on such statements, because, by nature, they are subject to known and unknown risks, uncertainties, and other factors, which may cause actual results, performance, achievements or prospects of SCOR to differ from any future results, performance, achievements or prospects explicitly or implicitly set forth in the Registration Document. In addition, such forward-looking statements bear no relation to “profi t forecasts” in the sense of Article 2 of Regulation (EC) 809/2004 of the European Commission.
ERNST & YOUNG Audit Represented by Mr. Pierre Planchon Tour Ernst and Young 11, Faubourg de l’Arche 92037 Paris la Défense Cedex CRCC of Versailles
Certain life insurance products include guarantees, most frequently with respect to premium rates, insurance benefi ts, and surrender or maturity values, or guarantees with regard to interest accrued on reserves or policyholder funds. Other guarantees may exist, for example with regard to automatic adjustments of benefi ts or options applied in deferred annuity policies.
In order to mitigate potential behavioural risk, SCOR Global Life carries out a thorough assessment of the client, the client’s target clientele, the market and the design of the insurance product. Anti-selection risks are mitigated through careful product design and a well-defi ned medical and fi nancial underwriting selection process. SCOR mitigates lapse risk through appropriate reinsurance treaty clauses, as well as product, client and market diversifi cation in which the lapse risk exposure is variable.
In 2008, SCOR reduced its exposure to asbestos-related risks and environmental risks specifi cally through large commutations of business. SCOR evaluates its exposure and its potential development notably using actuarial techniques and market practices, that allow opportunistic negotiation of the terms of commutation settlement. The Group intends to continue and expand its commutation policy in 2009 and thereafter. It is anticipated that this policy will affect settlement patterns to a limited degree in future years, but these changes in settlement patterns should progressively improve predictability and reduce the potential volatility of reserves.
Conforming to applicable regulatory requirements and in accordance with industry practices, the Group maintains in addition to outstanding claims reserves, IBNR Reserves. These reserves represent: the fi nal amount that may be paid by the Group on losses or events that have occurred, but are not yet reported to the ceding company or to the SCOR entity concerned; and the estimated cost variation on claims already reported to the Group.
A table showing changes in the mathematical reserves in Life reinsurance is provided in Section 20.1.6 - Notes to the consolidated fi nancial statements, Note 16 - Contract liabilities.
4.1.6 WE MAY BE ADVERSELY AFFECTED BY THE INABILITY OF OUR RETROCESSIONAIRES AND CEDENTS OR MEMBERS OF POOLS IN WHICH WE PARTICIPATE TO MEET THEIR OBLIGATIONS AND BY THE AVAILABILITY OF RETROCESSION REINSURANCE ON COMMERCIALLY ACCEPTABLE TERMS
Many of our reinsurance treaties, notably in the United States and in Asia, and also increasingly in Europe, contain clauses concerning our fi nancial strength, and provide for the possibility of early termination for our cedents if our rating is downgraded, or when our net fi nancial position falls below a certain threshold, or if we carry out a reduction in share capital. Accordingly, such events could allow some of our cedents to terminate their contract commitments, which could have a material adverse effect on our revenues, net income, cash fl ow and fi nancial position.
SCOR carries out a prudent policy for the selection of its retrocessionaires, in particular through: the analysis of the fi nancial ratings of the retrocessionaires; the analysis of external studies prepared by the security departments of the main reinsurance brokers; in this regard SCOR meets the securities departments of two large reinsurance brokers at least twice a year to analyse the security of its retrocessionaires.
We are exposed to the risk of losing all or part of any cash deposited with a retail bank in the event of such a bank no longer being able to honour its commitments (e.g. following liquidation).
These risks are described in more detail in Section 4.1.6 - We may be adversely affected by the inability of our retrocessionaires and cedents or members of pools in which we participate to meet their obligations and by the availability of retrocessional reinsurance on commercially acceptable terms.
However, there can be no assurance that such measures, including the two-levels of interest rate risk management and sensitivity analysis will be suffi cient to protect the Group against all the risks related to variations in interests rates.
In order to reduce transaction risk, the Group’s fi nancial assets are primarily denominated in the same currencies as its insurance liabilities and fi nancial contracts.
Our other bonds are redeemable only at the discretion of SCOR, and not of their holders (except in the usual events of default applicable 4.3 Liquidity risk 4 | RISK FACTORS
The reinsurance of credit insurance, surety commitments and political risk is managed by teams primarily based in Europe. Under credit insurance, the insurer covers the risk of losses from the non-payment of commercial debts. Surety insurance is a contract under which a guarantor makes a commitment to a benefi ciary to perform the obligation to ensure payment by or to pay the debt of the secured debtor. Political risk insurance covers the risk of losses due to measures taken by a government or similar entity which endangers the existence of a sales contract or commitment made by a public or private citizen of the country in which the covered operations are performed. These risks are underwritten through quota share (proportional and nonproportional ) treaties as well as facultative.
SCOR Global Life benefi ts from an established competitive position, strengthened by the acquisition in 2006 of Revios and in 2007 of Converium. Thanks to these two transactions, SCOR Global Life assured its strong presence in leading markets such as France, Italy, Spain and Portugal, and strengthened the position in Germany, Scandinavia and the United Kingdom.
The current structure of the Group has been developed to facilitate access to local markets through a network of local subsidiaries, branches, and sales offi ces, to provide better identifi cation of profi t centres in each major reinsurance market, and to develop local management and underwriting expertise, in order to provide better customer service, maintain relationships with ceding companies, and to obtain a deeper understanding of the specifi c features of local risks.
9.1 Financial position The 2008 results and balance sheet strength demonstrate the effectiveness of SCOR’s strategy which relies on high business and geographical diversifi cation and focuses on traditional reinsurance activity with very limited exposure of reinsurance liabilities to economic activity risks and no material off balance sheet exposure. SCOR was well-positioned to benefi t from an increase in renewal demand and an increase in premium rates in January 2009 (Refer to Section 12 – Trend information).
The operating results for 2008 refl ect the successful integration of Converium and Revios into the Group as well as successful renewals.
SCOR generated net income of EUR 315 million in 2008, compared to EUR 407 million and EUR 314 million for the years ended 31 December 2007 and 2006, despite a challenging fi nancial market environment and above-average natural catastrophe claims. The results benefi t from a positive operating performance of SCOR Global P&C and SCOR Global Life as well as from a prudent asset management policy. SCOR’s business model, which is based on high business and geographical diversifi cation and focuses on traditional reinsurance, demonstrates its strength in a time of fi nancial crisis, having also withstood major recent claims following hurricanes in the United States.
Refer to Section 20.1.6 – Notes to the consolidated fi nancial Statements, Note 14 - Financial debts for a description of the fi nancial debts of the Group.
In 2009, SCOR will maintain its three joint ventures and partnerships, i.e. Lloyd’s, GAUM (Global Aerospace Underwriting Managers Limited) and MDU (Medical Defence Union). The Group estimates that gross written premiums from this segment should amount to EUR 392 million in 2009.
Birth Date: Professional address: VITTORIA ASSICURAZIONI S.p.A. Via Don Minzoni, 14
Abroad Chairman: - BPC Investimenti SGR S.p.A. (Italy) - Vittoria Capital N.V. (The Netherlands)
Principal position: Vice-Chairman and Deputy Director of COVEA (mutual insurance group company)
(3) Member of the Accounting and Audit Committee. (4) Member of the Compensation and Nominating Committee.
Other positions: France Director: - Bouygues S.A.* - Alstom* - Nexans S.A.* - Société Foncière Financière et de Participations (FFP)* - Verner Investissements SAS
The following list provides biographical information on the directors in offi ce at the date of the Registration Document.
(1) Pursuant to the decision made by the Board of Directors on 21 March 2006, the Chairman and Chief Executive Offi cer receives directors’ fees along with the other members of the Board of Directors of the Company, based on the same conditions for distribution. (2) Director whom appointment has been ratifi ed by the Annual Ordinary General Meeting of the Shareholders of 7 May 2008. (3) Director who resigned from offi ce on 27 August 2007. His directors’ fees were paid to GROUPAMA S.A. (4) Director representing the employees elected by the Annual Shareholders’ Meeting of 24 May 2007 as employee representative. His directors’ fees are paid to the CFDT union. (5) Mr. Jean Simonnet resigned from offi ce on 18 March 2008. (6) Mr. Thourot received a fi xed remuneration of EUR 410,000 for his role as Deputy to the Chairman and Chief Executive Offi cer.
Denis Kessler - Not applicable Not applicable 15.1.2.2 Remuneration to Executive Committee (COMEX) members other than the Chairman and Chief Executive Offi cer in 2008
Refer also to Section 20.1.6 – Notes to the Consolidated Financial Statements, Note 25 – Related party transactions and Appendix A – Notes to the Corporate Financial Statements, Note 6 – Contingency reserves.
Jean-Claude Seys Director 2009* 15 May 2003 Yes Claude Tendil Director 2011* 15 May 2003 NA
The remaining shares will be transferred in full ownership to the benefi ciaries at the end of a vesting period of two years to run from the date of grant, on 27 August 2010, under the condition of compliance (i) the status of the benefi ciary’s presence in the Group on 15 August 2010 and (ii) the performance conditions are fulfi lled, they are identical to the performance conditions applicable to the plan of 7 May 2008.
17.4 Defi ned pension schemes Les plans de retraites supplémentaires, à cotisations ou prestations défi nies dans le Groupe sont présentés dans ce qui suit.
La Compagnie Financière Edmond de Rothschild 5, 739, 600 3.14% 3.19%
On 26 January 2007, UBS AG declared that it had (i) exceeded on 22 January 2007, directly or indirectly through UBS Securities LLC, following an acquisition of stock, the thresholds of 5% of the capital and voting rights in the SCOR company, and that it held directly or indirectly 9,544,987 shares representing 95,449,870 voting rights, or 8.06% of the capital and voting rights in SCOR and that, on 22 January 2007, (ii) it dropped, directly or indirectly through UBS Securities LLC, following a placement of shares with qualifi ed investors, below the thresholds of 5% of the capital and voting rights in SCOR, and that it held directly or indirectly 3,055,663 shares representing 30,556,630 voting rights, or 2.58% of the capital and voting rights in SCOR.
The transaction was fi nalised at the end of December 2005.
With regard to the notional cash-pooling scheme, each participating entity receives remuneration of its account’s positive balance, under the terms and conditions negotiated for the Group and otherwise, pays interest on the negative balance of their account, at an agreed rate for the Group. The generated profi t by the notional cash-pooling scheme is allocated to SCOR SE, in exchange for (i) the management of the notional cash-pooling scheme by the former, as well as (ii) the fact that SCOR SE alone, bears the indemnity paid to BNP Paribas, in the cases when the participating companies ’ global negative balance exceeds EUR 50,000,000.
In the United States of America (USA) and in Canada: SCOR Reinsurance Company Ltd (US), General Security Indemnity Company of Arizona, General Security National Insurance Company, Investors Insurance Corporation., SCOR Life Insurance Company, SCOR Life U.S. Re Insurance Company, SCOR Canada Reinsurance Company.
In Asia: SCOR Asia-Pacifi c Pte Ltd, SCOR Reinsurance Company (Asia) Ltd.
At its meeting of 26 August 2008, the Company’s Board of Directors authorised, pursuant to Article L.225-38 of the French Commercial Code, the signature by SCOR SE, with regard to the acquisition of the company Prévoyance et Réassurance and its subsidiary, Prévoyance Ré, of the engagement letter concerning a fi nancial advisory assistance by BNP Paribas, for a 9 months duration. The commission paid by virtue of this engagement letter amounts to EUR 150,000 euros tax excluded, of intervention commission and to EUR 600,000 euros tax excluded, of execution commission.
At its meeting of 13 November 2008, the Company’s Board of Directors authorised, pursuant to Article L.225-38 of the French Commercial Code, the parent company guarantee’s signature by SCOR SE for the reinsurance engagements of Prévoyance Ré.
of USD 150,000,000 following this increase primarily for the purpose of issuing a counter-guarantee related to the Property & Casualty insurance policy CLP 3001140 issued for the WTC towers by Allianz Insurance Company, which is reinsured by the Company.
Group shareholders’ equity Note 13 3,410 3,614 Share capital 1,451 1,439 Additional paid-in capital 952 1,017 Revaluation reserves (251) (13) Retained earnings 904 715 Net income for the year 315 407 Equity based instruments 39 49
Contract liabilities 20,240 19,401 Insurance contract liabilities Note 16 20,029 19,219 Investment contract liabilities Note 16 211 182
Consolidated net income for the year - - 407 - - - - - 407 3 410
Mathematical reserves are calculated underwriting reserves relating to guaranteed claims and benefi ts of ceding companies in life reinsurance. Mathematical reserves are determined using actuarial methods on the basis of the present value of future payments to cedents less the present value of premium still payable by cedents. The calculation includes assumptions relating to mortality, disability, lapses and the expected future interest rates. Actuarial principles used allow an adequate safety margin for the risks of change, error and random fl uctuation. They correspond to those used in the premium calculation and are adjusted if the original safety margins are no longer considered suffi cient.
If a financial asset is impaired, the impairment is computed as the difference between the cost of the asset (net of any principle repayment and amortisation) and its current fair value, less any impairment previously recognised in the statement of income, is transferred from equity to the statement of income.
Treasury shares and any directly related costs are recorded as a deduction from shareholders’ equity When treasury shares are subsequently sold or reissued any consideration received is included in consolidated shareholders equity net of any directly related costs and tax effects, accordingly there is no related income, gain or loss recognised in the income statement.
Assumed and ceded reinsurance transactions are those contracts that transfer signifi cant insurance risk at the inception of the contract. Reinsurance risk is transferred when the group agrees to compensate a cedent if a specifi ed uncertain future event (other than a change in fi nancial variable) adversely affects the cedent. Any contracts not meeting the defi nition of a reinsurance contract under IFRS 4 are classifi ed as investment contracts or derivative contracts as appropriate.
Non Life gross premiums written and earned are based upon reports received from ceding companies, supplemented by the Company’s own estimates of premiums written and earned for which ceding company reports have not yet been received. Differences between such estimates and actual amounts are recorded in the period in which the estimates are changed or the actual amounts are determined. The difference between ultimate estimated premiums, net of commissions, and premiums reported by ceding companies, is recorded under accounts receivable arising from assumed reinsurance transactions. Premiums are earned on a basis that is consistent with the risks covered under the terms of the reinsurance contracts, which is generally one to two years. For certain U.S. and Japanese catastrophe risks and certain other risks, premiums are earned commensurate with the seasonality of the underlying exposure. The reserve for unearned premiums represents the portion of premiums written that relate to the unexpired terms of contracts and policies in force. Such reserves are computed by pro-rata methods based on statistical data or reports received from ceding companies. Reinstatement premiums are estimated after the occurrence of a signifi cant loss and are recorded in accordance with the contract terms based upon paid losses and case reserves reported in the period. Reinstatement premiums are earned when written.
The Group offers stock option plans to its employees. The fair value of the services received in exchange for the granting of options is recognised as an expense. The total amount that is recognised over the vesting period is established by reference to the fair value of options granted, excluding conditions of attribution that are not linked to market conditions. (ROE, for example). These conditions are taken into account when determining the probable number of options which will be acquired by the benefi ciaries. At each balance sheet date, the Company reviews the estimated number of options which will be acquired. Any impact is then recorded in the income statement with the offsetting entry in shareholders’ equity for the remaining vesting period.
Gross written premiums 2,701 3,106 - 5,807 2,432 2,329 - 4,762 Change in unearned premiums (10) (38) - (48) 5 (27) - (23) Gross earned premiums 2,691 3,068 - 5,759 2,437 2,302 - 4,739 Other operating revenues 3 28 (20) 11 14 16 (11) 19 of which other income excluded from combined ratio calculation - (7) - (7) - (3) - (3)
Key balance sheet captions by segment are estimated as follows: In EUR million
Cumulative depreciation and impairment at 31 December 2008 (80) (21) (101)
In December 2003, the Group sold its headquarters but will remain a tenant of this building until December 2012. The owner of the building has a bank guarantee based on SCOR’s rating. SCOR has pledged assets for the same value with the bank that issued this guarantee.
The fair value adjustment recognised in the income statement during the year for fi nancial assets at fair value through income estimated using a valuation technique is EUR (35.2) million (2007: EUR 5 million).
Unrealised gains and losses on available-for-sale investments (gross of tax) 140 (618) (478)
Short term investments are carried at fair value. Other loans and receivables are carried at cost which approximates the fair value at 31 December 2008 and 2007.
The underlying indexed annuity contracts contain caps (limits) on the percentage increase in the underlying index that SCOR contractually must credit to the policyholders’ accounts. The average cap on the portfolio is about 6%. Our maximum total exposure at 31 December 2008 associated with the USD 734 million notional amount including recognition of the caps if counterparties fail to pay is USD 76 million.
The Group’s capital management policy is to optimise the utilisation of its capital and debt structure in order to maximize the short term and long term profi tability to shareholders while at the same time providing its customers with an adequate level of security as measured by internal capital allocation models, rating agencies and national regulators.
The Group also considers alternative sources of capital including reinsurance and securitisation, as appropriate when assessing its deployment and usage of capital.
In accordance with the accounting principles described in Note 1, this loan has been separated from its shareholders’ equity component.
Net incurred losses (3) 1 year later 8,161 8,191 6,776 5,917 5,987 5,701 9,480 - 2 years later 8,832 8,133 6,762 5,989 6,262 5,765 - - 3 years later 8,927 8,418 6,866 6,243 6,312 - - - 4 years later 9,117 8,543 7,145 6,306 - - - - 5 years later 9,273 8,853 7,205 - - - - - 6 years later 9,568 8,901 - - - - - - 7 years later 9,615 - - - - - - -
Roll-up: The GMDB increases each year from the initial premium adjusted for later deposits and partial withdrawals, as the case may be, by a fi xed percentage. Rollup guarantees reinsured under SCOR Global Life’s agreements grant an annual accumulation percentage between 3% and 7%. In many products, especially for higher rollup percentages, an upper limit applies (e.g. 200% of the paid policyholder premium adjusted for later deposits and partial withdrawals).
These plans call for the payment of a lump sum, calculated by reference to the employee’s length of service within the Group and the salary level at the time of departure. These plans relate primarily to employees of the French and Italian entities.
The following schedule reconciles the movements in the balance sheet amounts for the years ended 31 December 2008 and 2007: In EUR million Total 2008 Europe Switzerland
Obligation as at 1st January 154 52 64 38 86 43 0 43
Balance sheet as at 31 December Income statement for the year ended 31 December
Unrealised revaluations and temporary differences on investments 125 18 8 -
On 7 May 2008, SCOR announced that it had reached a settlement with Groupama regarding the defi nitive amount of a guarantee relating to the acquisition of SOREMA SA and SOREMA NA and their subsidiaries (“SOREMA”) by SCOR in 2001. At the time, SOREMA was the reinsurance division of Groupama. The guarantee contemplated that Groupama would indemnify SCOR in the event of negative developments concerning the technical reserves of SOREMA entities for all underwriting years up to and including 2000. The parties agreed on a payment of EUR 240 million which occurred on 1 June 2008. SCOR’s 2007 accounts included a recoverable of EUR 250 million. Consequently, the net income for the 2008 year includes a charge of EUR 10 million, (EUR 7 million net of tax), in respect of the settlement agreement.
The Company incurred expenses of EUR 10 million that either (i) do not meet the accounting defi nition of restructuring costs, mainly IT, or (ii) were incurred prior to meeting the accounting recognition criteria. It is expected that the remaining costs of the “R3 plan” of EUR 7 million, which either do not meet the accounting defi nition of restructuring costs, will be recognised during the ongoing implementation of the plan.
(1) Average number of shares during the period. See Note 1 of the consolidated fi nancial statements. (2) After stock consolidation on 3 January 2007: 1 new share equals 10 old shares. (3) Adjusted for the completion of the initial acquisition accounting of the Converium and ReMark acquisitions. See Notes 1 and 3 to the consolidated fi nancial statements.
Commitments granted Letters of credit 1,403 1,572 Pledged securities 2,708 2,923 Endorsements and deposits 28 32 Other commitments granted 80 78
In 2004 Converium (which has since become SHS) announced the successful private placement of USD 100.0 million of fl oating rate notes issued by Helix 04 Limited (“Helix”), a Bermuda special purpose exempted company. By means of a counterparty contract with the issuer, the transaction provides SCOR Switzerland with fully collateralised second and subsequent event protection for North Atlantic hurricane, U.S. earthquake, Japanese earthquake and European windstorm property catastrophe exposures. The notes pay only for second and subsequent events in any of the four peril regions during the fi ve-year term of the transaction expiring 23 June 2009.
The amount of gross deposits which have been netted against expected life benefi ts are EUR 3,978 million and EUR 4,035 million in 2008 and 2007, respectively.
Less than one year 15 14 From one to fi ve years 51 57 More than fi ve years 3 1
For currency translation risk, the following sensitivity analysis considers the impact in equity of a 10% movement in the exchange rates of the Group’s two largest translation risk currency exposures; USD and GBP relative to EUR.
In Europe: SCOR Global Life (formerly SCOR VIE), as the reinsurer of an insurance company, is involved in a lawsuit in connection with a life insurance policy in the amount of approximately EUR 4.5 million. The beneficiary of the policy was killed in 1992. In June 2001, a Spanish court ordered the ceding company to pay approximately EUR 16 million under the policy, which amount included accumulated interest since 1992 as well as damages. Following this decision, SCOR VIE booked a technical provision of EUR 17.7 million in its accounts for the 2001 financial year. In May 2002, the Barcelona Court of Appeals found in favor of the ceding company. The representatives of the deceased have now appealed the case to the Spanish Supreme Court. In June 2007, the Spanish Supreme Court confirmed the decision by the Court of Appeals in favor of the cedent and, as a result, SCOR decided to re-absorb the provision booked for this litigation. However, the beneficiaries of the insurance policy filed a “recours d’amparo” (individual protection claim) before the Spanish Constitutional Court. The cedent has therefore decided to maintain its provision.
In October 2007, SCOR received an arbitration notice from the “captive” of a British pharmaceuticals laboratory. SCOR contests the validity of the presentation of this claim. Documents are being exchanged and no decision should be expected before the beginning of the year 2010. A mediation has been proposed.
As stated in part 20.1.6.1 “Use of estimates” and “Accounting principles and methods specifi c to reinsurance business”, and notes 7, 10, 11 and 16 to the consolidated fi nancial statements, the technical accounts specifi c to reinsurance are estimated on the basis of reinsurance commitments or on statistical and actuarial bases, particularly in the case of accounts not received from cedents accounted for under the receivable caption, technical reserves, and deferred policy acquisition costs. The methods used to calculate these estimates are described in the Notes to the consolidated fi nancial statements.
20.7 Litigation and arbitration procedures Please see Section 20.1.6.28 – Note 28 – Litigation.
In addition, the Shareholders’ Meeting which decides on a capital increase may reserve it for named persons or categories of persons corresponding to specifi c characteristics, in application of Article L.225-138 of the French Commercial Code.
The FA was launched in two phases. In the fi rst phase, effective 31 December 2005, USD 105 million was placed in trust in lieu of letters of credit. In the second phase, an additional USD 96 million of funding was placed in trust effective 30 September 2006.
A stand-by letter of credit facility agreement dated 23 December 2008, was executed between BNP Paribas on one side and SCOR SE, SCOR Global Life SE and SCOR Global P&C SE on the other side. The purpose of these contracts is to guarantee the execution of the commitments of the above mentioned companies and some of SCOR SE’s subsidiaries under their re-insurance operations. These credit facilities are made available through the issuance of revolving letters of credit and/or counter-guarantees (stand-by letters of credit or SBLC) up to a maximum of USD 100,000,000 for SCOR SE, USD 40,000,000 for SCOR Global P&C SE and USD 250,000,000 for SCOR Global Life SE, under a global ceiling of USD 400,000,000 as from 2 January 2009 until 31 December 2011.
Increase of the stake in the capital of Prevoir Vietnam Life Insurance Company
On 5 August 2008, SCOR Global Life subscribed for USD 1,450,000 to the capital increase in the amount of USD 14,500,000 of Prévoir Vietnam, thus preserving its 10% ownership interest in the share capital and voting rights of this company.
Information published on the Autorité des Marchés Financiers (AMF) website (www.amf-france.org)
Shareholders’ equity and reserves (1) Note 5 2,361 2,521 Share capital 1,451 1,439 Additional paid-in capital 923 988 Re-valuation reserves Unavailable reserve Other reserves 22 20 Capitalisation reserve Retained earnings 24 45 Net income (64) 28 Regulated reserves 5 1
Expenses for Life reinsurance and other underwriting reserves (47) (47) 43 Life reinsurance reserves (47) (47) 43 Unit-linked contract Other underwriting reserves
As from 1st January 2008, SCOR applies the new rules relating to the accounting of transactions in foreign currencies by entities subject to the rules of the Insurance Code as required by the CNC in its opinion n° 2007-02 dated 4 May 2007.
Such instruments may include foreign currency and interest rate swaps; caps and fl oors; forward currency contracts; puts and calls on equity securities and other rate options.
Depreciation and allowances at the end of the fi nancial year
The CRP loan is USD 62 million against which an allowance of USD 32 million has been recorded based on the negative net assets of the company.
In EUR million 2007 2008 Ex ante Ex 2007 Total Ex ante Ex 2008 Total
On 28 December 2006, the Court issued an Opinion and Order granting in part and denying in part defendants’ motions to dismiss the Complaint. The Court dismissed the claims against all defendants alleging violations of Sections 11, 12 and 15 of the Securities Act as well as claims asserting violations of Sections 10(b) and 20(a) of the Exchange Act based upon allegations that Converium misrepresented and omitted material information in its 11 December 2001, initial public offering (the “IPO”) prospectus and registration statement. The Court denied the motion to dismiss those claims against Converium and its former offi cers alleging that those defendants violated Section 10(b) and Section 20(a) of the Exchange Act by misrepresenting and omitting material information in various public disclosures following Converium’s IPO. In addition, the Court denied Lead Plaintiffs’ motion to amend their complaint.
Without qualifying our opinion, we draw attention to the matters discussed: in Note 1.5 to the fi nancial statements relating to the change of accounting method related to the accounting of share purchase, share subscription and share allocation plans to the employees, in application of règlements CRC n° 2008-15 of 4 December 2008 and n° 2008-17 of 10 December 2008, in Note 1.10 to the fi nancial statements relating to the change of accounting method related to the accounting of the operations in foreign currencies for the companies subject to the French Insurance Code (Code des assurances), in application of règlements CRC n° 2007-07 et n° 2007-09 of 14 December 2007.
the management and to assess performances, strategies and risks. The feedback attests to the Board’s confi dence in the quality of fi nancial reporting due to the work of the Audit Committee.
At the Board Meeting held on 31 March 2004, an interim assessment was made of the Board’s organisation and operation. A new set of internal regulations (the “Internal Regulations”) was adopted to formalise and strengthen the strategic decisions made. These Internal Regulations were amended by the Board of Directors on 2 November 2005 and on 4 July 2006. The main provisions of the Internal Regulations are provided below: Mission of the Board of Directors of the Company
At least fi ve days before any meeting of the Board of Directors, the Chairman and Chief Executive Offi cer is required to submit a fi le to the Directors containing all information that will allow them to participate in the discussions listed on the agenda in a discerning and effi cient manner. Furthermore, outside of Board meetings, the Chairman and Chief Executive Offi cer is required to submit any necessary information and documents to the Directors to complete their duties, and the Directors may submit requests for information to the Chairman and Chief Executive Offi cer. In addition, Directors may ask the Chairman and Chief Executive Offi cer to invite the major executives of the Company to attend Board meetings.
the Board in full in advance. Such Directors are required to abstain from participating in any Board discussions.
The data on compensation for corporate offi cers appears in Section 15 – Compensation and benefi ts – and 17.2 – Information on interests and stock options of the members of the management and administrative bodies.
Following the recommendation of the Compensation and Nomination Committee, the meeting of the Board of Directors on 12 December 2008 decided that the Chairman and Chief Executive Offi cer: will receive a fi xed gross annual sum of EUR 1,200,000, payable in twelve monthly installments; and will receive, a variable annual compensation, capped at EUR 1,000,000 determined as follows: – 50% on the basis of the achievement of personal objectives, defi ned annually at the beginning of each year by the Board of Directors of the Company on the recommendation of the Compensation and Nomination Committee; and
In case of dismissal or imposed departure due to a change in the structure of the share capital or in the strategy, substantially affecting the content of his duties or making the continuation of his activities and the normal exercise of his powers of the Company, the Chairman and Chief Executive Offi cer: will receive an indemnity corresponding to the sum of all the fi xed and variable elements of his annual gross compensation, paid by the Company during the two years prior to his departure. This severance pay is subject to the performance conditions adopted by the Board of Directors, under the recommendation of the Compensation and Nomination Committee. These performance conditions can be referred to in the Board of Director’s Management report; will keep the right to exercise the defi nitively acquired options granted to him, in the time periods fi xed by the option subscription or purchase plans. Regarding the options he is unable to exercise according to the plan, he will benefi t from an indemnity, compensating for this loss of the right to exercise the options, the amount of which will be determined by an independent expert using the Black & Scholes evaluation method, as at the date of his departure; receive an indemnity, including the loss of the right to the shares, equal to the number of shares concerned by the average price of SCOR shares on his departure date, in connection with the shares that would have been granted to him for free but from which he could not benefi t.
On meeting on 7 May 2008, the Board of Directors, upon authorisation granted by the Extraordinary general meeting of the Shareholders, decide to allot free shares to the Chairman and Chief Executive Offi cer. The granting will be effective at the end of a vesting period of two years and subject to the realisation of performance conditions as defi ned by the Compensation and Nomination Committee. Such granting is also submitted to a non-transferability period of two years at the end of which the shares will be available and be freely assigned. The Chairman and Chief Executive Offi cer shall retain 10% of these shares in the registered form until he ceases to hold his duties of corporate offi cer.
Finally, at the meeting of the Board of Directors on 21 March 2006, it was decided that the Chairman and Chief Executive Offi cer will have specifi c life insurance to cover the risks inherent in the duties of Chairman and Chief Executive Offi cer of the Company, in an amount equivalent to three years of fi xed and variable compensation; the insurance will be obtained by the Company.
In particular: The Group Risk Management Department includes the Group Actuarial Department, the Group Retrocessions Department and the Group Risk Management Department. Two other departments, the Corporate Actuarial Department and the Group Financial Analysis & Risk Modelling (“Finmod”) Department now also report to it (since 2008).
ii) Asset management the Group has harmonised the principles governing asset management: the Statement of Group Investment Principles defi nes the Group’s governance in terms of asset management and the Manual of Group Investment Guidelines determines the conditions in which SCOR Global Investments will implement, on behalf of all Group subsidiaries, the investment policy as defi ned by the Group’s Investment Committee; both of these documents have been approved by the Group’s Executive Committee; the new entity SCOR Global Investments has been specially created to manage all of SCOR’s assets and aims to obtain approval from the French fi nancial market regulatory body (AMF) as an asset management company. To this end, it has been decided, amongst other things, to revise the management and control procedures and to appoint a Head of Compliance and Internal Control to meet the requirements of the regulatory body; investment decisions are implemented by SCOR Global Investments in accordance with the investment guidelines. An Investment Committee meets at least once every quarter. Its role is to coordinate asset allocation on a Group level and to supervise the application of the objectives by the asset management company, observing the constraints established; the investment portfolios managed by external service providers are reviewed during quarterly investment committees, attended by the external fund managers, the Senior Managers of the subsidiary in question and representatives of SCOR Global Investments; the information systems used by SCOR Global Investments monitor transactions on publicly traded securities (audit trail, valuation of securities). New methods for monitoring assets and accounting tools were implemented in 2008 in Paris and will be deployed in 2009 in the Group’s principal subsidiaries. Performance analysis and risk monitoring tools are currently being deployed.
The Corporate Communications Department systematically and simultaneously publishes regulated information, including press releases, via a professional host included in the offi cial list published by the AMF and on SCOR’s website (www.scor.com).
The accounting and fi nance function is the responsibility of the Chief Financial Offi cer (CFO), who manages all fi nancial areas in order to have an overall view of the Group’s technical and fi nancial results.
Our role is to: report on information contained in the chairman’s report in respect of internal control procedures relating to the preparation and processing of accounting and fi nancial information, confi rm that the report also includes other information required by article L.225-37 of the French commercial code (Code de Commerce). It should be noted that our role is not to verify the fairness of this other information.
We confi rm that the report prepared by the chairman of the board of directors also contains other information required by article L.225-37 of the French Commercial Code (Code de Commerce).
Objectives assigned by the Company to its foreign subsidiaries: The consumption of water resources, raw materials, and energy with any measures taken to improve energy effi ciency and use of renewable energy, land use conditions, emissions into the air, water, and soil which signifi cantly affect the environment and for which the list will be determined by order of the ministers responsible for the environment and industry, sound or odor nuisances, and waste; Measures taken to limit threats to the biological equilibrium, the natural environment, and protected animal and plant species; Evaluation or certifi cation measures taken in environmental matters; All measures taken to ensure conformance of the company’s activities to applicable legislative and regulatory provisions; Expenses incurred to prevent the company’s activities having consequences on the environment; The existence within the company of internal environmental management services, training, and related employee information resources dedicated to reducing environmental risk, as well as the organisation to address pollution accidents with consequences beyond the company’s sites.