These risks are monitored via regular risk reporting mechanisms throughout the Group, including complementary risk analyses on ad-hoc topics, where deemed necessary. Potential impacts on SCOR’s risk profile are managed through a variety of dedicated and transversal risk management mechanisms. For more details on risk reporting mechanisms and roles and responsibilities of SCOR’s main governance bodies, see Appendix A – Report of the Chairman on the internal control.
3.3.1.2 MANAGEMENT OF RISKS RELATED TO CAPITAL AND TO LEGAL AND REGULATORY DEVELOPMENTS
Risks related to capital are managed via specific principles and processes throughout the Group. SCOR ensures maximum capital fungibility within the Group through:  A reduced number of subsidiaries enhancing fungibility while supporting local business presence. It is facilitated by the “Societas Europaea” (“SE”) structure supported by an efficient branch set-up in Europe, enabling integrated supervision at Group parent company level through SCOR SE, focusing on communication with a limited number of supervisors with whom SCOR can share its global strategy, while taking advantage of diversification benefits;  An Integrated supervision of regulatory constraints at Group level and an optimal capital allocation.
SCOR’s current ratings are at the highest levels within the reinsurance sector after S&P and Fitch upgraded the Group’s ratings to “AA-“ from “A+” in 2015. Therefore, a downgrade by one notch would not endanger its future business development, its liquidity position nor its capacity to raise funds. For further information on SCOR’s current rating, refer to Section 1.2.4 - Ratings information.
SCOR monitors its ratings assigned by the top four rating agencies via a dedicated team placed under the supervision of the Group CFO. This team analyses rating agencies’ methodologies, reports published on the reinsurance market, on SCOR and on its main competitors, in order to anticipate any potential rating actions. It also monitors specific qualitative and quantitative Key Performance Indicators developed by the four main rating agencies, and performs analyses of selected deterministic scenarios (for more details on 'footprint scenarios' process, see Appendix A – II internal control procedures and risk management). It also monitors the capital adequacy level as measured by the capital models developed by rating agencies.
3.3.1.5 MANAGEMENT OF VALUATION RISKS RELATED TO SCOR’S INTANGIBLE ASSETS AND DEFERRED TAX ASSETS
Refer to Section 3.3.6 – Management of operational risks for further details on SCOR’s Internal control system approach, Appendix A – Report of the Chairman on the internal control, paragraph 2.3.4 – Group functions for a description of some of the departments involved in the management of intangible assets (for instance Consolidation, Systems & Process, IFRS Center of Excellence, Group Tax department), and Appendix A – Report of the Chairman on the internal control, paragraph 2.6 – Financial reporting for further details on the production of SCOR’s technical and financial results, including intangible assets.
For further details on management of valuation risks related to goodwill and Value of Business Acquired, refer to Section 3.3.1.4 – Management of risks related to acquisitions.
Consistent with the Group's strategy of selective market and business division development, SCOR seeks to maintain a portfolio of business risks that is strategically diversified both geographically and by line and class of business. The Group's insurance risk exposure is mitigated by diversification across a large portfolio of reinsurance contracts. The volatility of risks is reduced by careful business selection, implementation of underwriting guidelines, the use of retrocession and other risk transfer arrangements and proactive claims handling as well as underwriting, claims and administration audits at ceding companies. SCOR's underwrites reinsurance covers in Non-Life and Life and occasionally in direct Non-Life insurance. Such underwriting is conducted through duly authorized subsidiaries and branches of the Group, as well as from “The Channel Managing Agency Limited”, which acts as Managing Agent for SCOR’s own Lloyd’s syndicate, Channel 2015, since April 1, 2014.
 The Property and Casualty Treaty underwriters manage client relationships and offer reinsurance support after a careful review and assessment of the cedents’ underwriting policies, portfolio profiles, exposures and management procedures. They are responsible for writing treaty business as well as associated support on small and medium size facultative risks in their respective territories within the limits of their individually delegated underwriting authority and the scope of underwriting guidelines.
 Most of SCOR's facultative underwriters work in the Business Solutions domain of SCOR Global P&C, which operates worldwide. This business area is dedicated to large corporate businesses and is geared to provide the clients of SCOR Global P&C with solutions for coverage of large conventional risks.
- Underwriting guidelines in place within SCOR Global P&C specify (i) the underwriting rules and principles to be complied with, (ii) underwriting capacities delegated to the underwriters in each of the markets and lines of business in which the Group operates, as well as (iii) the relevant maximum acceptable commitments per risk and per event. They are reviewed and updated annually by the Underwriting Management function and approved by the Chief Executive Officer and Chief Risk Officer of SCOR Global P&C.
 In order to mitigate its property exposure, the Group retrocedes a portion of the risks it underwrites. See 3.3.2.5 - Retrocession and other risk mitigation techniques for further information on how these instruments are managed.
 Cross reviews are conducted by SCOR Global P&C's Risk Management to evaluate the quality of underwriting, pricing and claims handling of particular business units or certain lines of business, to identify and assess risks, to evaluate the appropriateness and effectiveness of controls and to propose risk-management measures, including mitigating actions.
In addition to the transversal risk management mechanisms described in the introduction of this section, SCOR Global Life also implements mechanisms to mitigate certain risks specific to the Division:  Claims deterioration risks are mitigated through yearly renewable terms for parts of the mortality business, and through premium adjustment clauses for some Disability, Long Term Care (LTC) and Critical Illness (CI) products. In the case of LTC, the premium adjustments are designed to offset worsening incidence or increasing longevity of disabled lives. In the case of CI, premium adjustments mitigate potential negative impacts on future claims patterns due to a general deterioration in health and improved medical diagnosis.
 Generally, life reinsurance business is underwritten throughout the year. The life business actually underwritten is monitored on a quarterly basis against prior year development as well as the business plan and regular update is provided to SGL Senior Management and COMEX.
 The underwriting of Life business within the Group is under the worldwide responsibility of SCOR Global Life. The clients are life, pension or accident and health insurance companies worldwide. They are served by SCOR's specialized underwriters and actuaries who are familiar with the specific features of the markets in which they operate, in particular with local lines of business and policy conditions, as well as the technical specifics such as mortality tables, morbidity incidence rates and persistency rates. In the Life underwriting process, consideration is typically given to the quality of the client’s medical and financial underwriting standards, the target clientele of the ceding company, as well as past experience to the extent credible data is available.
 In order to ensure that SCOR Global Life is continually kept up-to-date with biometric trends and scientific developments, SCOR Global Life uses the expertise of five dedicated Research & Development centers within the Life Central Actuarial and Underwriting Department to analyze and assess the key factors underlying mortality, longevity, morbidity and policyholder behavior. The SCOR Global Life Research & Development Centers provide recommendations for the implementation of the research results into the pricing, underwriting processes and determination of exposure limits.
Business opportunities going beyond the stipulations of these guidelines and documents are subject to a special referral procedure in order to ensure that the business respects defined risk-adjusted return criteria and risk tolerance limits. These cases are examined at the SCOR Global Life level by the Regional and Global Pricing and Risk Management Department and, where applicable, the Finance Department. Cases which may have a significant impact on the balance sheet of the Group are additionally reviewed by the Group Risk Management function. Thresholds or conditions for a referral to Group Risk Management are defined in specific guidelines.
 Maximum underwriting capacities are defined to limit SCOR Global Life’s exposure on various types of treaties underwritten, proportional and non-proportional, covering individual or Group policies. These capacities are revised each year, taking into account the capacities obtained by the retrocession coverage. These limits include: maximum commitment per life accumulated for all SCOR exposures, maximum annual commitments for non-proportional cover per life or per event, maximum commitment per country for non-proportional exposures by event. Aggregate portfolio exposures are continually monitored. Specialized software allows an accumulation control of insured lives and is fed with single risk information as received by the client companies. Based on this system, risks under which the accumulated exposure exceeds SCOR Global Life’s retention are identified and retroceded. The retention limits are revised regularly. The exposure is monitored throughout the year against SCOR’s defined risk limits and used for decisions on mitigating measures. Monitoring of peak exposures is included in life regular risk reporting. See 3.3.2.5 – Retrocession and other risk mitigation techniques for further information on how these instruments are managed.
 The adequacy of SGL reserves are controlled based on specific procedures. For further information on how risks related to reserves are managed, please refer to Section 3.3.2.4 – Management of reserving risks.
 Risks specific to the administration of contracts are mitigated by specific controls supported by SCOR’s IT Systems include multiple automatic controls and additional control tools.
 SCOR Global Life's Risk Management organizes the quarterly Life Risk Committee, which is responsible for highlighting the main risks to which the Life division is exposed.
See section 3.2.2.3 – Interdependence and accumulation risks between SCOR’s activities.
The Non-Life and Life reserves adequacy are controlled on a quarterly basis by internal actuaries at division level as well as at the Group level by the Group Chief Actuary who signs off on the reserving adequacy and reports to the Executive Committee and to the Audit Committee. External consulting firms also review on a regular basis the Non-Life reserves. Life reserving assumptions are reviewed as well by an external firm in the framework of the embedded value calculation. If necessary, internal audits of its portfolios are performed. The Chief Reserving Actuaries of the divisions own the primary role to overview the reserves of their respective division, to assure appropriateness in the reserving methods and to enhance the reserving governance. The Group Chief Actuary controls the independent validation and testing of reserving tools, workflows, assumptions and processes. A centrally defined and tightly controlled reserving process, strong portfolio diversification, prudent reserving, sound reserving tools and, state of the art actuarial methods used by highly skilled professionals and high level of transparency, both internally and externally, all tend to minimize the risk of inadequate reserves.
For SCOR Global Life, the Group Chief Actuary gives his opinion on the reserves adequacy with regards to products or portfolios whose estimation is particularly complex. The scope under the review of the Group Actuarial Department, which reports to the Group Chief Risk Officer, includes among others products containing, long-term care in France, health, mortality and critical illness in the UK and in Ireland, and mortality in the US. The Group Actuarial Department does not intend to provide an alternative best estimate but verifies the adequacy of the assumptions and methods and processes used by the teams of SCOR Global Life to determine the life reserves. In some cases, the Group Actuarial Department applies a global approach and calculates a confidence interval in order to check that the reserves booked are within the said confidence interval. Similar to the P&C side, an annual report is established by the Group Actuarial Department, where the Group Chief Actuary gives his opinion on the reviewed booked reserves. The main objective of this report is to provide to the Group COMEX as well as to the Audit Committee of the Group an opinion on the level of the reviewed reserves of the Life division, and to highlight the uncertainties surrounding this assessment. For its Life business, SCOR is required to maintain adequate reserves to reflect the liability for future claims and benefit payments resulting from life reinsurance treaties, mainly mathematical reserves and claim reserves.
The mathematical reserves are established on initial recognition of a contract on the basis of best estimates assumptions and allow for an adequate safety margin for the risks of change, error and random fluctuation. They are subject to a liability adequacy test.
Beyond traditional retrocession, purchased for all main lines of business, SCOR has implemented a “Capital Shield Strategy”, which combines the following solutions:  Traditional retrocession (proportional or non-proportional);  Capital markets solutions and alternative risk transfer solutions (collateralized retrocession, Insurance-Linked Securities including Catastrophe and extreme mortality bonds, sidecars);  Solvency buffer (or capital buffer); SCOR has set out a solvency scale with clear and well-defined buffers safeguarding the Group’s franchise;  Contingent capital facilities, designed as tools of last resort, to partially replenish the Group’s capital base in case of very remote pre-defined events. The current contingent capital guaranteed equity line is providing the Group with EUR 200 million coverage. It is innovative in that it protects the Group against both natural catastrophes and extreme mortality events.
For further information on how counterparty default risks related to retrocessionnaires are managed, see Section 3.3.4 – Counterparty default risks. An analysis of the share of retrocessionaires in contract liabilities by rating of the retrocessionaires and collateral from retrocessionaires in favor of SCOR at December 31, 2015 and 2014 is presented in Section 4.6 – Financial information concerning the issuer's assets and liabilities, financial position and profits and losses, Note 16 – Net Contract liabilities and Note 21 – Net results of retrocession.
Group’s objective is to maintain an appropriate mix of fixed and variable rate instruments. It also manages the maturities of interest bearing financial assets. Interest rate risk is managed within the Group primarily at two levels. At the level of each entity, the Group takes into account the regulatory and accounting constraints. At the Group level, SCOR reviews its consolidated investment portfolios in order to identify the overall level of risk and return. It uses analytical tools which guide both its strategic allocation and local distribution of assets. Sensitivity to changes in interest rates is generally analyzed on a weekly basis.
In addition, SCOR has entered into interest rates swaps to cover its exposure to financial debt with variable interest rates. For further details on these swaps, please refer to Section 4.6 – Notes to the consolidated financial statements, Note 9 – Derivatives instruments.
Limits by counterparty exposure and by rating are defined in the Investment Guidelines. Credit risks are monitored at Group and local level. The average rating of the portfolio and the distribution of ratings are closely monitored. Concentration limits ensures a correct diversification of issuers and counterparties.
SCOR has a balance sheet hedging approach whereby there is an objective to match monetary assets and liabilities in each foreign currency so that the fluctuation in the exchange rate has no material impact on the reported net income. The policy is to closely monitor the net monetary currency positions and, where appropriate, execute either cash arbitrages or forward hedges. The Group has one net investment hedge in place to reduce its exposure to variations in the net assets of a USD functional currency subsidiary.
SCOR mitigates the credit risks related to bond and loans portfolios by implementing a policy of geographic and sector diversification. SCOR maintains its investment policy in high-quality assets and in countries with the lowest sovereign risk.
Deposits with cedents are mitigated through a quarterly examination of exposure and associated risks as well as actions aiming at reducing or limiting the exposure (e.g. though the introduction of offset clauses).
Concentration risk from cash deposits at banks is mitigated by defining counterparty exposure limits. Furthermore, SCOR selects bank counterparties according to their rating and credit quality. SCOR also considers the public assistance (e.g., loans, guarantees of deposits, nationalizations) certain banks may benefit from during a financial crisis, as they are important in the economy of their respective country.
Credit risk on future cash-flows from Life reinsurance policies is mitigated by industry-wide protection solutions in several countries. In addition, SCOR monitors the development of its clients through regular client contact, which enables SCOR to take appropriate action when deemed necessary.
For more details on the impact of the valuation of intangible assets refer to section 3.2.1.6 – The Valuation of SCOR’s intangible assets and deferred tax assets may significantly affect its shareholders’ equity and the price of its securities, and to Section 4.6 Notes to the financial statements, Note 5 – Intangible assets.
For special highly technical risk categories such as Terrorism, Nuclear, Aviation or Pollution, SCOR chooses to participate in market dedicated pools which offer best available expertise and risk sharing at market level. In the case of joint liability of the members, the risk of default of other pool members is carefully managed by SCOR:  by being appointed as director and via the participation of senior management in dedicated committees such as Audit and Risk Committees and Technical committees, for the pools in which SCOR’s participation is the most significant; and
 via the careful consideration of the financial situation of other pool members. This contributes to the application of sound and robust governance.
The aforementioned credit risks could accumulate in either a single counterparty, in the same sector of activity or the same country. SCOR attaches particular importance to the establishment of and respect of counterparty exposure limits. The quarterly examination of its exposure enables the Group to identify and quantify the risks and, in case of accumulations, formulate appropriate responses.
Liquidity considerations over a long term need to be assessed in a way which takes into consideration the possibility of various unexpected and potentially adverse business conditions where assets may not be sold for current market values. SCOR has defined an internal methodology to estimate the level of its liquid free assets (i.e. non-pledged assets) which could be sold within a reasonable time.
The Group has also been granted credit facilities from several companies of the banking sector to support the reinsurance activities of various subsidiaries. The Group aims at reducing the portion of those credit facilities which is collateralized with assets and regularly adapts and renews those facilities successfully with banks to support the business needs.
The process owners are responsible for managing operational risks within the processes. In order to respect high quality standards, the Group relies on a highly qualified staff to manage processes and the risks within these processes.
Outsourcing some activities or processes may improve or rationalize some aspects of a process, but SCOR is still expected to deliver the same level of service. Principles to properly manage potential operational risks stemming from outsourcing of certain functions are set out in dedicated policies and guidelines.
4.1 Consolidated balance sheet 145 4.2 Consolidated statement of income 147 4.3 Consolidated statement of comprehensive income 148 4.4 Consolidated statement of changes in cash flows 149 4.5 Consolidated statement of changes in shareholders’ equity 150 4.6 Notes to the consolidated financial statements 153 4.6.1 Note 1 – accounting principles and methods 153 4.6.2 Note 2 – consolidation perimeter 158 4.6.3 Note 3 – acquisitions and disposals 161 4.6.4 Note 4 – segment information 166 4.6.5 Note 5 – intangible assets 170 4.6.6 Note 6 – tangible assets and property related commitments 173 4.6.7 Note 7 – insurance business investments 174 4.6.8 Note 8 – loans and receivables 182 4.6.9 Note 9 – derivative instruments 182 4.6.10 Note 10 – assumed and ceded insurance and reinsurance receivables and payables 185 4.6.11 Note 11 – deferred acquisition costs 186 4.6.12 Note 12 – cash and cash equivalents and cash flows 186 4.6.13 Note 13 – information on share capital, capital management, regulatory framework and shareholders’ equity 187 4.6.14 Note 14 – financial debt 191 4.6.15 Note 15 – contingency reserves 194 4.6.16 Note 16 – net contract liabilities 195 4.6.17 Note 17 – provisions for employee benefits 200 4.6.18 Note 18 – stock options and share awards 205 4.6.19 Note 19 – income taxes 208 4.6.20 Note 20 – investment income 212 4.6.21 Note 21 – net results of retrocession 212 4.6.22 Note 22 – other operating and administrative expenses 213 4.6.23 Note 23 – earnings per share 214 4.6.24 Note 24 – related party transactions 214 4.6.25 Note 25 – commitments received and granted 215 4.6.26 Note 26 – insurance and financial risks 216 4.6.27 Note 27 – litigations 216 4.6.28 Note 28 – subsequent events 217 4.7 Information on holdings 218 4.8 Statutory auditors 219 4.9 Auditing of historical consolidated financial information 220
The consolidated financial statements for the year ended December 31, 2015 are presented below: 4.1 Consolidated balance sheet
ASSETS As at December 31 In EUR million 2015 2014 Intangible assets 2,550 2,385 Goodwill Notes 3, 5 788 788 Value of business acquired Note 5 1,600 1,455 Other intangible assets Note 5 162 142 Tangible assets Note 6 593 542 Insurance business investments 27,676 25,217 Real estate investments Note 7 838 845 Available-for-sale financial assets Note 7 15,381 14,684 Investments at fair value through income Note 7 744 690 Loans and receivables Note 8 10,492 8,947 Derivative instruments Note 9 221 51 Investments in associates Note 2 105 108 Share of retrocessionaires in insurance and investment contract liabilities Note 16 1,258 1,195 Other assets 7,797 7,099 Deferred tax assets Note 19 794 825 Assumed insurance and reinsurance accounts receivables Note 10 5,303 4,591 Receivables from ceded reinsurance transactions Note 10 75 192 Tax receivables 138 127 Other assets 211 277 Deferred acquisition costs Note 11 1,276 1,087 Cash and cash equivalents Note 12 1,626 860
SHAREHOLDERS' EQUITY AND LIABILITIES As at December 31 In EUR million 2015 2014 Shareholders’ equity - Group share Note 13 6,330 5,694 Share capital 1,518 1,518 Additional paid-in capital 838 841 Revaluation reserves 112 174 Consolidated reserves 3,350 2,754 Treasury shares (172) (139) Net Income for the year 642 512 Equity based instruments 42 34 Non-controlling interests 33 35
In EUR Earnings per share (Basic) Note 23 3.46 2.75 2.96 Earnings per share (Diluted)
4.3 Consolidated statement of comprehensive income For the year ended December 31
Net cash flows provided by / (used in) operations Note 12 795 894 897
Change in scope of consolidation (cash and cash equivalents of acquired / disposed companies)
Net cash flows provided by / (used in) investing activities (533) (1,397) (666)
Effect of change in foreign exchange rates on cash and cash equivalents
Net cash flows provided by / (used in) operations 795 894
(1) In 2014, mainly related to the acquisition of two private equity investments, accounted for as investments in associates (2) Acquisitions and disposals of other insurance business investments also include movements relating to bonds and other short-term investments which have a maturity date of < 3 months, and are classified as cash equivalents (3) Of which EUR (2) million of dividends paid by MRM to non-controlling interests (EUR (2) million in 2014) (4) Includes the repurchase of subordinated debt of USD (46) million (EUR (35) million), the redemption of MRM S.A. debt of EUR (33) million (including EUR
(19) Comprehensive income net of tax 333 Share-based payments 25 Other changes 5 Dividends paid
EUR 6 million in additional paid-in capital). This resulted in the creation of 711,022 new shares during the year ending December 31, 2014. These movements were compensated by a reduction in group capital by cancellation of treasury shares for EUR (13) million (EUR (6) million in share-capital and EUR (7) million in additional paid-in capital)
EUR 11 million in additional paid-in capital). This resulted in the creation of 1,221,843 new shares during the year ending December 31, 2015. These movements were compensated by a reduction in group capital by cancellation of treasury shares for EUR (24) million (EUR (10) million in share-capital and EUR (14) million in additional paid-in capital)
SCOR SE (“the Company”) is an European Company (Societas Europaea) domiciled in France and governed by the provisions of French law relating to European Companies as well as by the French corporate law provisions applicable to Sociétés Anonymes where this is not contrary to the specific provisions applicable to European Companies. SCOR’s shares are publicly traded on the Eurolist by Euronext Paris stock market and on the SIX Swiss Exchange. The principal activities of the Company and its subsidiaries (“the Group” or “SCOR”) are Life and Non-Life reinsurance.
SCOR’s consolidated financial statements for the years ended December 31, 2015, 2014 and 2013 have been prepared in compliance with IFRS issued by the International Accounting Standards Board (IASB) as adopted by the European Union (“EU”) and effective as at December 31, 2015. The term “IFRS” refers collectively to International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) and to Interpretations of the Interpretations Committees (Standing Interpretations Committee (SIC) and IFRS Interpretations Committee (IFRIC)) mandatorily applicable as at December 31, 2015. Refer to paragraph 4.6.1.3 below for a detailed overview on the new and amended International Financial Reporting Standards that are relevant to SCOR and adopted by the Group as endorsed by the European Union applicable in 2015 and the standards relevant to SCOR and expected to have a significant impact which have been issued by the IASB during the period but have not been adopted by the European Union.
The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, and financial instruments (including derivative instruments) at fair value through profit or loss.
The financial statements of material subsidiaries are prepared for the same accounting period as for the parent company. All material intra-group balances and transactions including the result of inter-company transactions are eliminated.
In the context of the implementation of the Solvency 2 directive, the Group has updated its presentation policy regarding commitments received and granted. The amounts disclosed in the 2014 Registration Document were EUR 243 million for the commitments received and EUR 4,992 million for the commitments given.
The preparation of the consolidated financial statements requires management to make certain judgments, assumptions and estimates. These affect the reported amounts of revenue, expenses, assets and liabilities, and the disclosure of contingent assets and liabilities at the reporting date. Management reviews these estimates and assumptions periodically, based on past experience and other factors. The actual outcome and results could differ substantially from estimates and assumptions made. The most material financial statement captions for which the Group uses estimates
and assumptions are reinsurance reserves, receivables and liabilities relating to reinsurance operations, the fair value and impairment of financial instruments, intangible assets, retirement and other defined benefit plans and deferred taxes, in particular with respect to the recognition of deferred tax assets and the availability of future taxable profit against which carryforward tax losses can be used.
Ending rate Average rate As at December 31, 2014 Q4 2014 Q3 2014 Q2 2014 Q1 2014
Transactions denominated in foreign currencies (currencies other than the functional currency) are translated into the functional currency at the exchange rate at the date of the transaction (for practical purposes, an average rate is used). These rates may differ from the rates used to translate functional currency into the reporting currency as mentioned above.
The treaties and facultative contracts assumed and retroceded by the Group are subject to different IFRS accounting rules depending on whether they fall within the scope of IFRS 4 - Insurance Contracts or IAS 39 - Financial Instruments: Recognition and Measurement.
Assumed and ceded reinsurance transactions are those contracts that transfer significant reinsurance risk at the inception of the contract. Reinsurance risk is transferred when the Group agrees to compensate a cedent if a specified uncertain future event (other than a change in financial variable) adversely affects the cedent. Any contracts not meeting the definition of a reinsurance contract under IFRS 4 - Insurance Contracts, are classified as investment and financial reinsurance contracts or derivative contracts as appropriate.
Non-Life gross premiums (both written and earned) are based upon reports received from ceding companies, supplemented by the Group’s own estimates of premiums (both written and earned) for which ceding companies’ reports have not yet been received. Differences between such estimates and actual amounts are recorded in the period in which the estimates are changed or the actual amounts are determined. The difference between ultimate estimated premiums, net of commissions, and premiums reported by ceding companies, is recorded under accounts receivable arising from assumed reinsurance transactions. Premiums are earned on a basis that is consistent with the risks covered under the terms of the reinsurance contracts, which is generally one to two years. For certain US and Japanese catastrophe risks, agriculture risks in Brazil and certain other risks, premiums are earned commensurate with the seasonality of the underlying exposure. The reserve for unearned premiums represents the portion of premiums written that relate to the unexpired terms of contracts and policies in force. Such reserves are computed by pro-rata methods based on statistical data or reports received from ceding companies. Reinstatement premiums are estimated after the occurrence of a significant loss and are recorded in accordance with the contract terms based upon paid losses and case reserves reported in the period. Reinstatement premiums are earned when written.
For the measurement of deferred acquisition costs (DAC), value of business acquired (VOBA) and reserves recognized for different insurance portfolios, SCOR applies the shadow accounting principles stipulated in IFRS 4. As the amortization of DAC (for Life) and VOBA is calculated using expectations for estimated revenues from investments and the measurement of reserves is based on the discount rate reflecting directly the performance of assets, relevant parts of the recognized unrealized gains and losses from financial investments are considered as shadow DAC, shadow VOBA and shadow reserves and offset directly in equity. Impairment of shadow DAC and shadow VOBA for the life business is included within the liability adequacy testing conducted by SCOR Global Life.
proportionate share of the syndicates insurance and reinsurance premiums as revenue over the policy term, and claims, including an estimate of claims incurred but not reported. On the closure of an underwriting year, typically three years after its inception, syndicates reinsure all remaining unsettled liabilities into the following underwriting year, a mechanism known as Re-Insurance To Close (“RITC”). If the Group participates on both the accepting and ceding years of account and has increased its participation, RITC paid is eliminated, as a result of this offset, leaving an element of the RITC receivable. This reflects the fact that the Group has assumed a greater proportion of the business of the syndicates. If the Group has reduced its participation from one year of account to the next, the RITC receivable is eliminated, leaving an element of RITC payable. This reflects the reduction in the Group’s exposure to risks previously written by the syndicates. The Group recognizes Lloyd’s RITC in claims and policy benefits to ensure consistency with similar transactions recognized in accordance with IFRS and to present a true and fair view.
4.6.1.3 IFRS STANDARDS EFFECTIVE DURING THE PERIOD AND IFRS STANDARDS NOT YET EFFECTIVE
The Group has adopted the following new and amended International Financial Reporting Standards and Interpretations as adopted by the European Union that are relevant to SCOR’s consolidated financial statements:  Amendments to IAS 19 – Defined Benefit Plans: Employee Contributions, clarify that contributions from employees or third parties to defined benefit plans that are independent of the number of years of service can be recognized as a reduction in service costs in the period in which the service is rendered, instead of allocating the contributions to the periods of service. The amendment was endorsed on December 17, 2014 and is effective for annual periods beginning on or after July 1, 2014. The amendments are applicable to the defined benefit plan in Switzerland. They did not have a material impact on the Group’s financial position or performance.
The following standards relevant to SCOR and expected to have a significant impact on its consolidated financial statements have been issued by the International Financial Reporting Standards Board but are not yet effective or have not been endorsed by the European Union:  On July 24, 2014, the IASB published IFRS 9 – Financial Instruments. The final version of IFRS 9 replaces the previously published versions of IFRS 9 on classification and measurement and hedge accounting. It also replaces IAS 39 – Financial Instruments: Recognition and measurement and covers classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with earlier application permitted.
 On January 13, 2016, the IASB published IFRS 16 – Leases. The Standard will replace the current guidance in IAS 17 – Leases, and is applicable from January 1, 2019. Earlier application is permitted, subject to endorsement by the EU and provided IFRS 15 – Revenue from Contracts with Customers, is also applied. IFRS 16 will significantly change the accounting by lessees, who will recognize a lease liability reflecting the present value of future lease payments and a ‘right-of-use asset’ for lease contracts on the balance sheet. Exemptions are optional for certain short-term leases and leases of low-value assets. Lessees will recognize depreciation of the right-of use asset and interest expense in accordance with the effective interest rate method on the lease liability in their income statement. The accounting for lessors remains broadly unchanged from IAS 17. Transition to the new principles for lease accounting can be done either fully retrospectively or by adopting a simplified approach that includes specified reliefs related to the measurement of the right-of use asset and the lease liability and would not require a restatement of comparative amounts. SCOR will assess the impacts of IFRS 16 on its financial position and performance as well as on disclosures in detail prior to its effective date.
Critical judgments are sometimes required to determine the consolidation method for certain entities in which the Group holds less than 50% of the voting rights. During the year ended December 31, 2015, SCOR’s voting rights in MRM S.A., a fully consolidated entity of the SCOR Group, decreased from 56.5% at acquisition date to 47.29% as at December 31, 2015. The Group determined that it continues to control MRM S.A. as it exerts de facto control as defined by IFRS 10 in light of the relative size of its holding of voting rights, and of the wide dispersion of other vote holders (the second biggest investor holds 4.65% of the voting rights).
SCOR determined that its Lloyd’s participations and reinsurance pools do not constitute joint arrangements as there is no contractually agreed sharing of control, requiring unanimous consent for decisions about the relevant activities of those arrangements.
The Group, through SCOR Investment Partners, acts as a fund manager for various investment funds. Funds for which SCOR acts as principal, even if the Group holds less than 50% of the voting rights must be consolidated. SCOR consolidates a fund (Euroloan III) in which it holds a 29% ownership, managed by the Group, as it is deemed to act as principal. When determining whether the Group is an agent or principal with respect to investment funds, the power to direct the relevant fund activities, i.e. the scope of the Group’s decision making authority over the funds, as well as the aggregated economic interest, including the returns and fund management remuneration generated for the Group are taken into account.
Mutual funds and real estate entities are fully consolidated or recorded using the equity method in accordance with the afore-mentioned rules. The non-controlling interests in fully consolidated mutual funds are presented in “Other liabilities” as the third party holders have an unconditional right to sell their holdings to SCOR.
The Group has investments that are accounted for using the equity method and are not individually or in aggregate material to the Group. The following table provides a summary of the aggregate amount of SCOR’s share of these investments. As at December 31 In EUR million 2015 2014 Aggregate net book value (in SCOR) of individually immaterial associates 105 108 Aggregate amount of the reporting entity’s share of net income (4) (5) Other comprehensive income - - Total comprehensive income (4) (5)
The table above is based on 2015 and 2014 provisional financial information.
Depending on the design of the risk transfer agreement with the SPV, the transaction is classified as either a derivative or as an insurance contract. Derivatives are accounted for as at fair value through profit and loss and are included in the balance sheet line item “derivative instruments”. Future payments to the SPV scheduled in the risk transfer contract are recognized as “other liabilities”. Assets from the agreements designated as insurance contracts are recognized in the balance sheet line item “share of retrocessionaires in insurance and investment contract liabilities”. Payments to the SPV are recognized in the income statement as “ceded written premiums”.
Insurance business investments - 13 27 - 2 17 - - Share of retrocessionaires in insurance and investment contract liabilities
SCOR’s maximum exposure to losses from unconsolidated structured entities is the carrying amount of the assets (such carrying amount varies during the coverage period, in particular if a significant catastrophic event occurs) which cannot exceed the maximum residual cover of the risk transfer agreement. Exposure relates to credit risk which is very limited due to the use of low-risk collaterals. Liabilities are settled by SCOR according to the risk transfer agreement.
On December 12, 2011, SCOR placed a catastrophe bond, Atlas VI Capital Limited Series 2011-1 and 2011-2, which provides the Group with USD 270 million of protection against US Hurricanes and Earthquakes and EUR 50 million of protection against European windstorms, for a risk period which extended from December 13, 2011 to December 31, 2014 for the US series and which extends to March 31, 2015 for the European series. Atlas VI is a special-purpose vehicle incorporated under the laws of Ireland and its notes are placed with various institutional investors. In accordance with IAS 39 “Financial Instruments recognition and measurement”, due to the absence of an ultimate net loss clause, contracts concluded between SCOR and these vehicles have been recognized as derivative instruments.
Amounts are recorded in the balance sheet representing the derivative asset recognized at fair value through P&L and other liabilities representing the value of interest payments.
In February 2015, SCOR sponsored a catastrophe bond, Atlas IX Series 2015-1, which provides the Group with multiyear risk transfer capacity of USD 150 million for US Named Storm and US and Canada Earthquake events. This transaction replaced the US tranches of Atlas VI Series 2011-1. The issuer of the cat bond, Atlas IX Capital Limited, is an Irish private limited company, incorporated on August 2, 2013. The risk period for Atlas IX 2015-1 runs from February 11, 2015 to December 31, 2018. The instrument is accounted for as a derivative instrument.
Business combinations are accounted for using the purchase method of accounting which requires that the assets acquired and liabilities assumed be recorded at the date of acquisition at their respective fair values. If the business combination is achieved in stages, the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.
A gain from bargain purchase is generated when the fair value of the net assets acquired by the Group exceeds the acquisition price and is recognized in the statement of income from the date of acquisition. Provisions, contingent assets and contingent liabilities are assessed at the acquisition date for the entities acquired. Such positions are subject to revision as at the acquisition date while the initial accounting is not final. Any revision after the initial accounting is final is recognized in the statement of income in accordance with IFRS 3 - Business Combinations.
The accounting for the acquisition of Generali U.S. generated a gain from bargain purchase of EUR 197 million as the fair value of net assets of EUR 784 million was in excess of the aggregate consideration. The gain from bargain purchase included a foreign currency exchange loss of EUR 14 million.
The share of the reinsurance business of Generali U.S. included in SCOR’s consolidated income corresponds to the results generated during the period from October 1, 2013, the date of acquisition by the Group, up to the end of the reporting period, December 31, 2013.
The pro forma financial information as at December 31, 2013 is presented to illustrate the effect on the Group’s statement of income of the Generali U.S. acquisition as if the acquisition had occurred on January 1, 2013. The Generali U.S. information is based on the estimated revenues and net income of the acquired business for the twelve month period ended December 31, 2013 and includes estimates for the impact of purchase accounting. The pro forma financial information is not necessarily indicative of what would have occurred had the acquisition and related transactions been made on the dates indicated, or of the future results of the Group.
The tax rates applied are 35% for adjustments that occurred in the US and 12.5% for that occurred in Ireland. The total corporate income tax effect related to the afore-mentioned pro forma adjustments amounted to EUR 7 million, including the impact of the non-taxable gain from bargain purchase.
The income statement pro forma information presented below has been prepared in accordance with AMF requirements and SCOR Group’s accounting principles and is presented in columnar format, composed of:  The 2013 full-year statement of income of the SCOR Group excluding Generali U.S.;  The 2013 full-year statement of income of Generali U.S.;  Adjustments to the standalone statement of income of SCOR Group and Generali U.S.;  The resulting pro forma financial information.
Forma In EUR million Generali U.S. Gross written premiums 10,044 854 - 10,898 Change in unearned premiums reserves (75) - - (75) Gross earned premiums 9,969 854 - 10,823 Other income and expense (65) - - (65) Investment income 513 21 (3) 531 Total income from ordinary activities 10,417 875 (3) 11,289 Gross benefits and claims paid (6,893) (678) - (7,571) Gross commissions on earned premiums (1,910) (79) - (1,989) Net results of retrocession (438) (42) - (480) Investment management expenses (36) (1) - (37) Acquisition and administrative expenses (367) (26) - (393) Other current operating expenses (155) - - (155) Total other current operating income and expenses (9,799) (826) - (10,625)
CONSOLIDATED NET INCOME, BEFORE TAX 450 49 167 666 Corporate income tax (94) (8) 7 (95)
The consideration paid by SCOR amounted to EUR 53 million and was made in exchange for MRM S.A. shares. The transaction was financed by SCOR through the use of own funds, without the issuance of any new debt or own shares.
MRM S.A.: FAIR VALUE OF ASSETS AND LIABILITIES ACQUIRED AS AT MAY 29, 2013 Provisional and final In EUR million Assets Real estate investments 259 Other assets 12 Cash and cash equivalents 57 TOTAL ASSETS 328 Liabilities Real estate financing 181 Other financial debt 11 Contingency reserves 2 Other liabilities 15 TOTAL LIABILITIES 209 Fair value of net assets 119 Consideration paid (53) Fair value of non-controlling interests (36) Gain from bargain purchase 30
Fair values have been determined by independent appraisers, having recent experience in the location and category of investment property assessed and approved by the domestic regulators (l’Autorité de Contrôle Prudentiel et de Résolution in France).
Debt related to real estate financing has been recorded at fair value.
The fair value of the non-controlling interests in MRM S.A. has been determined by an independent appraiser and is in proportion to the fair value paid by SCOR.
The cost of the investment was lower than the fair value of the net assets acquired. This difference, or gain from bargain purchase of EUR 30 million, was recorded in the statement of income of the Group for the year ended December 31, 2013.
Acquisition related expenses of EUR 3 million have been stated separately on the face of the consolidated statements of income for the year ended December 31, 2013.
MRM S.A.’s share of investment income of EUR 2 million and result before tax of EUR 0 million included in SCOR’s consolidated 2013 results correspond to the results generated by MRM S.A. during the period from May 29, 2013, the acquisition date, up to the end of the reporting period.
If the business combination had taken place at the beginning of the year, investment income would have been EUR 519 million and the profit before tax for the Group would have been EUR 674 million. Impact of MRM S.A. acquisition on consolidated statement of cash flows The consolidated statement of cash flows includes the following impacts related to the MRM S.A. acquisition: In EUR million Acquisition of consolidated entity (53) Change in scope of consolidation 57 Cash used to redeem financial debt (26) Interest paid on financial debt (8)
For management purposes, the Group is organized into three divisions (SCOR Global P&C, SCOR Global Life and SCOR Global Investments), of which SCOR Global P&C and SCOR Global LIfe are considered operating segments, and one corporate cost center: Group Functions. SCOR Global Investments is the asset management division of the Group. Its role is complementary to the two operating segments as it manages SCOR Global P&C’s and SCOR Global Life’s investment assets associated with the contract liabilities. SCOR Global Investments also manages third party assets, however these activities are currently considered not material. Therefore SCOR Global Investments is not considered a separate reportable operating segment for purposes of IFRS 8, Operating segments.
The operating segment SCOR Global P&C has responsibility for property and casualty insurance and reinsurance (also referred to as “Non-Life”); and the operating segment SCOR Global Life has responsibility for life reinsurance (also referred to as “Life”). Each operating segment underwrites different types of risks. Responsibilities and reporting within the Group are established on the basis of this structure. No operating segments have been aggregated to form the SCOR Global P&C and SCOR Global Life reportable operating segments.
(6,364) (3,135) - - (9,499) (5,047) (2,788) - - (7,835) (4,087) (2,967) - - (7,054) Gross commission on earned premiums
Other income and expense excl. Revenues associated with financial reinsurance contracts
364 808 (124) - 1,048 285 648 (107) - 826 199 466 (84) - 581 (1) Technical results are the balance of income and expenses allocated to the insurance and reinsurance business
4.6.4.1 GROSS WRITTEN PREMIUMS AND INSURANCE CONTRACT LIABILITIES BY GEOGRAPHIC REGION
The distribution of gross written premiums by geographic region for the Life segment, based on market responsibility, is as follows: Life Segment
(1) In 2015, SCOR Global Life’s individual treaties have been reallocated based on review of region allocation. The gross written premiums for SCOR Global Life in EMEA, Americas and Asia Pacific previously reported in the 2014 Registration Document were EUR 2,103 million, EUR 3,498 million and EUR 780 million respectively for the year ended December 31, 2014 and EUR 2,068 million, EUR 2,744 million and EUR 593 million for the year ended December 31, 2013
The distribution of gross written premiums by geographic region for the Non-Life segment, based on the country in which the ceding company operates for treaty business and localization of the insured for facultative business, is as follows: 1
For the Non-Life segment, insurance contract liabilities, allocated on the same basis as gross written premiums, and share of retrocessionaires in insurance and investment contract liabilities, allocated based on the location of the retrocessionaire, are as follows: As at December 31, 2015 As at December 31, 2014
Key balance sheet captions by segment, as reviewed by management, are split as follows: In EUR million
(13,744) (14,095) (27,839) (12,694) (13,145) (25,839) (1) In 2015, Management revised the allocation of assets held by certain composite entities, mainly real estate, which is now evenly allocated between Life and
Assets and liabilities by geographic region are based on the location of the entities.
The cash flows, by segment, are presented as follows: For the year ended December 31 2015 2014 2013
Goodwill represents the future economic benefits arising from assets acquired in a business combination that are not individually identified and separately recognized. It is initially measured at cost being the excess of the cost of the business combination over the fair value of the Group’s share of the net assets of the acquired company and is included in intangible assets.
At least annually, goodwill is tested for impairment. For the purposes of impairment testing, goodwill acquired in a business combination is allocated by SCOR to the groups of cash generating units that are expected to benefit from the profitability and synergies of the business combination. As part of the impairment testing, SCOR assesses whether the recoverable amount of operating units is at least equal to the total carrying value of operating units (including goodwill). If it is determined that an impairment exists, the total carrying value is adjusted to the recoverable amount. Any impairment charge is recorded in income in the period in which it arises.
The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial recognition intangible assets are carried at cost less any accumulated amortization and any accumulated impairment losses.
Intangible assets with finite lives are amortized over the expected useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for intangible assets with finite useful lives are reviewed annually. Changes in the expected useful life or the expected pattern of future economic benefits are accounted for prospectively by changing the amortization period or method as appropriate and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of income in the expense category consistent with the intangible asset. Intangible assets with indefinite useful lives are tested for impairment annually. The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether the indefinite life assumption continues to be appropriate. If not, the change in the useful life assessment from indefinite to finite is made on a prospective basis. Gains or losses arising from the de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of income when the asset is derecognized.
Other intangible assets consist primarily of customer related intangible assets arising from Non-Life business combinations and purchased software or development expenditure related to software.
(2) Gross value at December 31, 2014 969 1,987 260 3,216 Foreign exchange rate movements - 197
Change in scope of consolidation - - - Gross value at December 31, 2015 969 2,097 276 3,342 Cumulative amortization and impairment at December 31, 2013 (181) (462)
(1) Disposal and amortization of VOBA for the 2015 period include EUR 80 million resulting from the derecognition of VOBA due to fully amortized treaty terminations. Regular amortization related to business in force amounts to EUR (44) millions for the year ended December 31, 2015
(2) Disposal and amortization of the period mainly include the scrapping of fully amortized software (EUR 19 million)
The net book value of goodwill allocated to SCOR Global P&C and SCOR Global Life is disclosed in Note 4 – Segment information. SCOR groups its cash-generating units (CGUs) by its operating segments, SCOR Global P&C and SCOR Global Life. This is consistent with the way SCOR manages and monitors its business and cash flows.
In order to estimate the fair value of SCOR Global P&C for the purpose of impairment testing, SCOR uses a discounted cash flow model comprised of an earnings model, which considers forecasted earnings and other financial ratios of the reportable segment over a five year period. The first two years are based on Board-approved business plans and the last three are extrapolated using an approach based on past experience. Business plans include assessments of gross and net premium expectations, expected loss ratios and expected expense ratios together with actuarial assumptions such as the coefficient of variation on ultimate net reserves together with assumptions as to the mean time to payment of existing reserves and future business. Premium income beyond this period is extrapolated using a growth rate of 6.9%. SCOR uses risk free interest rates per currency. The estimated Group cost of capital is 7.18% as derived from the Capital Asset Pricing Model (CAPM).
The annual goodwill impairment tests conducted for both SCOR Global P&C and SCOR Global Life segments show recoverable amounts in excess of the respective total carrying values for the years ended December 31, 2015, 2014 and 2013. Consequently, no goodwill impairment charges were recognized.
Other intangible assets with finite useful lives at December 31, 2015 were EUR 137 million compared with EUR 111 million at December 31, 2014. The additions during the year ended December 31, 2015 of EUR 36 million comprise mainly software development cost capitalized relating to the Group’s general ledger, technical accounting system and internal model of the Group.
Intangible assets with an indefinite life are tested for impairment annually. Following the impairment test, US state licenses acquired in 2009 have been written off for EUR 3 million. The price of the Lloyd’s syndicate participations from the Lloyd’s auction process are key inputs to the impairment tests conducted, which demonstrated that there are no indicators of impairment.
Gross value at December 31, 2013 633 Foreign exchange rate movements 9 Additions 17 Reclassification - Disposal (14) Change in scope of consolidation - Other - Gross value at December 31, 2014 645 Foreign exchange rate movements 17 Additions 59 Reclassification - Disposal (5) Change in scope of consolidation - Other - Gross value at December 31, 2015 716 Cumulative depreciation and impairment at December 31, 2013 (89) Depreciation for the period (23) Impairment for the period - Reclassification - Disposal 9 Cumulative depreciation and impairment at December 31, 2014 (103) Depreciation for the period (25) Impairment for the period - Reclassification - Disposal 4 Cumulative depreciation and impairment at December 31, 2015 (123) CARRYING VALUE AS AT DECEMBER 31, 2013 544 CARRYING VALUE AS AT DECEMBER 31, 2014 542 CARRYING VALUE AS AT DECEMBER 31, 2015 593
Payments for operating leases relate primarily to rental payments for offices and business premises of the Group. They include extension options as well as restrictions regarding subleases. In the period under review, minimum lease payments of EUR 24 million (2014: EUR 21 million; 2013: EUR 18 million) were recognized as an expense, net of sublease payments of EUR (3) million (2014: EUR (2) million; 2013: EUR (3) million). The main lease contracts are for the US and Zurich offices. The minimum payments are as follows: 2015 2014 In EUR million Minimum payments Minimum payments
In October 2013, SCOR Reinsurance Asia Pacific PTE Ltd. entered into contract to acquire two floors in a building still under construction in Singapore and has purchased eight additional units located on two floors since then. The total acquisition price estimated, including fees, is SGD 88 million as at December 31, 2015 (SGD 76 million as at December 31, 2014). As at December 31, 2015, SGD 45 million (EUR 31 million) were recognized in the balance sheet (SGD 24 million (EUR 16 million) as at December 31, 2014). As at December 31, 2015, SCOR Reinsurance Asia Pacific PTE Ltd. did not have the right to use the building, which is contingent on completion of construction and fitting, expected to take place before June 2017.
The Group classifies its financial assets in the following categories: available-for-sale, fair value through income, loans and receivables and cash and cash equivalents. There are currently no assets classified as held-to-maturity. Sales and purchases of assets are recorded on the trade date. Once a financial asset has been recorded, it is measured according to its asset category, determined according to the methods set forth below. Financial assets are derecognized when the contractual rights to the cash flow of the financial asset expire or are transferred, and the Group has substantially transferred the risks and rewards inherent to the ownership of the financial asset.
Available-for-sale financial assets include non-derivative assets that are either classified as available for sale or not allocated to another category. They are carried at fair value. Unrealized gains and losses are recorded directly in shareholders’ equity. Foreign exchange variations on non-monetary available-for-sale assets are recorded directly in shareholders’ equity while variations due to foreign exchange rate movements for monetary available-for-sale assets are recorded through income. Interest on debt instruments is calculated in accordance with the effective interest method, which includes the amortization of any premiums or discounts and is recognized as investment income. Dividends on equity instruments are recognized as investment income on the ex-dividend date. Upon the derecognition of an available-for-sale financial asset, the accumulated unrealized gains and losses included in shareholders equity are transferred to realized capital gains / (losses) on investments in investment income, net of any amounts previously recorded through income.
The Loans and receivables category includes funds held by ceding companies as collateral for underwriting commitments included at the amount deposited. Non-derivative financial assets, where payment is fixed or determinable and which are not listed on an active market, are also included within this category and are recognized at amortized cost using the effective interest rate method. Loans and receivables include short-term deposits or investments with a maturity of more than three months but less than twelve months at the date of purchase or deposit. Loans and receivables include a provision for recoverability if deemed necessary.
Cost or amortized cost Real estate investments 838 - - - 838 Equity securities 770 214 492 - 64 Debt securities 14,611 13,499 1,111 - 1 Available-for-sale financial assets 15,381 13,713 1,603 - 65 Equity securities 744 288 456 - - Debt securities - - - - - Investments at fair value through income 744 288 456 - - Loans and receivables Note 8 10,492 408 - - 10,084 Derivative instruments Note 9 221 - 181 40 - TOTAL INSURANCE BUSINESS INVESTMENTS 27,676 14,409 2,240 40 10,987 Cash and cash equivalents Note 12 1,626 1,626 - - -
Cost or amortized cost Real estate investments 845 - - - 845 Equity securities 726 313 347 - 66 Debt securities 13,958 12,888 1,068 - 2 Available-for-sale financial assets 14,684 13,201 1,415 - 68 Equity securities 657 377 280 - - Debt securities 33 - 33 - - Investments at fair value through income 690 377 313 - - Loans and receivables Note 8 8,947 93 - - 8,854 Derivative instruments Note 9 51 - 32 19 - TOTAL INSURANCE BUSINESS INVESTMENTS 25,217 13,671 1,760 19 9,767 Cash and cash equivalents Note 12 860 860 - - -
 Level 2: models prepared by internal and external experts using observable market inputs
The Group has certain investments which are valued based on models prepared by internal and external experts using observable market inputs. These primarily comprise structured products, other than securities issued by government agencies for which the market is considered active, hybrid and tier 1 and tier 2 corporate debt, private placements, inflation linked government assimilated bonds, specific alternative investments and derivative instruments. For further detail on the valuation of derivative instruments please see Note 9 – Derivative Instruments.
 Level 3: valuation inputs for the asset or liability which are not based on observable market data (unobservable inputs) The value of these instruments is neither supported by prices from observable current market transactions in the same instrument nor is it based on available market data. If a fair value measurement uses inputs based
significantly on unobservable inputs it is classified as a Level 3 measurement. Level 3 instruments consist of derivative instruments primarily relating to the Atlas catastrophe and mortality bonds. Further detail on the valuation of these derivative instruments is included within Note 9 - Derivative Instruments.
 a duration of decline of more than 24 months. For certain investments, in addition to the above impairment guidelines, SCOR takes into consideration other important factors such as:  the fact that the asset is specifically excluded from any actively traded portfolio;  its ability and intent to continue to hold the investment for a significantly longer period than a normal investment;  its business relationship with the investee; and  the estimated long-term intrinsic value of the investment.
For debt securities, and loans and accounts receivables, an objective indicator of impairment relates primarily to proven default credit risk. Different factors are considered to identify those debt securities potentially at risk of impairment, including significant financial difficulty or default in payments, to enable the Group to conclude whether there is objective evidence that the instrument or group of instruments is impaired.
Income and expense recognized in statement of income - - - (15)
(1) Movements in derivative instruments are due to the change in fair value of Atlas IX Series 2015-1 and Atlas IX 2013-1 (Extreme Mortality Risk Transfer Contract) derivatives recorded in other operating expenses
Total Net book value at January 1, 2014 - - - 59 59 Change in FX - - - -
Change in scope of consolidation - - - - - Net book value at December 31, 2014 - - - 19 19
(1) Movements in derivative instruments are mainly due to the change in fair value of Atlas VI and Atlas IX (2013-1 Extreme Mortality Risk Transfer Contract) derivatives recorded in other operating expenses
The EUR (15) million total losses (2014: EUR (40) million) recorded in the statement of income in 2015 includes EUR (19) million of change in fair value (2014: EUR (41) million). No realized gain/loss was recognized in 2015 and 2014, respectively.
There have been no material transfers between Level 1 and Level 2 in 2015 and 2014, respectively. There were also no changes in the purpose of a financial asset that subsequently resulted in a different classification of that asset.
At the end of each reporting period, properties are assessed to determine whether there is any indication of impairment. One such indicator is that the building’s market-value is below its carrying value. If any such indicators is found, the Group assesses the recoverable amount of the building in question. The recoverable amount is the higher of the property’s fair value less cost to sell and its value in use. The value in use is assessed using an internal discounted cash flow model based on current market assumptions and considers rental status, completeness of construction and renovation work, as well as recent developments within the local real estate market. If the recoverable amount is greater than 20% below the carrying amount, the resulting impairment loss is recognized in the statement of income.
The properties held by the Group and considered as investment property are owned either by wholly-owned subsidiaries of SCOR, or by MRM S.A. They consist of office buildings (wholly-owned subsidiaries and MRM S.A.), and retail buildings (MRM S.A.). The movements in real estate investments and finance leases are analyzed as follows: In EUR million Real estate investments Finance leases Total Gross value at December 31, 2013 949 - 949 Foreign exchange rate movements - - - Additions 60 - 60 Disposal (49) - (49) Reclassification - - - Change in scope of consolidation - - - Gross value at December 31, 2014 960 - 960 Foreign exchange rate movements - - - Additions 29 - 29 Disposal (14) - (14) Reclassification - - - Change in scope of consolidation - - - Gross value at December 31, 2015 975 - 975 Cumulative depreciation and impairment at December 31, 2013 (88) - (88) Depreciation for the period (25) - (25) Impairment for the period (3) - (3) Disposal 1 - 1 Reclassification - - - Cumulative depreciation and impairment at December 31, 2014 (115) - (115) Depreciation for the period (22) - (22) Impairment for the period - - - Disposal - - - Reclassification - - - Cumulative depreciation and impairment at December 31, 2015 (137) - (137) CARRYING VALUE AS AT DECEMBER 31, 2013 861 - 861 CARRYING VALUE AS AT DECEMBER 31, 2014 845 - 845 CARRYING VALUE AS AT DECEMBER 31, 2015 838 - 838
In EUR million Real estate investments Finance leases Total Fair value as at December 31, 2013 972 - 972 Fair value as at December 31, 2014 973 - 973 Fair value as at December 31, 2015 1,057 - 1,057
Real Estate financing is presented in Note 14 – Financial Debt.
Fair value of real estate investments is categorized within Level 3. The fair value technique and unobservable inputs are as follows as at December 31, 2015 and 2014 respectively: Real estate
market comparison and income capitalization market comparison and income capitalization 10% 344-6,824 (1) Discounted Cash Flows (DCF) approach or transaction price (for real estate investments under purchase bids) might also be used for some real estate investments
The rental income related to investment property was EUR 45 million in 2015 (2014: EUR 48 million) and the related direct operating expenses EUR 11 million (2014: EUR 16 million).
4.6.7.5 BREAKDOWN OF AVAILABLE FOR SALE AND FAIR VALUE THROUGH INCOME SECURITIES
The following table summarizes the debt and equity securities and unrealized gains/(losses) by class of securities classified as available for sale and fair value through income: As at December 31, 2015 As at December 31, 2014
As at December 31, 2015, net unrealized gains (losses) on debt securities comprise EUR 193 million unrealized gains and EUR (137) million unrealized losses (as at December 31, 2014, EUR 291 million and EUR (75) million, respectively). Net unrealized gains/(losses) on equity securities as at December 31, 2015 are comprised of EUR 116 million unrealized gains and EUR (26) million unrealized losses (as at December 31, 2014, EUR 85 million and EUR (29) million, respectively). Net unrealized gains and losses on available for sale investments exclude:  Gains and losses relating to foreign exchange of EUR (7) million (2014: EUR (0.5 million)
 Shadow accounting of EUR (3) million (2014: EUR (37) million)  Non-controlling interests of mutual funds of EUR 9 million (2014: EUR 6 million)
 Tax effects on above stated items of EUR (43) million (2014: EUR (62) million)
 Unrealized gains and losses relating to funds withheld of EUR (10) million (2014: EUR (5) million)
In EUR million As at December 31, 2015 As at December 31, 2014
In EUR million As at December 31, 2015 As at December 31, 2014 Funds held by ceding companies 8,524 8,108 Short term investments 1,412 505 Loans secured against collateral - 16 Infrastructure and Real estate loans 495 248 Other loans maturing in more than one year 30 45 Deposits 31 25 Total 10,492 8,947
Loans and receivables include primarily receivables from cash deposits made at the request of ceding companies as collateral for commitments (insurance contract liabilities), short-term investments and related accrued interest. Shortterm investments include government bonds, certificates of deposit (CDs) and treasury bills (T-bills) maturing between three and 12 months from the date of purchase. CDs and T-bills maturing in more than 12 months from the date of purchase are included in “other loans maturing in more than one year”. Part of the assets presented within loans and receivables are managed by SCOR Investment Partners (short-term government bonds, infrastructure and real estate loans, and most of loans secured against collateral).
As at December 31, 2015, the increase in loans and receivables of EUR 1,545 million compared to year-end 2014 is mainly due to the increase in short term investments following the issuance of subordinated notes in December 2015 (refer to Note 14 – Financial debt) and the impact of fluctuating exchange rates.
The accounting method varies according to whether or not the derivative instrument is designated as a hedging instrument, as described below in “Hedging Instruments.” When the Group has not designated the derivative as a hedging instrument, gains and losses resulting from the change in the fair value of the instrument are recorded in the statement of income in the period in which they occur. The Group uses the following derivative instruments to reduce its exposure to various risks: swaps based on interest rates, foreign currency forward purchase and sale contracts, caps and floors, puts and calls an insurance linked securities (ILS).
A derivative instrument designated as fair value hedge is initially recognized at fair value on the date on which the derivative contract is entered into. The carrying amount of the hedged item is adjusted for gains and losses attributable to the risk being hedged. The derivative is remeasured at fair value and gains and losses are recognized in the income statement. A derivative instrument designated as cash flow hedge is initially recognized at fair value on the date on which the derivative contract is entered into. The effective portion of the gain or loss on the hedging instrument is recognized in other comprehensive income in the cash flow hedge reserve, while the ineffective portion is recognized in the statement of income. Amounts taken to other comprehensive income are transferred to the statement of income when the hedged transaction is reflected in the statement of income, such as when hedged financial income or financial expense is recognized or when the forecast sale or purchase occurs.
Gains or losses recognized through other comprehensive income In EUR million 2015 2014 2015 2014 2015 2014 2015 2014 Atlas VI & IX 2015-1 27 2 - - (11) (35) - - Atlas IX - extreme mortality risk transfer contract 13 17 - - (4) (5) - - Interest rate swaps - - 23 30 1 - 6 (4) Cross currency swaps 157 16 - - 112 17 29 (4) Other 24 16 66 48 (50) (29) (22) (17) Total 221 51 89 78 48 (52) 13 (25)
The Atlas VI and IX catastrophe bonds transactions (see Note 2 – Consolidation perimeter, Information related to unconsolidated structured entities) are recorded as derivative assets recognized at fair value through P&L and as other liabilities representing the value of interest payments. Atlas IX catastrophe bonds are valued using a cumulated expected loss model that is based on a combination of market inputs to the extent that trades in these instruments are active and catastrophe modeling tools developed by third party companies (AIR / RMS). These assets are disclosed as level 3 investments within insurance business investments (see Note 7 – Insurance Business Investments). The significant unobservable inputs used in the valuation model are: Unobservable inputs Atlas IX Series 2015-1 Expected loss US Named Storm based on AIR model: 5.62% Expected loss US and Canadian Earthquake based on AIR model: 4.60%
A significant catastrophic event (US or Canadian Earthquake or a US Named Storm) covered by Atlas IX Series 2015-1 and occurring during the coverage period of this bond, would lead to an increase in the fair value of the respective portion of the derivative instrument recorded.
The Atlas IX mortality risk transfer contract transaction (refer to Note 2 – Consolidation perimeter, Information related to unconsolidated structures entities) is recorded as a derivative asset recognized at fair value through income and a liability for the value of interest payments. SCOR values the derivative asset using a model that is based on indicative secondary market interest spread, considering both the probability of trigger and alternative investment opportunities to the extent that trades in these instruments are active. The average indicative secondary market interest spread is calculated based on third-party sources, which provide regular overviews on the current indicative secondary market. The average indicative secondary market interest spread used as at December 31, 2015 was 2.663% (December 31, 2014: 2.843%). Extreme mortality events in the US (such as pandemics, natural catastrophes and terrorist attacks) covered by the Atlas extreme mortality bond and occurring during the coverage period of this bond, would increase the fair value of the derivative instrument. The asset is disclosed as level 3 investment within insurance business investments (see Note 7 – Insurance Business Investments).
Cash-flow hedge accounting is applied. The fair value of the swaps is obtained from the banking counterparty using market inputs. As part of the usual analysis of accounts processes these third party valuations are checked for reasonableness against internal models. The total relating notional amount is CHF 1,215 million as at December 31, 2015 and 2014. Fair value of the swaps is EUR 157 million as at December 31, 2015 (EUR 16 million as at December 31, 2014). The increase in fair value of these swaps is mainly due to the Swiss National Bank’s decision taken in January 2015 to remove the cap of CHF 1.20 per EUR which resulted in a significant strengthening of the CHF against the EUR. No inefficiency was identified on these swaps during 2015.
SCOR purchases and sells forward currency contracts to reduce its overall exposure to balances held in currencies other than the functional currencies of its subsidiaries. The contracts are recorded at their fair value from valuations provided by banking counterparties using market inputs. The outstanding contracts at December 31, 2015 and 2014, converted into EUR at the closing rates, were as follows: Forward sales Forward purchases In EUR million Notional Fair value Notional Fair value December 31, 2015 1,797 (35) 1,226 - December 31, 2014 2,136 (23) 1,525 (9)
Accounts receivable from and payable to cedents and retrocessionaires are mostly due in less than one year. A complete aging of financial assets is included in Section 3.2.4 – Counterparty default risks.
Gross receivables from ceding companies of SCOR Global Life include unassigned cash receipts for settlements not yet recorded but recognized in the estimated premiums receivable from cedents, net of commission.
P&C Total Carrying value at January 1 646 441 1,087 529 379 908 451 359 810 Capitalization of new contracts for the period / Change of the period 153 526 679 196 415 611 169 390 559 Change in scope of consolidation and contract portfolio exchanges - - - - - - - - - Amortization for the year (113) (466) (579) (88) (379) (467) (87) (351) (438) Impairment losses during the year - - - - - - - - - Foreign exchange rate movements 39 35 74 24 26 50 (21) (19) (40) Other changes (including change in shadow accounting) 15 - 15 (15) - (15) 17 - 17 Carrying value at December 31 740 536 1,276 646 441 1,087 529 379 908 4.6.12 NOTE 12 - CASH AND CASH EQUIVALENTS AND CASH FLOWS
The following table reconciles consolidated net income to net cash flows provided by / (used in) operations as presented on the statement of cash flows: In EUR million 2015 2014 2013 Consolidated Group net income 642 512 549 Realized gains and losses on investment disposals (274) (181) 25 Change in accumulated amortization and other provisions 126 108 (127) Changes in deferred acquisition costs (89) (120) (97) Net increase in contract liabilities 608 533 487 Change in fair value of financial instruments recognized at fair value through income (97) 33 7 Other non-cash items included in operating results 103 (101) 66 Net cash flows provided by / (used in) operations, excluding changes in working capital 1,019 784 910 Change in accounts receivable and loans (265) 212 8 Cash flows from other assets and liabilities 38 3 - Change in taxes receivables and payables 3 (105) (21) Net cash flows provided by / (used in) operations 795 894 897
During the year 2015, the Group received and paid out operational cash relating to investment income and taxes. Dividend and interest cash receipts relating to investments held during the year were EUR 20 million (2014: EUR 14 million and 2013: EUR 27 million) and EUR 495 million (2014: EUR 360 million and 2013: EUR 309 million).
Treasury shares and any directly related costs are recorded as a deduction from shareholders’ equity. When treasury shares are subsequently sold or reissued any consideration received is included in consolidated shareholders’ equity net of any directly related costs and tax effects. Accordingly, there is no related income, gain or loss recognized in the statement of income.
The number of ordinary shares which were issued and fully paid in circulation as at December 31, 2015, 2014 and 2013 was as follows: 2015 2014 2013 As at January 1 192,691,479 192,757,911 192,384,219 Share capital Decrease - Decision of the Board of Directors (1,260,227) (777,454) (880,470) Share capital Increase - Exercise of stock-options 1,221,843 711,022 1,254,162
 The issuances of shares relate to the exercise of stock options for EUR 20 million (EUR 10 million in share capital and EUR 10 million in additional paid-in capital). This resulted in the creation of 1,254,162 new shares throughout the year.
In 2014, the movements are due to the following operations:  The Board of Directors held on March 4, 2014 decided to reduce the Group capital by cancellation of 777,454 treasury shares for EUR (13) million (EUR (6) million in share capital and EUR (7) million in additional paid-in capital).
The shares issued in 2015, 2014 and 2013 were issued at a nominal price of EUR 7.8769723 per share.
SCOR’s Combined General Meeting of April 30, 2015 resolved to distribute, for the 2014 fiscal year, a dividend of one euro and forty cents (EUR 1.40) per share, being an aggregate amount of dividend paid of EUR 260 million, calculated on the basis of the number of shares eligible for dividend as at the payment date. The ex-dividend date was May 5, 2015 and the dividend was paid on May 7, 2015.
The primary source of capital used by the Group is equity shareholders’ funds and subordinated debts. The leverage ratio as at December 31, 2015 is 27.5%. For a description of the leverage ratio, please refer to Section 1.3.6 – Financial position, liquidity and capital resources.
The Groups’ capital management objectives are:  To match the profile of its assets and liabilities, taking into account the risks inherent to the business;  To maintain strong credit ratings and healthy capital ratios in order to support its business objectives and maximize shareholders’ value;  To ensure a high degree of capital fungibility;  To retain financial flexibility by maintaining strong liquidity and access to a range of capital markets;  To allocate capital efficiently and support the development of business by ensuring returns on capital employed meet the requirements of the regulators and stakeholders; and
On December 20, 2013, SCOR has arranged a EUR 200 million contingent capital facility line with UBS and issued 12,695,233 warrants in favor of UBS. This contingent capital facility which is effective since January 1, 2014, replaced the previous contingent capital arrangement which ended on December 31, 2013. Under the new arrangement, the protection is triggered in case of extreme life events, as well as natural catastrophe events included within the last facilities. Each warrant commits UBS to subscribe to two new SCOR shares (maximum amount of EUR 200 million available per tranche of EUR 100 million each, including issuance premium) when the aggregated amount of (i) the estimated ultimate net losses resulting from eligible natural catastrophes incurred by the Group (in its capacity as an insurer / reinsurer) or (ii) the ultimate net claims amount recorded by SCOR group life segment (in its capacity as an insurer / reinsurer) reaches certain contractual thresholds between January 1, 2014 and December 31, 2016. In addition, subject to no drawdown having already been conducted under the facility, if SCOR’s share price falls below EUR 10 an individual tranche of EUR 100 million will be drawn down out of the EUR 200 million facility.
This caption includes debt relating to the acquisition of real estate property. At initial recognition, real estate financing debt is recorded at fair value less directly attributable transaction costs. After initial recognition, it is measured at amortized cost using the effective interest rate method.
At initial recognition, other financial debts are recorded at fair value less directly attributable transaction costs. After initial recognition, they are measured at amortized cost using the effective interest rate method.
Maturity Net book value Fair value Net book value Fair value Subordinated debt USD 100 million (1)
3,155 3,207 2,232 2,306 (1) Amounts are not publicly traded. Therefore the net book values are reflective of the fair value (2) Includes EUR 39 million accrued interests (December 31, 2014: EUR 31 million)
During 2011, the Group re-purchased USD 33 million out of this debt, at a price of 82.5%. The purchase price of this debt at a discount rate gave rise to a consolidated pre-tax profit of EUR 4 million. During 2013, the Group re-purchased USD 43 million and USD 3 million of this debt at a price of 89.75% and 85% respectively. These debt repurchases gave rise to a consolidated pre-tax profit of EUR 4 million.
During 2014, the Group re-purchased USD 10 million out of this debt, at a price of 93.24%. The purchase price of this debt at a discount rate gave rise to a consolidated pre-tax profit of EUR 0.5 million.
On June 25, 2015, SCOR called the remaining balance of the note resulting in a diminution of debt of USD 11 million.
During 2009, the Group provided liquidity to both its perpetual super-subordinated debt security (Tier 1 type) (TSSDI EUR 350 million) and its EUR 100 million subordinated debt issuance (call date July 2010) resulting in acquisition of own debt of EUR 99 million at an average price of 46.5%. The purchase of this debt at a discount gave rise to a consolidated pre-tax profit of EUR 53.4 million.
On July 6, 2015, SCOR called the remaining balance of the EUR 100 million subordinated note resulting in a diminution of debt of EUR 93 million.
In 2006, SCOR issued a perpetual super-subordinated debt security (Tier 1 type) in an aggregate principal amount of EUR 350 million to finance the acquisition of Revios Rückversicherung AG. The bond issue, comprised of last-rank subordinated bearer certificates with a face value of EUR 50,000 bearing interest at an initial rate of 6.154% per annum then a floating rate indexed on the 3-month EURIBOR plus a margin of 2.90%, payable quarterly. There is no fixed redemption date but SCOR reserves the right to redeem, in part or in whole, the bonds as from July 28, 2016.
In 2011, SCOR issued CHF 400 million perpetual subordinated notes, redeemable by SCOR each quarter as at payment of interest dates from August 2, 2016. The coupon has been set to 5.375% (until August 2, 2016) and 3-month CHF LIBOR plus a margin of 3.7359% thereafter.
SCOR has entered into a cross-currency swap which exchanges the principal of the first tranche into EUR and exchanges the CHF coupon on the notes to EUR 6.98% and matures on August 2, 2016. Refer to Note 9 – Derivative Instruments.
On October 8, 2012, SCOR issued CHF 250 million perpetual subordinated notes, redeemable by SCOR each quarter as at payment of interest dates from June 8, 2018. The strong market demand observed prompted the Group to extend its placements from CHF 250 million to a total of CHF 315 million on September 24, 2012. The coupon has been set to 5.25% (until June 8, 2018) and 3-month CHF LIBOR plus a margin of 4.8167% thereafter.
SCOR has entered into a cross-currency swap which exchanges CHF 250 million of the principal into EUR and exchanges the CHF coupon on the notes to EUR 6.2855% and matures on June 8, 2018. SCOR has entered into a second cross-currency swap which exchanges CHF 65 million of the principal into EUR and exchanges the CHF coupon on the notes to EUR 6.2350% and matures on June 8, 2018. Refer to Note 9 – Derivative Instruments.
On October 20, 2014, SCOR issued CHF 125 million perpetual subordinated notes, redeemable by SCOR as at payment of interest dates from October 20, 2020. The coupon has been set to 3.375% (until October 20, 2020), and resets every 6 years at the prevailing 6-year CHF mid-swap rate + 3.0275%.
On October 1, 2014, SCOR issued EUR 250 million perpetual subordinated notes, redeemable by SCOR as at payment of interest dates from October 1, 2025. The coupon has been set to 3.875% (until October 1, 2025), and resets every 11 years at the prevailing 11-year EUR mid-swap rate + 2.7%.
Some provisions in the terms and conditions of notes allow for early redemption under certain conditions other than the liquidation of the issuer (e.g. tax, accounting, regulatory), however these early redemption cases (i) are always at the option of the issuer and no reimbursement can be imposed on the Issuer by the Noteholders; and (ii) are always subject to prior approval by the relevant supervisory authority.
The Group is planning to sell four investment properties and to redeem the related real estate debts in the course of 2016. One of these debts was redeemed in February 2016.
(1) The amounts presented in other financial costs include certain other letter of credit charges, custodian and overdraft fees, amortization of issuance fees and other bank charges (commissions, etc.), as well as gains on debt repurchase of EUR 0 million in 2015 (EUR 0.5 million in 2014 and EUR 4 million in 2013)
Where the Group expects the provision to be reimbursed for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain.
The Group maintains reserves to cover its estimated liability for future claims and benefit payments resulting from reinsurance treaties. Reserves are reviewed by management during the year, using new information as soon as it is available, and are adjusted if necessary. Management considers many factors when establishing reserves, including:  information from ceding companies;  historical developments, such as reserve patterns, claims payments, number of claims to be paid and product mix;  internal methods to analyze the Group’s experience;  most recent legal interpretations concerning coverage and commitments;  economic conditions;  biometric developments such as mortality, morbidity and longevity; and
The table below shows the movement in the net reserves for unpaid losses and loss expenses of SCOR Global P&C. The table begins by showing the reported year-end gross and net reserves, including IBNR, recorded at the exchange rates applicable at each corresponding balance sheet date.
period during which the payments are made and are not revalued to the initial foreign exchange rates at which the reserves were established. Additionally, payments include losses covered by unearned premium reserves. The net incurred losses section is the sum of the paid claims and the change in claims reserves and IBNR at the average foreign exchange rate of the period.
Net cumulative inception to date incurred losses as at December 31, 2015
Gross reserves, including IBNR reserves (in EUR million) 96 92 15 19
Actual number of claims notified under non-proportional and facultative treaties (in EUR million)
In assessing the Group’s liability for these plans, the Group uses external actuarial valuations which involve critical judgments and estimates of mortality rates, rates of employment turnover, disability, early retirement, discount rates, future salary increases and future pension increases. These assumptions may differ from actual results due to
changing economic conditions, higher or lower withdrawal rates or longer or shorter life spans of participants. These differences may result in variability of pension income or expenses recorded in future years. Actuarial gains and losses arising from experience adjustments and the effects of changes in actuarial assumptions are reflected in shareholders’ equity.
Defined contribution plans include plans whereby an employer makes periodic contributions to an external plan which manages all administrative and financial aspects. These external plans relieve the employer of all future obligations and manage the payment to employees of all amounts which are due (e.g. National insurance pension scheme, complementary pension scheme (AGIRC / ARRCO in France), defined contribution retirement plans).
Discount rates are defined with reference to high quality long-term corporate bonds with duration in line with the duration of the obligations evaluated. Management considers “AAA”, “AA” and “A” rated bonds to be high quality.
The following schedule reconciles the movements in the balance sheet amounts for the year ended December 31, 2015, 2014 and 2013: In EUR million
Effect of foreign exchange 22 1 12 9 8 1 2 5 (3) 1 (1) (3) Fair value of assets as at December 31 243 29 137 77 209 27 111 71 179 25 97 57 NET DEFINED BENEFIT OBLIGATION AS AT DECEMBER 31 - DEFICIT
Funded or partially funded obligation as at December 31 354 89 158 107 303 84 124 95 247 62 111 74 Fair value of plan assets as at December 31 243 29 137 77 209 27 111 71 179 25 97 57 Funded status as at December 31 - deficit 111 60 21 30 94 57 13 24 68 37 14 17 Unfunded obligation as at December 31 54 41 7 6 55 44 6 5 49 40 4 5 TOTAL FUNDED STATUS AS AT DECEMBER 31 – DEFICIT
(EUR 49 million in 2014) and actuarial (gains) / losses due to change in demographic assumptions for EUR 5 million (EUR 1 million in 2014)
America 2015 2014 2013 Accrued / (Prepaid) as at January 1 149 101 19 29 118 78 18 22 113 73 22 18 Total pension cost 15 7 6 2 1 4 (1) (2) 15 8 6 1 Benefits paid by employer - - - - - - - - - - - - Employer contribution (13) (6) (6) (1) (15) (3) (5) (7) (9) (3) (5) (1) Acquisitions /divestitures - - - - - - - - 10 - - 10 Actuarial (gains) / losses immediately recognized in other comprehensive income (OCI) 7 (1) 7 1 43 21 8 14 (9) 2 (5) (6) Effect of foreign exchange 7 - 2 5 2 1 (1) 2 (2) (2) - - Accrued / (Prepaid) as at December 31 165 101 28 36 149 101 19 29 118 78 18 22
The following table includes the allocation of plan assets as at December 2015 and 2014: Total in EUR
million Europe Switzerland North America 2015 Equities 85 12 36 37 Government bonds 5 - - 5 Corporate bonds 116 4 78 34 Property 22 - 22 - Insurance contracts 12 12 - - Other 3 1 1 1 TOTAL 243 29 137 77 2014 Equities 82 11 28 43 Government bonds 3 3 - - Corporate bonds 88 - 64 24 Property 18 - 18 - Insurance contracts 13 13 - - Other 5 - 1 4 TOTAL 209 27 111 71
As at December 31, 2015, employer contributions for the year ahead are expected to amount to EUR 20 million (2014: EUR 8 million).
The Group offers stock option plans to certain of its employees. The fair value of the services received in exchange for the granting of options is recognized as an expense. The total amount that is recognized over the vesting period is established by reference to the fair value of options granted, excluding conditions of attribution that are not linked to market conditions (return on equity (ROE), for example). These conditions are taken into account when determining the probable number of options which will be acquired by the beneficiaries. At each balance sheet date, the Group reviews the estimated number of options which will be acquired. Any impact is then recorded in the statement of income with the offsetting entry in shareholders’ equity over the remaining vesting period.
The Group also grants shares to certain of its employees. These grants are recorded in expenses over the vesting period with the offset recorded as an increase in shareholders’ equity. The dilutive effect of outstanding options is reflected in the calculation of the diluted earnings per share.
The exercise of the stock options allocated on March 20, 2015 is subject to performance conditions which are based on the strict observance of the principles set forth in the SCOR Code of Professional Conduct and on the solvability ratio, SCOR Global P&C’s combined ratio, SCOR Global Life’s technical margin and the SCOR group’s ROE in 2015 and 2016.
Outstanding options at December 31 6,498,126 20.57 7,234,382 19.07 Exercisable at December 31 3,505,120 17.33 3,914,507 16.97
The average weighted remaining life of the options for 2015 and 2014 was 5.35 and 5.52 years respectively. The fair value of options is estimated by using the Black & Scholes method which takes into account the terms and conditions under which the options were granted. The following table lists the characteristics used at the end of 2015, 2014 and 2013: Plan March 20, 2015 Plan
Expected life 4 years 4 years 4 years 4 years 4 years 4 years 4 years Historical volatility
(1) The historical volatility used to determine the fair value of stock options is based on the historical volatility over periods corresponding to the expected average maturity of the options granted, which is partially adjusted to eliminate extreme deviations and to better reflect long-term trends 4.6.18.2 FREE SHARE PLANS
The terms and conditions of the performance share “LTIP” plans of December 18, 2015, provide that after the vesting period of six years for all beneficiaries, the final acquisition of these shares will be subject to the condition of presence of six years and to the satisfaction of performance conditions.
All grants of the performance share plan of March 4, 2015 (except LTIP), to the Chairman and Chief Executive Officer and to the other members of the COMEX, are subject to performance conditions which are based on the strict observance of the principles set forth in the SCOR Code of Professional Conduct and on the solvency ratio, SCOR Global P&C’s combined ratio, SCOR Global Life’s technical margin and the SCOR group’s ROE in 2015 and 2016.
All grants of the performance share plans of December 18, 2015 (except LTIP), to the new member of the COMEX, to the Executive Global Partners and to the Senior Global Partners and half of the allocation to the other beneficiaries (under Senior Global Partners), are subject to performance conditions which are based on the strict observance of the principles set forth in the SCOR Code of Professional Conduct, on the solvency ratio and the SCOR group’s ROE in 2015 and 2016.
The grants of the share plans of December 18, 2015 to the Non Partners, in the collective plan, are not subject to performance conditions. All the “LTIP” plans of March 4, 2015 and December 18, 2015 shares are subject to performance conditions which are based on the strict observance of the principles set forth in the SCOR Code of Professional Conduct, on the solvency ratio and the SCOR group’s ROE in 2015 and 2016.
The fair value of the free shares corresponds to the market value adjusted for dividends and non-transferability costs, estimated using a forward acquisition/disposal method. The following table lists the characteristics used at the end of 2015, 2014 and 2013: Plan
French residents 30.07 26.14 22.45 - 20.12 20.67 Non-French residents 30.07 26.14 24.90 18.09 18.05 18.56
Vesting period French residents 3 years 6 years 2 years - 3 years 2 years Non-French residents 3 years 6 years 2 years 6 years 5 years 4 years
Dividend 4.67% 4.67% 4.83% 4.83% 5.03% 5.03% Risk-free interest rate (0.174)% 0.280% 0.059% 0.461% 0.292% 0.189%
Vesting period French residents 2 years 2 years 6 years 3 years 2 years - Non-French residents 2 years 4 years 8 years 5 years 4 years 4 years
Dividend 5.03% 5.03% 5.03% 5.03% 5.03% 5.03% Risk-free interest rate 0.332% 0.655% 1.220% 1.139% 0.777% 0.879%
Vesting period French residents 2 years 6 years Non-French residents 4 years 8 years
The main temporary differences arise from tax losses carried forward and the revaluation of certain financial assets and liabilities including derivative contracts, certain insurance contract liabilities, provisions for pensions and other post-retirement benefits. In addition, temporary differences arise on acquisitions due to the difference between the fair values of the net assets acquired and their tax base. Deferred tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries, associates and joint ventures, except where it is probable that the difference will not reverse in the foreseeable future.
and estimates related to income projections to determine the availability of sufficient future taxable income. SCOR uses a discounted cash flow model comprised of an earnings model, which considers forecasted earnings, and other financial ratios of legal entities based on board approved business plans, which incorporate key drivers of the underwriting results. Business plans include assessments of gross and net premium expectations, expected loss ratios and expected expense ratios, together with actuarial assumptions. To the extent that net operating losses carried forward cannot be utilized or expire, there may be deferred income tax expenses recorded in the future.
Taxes relating to items recorded directly in shareholders’ equity are recorded directly in equity and not in the statement of income. Deferred tax assets and liabilities are offset, if a legally enforceable right exists to set off current tax assets and liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.
The main components of corporate income taxes for the years ended December 31, 2015, 2014 and 2013 are presented below: In EUR million 2015 2014 2013 Amounts reported in the consolidated statement of income Current tax - current year (199) (164) (124) Current tax - prior years 7 (6) (17) Deferred taxes due to temporary differences 34 (15) 52 Deferred taxes from tax losses carried-forward (69) 20 (5) Changes in deferred taxes due to changes in tax rates or tax law - (1) 3 CORPORATE INCOME TAX (EXPENSE) / BENEFIT REPORTED IN STATEMENT OF INCOME (227) (166) (91)
A reconciliation of the income tax expense, obtained by applying the French tax rate of 38.00% for 2015, 2014 and 2013 to income (loss) before corporate income taxes and excluding share in results of associates, to the actual corporate income tax expense/benefit recorded in the consolidated statement of income is presented in the table below. The effective tax rate in 2015 is 26.0% (2014: 24.4% (1) and 2013: 13.9% (1)). The main reconciling items are due to the difference between the local corporate income tax rate of each taxable entity and the Group tax rate, permanent differences reported by each entity, reduced rates and specific items.
In EUR million 2015 2014 2013 Income before corporate income tax (excluding share in results of associates) 873 680 653 Theoretical corporate income tax at 38.00% (332) (259) (248) Reconciling items to actual corporate income tax (expense) / benefit Differences between French and local corporate income tax rates 114 106 120 Tax-exempt income 10 26 88 Non-deductible expenses (26) (28) (38) Write-down and reversal of previous write-down of deferred tax assets 1 (1) - Change in tax risk provision 4 (17) (2) Non creditable / refundable withholding tax - (1) - Change in corporate income tax rates - (1) 3 Share based payments 5 2 (1) Corporate income taxes prior year (6) 1 (13) Others 3 6 - ACTUAL CORPORATE INCOME TAX (EXPENSE) / BENEFIT (227) (166) (91)
(1) The effective tax rate calculation method has been adjusted to exclude the share in results of associates from the income before tax. The effective tax rates previously reported in the 2014 Registration Document were 24.5% and 14.2% for 2014 and 2013, respectively
Deferred tax assets and liabilities and the related expense or benefit as at and for the years ended December 31, 2015, 2014 and 2013 were generated by the following items: Balance sheet as at December 31 Deferred tax benefit / (expense) for the period
In EUR million 2015 2014 2013 2015 2014 2013 Deferred tax liabilities Deferred acquisition costs (78) (102) (87) (22) (14) 38 Unrealized revaluations and temporary differences on investments (94) (170) (127) 22 16 (44) Equalization reserves (111) (118) (109) 8 (9) (11) Value of business acquired (285) (274) (264) 19 25 (17) Financial instruments (32) (36) (13) (9) (7) 5 Claims reserves (153) (124) (96) (12) (43) 12 Other temporary differences (4) (103) (134) 70 (2) (13) Elimination of internal capital gains - - - - - - TOTAL DEFERRED TAX LIABILITIES (757) (927) (830) 76 (34) (30) Deferred tax assets Unrealized revaluations and temporary differences on investments 22 51 36 (11) 25 (34) Retirement scheme 20 28 17 1 1 4 Net operating losses for carry forward 631 671 651 (69) 20 12 Financial instruments 22 40 25 7 9 7 Claims reserves 188 180 116 (12) 14 27 Shadow accounting 2 10 - - - - Other temporary differences 300 384 432 (27) (31) 64 Elimination of internal capital gains - - - - - - TOTAL DEFERRED TAX ASSETS 1,185 1,364 1,277 (111) 38 80
Recognition of deferred tax assets on tax losses carried forward is assessed on the availability of sufficient future taxable income and local tax rules - e.g. unlimited carry forward in France and 20 year carry forward period in the United States. Under French Tax Law on tax loss carry forward, the utilization of tax losses is capped to EUR 1 million plus 50% of the remaining current year taxable result. The forecast of taxable income is based on the main assumptions described in the accounting principles of this note. SCOR expects to utilize all recognized tax loss carry forwards before expiry.
The table below shows the net results of retrocession for the years ended December 31, 2015, 2014 and 2013: In EUR million
P&C Total Ceded written premiums (703) (641) (1,344) (660) (518) (1,178) (591) (532) (1,123) Change in ceded unearned premium reserves 1 28 29 1 30 31 - 11 11 Ceded earned premiums (702) (613) (1,315) (659) (488) (1,147) (591) (521) (1,112) Ceded claims 595 198 793 438 167 605 258 237 495 Ceded commissions 111 75 186 108 49 157 112 52 164 Net results of retrocession 4 (340) (336) (113) (272) (385) (221) (232) (453)
Basic and diluted earnings per share are calculated as follows for the years ended December 31, 2015, 2014 and 2013 respectively: At December 31, 2015 At December 31, 2014 At December 31, 2013
Net income attributable to ordinary shareholders 2.96 Diluted earnings per share
SCOR SE is the ultimate parent of the Group. Transactions with associates for the financial years ended December 31, 2015, 2014 and 2013 were realized on an arm’s length basis and their volume is not material.
Parties are considered to be related if one party has the ability to directly or indirectly control the other party or exercises significant influence over the other party in making financial or operational decisions. The Group’s related parties include:  Key management personnel, close family members of key management personnel, and all entities which are controlled, significantly influenced by, or for which significant voting power is held by key management personnel or their close family members
There is no shareholder meeting the criteria of a related party according to IAS 24 for the years ended December 31, 2015, 2014 and 2013.
Key management personnel are those individuals having responsibility and authority for planning, directing and controlling the activities of the Group. The Group considers that the members of the Executive Committee and the Board constitute key management personnel for the purposes of IAS 24. The total gross compensation of key management personnel, allocated or paid, which includes short-term employee benefits, post-employment benefits, other long-term benefits, termination benefits and share-based payments, for the years ended December 31, 2015, 2014, and 2013 is outlined below: In EUR
As at December 31, 2015 As at December 31, 2014 Commitments received Unused lines of credit
6,126 5,802 (1) Letters of credits received from external retrocessionaires detailed in Note 16 – Net contract liabilities (2) This is the total carrying amount of financial assets pledged to the benefit of SCOR as collateral for loans, receivables and ceded technical reserves, including securities pledged by retrocessionaires for a total amount of EUR 498 million (2014: EUR 455 million) detailed in Note 16 – Net contract liabilities (3) Represents the total amount of letter of credits granted by the Group in favor of its cedents, including those issued by banks on behalf of the Group
Assets including investment securities, real estate and shares in certain real estate subsidiaries for a total amount of EUR 4,342 million (2014: EUR 4,217 million) have been pledged to certain ceding companies and financial institutions. Minimum payments under operating lease commitments, estimated minimum rental income amounts received by SCOR as part of its real estate investment activities and commitments to purchase properties are included within Note 6 – Tangible assets and property related commitments and Note 7 – Insurance business investments.
In accordance with the terms of its stand by letter of credit facilities, the Group must meet certain minimum requirements relating to net worth. The Group currently meets all such requirements.
Please refer to Sections 3.2.3 – Market risks and 3.3.3 – Management of market risks.
Please refer to Sections 3.2.3 – Market risks, 3.2.4 – Counterparty default risks, 3.3.3 – Management of market risks and 3.3.4 – Management of counterparty default risks.
On June 2, 2015, SCOR received the decision from the Spanish Supreme Court on the State Attorney’s appeal. In its decision, the Supreme Court confirmed that SCOR and Asefa (an insurance company 40% owned by SCOR), together with certain other market participants, were part of an antitrust violation. However, the Supreme Court canceled the fine imposed by the Agency and requested it to be recalculated. On July 2, 2015, SCOR filed an action for annulment of the Supreme Court decision. On September 15, 2015, this action was dismissed by the Supreme Court. On November 3, 2015, SCOR has filed an appeal against the Supreme Court’s decision in front of the Spanish Constitutional Court. This appeal is ongoing.
Highfields directors and officers insurance policy: On June 18, 2009, SCOR commenced an action before the Commercial Court of Nanterre against an insurance company with respect to the recovery of the attorneys’ fees and costs arising from the Highfields Capital LTD, Highfields Capital I LP and Highfields Capital II LP litigation covered by the directors and officers insurance policy. The proceedings were dismissed on October 24, 2012. On November 23, 2012, SCOR filed an appeal before the Court of Appeal of Versailles. On March 18, 2014, the Court of appeal of Versailles partially reversed the decision of the Commercial Court and, ruling anew, rejected SCOR SE’s application. After a legal analysis of the decision of the Appeal Court, SCOR SE filed an appeal before the Supreme Court on July 29, 2014. On October 22, 2015, the Supreme Court granted SCOR’s request and referred the case to other judges of the Court of appeal of Versailles to rule on the outstanding issues.
On the basis of the two directors and officers insurance policies in excess coverage, SCOR also commenced two distinct procedures on January 10, 2012 and June 22, 2012 before the Commercial Court of Nanterre and the Commercial Court of Paris against two insurance companies with respect to the recovery of the attorneys’ fees and costs and a portion of the settlement amount relating to the litigation with Highfields Capital LTD, Highfields Capital I LP and Highfields Capital II LP covered by its excess policies. Both proceedings are ongoing. SCOR and its subsidiaries are involved in legal and arbitration proceedings from time to time in the ordinary course of their business.
As at December 31, 2015, SCOR SE held indirectly shares or units in the companies representing at least 10% of the consolidated net assets or generating at least 10% of the consolidated net profit or loss. The above mentioned holdings are listed below: Registered office
SCOR Switzerland AG General Guisan – Quai 26 – 8022 Zurich - Switzerland Reinsurance 100% SCOR Global Life Reinsurance Ireland Ltd 4th Floor, Whitaker Court - Whitaker Square – Sir John Rogerson's Quay – Dublin 2 - D02 W529 - Ireland Reinsurance 100%
One Seaport Plaza – 199 Water Street, Suite 2100 – New York, NY 10038 - USA Reinsurance 100%
Represented by Messrs. Jean-Claude Pauly and Antoine Esquieu Tour Exaltis - 61, rue Henri Regnault 92075 Paris-La Défense cedex, France
Refer to Section 4.6.22.3 – Notes to the consolidated financial statements, Note 22 – Other operating and administrative expenses for the detail of audit fees.
4.9 Auditing of historical consolidated financial information The date of the most recently audited financial information is December 31, 2015.
In application of the EC Commission Regulation No. 809/2004, the following information is included by reference in this Registration Document:  The report from the Statutory Auditors on the consolidated financial statements for the financial year ending December 31, 2014 published from pages 289 to 290 of the Registration Document filed with the Autorité des marchés financiers on March 20, 2015 under Number D.15-0181 (and from pages 279 to 280 of the free translation into English of such Registration Document, such translation being available on SCOR’s website www.scor.com).
The report from the Statutory Auditors on the consolidated financial statements for the financial year ended December 31, 2015 is reproduced below.
In accordance with the requirements of article L. 823-9 of the French commercial code (Code de commerce) relating to the justification of our assessments, we bring to your attention the following matters:
We have examined the approaches used in this impairment test, the forecasted future taxable income and the assumptions made. We have verified that the information described in note 19 to the consolidated financial statements is appropriate.
 As stated in the notes 1 - “Basis of preparation – Accounting principles and methods specific to reinsurance activities”, 9, 10, 11 and 16 to the consolidated financial statements, the technical accounts specific to reinsurance are estimated on the basis of reinsurance commitments or on statistical and actuarial bases, particularly in the case of accounts received from cedents recognized as receivables, assumed and ceded technical reserves, and deferred acquisition costs. The methods used to calculate these estimates are described in the notes to the consolidated financial statements.
The related-party agreements executed in 2015 or continued during 2015, as defined by Articles L. 225-38 and following of the French Commercial Code have been the subject of a specific report by the statutory auditors in Section 2.3.3. SCOR SE’s corporate accounts for the financial periods ending December 31, 2015, 2014 and 2013, included respectively in Appendix C of this Registration Document, in appendix A of the Registration Document filed with the Autorité des marchés financiers on March 20, 2015 under the number D.15-0181 and in appendix A of the Registration Document filed with the Autorité des marchés financiers on March 5, 2014 under the number D.14-0117 with the Autorité des marchés financiers, have been the subject of reports by the statutory auditors, featured respectively in Appendix C of this Registration Document, in appendix A of the Registration Document filed with the Autorité des marchés financiers on March 20, 2015 under the number D.15-0181 and in appendix A of the Registration Document filed with the Autorité des marches financiers on March 5, 2014 under the number D.14-0117.
5.1 Charter and bylaws 224 5.1.1 Corporate purpose of the issuer (article 3 of the bylaws) 224 5.1.2 Summary of the bylaws and internal regulations of the company concerning the members of its administrative, management and supervisory bodies 5.1.3 Rights, privileges and restrictions attached to existing shares voting rights 225 5.1.4 Actions required to modify shareholders’ rights 227 5.1.5 Conditions for calling annual shareholders’ meetings and extraordinary shareholders’ meetings (articles 8 and 19 of the bylaws)
5.1.6 Provisions that could delay, defer or prevent a change in control or in the shareholding of the company 5.1.8 Conditions governing modifications to the share capital (other than legal provisions)
5.1 Charter and bylaws 5.1.1 CORPORATE PURPOSE OF THE ISSUER (ARTICLE 3 OF THE BYLAWS)
As set forth in Article 3 of the bylaws (statuts), our corporate purpose includes the following:  Insurance, reinsurance, cession or retrocession of business of any nature in all classes and in all countries, the assumption in any form of reinsurance contracts or liabilities of any French or foreign company, organization, entity or association, and creation, acquisition, rental, lease, installation and operation of any undertaking related to these activities;  The construction, lease, operation or purchase of any and all properties;  The acquisition and management of all securities and other equity rights by any means including but not limited to subscription, transfer or acquisition of shares, bonds, corporate rights, partnerships and other equity rights;  Acquisition of equity investments or interests in any industrial, commercial, agricultural, financial, securities or real estate companies, the formation of any company, participation in any capital increases, mergers, demergers and spin-offs;  Administration, management and control of any company or other undertaking, direct or indirect participation in all transactions carried out by such companies or undertakings by any means including, but not limited, to participation in any company or equity investment;  Implementation and management of centralized cash resource management within the Group and the provision of services, to any Group company concerned, relating to the management and operations of centralized cash resources, and;  Generally all such industrial, commercial and financial transactions, or transactions involving moveable property and real estate, as may pertain directly or indirectly to the above stated corporate purpose or as may be related to or facilitate the implementation or pursuit thereof.
shareholders may in turn hold the Board of Directors or interested representative of the Company liable for any damages suffered as a result thereof. Any related party transaction concluded without the prior consent of a majority of the non related Directors can be voided by a court, if we incur a loss as a result. In addition, an interested related party may be held liable on this basis.
Where the shares are held by a beneficial owner, the voting rights attached to those shares belong to the beneficial owner at Ordinary Shareholders’ Meetings, and to the bare owner at Extraordinary Shareholders’ Meetings. Failure to observe the legal and statutory obligations concerning thresholds may be sanctioned by the removal of voting rights for those shares or rights exceeding the undeclared fraction.
Each share entitles its holder to a share (in direct proportion to the number and to the par value of the existing shares) in the corporate assets, the profits or the liquidation dividend. The Company’s bylaws (statuts) also provide that profits available for distribution can be allocated to one or more optional or statutory reserves or distributed as dividends, as may be determined by the Shareholders’ Meeting.
Under French law, the Board of Directors is entitled to redeem a set number of shares as authorized by the Extraordinary Shareholders’ Meeting to the aim of a capital reduction not motivated by losses. In the case of such an authorization, the shares redeemed must be cancelled within one month after the end of the offer to purchase such shares from shareholders.
Under current French regulations, and in particular Article L. 225-132 of the French commercial Code, any cash capital increase gives a pre-emptive right for shareholders to subscribe to new shares which is proportional to the amount of their shares. The Shareholders’ Meeting which decides or authorizes 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 or through an offer referred to in Article L.411-2, II of the French financial and monetary Code without pre-emptive subscription rights, the issue price must be set according to Article L. 225-136 of the French commercial Code. In addition, the Shareholders’ Meeting which decides on a capital increase may reserve it for named persons or categories of persons corresponding to specific characteristics, in application of Article L. 225-138 of the French commercial Code.
The Shareholders’ Meeting may also reserve it for shareholders of another company that is the target of a public exchange offer initiated by the Company pursuant to Article L. 225-148 of the French commercial Code or for certain persons in the context of contributions in kind in application of Article L. 225-147 of the French commercial Code.
The rights of shareholders are set forth in the bylaws of the Company. Under Article L. 225-96 paragraph 1 of the French commercial Code, amendments to the bylaws must be approved by the Extraordinary Shareholders’ Meeting, by a majority vote of two-thirds of the shareholders present or represented.
At least 15 days before the date set for any General Meeting on first call, and at least ten days before any second call, notice of the meeting must be sent by mail to holders of Ordinary Shares who have held such Ordinary Shares in registered form for at least one month prior to the date of the notice.
Such notice can be given by e-mail to holders of Ordinary Shares in registered form who have accepted in writing this method of convocation. For all other holders of Ordinary Shares notice of the meeting is given by publication in a journal authorized to publish legal announcements in the country in which we are registered and in the Bulletin des annonces légales obligatoires ("BALO") with prior notice given to the AMF. At least 35 days prior to the date set for any Ordinary or Extraordinary General Meeting, a preliminary written notice (“avis de réunion”), containing, among other things, the agenda for the meeting and a draft of the resolutions to be considered, must also be published in the BALO. The AMF also recommends that such preliminary written notice be published in a newspaper of French national circulation.
represent approximately 0.5% of our share capital), the Workers’ Council or a duly authorized association of shareholders holding their Ordinary Shares in registered form for at least two years and holding together a certain percentage of the voting rights (computed on the basis of a formula related to capitalization which on the basis of the outstanding share capital as at December 31, 2015, would represent approximately 1% of SCOR SE’s voting power) may, within 10 days after such publication, propose resolutions to be submitted for approval by the shareholders at the meeting.
Attendance and exercise of voting rights at Ordinary General Meetings and Extraordinary General Meetings of Shareholders are subject to certain conditions. In accordance with French law and the Company’s bylaws (statuts), the right to participate in Shareholders’ Meetings is subject to registration of shares in the name of the shareholder or of the approved intermediary acting on his or her behalf, by T-0 (Paris time) on the second trading day prior to the Shareholders’ Meeting, either in the nominative share registers held on the Company's behalf by the Company’s agent or in the bearer share accounts held by an authorized intermediary.
The registration of shares in the bearer share accounts held by the authorized financial intermediary shall be demonstrated by a participation certificate issued by the latter, which must be attached to the remote voting form, to the proxy voting form, or to the request for an entry card completed in the name of the shareholder or on behalf of the shareholder represented by an authorized intermediary.
Each Ordinary Share confers on the shareholder the right to one vote. There is no provision in the bylaws (statuts) for double or multiple voting rights for the Company’s shareholders. Under French company law, Ordinary Shares held by entities controlled directly or indirectly by the Company are not entitled to any voting rights.
Proxies may be granted by a shareholder or, under certain conditions, by its intermediary, to his or her spouse, to another shareholder, or by sending a proxy in blank to the Company without nominating any representative. In the latter case, the Chairman of the Meeting of Shareholders will vote the Ordinary Shares covered by such blank proxy in favor of all resolutions proposed or approved by the Board of Directors and against all others. Voting by correspondence is also allowed under French company law. Forms for voting by mail or proxy forms must be addressed to the Company, either by regular mail or, pursuant to a decision of the Board of Directors, in electronic format. Mail voting forms must be addressed Company within a period prior to the meeting as established by the Board of Directors. Such period may not exceed three days before the meeting date. Proxy forms must be received by the Company no later than 3 p.m. (Paris time) on the day prior to the meeting.
5.1.5 CONDITIONS FOR CALLING ANNUAL SHAREHOLDERS’ MEETINGS AND EXTRAORDINARY SHAREHOLDERS’ MEETINGS (ARTICLES 8 AND 19 OF THE BYLAWS)
5.1.6 PROVISIONS THAT COULD DELAY, DEFER OR PREVENT A CHANGE IN CONTROL OR IN THE SHAREHOLDING OF THE COMPANY
Pursuant to Articles L. 322-4 and R. 322-11-1 of the French insurance Code, any transaction allowing a person acting alone or in concert with other persons, as defined by Article L. 233-10 of the French commercial Code, to acquire, to increase, to decrease or to cease holding, directly or indirectly, as defined by Article L. 233-4 of the French commercial Code, an equity stake in an insurance or a reinsurance company, shall be notified by such person(s) to the ACPR prior to its completion when any one of the following conditions is met:  The portion of the voting rights or capital shares held by such person(s) crosses upwards or downwards the thresholds of the tenth, the fifth, the third or half; or
In case of failure of these rules, and without prejudice of the provisions of Article L. 233-14 of the French commercial Code, upon request from the ACPR, the District Attorney (procureur de la République) or any shareholder, the judge shall adjourn the exercise of the voting rights of the failing persons, until regularization of the situation.
French law provides that any individual or legal entity, acting alone or in concert with others, that holds, directly or indirectly, more than 5%, 10%, 15%, 20%, 25%, 30%, 33 1/3%, 50%, 66 2/3%, 90%, or 95% of the shares or the voting rights attached to the shares, or whose holding decreases below any such thresholds, must notify us within four trading days of crossing that threshold, of the number of shares and voting rights it holds. An individual or a legal entity must also notify the AMF within four trading days of crossing such threshold. Any shareholder who fails to comply with these requirements will have its voting rights in excess of such thresholds suspended for a period of two years from the date such shareholder complies with the notification requirements and may have all or part of its voting rights suspended for up to five years by the Commercial Court at the request of our Chairman, any of our shareholders or the AMF. In addition, every shareholder who, directly or indirectly, acting alone or in concert with others, acquires ownership of shares representing 10%, 15%, 20% or 25% of our share capital must notify us and the AMF of its intentions for the six months following such acquisition. Failure to comply with this requirement will result in the suspension of the voting rights attached to the shares exceeding the applicable threshold held by the shareholder for a period of two years from the date on which the shareholder has cured such default and, upon a decision of the Commercial Court, part or all the shares of such shareholder may be suspended for up to five years.
Cumulative number of shares 12/31/2012 1,515,405,164 192,384,219 Exercise of subscription option 08/25/2004 10.90 70,591 556,043.35 213,398.55
5.3 Third-party information and statements by experts and declarations of any interest 5.3.1 EXPERT’S REPORT
Appendix A: Report of the chairman of the board of directors 234
Appendix F: Additional information relating to the management report of the company and the group – table of compliance 309
It has been incorporated in Appendix A of the 2015 Registration Document of SCOR SE which is available on the Company’s web site (www.scor.com) and on the AMF web site (www.amf-france.org). During its meeting on December 12, 2008, the Company’s Board of Directors designated the consolidated corporate governance code listed corporations of the AFEP-MEDEF (Association Française des Entreprises Privées – Mouvement des Entreprises de France) of December 2008 and updated in April 2010, June 2013 and November 2015 (“AFEP-MEDEF Governance Code”) as its reference code, according to the implementation of this law on July 3, 2008 (act no. 2008-649 aimed at providing various provisions regarding the adaptation of French company law with the European Community law changing articles L. 225-37 and L. 225-68 of the French Commercial Code). Details of this code can be found on the Company’s website www.scor.com or alternatively on AFEP’s website www.afep.fr.
 Underwriting risks related to the Non-Life and Life reinsurance business
 Operational risks All these risks are managed through a variety of mechanisms in SCOR’s ERM (Enterprise Risk Management) Framework, further described below.
This report was prepared with the contribution of the Group Risk Management Department, the risk management departments of the operating companies, the Group Internal Audit Department, the General Secretary’s Department and the Finance Department. It was presented to the Audit Committee on February 22, 2016 and approved by the Board of Directors of SCOR SE (“the Company”) on February 23, 2016.
The structure of this report is based on these components corresponding to the framework implemented by SCOR:  Components 1 and 2 are being dealt with in the paragraph “Internal environment and setting of objectives”  Components 3, 4 and 5 are described in the paragraph “Identification and assessment of risks”.
Monitoring of the internal control procedures falls under the remit of the Group’s Executive Management.
The Group is organized around three engines made of two main reinsurance businesses and one asset-management activity:  The P&C division carries out its operations through a European Company incorporated in France, SCOR Global P&C SE (SGP&C SE) and a network of dedicated subsidiaries, branches and representative offices worldwide, as well as through composite subsidiaries and branches of SCOR SE. It is supported by Group and divisional transversal functions;  The SCOR Global Life division carries out the operational life reinsurance business through a European Company incorporated in France, SCOR Global Life SE (SGL SE) and a network of subsidiaries, branches and representative offices, as well as through subsidiaries and branches of SCOR SE. It is supported by Group and divisional global functions;  SCOR Global Investments is the third division of the Group. It is composed of the Group Investment Office and SCOR Investment Partners SE (SCOR IP), the asset management company of the Group, 100% owned by SCOR. SCOR IP is regulated by the “Autorité des marchés financiers” (AMF).
SCOR SE, a European company having its registered office in Paris, avenue Kléber (France), is the parent company of the SCOR Group. Beyond its responsibilities as a parent company, the Company has operational responsibilities for cash management, capital management and functional responsibilities.
 Human Resources  Group Project Office  Group Cost control & Budget
Accounting  IFRS Center of Excellence  Solvency reporting  Consolidation & Reporting
Natural Hazards  Strategy & Development  Underwriting Management Business functions  Treaty P&C  Business Solutions &
The main tasks of the Group Risk Management Department (GRM) are to further develop the Enterprise Risk Management framework and to promote an ERM culture within the Group so that risks are managed consistently within each department.
The approach used to develop and maintain the internal control system is specified in the ICS Group Policy. The policy sets out the reference framework and details the Group principles, the responsibilities of the different participants in internal control and the quality requirements. The principal characteristics of the internal control system are as follows:  A risk-based approach, i.e. addressing critical operational risks that, if not controlled, could significantly impact SCOR’s franchise, balance sheet or statement of income and indirectly its solvency. The optimal risk response is obtained through appropriately designed key controls at company level, process level and IT level;  On a process level, appointment of global process owners (GPO) at Group, SCOR Global P&C, SCOR Global Life and SCOR Global Investments levels and local process owners (LPO). The GPOs’ responsibility is to document the processes, identify the related critical risks, define the appropriate key controls and to ensure their deployment and application in the various entities of the Group. The LPOs’ main responsibilities are to assess processes, risks and key controls on a local level based on the defined global process and to ensure application of risk based control activities;  Monitoring, upon completion of the initial documentation through a self-assessment procedure on the maturity (quality) of processes and controls by their owners; In accordance with its risk-based audit plan and through its periodic missions, the Group Internal Audit Department assesses the effectiveness of the internal control system. Any level of effectiveness assessed as insufficient leads to management remediation actions followed up by the Group Internal Audit.
Group business standards and practices are governed by Group Policies and underlying guidelines established in a common format, by the three divisions and the central functions such as Group Internal Audit, the Group Chief Financial Officer functions, the Group Chief Operating Officer functions and the Group Chief Risk Officer functions. The latter are approved by the Group COMEX and for relevant topics are submitted regularly to the Audit Committee, the Risk Committee, or the Compensation & Remuneration Committee and, ultimately, to the Board of Directors of the Company. These Group policies are not intended to enumerate all the rules governing SCOR’s activities in the different countries in which the Group operates, but rather to establish certain principles intended to ensure that SCOR Group companies and employees share a common understanding of the Group’s standards and that they work in compliance with these standards. When approved, these documents are made available to employees on the SCOR intranet on a dedicated page where Group policies are all grouped together.
Given the importance of having Group policies and their underlying guidelines embedded into the organization, SCOR’s Group Framework for Policies and Guidelines was strengthened. The updated version includes notably clearer definitions on Group policies and guidelines and their hierarchy, as well as a stricter review and notifications process.
To embed the latest Group Compliance Policies in force and other business-related legal & compliance requirements (e.g. anti-fraud, anti-bribery, anti-money laundering and sanctions compliance, anti-trust/competition law) as per latest developments into the organization, training sessions targeted for underwriters, claims and accounting staff were also held during 2015 in all Hubs and other major locations.
SCOR has implemented and formalized for several years 3-year strategic plans. On September 4, 2013, SCOR presented publicly its new strategic 3-years plan “Optimal Dynamics” which represents the main objectives of the Group, especially the two main objectives: a profitability of 1,000 bases points above 3-months risk free over the cycle, and a solvency ratio of between 185% and 220% in percentage of required capital calculated by SCOR’s Group Internal Model. The strategic plans also set the Group risk appetite framework.
The clarity and detailed description of strategic objectives and their implementation within the Group facilitate the identification, evaluation and control of risks generated by these objectives, regardless of their nature (e.g. underwriting risk, market risk, and operational risk).
2.2 Identification and Assessment of Risks Several processes and tools for identifying and assessing risks have been implemented to approach risk from different angles and to deal with them in an exhaustive manner. These include:  A risk information process: every quarter, the Group Risk Committee reviews the "Group Risk Dashboard" which describes and assesses the major risks the Group is exposed to. This report assembles various risk assessments from different identification and assessment processes for all risk categories;  A process for the monitoring of risk exposures compared to risk tolerances i.e. the limits established in order to ensure that the Group’s risk profile remains aligned with the risk level validated by SCOR SE’s Board of Directors. The Group uses various risk measures to define these exposures, which are measured based on either model outputs and / or expert opinions, depending on the technical constraints and the level of information available. This includes: - A ‘risk driver’ system ensuring that the Group’s annual aggregate exposure to each major risk is well managed. The objective is to avoid overconcentration of risk and hence maximize diversification benefits. The amount of post-tax retained annual exposure per main risk driver (with a probability of 1 in 200 years) is limited to 20% of the Group’s available capital; - An ‘extreme scenario’ system designed to avoid the Group’s over-exposure to one single event. The amount of post-tax retained exposure to each defined extreme scenario (with a probability of 1 in 200 years) is limited to 35% of the Buffer capital (refer to definition in Appendix E).
 The ORSA (Own Risk Solvency Assessment), which provides the Group and legal entities Boards, the Group Executive Committee and senior management of legal entities with forward-looking information on SCOR’s risks and capital position.
2.3 Principal Activities and Participants of Risk Control Because of its activities, SCOR SE is exposed to many risks: reinsurance related risks, market risks and other risks (e.g. liquidity, rating). These risks are detailed in the Section 3 – Risk Factors of the Registration Document. This report does not detail these risks, but aims at summarizing the principal activities and participants of Risk Control for the following important areas.
 activities related to reinsurance;  asset management;  accounting management;
The Group invests in assets through its SCOR Global Investments Division composed of an asset management company (SCOR Investment Partners SE) and a Group Investment Office (GIO). Most of the subsidiaries have delegated the management of their assets to SCOR SE through a Master Investment Management Agreement. SCOR SE has outsourced the management of some assets to SCOR Investment Partners SE (SCOR IP), its fully owned regulated asset management company. The other entities have selected directly their investment manager following a strict selection process. SCOR IP is in charge of managing all assets for which it has been certified by the French financial market regulatory body (AMF). Investment decisions are implemented by SCOR IP in accordance with the directives of the Group and Local Investment Committees, with the investment guidelines and with AMF requirements. A head of Compliance and Internal Control was appointed within SCOR IP in 2009 in order to meet the requirements of the regulator. His role is to ensure the compliance and the effective implementation of procedures, via an effective internal control program which covers all activities relating to financial asset management. The Group Investment Committee meets at least once every quarter. Its role is to define the investment strategy on a Group level and to supervise the implementation of this strategy given the regulatory and contractual constraints.
The Group has harmonized the principles governing the management of its assets: the Group Policy on Invested Assets defines the Group’s governance in terms of asset management and the Manual of Group Investment Guidelines determines the limits for concentration risk as well as limits of exposure to different asset classes. The Manual of Group Investment Guidelines thus determines the conditions in which SCOR IP 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 COMEX. These two documents are rolled out locally to ensure consistency across the Group.
The Group Investment Office monitors, on an ex ante and ex post basis, the compliance of the portfolio positioning with the Group risk appetite and investment guidelines. The GIO is also in charge of reporting processes related to invested assets. The Group Investment Office provides SCOR with a regular reporting used for the monitoring of the assets portfolios. Assets owned by all Group entities are monitored in one central information system under the responsibility of SCOR IP. The information systems used by SCOR IP monitor transactions on publicly traded securities (audit trail, valuation of securities). SCOR IP controls the consistency and the completeness of the data used for the valuation of the assets.
The Group’s functions, excluding the financial reporting and communication functions dealt with in parts 2.6 and 2.4 hereafter, comprise Risk Management, Treasury, Budget & Forecasting and functions relating to legal, consolidation, reporting, accounting, 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;
 Internal communication: SCOR strives to make all documents deemed important available to all SCOR employees on SCOR’s intranet. Furthermore, SCOR has increased the use of collaborative sites enabling it to share and retain document history or to collect and centralize information specific to certain subjects (e.g. emerging risks) from various sources.
The Group Internal Audit carries out a quarterly follow-up process to monitor and ensure that management actions agreed in the audit reports have been effectively implemented or that senior management has accepted the risk of not taking action. The follow-up results are provided to the Senior Management (COMEX) and the Audit Committee. The Audit Committee receives at least on a quarterly basis a report on the Internal Audit activities.
 SCOR also implements dedicated risk management mechanisms in both the Life and Non-Life divisions in order to evaluate the appropriateness and effectiveness of controls and propose risk-management measures, including mitigating actions. See section 3.2.2 - Management of underwriting risks related to the Life and NonLife reinsurance business for further details on these risk management mechanisms.
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 processes described below concerning reinsurance accounting and calculation of technical reserves, which are predominantly within the single technical information system (OMEGA), are applied by Group entities. A high level of control already exists in OMEGA. As part of the on-going OMEGA reengineering project, OMEGA 2.0, which was confirmed as a strategic project in July 2010 by the Board of the Group and by the Executive Committee, several improvements have already been or will be implemented to reinforce the level of control provided. 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 control reports. Quarterly inventories are also subject to specific control procedures. Finally, reinsurance technical results are analyzed quarterly by the finance departments of SCOR Global P&C and SCOR Global Life, and by the Group Chief Actuary as part of his review of the majority of reserves.
SCOR Global P&C: The calculation of technical reserves (including IBNR - Incurred But Not Reported) having a significant impact on the balance sheet and income statement, is largely based on contractual and accounting data provided by ceding companies, the relevance of which is verified upstream. This calculation of technical reserves inventories is subject to the following successive controls:  By the actuaries in charge of reserving through control reports for which the proper implementation is verified by the Actuarial Department of the Division and of the Group;  By the Chief Actuary, particularly for methods, tools and results.
SCOR Global Life: The recognition and measurement of technical reserves (in particular mathematical reserves) and related intangible assets and related deferred acquisition costs are largely based on contractual and settlement data and subject to the
The implementation of the new information system enabling the booking valuation and monitoring of all assets owned by Group entities improves substantially the investment accounting model. These accounting tools have been substantially deployed throughout the Group’s principal subsidiaries. The completion of this project in early 2011 improved the investment accounting organization, definition of roles, responsibilities and processes.
Regarding the processes of preparation of consolidation packages and consolidation of accounting data by the Group Consolidation, Systems & Process Department, and internal control is ensured by:  The definition by the Consolidation, Systems & Process 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;  Use of a market recognized consolidation software package ("SAP BFC”) common to all Group entities, which ensures the whole consolidation process through automated and formalized controls;  The use of a general accounting software shared by all Group entities;  The centralized management of charts of accounts and the use of one single chart of accounts (with minimum local specificities, aligned with existing source systems);
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 December 31, 2015. It is the Chairman's responsibility to prepare and submit for the Board of Directors' approval a report on internal control and risk management procedures implemented by the company and to provide the other information required by article L.225-37 of the French Commercial Code (Code de commerce) relating to matters such as corporate governance. Our role is to:  report on any matters as to the information contained 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; and
 confirm that the report also includes the other information required by article L. 225-37 of the French Commercial Code (Code de commerce). It should be noted that our role is not to verify the fairness of this other information.
Information on internal control and risk management procedures relating to the preparation and processing of accounting and financial information
On the basis of our work, we have no matters to report on the information relating to the company's internal control and risk management procedures relating to the preparation and processing of the accounting and financial information contained in the report prepared by the Chairman of the Board of Directors in accordance with article L. 225-37 of the French Commercial Code (Code de commerce).
1 NAME AND TITLE OF PERSON RESPONSIBLE Mr. Denis Kessler, Chairman of the Board of Directors and Chief Executive Officer of SCOR SE.
(ii) The corporate financial statements for the year ended December 31, 2013 and the Auditors’ Report pertaining thereto published on pages 342 to 372 and 373 to 374, respectively, of the registration document filed with the “Autorité des marchés financiers” on March 5, 2014 under number D. 14-0117 and from pages 334 to 363 and from pages 364 to 365, respectively, of the free translation into English of the Registration Document filed with the Autorités des marchés financiers with such translation being available on SCOR's website www.scor.com.
On May 19, 2015, SCOR SE paid a EUR 260 million dividend to its shareholders.
On July 6, 2015, the subordinated bonds that were issued on July 6, 2000 for an initial amount of EUR 100 million (EUR 93 million outstanding after a EUR 7 million repurchase in 2009) were fully redeemed.
On December 7, 2015, SCOR SE issued EUR 600 million dated subordinated notes, redeemable as at payment of interest dates from June 8, 2026. The coupon has been set to 3.0% (until June 8, 2026), and resets every 10 years at the prevailing 10-year EUR mid-swap rate + 3.25%.
On December 10, 2015, SCOR SE performed an early redemption of the EUR 93 million subordinated notes that SCOR Holding Switzerland repurchased on the market in 2009.
Sale of 20% of SCOR Holding Switzerland to SCOR Global P&C SE
On December 18, 2015, SCOR SE completed the transfer of 20% of SCOR Holding Switzerland to SCOR Global P&C SE for an amount of EUR 400 million.
Investments Notes 2 & 4 9,085 (116) 8,969 6,214 Real estate investments 207 (1) 206 206 Investments in associates 7,609 (113) 7,496 5,663 Other investments 1,269 (2) 1,267 345 Cash deposited with ceding companies - - - - Investments representing unit-linked contracts Note 2 - - - -
Accrued income and deferred charges Note 4 326 - 326 151 Due and accrued interests on rental income 25 - 25 4
2.2 Balance sheet – liabilities In EUR million 2015 2014 Shareholders' equity and reserves (1) Note 5 3,375 2,794 Share capital 1,518 1,518 Additional paid-in capital 810 813 Revaluation reserve - - Unavailable reserve - - Other reserves 53 53 Capitalization reserve 3 3 Retained earnings 132 5 Net income of the year 844 387 Regulated reserves 15 15
Gross underwriting reserves Note 4 3,878 3,583 Reinsurance reserves (Life) 436 459 Loss reserves (Life) 203 169 Unearned premiums reserves (Non-Life) 447 404 Loss reserves (Non-Life) 2,137 1,962 Other underwriting reserves (Non-Life) 655 589
Other liabilities Note 4 1,354 745 Liabilities arising from reinsurance operations 208 2 Convertible bond issue - - Debts to credit institutions - - Negotiable debt securities issued by the company - -
(1) Data for financial years 2015 and 2014 are before appropriation of results
Investment revenues 80 - 80 51 Investment income 73 - 73 43 Other investment income 6 - 6 6 Realized gains 1 - 1 2
Claims expenses (354) 4 (350) (238) Benefits and costs paid (328) 4 (324) (253) Claims reserve expenses (26) - (26) 15
Life reinsurance reserves 34 - 34 21 Unit-linked contract reserves Other underwriting reserves
Investment expenses (13) - (13) (15) Internal and external investment management expenses and interest expenses (10) - (10) (10)
In EUR million Related companies Other 2015 2014 COMMITMENTS RECEIVED Note 15 2,974 1,646 4,620 4,227
Endorsements, sureties and credit guarantees given - 70 70 7 Endorsements, sureties - 64 64 1 Letters of credit - 6 6 6
Rate swaps - - - - Rate and currency swaps (cross-currency swaps) - 973 973 973 Underwriting commitments - - - - Trust assets 10 - 10 -
Other commitments given 16,191 132 16,323 10,724 Securities pledged to ceding companies - 12 12 12 Marketable securities pledged to financial institutions - - - 2 Contract termination indemnities - 2 2 1 Foreign currency forward sales 169 118 287 490 Parental guarantees 16,022 - 16,022 10,219
At each balance sheet date, if the carrying value of an investment in associates is below its historical cost, an analysis is conducted in order to determine if an impairment loss should be recorded. The assumptions and outcome of this analysis, conducted as at December 31, 2015, are detailed in Note 5.2.1.
For real estate and financial (holding) companies, the fair value is calculated at the pro rata of the net assets including unrealized gains, net of tax. An impairment allowance is recorded on a line-by-line basis when such values are below historical cost.
When the realizable value is more than 20% below the initial cost for more than six consecutive months, a detailed lineby -line analysis is performed to determine whether the impairment is permanent. In accordance with the Notice of December 18, 2002 (amended on December 15, 2008) issued by the Emergency Committee of the French National Accounting Commission, an impairment allowance is recorded on a line-by-line basis for securities which are considered permanently impaired.
In accordance with Statement 2013-03 dated December 13, 2013 of the French standard-setter, the difference between cost and redeemable par value of depreciable assets in the scope of article R.332-20 of the French insurance Code is amortized to income over the remaining period until maturity.
R. 332-19 of the French Insurance Code, the difference between cost and redeemable par value is amortized to income over the remaining period until maturity using the effective interest rate method. No impairment is recognized for differences between net book value, as decreased or increased by the amortization of any premium or discount, and the realizable value. An impairment provision is recorded only in the event of issuer default. Upon disposal, any realized gain or loss is allocated to the capitalization reserve.
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 investments assets, excluding bonds and other fixed income securities (investments valued according to article R. 33219 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 realizable value for investments in subsidiaries as described in Note 5.2.1.
Based on the calculations performed, no such reserve was required or recorded in the financial statements for 2015 and 2014.
The evaluation of these indemnities depends on several factors such as age, years of service and salary;  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: 2.21%, defined with respect to high quality long-term corporate bonds with duration in line with the duration of the obligations evaluated; - Updated mortality tables for the various plans, with turnover data for managers and salary increases.
 Long-term service awards: the CNC (French accounting standard setter) Notice 2004-05 dated March 25, 2004 requires the recognition of a provision for long-term service awards as from 2004.
The Company recorded all past service costs unrecognized as at January 1, 2013 through retained earnings for EUR 3 million in accordance with Statement 2013-02 dated November 7, 2013.
This financial statements caption includes the various subordinated or unsubordinated notes issued by the Company as described in Note 5.2.3.
Estimates of premiums and commissions not yet received from ceding companies at period end are recorded in the income statement and shown on the balance sheet under “Accounts receivables from reinsurance transactions”.
Securities pledged as collateral by reinsurers to guarantee their commitment are presented off balance sheet at their fair value.
Finite reinsurance treaties, as defined under article L. 310-1-1 of the French Insurance Code, have to be accounted for under the provisions of opinion 2009-12 dated October 1, 2009 issued by the CNC.
The mathematical reserves for Life reinsurance are submitted by ceding companies and completed by estimates calculated by Life actuaries using statistics based on historical data and information provided by underwriters. Additionally, estimated claims are included in the provisions for claims payable.
The foreign currency differences on off-balance sheet positions (forward financial instrument contracts) and the related account represent unrealized foreign currency gains or losses. These differences are recorded on the balance sheet in the accounts “net translation adjustments” and “regularization of forward financial instrument contracts”, based on the underlying strategy.
In accordance with the Decree of June 8, 1994 and the Order of August 20, 1994 which set forth the rules and accounting principles for reinsurance companies, general expenses, previously recorded by type, are allocated to the following five functions: acquisition costs, claims settlement expenses, administrative expenses, investment portfolio management expenses, and other underwriting expenses.
Premium portfolio entries based on the accounts of ceding companies offset the risk on accounts managed by accounting year. In Non-Life premium portfolio entries represent the portion of unearned premiums paid at the start of the reinsurance contract and/or the financial year while the underlying risk (written in previous periods) relates to current or future periods. Likewise, premium portfolio withdrawals represent the portion of unearned premium at the end of the financial year and/or of the reinsurance contract. Premium portfolio entries and withdrawals are included in the premium written and are an integral part of premium income. In Life premium portfolio entries represent the portion of earned premiums paid at the start of the reinsurance contract while the underlying risk (written in previous periods) relates to future events. Portfolio movements are recorded as premium and claim portfolio entries or transfers.
Income and losses in the form of premiums or interests are recorded on a pro rata basis over the life of the contract. Commitments given and received recorded at the balance sheet date reflect the nominal amount of open transactions. In case of unrealized loss positions on swaps not defined as hedging strategy, a provision for loss risks on swaps is recognized in the accounts.
On December 18, 2015, upon the transfer of 20% of SCOR Holding Switzerland to SCOR Global P&C SE, SCOR SE granted a EUR 400 million treasury advance to SGPC SE. On July 21, 2015, SCOR SE granted a USD 125 million (EUR 115 million) loan to SCOR Reinsurance Company.
Treasury advance with SCOR GIE Informatique increased by EUR 61 million and was partly reimbursed for EUR 40 million.
SCOR Global Life SE redeemed USD 24 million (EUR 19 million) corresponding to the remaining balance of the USD 74 million treasury advance for the funding of the Transamerica International Reinsurance Ireland acquisition.
On December 3, 2015, SCOR SE contributed EUR 78 million in kind to a new affiliate, OPCI SCOR Properties II, in form of shares in real estate companies SCI Garigliano and SCI Le Barjac and of treasury advances to the same companies.
 SGF: EUR 3 million in 2015 (3 million in 2014).
Unrealized gains and losses 1 - Real estate investments and real estate investments in process 207 206 256 50 2 - Shares and other variable-income securities (other than mutual fund shares) 3,917 3,804 6,559 2,754 3 - Mutual funds shares (other than those in 4) 81 81 82 1 4 - Mutual fund shares exclusively invested in fixed-income securities 171 171 171 - 5 - Bonds and other fixed-income securities 92 90 92 2 6 - Mortgage loans - - - - 7 - Other loans and similar bills 2,039 2,039 2,039 - 8 - Deposits with ceding companies 1,653 1,653 1,653 - 9 - Cash deposits (other than those in 8) and security deposits 925 925 925 - 10 - Unit-linked investments - - - - Sub-total 9,085 8,969 11,777 2,808 11 - Other forward instruments - - - - - Investment or divestment strategy - - - - - Anticipation of investment - - - - - Yield strategy - - - - - Other transactions 155 155 155 - - Amortization premium/discount - - - - 12 - Total lines 1 to 11 9,240 9,124 11,932 2,808 a) including: - - - - - investments valued according to article R.332-19 92 90 92 2 - investments valued according to article R.332-20 8,993 8,879 11,685 2,806 - investments valued according to article R.332-5 - - - - - Forward instruments 155 155 155 - b) including: - - - - - investments and forward instruments issued in OECD countries 8,240 8,124 10,908 2,784 - investments and forward instruments issued in non-OECD countries 1,000 1,000 1,024 24
 EUR 115 million with SCOR Holding Switzerland AG  USD 125 million (EUR 115 million) with SCOR Reinsurance Company
The breakdown of the EUR 1,502 million balance as of December 31, 2014 was as follows:  EUR 751 million with SCOR Global Life SE
The loans contracted by SCOR SE with its subsidiaries amount to EUR 13.8 million. Their breakdown as of December 31, 2015 is as follows:  EUR 10 million with SCOR Investment Partners SE  EUR 3.5 million with SGF SAS
As of December 31, 2014, the breakdown was as follows:  EUR 0.3 million with SCOR Global Life SE
(Amounts in EUR million) (OC)* (OC)* (OC)* (EUR) (EUR) (EUR) (EUR) (EUR) (OC)* (OC)* (EUR) A-RELATED ENTITIES: DETAILED INFORMATION - SCOR GLOBAL LIFE SE EUR 287 5 avenue Kléber, 75116 PARIS, France - SCOR GLOBAL P&C SE EUR 582 5 avenue Kléber, 75116 PARIS, France - SCOR US CORPORATION USD 330 199 Water Street, NEW YORK, NY 10038-3526 USA
5 avenue Kléber, 75116 PARIS, France - SCOR AUBER S.A.S (France) EUR 47 5 avenue Kléber, 75116 PARIS, France - SCOR Holding (Switzerland) AG EUR 382
Avda Manoteras 32 Edificio A 28050 Madrid, Spain - SCOR PERESTRAKHOVANIYE.O.O.O. RUB 800 10 Nikolskaya Street, 109012, Moscou, Russian Federation - SCOR AFRICA LTD ZAR 2nd Floor, West Tower, Maude Street, Nelson Mandela Square, Sandton 2196, South Africa - SCOR INVESTMENT PARTNERS EUR 3 5 avenue Kléber, 75116 PARIS, France - SCOR BRAZIL PARTICIPAÇOES LTDA BRL 102
guarantee, on behalf and for the benefit of SCOR SE, the full and prompt performance of all of SCOR SE's payment obligations under all insurance, reinsurance and financial contracts entered into by SCOR SE
Gross values 106 31 (4) 133 Intangible assets 4 4 (4) 4 Goodwill - 4 - 4 Set-up costs - - - - Other intangible assets 4 - (4) - Tangible assets 102 27 - 129 Deposits and security bonds - - - - Equipment, furniture, fittings and fixtures 102 27 - 129 Depreciation and allowances (22) (10) - (32) Other intangible assets (excluding goodwill) - - - - Equipment, furniture, fittings and fixtures (22) (10) - (32)
As at December 31, 2015, the number of shares held as treasury shares amounted to 6,661,000 shares (3.46% of capital) for a total value of EUR 172,497,601. These shares were acquired in the context of anticipated awards to Company employees and officers as part of share allotment plans.
Other accruals 5 - 159 164 4 - 35 39 LIABILITIES Other capital base - - 1,769 1,769 - - 1,642 1,642
Deferred income and accrued expenses 63 - 10 73 - - - -
Other debts 65 - 206 271 32 - 85 117 Treasury advances granted 28 - - 28 7 - - 7 Miscellaneous 37 - 206 243 25 - 85 110
The balance includes EUR 39 million accrued interests (as at December 31, 2014: EUR 31 million)
 CHF 650 million fixed rate perpetual subordinated notes issued in two pari-passu ranking placements on February 2 and June 3, 2011. The notes are redeemable by SCOR each quarter as at payment of interests date as from August 2, 2016 with a first call date of August 2, 2016. The coupon has been set at 5.375% (until August 2, 2016) and to 3-month CHF LIBOR plus a margin of 3.7359% thereafter. The notes are hedged with a cross-currency swap detailed in Note 5.3.8 - Financial instruments received and given, in the analysis of commitments given and received;  CHF 315 million fixed rate perpetual subordinated notes issued in two pari-passu ranking placements on September 10 and September 24, 2012. The notes are redeemable by SCOR each quarter as at payment of interests date as from June 8, 2018 with a first call date of June 8, 2018. The coupon has been set at 5.25% (until June 8, 2018) and 3-month CHF LIBOR plus a margin of 4.8167% thereafter. The notes are hedged with
a cross-currency swap detailed in Note 5.3.8 - Financial instruments received and given, in the analysis of commitments given and received;  CHF 250 million fixed rate perpetual subordinated notes issued on September 10, 2013. The notes are redeemable by SCOR from November 30, 2018 on a quarterly basis on the payment of interest dates. The coupon has been set at 5% until November 30, 2018 and to 3-month CHF LIBOR plus a margin of 4.10% thereafter. If SCOR does not exercise this option on such date, such repayment may intervene, where applicable, quarterly, at the date of payment of interests. The notes are hedged with a cross-currency swap detailed in Note 5.3.8 - Financial instruments received and given, in the analysis of commitments given and received;  CHF 125 million fixed rate perpetual subordinated notes issued on October 20, 2014. The notes are redeemable by SCOR from October 20, 2020 on a quarterly basis on the interest payment dates. The coupon has been set at 3,375% until October 20, 2020 and resets every 6 years at the prevailing 6-year CHF midswap rate plus a margin of 3.0275% thereafter. The notes are not hedged with a cross-currency swap;  EUR 250 million fixed rate perpetual subordinated notes issued on October 1, 2014. The notes are redeemable by SCOR from October 1, 2025 on a quarterly basis on the payment of interest dates. The coupon has been set at 3,875% until October 1, 2025 and resets every 11 years at the prevailing 11-year EUR midswap rate plus a margin of 2.70% thereafter.
 Loans granted to SCOR SE by its subsidiaries (EUR 14 million as of December 31, 2015).
In EUR million 2015 2014 2013 Reinsurance reserves (Life) 436 459 473 Loss reserves (Life) 203 169 177 Unearned premiums reserves (Non-Life) 447 404 324 Loss reserves (Non-Life) 2,137 1,962 1,871 Other underwriting reserves (Non-Life) 655 589 556 Gross underwriting reserves 3,878 3,583 3,401
Less than 1 year 1-5 years +5 years Total Perpetual debt (other equity) 33 - 1,736 1,769 Other loans and deposits received
Total 53 - 2,591 2,644 (1) Mainly related to loan of subsidiaries described in Note 5.2.1 and subordinated notes described in chapter Financial liabilities
The analysis of accrued income and deferred charges at December 31, 2015 is as follows: ASSETS LIABILITIES
In EUR million 2015 2014 2015 2014 Reinsurance estimates - assumed - - - - Reinsurance estimates - assumed - Life - - - - Reinsurance estimates - assumed - Non-Life - - - - Other reinsurance estimates - - - - Due and accrued interests on rental income 25 4 - - Deferred acquisition costs - Non-Life 137 108 - - Deferred commissions received from reinsurers - - 63 - Other accruals 164 39 10 - TOTAL 326 151 73 -
The item « Reinsurance estimates – assumed » is reclassified to “Accounts receivable from reinsurance transactions”, whereas the item “”Reinsurance estimates – ceded” is reclassified to “Liabilities arising from reinsurance operations”.
The share capital comprising 192,653,095 shares with a par value per share of EUR 7.8769723 amounted to EUR 1,517,523,093 as at December 31, 2015.
In EUR million 2014 shareholders' equity before allocation Income allocation Other movements during the period 2015 Shareholders' equity before allocation Capital 1,518 - - 1,518 Additional paid-in capital 813 - (3) 810 Capitalization reserves 3 - - 3 Other reserves (legal reserve) 53 - - 53 Retained earnings 5 127 - 132 Net income 387 (387) 844 844 Regulated reserves 15 - - 15 Total 2,794 (260) 841 3,375
 The EUR 387 million gain for 2014 was allocated to dividends for EUR 260 million and EUR 127 million to the retained earnings.
Long-term awards 1 - - - 1 Other provisions 24 - - - 24 Total 125 39 (10) (13) 141
 EUR 77 million in reserves for post-employment benefits: retirement provisions (EUR 30 million), supplementary retirement (EUR 46 million), long-term service awards (EUR 1 million).
 EUR 24 million in other provisions. A plan amendment to the “congés de fin de carrière” and the “médailles du travail” in France occurred in the second quarter of 2014. The amendments concern the termination of the “congés de fin de carrière” on January 1, 2017 and the termination of the “médailles du travail” as at July 14, 2019. In addition, a temporary scheme called "compte senior" was implemented during the second quarter of 2014 and will be active to December 31, 2020. This scheme aims to provide, under conditions, a premium to employees going into retirement. The plan amendment resulted in a reduction of the retirement provisions. The corresponding income is recorded as a reduction of general expenses.
In EUR million 2015 2014 Commissions - assumed 479 373 Commissions - retroceded (121) - Total 358 373 5.3.2 NOTE 9 - ANALYSIS OF INVESTMENT INCOME AND EXPENSES BY NATURE
In EUR million Related companies Other Total Related companies Other Total Revenues from securities 776 5 781 355 2 357 Revenues from other investments 139 13 152 77 11 88 Other revenues 71 2 73 62 3 65 Realized gains 12 - 12 - 2 2 Total investment income 998 20 1,018 494 18 512 Management and financial costs 11 109 120 9 91 100 Other investment expenses - 6 6 9 2 11 Realized losses - 33 33 (6) 36 30 Total investment expenses 11 148 159 12 129 141
Dividends received from subsidiaries amount to EUR 775 million and include: SCOR Global Life SE EUR 100 million, SCOR Global P&C SE EUR 541 million, SCOR Holding Switzerland EUR 22 million, SCOR AUBER SAS EUR 81 million, SCOR Investment Partners SE EUR 2 million, MRM SA EUR 3 million and SCOR US USD 28 million (EUR 26 million).
5.3.3 NOTE 10 - ANALYSIS OF GENERAL EXPENSES BY NATURE AND NON RECURRING RESULT
In EUR million 2015 2014 Salaries 124 105 Retirement 3 4 Benefits 20 16 Other 4 6 Total personnel expenses 151 131 Other general expenses 171 157 TOTAL GENERAL EXPENSES BY KIND 322 288 Workforce Executives - Paris 244 223 Employees / Supervisors - Paris 31 26 Employees / branches 441 399 TOTAL CURRENT WORKFORCE 716 648
The SCOR SE Group in France is consolidated for tax purposes and is composed of SCOR SE as the parent company of the Group, SCOR Global P&C SE, SCOR Global Life SE, SCOR Investment Partners SE, SGF SAS, SCOR Auber SAS, SAS DB Caravelle, SAS Zerline, ReMark France SAS and Rehalto SA as subsidiaries. Under the tax agreement, SCOR SE benefits from the tax loss carry-forwards of its subsidiaries, and tax benefits are transferred back to the individual subsidiary concerned in the case of future profits.
Total tax losses of the consolidated French tax Group were EUR 1,228 million as at December 31, 2015. SCOR SE, as a stand-alone company, has a tax loss carry-forward. The corporate tax losses of EUR (0.3) million relates mainly to:  the contribution of subsidiaries that are consolidated for tax purposes by EUR 15.2 million;  tax expenses for the tax group for EUR (2.3) million (of which EUR (1.5) million non-recurring);  tax expense for previous financial years for EUR (0.2) million;  additional contribution on income distributed for EUR (7.8) million;  income tax from the branches for (5.2) million.
The table below summarizes the status of the various stock option plans for 2015: Plan
In 2013, 1,251,162 rights of options were exercised: 70,591 rights of options exercised under the stock option plan of August 25, 2004 vested on August 26, 2008, 105,835 options exercised under the stock option plan of September 16, 2005 vested on September 16, 2009, 143,936 options exercised under the stock option plan of September 14, 2006 vested on September 14, 2010, 29 500 options exercised under the stock option plan of December 14, 2006 vested on December 14, 2010, 240,500 options exercised under the stock option plan of September 13, 2007 vested on September 13, 2011, 274,950 options exercised under the stock option plan of 10 September 2008 vested on September 10, 2012, 60,000 options exercised under the stock option plan of May 22, 2008 vested on May 22, 2012, 314,850 options exercised under the stock option plan of March 23, 2009 vested on March 23, 2013 and 11,000 options exercised under the stock option plan of November 25, 2009 vested on November 25, 2013.
In 2014, 711,022 rights of options were exercised: 46,534 rights of options exercised under the stock option plan of August 25, 2004 vested on August 26, 2008, 30,188 options exercised under the stock option plan of September 16, 2005 vested on September 16, 2009, 34,050 options exercised under the stock option plan of September 14, 2006 vested on September 14, 2010, 3,000 options exercised under the stock option plan of December 14, 2006 vested on December 14, 2010, 90,00 options exercised under the stock option plan of September 13, 2007 vested on September 13, 2011, 111,250 options exercised under the stock option plan of September 10, 2008 vested on September 10, 2012, 152,500 options exercised under the stock option plan of March 23, 2009 vested on March 23, 2013, 2,000 options exercised under the stock option plan of November 25, 2009 vested on November 25, 2013, 239,200 options exercised under the stock option plan of March 18, 2010 vested on March 18, 2014 and 2,300 options exercised under the stock option plan of October 12, 2010 vested on October 12, 2014.
The amount of 2015 profit-sharing payouts has been estimated in the accounts and set aside for EUR 1.2 million.
As of January 1st, 2015 the “Compte Personnel de Formation” or “CPF” (Personal training account) replaces the “Droit Individuel à la Formation” or “DIF” (Individual training entitlement), in accordance with law n° 2014-288 of 5 March 2014 relating to professional training, employment and social democracy. It should be noted that the CPF is managed externally by the “Caisse des Dépôts et Consignations”.
Fixed compensation 1,200,000 1,200,000 Variable compensation 1,236,000 1,314,500 Directors' fees 63,000 44,000 Total cash compensation 2,499,000 2,558,500
Confirmed credits, letters of credit and guarantees given 408 461 18 20
In EUR million 2015 2014 2015 2014 Rate swaps - - - - Cross-currency swaps 1,120 1,011 973 973 Currency forward purchases/sales 293 495 287 490 Trust assets - - 10 - Total 1,413 1,506 1,270 1,463
Cross-currency swaps are used to hedge foreign exchange and rate risks of perpetual notes in CHF issued in 2011 and 2012: the instruments exchange the principal of 2011 placements for a total of CHF 650 million into EUR and exchange the coupon on the CHF 400 million placement to 6.98% and on the CHF 250 million placement to 6.925%. Both instruments mature on August 2, 2016. Additional instruments exchange the principal of 2012 placements for a total of CHF 315 million into EUR and exchange the coupon on the CHF 250 million tranche to 6.2855% and on the CHF 60 million tranche to 6.235%. These latest instruments mature on June 8, 2018.
In EUR million 2015 2014 2015 2014 Confirmed credit - - - - Letter of credit 408 461 6 6 Securities pledged to financial institutions - - - 2 Investments in subsidiaries and affiliates pledged to financial institutions - - - - Other guarantees given to financial institutions - - 12 12 Total 408 461 18 20
SCOR SE has signed agreements with different financial institutions concerning the granting of letters of credit for EUR 408 million.
The commitments received in terms of capacity to issue letters of credit amounted to EUR 408 million, corresponding mainly to contracts signed with the banks:  BNP Paribas: USD 38 million (EUR 35 million),  Deutsche Bank: USD 111 million (EUR 103 million),
On the basis of the two directors and officers insurance policies in excess coverage, SCOR also commenced two distinct procedures on January 10, 2012 and June 22, 2012 before the Commercial Court of Nanterre and the Commercial Court of Paris against two insurance companies with respect to the recovery of the attorneys’ fees and costs and a portion of the settlement amount relating to the litigation with Highfields Capital LTD, Highfields Capital I LP and Highfields Capital II LP covered by its excess policies. Both proceedings are ongoing.
6 CERTIFICATION OF AUDIT OF HISTORICAL FINANCIAL INFORMATION This is a free translation into English of the statutory auditors’ report on the financial statements issued in French and it is provided solely for the convenience of English-speaking users. The statutory auditors' report includes information specifically required by French law in such reports, whether modified or not. This information is presented below the audit opinion on the financial statements and includes an explanatory paragraph discussing the auditors’ assessments of certain significant accounting and auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the financial statements taken as a whole and not to provide separate assurance on individual account balances, transactions or disclosures. This report also includes information relating to the specific verification of information given in the management report and in the documents addressed to the shareholders.
We examined the control system in place 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.
We examined the company’s procedures to identify these risks, to evaluate and reflect them in the annual financial statements. These assessments were made as part of our audit of the financial statements taken as a whole, and therefore contributed to the opinion we formed which is expressed in the first part of this report.
We have also performed, in accordance with professional standards applicable in France, the specific verifications required by French law. We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given in the management report of the board of directors and in the documents addressed to the shareholders with respect to the financial position and the financial statements.
The items mentioned in the document pertain to the entire Group except ReMark (125 employees, fully consolidated entity), MRM (5 employees, fully consolidated entity), Telemed (39 employees), Réhalto (29 employees) and the Lloyd's Channel Syndicate (100 employees). ReMark, Telemed and Réhalto are controlled 100% by SCOR Global Life SE. The Lloyd's Channel Syndicate is controlled by SCOR Global P&C SE. MRM is controlled by SCOR SE. They are all managed independently from the Group in terms of human resources (HR policies, HR processes, HR rules and frames etc.).
(3) SCOR Global Life SE controls 100% of the capital of ReMark. Due to its specific activity, its business model and its organization, ReMark’s human resources are managed independently from the Group
Total including trainees 2,672 2,491 2,393 (1) We consider that the trainees are paid and under a tripartite relationship between the company, the school and the student
2015 2014 2013 Male Female Total Male Female Total Male Female Total Permanents contracts 195 175 370 148 130 278 173 139 312 Fixed-Term contracts 14 19 33 11 21 32 13 14 27 Trainees 75 50 125 50 52 102 62 71 133
Methodology: employees on fixed-term contract are considered as definitively leaving SCOR when their contracts expire. Therefore, the 18 employees who signed a permanent contract in 2015 at the end of their fixed-term contract are not included in this scope.
2015 2014 2013 Average fixed remuneration (2) 96,069 88,525 83,209 Average bonus
(1) The Corporate Officer is not included. The total compensation is calculated on the basis of 2,580 employees as at 31 December 2015 (2) The average fixed remuneration is based on the annual base salary paid to the employee, prorated to actual hours worked (3) Amount calculated by multiplying the number of shares granted by the fair value of each plan which is calculated in accordance with the IFRS rules
The cash bonus is calculated based on the annual gross salary. The components of the Partners’ bonuses are linked to their partnership level.
This remuneration policy reflects the Group’s desire to implement compensation schemes in accordance with best market practices and enables us to involve our key employees in the long-term development of the Group. In addition, the Group pursues a policy of employee shareholding, which resulted in 221,160 shares being allocated to non-Partners in 2010, 141,020 shares in 2011, 168,440 shares notified in 2013, 199,750 shares in 2014 and 154,425 shares in 2015.
Hub In EUR thousands 2015 2014 2013 Paris/ London 52,060 48,379 49,536 Americas 15,910 14,965 13,211 Zurich/Cologne 6,150 5,939 4,567 Singapore 2,730 1,655 1,716 Total 76,850 70,938 69,030 1.2.10 DISTRIBUTION BY AGE
(1) Due to local laws, the age of the employees working in the hub Americas has not been taken into account in these figures 1.2.11 DISTRIBUTION BY TYPE OF WORKING TIME
The annual working time in the Group is 206 days for the employees with “cadres” status in France, 210 days for the employees with “non-cadres” status in France, 218 days in Spain, 219 days in Italy, 219 days in Belgium, 221 days in the Netherlands, 247 days in Russia, 223 days in South Africa, 226 days in Ireland, 228 days in the UK, 246 days in Sweden, 223 days in Switzerland, 225 days in Israel, 223 days in Germany, 224 days in Austria, 233 days in the USA, 231 days in Brazil, 244 days in Argentina, 243 days in Canada, 251 days in Mexico, 244 days in Colombia, 248 days in Chile, 232 days in Australia, 229 in China, 228 days in Hong Kong, 216 days in India, 221 days in Malaysia, 230 days in South Korea, 228 days in Singapore, 226 days in Japan and 229 days in Taiwan.
The length of absence(1) within the Group is 13,318 days in France(2), 7 days in Belgium, 10 days for Netherlands, 570 days in Spain, 712 days in Italy, 365 days in Russia, 13 days in South Africa, 776 days in Ireland, 1,400 days in United Kingdom, 603 days in Sweden, 2,363 days in Switzerland, 9 days in Israel, 2,785 days in Germany, 279 days in Austria, 2,672 days in the USA(3), 15 days in Brazil(3), 0 day in Argentina(3), 802 days in Canada(3), 5 days in Mexico(3), 118 days in Colombia(3), 223 days in Chile(3), 435 days in Australia, 22 days in China, 56 days in Hong Kong, 1 day in India, 5 days in Malaysia, 116 days in South Korea, 1,152 days in Singapore, 61 days in Japan, 0 day in Taiwan.
Organization of employee /management dialogue 76 meetings were held with staff representatives in Europe (30 meetings in France (1), 1 in Italy, 9 in Switzerland, 32 in Germany, 4 in Sweden).
(1) For France, this figure includes the work councils meetings and the employee representative meetings (“délégués du personnel”)
5 occupational accidents on the working place without sick leave were recorded as at December 31, 2015 (1 meeting in France, 2 in Germany, 1 in Switzerland, 1 in Sweden) (3).
In 2015, a number of measures for health protection/prevention were implemented: - In Germany, a variety of medical services is offered in cooperation with the company doctor (e.g.: eye examinations, vaccination, massage, nutritional advice offer, implementation of a 'health day'), offer of ergonomic keyboard/mouse. A safety and health committee is in place. - In Austria, workplace evaluation (visits by safety engineers and occupational health physicians from the Austrian Workers' Compensation Board).
- In Switzerland, specific actions have been implemented to support employees with stress management (including yoga and fitness, membership in sports club), and solutions have been implemented to improve ergonomics at the workstation and to take care of the health of the employees (e.g.: promoting healthy food). - In France, the single document for the evaluation of occupational risks is reviewed by an external expert and updated to prevent all occupational risks by job families within the UES SCOR, regular medical appointments are organized by the occupational health department for the employees, support is provided for stress management especially through the sports association (a fitness room is located in the Kléber site), support is provided to employees experiencing difficulties at work: counselling service (Réhalto).
(1) Due to its non-materiality within the Group, the information related to occupational diseases is not reported (2) Number of occurrences in the course of work which leads to physical or mental harm and absence (3) The frequency rate and the severity rate of accidents are not calculated as these indicators are not significant within the Group
The training policy forms part of the "SCOR University" concept, which extends training to the international level and harnesses the synergies of existing training schemes. The concept is
59,699 (1) training hours have been offered by the Group in 2015. 22,337 training hours ( EUR 962,310 (2), 2,261 training participants) were offered in the Paris/London hub, 11,395 training hours (EUR 487,626, 1,093 training participants) were offered in the Zurich/Cologne hub, 5,734 training hours (SGD 352,588, 628 training participants) were offered in the Singapore hub, 20,233 training hours (USD 275,942, 1,337 training participants) were offered in the Americas hub.
In 2015, on average, approximately 23 hours of training were followed per employee.
(1) For the Paris hub, the Zurich/Cologne hub and the London hub, the number of training hours is calculated on the basis of the attendance sheets For the other hubs, the number of training hours is calculated on the basis of the information mentioned in the invoices sent by the providers
 In recent years in France, the Women's Day leads to the organization of an event dedicated to diversity within the group. For the first time in 2015, this event named “Gender Diversity Day” was global and rolled-out in larger entities. Three objectives have been achieved: promoting gender diversity within SCOR, presenting the European Charter on Professional Equality, proposing the first global actions on gender diversity within SCOR (especially raising awareness on gender stereotypes through a global communication campaign on the enterprise social network).
 A continued effort was made to reduce the pay gap between men and women and to apply the principles of professional equality (renewal of the agreement signed for France on 4 February 2014 for 3 years).
 SCOR promotes its female talent, notably through the Group’s participation in the Women in Insurance Awards in France in 2014 and 2015.
balancing family life with a progressive career), corporate membership with TWIN (The Women’s Insurance Network), partnerships with various training agencies for mentoring and coaching men & women in leadership,
 In Sweden, a company guideline regarding diversity and equal opportunities is in place, all companies with 25 employees (or more) needs to have a equal opportunities plan.
 In Singapore Hub, following the Gender Diversity Day, an interactive session was held in April 2015 where topics such as the importance of promoting gender diversity awareness was discussed.
In Germany, the whole building has been adapted to the mobility of people with disabilities. An integration management program aiming to provide the right conditions to help certain employees return to work after long-term sick leave is in place.
In Switzerland, support can be offered to the employees with disabilities who are back to the company after a long sick leave, which implies a progressive level of challenges approach, according to their situation.
In Sweden, the office building is handicap-friendly and adapted to individual disabilities, as appropriate. In Ireland, the office building is handicap-friendly.
- Specific monitoring of employees with disabilities via the Department of Health to work in coordination with the HR Hub Paris (including adapting the organization of work and/or working conditions).
- Establishment of an individual training dedicated to the new retirement scheme for deaf employees. - In Belgium, the office building is handicap-friendly.
The first “Victoires du Capital Humain” awards, organized by the publisher of the magazine Décideurs, Leaders League, has awarded two trophies to the SCOR group Human Resources department.
- The “Gold Trophy - special mention”, for the category “HR Department of the Year for an International Group”, highlighting in particular the fundamental transformation of HR policy over the past few years. The other nominees were GDF Suez, L’Oréal, LVMH and Total.
- The headcount is calculated on the basis of the employees registered at December 31, on fixed-term contracts (working contract signed directly between SCOR and the individual with a defined ending date) or permanent contracts (working contract signed directly between SCOR and the individual for an unlimited period). Trainees are employees paid by the company under a tripartite agreement between the company, the school and the student. - Employees on fixed-term contracts are considered as definitively leaving SCOR when their contracts expire. Employees who signed a permanent contract in 2014 at the end of their fixed-term contract are not included in the fixedterm contract endings. - For the employees who signed several similar working contracts during the year, only the initial hiring and the final departure are counted.
- Number of training hours: total number of hours of training received by all the employees. These training hours are directly managed by SCOR or by an external training organization at the behest of SCOR. For collective training, the number of hours of training should be multiplied by the number of participants.
- A employee with a disability is an employee officially affected by a disability recognized by the administration. The disability may be physical or mental or a combination of these. A disability may be present from birth, or occur during a person's lifetime.
2.1 Information required under Article R. 225-105 of the Commercial Code The information below, which relates to the environmental impact of SCOR’s activity, are presented in accordance with the regulatory provisions set out in Article 225 of the law n° 2010-788 of July 12, 2010 on France’s national commitment to the environment. The sections are presented in the same order as Decree n° 2012-557 of April 24, 2012 relating to the transparency obligations of companies in social and environmental terms. Unless otherwise specified, this information covers the Group and its direct impacts.
2.2 Environmental policy: framework SCOR’s environmental policy is guided by the international initiative to which it has subscribed. Signatory of the UnitedNations Global Compact since 2003 and the Kyoto Statement under the aegis of the Geneva Association since 2009, and since 2012 SCOR is also a founding signatory of the Principles for Sustainable Insurance, a global initiative placed under the umbrella of the United Nations Environment Program – Finance Initiative (UNEP-FI) and announced in the run up to the United Nations conference on sustainable development (RIO+20). These initiatives form the framework in which SCOR SE (the “Company”) and its main subsidiaries implement the Group’s environmental policy (“SCOR”). Although reinsurance is not an industrial activity, SCOR strives to conduct its global operation in accordance with the environmental principles which are set out by the United Nations Global Compact with regards to prevention, protection and precaution. Therefore, the environmental policy aims to reduce the environmental impacts directly linked to SCOR’s activity and whose main source is derived from office management (energy consumption, water consumption…), business travel (in particular air travel due to the global nature of its activity) and to a lesser extent office equipment (furniture, information technology equipment, paper…).
2.3 SCOR’s environmental policy: general organization and main areas The Group’s environmental policy is decentralized at “Hub” level (in Europe, Paris/London and Cologne/Zurich, in AsiaPacific, Singapore and in the Americas, Charlotte/New York/Kansas City) and monitored at Group level by the Green SCOR manager who, besides its responsibility with regards to compliance with environmental information disclosure requirements under the law on the national commitment in favor of the environment, encourages, coordinates and mandates locally implemented environmental initiatives.
Being mindful of controlling its direct “environmental footprint”, the Group supports any initiatives tending to minimize the environmental impacts in the following areas: (1) property offices, (2) energy efficiency with regards to its information technology system, (3) travel: (1) For several years now SCOR has been implementing projects in the property offices area (acquisition and site management) in order to reduce its impacts derived from offices that are occupied by SCOR’s employees:  with respects to offices acquisition, one of the site in London (10, Lime Street) which is owned by the Group has been certified BREEAM (”BRE Environmental Assessment Method”). In Cologne, SCOR’s local teams are hosted since March 2012 in a building that has been awarded a European environmental label in 2012 while in Paris, the headquarters is certified “Haute Qualité Environnementale” (HQE) for the design and the construction phase. In 2013, the Group has acquired two floors in a building still under construction in Singapore and has purchased four units of an additional floor in 2014. This building will be certified Green Mark Platinum, an award provided by the Building Construction Authority of Singapore. The building will be delivered in mid 2017.
 moreover, the Group has deployed certified environmental management systems on the buildings we directly operate. In addition to the Zurich office whose operations are certified ISO 14001, Cologne and Paris have decided to implement respectively the following standards: EMAS (“Eco-Management and Audit Scheme”) and HQE operation. Premises in Paris is certified HQE operation (HQE exploitation) since the end of 2013 while the environmental management system of Cologne has been certified EMAS at the end of 2014. These locations host 1 179 employees at the end of December 2015, or 43.5% of our employees globally consolidated in our financial statement.
(3) Streamlining of travel, which is the main contributor to the Group’s Green House Gas emissions, is sought through the roll-out of highly sophisticated and efficient high definition videopresence rooms, and the implementation of a travel policy setting out principles and rules for a proportionate use of transportation means.
Aside from the indications mentioned below, unless stated otherwise, the information with respect to the categories foreseen by the Decree n°2012-557 of April 24, 2012, refer to the Group and our direct impacts.
Activity data have been collected on a target perimeter embracing all the Group’s locations where more than 30 employees were in activity for the full reporting. In terms of employees, this target perimeter accounts for 84.3% of the employees (as of December 31, 2015) of the legal entities fully consolidated in the financial statements to which Channel Syndicate is added, since this company is hosted in the Group premise in London.
Moreover the threshold of 30 employees is not applicable for the calculation of the environmental impact due to air travel. Although information for all of the sites falling within the data collection scope is not available at this stage, data relating to the use of air travel covers 95.2% of the employees of the legal entities fully consolidated in the financial statements in terms of headcounts. 98.8% of them were able to report on this indicator. As the requested data were not available for all the legal entities covered by the environmental reporting protocol, a synthetic table is published at the end of this report with the rate of coverage for a selection of indicators.