Reinsurance – Insurance Businesses SCOR SE France 100,00 100,00 100,00 100,00 Parent Commercial Risk Partners Ltd (merged into GSNIC) Bermuda - - 100,00 100,00 Full Commercial Risk Reinsurance Company (merged into GSNIC) Bermuda - - 100,00 100,00 Full Commercial Risk Re-insurance Company (merged into GSNIC) United States - - 100,00 100,00 Full Converium Finance SA Luxemburg - - 100,00 100,00 Full General Security Indemnity Company of Arizona United States 100,00 100,00 100,00 100,00 Full General Security National Insurance Company United States 100,00 100,00 100,00 100,00 Full Prévoyance Ré France 100,00 100,00 100,00 100,00 Full SCOR AFRICA Ltd (Micawber) South Africa 100,00 100,00 - - Full SCOR GIE Informatique France 100,00 100,00 100,00 100,00 Full SCOR Global Investment France 100,00 100,00 100,00 100,00 Full SCOR Perestrakhovaniye Russia 100,00 100,00 100,00 100,00 Full SCOR Reinsurance Asia Pacific Pte Limited Singapore 100,00 100,00 100,00 100,00 Full SCOR Reinsurance Company Asia Hong Kong 100,00 100,00 100,00 100,00 Full SCOR U.S. Corporation United States 100,00 100,00 100,00 100,00 Full SCOR Global LIFE SE and its subsidiaries SCOR Global Life SE France 100,00 99,99 100,00 100,00 Full Investors Insurance Corporation United States 100,00 100,00 100,00 100,00 Full ReMark Group BV Netherland 100,00 100,00 100,00 98,67 Full ReMark International BV Netherland 100,00 100,00 100,00 98 67 Full Revios Canada Holding Corp. Ltd. Canada 100,00 100,00 100,00 100,00 Full Revios Reinsurance Canada Ltd Canada 100,00 100,00 100,00 100,00 Full SCOR Financial Services Ireland 100,00 100,00 100,00 100,00 Full SCOR Global Life Re Insurance Company of Texas United States 100,00 100,00 100,00 100,00 Full
Country Control Interest Control Interest Consolidation method SCOR Global Life Reinsurance (Barbados) Ltd., Bridgetown Barbados 100,00 100,00 100,00 100,00 Full SCOR Global Life Reinsurance Company of America United States 100,00 100,00 Full SCOR Global Life Reinsurance International (Barbados) Ltd., Bridgetown Barbados 100,00 100,00 100,00 100,00 Full SCOR Global Life Reinsurance Ireland Limited Ireland 100,00 100,00 100,00 100,00 Full SCOR Global Life Reinsurance UK Limited United Kingdom 100,00 100,00 - - Full SCOR Global Life Rückversicherung Schweiz AG Switzerland 100,00 100,00 100,00 100,00 Full SCOR Global Life U.S. Re Insurance Company United States 100,00 100,00 100,00 100,00 Full Sweden Reinsurance Co. Ltd Sweden 100,00 100,00 100,00 100,00 Full SCOR Global P&C SE and its subsidiaries SCOR Global P&C SE France 100,00 99,99 100,00 100,00 Full SCOR (UK) Group Limited United Kingdom 100,00 100,00 100,00 100,00 Full SCOR Canada Reinsurance Company Canada 100,00 100,00 100,00 100,00 Full SCOR Global P&C Ireland Ireland 100,00 100,00 100,00 100,00 Full SCOR Global South Africa (Pty) Ltd South Africa 100,00 100,00 - - Full SCOR P&C Ireland Holding Limited Ireland 100,00 100,00 100,00 100,00 Full SCOR UK Company Limited United Kingdom 100,00 100,00 100,00 100,00 Full SCOR Underwriting Ltd United Kingdom 100,00 100,00 100,00 100,00 Full SCOR Holding (SWITZERLAND) AG and its subsidiaries SCOR Holding (Switzerland) AG Switzerland 100,00 100,00 100,00 100,00 Full SCOR Finance (Bermuda) Ltd renamed to SCOR FINANCE (SWITZERLAND) LTD Switzerland 100,00 100,00 100,00 100,00 Full SCOR Holding (UK) Ltd United Kingdom 100,00 100,00 100,00 100,00 Full SCOR Insurance (UK) Ltd United Kingdom 100,00 100,00 100,00 100,00 Full SCOR PCC Ltd United Kingdom 100,00 100,00 100,00 100,00 Full SCOR Rückversicherung (Deutschland) AG Germany 100,00 100,00 100,00 100,00 Full SCOR Switzerland AG Switzerland 100,00 100,00 100,00 100,00 Full Real Estate Businesses Finimo Realty Pte Ltd Singapore 100,00 100,00 100,00 100,00 Full SCOR Auber France 100,00 100,00 100,00 100,00 Full Financial Activity Avance Germany 100,00 100,00 100,00 100,00 Full Europe MidCap Luxemburg - - 100,00 100,00 Full SCOR Picking Luxemburg - - 100,00 100,00 Full FCP SGI Euro Govies France 100,00 100,00 - - Full Associates and Joint Ventures ASEFA SA Seguros y reaseguros Spain 39,97 39,97 39,97 39,97 Equity interest MUTRE SA France 33,33 33,33 33,33 33,33 Equity interest SCOR Channel Limited Guernsey 99,86 99,86 99,86 99,86 Equity interest SCOR Gestion Financière France 100,00 100,00 100,00 100,00 Equity interest
Reinsurance commitments are recognised as liabilities within underwriting reserves and are offset by assets which are maintained for the settlement of claims. When the liabilities are not offset by cash deposited with the ceding companies, the underwriting reserves may be covered by pledged securities or letters of credit granted to ceding companies which disclosed within off-balance sheet commitments.
Commitments received Unused lines of credit (1) 50 50 Letters of credit – retrocessionaires (2) 137 125 Endorsements, sureties 16 19 Other commitments received - 1
TOTAL COLLATERAL RECEIVED FROM RETROCESSIONAIRES (4) 975 863 (1) Unused lines of credit represent those facilities available to the Group to enable it to meet its liquidity requirements. These include overdrafts and lines of credit, but exclude letter of credit facilities. The Group has total letter of credit facilities available to it of USD 3,840 million, composed of several syndicated and bilateral lines with international banks. The prior year comparative has been changed to reflect improved presentation and current year definitions. (2) Includes letters of credits received from external retrocessionaires. (3) Represents the total amount of letter of credits granted by the entity in favour of its cedants, including those issued by banks on behalf of the Group. (4) This is the total carrying amount of financial assets pledged as collateral for liabilities or contingent liabilities.
Parental guarantees provided by SCOR SE to a number of operating subsidiaries have been presented within Note 25 – Related party transactions.
Concentrations of gross written premium by geographical location, both based on subsidiary location and the location of the ceding company, is included in Note 2 – Segment Information
Credit risk is the risk that one party to a financial instrument or other asset (such as retrocessionaires) will cause a financial loss to the other party by failing to discharge an obligation.
Credit risks identified by SCOR are described in the 2009 Registration Document in Section 4.1.12 – We are exposed to credit risks.
The carrying amounts of the Group’s financial assets exposed to credit risk by counterparty credit quality, excluding consideration of collateral held or other credit enhancements is included in Note 6 – Insurance business investments (for fixed income securities) and Note 16 – Contract liabilities (for the share of retrocessionaires in insurance and financial liabilities).
Available-for-sale investments 9,997 - - - - 9,997 Fair value through income 165 - - - - 165 Derivative instruments 104 - - - - 104 Loans and receivables 7,544 527 - - - 8,071 Reinsurance assets 1,422 16 - - - 1,438 Insurance receivables 2,941 367 62 27 26 3,423 Taxes receivable 33 4 - - - 37 Other accounts receivable 348 4 4 - - 356 Cash and cash equivalents 1,320 5 - - - 1,325 TOTAL 23,874 923 66 27 26 24,916
The following table provides an overall analysis of the aging of financial assets as at 31 December 2008: In EUR million Current 1-12 months Total
Available-for-sale investments 7,220 - - - - 7,220 Fair value through income 153 - - - - 153 Derivative instruments 16 - - - - 16 Loans and receivables 8,868 438 - 2 - 9,309 Reinsurance assets 1,228 23 - - - 1,251 Insurance receivables 3,113 136 25 7 50 3,330 Taxes receivable 85 - - - - 85 Other accounts receivable 339 8 12 - 359 Cash and cash equivalents 1,783 - - - - 1,783 TOTAL 22,806 605 37 9 50 23,506
Impairment information relating to financial assets is included in Note 6, - Investments, Note 7 - Loans and receivables, and Note 10 - Accounts receivables and debts with cedants and retrocessionaires and Note 20 – Investment income.
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial instruments. SCOR does not currently face substantial liquidity issues in the short term due to limited obligations related to financial instruments and the significant level of cash and short term investments, EUR 1.7 billion at 31 December 2009 (2008: EUR 3.7 billion).
Liquidity risk is described in the 2009 Registration Document in Section 4.3.1- We face liquidity requirements in the short to medium term.
The technical reserves of SCOR Global P&C are established on an undiscounted basis (except workers compensation in the USA). The table below includes the estimated maturity profiles of the Non-Life insurance liabilities based on payment patterns derived from historical data.
Non-Life insurance liabilities(1) In EUR million 0-1 year 1-3 years 3-7 years > 7 years Total
OCEANE FINANCIAL DEBT REPAYABLE 1 JANUARY 2010 4.12% 191 - - 191
The previous tables are based on the IFRS 7 disclosure requirement and do not represent the intention of the Group to call the debt back before maturity.
The Group holds a finance lease which contains an option to purchase an investment property at the end of the lease term. The amount of the minimum payments and their discounted values are presented within Note 5 – Tangible assets and real estate investments. In addition, various entities in the Group rent their office headquarters. The minimum payments relating to these operating leases are presented within Note 5 – Tangible assets and real estate investments.
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and equity price risk.
Interest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Interest rate fluctuations have direct consequences on the market value of our fixed-income investments and therefore on the level of unrealised capital gains or losses of the fixed-income securities held in our portfolio. The return on the securities held also depends on changes in interest rates. Floating rate instruments expose the Group to cash flow interest risk, whereas fixed interest rate instruments expose the Group to fair value interest risk.
For the business written in the United Kingdom, Scandinavia, United States (traditional, non-savings products) and France (excluding Long Term Care), valuation interest rates are locked-in based on a prudent estimate of the expected rate earned on assets held less a provision for adverse deviation.
The life products with guaranteed minimum death benefits (GMDB) are not materially sensitive to 100 basis point decrease in interest rates. An increase in interest rates would not result in a decrease in the level of reserves as the interest rates are locked-in. The liabilities recorded for the annuity business would not change materially to a 100 basis point change in interest rates as they are linked to account values. However, the shadow accounting would be impacted.
Additional information is included in the 2009 Registration Document in Section 4.2.2 – We face risks related to our equity-based portfolio.
valuation assumptions are locked-in, an increase in equity values, resulting in a decrease in the economic liability, would not impact the level of reserves recorded in the financial statements.
The market sensitivities of the Group are estimated as follows: 31 December 2009 31 December 2008 In EUR million Income (3) Equity (3) (4) Income (3) Equity (3) (4)
In addition, during the year SCOR entered into a net investment hedge to reduce it’s exposure to variations in the net assets of USD functional currency subsidiaries. USD debt with a carrying value of USD 100 million was designated as a hedge as at 1 October 2009 and the movement in foreign exchange during the period ended 31 December 2009 reclassified to equity was EUR 1 million.
USD/EUR +10% 130 186 % of Equity 3.3% 5.4% USD/EUR -10% (130) (186) % of Equity (3.3)% (5.4)% GBP/EUR +10% 34 28 % of Equity 0.9% 0.8% GBP/EUR -10% (34) (28) % of Equity (0.9)% (0.8)%
On 23 September 2005, the lead plaintiffs filed a consolidated amended class action complaint (the “Complaint”). In addition to Converium and certain of its officers and directors, the Complaint also names as defendants Zurich Financial Services (“ZFS”); UBS AG; and Merrill Lynch International. The Complaint generally alleges that a class of shareholders who purchased shares of Converium between 11 December 2001 and 1st September 2004 were damaged because Converium did not establish adequate loss reserves to cover claims by policyholders; Converium announced reserve increases prior to 20 July 2004 that were insufficient; and, as a result of the foregoing, Converium’s earnings and assets were materially overstated. The Complaint asserts claims for violations of Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Sections 11, 12 and 15 of the Securities Act of 1933 (the “Securities Act”). The Complaint seeks unspecified monetary damages and other relief.
10(b) and Section 20(a) of the Exchange Act by misrepresenting and omitting material information in various public disclosures following Converium’s IPO. In addition, the Court denied Lead Plaintiffs’ motion to amend their complaint.
On 12 January 2007, Lead Plaintiffs filed a motion for reconsideration of the Court’s 28 December 2006 order. On 9 April 2007, the Court granted Lead Plaintiffs' motion for reconsideration in part and denied it in part. The Court granted Lead Plaintiffs' motion to reconsider its dismissal of Exchange Act claims arising out of the IPO. The Court denied Lead Plaintiffs' motion to reconsider the dismissal of the Securities Act claims, as well their motion to file a Consolidated Second Amended Class Action Complaint.
On 4 September 2007, the Court preliminarily approved the settlement. If the settlement obtains final approval, it would resolve the claims of the Settlement Class asserted against ZFS (and against certain other defendants as set forth in the Stipulation of Settlement, including all of Converium’s former directors). A fairness hearing on the settlement has not yet been scheduled.
On 20 March 2008, Lead Plaintiffs filed a motion for reconsideration of the ruling of the 6 March and 19 March 2008 Orders.
No final decision is expected on these two proceedings before the end of 2010.
In Europe: On 29 January 2008, the Spanish competition authority (Comisión Nacional de la Competencia, the “CNC") commenced a sanctioning procedure against SCOR Global P&C SE Ibérica Sucursal, a branch of SCOR Global P&C, and a number of other insurance and reinsurance companies for alleged antitrust practices to set the commercial conditions applied to customers in relation to the decennial insurance for construction that could result in an infringement of Article 1 of Law 15/2007, of 3 July 2007, on Competition (the "Competition Act") (which prohibits agreements and concerted practices that may have as an object or effect the restriction of competition in the market).
20.2 Auditing of historical consolidated financial information In application of the EC Commission Regulation No. 809/2004, the following information is included by reference in this Registration Document: (i) The report from the Statutory Auditors on the consolidated financial statements for the financial year ending 31
(ii) The report from the Statutory Auditors on the consolidated financial statements for the financial year ending 31 December 2007 published pages 292 to 295 of the registration document filed with the Autorité des Marchés Financiers on 28 March 2008 under Number D. 08-0154.0
This report, together with the statutory auditors’ report addressing financial and accounting information in the Chairman’s report on internal control, should be read in conjunction with, and is construed in accordance with French law and professional auditing standards applicable in France.
These consolidated financial statements have been approved by the Board of Directors at their meeting on 2 March 2010. Our role is to express an opinion on these financial statements, based on our audit.
In our opinion, the financial statements give a true and fair view of the assets, liabilities, financial position and results of the consolidated group in accordance with the accounting rules and principles applicable under IFRS, as adopted by the European Union.
Accounting estimates used to prepare the consolidated financial statements as at 31 December 2009 have been assessed in high market volatility and an uncertain economic future environment. In this context, and in accordance with the requirements of Article L. 823-9 of the French Commercial Code (Code de Commerce), we have performed our own assessments that we bring to your attention on the following matters: Within the framework of our assessment of the accounting rules and policies followed-up by our company, we ensured ourselves of the reasonableness of the change in accounting methods mentioned above and of the presentation thereof.
Notes 1- “(G) real estate investments”, 1 - “(H) financial instruments”, 5, 6 and 8 to the consolidated financial statements describe the principles and methods used to estimate the valuation and impairment of investments and derivative instruments.
In the specific context of the financial crisis, we examined the control system in place, detailed in note 27 to the consolidated financial statements, relative to the inventory of direct and indirect exposures, and the system in place for their assessment, as well as the valuation methods and write-down policies applicable to certain financial instruments. We have obtained assurance that the information provided in the aforementioned notes is appropriate, and that the approaches and policies described were properly applied by the Group.
Notes 1 - “(F) intangible assets”, 3 and 4 to the consolidated financial statements describe the principles and methods used to assess the valuation of goodwill and the value of business acquired for the Life and Non-Life reinsurance portfolios. The methods used to carry out these annual impairment tests are described in note 4 to the consolidated financial statements.
Notes 1 - “(R) Taxes” and 19 to the consolidated financial statements describe the principles and methods used to perform the valuation of deferred tax assets as well as the deferred tax assets impairment test.
Note 28 “Litigation” to the consolidated financial statements describes the litigation encountered by the Group.
Notes 1 - “(O) pension obligations and related benefits” and 15 to the consolidated financial statements specify the valuation methods applied to pension obligations and other related obligations.
We have no matters to report regarding its fair presentation and conformity with the consolidated financial statements.
The third-party agreements executed in 2009 or continued during 2009, as defined by Articles L. 225-38 and following of the French Commercial Code, listed in Section 19.3, have been the subject of a specific report by the statutory auditors.
The SCOR corporate accounts for the financial periods ending 31 December 2009, 2008 and 2007, included respectively in Appendix A of this Registration Document, at pages 286 to 324 of the registration document filed with the Autorité des marches financiers on 5 March 2009 under the number D. 09-0099 and at pages 147 to 185 of the registration document filed with the Autorité des marches financiers on 28 March 2008 under the number D. 08-0154, have been the subject of reports by the statutory auditors, featured respectively in Appendix A of this Registration Document, at pages 325 to 327 of the registration document filed with the Autorité des marches financiers on 5 March 2009 under the number D. 09-0099 and at pages 289 to 292 of the registration document filed with the Autorité des marches financiers on 28 March 2008 under the number D. 08-0154.
20.6 Dividend distribution policy The resolution to be presented to the Annual General Meeting to approve, during the first half of 2010, the accounts for the financial year 2009, sets out the distribution of a dividend of EUR 1 per share for the financial year 2009.
See also Section 20.1.6 – Notes to the consolidated financial statements, Note 24 - Earnings per share.
In accordance with the decision of the Combined Shareholders' Meeting on 16 May 2006 in its seventeenth resolution, to consolidate the shares comprising the share capital of SCOR in the ratio of one new share with a par value of EUR 7.8769723 (the “New Shares”) for 10 existing shares with a par value of EUR 0.78769723 per share (the “Old Shares”) and the decision of the Board of Directors of the Company on 7 November 2006, the Chairman and Chief Executive Officer noted on 15 December 2006 and 3 January 2007: that the reverse stock-split of SCOR shares would take place on 3 January 2007; and that prior to the reverse stock-split, the share capital would be reduced by a nominal amount of EUR 3, corresponding to the nominal amount of 4 SCOR shares (as a result of the cancellation of 4 treasury shares in order to obtain a number of outstanding Old Shares in circulation that was a multiple of 10).
The reverse stock-split took place on 3 January 2007 by an automatic exchange of ten (10) Old Shares for one (1) New Share. A residual proportion of the share capital, corresponding to the fractional Old Shares in the respective portfolios of the shareholders, initially continued to be listed and traded on the Eurolist by Euronext Paris S.A. market in the form of Old Shares to enable holders of Old Shares to sell or obtain a whole number of shares. The corresponding New Shares were held by the Company and could be exchanged on request by holders of Old Shares until 3 January 2009. The Old Share listing line was closed on 3 July 2007. The New Shares corresponding to the Old Shares the combination of which had not been requested by their holders on 3 January 2009 have been sold on the market by SCOR, and the corresponding Old Shares have been cancelled.
According to the decision of the Extraordinary Shareholders General Meeting of the Company dated 18 May 2004, in its fourth resolution to authorise the Board to grant to officers and employees options to subscribe for or purchase of shares and to acknowledge, if necessary, at its first meeting following the year end of the Company, the number and amount of new shares issued during that period following the exercise of options, the Board of Directors of SCOR acknowledged, on 2 March 2010, the capital increase of EUR 84,322 by creation of 10,705 shares with a nominal value of EUR 7.8769723 each.
- Number initially authorised (date of the Shareholder’s Meeting) - Outstanding number at the date of the Registration Document
25,390,466 shares (15 April 2009) 25,390,466 shares (Date of the Registration Document)
18th resolution (Delegation of authority granted to the Board of Directors for the purpose of deciding on the issuance of shares and/or of securities granting access to capital or giving entitlement to a debt instrument, with cancellation of preferential subscription rights)
16,948,136 shares (15 April 2009) 16,948,136 shares (Date of the Registration Document)
22nd resolution (Authority to issue shares for stock option plans) 3,000,000 shares (15 April 2009) 2,911,500 shares (Date of Registration Document)
3,000,000 shares (15 April 2009) 3,000,000 shares (Date of Registration Document)
The delegations of powers granted by the Shareholders' Meeting of 15 April 2009 are each granted for a twenty-six (26) months duration as from the date of the Shareholders’ Meeting, i.e. until 15 June 2011, date on which it will be deemed expired if the Board of Directors did not use it.
The authorisations granted by the Shareholders’ Meeting of 15 April 2009 are each granted for an eighteen (18) months duration as from the date of the Shareholders’ Meeting, i.e. until 15 October 2010, date on which it will be deemed expired if the Board of Directors did not use it.
The description of the stock buyback program implemented under the 6th resolution of the Annual Shareholders' Meeting of 15 April 2009 was published by the Company on 22 April 2009. The report of the Board of Directors of the Company to the Annual Shareholders’ Meeting to be held in the first half of 2010 on the use of the 6th resolution will be made available to SCOR shareholders under the conditions set forth by law.
In the context of the above mentioned buyback program and this liquidity agreement were as follows: SCOR proceeded, during the financial year 2009, to: the purchase of 4,328,112 treasury shares, the sale of 2,169,065 treasury shares, the transfer of 686,751 treasury shares.
Number of shares purchased Number of shares sold January 2009 15.535 15.822 2,194.86 431,275 307,896 February 2009 15.222 15.419 NA 324,245 298,718 March 2009 15.030 15.166 1,465.68 597,180 343,915 April 2009 15,635 15.888 NA 331,208 308,908 May 2009 15.239 15.473 NA 329,614 290,489 June 2009 14.681 14.770 NA 308,885 265,611 July 2009 15.263 15.401 1,344.78 309,327 327,831 August 2009 17.644 17.742 NA 154,184 205,572 September 2009 18.308 18.354 NA 329,304 371,942 October 2009 18.217 18.299 NA 291,507 210,148 November 2009 16.905 17.022 4,756.15 594,078 277,353 December 2009 17.106 17.000 29,944.83 1,727,083 5,000
Percentage of share capital 1.Stimulation of the secondary market or the liquidity of the Company's shares by an investment services provider through a liquidity agreement compliant with a professional ethics charter recognised by the Financial Markets Authority 2Implementation of any stock option plan of the Company within the framework of the provisions of Articles L. 225-177 et seq. of the French Commercial Code 3.Free allotment of shares to employees and/or company representatives 4.Allotment of shares to employees and, where applicable, company representatives for the purpose of participating in the results of the company's expansion and implementing any company savings plan, under the conditions specified by law, in particular within the framework of Articles L. 443-1 et seqq. of the French Labour Code 5.Purchasing of shares for keeping and later remittal for exchange or as payment within the framework of possible external growth operations 6.Remittal of shares during the exercise of rights attached to securities giving access to the capital 7.Cancellation of the shares bought back in this way, within the limits established by law 21.1.4 AMOUNT OF CONVERTIBLE SECURITIES, EXCHANGEABLE SECURITIES OR SECURITIES WITH SUBSCRIPTION WARRANTS
Refer also to Section 20.1.6 – Notes to the Consolidated Financial Statements - Note 14: Financial debt.
Section 20.1.6 - Notes to the Consolidated Financial Statements – Note 17: Provisions for employee benefits, and
Exercise of subscription options - None None None - Conversion of OCEANE - None None None - -
Cancellation of treasury shares - 129,539 1,020,375.11 None Exercise of subscription option 10.90 131,053 1,032,300.85 396,176.85
Exercise of subscription option 10.90 10,705 84,322.99 32,361.51 Cancellation of treasury shares NA 141,758 1,116,623.84 None 12The amounts in New Shares indicated for the periods prior to 3 January 2007 are amounts adjusted on the basis of the corresponding amounts for Existing Shares in order to reflect the impact of the reverse stock split described in Section 21.1.1 of the Registration Document, as if the split had taken place prior to the period covered by the information provided in this table, as the SCOR capital was entirely represented by Existing Shares prior to 3 January 2007. The adjustment was made by dividing the corresponding amount expressed in Existing Shares; the result was rounded off to the next lowest whole number. 13This capital increase was essentially intended to finance with equity a portion of the acquisition by SCOR VIE, a wholly owned subsidiary of SCOR, of 100% of the stock of Revios Rückversicherung AG (“Revios”), a German company, from GLOBALE RückversicherungsAktiengesellschaft. This issue was described in an offering circular approved by the AMF on 16 November 2006 under number 06-406. 14On 3 January 2007, SCOR executed a reverse stock split. In a decision on 2 January 2007, the Chairman and Chief Executive Officer of SCOR noted share capital of EUR 932,673,756 versus EUR 932,673,759 until that date because of the adjustment to fractional shares. 15This capital increase was intended to remunerate the in-kind contribution made to the Company by PatinexAG, a Swiss joint stock company, of 23,216,280 registered shares of Converium Holding AG stock. – For more information on this in-kind contribution of stock, refer to Section 5.2.1.1- Public offer upon the Converium shares. This contribution was described an E document registered by the AMF on 10 April 2007 under number E.07-032 and a supplemental E document registered by the AMF on 23 April 2007 under number E.07-039. 16This capital increase was intended to remunerate the in-kind contribution made to the Company by the pension fund Alecta pensionsförsäkring, ömsesidigt (“Alecta”), a Swedish pension fund, of 5,680,000 registered shares of stock in Converium Holding AG – For more information on this in-kind contribution of securities, refer to Section 5.2.1.1 - Public offer upon the Converium shares. This contribution was described in an E document registered by the AMF on 10 April 2007 under number E.07-032 and a supplemental E document registered by the AMG on 23 April 2007 under number E.07-039. 17This capital increase was intended to issue and list for trading the shares of the Company to be remitted in exchange for the shares of Converium Holding AG stock tendered in the combined tender/exchange offer made by the Company for the registered shares of Converium Holding AG stock held by the public. This capital increase was performed pursuant to Swiss legal and regulatory provisions and was described in an offering prospectus published and filed with the Swiss Commission des Offres Publiques d’Acquisition (“COPA”) on 5 April 2007 – For more information on this capital increase, refer to Section 5.2.1.1 - Public offer upon the Converium shares. This capital increase was described in (i) an offering notice approved by the AMF on 10 April 2007 under number 07-115, (ii) a supplemental notice approved by the AMF on 23 April 2007 under number 07-131, and (iii) a second supplemental notice approved by the AMF on 12 June 2007 under number 07-183. 18This capital increase was intended to pay the contribution in kind of the SCOR Holding (Switzerland) AG’s shares to SCOR by the minority shareholders in the framework of the cancellation proceedings of the SCOR Holding (Switzerland) AG’s shares not held by the Group – For more information on this operation and this cancellation proceedings, refer to Section 5.2.1.2 - Cancellation of the shares of SCOR Holding (Switzerland).
Refer to the report of the Chairman of the Board of Directors in Appendix B of the Registration Document.
The remaining Old Shares have been cancelled on 3 January 2009 and since then subject to applicable laws, all the shares of the Company give right to one voting right.
The Ordinary Shareholders’ Meeting may validly take all decisions necessary to give each shareholder the option of receiving all or part of a dividend or interim dividend in the form of shares in the Company, in accordance with the terms and conditions set forth by law.
The Shareholders’ Meeting which decides or authorises a capital increase may, under Article L. 225-135 of the French Commercial Code, eliminate the pre-emptive subscription right for the entire capital increase or for one or more segments of said increase and may allow or not allow a priority subscription period for shareholders. When the issue is carried out through a public offering without pre-emptive subscription rights, the issue price must be set according to Article L 225-136 of the French Commercial Code.
Refer to: Section 20.1.6 – Notes to Consolidated Financial Statements – Note 26 : Commitments received and granted and Note 27 : Insurance and financial risk
The FA is supported by the profitability of a large portfolio of in force life reinsurance contracts. Under the FA, Revios is able to cover under the guarantee approximately 90% of the excess of US statutory reserves over IFRS liabilities, up to the facility's maximum of USD 225 million.
under its reinsurance transactions. This revolving stand-by letter of credit agreement for up to USD 1,500 million was executed for a period of use from 25 June 2007, to 25 June 2010, with an option to be extended to 25 June 2012.
SCOR Global Life SE has added a new layer of protection to its current four-year mortality swap transaction. Under the new, extended arrangement, SCOR will be entitled to USD 75 million in the event of a rise in mortality over the course of the period from 1 January 2009 to 31 December 2011 notably due e.g. to major pandemics, natural catastrophes or terrorist attacks.
Stand-by letter of credit facility agreements executed on 24 July 2009 between SCOR SE, SCOR Global Life SE and SCOR Global P&C SE on one side and Deutsche Bank on the other side, as amended on 4 December 2009
The issuance of SBLCs pursuant to this agreement is subject to the execution of (i) a pledge over a financial instruments account to the benefit of Deutsche Bank, composed of U.S. treasury bills and French Government bonds under the terms and conditions required by the agreement and of (ii) a first demand guarantee to the benefit of Deutsche Bank up to a maximum amount of USD 125,000,000.
Under the terms of an agreement with SCOR, SCOR Global P&C SE, SCOR Global Life SE and SCOR Switzerland AG on one side and CALYON on the other side, CALYON has agreed to issue SBLCs to guarantee the reinsurance activities of the above mentioned companies up to a maximum of USD 200,000,000 in a form acceptable to the NAIC, as from 1 January 2009 until 31 December 2011.
23.1 page 279 Expert’s report 23.2 page 279 Information from third parties
23.2 Information from third parties The Company certifies that all the following information stated in this Registration Document and received from third parties has been accurately reproduced and that as far as the Company is aware and is able to ascertain from information published by such third party, no facts have been omitted, which would render the reproduced information inaccurate or misleading: Data issued from the Standard & Poor’s Global Reinsurance Highlights (2009 Edition) and relating to the ranking on reinsurance market participants quoted in sections 3.1 – Group key figures, 5.1.5 – Important events in the development of the issuer’s business and 6.5 – Information on SCOR’s competitive position; Ratings issued by the Standard & Poor’s, Fitch Ratings, AM Best and Moody’s rating agencies quoted in section 4.1.8 – Financial ratings play an important role in our business.
Section 20.1.6 – Notes to the Consolidated Financial Statements – Note 25 – Information on related parties.
As at 31 December 2009, SCOR held, however indirectly, shares or units in the following companies, which represent at least 10% of the consolidated net assets or generate at least 10% of the consolidated net profit or loss.
28.2 page 291 Information published in the Bulletin des Annonces Légales Obligatoires (BALO) [Bulletin of required legal notices publications] (www.journal-officiel.gouv.fr/balo/index.php)
28.5 page 293 Information published on the Info-Financières website (www.infofinancière. fr/search.php.com
1st December 2009 Disclosure of trading in the Company’s shares by members of the Board of Directors (Gérard Andreck)
24 November 2009 Disclosure of crossing thresholds 8 September 2009 Disclosure of trading in the Company’s shares by members of the Board of Directors (Jean-Claude Seys)
4 September 2009 Disclosure of trading in the Company’s shares by members of the Board of Directors (André Lévy-Lang)
24 April 2009 Disclosure of trading in the Company’s shares by members of the Board of Directors (Daniel Lebègue)
14 April 2009 Disclosure of trading in the Company’s shares by members of the Board of Directors (Claude Tendil)
Date Subject 2 December 2009 Other notices –Contractual reimbursement of OCEANE convertible bonds 2004/2010 11 September 2009 Other notices – Notice to OCEANE convertible bonds 2004/2010 holders 3 June 2009 Periodical publications – Approval of the financial statements for the financial year 2008 by the Ordinary Annual General Meeting of the Shareholders held on 15 April 2009 and certification of the auditors 29 April 2009 Other notices – Voting rights 27 April 2009 Other notices – Voting rights 30 March 2009 Notices of meeting – Notice of convening of the shareholders and securities holders to the Ordinary and Extraordinary General Meeting of the Shareholders of 15 April 2009 11 March 2009 Notices of meeting – Notice of convening of the shareholders and securities holders to the Ordinary and Extraordinary General Meeting of the Shareholders of 15 April 2009
SCOR wins Reinsurance Magazine’s « European Reinsurer of the Year » award – Press release 7 December 2009 Disclosure of trading in own shares – From 1st to 4 December 2009 7 December 2009 Disclosure of trading in own shares – From 23 to 30 November 2009 7 December 2009 Disclosure of trading in own shares – From 1st to 6 November 2009 7 December 2009 Disclosure of trading in own shares – From 1st to 31 July 2009 7 December 2009 Disclosure of trading in own shares – From 4 to 29 May 2009 4 December 2009 SCOR finalises purchase of XL Re Life America Inc. – Press release
SCOR Global Life launches SCOR Telemed to provide clients with value-added services in the field of tele-underwriting – Press release
Date Subject 30 April 2009 SCOR Global Life European Embedded Value increases by 3.9% to EUR 1.7 billion. Strong operating performance – Press release 23 April 2009 2009-2010 Sharebuy back program 15 April 2009 SCOR's Combined General Meeting adopts all proposed resolutions – Press release 3 April 2009 Disclosure of trading in own shares – From 3 to 27 March 2009 30 March 2009 Notice of convening to the 2009 Shareholders’ General Meeting (15 April 2009) 11 March 2009 Notice of meeting to the 2009 Shareholders’ General Meeting 26 March 2009 SCOR wins "Best International Reinsurer on the Russian Market in 2008" – Press release 16 March 2009 Modification of the means allocated to the liquidity agreement – Press release 13 March 2009 Standard & Poor's upgrades SCOR to "A" – Press release 28.4 Information published on NYSE-Euronext’s web site (www.euronext.com) All press releases and offering circulars published on the AMF site (point 1.1) and on SCOR’s web site (point 1.4) are simultaneously published on NYSE-Euronext’s website. In addition, the following were published on the NYSEEuronext ’s website: Date
Subject 1 December 2009 Contractual redemption of OCEANEs 2004/2010 – Delisting from the stock exchange of the OCEANEs 8 September 2009 Modification of the characteristics of the OCEANEs 6 September 2009 Press release – Leading global reinsurers establish an Independent “Global Reinsurance Forum”
(ii) The corporate financial statements for the year ended 31 December 2007 and the Auditors’ Report pertaining thereto published on pages 147 to 185 and 289 to 292, respectively, of the registration document filed with the Autorité des Marchés Financiers on 28 March 2008 under number D. 08-0154.
SCOR’s corporate financial statements for the financial year ended 31 December 2009 are shown below:
This year SCOR SE (“SCOR”) carried out the following transactions: SCOR SE completed a transfer, on 9 November 2009, of 51% of SCOR Switzerland AG to SCOR Global P&C SE for an amount of EUR 994 million.
Partial repurchase of subordinated notes (EUR 350 million), for an amount of EUR 93 million, by SCOR Holding Switzerland.
On 31 December 2009, merger of Commercial Risk Partner (CRP) and GSNIC.
On 22 June 2009, SCOR and the Highfields Funds concluded a transaction, including mutual renunciation of all legal recourse raised, or which could be raised, within the framework from the Highfields Action. On 24 June 2009, SCOR and the Highfields Funds deposited a declaration of desistance (“déclaration de désistement”) from the Highfields Action, thus ending the dispute.
Unearned premiums reserves (Non-Life) 2 - 2 Loss reserves (Non-Life) 68 - 68 6 Other underwriting reserves (Non-Life) - - - -
Operating property, plant and equipment 48 12 36 33 Bank accounts and cash 276 - 276 25
Gross underwriting reserves Note 4 1,899 1,705 Reinsurance reserves (Life) 231 308 Loss reserves (Life) 147 124 Unearned premiums reserves (Non-Life) 154 163 Loss reserves (Non-Life) 978 793 Other underwriting reserves (Non-Life) 389 317 Equalisation reserves (Non-Life) - Underwriting reserves for unit-linked contracts - -
NON-LIFE UNDERWRITING RESULTS (LOSS) (77) 165 87 (45) (1) Other underwriting reserve expense corresponds to the reserve for increasing risks.
Internal and external investment management costs and interest expense (7) - (7) (14)
Investment revenues 697 152 Investment income 120 134 Other investment income 457 6 Realised gains 121 12
Other commitments on investment securities, assets or revenues 79 79 167
Other commitments given 206 206 226 Securities pledged to ceding companies 18 18 24 Marketable securities pledged to financial institutions 4 4 Investments in subsidiaries and affiliates pledged to financial institutions - - -
Other guarantees given to financial institutions - - 1 Contract termination indemnities 5 5 5 Foreign currency forward sales 179 179 196 Real estate leases - - -
A new branch was created by SCOR SE in 2009, SCOR Zweignierderlassung Zurich, with a retroactive effect as from 1st January 2009, with no significant impact on the balance sheet or net income.
Intangible assets consist of software acquired or created by the Company which is capitalised and amortised over a period ranging from 1 to 5 years.
For real estate and financial (holding) companies, the fair value is calculated as the pro rata of the net assets increased for unrealised gains, net of tax. An impairment provision is recorded on a line-by-line basis when these values are less historical cost.
When the realisable value is more than 30% below the initial cost for more than six consecutive months, a detailed lineby -line analysis performed to determine whether the impairment is permanent. In accordance with the Notice of 18 December 2002 (amended of 15 December 2008) issued by the Emergency Committee of the French National Accounting Commission, an impairment provision is recorded on a line-by-line basis for securities which are considered permanently impaired.
An impairment provision is recorded for loans or other accounts receivable due in more than one year if the fair value is less than historical cost.
A liquidity risk reserve is recorded for the possible need to liquidate assets in order to make immediate payment on major claims. This reserve is included in underwriting reserves and is recorded when the total net book value of assets, excluding bonds and other fixed income securities (investments valued according to article R. 332-19 of the French Insurance Code), exceeds their fair value. The fair value corresponds to the market price for listed shares, the net asset value for unlisted shares and the net realisable value for investments in subsidiaries as described in 2.1.
Equipment, furniture and fixtures are depreciated on a straight-line or sliding scale basis depending on their estimated useful lives: Office equipment and furniture 5 to 10 years
Senior management pension obligations (Article 39): The valuation of the reserve for senior management pension obligations is based on the following actuarial assumptions: Discount rate: 5.20% based on IBoxx EUR Corporate AA bonds 10Y+ rates at 31 December 2009
Updated mortality tables for the various plans, with turnover data for managers and salary increases.
Long term service awards: The CNC Notice 2004-05 dated 25 March 2004 requires the recognition of a provision for long term service awards as from 2004.
Debt issuance costs are amortised over the life of the respective loan. Interest on financial debt is included in financing expenses.
Assumed reinsurance transactions: Assumed reinsurance is recorded upon receipt of accounts transmitted by ceding companies.
Estimates of premiums and commissions not yet received from ceding companies at period end are recorded in the income statement and included on the balance sheet in the account “Reinsurance estimates - assumed”.
The retrocessionaires’ share in estimates of assumed premiums and commissions is included on the balance sheet in the liability account, entitled “Reinsurance estimates - retrocessions.”
Life Activity: The mathematical reserves for Life reinsurance are submitted by ceding companies and completed by estimates calculated by Life actuaries using statistics based on historical date and information provided by underwriters.
A provision for increased risk (“risque croissant“) is recorded for long term care and disability business. This risk increases with the age of the insured although the premiums are typically constant. It is equal to the difference between the discounted values of the respective commitments of the insured and insurer.
Pursuant to the provisions of article R. 341-7 of the French Insurance Code, foreign currency transactions of the Company are recorded in their original currency. For purposes of financial statement presentation, balance sheet amounts are converted into Euro using the end of period exchange rates or the rate of the closest date immediately prior to the end of the period.
At each balance sheet date, items in foreign currencies are converted into Euro by allocating the underlying transactions as follows: Transactions relating to assets and liabilities generating a “structural” foreign currency position primarily investments in subsidiaries and related provisions; Other transactions generating an “operational” foreign currency position.
Differences relating to the conversion of structural positions are recorded on the balance sheet whereas conversion differences relating to operational positions are recorded in income.
The foreign currency differences on off-balance sheet positions (forward financial instrument contracts – “IFT”) and the related off-balance sheet account represent unrealised foreign currency gains or losses. These differences are recorded on the balance sheet in the accounts “net translation adjustments” and “regularisation of forward financial instrument contracts”, based on the underlying strategy.
The objective of the “net translation adjustments” account on the balance sheet is to ensure symmetrical treatment with the accounting of the exchange difference generated by the underlying instrument: When the IFT is linked to a structural element, the “net translation adjustments” account is maintained on the balance sheet until the structural element has been realised; When the IFT relates to a strategic investment, the “net translation adjustments” account is maintained until the date of the investment; When the IFT is related to an operational item, in the context of a strategic divestiture or investment, or the is linked to a non-structural financial debt, the “net translation adjustments” account is recorded in income.
Increase in capital of SCOR Asia Pacific for an amount of USD 25 million. On 31 December 2009, Amalgamation of Commercial Risk Partner (CRP) and GSNIC.
Shares in and advances to land and real Estate companies 1 - - - 1
The advance granted by SCOR to SCOR Global Life for the financing of the Revios acquisition is EUR 371 million at 31 December 2009 compared to EUR 505 million in 2008.
The shares held in SCOR U.S. Corporation were valued using the following method and assumptions: Enterprise value was assessed based on revalued net assets increased for the creation of future value determined using the Discounted Cash Flow (DCF) method. Projected income was used for the DCF method.
Analyses performed for other equity investments did not result in impairment provisions.
As at 31 December 2009, loans and advances granted by SCOR to its subsidiaries totalled EUR 405 million (including EUR 371 million to SCOR Global Life), compared to EUR 560 million as at 31 December 2008.
Loans granted to SCOR by its subsidiaries totalled EUR 1,126 million (including EUR 939 million from SCOR Global P&C) compared to EUR 994 million as at 31 December 2008.
(Amounts in million) (OC) * (OC) * (OC) * (EUR) (EUR) (EUR) (EUR) (EUR) (OC) * (OC) * (EUR) A- RELATED ENTITIES: DETAILED INFORMATION - SCOR GLOBAL LIFE S.E. (1) EUR 275 653 100,00% 430 430 371 100 - 1,835 -12 50 1, Avenue du Général de Gaulle 92800 PUTEAUX, France - SCOR GLOBAL P&C S.E. EUR 544 1,313 100,00% 1,465 1,465 - 104 - 1,547 -94 51 1, Avenue du Général de Gaulle 92800 PUTEAUX, France - SCOR REINSURANCE ASIAPACIFIC PTE LTD USD 74 36 100,00% 65 65 0 1 - 207 0 0 143 Cecil Street HEX 20-01 GB Building SINGAPORE 069542 - SCOR US CORPORATION USD 196 504 100,00% 1,211 711 0 2 - 601 193 0 199 Water Street, NEW YORK, NY 10038-3526 USA - SCOR AUBER S.A. (France) EUR 47 103 100,00% 149 149 5 23 - 15 17 8 1, Avenue du Général de Gaulle 92800 PUTEAUX, France GENERAL SECURITY NATIONAL INSURANCE COMPANY CORP USD 5 135 100,00% 66 66 0 0 - 0 -3 - 199 Water Street, NEW YORK, NY 10038-3526 USA - SCOR Holding Switzerland AG CHF 555 1,046 40,68% 788 788 - 0 - 0 77 0 General Guisan-Quai 26, 80022 Zurich, Suisse - ASEFA S.A. EUR 10 80 39,97% 6 6 - 0 - 0 -4 0 Avda Manoteras 32 Edificio A 28050 Madrid, Espagne - SCOR GESTION FINANCIERE S.A. EUR 4 1 100,00% 6 4 - 0 - 0 -1 0 1, Avenue du Général de Gaulle 92800 PUTEAUX, France - PREVOYANCE RE S.A. EUR 40 9 100,00% 41 37 - 0 - 78 7 - 1, Avenue du Général de Gaulle 92800 PUTEAUX, France - SCOR PERESTRAKHOVANIYE.O.O.O. RUB 7 0 100,00% 6 6 - 0 - 0 1 - 10 Nikolskaya Street, 109012, Moscou,
Other intangible assets (excluding goodwill) 1 - - 1 Equipment, furniture, fittings and fixtures 7 5 - 12
All the assets and liabilities of Prévoyance et Réassurance were transferred to SCOR by way of a “transmission universelle de patrimoine” or “TUP” on 28 December 2008. This transfer resulted in the elimination of the shares of Prévoyance et Réassurance (EUR 26 millions) and the recording of all assets and liabilities of the company in the accounts of SCOR. Badwill of EUR 3.7 million was recorded in connection with this transaction.
Shares other than variable income securities and bonds 4,480 6 117 4,603 4,092 6 38 4,136
Cash deposits with ceding companies - - - - - - - Share of retrocessionaires in underwriting reserves 6 - - 6 70 - - 70
Accrued income and deferred charges 1,211 - - 1,211 1,267 - 28 1,295 Deferred acquisition costs – assumed (Non-Life) 32 - - 32 25 - 6 32
Liabilities for cash deposits received from retrocessionaires - - - - - - - -
Liabilities arising from reinsurance operations 5 - 11 16 7 - - 7
Deferred commissions received from reinsurers (Non-Life) - - (1) (1) 1 - - 1
Long-term financial debt includes: (a) Other capital base: EUR 50 million in Perpetual Step-Up subordinated notes issued on 23 March 1999. These notes are callable by after 15 years, and at five-yearly intervals thereafter. The floating-rate notes bear interest based on the 6-month Euribor plus (i) 0.75% for the first fifteen years of the issue, and (ii) 1.75% thereafter.
Initial EUR 350 million (reduced to EUR 257 million after repurchase of EUR 93 million during 2009) undated deeply subordinated notes (Tier 1 type) issued on 28 July 2006 in connection with the financing of the acquisition of Revios Ruckversicherung AG. The bond issuance is represented by last-rank subordinated bearer notes with a par value of EUR 50,000 each bearing interest at an initial rate of 6.154% per annum, a floating rate indexed on the 3-month EURIBOR plus a margin of 2.90%, payable quarterly. No fixed redemption date is set but SCOR reserves the right to redeem the bonds in full or in part as from 28 July 2016.
The maturity of investments, debt, (other than financial debt), and receivables is less than one year.
The reinsurance estimates – assumed -Non Life (EUR 870 million) includes premiums for EUR 792 million, commissions payable of EUR (185) million and sinisters to repay for EUR 263 million.
Additional paid-in capital 923 (187) 9 745 Re-valuation reserves - - - Capitalisation reserves - - 2 2
The issuance of shares relating to the exercise of options through 31 December 2009 for a total of EUR 2 million were allocated to the share capital of the Company for EUR 1.3 million and to additional paid-in capital for EUR 0.7 million. The exercise of options resulted in the creation of 161,557 shares.
The Council of 3rd March has decided to reduce the share capital by cancellation of treasury shares for 129,539 shares with an amount of EUR 1.0 million.
The contingency reserves amount to EUR 47 million, of which: EUR 24.8 million for free share allotment plans with the following expiry : EUR 6.9 million at 2010, EUR 11.4 million at 2011, EUR 4.0 million at 2012, EUR 2.4 million at 2013.
8.1 - BREAKDOWN OF PREMIUMS BY GEOGRAPHIC REGION (COUNTRY WHERE CEDANT IS LOCATED)
2008 2009 In EUR million Prior years 2008 Total Prior years 2009 Total 8.3 - CHANGE IN COMMISSIONS
In EUR million Related companies Other Total Related companies Other Total
Revenues from real estate investments - - - 9 - 9
Dividends received from subsidiaries total EUR 120.6 million and include: SCOR Global P&C EUR 50.5 million, SCOR Global Life EUR 50 million, SCOR Auber EUR 8.4 million and SCOR Canada 12.3 million.
Results from transactions involving financial instruments (rate swaps, interest-rate options, real estate swap) were posted to financial income in the net amount of EUR 1.1 million in 2009 compared to EUR (4.1) million in 2008.
The corporate financial statements are prepared in original currencies converted to Euros. Fluctuations in the exchange rates used to convert the accounts might generate a significant foreign exchange impact. To limit the exchange rate fluctuation risk, forward foreign currency hedges are entered into at the beginning of the year to cover the main currency surpluses in the balance sheet at the beginning of the year and adjusted during the year for material arbitrage transactions involving currencies. Hedges include spot trades of foreign currencies, forward trades of foreign currencies and option strategies.
Workforce Executives - Paris 163 155 Employees / Supervisors -Paris 29 19 Employees / branches 343 329 TOTAL CURRENT WORKFORCE 535 503
The stock option plans for the years 2003 to 2009 are share subscription plans that may give rise to a share capital increase. The other plans are share purchase options.
Under these agreements, employees of SCOR SE and certain subsidiaries are entitled to invest the amounts due to them under the profit-sharing and incentive plans in a closed-end investment fund entirely invested in SCOR SE stock.
Amount distributed under the profit-sharing plan 439 1,230 1,442 1,708 1,138 Amount distributed under the collective incentive plan 1,688 2,198 1,540 979 -
The amount of 2009 profit-sharing payouts have been estimated in the accounts and set aside for EUR 1,751,793.
The number of hours accrued by the employees of SCOR SE was 12,695 on 1st January 2009.
The commitments given and received on rate swaps for an amount of EUR 79 million are related to real estate: real estate swap of EUR 61 million concerning the juxtaposition of swaps exchanging the performance of real estate in France against the performance in Germany.
15.1.2 - Confirmed credits, letters of credit, and guarantees received and given
The commitments received in terms of capacity to issue letters of credit amounted to EUR 403 million, corresponding mainly to contracts signed with the banks: BNP Paribas: USD 385 million (EUR 265 million),
Natexis: USD 125 million (EUR 86 million) for the WTC loss.
The guarantee given in consideration for underwriting commitments under the ACE Trust was EUR 18 million. This guarantee was in the form of securities pledged to ceding companies.
The earthquake that hit the Port-au-Prince area (Haiti) on 12 January 2010 is likely to have an impact upon various contractual obligations carried by SCOR, upon reinsurance treaties benefiting to local cedants as well as facultatives relating to industrial equipment or communication infrastructure. As at the date of this Registration Document, the valuations remain uncertain, due to the difficulties to communicate with the economic players in Haiti. The total damage could also impact the Life business and results.
In July 2001, leaseholders of the WTC (“Silverstein Parties”) purchased a USD 3.55 billion property insurance program covering the World Trade Center (“WTC”). SCOR underwrote a 10% quota share of that program as a
On 29 December 2008, Huntsman entered into a Settlement Agreement and Arbitration Submission Agreement (the "Agreement") with its reinsurers, including SCOR UK Company, whereby the parties agreed to resolve their disputes regarding certain insurance coverage and quantum issues arising out of the fire and to submit it to an arbitration panel. As part of this Agreement, a subsequent stay order was filed in the litigation pending in the U.S. District Court for the Southern District of Texas. The federal Court has maintained limited jurisdiction to resolve certain issues related to the arbitration. The Huntsman Action and the IRIC action were dismissed with prejudice pursuant to the arbitration Agreement.
In addition, as a result of its acquisition of Converium (which has since become SCOR Holding (Switzerland)), SCOR assumes the burden of the following litigation matters:
By Orders dated 6 March and 19 March 2008, the Court certified a class of plaintiffs consisting of all U.S. residents who purchased Converium Securities on the SWX Swiss Exchange and all persons who purchased Converium or in the American Depository Shares ("ADSs") on the New York Stock Exchange (NYSE) from 7 January 2002 through 2 September 2004 (the “Class”). The Court specifically excluded from the Class all non-US purchasers of Converium Securities on the SWX Swiss Exchange.
On 26 March 2008, Lead Plaintiffs moved for leave to file a second amended complaint.
On 9 January 2009, plaintiff Michael Rubin filed an appeal with the Second Circuit Court of Appeals of (i) that portion of the District Court's 28 December 2006 Order dismissing plaintiffs' Securities Act claims as untimely; (ii) that portion of the District Court's 28 December 2006 Order denying plaintiffs' motion to amend the complaint; and (iii) the Districts Court's 12 December 2008 Order and Final Judgment. An agreement was finally concluded with the plaintiff and the settlement became final on 17 June 2009.
Moreover, on 19 May 2008, SCOR Holding (Switzerland) initiated an arbitration proceeding in Switzerland against its D&O carriers. On 11 July 2008, a settlement agreement between SCOR Holding (Switzerland) and some of these insurers was concluded, pursuant to which SCOR Holding (Switzerland) received CHF 65 million. The arbitration proceeding with the others D&O carriers is underway.
At the same time, SCOR filed a petition before the Commercial Court of Zurich against two other D&O carriers. This procedure is in parallel with the arbitration proceeding in Switzerland against its D&O carriers.
This is a free translation into English of a report issued in French and it is provided solely for the convenience of English speaking users. This report should be read in conjunction with and construed in accordance with, French law and professional standards applicable in France.
In compliance with the assignment entrusted to us by your Annual General Meeting, we hereby report to you, for the year ended 31 December 2009, on: the audit of the accompanying annual financial statements of SCOR SE, the justification of our assessments, the specific verifications and information required by French law.
We conducted our audit in accordance with the professional standards applicable in France; those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes verifying, by audit sampling and other selective testing procedures, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used, the significant estimates made by the management, and the overall financial statements presentation. We believe that the evidence we have gathered in order to form our opinion is adequate and relevant.
In our opinion, the financial statements give a true and fair view of the assets; liabilities, financial position and result of the company at 31 December 2009, in accordance with the accounting rules and principles applicable in France.
Accounting estimates used to prepare the consolidated financial statements as at 31 December 2009 have been assessed in a high market volatility and an uncertain economic future environment. In this context, and in accordance with the requirements of Article L. 823-9 of the French Commercial Code (Code de Commerce), we have performed our own assessments that we bring to your attention on the following matters: As stated in notes 1.7 and 1.9 to the annual financial statements, the technical accounts specific to reinsurance are estimated on the basis of reinsurance commitments or on statistical and actuarial bases, particularly the technical estimates accounted for under receivable from reinsurance transactions, gross and ceded technical reserves, and deferred acquisition costs. The methods used to calculate these estimates are described in the Notes to the annual financial statements.
Notes 1.2, 1.10, 1.12, 2 and 15.1.1 to the annual financial statements describe the principles and methods used to estimate the valuation and impairment of investments and derivative instruments.
Appendix B: Report of the Chairman of the Board of Directors
III. page 356 Statutory auditors’ report, prepared in accordance with article L. 225-235 of the Commercial code, on the report prepared by the Chairman of the Board of Directors of SCOR SE
APPENDIX B: REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS ON THE TERMS AND CONDITIONS FOR PREPARING AND ORGANISING THE WORK OF THE BOARD OF DIRECTORS AND ON INTERNAL PROCEDURES IN ACCORDANCE WITH ARTICLE L. 225-37 OF THE FRENCH COMMERCIAL CODE
I. Terms and conditions for preparing and organising the work for the board of directors In accordance with the provisions of article L.225-37 of the French Commercial Code, this report serves to set forth the terms and conditions for the preparation and organisation of the work of the Company’s Board of Director’s, in addition to the internal auditing procedures that have been implemented by the Company.
The Board of Directors is composed of 15 Directors: Denis Kessler, Chairman of the Board, Carlo Acutis, Gérard Andreck, Antonio Borgès, Allan Chapin, Peter Eckert, Daniel Havis, Daniel Lebègue, André Lévy-Lang, Luc Rougé, Guillaume Sarkozy (as representative of Médéric Prévoyance), Herbert Schimetscheck, Jean-Claude Seys, Claude Tendil and Daniel Valot, and one non-voting Director: M. Georges Chodron de Courcel. Amongst these 16 members of the Board, 12 are independants: Carlo Acutis, Gérard Andreck, Antonio Borgès, Peter Eckert, Daniel Havis, Daniel Lebègue, André Lévy-Lang, Guillaume Sarkozy (as representative of Médéric Prévoyance), Herbert Schimetscheck, Jean-Claude Seys, Claude Tendil and Daniel Valot.
The experience and competences of the Directors and the Non-Voting Director are very varied. In addition to the Chairman of the Board, eight of the Directors listed, work or have worked at a high level within the insurance industry. Three Directors and the non-voting Director practise or have practised at a high level in the financial and banking industry, in addition to one Director from the manufacturing industry. The Board benefits from international experience, provided by the American, Austrian, Italian, Portuguese, and Swiss nationalities of its members.
A list of the members of the Company’s Board of Directors in 2009 features in the table below: Name Age Citizenship Date of appointment End of duty Renewals Denis Kessler, Chairman of the Board 57 French 04/11/2002 2011 24/05/2007 Carlo Acutis 71 Italian 15/05/2003 2011 15/04/2009 Gérard Andreck 65 French 18/03/2008 2011 Antonio Borgès 60 Portuguese 15/05/2003 2011 24/05/2007 Allan Chapin 68 American 12/05/1997 2011 31/05/2005 Peter Eckert 64 Swiss 15/04/2009 2011 Daniel Havis 54 French 18/11/1996 2011 31/05/2005 Daniel Lebègue 66 French 15/05/2003 2011 15/04/2009 André Lévy-Lang 72 French 15/05/2003 2011 15/04/2009 Luc Rougé 57 French 24/05/2007 2011 15/04/2009 Guillaume Sarkozy (2) 58 French 15/04/2009 2011 Herbert Schimetschek 72 Austrian 15/05/2003 2011 24/05/2007 Jean-Claude Seys 71 French 15/05/2003 2011 15/04/2009 Claude Tendil 64 French 15/05/2003 2011 24/05/2007 Patrick Thourot (1) 61 French 24/05/2007 15/04/2009 Daniel Valot 65 French 15/05/2003 2011 24/05/2007
G. Chodron de Courcel, Censeur 59 French 15/05/2003 2011 31/05/05-24/05/07 15/04/2009 (1) Patrick Thourot was a Director until the Shareholders’ meeting of 15 April 2009. (2) Guillaume Sarkozy representes Médéric-Prévoyance, member of the Board.
The Board of Directors is composed of 34% of foreigners, of 73% of Directors having a past experience in the insurance or reinsurance industry and of 80% of independent Directors.
Concerning the duration and the grading of the duties of the Directors, the AFEP-MEDEF Code indicates (§12): (i) the duration of Directors' terms of office should not exceed a maximum of four years,
The Internal Regulations of the Board of Directors provides that the Strategy Committee is in charge of reviewing the Group’s development strategies, including external growth investments and internal restructuration transactions, and to examine any contemplated acquisition or sale, merger or contribution of an amount higher than EUR 100 million. The Chairman of the Strategy Committee introduces its works to the Board of Directors which then deliberates upon its proposals.
2 must not have received remuneration greater than EUR 100,000 per year from SCOR within the last five years, excluding that received as directors’ fees; 3 must not be an officer in a company in which SCOR directly or indirectly is a director, or in which an employee has been appointed as such, or in which an officer of SCOR (currently or within the last five years) is a director; 4 must not be a significant client, supplier, investment banker, commercial banker of SCOR or of its group (the “Group”) or for which SCOR or its Group represents a significant share of the turnover. A significant share is a contribution to the turnover equal to the lesser of the following two amounts: more than 2% of the Company’s consolidated turnover, or an amount greater than EUR 100 million; 5 must not have a close family relationship with an officer of SCOR; 6 must not have been an auditor of the company within the last five years;
The Internal Regulations prohibit Directors from accepting benefits from the Company or from the Group that could jeopardize their independence, and require them to dismiss any pressure from other Directors, specific groups of shareholders, creditors, suppliers or other third parties. Directors undertake to submit to the Board of Directors of the Company any agreement falling under the purview of article L. 226-38 of the French Commercial Code. In the event of a conflict of interest, Directors are obliged to inform the Board in full in advance. Such Directors are required to abstain from participating in any Board discussions.
Information concerning the positions held by the SCOR Directors is provided in Section 14.1.1 entitled Information on the members of the Board of Directors of the Registration Document.
Finally, Directors are obliged to declare all transactions carried out concerning the Company’s securities, directly or by an intermediary, on their behalf or on behalf of a third party, by their spouse, or by a third party holding a power of attorney, to SCOR.
The Appendices of the Internal Regulations contain a description of the missions and the functioning of the various Committees. The Audit Committee and the Risks Committee decided each to adopt a Chart to complete such Appendices.
During the course of the financial year 2009, the Company’s Board of Directors held eight meetings on the following dates: 15 April, two Board Meetings, the first preceding the Annual General Meeting and the second following it ; The average attendance rate of the members of the Board was 87.5%.
The Strategy Committee is composed of Denis Kessler, Chairman, Carlo Acutis, Gérard Andreck, Antonio Borgès, Allan Chapin, Georges Chodron de Courcel (Non-Voting Director), Peter Eckert, Daniel Havis, Daniel Lebègue, André Lévy-Lang, Guillaume Sarkozy (as representative of Médéric Prévoyance, Director), Jean-Claude Seys, Herbert Schimetscheck, Claude Tendil, Patrick Thourot (until 15 April 2009) and Daniel Valot, appointed by the Board of
Directors and selected among the members of voting and non-voting Directors. The term of their mandates coincide with their term of office on the Board of Directors.
The Committee’s mission is to study the Group’s development strategies and to examine any acquisition or disposal plan concerning an amount in excess of EUR 100 million.
In 2009, the Strategy Committee met on five occasions. Its works dealt with the whole strategy of the Group and in particular, the review of acquisition plans.
The Audit Committee is composed of Daniel Lebègue, Chairman, André Lévy-Lang, Antonio Borgès and Daniel Valot. Each of its member is independent. According to its Internal Regulations, the Committee comprises between three and five members appointed by the Board of Directors of the Company and selected among the members of voting and nonvoting Directors and, in compliance with the AFEP and MEDEF corporate governance code of listed corporations of December 2008, it is composed of a majority of independent Directors. The term of their mandates coincide with their term of office on the Board of Directors.
The Committee may consult the Group’s Chief Financial and Accounting Officer, the Chief Internal Auditor and external auditors on these issues. During the financial year 2009, it proceeded to the hearing of the auditors, of the Group Chief Financial Officer during the review of the financial statements. It also heard the Chief of Internal Control. The review of the financial statements has been accompanied with a presentation made by the auditors underlying the major results of their works, as well as with a presentation made by the Group Chief Financial Officer describing the risks exposure and the material off-balance sheets liabilities of the Company.
During its seven meetings in 2009, the Audit Committee discussions focused primarily on the following matters: review of the quarterly and annual financial statements, management of the Group’s debt, impact of the financial crisis upon the Group’s assets, strategy plan, embedded value, impact of the litigations upon the financial statements..
The average attendance rate of the Committee Members was 89%. The following chart states the attendance of the Audit Committee’s members in 2009: Board members Attendance rate (%) Antonio Borgès 85.7 Daniel Lebègue, Chairman 100 André Lévy-Lang 85.7 Daniel Valot 85.7
The Committee submits recommendations concerning compensation packages for the corporate officers and members of the Executive Committee of the Group (‘COMEX’), pensions, stock allotment plans and stock option plans or stock subscription plans to the Board and makes proposals concerning the composition and organisation of the Board of Directors of the Company and its Committees. Its missions are described in the Internal Regulations.
The average attendance rate of the Committee Members was 83%. The following chart states the attendance of the members of the Risk Committee in 2009: Board members Attendance rate (%) Antonio Borgès 60 Peter Eckert, Chairman 100 Daniel Havis 100 Daniel Lebègue 100 André Lévy-Lang 100 Guillaume Sarkozy 25 Jean-Claude Seys 100 Daniel Valot 80 e) Principles and rules stated for the determination of compensation and in-kind benefits for corporate officers
The data on compensation for corporate officers appears in Section 15 – Remuneration and benefits – and 17.2 – Information on shareholding and stock options of the members of the management and administrative bodies.
Certain Directors or the Non-Voting Director of SCOR are also members of the Boards of Directors for the Group’s subsidiary companies and as a result of this, received Directors’ fees in 2009.
Following the recommendation of the Compensation and Nomination Committee, the meeting of the Board of Directors on 12 December 2008 decided that the Chairman and Chief Executive Officer: will receive a fixed gross annual sum of EUR 1,200,000, payable in twelve monthly instalments; and will receive, a variable annual compensation, capped at EUR 1,000,000 determined as follows: 50% on the basis of the achievement of personal objectives, defined annually at the beginning of each year by the Board of Directors of the Company on the recommendation of the Compensation and Nomination Committee; and 50% on the basis of the achievement of financial objectives, defined annually at the beginning of each year by the Board of Directors of the company on the recommendation of the Compensation and Nomination Committee.
The Company is currently re-negotiating this contract and it is specified that the Chairman and Chief Executive Officer will benefit from any policy that may replace the existing policy; and
Because of the international activity of the Group, and to ensure coherence between ERM and the internal control system, the Group now uses the COSO 2 report “Enterprise Risk Management – integrated framework” published by the Committee of Sponsoring Organisations of the Treadway Commission (COSO) in developing and formalising the risk management and internal control systems. The four general objectives sought through the application of this framework are (1) to ensure that strategic objectives are properly implemented in the Group, (2) to ultimately achieve better operating efficiency and use of resources, (3) to ensure compliance with applicable laws and regulations, and (4) to ensure reliable accounting and financial information. The use of this framework requires us to cover the eight components set forth by the COSO, i.e. (1) defining the internal environment, (2) ensuring objectives are set, performing (3) a risk identification, (4) a risk evaluation and (5) a risk response, (6) listing and formalising control activities, (7) presenting the information and communication process, and (8) ensuring monitoring of the risk management and internal control systems. The structure of this report is in line with the eight components of the COSO, components 1 and 2 being dealt with in the paragraph “Internal environment and setting of objectives” and components 3, 4 and 5 in the paragraph “Identification and assessment of risks”. The elements concerning accounting and financial reporting are separate and are presented in the last part.
Like any internal control system, the Group’s system cannot absolutely guarantee that the risks not to achieve the COSO objectives will be totally eliminated. For example, among the various limitations inherent in the effectiveness of internal controls relating to the preparation of financial documents, those involving decision-making errors based on human
SCOR improvements in terms of ERM have been acknowledged by Standard & Poor’s which raised in September 2009 SCOR’s ERM from “adequate” to strong”, principally evaluating the Group’s risk management culture as well as its strategic risk management.
The Group consists of SCOR SE (“SCOR”) and its 6 “hubs”, subsidiaries, branches and representation offices throughout the world. SCOR, a European company having its registered office in Puteaux (France), has the responsibilities of a parent company, operational responsibilities for cash management and for the retrocession of the Group’s operating entities and functional responsibilities. SCOR carried out operating activities of asset management in the first months of 2009. This responsibility was partly taken over during 2009 by SCOR Global Investments, a subsidiary of SCOR, and will be completely taken over for all subsidiaries over the next quarters.
SCOR’s functional responsibilities cover a broad area extending to all of the Group’s activities. The heads of both the Finance Department (the Chief Financial Officer (CFO)) and the Group Risk Management Department (the Chief Risk Officer (CRO)) report to the Chairman and Chief Executive Officer and are members of SCOR’s Executive Committee (Group Comex). The Group Internal Audit Department reports to the Chairman and Chief Executive Officer. The other departments, namely Information Systems Department, General Secretary and Corporate Legal and Reinsurance Legal Departments, Human Resources Department, Corporate Communications Department and Group Cost Control & Budget Department, report to the Chief Operating Officer (COO).
Reinsurance operating activities are divided between: SCOR Global P&C Non-life treaties, facultative business in major corporate risks, and specialty treaties
Furthermore, the Group is organised around six “hubs” (Paris, Zurich, Cologne, London, Singapore and New York), each hub having local, regional and Group responsibilities. The heads of hub report to the Group COO. This organisation enables: the operational structures and support functions to be optimised by creating service entities in charge of managing pooled resources: information systems, human resources, legal,… in the Group’s main locations. These service entities are distinct from the underwriting units which have direct reporting lines with the respective SCOR Global P&C and SCOR Global Life organisations, several Group functions to be carried out in a geographical location other than Paris in order to benefit fully from the competences within different locations.
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.
Within this environment, control responsibilities are exercised as follows: SCOR’s Board of Directors relies on the Accounting and Audit Committee and the Risk Committee to exercise its control responsibility over the objectives it has set for the Company; SCOR’s Executive Committee defines the procedures for implementing the strategy decided by the Board of Directors, the underwriting policy, the financial policy, the retrocession policy, and the claims management policy. It meets on a weekly basis and is currently made up of the Senior Managers of the Group: the Chairman and Chief Executive Officer of SCOR, the Chief Executive Officer of SCOR Global P&C and his deputy, the Chief Executive Officer of SCOR Global Life and his deputy, the Chief Executive Officer of SCOR Global Investments, the Chief Risk Officer and the Chief Financial Officer. SCOR is represented in the governance bodies of its principal subsidiaries. Eventually, SCOR’s Board of Directors, following a recommendation made by the Compensation and Nomination Committee, has decided to appoint independent directors of SCOR in each of the principal subsidiaries; the Group departments and functional or transversal departments of SCOR Global P&C, SCOR Global Life and SCOR Global Investments invested with a control responsibility have the task of defining and controlling the implementation of rules pertaining to the areas of their responsibility and applicable to all of the Group’s entities. These rules, and the participants, are described in detail in part c) of this report on control activities; the hubs’ support departments, the operational entities of SCOR Global P&C and SCOR Global Life and the operational departments of SCOR Global Investments must apply the rules defined above. They carry out all of the first-level controls related to business management and ensure compliance with regulatory, accounting and fiscal laws, at both local and Group levels; The Group Internal Audit Department eventually checks independently the effectiveness and relevance of the internal control procedures for all the Group’s entities whatever the area.
Furthermore SCOR is closely monitoring the potential impacts of the Solvency II Directive. SCOR’s Executive Committee decided in December 2009 to conduct a comprehensive assessment of the situation in relation to the Solvency II requirements. When this work is completed, the results and an action plan will be presented to the Executive Committee and Board of Directors of SCOR.
In 2009, the Group produced a new code of conduct which has been approved by the Risk Committee and presented to SCOR’s Board of Directors. This Code describes behaviour’s principles that each employee must apply during the course of his decision making and activities .
When approved, these documents are made available to Group employees on the SCOR intranet.
SCOR has implemented and formalised for several years 3 year strategic plans. The current plan, Dynamic lift V2, covers the years 2007 to 2010. The strategic plan includes objectives such as risk appetite and risk tolerance as well as written premiums, financing, profitability and rating. A new plan is in development and will be introduced following approval by SCOR’s Board of Directors mid-2010.
The clarity and precision of strategic objectives and their implementation within the Group ease the identification, evaluation and control of risks, whatever their nature (e.g. underwriting risk, market risk, and operational risk), possibly caused by these objectives.
All the resulting conclusions and studies of the two processes: Risk Enquiry process and Emerging Risks process are summarised in reports submitted each year to the Chief Risk Officer who discusses with the risk owners who decide which steps to take.
Because of its activities, SCOR is exposed to many risks: reinsurance related risks, market risks and other risks (e.g. liquidity, rating). These risks, as well as the main procedures implemented by SCOR to control or mitigate them are detailed in the part 4 – Risk Factors of the 2009 Reference Document. This report does not detail these risks, but aims at summarising the principal activities and participants of Risk Control.
The control activities dealt with below are considered as the principal activities for controlling risks specific to different fields. These control activities are: either applied across all Group entities; or they are adjusted and rolled-out gradually in order to ensure the internal control system is adequate and consistent across the Group.
SCOR’s control procedures are currently grouped in the following fields of activity: c) activities related to reinsurance, d) asset management, e) accounting management, f) Central functions.
The operating and control procedures concerning underwriting, pricing, administration of reinsurance contracts and claims management are validated by SCOR Global P&C and SCOR Global Life and are applied to all underwriting segments of the company in question, regardless of location. The following steps strengthen internal controls in this area: SCOR uses an internal model for determining economic capital managed by the Group Risk Management Department, necessary to implement its underwriting and asset management policies. Economic capital is allocated to SCOR Global P&C and SCOR Global Life and constitutes the reference for deciding and verifying the profitability expected from each of them; Most of the business underwritten by SCOR Global P&C is renewed on agreed dates. This situation enables to establish annual underwriting plans, both qualitative (description of the environment) and quantitative (activity budget). These plans are approved by the Group Comex. Concerning SCOR Global Life, business is underwritten along the year. As a result, the notion of underwriting plan is different. The plan is a multiyear plan and is updated on a quarterly basis with the business actually underwritten; A quarterly review of technical results is performed for: SCOR Global P&C, by sector (P&C Treaties, Specialties, Business Solutions) and region (EMEA (Europe, Middle East & Africa), Americas, Asia-Pacific). The review enables to analyse technical results by underwriting year, by nature and by line of business; SCOR Global Life, by Market Unit and provides technical results by legal entity, by region (i.e. France, Germany, UK/Ireland, Rest of Europe, North America, Asia/Pacific, Middle East, Others) and by line of business;
ii) Asset management the Group has harmonised the principles governing asset management: the Statement of Group Investment Principles defines the Group’s governance in terms of asset management and the Manual of Group Investment Guidelines determines the conditions in which SCOR Global Investments will implement, on behalf of all Group subsidiaries, the investment policy as defined by the Group’s Investment Committee; both of these documents have been approved by the Group’s Executive Committee; in 2008, SCOR Global Investments was specially created to manage all of SCOR’s financial assets and obtained on May 15th, 2009 approval from the French financial market regulatory body (AMF) as an asset management company. To this end, the management and control procedures have been revised and a Head of Compliance and Internal Control was appointed in 2009. In order to meet the requirements of the regulatory body, his role is to implement an effective internal control program which covers all activities relating to financial asset management;
The Group’s central functions, different from the finance and communication functions dealt with in parts (d) and (f) thereafter, comprise Risk Management, Treasury, budget & forecasting and functions relating to legal and tax issues, information systems, human resources and general service departments. These include: the Group Risk Management Department’s primary focus is to develop and manage ERM mechanisms, promote ERM concepts throughout the Group and perform a second-level control over reinsurance underwriting as mentioned above. The Department also supervises the placement of the Group’s insurance policies; the Group Treasury Department manages the Group’s cash flow, directly or indirectly and carries out a weekly centralised reporting of the Group’s cash situation. A quarterly reconciliation is carried out with the accounting figures; control of the Group’s information systems is provided by the Group Information Systems Department. A Unit has been established to deal with all issues of information system security. Periodic audits of information security applications and procedures are conducted. Since several years, SCOR has been improving its control procedures by basing them on the COBIT guidelines (Control objectives for information and technology) to cover the risks, listed in the 12 major processes of COBIT, relating to the development of programmes, changes in programmes, operation and access to data programmes. An IT contingency plan has been established, including an emergency and back-up centre located outside of SCOR’s head office and covers all Group entities, in terms of Group systems; the budgetary control system for general expenses is organised and managed by the Group Cost Control & Budget Department; the Group Financial Planning & Analysis Department establishes an annual financial plan for the Group by company and monitors actual data in relation to this plan on a quarterly basis. A presentation of the results of the analysis is made to the Executive Committee every quarter; the objective of the Group Tax Department is to ensure that the various entities of SCOR meet their tax obligations and promote the use of best practices in this domain; The General Secretary and Group’s Legal Departments exercise control at various levels. It is their responsibility to ensure compliance, both with the laws and regulations and with internal rules, decisions, commitments and practices of SCOR. This task particularly affects the legal organisation of the Group’s entities, the entry into agreements, and supervision of major disputes. They also monitor compliance with the Group’s filing obligations. In addition, in order to minimise compliance and reputation risks, the Group Compliance Officer, reporting to the General Secretary, must ensure that the various aspects of regulatory and legal compliance are properly identified and managed.
Following the organisation of the Group within six “hubs”, the local support functions are gradually assumed by entities especially dedicated and set up in each hub. This organisation enables to create centres of expertise and to strengthen the coherence and control of our activities. Thus the head of hub is responsible for defining the business continuity plan and implementing it in all locations within his hub. Furthermore, the hub is a key element for the implementation of Group procedures and policies.
Concerning the Registration Document, a specific process has been implemented to ensure the contribution of all relevant departments and the consistency of the information provided. A final edit is made by members of the Executive Committee.
The Group Internal Audit Department’s main responsibility is to inform the Chairman and Chief Executive Officer and the operating and functional departments of any operating irregularities through the implementation of an annual audit plan based on an analysis of risks, resulting amongst other things from discussions with the Group, P&C and Life Risk Management Departments, and approved by the Accounting and Audit Committee.
The CFO does not, however, exercise direct control over all accounting information systems and relies on the accounting departments of operating companies, who provide him with quarterly consolidation packages, as well as on the accounting departments of SCOR Global P&C and SCOR Global Life who assist him in coordinating aspects relative to the processes, methods and reporting.
The processes described below concerning reinsurance accounting and calculation of technical reserves, which are within the single technical information system (OMEGA), are being applied progressively by Group entities.
Concerning reinsurance accounting, numerous regular controls are conducted directly (automatic and systematic, or for consistency or by testing) by the Technical accounting teams located in the subsidiaries using both Group tools and Group or specific control reports. Quarterly inventories are also subject to specific control procedures.
The implementation of the new information system which enables to book, value and monitor of assets owned by all Group entities improves substantially the investment accounting model. Indeed, the accounting tools implemented in 2008 in Paris are being deployed in the Group’s principal subsidiaries. In addition to the use of a new accounting tool, this project will therefore improve the investment accounting organisation, definition of roles, responsibilities and processes.
Regarding the process of aggregating and consolidating accounting data by the Group Accounting Department, current internal control is ensured: by the use of general and consolidation accounting software shared by all Group entities; by the definition by the Group Accounting & Consolidation Department of a closing process, clear responsibilities and a detailed financial statement closing schedule, which is monitored, in the closing period, on a daily basis; by a definition of responsibilities for controlling the integration of auxiliary accounting systems; by the centralised management of charts of accounts; by the works of the IFRS Centre of Excellence whose objectives are to (1) communicate developments and standards to all contributors and (2) coordinate justifications and documentations of accounting processes for complex operations.
Control of the quarterly consolidation procedure under IFRS is provided in particular through:
use of a market recognised consolidation software package (“Magnitude”) and common to all Group entities, which ensures the whole consolidation process through automated and formalised controls; the formalisation of the reconciliations between the systems or auxiliary accounting methods with the general and consolidation accounting systems; at least three levels of control of the consistency and completeness of the consolidation package, one by the entity in question, another by the finance departments of SCOR Global P&C and SCOR Global Life and the third by the Group Finance Department; systematic analyses of the results, shareholders’ equity, taxation and cash flow; internal monitoring of changes in legislation and accounting standards, together with the Group’s external consultants and auditors; daily monitoring of the closing process of each of the Group entities; internal monitoring of changes in legislation and accounting standards, together with the Group’s external consultants and auditors; an audit performed by external auditors as at December 31, 2009 and a limited review as at June 30, 2009.
SCOR believes that its risk management and internal control systems are appropriate and adapted to its activities and is engaged in an ongoing process to improve its internal control standards and their implementation. The decision to create hubs and the projects which aim at providing a complete finance system integration (i.e. investment accounting and general accounting software) illustrate this will and significantly contribute to the Group’s last improvements in terms of control.
In our capacity as statutory auditors of SCOR SE and in accordance with article L. 225-235 of the French Commercial Code (code de commerce), we hereby report on the report prepared by the Chairman of your company in accordance with article L. 225-37 of the French Commercial Code (code de commerce) for the year ended 31 December 2009.
The professional standards require that we perform the necessary procedures to assess the fairness of the information provided in the Chairman's report in respect of the internal control and risk management procedures relating to the preparation and processing of the accounting and financial information. These procedures consist mainly in: obtaining an understanding of the internal control and risk management procedures relating to the preparation and processing of the accounting and financial information on which the information presented in the Chairman's report is based and of the existing documentation; obtaining an understanding of the work involved in the preparation of this information and of the existing documentation; determining if any material weaknesses in the internal control procedures relating to the preparation and processing of the accounting and financial information that we would have noted in the course of our work are properly disclosed in the Chairman's report.
Consumption of water, raw materials, and energy in 2009: Water consumption : 15,821 m3
Air emissions: Generation Station was renovated in 1998, covering combustion and emissions, in accordance with the provisions of the Order of July 25, 1997 defining general recommendations applicable to facilities classified for the protection of the environment and the applicable standards; Four closed air-cooling towers, treated in accordance with the applicable standards to combat legionnaires’ disease; Air conditioning plants using ultra-sound humidifiers (no noise) treated against legionnaire’s disease; Regular anti-bacterial analyses carried out by a control office; Implementation of the “ECOVENT” system on electricity generation groups in order to limit emissions of motor oil particles into the air.
Removal of industrial waste (obsolete IT components, oil) by a specialised supplier
Bacteriological treatment of the canteen’s fryer in order to reduce frequency of oil change
Aerial emissions of greenhouse gases, substances contributing to acidification, eutrophisation or photochemical pollution or long-lasting organic compounds: Recovery of gas (heat pumps, cold chambers, etc.) for reprocessing; Continuation of the program to replace HCFC compressors running at R22 with equipment that operates with replacement gases for HFC; Campaign to replace heat pumps operating at R22 by devices using R 407C.
Limitation of Greenhouse gas emissions and use of fossil energy (fuel) through modification of our electricity supply contract: termination of “EJP” contracts.
*This glossary is a list of selected reinsurance terms. It is not a complete list of terms used in this Document de Reference or in the insurance or reinsurance industry.
A ACCIDENT YEAR The accounting year in which loss events occur.
ACCOUNTING YEAR The entity’s financial year in which the accounts are recorded. Due to the time required to transfer information elating to a given period of cover, the ceding company’s accounting year may differ from that of the reinsurer. For reinsurers such as SCOR and its subsidiaries, which may calculate their results before receiving the accounts from the ceding company, estimates are made for ceding company information which has not been received at the date the financial statements are prepared.
ACCUMULATION The sum of all risks which are correlated such that a single insured event will affect theses risks or all the underwritten lines relating to the same risk.
CATASTROPHE (or CAT) BOND A high performance bond which is generally issued by an insurance or reinsurance company. If a predefined occurrence takes place (such as an earthquake, tsunami, hurricane etc.), the bondholder loses all or part of his investment in the bond.
CEDING COMPANY (ALSO CALLED cedant) OR CEDING OFFICE) Insurance company, mutual society or provident insurance provider that transfers (or “cedes”) a part of the risk it has underwritten to a reinsurer.
CLAIMS RATIO The ratio of the sum of claims paid, the change in the provisions for unpaid claims and claim adjustment expenses in relation to earned premium.
COMBINED RATIO Sum of the non-life claims ratio and the expense ratio.
DERIVATIVE FINANCIAL INSTRUMENT A financial instrument or other contract the three following characteristics: a) value changes in response to a change in the underlying (e.g. interest rate, price, foreign exchange rate); b) requires no or minimal net investment, and c) is settled at a future date.
EVENT Aggregation of claims having a common origin and affecting either a single insured under more than one policy, or more than one insured.
FAIR VALUE The price for which an asset could be exchanged between knowledgeable, willing parties in an arm’s-length transaction.
G GOODWILL Goodwill comprises the residual difference between the identifiable assets of an acquired entity and the purchase price paid in a business combination. Goodwill is recognised as an asset in the balance sheet, and represents future economic benefits expected to be generated from assets that are not capable of being individually identified and separately recognised. Goodwill is tested for impairment on a yearly basis.
GROSS WRITTEN PREMIUMS Actual and estimated premiums to be received for the period from the ceding companies. Gross premiums represent the turnover for the accounting period.
INCURRED BUT NOT REPORTED (IBNR) Provision for claims which have already occurred but have not yet been reported to the insurer at the balance sheet date.
N NET WRITTEN PREMIUM Gross premiums less the portion of premiums paid for retrocession.
PREMIUMS NET OF CANCELLATIONS Premium written by an insurer after deduction of cancelled premiums.
PROPERTY & CASUALTY (P&C) CLASSES All insurance classes other than Life. For SCOR, the Life segment includes all business underwritten by SCOR Global Life (including for example, health insurance).
PROPERTY INSURANCE Insurance that provides coverage to a person with an insurable interest in tangible property for that person’s property loss, damage or loss of use.
PURE PREMIUM Premium equal to the technical estimate of the risk covered by the insurer.
REINSTATEMENT A provision in an excess of loss reinsurance contract, particularly catastrophe and clash covers, that provides for reinstatement of a limit that had been reduced by the occurrence of a loss or losses. The number of times that the limit can be reinstated varies, as does the cost of the reinstatement.
REINSTATEMENT PREMIUMS Additional premiums charged under certain excess of loss reinsurance contracts to restore coverage amounts after a loss.
REINSURANCE PORTFOLIO The total reinsurance business (Treaty and Facultative) written and managed by a reinsurance company.
REINSURANCE PREMIUM Amount received by the reinsurer as a consideration for covering a risk. REINSURANCE TREATY Reinsurance convention between an insurer and a reinsurer defining the terms under which the risks covered by the convention are ceded and accepted. The two main categories of treaty reinsurance are proportional and nonproportional.
SCOR GLOBAL P&C (SGP&C) AND SCOR GLOBAL P&C SE. SCOR Global P&C refers to the operating segment and all business transacted by entities in this segment . SCOR Global P&C SE refers to the legal entity.
SPECIAL PURPOSE ENTITY (SPE) OR SPECIAL PURPOSE VEHICLE (SPV): A legal entity created to fulfil specific or temporary objectives (conduct defined activities or hold assets etc.). SPE's are typically used by companies to isolate the firm from financial risk.
TECHNICAL (OR UNDERWRITING) RESERVES Amounts that an insurer or reinsurer must place in reserves in order to pay out on claims insured, and on liabilities arising from policies written.
V VALUE OF BUSINESS ACQUIRED (VOBA) This refers to life reinsurance portfolios acquired in a business combination. It is calculated as the present value of the stream of expected future cash flows including estimates of the future technical results, the future investment income less future administration expenses. The present value calculation is based on assumptions and risk discount factors relevant at the date of acquisition. VOBA is amortised over the lifetime of the underlying reinsurance portfolio and is subject to impairment testing as part of the LAT.
1.1 page 371 Year 2009 1.2 page 372 Operating results of SCOR SE during the last financial years 3.1 page 373 Group’s personnel in France and abroad 3.2 page 374 Distribution of the personnel in France by type of contract 3.3 page 374 Information concerning plans to reduce the number of employees and protect jobs, reclassification efforts, reemployment, and support measures 3.4 page 375 Information related to equality between men and women 3.5 page 375 Information related to Group employees in France 3.6 page 379 List of agreements signed in 2009 3.7 page 379 Manner in which SCOR takes into account the territorial impact of its activities in terms of employment and regional development 3.8 page 379 Relations between the company and integration associations, teaching establishments, environmental defence associations, consumer associations and neighbouring residents 3.9 page 380 How SCOR SE promotes the provisions and basic agreements of the organisation of work with its sub-contractors and ensures that its subsidiaries comply with these provisions and basic agreements / How the Company’s foreign subsidiaries take into account the impact that their activities have on regional development and local populations
In accordance with the AMF Guide d’élaboration des documents de référence as of December 10, 2009, statements and information pertaining to the management report on the Company’s and on the Group’s activities in 2009, as approved by the Board of Directors on March 2, 2010 (the “Report”), are included and presented in the Registration Document 2009 which will be submitted as such to the Shareholders’ Meeting convened to approve the financial statements of the financial year ended on December 31, 2009.
1. OPERATING AND FINANCIAL REVIEW OF SCOR SE 1.1. Year 2009
The balance sheet of SCOR SE as at December 31, 2009 amounts to EUR 6,264,098,933 compared to EUR 6,028,662,240 at the end of 2008.
The reinsurance result of SCOR SE as at December 31, 2009 is EUR 64,490,497 while the financial result is EUR 216,280,682.
Pursuant to the provisions of Article L. 441-6-1 of the French Commercial Code, specific situations excepted (as, notably, litigations on invoices received), the suppliers’ invoices are paid at 30-days end of month or cash.
Pursuant to Article 223 quater of the French General Tax Code, we remind you that the amount of the expenses and charges referred to in Article 39.4 of said Code totals EUR 112,392 for the previous fiscal year and the amount of taxation borne by the Company due to the non-deductibility of such charges should amount to a total of EUR 38,697.
1.2. Operating results of SCOR SE during the last financial years
Pursuant to the provisions of Article R.225-102 of the French Commercial Code, the following table presents a summary of SCOR SE operating results during each of the last five financial years: I. - Financial position at the end of the year : c) Number of convertible bonds to shares. 10,470,000 10,470,000 10,470,000 10,765,428
II. - Global Profit and loss of effectives transactions : b) Net Profit before taxes, depreciations and reserves. 146 (3) (88) (62) (258)
(1) Accumulated shares as at December 31, 2007 (2) Could be adjusted according to the shareholders' meeting of April 28, 2010, (3) Allocated net dividend per non accumulated share (4) Allocated net dividend per accumulated shares after the accumulation of shares at 3 January 2007
We remind you that, over the three (3) previous fiscal years, the amounts distributed by SCOR SE as dividends were as follows: Fiscal year ended on: 31/12/2006 31/12/2007 31/12/2008
The total number of personnel members increased from 1,770 employees on December 31, 2008 to 1,790 on December 31, 2009. The personnel distribution is uniform between the different geographical zones, in keeping with the Group's strategic orientations.
SCOR Global Life 510 517 469 SCOR Global Investment(2) 25 - -
(1) The personnel breakdown is on the basis of the registered personnel on December 31, 2009. (2) SCOR Global Investments (100% subsidiary of SCOR SE) was created in February 2009 after the transfer of the employees dedicated to asset management. (3) Includes the finance, human resources, IT, management control, audit, legal and risk management departments. (4) SCOR Global Life SE holds 100% of the ReMark capital. Remark acquired ESG in May 2009. Given its specific activity, Remark human resources are managed independently from the Group. (5) The Converium employees were integrated into the Group during fiscal year 2008.
3.2. Distribution of the personnel in France by type of contract
Further to the announcement made in 2008 regarding the implementation of an “R3” plan to reduce the workforce(*), the Group’s Executive Committee agreed to the voluntary redundancy of 75 employees, among which 33 in France. These redundancies were by and large spread over 2009. An Advice and Information Point was set up right from the outset of the Job Protection Plan, which was subsequently changed into a Jobs Unit designed to offer support, for a maximum of 9 months, to employees who had left and who were looking for a job. The Job Protection Plan also provided for a range of measures aimed at encouraging internal reclassification, training, geographic mobility and the creation of companies as well as a partnership agreement with the Association Paritaire pour l’Emploi dans les Sociétés d’Assurances.
The SCOR Group strives to ensure equal treatment of applications from men and women.
With equivalent skills, experience and profiles, men and women must have the same career advancement and mobility possibilities, and the same access to management positions. The assessment of female employees must be based on objective criteria (technical, managerial and behavioural skills), thereby excluding any consideration related to sex. In terms of professional mobility, in the presence of the equivalent skills, experience and profiles, female employees will have the same chances of being hired for a position as a male employee.
Direct compensation 2009 In EUR thousands Annual payroll (gross taxable) 40,549 Average monthly compensation actually paid (*) (in twelfths) 6.588
(*) the indicated figures are the gross amounts, and they relate to the earnings from the previous fiscal year.
(in EUR thousands) SCOR 9,701 SCOR Global Life 4,391 SCOR Global P&C 7,577 SCOR Gestion Financière 289 SCOR Global Investments 466 Total 22,424
Temporary (in person / years) 2009 Temp workers 18.62 External service providers 59
Real estate loans and 1% Investments 2009 In EUR thousands Amounts lent 980 Realisations & 1% Investments Works loans (“pass travaux”) 19.2 Rental reservations 46.6
Additional services Maternity leave (1 additional month) 58.3 Retirement leave 3.2 Retirement benefits (IDR and IFC) 414.22 19 Authorised leave includes holidays and exceptional absences as a result of family events (marriage, baptism, communion, death, moving, backto -school period, care for sick children, paternity leave).
Number of meetings of the bodies 2009 Works Council 15 Personnel Delegates 5 CHSCT (Health and Safety) 6
Theoretical time credits 2009 Works Council 1,920 Personnel Delegates 1,980 Trade union delegates 720 Trade union representatives 720 CHSCT (Health and Safety) 1,800 Beneficiaries of labourer education or trade union training leave 3
Procedures 2009 Recourse to non-judicial solutions 4 Judicial proceedings initiated 2 Formal notice and reports from the Inspection -
Activity of the medical service 2009 Clinical examinations 293 Employees declared unfit - Orientation ACMS social service (Ile de France regional inter-professional association of medical and social centres) 4 In EUR thousands Occupational healthcare enrolment 70.2 Infirmary treatment requests 895 Infirmary expenses 2 Workplace or commuting accident 2009 Workplace accidents with sick leave 2 of which executives - Commuting accidents with sick leave 5 of which executives 2 Number of sick leave days (business days) 42 of which executives 10 Partial or total disablements - Accidents declared to the Social Security department 9 related to falling 8 resulting from machines - during handling - Others 1 Safety and working conditions 2009 Personnel with safety training 135 In EUR thousands Spending on safety 137.9 Expenses for improving working conditions 99.8
• Amendment to the incentive agreement signed on 29 May 2009 • Amendment to the profit sharing agreement signed on 29 May 2009 • Amendment to the agreement relative to the payroll savings plan at the SCOR company signed on 21
December 2009 • Agreement relative to the employee profit sharing agreement at the UES SCOR signed on 21 December 2009
• Agreement promoting the employment of elderly personnel signed on 21 December 2009
3.9. How SCOR SE promotes the provisions and basic agreements of the organisation of work with its sub-contractors and ensures that its subsidiaries comply with these provisions and basic agreements / How the Company’s foreign subsidiaries take into account the impact that their activities have on regional development and local populations
Any employee who deals with a supplier must, before concluding a contractual partnership, ensure that such supplier gives an undertaking to comply with the requirements of the Code of Conduct established in 2010 by the SCOR Group and which apply to all its employees.
4. ADDITIONAL INFORMATION RELATING TO THE MANAGEMENT REPORT OF THE COMPANY AND THE GROUP – TABLE OF COMPLIANCE Are fully incorporated into this Report, of which they are integral part, the information and statements set forth in the various sections of the Registration Document referred to in the table of compliance below: MANAGEMENT REPORT REGISTRATION DOCUMENT STATEMENTS DEALING WITH THE MANAGEMENT OF THE GROUP IN 2009
Appendix A. § 1.1 Research and development activities within the Group and the Company Section 11 Main risk factors exposure for the Group and the Company Section 4
Appendix A - Operations performed by the Company on its own shares Section 21.1.3 - Issuance of bonds and similar securities Appendix A and Section 20.1.6.14 - Share capital ownership and structure Section 18.1 - Cross shareholdings -2 - Elements which could have an impact in case of a tender offer -3 - Fluctuation of quotation related risks Section 4 - Employees’ shareholding in SCOR SE Section 17 and 18.1 - Adjustment of the conversion basis for securities granting access to the share capital Section 20.1.6.14
Compensation and benefits granted to SCOR SE’s officers and executives Section 15 Securities held by the Board Members Section 17.2.1 Environmental impacts of the Company’s activities Appendix C
REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS ON THE CONDITIONS FOR THE PREPARATION AND ORGANISATION OF THE WORK OF THE BOARD OF DIRECTORS AND THE INTERNAL CONTROL PROCEDURES SET UP BY THE ISSUER Appendix B