Pursuant to Article 28 of Regulation (EC) 809/2004 of April 29, 2004 of the European Commission implementing the Directive 2003/71/CE (the “Regulation (EC) 809/2004”), the following information is included by reference in this registration document (the “Registration Document”):  SCOR SE’s corporate and consolidated financial statements for the financial year ended December 31, 2014 and the report of the statutory auditors regarding said financial statements as presented in SCOR SE’s registration document filed with the AMF on March 20, 2015 under number D.15-0181;  SCOR SE’s corporate and consolidated financial statements for the financial year ended December 31, 2013 and the report of the statutory auditors regarding said financial statements as presented in SCOR SE’s registration document filed with the AMF on March 5, 2014 under number D.14-0117.
SCOR SE and its consolidated subsidiaries (“SCOR” or the “Group”), compose the world’s 5th largest reinsurer (1) serving more than 4,000 clients from its four organizational hubs located in Paris / London and Zurich / Cologne for Europe, Singapore for Asia and New York / Charlotte / Kansas City for the Americas Hub. Two of these Hubs result from the combination of previously existing Hubs with a view of strengthening the organizational structure of SCOR in Europe. The new Zurich / Cologne Hub was established on October 1, 2014 and became fully operational in the first quarter of 2015. The new Paris / London Hub was established on April 15, 2015 and became fully operational in the second quarter of 2015.
Consolidated net income - Group share 642 512 549 Net investment income on invested assets
Total shareholders' equity 6,363 5,729 4,980 P&C Segment Gross written premiums
(3) The ROE calculation method was adjusted to take into account material foreign exchange rates movements that do not occur evenly through the reporting period. A daily weighted average is applied for the currency or currencies that experienced such movements and simple weighted average is applied for the other currencies. The ratio previously reported in the 2013 Registration document was 11.5% for 2013
* 2011 and 2013 net results included a gain from bargain purchase for EUR
* The leverage ratio is calculated as the percentage of subordinated debt compared to the sum of shareholders’ equity and subordinated debt. The calculation excludes accrued interest from debt and includes the swaps effect related to subordinated debt issuances ** As at December 31, 2011, the calculation of debt taken into account in the ratio did not exclude accrued interest and therefore the ratio published in the 2011 Registration Document was 18.1% as at December 31, 2011 *** In September 2014 and December 2015, SCOR issued two subordinated notes for EUR 250 million and EUR 600 million, respectively. It is SCOR’s current intention, subject to the evolution of market conditions and to prior regulatory approval, to refinance through the proceeds of these two notes the optional redemptions of the remaining balance of the 6.154% undated deeply subordinated EUR 350 million notes callable in July 2016 and of the 5.375% fixed to floating rate undated subordinated CHF 650 million notes callable in August 2016. The proceeds of these notes may also be used for general corporate purposes. Had these redemptions been effective on December 31, 2015, the leverage ratio would have amounted to 20.6%
The statute of limitations for dividends is 5 years. Dividends whose payment has not been requested shall be allocated to the French Treasury Department. See also Note 4.6.23 – Earnings per share.
Domicile and legal form of the issuer, legislation governing its activities, country of incorporation, address and telephone number of its registered office
As at the date of this Registration Document, the SCOR SE shares are listed on the Eurolist of Euronext Paris SA and on the SIX Swiss Exchange (formerly SWX Swiss Exchange) in Zurich since August 8, 2007.
SCOR SE has been included in the “EuroStoxx Select Dividend 30” index of the 30 most attractive European companies in terms of dividends since March 12, 2010.
The Company converted into a European Company (Societas Europaea) in 2007. As such SCOR SE is governed by the provisions of Council Regulation (EC) No. 2157/2001 (the “SE Regulation”), and that of the European Council Directive 2001/86/EC of October 8, 2001 supplementing the Statute for a European Company with regard to the involvement of employees, and by the provisions of French law relating to European Companies, as well as for all other matters partially covered or not covered by the SE Regulation, by the French corporate law provisions applicable to a “société anonyme”, where not contrary to the specific provisions applicable to European Companies. The Group’s divisions’ business activities of insurance, reinsurance and asset management are subject to comprehensive regulation and supervision in each of the various jurisdictions where the Group operates. Given that the Group is headquartered in Paris (France), this supervision is based, to a significant extent, on European Union directives and on the French regulatory system. The Group’s principal regulators in France are the Autorité des Marchés Financiers (“AMF”), which is the French financial market regulator, and the Autorité de Contrôle Prudentiel et de Résolution (“ACPR”), which is the principal French insurance regulator. While the extent and nature of regulation varies from country to country, most jurisdictions in which SCOR’s insurance and reinsurance subsidiaries operate have laws and regulations governing standards of solvency, levels of reserves, permitted types and concentrations of investments, and business conduct to be maintained by insurance and reinsurance companies. The supervisory agencies having jurisdiction over the Group’s operations may conduct regular or unexpected examinations of the insurers’/reinsurers’ or asset managers’ operations and accounts and request particular information from the insurer or reinsurer. Certain jurisdictions also require registration and periodic reporting by holding companies that control a licensed insurer or reinsurer. This holding company legislation typically requires periodic disclosure concerning the corporation that controls the licensed insurer and other affiliated companies, including prior approval of transactions between the insurer, the reinsurer and other affiliates such as inter-corporate transfers of assets and payment of dividends by the controlled insurer or reinsurer. In general, these regulatory schemes are designed to protect the interests of insureds rather than shareholders.
Under the Reinsurance Directive 2005/68/EC (the “Reinsurance Directive”) and related European and French regulations, French companies, whose exclusive business is reinsurance, can only practice after having obtained an administrative license, issued by the ACPR. Registered reinsurers in France can operate under certain conditions in the EEA (European Economic Area) relying on the freedom to provide services and/or on establishment (branch).
SCOR SE, its insurance and reinsurance subsidiaries are subject to regulatory capital requirements in the jurisdictions where they do business, which are designed to monitor capital adequacy and to protect insureds. While the specific regulatory capital requirements (including the definition of admitted assets and methods of calculation) vary between jurisdictions, an insurer or reinsurance company’s required capital can be impacted by a wide variety of factors including, but not limited to, business mix, product design, sales volume, invested assets, liabilities, reserves and movements in the capital markets, including interest rates and equity markets. SCOR SE and the Group are subject to supervision by the ACPR which has extensive oversight authority, including to review the Group’s consolidated solvency margin as well as the solvency margin of each French incorporated reinsurance operating company. Following the implementation of the 2009 European Directive on the taking-up and pursuit of the business of insurance and reinsurance (“Solvency II”), as amended in 2014 by the 2014/51/EU Directive (“Omnibus II”), coming into effect on January 1st, 2016, the new European solvency requirements are expected to better reflect the risks that insurance and reinsurance companies face and deliver a supervisory system that is consistent across all European member States. The Solvency II framework is based on three main pillars: (1) Pillar 1 consists of the quantitative requirements around own funds, valuation rules for assets and liabilities and capital requirements, (2) Pillar 2 sets out requirements for the governance and risk management of insurers, as well as for the effective supervision of insurers including the requirement for insurers to submit an Own Risk and Solvency Assessment (ORSA) which will be used by the regulator as part of the supervisory review process; and (3) Pillar 3 focuses on disclosure and transparency requirements. The Solvency II framework covers, among other matters, valuation of assets and liabilities, the treatment of insurance and reinsurance groups, the definition of capital and the overall level of required capital. A key aspect of Solvency II is that assessment of the Group’s risks and capital requirements is aligned more closely with economic capital methodologies.
At this stage, the extent of the application of Solvency II to international groups is still unclear and there is a risk of inconsistent application throughout Europe, which may place SCOR at a competitive disadvantage with regard to other European and non-European financial services groups. The Group’s internal economic capital model which is intended to enable a better understanding of risks and risk management, has been approved by the ACPR. Going forward, the ACPR will review it regularly. For additional information on the impact of this regulatory change on the Group’s operations and financial position, refer to Section 3.2.1.3. For the description of new governance requirements, refer to Section 2.
SCOR Investment Partners SE (formerly known as SCOR Global Investments SE) is subject to extensive regulation in the various jurisdictions in which it operates. These regulations are generally designed to safeguard client assets and insure adequacy of disclosure concerning investment returns, risk characteristics of invested assets in various funds, suitability of investments for client investment objectives and risk tolerance, as well as the identity and qualifications of the investment manager. These regulations generally grant supervisory agencies broad administrative powers, including the power to limit or restrict the carrying on of business for failure to comply with such laws and regulations.
In August 2007, SCOR acquired Converium (which became SCOR Holding (Switzerland) AG (“SCOR Holding Switzerland”)). SCOR also listed its shares to trading in Swiss Francs on the SWX Swiss Exchange (which later became the SIX Swiss Exchange) in Zurich.
For more information on the Hub structure, see Section 1.2.3.1 – Brief description of the Group and of the position of the issuer as concerns the Hub structure. On October 29, 2008, SCOR announced its decision to create SCOR Global Investments SE (which became SCOR Investment Partners SE), its asset management company (société de gestion de portefeuille) and third operational entity within the Group along with SCOR Global P&C SE and SCOR Global Life SE. This new company, incorporated on February 2, 2009, carries the asset management of SCOR’s investment portfolio 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 (which became SCOR Investment Partners SE) was approved by the AMF, French market regulator, as a portfolio management company with effect from May 15, 2009. As a regulated asset management company, SCOR Investment Partners SE carries out its activities on an arms-length basis and with the operational independence required under Article L. 214-9 of the French monetary and financial Code. On December 4, 2009, SCOR Global Life US Reinsurance Company, a wholly-owned subsidiary of the Group, acquired XL Re Life America Inc., a subsidiary of XL Capital Ltd, for an amount of EUR 31 million. The acquisition helped SCOR Global Life strengthen its services in the mortality protection field and reinforce its position in the US Life reinsurance market.
On September 1, 2014, SCOR announced the creation of a local entity in Brazil, SCOR Brasil Resseguros SA (SCOR Brasil Re), following the granting of a license to operate as a Local Reinsurer granted by the Brazilian insurance authority SUSEP on August 26, 2014.
The Group company whose stock is listed on the Euronext Paris regulated market is SCOR SE, the Group parent company.
SCOR launched and completed several major restructuring projects, notably between 2005 and 2010. These reorganizations were undertaken 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.
The Societas Europaea statute enables SCOR SE to strengthen its European and transnational identity, facilitate acquisitions in Europe, improve flexibility in financial matters and capital allocation, simplify regulatory controls by using the possibilities offered by the Reinsurance Directive and reduce its local structures, by giving preference to the use of
Further to the 2011 acquisition of the mortality reinsurance business of Transamerica Re, SCOR Global Life reorganized its activities in the US and merged SCOR Global Life Reinsurance Company of America into SCOR Global Life U.S. “SCOR Global Life U.S. Re Insurance Company” was renamed “SCOR Global Life Americas Reinsurance Company” (SGL Americas). Following the 2013 acquisition of Generali U.S. Holding, Inc., Generali USA Life Reassurance Company, the primary operating company, relocated from Missouri to Delaware and was renamed “SCOR Global Life USA Reinsurance Company”.
 The Group to develop a global culture while keeping local specificities. Management reviews the operating results of the Non-Life and Life operating segments individually for the purpose of assessing the operational performance of the business and to allocate resources. For more information on SCOR’s operating segments, see Section 4.6.4 Note 4 – Segment Information. The Hub structure is designed to facilitate access to local markets through a network of local subsidiaries, branches and sales offices, provide better identification of profit centers in each major reinsurance market, obtain a deeper understanding of the specific features of local risks and develop local management and underwriting expertise, in order to provide better customer service and maintain relationships with ceding companies. Following the acquisition of the mortality reinsurance business, including the operational assets and personnel of Transamerica Re, and the acquisition of Generali U.S. Holding Inc., Charlotte, North Carolina, and Kansas City, Missouri, have become key locations for the Life division. As part of these integrations, Charlotte and Kansas City have joined New York as key competence centers of the Americas Hub.
Refer to:  Section 1.2.3 – Organizational structure of SCOR;  Appendix C – 5.2.1 Note 2 – Investments;  Section 4.6.24 Note 24 – Related party transactions;  Section 4.7 – Information on Holdings;  Section 1.2.3.1 – Brief description of the Group and of the position of the issuer as concerns the role of SCOR towards its subsidiaries;  Section 4.6.3 Note 3 – Acquisitions and disposals;  Section 4.6.2.1 – Significant subsidiaries investments in associates and joints ventures
At December 31, 2015, the relevant ratings for the Company were as follows (1): Financial Strength Senior Debt Subordinated Debt
On December 15, 2015, Moody’s raised the outlook of SCOR to “positive” from “stable”, and affirmed its Insurance Financial Strength rating of “A1” and its “A3” (hyb) subordinated debt rating. According to Moody’s, this decision reflects “the continued improvement in SCOR’s market position and franchise, the rating agency’s expectation of a continued high stability of SCOR’s earnings resulting from the Group’s diversified business model and a lower exposure to the most volatile reinsurance segments than peers, as well as SCOR’s strong capitalization and risk management”. On September 11, 2015, A.M. Best revised the outlook of SCOR and its main subsidiaries to “positive” from “stable”, as well as affirming the financial strength rating of “A” (Excellent) and the issuer credit ratings of “a+”, to reflect, according to A.M. Best’s statement, “the Group’s track record of solid earnings and stability in risk-adjusted capitalization despite the prevailing competitive market conditions”. With regard to SCOR’s debt instruments, A.M. Best also revised the outlook to “positive” from “stable” and affirmed the issue ratings.
On July 21, 2015, Fitch Ratings upgraded SCOR’s Insurer Financial Strength rating from “A+ positive outlook” to “AA- stable outlook” and affirmed the Long-Term Issuer Default Rating at “A+”. Fitch Ratings notably mentioned having taken into account “the development of SCOR’s reinsurance franchise, the scale and diversity of which have improved significantly through external growth and swift integration of acquired operations, helping to generate a more stable level of profitability”. The rating agency also noted “the level of capitalization that Fitch considers to be very strong” as well as “a consistent and prudent reserving philosophy”.
On August 20, 2014, Fitch Ratings raised to “positive” the outlook on the “A+” Insurer Financial Strength rating of SCOR SE and its main subsidiaries to reflect, according to Fitch, “SCOR’s improved profitability, strong solvency and financial leverage for its risk profile”.
For more information on risks arising from financial ratings, please see Section 3.2.1.4 – Downgrade risk.
 a robust “Capital Shield” policy (see Section 3.3 - SCOR's main risk management mechanisms).
“Optimal Dynamics” sets two specific targets for the Group:  a ROE of 1,000 basis points above the three-month risk-free rate over the cycle;  a solvency ratio in the 185-220% range (percentage of SCR, according to the Group Internal Model) (1)
It also affirms the Group’s consistent shareholder remuneration policy set by the SCOR’s Board of Directors. SCOR aims to remunerate shareholders through cash dividends. If relevant, the Group does not exclude other means (e.g. opportunistic share buy-back, special dividends). Overall the Board will aim to maintain a minimum dividend payout of 35% over the cycle, while pursuing low volatility in the dividend per share from year to year. During its annual Investors’ Day held on September 9, 2015 in Paris, SCOR’s Executive Management team, led by Denis Kessler, announced that SCOR is on track with the execution of its “Optimal Dynamics” strategic plan, combining growth, solvency and profitability.
Risk appetite defines the quantity of risk that SCOR wishes to accept to achieve a desired level of profitability. This determines where the Group wishes to position itself on the assumed risk-expected return spectrum, between extremely risk averse (low risk-low return) and extreme risk taker (high risk-high return). SCOR uses a target solvency ratio as well as a target expected profitability. These two components provide a comprehensive definition of its risk appetite. The Group actual solvency ratio and the retained profitability profile are regularly reported to the Board of Directors via the Risk Committee.
Footprint scenarios are an innovative and complementary risk management tool. Whereas risk drivers and extreme scenarios are probability-based, the footprint approach consists of carrying out an impact assessment on the Group under a deterministic scenario. This approach is complementary to a probability-based view. Taking into account SCOR’s current exposure and all risk mitigation instruments, footprint scenarios provide the impact assessment of past events on the Group’s actual solvency ratio, liquidity, and own operations. SCOR regularly produces and evaluates footprint scenarios, providing comfort that the impact of such events on the Group’s current solvency would be limited.
Reinsurance provides four essential functions:  it offers the direct insurer greater security for its capital and solvency, as well as protection against the potentially high volatility of results when abnormally high frequency or severity of losses or events occur, by covering the direct insurer above certain contractually set amounts per event or in aggregate;  it allows insurers to increase the maximum amount they can insure for a given loss or series of losses by enabling them to underwrite a greater number of risks, or larger risks, without excessively raising their need to cover their solvency margin and, therefore, to increase their capital base;  it gives access to substantial available liquidity to insurers in the event of major loss events; and
In addition, reinsurers may also provide advisory services to ceding companies by:  defining their reinsurance needs and devising the most effective reinsurance program to better plan their capital needs and solvency margin;  supplying a wide panel of support services, particularly in terms of the sharing of know-how, best practices and risk assessment, modeling and management tools;  providing expertise in certain highly specialized areas such as the analysis of complex risks and risk pricing; and
The two basic types of reinsurance arrangements are treaty and facultative reinsurance. In treaty reinsurance, the ceding company is contractually bound to cede and the reinsurer is bound to assume a specified, contractually defined portion of a type or category of risks insured by the ceding company. Treaty reinsurers, including SCOR, do not separately evaluate each of the individual risks assumed under their treaties and, consequently, after a review of the ceding company’s underwriting practices, such reinsurers are dependent on the original risk underwriting decisions made by the ceding company’s primary policy writers.
a specified portion of loss sustained, on a claim by claim basis or for amounts incurred, in excess of a specified amount, known as the ceding company’s retention or reinsurer’s attachment point, and up to a negotiated reinsurance contract limit.
Although the frequency of losses under a quota share reinsurance contract is usually greater than on an excess of loss contract, it is generally simpler to predict the losses on a quota share basis and the terms and conditions of a quota share contract can be structured to limit the indemnity offered under the contract. A quota share reinsurance contract therefore does not necessarily imply that a reinsurance company assumes greater risk exposure than on an excess of loss contract. Excess of loss reinsurance is often written in layers. One or a group of reinsurers accepts a tranche or layer of risk above the ceding company’s retention up to a specified amount, at which point another reinsurer or a group of reinsurers accepts the next layer of liability. Stacking layers protecting the same underlying portfolio are called a program, and after protection from the top layer is exhausted liability reverts to the ceding company. The reinsurer taking on the risk just above the ceding company’s retention layer is said to write primary or working layer or low layer excess of loss reinsurance. A loss that reaches just beyond the ceding company’s retention will create a loss for the lower layer reinsurer, but not for the reinsurers on the higher layers. Loss activity in lower layer reinsurance tends to be more predictable than that in higher layers due to a greater historical frequency, and therefore, like quota share reinsurance, underwriters and actuaries have more data to price the underlying risks with greater confidence. Premiums payable by the ceding company to a reinsurer for excess of loss reinsurance are not directly proportional to the premiums that the ceding company receives because the reinsurer does not assume a directly proportionate risk. In contrast, premiums that the ceding company pays to the reinsurer for quota share reinsurance are proportional to the premiums that the ceding company receives, consistent with the proportional sharing of risk. In addition, in quota share reinsurance, the reinsurer generally pays the ceding company a ceding commission. The ceding commission is usually based on the ceding company’s cost of acquiring the business being reinsured, including commissions, premium taxes, assessments and miscellaneous administrative expense, and also may include a profit factor in turn for producing the business.
SCOR’s cost center is referred to in this Registration Document as “Group Functions”. Group Functions is not an operating segment and does not generate revenues. The costs in Group Functions are Group related costs that are not directly attributable to either the Non-Life or Life segment. Group Functions includes the cost of departments fulfilling duties for the benefit of the whole Group, such as the costs for Group Internal audit, Group Chief Financial Officer functions (Group Tax, Group Accounting, Group Consolidation and Reporting, Group Financial Communication, Group Treasury and Capital Management, Group Financial Planning and Analysis), Group Chief Operations Departments functions (Group Legal, Group Communication, Group Human Resources, Group Information) and Group Chief Risk
Control Officer expenses (Group Actuarial, Group Risk Management, Group Prudential Affairs, Internal Model, Embedded Value). The Group organizes its operations around four regional management platforms, or “Hubs” named Paris / London and Zurich / Cologne located in Europe, Singapore located in Asia and New York / Charlotte / Kansas City located in the USA. Each of the Hubs has local, regional and Group responsibilities, with heads of each Hub reporting to the Group Chief Operations Department. Each Hub includes the following functions: a Legal and Compliance Officer, a Head of Information Systems, a Head of Finance, a Head of Human Resources and a Risk Manager. Hub shared service costs are allocated to the segments based on allocation keys. For a description of the Hub structure, see Section 1.2.3 – Organizational structure of SCOR.
SCOR Global P&C and SCOR Global Life, through their respective legal entities, are leading global reinsurers, executing an underwriting policy focused on profitability, developing value-added services and adhering to a cautious financial policy. As at December 31, 2015, the Group serves more than 4,000 clients throughout the world. SCOR’s strategy of offering both Non-Life and Life products provides it with well-balanced diversification benefits (both in terms of risks and geography and markets), which represent a key cornerstone of its strategy. SCOR Global P&C carries out its global operations through the subsidiaries and branches of its two main global reinsurance entities (SCOR Global P&C and SCOR SE) and subsidiaries and branches of a globally operating insurance entity (SCOR UK Limited), as well as insurance and reinsurance branches in Spain, Italy, Switzerland, the UK, Germany, South Africa, Russia, the Americas and Asia/Pacific, including in China, India, South Korea, Hong Kong and Singapore.
SCOR’s Non-Life segment is divided into four business areas:  Property and Casualty Treaties;  Specialty Treaties;  Business Solutions (large corporate accounts underwriting); and  Business Ventures and Partnerships.
SCOR underwrites these risks through proportional and non-proportional treaties as well as facultative reinsurance.
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.
According to laws in France, Italy and Spain, as well as laws in other jurisdictions, or by contractual obligation, inherent defects insurance must be purchased to cover major structural defects and collapse for a certain period, typically ten years after completion of construction.
Aviation insurance covers damages caused to aircraft, injuries to persons transported and to third parties caused by aircraft or air navigation, as well as losses resulting from products manufactured by companies in the aerospace sector.
Insurance for shipping risks includes insurance for hull, cargo and liability for the ships and shipped merchandise as well as shipbuilding insurance. It also includes insurance for offshore oil and gas fixed and mobile units in construction and in operation.
To cope with the broader needs of reinsurance buyers in transferring risk, and to benefit from these changes by broadening its services to clients, the Group has developed within the SCOR Global P&C Division a dedicated competency center that provides insurance and corporate clients with a wider range of hybrid reinsurance solutions for the transformation, financing or transfer of risks. The Group is able to assist clients in their active and effective capital management. This business unit combines the division’s expertise in terms of Structured Risk Transfer (SRT), Alternative Risk Financing (ARF) and Insurance Linked Securities (ILS).
The Group also participates in insurance and reinsurance pools, the main of which are: La Réunion Aérienne, La Réunion Spatiale, Assuratome and Assurpol.
The Protection reinsurance market, as well as SCOR Global Life’s Protection portfolio, is characterized by the dominance of long-term contractual relationships. SCOR Global Life also writes short-term Protection business, in markets and lines in which this is common practice.
Mortality protection represents more than 60% of the SCOR Global Life portfolio based on gross written premiums as at December 31, 2015. SCOR Global Life actively underwrites mortality risk in all the geographical markets it operates.
Critical Illness (“CI”) insurance pays a lump sum benefit, to be used at discretion, if the insured person suffers from a serious condition and survives a defined period.
For information on underwriting, catastrophe risk, claims and reserves, see Section 3.3.2 – Management of underwriting risks and other risks related to the P&C and Life (re)insurance business.
The relative amount of brokered and direct business written by the Group’s subsidiaries varies according to market and cedent practices. For the year ended December 31, 2015, Non-Life wrote approximately 58% of gross written premiums through brokers and 42% through direct business, while Life wrote approximately 7% through brokers and approximately 93% through direct business.
For the year ended December 31, 2015, SCOR’s largest brokers for Life were Aon Group with approximately 2% of the Group’s Life gross written premiums and Willis Group with approximately 1%. SCOR’s largest brokers for Non-Life were Aon Group with approximately 18% of the Group’s Non-Life gross written premiums, MMC with approximately 14% and Willis Group with approximately 11%. The direct reinsurance market remains an important distribution channel for reinsurance business written by the Group. Direct placement of reinsurance enables SCOR to access clients who prefer to place their reinsurance partly or in totality directly with reinsurers based upon the reinsurer’s in-depth understanding of the ceding company’s needs.
The Group reconciles its strategic objectives with the protection of its capital via its “capital shield” policy, which articulates the Group’s risk appetite. This policy is based on an economic approach and aims to protect the Group against potential shock losses. The policy builds on the following four concepts: traditional retrocession, capital markets solutions, solvency buffer and contingent capital facility. For more information on the Capital shield policy, refer to Section 3.3.2.5 – Retrocession and other risk mitigation techniques. For information on the Atlas structured entities used in the Capital shield policy, refer to Section 4.6 – Notes to the consolidated financial statements, Note 2 – Consolidation perimeter.
The investment portfolio is positioned dynamically in order to optimize the financial contribution from the investment portfolio to the Group’s results and the capital allocation. SCOR follows a capital-driven investment process, ensuring through a very strict ALM process, that the tactical asset allocation is aligned with the Group’s risk appetite. Meanwhile, the Group has set very stringent risk limits (value at risk, investment guidelines) that enable a permanent monitoring of limits aiming at preventing the Group from extreme market events and severe loss scenarios.
The Group Investment Committee 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 Investment Partners
SCOR Investment Partners aims at managing all the assets of the Group entities centrally, however in some jurisdictions, local entities delegate the asset management of their portfolios to external asset managers. The SCOR Investment Partners investment team is organized around six asset management desks:  aggregate, focusing on rates, covered bonds and investment grade credit;  credit, focusing on high yield debt and on leveraged loans;  equities and convertibles;  infrastructure loans;  insurance-linked securities (ILS); and
1.2.5.7 DEPENDENCY OF THE ISSUER WITH RESPECT TO PATENTS OR LICENSES, INDUSTRIAL, COMMERCIAL OR FINANCIAL CONTRACTS AND NEW MANUFACTURING PROCESSES
Please refer to Sections 3 – Risk factors and 1.2.6.2 – Research and development, patents and licenses.
SCOR moved in 2012 into its new office building in Paris, with more than 20,000 m² located at 5, avenue Kléber in Paris 16, held by its OPCI (French real estate UCIT) SCOR-Properties, and occupied at 85% by SCOR, the remaining area being rented to a third party. On December 28, 2012, the lease of SCOR's former headquarters (La Défense, Paris), was terminated. Nevertheless, the Group is continuing to lease one floor for IT projects.
Refer to the social and environmental report in Appendix D, Note 2 – Environmental impact of SCOR’s activity.
 R&D Center for Policyholder Behavior: providing support mainly in modeling and pricing lapse behavior within protection products.
 The Insurance Risks and Finance Research Center in cooperation with Nanyang Business School (Singapore), whose aim is to promote research in the field of risk management. For SCOR, the cost is SGD 2.5 million allocated over five years; and
In addition to the above, scientific risk management techniques are promoted, and knowledge spread, via the following:  Involvement in collective studies through the Geneva Association and the teaching of insurance and scientific risk management techniques in schools and universities (e.g. the 218 Master’s at Paris Dauphine, the Zurich ETH, the University Ca’Foscari in Venice Italy and the Enass MBA).
 The SCOR Global Risk Center, created in 2010, is devoted to Life insurance risks, Non-Life insurance risks and economic and financial environment risks. It 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.). The series of SCOR Papers has reached the number of 34 and represents a reference in the theory of actuarial science and insurance economics. SCOR Deutschland has also published a 135 page brochure with the contribution of various scientists on the development of metrics to measure insurance and reinsurance performance.
business, the embedded value calculation has been revised and integrated with the internal model. Other front-office solutions have been developed for SCOR Global Life providing underwriting solutions to our clients in different countries. In the US market in particular, underwriting solutions are proposed to SCOR's Life clients. Integration of Life Individual systems is underway in the US.
In 2014, SGI launched a strategic review. The first achievement has been the outsourcing of middle and back office activities related to asset management to BNP Paribas Securities Services in Q4 2014. This decision will allow to leverage on their expertise in the post-trade execution activities. A specific internal organization and related new procedures have been put in place to monitor the performance and the operational risks of this outsourcing. The frontend part remains internally, and a new project has been launched with the Bloomberg solution.
The SCOR technical environment is based on a secured international network, a consolidated global data center based on a fully replicated outsourced dual site, and a standard workplace deployed everywhere in the world. SCOR has also implemented an ambitious security plan based on stronger physical and logical access controls, data protection, and recovery in the event of any type of disaster.
SCOR IT is playing a key role in implementing the Group’s “Green SCOR” policy, and drives a number of elements of this multi-year plan, including data center consolidation, server virtualization, new low-energy desktops and laptops, and reduction in printing. Mobility is still being enhanced through ongoing developments in line with technological and business needs evolutions, requiring a more permanent connection with the company, and compliance with security standards.
Finally, the IT strategy is aligned with the SCOR business objectives. The mandate of SCOR IT under the past strategic plan has been largely completed with new solutions in the back-office and front-end areas to ensure operational excellence and business development. The ongoing strategic plan, “Optimal Dynamics”, has identified new directions for SGP&C, SGL, SGI and the Corporate Functions, which have been analyzed to define the new strategy for the SCOR Information System. This new strategy, launched as part of “Optimal Dynamics”, will help in materializing the ambitious “Digital SCOR” program, a key initiative for the digital transformation of SCOR.
Refer to Section 3.3.3 – Management of market risks for a description of risk management connected with SCOR investments in debt instruments and equity securities as well as with investments it owns. Refer to section 1.2.2 – History and development of SCOR and to Section 4.6.3 Note 3 - Acquisitions and disposals.
Refer to Section 1.2.6 – SCOR investments in tangible and intangible assets.
SCOR's success relies on the consistent implementation of the four principles on which its strategic plans, “Dynamic Lift”, “Strong Momentum” and now “Optimal Dynamics” are based: a strong franchise, a high diversification, a controlled risk appetite and a robust capital shield. Success in implementing such a strategy requires that, at regular intervals, the Group assesses whether opportunities which may present themselves relating to the optimization of its business portfolio via acquisitions and disposals and which would be likely to deliver value for its shareholders are in line with this consistent set of principles.
The current environment has prompted a wave of mergers and acquisitions in the global reinsurance market in 2015. This is notably due to a change in what clients expect from their reinsurers in terms of added value and due to economic factors such as economy of scale and of scope becoming increasingly important. There has been a structural change in the way insurers cede business, focusing mostly on global reinsurers. An increasing number of cedents are buying their reinsurance globally, asking for additional value-added services that can be offered by only a limited number of reinsurers. Other reinsurers do not have sufficiently large platforms and/or expertise, and have to consolidate to stay competitive. In addition, a number of companies who have embarked on aggressive organic growth strategies see this as unsustainable in the long-term, and face the necessity of merging.
The heterogeneity of the global growth has been reinforced during the year with, on one side, a dichotomy between the US and the European economy, and on the other side the Emerging countries that were entering into an era of high turbulence in a context of growing geopolitical risks. As a consequence, monetary policies have followed different cycles with the US Federal Reserve tightening its policy while the European Central Bank was expanding its Quantitative Easing and created discrepancies in the performance of equities. Hence, the total return of the S&P 500 was below 1.5% for the year while the total annual return of the EuroStoxx 600 was 9.6%. Rates markets were less impacted, with the Euro 10-year benchmark up from 0.54% to 0.63% and the USD 10 year benchmark from 2.17% to 2.27%. Similar to the equities market, the European credit market outperformed the US with the average spread over swap of 1.02% versus 1.79% at the end of 2015.
regulatory approval, to refinance the 5.375% fixed to floating rate undated subordinated CHF 650 million notes callable in August 2016 through the proceeds of the notes. The proceeds may also be used for general corporate purposes. On November 17, 2015, SCOR’s internal model was approved by the Autorité de Contrôle Prudentiel et de Résolution (French regulator).
Refer also to Section 4.6 – Notes to the consolidated financial statements, Note 1 – Accounting principles and methods and Note 26 – Insurance and financial risks.
 The diversification of underwritten risks by product lines in Life reinsurance (Protection, Financial Solutions, Longevity) and in Non-Life reinsurance (Property and Casualty Treaties, Specialty Treaties, Business Solutions (large corporate accounts underwriting essentially on a facultative business/occasionally direct insurance) and Business Ventures and Partnerships).
Gross written premiums for the financial year ended December 31, 2015 amounted to EUR 13,421 million, an increase of 18.6% compared to EUR 11,316 million in 2014. At constant exchange rates the growth is 6.4%. The overall increase
in gross written premiums of EUR 2,105 million in 2015 is due to an increase of EUR 788 million for SCOR Global P&C and EUR 1,317 million for SCOR Global Life. Gross written premiums for the financial year ended December 31, 2014 amounted to EUR 11,316 million, an increase of 10.4% compared to EUR 10,253 million in 2013. The overall increase in gross written premiums of EUR 1,063 million in 2014 was due to an increase for SCOR Global P&C of EUR 87 million and EUR 976 million for SCOR Global Life primarily driven by the business acquisition of the mortality portfolio of Generali U.S. on October 1, 2013 with a twelve months contribution in 2014, as well as Longevity and Financial Solutions contracts signed in 2014.
See Section 4.6 - Notes to the consolidated financial statements, Note 4 – Segment information, for further detail on the results of the segments.
The following table shows the breakdown by gross volume of Life and Non-Life premiums written by geographic area based on market responsibility, considering the country in which the ceding company operates for treaty business and location of the insured for facultative business: Total SCOR Global Life SCOR Global P&C
Net investment income (1)(2) for the year ended December 31, 2015 amounted to EUR 666 million as compared to EUR 576 million and EUR 509 million for the years ended December 31, 2014 and 2013, respectively. The net return on investments in 2015 was 2.6% compared to 2.5% in 2014 and 2.4% in 2013. The increase in investment income from 2014 to 2015 is mainly due to the increased asset basis as a result of currency movements as well as higher realized gains.
The net return on invested assets in 2015 was 3.1% as compared to 2.9% in 2014 and 2.6% in 2013 (3).
The 2014 and 2013 operating income benefitted from the strong technical performance of SCOR Global Life, the robust profitability of SCOR Global P&C, and the acquisition of Generali U.S. in spite of challenging market conditions.
In 2014, SCOR benefited from a strong underlying performance and a prudent asset management policy which safeguarded shareholders’ interests while delivering solid returns and a rather benign year in terms of natural catastrophes. In 2014, the effective tax rate was 24.4%(4).
In 2013, SCOR's net income benefited from a strong underlying performance, a gain from bargain purchase net of transaction costs (and the latter net of taxes) related to the acquisition of the business of Generali U.S. of EUR 183 million and a prudent asset management policy of SCOR Global Investments which safeguarded shareholders’ interests while delivering solid returns. In 2013, the effective tax rate was 13.9%(4), mainly impacted by the geographical mix and the recognition of tax-exempt gains from bargain purchase for the acquisitions of Generali U.S. and MRM S.A.
(1) Refer to Section 1.3.9 – Calculation of financial ratios (2) Excluding life reinsurance contracts that do not meet the risk transfer criteria (presented in the investment income line of the 2013 Registration Document).
The January 2015 renewals have been characterized by an increasingly competitive market environment. SCOR Global P&C has capitalized on the quality of its franchise and the active management of its portfolios, completing January renewals that bear witness to its strong competitive position, as illustrated by the main performance indicators set out below:  A pricing decrease contained at -0.7% across the entire renewed portfolio, which has benefited from primary insurance price increases, being mainly composed of proportional reinsurance;  Deterioration in the gross underwriting ratio limited to just 0.2 percentage points, thereby confirming that the teams have successfully achieved their targets in terms of slowing down the deterioration in expected profitability. Moreover, SCOR Global P&C successfully resisted the broader loosening of terms and conditions, particularly certain contract clauses, thanks to a technical and consistent underwriting approach that has notably enabled it to contain the extension of hour clauses and to maintain event aggregation conditions within acceptable limits for non-proportional contracts;  Improved outward retrocession conditions that provide SCOR Global P&C with broader and more efficient protection, and enable it to confirm its net combined ratio assumption of 94% for the second year of “Optimal Dynamics”.
Compared to 2014 the growth is driven by the performance of lines of business in Specialties (mainly in Lloyds and LRA portfolio) and SCOR Business Solutions.
In 2014 the combined ratio reflected very strong technical results, driven by the year-on-year improvement of the attritional ratio 56.9% (versus 57.7 % in 2013) and the lower impact of natural catastrophes compared to 2013. Natural catastrophes had a 4.2% impact on the Group net combined ratio for year end 2014 compared to a 6.4% impact in 2013.
In 2013, the slight improvement of the combined ratio came from the attritional loss ratio 57.7% (versus 57.8% in 2012) and the lower impact of natural catastrophes compared to 2012.
The following table highlights losses due to catastrophes for the years 2015, 2014, and 2013: As at December 31
Number of catastrophes occurred during the financial year 11 (3) 8 (4) 12 (6)
Hailstorm and Typhoon Rammasun (5) Andreas Hailstorm (July 2013) and South Africa Hailstorm’s development impacts are included in 2014 cat ratio (6) Including Saint Jude Storm, Andreas, Manni and Ernst Hailstorms in Germany, European Floods, South Africa (Gauteng) and Xaver Hailstorms, Hurricane
Manuel, Typhoon Haiyan, Alberta and Toronto floods and Oklahoma Tornado (7) Earthquakes in Italy (May 20 and 29, 2012) and Hurricane Sandy’s development impact are included in 2013 cat ratio
In 2014, SCOR was affected by the following catastrophes which resulted in total net estimated losses of EUR 163 million as at December 31, 2014: In EUR million
Original estimated loss net of retrocession as at December 31, 2014
Adjusted estimated loss net of retrocession as at December 31, 2015 Cat losses
European Hails (Ela) June 2014 82 81 Japan Snowstorm February 2014 32 38 USA floods (Warren Michigan) August 2014 16 17 Cyclone Hudhud October 2014 14 8 Other natural catastrophes (less than EUR 10 million) 2014 19 15
In 2013, SCOR was affected by the following catastrophes which resulted in total net estimated losses of EUR 259 million as at December 31, 2013: In EUR million Original estimated loss net of retrocession as at Adjusted estimated loss net of retrocession as at Cat losses Date of loss December 31, 2013 December 31, 2014 December 31, 2015 European Floods June 2013 62 60 58 Andreas Hailstorm July 2013 51 66 66 Alberta Floods June 2013 44 37 31 Saint Jude Storm October 2013 35 41 39 Xaver December 2013 20 24 23 Toronto Floods July 2013 15 14 14 Manni Hailstorm June 2013 10 13 13 Other natural catastrophes (less than EUR 10 million) 2013 22 22 19
In 2015, SCOR Global Life continued to grow profitably in a competitive Life reinsurance market.
The solid operating profitability of SCOR Global Life was maintained thanks to a robust technical performance across core regions and product lines.
SCOR Global Life ranks among the top five life reinsurers worldwide (1) and has grown by 20.6% in gross written Premiums from EUR 6,381 million in 2014 to EUR 7,698 million in 2015 (+7.5% at constant exchange rates (2)). SCOR Global Life has increased its new business premiums from new clients and increased new business with existing clients, in particular in Protection in Asia Pacific and the Americas, and in Longevity in Europe and North America. Protection The Protection business area accounts for 80% of 2015 total gross written premiums and remains the main driver for premium growth (+18% gross written premiums growth in 2015). SCOR Global Life has maintained its leadership in the US Life reinsurance market (3), the largest life reinsurance market in the world. After the successful integration of Generali USA Life reinsurance activities, SCOR Global Life has created one common operations platform in North America across multiple sites (Charlotte, Kansas City, Montréal and Toronto). Leveraging this new underwriting platform has led to new account wins, including in Canada.
 Long-Term Care: SCOR Global Life has been pioneering LTC reinsurance solutions in the French market for approximately twenty years, and has acquired a sound practical experience regarding the underwriting and the management of LTC risks. SCOR Global Life has also expanded its geographical scope by introducing its LTC reinsurance coverage to several markets.
 Disability: SCOR Global Life has established strong market positions in disability in many continental Europe markets and Canada. It has recently selectively entered into the Australian disability market in line with SCOR’s risk appetite, at pricing levels in line with its profitability target, thanks to hardening market conditions.
 Medical represents a small proportion of SCOR Global Life’s portfolio. It is a major product line in the markets of the Middle East and is written selectively in Asia, Continental Europe and the Americas.
 Personal Accident also represents a small proportion of SCOR Global Life’s portfolio. A main source of Personal Accident business for SCOR Global Life is obtained through its distribution services company,
(1) Based on 2014 gross written premiums (2) At 31/12/2015 exchange rates (3) Source: 2014 SOA/ Munich Re survey of US life reinsurance, published in 2015
In Distribution Solutions, SCOR Global Life has successfully deployed a number of innovative and tailored client services which aim to help insurers expand and develop their own client bases (ReMark, Velogica, SCOR Telemed and Rehalto). SCOR Global Life has leadership positions in many markets in the EMEA and Asia Pacific regions and achieved strong growth in 2015.
Financial Solutions In the Financial Solutions product line, accounting for 13% of its total 2015 gross written premiums, SCOR Global Life has built a recognized position in providing capital and solvency solutions. In 2013 and 2014, SCOR Global Life signed landmark transactions in Southern Europe, the US, Asia and Latin America. Regulatory environments have been in flux since late 2014, with Solvency II implementation in Europe and equivalent systems elsewhere (China, US). These changes have led to a slowdown in concluding new business, in particular in the EMEA region. Insurers are anticipated to deploy new solutions as these new regulations come in-force.
Overall, the Life technical margin in 2015 was 7.2% compared to 7.1% in 2014 and 7.4% in 2013.
The following table is a reconciliation of these and IFRS figures as presented in Section 4 – Consolidated financial statements.
Realized gains/(losses) on real estate 17 33 Realized gains/(losses) on other investments
Net interests income on funds withheld and contract deposits 180 176 Investment management expenses
Income/(losses) on technical items - (2) MRM S.A. gain from bargain purchase
Financing costs on real estate 10 11 IFRS INVESTMENT INCOME NET OF INVESTMENT MANAGEMENT EXPENSES
Return on invested assets (ROIA in %) 3.1% 2.9% 2.6% (1) Including MRM S.A. gain from bargain purchase (net of acquisition related expenses) in 2013 (2) Real estate financing expenses related to real estate investments (buildings owned for investments) only. They are not included in the IFRS investment income net of investment management expenses
During 2015, invested assets increased to EUR 17,963 million from EUR 16,247 mainly as a result of positive foreign exchange movements and the Group’s strong operating cash flows.
In an uncertain economic and financial environment, surrounded by diverging monetary policies between the US economy and the Eurozone, increased pressure on emerging countries, falling commodity prices and increasing geopolitical risks, resulting in a high volatility context, SCOR maintained a prudent investment strategy.
Total IFRS classification 770 Debt securities 14,611 Available-for-sale financial assets 744 Debt securities - Investments at fair value through income 744 Loans and receivables (2)
27,676 Cash and cash equivalents 1,626 TOTAL INSURANCE BUSINESS INVESTMENTS AND CASH AND CASH EQUIVALENTS
- (1) Including Atlas cat bonds and FX derivatives (2) Other Loans and Receivables excluded from invested assets are certificates of deposit (CDs) maturing in more than three months and less than twelve months included in short-term investments as well as infrastructure loans and real estate loans (3) Assets invested by third parties in mutual funds and non-controlling investments real estate fully consolidated by SCOR (4) Fair value less carrying value of real estate investments excluding amounts of EUR 10 million attributable to third party investors (5) Real estate financing related to real estate investments (buildings owned for investment) excluding amounts of EUR 45 million attributable to third party investors
- (1) Including Atlas cat bonds, mortality swap and FX derivatives (2) Other Loans and Receivables excluded from invested assets are certificates of deposit (CDs) maturing in more than three months and less than twelve months included in short-term investments as well as infrastructure loans and real estate loans in addition with funds withheld (3) Assets invested by third parties in mutual funds and non-controlling investments real estate fully consolidated by SCOR (4) Fair value less carrying value of real estate investments excluding amounts of EUR 6 million attributable to third party investors (5) Real estate financing related to real estate investments (buildings owned for investment) excluding amounts of EUR 53 million attributable to third party investors
After the payment of the 2015 dividend, shareholders’ equity increased from EUR 5,729 million at December 31, 2014 to EUR 6,363 million at December 31, 2015. Refer to Section 4.5 – Consolidated statement of changes in shareholders’ equity for a description of this variation.
Book value per share (1) stands at EUR 34.03 at December 31, 2015 as compared to EUR 30.60 and EUR 26.64 at December 31, 2014 and 2013, respectively. On December 20, 2013, following the authorization granted by SCOR’s shareholders in April 2013, SCOR arranged a new contingent capital facility with UBS. This equity line facility replaced, as at January 1, 2014, the previous contingent capital facilities which had ended on December 31, 2013. Under this new EUR 200 million arrangement, SCOR raised its protection by EUR 50 million. For more information on contingent capital refer to Section 4.6 – Notes to the consolidated financial statements, Note 13 – Information on share capital, capital management, regulatory framework and shareholders’ equity.
For information on the Atlas structured entities used in the Capital shield policy, refer to Section 4.6 – Notes to the consolidated financial statements, Note 2 – Consolidation perimeter.
Some of the letters of credit granted by SCOR to cedents require a 100% collateral in case of non-compliance with financial covenants or in case of a decrease in the Group’s financial strength rating. For example, The Group and its companies are subject to minimum net worth requirements and maximum debt levels under the terms of certain standby letter of credit agreements. Non respect of said covenants might lead to an increase in the percentage of required collateralization.
However, SCOR makes best efforts to limit collateral requirements related to financial covenants or the Group’s financial strength rating in its financial agreements. For more information related to collateral requirements refer to Section 3.2.5 – Liquidity risks.
Debt is a key component of the Group’s financing. It is essentially composed of subordinated debts used to optimize its cost of capital. Subordinated debts provide long-term financial resources as well as financial flexibility. The total level of financial debt which includes subordinated debts, real estate financing and other financial debts increased to EUR 3,155 million from EUR 2,232 million in 2014 (2013: EUR 2,053 million).
rate notes due 2029, and of the EUR subordinated step-up floating rate notes due 2020, on June 25 and July 6, 2015 respectively. On September 24, 2014, SCOR successfully placed perpetual subordinated notes on the Swiss franc market, with a first call date on October 20, 2020, for an amount of CHF 125 million. On September 25, 2014, SCOR successfully placed perpetual subordinated notes on the Euro market, with a first call date on October 1, 2025, for a total amount of EUR 250 million. On September 10, 2013, SCOR successfully placed perpetual subordinated notes on the Swiss Franc market, with a first call date on November 30, 2018, for an aggregate total amount of CHF 250 million.
SCOR uses real estate and other financial debt mainly for real estate financing and general corporate purposes. Operational leverage is subject to asset and liability matching with little to no risk that the assets will be insufficient to service and settle the liabilities. Debt used for operational leverage is treated as operational debt and excluded by the rating agencies from financial leverage calculations. SCOR’s debt positions are non-recourse, the debtors’ claims are limited to assets underlying the financing. As at December 31, 2015, real estate financing and other financial debt amounted to EUR 534 million and EUR 8 million, respectively (December 31, 2014: EUR 469 million and EUR 20 million, respectively). This includes the real estate debt of MRM S.A. (company acquired by SCOR on May 25, 2013) in the amount of EUR 112 million (EUR 132 million as at December 31, 2014).
The Group’s liquidity, defined as cash, cash equivalents, short-term government bonds with maturities above three months and below twelve months and bank overdrafts, which is well diversified across a limited number of banks, stands at EUR 2.0 billion at the end of 2015, up from EUR 0.9 billion at the end of 2014 (EUR 2.1 billion at December 31, 2013) due to the temporary pause in its rebalancing strategy of shifting the portfolio towards the strategic asset allocation set out in its strategic plan “Optimal Dynamics” from the second quarter of the year.
Total investment and cash and cash equivalents, amounted to EUR 29.3 billion at December 31, 2015 as compared to EUR 26.1 billion and EUR 23.8 billion at December 31, 2014 and 2013, respectively.
The new regime, which entered into force on January 1, 2016, represents a significant regulatory change for insurance and reinsurance business in Europe. SCOR has reviewed and, where needed, adapted its regulatory capital structures, systems and processes to meet the new requirements.
From January 1, 2016 onwards, the regulatory solvency position of the Group is assessed by SCOR’s internal model, which was approved in November 2015 by the relevant Supervisors.
Solvency II is putting a great emphasis on the robustness of the risk management system of (re)insurance companies. SCOR has leveraged on an existing robust risk management system and related processes to implement its risk management key function through mechanisms such as a regular monitoring of the risk management system and general risk profile, a dedicated process for identifying and assessing emerging risks, a full and holistic internal model supported by a robust governance, comprehensive reporting to the Executive management and Board of Directors through regular and dedicated ad-hoc risk analyses, as well as annual reports.
For further information on risk management mechanisms, see Section 3.3 – SCOR’s main risk management mechanisms and Appendix A – II Internal Control and Risk management procedures.
Refer to Section 4.4 – Consolidated statements of cash flows and Section 4.6 – Notes to the consolidated financial statements, Note 4 – Segment information for an analysis of the main cash flow statement items and Note 12 – Cash and cash equivalent and cash flows for a reconciliation between consolidated group net income and operating cash flows.
3.1% 2.9% 2.6% (1) Average investments are the quarterly averages of the Total Investments as per the “Invested assets” reconciliation table included in section 1.3.5.4 – Net investment income and investment income on invested assets, adjusted for funds withheld (2) Average invested assets are the quarterly averages of the Total Invested Assets as per the “Invested assets” reconciliation table included in section 1.3.5.4
For a detailed calculation of the management cost ratio refer to the table below: In EUR million
Section 4.2 – Consolidated statement of income (2) ULAE are part of gross benefits and claims paid
Consolidated net income - Group share 642 512 549 Opening shareholders' equity - Group share
(1) Pro-rata of 50%: linear acquisition throughout the period. Generali U.S. impact pro-rata temporis in 2013 (2) Considers time weighted transaction based on transaction dates 1.3.9.5 COMBINED RATIO
For a detailed calculation of the combined ratio refer to the table below: In EUR million Year ended
December 31, 2013 Gross earned premiums 5,580 4,775 4,777 Ceded earned premiums (613) (488) (521) Net earned premiums 4,967 4,287 4,256 Gross benefits and claims paid (3,135) (2,788) (2,967) Ceded claims 198 167 237 Total Net claims (2,937) (2,621) (2,730) Loss ratio 59.1% 61.1% 64.1% Gross commission on earned premiums (1,327) (1,068) (1,035) Ceded commissions 75 49 52 Total Net commissions (1,252) (1,019) (983) Commission ratio 25.2% 23.8% 23.1% Total technical ratio 84.3% 84.9% 87.2% Acquisition and administrative expenses (233) (191) (178) Other current operating expenses (40) (37) (49) Other income and expense from reinsurance operations (63) (52) (56) Total P&C management expenses (336) (280) (283) Total P&C management expense ratio 6.8% 6.5% 6.7% TOTAL COMBINED RATIO 91.1% 91.4% 93.9%
For a detailed calculation of the life technical margin refer to the table below: In EUR million
No material change has occurred in the Group’s financial or commercial situation since the end of the financial year 2015.
SCOR SE’s shares are listed on the Euronext exchange. 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.
In application of the Act of July 3, 2008 implementing the European Union Directive 2006/46/CE of June 14, 2006, SCOR SE refers to the AFEP-MEDEF governance code in preparing the report to be issued in accordance with article L. 225-37 of the French Commercial Code.
The AFEP-MEDEF governance code can be referred to on the Company’s Internet site (www.scor.com) or on the AFEP’s Internet site (www.afep.com).
At its meeting on April 18, 2002 and in compliance with Article L. 225-51-1 of the French Commercial Code and Article 16 of SCOR’s bylaws (“Executive Management”), the Board of Directors of the Company decided that the management of the Company would be carried out under his responsibility by the Chairman of the Board of Directors, with the title of Chairman and Chief Executive Officer, who may be assisted by a Deputy Chief Executive Officer.
In addition, any project regarding a sale, in one or more transactions, concerning at least half of the
Finally, in addition to the Chairman and Chief Executive Officer of SCOR SE, two other persons effectively running SCOR SE and the Group have been appointed. Since January 1, 2016, the effective management of the Company and the Group is managed by at least 2 persons, pursuant to the Solvency 2 directive requirements and the French Insurance Code (please refer to Section 2.1.4 – Executive committee).
The benefits of combining the functions of Chairman and Chief Executive Officer in terms of the decision-making process within SCOR and the guarantees provided by the Company’s governance rules justify the Board’s choice of this type of governance.
The information referred to in Article L.225-100-3 of the French Commercial Code is made public in the Annual Financial report which is included in this Registration Document (see Appendix H for the cross reference table to Annual Financial Report).
The term of the office of the directors appointed or renewed, such as set forth in SCOR SE's bylaws shall not exceed four years. Under SCOR SE’s bylaws, directors may hold office until the age of 77. A Director reaching the age of 77 while in office has to retire at the expiration of the term of his or her office, as determined at the Shareholders’ Meeting. Non-employee directors are elected by the shareholders and serve until the expiration of their respective term, or until their resignation, death or removal, with or without cause, by the shareholders. Vacancies on the Board of Directors may, under certain conditions, be filled by the Board of Directors, pending the next Shareholders’ Meeting.
Claude Tendil, a French citizen, began his career at the Union des Assurances de Paris in 1972. He joined the Drouot Group in 1980 as Chief Operating Officer. He was promoted in 1987 to Chief Executive Officer, and in 1987 was appointed Chairman and Chief Executive Officer of Présence Assurances, a subsidiary of the AXA Group. In 1989, he was appointed Director and Chief Executive Officer of Axa-Midi Insurance, Chief Executive Officer of AXA from 1991 to 2000, then Vice-Chairman of the management board of the AXA Group until November 2001. During this same period, he was also Chairman and Chief Executive Officer of the AXA Group’s French insurance and assistance companies. Claude Tendil was appointed Chairman and Chief Executive Officer of the Generali Group in France in April 2002 until October 2013. He is currently the Chairman of the Board of Directors.
 Permanent Representative of CE Holding Promotion and director of Nexity (France)  Permanent Representative of BPCE, Chairman of the SAS and Chairman of the Board of Directors of BPCE
 Chairman of the Board of Directors of GMF Assurances (France)
 Chairman of the Board of Directors of MAAF Assurances SA (France)  Chairman of the Board of Directors of MMA IARD (France)
Sauvegarde (France)  Permanent Representative of Assurances Mutuelles de France at the Board of Directors of la Sauvegarde
Protection Juridique (France)  Permanent Representative of Assurances Mutuelles de France at the Board of Directors of Fidelia Assistance
 Director and Vice-Chairman of Bipemme Assicurazoni S.p.A. (Italy)  Director and Vice-Chairman of Bipiemme Vita S.p.A. (Italy)  Member of the commission of Caser (Spain)  Chairman of the Board of Directors of Assurances Mutuelles d’Europe (Belgium)  Chairman of the Board of Directors of AME Lux (Luxembourg)  Vice-Chairman of AME Life Lux (Luxembourg)  Vice-Chairman of Eurazur (Luxembourg)  Director of la Capitale Assurances Générales Inc (Canada)
Thierry Derez, a French citizen, was a lawyer practicing in Paris, before joining the insurance group AM-GMF in 1995, first as Deputy Chief Executive Officer of GMF and then as Chairman and Chief Executive Officer of Assurances Mutuelles de France and of GMF in 2001 and as Chairman and Chief Executive Officer of the Group AZUR-GMF in September 2003. He is currently Chairman of the Board of Directors of Assurances Mutuelles de France, of GMF Assurances and Chairman and Chief Executive Officer of Garantie Mutuelle des Fonctionnaires (GMF). He was appointed as director of MAAF Assurances in November 2004 and became its Chairman and Chief Executive Officer in June 2005. Since June 2007, he has been the Chairman of the Board of Directors of MMA IARD Assurances Mutuelles, MMA IARD, MMA Vie Assurances Mutuelles and MMA Vie. Since 2008, he has been Chairman and Chief Executive Officer of Covéa.
Kevin J. Knoer Employee director Member of the Compensation and Nomination Committee
 Chairman and Chief Executive Officer of Aéroports de Paris (France)*
(France)  Permanent Representative of Caisse des dépôts et consignations at the Board of Directors of Icade
Augustin de Romanet, a French citizen, is a graduate of the Institut d'Etudes Politiques in Paris and a former student of the Ecole Nationale d’Administration. He was previously Chief Executive Officer of the Caisse des Dépôts et Consignations, between 2007 and 2012, and chaired the Strategic Investment Fund between 2009 and 2012. Prior to that, he was Deputy Finance Director at Crédit Agricole S.A. and a member of the Executive Committee. Before taking up that position, Augustin de Romanet served as Deputy Secretary General to the Presidency of the Republic of France, between June 2005 and October 2006, and held responsibilities in various ministerial offices. In particular, between 2002 and 2005, he was Chief of Staff to Alain Lambert, Minister Delegate for the Budget, Deputy Chief of Staff to Francis Mer, Minister for the Economy, Finance and Industry, Chief of Staff to Jean-Louis Borloo, Minister for Employment, Labour and Social Cohesion, and lastly, Deputy Chief of Staff to Prime Minister Jean-Pierre Raffarin. Awarded the Légion d’honneur in 2007, Augustin de Romanet holds a number of distinctions, notably “Capitalist of the Year” awarded by the magazine le Nouvel Economiste in 2008 and “Financier of the Year” awarded by Minister of the Economy in 2012. Augustin de Romanet has been Chairman & CEO of Aéroports de Paris since 2012.
(*) Companies which shares are listed on a regulated or organized market
Augustin de Romanet Director Member of the Strategic Committee and Compensation and Nomination Committee
 Chief Executive Officer of Malakoff Médéric Assurances SA (France)  Chairman of the Board of Directors of Viamédis SA (France)  Chairman of the Board of Directors of Quatrem SA (France)  Chairman of the Board of Directors of Auxia SA (France)  Chairman of the Board of Directors of Auxia Assistance SA (France)  Director of Fédéris Gestion d’actifs SA (France)  Director of GIE SI2M (France)  Permanent Representative of Malakoff Médéric Prévoyance at the Board of Directors of OPCI Vivaldi
 Chairman of the Board of directors of Fédéris Gestion d’actifs SA (France)  Chairman of the Directory of Malakoff Médéric Assurances SA (France)  Chairman of the Directory of Malakoff Médéric Epargne SA (France)  Chairman of the Board of Directors of Malakoff Médéric Innovation SAS (France)  Chairman of the Board of Directors of Holding FGA SAS (France)  Chairman of the Board of Directors of Monde Prévoyance SAS (France)  Chairman of the Board of Directors of Sévriena (France)  Director of Auxia SA (France)  Member of the Supervisory Board of Société Editrice du Monde SA (France)  Member of the Supervisory Board of Holding Fondateurs SAS (France)  Member of the Supervisory Board of Holding Accueil Mutuelles SAS (France)  Non-Voting director of Fédéris gestion d’actifs SA (France)  Permanent Representative of Malakoff Médéric Prévoyance at the Board of Directors of Korian (France)  Director of Vida Caixa Grupo* (Spain)
Guillaume Sarkozy, a French citizen, is an engineer by training and a graduate of the Ecole Spéciale des Travaux Publics (ESTP). He began his professional career in 1974 at the Office of Public Safety in the Ministry of the Interior, before joining IBM France as a large corporate accounts manager in 1977. From 1979 to 2005, he was a company leader in the textile industry. Up to June 2006, Guillaume Sarkozy exercised a number of responsibilities at the head of professional associations, in particular, the French Textile Industries’ Union (1993-2006), the Industrial Federations Group (2004-2006), CNPF (1994-1998), MEDEF (2000-2006), CNAV (1994-1998), CNAM (2004-2005) and the Conseil Economique et Social (2004-2006). In 2004, he became vice President of the MEDEF and of the CNAM (20042005 ). From 2004 to 2013, he was a member of the "Haut Conseil pour l'avenir de l'Assurance Maladie". Guillaume Sarkozy joined Médéric Group in June 2006 and was appointed Group General Manager on September 1, 2006. He was appointed Group General Manager of Malakoff Mederic Group in July 2008 with the merger of the Groups Médéric and Malakoff and non-executive General Manager from January 1, 2016.
 Director of Pernod Ricard (France)*  Member of the Supervisory Board of Château Mondot (France)  Director of Institut Pasteur (France)  Director of Phoenix Group Holdings (UK)*  Director of Aviva Insurance Limited (UK)  Director of Uniqa Insurance Group AG (Austria)*  Director of SCOR Global Life Americas Reinsurance Company (US) **  Director of SCOR Global Life USA Reinsurance Company (US) **  Director of SCOR Reinsurance Company (US) **
(*) Companies which shares are listed on a regulated or organized market (**) Companies of SCOR’s Group
Fields Wicker-Miurin Director Member of the Strategic Committee, Audit Committee, Risk Committee and Compensation and Nomination Committee
Date of first nomination: April 25, 2013 Expiration of term: 2019
(UK)  Director of BILT Paper (India)  Member of the Board of the Batten School of Leadership, University of Virginia (US)
The Board of Directors’ composition is guided by the following principles:  Application of best in class corporate governance practices;  An appropriate number of Board members in order to allow meaningful individual participation;  A majority of independent Directors, pursuant to criteria adopted by the Board of Directors based on those set forth in the AFEP-MEDEF Governance Code;  A diversity of expertise;  An international profile;  A high proportion of female Board members. As of December 31, 2015, the Board of Directors is composed of:  83.3% of independent Directors (84.6% as at December 31, 2014). The Audit Committee and Risk Committee are fully composed of independent directors. Since March 4, 2015, and pursuant to the recommendations set forth in the AFEP-MEDEF Code, the Compensation and Nomination Committee includes, in addition to the independent directors, the employee director;  58.3% of Directors having past experience in the insurance or reinsurance industry (53.8% as at December 31, 2014). The other directors work in the financial sector, banking, legal advisory services and other services ;  41.6% of non-French directors (46.2% as at December 31, 2014) with directors who are American, Belgian, British and Swiss;  33.3% of women (23.07% as at December 31, 2014). The composition of the Board of Directors is therefore compliant with the applicable law as well as with the recommendation of the AFEP-MEDEF Code relating to the balanced representation of men and women on Board of Directors for the year 2015.
In accordance with the provisions of the regulation governing the election of an employee candidate for the position of director of SCOR SE adopted by SCOR SE’s Board of Directors on April 3, 2007, the Board of Directors of SCOR SE has an employee director, elected by the Annual General Meeting on the proposal of the Board of Directors following a two-round election by universal suffrage, involving all of the Group’s employees. Once appointed by the Shareholders’ Meeting, the employee director has the same rights and obligations as the other members of the Board of Directors (including the right to vote on any decision of the Board of Directors). Since May 3, 2012, the position of employee director has been occupied by Kevin J. Knoer. His mandate was renewed for a two year period at the Annual General Meeting of May 6, 2014. A new ballot was organized in January and February 2016. Michèle Aronvald has been elected. Her appointment will be proposed to the vote of shareholders at the Annual general Meeting of April 27, 2016.
The Board of Directors held on March 31, 2004 adopted a Board Internal Charter (the “Board Internal Charter”) in order to enhance or specify the missions of the Board. This Board Internal Charter was amended by the Board of Directors on November 2, 2005, July 4, 2006, November 4, 2010, May 4, 2011, March 19, 2012, November 5, 2013, March 4, 2015, July 28, 2015, November 3, 2015 and February 23, 2016. It is available on the website of the Company (www.scor.com). The main provisions of the Board Internal Charter are provided below: Missions of the Board of Directors of the Company
The Board of Directors determines the Group’s business plan, oversees the implementation of the business plan, and supervises management’s administration. With the exception of powers explicitly reserved to shareholders in their General Meetings and within the limits of the corporate purpose, the Board addresses any subject related to the Company’s performance and takes decisions regarding business issues concerning the Company. It takes part in the sound and prudent management of the Company. It is informed each quarter by the management of the financial situation, cash position and commitments of the Company. It takes into account the Own Risk and Solvency Assessment (“ORSA”) when it makes a decision likely to have a significant impact on the Company. The Board also carries out the verifications and controls it deems necessary.
The independence of the directors is assessed on the basis of the following criteria, consistent with the AFEP-MEDEF Governance Code: 1. An independent director must not currently be, or have been within the last five years, an employee or a corporate officer of SCOR or an employee or a director of a company consolidated by the Company. However,
Moreover, the four following directors are or are directly related to main shareholders of SCOR:  Malakoff Médéric Group (3.05 % of SCOR capital and 3.16 % of voting rights as of December 31, 2015) , represented by Guillaume Sarkozy;  Thierry Derez, Chairman and Chief Executive Officer of Covea (2.03 % of SCOR capital and 2.10 % of voting rights as of December 31, 2015);  Jean-Marc Raby, Chief Executive Officer of Macif and Sferen (1.57 % of SCOR capital and 1.63 % of voting rights as of December 31, 2015);  Claude Tendil, Chairman of the Board of Directors of Generali France, Generali Group (0.69 % of SCOR capital and 0.72 % of voting rights as of December 31, 2015).
They hold less than 5% of SCOR capital and the Board of Directors, upon the recommendation of the Compensation and Nomination Committee, stated that these four Directors can be considered as independent.
The Lead Independent Director is appointed amongst the independent Directors by the Board of Directors upon proposal by the Compensation and Nomination Committee. He assists the Chairman and CEO in his duties, in particular in organizing the Board and its Committees and ensuring they function properly, and in supervising corporate governance and internal control. He is also in charge of assisting the Board concerning the good operation of the Company's corporate governance and advising the Board upon the operations on which the Board is convened to deliberate. He may include any subject he deems necessary to the agenda of the Board of Director’s meetings. He convenes the non-executive directors as often as needed. The Lead Independent Director of the Company chairs the Non-executive Directors Session.
Directors may receive training, at their request, on the specific nature of the Company, its business lines and its business sector. They agree to regularly attend meetings of the Board of Directors, committees of which they are members, and general shareholders’ meetings. Lastly, they are obligated to express their opposition when they believe that a decision of the Board of Directors is likely to be harmful to the Company.
Consistently with the AFEP-MEDEF Governance Code, the Executive director should not hold more than two other directorships in listed corporations, including foreign corporations, not affiliated with the SCOR Group. Moreover, he also seeks the opinion of the Board before accepting a new directorship in a listed company.
Lastly, Directors are required to inform the Company of all transactions conducted with regard to its securities, directly or by an intermediary, on their behalf or on behalf of a third party, by their spouse, or by a third party holding a power of attorney.
Each Director has a loyalty obligation to the Company. He or she shall not act in his or her own interest, against SCOR’s interests, and must avoid any situation with risks of conflict of interests. Through the Board Internal Charter of the Board of Directors, each Director undertakes not to seek or accept any function, benefit or situation from the Company or from the Group, directly or indirectly, that could jeopardize his or her independence of analysis, judgment or action, during the course of his or her functions as Director. He or she will also dismiss any direct or indirect pressure from other Directors, specific group of shareholders, creditors, suppliers or other third party.
2. An annual review of each Director’s situation, in order to analyze his or her independent status and potential existing conflicts of interests; 3. Its Board Internal Charter, according to which any Director in a situation of conflict of interests undertake to resign from his or her position if the conflict situation is not solved; 4. The adoption of a Code of Conduct communicated to all employees. This code establishes reinforced requirements as regards the prevention of situations with risks of conflict of interests. It is completed by a policy defining the alert procedures (“whistleblowing”) available for employees and which are reported to the Audit Committee.
The Company’s Board of Directors held 8 meetings in 2015 and they lasted approximately 2 to 3 hours.
During its meeting in 2015, the main topics which were discussed were:  Financial and compliance matters: Approval of the quarterly, half-yearly and annual accounts, approval of the half-year interim report, hybrid debt issuance, 2015 budget and operating plan, 2014 embedded value, review of the 2014 Registration Document and approval of the report of the Chairman of the Board, annual review of the Group Policies;  Risk matters: Quarterly review of the risk dashboard, approval of the regulatory reports (Solvency report and internal control report), follow-up on the implementation of Solvency 2, review of the “lettres de suite” received from the ACPR, review of the 2015 internal model, approval of the application file for the internal model, approval of the 2015 ORSA report, approval of the Group Policies required by the Solvency 2 directive;  Governance and Human Resources matters: Review of the Group remuneration policy, approval of stock and free shares allotment plans, compensation of the corporate officer, review of the “say on pay”, human resources briefing and outlook, assessment of the Board of Directors and follow-up, approval of the rules for granting the directors’ fees, designation of the persons effectively running SCOR SE and the Group under the provisions of Solvency 2, approval of the Group corporate governance manual, renewal of the D&O program, annual deliberation on the professional gender equality and equal pay;  Annual General Meeting: Convening of the General Meetings and approval of the related reports;  Business matters: Review of the investment strategy for 2015, update on the longevity product line;  Other topics: Annual review and authorization of related-party agreements, approval of the modifications made to the Board Internal Charter, authorization of the creation of a branch in India.
Gérard Andreck ** 100 Marguerite Bérard-Andrieu *** 100 Andreas Brandstetter ** 0 Thierry Derez 87.5 Peter Eckert 100 Charles Gave ** 50 Kevin J. Knoer 100 Vanessa Marquette *** 100 Jean-Marc Raby *** 100 Augustin de Romanet *** 100 Guillaume Sarkozy * 50 Guylaine Saucier ** 100 Kory Sorenson 100 Claude Tendil 87.5 Daniel Valot ** 50 Fields Wicker-Miurin 100 * Representing Malakoff Médéric Group, Director ** Director whose term ended at the Annual General Meeting on April 30, 2015 *** Director appointed by the Annual General Meeting on April 30, 2015
(1) The attendance rate does not take into account the directors whose term ended on April 30, 2015
Pursuant to the recommendations stated by the AFEP-MEDEF Governance Code and in the Board Internal Charter of SCOR SE, an assessment of the Board of Directors and of its committees was conducted end of 2015 / beginning of 2016.
The Board also mentioned the main points of improvement identified by the directors in particular to reduce the volume of the documentation of the Board and Committee meetings. Besides, at the end of 2015, Claude Tendil, the Lead independent director, conducted individual interviews with several Board members in order to talk about their personal contribution to the work of the Board.
To SCOR’s knowledge, there are no family relationships between the directors and the members of the Company’s Executive Committee.
To SCOR’s knowledge, during the last five years:  No director and no member of the Executive Committee has been convicted of fraud.
 No director and no member of the Executive Committee has been associated with a bankruptcy, sequestration, or liquidation.
 No director and no member of the Executive Committee has ever been prohibited by a court from acting as a member of an administrative, management, or supervisory body of an issuer or from participating in the management or business of an issuer.
To our knowledge, there are no conflicts of interest between the duties of the Directors and members of the Executive Committee with regard to SCOR and their private interests.
2.1.2.8 INFORMATION ON SERVICE CONTRACTS OF MEMBERS OF THE BOARD OF DIRECTORS AND THE EXECUTIVE COMMITTEE
The Strategic Committee met on 5 occasions in 2015, each meeting lasting approximately 2 hours. The members of the Strategic Committee also met during a day-long seminar of the Strategic Committee.
The Audit Committee has two main missions:  Accounting and financial mission, including the analysis of periodic financial statements, the review of the relevance of choices and correct application of accounting standards, the review of the accounting treatment of any material transaction, the review of the scope of consolidation, the review of significant off-balance sheet commitments, the control of the selection and remuneration of statutory auditors, the review of any accounting and financial reporting documents before they are made public.
 Ethical, internal control and compliance responsibilities: The Audit Committee is responsible for ensuring that internal procedures relating to the collection and auditing of data guarantee the quality and reliability of the
The discussions focused primarily on the following matters:  Accounting and financial responsibilities: The review of the quarterly, half-year and annual financial statements, the review of the half-year interim report, the hybrid debt issuance, the review of the 2015 budget and operating plan, the embedded value, the review of the auditors’ report, the review of the 2014 registration document and of the management report, the review of the financial resolutions for the Annual General Meeting ;  Ethical, internal control and compliance responsibilities: The quarterly review of the internal audit report and of the 2015 internal audit plan, the annual review of the Group Policies (especially those required by Solvency 2), the annual review of compliance activities, the annual review of the third-party related agreements and of the reporting from the Audit Committees of the subsidiaries.
The Risk Committee is composed of Peter Eckert (Chairman), Thierry Derez, Kory Sorenson, Claude Tendil and Fields Wicker-Miurin. Each of its members is independent. The Committee is responsible for examining, notably based on the Own Risk and Solvency Assessment (ORSA), the major risks with which the Company is confronted, both on the assets and liabilities side, and for ensuring that tools for monitoring and controlling these risks are in place. It examines SCOR’s risks and its Enterprise Risk Management (ERM) policy. It studies the Group's main underwriting and financial commitments (underwriting, reserving, market, concentration, counterparty, asset-liability management, liquidity and operating risks as well as relating to the evolution of prudential regulations).
The Risk Committee met 4 times in 2015, each meeting lasting approximatively 2 to 3 hours. The Committee discussed the following matters: main exposures of the Group, the Group risk appetite, the Capital Shield Strategy and its effectiveness, the Solvency 2 project, the review of the “lettres de suite” received from the ACPR, the review of the 2015 solvency report and internal control report, the review of the Group Policies required by Solvency 2, the 2015 internal Model results, the review of the application file for the Internal Model submitted to the ACPR, the review of the 2015 ORSA report, the cyber risks and the evolution of the prudential regulations.
Peter Eckert, Chairman 100 Thierry Derez 100 Charles Gave * 100 Guylaine Saucier * 100 Kory Sorenson 100 Claude Tendil 100 Daniel Valot * 100 Fields Wicker-Miurin 100 * Member of the Risk Committee until April 30, 2015 2.1.3.4 THE COMPENSATION AND NOMINATION COMMITTEE
The Committee discussed the following matters:  On compensation matters: Update of the Group remuneration policy, share and stock-options allotment plans,
Claude Tendil, Chairman 100 Thierry Derez 67 Charles Gave * 100 Kevin J. Knoer *** 100 Augustin de Romanet ** 100 Guylaine Saucier * 100 Daniel Valot * 100 Fields Wicker-Miurin 100 * Member of the Compensation and Nomination Committee until April 30, 2015 ** Member of the Compensation and Nomination Committee from April 30, 2015 *** Member of the Compensation and Nomination Committee from March 4, 2015 2.1.3.5 THE CRISIS MANAGEMENT COMMITTEE
The Crisis Management Committee is composed of Claude Tendil (Chairman), Thierry Derez, Peter Eckert, Denis Kessler and Kory Sorenson. The Crisis Management Committee meets only when necessary and as many times as it deems necessary.
Depending on the agenda, the Lead Independent Director, who chairs this Committee, may exclude the Chairman and CEO from the discussions of the Crisis Management Committee. The Chairman and CEO must, moreover, be disqualified from such discussions if the crisis is linked to a subject that personally concerns him.
The Non-executive Directors Session is composed of all the directors, with the exception of employee directors and corporate executive officers of the Company.
It brings together the non-executive directors so that they can exchange ideas outside the context of the Board of Directors meetings. It may be called in case of conflict of interest between the Board and the management team, a nonadherence to the code of corporate governance, an inability of the corporate officer to carry out his duties as the result of an accident or his death or a proven breach of the code of ethics on the part of the corporate officer.
Pursuant to article L 322-3-2 of the French Insurance Code, (re)insurance companies must apply, since January 1st, 2016, the “Four Eyes Principle”, which specifies that they must be effectively run by at least two persons. The persons effectively running SCOR SE and the Group were designated by SCOR SE’s Board of directors on November 3, 2015. In addition to Denis Kessler, Chairman and CEO of SCOR SE, they include Victor Peignet, CEO of SCOR Global P&C, and Paolo De Martin, CEO of SCOR Global Life.
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 the University of Freiburg and several other colleges, until he received a PhD in Economics based on research into the econometric modeling 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 at 2003, he headed the Corporate Actuarial & Treasury department of the Revios Group. In 2007, Frieder Knüpling headed SCOR’s Corporate Actuarial Department, reporting to the Chief Risk Officer. He was appointed Deputy Chief Risk Officer of SCOR in December 2008. In July 2010, he was appointed Deputy Chief Executive Officer of SCOR Global Life and member of the SCOR Group Executive Committee (Group Comex). On October 1st, 2012, he was appointed Deputy Group Chief Risk Officer and on January 17, 2014, he was appointed Group Chief Risk Officer. Frieder Knüpling is a fellow of the Deutsche Aktuarvereinigung (DAV) and a Chartered Enterprise Risk Analyst (CERA).
Victor Peignet, a French citizen, a Marine & Offshore Engineer and graduate of the Ecole Nationale Supérieure des Techniques Avancées (ENSTA), joined SCOR’s Facultative Department in 1984 from the offshore Oil & Gas contracting industry. He has more than 15 years’ underwriting and management experience in Energy & Marine insurance at SCOR. He has been at the head of the Group’s Corporate Business Division (Business Solutions) since its creation in 2000, first as Executive Vice President and as Managing Director from April 2004. Since July 5, 2005, he has been the Chief Executive Officer of SCOR Global P&C.
Nicolas Tissot, a French citizen, is a graduate of HEC and of the Ecole Nationale d’Administration, he is also a former French Treasury Auditor (Inspecteur des Finances). He started his career at the Ministry of Economy, Finance and Industry (1995-1999), and then joined the Suez Group (now Engie), where he first worked in the Financial Planning and Control Department, before being appointed Head of Group Business Control (2000-2003). He was subsequently
appointed Chief Financial Officer and Executive Vice President of Suez Energy International (2003-2005), Chief Financial Officer and Executive Vice President of Electrabel (2005-2008), and Deputy Chief Executive Officer of GDF Suez’s Global Gas & LNG business (2008-2010). In May 2010, he integrated Alstom as Chief Financial Officer and Member of the Executive Committee. From August 2015 to February 2016, he joined the SCOR Group as Chief Operating Officer.
The total number of employees of the Group increased from 2,555 as at December 31, 2014 to 2,706 as at December 31, 2015. The distribution of personnel covers the various geographical areas to meet the strategic principles of the Group. The following table sets forth the distribution of employees at the dates indicated: Distribution by Hub (1)
2.2 Executive compensation and share ownership 2.2.1 REMUNERATION OF THE EXECUTIVE CORPORATE OFFICER AND DIRECTORS
The Board of Directors of SCOR has decided, during the meeting of December 12, 2008, to apply the AFEP (Association of French Private-sector Companies) and MEDEF (French Business Confederation) recommendations of October 6, 2008 on the compensation of Corporate Executive Officers of listed companies to the compensation of the Executive Corporate Officer considering that those are in line with SCOR corporate governance principles.
In application of July 3, 2008 Act implementing the European Union Directive 2006/46/CE of June 14, 2006, SCOR shall thus refer to the AFEP-MEDEF governance code in preparing the report to be issued in accordance with article L. 22537 of the French Commercial Code.
Every year, the conditions of remuneration for the Corporate Executive Officer and the Directors are made public through the documents released for the Annual General Meeting.
The compensation structure of the Chief Executive Officer is as follows:  A fixed gross annual sum of EUR 1,200,000, payable in twelve monthly instalments. The fixed remuneration of the Chairman and Chief Executive Officer has not changed since January 1, 2008; and
All the characteristics of the compensation structure of the Chairman and CEO is described in details within the Say on Pay table of Section 2.2.1.2 – Remuneration of the Chairman and CEO for the financial year ended December 31, 2015.
Reminder of the specific award conditions applicable to the Executive Corporate Officer in respect of the principles AFEP/MEDEF: The Board of Directors of April 3, 2007 decided that for all the grants posterior to that date, the Corporate Officer is required to have as registered shares at least 10% of the shares issued from the exercise of stock options granted and at least 10% of the performance and free shares granted until the termination of his duties.
The allotments of the stock options and performance shares granted to the Corporate Officer cannot exceed either 10% of the share capital or 10% of the total allocations.
For 2015, the Board of directors has validated a performance free shares allotment of 125,000 and stock-options of 100,000 (unchanged compared to 2014). The conditions of these allocations are detailed in the Say on Pay table in the Section 2.2.1.2 – Remuneration of the Chairman and CEO for the financial year ended December 31, 2015.
As the Company representative, the Chairman and Chief Executive Officer is granted a company car with a shared driver.
In the event of termination of the Chairman and Chief Executive Officer, a severance pay is determined depending on the kind of termination.
Like all the Group’s Executive officers working in France and employed by the Group as at June 30, 2008, the Chairman and Chief Executive Officer is entitled to a supplementary pension plan. The conditions of these benefits are described within the Say on Pay table attached in section 2.2.1.2 – Remuneration of the Chairman and CEO for the financial year ended December 31, 2015.
2.2.1.2 REMUNERATION OF THE CHAIRMAN AND CEO FOR THE FINANCIAL YEAR ENDED DECEMBER 31, 2015
The following table presents a summary of the total compensation including gross compensation, shares and stock options granted to the Corporate Officer for fiscal years 2015, 2014 and 2013: Amount due Amount paid Amount due Amount paid Amount due Amount paid Fixed compensation 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000 1,200,000
Gross compensation 3,112,500 2,606,250 2,343,750 Value of stock options granted 6,252,500 5,266,250 5,134,250 (1) The variable annual compensation related to 2015 fiscal year has been determined by the Board of Directors for the President and Chief Executive officer on a percentage of achievement for the financial objective of 105.5%, a percentage of achievement for the personal objectives of 125 % and an additional and exceptional bonus (“ECB” – Exceptional Contribution Bonus) of 25% of his target variable compensation. This variable annual compensation amount is paid in one instalment in March 2016
(2) It should be noted that the figures stated above do not represent paid compensation but correspond to actuarial estimates in line with AFEP/MEDEF Code. The value is calculated according to the same assumptions as those used for the Group accounts (IFRS 2 standard). Since 2009, 100% of shares and stock options granted are submitted to performance conditions
Chief Executive Officer may not exceed 165% of his target variable annual compensation of EUR 1,200,000. Therefore, the total cash variable annual compensation of the Chairman and Chief Executive Officer may under no circumstances exceed 165% of his fixed annual remuneration. The variable compensation for any given year is paid in year n+1, as soon as the financial statements of the Company for such given year are approved by the Board of Directors. For 2015, the variable compensation of the Chairman and Chief Executive Officer has been determined according to the following objectives:  For 50% based on a financial objective: level of Return on Equity (RoE) achieved by SCOR, with a target at 1,000 bps above the risk-free rate;  For 50% based on personal objectives: internal model approval, consolidation of the leading market position in US Life reinsurance, obtaining at least one rating upgrade, achievement of a solvency ratio within the optimal range as defined by SCOR Strategic Plan, achievement of a cost ratio at 5.0% or under, CSR: active participation to the COP21. These objectives are equally weighted.
The Board of Directors determined a percentage of achievement for the financial objective of 105.5%.
Regarding the personal objectives, the Board of Directors determined, on the proposal of the Compensation and Nominations Committee, that the objectives related to the market position, the solvency ratio and the operational efficiency were fully achieved and that the objectives related to the internal model, the rating and the CSR were exceeded, leading to a percentage of achievement of personal objectives of 125%.
 Market position (consolidate the leading position of the Group in terms of Life reinsurance in the United States following the integration of Transamerica Re and Generali USA): SCOR Global Life is the first reinsurer in the US in terms of new business volume in 2015.
Compensation elements due or attributed for the financial year ended December 31, 2015
- On June 9 and 10, 2015, the Toulouse School of Economics, the Geneva Association and the SCOR Foundation for Science organized in the Paris office of SCOR, an international scientific seminar on the issue of anticipation and of insurability of climate risks.
- On November 30, 2015, SCOR announced it had divested businesses with companies whose turnover is achieved over 50% through coal activities and committed to the future, not to carry out any new financial investment in these companies
In addition, the Board of Directors, on the proposal of the Compensation and Nominations Committee, decided to attribute to the Chairman and Chief Executive Officer an Exceptional Contribution Bonus (ECB) that amounts to 25% of his annual target variable remuneration as part of his implication in the successful implementation of the various initiatives of the strategic plan Optimal Dynamics.
NA The Group remuneration policy does not provide for variable deferred compensation.
Stock options EUR 194,000 Shares EUR 3,112,500 (accounting valuation under IFRS)
Following the authorization by the Shareholders' Meeting on May 6, 2014 in its twenty-third resolution, the Company's Board of Directors of March 4, 2015, on the proposal of the Compensation and Nominations Committee of February 23, 2015, decided to allocate on March 20, 2015 stock options to the Chairman and Chief Executive Officer and to the other members of the Executive Committee. The Company's Board of Directors of March 4, 2015, on the proposal of the Compensation and Nominations Committee of February 23, 2015, decided to allocate 100,000 stock options to the Chairman and Chief Executive Officer. These options are subjected to 100% performance conditions: (1) The solvency ratio at the end of each quarter must not be lower
Proportion of the shares definitively granted Starting from 1,000 bps 100% Between 800 and up to 999 bps 90% Between 600 and up to 799 bps 70% Between 400 and up to 599 bps 50% Between 301 and up to 399 bps 25% Below or equal to 300 bps 0%
Director’s fees EUR 63,000 In 2015, the Chairman and Chief Executive Officer received Director’s fees in the form of a fixed amount of EUR 28,000 and, from the Shareholders’ Meeting held on April 30, 2015, a variable amount equals to EUR 3,000 per Board meeting and Committee at which he participated. Until the Annual General Meeting held on April 30, 2015, the variable part equals to EUR 2,000 per meeting.
He attended 8 Board meetings, 4 Strategic committees and one Strategic Seminar of the Board, leading to a variable part of EUR 35,000.
In addition to the deferred amount, an amount of EUR 78,257 was paid by the company in 2015 with regard to social security schemes and individual health coverage
Chief Executive Officer will benefit from any policies that may replace the existing one.
In the event of termination of the Chairman and Chief Executive Officer, the benefits he may be allocated would be determined according to the following situations:  In the event that the Chairman and Chief Executive Officer is dismissed for misconduct or following a notoriously negative performance of the Company (non-achievement of the performance condition (C_n) as described below, and for at least two years during the three previous years) no compensation will be due;  Where his departure is imposed or a dismissal ad nutum mainly for typical difference of opinion regarding the Group's strategy, the Chairman and Chief Executive Officer will benefit from a cash payment equal to the amount of fixed and variable compensations paid to him by the Group for the two financial years prior to his departure. This payment is subject to the satisfaction of the performance condition (C_n) defined below for at least two out of the three years preceding the date of departure of the Chairman and Chief Executive Officer;  Where his departure is imposed or a dismissal resulting from the event of a hostile takeover bid leading to a change in control of the SCOR group, the Chairman and Chief Executive Officer will benefit from a cash payment equal to the amount of fixed and variable compensations paid to him by the Group for the two financial years prior to his departure. This payment is subject to the satisfaction of the performance condition (C_n) as defined below for at least two out of the three years preceding the date of his departure. Furthermore, the performance shares and stock options which have been granted prior to his departure will be subject, in their entirety, only to performance conditions of each plan as approved by the Board of Directors at the time of the grant.
The Shareholders’ Annual General Meeting of May 3, 2012, in its 5th resolution, approved in accordance with the arrangements of Article L 225-42-1 of the “Code du commerce”, the following commitments taken by the Board of Director to the benefit of the Chairman & Chief Executive Officer: Like all the Group’s Executive officers based in France and employed by the Group as at June 30, 2008, the Chairman and Chief Executive Officer is entitled to a guaranteed pension plan of 50% of his referred compensation, less any pension benefits acquired under other collective and mandatory pension schemes. Moreover, this amount may under no circumstances exceed 45% of the benchmark remuneration, pursuant to the AFEP-MEDEF Governance Code. It should be noted that, given his seniority within the Company, the Chairman and Chief Executive Officer reached the ceiling of 45 % set by the plan. In this context, the legal provision which limits the annual increase in potential rights to 3% of the compensation of the beneficiary is not applicable to him. This pension is based on his average compensation over the last five years within the Group. The reference compensation is EUR 2,033,300 at December 31, 2015. The Chairman and Chief Executive Officer is entitled to the pension, conditioned on being in the Company as a Chairman or an employee of the Company at the time of the liquidation of the rights. No retirement benefit (or commitment) has been paid to the Chairman and Chief Executive Officer. The total pension benefits provision relating to the executive corporate officer (“dirigeant mandataire social”) amounts to EUR 24 million.
The decrease of EUR 5 million between 2014 and 2015 mainly reflects the evolution of the technical assumptions and tax suppression: EUR 1 million due to the 0.25% decrease in the technical rate, EUR 9 million due to the suppression of pension tax when pension annuities are above 8 annual social security ceilings (previously at 45% for French beneficiaries), the remaining part corresponds to the acquisition of an additional year of rights.
In accordance with the AFEP/MEDEF Code, the following tables present for the Executive and Corporate Officer the stock options granted and exercised during the fiscal year as well as the grants and performance shares vested during the fiscal year.
Valuation of options as per method used in the consolidated accounts In EUR
Subscription and share purchase options exercised by the Executive Corporate Officer
Number of options exercised during the period Date of plan Exercise price Denis Kessler 57,524 09/14/2006 18.30
Valuation of shares as per method used in the consolidated accounts In EUR Acquisition date
Denis Kessler 125,000 March 7, 2011 Requirement of presence at the company as at
Fees paid to directors for 2015 and 2014 are broken down as follows: In EUR
(1) Pursuant to the decision made by the Board of Directors on March 21, 2006, the Chairman and Chief Executive Officer receives directors’ fees along with the other members of the Board of Directors of the Company, based on the same conditions for distribution
SCOR Global Life USA Reinsurance Company Kory Sorenson USD 27,000 USD 27,000
Directors and Officers Number of shares as at 12/31/2015 Mr. Denis Kessler 946,040 Mrs. Marguerite Bérard-Andrieu 310 Mr. Thierry Derez 1,092 Mr. Peter Eckert 4,030 Mr. Kevin J. Knoer 5,700 Mrs. Vanessa Marquette 310 Mr. Jean-Marc Raby 310 Mr. Augustin de Romanet 310 Malakoff Médéric Group, represented by Guillaume Sarkozy 5,875,506 Mrs. Kory Sorenson 1,692 Mr. Claude Tendil 4,367 Mrs. Fields Wicker-Miurin 1,092 Total 6,840,759
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 the Executive Corporate Officer in 2015.
Directors and Officers Operations made in 2015 for a greater amount than EUR
5,000 Mr. Denis Kessler Options exercised for a total amount of EUR 1,052,689.20 Mrs. Marguerite Bérard-Andrieu Acquisition of shares for a total amount of EUR 10,000 Mr. Thierry Derez Acquisition of shares for a total amount of EUR 20,000 Mr. Peter Eckert Acquisition of shares for a total amount of EUR 66,120 Mr. Kevin J. Knoer N/A Mrs. Vanessa Marquette Acquisition of shares for a total amount of EUR 10,000 Mr. Jean-Marc Raby Acquisition of shares for a total amount of EUR 10,000 Mr. Augustin de Romanet Acquisition of shares for a total amount of EUR 10,000 Malakoff Médéric Group, represented by Guillaume Sarkozy N/A Mrs. Kory Sorenson Acquisition of shares for a total amount of EUR 20,000 Mr. Claude Tendil Acquisition of shares for a total amount of EUR 20,000 Mrs. Fields Wicker-Miurin Acquisition of shares for a total amount of EUR 20,000 Mr. Gérard Andreck Acquisition of shares for a total amount of EUR 10,000 Mr. Andreas Brandstetter Acquisition of shares for a total amount of EUR 10,000 Mr. Charles Gave Acquisition of shares for a total amount of EUR 10,000 Mrs. Guylaine Saucier Acquisition of shares for a total amount of EUR 10,000 Mr. Daniel Valot Acquisition of shares for a total amount of EUR 10,000 2.2.2 REMUNERATION OF EXECUTIVE COMMITTEE MEMBERS (COMEX) OTHER THAN THE CHAIRMAN AND CEO
The members of the Executive Committee do not receive directors’ fees in respect of their directorships of companies in which SCOR holds more than 20% of the capital. Each member of the Executive Committee benefits from the use of a vehicle (or equivalent car allowance) for business purposes.
2.2.2.2 REMUNERATION OF THE COMEX MEMBERS (OTHER THAN THE CHAIRMAN AND CEO) FOR THE FINANCIAL YEAR ENDED DECEMBER 31, 2015
12,385,199 11,303,606 10,057,305 9,159,368 10,090,582 8,924,916 (1) Compared to 2014, in 2015 the remuneration of COMEX members includes Nicolas Tissot, who joined the COMEX on August 31, 2015, and Simon Pearson for the full year 2015 (as opposed to one month and a half in 2014). No members left the COMEX in 2015. Moreover, the remuneration of Executive Committee members disclosed for 2014 did not include the remuneration of Philippe Trainar and Gilles Meyer, who left the COMEX during 2014
The table below presents the stock-options plans granted to the Chairman and to the COMEX members still active within the Group as of December 31, 2015: Number of stock options underlying shares granted
The options granted during financial year ended December 31, 2003 and after are options to subscribe stocks. No options have been granted by a related company as defined by article L.225-180 of the French Commercial Code.
Registration documents filed with the Autorité des marchés financiers on March 20, 2015 and March 5, 2014 under numbers D.15-0181 and D.14-0117 for the details of the performance conditions applicable to the stock options. It should be noted that it is not possible to exercise these stock options during the 30 days before publication of the annual or half-yearly financial results, or during the 15 days before the public release of SCOR’s quarterly financial results. On top of this period, for plans put in place from 2007 onwards, there is an additional period during which the stock options may not be exercised: 10 stock market trading sessions preceding and 10 stock market trading sessions (3 trading sessions for plans put in place from 2014 onwards) following the date on which the consolidated accounts, or in the absence thereof, the annual accounts, are made public. Moreover, the exercise of stock options by the Chairman & CEO and COMEX members is subject to clearance to deal in securities of SCOR SE by the General Secretariat.
Number of shares underlying the stock options granted during the financial year by the issuer and by any company included in the scope of allocation of the options to the ten employees of the issuer and of any company included in such scope, whose number of shares thus purchased or granted is the highest (aggregate information) 406,250 30.57
For more information on the stock option plans or stock purchase plans, refer to Appendix C – 1.5. Notes to the corporate financial statements, Note 12 – Stock Options.
Denis Kessler 2004 Plan – Tranche A 18,750 14.40 270,000 01/10/2005 2004 Plan – Tranche B - - - 11/10/2005 2004 Plan – Forfeiture – redistribution 26,250 17.97 471,713 09/01/2007 2005 Plan 45,000 17.97 808,650 09/01/2007 2006 Plan 55,000 14.88 818,400 07/05/2008 2007 Plan 80,000 15.17 1,213,600 05/25/2009 2008 Plan 75,000 17.55 1,316,250 05/08/2010 2009 Plan 125,000 18.885 2,360,625 03/17/2011 2010 Plan 125,000 19.815 2,476,875 03/03/2012 2011 Plan 125,000 22.61 2,826,250 03/08/2013 2011 – 2019 Long Term Incentive Plan 125,000 - - 09/02/2017 2012 Plan 125,000 26.33 3,291,250 05/04/2014 2013 Plan 125,000 30.60 3,825,000 03/06/2015 2014 Plan 125,000 - - 03/05/2016 2015 Plan 125,000 - - 03/05/2017 Total 1,300,000 19,678,613 Frieder Knüpling 2006 Plan 5,000 14.88 74,400 11/24/2008 2007 Plan 5,000 15.17 75,850 05/25/2011 2008 Plan 15,000 16.55 248,250 08/27/2012 2009 Plan 15,000 18.885 283,275 03/17/2013 2010 Plan 32,000 19.815 634,080 03/03/2014 2011 Plan 40,000 30.28 1,211,200 03/08/2015
Transfer date 2015 - 2023 Long Term Incentive Plan 40,000 - - 03/05/2023 Total 225,000 1,183,890 Victor Peignet 2004 Plan - Tranche A 7,500 14.40 108,000 01/10/2005 2004 Plan – Tranche B - - - 11/10/2005 2004 Plan – Forfeiture - redistribution 10,500 17.97 188,685 09/01/2007 2005 Plan 20,000 17.97 359,400 09/01/2007 2006 Plan 25,000 14.88 372,000 07/05/2008 2007 Plan 35,000 15.17 530,950 05/25/2009 2008 Plan 36,000 17.55 631,800 05/08/2010 2009 Plan 48,000 18.885 906,480 03/17/2011 2010 Plan 48,000 19.815 951,120 03/03/2012 2011 Plan 48,000 22.61 1,085,280 03/08/2013 2011 – 2019 Long Term Incentive Plan 48,000 - - 09/02/2017 2012 Plan 48,000 24.46 1,174,080 03/20/2014 2012 Plan (PPP) (1) 5 24.55 123 07/27/2014 2013 Plan 48,000 30.60 1,468,800 03/06/2015 2013 – 2019 Long Term Incentive Plan 48,000 - - 03/06/2019 2014 Plan 60,000 - - 03/05/2016 2014 Plan (PPP) (2) 5 - - 07/31/2016 2015 Plan 60,000 - - 12/19/2018 Total 590,010 7,776,718 Nicolas Tissot 2015 Plan 40,000 - - 12/19/2018 Total 40,000 - François De Varenne 2005 Plan 7,000 17.97 125,790 09/01/2007 2006 Plan 15,000 14.88 223,200 11/08/2008 2007 Plan 20,000 15.17 303,400 05/25/2009 2008 Plan 24,000 17.55 421,200 05/08/2010 2009 Plan 32,000 18.885 604,320 03/17/2011 2010 Plan 40,000 19.815 792,600 03/03/2012 2011 Plan 40,000 22.61 904,400 03/08/2013 2011 – 2019 Long Term Incentive Plan 40,000 - - 09/02/2017 2012 Plan 40,000 24.46 978,400 03/20/2014 2012 Plan (PPP) (1) 5 24.55 123 07/27/2014 2013 Plan 40,000 30.60 1,224,000 03/06/2015 2014 Plan 40,000 - - 03/05/2018 2014 Plan (PPP) (2) 5 - - 07/31/2016 2015 Plan 40,000 - - 12/19/2018 Total 378,010 5,577,433 GENERAL TOTAL 4,053,520 46,024,915
(2) This collective free shares Plan to the employees of the Company that are France residents, under the collective agreement signed on July 3, 2014 as part of the negotiations with the social partners of France, concerning the profit-sharing arrangement established by the July 28, 2011 law which relates to financing for social security in 2011. This plan provides for an identical allocation of five free shares without a presence condition nor a performance condition
2.2.3.3 POTENTIAL VOLUME OF NEW SHARES FROM OUTSTANDING EQUITY-BASED COMPENSATION AS OF DECEMBER 31, 2015
- - of which number of new shares from outstanding warrants - - of which unused volume under all authorizations still outstanding 1,454,750 (1) The free share allocation plans currently in force allocate only outstanding shares (2) Authorization granted by the Shareholders’ Meeting of 30 April 2015 in its 24th resolution (stock options)
- - of which number of new shares from outstanding warrants - - of which potential shares from other securities convertible or redeemable in new shares 25,390,466 (1) The free share allocation plans currently in force allocate only outstanding shares (2) Shares underlying the warrants issued to UBS under the contingent capital facility
If, despite the absence of the dilutive effect mentioned above, free shares were taken into account in the calculation of the potential volume of new shares from outstanding equity-based compensation, the fully diluted share capital would stand at 230,934,618 at 31 December 2015.
Thus, as at December 31, 2015 the potential volume of new shares from outstanding equity-based compensation plans linked to Group executive and employee remuneration instruments stands at 3.54% of the fully diluted share capital. If free shares were taken into account in the calculation of the potential volume of new shares from outstanding equitybased compensation plans and in the calculation of the fully diluted share capital, this theoretical volume (which corresponds to outstanding shares or new shares to be issued) would stand at 7.24 % of the fully diluted share capital at 31 December 2015.
Refer to Section 4.6 – Notes to the consolidated financial statements, Note 17 – Provisions for Employee Benefits and Appendix C – 5 – Notes to the corporate financial statements, Note 13 – Employee Share-ownership Plans.
On April 30, 2015, the General Shareholders’ meeting of the Company's Board of Directors had authorized, in its twenty-fourth resolution, the Company's Board of Directors, under the provisions of Articles L.225-177 to L.225-186-1 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 one million five hundred thousand (1,500,000) shares. The envelope volume is defined and optimized taking into account both the annual allocations as per our Compensation policy and the potential needs in case of acquisition as to ensure our key employees’ retention. This authorization was given for a period of 24 months from April 30, 2015 and cancelled and replaced, for the unused portion thereof, the previous authorization as at May 6, 2014. Moreover, it should be noted that SCOR is committed to the neutral impact of each stock option allocation in terms of dilution. To achieve this, SCOR’s policy is to systematically neutralize, insofar as possible, the potential dilutive impact that could result from the issuance of new Ordinary Shares following the exercise of stock options, by covering the exposure resulting from the issuance of stock options through the purchase of Ordinary Shares in the context of its share buyback program, at a price close to the exercise price, and by cancelling the treasury shares thus acquired as the options are exercised. Thus, there is no dilution of capital with regard to the granting of stock options.
Following the authorization by the Shareholders' Meeting on May 6, 2014, the Company's Board of Directors of March 4, 2015, on the proposal of the Compensation and Nominations Committee of February 23, 2015, decided to allocate on March 20, 2015 stock options to the Chairman and Chief Executive Officer, to members of the Executive Committee and to the hignest levels of Partners (Executive Global Partners and Senior Global Partners). The partners are 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 leadership. Therefore, they benefit from a specific and selective program in terms of information sharing, career development and compensation schemes. Partners represent approximately 25% of the total number of staff.
The Company's Board of Directors of March 4, 2015, on the proposal of the Compensation and Nominations Committee of February 23, 2015, decided to allocate 100,000 stock options to the Chairman and Chief Executive Officer and 340,000 stock options to the other members of the Executive Committee on March 20, 2015. The Chairman and CEO, under the authority given by the Board of Directors held on 4 March 2015 for the implementation of this plan, allocated on 20 March 2015 226,881 stock options to 58 Partners (Executive and Senior Global Partners). Those options can be exercised at the earliest four years after the grant date, if the presence condition (four years) is respected. The exercise price is calculated without discount, based on the weighted average price of SCOR’s shares on the Euronext Paris over the 20 trading days preceding the decision to award the stock options. The stock options can be exercised on one or more occasions from 21 March 2019 to 20 March 2025 inclusive. From this date, the purchase right shall expire.
Following the authorization by the Shareholders' Meeting on April 30, 2015, the Company's Board of Directors of December 18, 2015, on the proposal of the Compensation and Nominations Committee of November 2, 2015, decided to allocate on December 18, 2015 a specific plan for stock options promised at hiring in order to attract employees of Senior Global Partner status.
Those options can be exercised four years after the grant date at the earliest, if the presence condition (four years) is respected. The exercise price is calculated without discount, based on the closing price of SCOR SE on the day before the grant date. The stock options can be exercised on one or more occasions from December 19, 2019 to December 18, 2025 inclusive. From this date, purchase rights shall expire.
The exercise of all of the stock options allocated in 2015 is subject to performance conditions. The final acquisition of half of the shares granted is subject to the fulfilment of the following conditions: (1) that the beneficiary respects the Group’s ethical principles as described in its Code of Conduct; (2) that the average SCOR ROE over 2 years (from January 1, 2015 to December 31, 2016) is equal to the average of SCOR ROE strategic target (the “Target ROE”) over the period without being lower than 300 points above the risk-free rate.
Starting from 1,000 bps 100% Between 800 and up to 999 bps 90% Between 600 and up to 799 bps 70% Between 400 and up to 599 bps 50% Between 301 and up to 399 bps 25% Below or equal to 300 bps 0%
Total number of stock options allocated in 2014 Total number of beneficiaries in 2014 Corporate Officer (1) 100,000 1 100,000 1 Members of the Executive Committee
Total 712,131 69 703,875 69 (1) Chairman and Chief Executive Officer
A table showing features of the SCOR stock option plans is found in Section 4.6 – Notes to the consolidated financial statements, Note 18 - Stock options and share awards. Refer also to Section 4.6 – Notes to the consolidated financial statements, Note 17 – Provisions for employee benefits.
On December 18, 2015, in its first resolution and on the proposal of the Compensation and Nominations Committee, the Shareholders’ Meeting of the Company, authorized the Company’s Board of Directors, under the provisions of Articles L.225-197-1 to L.225-197-6 of the Commercial Code, to grant, on one or more occasions, to staff members or to corporate officers of the Company and of companies or groups affiliated to it pursuant to Article L. 225-197-2 of the French Commercial Code, The Chairman & CEO was excluded from any free share attributions approved under this resolution in 2015. The Extraordinary General Meeting resolved that the Company's Board of Directors would identity the beneficiaries of such share attributions, along with the associated conditions and criteria. The Shareholders’ Meeting also decided that (i) the total number of free shares granted under this authorization may not exceed 3,000,000 Shares (the envelope volume is defined and optimized taking into account both the annual allocations
This authorization was given for a period of twenty-four months from December 18, 2015 and had canceled and completely replaced the previous authorization as at April 30, 2015, in order to give the opportunity to French tax resident employees to take advantage of the “Loi Macron” benefits.
This compensation scheme reflects best market practices and aims to involve and associate our key employees in the Group long-term development. The LTIP plan is entirely based on SCOR performance shares.
The Chairman and CEO, under the authority given by the Board of Directors held on March 4, 2015 for the implementation of this plan, allocated on March 4, 2015, 40,000 performance shares to the new member that joined the Executive Committee in 2014.
The level of this performance condition will be assessed and validated annually by the Compensation and Nomination Committee.
Aside from the mandatory conditions (1) and (2), if the observed average ROE (condition (3)) is lower or higher than the Target ROE without being lower than 300 points above the risk-free rate, the shares will be acquired according the progressive scale set out in the table below: Ratio between the observed average ROE and the Target ROE Proportion of the shares definitively acquired via this criteria From 125% 150% Between 120% and 124.99% 140% Between 110% and 119.99% 120% Between 100% and 109.99% 100% Between 80% and 99.99% 90% Between 70% and 79.99% 70% Between 60% and 69.99% 50% Between 50% and 59.99% 25% Below 50% 0%
The conditions of the plans are similar to those previously settled on by SCOR regards to the presence condition but with a vesting period of three years for all beneficiaries. There is no obligation anymore to retain shares after the vesting period for the tax residents in France.
All the shares awarded to the new Executive Committee member, to the Executive Global Partners and Senior Global Partners and half of the allocations awarded to the other Partners (below Senior Global Partners), are subject to the satisfaction of performance conditions. The free shares awarded under the collective plan for Non Partners are not submitted to performance conditions.
Following the authorization by the Shareholders' Meeting on December 18, 2015, the Company's Board of Directors of December 18, 2015, on the proposal of the Compensation and Nomination Committee of November 2, 2015, reproduced a SCOR Long Term Incentive Plan (the “LTIP”), for selected managers and executives of the Group in order to ensure retention of key employees. The performance measurement of this plan of LTIP is set to six years. This compensation scheme reflects best market practices and aims to involve and associate our key employees in the Group long-term development. The LTIP plan is entirely based on SCOR performance shares.
The Chairman and CEO, under the authority given by the Board of Directors held on December 18, 2015 for the implementation of this plan, allocated on December 18, 2015 30,752 performance shares to 11 Partners French tax residents of the Company.
In agreement with the Board of Directors, the Chairman and CEO has granted, as a non-qualified “LTIP” plan, on December 18, 2015, 75,680 performance shares to the 23 non-French tax resident Partners of the Group. All the shares made under the LTIP are subject to the satisfaction of a presence condition and of performance conditions. The performance conditions are defined as follows.
The final acquisition of half of the shares granted is subject to the fulfilment of the following conditions: (1) that the beneficiary respects the Group’s ethical principles as described in its Code of Conduct; (2) that the average SCOR ROE over 6 years (from January 1, 2015 to December 31, 2020) is equal to the average of SCOR ROE strategic target (the “Target ROE”) over the period without being lower than 300 points above the risk-free rate.
From 04/03/2015 to 04/03/2023 included 6 years 1 40,000 03/04/2021 Yes
From 01/12/2014 to 01/12/2017 included 2 years 3 7,000 12/01/2017 Yes
From 05/11/2014 to 05/11/2016 included 2 years 6 7,500 11/05/2016 Yes
From 30/07/2014 to 30/07/2016 included 2 years 698 50 na Na
From 04/03/2014 to 04/03/2020 included 2 years 10 31,500 03/04/2020 Yes
From 04/03/2014 to 04/03/2016 included 2 years 385 5,000 03/04/2016 na
From 04/03/2014 to 04/03/2016 included 2 years 202 177,000 03/04/2016 Yes
From 03/05/2012 to 03/05/2014 included 2 years 1 - 05/03/2014 Yes
From 19/03/2012 to 19/03/2014 included 2 years 155 182,000 03/19/2014 Yes
From 01/09/ 2011 to 01/09/2017 included 2 years 21 253,000 09/01/2017 Yes
From 01/09/ 2011 to 01/09/2019 included Na 30 222,500 09/01/2017 Yes
From 01/09/ 2011 to 01/09/2015 included Na 85 122,500 09/01/2013 Yes
Refer also to Section 4. 6 – Notes to the consolidated financial statements, Note 18 – Stock options and share awards. Since the implementation of free shares plans in 2004, 19,174,034 shares have been allocated, all types of plans included.
For the number of stock options held on the issuer and on the companies referred to previously and exercised during the financial year by the ten employees of the issuer or these companies, whose number of shares thus purchased or subscribed is the highest, as well as the stock options granted during the financial year by the issuer and by any company included in the scope of allocation of the options to the ten employees of the issuer and of any company included in such scope whose number of stock options thus granted is the highest, refer to table in Section 2.2.3.1 – Stock options held by the members of the Executive Committee and executive company officer as at December 31, 2015.
The employees with a French contract (excluding directors and officers) may invest in the Employee Savings Plan. An agreement specifies the principle, financing, and conditions of the Plan. The Employee Savings Plan has four mutual investment funds, two of which are entirely dedicated to SCOR. An employer’s contribution is expected on two funds. The funds may receive several types of deposits: sums received from profit-sharing plans, collective incentive plans, or any other voluntary contributions. On April 30, 2015, the Combined Shareholders’ Meeting of the Company in its twenty-sixth resolution delegated its authority to the Company’s Board of Directors in order to increase the share capital by issuing shares reserved for employees of the company and of French and foreign companies affiliated with it pursuant to Article L. 225-180 of the French Commercial Code, who are participants in savings plans and/or any mutual funds, eliminating the pre-emptive right they have. This new authorization replaces the authorization granted by the General Shareholders’ Meeting of May 6, 2014. As at the date of the Registration Document, the Company’s Board of Directors has not exercised this authorization. This authorization was granted for a period of eighteen months as at the date of the Combined Shareholders’ Meeting on April 30, 2015.
As of December 31, 2015, SCOR’s shareholders are mainly institutional as they represent 85% of SCOR’s share capital. Institutional shareholders come mainly from Europe (55%), the United States (30%) and Asia (13%). The rest of the share capital is split between treasury (3%), employees (3%), retail (2%), brokerage (3%) and others (3%).
(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) Member of the Board (3) BlackRock Inc’s aggregated number of shares, including BlackRock Institutional Trust Company, amounted to 9,772,590 representing 5.07% of capital and 5.25% of voting shares (4) Employee shares eligible to vote, excluding sold or transferred employee shares (5) This shareholding notably includes performance shares granted in accordance with the authorizations of the SCOR SE General Meeting of Shareholders, prior to the publication of Law n°2015-990 of August 6, 2015 and held as registered shares by employees as at December 31, 2015. Employee shareholdings, as defined in Article L.225-102 of the French Commercial Code, amount to 0.34% of the capital and 0.35% of voting rights
Distribution of capital (number of shares, % of capital and voting rights) – (i) shareholders having more than 2.5% of the registered capital and/or voting rights and (ii) shareholders members of the Board of Directors (on the basis of a study of
identifiable share bearers ("Titres aux Porteurs Identifiables" – "TPI") conducted by the Company as at December 31, 2013): As at December 31, 2013 Number of shares % of capital % voting rights (1)
The results of the TPI search conducted in December 31, 2015 are presented in the following table: TPI Date December 2012 December 2013 December 2014 December 2015 Number of shareholders 20,618 19,923 22,304 17,682
On March 11, 2015, Sompo Japan Nipponkoa Holdings, Inc. declared that it had exceeded the registered threshold of 2.5% of the capital and voting rights in SCOR SE and that it held 9,450,000 shares and 9,450,000 voting rights in SCOR SE.
2.3.1.2 NEGATIVE STATEMENT AS TO THE ABSENCE OF DIFFERENCES BETWEEN THE VOTING RIGHTS OF VARIOUS SHAREHOLDERS
Until January 3, 2009, pursuant to Article 8 (“Rights attached to each share”) of the bylaws, for two years after the Company’s reverse stock split, as decided by the Company’s Combined Shareholders’ Meeting on May 16, 2006 in its seventeenth resolution, each share with a par value of EUR 0.78769723 entitled the holder to one vote and each share with a par value of EUR 7.8769723 entitled the holder to ten votes, so that the number of votes attached to the shares remains proportional to the percentage of share capital they represent.
Since January 3, 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.
All SCOR shares outstanding are fully paid up. According to the decisions of the Extraordinary Shareholders General Meetings of the Company dated (i) May 18, 2004, in its fourth resolution, (ii) May 31, 2005 in its sixth resolution, (iii) May 16, 2006 in its fifth resolution, (iv) May 24, 2007 in its 21st resolution and (v) May 7, 2008 in its 19th resolution to authorize the Board to grant to officers and employees options to subscribe for or purchase of shares and to acknowledge, if necessary, at its first meeting following the year end of the Company, the number and amount of new shares issued during that period following the exercise of options, the Board of Directors of SCOR SE acknowledged, on March 5, 2013, the capital increase of EUR 4,456,365.57 by creation of 565,746 shares with a nominal value of EUR 7.8769723 each.
According to the decision of the Shareholders General Meeting of the Company dated April 25, 2013, the Board of Directors of the Company decided on the share capital reduction of EUR 6,935,437.80 by cancellation of 880,470 treasury shares to reduce the share capital from EUR 1,519,160,179.73 to EUR 1,512,224,741.93, divided by 191,980,457 ordinary shares. The reason for such decision of capital reduction is to avoid any dilutive effect of the exercise of stock options upon the share capital. According to the decisions of the Extraordinary Shareholders General Meetings of the Company dated (i) May 18, 2004, in its fourth resolution, (ii) May 31, 2005 in its sixth resolution, (iii) May 16, 2006 in its fifth resolution, (iv) May 24, 2007 in its 21st resolution, (v) 7 May 2008 in its 19th resolution and (vi) April 15, 2009 in its 22nd resolution to authorize the Board to grant to officers and employees options to subscribe for or purchase of shares and to acknowledge, if necessary, at its first meeting following the year end of the Company, the number and amount of new shares issued during that period following the exercise of options, the Board of Directors of SCOR SE acknowledged, on March 4, 2014, the capital increase of EUR 6,123,983.62 by creation of 777,454 shares with a nominal value of EUR 7.8769723 each.
As a result, on December 31, 2015, the share capital of SCOR SE was EUR 1,517,523,092.82 divided into 192,653,095 shares with a par value of EUR 7.8769723 each.
Refer to Section – Amount of convertible securities, exchangeable securities or securities with subscription warrants for a description of the warrants issued on December 20, 2013.
26th resolution (Delegation of authority granted to the Board of Directors in order to carry out an increase in share capital by the issuance of shares reserved to the members of savings plans (plans d’épargne), with cancellation of preferential subscription rights to the benefit of such members)
This resolution can only be used with the 17th, 18th and 19th resolutions and is in any case capped by the 27th resolution 24th resolution (Authority to issue shares for stock option plans)
(Date of the Registration Document) 25th resolution (Authorization granted to the Board of Directors to issue shares under the free share allotment plans) (This resolution was replaced by the first resolution adopted by the General Meeting of shareholders of December 18th, 2015)
Authorizations granted by the Extraordinary Shareholders’ Meeting of December 18, 2015 1st resolution (Authority to issue shares under free share allotment plans) (This resolution replaces the 23rd resolution adopted by the general meeting of shareholders of April, 30st, 2015)
The total number of shares authorized at the date of the Registration Document, including the shares that could be issued in connection with the implementation (i) of stock option plans, (ii) equity securities and (iii) the current delegations and authorizations is 129,721,039.
In the context of the above mentioned buyback program and this liquidity agreement were as follows: SCOR proceeded, between January 1, 2015 and December 31, 2015, to:  the purchase of 6,421,518 treasury shares;  the sale of 3,466,383 treasury shares;  the transfer of 1,627,040 treasury shares;  the cancellation of 1,260,227 treasury shares.
On December 31, 2015, SCOR held 6,661,000 shares compared with 6,593,132 shares at December 31, 2014. The par value of these treasury shares is EUR 52 468 512.49 and their book value is EUR 172 497 601. The average purchase price was EUR 30.37. The average sale price was EUR 31.55. The amount of fees was EUR 86 324.11.
Refer to:  Section 2.2.3 – Stock options and performance shares;  Section 2.3.1.5 – Capital share;  Section 4.6 – Notes to the consolidated financial statements, Note 13 - Information on share capital, capital management, regulatory framework and shareholders' equity;  Section 4.6 – Notes to the consolidated financial statements, Note 17 – Provisions for employee benefits;  Section 4.6 – Notes to the consolidated financial statements, Note 18 – Stock options and share awards;  Appendix C – 5.3.5 – Notes to the corporate financial statements, Note 12 – Stock Options, and ;  Appendix C – 5.2.4 – Notes to the corporate financial statements, Note 5 – Shareholders’ Equity.
Refer to:  Section 2.2.3 – Stock options and performance shares;
Regulated agreements and commitments in accordance with Articles L. 225-38 and following of the French commercial Code appear in the auditors special report in Section 2.3.3 – Special report of the auditors on regulated agreements and commitments.
2.3.3 SPECIAL REPORT OF THE AUDITORS ON REGULATED AGREEMENTS AND COMMITMENTS
To the Shareholders, In our capacity as statutory auditors of your company, we hereby report on certain related party agreements and commitments referred to in article L. 225-38 of the French commercial Code (Code de commerce) and on the information referred to in article R. 322-7 of the French insurance Code (Code des assurance) We are required to inform you, on the basis of the information provided to us, of the terms, the conditions and the reasons for the company’s interest of those agreements and commitments indicated to us, or we would have identified performance 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. In addition, we are required, where applicable, to inform you in accordance with Article R. 225-31 of the French commercial Code (Code de commerce) concerning the implementation of the agreements and commitments which were already approved by the shareholders’ meeting. We performed those procedures which we considered necessary to comply with professional guidance issued by the national auditing body (Compagnie Nationale des Commissaires aux Comptes) relating to this type of engagement. These procedures consisted in verifying that the information provided to us is consistent with the documentation from which it has been extracted.
In return for the service offered by BNP Paribas and the other Joint Lead Managers, the contract provides the payment, by our Company, of a commission of management, investment and offer, in line with market price, distributed to the different financial institutions in proportion of their respective investment engagement.
Authorization to purchase a subscription agreement for the issuance and the placement of subordinated notes (known as “Bugatti II”)
Denis Kessler, as Chairman and Chief Executive Officer of your Company and as member of the Board of Directors of BNP Paribas, and Ms Fields Wicker-Miurin, as member of the Board of Directors of your Company and BNP Paribas.
The board of directors, at its meeting of November 3, 2015, in accordance with Article L. 225-38 of the French Commercial Code (Code de commerce) authorized the signature of a subscription agreement for the issuance and the investment of subordinated notes, characterized as follows:  issuance currency: euros;  issue total amount: MEUR 300 maximum;  subscriber profile: institutional investors on the international market  interest rate: fixed then revised (based on the conditions of fixed/variable rate SWAP for the related period)
This new issuance of subordinated note may be realized via a new issuance of subordinated debt or via the reopening of the 32NC12-type debt of MEUR 250 issued by the Company the June 5, 2015.
Your Board of Directors has determined this agreement as follows: During its meeting of November 3, 2015, the Board of Directors of your Company has considered “appropriate to take advantage of these favorable market conditions and to issue, on the Luxembourg market, one or several lines of Tier 2 subordinated notes.” During its meeting of November 30, 2015, it has been decided to “increase the amount of the new project of debt issuance to MEUR 600 so at to finance the repayment of the MCHF 650 subordinated bond, issued February 2, 2015 for an amount of MCHF 400 and re-opened on May 31, 2015 for an additional amount of MCHF 250, for which the next callable date is in august 2016, and hence replace this subordinated debt by the new subordinated debt which is issued at more favorable market conditions.”
1. With Mr. Denis Kessler, Chairman and Chief Executive Officer of your Company
In addition, the performance stock and stock options granted to the Chairman and Chief Executive Officer before his departure shall be subject, in their totality, to the only performance conditions of each plan as validated by the Board of Directors at the time of attribution: thereby focusing on the common interest to add value to the Group in the scope of the offer. The performance condition (C_n) established by the Board of Directors on the recommendation of the Compensations and Nominations Committee will be achieved for the year n is at least three of the four conditions below are satisfied: - (A) SCOR's financial rating by S&P must be maintained to a minimum “A” on average in the years n-1 and n-2; - (B) SCOR Global P&C’s net combined ratio must be less than or equal to 102% on average in the years n-1 and n-2; - (C) SCOR Global Life’s technical margin must be higher than or equal to 3% on average in the years n-1 and n-2; - (D) The SCOR Group’s return on equity "ROE" must be higher by 300 base points than the risk-free rate on average in the years n-1 and n-2.
This agreement between SCOR and BNP Paribas was signed on October 20, 2008. It gave rise to the payment by SCOR SE to BNP Paribas of non-material amounts during the 2013, 2014 and 2015 financial years.
Contract between your Company and BNP Paribas participating in the notional cash-pooling agreement.
An agreement contract signed on October 20, 2008, by which participating companies give the power to SCOR SE for the management of cash-pooling. The following entities of the Group have been authorized to participate in the cash-pooling scheme during a first phase:  SCOR SE,
Mr. Denis Kessler as Chairman and Chief Executive Officer of your Company and as member of the Board of Directors of BNP Paribas.
The Master Trust Agreement was signed on August 9, 2011 and gave rise to a non-material payment during the 2013, 2014 and 2015 financial years.
Stand-By Letter of Credit Facility Agreement with BNP Paribas dated December 23, 2008, as amended by 6 successive amendments (“Multicurrency Revolving Letter of Credit Facility Agreement”)..
Mr. Denis Kessler, as Chairman and Chief Executive Officer of your Company and as member of the Board of Directors of BNP Paribas regarding the original agreement and its amendments 1 to and Mr Denis Kessler as Chairman and Chief Executive Officer of your Company and as member of the Board of Directors of BNP Paribas and Ms Fields Wicker-Miurin, as member of the Board of Directors of your Company and BNP Paribas regarding amendments 5 and 6.
The companies party to this agreement are your Company, SCOR Global P&C SE and SCOR Global Life SE. The other companies within the Group could equally benefit from this agreement with approval of BNP Paribas. Under the terms of the Facility Agreement, BNP Paribas made a credit line available to the concerned Group’s companies, under the conditions stipulated in the Facility Agreement, in a maximum principal amount of USD 400,000,000 to be made available through the issuance of SBLC or counter-guarantees intended to allow the concerned company to guarantee the execution of its commitments under its insurance and reinsurance operations, for a period of use running from January 2, 2009, to December 31, 2011.
In order to guarantee its obligations under the terms of the Facility Agreement, each Group companies which is a party to the Facility Agreement granted/will grant a senior pledge on a financial instruments account to BNP Paribas under the terms of a pledge agreement entered/to be enter into with BNP Paribas (and the related pledge declaration) and pledged/will pledge (i) on the date of the signature of the pledge agreement, a number of OATs for a minimum amount equal to EUR 5,000; (ii) on January 2, 2009, an additional number of OATs for an amount equivalent to the value in EUR of 55% of the SBLCs (corresponding to the letters of credit issued under the old credit agreement and assumed and extended by BNP Paribas); and (iii) to pledge before each new utilization a number of OATs for an amount equivalent to the value in EUR of 55% of the amount of the new utilization.
At its meeting of 22 March and July 27, 2011, the Company’s Board of Directors authorized, pursuant to Article L. 22538 of the French Commercial Code (Code de commerce), the amendment #2 to the Facility Agreement with BNP Paribas in order to allow the accession of SCOR International Reinsurance Ireland Ltd (“SIRI”) (formerly known as Transamerica International Reinsurance Ireland Ltd) as additional borrower after the closing of its acquisition, allow to put in place SCOR Global Life SE’s joint and several liability for the benefit of SIRI, exclude SCOR Rückversicherung (Deutschland) AG (absorbed by SCOR Global Life SE on October 19, 2010) from the scope of the Facility Agreement, update the list of existing guarantees and securities.
Amendment #2 to the Facility Agreement was signed on September 5, 2011.
Pursuant to an accession letter dated September 19, 2011, SIRI benefitted from the Facility Agreement. SCOR Global Life Reinsurance Ireland PLC has been subrogated into the rights and obligations of SCOR International Reinsurance Ireland PLC resulting from the merger of these two companies taking effect on January 1, 2013.
Amendment #3 to the Facility Agreement was signed on November 14, 2011.
Amendment #5 to the Facility Agreement was signed on June 7, 2013.
Amendment to the additional pension plan subject to Article 39 of the French Tax Code (Code général des impôts).
Mr. Denis Kessler as Chairman and Chief Executive Officer of your Company.
Mr. Patrick Thourot as member of the Board of Directors of your Company (Mr. Patrick Thourot ceased his duties as member of the Board of Directors of your Company on April 15, 2009).
At its meeting of March 18, 2008, the Board of Directors of the Company authorized pursuant to the Article L.225-38, the execution of an additional pension plan, which was ultimately executed on May 15, 2008.
On July 27, 2011, the Board of Directors of the Company approved an amendment to the additional pension scheme concerning the condition of age and retirement rate (62 years minimum or full retirement, vs 60 previously).
Agreements and commitments from preceding financial years not subject to the authorization to preceding annual general meeting of the shareholders
Authorization to purchase a subscription agreement for the issuance and the placement of subordinated notes (Project “Serenity”)
Mr Denis Kessler as Chairman and Chief Executive Officer of your Company and as member of the board of directors of BNP Paribas, and Ms Fields Wicker-Miurin as member of the board of directors of BNP Paribas.
At its meeting of July 30, 2014, the Board of directors, in accordance with Article L.225-38 of the French Commercial Code (Code de commerce) authorized the signature of a subscription agreement regarding the issuance of a new line of undated subordinated note for a total amount of EUR 250 million on the Luxemburg market.
The companies party to this agreement are your Company and the selected financial institutions (including BNP Paribas).
In return for the service offered by BNP Paribas and the other Joint Lead Managers, a commission of management, placement and offer of 0.30% of the minimal amount of notes issued may be paid by the Company and distributed to the different financial institutions in proportion to their respective investment commitment. The Company would also have the faculty to pay to these financial institutions a discretionary commission of 0.15% computed on the nominal amount of notes issued. Following the issuance of October 1, 2014, a commission of EUR 278,750 has been paid to BNP Paribas.
3.1 Introduction The information included in this section referring to the nature and extent of risks arising from financial instruments and insurance and reinsurance contract as required by IFRS 7 - Financial Instruments - Disclosures and IFRS 4 - Insurance contracts, is an integral part of the consolidated financial statements as at December 31, 2015. As such, the corresponding information is audited.
 Market risks (including credit spread risk)  Counterparty default risks
All risks described in Section 3.2 are managed through a variety of mechanisms in SCOR’s ERM (Enterprise Risk Management) Framework. This framework is described in:  Section 3.3 for a description the risk main management measures, processes and hedging positions planned or implemented by the Group in order to identify, assess and mitigate the risks.
“Strategic risk” covers two different kinds of risks: (i) those entailed by the strategy itself, such as the accumulation of risks or development in lines of business or less known markets, and the financial or operational risks related to acquisitions, and (ii) risks that could hinder the success of the strategy, whether arising from external factors, such as an adverse economic environment, or internal factors, such as certain causes of operational risks. Therefore many of the risks discussed in the next section, including emerging risks, could also impact the success of the strategy.
The main risks are the uncertain economic recovery, impacting on SCOR’s growth, especially in emerging countries, and the poor returns on financial markets amplifying the adverse competitive environment.
The Group’s results of operations could be materially affected by the global capital markets conditions and the economy in France, other countries in continental Europe, the United Kingdom, the United States of America and elsewhere around the world, particularly in Latin America and Asia Pacific. Any continued deterioration in macroeconomic trends could have an adverse effect on SCOR’s business and results of operations, even more so as the global economy is still in convalescence since the 2008 financial crisis and remains vulnerable to negative economic, financial and geopolitical shocks fueled by on-going tensions or open conflicts in several regions across the world. In particular, the growing debt of governments in advanced economies and of private companies in emerging countries could generate significant adjustments if the main central banks were to raise interest rates. As a result, financial markets could enter a period of high volatility which could lead to adverse consequences such as waves of company defaults, or a major liquidity crisis. The financial situation in many countries of the Eurozone remains unstable and downgrades of some states' financial ratings have occurred. While SCOR does not currently own any securities issued by the governments of Greece, Italy, Spain, Ireland, or Portugal, it cannot predict whether any of the other government securities that it holds in its investment portfolio will be adversely affected in the future by ratings downgrades, the continuing debt crisis or other developments. For further information on investments, refer to Section 1.3.5.4 – Net investment income and Section 4.6 – Notes to the consolidated financial statements, Note 7 – Insurance Business Investments.
The global economy may suffer from a sharp turn in American monetary policy, which could spur a rise in interest rates all along the yield curve. Financing conditions could thus deteriorate across sectors and economies. In particular, the emerging and developing countries may suffer from capital outflows in the wake of such a US monetary normalization.
This difficult environment and the continuing market upheavals may have an adverse effect on SCOR, from both an investment and reinsurance business viewpoint.
Even in the absence of a market downturn, SCOR remains exposed to a substantial risk of loss due to market volatility. See Section 3.2.3 – SCOR is exposed to other risks arising from the investments it owns.
Impact on SCOR’s reinsurance business: SCOR is also dependent upon customer behavior / premium growth. The Group’s premiums are likely to decline in such circumstances and its profit margins could erode. In an economic downturn characterized by higher unemployment, lower household income, lower corporate earnings, lower business investment and lower consumer spending, the demand for SCOR’s and its clients’ products could be adversely affected. Factors such as government and consumer spending, business investment, the volatility and strength of both debt and equity markets, and inflation, all affect the business and economic environment and ultimately, the size and profitability of SCOR’s business.
In addition, the Group may experience an elevated incidence of claims or be impacted by a decrease in demand for reinsurance and increased surrenders of policies from the cedents (see paragraph on lapse risk in Section 3.2.2.2 Life Reinsurance) that could affect the current and future profitability of its business. Although written premiums have seen steady growth in prior years, a prolonged economic crisis could result in lower written premiums in the future.
Risks related to regulatory initiatives failing to stabilize the financial markets
SCOR operates in a highly competitive sector and would be adversely affected by losing competitive advantage or if adverse events affect the reinsurance industry
Therefore, SCOR remains exposed to the risk of losing its competitive advantage. In particular, when available reinsurance capacity, via traditional reinsurers or capital markets, is greater than the demand from ceding companies, its competitors, in particular (re)insurers benefiting from higher ratings than SCOR’s or other competitors in alternative capital markets, may be better positioned to enter new contracts and gain market shares at SCOR’s expense.
Consolidation in the insurance and reinsurance industries could adversely impact SCOR
Insurance industry participants may seek to consolidate through mergers and acquisitions. These consolidated entities may use their enhanced market power and broader capital base to negotiate price reductions for SCOR’s products and services, and reduce their use of reinsurance, and as such, the Group may experience price declines and possibly write less business.
Reinsurance industry consolidation could happen as well, with SCOR’s competitors undertaking mergers or acquisitions. Such external growth activity of SCOR’s competitors could potentially enhance these players’ competitive position, e.g. in terms of being able to offer greater capacity or broader product offerings, which could permit them to gain market shares at SCOR’s expense.
Capital may not be completely fungible between different regulated legal entities, which may have negative consequences for the legal entities
Adverse capital and credit market conditions may significantly affect SCOR’s ability to access capital and/or liquidity or increase the cost of capital
The disruptions of financial markets, and more particularly credit market conditions, could also affect SCOR’s ability to access liquidity. Please refer to section 3.2.5 - Liquidity risks for further details.
In November 2015, the Financial Stability Board (“FSB”) updated the list of nine systemic direct insurers (“G-SIIs”) according to their interconnectedness and their exposures to activities considered as non-traditional or non-insurance. The FSB stated its intention to consider the designation of systemic reinsurers as well, with slight amendments of the methodology designed for insurers. There is a risk that SCOR will receive such a designation. The impact of receiving
Similarly, changes in tax legislation and regulations, or in their interpretation may induce an impact on SCOR’s results, for instance due to the inability to recognize deferred tax assets in the future.
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. For more details on the current rating of the Group, refer to section 1.2.4 - Ratings information.
Some of SCOR’s cedents’ credit models or reinsurance guidelines face regulatory capital requirements or depend on their reinsurers’ financial rating. If SCOR’s rating deteriorates, cedents could be forced to increase their capital charge in respect of their counterparty risk on SCOR. This could lead to a loss of competitive advantage for SCOR.
Many of the Group’s reinsurance treaties contain a requirement to put in place letters of credit (“LOC”) as a general requirement or when triggered by a downgrade of SCOR or one of its subsidiaries. In certain circumstances, the cedent has the right to draw down on a LOC issued by a bank in SCOR’s name. Banks providing such facilities usually ask SCOR to post collateral. The value retained by the bank, which can be different from the market value since it includes security margins by asset type (“haircuts”), is at maximum the amount of the corresponding LOC facility. For some facilities, initial collateral requirements may be increased following a downgrade of SCOR’s rating, impacting the Group’s liquidity level. In the case of a LOC being drawn by a cedent, the bank has the right to request a cash payment from this collateral, up to the amount drawn by the cedent. It enforces this right by drawing on the collateral the Group posted to such bank. In the case of a large number of LOCs being drawn simultaneously, SCOR could encounter difficulties in providing the total amount of required cash or fungible assets, i.e. exposing itself to a liquidity risk.
For more details about the Group’s lines of credit, refer to Section 1.3.6 – Financial position, liquidity and capital resources. For more details on liquidity risks, refer to Section 3.2.5 – Liquidity risks.
In recent years, SCOR has completed a number of acquisitions around the world. Acquisitions involve risks that could adversely affect its operating results, including the substantial amount of management time that may be diverted from
operations to pursue and complete acquisitions. Acquisitions could also result in additional indebtedness, costs, contingent liabilities, and impairment and amortization expenses related to goodwill and other intangible assets. In addition, acquisitions may expose SCOR to operational challenges and various risks, including:  the ability to integrate the acquired business operations and data with its systems;  the ability to retain client relationships and related business volumes;  the ability to integrate, retain or recruit required personnel for the proper functioning of the acquired business;  the availability of funding sufficient to meet increased future capital needs;  the obligation to comply with new regulatory requirements;  the ability to fund cash flow shortages that may occur if anticipated cash flows are not realized or are delayed, whether by general economic or market conditions or unforeseen internal difficulties; and
Integrations may take longer, be more expensive or may be more difficult than expected. The success of integrations may depend, notably, on the ability to coordinate development efforts effectively, at the operational and commercial levels among others, to streamline and/or integrate the information systems and internal procedures, and on the ability to retain key employees. Difficulties encountered in integrations could entail higher integration costs and/or less significant savings or fewer synergies than expected.
SCOR is also exposed to risks relating to the integration of the underlying data of newly acquired companies into its operating and financial accounting systems.
It may be outside the control and influence of SCOR to retain certain client relationships and business volumes related to acquired businesses. Related earnings and efficiencies may be lower than expected, which may dilute the return on such acquisition related investments.
Since August 2011, the majority of the mortality reinsurance business in the US related to the former Transamerica Reinsurance Co. flows into SCOR via retrocession from AEGON companies. As long as not all underlying reinsurance agreements between cedents and AEGON companies have been novated, an AEGON insolvency might lead to premiums from clients no longer being passed on to SCOR, and thus potentially impair the value of business acquired (“VOBA”).
SCOR could have to assume the burden of the litigation matters of acquired companies related to years preceding the acquisition or relating to those acquisitions. The costs of these litigation matters could have an adverse effect on its future operating income and an unfavorable outcome to one or more of these litigation matters could have a material adverse impact on SCOR. For further details, refer to Section 4.6 – Notes to the consolidated financial statements, Note 27 – Litigations.
For further details on the terminology used to describe the Group’s activity, refer to Section 1.2.5 – Business Overview. The principal risk the Group faces under insurance and reinsurance contracts is that the actual amounts of claims and benefit payments, or the timing thereof, differ from expectations. The frequency of claims, their severity, actual benefits paid, the development of long-tail claims and long-term mortality trends as well as external factors are all beyond the Group’s control. Additionally, the Group is dependent on the quality of underwriting of its cedents for certain reinsurance treaties, and on the quality of claims management by these companies and the data provided by them. Under these uncertainties, the Group seeks to ensure that sufficient reserves are available to cover its liabilities. Generally, SCOR’s ability to increase or maintain its portfolios of insurance and reinsurance risks in the P&C and Life divisions may depend on external factors such as, professional practices, legal, jurisdictional, regulatory, social, political, economic, financial and environmental conditions. These factors create uncertainties and may adversely affect SCOR’s business due to either an interpretation of the contracts leading to an extension of coverage (e.g. through inapplicability or interpretation of treaty clauses) or by increasing the frequency and/or severity of claims beyond what was anticipated at the time of the underwriting. SCOR mitigates its underwriting risks related to the Non-Life and Life reinsurance business through the purchase of risk-mitigation covers, both on the traditional retrocession market and on the capital markets via alternative risk transfer solutions (e.g. the multi-year securitization of catastrophic and pandemic risk in the form of Insurance-Linked Securities ("ILS") and the issuance of contingent capital facilities). However, there is a risk that SCOR may not be able to transfer / lay off its liabilities through the purchase of such instruments on economically viable terms and conditions in the future. For further details on retrocession and other risk mitigation techniques within SCOR, see section 3.3.2 – Management of Underwriting risks and Appendix A – 2 Internal Control Procedures and Risk Management – Paragraph on Capital Shield Strategy.
The main risks linked with the Non-Life reinsurance business underwritten by SCOR’s P&C division are Natural Catastrophes, P&C long-tail reserves deterioration and Terrorism. SCOR’s P&C division is also exposed to such risks as part of its direct insurance activity.
SCOR may be subject to higher than expected P&C claims inflation on long-tail lines of business which can lead to a deterioration in the reserves. In particular Motor and General Liability represent the most material exposures.
For SCOR’s casualty business, the frequency and severity of claims and the related indemnification payment amounts can be affected by several factors. The most significant factors are the changing legal and regulatory environment, including changes in civil liability law and jurisprudence. Additionally, due to the time needed to resolve arbitration and court claims settlement procedures, the casualty business is exposed to inflation risks regarding the assessment of claim amounts. For further information on risks related to reserves, please refer to section 3.2.2.4 – Risks related to reserves.
SCOR Global P&C is exposed to single or multiple terrorist attacks through some P&C treaties and national terrorism pools.
The Group 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. Pools have been created in countries such as but not limited to: France (GAREAT), Germany (Extremus), the Netherlands (NHT), Austria (VVO) and Belgium (TRIP), which also benefit from varying levels of state support. The Group participates in some of these pools. In the US, the Terrorism Risk Insurance Act, and subsequent successive legislation, requires that insurers provide coverage for terrorist acts. It establishes a federal program to help insurance companies cover claims related to terrorist acts. Beyond the legal requirements in the US and other countries, market practices frequently require that reinsurers or insurers provide terrorism coverage.
In addition to the three main risks of SCOR’s non-life underwriting risk as listed above, other factors could have an adverse impact, such as cyclicality of the business and concentration risks related to its broker business.
The primary consequences of these factors are a reduction or an increase of the volume of Non-Life reinsurance premiums on the market, an increase in competition within the reinsurance market, and also a preference for those operators who are most attentive to the specific needs of the cedents and the most capable of answering them. This could lead potentially to a loss of competitive advantage for SCOR. Beyond the general trends, the premium rate cycle affects certain geographic markets and/or certain lines of business in a differentiated fashion and independently of each other.
SCOR produces its Non-Life business both through brokers and through direct relationships with insurance company clients. For the year ended December 31, 2015, SCOR’s largest brokers for Life were Aon Group with approximately 2% of the Group’s Life gross written premiums and Willis Group with approximately 1%. SCOR’s largest brokers for Non-Life were Aon Group with approximately 18% of the Group’s Non-Life gross written premiums, MMC with approximately 14% and Willis Group with approximately 11%. Refer to Section 1.2.5.4 – paragraph on distribution by production source. The risk for SCOR is mainly the significant concentration of premiums written through a limited number of brokers. A significant reduction in the business generated through these brokers could potentially reduce premium volume and net income.
This risk refers to potential negative deviations in future mortality patterns from current best-estimate assumptions due to a higher than anticipated number of deaths (i.e. increased mortality rates) among the portfolio lives reinsured by SCOR. This could result from inherent volatility, initial mispricing (level risk) or an adverse long-term trend. The latter could potentially be influenced by various emerging risks. SCOR’s long term mortality reserves are based on a number of assumptions and information provided by third parties, which, if incorrect and/or incomplete, could have an adverse effect on the Group. For further information on risks related to reserves, please refer to section 3.2.2.4 – Risks related to reserves.
mortality far beyond the usual volatility. A lethal virus strain not only of influenza but of any other communicable disease could lead to a heavy increase in mortality rates and increased medical costs which could significantly affect SCOR’s results.
Longevity risk refers to the risk of a negative deviation from expected results due to the insured or annuitant living longer than assumed in the pricing. This risk could have an impact on longevity swaps, annuity and long-term care covers and on other longevity protection products.
SCOR Global Life is also exposed to risks related to policyholder behavior, including risks such as lapsation and antiselection at policy issue. Lapses refer to either non-payment of premium by the policyholder or to policies which are terminated by the policyholder before the maturity date of the policy. Depending upon the product design, higher or lower policyholder lapses than assumed in the pricing may reduce SCOR Global Life’s expected future income. Anti-selection refers to the problem of asymmetry of information between the insured and the insurer. An individual applying for life or health insurance cover usually has better knowledge about his or her own state of health than the insurer. The risk to the (re)insurer is of policyholders deliberately deciding among other things to:  take out a policy in the knowledge that either their chances of claiming is high or higher than average;  terminate a policy in the knowledge that their chances of claiming are low or lower than average, or;  choose and exercise a policy option which increases the policyholder’s expected benefit. This might lead to a portfolio composition which differs from the one assumed during pricing and might imply lower than expected profits for both the direct insurer and the reinsurer.
Products such as critical illness, short-term and long-term disability and long-term care, which all contain morbidity risk, are subject to the risk of negative trends in health, as well as to the consequences of improved medical diagnoses capabilities which increase the number of claims due to conditions that otherwise would possibly have remained undetected. Medical progress may in the future enable better treatment, resulting in higher claims, since certain diseases would have otherwise led to a much shorter life expectancy of insured. Products providing cover for medical expenses are in particular subject to the risk of higher than expected incidence and inflation of medical costs.
In addition to the main underwriting risks of SCOR Global Life as listed above, other factors could have an adverse impact, whether related to policyholder behavior such as resale or purchase of policies by third parties with no insurable interest, or other risk factors such as risks related to product guarantees and collateral requirements, or recapture risk.
For further details on risks related to collateral requirements, please refer to section 3.2.5 – Liquidity risks.
Non-Life and Life reinsurance activities take place in two different market environments. They are subject to heterogeneous external constraints, which generally benefit from a high diversification effect. The overall balance between the two business areas within the Group hence provides stability. However, in some cases, evolutions of the Non-Life and Life activities are linked to each other as well as to those of the financial markets. This exposes SCOR to risks of accumulation between its lines of business and/or asset classes.
Unforeseen events, such as natural catastrophes or man-made catastrophes, can make SCOR’s claims experience vary significantly from one year to the next, which can have significant impact on its profitability and financial position. These types of risk primarily affect Non-Life business areas. However, in cases where SCOR faces a large number of casualties, the possibility of the losses also affecting its Life lines of business cannot be excluded. Similarly, unforeseen events such as terrorist attacks may materially impact the Non-Life business area, but also the Life business area, in the case of attacks resulting in many fatalities. Although in past events the life claims incurred have been comparatively small in relation to the non-life claims incurred, a terrorist act might claim a large number of insured lives. In the event of a very large natural catastrophe or terrorism attack, the losses generated in the Non-Life and Life divisions could potentially accumulate with losses on financial assets related to the potential reaction of markets (i.e. movements in interest rates, exchange rates and equity market prices). In the same way, a major pandemic event may cause financial market turmoil and/or business interruptions.
The SCOR Group is required to maintain reserves to cover its estimated ultimate liability for losses and loss adjustment expenses with respect to reported and unreported claims, incurred as at the end of each accounting period, net of estimated related recoveries. Its reserves are established both on the basis of information it receives from its cedent insurance companies, including their own reserving levels, as well as on the basis of its knowledge of the risks, the studies it conducts and the trends it observes on a regular basis. As part of the reserving process SCOR reviews, available historical data and it tries to anticipate the impact of various factors such as change in laws and regulations and judicial decisions that may affect potential losses from claims, changes in social and political attitudes that may increase exposure to losses and trends in mortality and morbidity, or evolution in general economic conditions. As stated before, the Group’s reserves 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 the Group. Despite the audits it carries out on the companies with which it does business and its frequent contacts with these companies, reserving practices differ among ceding companies and the Group is still dependent upon such companies’ risk evaluations in establishing its reserves.
Another factor of uncertainty resides in the fact that some of SCOR’s activities are long-tail in nature, in particular longterm care, whole life products, term assurance, longevity, workers compensation, general liability or medical malpractice. For some of these activities, it has, in the past, been necessary for SCOR to revise estimated potential loss exposure and, therefore, to reinforce the related loss reserves.
Market risk is the risk that the fair value or future cash flows of a financial instrument fluctuates because of changes in market prices or macro-economic variables 3.2.3.1 INTEREST RATE RISK
Interest rates are very sensitive to a number of external factors, including monetary and budgetary policies, the national and international economic and political environment, and the risk aversion of economic agents.
Interest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Interest rate fluctuations have direct consequences on both the market value and the return of SCOR’s investments as the level of unrealized capital gains or losses and the return on securities held in its portfolio both depend on the level of interest rates. Floating rate instruments expose the Group to cash flow interest risk, whereas fixed interest rate instruments expose the Group to fair value interest risk. During periods of declining interest rates, income from investments is likely to fall due to investment of net cash flows and reinvestments of redemptions at rates lower than those of the existing portfolio (dilutive effect of new investments). During such periods, there is therefore a risk that SCOR’s return on equity objectives are not met. For callable bonds for which the issuer has an option to redeem earlier than the ultimate maturity, the probability of having to reinvest the early proceeds at lower interest rates is increased.
On the other hand, an increase in interest rates could lead to a fall in the market value of fixed income securities that SCOR holds. In the case of a need for cash, SCOR may be obliged to sell fixed income securities, possibly resulting in capital losses to the Group.
SCOR’s reinsurance business may also be exposed to interest rate risk. The Group has certain life insurance contracts which are sensitive to fluctuations in interest rates. Although in general all long-term liabilities are discounted, in most
Equity prices are likely to be affected by risks which affect the market as a whole (uncertainty on economic conditions in general, such as anticipated changes in growth inflation, fluctuations of interest rates, sovereign risk, etc.) and/or by risks which influence a single asset or a small number of assets (specific or idiosyncratic risk). This may lead to a decrease in prices of the equity held by SCOR and may impact its unrealized gains and losses. A material or longlasting decline of prices of SCOR’s equity holdings may also result in an impairment of its equity portfolio. Such an impairment would affect its net income.
Real estate risks, either for properties owned directly or through funds, are risks arising from a variation in the real estate market valuation or a change in the rental market conditions. The rental income of the property portfolio is exposed to the variation of the indices on which the rents are indexed (for instance in France, the Construction Cost Index) as well as risks related to the rental market (changes in supply and demand, changes in vacancy rates, impact on market rental values or rent renewals) and the default of lessees. The value of property assets is exposed to the risk of regulatory obsolescence of properties (regulatory developments related to the accessibility of buildings for people with disability, on the reduction of energy consumption and the production of carbon dioxide, etc.) which would lead to losses of value in the event of a sale of the assets or to additional expenditure to restore the value of the property.
The financial markets remain uncertain and expose SCOR to significant financial risks linked to changes in macroeconomic variables, inflation, interest rates and sovereign debts, credit spreads, equity markets, commodities, exchange rates and real estate securities but also to changes in the models used by the rating agencies. The Group may also be faced with the deterioration of the financial strength or rating of some issuers.
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.
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 perfect matching between monetary assets and liabilities in foreign currencies. In this case and to reduce the impact of imperfect matching, SCOR uses derivative financial instruments in order to hedge against currency fluctuations on currency particularly sensitive in times of greater volatility on the capital markets. Nevertheless, a perfect matching of monetary assets and liabilities can never be achieved and a potential profit or loss impact due to fluctuations in exchanges rates can arise.
The interest sensitivities for equity presented in the table below include the movements on the debt security portfolio, cash and cash equivalents, structured notes, the impact of changes in interest rates on variable rate financial debt and the GMDB business.
The interest sensitivities for profit & loss presented in the table below show the impact of changes in fair value of financial assets at fair value through profit & loss held at closing date, and change in income on variable rate financial assets held at closing date, following an increase / decrease in interest rates of 100 basis points. An estimate of the impact on the future profit & loss following a change of 100 basis points is therefore included. However, SCOR does not include in this analysis the impact that changes in interest rates might have on the reinvestment of future cash flows, as future cash flows of our business are difficult to predict and asset allocations might change over time.
Both Life and Non-Life businesses have minimal sensitivity to equity price movements. The market sensitivities of the Group are estimated as follows: In EUR million Income (2) (3)
(2) The reduction in equity represents the estimated net asset impact including the additional impairment recognized in the profit and loss account (3) Net of tax at an estimated average rate of 21% in 2015 (24% in 2014 and 26% in 2013)
SCOR’s currency risk management is described in section 3.3.3.4 – Management of currency risk.
The Group recognized a net foreign exchange gain of EUR 16 million for the year ended December 31, 2015 (2014: gain of EUR 11 million and 2013: loss of EUR 10 million). For currency translation risk, the following sensitivity analysis (1) considers the impact on equity of a 10% movement in the exchange rates of the Group’s two largest translation risk currency exposures, USD and GBP relative to EUR.
Equity impact In EUR million Currency movement 2015 2014 2013 USD / EUR 10% 347 271 252 % of equity 5.5% 4.8% 5.1% USD / EUR (10)% (347) (271) (252) % of equity (5.5)% (4.8)% (5.1)% GBP / EUR 10% 41 37 33 % of equity 0.6% 0.6% 0.7% GBP / EUR (10)% (41) (37) (33) % of equity (0.6)% (0.6)% (0.7)%
Counterparty default risk is the risk that one party to a financial instrument or other asset will cause a financial loss to the other party either by failing to discharge an obligation or by a deterioration in its financial situation.
SCOR is mainly exposed to the following credit risks or the accumulation of such risks in either a single counterparty, in the same sector of activity or the same country: from bond and loans portfolios, shares of retrocessionaires in contract liabilities, deposits with cedents, cash deposits at banks, future profits of Life reinsurance treaties and default of pool members. SCOR may be exposed to credit risk through its Credit & Surety reinsurance portfolio.
A deterioration in the financial situation of an issuer (sovereign, public or private) or borrower can cause it to become insolvent and lead to the partial or total loss of coupons and of the principal invested.
For information on the debt securities portfolio, refer to Section 4.6 – Notes to the consolidated financial statements, Note 7 Insurance Business Investment.
SCOR is exposed to the risk of losing all or part of any cash deposited with a retail bank in the event such a bank is no longer able, due to insolvency, to honor its commitments (e.g., following liquidation). The current main risk for the Group is the significant concentration of deposits in a small number of banks. This risk is a direct result of the selection of the most stable banks.
Credit risk on future cash-flows from Life reinsurance policies arises from two risk factors:  Firstly, the payment of future profits expected under Life reinsurance contracts requires that the cedent is solvent. Therefore, 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 cedent. This may lead to a depreciation of both the value of business acquired (“VOBA”) and deferred acquisition costs (“DAC”).
Derivative instruments 221 - - - - 221 Loans and receivables 10,492 - - - - 10,492 Insurance receivables 4,929 369 36 11 33 5,378 Tax receivables 138 - - - - 138 Other assets 208 3 - - - 211 Cash and cash equivalents 1,626 - - - - 1,626 Total 33,739 372 36 11 33 34,191
Financial assets have been categorized within the above aging analysis according to their original due date. The due date for each of these instruments may vary depending on the nature of the asset. Insurance receivables business credit terms are typically based on normal terms of trade, as specified within contracts. Insurance receivables include estimates, which are presented as current. The available-for-sale investments and fair value through income categories presented above include fixed income securities and equity securities. For fixed income securities, amounts are only presented as non-current if the security has not been redeemed on the date of maturity and therefore the amount receivable is past due. For equity securities, due to the absence of a contractual date of redemption, these instruments are presented as current. Other assets presented in the above aging analysis, including derivative instruments, loans and receivables, cash and cash equivalents and other accounts receivable, are presented in a similar manner as those instruments described above, depending on the existence of a redemption date.
Impairment information relating to financial assets is included in Section 4.6 – Notes to the consolidated financial statements, Note 7 – Insurance Business Investments, Note 8 – Loans and receivables, Note 10 – Assumed and ceded insurance and reinsurance receivables and payables and Note 20 – Investment income.
Liquidity risks arise when available liquidity is not sufficient to meet liquidity needs. This liquidity shortfall can result either from:  A deviation from planned liquidity needs over either the short term, or the medium/long term;  A deviation from estimated liquidity capacities, e.g. due to adverse business conditions.
The principal internal sources of the Group’s liquidity, consisting mainly of cash or assets that are readily convertible into cash, are reinsurance premiums, cash flows from its investment portfolio and other assets.
External sources of liquidity in normal markets include a variety of short and long term instruments, including repurchase agreements, commercial paper, medium and long term debt, junior subordinated debt securities, capital securities and stockholders’ equity. For further information on SCOR’s financial debt, including related financial covenants, refer to Section 4.6 – Notes to consolidated financial statements, Note 14 – Financial debt.
Liquidity risks are increased when capital and credit markets experience extreme volatility or disruption, as SCOR may need to sell a significant portion of its assets quickly and at unfavorable terms, all the more as, if occurring in the event that current internal resources do not satisfy its liquidity needs.
Such risk may be increased due to the characteristics of certain SCOR’s assets:  “Side pockets” or “gates”: SCOR holds shares of private equity or hedge funds or funds of funds in its alternative assets portfolio. Some of these funds have the possibility to temporarily restrict the liquidity of these shares pursuant to restrictions that are commonly referred to as “side pockets” or “gates.” The Group does not hold a material portfolio of such assets.
As at December 31, 2015 3,619 4,409 3,350 2,611 13,989 As at December 31, 2014 3,531 4,086 3,044 2,365 13,026
As at December 31, 2015 1,868 1,305 1,491 9,080 13,744 As at December 31, 2014 2,362 1,540 1,088 7,704 12,694
Total Subordinated debt 1.02% - 6.98% 110 349 3,501 3,960 Real estate debt 0.97% - 4.50% 59 341 175 575 Other financial debt 0.19% 6 2 - 8 Total 175 692 3,676 4,543
Total Subordinated debt 1.06% - 6.98% 92 280 1,623 1,995 Real estate debt 1.18% - 4.50% 64 385 82 531 Other financial debt 0.42% 6 2 1 9 Total 162 667 1,706 2,535 * The interests for perpetual debt as at December 31, 2015 represent EUR 84 million, on a yearly basis (2014: EUR 54 million)
Details on financial debts are presented in Section 4.6 – Notes to the consolidated financial statements, Note 14 – Financial Debt.
Operational risks are inherent to all businesses including SCOR’s. Operational risks may be split into four broad categories further described below: risks related to staff, systems or facilities, processes or external events.
SCOR’s risk management policies, procedures and controls may not be appropriate or sufficient. In particular, any additional workload to the planned activities could reduce the effectiveness of some processes and controls. As an example, the creation of a new entity or development of a new Line of Business may lead to an accumulation of operational risks.
Some of SCOR’s and SCOR’s subsidiaries’ processes are partially or integrally outsourced. Failed outsourced processes could lead to direct losses and other operational incidents. For further details on current main regulatory developments which may have an impact on SCOR, please refer to 3.2.1.3 – Risks related to capital and regulatory developments.
SCOR can be exposed to unfavorable business environment such as evolving or additional regulatory constraints potentially hindering its business model. In addition, as an international group, SCOR must comply with national and international laws, regulations and accounting standards. This includes all applicable economic sanctions, anti-bribery as well as anti-terrorism laws and regulations applicable to its operations, such as the economic trade sanctions laws and regulations administered by the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) as well as certain laws administered by the United States Department of State, the Foreign Corrupt Practices Act (FCPA) and other anti-bribery laws such as the UK Bribery Act that generally bar corrupt payments or unreasonable gifts to foreign governments or officials. The level of legal, regulatory, tax or accounting requirements depends on several factors including the type of business (e.g. primary insurance or reinsurance business), the location and the legal structure of the entity. The large number of regulatory environments, as well as changes in regulations increase the complexity of the related processes. Any violation of laws, regulations or accounting requirements could expose SCOR to, for example, fines, class actions with compensation payments, accounts restatements or business restrictions.
 Systems could be slowed down, corrupted or stopped potentially resulting in loss of productivity, corrupted data and remediation costs
 Data could be stolen, deleted or corrupted, or made public in contradiction with SCOR’s regulatory or contractual obligations.
 Liability risks are mostly covered at Group level and include 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 cyber risks.
3.3.1.1 MANAGEMENT OF RISKS RELATED TO THE MACRO-ECONOMIC ENVIRONMENT AFFECTING SCOR’S STRATEGY