This registration document was filed on 20 March 2015 with the French Autorité des marchés financiers (AMF) in accordance with Article 212-13 of its general regulation. It can be used as a support document for a financial transaction only if presented together with a securities information note (note d’opération) approved by the AMF. This registration document was prepared by the issuer and is the responsibility of the person whose signature appears therein.
 SCOR SE’s corporate and consolidated financial statements for the financial year ended 31 December 2012 and the report of the statutory auditors regarding said financial statements as presented in SCOR SE’s registration document filed with the AMF on 6 March 2013 under number D.13-0106.
1 Person responsible 9 1.1 Name and title of person responsible 9 1.2 Declaration by person responsible 9 2 Statutory Auditors 12 2.1 Auditors 12 2.1.1 Principal Auditors 12 2.1.2 Alternate Auditors 12 2.2 Resignation or non-renewal of Auditors 12 3 Selected financial information 15 3.1 Group key figures 15 4 Risk factors 19 4.1 Risk related to the business environment 21 4.1.1 SCOR is exposed to diverse risk factors in the Non-Life and Life reinsurance businesses 21 4.1.2 SCOR is exposed to losses from catastrophic events 24 4.1.3 SCOR could be subject to losses as a result of its exposure to terrorism 25 4.1.4 SCOR could be subject to increased reserves from Business that it does not actively underwrite 25 4.1.5 If SCOR’s reserves prove to be inadequate, its net income, cash flow and financial position may be adversely affected 26 4.1.6 SCOR may be adversely affected if its cedents, retrocessionaires, insurers or members of pools in which it participates do not respect their obligations 26 4.1.7 SCOR operates in a highly competitive sector and would be adversely affected by losing competitive advantage or if adverse events affect the reinsurance industry 27 4.1.8 Consolidation in the insurance and reinsurance industry could adversely impact SCOR 27 4.1.9 Financial ratings play an important role in SCOR’s business 27 4.1.10 A significant portion of SCOR’s contracts contain provisions relating to financial strength which could have an adverse effect on its portfolio of contracts and its financial position 28 4.1.11 Operational risks, including human errors or cyber risks, are inherent to SCOR’s business 28 4.1.12 SCOR’s risk management policies and procedures may leave it exposed to unidentified or unanticipated risk, which could negatively affect its business 29 4.1.13 SCOR is exposed to risks related to its recent acquisitions 30 4.1.14 SCOR is exposed to losses due to counterparty default risks or credit risks 31 4.1.15 SCOR is exposed to the risk of no longer being able to retrocede liabilities on economically viable
SCOR is exposed to a higher rate of general inflation SCOR is exposed to a protracted period of deflation 33 4.2 Risk related to Financial Markets 33 4.2.1 SCOR faces risks related to its fixed income investment portfolio 33 4.2.2 SCOR faces risks related to its equity-based portfolio 34 4.2.3 SCOR is exposed to other risks arising from the investments it owns 34 4.2.4 SCOR is exposed to foreign currency exchange rate fluctuations 35 4.2.5 The valuation of SCOR’s intangible assets and deferred tax assets may significantly affect its shareholders’ equity and the price of its securities 36 4.3 Liquidity risk 36 4.3.1 SCOR faces liquidity requirements in the short to medium term in order to cover, for example, claims payments, operational expenses and debt redemptions. In the case of catastrophe claims, in particular, it may need to settle in a reduced timeframe amounts which exceed the amount of available liquidity 36 4.3.2 Adverse capital and credit market conditions may significantly affect SCOR’s ability to access capital and/or liquidity or increase the cost of capital 37
SCOR is subject to applicable laws and regulations relating to sanctions and anti-bribery, the violation of which could adversely affect its operations 4.4.3 SCOR is exposed to risks linked with Solvency II implementation 39 4.4.4 SCOR is exposed to the risk of being designated systemic or to the risk of its peer being designated as such 4.4.5 Inconsistent application of EU directives by regulators in different EU Member States may place SCOR’s business at a competitive disadvantage 39
Strategy or factors of governmental, economic, fiscal, monetary or political character which have had or could have a material impact on the operations of the SCOR Group 93 9.2.6 Calculation of financial ratios 93 10 Capital resources 102 10.1 Capital 102 10.2 Cash flow 102 10.3 Borrowing conditions and financing structure 102 10.4 Restrictions on the use of capital 103 10.5 Sources of financing relating to the future investments by the company and to its property, plant and 11 Research and development, patents and licenses 106 11.1 Research and development activities 106 11.2 Information technologies 107
12 Trend information 109 12.1 Most significant trends in production, sales, inventory, costs, and selling prices since the end of the last financial year 111 12.1.1 Non-Life Reinsurance 111 12.1.2 Life Reinsurance 112 12.2 Known trends, uncertainties, demands, commitments and events reasonably likely to have a material effect on the issuer’s prospects 113 13 Profit forecasts or estimates 114 14 Administrative and management bodies 118 14.1 Information on the members of the Board of Directors and Senior Management 118 14.1.1 Information concerning the members of the Board of Directors 118 14.1.2 Biographical information on members of the Board of Directors 126 14.1.3 Executive Committee 128 14.1.4 Biographical information on the members of the Executive Committee 131 14.1.5 Negative disclosures about members of the Board of Directors and Senior Management 132 14.2 Administrative, management, and supervisory bodies and Senior Management conflicts of interest 133 15 Remuneration and benefits 136 15.1 Amount of remuneration paid and benefits in-kind 136 15.1.1 Directors’ fees 136 15.1.2 Remuneration of the members of the COMEX and of the executive corporate officer in 2014 137 15.1.3 Remuneration in the form of options and share allocation 144 15.2 Total amounts set aside or accrued to provide pension, retirement, or similar benefits for financial 16 Board practices 148 16.1 Date of expiration of the current term of office 148 16.2 Information on service contracts of members of Administrative and senior officers 148 16.3 Information on the Audit Committee and the Compensation and Nomination Committee 148 16.4 Corporate governance regime 149 17 Employees 152 17.1 Number of employees 152 17.2 Information on shareholdings and stock options or Company stock purchases by members of
Free allocation of shares to Executive Committee members and other company officers as at 31 December 2014 158 17.2.4 Potential volume of new shares from outstanding equity-based compensation as of 31 December 2014 160 17.3 Plans providing employee participation in Company 161 17.3.1 Stock options plans 161 17.3.2 Free share allocation plans 163 17.3.3 Stock option plans currently in force within the Group 172 17.3.4 Employee savings plan 172 17.4 Defined pension schemes 172 17.4.1 Defined contribution pension schemes 173 17.4.2 Define benefits pension schemes 174 18 Principal shareholders 175 18.1 Significant shareholders known to SCOR 177 18.2 Negative statement as to the absence of differences between the voting rights of various shareholders 180 18.3 Direct or indirect control by one shareholder 180 18.4 Agreement which could result in a subsequent change in control 180 19 Related party transactions 183 19.1 Related party transactions 183 19.2 Regulated agreements 183 19.3 Special report of the auditors on regulated agreements and commitments 183 20 Financial information concerning the issuer’s assets and liabilities, financial position and profits and losses 192 20.1 Historical financial information: consolidated financial statements 192 20.1.1 Consolidated balance sheets 193 20.1.2 Consolidated statements of income 195
20.1.3 Consolidated statements of comprehensive income 196 20.1.4 Consolidated statements of cash flows 196 20.1.5 Consolidated statements of changes in shareholders’ equity 198 20.1.6 Notes to the consolidated financial statements 201 20.2 Auditing of historical consolidated financial information 279 20.3 Sources of financial information not extracted from the audited financial statements of the issuer and indication of such absence of audit 281 20.4 Date of most recently audited financial information 281 20.5 Interim and other financial information 281 20.6 Dividend distribution policy 281 20.7 Litigation and arbitration procedures 281 20.8 Material change in financial or commercial situation 281 21 Additional information 284 21.1 Share capital 284 21.1.1 Amount of issued capital and additional information 284 21.1.2 Existence of non-equity shares 287 21.1.3 Number and value of directly or indirectly held treasury shares 287 21.1.4 Amount of convertible securities, exchangeable securities or securities with subscription warrants 289 21.1.5 Information about and terms of any acquisition rights and/or obligations over authorized but unissued capital or an undertaking to increase the capital 289 21.1.6 Information about any capital of any member of the Group which is under option or agreed conditionally or unconditionally to be put under option and characteristics of such options 289 21.1.7 History of the Company’s share capital for the period covered by the historic financial information 290 21.2 Charter and Bylaws 291 21.2.1 Corporate purpose of the issuer (article 3 of the Bylaws) 291 21.2.2 Summary of the Bylaws and internal regulations of the Company concerning the members of its
Administrative, Management and Supervisory bodies 291 21.2.3 Rights, privileges and restrictions attached to existing voting right 292 21.2.4 Form, holding and transfer of ordinary shares 294 21.2.5 Actions required to modify shareholders’ rights 295 21.2.6 Conditions for calling annual shareholders’ meetings and extraordinary shareholders’ meetings
Company 297 21.2.8 Declaration thresholds 298 21.2.9 Conditions governing modifications to the share capital (other than legal provisions) 298 23 Third-party information and statements by experts and declarations of any interest 303 23.1 Expert’s report 303 23.2 Information from third parties 303 24 Documents on display 305 25 Information on holdings 307 26 Non financial information 309 27 Fees paid by the Group to the Auditors 311
 I have obtained an audit completion letter from the statutory auditors, in which they indicate that they have verified the information concerning the financial situation and the accounts provided in this Registration Document, and have read the entire Registration Document.
On the date of the Shareholders’ Meeting called to approve the financial statements of the financial year ending 2.1.2 ALTERNATIVE AUDITORS
Tour First -1, Place des saisons 92037 Paris-La Défense cedex, France CRCC of Versailles
In 2014, Fitch raised the outlook on the “A+” rating of SCOR SE and its main subsidiaries to “positive” to reflect “SCOR’s improved profitability, strong solvency and financial leverage for its risk profile”(2).
Return on invested assets .(1) (2) 2.9% 2.6% 2.9% Return on equity .(1) (3) 9.9% 11.4% 9.1%
Capitalization and indebtedness .(7) 7,472 6,359 6,019 SCOR Global P&C Division
(5) Closing stock price on 31 December 2014 (2013, 2012) (6) The Group’s liquidity is defined as cash, cash equivalent, short-term government bonds with maturities above three months and below 12 months and bank overdrafts (7) Capitalization and indebtedness is defined as the sum of IFRS shareholders’ equity and subordinated debt (8) Life technical margin is calculated as a percentage of net technical result plus income from funds held by ceding companies and the net of gross and ceded earned premiums. The net technical result represents the result of the net reinsurance operations of the Life division including income and expenses either implied in the reinsurance and retrocession arrangements or fully related to these arrangements. The technical result calculation method was adjusted to include revenues from Life reinsurance contracts that do not transfer significant reinsurance risk (presented in the investment income line of the 2013 Registration Document). The ratios previously reported in the 2013 Registration Document were 7.3% and 7.7% for the years ended December 31, 2013 and 2012, respectively
4 RISK FACTORS The risk factors described below must be considered together with the other information contained in the Registration Document, and specifically with:  Appendix B – Report from the Chairman of the Board of Directors - Part II, which describes the internal control and risk management procedures set up by the Group to address the risks to which the Group is exposed;  The consolidated financial statements of the Group presented in Section 20.1 – Historical financial information: consolidated financial statements and, in particular, in Section 20.1.6 – Notes to the consolidated financial statements, Note 26 – Insurance and financial risk;  Section 6 – Business Overview. The information included in this section referring to the nature and extent of risks arising from financial instruments as required by IFRS 7 – Financial Instruments – Disclosures, is an integral part of the consolidated financial statements as at 31 December 2014. As such the information is audited. These sections describe the risk management measures, processes and hedging positions planned or implemented by the Group in order to identify, assess and mitigate the risks. The Group conducted a review of the risks that could have a material adverse effect on its activity, its financial situation or its results (or capacity to reach objectives), and considers that no other significant risk than those disclosed exists.
Difficult conditions in the global capital markets and the economy generally may materially adversely affect SCOR’s business and results of operations
Recently, advanced economies, with the exception of the Eurozone, have experienced an improvement in their economic situation. While these developments may eventually unfold into a noticeable expansion, the risk of a relapse of all or part of these economies remains important. 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, in part because it has a large investment portfolio and also because it is dependent upon customer behavior. The Group’s premiums are likely to decline in such circumstances and its profit margins could erode. In the event of extreme prolonged market events, such as the global credit crisis, SCOR could incur significant losses in its investment portfolio. Refer to Section
20.1.6 – Notes to the financial statements, Note 6 – Insurance Business Investments, which includes analyses of unrealized and realized investment losses. See also Section 4.2.2 – SCOR faces risks related to its equity-based portfolio. Even in the absence of a market downturn, SCOR is exposed to a substantial risk of loss due to market volatility. See Section 4.2.3 – SCOR is exposed to other risks arising from the investments it owns.
In a number of countries in which the Group operates, legislation has been passed in an attempt to stabilize the financial markets, including bank stabilization programs by the Government and Bank of England in the UK and similar programs under the Emergency Economic Stabilization Act of 2008 in the US, as well as the Financial and Banking Regulation Act of 2010 in France and the Basel III agreements reached by the Basel Committee on Banking Supervision. Additionally, the EU has established the European Stability Mechanism (ESM) to assist European governments with their budgetary deficits and to stabilize the sovereign debt markets in the Eurozone. Such legislation or similar proposals, as well as accompanying actions, such as monetary or fiscal actions, of comparable authorities in the US, UK, Euro-zone and other countries, may fail to stabilize durably the financial markets. Although the European sovereign debt crisis has receded, public finances are far from equilibrium and public debt in some Eurozone countries is following an unsustainable path. Thus, tensions on some sovereign issuers are likely to reappear, in particular when long-term interest rates are on the rise again.
SCOR takes into consideration the numerous changes to the environment in which the Group operates, examples being: professional practices, legal, jurisdictional, regulatory, social, political, economic, financial and environmental conditions. These emerging or latent risks may adversely affect SCOR’s business due to either an interpretation of the contracts leading to an extension of coverage beyond its underwriting anticipation (e.g. through inapplicability or interpretation of treaty clauses) or by increasing the frequency and/or severity of claims. This would have an adverse effect on business, present and future revenues, net income, cash flows, financial position, and potentially, on the price of securities.
For further details on the terminology used to describe the Group activity, refer to Section 6 – 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 as well as external factors all beyond the Group’s control, especially inflation, legal and regulatory developments, and others, have an influence on the principal risk faced by the Group. Additionally, the Group is subject to the underwriting of cedents for certain reinsurance treaties, and to claims management by these companies and the data provided by them. In spite of these uncertainties, the Group seeks to ensure that sufficient reserves are available to cover its liabilities (Refer to Section 6.1.3.5 – Reserves).
Generally, SCOR’s ability to increase or maintain its portfolios of insurance and reinsurance risks in the Non-Life and Life divisions where it operates may depend on external factors such as economic risks and political risks.
Non-Life insurance and reinsurance businesses are cyclical. Historically, reinsurers have experienced significant fluctuations in operating income due to volatile and unpredictable developments, many of which are beyond the control of the reinsurer including primarily frequency or severity of catastrophic events, levels of capacity offered by the market, general economic conditions and the level of competition with regards to pricing. 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.
See Section 20.1.6 – Note 26, Insurance and financial risk – Non-Life reinsurance risks for further information on risk mitigation actions.
The main categories of risks for the life reinsurance underwritten by SCOR’s Life division, which is also referred to as “SCOR Global Life”, “Life” or “Life division”, are biometric, behavioral and catastrophe risks as well as credit risk (see Section 4.1.14 - SCOR is exposed to losses due to counterparty default risks or credit risks), currency risks (see Section 4.2.4 – SCOR is exposed to foreign currency exchange rate fluctuations) and market risks (see Section 4.2 – Risk related to Financial Markets and Section 4.2.3 – SCOR is exposed to other risks arising from the instruments it owns).
Mortality Risk Mortality risk is the risk of negative deviation from expected results due to higher than anticipated death rates resulting primarily from either the inherent volatility, an initial mispricing, an adverse long-term trend, antiselection, lapsation or a mortality shock event in the reinsured portfolio.
Lapsation 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 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.
As previously indicated, natural or man-made catastrophic events can cause very significant material damages affecting the Non-Life activities of the Group. In addition, such events could cause a large number of deaths and/or injuries which could impact the Life activities of SCOR, particularly under contracts covering groups of employees working at the same location.
Collateral arrangements in Life reinsurance transactions are stipulated in contractual agreements to address clients' counterparty risk mitigation requirements.
Regulatory reserve and related collateral requirements in various jurisdictions in which SCOR operates may be significantly higher than the reserves required under IFRS. A regulation in the US (NAIC Model Regulation XXX or Valuation of Life Insurance Policies Model Regulation), commonly referred to as Regulation XXX (or Triple X) and adopted by most US states as at 1 January 2000, requires a relatively higher level of regulatory, or statutory, reserves that US Life insurance and Life reinsurance companies must hold on their statutory financial statements for various types of Life insurance business, primarily certain level premium term life products. The reserve requirements under Regulation XXX increase over time and are normally in excess of reserves required under IFRS in other jurisdictions. The increase and the ultimate level of XXX reserves will depend upon the mix of business and future production levels in the US.
 Because term life insurance is a particularly price-sensitive product, any increase in insurance premiums charged on these products by life insurance companies, in order to compensate them for the increased
statutory reserve or collateral requirements or higher costs of reinsurance they face, may result in a significant loss of volume in their life insurance operations, which could, in turn, adversely affect life reinsurance operations.
Under certain long-term reinsurance treaties, ceding companies have the right to totally or partially recapture the book of business ceded under the reinsurance treaty after a pre-defined number of years after the inception of the treaty. The exercise of such recapture options may reduce SCOR Global Life’s expected future income. See Section 20.1.6 – Note 26, Insurance and financial risk – Life reinsurance for information on risk mitigation actions.
The Group takes into account the effect of the diversification between its two divisions, Non-Life and Life, in its internal model, by setting parameters for the interdependence of the various lines of business.
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. SCOR’s ability to grow or maintain its portfolios in the Non-Life and Life reinsurance divisions may be subject to external factors whose evolutions may be linked, such as economic and political risks.
Like other reinsurance companies, SCOR may be exposed to multiple insured losses to property and/or to individuals arising from a single occurrence, whether a natural catastrophe such as a hurricane, typhoon, windstorm, flood, hail, severe winter storm, earthquake, etc., or a man-made catastrophe such as an explosion, fire at a major industrial facility or an act of terrorism. Any such catastrophic event may generate insured losses in one or more of the Group’s lines of business.
The frequency and severity of such catastrophic events, particularly natural hazards, are by their nature unpredictable. The inherent unpredictability of these events makes forecasts and risk evaluations uncertain for any given year. As a result, SCOR’s claims experience may vary significantly from one year to the next, which can have a significant impact on its profitability and financial position. In addition, depending on the frequency and nature of losses, the speed with which claims are made and the terms of the policies affected, it may be required to make large claim payments within a short period. SCOR may be forced to fund those obligations by liquidating investments in distressed market conditions, or by raising funds under unfavorable conditions. In particular, its most significant exposure to natural catastrophes in Non-Life relates to earthquakes, storms, typhoons, hurricanes, floods and other weather-related phenomena like hail or tornados.
In the context of its business, SCOR may be exposed to claims arising from the consequences of terrorist acts. Terrorist acts can affect both individuals and property, their potential significance can be illustrated by the 11 September 2001 attack on the World Trade Center (WTC) in the USA.
Therefore, SCOR does reinsure and, in some cases, insure, terrorist risks, wherever possible limiting either the event or annual aggregate amount of coverage for damage caused by terrorist acts.
Beyond the potential impact on its non-life portfolio, a terror event could also have an impact on the Group’s life portfolio. 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.
The reserve amount for these risks in addition to the number and the amount of losses are indicated in Section 20.1.6 – Notes to the consolidated financial statements, Note 16 – Net Contract Liabilities. Data related to the reserves arising from the risks related to asbestos and environmental pollution is also included in Section 4.1.5 – If SCOR’s reserves prove to be inadequate, its net income, cash flow and financial position may be adversely affected.
For further details on the Group’s reserves refer to Section 6.1.3.5 – Reserves.
4.1.6 SCOR MAY BE ADVERSELY AFFECTED IF ITS CEDENTS, RETROCESSIONAIRES, INSURERS OR MEMBERS OF POOLS IN WHICH IT PARTICIPATES DO NOT RESPECT THEIR OBLIGATIONS
SCOR is subject to a risk of possible non-payment of premiums due by its cedents and/or to the possible non-respect by one or several of its commercial partners, of their commitments to the Group.
The Group transfers a part of its exposure to certain risks to other reinsurers through retrocession arrangements. Under these arrangements, other reinsurers assume a portion of its losses and expenses associated with losses in exchange for a portion of premiums received. When SCOR obtains retrocession, it remains liable to its cedents for that part of the risk that is subsequently transferred to the retrocessionaire and it must meet its obligation even if the retrocessionaire does not meet its obligations to SCOR.
Similarly, when the Group transfers its own operational risks to insurers, it is subject to the risk of the insurers not respecting their obligations. See Section 4.6 – Insurance of specific operational risks (excluding reinsurance activity).
Thus, the non-respect of financial obligations, in particular the payment of premiums, return of funds withheld and payment of claims, of SCOR’s cedents, retrocessionaires, insurers, or members of pools in which it participates could negatively affect its business, present and future revenues, net income, cash flows, financial position, and potentially, its share price. The specific risk linked to the default of the retrocessionaires is provided in Section 4.1.14 –SCOR is exposed to losses due to counterparty default risks or credit risks – B. Receivables from retrocessionaires.
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 those benefiting from higher ratings than the ones of SCOR, may be better positioned to enter new contracts and gain market shares at SCOR’s expense.
The occurrence of any of the foregoing could have a material and adverse effect on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
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. The Group’s Life reinsurance activities and the Business Solutions (large corporate accounts underwritten essentially on a facultative basis and occasionally as direct insurance) business area in Non-Life reinsurance are particularly sensitive to the way its existing and prospective clients perceive its financial strength notably through its ratings. This is also true for the reinsurance treaties business in Non-Life in the US and UK markets. Some of the reinsurance treaties, including the treaties that were entered into with AEGON companies in the course of the acquisition of the mortality reinsurance business of Transamerica Re (see Section 5.1.5 – Important events in the development of the issuer’s business for details on this acquisition), contain termination rights for the cedents triggered by a rating downgrade of the Group. Refer to Section 4.1.10 – A significant portion of SCOR’s contracts contains provisions relating to financial strength which could have an adverse effect on its portfolio of contracts and its financial position.
Some of SCOR’s cedents’ credit models or reinsurance guidelines depend on their reinsurers’ financial rating or face regulatory capital requirements. 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.
4.1.11 OPERATIONAL RISKS, INCLUDING HUMAN ERRORS OR CYBER RISKS, ARE INHERENT TO SCOR’S BUSINESS
Cyber-attacks are very diverse in their sophistication and execution. They include: identity theft, fraud, extortion, malware, pharming, smurfing, phishing, spamming, spoofing, spyware, Trojans horses and viruses, stolen hardware such as laptops or mobile devices, denial-of-service attacks, breach of access, password sniffing, system infiltration, website defacement, exploitation of private and public web browsers, abuse of instant messaging, intellectual property (IP) theft or unauthorized access. The main targeted elements are system functions, data and cash management. The interruption of IT systems could damage commercial activities including underwriting, pricing, reserving, premium and claims payment, commercial support, and financial asset management. Depending on the type of attack, the data could be stolen, deleted or corrupted, or made public in contradiction with SCOR’s regulatory or contractual obligations. Any of these could generate a reputational risk, give rise to a breach of SCOR’s legal responsibility, and may result in regulatory sanctions depending on the level of sensitivity of the data or system that is successfully attacked.
The impact for the group depends on the type of attack, the time interval to detect it and its size compared to the Group and the market. In case of a successful cyber-attack, this could have a material and adverse effect on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price. The failure to attract or retain the necessary personnel could have a material adverse effect on SCOR’s results and/or financial condition. As a global financial services organization with a multi-centric management structure, the Group relies, to a considerable extent, on the quality of local management in the regions and countries in which it operates. The success of its operations is dependent, among other things, on its ability to attract and retain highly qualified professional people on a global scale. Competition for such key people in most countries in which it operates is intense. SCOR’s ability to attract and retain key people, and in particular directors, experienced managers and investment managers, fund managers, underwriters and actuaries, is dependent on a number of factors, including prevailing market conditions and compensation packages offered by companies competing for the same talent. If SCOR is unable to attract or retain key personnel, this could have a material and adverse effect on its financial condition, results of operations and business. SCOR’s modeling, underwriting, price calculation and information technology and application systems are critical to the operation of its businesses. Moreover, its proprietary technology and applications are an important part of the Group’s underwriting and claims management processes and are a contributing factor to its competitiveness. It is, therefore, exposed to malfunctioning, or errors and omissions in feeding the systems, a major breakdown in its IT systems, outages, disruptions due to viruses, attacks by hackers and theft of data. SCOR is also exposed to risks relating to the integration of the underlying data of newly acquired companies into its operating and financial accounting IT systems. A major defect or failure in SCOR’s internal controls or IT and application systems could result in a loss of efficiency of its teams, harm to its reputation, increase in the risk of external fraud, or increased expense or financial loss.
Risk management requires, among other things, policies and procedures to be rolled out across the Group in order to monitor and manage the risks related to SCOR’s main operations and transactions. However, SCOR’s risk management policies and procedures may not be sufficient. Many of its methods for managing risk and exposures are based upon the use of observed historical market behavior, of statistics based on historical models, or the use of expert judgment. As a result, these methods may not fully predict future exposures, which can be significantly greater than the historical measures indicate, particularly in unusual markets and environments. Other risk management methods depend upon the evaluation of information regarding markets, clients, catastrophe occurrence or other matters that is publicly available or otherwise accessible to SCOR. This information may not always be accurate, complete, up-to-date or properly evaluated. Furthermore, the Group cannot exclude the possibility of exceeding SCOR’s risk tolerance limits due to an incorrect estimation of its risks and exposures. If its policies and procedures prove to be insufficient, this could have an adverse impact on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price. See Appendix B – II. Internal control and risk management procedures, C. Principal activities and participants of risk control for information on risk mitigation actions.
In recent years, SCOR has completed a number of acquisitions around the world. The Group may make further acquisitions in the future. Growth by acquisition involves 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, all of which could materially adversely affect SCOR’s businesses, financial condition and results of operations. Future acquisitions may have a dilutive effect on the ownership and voting percentages of existing shareholders. The Group may also finance future acquisitions with debt issuances or by entering into credit facilities, each of which could adversely affect its business, present and future revenues, net income, cash flows, financial position, and potentially, its share price.
A failure to successfully manage the operational challenges and risks associated with or resulting from acquisitions could adversely affect its business, present and future revenues, net income, cash flows, financial position, and potentially, its share price. The businesses SCOR has recently acquired are described in Section 5 – 5.1.5 Important events in the development of the issuer’s business.
The success of SCOR’s business combinations will be assessed with regards to the success of the integration into the Group. However, integrations may take longer or may be more difficult than expected. The success of integrations will depend, notably, on the ability to maintain the former client base, 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.
Since August 2011, the majority of the mortality reinsurance business in the United States of the former Transamerica Reinsurance Co. ("Transamerica Re") 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”) and have a material adverse effect on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
Due notably to the size and complexities of acquisitions and despite pre-acquisition due diligence work carried out (SCOR not having always been granted complete access to exhaustive data at the time of the acquisition) and the integration work performed to date, there is a risk that not all financial elements may have been fully and/or correctly evaluated or unknown or unexpected financial risks emerge, which may have significant consequences on the initially estimated impact of the relevant acquisition on the combined Group.
D. SCOR could be exposed to certain litigation matters related to acquired companies
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 effect on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price. For further details, refer to Section 20.1.6 – Notes to the consolidated financial statements, Note 27 – Litigation and Section 4.4.9 – SCOR is exposed to certain litigation matters.
SCOR is mainly exposed to the following credit risks: A. Bond and loan portfolios
Credit risks on fixed and variable income securities cover two areas at risk. Firstly, a deterioration in the financial situation of an issuer (sovereign, public or private) may result in an increase in the relative cost of refinancing and a reduction in the liquidity of the securities issued leading to a reduction in the value of such securities. Secondly, the borrower’s financial situation can cause it to become insolvent and lead to the partial or total loss of coupons and of the principal invested.
The risk of losing all or part of the value of bonds or loans the Group owns could have a material adverse impact on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
SCOR transfers part of its risks to retrocessionaires via retrocession programs. The retrocessionaires then assume, in exchange for the payment of premiums by SCOR, the losses related to claims covered by the retrocession contracts. In the event of default of a retrocessionaire, SCOR would lose the coverage provided by its retrocessionaire whereas it would retain its liability to the cedent for the payment of all claims covered under the reinsurance contract.
The risk of non-performance of retrocessionaire undertakings is set out in Section 4.1.6 – SCOR may be adversely affected by its cedents, retrocessionaires, insurers or members of pools in which it participates do not respect their obligations.
The retrocessionaires’ part in the reserves split by retrocessionaires’ financial rating is included in Section 20.1.6 – Notes to the consolidated financial statements, Note 16 – Net Contract Liabilities. In spite of the measures to control, diversify and reduce the risk of defaults of its retrocessionaires, the occurrence of one or more of such defaults could have a material adverse impact on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
There are three aspects of credit risk related to contracts with cedents. Firstly, SCOR may be exposed to credit risk in relation to amounts deposited with ceding companies in respect of reserves which cover its current and future liabilities. Depositing these amounts does not a priori discharge the Group of its liability towards cedents in case it is not able to recover these amounts in the event of default of cedents. Secondly, SCOR is exposed to a credit risk in the event of a payment default by the cedents of the balance of the profit and loss reinsurance account due under its acceptance of a portion of their risks.
Thirdly, SCOR is exposed to a credit risk in the event of a payment default by the cedents of the premiums due under its acceptance of a portion of their risks. In cases where such an event does not lead to termination of the reinsurance contract, any offset between contractual obligations between the two parties is dependent on court decisions, and it is possible that the Group will remain liable for paying claims without being able to offset the unpaid premiums. Thus, the inability of its cedents to fulfill their financial obligations could affect SCOR’s business, present and future revenues, net income, cash flows, financial position, and potentially, its share price.
The risk of losing all or part of receivables the Group owns could have a material adverse impact on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
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. The inability of one or several banks to return its deposits to SCOR could have a material adverse impact on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
The risk of losing all or part of securities the Group owns could have a material adverse impact on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
This business is situated in many countries, and across a diverse range of risks, cedents and activity sectors.
The aforementioned risks could accumulate in either a single counterparty, in the same sector of activity or the same country. See Section 20.1.6 – Notes to the consolidated financial statements, Note 26, Insurance and financial risk – Credit risk for information on risk mitigation actions.
4.1.15 SCOR IS EXPOSED TO THE RISK OF NO LONGER BEING ABLE TO RETROCEDE LIABILITIES ON ECONOMICALLY VIABLE TERMS AND CONDITIONS
In conclusion, high inflation could have a material adverse effect on SCOR’s business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price. See Section 20.1.6 – Notes to the consolidated financial statements, Note 26, Insurance and financial risk – Market risk for information on risk mitigation actions.
The Group’s liabilities could be exposed to a protracted period of deflation which could exert a negative pressure on reinsurance prices and decrease the value of new premiums. A protracted period of deflation would induce a decrease of interest rates all along the yield curve and may therefore negatively impact the returns on SCOR’s fixed income assets. In addition, the value of SCOR’s equity portfolio might be reduced as deflation could reduce the future cash flows of the companies whose stocks are part of the Group’s portfolio. In conclusion, a protracted episode of deflation could have a material adverse effect on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
During periods of declining interest rates, income from investments is likely to fall due to investment of net cash flows 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. In addition, in these periods of declining interest rates, fixedincome securities are more likely to be redeemed early in cases where bond issuers benefit from an early redemption
The impact of a uniform drop of 10% in equity markets is included in Section 20.1.6 – Notes to the consolidated financial statements, Note 26 – Insurance and Financial Risk.
SCOR holds in its investment portfolio some securities related to insurance risks (e.g. Insurance Linked Securities (“ILS”)). These securities can be indexed bonds ("CAT bonds"), Over-The-Counter (“OTC”) i.e. Insurance Loss Warranty (“ILW”) or collateralized reinsurance. Such securities could be impacted by the occurrence of insurance risks (e.g. natural catastrophe, mortality etc.) that could significantly result in changes in value, or even possibly the full loss of the invested amount. These risks could also have a significant impact on the liquidity of these securities.
SCOR publishes its consolidated financial statements in Euros, but a significant part of its income and expenses, as well as its assets and liabilities, are denominated in currencies other than the Euro. Consequently, fluctuations in the exchange rates used to convert these currencies into Euros may have a significant impact on its reported net income and net equity from year to year.
SCOR’s main non-French legal entities are located in Ireland, Switzerland, the Americas, the UK and Asia/Pacific. The shareholders’ equity of these entities is denominated mainly in Euros, US dollars, British pounds, Canadian dollars or Australian dollars.
As a result, changes in the exchange rates used to convert foreign currencies into Euros, particularly the fluctuation of the US dollar against the Euro, have had and may have in the future, an adverse effect on the Group’s consolidated shareholders’ equity. SCOR does not fully hedge its exposure to this risk. The impact of the fluctuation in the exchange
rates used to translate foreign currencies into Euros on its consolidated shareholders’ equity is described in Section 20.1.5 – Consolidated Statements of Changes in Shareholders’ Equity.
Forward sales and purchases of currencies are included in Section 20.1.6 – Notes to the consolidated financial statements, Note 8 – Derivative Instruments.
In spite of the measures to control and reduce SCOR’s exposure to fluctuations of exchange rates of major currencies, such fluctuation could have a material adverse impact on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
4.2.5 THE VALUATION OF SCOR’S INTANGIBLE ASSETS AND DEFERRED TAX ASSETS MAY SIGNIFICANTLY AFFECT ITS SHAREHOLDERS’ EQUITY AND THE PRICE OF ITS SECURITIES
4.3 Liquidity risk The Group undertakes specific reviews of its liquidity risk and considers it is able to face forthcoming settlement dates. Forthcoming settlement dates are estimated based on reasonable hypotheses and are composed of the following: incurred and future claims, re-insurance commissions, profit sharing granted to cedents, payments to suppliers, operating expenses, and other settlements, for which related amounts are not material for the analysis of the liquidity risk.
Liquidity risk is increased in situations of market disruption as SCOR may need to sell a significant portion of its assets quickly and at unfavorable terms.
Information on SCOR’s letter of credit facilities is included in Section 20.1.6 - Notes to consolidated financial statements, Note 25 – Commitments Received and Granted.
4.3.2 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 reinsurance sector has been exposed in the past – and may be in the future – to involvement in legal proceedings, regulatory inquiries and actions by various administrative and regulatory authorities, as well as to regulation concerning certain practices used in the insurance sector. This involvement notably concerned agreements over the payment of “contingency commissions” by insurance companies to their agents or brokers and the consequences of such payments on competition between insurance operators, as well as the accounting of various alternative risk transfer products.
Adverse changes in laws or regulations or an adverse outcome of these proceedings could have adverse effects on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price. There are no governmental, judicial or arbitration proceedings, including any proceedings SCOR would be aware of, pending or which SCOR could be threatened with, likely to have or having significant impact on SCOR's financial situation or profitability over the last 12 months. See Appendix B – II. Internal control and risk management procedures, C. Principal activities and participants of risk control for information on risk mitigation actions.
4.4.2 SCOR IS SUBJECT TO APPLICABLE LAWS AND REGULATIONS RELATING TO SANCTIONS AND ANTIBRIBERY, THE VIOLATION OF WHICH COULD ADVERSELY AFFECT ITS OPERATIONS
Although the Group has policies, controls and training in place that are designed to ensure compliance with these aforementioned laws and regulations, it is possible that an employee or service provider could fail to comply with applicable laws and regulations. In such event, the Group could be exposed to civil penalties, criminal penalties and other sanctions, including fines or other punitive actions. In addition, such violations could damage the Group’s business and/or reputation, and could have a material adverse impact on SCOR’s present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
4.4.3 SCOR IS EXPOSED TO RISKS LINKED WITH THE SOLVENCY II DIRECTIVE IMPLEMENTATION
The “Solvency II” European Directive, no. 2009/138/EC of 25 November 2009, published in the Official Journal of the European Union on 17 December 2009, related to the solvency standards applicable to insurers and reinsurers ("Solvency II Directive"), lays down, at the level of individual companies and at the level of groups, the minimum amounts of financial resources that insurers and reinsurers operating in the European Economic Area will be required to
Although it is difficult to quantify the impact and the scope of these requirements, it is very likely that risk management and control measures will be reinforced for reinsurers in the near future, which may in turn result in an increase in regulatory capital requirements (or a reduction in the underwriting capacity) and increase their operating costs. This could have a material adverse impact on SCOR’s business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
The official date of entry into force of the Solvency II Directive is 1 January 2016. Detailed legal requirements that are necessary to make the Solvency II regime effective remain to be definitely adopted, at both European and national level. These will be finalized in the course of 2015 in Level 2 delegated acts and technical standards. EU Member States shall ensure the full transposition of the Solvency II Directive on 31 March 2015. SCOR intends to use its internal model for the purpose of calculating its regulatory capital requirements. This use is subject to supervisory authorities approval in 2015. Delays in the application of Solvency II may increase the costs of implementation. Inversely, a fast implementation of certain aspects of the new regime could also take place, with the risk of increased cost for SCOR. This could have a material adverse impact on SCOR’s business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
4.4.4 SCOR IS EXPOSED TO THE RISK OF BEING DESIGNATED SYSTEMIC OR TO THE RISK OF ITS PEERS BEING DESIGNATED AS SUCH
4.4.5 INCONSISTENT APPLICATION OF EU DIRECTIVES BY REGULATORS IN DIFFERENT EU MEMBER STATES MAY PLACE SCOR’S BUSINESS AT A COMPETITIVE DISADVANTAGE
The requirements of the regulations ultimately adopted under the Dodd-Frank Act, the effect such regulations will have on the US insurance market and the additional costs of compliance with such regulations is not clear. However, SCOR’s business could be materially and possibly adversely affected by changes to the US system of insurance regulation or its designation or the designation of insurers or reinsurers with which it does business as systemically significant non-bank financial companies. This could have a material adverse impact on SCOR’s business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
See Appendix B – II. Internal control and risk management procedures, C. Principal activities and participants of risk control for further information on risk mitigation actions.
4.4.8 CAPITAL AND LIQUIDITY MAY NOT BE COMPLETELY FUNGIBLE BETWEEN DIFFERENT REGULATED LEGAL ENTITIES, WHICH MAY HAVE NEGATIVE CONSEQUENCES FOR THE LEGAL ENTITIES
SCOR’s regulated legal entities must satisfy local regulatory capital requirements and must have sufficient liquidity to pay claims and expenses. In certain circumstances, it may be difficult, due to local regulatory constraints, to transfer capital or liquidity from one legal entity to another, and in particular from one subsidiary or a branch to another, or to the parent legal entity. This may have negative consequences for the legal entity concerned and could have a material adverse impact on SCOR’s business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price. In addition, there are currently regulatory developments and discussion for global standards ongoing which may impact SCOR in the future.
An unfavorable outcome in one or more of these court or arbitration proceedings could have a material adverse impact on SCOR’s business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
SCOR operates in numerous tax jurisdictions around the world. Tax risk is the risk associated with changes in tax law or in the interpretation of tax law. This risk is increased by the instability of the regulatory tax environment in some countries in which SCOR operates, including topics such as deferred tax assets (DTA) recovery or derecognition. Additionally, tax laws and regulations may change with retroactive impact. Tax risk also includes the risk of changes in tax rates and the risk of failure to comply with procedures required by tax authorities. Failure to manage tax risks could lead to an additional tax charge. It could also lead to a financial penalty for failure to comply with required tax procedures or other aspects of tax law. If, as a result of a particular tax risk materializing, the tax costs associated with particular transactions are higher than anticipated, it could affect the profitability of those transactions.
4.6 Insurance of specific operational risks (excluding reinsurance activity) (1) SCOR is exposed to specific operational risks. See Section 4.1.11 – Operational risks, including human errors or cyber risks, are inherent to SCOR’s business, some of which are transferred in whole or in part to direct insurers as follows:  The properties and other assets of SCOR and its subsidiaries are covered locally through property and fire damage as well as IT risk policies.
Nevertheless, these insurance covers could prove to be insufficient. In case of a loss, the insurance companies could also possibly contest their liability towards SCOR. This could have a material adverse impact on SCOR’s business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
The Company was incorporated on 16 August 1855, as a limited partnership company, under the name Compagnie Impériale des Voitures de Paris. The Company then took the form of a limited liability company and changed its name to SCOR S.A. on 16 October 1989. Consecutively, in 1990, SCOR SA absorbed the Société Commerciale de Réassurance created in 1970 and carried on the reinsurance business of the latter. On 13 May 1996, SCOR SA changed its name to SCOR. On 25 June 2007, SCOR changed its company form to a European Company (Societas Europaea) and became SCOR SE. On 25 April 2013, the Company’s length of life was extended for 99 years by decision of the Extraordinary General Meeting.
5.1.4 DOMICILE AND LEGAL FORM OF THE ISSUER, LEGISLATION GOVERNING ITS ACTIVITIES, COUNTRY OF INCORPORATION, ADDRESS AND TELEPHONE NUMBER OF ITS REGISTERED OFFICE
On 24 May 2007, the annual General Shareholders’ Meeting approved the conversion of the Company into a European Company or Societas Europaea, pursuant to Articles 1 §1, 2 §4 and 37 of the SE Regulation, and Article L. 225-245-1 of the Commercial Code, thereby becoming, on 25 June 2007, the first French listed company to adopt the Societas Europaea statute.
Following approval of this conversion, SCOR SE is registered with the Nanterre Trade and Companies Register under the corporate name SCOR SE and has taken the form of a European company as at the date of such registration. The Company was relocated in Paris further to a decision of the Board dated 7 March 2012, ratified by the Extraordinary General Meeting held on 3 May 2012 and thus registered with the Paris Trade and Companies Register from this date. The conversion did not result in either the dissolution of SCOR SE or the creation of a new legal entity.
Following the reorganization of Euronext indices on 3 January 2005, the Ordinary Shares are now included notably in the following indices: SBF 80, SBF 120, CAC All-Shares, CAC LARGE 60, CAC Next 20, CAC Financials, CAC All Tradable and EURONEXT 100. The SBF 120 and 250 consist of the 120 most actively traded French stocks and the 250 largest stocks by capitalization. The SBF 80 is made up of the SBF120 stocks not included in the CAC 40 index, which are the most traded on the continuous segments. EURONEXT 100 index comprises the 100 largest and most liquid stocks traded on Euronext. The CAC All-shares index is composed of all the stocks listed on Euronext Paris for which annual velocity ratio exceeds 5% of their shares. The CAC Next 20 index includes the most representatives stocks in terms of free float adjusted capitalization and turnover not included in the CAC 40 index. The CAC Large 60 index is composed of the constituents of the CAC 40 and CAC Next 20 indices. The CAC All Tradable index includes all the stocks of the Euronext Paris market with an annual free float velocity over 20%. SCOR SE has been included in the “EuroStoxx Select Dividend 30” index of the 30 most attractive European companies in terms of dividends since 12 March 2010.
 the ACPR is authorized to address prevention measures and to issue warnings to a monitored company or its executives.
In the UK, SCOR UK Company Limited is regulated by the Prudential Regulation Authority while subsidiaries in Ireland are regulated by the Central Bank of Ireland. In Sweden, the Group transformed its Swedish subsidiary into a branch which, since 2013, is no longer regulated by the Swedish FSA.
In the United States, the Group’s reinsurance and insurance subsidiaries are regulated primarily by the insurance regulators in the state in which they are domiciled, but they are also subject to regulations in each state in which they are authorized or licensed. SCOR Reinsurance Company, the Group’s main Non-Life subsidiary in the United States, is domiciled in the State of New York and SCOR Global Life Americas Reinsurance Company and SCOR Global Life USA Reinsurance Company, the Group’s main Life insurance subsidiaries in the United States, are domiciled respectively in North Carolina and in Delaware. The Group’s other subsidiaries in the United States are currently domiciled in Arizona New York and Delaware.
In July 1996, SCOR acquired the reinsurance portfolio of the American insurer Allstate Insurance Company, which doubled its then existing US business. In 2000, SCOR acquired Partner Re Life, a US life reinsurer, thus gaining a platform from which to expand its then existing life reinsurance business in the US market.
In 2003, the Group reorganized its Life reinsurance business. The companies of the Group transferred to SCOR Vie and its subsidiaries all of the Group’s Life reinsurance business throughout the world. SCOR Vie, whose corporate name was changed to SCOR Global Life in 2006, and which became a European Company (Societas Europaea) in 2007, along with its subsidiaries, are all directly or indirectly wholly owned by its parent company, SCOR SE. On 16 May 2006, SCOR transferred all of its Non-Life reinsurance business in Europe, including Property & Casualty Treaties (including Credit & Surety business). Large Corporate Accounts and Construction reinsurance to Société
Putéolienne de Participations, a French subsidiary wholly owned by SCOR, whose corporate name was changed to SCOR Global P&C, effective retroactively to 1 January 2006. In 2007, SCOR Global P&C adopted the European Company (Societas Europaea) statute via a merger by absorption of SCOR Deutschland Rückversicherungs AG and SCOR Italia Riassicurazioni SpA.
On 21 November 2006, SCOR completed the acquisition of Revios Rueckversicherung AG (“Revios”), which secured its position as a top worldwide Life reinsurer. Based in Cologne (Germany), Revios was the former Life reinsurance unit of Gerling Global Re Group, which developed successfully autonomously from 2002 onward. Revios had since developed into one of the leading European reinsurers specializing in Life reinsurance, with offices in 17 countries. SCOR combined Revios and SCOR Vie to create SCOR Global Life SE. SCOR Global Life SE is now one of its three primary operational entities (along with SCOR Global P&C SE and SCOR Global Investments SE, described below), with responsibility for the Life reinsurance business.
On 10 January 2007, SCOR increased the level of its investment (which stood at 10.2% since 1994) to 39.7% of the share capital and 40.2% of the voting rights of ReMark Group BV (“ReMark”) and on 22 August 2007, SCOR Global Life SE announced that it held 98.67% of the share capital of ReMark. Since 2009, SCOR Global Life SE holds 100% of the share capital of ReMark. Established in 1984, ReMark is an important player of the direct global marketing of Life insurance products.
On 27 November 2008, SCOR announced its decision to establish a fully-fledged composite subsidiary to continue to develop its Life and Non-Life activities in Russia. SCOR Perestrakhovaniye has been incorporated in December 2008 in Moscow and obtained its license to operate in 2009.
On 18 July 2009, SCOR Global Life US Reinsurance Company, a wholly-owned subsidiary of the Group, reached a definitive agreement to acquire XL Re Life America Inc., a subsidiary of XL Capital Ltd, for an amount of EUR 31 million. The acquisition closed on 4 December 2009. The acquisition helped SCOR Global Life SE strengthen its services in the mortality protection field and reinforce its position in the US Life reinsurance market.
On 18 November 2009, SCOR Global Life launched SCOR Telemed to prove clients with value-added services in the field of tele-underwriting.
On 20 January 2011, SCOR successfully placed on the Swiss franc market perpetual subordinated notes with a first call date in August 2016, for an aggregate total amount of CHF 400 million. On 11 May 2011, SCOR successfully placed CHF 225 million additional perpetual subordinated notes on the Swiss franc market. These notes are interchangeable with those of the placement announced on 20 January 2011, and the conditions are similar to those of this placement. On 18 May 2011, SCOR Global Life opened a subsidiary in Sydney (Australia) for the Australian and New Zealand markets, after the Australian Prudential Regulation Authority granted SCOR Global Life Australia Pty Limited the authorization to conduct reinsurance business in the Australian market. On 8 July 2011, the subsidiary of SCOR SE, SCOR Alternative Investments SA, was registered by the Commission de Surveillance du Secteur Financier (“CSSF”) in Luxembourg as a company in charge of the management of the portfolio of assets specialized in the asset class, known as “Insurance-Linked Securities” (“ILS”). SCOR Global Investments SE having then obtained the approval from the CSSF to manage its ILS portfolios, SCOR Alternative Investments SA was sold on 17 April 2014.
On 29 May 2013, SCOR acquired a 59.9 % stake in the capital of MRM S.A., a listed real estate company subject to the French REIT régime (“Régime des sociétés d’investissements immobiliers cotées” or “SIIC”), as part of a cash capital increase, after the restructuring of MRM S.A. group’s banking and bond debts. This investment amounts to EUR 53.3 million. On 10 September 2013, SCOR successfully placed on the Swiss franc market perpetual subordinated notes with a first call date on 30 November 2018, for an aggregate total amount of CHF 250 million. The first installment of the early repayment SCOR option is set to occur on 30 November 2018. On 1 October 2013, SCOR finalized the acquisition of the Generali life reinsurance operations in the US (Generali U.S. Holdings, Inc. “Generali U.S.”, after having obtained all the necessary regulatory approvals. Further to this transaction, the main operating company, Generali USA Life Reassurance Company changed its name to SCOR Global Life USA Reinsurance Company. This acquisition, which was announced on 4 June 2013, amounted to a total consideration of EUR 573 million (USD 774 million) including a 2013 earnings adjustment. The transaction was financed by SCOR without the issuance of new shares. The combination of SCOR Global Life Americas and Generali U.S. creates the market leader in the US Life reinsurance market. On 4 December 2013, SCOR Global Life SE, a subsidiary of SCOR SE, entered into an innovative longevity transaction with the Netherlands-based insurer Aegon. The transaction covers underlying longevity reserves in the Netherlands of EUR 1.4 billion. It has a maturity of 20 years with a commutation reflecting an estimation of the remaining exposure at year 20. SCOR is taking a leading role with a 50% share in reinsuring the residual trend risk. The effective date of the transaction is retrospectively 1 January 2013. On 6 March 2014, SCOR Global Life SE entered into a longevity transaction with the UK-based insurer Aviva. The transaction covers pensions in payment of some 19,000 pensioners who are members of the Aviva Staff Pension Scheme. The risk of these members living longer is transferred from Aviva’s pension scheme to the reinsurance market. The associated liabilities are approximately GBP 5 billion, which makes this the largest pension scheme longevity swap completed to date globally. SCOR is assuming a meaningful portion of this risk. The effective date of the transaction is 1 January 2014. On 28 March 2014, SCOR Global Life SE entered into a VIF (Value of In-Force) monetization transaction with Mediterráneo Vida, a Spanish insurance company fully owned by Banco Sabadell. This transaction, effective 1 January 2014, will reinsure a portfolio of life policies, covering mortality and permanent disability risks, written by Mediterráneo Vida up to 31 December 2013.
On 23 June 2014, SCOR announced the merger of Hubs existing Cologne and Zurich Hubs, to further strengthen its organizational structure in Europe. The new Hub is effective as of 1 October 2014 and is expected to be fully completed in the first quarter of 2015.
On 24 September 2014, SCOR successfully placed perpetual subordinated notes on the Swiss franc market in the amount of CHF 125 million. The net proceeds of the notes issue will be used for general corporate purposes.
Refer to Section 20.1.6 – Notes to the consolidated financial statements - Note 26 - Insurance and financial risk for the detailed ranking by maturity of fixed-term investments in the Group’s portfolio as at 31 December 2014. Refer to Section 4.2.1 – SCOR faces risks related to its fixed income investment portfolio - and 4.2.2 – SCOR faces risks related to its equity based portfolio, for a description of risk management connected with its investments in debt instruments and equity securities - and 4.2.3 - SCOR is exposed to other risks arising from the investments it owns. Refer to section 5.1.5 - Important events in the development of the issuer's business.
Refer to Section 8 – Property, plant and equipment for a description of our risk management with our investments in real estate.
This plan covers the period mid-2013 to mid-2016 and respects the four cornerstones of the Group - strong franchise, high diversification, controlled risk-appetite and robust capital shield. Continuing on from “Back on Track”, “Moving Forward”, “Dynamic Lift” and “Strong Momentum”, “Optimal Dynamics” is the fifth strategic plan drawn up and implemented by the Group under the chairmanship of Denis Kessler. This plan was approved by the Board of Directors during its meeting of 31 July 2013. With it, the three-year strategic plan “Strong Momentum”, launched in September 2010 and updated following the acquisition of Transamerica Re in August 2011, has come to a successful conclusion.
“Optimal Dynamics” also further refines the Group’s risk profile and capital management. Retrocession strategy is optimized, Assets and Liabilities Management (ALM) strategy enhanced and solvency governance strengthened. Moreover, the Group’s structurally long liquidity position remains strong thanks to the significant operating cashflow from its business engines.
SCOR continues to execute its business initiatives as defined in the plan and continues to focus on capital optimization and technical profitability, in order to provide added value to all its stakeholders.
(1) This is the ratio between the available capital and the Solvency Capital Requirement (SCR)
Risk Preferences Risk preferences are qualitative descriptions of the risks which SCOR is willing to accept. The Group aims to cover a wide range of reinsurance risks and geographical areas. On the other hand, it has no desire to take operational, legal, regulatory, tax and reputational risks. This does not mean that the Group is immune to these risks. These risk preferences determine the risks to be included, in the Group’s underwriting guidelines.
Risk Tolerances Risk Tolerances are the limits required by SCOR’s stakeholders (e.g., clients, shareholders, regulators etc.). The Board of Directors defines and approves risk tolerance limits for the Group in terms of solvency, by risk driver, and extreme scenario in order to ensure that the Group’s risk profile remains aligned with its risk appetite framework. SCOR uses various risk measures to verify that its exposures remain within these limits. These measures can take several forms depending on the technical constraints or the level of information available and are based on either internal model outputs, scenarios or expert opinions.
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. Such dependence may expose reinsurers in general, including SCOR, to the possibility that the ceding companies have not adequately evaluated the risks to be reinsured and, therefore, that the premiums ceded in connection therewith may not adequately compensate the reinsurer for the risk assumed. The reinsurer’s evaluation of the ceding company’s risk management and underwriting practices and policies, as well as claims settlement practices and procedures, therefore, will usually impact the pricing of the treaty.
With respect to proportional (or quota share) reinsurance, the reinsurer, in return for a predetermined portion or share of the insurance premium charged by the ceding company, indemnifies the ceding company against the same portion of the losses of the ceding company under the covered insurance contract(s). In the case of reinsurance written on a nonproportional, through an excess of loss or a stop loss, basis, the reinsurer indemnifies the ceding company against all or 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.
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.
SCOR writes direct insurance, primarily on a business-to-business basis to cover on P&C certain large industrial risks through the Business Solutions domain of SCOR Global P&C and through the participation in Lloyd’s syndicates among which Channel 2015, for which SCOR is the sole capital provider as well as through some participations in Business Ventures and partnerships. For a description of products and services, see Section 6.1.2.1 – Non-Life reinsurance. Before the sale of Investors Insurance Corporation, SCOR Global Life also offered fixed annuity contracts in the US direct insurance markets.
SCOR’s cost center is referred to in this Registration Document as “Group Functions”. Group Functions is not an operating division 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 division. 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 Chief Operations Departments functions (Group Legal, Group Communication, Group Human Resources) 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 five regional management platforms, or “Hubs” located in Paris, Zurich/Cologne and London for Europe, Singapore for Asia and New York / Charlotte / Kansas City for the Americas Hub. 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 divisions based on allocation keys. For a description of the Hub structure, see Section 7.1.1.5 - The Hub Structure.
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 31 December 2014, the Group serves more than 4000 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’s Non-Life division is divided into four business areas:  Property and Casualty Treaties;  Specialty Treaties;  Business Solutions (large corporate accounts underwriting); and
SCOR's Property and Casualty Treaties business area underwrites proportional and non-proportional reinsurance treaties. Property SCOR's property treaties typically cover damages to the underlying assets (automobile and industrial and commercial lines of business) and direct or contingent business interruption losses caused by fire or other perils, including natural catastrophes.
Space Insurance for the space sector covers the launch preparation, launch, and the in-orbit life operation of satellites, primarily commercial telecommunication and earth observation satellites.
Marine 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.
Engineering Engineering insurance, which is divided into Construction All Risks and Erection All Risks insurance, includes basic Property and Casualty coverage and may be extended to the financial consequences of a delay in start-up (advanced loss of profits) caused by losses indemnifiable under Property and Casualty coverage.
Agricultural Risks The Group provides insurance/reinsurance solutions in the field of multiple peril crop, aquaculture, forestry and livestock insurance.
Alternative Solutions 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 new business unit, launched in May 2014, combines the division’s expertise in terms of Structured Risk Transfer (SRT), Alternative Risk Financing (ARF) and Insurance Linked Securities (ILS).
Natural Resources Natural Resources provides coverage to midstream and downstream business (main business sectors being oil and gas, refining, petrochemicals, liquefaction, gasification, power generation and distribution, new energy sources and mining), and to upstream business (oil and gas exploration and production, offshore construction) and shipbuilding industrial groups and oil services companies. Industrial & Commercial Risks Industrial & Commercial Risks provides coverage to manufacturing and heavy industries (automotive, pulp and paper, aeronautics / defense, high tech) and finance and services (infrastructures, intellectual services, general contractors, distribution and trading).
SCOR's Business Ventures and Partnerships business area has historically included the provision of capital to third party businesses, including Lloyd’s syndicates. SCOR contributes to several Lloyds syndicates with various participations, including Channel 2015, for which SCOR is the sole capital provider.
(1) In the context of the Optimal Dynamics strategic plan, SCOR Global Life's products were grouped per business area, rather than the nine lines of business disclosed in the 2012 Registration Document and previous financial reporting
Personal Accident Personal Accident insurance pays a lump sum benefit if the insured person dies or suffers from a serious injury as a result of an accident.
Longevity Solutions refer to products covering the risk of negative deviation from expected results due to the insured or annuitant living longer than assumed in the pricing of insurance covers provided by insurers or pension funds. Longevity Solutions cover traditional biometric risks.
Underwriting cross-reviews are initiated by SCOR Global P&C Risk Management to evaluate the quality of underwriting, pricing and claims handling of particular business units or certain lines of business, to identify and assess risks, to evaluate the appropriateness and effectiveness of controls and to propose risk-management measures, including mitigating actions. Life Business SCOR Global Life’s core business is to reinsure underlying biometric risks, which are the risks related to human life conditions, e.g. in mortality, morbidity and longevity. As a reinsurer, SCOR Global Life is exposed to adverse developments in these biometric risks, to lapse risks, to antiselection risks and to pandemic/epidemic risks.
 Lapse risks are mitigated through appropriate reinsurance treaty clauses, as well as product, client and market diversification.
 Peak Mortality, Disability and Critical Illness risks are covered either by surplus per life retrocession programs, or in some cases, by excess of loss per life or per event retrocessional coverage. Pandemic risk exposure is mitigated by a risk transfer contract with Atlas IX Capital Limited (“Atlas IX”) which provides SCOR Global Life with protection against extreme mortality events in the US.
The underwriting of Life business within the Group is under the worldwide responsibility of SCOR Global Life. The clients are life, pension or accident and health insurance companies worldwide. They are served by SCOR's specialized underwriters and actuaries who are familiar with the specific features of the markets in which they operate, in particular with local lines of business and policy conditions, as well as the technical specifics such as mortality tables, morbidity incidence rates and persistency rates. In the Life underwriting process, consideration is typically given to the quality of the client’s medical and financial underwriting standards, the target clientele of the ceding company, as well as past experience to the extent credible data is available.
For the year ended 31 December 2014, for Life the largest brokers SCOR wrote gross premiums written with were AON Benfield with approximately 3% and Willis with approximately 1%. For Non-Life, the largest brokers that the Group wrote gross premium with were AON Benfield with approximately 21% Guy Carpenter with approximately 15% and Willis Gras Savoye with approximately 10% of total gross written premiums in the Non-Life segment.
The claims handling function is performed by the claims teams, located in Paris, New York, Zurich/Cologne, London and Singapore, which review, process and monitor reported claims. The P&C Claims & Commutations function supports and controls the day-to-day activity and takes over the direct management of large, litigious, serial and latent claims. Additionally, periodic audits are conducted on specific claims and lines of business, and claims processing and procedures are examined at the ceding companies’ offices with the aim of evaluating their claims adjusting process, valuation of case reserves and overall performance.
Non-Life Catastrophe management is split into three sections under SCOR Global P&C: portfolio accumulation, optimization and procedures; research and development; and modeling in support of underwriting. Descriptive guidelines for each of the main business processes are available: “catastrophe methodologies”, “data quality & modeling”, “accumulation control”, “Cat pricing” and “system & processes”. For Cat pricing, a matrix organization described in the guidelines has been implemented in each Hub, distributing the responsibility of Cat pricing to the Cat modelers, the pricing actuaries or the underwriter. In addition, a system of Cat referrals has been introduced in excess of a given threshold. For all SCOR's property business, it evaluates the accumulations generated by potential natural events and other risks. Pursuant to the rules and procedures, Regional Managers from SCOR’s natural catastrophes risks modeling team monitor the structure of the portfolio for each region or country and the data is consolidated under the supervision of the Head of natural catastrophes risks modeling.
The Group tracks natural catastrophe accumulation (earthquakes, wind and flood perils…) for all exposed countries worldwide. Depending on the region of the world and the peril in question, it uses a variety of techniques to evaluate and manage its total exposure. The Group quantifies this exposure and monitors its risk tolerance in terms of a Probable Maximum Loss. It measures this risk metric, taking into account policy limits, as the probable maximum loss caused by a catastrophe affecting a geographic area, such as a storm, hurricane or earthquake, and occurring within a given return period. SCOR estimates that its probable maximum losses for catastrophes, before retrocession, come from windstorms in Europe, hurricanes in the US and Caribbean typhoons in Japan or from earthquakes in Japan or the US.
The Group makes extensive use of proprietary external models from industry-leading catastrophe model suppliers, including Risk Management Solutions RiskLink® (“RMS”) and AIR Worldwide Catrader® (“AIR”). In addition, it has access to local cat model expertise for Australia from Risk Frontiers, a commercial provider of tools developed at Macquarie University. Access to multiple external models allows the Group to better appreciate the strengths and limitations of each model and make adjustments where appropriate, and it is well equipped with alumni from the main model providers.
Since 2011, SCOR has operationally used the RMS modeling results format as its common framework for assessing accumulations of natural catastrophe risk, including catastrophe risk management controls (Capacity Monitoring) and provision of data to its internal capital models, and retrocession department.
SCOR is making use of the RMS model for infectious diseases in order to assess the exposure to catastrophe risk arising from global and regional pandemics. This exposure is monitored throughout the year against SCOR’s defined risk limits and used for decisions on mitigating measures. Specifically designed retrocession programs aim at protecting its Life reinsurance business. One program protects assumed catastrophe excess of loss acceptances; the other protects the retained lines in respect of all other acceptances.
The Non-Life and Life reserves adequacy are controlled on a quarterly basis by internal actuaries at division level as well at the Group level by the Group Chief Actuary who signs off on the reserving adequacy and reports to the Executive committee and to the Audit Committee. External consulting firms also review on a regular basis the Non-Life reserves. Life reserving assumptions are reviewed as well by an external firm in the framework of the embedded value calculation. If necessary, internal audits of its portfolios are performed. The Chief Reserving Actuaries of the divisions own the primary role to overview the reserves of their respective division, to assure consistency in the reserving methods and to enhance the reserving governance. The Group Chief Actuary controls the validation and testing of reserving tools, workflows, assumptions and processes. Centrally defined and tightly controlled reserving process, strong portfolio diversification, prudent reserving policy, sound reserving tools and, state of the art actuarial methods used by highly skilled professionals and high level of transparency, both internally and externally, tends to minimize the risk of inadequate reserves. However, the Group is subject to all of the factors of uncertainty mentioned above and, in consequence, to the risk that its reserves are inadequate compared to its liabilities.
See Section 4.1.5 - If SCOR's reserves prove to be inadequate, its net income, cash flow and financial position may be adversely affected for further information on reserves.
Conforming to applicable regulatory requirements and in accordance with industry practices, the Group maintains in addition to outstanding claims reserves, IBNR Reserves. These reserves represent:  the estimated final amount that may be paid by the Group on losses or events that have occurred, but are not yet reported to the ceding company or to the SCOR entity concerned; and
 the estimated cost variation on claims already reported to the Group. In determining the amount of its reserves, the Group generally uses actuarial techniques that take into account quantitative loss experience data, together with qualitative factors, where appropriate. The reserves are also adjusted to reflect reinsurance treaty terms and conditions, the variety of claims processing that may potentially affect the Group's commitment over time. With the exception of the reserves for worker’s compensation in the USA most of the reserves of Commercial Risk Partners ("CRP"), the former Bermudan entity of the Group now in run-off and merged within GSNIC, which are discounted pursuant to American and Bermudan regulations, and French motor annuities, the Group does not discount Non-Life reserves.
A table showing historical changes in reserves for Non-Life claims is provided in Section 20.1.6 - Notes to the consolidated financial statements, Note 16 – Net Contract liabilities. The Group continues to pursue the active commutations policy of its portfolios initiated in 2003, the main goals being to reduce the volatility of claims reserves, to reduce the administrative costs particularly of the oldest reserves, and to allow the reallocation of capital. This policy will be continued by focusing efforts on the US run-off activities, business exposed to asbestos and pollution risks and some treaties written by the former Converium company acquired by SCOR in 2007.
For SCOR’s Life business, it is required to maintain adequate reserves to reflect the liability for future claims and benefit payments resulting from life reinsurance treaties, mainly mathematical reserves and claim reserves for losses.
The mathematical reserves are established on initial recognition of a contract on the basis of the Group’s best estimates’ assumptions and allow for an adequate safety margin for the risks of change, error and random fluctuation. They are subject to a liability adequacy test.
monitored upon receipt of any information on retrocessionaires and automatic feeding of retrocessionaires rating on a quarterly basis, paying particular attention to the retrocessionaires’ default risk in the treaty renewal period. The Group meets with the security departments of large reinsurance brokers at least twice a year as part of this monitoring. It also analyzes external studies prepared by the security departments of these reinsurance brokers. It reviews its retrocession arrangements periodically, to ensure that they fit closely to the development of its business, and revise its global retrocession program annually. Furthermore, to reduce the credit risk arising from its retrocessionaires, SCOR requests that certain of its retrocessionaires provide that all or a portion of the receivables from its retrocession contracts be supported by collateral (cash deposits, letters of credit, pledging of securities etc.) in its favor.
For further information see Section 4.1.6 – SCOR may be adversely affected if its cedents, retrocessionaires, insurers or members of pools in which it participates do not respect their obligations and Section 4.1.14 – SCOR is exposed to losses due to counterparty default risks or credit risks.
SCOR's Capital Shield Policy includes traditional retrocession as well as the use of alternative risk transfer solutions (e.g., the multi-year securitization of catastrophic risk in the form of catastrophe bonds) and contingent capital facilities, which are designed as tools of last resort. See below for a description of the securitization of catastrophic risk, the Mortality risk transfer contract and the sidecar collateralized with contingent capital facilities. The credit risk that SCOR may be exposed to through these alternative risk transfer solutions can be more limited than the credit risk related to traditional retrocession arrangements because alternative retrocession is usually fully collateralized. Although some traditional retrocessions are also collateralized, the credit risk associated with it depends on the retrocessionaire’s rating. See Section 4.1.15 – SCOR is exposed to the risk of no longer being able to retrocede liabilities on economically viable terms and conditions and Section 4.1.2 – SCOR is exposed to losses from catastrophic events for more information on the risks related to the retrocession.
On 9 December 2009, SCOR completed its retrocession programs with EUR 75 million Atlas VI transaction which provided EUR 75 million of protection against European windstorms and Japanese earthquakes risks until 31 March 2013.
This transaction succeeded Atlas V Capital Limited which provided similar geographical cover as Series 2011-1 for an amount of USD 200 million.
According to the structure of the arrangement, a payment will be triggered if, at any time during the risk period, the observed index value exceeds the defined attachment point of 102%. At any index level between the attachment point and the exhaustion point of 104%, Atlas IX Capital Limited will pay to SCOR a pro-rata amount of the notional USD amounts.
Amounts are recorded in the balance sheet representing the derivative asset recognized at fair value through P&L and other liabilities representing the value of interest payments (See Section 20.1.6 – Notes to the consolidated financial statements, Note 8 – Derivative instruments).
On 6 January 2014, SCOR announced having successfully placed a fully collateralized sidecar, Atlas X Reinsurance Limited (“Atlas X”). It provides the Group with an additional three-year capacity of USD 55.5 million from a new panel of investors. This is in line with SCOR’s policy of pooling in its capital shield all the available capital protection tools, as set out in its new strategic plan “Optimal Dynamics”.
Atlas X is an Irish-domiciled special purpose reinsurance vehicle. Atlas X and SCOR Global P&C SE have entered into a quota share retrocession agreement, effective 1 January 2014, under which Atlas X reinsures a proportional share of SCOR’s diversified property catastrophe portfolios in specific countries. This agreement is accounted for as a reinsurance contract in 2014.
Subsequent to 31 December 2014, SCOR has sponsored a new catastrophe bond, Atlas IX Series 2015-1, which will provide the Group with multi-year risk transfer capacity of USD 150 million for US Named Storm and US and Canada Earthquake events. This transaction replaces the US tranches of Atlas VI Series 2011-1, which matured on 8 January 2015. The risk period for Atlas IX 2015-1 runs from 11 February 2015 to 31 December 2018. The instrument will be accounted for as a derivative instrument.
Fixed income investments are managed by SCOR Global Investments or by external managers monitored by SCOR. In all cases, investment guidelines are provided to managers and strict monitoring is carried out over the global portfolio by the respective Group entities. The tactical allocation of the global portfolio is defined by the Group Investment Committee which meets each quarter at least. It is chaired by the Group’s Chief Executive Officer and is composed of the Group Chief Financial Officer, the Group Chief Risk Officer, the Chief Economist, the Chief Executive Officer of SCOR Global
P&C and the Chief Executive Officer of SCOR Global Life, the Chief Executive Officer of SCOR Global Investments and other representatives of SCOR Global Investments.
SCOR's total exposure to covered and agency MBS in its investment portfolio was EUR 1,940 million at 31 December 2014 (EUR 1,507 million at 31 December 2013). SCOR's total exposure to corporate bonds in its investment portfolio was EUR 5,674 million at 31 December 2014 (EUR 4,609 million at 31 December 2013), of which exposures to Greece, Ireland, Italy, Portugal, and Spain was EUR 180 million (EUR 159 million in 2013), primarily in Italy. SCOR's total exposure to structured and securitized products in its investment portfolio was EUR 1,013 million at 31 December 2014 (EUR 815 million at 31 December 2013).
The portion invested in real estate investments decreased from EUR 861 million at 31 December 2013 to EUR 845 million at 31 December 2014. The liquidity, defined as cash, cash equivalent, short-term government bonds with maturities above three months and below twelve months and bank overdrafts, has decreased from EUR 2,120 million at 31 December 2013 to EUR 940 million at 31 December 2014. For further detail on the investment portfolio for the years ended 31 December 2014 and 2013 see Section 20.1.6 - Notes to the consolidated financial statements, Note 6 - Insurance Business Investments. For a table summarizing the investment income of SCOR for the years ended 31 December 2014, 2013 and 2012 see Section 20.1.6 - Notes to the consolidated financial statements, Note 20 – Investment income.
The following table details the distribution by category of investment of SCOR’s total investments and cash, by net carrying value: As at December 31 2014 2013 2012 In EUR
Real estate investments 845 3.3% 861 3.6% 584 2.6% Available-for-sale equities 726 2.8% 734 3.1% 1,016 4.5% Available-for-sale fixed income 13,958 54.0% 11,333 47.6% 9,651 42.7% Fair value though income equity investments 417 1.6% 322 1.4% 160 0.7% Fair value through income fixed income 33 0.1% 47 0.2% 56 0.2% Loans and receivables (excluding short-term investments) 8,854 34.3% 8,275 34.8% 8,266 36.7% Derivative investments 51 0.2% 94 0.4% 107 0.5% Short-term investments 93 0.4% 606 2.5% 1,269 5.6% Cash and cash equivalents 860 3.3% 1,514 6.4% 1,466 6.5% Total 25,837 100% 23,786 100% 22,575 100%
See Section 20.1.6 – Notes to the consolidated financial statements, Note 6 – Insurance Business Investments for a breakdown of estimated fair values and unrealized gains and losses of fixed income investments by major type of security, including fixed income securities and available for sale as at 31 December 2014, 2013 and 2012.
6.2 Principal markets SCOR is characterized by its strategic positioning aimed at underwriting risks so as to diversify exposure. To this end, the Group seeks to preserve:  The diversification of its business by maintaining a broadly balanced business division split between Life and Non-Life reinsurance. The portfolio business volume split for the year ended 31 December 2014 was approximately 56% for Life reinsurance and 44% for Non-Life reinsurance based on gross written premiums.
See Section 20.1.6 - Notes to the consolidated financial statements, Note 2 – Segment information, for further detail on the results of the divisions.
6.5 Information on SCOR’s competitive position SCOR competes for business in the European, American, Asian and other international markets with numerous international and domestic reinsurance and insurance companies, some of which have a larger market share than its own, greater financial resources and, in certain cases, higher ratings from the rating agencies. Competition in the types of reinsurance and insurance that the Group underwrites is based on many factors, including financial strength as perceived by the rating agencies, customers and their brokers, underwriting expertise, reputation and experience in the lines of reinsurance and insurance written, country of operation, premiums charged, the quality of the proposed reinsurance structures, the services offered and the speed at which claims are paid.
SCOR Global P&C continued to strengthen its competitive position during the January renewals 2014, both with its existing clients and with new cedents. SCOR Global P&C managed to grow gross premiums by 5% during the January 2014 renewals, to EUR 3.4 billion. .
The main business line developments at the 1 January 2014 renewals were as follows:  For P&C Treaties: gross premiums increased by 6% at constant exchange rates, to EUR 1.927 billion, of which 4 percentage points relate to the renewal of the large quota share deals in Asia.
SCOR Global P&C continued to diversify its portfolio towards Asia (32% growth), this region now representing 19% of the P&C Treaty portfolio. In all regions, the growth was accompanied by active portfolio management and a successful handling of clients’ program restructurings. The global insurers’ initiative is bearing fruit, with SCOR achieving growth from this client base despite these clients restructuring and increasing their retentions.
Some segments have benefited from relatively better market conditions, leading to a 6% premium increase in Marine & Energy and a 4% increase in Engineering. The US cat segment represented only 2% of the overall P&C book to be renewed, and witnessed 6% growth thanks to increased shares with large national, multinational and global insurers, more than compensating the reductions on the regional book where pricing and general conditions often viewed as unsatisfactory.
Looking at the January to April 2014 period versus the same period in 2013, the expected gross underwriting ratio increased by 1 percentage point, while the net underwriting ratio was expected to benefit from savings achieved in the retrocession program, as announced in January. The return on allocated capital was nearly stable. The expected profitability of the overall book renewed in April remained well within SCOR Global P&C targets. Given that profit levels of the April and later renewals tend to be higher than in January, these April renewals contributed to improving the 2014 profitability expectation.
Overall, SCOR Global P&C benefited from the composition of its book of business, with 72% of the premiums renewed in April 2014 relating to proportional business, which benefits from sound and generally improving primary insurance trends. As a result of this, the risk-adjusted price reduction was contained at 2.7% overall. A small increase in proportional reinsurance prices (+ 0.3%) partly compensated an 8.3% reduction on non-proportional segments, especially in Property CAT.
On 31 July 2014, SCOR confirmed its strong franchise in delivering resilient June-July 2014 renewals.
SCOR Global Life ranks among the top five life reinsurers worldwide (1) and has grown by 18.1% in Gross Written Premiums in 2014.
In Asia, SCOR Global Life has built a strong franchise and continues to develop it.
The Protection business area was the main driver for premium growth. In mortality, its largest activity, SCOR Global Life has maintained or improved its competitive positions in its main markets (US, Europe):  Mortality: more than 60% of SCOR Global Life’s portfolio is traditional mortality reinsurance business, based on 2014 gross written premiums. SCOR Global Life has built strong positions in Mortality in the US, especially thanks to the acquisition of Transamerica Re in 2011 and of Generali U.S.’s reinsurance activities in 2013, as well as in the major European markets.
 Critical Illness: SCOR Global Life is a market leader in the UK It also leverages its experience and expertise in the UK to expand into selected Asian markets.
(1) Based on 2014 Gross Written Premiums (2) Source: 2013 SOA/ Munich Re survey of US life reinsurance, published in 2014
SCOR Global Life has established itself as a recognized leading longevity reinsurer. To date the main active market for SCOR Global Life is the UK, focusing on longevity risk transfer transactions for large in-payment portfolios, but it has also established an active presence in North America and Continental Europe. SCOR Global Life participated in the longevity transaction with the UK-based insurer Aviva in March 2014. The transaction has associated liabilities of approximately GBP 5 billion and SCOR Global Life is assuming a meaningful portion of this risk under a treaty effective 1 January 2014.
The Group company whose stock is listed on the Euronext Paris regulated market is SCOR SE, the Group parent company. The Group is a twin engine group driven by SCOR Global Life and SCOR Global P&C. Mobilization of skills and expertise, a balance among teams from different entities of the Group, operating efficiency, simplicity of structures, and clarity of reporting lines were the principles that guided the Group's organizational choices. SCOR’s Non-Life division reinsurance operations are conducted under the supervision and management of SCOR Global P&C. The latter carries out its operations through European branches in Spain, Italy, Switzerland, the UK and Germany, and a network of dedicated subsidiaries, branches of SCOR Global P&C SE and representative offices in the UK, the Americas and Asia/Pacific, as well as composite Non-Life/Life subsidiaries of SCOR SE and branches in Russia, South Africa, China, Hong Kong, South Korea and Brazil.
The adoption of the European Company statute by SCOR SE, SCOR Global P&C SE and SCOR Global Life SE, occurred respectively on 25 June, 3 August and 25 July 2007, the registration dates for each company as a Societas Europaea with the Nanterre Trade and Company Register. This registration occurred after: (i) the completion of the negotiations on the involvement of the employees in the various European companies, as stipulated by the legislation governing a European Company, with the special negotiation group (“SNG”) formed for this purpose in July 2006, and representing the employees of the Group; an agreement on the involvement of the employees within SCOR SE and SCOR Global P&C SE was signed with the SNG on 14 May 2007; and (ii) the approval by the Extraordinary Shareholders’ Meeting of each of the companies of the adoption of the Societas Europaea statute. 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 branches, rather than local subsidiaries. The Group is thereby demonstrating its ambition to be a company with European roots and global reach. This legal flexibility is today demonstrated by the speed of the integration process for the European entities of Converium, which became SCOR Holding (Switzerland) AG, in SCOR’s European companies. SCOR Global Investments SE has also been incorporated as a Societas Europaea.
On 8 September 2006, concurrently with the announcement of the upgrade of the rating of the Group’s companies by AM Best, the Group announced a change in its Non-Life reinsurance structures in the United States. This change, which was completed on 31 December 2006, is two-fold: first, SCOR Reinsurance Company acquired 100% of the capital of GSINDA, a company specializing in underwriting “surplus lines”, with a primary insurance license in the United States and, secondly, SCOR acquired GSNIC, an entity entirely dedicated to run-off, from SCOR Reinsurance Company (a subsidiary indirectly wholly owned by SCOR). In this restructuring, SCOR contributed USD 80 million to SCOR Reinsurance Company.
Further to the acquisition on 9 August 2011 of the mortality reinsurance business of Transamerica Re, SCOR Global Life reorganized its activities in the US. Thus, on 20 September 2011, the merger of SCOR Global Life Reinsurance Company of America with and into SCOR Global Life U.S. has been approved by the State of Delaware. Moreover, the State of Delaware also approved, effective 27 September 2011, the change of name of “SCOR Global Life U.S. Re Insurance Company” into “SCOR Global Life Americas Reinsurance Company” (SGL Americas). Further to the acquisition on 1 October 2013 of Generali U.S. Holding, Inc., SCOR Global Life strengthened its activities in the US. In the context of this transaction, Generali USA Life Reassurance Company, the primary operating company, has transferred its location from Missouri to Delaware after obtaining the necessary agreement from both states. The state of Delaware also approved the change of name of “Generali USA Life Reassurance Company” into “SCOR Global Life USA Reinsurance Company”.
Since 2008, SCOR restructured its operations around five regional management platforms, or Hubs: Paris, Zurich / Cologne, London, Singapore and the Hub Americas.
SCOR’s decision to implement the Hub structure stemmed from the desire to realign its organizational structure following the successful consolidation of Revios and Converium. The Hub structure was 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. The Hub structure was implemented in Cologne on 5 May 2008, in London on 20 May 2008, in New York on 18 June 2008, in Singapore on 16 June 2008, in Zurich on 27 January 2009 and in Paris on 24 February 2009. 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 a key competence center of the Hub Americas.
8.1 Major existing or planned property, plant and equipment SCOR owns offices in Paris (France), Cologne (Germany), London (UK), Singapore and Madrid (Spain), where its local entities and subsidiaries have their corporate offices. Any surplus space is leased to third parties as part of SCOR's investment management business. The Group leases office space for its other business locations. It leases space separate from its head office for the purpose of safeguarding its data storage facilities for business continuity planning purposes. The Group believes that the Group’s offices are adequate for its current needs. SCOR owns in London at 10 Lime Street a 5,000 m² office and retail building. As at 31 December 2014, the building was occupied at 53% by SCOR for its London Hub office. The remaining space was rented to third parties. In 2014, SCOR has committed to acquire another building in Lime Street. The acquisition should take place in 2015, at works completion. SCOR moved during Q2 2012 into its new office building in Paris, with more than 20,000 m² located at 5, avenue Kleber 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 28 December 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.
In Cologne, SCOR moved during Q2 2012 into its new office building with more than 6,000 m² located at 10, Goebenstrasse, held by the German branch of SCOR SE “SCOR Rückversicherung Direktion für Deutschland, Niederlassung der SCOR SE“, and fully occupied by SCOR.
SCOR Reinsurance Asia Pacific PTE LTD, signed in October 2013 a sale and purchase agreement to acquire in state of future completion two floors in a leasehold building under construction in Singapore. In 2014, four units of an additional floor were acquired in the same building. As at 31 December 2014, SCOR has not yet the use of the offices which is contingent upon the delivery of the building, expected in 2017. In November 2014, the floors formerly occupied by SCOR in another building were sold. The Madrid office is not material for the Group.
For more information on the Group’s real estate investments, refer to Section 5.2.1 - Principal investments made over the past three financial years, Appendix A – 1.5 – Notes to the corporate financial statements, Note 2.1 – Changes in investments, Note 2.2 – Schedule of investments, Note 15 - Analysis of commitments given and received and Section 20.1.6 – Notes to the Consolidated financial statements, Note 5 – Tangible assets and property related commitments and Note 6 – (C) Real estate investments.
9 OPERATING AND FINANCIAL REVIEW The Group's financial data are presented in Section 3 – Selected financial information and in Section 20.1 – Historical financial information: consolidated financial statements. The commentary below is based on the financial data presented in the aforementioned sections.
9.1 Financial position The strength of the 2014 results and balance sheet demonstrate the effectiveness of SCOR’s strategy which relies on high business and geographical diversification, focusing on traditional reinsurance activity with very limited exposure to reinsurance liabilities with economic activity risks and no material off balance sheet exposure.
Gross benefits and claims paid were EUR 7,835 million, EUR 7,054 million and EUR 6,613 million in 2014, 2013 and 2012, respectively. The level of gross benefits and claims paid for SCOR Global P&C decreased to EUR 2,788 million during 2014 from EUR 2,967 million in 2013 (2012: EUR 2,833 million). For SCOR Global Life the level of gross benefits and claims paid increased to EUR 5,047 million during 2014 from EUR 4,087 million in 2013 (2012: EUR 3,780 million).
The net results of the Group’s retrocession program were EUR (385) million, EUR (453) million and EUR (189) million in 2014, 2013 and 2012, respectively.
The total cost recorded in 2014 "other operating expenses" related to Atlas Cat Bonds and the Mortality transfer contract was EUR 41 million (2013: EUR 44 million). Atlas VII catastrophe bonds are accounted for as a reinsurance contract at the beginning of their coverage period in 2013, due to the presence of an ultimate loss clause.
for the year ended 31 December 2014, down from 5.1% in 2013 and 5.3% in 2012. The management expenses for the years ended 31 December 2014, 2013 and 2012 was EUR 649 million, EUR 599 million and EUR 588 million respectively, on a comparative basis.
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 14.2%, 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. Although 2012 was impacted by higher than expected natural catastrophes (Earthquakes in Italy and Hurricane Sandy) especially in the last quarter of the year, the net income was positively influenced by the strong underlying technical performance of both SCOR Global Life and SCOR Global P&C and the prudent asset management policy of SCOR Global Investments which safeguarded shareholders’ interests while delivering solid returns. In 2012, the effective tax rate was 20.4%. This resulted from a positive geographical rate mix partially offset by a negative EUR 12 million impact from the additional contribution to the 2010 exit tax on the capitalization reserve in France. Return on equity (1) was 9.9%, 11.4% and 9.1% for the years ended 31 December 2014, 2013 and 2012 respectively. Basic earnings per share were EUR 2.75, EUR 2.96 and EUR 2.28 for the years ended 31 December 2014, 2013 and 2012.
The January 2014 renewals have been characterized by a challenging market environment with a number of large and even mid-size insurers reconsidering their protection strategies, reinsurance buying policies, and restructuring their reinsurance programs. The reinsurance market has been witnessing a “tiering” of players, to the benefit of the larger and most diversified ones, operating as true multi-liners in terms of pricing and underwriting capabilities, with a global approach to client relationships. In this context, SCOR Global P&C has been successful in expanding its franchise and crystalizing new business opportunities, while keeping a disciplined underwriting approach, pushing back unsatisfactory terms and conditions and accepting the non-renewal of underpriced business (Refer to Section 12 – Trend information).
Compared to 2013 the growth is driven by the performance of lines of business in P&C treaties (mainly in Motor and Property Proportional portfolio) and by improved geographical diversification towards Asia and the Americas. In 2013, gross written premium increased by 4.3% compared to 2012. At constant exchange rates the growth was 8.3% (particularly due to the appreciation of the Euro) and led to achieve the target growth of the “Strong Momentum” plan over the 3 years period (32.5% at current exchange rates, 35% at constant exchange rates). The growth was mainly driven by the performances of lines of business in P&C treaties and Specialties business (particularly Lloyds, Aviation and Agriculture) and by improved geographical diversification towards Asia, in particular China, India and SIT (Singapore, Indonesia, Thailand) and the Latin American area (Central America, Latin America and Caribbean). In 2012, gross premium written increased by 17% compared to 2011, of which 6% was linked to foreign exchange impact (particularly due to the appreciation of the US Dollar). At constant exchange rates the growth was 11%, above the 9%-10% gross written premium increase announced in “Strong Momentum”. The growth was mainly driven by the performances of lines of business in P&C treaties and natural catastrophes and by improved geographical diversification towards Asia and the Americas.
Combined ratio SCOR Global P&C achieved a net combined ratio (1) of 91.4% in 2014 against 93.9% in 2013 and 94.1% in 2012.
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 Nat Cat compared to 2012. The improvement of the combined ratio in 2012 was in line with expectations in spite of the main events in 2012: hurricane Sandy, Costa Concordia shipwreck, worldwide climate disturbances impacting agriculture in the United States and Brazil, and developments on the floods in Thailand. Impact of natural catastrophes SCOR defines a catastrophe as a natural event involving several risks and causing pre-tax losses, net of retrocession, totaling EUR 3 million or more. The following table highlights losses due to catastrophes for the years 2014, 2013, and 2012: As at 31 December 2014 2013 2012 Number of catastrophes occurred during the financial year 8 (7) 12 (5) 10 (3) In EUR million
Typhoon Haiyan (6) Earthquakes in Italy (20 and 29 May 2012) and Hurricane Sandy’s development impact are included in 2013 cat ratio (7) Including European Hails (Ela), Japan Snowstorm, USA Floods (Warren Michigan) and Cyclone Hudhud (8) Andreas Hailstorm (July 2013) and South Africa Hailstorm’s development impacts are included in 2014 cat ratio
In 2014, SCOR was affected by the following catastrophes which resulted in total net estimated losses of EUR 163 million as at 31 December 2014: In EUR million
Estimated loss net of retrocession as at 31 December 2014 European Hails (Ela) June 2014 82 Japan Snowstorm February 2014 32 USA floods (Warren Michigan) August 2014 16 Cyclone Hudhud October 2014 14 Other natural catastrophes (less than EUR 10 million) 2014 19
Original estimated loss net of retrocession as at 31 December 2013
Xaver December 2013 20 24 Toronto Floods July 2013 15 14 Manni Hailstorm June 2013 10 13 Other natural catastrophes (less than EUR 10 million) 2013 22 22
SCOR Global Life underwrites life reinsurance business in the following business areas (1):  Protection  Financial Solutions
In 2014, SCOR Global Life continued to grow profitably in a competitive Life reinsurance market. It gained new business partners and succeeded in further strengthening its long-term business relationships. SCOR Global Life renewed existing business and increased the in-force business with existing clients.
SCOR Global Life's acquisition of the mortality business portfolio of Generali U.S. contributed EUR 938 million to 2014 gross written premiums compared to EUR 209 million for the three months period after the acquisition on 1 October 2013. Besides the premium growth resulting from the acquisition, a significant premium contribution was achieved from new Financial Solution deals in Latin America. EMEA markets premium rise is driven by new Longevity business and increased Financial Solutions business. The performance in Longevity business demonstrates SCOR Global Life’s expertise in this business area with continuous growth in 2014 from new treaties and clients. In Asia/Pacific premiums developed driven by new Financial Solutions business in South Korea, increase in capital relief deals in China and Korea, as well as higher Protection business volume in China and Australia/New Zealand.
Life technical margin in 2014 was 7.1% compared to 7.4% in 2013 and 7.7% in 2012. The decline of the Life technical margin confirms the announced evolution in the business mix. The technical result calculation method was adjusted to include revenues from Life reinsurance contracts that do not transfer significant reinsurance risk (presented in the investment income line of the 2013 Registration Document). Refer to section 9.2.6 – Calculation of financial ratios for details. The ratios previously reported in the 2013 Registration Document were 7.3% and 7.7% for the years ended December 31, 2013 and 2012, respectively. The life technical margin is strongly supported by the in-force business performance in Americas and EMEA.
Subsequent to 31 December 2014, SCOR sponsored a new catastrophe bond, Atlas IX Series 2015-1, which will provide the Group with multi-year risk transfer capacity of USD 150 million for US Named Storm and US and Canada Earthquake events. This transaction replaces the US tranches of Atlas VI Series 2011-1, which matured on 8 January 2015. The risk period for Atlas IX 2015-1 runs from 11 February 2015 to 31 December 2018. The instrument will be accounted for as a derivative instrument.
On 6 January 2014, SCOR announced having successfully placed a fully collateralized sidecar, Atlas X Reinsurance Limited (Atlas X). It provides the Group with an additional three-year capacity of USD 55.5 million from a new panel of investors. This is in line with SCOR’s capital shield policy as set out in its strategic plan “Optimal Dynamics”, which considers all the available capital protection tools.
A payment will be triggered if the observed index value exceeds the attachment point of 102%. At any index level to the exhaustion point of 104%, Atlas IX Capital Limited will pay to SCOR a pro-rata amount. The risk transferred is variable based on a defined index (CDC mortality index weighted by age and gender mortality) and not based on SCOR’s effective portfolio. As a consequence, the contract has been accounted for as a derivative.
On 12 December 2011, SCOR placed a new catastrophe bond (“cat bond”), Atlas VI Capital Limited Series 2011-1 and 2011-2, which provides the Group with USD 270 million of protection against US Hurricanes and Earthquakes and EUR 50 million of protection against European windstorms, for a risk period extending from 13 December 2011 to 31 December 2014 for the US series and from 13 December 2011 to 31 March 2015 for the European series. This transaction succeeded Atlas V Capital Limited, which provided similar geographical cover as the one of the Series 20111 for an amount of USD 200 million for the risk period from 20 February 2009 to 19 February 2012.
The loss payments covered by this cat bond are based on market share factors applied to the market insured loss, as reported by PCS for the US and by PERILS for Europe. Due to the absence of ultimate loss clause, contracts with Atlas VI special purpose vehicles are accounted for as derivatives.
Refer to Section 4.4.1 – SCOR is exposed to risks related to legislative and regulatory changes and political, legislative, regulatory or professional initiatives concerning the insurance and reinsurance sector, which could have adverse consequences for its business and its sector. Also refer to Section 5.1.4.2 – Legal form and applicable legislation.
In EUR million 2014 2013 2012 Average invested assets (2) 15,074 14,056 13,313 Total investment income on invested assets 436 369 392 Return on invested assets (ROIA) (3) 2.9% 2.6% 2.9%
(1) Average investments are the quarterly averages of the Total Investments as per the “Invested assets” reconciliation table included in this note, adjusted for ceded funds withheld (2) Average invested assets are the quarterly averages of the Total Invested Assets as per the “Invested assets” reconciliation table included in this note (3) The return on invested assets’ calculation method was adjusted to exclude revenues from Life reinsurance contracts that do no transfer significant reinsurance risk
(presented in the investment income line of the 2013 Registration Document). The ratios previously reported in the 2013 Registration Document were 2.6% and 3.0% for the years ended December 31, 2013 and 2012, respectively.
(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 (3) Excluding life reinsurance contracts that do not meet the risk transfer criteria (presented in the investment income line of the 2013 Registration Document).
Return on investment and return on invested assets are calculated based on investments as defined for management purposes. The following table is a reconciliation of this and IFRS figures as presented in Section 20.1 Historical financial information: consolidated financial statements: As at 31 December 2014 Management classification
Real estate investments 861 861 861 861 Equities 57 47 343 126 161 734 734 - 734 Fixed income 10,893 334 - 2 11,229 11,229 104 11,333 Available-for-sale financial assets 10,950 381 343 126 163 11,963 11,963 104 12,067 Equities - - 108 214 322 322 - 322 Fixed income 46 - - - 46 46 1 47 Investments at fair value through income
For a detailed calculation of the management cost ratio refer to the table below: As at 31 December
In EUR million 2014 2013 2012 Total expenses as per profit & loss account .(1) (607) (565) (556) Unallocated loss adjustment expenses (ULAE) .(2) (42) (34) (32) Total management expenses (649) (599) (588) Investment management expenses (40) 36 30 Total expense base (609) (563) (558) Corporate finance 1 4 7 Amortization 34 31 27 Non controllable expenses 10 9 24 Total management expenses (for cost ratio calculation) (564) (519) (500) Gross written premiums 11,316 10,253 9,514 GROUP COST RATIO 5.0% 5.1% 5.3%
(1) Total expenses are investment management expenses, acquisition and administrative expenses and other current operating expenses as presented in Section 20 – Financial information concerning the issuer’s assets and liabilities, financial position and profits and losses
In EUR million 2014 2013 2012 Consolidated net income – Group share . 512 549 418 Opening shareholders' equity - Group share 4,940 4,800 4,400
Weighted consolidated net income (1) 256 227 209 Payment of dividends (2) (154) (148) (128) Weighted increase in capital (2) (6) 8 3
For a detailed calculation of the combined ratio refer to the table below: As at 31 December
In EUR million 2014 2013 2012 Gross earned premiums 4,775 4,777 4,500 Ceded earned premiums (488) (521) (437) Net earned premiums 4,287 4,256 4,063 Gross benefits and claims paid (2,788) (2,967) (2,833) Ceded claims 167 237 177 Total net claims (2,621) (2,730) (2,656) Loss ratio 61.1% 64.1% 65.5% Gross commission on earned premiums (1,068) (1,035) (956) Ceded commission 49 52 49 Total net commissions (1,019) (983) (907) Commission ratio 23.8% 23.1% 22.3% Total technical ratio 84.9% 87.2% 87.8% Acquisition and administrative expenses (191) (178) (176) Other current operating expenses (37) (49) (44) Other income and expense excluding revenues associated with financial reinsurance contracts (52) (56) (39) Total P&C management expenses (280) (283) (259) Total P&C management expense ratio 6.5% 6.7% 6.3% TOTAL COMBINED RATIO 91.4% 93.9% 94.1%
10.1 Capital Refer to Section 20.1.5 – Consolidated statement of changes in shareholders’ equity and Section 20.1.6 – Notes to the consolidated financial statements, Note 12 – Cash and cash equivalents and cash flows and Note 13 – Information on share capital, capital management, regulatory framework and shareholders’ equity. On 2 February 2011, SCOR issued CHF 400 million perpetual subordinated notes. On 11 May 2011, the placement was increased by CHF 250 million, as described in Section 20.1.6 – Notes to the consolidated financial statements, Note 14 – Financial debt. On 27 September 2012, SCOR re-purchased the entire tranche of its EUR 50 million perpetual subordinated Notes.
On 8 October 2012, SCOR issued CHF 315 million perpetual subordinated notes, as described in Section 20.1.6 – Notes to the consolidated financial statements, Note 14 – Financial debt. On 30 September 2013 SCOR issued CHF 250 million perpetual subordinated notes, as described in Section 20.1.6 – Notes to the consolidated financial statements, Note 14 – Financial debt.
In addition to this, during 2014 and 2013, SCOR actively managed its liabilities, providing liquidity to its outstanding debts by acquiring a total face value of USD 10 million at an average price below 93% to par, and a total face value of USD 46 million at an average price below 90% to par, respectively.
On 1 October 2014 SCOR issued EUR 250 million perpetual subordinated notes, as described in Section 20.1.6 – Notes to the consolidated financial statements, Note 14 – Financial debt. On 24 October 2014 SCOR issued CHF 125 million perpetual subordinated notes, as described in Section 20.1.6 – Notes to the consolidated financial statements, Note 14 – Financial debt.
10.3 Borrowing conditions and financing structure Refer to Section 20.1.6 – Notes to the consolidated financial statements, Note 8 – Derivative instruments.
Refer to Section 20.1.6 – Notes to the consolidated financial statements, Note 12 – Cash and cash equivalents and Cash Flows for information on the Group’s cash positions.
On 30 September 2013, SCOR entered into a bridge loan agreement with BNPP and Deutsche Bank in the amount of USD 228 million to finance the acquisition of Generali U.S. This short-term financing facility was repaid in full early during the first quarter of 2014.
10.4 Restrictions on the use of capital Refer to Section 4.3.1 with respect to the risk related to letters of credit granted by SCOR to cedents which 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. However, SCOR makes efforts to limit collateral requirements related to financial covenants or the Group’s financial strength rating in its letters of credit facilities. For information on regulatory restrictions on the use of capital, refer to Section 5.1.4.2 – Legal form and applicable legislation and to Section 20.1.6 – Notes to the Consolidated financial statements, Note 13 – Information on share capital, capital management, regulatory framework and shareholders’ equity. Until 8 August 2012, SCOR Switzerland AG was subject to certain specific reporting requirements stipulated by the Swiss Financial Market Supervisory Authority (“FINMA”) as per the decree of 1 April 2010. As at 8 August 2012 these specific reporting requirements were fully revoked and only the regulatory requirements are to be observed by SCOR Switzerland AG.
(1) The calculation of the leverage ratio excludes accrued interest from debt and includes the swaps effect related to the CHF 650 million, CHF 315 million and CHF 250 million subordinated debt issuance.
The Centers have entered into many scientific partnerships over the years, the current ones being with: the Assmann Foundation on cardiovascular diseases (EUR 100 000 annually), the Erasmus University over the incidence impact of cancer screening programs (EUR 45 000 over 2 years ending in 2015) and the Pierre et Marie Curie University at the Pitié-Salpêtrière Hospital over HIV developments (EUR 30 000 annually).
The Centers provide input at the product development stage, giving advice on definitions, underwriting standards, pricing and reserving. They contribute to the monitoring of biometric risks by carrying out experience studies on portfolio data and by undertaking prospective risk modeling.
The R&D Centers report to the Head of Actuarial & Underwriting of SCOR Global Life. Their employees are based in Paris, Cologne, Dublin and Singapore and are active worldwide, responding to requests from the local teams in charge of business development and client relationships.
At the forefront of the risk modeling field, particularly extreme risks in Life and Non-Life businesses, the Group devotes considerable resources to fundamental research and the promotion of scientific risk management techniques in various disciplines. As well as prize-winning internal research projects, conducted with the assistance of students from renowned schools and universities, SCOR has signed partnership agreements with the following institutions:  The Risk Foundation, in collaboration with the IDEI of Toulouse university and Paris Dauphine University, is dedicated to the risk market and to value creation. For SCOR, it implies costs of EUR 1.5 million allocated over five years;  A Research Chair in Finance, in cooperation with Jean-Jacques Laffont Foundation based in Toulouse, deals with risk management, long-term investment, corporate governance and asset management strategy. For SCOR, the cost is EUR 1.5 million allocated over five years;  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
Alongside these partnership agreements, the Group develops scientific research in the field of risks through sponsorship operations conducted by its corporate foundation, the SCOR Corporate Foundation for Science.
 As expression of SCOR’s commitment to the knowledge and science of risk, in 2013 SCOR appointed a Group Scientific Advisor to the Chairman and CEO. This advisor is notably responsible for promoting scientific risk assessment techniques among the Group’s clients and in academic circles, and for developing research in major fields, in order to ensure sound management of the Group’s business portfolio and internal model.
11.2 Information technologies SCOR was one of the first reinsurers to implement a uniform global information system. This strategy is reaffirmed each time the Group runs through an integration after a new acquisition. SCOR then aims to rapidly return to a global integrated information system. In the accounting, consolidation and financial reporting domain, SCOR has delivered its global SAP solution, embedding a unique chart of accounts and standard processes, in all its hubs throughout the Group. All accounting teams have been mobilized over the three last years, along with IT, to build this new global finance system at high stakes for SCOR.
The Group’s Life and P&C reinsurance global back-office system operates on a custom software package known as “Omega.” Omega was designed to allow the tracking of clients and policyholders within the Group, grant online underwriting authorization throughout the world, track premium and claims, analyze the technical profitability of contracts, and perform quarterly closings based on the latest estimated results. The Omega database reflects the current organization of SCOR Global P&C and SCOR Global Life worldwide reinsurance risk portfolios. After an extensive study, the Group has decided to update and improve Omega, thereby capitalizing on its existing strength. The project, which includes technical modernization and development of functional evolutions, has been launched and is expected to complete in 2015.
12.1 Most significant trends in production, sales, inventory, costs, and selling prices since the end of the last financial year 111 12.2 Known trends, uncertainties, demands, commitments and events reasonably likely to have a material effect on the issuer’s prospects 113
The “Optimal Dynamics” business initiatives, along with an approach centered on the needs of its clients across all of their business lines and markets worldwide, allow SCOR Global P&C to benefit from selective portfolio growth while deepening its franchise. SCOR Global P&C notably continues:  to grow selectively as part of the US client-focused initiative;  to expand its activity on the Lloyd’s market, thanks to the successful development of The Channel 2015 syndicate;  to strengthen its presence on emerging markets, with growth of 10% observed on P&C treaties in Asia. This is due to a strong local presence on these markets and to long-term client relationships, based on more than 40 years of stability and continuity and on heightened cooperation with insurer clients in order to further develop their markets;  to develop and expand its business with large industrial groups (SCOR Business Solutions), notably with the captives of these groups.
In an increasingly competitive market environment, SCOR Global P&C continues to optimize its growth within the constraints of the Group’s two targets: solvency and profitability. For 2015, SCOR Global P&C thus expects to achieve gross premium income of around EUR 5.3 billion.
This slight growth is due to active portfolio management designed to maintain the profitability of underwritten business, particularly in the EMEA region which records a 4% reduction in premiums. This is more than offset by premium volume increases in other regions. In Asia, SCOR Global P&C has strengthened its position not only in China but also in most growing markets, such as South Korea and Malaysia. Share increases and new business with existing clients have supported growth in the Americas, particularly in Canada and the US where the client-focused initiative is bearing fruit.
In particular, SCOR Global Life has entered in February 2015 into a longevity insurance transaction with Sun Life Assurance Company of Canada (Sun Life). The transaction, which is a first in the Canadian market, covers benefits in payment for pensioners who are members of the Bell Canada pension plan. The risk of these members living longer is transferred from Bell Canada’s pension scheme to Sun Life and two reinsurers. The associated liabilities are approximately CAD 5 billion, which makes this transaction one of the largest pension scheme longevity insurance transactions completed globally. SCOR Global Life is assuming a significant portion of this risk. The effective date of the transaction is 1 January 2015.
Thus SCOR Global Life has built a strong global competitive position. The UK market remains the largest and most active one. While legislative changes introduced in 2014 have resulted in making annuitizing less compelling for pensioners, there is still a large existing stock of pensions and annuities which is expected to continue to generate opportunities. Indeed, 2014 was a record year for the volume of longevity transactions completed in the UK market.
In Asia/Pacific markets further growth has been achieved by answering the ongoing demand for capital motivated reinsurance solutions and by providing product development support. Local regulations are also evolving (e.g. in China), with potential implications for this business area.
In the United States, SCOR Global Life has become an active player in XXX-related solutions.
In Europe, the preparation for Solvency II could prove to be a trigger for solvency and capital management business opportunities.
Under European and French law, the Company’s Board of Directors prepares and presents the year-end accounts of the Company to the shareholders and convenes the shareholders’ meetings of the Company (the “Shareholders’ Meetings”). In addition, the Board of Directors reviews and monitors SCOR’s economic, financial and technical strategies. SCOR SE’s bylaws provide that the Board of Directors is composed of no fewer than nine and no more than eighteen members. The actual number of Directors may be modified by the shareholders at the Shareholders’ Meetings. The Board of Directors cannot by itself increase the number of its members. The Board of Directors consists of 13 voting members (including one elected employee representative, known as the “Employee Director”). The Employee Director is elected by the employees of the Company and of its subsidiaries in a two round election on a simple majority basis. The elected candidate is then proposed by the Board of Directors to be appointed by the Shareholders’ Meeting. 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). Under SCOR SE’s bylaws, each director must own at least one Ordinary Share for the duration of his or her entire term of office. Under French law, a director may be an individual or a legal entity for which an individual is appointed as permanent representative, except for the Chairman, who must be an individual. Pursuant to article L. 225-20 of the French Commercial Code, the permanent representative of a legal entity is subject to the same conditions, obligations and civil and criminal liabilities as if he or she were director in his or her own name, without prejudice to the joint and several liability of the legal entity he or she represents. 12 of the 13 members of the Board of Directors are individuals and 1 director, Malakoff Médéric Group, is a corporation (represented by Guillaume Sarkozy as permanent representative).
Offices within the Group: Chairman of the Board: -SCOR Global P&C SE (France) -SCOR Global Life SE (France) - SCOR Global Life Americas Reinsurance Company (f.k.a.-SCOR Global Life U.S. Re Insurance Company) (US) - SCOR Global Life USA Reinsurance Company (US) - SCOR Reinsurance Company (US) - SCOR US Corporation (US) - SCOR Global Life Re Insurance Company of Delaware (f.k.a SCOR Global Life Reinsurance Company of Texas) (US) - SCOR Holding Switzerland AG (Switzerland) - SCOR Services Switzerland AG (Switzerland) - SCOR Switzerland AG (Switzerland)
Offices and positions held in the Group - SCOR Perestrakhovaniye (Russia)
France: Chief Executive Officer: - Generali France (France) - Generali Vie (France) - Generali IARD (France)
Vice-Chairman of the Board of Directors: - OFI Asset Management - Etablissements Maurel & Prom
France: Chairman of the Board of Directors: - MACIF (until June 2014) - CEGES - CEMM - Macif Gestion - MACIF SGAM (until June 2014)
Chairman: - GEMA (until July 2014) - AFA (Association) (until July 2014) - OFI SMIDCAP
Vice-Chairman of the Board of Directors or of the Supervisory Board: - IMA (until June 2014) - SFEREN SGAM (until May 2014)
Director: - Macif-Mutualité (until May 2014) - MACIF Gestion (until June 2014) - CEGES (Association) (until May 2014) - ICOSI (Institut) (until June 2014)
Member of the Executive Committee: - SIEM (until June 2014) - SIIL (until June 2014)
Permanent representative of MACIF: - on the Board of Directors of Domicours - on the Supervisory Board of OFI RES - on the Board of Directors of Maurel & Prom Nigeria
Other functions: Out of France: Chairman of the Supervisory Board: - Raiffeisen Versicherung AG - UNIQA International
- UNIQA Osterreich Versicherung AG - Sigal UNIQA - Sigal UNIQA Life
Member of the Supervisory Board of: - Raiffeisen Zentralbank Osterreich AG
Professional address: COVEA 86, rue Saint Lazare CS 10020 75320 Paris Cedex 09
Other Functions: France: Chairman of the Board of Directors and Chief Executive Officer of: - La Garantie Mutuelle des Fonctionnaires - MAAF Assurances
Permanent Representative of Assurances Mutuelles de France at the Board of Directors of: - Fidélia Assistante - Assistance Protection Juridique
France: Chairman of the Board of Directors of: - Azur-GMF Mutuelles d'Assurances Associées
Malakoff Médéric Group (1)(3) (represented by Guillaume Sarkozy as permanent representative)
Permanent Representative of Malakoff Médéric Prévoyance to the Board of Directors: - OPCI Vivaldi
France: Chairman of the Board: - Malakoff Médéric Assurances SA -Médéric Epargne SA
Chairman of the Board of Directors: - Malakoff Médéric Innovation SAS - Holding FGA SAS - Le Monde Prévoyance SAS - Sévriena 2
Professional Address: 1000, rue de La Gauchetière ouest Montréal (Québec) H3B 0A2 Canada
Out of France: Director: - SCOR Global Life Americas Reinsurance Company (US) - SCOR Global Life USA Reinsurance Company (US) - SCOR Reinsurance Company (US) - Uniqa Insurance Group AG (Austria) - Phoenix Group Holdings (UK)
Member: - of the Board of the King's College London and Chairman of the Audit Committee (UK)
Director and Chairman of the Investment Committee: - UK Government, Department of Business (UK)
Denis Kessler, a French citizen, is a graduate of HEC business school (Ecole des Hautes Etudes Commerciales) and holds a PhD in economics and advanced degrees in economics and social sciences. He was Chairman of the Fédération Française des Sociétés d’Assurance (FFSA), Senior Executive Vice-President and Member of the Executive Committee of the AXA Group and Executive Vice-President of MEDEF (Mouvement des Entreprises de France). He joined the Group as Chairman and Chief Executive Officer on 4 November 2002.
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 the Chairman and Chief Executive Officer of the Generali Group in France from April 2002 to October 2013, when he became Chairman of the Board of Directors. He is also Chairman of the Europ Assistance Group since March 2003.
Charles Gave, a French citizen, has been researching tactical asset allocation for over forty years. In 1974, after three years as a financial analyst with a French investment bank, he created CECOGEST, an independent research firm through which he serviced a wide portfolio of clients across the world for 12 years. In 1986, Charles Gave stepped away from pure research to move into money management: he co-founded Cursitor-Eaton Asset Management where he was in charge of investment policy and managed over 10 billion US dollars of institutional money on a global asset allocation mandate. Cursitor was sold in 1995 to Alliance Capital which Charles finally left in 1998 to create GaveKal where he currently serves as Chairman. Today, he is a member of the board of directors of Grace Financial and the Chairman of the Institute of Liberties (Institut des Libertés) in Paris. He holds a DESS in Economy (Toulouse) a degree from IEP (Toulouse) and a MBA from the New York University.
Guillaume Sarkozy, a French citizen, is an engineer by training and a graduate of the Ecole Spéciale des Travaux Publics (ESTP) in 1974. 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 from 1977 to 1979. From 1979 to 2005, he has been a company leader in the textile industry. Until June 2006, Guillaume Sarkozy exercised a number of responsibilities at the head of professional associations and acquired real expertise in social protection, in particular, in 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), Conseil Economique et Social (2004-2006) and he was a member of the "Haut Conseil pour l'Avenir de l'Assurance Maladie" (2004-2013). He joined Médéric Group in June 2006 and was appointed Group General Manager on 1 September 2006. Then he was appointed Group General Manager of Malakoff Mederic Group in July 2008 with the merger of the Groups Médéric & Malakoff.
Guylaine Saucier, a Canadian citizen, is a graduate of the École des Hautes Études Commerciales, Fellow of the Institute of Chartered Accountants (F.C.A.) and Fellow of the Institute of Corporate Directors. She was Chairman and Chief Executive Officer of the Gérard Saucier Group, a company specializing in forestry products. She sat on the board of directors of many major corporate entities, including la Banque de Montréal, Areva and Petro Canada. She currently sits on the supervisory board of Wendel. In the past, she has chaired the Joint Committee on Corporate Governance (CICA, CDNX & TSX), created in 2000, acted as Chairman of the Board of Directors of CBC/Radio-Canada and as Chairman of the "Institut canadien des comptables agréés". She was also the first woman to serve as President of the Quebec Chamber of Commerce. She became a Member of the Order of Canada in 1989 and a Fellow of the Institute of Corporate Directors in 2004, received the 25th McGill University Management Prize in 2005 and obtained the professional qualification of ICD.D from the Institute of Corporate Directors in 2010.
Kory Sorenson, a British citizen born in the United States, made her career in finance, devoting the last fifteen years exclusively to the management of capital and risk in insurance companies and banking institutions. She held the position of Managing Director, Head of Insurance Capital Markets at Barclays Capital in London, where her team conducted innovative transactions in capital management such as the launch of the first private and renewable securitizations. She also conducted mergers and acquisitions, as well as transactions in equity, hybrid capital, debt and risk management for insurance companies. She previously led teams in charge of insurance at Credit Suisse and financial institutions debt at Lehman Brothers for Germany, Austria and the Netherlands. She began her career in investment banking at Morgan Stanley and in the financial sector at Total SA. She speaks fluent French and holds a Masters from the Institut d'Etudes Politiques de Paris, a Masters in Applied Economics from the University of Paris Dauphine and a BA in Political Science and Econometrics with honors from the American University in Washington DC. In addition to her role at SCOR, Kory Sorenson is a director of Phoenix Group Holdings in the UK, Uniqa Insurance Group AG in Austria and the Institut Pasteur in France.
Daniel Valot, a French citizen, former student of the Ecole Nationale d’Administration and Counsellor to the French Accounting Office (Cour des Comptes), was also in particular Technical Cooperation Counselor to the French Embassy in Tunisia, Managing Director of Total South East Asia, Chairman and CEO of Total Petroleum North America, Chief Executive Officer of Total Exploration Production, then Chairman and Chief Executive Officer of Technip SA from September 1999 until 27 April 2007.
The Chief Executive Officer (Président et Directeur Général) has full executive authority to manage the business, subject to the prior authorization of the Board of Directors or the shareholders for certain decisions as required by law. The Chief Executive Officer has authority to act on the Group’s behalf and to represent SCOR in dealings with third parties, subject only to those powers expressly reserved by law to the Board of Directors or the shareholders. The Chief Executive Officer determines, and is responsible for, the implementation of SCOR’s goals, strategies and budgets, which are reviewed and monitored by the Board of Directors. The Board of Directors has the power to appoint and remove, at any time and with or without cause, the Chief Executive Officer, as well as to appoint separate persons to hold the positions of Chairman of the Board (Président du Conseil d’administration) and Chief Executive Officer (Président et Directeur Général). Upon a proposal made by the Chief Executive Officer, the Board of Directors may also appoint a Deputy Chief Executive Officer (Directeur Général Délégué) to assist the Chief Executive Officer in managing the business.
Benjamin Gentsch 54 Deputy Chief Executive Officer of SCOR Global P&C
2007 (2) Chairman of the Board of Directors: SCOR Holding (UK) Ltd (UK) SCOR UK Company Ltd (UK) SCOR Brasil Resseguros SA (Brazil)
Director: SCOR Perestrakhovaniye (Russia) (until 1st June 2014) SCOR (UK) Group Ltd (UK) SCOR Lime Street Limited (UK) The Channel Managing Agency Limited (UK)
Mark Kociancic 45 Group Chief Financial Officer 2013 Director: SCOR Global Life SE (France) SCOR Global P&C SE (France) SCOR Canada Reinsurance Company (Canada) SCOR Reinsurance Company (US) General Security National Insurance Company (US) General Security Indemnity Company of Arizona (US) SCOR Global Life Americas Holding Inc. (US) SCOR Global Life Americas Reinsurance Company (US) SCOR Global Life Reinsurance Company of Delaware (US) SCOR Global Life USA Reinsurance Company (US) SCOR Life Assurance Company (US) SCOR Life Reassurance Company (US)
Gilles Meyer 57 Advisor to the CEO of SCOR Global Life (3)
Officer Since Other Offices Permanent Representative: SCOR Global Life SE at MUTRE S.A.’s Board (France)
Director: SCOR Africa Ltd (South Africa) SCOR Global Life Reinsurance Ireland Ltd (Ireland)
Director: SCOR UK Company Ltd. (UK) SCOR UK Group Ltd. (UK) Blue Star Syndicate Management Limited (UK) The Channel Managing Agency Limited (UK) The Channel Syndicate LLP (UK) SCOR Channel Ltd. (Guernsey) Arisis Ltd. (Guernsey) SCOR Switzerland AG (Switzerland) SCOR Holding (Switzerland) AG (Switzerland) SCOR Perestrakhovaniye (Russia) (until 1st June 2014) General Security Indemnity Company of Arizona (US) General Security National Insurance Company (US) SCOR Reinsurance Company (US) SCOR Canada Reinsurance Company (Canada) Finimo Realty Pte Ltd (Singapore) SCOR Reinsurance Company (Asia) Ltd (Hong Kong) SCOR Services International Ltd (Hong Kong) Arope Insurance SAL (Lebanon)
François de Varenne 48 Chief Executive Officer of SCOR Global Investments 2005 Chairman of the Board of Directors: SCOR Auber SAS (France) DB Caravelle SAS (France) 5 avenue Kléber SAS (France) SCOR Properties SA (France) MRM (France) SCOR Capital Partners (France)SCOR ILS Fund SA, SICAV-SIF (Luxembourg) SCORLUX SICAV-SIF (Luxembourg)
(1) Paolo De Martin was an executive officer of Converium Holdings AG since 2006 (2) Benjamin Gentsch was an executive officer of Converium Holdings AG since 2002 (3) Gilles Meyer was a member of the Executive Committee until 5 November 2014 as Deputy Chief Executive Officer of SCOR Global Life SE
Refer to Section 14.1.2 – Biographical information on the members of the Board of Directors.
Benjamin Gentsch, a Swiss citizen, graduated with a degree in management from the University of Saint-Gall where he specialized in insurance and risk management. From 1986 to 1998, he held several positions at Union Reinsurance Company, where from 1990 to 1998 he directed treaty underwriting in Asia and Australia. In 1998, he joined Zürich Re as head of international underwriting responsible for strengthening the company’s position in Asia, Australia, Africa and Latin America. He also supervised the “Global Aviation” reinsurance department and developed its “Global Marine” department. In September 2002, Benjamin Gentsch was appointed Chief Executive Officer of Converium Zürich, then Executive Vice President in charge of Specialty Treaties. In September 2007, he was appointed Chief Executive Officer of SCOR Switzerland and Deputy Chief Executive Officer of SCOR Global P&C.
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 has headed SCOR’s Corporate Actuarial Department, reporting to the Chief Risk Officer. He was appointed Deputy Chief Risk Officer of SCOR in December 2008. 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 1st October 2012, he was appointed Deputy Group Chief Risk Officer and on 17 January 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).
appointed SCOR Americas Hub CFO in June 2008 and was promoted to Executive Vice President in July 2010. He was appointed Deputy CFO of SCOR Group in October 2012 and in May 2013 became Group Chief Financial Officer.
Gilles Meyer, a dual French and Swiss citizen, holds a degree from a French business school and an MBA from GSBA in Zürich. Gilles Meyer started his career as an underwriter at Swiss Re before managing the facultative department of La Baloise in Basel. After 23 years of experience in facultative and treaty reinsurance, Gilles Meyer was Chief Executive Officer of Alea Europe from 1999 to 2006, where he was in charge of property-casualty reinsurance and Life reinsurance, and was Group Chief Underwriting Officer from 2005 to 2006. He joined the Group in January 2006 and has managed the German-speaking markets of SCOR Global P&C based in Hanover, Basel, and Winterthur. He was named head of Business Unit 1 of SCOR Global Life and a member of the Group Executive Committee in November 2006, then Deputy Chief Executive Officer of SCOR Global Life in September 2007. In February 2008, he was appointed Chief Executive Officer of SCOR Global Life and in January 2014, he became Deputy Chief Executive Officer of SCOR Global Life. In November 2014, he was appointed Advisor to the Chief Executive Officer of SCOR Global Life.
Simon Pearson, a British citizen, is a Fellow of the Institute of Actuaries. After graduating in 1987 with an Honours degree in Economics from the University of York Simon started his actuarial career with a mid-sized UK mutual life insurer, NPI. Qualifying as an Actuary in 1992 Simon held a number of actuarial management positions covering pricing & product development, reserving, embedded value & financial reporting. Simon joined the UK life subsidiary of Gerling Global Re in 1999, becoming the Appointed Actuary in 2001. At the beginning of 2004 Simon became the CEO of the UK subsidiary of the newly established Revios. Upon the integration of Revios into SCOR he became a member of the SCOR Global Life senior management team at the end of 2006. In 2008 Simon was promoted to manage SGL’s Northern Europe region covering UK, Ireland and Scandinavia. In August 2011 Simon was appointed SGL Head of EMEAA covering Europe, Middle East, Africa and Asia-Pacific. In November 2014, he was appointed Deputy Chief Executive Officer of SCOR Global Life and CEO of SCOR Global Life Europe, Middle East & Africa (EMEA).
14.1.5 NEGATIVE DISCLOSURES ABOUT MEMBERS OF THE BOARD OF DIRECTORS AND SENIOR MANAGEMENT
To our knowledge, there are no family relationships between the directors and the members of the Company’s senior management.
14.2 Administrative, management, and supervisory bodies and Senior Management conflicts of interest No loans or guarantees have been granted or established in favor of the Directors by SCOR or by any other Group company.
Also refer to Sections 14.1.5 – Negative disclosures about members of the Board of Directors and senior management, 16.4 – Corporate governance regime and 19 – Related party transactions.
(1) Pursuant to the decision made by the Board of Directors on 21 March 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 (2) Directors whose appointment ended at the Annual Ordinary General Meeting of the Shareholders of 25 April 2013
Gross compensation paid in 2014 to the Group Executive Committee members (including the Chairman and Chief Executive Officer) as at 31 December 2014 amounts to EUR 9,159,367 ( 1). In addition, they were awarded a total number of 445,000 shares and 420,000 stock options in 2014 for a total estimated value of EUR 9,563,450 (2).
The Board of Directors of SCOR has decided, during the meeting of 12 December 2008, to apply the AFEP (Association of French Private-sector Companies) and MEDEF (French Business Confederation) recommendations of 6 October 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 compliance with the AFEP (Association of French Private-sector Companies) and MEDEF (French Business Confederation) recommendation applicable to the Chairman and Chief Executive Officer, there is no employment contract between Mr. Denis Kessler and the Company. Following the recommendation of the Compensation and Nomination Committee on 25 February 2014, the meeting of the Board of Directors on 4 March 2014 decided that the Chairman and Chief Executive Officer:  will receive a fixed gross annual sum of EUR 1,200,000 (3), payable in twelve monthly instalments, which has not changed since 1 January 2008; and
In accordance with the Group Compensation policy applicable to all Partners within the Group, the variable annual compensation of the Chairman and Chief Executive Officer may benefit, in the event of outperformance, from a multiplier applied to personal (capped to a maximum of 150% of the personal objectives target part) and financial objectives (capped to a maximum of 130% of the financial objectives target part) which will carry the variable annual compensation of the Chairman and Chief Executive Officer to a ceiling of 140% of his variable annual target compensation.
(1) In Section 15.1.2 – Executive Committee members remuneration, the exchange rates used (official average quarterly exchange rates of Q4 2014 of the Registration Document) are: 1 EUR = 1.2029 CHF, 1 EUR = 1.2454 USD and 1 EUR = 0.7903 GBP
Moreover, the Group policy states that, for participation and strong involvement in the success of specific strategic projects, an additional and exceptional bonus (“Exceptional Contribution Bonus” - ECB) may be granted; the ECB can reach a maximum of 25% of the variable annual compensation of the Chairman and Chief Executive Officer. The total cash variable annual compensation of the Chairman and Chief Executive Officer may not exceed 165% of his target variable annual compensation about EUR 1,000,000. Therefore, the total cash variable annual compensation of the Chairman and Chief Executive Officer may under no circumstances exceed 137.5% of his fixed annual remuneration. The variable compensation for any given year will be 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 2014, the variable compensation of the Chairman and Chief Executive Officer has been determined according to the following objectives:  financial objectives: level of Return on Equity (RoE) achieved by SCOR;  personal objectives: implementation of Solvency II, pursue the reinforcement of the ERM and finalization of the internal model; continuation of an active policy of increasing the value of the Group in the opinion of the investors and analysts; deepening of the employees management policy; consolidation of the Group's commercial positions; general management. These objectives are equally weighted.
Pursuant to the decision of the Board of Directors’ meeting of 21 March 2006, the Chairman and Chief Executive Officer shall benefit from a specific life insurance subscribed by the Group aimed at covering the risks inherent to the functions of Chairman and Chief Executive Officer for an amount equivalent to three years of fixed and variable compensation. As the Company representative, the Chairman and Chief Executive Officer is granted with a company car with a shared driver. The insurance, maintenance, fuel and all costs related to the driver are paid by the Company.
In the case of departure of the Chairman and Chief Executive Officer during financial current year:  all the variable part of his compensation for prior year will be payable during current year as soon as the Company’s financial statements for prior year are settled by the Board of Directors;  in addition, in the case of dismissal, the amount of the variable part of his compensation for current year will be (i) determined on the basis of the variable compensation for prior year and prorated on the basis of the departure date for the current year, and (ii) paid as soon as the Company’s financial statements for prior year are settled by the Board of Directors.
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) 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 situation of the SCOR group, the Chairman and Chief Executive Officer will benefit from a cash payment equal to the amount of fixed and variable compensations paid to him by the Group for the two financial years prior to his departure. This payment is subject to the satisfaction of the performance condition (C_n) as defined below for at least two out of the three years preceding the date of his departure. Furthermore, the performance shares and stock options which have been granted prior to his departure will be subject, in their entirety, only to performance conditions of each plan as approved by the Board of Directors at the time of the grant. The criteria of the conditions of performance are available in the report of the Board of Directors.
For more details, see Appendix B – I. Terms and conditions for preparing and organizing the work of the Board of Directors, (F) Principles and rules stated for the determination of compensation and in-kind benefits for corporate officers. 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 2014, 2013 and 2012: In EUR Gross compensation
(details below) Value of the shares granted .(1) Value of stock options granted .(1) Total
Reminder of the specific award conditions applicable to the Corporate Officer in respect of the principles AFEP/MEDEF: The Board of Directors of 3 April 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. In addition to these conditions specified above, the Board of Directors decided that for all the 2009 grants and following ones, the Corporate Officer is required to retain on the market a number of shares equal to 5% of the of the shares freely assigned to him as soon as these shares may be sold. The following table presents a summary of the gross compensation of the Corporate Officer for fiscal years 2014, 2013 and 2012: In EUR Fixed compensation (4) Variable compensation Director's fees Gross compensation Additional benefits 2014 1,200,000 1,236,000.(3) 44,000 2,480,000 Company Car 2013 1,200,000 1,314,500 48,000 2,562,500 Company car 2012 1,200,000 950,000 48,000 2,198,000 Company car
Refer also to Appendix A - Notes to the Corporate financial statements, Note 14 - Compensation of the Corporate Officer. In accordance with the AFEP/MEDEF corporate governance code of listed corporations, the following tables present for the Executive and Corporate Officer the stock options granted and exercised during the fiscal year as well as the grants and performance shares vested during the fiscal year
(1) It should be noted that the figures stated above do not represent paid compensation but correspond to actuarial estimates in line with AFEP/MEDEF governance code for listed companies. These grants are subject to presence conditions and, for some grants, to performance conditions. Please refer to the sections 17.3 of this Registration Document and the registration documents of SCOR filed with the Autorité des marchés financiers on 5 March 2014 and 6 March 2013 under number n. D.14-0117 and D.13-0106 for the details of the performance conditions applicable to the shares and stock options granted to the Executive and Corporate Officer
(3) The variable annual compensation related to 2014 fiscal year has been determined by the Board of Directors for the President and Chief Executive officer on an overall percentage of achievement for the financial objectives of 97.2% and an overall percentage of achievement for the personal objectives of 150%. This variable annual compensation amount is paid in one instalment in March 2015. For confidential reasons, the percentage of achievement of each objective is not detailed
(4) The fixed remuneration of Chairman and Chief Executive Officer has not changed since 1 January 2008
Number of options exercised during the period Date of plan Exercise price Denis Kessler 0 - -
Date of ownership transfer Denis Kessler 4 March 2014 125,000 .(1) 2,606,250 5 March 2016 5 March 2018
Number of shares granted during the period Date of plan Conditions of acquisition
15.1.2.2 Gross remuneration to Executive Committee members (COMEX) other than the Chairman as at 31 December 2014
The following table presents the gross compensation related to fiscal years 2014, 2013 and 2012 and paid in 2014, 2013 and 2012 to the members of the Executive Committee: Members of the Executive Committee - Gross Compensation 2014 2013 2012 In EUR Related to Paid Related to Paid Related to Paid Benjamin Gentsch 926,860 948,208 949,165 893,499 892,543 836,757 (Paid in CHF) .(1) Frieder Knüpling 739,880 732,970 733,000 637,160 557,160 497,432 Mark Kociancic (Paid in USD)
.(2) 1,191,376 1,143,970 902,311 357,667 NA NA Paolo De Martin .(3)
1,804,664 1,225,247 742,165 909,319 1,292,576 1,291,997 (Paid in CHF) .(1) Simon Pearson (Paid in GBP)
Victor Peignet 1,733,443 1,541,156 1,440,788 1,306,274 1,306,743 1,074,563 François de Varenne 938,541 950,334 949,966 863,773 864,241 797,821 Members of the Executive Committee
(1) The compensation is paid in CHF, the exchange rate used is: 1 EUR = 1.2029 CHF (official average quarterly exchange rates of Q4 2014 of the Registration
Q4 2014 of the Registration Document) (3) Group CFO until 15 May 2013. In sabbatical (not paid) from 1 July 2013 to 6 January 2014. Chief Executive Officer of SCOR Global Life SE since 17 January 2014 (4) Deputy CEO of SCOR Global Life SE since 10 November 2014. The compensation is paid in GBP, the exchange rate used is: 1 EUR = 0.7903 GBP (official average quarterly exchange rates of Q4 2014 of the Registration Document) (5) Including the Chairman and Chief Executive Officer for whose remuneration details are available in Section 15.1.2.1
The Compensation and Nomination Committee proposes to the Board of Directors the variable compensation attributed to the members of the Executive Committee (other than the Chairman and Chief Executive Officer) in agreement with the Chairman and Chief Executive Officer. The variable portion of the compensation presented in the table below depends, on the one hand, on the achievement of individual objectives and, on the other hand, on the achievement of the Group’s earnings objectives, which are based on return on equity (or ROE).
Victor Peignet 800,000 928,800 (7) 4,643 1,733,443 700,000 736,121 (6) François de Varenne 500,000 434,400 4,141 938,541 500,000 445,800
Registration Document) (2) Those allowances cover business expenses (3) Group CFO since 15 May 2013. The compensation is paid in USD, the exchange rate used is: 1 EUR = 1.2454 USD (official average quarterly exchange rates of Q4 2014 of the Registration Document) (4) Group CFO until 15 May 2013. In sabbatical (not paid) from 1 July 2013 to 6 January 2014. Chief Executive Officer of SCOR Global Life SE since 17
January 2014 (5) This amount includes an expatriation bonus for 2012 (6) This amount includes an expatriation bonus for 2013 (7) This amount includes an expatriation bonus for 2014 (8) Deputy CEO of SCOR Global Life SE since 10 November 2014. The compensation is paid in GBP, the exchange rate used is: 1 EUR = 0.7903 GBP
498,795 414,798 34,616 (2) 948,208 498,795 359,132 Frieder Knüpling 400,000 332,640 330 732,970 400,000 236,800 Mark Kociancic (Paid in USD)
(1) 819,087 371,544 34,616 (2) 1,225,247 353,313 538,698 Simon Pearson (Paid in GBP)
49,361 N/A 9,620 58,982 N/A N/A Victor Peignet 800,000 736,513 4,643 1,541,156 700,000 601,606 François de Varenne
(1) The compensation is paid in CHF, the exchange rate used is: 1 EUR = 1.2029 CHF (official average quarterly exchange rates of Q4 2014 of the
(1) The compensation is paid in CHF, the exchange rate used is: 1 EUR = 1.2029 CHF (official average quarterly exchange rates of Q4 2014 of the Registration Document)
For additional information on stock options held by members of the Executive Committee, refer to Sections 17.2.2 - Stock options held by members of the Executive Committee and other company officers as at 31 December 2014 and 17.2.3 – Free allocation of shares to the members of the executive committee and other company officers as at 31 December 2014. Each member of the Executive Committee benefits from the use of a vehicle (or equivalent car allowance) for business purposes; The Chairman and Chief Executive Officer has a company car (with a shared driver).
The benefits in kind and insurance services granted to the Chairman and Chief Executive Officer are presented in Appendix B - Report of the Chairman of the Board of Directors.
In the event of a change in the structure of the share capital of the Company, if a member of the Executive Committee is dismissed (except for reason of serious or gross misconduct) or if he decides to resign, he will benefit from (i) 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, (ii) a cash payment compensating him for his inability to exercise stock options granted prior to his departure date and which he would be unable to exercise due to the vesting period conditions set forth in the applicable stock option plan, in an amount to be determined by an independent expert using the “Black-Scholes” pricing model, and (iii) a cash payment compensating him for his inability to definitively acquire Ordinary Shares of SCOR SE granted to him for free prior to his departure and which he would be unable to acquire due to the terms and conditions of the applicable free share allocation plan. The amount of this cash payment is equal to the product of the number of shares concerned by the average value of the opening prices of the Ordinary Shares of SCOR SE in the Paris Stock exchange during the twenty trading days preceding the date of the change in the structure.
Two executives under a Swiss contract are entitled to a specific scheme with specific conditions for a guaranteed pension of 50% of the average compensation over the last five years before retirement.
(1) This amount takes into account changes in the pension tax rate (from 30 to 45% for French beneficiaries) when pension annuities are above 8 annual social security ceilings
Duties the renewal of which will be proposed to the next Ordinary annual meeting of the Shareholders
(1) At the end of the Ordinary Annual General Shareholders’ Meeting taking place during the indicated year (2) Cooptation with ratification voted on by the Ordinary General Shareholders’ Meeting of 7 May 2008 16.2 Information on service contracts of members of Administrative and senior officers To our knowledge, there are no service agreements involving the members of the administrative or senior officers and the Company or one of its subsidiaries providing for benefits upon termination of such agreement.
16.3 Information on the Audit Committee and the Compensation and Nomination Committee The information on these two committees can be found in the report from the Chairman of the Board of Directors in Appendix B (part I of the Report from the Chairman of the Board of Directors on the conditions for preparation and organization of the work of the Board of Directors).
16.4 Corporate governance regime Since 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.
(10) For 2013 and 2014, the Lloyd's Channel Syndicate (80 employees at 31 December 2014) is a subsidiary of SCOR Global P&C SE, managed independently from the Group in terms of human resources and not aggregated in the division.
The table below presents the acquisitions, sales, subscriptions or exchanges of SCOR SE shares as well as operations upon securities linked to SCOR SE made by Directors and Senior managers in 2014.
EUR 5,000 Mr. Denis Kessler NA Mr. Gérard Andreck NA Mr. Andreas Brandstetter NA Mr. Thierry Derez NA Mr. Peter Eckert NA Mr. Charles Gave NA Mr. Kevin J. Knoer NA Malakoff Médéric Group, represented by Guillaume Sarkozy NA
Mrs. Guylaine Saucier NA Mrs. Kory Sorenson NA Mr. Claude Tendil NA Mr. Daniel Valot NA Mrs. Fields Wicker-Miurin NA
17.2.2 STOCK OPTIONS HELD BY THE MEMBERS OF THE EXECUTIVE COMMITTEE AND OTHER COMPANY OFFICERS AS AT 31 DECEMBER 2014
Reminder of the specific award conditions applicable to the Corporate Officer in respect of the principles AFEP/MEDEF: The Company's Board of Directors of 3 April 2007 decided that for all the grants subsequent to that date, the Corporate Officer is required to retain as registered shares at least 10% of the shares issued from the exercise of stock options granted and at least 10% of the performance shares granted until the termination of his duties.
No options have been granted by a related company as defined by article L.225-180 of the French Commercial Code. The allocation of stock options since 2008 is subject if necessary to the satisfaction of performance conditions. Thus, a third of the number of options awarded on 22 May 2008, half of the options awarded on 23 March 2009 and all the options awarded since 18 March 2010 are subject to the satisfaction of performance conditions. However all the options allocated since 23 March 2009 to the Chief Executive Officer are subject to the satisfaction of performance conditions. Please refer to 17.3 of this Registration Document and the registration documents of SCOR filed with the Autorité des marchés financiers on 5 March 2014 and 6 March 2013 under number n. D.14-0117 and D.13-0106 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.
Number of shares underlying the stock options held on the issuer and on the companies referred to above and exercised during the financial year by the ten employees of the issuer or these companies, whose number of options thus purchased or subscribed is the highest (aggregate information)
For more information on the stock option plans or stock purchase plans, refer to Appendix A – 1.5. Notes to the corporate financial statements, Note 12 – Stock Options.
17.2.3 FREE ALLOCATION OF SHARES TO THE MEMBERS OF THE EXECUTIVE COMMITTEE AND OTHER COMPANY OFFICERS AS AT 31 DECEMBER 2014
Transfer date 2011 – 2019 Long Term Incentive Plan 48,000 - - 02/09/2019 2012 Plan 48,000 - - 20/03/2016 2013 Plan 48,000 - - 06/03/2017 2013 – 2021 Long Term Incentive Plan 48,000 - - 06/03/2021 2014 Plan 60,000 - - 05/03/2018 TOTAL 482,000 3,247,900 Simon Pearson (1) Plan 2006 7,000 14,88 104 160 24/11/2008 Plan 2007 10,000 15,17 151 700 25/05/2011 Plan 2008 12,000 16,55 198 600 27/08/2012 Plan 2009 10,000 18,885 188 850 17/03/2013 Plan 2010 12,000 19,815 237 780 03/03/2014 Plan 2011 10,000 - - 08/03/2015 2011 – 2019 Long Term Incentive Plan 10,000 - - 02/09/2019 Plan 2012 10,000 - - 20/03/2016 Plan 2013 12,000 - - 06/03/2017 2013 – 2019 Long Term Incentive Plan 12,000 - - 06/03/2021 Plan 2014 40,000 - - 05/03/2018 TOTAL 145,000 881,090 Victor Peignet 2004 Plan - Tranche A 7,500 14.40 108,000 10/01/2005 2004 Plan – Tranche B - - - 10/11/2005 2004 Plan – Forfeiture - redistribution 10,500 17.97 188,685 01/09/2007 2005 Plan 20,000 17.97 359,400 01/09/2007 2006 Plan 25,000 14.88 372,000 05/07/2008 2007 Plan 35,000 15.17 530,950 25/05/2009 2008 Plan 36,000 17.55 631,800 08/05/2010 2009 Plan 48,000 18.885 906,480 17/03/2011 2010 Plan 48,000 19.815 951,120 03/03/2012 2011 Plan 48,000 22.61 1,085,280 08/03/2013 2011 - 2019 Long Term Incentive Plan 48,000 - - 02/09/2017 2012 Plan 48,000 24.46 1,174,080 20/03/2014 2012 Plan (PPP) (2) 5 24.55 123 27/07/2014 2013 Plan 48,000 - - 06/03/2015 2013 – 2019 Long Term Incentive Plan 48,000 - - 06/03/2019 2014 Plan 60,000 - - 05/03/2016 2014 Plan (PPP) (3) 5 - - 31/07/2016 TOTAL 530,010 6,307,918 François de Varenne 2005 Plan 7,000 17.97 125,790 01/09/2007 2006 Plan 15,000 14.88 223,200 08/11/2008 2007 Plan 20,000 15.17 303,400 25/05/2009 2008 Plan 24,000 17.55 421,200 08/05/2010 2009 Plan 32,000 18.885 604,320 17/03/2011 2010 Plan 40,000 19.815 792,600 03/03/2012 2011 Plan 40,000 22.61 904,400 08/03/2013 2011 - 2019 Long Term Incentive Plan 40,000 - - 02/09/2017 2012 Plan 40,000 24.46 978.400 20/03/2014 2012 Plan (PPP) (2) 5 24.55 123 27/07/2014 2013 Plan 40,000 - - 06/03/2015 2014 Plan 40,000 - - 05/03/2018 2014 Plan (PPP) (3) 5 - - 31/07/2016 TOTAL 338,010 4,353,433 GENERAL TOTAL 3,508,520 35,116,513
(1) Simon Pearson is member of the Executive Committee since 10 November 2014 as Deputy CEO of SCOR Global Life SE (2) This collective free shares Plan to the employees of the Company that are France residents, under the collective agreement signed on 20 July 2012 as part of the negotiations with the social partners of France, concerning the profit-sharing arrangement established by the 28 July 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
17.2.4 POTENTIAL VOLUME OF NEW SHARES FROM OUTSTANDING EQUITY-BASED COMPENSATION AS OF 31 DECEMBER 2014
The company's fully diluted issued share capital, as defined below, stood at 232 464 902 shares as of 31 December 2014, split as follows: Thus, as of 31 December 2014 the potential volume of new shares from outstanding equity-based compensation plans stood at 8.24% of the fully diluted issued share capital.
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 25 April 2013, the Company's Board of Directors of 4 March 2014, on the proposal of the Compensation and Nominations Committee of 25 February 2014, decided to allocate on 20 March 2014 stock options to the Chairman and Chief Executive Officer, to members of the Executive Committee and to the highest 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 4 March 2014, on the proposal of the Compensation and Nominations Committee of 25 February 2014, decided to allocate 100,000 stock options to the Chairman and Chief Executive Officer and 320,000 stock options to the other members of the Executive Committee on 20 March 2014. The Chairman and CEO, under the authority given by the Board of Directors held on 4 March 2014 for the implementation of this plan, allocated on 20 March 2014 274,875 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 2018 to 20 March 2024 inclusive. From this date, the purchase right shall expire.
higher than 1,000 points above the risk-free rate on average. (5) Absolute compliance with the Group’s ethical principles as described in the Code of Conduct of the SCOR
Group. These principles, which are designed to protect the interests of clients, are the pillars of SCOR’s sustainable development and therefore of its performance.
Following the authorization by the Shareholders' Meeting on 6 May 2014, the Company's Board of Directors of 5 November 2014, on the proposal of the Compensation and Nominations Committee of 5 November 2014, decided to allocate on 1 December 2014 a specific plan for stock options promised at hiring in order to attract employee 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 2 December 2018 to 1 December 2024 inclusive. From this date, purchase rights shall expire.
A table showing features of the SCOR stock option plans is found in Section 20.1.6 – Notes to the consolidated financial statements, Note 18 - Stock options and share awards.
The Shareholders’ Meeting also decided that (i) the total number of free shares granted under this authorization may not exceed 4,000,000 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), (ii) the allocation of shares to their beneficiaries will be definitive only after a vesting period of a minimum set at two years for tax residents of France and a minimum of four years for beneficiaries non tax residents of France, (iii) the beneficiaries will be subject, where appropriate, to an obligation to retain shares in a period of two years from the end of the vesting period for tax residents of France and that the retention period for beneficiaries not tax residents of France would be deleted, and (iv) the Company's Board of Directors of the Company will have the authority to increase the lengths of the acquisition period and the holding obligation period.
This authorization was given for a period of twenty-four months from 6 May 2014 and had canceled and replaced, for the unused portion thereof, the previous authorization as at 25 April 2013.
The Company's Board of Directors of 4 March 2014, on the proposal of the Compensation and Nominations Committee of 25 February 2014, decided to allocate 125,000 performance shares to the Chairman and Chief Executive Officer and 320,000 performance shares to the other members of the Executive Committee.
All the shares awarded to the Chairman and Chief Executive Officer, to the other Executive Committee members, 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 performance conditions are defined as follows: - For the Chairman and Chief Executive Officer, the other Executive Committee members, the Executive Global Partners and the Senior Global Partners, the performance conditions will be deemed satisfied if, in addition to the mandatory condition (5) below, at least three out of the four other conditions listed below are met: (1) The solvency ratio at the end of each quarter must not be lower than 150% for the years 2014 and 2015; (2) SCOR Global P&C’s combined ratio must be less than 100% on average in 2014 and 2015; (3) SCOR Global Life’s technical margin must be higher than or equal to 3% on average in 2014 and 2015; (4) The SCOR Group’s ROE for the financial years ending 31 December 2014 and 31 December 2015 must be higher than 1,000 points above the risk-free rate on average. (5) Absolute compliance with the Group’s ethical principles as described in the Code of Conduct of the
Nevertheless, if condition (4) is not met and, in addition, one of the three performance conditions (1), (2) or (3) is considered not to have been met, only a reduced percentage of the initial performance share allocation, in accordance with the table below, will be granted: Therefore, in case of actual misconduct as per the Code of Conduct (condition (5)), for instance in the event of fraud, the beneficiary will lose all of his/her performance shares benefits (clawback policy). - For the other beneficiaries (below Senior Global Partners), the performance conditions will be deemed satisfied if, in addition to the mandatory condition (5) below, at least three of the four other conditions listed below are met: (1) The solvency ratio at the end of each quarter must not be lower than 150% for the years 2014 and 2015; (2) SCOR Global P&C’s combined ratio must be less than 100% on average in 2014 and 2015; (3) SCOR Global Life’s technical margin must be higher than or equal to 3% on average in 2014 and 2015; (4) The SCOR Group’s ROE for the financial years ending 31 December 2014 and 31 December 2015 must be higher than 600 points above the risk-free rate on average. (5) Absolute compliance with the Group’s ethical principles as described in the Code of Conduct of the
The Chairman and CEO, under the authority given by the Board of Directors held on 5 November 2014 for the implementation of this plan, allocated 2014 35,000 performance shares to 23 Partners of the Group on 5 November.
All the shares awarded to the Senior Global Partners and half of the allocations awarded to the other (below Senior Global Partners) beneficiaries, are subject to the satisfaction of performance conditions (for the description of the performance conditions, refer to Section 17.3.2 – Free Share allocation plans – 4 March 2014 performance shares).
Total number of shares allocated in 2014 (excluding LTIP and PPP)
Total number of beneficia ries in 2013 (excludin g LTIP and PPP)
.(1) - - 125,000 1 - - 125,000 1 Members of the Executive Committee
In 2014, the Compensation and Nomination Committee observed the validation of 100% of performance conditions attached to the 2012 performance shares plans as defined in the 2012 reference document.
No holding period company as at 4 March 2020 Performance conditions
Requirement of presence at the company as at 4 March 2020 Performance conditions Treasury shares included No holding period 1,099 15,250
Requirement of presence at the company as at 4 March 2016 Performance conditions Treasury shares
Requirement of presence at the company as at 5 March 2019 Performance conditions Treasury shares
Requirement of presence at the company as at 5 March 2019 Performance conditions Treasury shares included No holding period 363 273,000
Requirement of presence at the company as at 5 March 2015 Performance conditions Treasury shares
/ start of the holding period / duration of the holding period
Requirement of presence at the company as at 12 December conditions Treasury shares
From 7 March 2011 to 7 March 2013 included 2 years 148 269,500
Requirement of presence at the company as at 7 March 2013 Performance conditions Treasury shares included No holding period 249 216,500
Requirement of presence at the company as at 25 November conditions Treasury shares
Requirement of presence at the company as at conditions Treasury shares included No holding period 50 25,000