Certain statements contained in this Registration Document may relate to objectives of SCOR SE (“SCOR SE” or the “Company”) or of the SCOR Group (the “Group”) or to forward-looking information, specifically statements announcing or corresponding to future events, trends, plans, or objectives, based on certain assumptions. These statements are typically identified by words or phrases indicating an anticipation, assumption, belief, continuation, estimate, expectation, forecast, intention, and possibility of increase or fluctuation and similar expressions or by future or conditional verbs. This information is not historical data and must not be interpreted as a guarantee that the stated facts and data will occur or that the objectives will be met. Undue reliance should not be placed 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 SE 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 “profit forecasts” in the sense of Article 2 of Regulation (EC) 809/2004. This document is a free English translation of the “Document de Référence” drafted in French and filed with the AMF on 8 March 2011 under number D.11-0103. It is for information purposes only and should not be relied upon.
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1 Person responsible 5 1.1 Name and title of person responsible 7 1.2 Declaration by person responsible 7 2 Statutory Auditors 8 2.1 Auditors 10 2.1.1 Principal Auditors 10 2.1.2 Alternate Auditors 10 2.2 Resignation or non renewal of Auditors 10 3 Selected financial information 11 3.1 Group key figures (under current consolidation scope) 13 4 Risk factors 14 4.1 Risk related to the business environment 17 4.1.1 The Group is exposed to diverse risk factors in the Non-Life and Life reinsurance businesses 17 4.1.2 SCOR is exposed to losses from catastrophic events 22 4.1.3 SCOR could be subject to losses as a result of its exposure to terrorism 23 4.1.4 SCOR could be subject to losses related to deteriorating results in lines where it is no longer actively writing business 24 4.1.5 If SCOR’s reserves prove to be inadequate, its net income, cash flow and financial position may be adversely affected 25 4.1.6 SCOR may be adversely affected by its cedents, retrocessionaires, insurers or members of pools in which it participates do not respect their obligations 27 4.1.7 SCOR operates in a highly competitive sector 27 4.1.8 Financial ratings play an important role in SCOR’s business 27 4.1.9 A significant portion of SCOR’s contracts contain provisions relating to financial strength which could have an adverse effect on its portfolio of contracts and its financial position 28 4.1.10 Operational risks, including human errors or computer system failure, are inherent in SCOR’s business 28 4.1.11 SCOR is exposed to risks related to the recent acquisitions 29 4.1.12 SCOR is exposed to credit risks 30 4.1.13 SCOR is exposed to the risk of no longer being able to retrocede liabilities on economically viable terms and conditions 33 4.1.14 SCOR is exposed to inflation 33 4.2 Market risk 33 4.2.1 SCOR faces risks related to its fixed income investment portfolio 33 4.2.2 SCOR faces risks related to its equity-based portfolio 34 4.2.3 SCOR is exposed to other risks arising from the investments it owns 35 4.2.4 SCOR is exposed to currency risk 35 4.2.5 SCOR’s shareholders’ equity and net income are sensitive to the valuation of the Group’s intangible assets and deferred tax assets 36 4.3 Liquidity risk 37 4.3.1 SCOR faces liquidity requirements in the short to medium term in order to cover, for example, claims payments, operational expenses and debt redemptions. In the case of catastrophe claims, in particular, it may need to settle amounts which exceed the amount of available liquidity 37 4.4 Legal risk 37 4.4.1 SCOR is exposed to risks related to legislative and regulatory changes and political, legislative, regulatory or professional initiatives concerning the insurance and reinsurance sector, which could have adverse consequences for its business and its sector 37 4.4.2 SCOR is exposed to risks linked with Solvency II implementation 38 4.4.3 SCOR is exposed to certain litigation matters 38 4.4.4 SCOR’s positions on tax accounts are subject to audit and approval by tax authorities 39 4.5 Insurance of specific operational risks (excluding reinsurance activity) 39 4.6 Risk and Litigation: Reserving methods 39 5 Information about the issuer 40 5.1 History and development of the issuer 42 5.1.1 Legal name and commercial name of the issuer 42 5.1.2 Place and registration number of issuer 42 5.1.3 Date of incorporation and length of life of issuer 42 5.1.4 Domicile and legal form of issuer, legislation governing its activities, country of incorporation, address and telephone number of its registered office 42 5.1.5 Important events in the development of the issuer’s business 43 5.2 Investments 46 5.2.1 Principal investments made over the past three financial years 46 5.2.2 Principal investments in progress 48 5.2.3 Principal future investments 48 6 Business overview 49 6.1 Primary activities 53 6.1.1 The reinsurance business 53
Administrative and Management bodies 137 17.2.1 Number of shares held by Directors and Senior managers 137 17.2.2 Stock options held by the members of the Executive Committee and other Company officers as of 31
B Report of the Chairman of the Board of Directors on the terms and conditions for preparing and organising the work of the Board of Directors and on internal procedures and on risk management in accordance with article L.225-37 of the French Commercial Code 323
PERSON RESPONSIBLE 1.1 PAGE 7 Name and title of person responsible
The historical financial information included in the Registration Document was certified by the auditors. Their reports are reproduced in Section 20.2 and Appendix A of this document, and incorporated by reference for financial years 2009 and 2008, in section 20.2 and Appendix A of the 2009 Registration Document and in section 20.2 and Appendix A of the 2008 Registration Document. The audit reports on the 2010 Consolidated Financial Statements, 2009 Consolidated Financial Statements and 2008 Corporate Financial Statements include comments.
On the date of the Shareholder’s Meeting called to approve the financial statements of the financial year ending 31 December 2013 2.1.2 ALTERNATIVE AUDITORS
3.1 Group key figures (under current consolidation scope) SCOR SE and its consolidated subsidiaries (“SCOR” or the “Group”) is the world’s 5th largest reinsurer (1) serving more than 4,000 clients from its organisational Hubs located in New York, Cologne, London, Paris, Singapore and Zurich.
 The consolidated financial statements of the Group that appear in Section 20.1 - Historical financial information: consolidated financial statements and in particular Note 26 - Insurance and financial risk.
The risk appetite framework encompasses three concepts: risk appetite, risk preferences and risk tolerances: (a) Risk appetite
Risk appetite defines the quantity of risk that SCOR wishes to accept to achieve a desired level of profitability. This determines where SCOR wishes to position itself on the risk-return spectrum, between extremely risk averse (i.e. low risk-low return) and an extreme risk taker (i.e. high risk-high return). SCOR uses a target retained risk profile (probability distribution of economic profits and losses) and target expected profitability to provide a complete definition of its risk appetite. A comparison of SCOR’s actual and target retained risk profile and profitability is regularly reported to the Board via the Board Risk Committee.
Risk preferences are qualitative descriptions of the risks which the Group is willing to accept. SCOR aims to cover a wide range of reinsurance risks and geographical areas. However the Group has no desire to take operational, legal, regulatory, tax and reputation risks (but this does not mean that SCOR is immune to these risks). This choice of risk preferences determines the risks to be included in SCOR’s underwriting guidelines.
In September 2010 SCOR launched its new three year Strategic Plan “Strong Momentum”, which replaced the previous plan “Dynamic Lift”. The “Strong Momentum” plan has three targets over the cycle:  Optimization of the Group's risk profile1
 Profitability of 1,000 basis points above risk-free rate over the cycle1 1 For "Strong Momentum", the aim is to increase moderately (relative to the previous "Dynamic Lift" strategic plan) the target risk profile in the middle of the economic profit/loss probability distribution with no increase on tail risks (after hedging) 2 This reflects the level of security provided by SCOR according to the S&P scale; however it does not reflect any Rating Agencies’ opinion of the Group.
Using various risk monitoring and response mechanisms within its ERM Framework, SCOR’s Executive Management and the Board Risk Committee periodically review the Group’s actual risk profile and are systematically informed of any deviation from the target risk profile. In particular, actual exposures are monitored against risk exposure limits for different lines of business, derived from the Group risk tolerances.
Risk monitoring and response mechanisms enable SCOR to:  take mitigation actions to ensure that the Group’s retained exposure to specific risks remains within the defined exposure limits
The second part of SCOR’s Capital Shield Policy is to hold Buffer Capital in addition to the required solvency capital. This is an important capital management mechanism. The level of Buffer Capital is chosen to be consistent with SCOR’s risk appetite framework and strategic targets and enables SCOR to absorb a significant amount of inherent volatility in annual results, without having to turn to the market too frequently to raise capital (less than every ten years).
Regulation of the reinsurance sector contributes through prudential rules and principles to an increased vigilance on the part of companies in this sector thus reinforcing the existing risk management mechanisms. One particularity of the reinsurance sector concerns a non–significant number of balance sheet items which are either based on accounting or model estimations. These estimations depend very much on the underlying assumptions, data used and the appropriateness of the model. Also see section 4.2.5 - SCOR's shareholders' equity and net income are sensitive to the valuation of the Group's intangible assets and deferred tax assets.
The Group will continue to use all available risk management tools to manage the risks and also take advantage of opportunities that offer good returns in relation to risk.
Generally, SCOR's ability to increase or maintain its portfolios in the Life and Non-Life reinsurance segments may be subject to external factors such as economic risks and political risks.
Underwriting guidelines, which specify maximum acceptable commitment per risk and per event, are in place within SCOR Global P&C. They are reviewed and updated annually by the Underwriting Management Department and approved by the CEO and Chief Risk Officer of SCOR Global P&C. Any request for deviations from the underwriting guidelines is subject to special referral procedures at two key levels: at the first level, the request is submitted by the underwriting units to the Underwriting Management Department and at the second level, for exposures exceeding certain thresholds or with specified characteristics, the request is submitted by the Underwriting Management Department to the Group Risk Management Department of SCOR SE.
Products such as critical illness, short-term and long-term disability and long term care, which all contain morbidity risk, are subject to, among others, the risk of negative trends in health as well as improved medical diagnoses capabilities which increase the number of claims that otherwise would possibly have remained undetected. Products providing cover for medical expenses are subject to the risk of higher than anticipated incidence rates and medical inflation.
In life reinsurance, a major risk lies in the occurrence of a severe pandemic. In the past century, three major outbreaks of influenza occurred and claimed millions of lives. The occurrence of a similar event could cause large losses to the Group, due to an increased mortality far beyond the usual volatility. Even after the attenuation of the H1N1 influenza pandemic, which was less severe than anticipated, experts continue to closely monitor the current influenza virus strains and those of other infectious diseases. A lethal virus strain not only of influenza but of any other communicable disease could lead to a heavy increase in mortality rates which could significantly affect SCOR’s results. In general, better means of communication and increased public health measures, combined with progress in vaccine research, make the estimated impact of future pandemics less severe than those of the past.
SCOR Global Life is also exposed to risks related to policyholder behaviour. This includes risks such as lapsation, antiselection at policy issue detrimental to the insurer, resale of policies, unexpected number of exercises of options by the policyholder, and fraudulent applications.
Lapses refer to either non-payment of premium by the policyholder or to policies which are terminated by the assured before the maturity date of the policy. Depending on the product design, higher or lower policyholder lapses may reduce SCOR Global Life's expected future income. Lapses may differ from expectations due to a changing economic environment or other reasons, such as changes in tax incentives for the reinsured policies, tarnished reputation of the cedant or from the introduction of more attractive products in the market. SCOR studies and closely monitors this risk.
In general, for most individual life covers, policyholder and insured person are identical. The pricing of these policies is based on this assumption. However, there is a trend, especially in the US, where policyholders that can no longer afford to pay the premiums, are selling their polices and the eventual death benefit to third parties who continue to pay the premium. These “stranger owned life insurance”, or STOLI, lead to deviations between actual and expected lapse rates and can be a risk to the insurer and reinsurer of the cover.
Furthermore, they set out the retention of SCOR Global Life for various risks and types of covers. Deviations from guidelines are subject to review by SCOR Global Life's Central Actuarial and Underwriting Department and Risk Management areas in order to ensure that the business respects defined risk-adjusted return criteria and risk tolerance limits.
Accumulations of risk particularly exposed to catastrophes 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. Specifically designed retrocession programmes aim to protect the life reinsurance business of SCOR. One programme protects assumed catastrophe excess of loss acceptances, the other protects the retained lines in respect of all other acceptances.
SCOR takes into account the effect of the diversification between the two engines Life and Non-Life in its internal model, by setting parameters for the interdependence of the various lines of business.
Political risks, which are characterised by social and political instability in certain countries, are particularly significant in emerging markets. These risks could lead to significantly reduced business growth in SCOR markets. In such countries, substantial changes in legislation and regulations, particularly in tax or commercial legislation, are more probable than in more developed markets.
Biometric risks, other than pandemic risk, are diversified on a geographic and a product basis with a claims experience following the laws of large numbers.
Peak mortality, disability and critical illness risks are covered either by surplus per life retrocession programmes, or, in some cases, by excess of loss per life or per event. In 2008, SCOR Global life entered into a fully collateralised Mortality Swap arrangement with JP Morgan. The Mortality Swap reduces SCOR's exposure to major mortality shock events. In 2009, SCOR Global Life extended its protection by arranging an additional tranche of the Mortality Swap with a lower attachment point. Both tranches are fully collateralised.
Like other reinsurance companies, SCOR may be exposed to multiple insured losses to property or to the person arising from a single occurrence, whether a natural catastrophe such as a hurricane, windstorm, flood, hail, severe winter storm, earthquake, or a man-made catastrophe such as an explosion, fire at a major industrial facility or an act of terrorism. Any such catastrophic event may generate insured losses in one or more of SCOR's lines of business.
Different risk measures (such as Value at Risk, Tail Value at Risk or Expected Shortfall) per peril and region provide the information required to determine levels of retrocession and other risk transfer means (e.g. catastrophe bond) needed to
In Life Reinsurance, maximum underwriting capacities are defined to limit the exposure of SCOR Global Life on the various types of treaties underwritten, proportional and non-proportional, covering individual or Group policies. These capacities are revised each year, taking account of the capacities obtained by the retrocession coverage purchased by the Group. These limits include: maximum commitment per life accumulated for all SCOR exposures, maximum annual commitments for non-proportional cover per life or per event, maximum commitment per country for non-proportional exposures by event, a restrictive approach as regards terrorist or nuclear risks. Exposures by risk or by event, for the portfolio as a whole, are measured by aggregating SCOR's retention and by taking into account the capacity obtained through retrocession programmes.
SCOR also seeks to reduce its dependence on traditional retrocession by using alternative retrocession agreements. Accordingly, on 21 December 2006, the Group signed a multi-year catastrophe Property retrocession agreement with Atlas III, a dedicated vehicle (SPRV, Special Purpose Reinsurance Vehicle) organised pursuant to the laws of Ireland and financed by the issuance of a Cat Bond, the purpose of which is to provide EUR 120 million in additional retrocession coverage for SCOR and its subsidiaries in the context of a second or subsequent event such as Europe Storm or Japan Earthquake, the losses of which are determined by a model over a period running from 1 January 2007 to 31 December 2009. Continuing this strategy to diversify retrocession sources, SCOR issued two similar Cat Bonds, Atlas IV on 29 November 2007 for a term of three years and one month, providing EUR 160 million in additional retrocession coverage for SCOR and its subsidiaries for a first event such as Europe Storm or Japan Earthquake and Atlas V on 19 February 2009 for a term of three years providing USD 200 million in additional retrocession coverage for SCOR and its subsidiaries for an event such as U.S. and Puerto Rico Earthquake or Hurricane. Finally on 10 December 2009, Atlas VI series 2009 was issued to ensure continued protection in view of the imminent expiry of Atlas III, Atlas VI is a more “working” cover than Atlas III providing EUR 75 million coverage against the risk of one or several earthquakes in Japan or windstorms in Europe.
Nevertheless, no guarantee that the Group is protected against material catastrophic losses, or that retrocession will continue to be available in the future at commercially acceptable rates shall be implied from the measures detailed above, including those relating to the management of risks on a geographical basis or retrocessions. Although SCOR attempts to limit its exposure to acceptable levels, it is possible that multiple concurrent catastrophic events could have a material adverse effect on its current and future revenues, net income, cash flow and financial position.
After the attack of 11 September 2001, the Group adopted underwriting rules designed to exclude or limit its exposure to risks related to terrorism in its reinsurance contracts, in particular in those countries and/or for the risks expected to be most exposed to terrorism. However, it has not always been possible to implement these measures, particularly in its principal markets. For example, certain European countries do not permit the exclusion of terrorist risks from insurance policies. Due to these regulatory constraints, it has actively supported the creation of insurance and reinsurance pools involving insurance and reinsurance companies as well as public authorities in order to spread the risks of terrorist activity among the members of these pools. SCOR participates in pools created in certain countries, such as France (GAREAT), Germany (Extremus), the Netherlands (NHT) and Belgium (TRIP), which allow it to have limited and known
Beyond the potential impact on its non-life book, a terror event could also affect SCOR’s life portfolio. Although the insured losses from past events have been comparatively small in relation to the non-life losses, a future terrorist act, such as a “dirty bomb”, could claim a substantial amount of insured lives. SCOR monitors this extreme event on the life side by running dedicated scenarios.
4.1.4 SCOR COULD BE SUBJECT TO LOSSES RELATED TO DETERIORATING RESULTS IN LINES WHERE IT IS NO LONGER ACTIVELY WRITING BUSINESS
SCOR Global Life inherited from the Converium retrocession liabilities with regard to Guaranteed Minimum Death Benefit (GMDB) rider options attached to variable annuity policies written in the U.S. This type of business, which carries during financial crisis a specific economic risk is not within the usual scope of the SCOR Global Life underwriting policy. These treaties are all in run-off and cover in total approximately 0.7 million policies guaranteed by two cedants. They were issued mainly in the late 1990's and incorporate various benefit types. Claims occur in the event of death and if the GMDB exceeds the insured’s account balance. Under these circumstances, the difference between the GMDB and the account balance or the GMDB and the cash surrender value becomes due, depending on the definition of the underlying reinsurance agreements.
There are some risks which are specific to the GMDB portfolio. Due to the nature of the product the remaining liability is influenced by developments on the financial markets, in particular changes in the price of equities, bonds, interest rates as well as the implied volatility on equity options. The liability is also dependent on policyholder behaviour, particularly on the exercise of partial withdrawal options, but also on other aspects, such as lapse behaviour and the use of options to choose the underlying funds. As a retrocessionaire, SCOR Global Life is exposed to uncertainties concerning data received from its retrocedants and the original ceding companies and also due to the inherent reporting lag. SCOR Global Life is also exposed to risks inherent to the model used or the assessment of the liability under its portfolio. More information about GMDB appears in Section 20.1.6 – Notes to the consolidated financial statement, Note 16 – Contract liabilities.
In the past, SCOR strengthened the long term capital base of its U.S. subsidiaries in order to satisfy U.S. statutory capital requirements and provide for an on-going business platform while undertaking an active management of its legacy business portfolios.
In January 2003, CRP was placed into run-off. In 2004, SCOR implemented a focused management strategy of its legacy portfolios in the U.S.
This pro-active management has included but is not limited to the following characteristics: a dedicated manager with access to internal and external actuarial, accounting and claims professionals; analysis and prioritization of all portfolios and contracts; auditing of these discontinued business portfolios in order to prepare for settlement negotiations and / or commutations.
As stated before, SCOR’s reserves and policy pricing are based on a number of assumptions and on information provided by third parties, which, if incorrect and/or incomplete, could have an adverse effect on SCOR’s results of
operations. Despite the audits carried out by the Group on the companies with which it does business, and its frequent contacts with these companies, it is still dependent upon their evaluation of the risk with regard to the establishment of its own reserves.
As is the case for all other reinsurers, the inherent uncertainties in estimating its reserves are compounded by the significant periods of time that often elapse between the occurrence of an insured loss, the reporting of the loss to the primary insurer and ultimately to the reinsurer, and taking also into account the delay between the payment of a loss by the primary insurer and the indemnification by the reinsurer. In addition, reserving practices may differ among ceding companies.
The Group continues to pursue the active commutations policy of its portfolios initiated in 2003, the main goals being to reduce the volatility of claims reserves, to reduce the administrative costs particularly the oldest, and to allow the reallocation of capital. This policy will be continued by focusing efforts on the U.S. run-off activities, business exposed to Asbestos and Pollution risks, and some treaties written by the former Converium company acquired by SCOR.
4.1.6 SCOR MAY BE ADVERSELY AFFECTED BY ITS CEDANTS, RETROCESSIONAIRES, INSURERS OR MEMBERS OF POOLS IN WHICH IT PARTICIPATES DO NOT RESPECT THEIR OBLIGATIONS
SCOR is subject to a risk of possible non-payment of premiums due by the cedants and/or to the possible non-respect by one or several SCOR’s partners, of their commitments to the Group.
Thus, the non-respect of financial obligations, in particular the payment of premiums, return of funds withheld and payment of claims, of SCOR’s cedants, retrocessionaires, insurers, or members of pools in which SCOR participates could negatively affect its revenues, net income, cash flow, financial situation, and potentially, the SCOR share price. The Group periodically reviews the financial position of its cedants, retrocessionaires and insurers notably before the conclusion of contracts. This does not preclude the possibility that its cedants, retrocessionaires or insurers may become financially unsound by the time they are called upon to pay amounts due, which may not occur until many years after the contract was executed. Provisions are made on those receivables for which a loss is deemed probable.
The specific risk linked to the default of the retrocessionaires is provided in Section 4.1.12 – SCOR is exposed to credit risks – (b) Receivables from retrocessionaires 4.1.7 SCOR OPERATES IN A HIGHLY COMPETITIVE SECTOR
Therefore, SCOR remains exposed to the risk of losing its competitive advantage. In particular, when available reinsurance capacity is greater than the demand from ceding companies, its competitors, some of which hold higher ratings than it does, may be better positioned to enter new contracts and gain market shares at its expense.
Financial ratings are very important to all reinsurance companies, including SCOR, as ceding companies wish to reinsure their risks with companies having a satisfactory financial position. SCOR’s Life reinsurance activities and the
In addition, if the rating of the Group deteriorates, certain stand-by letter of credit facilities would require a higher level of collateralisation. The timing of any review of the Group’s financial ratings by the rating agencies is also very important to its business since the Non-Life contracts and treaties are renewed at various set times throughout the year.
In order to keep close control over the Group’s ratings and notably to prevent downgrades in its financial ratings and encourage and justify upgrades, the Group maintains close relationships with the main rating agencies. These relationships take the form of regular contacts during the financial year to present the Group’s results and its financial position to them and specific meetings before implementing strategic or financial projects, to assess their potential impact on its rating.
4.1.9 A SIGNIFICANT PORTION OF SCOR’S CONTRACTS CONTAIN PROVISIONS RELATING TO FINANCIAL STRENGTH WHICH COULD HAVE AN ADVERSE EFFECT ON ITS PORTFOLIO OF CONTRACTS AND ITS FINANCIAL POSITION
Many of SCOR’s reinsurance treaties, notably in the United States and in Asia, and also increasingly in Europe, contain clauses concerning its financial strength, and provide for the possibility of early termination for its cedants if its rating is downgraded, or when its net financial position falls below a certain threshold, or if the Group carries out a reduction in share capital. Accordingly, such events could allow some of its cedants to terminate their contract commitments, which could have a material adverse effect on its revenues, net income, cash flow, financial position, and potentially, on the SCOR share price.
In the case of a large number of LOCs being drawn down simultaneously, SCOR could encounter difficulties in providing the total amount of required cash or fungible assets, i.e. SCOR is also exposed to a liquidity risk.
For more details about the Group’s lines of credit, refer to Section 22 - Material Contracts.
4.1.10 OPERATIONAL RISKS, INCLUDING HUMAN ERRORS OR COMPUTER SYSTEM FAILURE, ARE INHERENT IN SCOR’S BUSINESS
commercial performance or external events. The Group is also exposed to risks relating to the integration of the underlying data of newly acquired companies into its operating and financial accounting IT systems.
A major defect or failure in SCOR’s internal controls or information technology and application systems could result in a loss of efficiency of its teams, harm to its reputation or increased expense or financial loss. Appropriate procedures to minimise the occurrence and the impact of the failures and defaults mentioned above are in place and appropriate, or are currently being formalised and deployed.
Some of SCOR’s processes are partly or completely outsourced. Outsourcing can increase operational risk which could cause a significant impact on SCOR’s results and/or reputation. In order to reduce this risk, SCOR is developing an Outsourcing Group Policy which will oblige all entities of the Group to draft a contract, to respect the selection process for service providers and respect reporting and control procedures.
SCOR, as for all companies, must comply with laws and regulations. Furthermore, as an international Group, SCOR must take into account international laws and regulations. The level of legal or regulatory requirements depends on the location and the legal structure of the SCOR entity. The risk is that SCOR might not respect the level of required compliance appropriate to each location and legal structure. SCOR’s reputation could be affected. In particular, SCOR writes some direct insurance business
For direct business SCOR is subject to the laws, regulations and tax rules governing direct insurance which can create specific compliance risks (i.e. different from those relating to reinsurance business). The business written directly through IIC is subject to USA consumer and product laws and regulations which aim to ensure that only suitable products are sold and policyholders are provided with accurate information about the product at all times. Any violation of such laws and regulations could expose SCOR to legal risks or class actions.
An operational risk failure, in particular the failure of internal control procedures, could have an adverse impact on SCOR’s activities, current or future revenue, net income, cash flow, financial position, and potentially, on the SCOR share price.
4.1.11 SCOR IS EXPOSED TO RISKS RELATED TO THE RECENT ACQUISITIONS
On 4 December 2009, SCOR Global Life US (SGL U.S.), a wholly-owned subsidiary of the SCOR Group, reached a definitive agreement to acquire XL Re Life America Inc. (XLRLA), a subsidiary of XL Capital Ltd.. In 2008, XLRLA generated EUR 22.1 million in premium income.For more information on this acquisition see Section 20.1.6 – Notes to the Consolidated Financial Statements - Note 3 - Acquisitions.
The success of recent business combinations will be assessed with regards to the success of the integration into the Group of the businesses acquired. Subsequently, as with any external growth transaction in the services sector in general, and reinsurance in particular, the integration of the activities of recently acquired companies may take longer and/or be more difficult than expected. The success of this integration will depend, notably, on the ability to maintain the client base to coordinate development efforts effectively, in particular at the operational and commercial levels, and to streamline and/or integrate the information systems and internal procedures and the ability to retain key employees. Difficulties encountered in the integration could entail higher integration costs and/or less significant savings or fewer synergies than expected.
SCOR could be exposed, due to recently acquired companies, to certain litigation matters
SCOR could have to assume the burden of the litigation matters of acquired companies or relating to those acquisitions. The costs of these litigation matters could have an adverse effect on the Group's future operating income and an unfavourable outcome to one or more of these litigation matters could have a material adverse effect on the Group's revenues, net income, cash flow and financial position. For further details, refer to Section 20.1.6 - Notes to the consolidated financial statements, Note 27 – Litigation.
SCOR remains committed to exploring acquisition opportunities which may present themselves and which would be likely to deliver value for its shareholders and, will rely on the consistent application of its strategic plans.
Firstly, a deterioration in the financial situation of an issuer (sovereign, public or private) may result in an increase in the relative cost of refinancing and a reduction in the liquidity of the securities issued leading to a reduction in the value of such securities. Secondly, the borrower’s financial situation can cause it to become insolvent and lead to the partial or total loss of coupons and of the principal invested by SCOR.
SCOR mitigates these risks by implementing a policy of geographic and sector diversification. Limits by counterparty exposure and by rating are also defined. An a posteriori quarterly analysis by segment (business sector, geographical area, counterparty, rating) enables critical risks to be identified and evaluated in order to take appropriate actions.
The Group has a prudent investment policy and puts great importance on several selection criteria notably internal assessments, the rating provided by the rating agencies to the issuer and liquidity of the securities purchased. The Group invests a significant proportion of its Bond portfolio in OECD Government bonds, supra-national bonds and bonds guaranteed by a State which frequently have better financial ratings and lower risk profile than Corporate bonds.
Bond investments are managed by SCOR Global Investment SE or by external managers. In all cases, Investment Guidelines are provided to managers and strict monitoring is carried out over the global portfolio for all Group entities. Whether managed internally or externally, each entity monitors, either directly or via an intermediary, the changes in value of the investment assets.
In general, the tactical allocation of the global portfolio is defined by the Group Investment Committee which meets each quarter. It is chaired by the Group’s Chief Executive Officer and is composed of the Group Chief Financial Officer, the Group Chief Risk Officer, the Chief Economist, the Chief Executive Officer of SCOR Global P&C and the Chief Executive Officer of SCOR Global Life, the Chief Executive Officer of SCOR Global Investments SE and other representatives of SCOR Global Investments .
The Group transfers part of its risks to retrocessionaires via retrocession programmes. The retrocessionaires then assume, in exchange for the payment of premiums by SCOR, the losses related to claims covered by the retrocession contracts. So, in the event of default by the retrocessionaire, SCOR would be liable to lose the coverage provided by its retrocessionaires whereas it would retain liability to the cedant for the payment of all claims covered under the reinsurance contract.
Furthermore, to reduce the credit risk arising from its retrocessionaires, SCOR:  requests that certain of its retrocessionaires provide that all or a portion of the receivables from its retrocession contracts be guaranteed by collateral (cash deposits, letters of credit, pledging of securities etc.) in favour of SCOR;  carries out an active commutation policy in Non–Life.
SCOR seeks to reduce its dependence on its traditional retrocessions by using alternative retrocession agreements such as the securitisation of catastrophic risk or mortality swaps or the issuance of contingent capital securities. Alternative retrocession agreements are described in more detail in Section 4.1.2 – SCOR is exposed to losses from catastrophic events. The credit risk that SCOR may be exposed to, through these alternative retrocession agreements, can be more limited than the credit risk related to traditional retrocession arrangements.
The risk of non-performance of retrocessionaire undertakings is set out in Section 4.1.6 - SCOR may be adversely affected by its cedants, retrocessionaires, insurers or members of pools in which it participates do not respect their obligations.
Secondly SCOR is exposed to a credit risk in the event of a payment default by the cedants of the premiums due under SCOR's acceptance of a portion of their risks. In cases where such an event does not lead to termination of the reinsurance contract, any offset between contractual obligations between the two parties is dependent on court decisions and it is possible that SCOR remains liable for paying claims without being able to offset the unpaid premiums.
In order to reduce such risks, SCOR carries out a quarterly examination of exposure and associated risks. Depending on the financial situation of the principal cedants, actions aimed at reducing or limiting exposure or mitigating the risk through guarantees on deposits (for example, via offset clauses) may be carried out. Moreover, should their financial strength deteriorate between the time their financial commitment is made and the time it must be honoured, an appropriate financial provision is established in SCOR’s accounts corresponding to the liability for which a loss is considered probable.
Thus, the inability of its cedants to fulfil their financial obligations could affect SCOR’s current and future revenues, net income, cash flow and financial position.
The risk of losing all or part of securities owned by the Group could have a material adverse impact on SCOR’s business, its present and future revenues, its net income, its cash flows, and its financial position, and potentially, on the SCOR share price.
Most of this business is situated in Europe across a diverse range of activity sectors.
SCOR's Credit & Surety business does not cover either CDS ("Credit Default Swap") or real estate loans, notably in the U.S., nor is it exposed to the various U.S. credit "monoliners" or "guarantors".
However, multiple defaults of companies (or in the event of the default of a major company) on which the ceding companies are exposed could have a material adverse impact on its business, its present and future revenues, its net income, its cash flows, and its financial position, and potentially, on the SCOR share price.
First of all, the payment of future profits expected under Life reinsurance contracts necessarily implies that the cedant is solvent: for this reason, SCOR risks a reduction in the value of its portfolio of Life contracts in the event of a deterioration in the financial strength of the cedant. In such a case, it is possible that the VOBA (Value Of Business Acquired) and DAC (Deferred Acquisition Costs) may as a consequence need to be written down and as a consequence, shareholders’ equity is reduced accordingly.
Calculations are also made on the current treaties in order to verify the solidity of the value of future profits from the portfolio in question. This regular monitoring allows for a timely action to manage and mitigate the effects from any possible deviations of the actual results from the projections in the underwriting plan.
For further details on the impact of the assessment of its intangible assets upon its results, see Section 4.2.5 – SCOR’S shareholders' equity and net income are sensitive to the valuation of the Group's intangible assets and deferred tax assets.
The Group’s liabilities are exposed to an increase in the rate of general inflation (prices and salaries) which would require an increase in the value of non-life technical reserves, in particular in respect of long-tail business, e.g. general liability and motor bodily injury claims. In addition, the Group 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.
In conclusion, inflation would have a significant negative impact on the reserves, the net income, the cash flow, the financial position, and potentially on the SCOR share price.
During periods of declining interest rates, income from its investments is likely to fall due to investments of new premiums at rates lower than those of the existing portfolio (dilutive effect of new investments). In addition, in these periods of declining interest rates, SCOR’s fixed-maturity securities are more likely to be redeemed early in cases where
Because equities are more volatile than bonds, this asset class is closely and regularly monitored. All equity positions (direct positions and mutual funds) are aggregated and valued daily. This approach allows the Group to monitor changes in the portfolio and to identify investments with higher-than-average volatility as soon as possible, using alert signals. It also facilitates arbitrage or portfolio re-allocation decisions.
To measure the risk, an assumed "equity" beta of 1 is generally used. This assumes that the whole portfolio varies homogeneously and with the same magnitude as the equity market, The Group therefore uses an instantaneous change in the equity market as a measure of the change in the unrealised capital gains or losses of the equity portfolio.
The impact of a uniform drop of 10% in equity markets is included in 20.1.6 - Notes to the consolidated financial statements, Note 26 - Insurance and financial risk.
Some financial instruments do not have a sufficient and recurrent number of transactions to allow valuation with reference to a market price and therefore need to be valued using an appropriate model. There is a risk that the price provided by the model is noticeably different from the price which would be observed in the event of rapid disposal of the financial instrument, which could have an adverse effect on SCOR’s financial position. This risk is higher for non-listed assets, structured products (e.g. ABS, CDO, CLO, CMO, CMBS, RMBS, structured notes, etc) and on the alternative investment portfolio (e.g. hedge funds, infrastructure, commodities, private equity, etc).
However, in spite of the measures to control and reduce the risk exposure described above, the occurrence of one or more of these risks could have a material adverse impact on the business of the Group, its present and future revenues, its net income, its cash flows, its financial position, and potentially, on the SCOR share price.
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. The following types of foreign exchange risk have been identified by SCOR: (a) Transaction risk
Fluctuations in exchange rates can have consequences on SCOR’s reported net income because of the conversion results of transactions expressed in foreign currencies, the settlement of balances denominated in foreign currencies and the lack of imperfect matching between monetary assets and liabilities in foreign currencies.
As a result, changes in the exchange rates used to convert foreign currencies into Euros, particularly the fluctuation of the U.S. dollar against the Euro, have had and may have in the future, an adverse effect on the Group’s consolidated
shareholders' equity. The Group does not fully hedge its exposure to this risk. The impact of the fluctuation in the exchange rates used to translate foreign currencies into Euros on the consolidated shareholders' equity of the Group is described in Section 20.1.5 – Consolidated statements of changes in shareholders’ equity.
For the consolidated net position of assets and liabilities by currency, and for an analysis of sensitivity to exchange rates, refer to Section 20.1.6 - Notes to the consolidated financial statements, Note 26 – Insurance and financial risk.
4.2.5 SCOR’S SHAREHOLDERS EQUITY AND NET INCOME ARE SENSITIVE TO THE VALUATION OF THE GROUP’S INTANGIBLE ASSETS AND DEFERRED TAX ASSETS
In order to evaluate any potential impairment of goodwill, an impairment test is performed annually.
Additionally at each reporting date SCOR assesses if there is any indication that an intangible asset may be impaired and if such indication exists SCOR completes an estimate of the recoverable amount which may or may not result in an impairment charge. The assessment of the existence of an indication of impairment includes numerous internal and external sources of information in accordance with IAS 36 Impairment of assets and SCOR is therefore dependent on the reliability of those sources.
Acquisition costs, including commissions and underwriting costs, as well as the value of business acquired (“VOBA”) for life reinsurance, and the contractual rights with clients are recognised as assets subject to the profitability of the contracts. They are amortised on the basis of the residual term of the contracts in Non-Life, and on the basis of the pattern of recognition of future margins for Life contracts. As a result, the assumptions considered concerning the recoverable nature of the deferred acquisition costs, are affected by factors such as operating results and market conditions. If the assumptions for recoverability of deferred acquisition costs or VOBA are incorrect, it would then be necessary to accelerate amortisation.
Details of intangible assets, related impairment testing policy and recent acquisitions is included in Section 20.1.6 - Notes to the consolidated financial statements, Note 1 - Accounting principles and methods, Note 3 – Acquisitions, Note 4 - Intangible assets and Note 19- Income Tax.
The main sources of revenue from SCOR’s reinsurance operations are premiums, revenues from investment activities, and realised capital gains. The majority of these funds are used to pay out claims and related expenses, together with other operating costs. These positive operating cash flows, together with the portion of the investment portfolio held directly in cash or highly liquid securities, have always enabled SCOR to meet the cash demands generated by its operating activities.
However liquidity risk is increased in situations of market disruption as the Group may need to sell a significant portion of its assets quickly and at unfavourable terms. Additional information on SCOR’s liquid assets is included in Section 20.1.6-Notes to consolidated financial statements, Note 6 – Insurance business investments.
Some letter of credit facilities granted by SCOR to cedants require a 100% collateral in case of non-respect of financial covenants or level of rating. Significant changes in SCOR’s solvency or rating could force the Group to collateralise these facilities at 100%, which would thus deteriorate SCOR’s liquidity level. Additional information on SCOR’s letter of credit facilities is included in Section 20.1.6 - Notes to consolidated financial statements, Note 25 - Commitments received and granted.
Additional information on the timing of repayments is included in Section 20.1.6 - Notes to the consolidated financial statements, Note 26 - Insurance and financial risk.
The Reinsurance sector has been exposed in the past – and may be in the future – to involvement in legal proceedings, regulatory inquiries and actions by various administrative and regulatory authorities, as well as to regulation concerning certain practices used in the insurance sector. This involvement notably concerned agreements over the payment of "contingency commissions" by insurance companies to their agents or brokers and the consequences of such payments on competition between insurance operators, as well as the accounting of various alternative risk transfer products. Insurers appear to have put a stop to various commercial contingency commissions; a development which has spread to reinsurers in terms of the business they underwrite through brokers.
Adverse changes in laws or regulations or an adverse outcome of these proceedings could have adverse effects on SCOR’s present and future revenues, cash flows, financial position and operating income, and potentially, on the SCOR share price.
The "Solvency II" European Directive, no 2009/138/CED of the 25 November 2009, published in the OJEU on the 17 December 2009, relative to the solvency standards applicable to Insurers and Reinsurers, defines the principles and rules that will apply to the appreciation and control of risk in order that the companies in the sector will be able to attain their strategic, operational, analysis, reporting and compliance objectives.
In order to monitor the implementation of the directive across the Group, a dedicated team at the heart of the Solvency II project has been established to coordinate the efforts in the entities involved. A time line, work schedule, specific governance framework and various work stream project teams have been established to implement the directive’s requirements as they are disclosed, and in particular, to implement the 3 pillars of the Solvency II directive. The direct implication of the Group’s Executive committee is ensured by the individual members involvement in the various "Solvency II" projects work streams.
4.4.4 SCOR’S POSITIONS ON TAX ACCOUNTS ARE SUBJECT TO AUDIT AND APPROVAL BY TAX AUTHORITIES
The Group's companies establish their tax accounts in accordance with applicable local laws and regulations. However, some tax positions adopted by the Group's companies may differ from the view taken by the relevant tax authorities. Additionally tax laws and regulations may change with retroactive impact.
With the exception of a few policies purchased locally, liability risks are mostly covered at Group level for amounts deemed sufficient.
This is the case for civil liability risks related to the operation of the company caused by employees and real estate, professional liability risks, civil liability risks of directors and officers, and fraud.
5.1 History and development of the issuer 5.1.1 LEGAL NAME AND COMMERCIAL NAME OF ISSUER
SCOR SE 1, avenue du Général de Gaulle 92800 PUTEAUX France Tel. +33 (0)1 46 98 70 00 Fax : +33 (0)1 47 67 04 09 www.scor.com E-mail: scor@scor.com 5.1.4.2 Legal form and applicable legislation
the SIX Swiss Exchange (formerly SWX Swiss Exchange) in Zurich since 8 August 2007 and tradable over-the-counter on the Frankfurt Stock Exchange. The Company’s American Depositary Shares which were listed on the New York Stock Exchange since 11 October 1996 were delisted on 14 June 2007 and the Company’s securities were deregistered with the Securities and Exchange Commission (SEC) on 4 September 2007.
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 (prudential control 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 prudential control Authority), dated 15 July 2008.
 the authorised reinsurers in France can thus operate in the European Union and in the European Economic Area (“EEA”) relying on the freedom to provide services and/or on establishment (branches).
In the United States, the Group’s reinsurance and insurance subsidiaries are regulated primarily by the insurance regulators in the state in which they are domiciled, but they are also subject to regulations in each state in which they are authorised or licensed. SCOR Reinsurance Company, the Group’s main Non-Life subsidiary in the United States, is domiciled in the State of New York and SCOR Global Life U.S. Re Insurance Company, the Group’s main Life insurance subsidiary in the United States, is domiciled in Texas. The Group’s other subsidiaries in the United States are currently domiciled in Arizona, Delaware, Florida and Texas.
SCOR was founded in 1970 at the initiative of the French government to create a reinsurance company of international stature. SCOR developed quickly in the various world markets, building up a substantial international portfolio.
At the beginning of the 1980s, the government’s stake in the Company’s share capital, held through the Caisse Centrale de Réassurance, was progressively reduced in favour of insurance companies that were active on the French market.
In 1989, SCOR and UAP Reassurances combined their Property & Casualty and Life reinsurance businesses as part of a restructuring of SCOR share capital, and listed the Company on the Paris stock exchange. The withdrawal of Compagnie UAP, which held 41% of the share capital, was completed in October 1996 via an international public offering at the time of SCOR listing on the New York Stock Exchange.
In July 1996, SCOR acquired the reinsurance portfolio of the American insurer Allstate Insurance Company, doubling the share of its U.S. business in the Group’s total Group turnover.
In 1999, SCOR purchased the 35% stake held by Western General Insurance in the Bermudan company Commercial Risk Partners (CRP), thus raising its stake in this subsidiary to 100%.
In 2003, the Group reorganised its Life reinsurance business. The companies of the Group transferred to SCOR VIE and its subsidiaries all of the Group’s Life reinsurance business throughout the world. SCOR VIE, whose corporate name was changed in 2006 to SCOR Global Life SE, and which became a European Company in 2007, along with its subsidiaries, are all directly or indirectly wholly owned by SCOR SE.
On 16 May 2006, SCOR transferred all of its Non-Life reinsurance business in Europe, including Property & Casualty Treaties (including Credit & Surety business), Large Corporate Accounts and Construction reinsurance to a company of the Group, Société Putéolienne de Participations, whose corporate name was changed to SCOR Global P&C, a French subsidiary wholly owned by SCOR, effective retroactively to 1 January 2006. In 2007, SCOR Global P&C adopted the European Company statute via a merger by absorption of SCOR Deutschland Rückversicherungs AG and SCOR Italia Riassicurazioni SpA.
The Group created, on 21 April 2008, a representative office in South Africa, bound to operate Non-Life activities. On 30 June 2009, the Group announced that the South African regulatory body for the insurance sector, the FSB, has granted SCOR SE a license to conduct Life and Non-Life reinsurance business. The Group’s Non-Life representative office in Johannesburg has thus become a fully-fledged composite subsidiary of SCOR, called SCOR Africa Limited. This subsidiary’s activities will cover Africa’s English and Portuguese speaking markets as well as Mauritius.
On 27 October 2008, SCOR Global Life SE incorporated in Spain SCOR Telemed, a wholly owned subsidiary. The corporate purpose of this company is the carrying out of medical interviews by phone in the aim of Life insurance teleunderwriting. The activities of this company have been launched on 18 November 2009 to provide clients with valueadded services in the field of tele-underwriting. The company uses IT software to conduct tele-interviews and has a specialised automated underwriting system to deal with cases ranging from the standard to the most complicated ones. Severely substandard cases are handled using SCOR’s web-based underwriting manual. The advantages of SCOR Telemed for clients are manifold and include enhanced customer satisfaction, speed of service, increased disclosure and strong operational savings. The reduced level of administration also means that the sales team can focus on their core activity.
On 29 October 2008, the Group announced its decision to create SCOR Global Investments SE, its portfolio management company and third operational entity within the Group along with SCOR Global P&C SE and SCOR Global Life SE. This new structure, incorporated on 2 February 2009, carries the asset management of the investments portfolio of the Group and implements the investment strategy as determined by the Group’s Investment Committee chaired by the Group Chairman and Chief Executive Officer. SCOR Global Investments SE has been approved by the AMF as a portfolio management company with effect from 15 May 2009.
On 18 July 2009, SCOR Global Life US, a wholly-owned subsidiary of the Group, has reached a definitive agreement to acquire XL Re Life America Inc., a subsidiary of XL Capital Ltd, for an amount of EUR 31.7 million. The definitive completion of this acquisition has been announced on 4 December 2009. The acquisition will help SCOR Global Life SE to further develop its mortality and U.S. Life reinsurance market position. In 2008, XL Re Life America Inc. generated EUR 22.1 million in premium income.
On 1 November 2010 Lloyd’s Market Franchise Board gave its “in principle” approval to the creation of Syndicate 2015, of which SCOR will be the sole capital provider and which stamp capacity will be GPB 75 million for the first year. Underwriting began on 5 January 2011 for arrangement entering in force from this date. The envisaged portfolio has a strong focus on shorter tail lines coming from markets outside the US and excludes reinsurance treaty business.
On 21 December 2010, the Mexican Ministry of Finance granted SCOR Global Life SE a licence to set up a representative office in Mexico, under the name of SCOR Global Life SE Oficina de Representación en Mexico. This office supports the activity of SCOR Global Life SE on the Mexican, Central American and Caribbean markets. Effective opening of these offices occurred in January 2011.
In December 2010, the Group submitted a request for a license for SCOR Alternative Investments SA, a portfolio management company, to the Commission de Surveillance du Secteur Financier (CCSF) in Luxemburg.
Refer to Section 20.1.6 – Notes to the consolidated financial statements - Note 26 - Insurance and financial risk for the detailed ranking by maturity of fixed-term investments in the Group’s portfolio as at 31 December 2010.
Refer to Section 4.2.1 -The Group faces risks related to its fixed income investment portfolio - and 4.2.2 - The Group faces risks related to our equity based portfolio, for a description of risk management connected with its investments in debt instruments and equity securities.
Under the terms of the Contribution Treaties, Patinex and Alecta have committed to contribute to the Company 23,216,280 and 5,680,000 Converium shares respectively, i.e. a total of 28,896,280 Converium shares (the “Contributions”). A description of the contributions can be found in the document drawn up by SCOR SE, filed with the AMF on 10 April 2007 under number E. 07-032 and in an additional document filed with the AMF on 23 April 2007 under
92,969,353 Converium shares were presented for acceptance of the Offer opened from 12 June to 9 July 2007, with a supplementary acceptance period opened from 13 to 26 July 2007. The settlement/delivery of the Offer was executed according to the procedures appearing in the Offer Prospectus and SCOR proceeded to issue 46,484,676 new shares on 8 August 2007, with a unit price of EUR 18.79, including EUR 10.9130277 in issue premium and EUR 7.8769723 of face value; SCOR SE paid the Converium shareholders who contributed their shares to the Offer, a total amount of CHF 511,331,441.50 as payment of CHF 5.50 per Converium share contributed, and a total amount of EUR 37,187,741.20 as payment of EUR 0.40 per Converium share contributed, i.e. CHF 61,400,679.50 after conversion into Swiss francs on the basis of the Euro/Swiss franc exchange in effect on the date the Offer was executed.
The cash portion of the Counterpart of the Offer, including the increase in the counterpart declared on 10 May 2007, was financed out of SCOR SE’s own total equity.
A request for cancellation of the 2,840,816 shares of SCOR Holding (Switzerland) was filed on 25 October 2007 with the Business Court of the canton of Zurich (Handelsgericht des Kantons Zürich), the counterpart in cash and shares offered within the context of this cancellation proceedings being identical to the counterpart made by SCOR SE in the mixed public offer in Switzerland for all of the publicly-held registered shares comprising Converium’s share capital.
decision, the Swiss Federal Banking Commission confirmed the position expressed by the Swiss Takeover Board in its Recommendation IV dated 9 June 2007, according to which Mr. Martin Ebner, Patinex and BZ Bank AG had acted in concert with SCOR in connection with the Offer. SCOR refutes this characterisation and reaffirms that such physical person and legal entities did not act in concert with SCOR in connection with the Offer. With its decision of 23 December 2008, TAF decided that it did not have to decide in the merits, as the Offer had been consummated and the period for the application of the best price rule had expired on 26 January 2008. In its report dated 22 April 2008 (with supplement dated 13 May 2008), the independent review body Ernst & Young had confirmed that SCOR had complied with all its obligations in connection with the Offer even if Martin Ebner and the persons directly or indirectly controlled by him had been deemed to be acting in concert with SCOR. Accordingly, the appeal was written off without judgment on the merits due to the interests in the appeal having fallen away during the procedure and the appeal therefore having become abstract. None of the parties filed an appeal against this decision of the Federal Administrative Court.
During 2010, the Group committed, subject to certain condition precedents, to purchase a company, whose primary asset is an office building in Paris as described in Section 20.1.6.5 – Notes to the Consolidated Financial Statements – Note 5: Tangible assets and real estate investments. The purchase price has not been finalized yet but is estimated to be approximately EUR 150 million, payable once the transaction has closed. This purchase will be financed through SCOR’s own funds, which already made a deposit of EUR 17 million relating to this acquisition.
Dependency of the issuer with respect to patents or licenses, industrial, commercial or financial contracts and new manufacturing processes
In 2006, SCOR’s turnover grew by 26.8% in Non-Life reinsurance and by 15.3% in Life reinsurance (1.7% excluding the portion of sales realised by Revios between the date of its acquisition by SCOR and the closing date), due in particular to regaining lost shares after the rating upgrades in August 2005 and September 2006.
the "new" SCOR, one of the 5 largest multi-line reinsurance companies, on the basis of two business engines: Life and Non-Life. For more information on this acquisition, see Sections 5.2.1.1 – Public offer upon the Converium shares.
The combination of SCOR and Converium created a group organised as a network based on six platforms (“Hubs”) worldwide. Four Hubs have been created in Europe (Paris, Zurich, Cologne and London), one in the USA (New York) and one for Asia- Pacific (Singapore).
The “Dynamic Lift” plan was followed by the strategic “Strong Momentum” plan for the period 2010-2013, in which the Group set its three-year objectives adopted at its Board of Directors meeting of 28 July 2010, acting on the proposal of the management team.
With this new plan, SCOR notably intends:  To pursue its development model balanced between Life and Non-Life reinsurance business;  To continue to grow in the markets where it already operates, with its current range of products and services;  To expand its franchise, which is already highly developed throughout the world, and to further improve the quality of its long-term client relations;  To increase the contribution to its results made by asset management;  To achieve an organic growth of approximately 5% per year by leveraging on a strong market position and increasing services while increasing moderately the level of risk appetite compared to the “Dynamic Lift V2” plan. In addition to this organic growth, SCOR is planning to launch 6 initiatives in Non-Life reinsurance and 4 initiatives in Life reinsurance dealing for example with Longevity cover and the expansion of the Group’s facultative reinsurance services. Including these initiatives, the Group’s total growth should be 9% per year over the period.
The plan sets out the ways and means by which to achieve these objectives and enables the SCOR group to reinforce its position amongst the leading reinsurers. With the new plan, SCOR is thus in a position to face the current economic, financial and regulatory uncertainties and to optimise it risk profile whilst strengthening its solvency, thus creating value for its shareholders, simultaneously respecting all of its stakeholders.
Throughout 2010, the Group continued to deliver on its 3-year “Dynamic Lift V2” plan, followed by its 3-year “Strong Momentum” plan after September. The renewals throughout the year demonstrated the strength of SCOR’s franchise, based on a well diversified and balanced set up between the Life and Non-Life entities.
In March 2010, with long-standing business relations in the Israeli Life insurance market, SCOR Global Life SE, a subsidiary of SCOR SE, decided to establish a Life representative office in Tel Aviv for the Israeli Life and Health market.
Both treaty and facultative reinsurance can be underwritten on a proportional (or quota share) basis, or non-proportional (excess loss) basis or on a stop loss basis.
With respect to proportional or quota share reinsurance, the reinsurer, in return for a predetermined portion or share of the insurance premium charged by the ceding company, indemnifies the ceding company against the same predetermined portion or share of the losses of the ceding company under the covered insurance contract or contracts. In the case of reinsurance written on a non-proportional, or excess of loss basis or excess of stop loss, the reinsurer indemnifies the ceding company against all or a specified portion of losses, on a claim by claim basis or with respect to a specific event or a line of business, in excess of a specified amount, known as the ceding company’s retention or reinsurer’s attachment point, and up to a negotiated reinsurance treaty limit.
Reinsurance can be written through reinsurance brokers or directly from ceding companies. The involvement of a broker in the placement of a reinsurance contract is a decision belonging to the ceding company which depends upon local market practices, the cedent’s worldwide reinsurance market knowledge, the complexity of the risks the cedent intends to transfer and the corresponding available reinsurance capacity in the market, the cedent’s capability and resources to structuring a market submission data, placing risks and administrating them. In most of the cases, reinsurance programs are subject to a placement involving several reinsurers. The relative amount of brokered and direct business written by the Group’s subsidiaries varies according to local market practices.
Credit & Surety 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 beneficiary 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 non-proportional) treaties as well as facultative.
Ten-Year Inherent Defects Insurance According to French, Italian, Spanish laws as well as laws in other jurisdictions, ten-year inherent defects insurance covers major structural defects and the collapse of a building for ten years after completion. These risks are underwritten by proportional and non-proportional treaties as well as by facultative reinsurance.
Shipping (Marine) Insurance for shipping risks includes insurance for general property and liability for the ships and shipped merchandise as well as for ship construction.
Engineering Engineering insurance, which is divided into Construction All Risks and Erection All Risks insurance, includes the basic Property and Casualty coverage and may be extended to the financial consequences of a delay in delivery (anticipated operating losses) caused by losses identifiable under the basic Property and Casualty coverage.
Structured Risk Transfer To cope with the broader reinsurance buyers needs in transferring risk and to benefit from these changes by broadening the SCOR’s field of activity, SCOR employs a Global Head of Structured Risk Transfer who facilitates the knowledge transfer of structured products and associated risks throughout the SCOR’s organisation.
This activity is dedicated to coverage underwritten by Joint Ventures and Partnerships historically established with Lloyd’s syndicates, GAUM (Global Aerospace Underwriting Managers Limited) and MDU (Medical Defence Union).
The main other classes of Life business currently underwritten are: Financing SCOR Global Life's reinsurance services can also enable its clients to finance their development (e.g. product launching costs, portfolio acquisition). Thanks to its experience in prospective risk analysis, SCOR Global Life has the resources to combine risk acceptance and the management of financial variations in order to provide its clients with tailor-made, effective financing solutions over the medium or long term.
Disability The purpose of Disability insurance is to mitigate the loss of income when the insured is totally or partially unable by reason of sickness or accident to follow his professional occupation or any occupation for which he is suited.
Critical Illness Critical Illness (CI) insurance pays a lump sum benefit, to be used at discretion, if the insured person suffers a serious condition and survives a defined period. The use and effectiveness of CI covers varies considerably between countries. SCOR Global Life is a market leader in Critical Illness in the UK. It leverages experience and expertise from the UK to cross-sell into selected markets, such as Taiwan, Korea and Sweden.
Health Health represents a small proportion of SCOR Global Life’s portfolio. It is written predominantly in the Middle East with a book inherited from Converium, and small volumes in markets such as France and Canada. The SCOR Global Life approach is selective, with a careful market entry strategy.
6.2 Principal markets 6.2.1 BREAKDOWN OF GROSS PREMIUMS BY BUSINESS SEGMENT
On 24 August 2010, Fitch Ratings upgraded the outlook on the “A” rating of SCOR SE and its subsidiaries from “stable” to “positive” for Insurer Financial Strength (IFS) and Long-term Issuer Default Ratings (IDRs). Fitch notably indicates that this upgrade took account of “the resilience of the group’s financial strength, due to its conservative investment policy, reduced debt leverage and continued strong capital adequacy amid volatile financial markets and a less favourable claims environment. The ratings also took SCOR’s strong business and risk diversification, solid business position and resilient profitability into account”.
On 4 September 2009, Standard & Poor's raised SCOR’s Enterprise Risk Management (ERM) from “adequate" to “strong". According to Standard & Poor’s the ERM ratings upgrade reflects the Group’s excellent risk management culture, excellent emerging risk management, strong strategic risk management and strong or at least adequate risk controls for the Group’s major risks.
On 14 November 2008, A.M. Best confirmed its “A- stable outlook” Insurer Financial Strength rating for SCOR. The senior debt rating for SCOR remained at “a-” and the subordinated debt rating at BBB+.
6.4 Dependency of the issuer with respect to patents or licenses, industrial, commercial or financial contracts and new manufacturing processes Please refer to Section 4.1.6 – SCOR may be adversely affected if its cedants, retrocessionaires, insurers or members of pools in which it participates do not respect their obligations, 4.1.9 – A significant portion of our contracts contains provisions relating to financial strength which could have an adverse effect on its portfolio of contracts and its financial position, 4.1.10 - Operational risks, including human errors or computer system failure, are inherent in SCOR business, 4.2.1 – SCOR faces risks related to its fixed income investment portfolio, 4.2.2 – SCOR faces risks related to its equitybased portfolio, 4.3 – Liquidity risks, 4.5 – Insurance of specific operational risks (excluding reinsurance activity).
(ii) The geographic diversification of its business by operating in a large number of countries, both mature and emerging, and by maintaining its policy of positioning itself on strong-growth markets (opening of a Life representative office in Israel, obtaining a composite reinsurance licence in China, enabling it to add Life & Health reinsurance services to its existing non-Life activities, backing a new Lloyds syndicate, constituting a complementary route for SCOR by which to optimize the Group’s access to business that is not currently being underwritten); (iii) The diversification of underwritten risks (product lines): longevity, mortality, dependence, health and disability major illnesses in Life reinsurance; Property & Casualty (P&C) Treaties, Specialty treaties and facultative, large corporate Facultative risks and Joint Ventures and Partnerships in Non-Life reinsurance.
The SCOR as a whole is the world’s 5th largest reinsurer as ranked by “S&P Global Reinsurance Highlights 2010” excluding the Lloyd’s of London.
The highlights of 2010 January renewals were as follows:  On average, 300 basis points improvement in the expected gross pricing Underwriting Ratio;  7% rise in business volume at constant exchange rates to EUR 1,787 million, while applying an underwriting policy geared towards increased expected technical profitability;  Positive weighted average price increase of 2% across the portfolio;  7% of total premiums up for renewal cancelled and more than adequately replaced by increased shares and new business showing better profitability expectancy, from existing and new clients;  Reaffirmation of the strength and depth of SCOR’s business franchise, with minimal cedent attrition of less than 1% and increased shares and new business from existing and new clients;  Further increase in non-proportional business (36% vs. 35% in 2009) with improved geographical diversification through selective growth in the Americas (17% vs. 15%) and Asia-Pacific (5% vs. 4%).
SCOR Global Life SE has been granted on 21 December 2010, a license by the Mexican Ministry of Finance to set up a representative office in Mexico, under the name of SCOR Global Life SE Oficina de Representación en México. With the opening of the Mexican office, SCOR Global Life is gaining closer proximity with its clients in Mexico, which is the second largest Life Insurance market in Latin America.
SCOR Global Life US has completed the acquisition of XL Re Life America and completed the move of most of its operation from Plano, Texas to New York City. Underwriting and Claims will remain in Plano. SCOR Global Life US has extended its underwriting focus along the mortality gradient by supporting fully underwritten, simplified issue and guaranteed issue mortality business in order to expand its value proposition. In doing so, the Company has expanded its market penetration by adding new clients and expanded its market participation by gaining increased pool shares.
SCOR Global Life in Canada is attracting increased market attention and continues its steady growth with success in individual life, Group life & health, and has now become a new player in the critical illness market.
In the Middle East, SCOR Global Life reinforced its excellent positioning in 2010 thanks to client relations developed over the long term and an efficient network. The region recorded double-digit growth rates for both Life and Health insurance products, along with solid profits. The outlook for growth remains very high in the upcoming years.
SCOR Global Life offers its clients full product and actuarial support, backed by advanced research centres. Its market development can build on our four Research and Development (R&D) Centres. Each R&D centre focuses on a unique aspect of global life risk assessment to ensure that we develop a detailed understanding of the underlying risk factors and remain on the cutting edge of insurance innovations and developments. SCOR Global Life clients trust in our R&D Centres’ in-depth experience and expertise.
In 2010 SCOR Telemed has successfully initiated its services with several clients in Spain and is now positioned as a leading provider of tele-underwriting services on the Spanish market. SCOR Telemed also entered the Swedish market, where a local platform has been successfully set up. In 2011, SCOR Telemed will be deploying its services on the German market, where SCOR Global Life already initiated tele-interviewing services.
(1) Company the all shares of which are in the process of being sold
The Group’s subsidiaries, branches and offices are connected through a backbone network, applications and data exchange platforms, which allow local access to centralised risk analysis, underwriting or pricing databases and also give access to information on local market conditions, to be shared among the Group’s subsidiaries, branches and offices. In addition, through regular exchanges of personnel between the Group’s head offices in Paris and its nonFrench subsidiaries and branch offices, the Group encourages professional development and training across its various geographic markets and business lines.
The Group launched and completed several major restructuring projects from 2005 to 2010. This reorganisation was made in order to simplify the legal structure of the Group and clearly differentiate between the operations of subsidiaries that are dedicated respectively to Life reinsurance and Non-Life reinsurance, with a view towards optimal annual allocation of capital between the operations.
In connection with the implementation of the New SCOR project, which was announced in June 2005, SCOR transferred, by way of spin-off, all of its Non-Life reinsurance business in Europe, including Property & Casualty Treaties (Specialty Treaties, Business Solutions (facultative) and Major Corporate Accounts to Société Putéolienne de Participations (the corporate name of which was changed to SCOR Global P&C), a French subsidiary wholly owned by SCOR. This contribution was approved on 16 May 2006, by the Combined Shareholders’ Meeting of the Company, effective retroactively on 1 January 2006.
In 2009, the three Group Non-Life run-off companies based in the Americas dedicated to the run-off of the Non-Life portfolios following the termination of the activities in the concerned fields and segments – namely GSNIC, Commercial Risk Partners Ltd and Commercial Risk Re-Insurance Company – have been consolidated. The process required an amalgamation of Commercial Risk Partners Ltd and Commercial Risk Re-Insurance Company with GSNIC. The assets,
In 2008 and 2009, SCOR structured itself around six Hubs: Paris, Zurich, London and Cologne for Europe, Singapore for Asia and New York for the Americas.
The acquisition of Converium in August 2007 led the Group's companies to launch a significant restructuring effort, the effects of which continued until 2010, including:  the creation of a single structure for all the common support functions to the branches of the two operating companies SCOR Global Life and SCOR Global P&C in Cologne, Germany, in the form of a SCOR services branch;  the creation of a SCOR services branch in London, in May 2008, which combines the personnel of SCOR Global Life and SCOR Global P&C based in London, branches of the Life and Non-Life reinsurance and direct insurance companies and capital provider for Lloyd's syndicates, the latter being subsidiaries of SCOR Global P&C. The reinsurance entities will become branches of SCOR Global P&C and of SCOR Global Life in the framework of the corporate form of Societas Europaea;  the transfer of portfolios and the network rationalisation, in particular in Asia-Pacific and in Latin-America,
The “Hub” structure has been implemented in Cologne on 5 May 2008, in London on 20 May 2008, in New York on 18 June 2008, in Singapore on 16 June 2008, in Zurich on 27 January 2009 and in Paris on 24 February 2009.
7.2 List of issuer’s significant subsidiaries Refer to:  Section 7 - Organisational structure chart;  Appendix A – 1.5 -- Unconsolidated Corporate Financial Statements of SCOR SE – Note 2.3: Subsidiaries and Affiliates;  Section 20.1.6 – Notes to the Consolidated Financial Statements – Note 24: Related party transactions;  Section 25 – Information on Holdings;  Section 7.1.1 – Group operating companies as concerns the role of SCOR towards its subsidiaries;  Section 20.1.6 – Notes to the Consolidated Financial Statements – Note 3: Acquisitions as concerns the financial equation of the acquisitions of entities in 2009;  Section 20.1.6 – Notes to the Consolidated Financial Statements – Note 3: Acquisitions as concerns the share of the entities acquired in 2009 income included in the Group’s consolidated income;
 Section 20.1.6 – Notes to the Consolidated Financial Statements – Note 3: Acquisitions for a description of the operations, of the relevant interim management balances and of the strategic economic assets of the main subsidiaries.
8.1 Major existing or planned property, plant and equipment SCOR is lessee of its head office which is located at 1, avenue Général de Gaulle, 92074 Paris La Défense (district of Puteaux – 92800). The SCOR building, of more than 30,000 m2 of office space, is held by Compagnie La Lucette since 2006. Neither the sale of the building from KanAm to Compagnie La Lucette in 2006, nor the recent acquisition of Compagnie La Lucette by Icade, a French REIT, resulted in any change in the terms of the lease that had been signed by SCOR and KanAm when the property was sold to KanAm in 2003. This lease was signed for a nine-year term and for an annual rent reduced in 2010 to EUR 12.9 million as a result of the recent ICC index variation. Under this lease and in addition to the usual guarantees, KanAm requested financial guarantees based on the financial rating of SCOR and the term of the lease, the benefit of which was transferred to Compagnie La Lucette. For more information on these guarantees, refer to Appendix A – Unconsolidated corporate financial statements of SCOR SE, Note 15 - Analysis of commitments given and received. The Group leases space separate from its head office for the purpose of safeguarding its data storage facilities in case of emergency.
8.2 Environmental issues that may affect the utilisation of property, plant and equipment Refer to the environmental report in Appendix C Environmental impacts.
The financial data of the SCOR Group is presented in Section 3 – Selected financial data and in Section 20.1 – Historical financial information: consolidated financial statements. The commentary below is based on the financial data presented in the aforementioned sections.
9.1 Financial position The 2010 results and balance sheet strength demonstrate the effectiveness of SCOR’s strategy which relies on high business and geographical diversification, focusing on traditional reinsurance activity with very limited exposure of reinsurance liabilities to economic activity risks and no material off balance sheet exposure. For the January 2011 renewals, SCOR was well-positioned to benefit from its improved industry position to combine strong premium growth and stable price changes in an overall declining reinsurance market context, which is increasingly fragmented (Refer to Section 12 – Trend information).
SCOR’s shareholders’ equity increased by 16.1% before the impact of dividends. After dividend payments, shareholders’ equity increased from EUR 3,901 million at 31 December 2009 to EUR 4,352 million at 31 December 2010 (consolidated shareholders’ equity was EUR 3,416 million at 31 December 2008).
SCOR maintained its conservative asset management policy whilst executing a prudent inflection programme directed to improve the return of its invested assets whilst keeping a strong focus on liquidity management. As indicated in September 2010 in the “Strong Momentum” strategic plan, the Group maintained a “rollover investment strategy" for its fixed income portfolio in order to have significant financial cash flows to reinvest in the event of a sudden change in the economic and financial environment, whilst seizing market opportunities in the short term.
Net invested assets including cash and cash equivalents, amounted to EUR 20.9 billion at 31 December 2010 as compared to EUR 20.0 billion and EUR 18.8 billion at 31 December 2009 and 2008, respectively.
9.2 Operating results This section includes comments on both the current year operating results as well as comparisons to prior years.
Net earned premium for the year ended 31 December 2010 amounted to EUR 6,042 million as compared to EUR 5,763 million and EUR 5,281 million for the years ended 31 December 2009 and 2008, respectively. The overall increase in net earned premium of EUR 279 million from 2009 to 2010 is consistent with the increase in written premiums.
The net results of the Group’s retrocession programmes were EUR (160) million, EUR (136) million and EUR (140) million in 2010, 2009 and 2008, respectively.
However, the impact of alternative retrocession coverage, Atlas V, Atlas VI (SCOR Global P&C) and the mortality swaps (SCOR Global Life) are not included in the net cost of retrocession as the products are accounted for as derivatives. The total cost recorded in 2010 relating to Atlas V and Atlas VI amounted to EUR 28.0 million, excluding one time issuance costs totalling EUR 1 million included as financing expenses. The 2010 cost relating to the mortality swaps and included in investment income amounted to EUR 6 million. In 2009, this cost amounted 5.5 million.
The Group cost ratio, calculated as the total of all management expenses less certain non standard expenses (e.g. bad debts), legal settlements, brokerage commissions and amortisations, divided by gross written premium, slightly increased from 5.5% at 31 December 2009 to 5.6% for the year ended 31 December 2010. The total expense base for the years ended 31 December 2010 and 31 December 2009 respectively was EUR 404 million and EUR 389 million.
The 2009 gross written premium of EUR 3,261 million represents an increase of 5% compared with the 2008 published gross written premium of EUR 3,106 million. The increase in premium was primarily driven by strong January and April renewals coupled with overall increases in prices, which demonstrates SCOR’s ability to benefit from improving reinsurance market conditions.
Number of catastrophes occurred during the financial year (1) 17 (7) 11(6) 10 (3)
Losses and claim management expenses due to catastrophes, gross 346 153 214
Losses due to catastrophes, net of retrocession (5) 317 153 189
Group ratio of losses excluding catastrophes 61.6% 62.9%(2) 63.9% (1) SCOR defines a catastrophe as an event involving several risks and causing pre-tax losses, net of retrocession, totalling EUR 3 million or more. (2) Excluding exceptional impact of the arbitration results with Allianz relating to the World Trade Center (3) Storm Emma, China Snowstorm, Australian Floods, China Earthquake, Maiunwetter Storm Germany, Indiana and Iowa Floods, Hurricanes
Ike and Gustav, and Hail Storm Spain. (4) Loss ratios are calculated on the basis of Non-Life claims, expressed as a percentage of Non-Life premiums earned. (5) Net of recoveries and reinstatement premiums (assumed and retrocession) and immaterial development on prior year (6) Wind storm Klaus, earthquake in Costa Rica, forest fire in Australia, earthquake in Aquila, Italy, hailstorm Felix, Eastern European floods, earthquake in South Africa, hail storm in Austria and Switzerland, typhoon Morakot in Taiwan, floods in Turkey and earthquake in Japan (7) Earthquakes in Chili, Haïti and New Zealand, floods in Saudi Arabia, Eastern Europe, China, Paksitan, Poland, Germany and Australia, storm Xynthia, Typhoon Kompasu, Melbourne hailstorm in Australia, East cost USA, Catalonia (Spain) and Scandinavian snow storms, rainfalls in Denmark, storm in Brazil.
 The estimated net loss impact of floods in Poland and Germany (August 2010) is EUR 10 million;  Rainfalls in Denmark (August 2010) : estimated loss of EUR 11 million;  Impact of recent cat events, earthquake in New Zealand (September 2010) and floods in Australia (December 2010), for which final assessments remain uncertain, has been preliminary estimated to be EUR 65 million
 Additionally, in 2009, there was only one non natural catastrophe loss in excess of EUR 10 million. This was a business solutions claim which resulted in an impact of EUR 18 million, gross and net of retrocession. As at 31 December 2010, there have been no further material developments in this loss.
In 2009, the Group successfully renewed its retrocession programmes. Furthermore, SCOR reopened the market for catastrophe bonds, setting new innovative standard with its USD 200 million Cat cover closed early February 2009. Overall, the purchase of collateralised solutions (Atlas IV, V, VI and the Mortality Swap), improves the credit exposure of the Group vis à vis its retrocessionnaires.
In 2008, the Group renewed its retrocession programme post acquisition of Converium in line with the strategy determined in 2007. The increased needs and potentially volatile retrocession market lead to continued diversification strategy as evidenced by the Atlas III and IV structures and the mortality swap. The 2009 retrocession coverage was implemented at cost which was below initial budgeted amounts.
On 17 December 2010, SCOR entered into a Contingent Capital arrangement with UBS, as described in Section 20.1.6 – Notes to the consolidated financial statements, Note 13 – Information on share capital, shareholders’ equity and capital management.
The total liquidity of the Group of EUR 1.3 billion (comprised of cash and cash equivalents and short term investments) and the low financial leverage ratio reflects the Group’s treasury and financing strategy to remain very liquid.
On 1 April 2010, the Swiss Financial Market Supervisory Authority ("FINMA") revoked its decree of 26 June 2007, which it issued in conjunction with the take-over of Converium by SCOR, under the condition that all intra-group transactions or any transaction affecting the capital resources of SCOR Switzerland AG (formerly Converium AG) and exceeding a certain threshold be submitted to FINMA for prior approval. This reporting requirement will remain in force until 8 August 2012.
In addition, the Group and its companies are subject to certain financial covenants (minimum net worth requirements and maximum debt levels) under the terms of certain stand-by letter of credit agreements. Non respect of said covenants might lead to an increase in the percentage of required collateralisation.
10.5 Sources of financing relating to the future investments by the company and to its property, plant and equipment SCOR SE committed to purchase a property Company, whose only asset is an office building in Paris, as described in Section 20.1.6.5. The purchase will be financed through SCOR's own funds.
11.1 Research and development activities Biometric risks such as mortality, longevity, disability and long term care are at the heart of underwriting in life reinsurance. Since these risks are subject to shocks and various trends, SCOR Global Life closely monitors their current developments in four Research & Development Centres which are:  R&D Centre for Longevity and Mortality Insurance: carrying out mortality studies on life and annuity portfolios and providing support in pricing assumptions for new business, in particular new products.
 R&D Centre for Disability and Critical Illness: dedicated to the analysis of disability and critical illness risks; two complex risks due to multiple definitions, cover types and socio-economic environments.
The R&D Centres are part of SCOR Global Life’s range of services: analyses and risk projections produced by the Centres are used by SCOR Global Life’s teams to advise their clients on the design and the monitoring of their life and health insurance products.
SCOR is also a member of two conventions with the following partners:  Risk Fondation, in collaboration with the universities of Toulouse and Paris Dauphine, is dedicated to risks market and value creation. For SCOR, it implies costs of EUR 1.5 million allocated over 5 years.
In 2010, as part of the Group’s strategic plan for Strong Momentum, SCOR created the SCOR Global Risk Center which is committed to the knowledge and science of risks in both the actuarial and other fields. The SCOR Global Risk Center is devoted to life insurance risks, non-life insurance risks and economic and financial environment risks and brings together studies and publications produced or supported by SCOR, as well as all of the resources that SCOR wishes to reference for all those interested in risk. The Global Risk Center deals with all disciplines concerned by risk (mathematics, actuarial, physics, chemistry, geophysics, climatology, sociology, law, economics, finance, etc.), although contributions may originate from any science field, without restriction.
SCOR’s central back-office system is a custom software package known as Omega. Omega was designed to allow the tracking of clients and policyholders within the Group, grant online underwritting authorisations throughout the world, track claims, analyse the technical profitability of contracts, and perform quarterly closings based on the latest estimated results. The Omega database has reflected the new organisation of SCOR Global P&C and SCOR Global Life worldwide portfolios. After an extensive study, SCOR has decided to update and improve Omega, thereby capitalizing on its existing strength. The project which will mix technical modernization and development of functional evolutions has now entered a preparation phase to confirm global architecture, exact functional scope, ergonomy and workflow, along with governance.
The focus in 2010 has again been on strengthening the front office applications to improve risk selection, anticipation and reactivity in markets and products, and simulations of results. A number of projects have been commenced in recent years, and the objective will be reinforced over the next two years. The monitoring system is modernising and expanding in order to strengthen visibility on the development of product lines and markets. Accounting forecasts are developed from underwriting plans and comparative analysis is produced in standard reports. All the components of this planning system, expenses, Non Life, Life planning and corporate planning, have been integrated in the market software solution SAP BPC. New reserving and financial modelling tools are implemented. Non-Life pricing is closely managed using xAct, the new in-house standard pricing tool, based on standardised models, profitability analysis and full traceability of proportional and non-proportional business, on a global basis. A first version of xAct has been implemented to manage 2011 renewals in priority markets, before covering the full portfolio next year and replacing the prior solutions. Control of exposure to natural catastrophes has also been improved by implementing a data warehouse of all liabilities and accumulations, after modelling with market solutions RMS, AIR and EQECAT. In the Life business, the embedded value calculation has been revised and integrated with the internal model. Life pricing harmonization is another main priority, and a project has just been launched this year. Other front-office solutions have been developed for SCOR Global Life, for harmonising and reinforcing substandard risks underwriting, and tele-underwriting. Finally, the SCOR Group continues to work on extending and industrialising its Asset and Liability Management (ALM) tool. After the implementation of Non Life last year, the Life risks modelling module has been developed in 2010. This internal model will be central in the Solvency II compliance process, in which IT is deeply involved. In parallel with the internal model CoCPIT system development and enhancement, IT initiated in 2010 the design and description of a global master data model for reinsurance, and will pursue a thorough data quality control and integration of the economic balance sheet calculation in 2011. The importance that SCOR places on risk control and on strategic planning has clearly been confirmed.
also co-chairing the Rüschlikon Initiative, launched with the major Brokers and Reinsurers to develop e-administration in Reinsurance.
The Group has also implemented an ambitious security plan based on stronger physical and logic access controls, protection against unauthorised access, and restart in the event of a disaster or a pandemic.
SCOR IT is playing a key role in implementing the “Green SCOR” policy decided by the Group, and drives a number of actions in the frame of a multi-year plan, which includes especially data centre consolidation, server virtualisation, new low-energy desktops and laptops, and reduction in printing. In 2010, latest generation telepresence facilities have been deployed in all Hubs, leading to reduced travel.
A global information systems governance is progressively defined. The governance approach covers budget preparation, project portfolio management, technical standards, first elements of the IT internal control and other areas. In 2010, change management processing rules have been defined.
Information-sharing remains a priority. The portal, collaborative sites, and the use of the external information collected by SCORWatch, the Group's Competitive Intelligence solution, have been extended to the entire Group.
Finally, SCOR's IT strategy for 2013, aligned with the Group's growth objectives, has been defined as a full part of the Strong Momentum SCOR strategy.
Additionally SCOR uses its expertise to develop expert IT solutions for its clients (including the field of medical selection). Different solutions are already in place and widely used by ceding companies. Other initiatives are engaged in this field in order to reinforce the alignment of our services with market expectations.
Thus, the renewals at 1 January 2011 experienced a stable expected technical profitability and return on capital in line with the objectives of the “Strong Momentum” plan, due to dynamic management of the portfolio. In addition, the average weighted rates were stable in an environment of slight rate decreases, with a few upward and downward exceptions such as Energy and US Cat driven by loss experience. In the meanwhile, the terms and conditions remained- unchanged. Finally, the Group benefited from a significant increase in written premiums, demonstrating the Group’s momentum on the reinsurance markets as well as the strength of its franchise.
The key characteristics of these SCOR Non-Life renewals at 1 January 2011 are as follows (all figures below are at constant exchange rates):  stable weighted average underwriting ratio (-0.2 percentage points), hence stability of expected technical profitability;  13% rise in gross written premiums to a total of EUR 2,056 million, including two major quota share contracts - one motor treaty in the UK and one whole account treaty in China - corresponding to 2 new “Strong Momentum” initiatives and representing growth of 6%;  prices virtually stable, with a weighted average decrease of around 0.2%;  continued active portfolio management, with 7% of the premiums up for renewal cancelled and 12% restructured;  no change in the portfolio profile, remaining underweight in US long-tail Casualty and to a lesser extent in US Cat, which proved to be the areas under most price pressure.
The total volume of premiums renewed at 1 January 2011 increased by 15% to EUR 1,533 million, against EUR 1,335 million up for renewal (69% of Treaty P&C annual volume). Besides the two above-mentioned deals, SCOR continues to actively execute its portfolio management strategy by further expanding Non-proportional business and improving geographic diversification towards Asia and the Americas.
In terms of geographies, 10% growth is recorded in Europe Middle East and Africa through first the new motor quotashare deal in UK and successes in acquiring new selected clients or businesses in Germany and Austria. In Americas,
the premium volume has increased by 19%. This meaningful growth is concentrated in the US and leverages the recent rating agency upgrades and the launch of the Strong Momentum New Initiatives. A very strong growth (+66%) is recorded in Asia, mainly driven by the acquisition of a large new quota-share in China.
In term of business mix, the most significant progress was recorded in Marine & Energy (+22%), Credit & Surety (+18%)and Engineering (+14%), through share increases and new opportunities. In Marine & Energy, Pure Energy programs and programs containing Energy benefit from 2010 loss impact on rates.
The financial crisis that began in 2008, which led to recession for developed economies, affected the Life insurance markets in 2009 and continued to weigh on business in 2010, presenting a number of different challenges to Life reinsurance players such as SCOR.
Conversely, faced with the moribund economic situation, the demand for income protection has risen.
In the United Kingdom, the savings and mortgage market declined very sharply. However the loss of mortgage related protection sales was countered by increased sales to cover family and business protection needs. The depth of the recession in Ireland has been very significant and consequently protection sales are some 25% below the pre-recession peak
SCOR is watching the opportunities in the current market environment. Due to significant decreases in their investment portfolios, insurers have seen a non-negligible deterioration in their solvency ratios. Faced with the financial markets,
Information on the members of the Board of Directors and Senior Management
Administrative, management, and supervisory bodies and Senior Management conflicts of interest
The Board of Directors of the Company had the following 16 members as of the date of this Registration Document:  Chairman: Denis Kessler
(1) Member of the Strategic Committee. (2) Member of the Risk Committee (3) Member of the Accounts and Audit Committee (4) Member of the Compensation and Nominating Committee (*) Companies which shares are listed on a regulated or organised market
Director: - SCOR SE (France) - SCOR Global P&C SE (France) - SCOR Global Life SE (France) - SCOR Global Life U.S. Re Insurance Company (U.S.) - SCOR Reinsurance Company (U.S.) - SCOR U.S. Corporation (U.S.) - SCOR Holding (Switzerland) AG (Switzerland) - SCOR Global Life Re Insurance company of Texas
(U.S.) - SCOR Canada Reinsurance Company (Canada) - SCOR Global Life Rückversicherung Schweiz AG
(Switzerland) - SCOR Switzerland AG (Switzerland) - SCOR Global Life Reinsurance Company of America
Member of the Supervisory Board: - SCOR Global Investments SE (France)
Offices and positions held in the Group Chairman of the Board: - Commercial Risk Partners Limited (Bermudes) - Commercial Risk ReInsurance Company (U.S.) - Commercial Risk Reinsurance Company Limited (U.S.) - SCOR Italia Riassicuriazioni S.p.A (Italie)
Holding B.V.) (The Netherlands) - Pirelli & C. S.p.A. (Italy)* - Association de Genève (Switzerland)
Vice-Chairman: - Banca Passadore S.p.A. (Italy) - Chairman's Council of the CEA Comité Européen des Assurances, the European insurance and reinsurance federation (Belgium)
Director: - Yura S.A. (The Netherlands) - Camfin S.p.A. (Italy)* - IFI S.p.A. (Italy)* - Ergo Italia S.p.A. (Italy) - Ergo Assicurazioni S.p.A
Offices held during the last five years: Gérard ANDRECK (1) Director
Other positions: France Chairman of the Board of Directors: - SOCRAM BANQUE - MACIF SGAM - MACIF - CEMM SAS - OFI HOLDING (ex OFI INSTIT)
Director: - SEREN (SGAM) - Etablissements Maurel & Prom* - MACIFILIA - Macif-Mutualité - SCOR SE* - MACIF GESTION - Compagnie Foncière de la MACIF - Foncière de Lutèce - UGM Couleurs Mutuelles - OFI SMIDCAP (SICAV)
Chairman of Supervisory Board: - IN SERVIO - Maurel & Prom* - Capa Conseil SAS
Permanent Representative of MACIF Participations: - on the Board of Directors of Compagnie Immobilière MACIF
Chairman: - American Friends of the Claude Pompidou Foundation (U.S.) - French American Foundation (U.S.)
Director: - SCOR U.S. Corporation; - General Security Indemnity Company (U.S.) - General Security Property and Casualty Company (U.S.) - InBev (Belgium) - CIFG Holding (Bermuda) - CIFG Guaranty (Bermuda)
Director: - Deliciel AG (Switzerland) - SCOR UK Company Ltd (UK) - SCOR Switzerland AG (Suisse)- SCOR Holding (Switzerland) AG (Switzerland) - SCOR Global Life Rückversicherung Schweiz AG (Switzerland)
Director: - Sal. Oppenheim (Schweiz) AG (Switzerland) - Zurich Vie (Switzerland) - Zurich American Ins. Co. (US) - Zurich Vida, Companhia de Seguros SA (Portugal)
Board member of the European advisory Board : - Booz & Co (US)
Other: - Conseil Supérieur de la Mutualité (High Council on Mutual Insurance): member of the “Approval” Committee and member of the “General Affairs” Committee - FNMF: Vice-Chairman of the Comité National des Réalisations Sanitaires et sociales (National Council on Health and Social Achievements)
Commercial Code Chairman of the Supervisory Board: - MATMUT Assurances - MATMUT VIE - MATMUT Protection Juridique - MATMUT ENTREPRISES
Chairman: - MATMUT DEVELOPPEMENT - MATMUT IMMOBILIER - MATMUT LOCATION VEHICULES
Vice-Chairman of the Board of Directors: - OFI Holding (ex OFI INSTIT)
Vice-Chairman of the Board: - MATMUT Vie - AMF Assurances - MTG XV
Permanent Representative of: - SMAC to the Board of Directors of OFIMA TRESOR - MATMUT to the Supervisory Board of OFI Palmarès - SMAC on the Board of Directors of OFI Convertibles - SMAC on the Board of Directors of OFI SMIDCAP - MATMUT on the Supervisory Board of IMA - MATMUT on the Supervisory Committee of OFI RES - OFIVALMO Gestion on the Board of Directors of OFIVALMO NET EPARGNE
Other: - Vice-Chairman of CEGES - Member of the staff of the Fédération Nationale de la Mutualité Interprofessionnelle (FNMI) - Chairman of the Comité National des Réalisations Sanitaires et
Offices held during the last five years: Birth Date: 4 May 1943
Professional address: Institut Français des Administrateurs 7 rue Balzac 75382 Paris Cedex 08
Principal position: Chairman of the Institut Français des Administrateurs (IFA, French Society of Directors) (France)
France : Director: - Alcatel Lucent* - Crédit Agricole S.A.* - Gaz de France* - SCOR VIE
Other positions: France: Chairman and CEO: - Médéric Assurances SA - Tissage de Picardie – Tissage Rinet SA
Chairman: - Holding FGA SAS - Holding Fondateurs SAS - Le Monde Prévoyance SAS - Médéric Innovation SAS
Chairman of the Board of Directors: - Médéric Epargne SA - Viamédis SA
Member of the Supervisory Board: - Société Editrice du Monde SA
Member of the Supervisory Committee: - Holding Fondateurs SAS - Holding Accueil Mutuelles SAS
Offices held during the last five years: Monica MONDARDINI (1) Director
Principal position: - Deputy Director and Chief Executive Officer of Gruppo Editoriale L’Espresso S.p.A. (Italy)
Vice-Chairman: - Editoriale FVG S.p.A. (Italy) - Editoriale La Nuova Sardegna S.p.A. (Italy) - S.E.T.A. S.p.A. (Italy)
Professional address: UNIQA Versicherungen AG Untere Donaustrasse 21 A-1020 Vienna Austria
Principal position: Chairman of the Management Board: - Austria Versicherungsverein auf Gegenseitigkeit Privatstiftung (Holding) (Austria)
Chairman of the Supervisory Board: - UNIQA International Versicherungs Holding GmbH (Austria) - DIE ERSTE österreichische Sparkasse Privatstiftung, Wien (Austria) - UNIQA Assurances S.A. (Switzerland)) - UNIQA Previdenza S.p.A. (Italy) - UNIQA Assicurazioni S.p.A. (Italy) - UNIQA Protezione S.p.A.,(Italy)
Other offices and positions held in any company in France and abroad as at the date of the Registration Document
Offices held during the last five years: Jean-Claude SEYS (1) (2) ** Director
Principal position: Vice-Chairman and Deputy Director of COVEA (mutual insurance group company) (France)
France - MAAF Assurances (SAM) - MAAF (SA) - MMA IARD (SAM) - MMA VIE (SAM) - COVEA (SGAM)
Chairman of the Board of Directors: - Covéa Ré (formerly Océan Ré) - DAS (SAM) - MAAF Santé (Mutuelle 45) - Force et Santé (Union Mutualiste) - COSEM (Association) - SC Holding S.A.S. (Santéclair) - MMA IARD (SA) - MMA VIE (SA) - MMA Coopérations (SA)
Offices held during the last five years: Claude TENDIL (1) (4) Director
Professional address: GENERALI FRANCE Chairman and Chief Executive Officer 7/9, boulevard Haussmann 75009 Paris
Chairman of the Board of Directors: - Europ Assistance Holding - Generali France Assurance
Member of the Supervisory Board : - Generali Investments SpA (Italy)
(1) Member of the Strategic Committee. (2) Member of the Risk Committee (3) Member of the Account s and Audit Committee (4) Member of the Compensation and Nominating Committee (*) Companies which shares are listed on a regulated or organised market
Director: - Bouygues S.A.* - Alstom* - Nexans S.A.* - Société Foncière Financière et de Participations (FFP)* - Verner Investissements SAS
(1) Member of the Strategic Committee (2) Member of the Risk Committee (3) Member of the Accounts and Audit Committee (4) Member of the Compensation and Nominating Committee (*) Companies which shares are listed on a regulated or organised market
Gérard Andreck, a French citizen, has been Chairman of the MACIF Group since June 2006. Andreck has a deep interest in the mutual company and insurance sector, and he served as President of CJDES (Centre des Jeunes Dirigeants de l’Economie Sociale) from 1991 to 1993. In June 1997, he became Chief Executive Officer of Macif and second-in-command to Jean Simonnet, who was Chairman at that time. Gérard Andreck was instrumental in the development of the close partnership between Caisses d'Epargne, Macif and Maif in October 2004, and he was appointed Chairman of the Management Board of the holding company that formalised this partnership in November 2005. On1 July 2008, he has been appointed Chairman of the Groupement des Entreprises Mututelles d’Assurances (GEMA) for three years and became President of the Conseil des Entreprises, Employeurs et Groupements de l’Economie Sociale (CEGES) on 12 May 2009. In October 2010 he was appointed in the Conseil Economique et Social et Environnemental (CESE).
Before becoming a partner at Compass Advisers LLP in New York in June 2002, Allan Chapin, a U.S. citizen, was a partner at Sullivan & Cromwell LLP and Lazard Frères in New York for several years. He also serves on the boards of directors for the Pinault Printemps Redoute group (PPR) and Chairman of the French American Foundation.
Peter Eckert, a Swiss citizen, has a broad international experience in Risk Management, General and Life Insurance, Asset Management, Banking and IT. He was member of the Management Board (1991-2007) and Chief Operating Officer (2002-2007) of Zurich Financial Services, member of the Swiss Federal Banking Commission EBK since 1 July 2007 until 31 December 2008 and Deputy Chairman of the Board of the Federal Financial Market Supervising Authority (FINMA) in Switzerland from 1 January 2008 to 31 December 2008. Since 1 January 2009, he is Chairman of Bank Clariden Leu.
Daniel Lebègue, a French citizen, has been Chairman of the French National Treasury, Chief Executive Officer of BNP and Caisse des Dépôts et Consignations. He currently serves on the Boards of Directors for Technip. He is the Chairman of the French Institute of Directors (Institut Français des Administrateurs – IFA) and of several associations and foundations.
André Lévy-Lang, a French citizen, a former student of the Ecole Polytechnique (1956) and a Ph.D. in Business Administration from the University of Stanford, began his career in 1960 as a physicist at the French Atomic Energy Commission. From 1962 to 1974 he held various different technical and managerial positions at the Schlumberger group, both in France and the United States. He joined the Paribas group in 1974 and in 1982 was appointed Chairman of the Board of Directors of the Compagnie Bancaire, a specialised financing subsidiary of Paribas, before becoming Chairman of the Board of Directors of the Paribas group in 1990. He held these positions until the merger with BNP in 1999. André Lévy Lang is an associate professor emeritus at the University of Paris-Dauphine, Chairman of the Supervisory Board of Les Echos, Chairman of both the Risk Foundation and the Louis Bachelier Institute, ViceChairman of the Europlace Finance Institute and Vice-Chairman of the French Institute for International Relations. He is also a member of the boards of the Institut des Hautes Etudes Scientifiques and the American Hospital in Paris.
Chairman and Chief Executive Officer Denis Kessler is assisted in his duties to define and implement the strategy for SCOR's business by an executive board, known as the Executive Committee (the “COMEX”), the members of which are employees of SCOR.
20071 Chairman of the Board of Directors: SCOR Holding (UK) Ltd (UK) SCOR Insurance (UK) Ltd (UK) SCOR UK Company Ltd (UK)
1 Benjamin Gentsch was previously an executive at Converium since 2002.
Permanent Representative: of SCOR Global Life SE at MUTRE S.A.’s Board (France) of SCOR SE with the French Federation of Insurance Companies (France)
Statutory Director : ReMark International BV (The Netherlands) ReMark Group BV (The Netherlands)
Director: SCOR Holding (Switzerland) AG (Switzerland) SCOR Reinsurance Asia-Pacific PTE Ltd (Singapore) SCOR Global Life Re Insurance Company of Texas (US) SCOR Global Life Reinsurance Company of America (U.S.) SCOR Global Life Re Insurance Company (U.S.) Prévoyance Ré (France) ReMark Japan K. K. (Japan) Sweden Reinsurance Co. Ltd (Sweden) SCOR Global Life Rückversicherung Schweiz AG (Switzerland) SCOR Switzerland AG (Switzerland)
Member of the Supervisory Board : SCOR Global Investments SE (France)
Philippe Trainar 57 Group Chief Risk Officer 2010 Director: SCOR Africa Limited (South Africa) SCOR Global Life Rückversicherung Schweiz AG (Switzerland) SCOR Global Life SE (France) SCOR Global P&C SE (France) SCOR Holding (Switzerland) AG (Switzerland) SCOR Switzerland AG (Switzerland) SCOR UK Company Limited (UK) SCOR Underwriting Limited (UK)
Chairman and Chief Executive Officer: SCOR Auber (France) Chairman: DB Caravelle (France)
Member of the Investment Committee: SCOR Reinsurance Asia-Pacific Pte Ltd (Singapore)
Denis Kessler, 58, Chairman of the Board of Directors and Chief Executive Officer of SCOR SE
Julien Carmona, a French citizen, is a former student of the Ecole Normale Supérieure and has an advanced degree in history. He is also a former student of the Ecole Nationale d'Administration and a former French Treasury Auditor. After beginning his career at the French Finance Ministry, he joined BNP Paribas in 2001. From 2004 to 2007, he acted as Financial Adviser to the President of the Republic. He was Executive Finance Director at the Caisse Nationale des Caisses d'Epargne (CNCE) from June 2007 until it merged with the federal Bank of Banques Populaires in July 2009. He joined SCOR in October 2009 and was appointed Chief Operating Officer on 1 January 2010.
Benjamin Gentsch, 50, Deputy Chief Executive Officer of SCOR Global P&C SE and Chief Executive Officer of SCOR Switzerland
Frieder Knüpling, a German citizen, holds degrees in Mathematics and Physics from the Universities of Göttingen and Freiburg. He worked as a lecturer and research assistant at Freiburg University and several other colleges, until he received a PhD in Economics based on research on econometric modelling of macroeconomic and financial data. From 1999 to 2002 he worked for Gerling-Konzern Globale Rückversicherungs-AG and its UK subsidiary, dealing with pricing and valuation. As of 2003 he headed the Corporate Actuarial & Treasury department of the Revios group. Since 2007 Frieder Knüpling has headed SCOR’s Corporate Actuarial Department, reporting to the Chief Risk Officer. He was appointed Deputy Chief Risk Officer of SCOR in December 2008, then Head of Financial & Actuarial of SCOR Global Life. He is a fellow of the German Association of Actuaries (DAV).
Paolo De Martin, 41, Group Chief Financial Officer of SCOR SE
Committee in November 2006, then Deputy Chief Executive Officer of SCOR Global Life SE in September 2007. In January 2008, he was appointed Chief Executive Officer of SCOR Global Life SE.
Victor Peignet, 53, Chief Executive Officer of SCOR Global P&C SE
François de Varenne, 44, Chief Executive Officer of SCOR Global Investments SE
To our knowledge, during the last five years:  no Director and no member of senior management has been convicted of fraud;  no Director and no member of senior management has been associated with a bankruptcy, sequestration, or liquidation;  no Director and no member of senior management has been the subject of an accusation or official public sanction issued by statutory or regulatory authorities1; and
The approved principles and rules for setting compensation and benefits granted to Board members are provided in Appendix B - Report of the Chairman of the Board of Directors on the terms and conditions for preparing and organising the work of the Board of Directors and on internal control and risk management procedures in compliance with Article L. 225-37 of the French Commercial Code – Part I – Conditions for preparing and organising the work of the Company’s Board of Directors – e) Principles and rules for the determination of compensation and in-kinds benefits for corporate officers.
Mr. Denis Kessler (1) 41,250 35,300 Mr. Carlo Acutis 37,000 41,900 Mr. Gérard Andreck 37,000 43,600 Mr. Antonio Borgès (2) 39,550 53,800 Mr. Allan Chapin 42,950 50,400 Mr. Georges Chodron de Courcel 37,850 50,400 Mr. Peter Eckert (3) 48,050 40,300 Mr. Daniel Havis 46,350 53,800 Mr. Daniel Lebègue 61,650 64,000 Mr. André Lévy Lang 58,250 64,000 Médéric Prévoyance, represented by Guillaume Sarkozy (3) 37,850 31,800 Mrs. Monica Mondardini (4) 30,100 N/A Mr. Luc Rougé(5) 34,450 33,600 Mr. Herbert Schimetschek 37,000 45,300 Mr. Jean-Claude Seys 46,350 52,100 Mr. Claude Tendil 42,950 52,100 Mr. Patrick Thourot (6) N/A 16,800 Mr. Daniel Valot 61,650 67,400
(1) Pursuant to the decision made by the Board of Directors on 21 March 2006, the Chairman and Chief Executive Officer receives directors’
Moreover, certain SCOR directors participate, or have participated, on the Boards of Directors of the Group’s subsidiaries and received directors’ fees in 2010 and/or 2009 as follows: SCOR Reinsurance Company Allan Chapin USD 3,000 USD 24,000 SCOR Holding (Switzerland) Georges Chodron de Courcel CHF 5,000 CHF 5,000 Jean-Claude Seys CHF 5,000 CHF 5,000 Peter Eckert CHF 5,000 CHF 5,000 SCOR Global Life Rückversicherung Schweiz AG Peter Eckert CHF 16,000 CHF 14,000 Jean-Claude Seys CHF 16,000 CHF 16,000 Georges Chodron de Courcel CHF 14,000 CHF 14.000 SCOR Switzerland AG Peter Eckert CHF 21,000 CHF 19,000 Jean-Claude Seys CHF 21,000 CHF 21,000 Georges Chodron de Courcel CHF 19,000 CHF 19,000 SCOR Reinsurance Asia Pacific PTE Ltd Daniel Valot USD 21,000 N/A
Gross compensation paid in 2010 to the Group Executive Committee members (including the Chairman and Chief Executive Officer) as of 31 December 2010 amounts at EUR 7,495,808(1). In addition, they were awarded a total number of 469,000 shares and 469,000 stock options in 2010 for a total estimated value of EUR 8,425,600(2).
The approved principles and rules for setting compensation and benefits granted to the Chairman and Chief Executive Officer for 2010 are provided in Appendix B - Report of the Chairman of the Board of Directors on the terms and conditions for preparing and organising the work of the Board of Directors and on internal control procedures and on risk management in accordance with article L.225-37 of the French Commercial Code.
The following table presents a summary of the total compensation including gross compensation, shares and stock options granted to the Executive and Corporate Officer for fiscal years 2010, 2009 and 2008: Summary table of the gross compensation, shares and stock options granted to the Executive and Corporate Officer: In EUR
is: 1 EUR = 1.3732 CHF. (2) The amount corresponds to the IFRS 2 Share-based Payment fair value as described in note 18 of section 20. (3) It should be noted that the figures stated above do not represent paid compensation but correspond to actuarial estimates in line with
In addition to these conditions specified above, the Board of Directors of 12 December 2008 decided that for all the grants posterior to that date, the Corporate Officer is required to buy on the market a number of shares equal to 5% of the number of performance and free shares granted as soon as these shares may be sold.
(*) The gross fixed compensation paid to Denis Kessler in 2009 includes (i) EUR 200,000 corresponding to arrears for fiscal year 2008, the payment of which had been decided in 2008 but which had not been paid at such time and (ii) EUR 1 200 000 for fiscal year 2009. As shown in the above summary table of the gross compensation owed to the Executive and Corporate Officer, the gross fixed compensation of Denis Kessler remained unchanged between 2008 and 2009.
In accordance with the AFEP/MEDEF corporate governance code of listed corporations, the following tables present for the Executive and Corporate Officer the stock options exercised during the fiscal year as well as the grants and performance shares vested during the fiscal year.
In EUR Related to Actual Related to Actual Related to Actual
Julien Carmona* 874,098 582,045 Not concerned Not concerned Not concerned Not concerned
Benjamin Gentsch (Paid in CHF**) 761,448 761,448 760,719 704,030 705,426 736,904
Frieder Knüpling*** 339,110 257,360 Not concerned Not concerned Not concerned Not concerned
Paolo De Martin (Paid in CHF**) 1,077,180 1,066,257 1,066,403 948,278 833,148 847,599
Members of the Executive Committee 5,866,750 5,252,958 4,218,144 4,020,278 3,604,503 3,660,209
(*) Julien Carmona is member of the COMEX since 1 January 2010 as Group Chief Operating Officer. (**) The compensation is paid in CHF, the exchange rate used is: 1 EUR = 1,3732 CHF. (***) Frieder Knüpling is member of the COMEX since 1 July 2010 as Deputy CEO Scor Global Life. (****) Philippe Trainar is member of the COMEX since 1 April 2010 as Chief Risk Officer. (*****) Including the Chairman and Chief Executive Officer for whose remuneration details are available in section 15.1.2.1.
The following table presents the components of the gross compensation for fiscal years 2010, 2009 and 2008 for the members of the Executive Committee (other than the Chairman and Chief Executive Officer).
Julien Carmona 500,000 370,000 4,098 874,098 Not concerned Not concerned Benjamin Gentsch (Paid in CHF*) 420,187 310,938 30,323** 761,448 420,186 310,938
Frieder Knüpling 200,000 57,000 360 257,360 Not concerned Not concerned Paolo de Martin (Paid in CHF*) 590,577 449,726 25,954** 1,066,257 590,577 331,602
Not concerned Not concerned Not concerned Not concerned Not concerned Not concerned
The members of the Executive Committee also benefit from the use of a vehicle for business purposes; the Chairman and Chief Executive Officer has a company car (with a shared driver).
The pension benefits offered to the other COMEX members are comparable to the French ones.
The executives under a Swiss contract are entitled to a specific scheme with a guaranteed pension of 50% of the average compensation over the last five years before retirement.
1 This pension plan was closed to employees hired after June 2008 and is only applicable for a very narrow number of partners in France
Duties the renewal of which will be proposed to the next Ordinary annual meeting of the
Chairman of the Board of Directors and Chief Executive Officer 2011 (*) 4 November 2002 To be determined (3)
Allan Chapin Director 2011 (*) 12 May 1997 To be determined (3)
Daniel Havis Director 2011 (*) 18 November 1996 (2) To be determined (3)
André Lévy-Lang Director 2011 (*) 15 May 2003 To be determined (3)
Médéric Prévoyance Director 2011 (*) 15 April 2009 To be determined (3)
Claude Tendil Director 2011 (*) 15 May 2003 To be determined (3)
Daniel Valot Director 2011 (*) 15 May 2003 To be determined (3)
(*) At the end of the Ordinary Annual General Shareholder’s Meeting taking place during the indicated year (1) Cooptation with ratification voted on by the Ordinary General Shareholders’ Meeting of 7 May 2008. (2) Cooptation with ratification voted on by the Joint General Shareholders’ Meeting of 12 May 1997. (3) To be determinded prior to the Ordinary Shareholders’ Meeting of 4 May 2011.
16.4 Corporate governance regime Since SCOR SE’s shares are listed on the Euronext, the provisions relating to corporate governance applicable to SCOR SE include French legal provisions, as well as rules dictated by its market authorities. SCOR believes that its application of corporate governance principles is appropriate and is in compliance with the best practices of corporate governance in effect in France in consideration with AMF rules.
The Board considered In application of 3 July 2008 Act implementing the European Union Directive 2006/46/CE of 14 June 2006, SCOR SE refers to the AFEP-MEDEF governance code relating to listed companies in preparing the report to be issued in accordance with article L. 225-37 of the French commercial Code.
17.1 Number of employees The total number of employees increased from 1,790 as of 31 December 2009 to 1,822 as of 31 December 2010. The distribution of personnel is uniform over the various geographical areas to meet strategic principles of the Group.
Mr. André Lévy Lang 20,441 Mr. Guillaume Sarkozy, representing Médéric Prévoyance(1) 0 Mrs. Monica Mondardini 100
The table below presents the acquisitions, sales, subscriptions or exchanges of SCOR SE shares as well as operations upon securities linked to SCOR SE made by Directors and Senior managers in 2010.
Operations made in 2010 for a greater amount than EUR 5,000
M. Denis Kessler None M. Carlo Acutis None M. Gérard Andreck None M. Allan Chapin None M. Peter Eckert None M. Daniel Havis None M. Daniel Lebègue None M. André Lévy Lang None
Médéric Prévoyance Payment of the dividend in shares for a total amount of EUR 3,913,168 Mme. Monica Mondardini None M. Luc Rougé None M. Herbert Schimetschek None
Acquisition of shares for a price of EUR 15 per share and for a total amount of EUR 12,000 M. Claude Tendil None M. Daniel Valot None Censeur M. Georges Chodron de Courcel None
Potential transaction volume (EUR) Exercise period 02/27/2013 06/02/2013 08/25/2014 09/15/2015 09/14/2016 09/12/2017 05/21/2018 03/22/2019 03/18/2020 11/25/2013 to 11/24/2019 03/18/2020 12/15/2010 to 12/14/2016 09/12/2017 09/09/2018 03/22/2019 03/18/2020 09/13/2011 to 09/12/2017 05/21/2018 03/22/2019 03/18/2020 09/13/2011 to 09/12/2017 05/21/2018 03/22/2019 03/18/2020 09/14/2016 09/12/2017 05/21/2018 03/22/2019
Potential transaction volume (EUR) Exercise period 03/18/2020 09/03/2011 10/02/2011 02/27/2013 06/02/2013 08/25/2014 09/15/2015 09/14/2016 09/12/2017 05/21/2018 03/22/2019 03/18/2020 09/15/2010 to 09/14/2016 09/12/2017 09/09/2018 03/22/2019 03/18/2020
The allocation of stock options since 2008 is subject if necessary to the satisfaction of performance conditions. Thus, a third of the number of options awarded on 22 May 2008, half of the options awarded on 23 March 2009 and all the options awarded on 18 March 2010 are subject to the satisfaction of performance conditions. However all the options allocated on 23 March 2009 and 18 March 2010 to the Chief Executive Officer are subject to the satisfaction of performance conditions. Please refer to 17.3 of this Registration Document and the registration documents of SCOR filed with the Autorité des marchés financiers on 3 March 2010 and 5 March 2009 under number n. D.10-0085 and D.090099 for the details of the performance conditions applicable to the stock-options.
For more information on the stock option plans or stock purchase plans, refer to Appendix A – 1.5.Notes to the corporate Financial Statements, Note 12 – Stock Options.
17.2.3 FREE ALLOCATION OF SHARES TO COMEX MEMBERS AND OTHER COMPANY OFFICERS AS OF 31 DECEMBER 2010
The table below presents the share allocation plans awarded to the members of the Executive Committee on 31 December 2010: Plan Share award rights
The attribution of shares since 2008 is subject to the satisfaction of performance conditions. Thus, a third of the number of shares awarded on 07 May 2008, an half of the shares awarded on 16 March 2009 and all the shares awarded on 2 March 2010 are subject to the satisfaction of performance conditions. However all the shares allocated on 16 March 2009 and on 2 March 2010 to the Chief Executive Officer are subject to the satisfaction of performance conditions. Please refer to 17.3 of this Registration Document and the registration documents of SCOR filed with the Autorité des marchés financiers on 3 March 2010 and 5 March 2009 under number n. D.10-0085 and D.09-0099 for the details of the performance conditions applicable to the stock-options.
17.3 Plans providing employee participation in Company Refer to Section 20.1.6 - Notes to the Consolidated Financial Statements, Note 17 - Provisions for employee benefits and Appendix A – Unconsolidated Corporate financial statements of SCOR SE, Note 13 - Employee share-ownership plans.
On 15 April 2009, the General Shareholder’s meeting of the Board of Directors had authorized, in its twenty second resolution, under the provisions of Articles L.225-177 to L.225-185 of the Commercial Code, to grant upon proposal of the Compensation and Nominations Committee, on one or more occasions for the benefit of members of staff and the corporate officers, of the Company and companies or groups linked to it in terms of Article L.225-180 of the Commercial Code, options entitling to the subscription of new ordinary shares of the Company in issue as to increase its capital, as well as options entitling to purchase shares of the Company from acquisitions made by it as provided by law within the limits of a number of options giving right to a maximum of three million (3,000,000) of shares. This authorisation is given for a period of eighteen months from 15 April 2009.
The Partnership gathers key executives, managers, experts, and high potentials formally identified across the Group. Partners are given specific responsibilities in terms of significant achievements, high impact project management and/or leadership. Therefore, they benefit from a specific and selective programme in terms of information sharing, career development and compensation schemes. Partners represent approximately 25 % of the total number of staff.
The Board of Directors of 2 March 2010 allocated, on 18 March 2010, 1,378,000 stock options on the basis of the authorisation of the Shareholders meeting of 15 April 2009 in its twenty second resolution.
Those options can be exercised at the earliest 4 years after the grant date, if the presence condition is respected. The stock options can be exercised on one or more occasions from 19 March 2014 to 18 March 2020 inclusive. From this date, the purchase right shall expire.
The exercise of options is conditioned, in addition to the presence conditions, by three out of the four conditions outlined below:  The Standard & Poor’s financial strength rating must be “A” in 2010 and 2011;  The P&C business combined ratio must be less than or equal to 102% on average in 2010 and 2011;  The Life business operating margin must be higher than or equal to 3% average in 2010 and 2011;  The SCOR group’s ROE for the financial years ending 31 December 2010 and 31 December 2011 must exceed the risk-free rate in 2010 and 2011 by 300 points on average.
In addition to the conditions reminded above, 20% of the stock options allocated to the Chairman and Chief Executive Officer (and the ones allocated to the members of the Executive Committee) are subject to another performance condition : the SCOR group's financial strength rating of AM Best must have increased to "A" before March 2011.
Those options can be exercised at the earliest 4 years after the grant date, if the presence condition is respected. The exercise price is calculated without discount, based on the weighted average of the opening date of the 20 trading days preceding the decision to award the stock options.
Refer also to Section 20.1.6 – Notes to the Consolidated income Statements, Note 17 - Provisions for employee benefits.
On 15 April 2009, the Shareholder’s Meeting, in its twenty third resolution, had authorised the Company’s Board of Directors to make, on one or more occasions, to the employees and directors and officers defined by law, or to some of them, of the Company and of companies or groups affiliated with it pursuant to Article L. 225-197-2 of the French Commercial Code, free allotments of existing or yet-to-be-issued shares of the Company and resolved that the Board of Directors of the Company would determine the identity of the beneficiaries of the allotment and the conditions and criteria for the allotment of the shares.
On 28 April 2010, the Shareholder’s Meeting of the Company, in its twentieth resolution, had authorised the Company’s Board of Directors to make, on one or more occasions, to the employees and directors and officers defined by law, or to some of them, of the Company and of companies or groups affiliated with it pursuant to Article L. 225-197-2 of the French Commercial Code, free allotments of existing or yet-to-be-issued shares of the Company and resolved that the Board of Directors of the Company would determine the identity of the beneficiaries of the allotment and the conditions and criteria for the allotment of the shares.
The Shareholders’ Meeting also decided that (i) the total number of free shares granted under this authorisation may not exceed 3,000,000 Shares, (ii) the allocation of shares to their beneficiaries will be definitive only after a vesting period of
a minimum set at two years for tax residents of France and a minimum of 4 years for beneficiaries not tax residents of France, (iii) the beneficiaries will be subject, where appropriate, to an obligation to retain shares in a period of two years from the end of the vesting period for tax residents of France and that the retention period for beneficiaries not tax residents of France would be deleted, and (iv) the Board of Directors of the Company will have the authority to increase the lengths of the acquisition period and the holding obligation period.
On the proposal of the Compensation and Nominations Committee, the Board of Directors decided to grant on 2 March 2010, 210 free shares to each employee non Partner of SCOR Group on the basis of the authorisation of the General Shareholders’ meeting of April 15th 2009.
The Board of Directors of 2 March 2010, on the proposal of the Compensation and Nominations Committee of 9 February 2010, decided to make an exceptional grant of free shares to Partners, to the members of the COMEX and to the Chairman and Chief Executive Officer.
Following the authorisation of the Shareholders Meeting of 28 April 2010 in its twentieth resolution, the Board of Directors of 28 April 2010 decided of the allocation of performance and free shares to some employees hired after 2 March 2010 with the same performance conditions as those set for the 2 March 2010 Plan (for the description of the performance conditions, refer to 17.3.1 – Stock option plan – Specific allocation of stock options). Following this decision, 44,910 free shares and performance shares were allocated on 12 October 2010 to 20 Partners (non-members of the Executive Committee).
Following the authorization of the Shareholders Meeting of 28 April 2010, and as proposed by the Compensation and Nominations Committee, the Chairman and Chief Executive Officer, acting upon delegation by the Board of Directors held on 28 April 2010, decided on 17 December 2010 to award free shares to employees of SOLAREH SA. Following this decision, 6,120 free shares were allocated to 25 employees on 17 December 2010.
The conditions of this plan are similar to those usually decided by the SCOR Group with a vesting period of 2 years for the tax residents of France (and an obligation to retain shares for a period of 2 years from the end of the vesting), and of 4 years for the beneficiaries not tax residents of France.
The table below presents the total number of shares allocated in 2009 and 2010 by category of beneficiary within the Group : Total number of shares allocated in 2010
The following table shows the free stock award plans currently in force within the Group: Shareholders meeting and Board of Director
Requirement of presence at the company as of 17 December 2012
From 2 March, 2010 to 2 March, 2014 included No holding period
Requirement of presence at the company as of 2 March 2012
Requirement of presence at the company as of 25 November 2011
Requirement of presence at the company as of 16 March 2011 Performance conditions
Requirement of presence at the company as of 15 February 2011
From 3 March 2009 to 3 March 2013 No holding period
Requirement of presence at the company as of 30 April 2010
For the list of the stock options plans currently in force within the the Group refer to Annexe A – 1.5.Notes to the Corporate income Statements - Note 12: Stock Options.
"Indemnités de fin de carrière", "Indemnités de Départ à la Retraite", "Congés Fin de Carrière"
Switzerland Pension 1 Annuity or lump sum benefit paid at normal retirement age. The amount is equal to the accrued savings and depends on the retirement date.
The amount of annual benefit is paid at Normal Retirement Date in monthly instalments for life is 46% of Average Monthly Compensation, multiplied by a fraction, not exceed 1 and based on seniority upon retirement. The SCOR U.S. Group Pension Plan was frozen on 10/01/2006
COMEX members benefit from the collective pension schemes in place in their entity and do not have any specific plan except for members with Swiss contracts who have been awarded a similar advantage than the one granted to the other COMEX members hired before 30 June 2008.
Other 124,090,178 66.08 % 68.42 % TOTAL 187 795 401 100.00 % 100.00% (1) The percentage of voting rights is determined on the basis of the number of shares at closure, excluding the company’s own treasury shares. (2) Source: TPI and Ipreo.
Share capital structure and voting rights in the Company to the knowledge of SCOR on the basis of a study of identifiable share (titres aux porteurs identifiables – TPI) conducted by the Company as at 31 December 2009: As at 31 December 2009 Number of shares % of capital % voting rights (1)
Others 123,228,314 66.53% 68.98% TOTAL 185,213,031 100.00% 100.00% (1) The percentage of voting rights is determined on the basis of the number of shares at closure, excluding the company’s own treasury shares. (2) Source: TPI and Ipreo.
To the Company’s knowledge, there was no other shareholder than those indicated in the table above holding more than 2.5% of the share capital or voting rights of the Company as at 31 December 2009 and 31 December 2008.
The Company regularly conducts TPI searches to find out the number and identity of its bearer shareholders. The results of those analyses are presented in the following table: TPI Date December
On 28 October 2008, Malakoff Médéric declared that, on 24 October 2008, it had exceeded the registered thresholds of 2.5% of the capital and voting rights in SCOR and that it held 5,258,103 shares representing 52,581,030 voting rights, or 2.86% of the capital and 2.98% of voting rights in SCOR.
On 26 November 2008, Malakoff Médéric declared that, on 19 November 2008, it had exceeded the registered thresholds of 3% of the capital and voting rights in SCOR and that it held 5,529,075 shares representing 55,290,750 voting rights, or 3% of the capital and 3.09% of voting rights in SCOR.
On 6 April 2009, BNP Paribas declared that, on 6 April 2009, it had exceeded the registered thresholds of 2.5% of the capital and voting rights in SCOR and that it held, on behalf of its clients, 8,154,783 shares representing 8,154,783 voting rights, or 4.43% of the capital and 4.56% of voting rights in SCOR.
voting rights in SCOR and that it held 2,054,851 shares representing 2,054,851 voting rights, or 1.12% of the capital and 1.14 % of voting rights in SCOR.
On 27 October 2009, Barclays Global Investors UK Holding Ltd declared that, on 11 September 2009, Barclays Global Investors Limited, Barclays Global Investors N.A., Barclays Global Fund Advisors and Barclays Global Investors (Deutschland AG), portfolio management companies wholly owned by Barclays Global Investors UK Holding Ltd (controlled by Barclays PLC) had exceeded the registered thresholds of 2.5% of the capital and voting rights in SCOR and that they held 5,085,731 shares representing 5,085,731 voting rights, or 2.76% of the capital and 2.83 % of voting rights in SCOR.
On 24 November 2009, Barclays Global Investors UK Holding Ltd declared that, on 19 November 2009, Barclays Global Investors Limited, Barclays Global Investors N.A., Barclays Global Fund Advisors and Barclays Global Investors (Deutschland AG), portfolio management companies wholly owned by Barclays Global Investors UK Holding Ltd (controlled by Barclays PLC) had exceeded the legal thresholds of 5% of the capital and voting rights in SCOR and that they held 9,266,490 shares representing 9,266,490 voting rights, or 5.03% of the capital and 5.16 % of voting rights in SCOR.
On 21 April 2010, Amundi Asset Management declared that the three portfolio management companies of group Amundi, i.e. Amundi, Société Générale Gestion and Etoile Gestion SNC, (i) further to an acquisition made on 16 April 2010, had exceeded the registered thresholds of 2.5% of the capital and voting rights in SCOR and that they held in their OPCVM 4,723,216 shares and (ii) further to a sale made on 20 April 2010, had fallen below the registered thresholds of 2.5% of the capital and voting rights in SCOR and that they held in their OPCVM 4,577,623 shares in SCOR.
On 26 April 2010, BNP Paribas Asset Management declared, on behalf of the portfolio management companies of group BNP Paribas carrying their business under its responsibility, that it had exceed the registered thresholds of 2.5% of the capital and voting rights in SCOR and that it held, through FCP, SICAV and mandates, 4,990,085 shares in SCOR representing 2.69%of the capital in SCOR.
On 26 May 2010, the Goldman Sachs Group Inc. declared that, on 20 May 2010, it had fallen below the thresholds of 5% of the capital and voting rights in SCOR and that it held 8,956,030 shares representing 4.84% of the capital in SCOR.
On 30 June 2010, the group BNP Paribas declared that, on 30 June 2010, it had fallen below the registered thresholds of 2.5% of the capital and voting rights in SCOR and that it held 1,859,774 shares representing 1.21% of the capital in SCOR.
On 30 September 2010, BNP Paribas Asset Management declared on behalf of CamGestion, Fundquest France and of the affiliates of Fortis Investments integrated into BNP Paribas Investment Partners for the FCP, SICAV, Mandates and FCPE, that it had exceeded the registered thresholds 2.5% of the capital and voting rights in SCOR and that it held 5,137,571 shares, representing 2.7367% on 27 September 2010, of the capital in SCOR.
As at 31 December 2010:  SCOR held 6,427,554 treasury shares;  The total number of voting rights amounted to 187,795,401 (including the voting rights attached to treasury shares).
Since 3 January 2009 and the completion of the Company’s reverse stock split, no further shares with a par value of EUR 0.78769723 are in existence and each share with a par value of EUR 7.8769723 entitles the holder to one vote.
19.1 PAGE 159 Related party transactions entered into 2010 as defined articles L.225-38 et seq. of the French commercial code 19.2 PAGE 164 Related party transactions entered into in past years, which were continued or terminated in the 2010 financial year 19.3 PAGE 166 Special report of the auditors on related party agreements and commitments
(formerly known as XL Re Life America Inc) for reinsurance committments
At its meeting of 3 November 2009, the Company’s Board of Directors authorised, pursuant to Article L. 225-38 of the French Commercial Code, the parent company guarantee’s signature for the reinsurance commitments of SCOR Global Life Reinsurance Company of America.
At its meeting of 2 March 2010, 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 a contemplated acquisition of 100% of the shares of a company, an engagement letter for a mission of financial advice with BNP Paribas, for a period of 9 months. The remuneration conditions provided for in this letter are in line with market standards for this type of transactions.
 Authorisation to issue a First Demand Guarantee within the framework of the Stand-By Letter of Credit Facility Agreement with Société Générale
The companies party to this agreement are SCOR SE, SCOR Global P&C SE, SCOR Global Life SE, SCOR Switzerland AG and SCOR Rückversicherung (Deutschland) AG (absorbed by SCOR Global Life SE on 19 October 2010). The other companies within the Group could equally benefit from this agreement.
The first demand guarantee was signed on 10 June 2010. It gave rise to no payment during the 2010 financial year.
The Directors concerned by this agreement, within their quality of members of the Board of SCOR Switzerland AG, are Messrs. Denis Kessler, Jean-Claude Seys and Peter Eckert.
 Authorisation to conclude an amendment to the opening contract for accessible credit through the issue of a credit letter signed on 23 December 2008 between SCOR SE and BNP Paribas
The amendment to the Facility Agreement was signed on 24 June 2010 and gave rise to the payment of up-front fees of USD 150,000 and EUR 100,000 during the 2010 financial year.
 Acquisition of 100% of the shares of SCOR Reinsurance Asia-Pacific Pte by SCOR Global P&C SE from SCOR SE
This transaction was completed on 13 December 2010 for a price of EUR 260,425,266 which corresponds to the market value of 100% of the shares of SCOR Reinsurance Asia Pacific Pte.
The signature of the retrocession framework agreement between SCOR SE and SCOR Global Life SE (then named SCOR Vie) was authorised by the Board on 16 May 2006, pursuant to the provisions of Article L.225-38 of the French Commercial Code. The contract was signed on 4 July 2006 with retroactive effect on 1 January 2006.
On 25 July 2007, SCOR Global Life SE adopted the form of Societas Europaea (SE) at the time of the merger absorption of its wholly owned subsidiary SCOR Global Life Rückversicherung AG (formerly named Revios Rückversicherung AG).
In order to maintan an appropriate capital structure of the new company SCOR Global Life SE, it has been decided to modify the scope of the internal retrocession agreement with SCOR SE (termination of the agreement in Singapore and in Canada).
At its meeting of 28 July 2010, the Company’s Board of Directors authorised, pursuant to Article L. 225-38 of the French Commercial Code, the signature, of an amendment n°3 to the retrocession agreement signed by SCOR SE and SCOR Global Life SE on 4 July 2006.
The amendment n°3 was executed on 21 December 2010 with retroactive effect from 1 January 2010 and gave rise to the payment of EUR 10.7 million to SCOR SE during the 2010 financial year.
At its meeting of 28 July 2010, the Company’s Board of Directors authorised, pursuant to Article L. 225-38 of the French Commercial Code, (i) the signature by SCOR SE of a contribution agreement with its wholly owned subsidiary SCOR US Corporation and (ii) the completion by SCOR SE of the contribution in kind of 100% of the shares of GSNIC to its subsidairy SCOR US Corporation in consideration for the issue of 392 new shares by the latter. This increase in capital by contribution in kind, of an amount of EUR 103 million, was completed on 1 October 2010.
At its meeting of November 7, 2006, the Board of Directors authorized, pursuant to Article L. 225-38 of the French Commercial Code, the extension (i) of the term of the parent company guarantee dated December 19, 2005 issued by SCOR to ten years; and (ii) the amount of the SCOR guarantee to USD 400 million, in line with the new term of coverage by the letter of credit and the new amount of the CALYON global commitments under the terms of the Agreement.
 Authorisation to issue a First Demand Guarantee within the framework of an amendment to the Stand-By Letter of Credit with Deutsche Bank dated 23 October 2008
 Authorisation to execute an engagement letter and a subscription agreement between SCOR SE and a bank syndicate including BNP Paribas and to conclude an agency agreement between SCOR SE and BNP Paribas
At its meeting of 3 December 2010, 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 a contemplated issuance and placement of subordinated notes, an engagement letter for a mission of financial advice and a subscripion agreement with a bank syndicate including BNP Paribas and an agency agreement with BNP Paribas.
The commitments under this amendment n°5 have a retroactive effect from 1 October 2010. This agreement as modified by the amendments gave rise to the payment of EUR 70.7 million to SCOR SE during the financial year 2010.
 Remuneration of the parent company guarantee granted by SCOR SE to the benefit of the reinsurance subsidiaries and remuneration of the upstream guarantee granted by SCOR Global P&C SE and SCOR Global Life SE to the benefit of SCOR SE.
In Asia: SCOR Reinsurance Asia-Pacific Pte Ltd; SCOR Reinsurance Company (Asia) Ltd.
The Directors concerned by this agreement were Messrs. Denis Kessler, Daniel Lebègue, Allan Chapin, Peter Eckert, Jean-Claude Seys and Daniel Valot.
At its meeting of 13 November 2007, the Board of Directors authorised the signature of an agreement with BNP Paribas to establish a notional cash-pooling between SCOR and the European entities of the Group.
This agreement between SCOR and BNP Paribas was signed on 20 October 2008. It gave rise to the payment by SCOR SE to BNP Paribas of non material amounts during the 2010 financial year.
 Contract between SCOR SE and its subsidiaries participating in the notional cash-pooling agreement
The Directors concerned by this agreement were Denis Kessler, Patrick Thourot, Allan Chapin, Daniel Lebègue and Jean-Claude Seys.
 Remuneration of the parent company guarantee conferred by SCOR SE to the benefit of the reinsurance subsidiaries, pursuant to the insurance and reinsurance contracts finalised by the latter.
At its meeting of 18 March 2008, the company’s Board of Directors authorised, pursuant to Article L. 225-38 of the French Commercial Code, the payment of existing parent company guarantees, drawn up by SCOR SE or of those which could be drawn up in accordance with the agreement granted by the Board of Directors of 28 August 2007, at a
rate of 1 for one thousand, based on the amount of the Company’s shareholder’s equity, of which the agreements are guaranteed from the 1st January 2008.
 Authorisation of the agreement concerning the payment of parental guarantee compensation of SCOR Global P&C SE and SCOR Global Life SE
The participant who leaves the Company, in order to enter into retirement, will have the right to a supplemented pension if he/she fulfils the following criteria on the date of his/her departure, and notably:  they have acquired a seniority of at least 5 years from their date of departure;  they have successfully obtained the settlement of their pensions with regard to the obligatory retirement schemes.
The Directors concerned by this scheme were Messrs. Denis Kessler and Patrick Thourot.
19.3 Special report of the auditors on related party agreements and commitments To the Shareholders,
We are required to inform you, on the basis of the information provided to us, of the terms and conditions of those agreements and commitments indicated to us, or we would have identified performing our role. We are not required to comment as to whether they are beneficial or appropriate or to ascertain the existence of any such agreements and commitments. It is your responsibility, in accordance with Article R. 225-31 of the French commercial code (Code de Commerce), to evaluate the benefits resulting from these agreements and commitments prior to their approval.
Agreements and commitments subject to the approval of the shareholders’ meeting
The companies party to this amendment are SCOR Global P&C SE, SCOR Global Life SE, SCOR Switzerland AG, SCOR Rückversicherung (Deutschland) AG (absorbed by SCOR Global Life SE on 19 October 2010) and your company. The other companies within the Group could equally benefit from this agreement as amended.
Authorization to execute an engagement letter between your company and BNP Paribas with regard to the acquisition of certain business of a company
At its meeting of 16 September 2010, the Company’s Board of Directors authorized, pursuant to Article L. 225-38 of the French Commercial Code, the signature by your company, with regard to a contemplated acquisition, an engagement letter for a mission of financial advice with BNP Paribas, for a period of nine months. The remuneration conditions provided for in this letter are in line with market standards for this type of transactions.
This transaction was executed on 5 November 2010. It gave rise to no payment during the 2010 financial year.
At its meeting of 3 December 2010, the Company’s Board of Directors authorized, pursuant to Article L. 225-38 of the French Commercial Code, the signature by SCOR SE, with regard to a contemplated issuance and placement of subordinated notes, an engagement letter for a mission of financial advice and a subscription agreement with a bank syndicate including BNP Paribas and an agency agreement with BNP Paribas.
This engagement letter was signed on 28 January 2011 and gave rise to the payment of CHF 1.345 million during the first half of the 2011 financial year.
Only SCOR Global Life Reinsurance Company of America’s commitments, pursuant to the insurance and/or reinsurance contracts, are covered by this parent guarantee.
The granting of this unlimited guarantee is subject of the same remuneration for your company as that given for the other parental guarantees previously granted by the Company.
The parent guarantee was signed on 22 January 2010. It gave rise to no payment during the 2010 financial year 3. With SCOR Global P&C SE and SCOR Reinsurance Asia-Pacific Pte Ltd
Related persons: Denis Kessler as Chairman and Chief Executive Officer of your company and as Chairman of the Board of SCOR Global P&C SE.
In 2006, despite SCOR SE's spin-off of its Non-Life reinsurance operations to SCOR Global P&C SE, your company remained a reinsurance company because of the retrocessions established between SCOR Global Life SE and SCOR Global P&C SE as the retroceding companies, and your company as the retrocessionnaire. These retrocessions back the Group's debt carried by your company for maintaining the Group’s aggregate solvency and confirming its rating.
The signature of the retrocession framework agreement between your company and SCOR Global P&C SE was authorised by the Board on 16 May 2006, pursuant to the provisions of Article L.225-38 of the French Commercial Code. The contract was signed on 4 July 2006, as part of the reorganisation of the Group through the creation, via spin-off, of the subsidiary SCOR Global P&C SE.
Due to the completion of this merger on 3 August 2007, (but retroactive to 1 January 2007 pursuant to the terms of the merger agreement), the contracts underwritten by its German subsidiary fall under the scope of the retrocession agreement which resulted in a significant increase in the volume of retrocessions from SCOR Global P&C SE to SCOR SE.
As a result, SCOR Global P&C SE and your company signed amendment No. 2 to the retrocession agreement they signed on 4 July 2006, in order to exclude from the retroceded business, as of 1 January 2007, the contracts underwritten by the German branch.
The Board of Directors of SCOR SE, at its meeting of 13 November 2007, authorised, pursuant to Article L.225-38 of the French Commercial Code, the signature of the amendments to the retrocession agreement signed by your company and its subsidiary Global P&C SE on 4 July 2006.
On 15 April 2009, for these same reasons and taking into account the 2009 UK reorganisation, i.e.: the creation of a branch of SCOR Global P&C SE in London and the business transfer from SCOR UK Company Ltd to this branch, the Board of Directors approved a new addendum to the retrocession agreement to exclude the business written by the newly created branch in London of the scope of the retrocession agreement.
At its meeting of 3 December 2010, the Company’s Board of Directors authorized, pursuant to Article L. 225-38 of the French Commercial Code, the signature by SCOR SE, of an amendment n°5 to the retrocession agreement signed by SCOR and SCOR Global P&C SE on 4 July 2006.
 decrease the advance in cash of SCOR Global P&C SE to your company,
The commitments under this amendment n°5 have a retroactive effect from 1 October 2010 and gave rise to the payment of EUR 70.7 million to your company during the financial year 2010.
Global P&C SE as the retroceding companies, and your company as the retrocessionnaire. These retrocessions back the Group's debt carried by your company for maintaining the aggregate Group’s solvency and confirming its rating.
In order to maintan an appropriate capital structure of the new company SCOR Global Life SE, it has been decided to modify the scope of the internal retrocession agreement with your company (termination of the agreement in Singapore and in Canada).
SCOR Global Life SE and your company signed amendment No. 2 to the retrocession agreement dated 4 July 2006, for the purpose of excluding from the retroceded business, with retroactive effect as at 1 January 2007, the policies underwritten by the German, Canadian and Singapore branches.
The annual financial statements regarding the retrocession agreement cannot be issued if the financial statements of the concerned retroceeding companies are not available, which could lead to different maturities (including post-closing date) of the concerned financial year, and lengthens and complicates the management and the follow-up of the agreement and increases costs considerably.
At its meeting of 28 July 2010, the Company’s Board of Directors authorised, pursuant to Article L. 225-38 of the French Commercial Code, (i) the signature by your company of a contribution agreement with its wholly owned subsidiary SCOR US Corporation and (ii) the completion by your company of the contribution in kind of 100% of the shares of GSNIC to its subsidiary SCOR US Corporation in consideration for the issue of 392 new shares by the latter. This increase in capital by contribution in kind, of an amount of EUR 103 million, was completed on 1 October 2010.
At its meeting of 2 November 2005, the Board of Directors of the Company authorized, pursuant to Article L.225-38 of the French Commercial Code, the issuance of a parent company letter of guarantee intended to cover the financial obligations of SCOR Global Life (formerly SCOR VIE) under the terms of an agreement to issue letters of credit that would be signed by SCOR Global Life, SCOR Financial Services Limited (“SFS”) and CALYON (“SFS-CALYON Letter of Credit Facility Agreement”) dated 13 December 2005 (for the purposes of this Section, the “Agreement”).
Peter Eckert as administrator of your company and Deputy Chairman of the Board of SCOR Switzerland AG.
The companies party to this agreement are SCOR Global P&C SE, SCOR Global Life SE, SCOR Switzerland AG and your company. The other companies within the Group could equally benefit from this agreement.
Authorization to issue a First Demand Guarantee within the framework of the Stand-By Letter of Credit Facility Agreement with Société Générale
Related persons: The Directors concerned by this agreement were Messrs. Denis Kessler, Patrick Thourot, Daniel Lebègue, Allan Chapin, Peter Eckert, Jean-Claude Seys and Daniel Valot.
Remuneration of the parent company guarantee granted by your company to the benefit of the reinsurance subsidiaries and remuneration of the upstream guarantee granted by SCOR Global P&C SE and SCOR Global Life SE to the benefit of your company.
Agreements and commitments approved in prior years that have been implemented during the year
This agreement between your company and BNP Paribas was signed on 20 October 2008. It gave rise to the payment by your company to BNP Paribas of non material amounts during the 2010 financial year.
Opening contract for accessible credit through the issue of a credit letter with BNP Paribas.
The bank fees stipulated under the Facility Agreement are in line with market standards for this type of transactions.
This Facility Agreement gave rise to the payment of USD 594,776 from your company to BNP Paribas during the financial year 2010.
2. With SCOR Global P&C SE, SCOR Global Life SE, SCOR Auber, GIE Informatique, GIE Informatique, SCOR
Global Life Deutschland (branch), SCOR Global P&C Deutschland (branch), SCOR Rückversicherung AG,
(branch), SCOR Global Life Reinsurance Services UK Ltd, SCOR Global Life Reinsurance Ireland Ltd,
This agreement gave rise to the payment by your company to BNP Paribas of non material amounts during the 2010 financial year.
Risk Reinsurance Company, Asia-Pacific Pte Ltd; SCOR Reinsurance Company (Asia) Ltd.
Remuneration of the parent company guarantee conferred by your company to the benefit of the reinsurance subsidiaries, pursuant to the insurance and reinsurance contracts finalised by the latter.
At its meeting of 18 March 2008, the company’s Board of Directors authorised, pursuant to Article L. 225-38 of the French Commercial Code, the payment of existing parent company guarantees, drawn up by SCOR SE or of those which could be drawn up in accordance with the agreement granted by the Board of Directors of 28 August 2007, at a rate of one for one thousand, based on the amount of the Company’s shareholder’s equity, of which the agreements are guaranteed from 1 January 2008.
At its meeting of 18 March 2008, the Company’s Board of Directors authorised, pursuant to Article L. 225-38 of the French Commercial Code, the payment of existing upstream parent company guarantees (granted by SCOR Global P&C SE and SCOR Global Life SE) or those which could be drawn up in accordance with the authorisation granted by the Board of Directors of 28 August 2007, at a rate of one for one thousand, based on the amount of the Company’s shareholder’s equity, of which the agreements are guaranteed from the 1 January 2008.
The participant who leaves the Company, in order to enter into retirement, will have the right to a supplemented pension if he/she fulfils the following criteria on the date of his/her departure, and notably:  they have acquired a seniority of at least five years from their date of departure;  they have successfully obtained the settlement of their pensions with regard to the obligatory retirement schemes.
Sources of financial information not extracted from the audited Financial Statements of the issuer and indication of such absence of audit
20 FINANCIAL INFORMATION CONCERNING THE ISSUER’S ASSETS AND LIABILITIES, FINANCIAL POSITION AND PROFITS AND LOSSES
Value of business acquired Note 4 521 551 Other intangible assets Note 4 95 80
Shareholders’ equity – Group share Note 13 4,345 3,894 Share capital 1,479 1,459 Additional paid-in capital 796 774 Revaluation reserves 56 37 Retained earnings 1,540 1,217 Net income for the year 418 370 Equity based instruments 56 37
Financial debt Note 14 675 629 Subordinated debt 479 477 Debt instruments issued - Other financial debt 196 152
Treasury share transactions (5) (42) Dividends paid (137) (143) Cash generated by issuance of financial debt 70 57 Cash used to reimburse financial debt (206) (129) Interest paid on financial debt (33) (27)
Net cash flows from operations 656 851 Net cash flows from investing activities (730) (1,052) Net cash flows from financing activities (314) (269) Effect of change in foreign exchange rates on cash and cash equivalents 70 12
Net income for year ended 31 December 2009 - - 370 - - - 1 371
The consolidated financial statements as of 31 December 2010 will be presented for approval at the Annual General Meeting which will take place on 4 May 2011.
In conformity with IAS 1 - Presentation of Financial Statements, the Group has opted to present expenses by function in the income statement. The costs are allocated to four categories (acquisition and administrative expenses, claims settlement expenses, investment management expenses and other current operating expenses) based on allocation keys which are determined based on management’s judgment.
The Group’s investments in associated companies are recorded using the equity method. Associated entities are companies in which the Group exercises significant influence but not control. Significant influence generally occurs when the Group owns, directly or indirectly, between 20% and 50% of the outstanding voting rights. Joint ventures, where there is joint control, are accounted for using the equity method.
The Group’s consolidated financial statements are presented in Euros (EUR) and all values are rounded to the nearest EUR million except where stated otherwise. The other key currencies in which the Group conducts business and the exchange rates used for the preparation of the 2010 financial statements are as follows: Currency Ending rate 2010 Average rate - 2010
 Amendments to IFRS 2 – Share based payments – Group cash settled share-based payment transactions was issued in July 2009 and endorsed by the EU in March 2010. The amendments clarified the accounting for group cash-settled share-based payment transactions in the individual financial statements of the entity receiving the services when that entity has no obligation to settle the transaction. It also clarifies the scope of the standard through incorporation of the guidance contained in IFRIC 8 (Scope of IFRS 2) and IFRIC 11 (IFRS 2—Group and Treasury Share Transactions).
 The improvements to International Financial Reporting Standards published in April 2009 and applicable in part for annual periods beginning on or after 1 July 2009, comprise non-urgent, minor amendments to Standards. They are presented in a single document rather than as a series of isolated changes. They include both amendments that result in accounting changes for presentation, recognition or measurement purposes, and amendments that are terminology or editorial changes only, expected to have no or minimal effect on accounting.
 IFRIC 19 – “Extinguishing financial liabilities with equity instruments” issued in November 2009 clarified the treatment of debt equity extinguishments to enhance consistency between entities. An entity is now required to initially measure equity instruments issued to a creditor to extinguish all or part of a financial liability at the fair value of the equity instruments issued or the fair value of the liability extinguished, whichever is more reliably determinable. The difference between the carrying amount of the financial liability extinguished and the initial measurement amount of the equity instruments issued is recognised in profit or loss. This interpretation is
 Amendments to IAS 24 – “Related party transactions” issued in November 2009 aims to simplify the definition of a related party, clarifying its intended meaning and eliminating inconsistencies from the definition. In addition it provides a partial exemption from the disclosure requirements for government-related entities. The amendments are applicable for annual periods beginning on or after January 2011 and are not expected to have any material impact on the Group's consolidated financial statements.
Repairs and maintenance costs are charged to the income statement during the financial period in which they are incurred. All costs directly associated with purchases or constructions of properties are capitalised. All subsequent value enhancing capital expenditures are capitalised when it is probable that future economic benefits related to the item will flow to the Group.
The Group classifies its financial assets in the following categories: available-for-sale, fair value through income, loans and other accounts receivable and derivative instruments. There are currently no assets classified as held-to-maturity. Sales and purchases of assets are recorded on the settlement date. Once it has been initially recorded, an asset is measured according to its asset category, determined according to the methods set forth below. Financial assets are derecognised when the contractual rights to the cash flow of the financial asset expire or are transferred, and when the Group has substantially transferred the risks and rewards inherent to the ownership of the financial asset.
Available-for-sale financial assets are recorded at their fair value. Unrealised gains and losses and the respective foreign exchange resulting from variations in the fair value of a financial available-for-sale asset are recorded directly in shareholders’ equity.
When the Group has not designated the derivative as a hedging instrument, gains and losses resulting from the change in the fair value of the instrument are recorded in the income statement in the period in which they occur. The Group uses the following derivative instruments to reduce its exposure to various risks: swaps based on interest rates, mortality indices and real estate indices, foreign currency forward purchase and sale contracts, caps and floors, and puts and calls.
 where the hybrid instrument is not assessed at fair value through the income statement.
Where an embedded derivative has been separated from its host contract, it is recognised in accordance with the guidance relating to the accounting for derivative financial instruments.
The fair value of financial instruments that are actively traded in organised financial markets is determined by reference to quoted market bid prices, at the close of business on the balance sheet date. If quoted market prices are not available, reference can also be made to broker or dealer price quotations.
The Group provides disclosures over the measurements of those financial instruments held at fair value, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:  quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);  inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2); and
operates. After consideration of these factors if a security remains unimpaired the Group ultimately considers objective evidence of impairment, as per IAS 39, by reference to three further key criteria being the existence or not of:  a consistent decline of more than 30% for twelve months; or
If an available for sale financial asset is impaired and a decline in the fair value of this asset has been recognised in other comprehensive income, the cumulative loss is reclassified from equity to the statement of income. The cumulative loss 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.
Contingent liabilities are disclosed if there is a possible future obligation as a result of a past event, or if there is a present obligation as a result of a past event but either a payment is not probable or the amount cannot be reliably estimated.
Assumed and ceded reinsurance transactions are those contracts that transfer significant insurance risk at the inception of the contract. Reinsurance risk is transferred when the Group agrees to compensate a cedant if a specified uncertain future event (other than a change in financial variable) adversely affects the cedant. 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 risk are recognised in the accounts in accordance with IAS 39 - Financial Instruments: Recognition and Measurement, which means that amounts collected are no longer recognised as premiums, and technical reserves and deferred acquisition expenses recorded as assets or liabilities on the balance sheet 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 income statement.
Claim reserves for losses and claims settlement expenses are recognised for payment obligations from reinsurance losses that have occurred but have not yet been settled. They are recognised for reserves for reinsurance losses reported before the reporting date and reserves for reinsurance losses that have already been incurred but not yet reported (IBNR), and are calculated on the basis of their ultimate cost, undiscounted, except for workers’ compensation claims which are discounted in the USA.
Reserves for investment contract liabilities are recognised for reinsurance contracts, either life or non-life, that do not meet the risk transfer criteria described in IFRS 4.
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, agriculture risks in Brazil and certain other risks, premiums are earned commensurate with the seasonality of the underlying exposure.
For the Non-Life segment, the test is performed in the event the ultimate underwriting combined ratio is in excess of 100% to the unearned premium reserve, net of deferred acquisition costs. The liability adequacy test is performed on the level of the actuarial segment and then aggragated at the entity level.
The liability adequacy test for the life segment compares the carrying value of the technical reserves less deferred acquisition costs and value of business acquired with the fair value of the liabilities from the reinsurance portfolio recognised. The fair value is calculated as the present value of the projected future cash flow using current actuarial assumptions and parameters. In case of deficiency SCOR would impair deferred acquisition costs and value of business acquired and increase technical reserves. The liability adequacy test is performed on the level of portfolios that are managed together and are subject to broadly similar risks.
Premiums payable in respect of reinsurance ceded are recognised in the period in which the reinsurance contract is entered into and includes estimates where the amounts are not determined at the balance sheet date. Ceded premiums are expensed over the period of the reinsurance contract in the same manner as assumed business.
For the measurement of deferred acquisition costs, value of business acquired and technical reserves recognised for different insurance portfolios, SCOR applies the shadow accounting principles stipulated in IFRS 4. As the amortisation of DAC (for Life) and VOBA is calculated using expectations for estimated revenues from investments and the measurement of reserves is based on the discount rate reflecting directly the performance of assets, relevant parts of the recognised unrealised gains and losses from investments available for sale are considered as shadow DAC, shadow VOBA and shadow reserves and offset directly in equity.
Participations in syndicates operating at Lloyd’s of London are accounted for on an annual accounting basis with a delay due to the transmission of information from syndicates that it does not control. The Group recognises its proportionate share of the syndicates insurance and reinsurance premiums as revenue over the policy term, and claims, including an estimate of claims incurred but not reported. On the closure of an underwriting year, typically three years after its inception, syndicates reinsure all remaining unsettled liabilities into the following underwriting year, a mechanism known as Re-Insurance To Close (“RITC”). If the Group participates on both the accepting and ceding years of Account and has increased its participation, RITC paid is eliminated, as a result of this offset, leaving an element of the RITC receivable. This reflects the fact that the Group has assumed a greater proportion of the business of the syndicates. If the Group has reduced its participation from one year of account to the next, the RITC receivable is eliminated, leaving an element of RITC payable. This reflects the reduction in the Group’s exposure to risks previously written by the syndicates. The Group recognises Lloyds RITC in claims and policy benefits to ensure consistency with similar transactions recognised in accordance with IFRS and, present a true and fair view, rather than an adjustment to gross written premium as per Tech 1/99 (UKGAAP).
The Group provides retirement benefits to its employees, in accordance with the laws and practices of each country. The main plans are in France, Switzerland, the United Kingdom, the United States and Germany. Group employees in certain countries receive additional pension payments, paid as an annuity or in capital upon retirement. The benefits granted to Group employees are either in the form of defined contribution or defined benefit plans. Plan assets are generally held separately from the Group’s assets.
Provisions, contingent assets and contingent liabilities have also been assessed at the acquisition date for the entities acquired. Such positions are subject to revision as at the acquisition date whilst the initial accounting is not final. Any revision after the initial accounting is final is recognised in the income statement in accordance with IFRS 3 – Business Combination.
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised in other comprehensive income or directly in equity.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available to utilise net operating losses carried forward. Management makes assumptions and estimates related to income projections to determine the availability of sufficient future taxable income. SCOR uses a discounted cash flow model comprised of an earnings model, which considers forecasted earnings, and other financial ratios of legal entity based on board approved business plans, which incorporate key drivers of the underwriting results. Business plans include assessments of gross and net premium expectations, expected loss ratios and expected expense ratios over a 3 year time horizon, together with actuarial assumptions. To the extent that net operating losses carried forward cannot be utilised or expire, there may be deferred income tax expenses recorded in the future.
Each segment offers different products and services which are marketed via separate channels. The SCOR Global P&C segment offers four product groups being: Property and Casualty Treaties; Specialty Treaties (including Credit & Surety, Ten-Year Inherent Defects Insurance, Aviation, Space, Marine, Engineering, Agriculture and Structured Risk Transfer); Business Solutions (facultative); and Joint Venture and Partnerships. The SCOR Global Life division offers products for: Life (treaties with mainly mortality risks); Financing reinsurance; Critical illness; Disability; Long term care; Annuities; Health; and Personal accident.
Management reviews the operating results of the SCOR Global P&C and Life segments individually for the purpose of assessing the operational performance of the business and to allocate resources. No operating segments have been aggregated to form the SCOR Global P&C and Life reportable operating segments.
Realised capital gains/(losses) on investments 52 157 (2) 207 41 136 - 177 Change in fair value of investments 3 (3) - - 12 7 - 19
Share of retrocessionaires in insurance and investment contract liabilities 833 277 4 1,114 990 447 2 1,439
The cash flows, by segment, are presented as follows: For the year ended 31 December 2010 2009
The following section describes acquisitions which either occurred or for which the acquisition accounting was finalised in 2010.
Net book value at 1 January 2009 787 607 70 1,464
Change in scope of consolidation - 20 11 31 Amortisation for the year - (54) (24) (78) Impairment for the year - - (3) (3)
NET BOOK VALUE AT 31 DECEMBER 2009 787 551 80 1,418
Goodwill, which represents the excess of the cost of each business combination over SCOR’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities acquired, was EUR 788 million as at 31 December 2010 and EUR 787 million as at 31 December 2009.
SCOR Group cost of capital (9.01%) as derived from the Capital Asset Pricing Model (“CAPM”) for discounting purposes. SCOR also uses conservative growth rate assumptions in its valuation models.
For SCOR Global Life, goodwill is tested for impairment by analysis using the inputs and methodology that SCOR applies in calculating the Life Embedded Value. This approach utilises discount rates based on risk free swap rates ranging between 1.62% and 4.86% depending on the currency and the duration. In addition a risk margin is applied to these yields, which is 3.2% for most reinsurance treaties and 1.2% for special products and a limited number of reinsurance financing contracts.
Revios Group acquired in 2006 397 436 Converium Life portfolio acquired in 2007 27 35 Remark acquired in 2007 40 44 Prévoyance Ré acquired in 2008 17 16 XL Life America Inc. acquired in 2009 40 20 TOTAL VOBA 521 551
The IFRS 4 liability adequacy testing which includes VOBA recoverability, showed no indicators of impairment for the years ended 31 December 2010 or 2009. Shadow VOBA amounted to EUR (3) million and EUR 7 million at 31 December 2010 and 2009, respectively.
The amortisation charge associated with other intangibles with finite lives was EUR 7 million and EUR 21 million for the years ended 31 December 2010 and 2009 respectively.
Other intangible assets also include indefinite life intangible assets associated with Lloyds syndicate participations acquired through the Converium business combination. The Lloyds intangibles of EUR 15 million are deemed to have an indefinite life due to the ability to realise cash for these contractual rights through the Lloyds auction process. During 2009, an agreement was reached to cease underwriting in one syndicate. This agreement resulted in an impairment charge of EUR 3 million. Other intangible assets having an indefinite useful life at 31 December 2010 were EUR 14 million compared with EUR 19 million at 31 December 2009.
Intangible assets with an indefinite life are tested for impairment annually. The price of the Lloyds syndicate participations from the Lloyds auction process are key inputs to the impairment tests conducted which demonstrated that there are no indicators of impairment. EUR 3 million impairment relating to a Lloyds underwriting syndicate were recognised in 2009, and no impairment charges were recognised for the year ended 31 December 2010.
Tangible assets and real estate investments include all fixed assets and properties of the Group, comprising real estate investments and office buildings which the Group owns or leases. Other property related matters such as rental income received or commitments made to acquire property are also presented within this note.
The majority of properties held by the Group are considered as investment property. They consist of office buildings, which the Group owns and leases, and one office building capitalised under finance lease contracts. The movements in the real estate investments and finance leases are analysed as follows: In EUR million
Cumulative depreciation and impairment at 31 December 2008 (81) (21) (102)
Depreciation for the period 6 (3) 3 Impairment for the period - - -
On 30 October 2009 SCOR Auber, a wholly owned subsidiary of the Group, acquired Société Civile Immobilière (“SCI”) 3-5 avenue de Friedland for EUR 82 million as part of its real estate investment portfolio. This was partly funded by debt re-financing as presented within other financial debt within Note 14. In addition, the sale of “le Vivaldi” property on 23 December 2009 generated a capital gain of EUR 24 million. This gain was presented in the statement of income within investment income.
As part of its real estate investment activities described above, SCOR leases or subleases its investment buildings and warehouses. The leases generally conform to the local market conditions and have annual indexation clauses for the rental payments. The estimated minimum rental income is as follows: In EUR million Minimum rental income Minimum rental income
Less than one year 25 24 From one to five years 31 48 More than five years 4 4 TOTAL MINIMUM RENTAL INCOME 60 76
Commitments relating to the financing of acquisitions of investment properties through financial leases and other bank loans are presented within note 14.
Fixed income 9 124 Investments at fair value through income – designated upon initial recognition 40 165
Included within this category are financial investments that are measured by direct reference to published quotes within an active market. Financial instruments are included within this category if quoted prices or rates represent actual and regularly occurring transactions that are available from an exchange, dealer or broker.
Investments and cash as at 31 December 2009 19,969 10,454 1,313 70 8,132
(2) Purchase of the second tranche of ATLAS VI catastrophe bonds
(losses) Total Total gains or (losses) included in profit or loss for the period - (25) (25)
Total gains or (losses) included in profit or loss for the period for assets still held as at 31 December - (25) (25)
Total impairment losses recorded in 2010 amounted to EUR 57 million, of which EUR 37 million (2009: EUR 185 million) relate to the equity portfolio and EUR 20 million (2009: EUR 47 million) on fixed-income securities.
Net unrealised gains (losses) net of tax 1 January 37 (251)
Transferred to consolidated net income during the period, net of impairment 46 95 Change in unrealised gains and losses (including investments purchased during the period) (1) (56) 189 Impact of foreign exchange 36 14 Change in scope and other (7) (10) Net unrealised gains (losses) net of tax 31 December 56 37
Total unrealised losses on available-for-sale equity securities analysed on a line-by-line basis (4) - - (4)
Total unrealised losses on available-for-sale equity securities analysed on a line-by-line basis 0 (3) 0 (3)
Net unrealised gains / (losses) - - - (7) (1) Other also includes one listed investment with an unrealised loss of EUR 9 million (2009: EUR 7 million) judged not impaired given the strategic nature of the investment.
An analysis of the credit ratings of fixed income securities classified as available-for-sale and fair value through income is as follows: As at 31 December 2010 As at 31 December 2009
In EUR million AAA AA A BBB < BBB Not rated Total
The table below presents the estimated maturity profiles of financial assets, which are expected to generate cash inflows to meet cash outflows on financial liabilities: 20.1.6.7 NOTE 7 - LOANS AND RECEIVABLES
TOTAL 7,898 8,071 (1) 2009 comparatives have been aligned following reclassification of certain balances in 2010
Short term investments are carried at fair value. Other loans and receivables are carried at cost which approximates the fair value at 31 December 2010 and 2009.
Atlas V & VI 61 60 - - (28) (17) Mortality swaps 6 11 - - (6) (5) Real estate swaps - - 3 1 (3) (1) S&P 500 index options 22 30 - - 11 12 Interest rate swaps - - 2 1 (2) (1) Forward currency contracts 5 3 3 7 - -
As at 31 December 2009 In EUR million 255 4,881 1,992 673 1,173 8,974
On 9 December 2010, SCOR successfully placed a new catastrophe bond (“Cat bond”), Atlas VI Capital Limited Series 2010-1, which will provide the Group with EUR 75 million of protection against European windstorms and Japanese earthquakes for a risk period extending from 10 December 2010 to 31 March 2014. This transaction succeeds Atlas IV Reinsurance Limited, which is due to mature on 31 December 2010 and provides similar geographical cover of EUR 160 million.
Amounts are recorded in the balance sheet representing the derivative asset recognised at fair value through P&L and other liabilities representing the value interest payments. SCOR values the derivative asset using a model that is based on a combination of market inputs to the extent that trades in these instruments are active and catastrophic modelling tools. These assets are disclosed as level 3 investments within insurance business investments (Note 6).
During 2008 SCOR Global Life SE concluded a four-year mortality swap with JP Morgan, effective 1 January 2008. On 1 September 2009, the terms of the agreement were amended to add an additional layer of protection.
SCOR has entered into two real estate swap contracts, with ABN AMRO. The contracts were subsequently assigned to RBS. This dual-swap transaction has been concluded for 5 years commencing in 2007 and running until 2011. The two separate swaps are calculated and settled annually April of each year:
 SCOR swaps the French offices total return for 1Y Euribor + 2.20%.
 Diversify SCOR’s real estate direct allocation to other real estate sectors, especially residential, with geographical diversification through other country exposures.
The indices used to measure the relevant real estate returns are those issued by an independent third party company (IPD). These indexes are obtained by the analysis of the appraised market values on 31 December of each year and rental incomes of the real estate portfolios of institutional investors using the independent third party provider. The indices are therefore derived from a large and diversified data base. The notional exposure for each of the four legs of the transactions is EUR 30 million.
In connection with its asset-liability matching strategy, SCOR hedges the equity index annuities portfolio through various call options on one or more of the following indices: S&P 500, NASDAQ, Euro Stoxx 50, London World Community. For these annuities, policyholder values are credited based on the performance of a specified index, over the counter options are purchased as investments to provide the income needed to fund the index credits. Any basis risk and risk associated with actual versus expected assumptions for mortality and lapse rates are retained by the Group.
These options are valued based on the Black-Scholes and other stochastic simulation models using 31 December 2010 financial data including the appropriate indices, implied volatility and risk-free rates. The notional amount at 31 December 2010 was USD 842 million or EUR 626 million (2009: USD 812 million, EUR 558 million) for which the cost of the option was USD 30 million or EUR 22 million (2009: USD 31 million, EUR 21 million). The fair value adjustment recorded at 31 December 2010 amounted to USD (1) million or EUR (1) million (2009: USD 13 million, EUR 9 million) to reduce the options to their fair value of USD 29 million or EUR 22 million (2009: USD 44 million, EUR 30 million). The total decrease in fair value for these contracts in 2010 recorded through income amounted to USD 14 million or EUR 11 million (2009 decrease in fair value of: USD 17 million, EUR 12 million).
SCOR enters into forward currency purchase and sales contracts to reduce its overall exposure to balances held in currencies other than the functional currencies of its subsidiaries. The contracts are recorded at their net fair value from valuations provided by banking counterparties using market inputs. The outstanding contracts at 31 December 2010 and 2009, converted into EUR at the closing rates, were as follows: Forward sales Forward purchases
ASEFA 40% Spain 1,121 1,043 112 3 31 Mutre 33% France 838 776 307 (3) 32 SCOR CHANNEL 100% Guernsey 14 12 12 - 2 SCOR Gestion financière 100% France 4 - - (1) 4
TOTAL 2009 (2) 69 (1) Based on 2010 provisional financial information. (2) Based on 2008 accounts except ASEFA and SGF which are based on 2009 provisional financial information.
20.1.6.10 NOTE 10 - ACCOUNTS RECEIVABLES AND DEBTS WITH CEDANTS AND RETROCESSIONAIRES
Accounts receivable from and payable to cedants and retrocessionaires are mostly due in less than one year. A complete aging of financial assets is included in Note 26.
Liquidity is defined as cash and cash equivalents (as presented above) and short term investments comprised primarily of government bonds maturing less than 12 months from date of purchase (as presented within Note 7). Total liquidity as at 31 December 2010 is EUR 1,266 million (2009: EUR 1,655 million).
 All other movements presented above relate to the issuance of shares on the exercise of stock options for EUR 2 million (EUR 1.3 million in share capital and EUR 0.7 million in additional paid-in capital). This resulted in the creation of 161,557 new shares throughout the year.
In 2010, the movements were due to the following operations:  On 28 July 2010 the Board proposed the option to pay dividends with issuance of new shares (scrip dividends). At the end of exercise period (2 June 2010), 2,647,517 new shares were issued for a total of EUR 21 million (plus EUR 21 million in additional paid capital).