million for the year ended December 31, 2017 (2016: EUR 5 million and 2015: EUR 6 million).
Interest income on plan assets 4 1 1 2 5 1 1 3 6 1 2 3
Net DAC – end of year 228 226 238 277 320 352 371 431 522 538 551
Gross claims reserves & estimates – end of year (1) 9,325 9,127 9,156 9,696 10,602 10,857 10,691 11,088 11,750 11,784 12,318
All grants under the performance share plans of February 21, 2017 and December 1, 2017 (except LTIP), to the Chairman and Chief Executive Officer, to the members of the Executive Committee, to the Executive Global Partners and to the Senior Global Partners and half of the allocation to the other beneficiaries (below Senior Global Partners), are subject to performance conditions which are based on the strict observance of the principles set forth in the SCOR Code of Professional Conduct, on the solvency ratio and the SCOR Group’s ROE in 2017, 2018 and 2019.
Deferred taxes are recognized using the balance sheet liability method, for all temporary differences at the reporting date between the tax base of assets and liabilities and their carrying amount on the balance sheet.
Change in ceded unearned premium reserves - 8 8 (2) (12) (14) 1 28 29
Transactions with associates for the financial years ended December 31, 2017, 2016 and 2015 were carried out on an arm’s length basis and their volume is not material.
SCOR is committed to grant loans and to invest in various investment funds for a total amount of EUR 54 million (2016: EUR 60 million). Those amounts do not include the commitments taken by SCOR on behalf of third parties as part of its asset management activity.
On June 2, 2015, SCOR received the decision from the Spanish Supreme Court on the State Attorney’s appeal. In its decision, the Supreme Court confirmed that SCOR, together with certain other market participants, were part of an antitrust violation. However, the Supreme Court canceled the fine imposed by the Agency and requested it to be recalculated. On July 2, 2015, SCOR filed an action for annulment of the Supreme Court decision. On September 15, 2015, this action was dismissed by the Supreme Court. On November 3, 2015, SCOR filed an appeal against the Supreme Court’s decision in front of the Spanish Constitutional Court. This action was dismissed on February 26, 2016.
MAZARS Represented by Jean-Claude Pauly and Guillaume Wadoux Tour Exaltis – 61, rue Henri Regnault 92075 Paris-La Défense cedex, France CRCC de Versailles June 22, 1990
MAZARS Lionel Gotlib Tour Exaltis – 61, rue Henri Regnault 92075 La Défense Cedex CRCC of Versailles May 6, 2014
In application of EC Commission Regulation No. 809/2004, the following information is included by reference in this Registration Document: ●● The report of the Statutory Auditors on the consolidated financial statements for the financial year ended December 31, 2016 published on pages 223 to 224 of the Registration Document filed with the AMF on March 3, 2017 under Number D.17-0123 (and from pages 223 to 224 of the free translation into English of such Registration Document, such translation being available on SCOR’s website www.scor.com).
Under Article L. 225-43 of the French Commercial Code, the directors, other than legal entities, Chief Executive Officer and Deputy Chief Executive Officers (Directeurs Généraux Délégués) may not borrow money or obtain a guarantee from the Company. Any such loan or guarantee would be void and may not be relied upon by third parties.
Shareholders’ rights are set forth in the Company bylaws. Under Article L. 225-96 Paragraph 1 of the French Commercial Code, amendments to the bylaws must be approved by the Extraordinary Shareholders’ Meeting by a two-thirds majority of the shareholders present or represented.
The deadline for the return of remote voting forms and proxies shall be determined by the Board of Directors. The deadline cannot be less than one day before the date of the Shareholders’ Meeting. However, if authorized by the Board of Directors, electronic remote voting forms and instructions given by electronic means involving a proxy or a power of attorney may validly be received by the Company up until 3 p.m. (Paris time) on the eve of the Shareholders’ Meeting.
The Company certifies that the following information in this Registration Document and received from third parties has been accurately reproduced and that as far as the Company is aware and is able to ascertain from information published by said third party, no facts have been omitted, which would render the reproduced information inaccurate or misleading: ●● data issued from the AM Best Special Report Reinsurance (2017 Edition) and relating to the ranking on reinsurance market participants quoted in Section 1.1.1 – Group key figures and Section 1.3.4 – Information on SCOR‘s competitive position; ●● ratings issued by the Standard & Poor’s, Fitch Ratings, AM Best and Moody’s rating agencies quoted in Section 1.2.4 – Ratings information and Appendix A – Internal control and risk management procedures; ●● 2016 Society of Actuaries (SOA) and Munich Re Life survey of U.S. life reinsurance, published in June 2016, quoted in Section 1.3.5.3 – SCOR Global Life.
APPENDIX F: ADDITIONAL INFORMATION RELATING TO THE MANAGEMENT REPORT OF THE COMPANY AND THE GROUP – CORRESPONDENCE TABLE 329 1. Operating and financial review of SCOR SE 329 2. Trends in the SCOR SE share price throughout 2017 332 3. Social impact of SCOR’s activity 332 4. Environmental impact of SCOR’s activity 332 5. Information related to societal commitments in support of sustainable development 332 6. Related party agreements 332 7. Additional information provided in the management report of the Company and the Group – Correspondence table 333
Several processes and tools for identifying and assessing risks have been implemented to approach risk from different angles and to deal with them in an exhaustive manner. These include: ●● a risk information process: every quarter, the Group Risk Committee reviews the “Group Risk Dashboard” which describes and assesses the major risks the Group is exposed to. This report assembles various risk assessments from different identification and assessment processes for all risk categories; ●● a process for the monitoring of risk exposures compared to risk tolerances, i.e. the limits established in order to ensure that the Group’s risk profile remains aligned with the risk level validated by SCOR SE’s Board of Directors. The Group uses various risk measures to define these exposures, which are measured based on either model outputs and/or expert opinions, depending on the technical constraints and the level of information available. This includes: – a “risk driver” system that enables the Group to manage the annual aggregate exposure to each major risk. The objective is to avoid overconcentration of risk and hence maximize diversification benefits. For the majority of SCOR’s risk drivers, the amount of post-tax retained annual exposure per main risk driver (with a probability of 1 in 200 years) is limited to a percentage of the Group’s available capital. Other risk drivers have limits expressed in terms of reduction in the Group’s solvency ratio or duration for invested assets,
– an “extreme scenario” system designed to avoid the Group’s over-exposure to one single event. The amount of post-tax retained exposure to each defined extreme scenario (with a probability of 1 in 200 years) is limited to 10% of available capital,
– sub-limits for invested assets, – limits per risk which are set in the underwriting and investment guidelines; ●● “footprint scenarios”, which aim to review and assess the potential impact of selected deterministic scenarios on the Group. This process provides an alternative perspective on the Group’s exposures. Working groups dedicated to specific subjects are composed of experts across the Group and coordinated by the Group Risk Management Department with the support of the divisional Chief Risk Officers. These groups perform quantitative studies which are summarized in specific reports; ●● an Emerging Risks process which is part of SCOR’s ERM Framework and is linked to other risk management methods, such as the use of “footprint scenarios”. Potential emerging risks are identified and Individual risk assessments are carried out by experts from SCOR Global P&C, SCOR Global Life and the Group functions. Significant emerging risks are then reported to SCOR’s Executive Management and Board. SCOR, as a member of the CRO Forum, also actively participates and contributes to the CRO Forum Emerging Risks Initiative alongside other major insurers and reinsurers.
INTERNAL CONTROL AND RISK MANAGEMENT PROCEDURESA Monitoring of the internal control and risk management system 6. MONITORING OF THE INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM
General accounting for SCOR subsidiaries is supported by two main auxiliary accounting systems, namely (1) technical reinsurance accounting: premiums, claims, commissions, underwriting reserves, value of business acquired (VOBA), deferred acquisition costs (DAC), funds held; and (2) financial asset accounting: securities, bank accounts, investment income and expenses.
Regarding the processes of preparation of consolidation packages and consolidation of accounting data by the Group Consolidation, Systems & Process Department, and internal control is ensured by: ●● the definition by the Consolidation, Systems & Process Department of a closing process, clear responsibilities and a detailed financial statement closing schedule, which is monitored, in the closing period, on a daily basis; ●● use of a market recognized consolidation software package (“SAP BFC”) common to all Group entities, which ensures the whole consolidation process through automated and formalized controls; ●● the use of a general accounting software tool shared by all Group entities; ●● the centralized management of charts of accounts and the use of a single chart of accounts (with minimum local specificities, aligned with existing Group systems); ●● a definition of responsibilities for controlling the integration of auxiliary accounting systems; ●● the formalization of the reconciliations between the systems or auxiliary accounting methods with the general and consolidation accounting systems; ●● at least three levels of control of the consistency and completeness of the consolidation packages, one by the entity in question, another by the finance departments of SCOR Global P&C and SCOR Global Life relative to technical accounting and the third by the Group Finance Department; ●● systematic analyses of results, shareholders’ equity, taxation and cash flow;
INTERNAL CONTROL AND RISK MANAGEMENT PROCEDURESA Conclusion on the control procedures implemented
In 2017, SCOR SE carried out the following significant transactions: Dividends received
Partial repayment of the treasury advance granted to SCOR Auber SAS
UNCONSOLIDATED CORPORATE FINANCIAL STATEMENTS OF SCOR SE CNotes to the corporate financial statements 5.2. ANALYSIS OF KEY BALANCE SHEET ITEMS
●● The cash advance to OPCI SCOR Properties was partly reimbursed for EUR 7 million.
●● investments valued according to Article R. 343-9 830 830 822 (8)
●● SCOR AUBER S.A.S (France) 5 avenue Kléber, 75116 Paris, France EUR 47 146 100.00% 149 149 40 64 - 8 125 22
●● CHF 250 million in fixed rate perpetual subordinated notes was issued on September 10, 2013. The notes are redeemable by SCOR from November 30, 2018 on a quarterly basis on the interest payment dates. The coupon has been set at 5% until November 30, 2018 and at 3-month CHF LIBOR plus a margin of 4.10% thereafter. If SCOR does not exercise this option on such date, such repayment may intervene, where applicable, quarterly, at the interest payment dates. The notes are hedged by a cross-currency swap detailed in 5.3.8 – Financial instruments received and given, in the analysis of commitments given and received.
The table below summarizes the status of the various stock option plans in force in 2017: Plan Date of
We reviewed the process related to the measurement of investments in affiliates and we tested the efficiency of key controls. Our procedures consisted notably in: ●● reviewing of the estimates determined by management and analyzing the valuation methodology and the figures used, based on the information communicated to us; ●● comparing the data used in the impairment tests of investments in affiliates to source data per entity as well as results of audit work on these affiliates; ●● testing, on a sample basis, the calculation of recoverable values used by the Company.
End of fixed-term contract 5 14 19 11 7 18 8 14 22
All employees have access to a full description of the Group’s compensation policy on the Company intranet. This policy is consistent across all the Hubs and applies to the entire Group worldwide. In accordance with the Group’s values, one of the policy’s objectives (beyond retaining employees and rewarding performance) is to discourage excessive risk taking.
The Partners of SCOR are also eligible for free shares and stock options. However, this does not mean that an allocation occurs every year or that every Partner will receive them. In addition, free shares are allocated to some partners with performance conditions measured over six years. The goal of this compensation scheme, the Long Term Incentive Plan (LTIP), is to retain certain key employees over the long term. The process is supervised by the Compensation and Nomination Committee of the Board of Directors.
SCOR’s environmental approach is guided by its Climate policy. Adopted in 2017, this policy draws on the international initiatives to which SCOR has been adhering for many years as regards the environment and the fight against climate change. A signatory to the United Nations Global Compact (2003) and the Kyoto Protocol (2009) under the aegis of the Geneva Association, SCOR is also a founding member of the Principles for Sustainable Insurance (2012). Similarly, the Group is a signatory of more recent initiatives and statements such as the “United for Resilience statement” (2015), the “French Business Climate Pledge” (2015, 2017) and the “Decarbonize Europe Manifesto” (2017).
Moreover, SCOR is one of the earliest supporters of OASIS, a British non-profit organization developing an open source platform for the modeling climate events. The Group has also partnered with Climate-KIC, one of the largest public-private partnerships designed to combat climate change.
SCOR embeds climate-related risk management considerations in its ESG report on investments. Drawing on its expertise, the Group assesses the potential physical climate-related risks to which its investments in real-estate, infrastructure loans and real-estate loans are exposed. Transition risks induced by climate change are also another area of investigation for which the Group explores several different risk metrics on a large portion of its investment portfolio. Further information is available in the ESG report on investments, prepared in compliance with Article 173 of the French law on energy transition for green growth, and published on the Group’s website in June 2017.
Although reinsurance is not an industrial activity with a significant impact on the environment, SCOR strives to manage the environmental impact stemming from its operational processes, among which are office management, business travel and to a lesser extent office equipment.
This category is not material due to the nature of the Group’s business (i.e. financial services). The direct impact of the Group’s business is insignificant in terms of sound pollution.
Our work involved five persons and was conducted between mid-November and end of January during a five-week period.
b) Net profit before taxes, depreciations and reserves (90) 507 802 355 240 d) Net profit after taxes, depreciations and reserves (5) 647 844 387 227