• Accumulations of risk particularly exposed to catastrophes in the Life business are regularly assessed in “footprint” scenarios and local catastrophe scenarios. Specific tools are used to monitor known Group cover accumulation in selected geographical areas.
3.2.2.3. MANAGEMENT OF INTERDEPENDENCE AND ACCUMULATION RISKS BETWEEN SCOR’S AREAS OF BUSINESS
The Group aims at diversifying its business and monitors its main accumulation risks and areas of dependencies across its business through regular risk monitoring and reporting mechanisms, including via its internal model.
External consulting firms are mandated to review certain aspects of the reserve calculation and thereby support the internal analysis and validation.
In compliance with applicable regulatory requirements and in accordance with industry practices, the Group maintains IBNR reserves in addition to outstanding claims reserves. These reserves represent: • the estimated final amount that may be paid by the Group on losses or events that have occurred, but are not yet reported to the ceding company or to the SCOR entity concerned; and
A table showing historical changes in reserves for P&C claims is provided in Section 4.6 – Notes to the consolidated financial statements, Note 16 – Net contract liabilities.
Life business Within SCOR’s Life business unit, in order to ensure an adequate and efficient monitoring of the reserves, a report is established on a yearly basis by the Group Actuarial Department where the Group Chief Actuary gives his opinion on the year-end booked reserves’ adequacy. The main objective of this report is to provide SCOR’s Executive Committee and Audit Committee with an overall opinion on the adequacy of the Life business unit’s reserves but also to highlight the inherent uncertainties surrounding this assessment.
The monitoring of the reserves by the business unit’s and Group’s Actuarial Department is centered on three mechanisms: • a quarterly follow-up of the claims activity and review of reserves for each segment through adequate reporting procedures; • an annual internal actuarial analysis, including a review of all segments together with a full analysis of the segments that may have a substantial impact on SCOR’s balance sheet. This analysis is performed by the Life business unit’s reserving actuaries and reviewed by the Group Actuarial Department which also performs its own full analysis. These analyses are recorded in an annual actuarial report; • regular external reviews of the Life business unit’s reserves adequacy are performed including those required by local regulators.
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 the Life business unit to determine the reserves. In some cases, the Group Actuarial Department applies a global approach and calculates a confidence range in order to check that the reserves booked are within said confidence range.
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.
A table showing changes in the mathematical reserves in Life reinsurance is provided in Section 4.6 – Notes to the consolidated financial statements, Note 16 – Net contract liabilities.
The level of retrocession is selected each year to ensure that SCOR's retained risk profile respects the specific Group risk appetite framework and to help the Group achieves its return on capital and solvency objectives.
(collateralized retrocession, Insurance-Linked Securities including catastrophe bonds); • solvency 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 300 million coverage. It is innovative in that it protects the Group against both natural catastrophes and extreme mortality events.
3.2.4. MANAGEMENT OF MARKET RISKS The Group’s investment strategy is prudent, with the majority of assets held in cash and fixed income securities. It is defined in line with the Group’s risk appetite and its risk tolerance limits and considers the economic and market environment, and the ALM process.
Exposures to major risks are monitored on a weekly basis and stress tests measure the impact of parametric or footprint scenarios on the invested assets portfolio. These scenarios cover changes in interest rates, inflation, equities, credit spreads and real estate market. Portfolio sensitivity analysis to major risks is an important management tool which is used when making portfolio reallocation or hedging decisions.
For further information on the sensitivity of the Group’s consolidated income and consolidated equity to interest rate risk, see Section 3.2.4.6 – Monitoring of sensitivity to market risks.
3.2.4.3. MANAGEMENT OF CREDIT SPREAD RISKS SCOR applies strict limits in terms of asset concentration by asset class but also within a single asset class and actively diversifies its portfolio (by type of investment, by issuer, by country and by sector). The application of these limits also helps to mitigate the counterparty default risk arising from investments, as described in the Section 3.2.5 – Management of credit risks.
For information on the ratings of the debt securities owned by SCOR, see Section 4.6 – Notes to the consolidated financial statements, Note 8 – Insurance business investments.
3.2.4.4. MANAGEMENT OF EQUITY RISKS With regards to equity investments, the Group’s objective is to develop and manage a high-quality diversified portfolio.
Management of credit risks related to bond and loan portfolios SCOR mitigates the credit risk related to bond and loan portfolios by careful analysis and selection of issuers, and by a policy of geographic sector diversification. SCOR maintains its investment policy in highquality assets and in countries with the lowest sovereign risk.
For further information on how risks related to invested assets are managed, see Section 3.2.4 – Management of market risks.
03 RISK FACTORS AND RISK MANAGEMENT MECHANISMS Management of main risks 3.2.5.2. MANAGEMENT OF REINSURANCE CONTRACTS
For more details on the valuation of intangible assets, see Section 4.6 – Notes to the consolidated financial statements, Note 7 – Value of business acquired.
The retrocessionaires’ share in the reserves broken down by retrocessionaires’ credit rating is included in Section 4.6, Note 16 – Net contract liabilities.
3.2.5.3. MANAGEMENT OF OTHER CREDIT RISKS In the event of joint liability of the members in pools to which SCOR participates, the risk of default of other pool members is carefully monitored by SCOR: • through its appointment as director and via the participation of its 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.
3.2.5.4. AGING OF ASSETS The following table provides an overall analysis of the aging of financial assets and receivables as at December 31, 2020: In EUR millions Current 1-12 months 12-24 months 24-36 months > 36 months Total
The following table provides an overall analysis of the aging of financial assets and receivables as at December 31, 2019: In EUR millions Current 1-12 months 12-24 months 24-36 months > 36 months Total
3.2.6. MANAGEMENT OF LIQUIDITY RISKS Timing SCOR assesses liquidity risks arising from both short-term and longterm liquidity needs. SCOR manages these risks via different mechanisms which consider: • actions to be taken by the insurance or reinsurance business areas to take into account both short term and long-term liquidity risk (refer to “Maturity Profiles” in Section 3.1.5 – Liquidity risks); and
Additional information on SCOR’s letter of credit facilities is included in Section 4.6 – Notes to the financial statement, Note 24 – Commitments received and granted.
3.2.7. MANAGEMENT OF OPERATIONAL RISKS The two main principles driving the operational risk management approach are: • exhaustiveness: ensure that a complete and exhaustive identification of all risks within the Group is carried out to the extent possible; • proportionality: once operational risks are identified, management uses appropriate and proportionate responses, resources and procedures, focusing on key risks.
At Group level, experienced staff members collect relevant information and analyses on operational risks, on a qualitative and quantitative basis. When relevant, they develop key indicators, with support from Risk Governance. The Group has also implemented regular risk reporting mechanisms in order to provide an overview of operational risks across the Group.
On risks which may develop rapidly, such as external fraud, SCOR adapts its risk management, for example, by organizing specific training programs and sending regular warnings, and detailed instructions to its employees.
The Group has identified the following categories of risks, as described in Section 3.1 – Main risks: • strategic risks; • underwriting risks related to the Non-Life and Life reinsurance business; • market risks; • credit risks; • liquidity risks; • operational risks.
The Group has implemented and continued to further develop and formalize the risk management and internal control systems for several years.
Section “Identification and assessment of risks”; • components 6, 7, and 8 are respectively addressed in the
Each component is composed of several complementary mechanisms. These mechanisms are adapted to business units and legal entities when appropriate. Some mechanisms are only relevant at Group or business unit level and are not implemented specifically at the legal entity level in line with materiality principles.
For further information on this organization, see Section 1.2.3 – Organizational structure of SCOR.
Compliance • Human Resources • Group Project Office • Group Cost control
Planning and Analysis • Investor Relations • Group Accounting • Group Tax • Group Investment
Within this environment, control responsibilities are exercised as follows: • SCOR SE’s Board of Directors relies on several dedicated committees, including, but not limited to, the Audit Committee and the Risk Committee to exercise its control responsibility over the objectives it has set for the Company. These two committees are both chaired by independent directors; • the Group’s Executive Committee is chaired by the Chairman and Chief Executive Officer of SCOR SE and meets on a weekly basis. The Executive Committee defines the procedures for implementing the strategy approved by SCOR SE’s Board of Directors in line with the principles set out in Group policies, approved by the Board of Directors, for its main areas of activity (e.g. investment, finance, risk management) and for certain topics, such as the underwriting plan and the allocation and management of resources. The Executive Committee also supervises the functioning of the Group and the Hubs by monitoring, on a quarterly basis, the bodies contributing to the sound administration of the Group. In addition to the Chairman and Chief Executive Officer, the Executive Committee is currently made up of: — the Group Chief Financial Officer (CFO), — the Group Chief Risk Officer (CRO), — the Group Chief Operating Officer (COO), — the SCOR Global P&C Chief Executive Officer (CEO) and his deputy, — the SCOR Global Life Chief Executive Officer (CEO) and his deputy, — the SCOR Global Investments Chief Executive Officer (CEO); • the Group Risk Committee meets quarterly and is comprised of the members of the Group Executive Committee. Other risk management and control functions of the business units and the Head of Group Internal Audit are invited to the regular committee meetings. The main missions of the Group Risk Committee are to steer the Group’s risk profile, maintain an effective ERM Framework and spread an appropriate Risk Culture throughout the Group; • monitoring of the internal control procedures falls under the remit of the Group’s Executive Management. The Group departments and functional or transversal departments of SCOR Global P&C, SCOR Global Life and SCOR Global Investments with a control responsibility have the task of defining and controlling the implementation of rules pertaining to the areas of their responsibility and applicable to all of the Group’s entities. These rules, and the participants, are described in detail in Section 3.3.1.3; • the three business units, the group functions, as well as the Hubs’ support departments must apply the rules defined above. They carry out all controls related to business management and ensure compliance with regulatory, accounting and fiscal laws, at both local and Group levels; • the Head of Group Internal Audit reports directly to the Chairman and Chief Executive Officer of SCOR SE and functionally to the Chairman of the Audit Committee of the Board of Directors of SCOR SE. This positioning gives the Head of Group Internal Audit the necessary independence and objectivity, and allows for the largest possible room for investigation. Group Internal Audit checks independently the effectiveness and relevance of the governance, risk management and internal control procedures for the Group’s entities following a methodical risk based approach, as promoted by the “International Standards for the Professional Practice of Internal Auditing” set out by the Institute of Internal Auditors and the Institute’s Code of Ethics. The Internal Audit Charter, approved by the Audit Committee, defines the position within the organization, the role and areas of activity, the principles and main operating procedures of Group Internal Audit.
3.3.1.2. GROUP STANDARDS AND PRACTICES Group business standards and practices are governed by Group policies and underlying guidelines established in a common format, by the three business units (SCOR Global P&C, SCOR Global Life, SCOR Global Investments) and the central functions such as Group Internal Audit and the functions managed by the Group Chief Financial Officer, the Group Chief Operating Officer and the Group Chief Risk Officer respectively. Group policies are approved by the Group Executive Committee and where required by applicable regulation, are also submitted regularly for review to the relevant committees of the Board and, ultimately, to the approval of 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 all made available to employees on a platform fully dedicated to the policies in force and accessible via the SCOR intranet page.
3.3.1.3. ENTERPRISE RISK MANAGEMENT AND GROUP INTERNAL CONTROL APPROACH The main tasks of the Risk Governance department 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.
03 RISK FACTORS AND RISK MANAGEMENT MECHANISMS Internal control and risk management procedures 3.3.2. SETTING OF OBJECTIVES For several years, SCOR has implemented and formalized threeyear strategic plans. On September 4, 2019, SCOR publicly presented “Quantum Leap”, its latest strategic plan (mid-2019 to year-end 2021). “Quantum Leap” builds on the success of SCOR’s previous strategic plan, “Vision in Action” and sets the Group’s new core objectives of: • a return on equity (ROE) above 800 basis points over the 5-year risk-free rate over the cycle (1); and • a solvency ratio in the optimal 185%-220% range (2).
— 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 10% of available capital,
— sub-limits for invested assets, — limits per risk which are set in the underwriting and investment guidelines; • “footprint scenarios”, which aim to review and assess the potential impact of selected deterministic scenarios on the Group. This process provides an alternative perspective on the Group’s exposures. Working groups dedicated to specific subjects are composed of experts across the Group. These groups perform quantitative studies which are summarized in specific reports; • an Emerging Risks process which is part of SCOR’s ERM Framework and is linked to other risk management methods, such as the use of “footprint scenarios”. Potential emerging risks are identified and individual risk assessments are carried out by experts from the business units and the Group functions. Significant emerging risks are then reported to SCOR’s Executive Committee and Board. SCOR, as a member of the CRO Forum, also actively participates and contributes to the CRO Forum Emerging Risks Initiative (ERI) alongside other major insurers and reinsurers; • SCOR’s ORSA (Own Risk and Solvency Assessment), which provides the Group’s Board and those of the legal entities, the Group Executive Committee and senior management of legal entities, with forward-looking information on SCOR’s risks and capital position; • SCOR’s internal model, which is deeply embedded in SCOR’s risk management system and contributes to the assessment of risks. SCOR uses its internal model for determining economic capital. Its results are used to implement SCOR’s underwriting and asset management policies and guidelines.
This section summarizes the principal activities and participants of risk control for the following important areas: • group functions; • activities related to (re)insurance; • asset management; • accounting management.
3.3.4.1. GROUP FUNCTIONS The Group’s functions are organized into three areas led by the Chief Operating Officer, Chief Financial Officer and Chief Risk Officer respectively. The Operations area comprises Information Technology, Human Resources, the General Secretariat (including the Compliance and Legal departments), the Group Project Office, Cost Control and Budgeting, and Corporate Communications. The Finance area comprises Treasury, Financial Planning and Analysis, Corporate Finance, and other functions relating to consolidation, reporting, accounting, financial communications and tax issues. The Risk Management area comprises the Risk Coverage, Risk Governance, Prudential and Regulatory Affairs, Group Actuarial and Risk Modeling departments. Further information is presented below, excluding the financial reporting and financial communication functions dealt with in Sections 3.3.5 and 3.3.7 hereafter.
Operations • Control of the Group information system is overseen by the
• The General Secretariat contributes to the management of the following functions: — legal and functional governance of the Group; — compliance, with the Group Chief Compliance Officer reporting to the General Secretariat (special attention is given to anti-trust/competition law, anti-money laundering and terrorism financing, sanctions and embargoes, anti-bribery, anti-fraud, data protection and privacy, insider trading and conflicts of interest); — management of the regulatory supervision of the Group and coordination at legal entity level with the relevant legal departments; — management of the Corporate and Social Responsibility approach; — the Group’s insurance policies, in particular with respect to D&O and professional liability.
• The Human Resources department controls all processes related to the management of human capital.
Finance • The Group Treasury Department manages the Group’s operating cash flow, directly or indirectly and prepares a weekly centralized report of the Group’s cash situation.
• The IFRS Center of Excellence (IFRS CoE) determines the Group accounting policies, handles the accounting of complex transactions and manages the production process of the Universal Registration Document, the Half-Year Report and the Solvency II narratives reports (SFCR and RSR).
• The Systems, Process and Projects department maintains the accounting system in collaboration with the Group IT Department, provides both technical and functional support to end-users, promotes operational excellence within the Finance domain, and is actively involved in the delivery of the Finance projects.
• The Group Actuarial department provides quarterly approval on the adequacy of the reserves held for both the Life and P&C business units. In the context of Solvency II, the Group Actuarial Department provides an opinion on the Technical Provisions, the underwriting policy and the retrocession arrangements, validates the Group’s Internal Model and contributes to the effective implementation of risk management throughout the Group.
• The Risk Modeling department manages and operates SCOR’s Internal Model and provides a detailed quantitative analysis on the modelled range of changes in economic value. It provides reports to management on risk assessment and actively assists the Company in its various uses of the Internal Model.
For further information on how the main underwriting risks related to the Non-Life and Life reinsurance business are managed, see Section 3.2.2 – Management of underwriting risks related to the P&C and Life businesses.
The primary investment objective of SCOR is to generate recurring investment income in accordance with the risk limits of the Group, and to ensure that the Group: • is able to meet its claims and expense payment obligations at all times; and • creates value for its shareholders in line with the objectives set out in the strategic plan.
Reporting and risk monitoring Group Investment Risk & Sustainability monitors, on an ex ante and ex post basis, the compliance of the portfolio positioning with regard to the Group risk appetite and investment guidelines. Breaches are escalated to the Group Investment Committee as well as to the Group and Board Risk Committees. Investments falling outside of the scope of the Group Investment Guidelines are subject to special referral procedures managed by the Risk Management area. Investment Business Performance is responsible for monitoring processes related to financial performance and reporting regarding invested assets.
3.3.5. INFORMATION AND COMMUNICATION Financial communication The establishment and centralization of all financial information – particularly press releases, intended for the market, investors, financial analysts, and the press – are the joint responsibility of the Corporate Communications Department and the Investor Relations Department, according to a formalized process. Financial information intended for rating agencies is the responsibility of the Rating Agencies Department. All of this information is ultimately controlled by General Management.
Concerning the Universal Registration Document, a specific process has been implemented to ensure the contribution of all relevant departments and the consistency of the information provided. A final edit is made by members of the Executive Committee.
Internal communication SCOR strives to make all documents deemed important available to all SCOR employees on its intranet, OneSCOR, a single point of entry for all the latest information about the Group and its business units, Group functions and offices. OneSCOR has notably strengthened the Group’s crisis communication, for example with regard to the Covid-19 health crisis.
SCOR designs and implements training and development programs on these topics across the Group through SCOR University, aimed at maintaining and developing the skills of all SCOR’s staff in accordance with the strategy and the objectives of the Group.
SCOR also operates an “Internal Control System Competence Center” (ICS-CC). The core objective of this competence center is to pool the ICS expertise in order to foster a consistent ICS approach and application of ICS standards across the Group. The ICS-CC consists of experts, who are dedicated to coordinating the internal control formalization activities within the Group, its business units and entities, and supporting the business process owners where necessary. The ICS standards are applied based on the principle of proportionality. ICS processes have been documented accordingly, focusing on those considered the most critical. The ICS documentation is being maintained across the Group and regularly reviewed for continuous improvement.
Group Internal Audit develops a multi-year internal audit plan (revised at least annually) in a risk-based manner, taking the organization’s risk management framework and including risk appetite levels set by management for the different activities, or parts of the organization, into account. The expectations of senior management and the Audit Committee are considered in this process. Once reviewed and approved by the Audit Committee, it is communicated internally and headlines are published on the SCOR intranet.
3.3.7. FINANCIAL REPORTING The accounting and finance function is the responsibility of the Chief Financial Officer, who manages all financial areas in order to have an overall view of the Group’s technical and financial results.
General accounting for SCOR subsidiaries is supported by two main auxiliary accounting systems, namely (1) a system for technical accounting; and (2) a system for investment accounting.
Concerning technical 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. Technical results are analyzed quarterly by the finance departments of SCOR Global P&C and SCOR Global Life, and the Group Chief Actuary regularly performs an actuarial review of the Group technical reserves.
SCOR Global P&C The calculation of technical reserves (including IBNR – Incurred But Not Reported) which have 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 is subject to the following successive controls by: • the actuaries in charge of reserves through control reports for which the proper implementation is verified by the Actuarial Department of the business unit and of the Group; • the Group Chief Actuary, particularly for methods, tools and results.
4.1. CONSOLIDATED BALANCE SHEET 162 4.2. CONSOLIDATED STATEMENT OF INCOME 164 4.3. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 165 4.4. CONSOLIDATED STATEMENT OF CASH FLOWS 166 4.5. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY 167 4.6. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 170 4.7. INFORMATION ON HOLDINGS 244 4.8. STATUTORY AUDITORS 244 4.9. AUDITING OF HISTORICAL CONSOLIDATED FINANCIAL INFORMATION 245
The consolidated financial statements for the year ended December 31, 2020 are presented below: 4.1. CONSOLIDATED BALANCE SHEET
Share of retrocessionaires in insurance and investment contract liabilities Note 16 1,781 2,227
Items that will be reclassified subsequently to income (408) 506 (164)
Change in scope of consolidation (cash and cash equivalents of acquired companies)
Cash generated by issuance of financial liabilities Note 14 335 150 (6) 739 (6)
(1) Cash related to the acquisition of the capital voting rights of Coriolis, see Note 4 – Acquisitions and disposals. (2) Cash related to the acquisition of the capital voting rights of MutRé and Essor Seguros, see Note 4 – Acquisitions and disposals. (3) Partial disposal of Asefa in 2018 for EUR 4 million. (4) Acquisitions and disposals of other insurance business investments also include movements relating to bonds and other short-term investments with a maturity of less than three months and classified as cash equivalents.
(5) Of which EUR 2 million of dividends paid by MRM to non-controlling interests (EUR 2 million paid in 2019 and EUR 2 million paid in 2018). (6) Cash generated by issuance of financial liabilities includes net proceeds from perpetual subordinated notes issuance of USD 125 million in 2019 and
04CONSOLIDATED FINANCIAL STATEMENTS Consolidated statement of changes in shareholders’ equity 4.5. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
Other comprehensive income net of tax - - 101 (521) - - - - (420)
Taxes recorded directly in equity - - (27) (5) - - - - (32)
04 CONSOLIDATED FINANCIAL STATEMENTS Consolidated statement of changes in shareholders’ equity
Shareholders' equity at January 1, 2019 after adoption of new IFRS 1,521 815 (145) 3,511 (338) 322 69 28 5,783
Net income for the year ended December 31, 2019 - - - - - 422 - - 422
Comprehensive income net of tax - - 359 123 - 422 - - 904
Remeasurements of post-employment benefits - - - (24) - - - - (24)
04 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements 4.6. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE•9 ACCOUNTS RECEIVABLE FROM AND PAYABLE ON ASSUMED AND CEDED INSURANCE AND REINSURANCE TRANSACTIONS 203
NOTE•13 INFORMATION ON SHARE CAPITAL, CAPITAL MANAGEMENT, REGULATORY FRAMEWORK AND CONSOLIDATED RESERVES 211
SCOR’s consolidated financial statements for the financial year ended December 31, 2020 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, 2020. The term “IFRS” refers collectively to International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) and to the interpretations of the Standing Interpretations Committee (SIC) and the IFRS Interpretations Committee (IFRIC), mandatorily applicable as at December 31, 2020. See Note 1.3 – IFRS Standards applied for the first time and IFRS Standards published but not yet effective for a detailed overview on the new and amended International Financial Reporting Standards applicable in 2020 that are relevant to SCOR and adopted by the Group as endorsed by the European Union and the standards relevant to SCOR and expected to have a significant impact that were issued by the IASB but have not yet 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 income.
Certain immaterial reclassifications and revisions have been made to the financial information in respect of the prior years to bring it in line with the current year presentation.
The preparation of the consolidated financial statements requires management to make certain judgments, assumptions and estimates. These may affect the reported amounts of revenues, 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. With regards to the Covid-19 pandemic, assessment of the impact with respect to the P&C and Life business exposures requires a high degree of estimation and is highly judgmental. In general, claims information is still limited.
Estimates for determining the accounting positions as at December 31, 2020 are made based on current available information and SCOR’s expertise. There is still a high degree of uncertainty regarding future developments and current estimates could evolve as more information becomes available. The actual outcome and results could differ substantially from estimates and assumptions made. The main material financial statement captions for which the Group uses estimates and assumptions are reinsurance reserves, accounts receivable from and accounts payable on reinsurance transactions, the fair value and impairment of financial instruments, intangible assets, retirement and other defined postemployment benefits and deferred taxes, in particular with respect to the recognition of deferred tax assets and the availability of future taxable income against which tax loss carryforwards can be used.
Refer to Note 2 – Significant events of the year and Covid-19 for details relating to the pandemic and a summary of financial impacts from Covid-19 in 2020.
SCOR SE’s functional currency is EUR. Where the functional currency of an entity is not the same as the reporting currency used to present the Group’s consolidated financial statements, assets and liabilities of the entity are translated using the exchange rate at the reporting date and the statement of income and the statement of comprehensive income are translated using the average exchange rate for the period. Translation differences are recognized directly in shareholders’ equity in the reserve line denominated “Currency translation adjustment”.
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 from or accounts payable on 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.
Following the issuance on September 26, 2019 of the phase 1 of its amendments to IFRS 9, IAS 39 and IFRS 7 relating to the Interest Rate Benchmark Reform, the IASB released on August 27, 2020 the ‘Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)’ to address the impacts of the IBOR reform on financial reporting once a benchmark rate is replaced by an alternative reference interest rate. Amendments concern: • changes applicable to financial assets, financial liabilities and lease liabilities where the IASB introduces a practical expedient considering that such assets or liabilities should not be derecognized but remeasured using the updated Effective Interest Rate (EIR); • hedge accounting requirements where existing hedging relationships should not be discontinued but the relating documentation and qualification should be updated accordingly; • quantitative disclosure at each reporting period on progress made on the transition to alternative benchmark rates and risks arising from this transition.
The following standards relevant to SCOR and expected to have a significant impact on its consolidated financial statements have been issued by the International Accounting Standards Board but are not yet effective or have not been adopted by the European Union: • On July 24, 2014, the IASB published IFRS 9 – Financial
IFRS 9 requires financial assets to be classified based on the business model for managing the financial assets and their contractual cash flows characteristics. Based on their classification, financial assets will be measured at amortized cost, fair value through other comprehensive income (OCI) or fair value through P&L. The new impairment model requires recognition of expected credit losses based on available historical, current and forward looking information and defines new criteria for significant increase in credit risk information. The hedging model included in IFRS 9 aligns hedge accounting more closely with risk management but does not fundamentally change the types of hedging relationships or the requirements to measure and recognize hedge effectiveness. The adoption of IFRS 9 will affect the classification and measurement of the Group’s financial assets as more financial assets are expected to be accounted for at fair value through profit or loss. For equity investments, an accounting policy choice will be available to account for such instruments at fair value through profit or loss, or at fair value though OCI without recycling. SCOR’s impairment policies will also be affected as impairments will be recognized based on expected credit losses and no longer based on incurred credit losses only. There are no significant changes expected for the hedge accounting as applied by SCOR. The Group is in the process of implementing IFRS 9 and has finalized the methodologies for classification and measurement as well as for the expected credit risk model. Design and systems implementation are about to be finalized and several test phases are scheduled throughout 2021 to ensure operational readiness for adoption of IFRS 9 on January 1, 2022.
Fair value as of 2020 year-end and the amount of change of fair value during the financial year 2020 for the two groups of financial assets meeting or not meeting the SPPI criteria are the following: In EUR millions Fair value as at
(1) The change in fair value during 2020 displays the movement in unrealized gain/loss balances of financial assets held as at December 31, 2020. The change in fair value includes the impact from foreign exchange rate changes and partial reductions in holdings of financial assets still in the portfolio as at
Note•2 SIGNIFICANT EVENTS OF THE YEAR AND COVID-19 The outbreak of the new coronavirus was first reported around end of 2019/early 2020 and was characterized as a pandemic by the World Health Organization on March 11, 2020. Management continuously monitored the developments and has assessed the impacts of the pandemic on SCOR’s consolidated financial statements as at December 31, 2020 considering that a high degree of management judgment is required in making accounting assessments.
The full impact of the Covid-19 crisis on SCOR’s business and results can still not be accurately assessed at this stage, given the uncertainty related both to the magnitude and duration of the Covid-19 pandemic and to the possible effects of future governmental actions and/or legal developments in this context. This uncertainty follows from the high difficulty in working on sound hypothesis on the impact of this crisis due to the lack of comparable events, the ongoing nature of the pandemic, and its far-reaching impacts on world-wide economies, on the health of the population and on customers and counterparties. These hypotheses include, in particular: • the duration of the pandemic, its impact on health on the short and long term, the availability and effect of the vaccines; • the response of government bodies world-wide (including executive, legislative and regulatory); • potential judicial actions or social influences; • the coverage and interpretation of SCOR’s contracts under these circumstances; • the assessment of the net claim estimate and impact of claim mitigation actions.
The pandemic led to increased volatility in financial markets, particularly during the first half of 2020. SCOR did not reclassify financial instruments. Fair value measurement approaches have not been changed. The financial year 2020 includes EUR 42 million impairments on invested assets (1) before tax.
Many governments around the world have reacted to the economic crises triggered by the pandemic and issued government assistance packages, including tax concessions or rebates. SCOR assessed potential impacts on reported tax charges and balances under consideration of whether these were substantively enacted and met recognition requirements. Deferred tax assets and liabilities are recorded in applying accounting policies consistently. Deferred tax asset recoverability tests have been updated following the Covid-19 pandemic and did not result in changes in the overall position. Recoverability of deferred tax assets will depend on the availability of future taxable income.
For further information on other significant events occurred during the financial year 2020 please refer to: • Note 13.1, Share capital – Dividends; • Note 4, Acquisitions and Disposals – AgroBrasil acquisition; • Note 8.9, Derivative instruments – New Cat bond Atlas Capital
Reinsurance 2020 DAC; • Note 14.1, Subordinated debt – Placement of EUR 300 million subordinated notes; • Note 26, Litigation – Court ruling related to Covéa litigation.
(1) Impairments on insurance business investments net of (i) third party interest, (ii) non-controlling interest and (iii) assets not held for investment purposes.
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. As such, from its acquisition date to December 31, 2018, despite having held less than 50% of its voting rights, the Group determined that it controlled MRM as it exerted de facto control as defined by IFRS 10 in light of the proportion of voting rights it held and of the wide dispersion of the other vote holders. As at December 31, 2020, the Group holds more than 50% of MRM’s voting rights.
When determining whether the Group acts as an agent or a principal with respect to investment funds, the power to direct the relevant fund activities, i.e. the scope of the Group’s decisionmaking authority over the funds, as well as the aggregated economic interest, including the returns and fund management compensation generated for the Group are taken into account.
SCOR Life Assurance Company (SLAC) US 100 100 100 100 Full
SCOR Fin Life Insurance Company US 100 100 100 100 Full
SCOR SERVICES ASIA-PACIFIC PTE LTD Singapore 100 100 100 100 Full
SCOR Management Services Ireland Ltd Ireland 100 100 100 100 Full 178 UNIVERSAL REGISTRATION DOCUMENT SCOR 2020
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.
Aggregate net book value (in SCOR) of individually immaterial associates 13 13
Aggregate amount of the reporting entity’s share of net income/(loss) (1) (1)
The Group sponsors a number of special purpose vehicles (SPVs) designed to reduce SCOR’s exposure to catastrophe losses and to longevity developments through the transfer of risk to external investors.
Depending on the design of the risk transfer agreement with the SPV, the transaction is classified as either a derivative instrument or an insurance contract. Derivatives are accounted for at fair value through income and are presented 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 “Retroceded written premiums”.
Mangrove Insurance 2020 DAC 2019 PLC 2018 PLC PCC Limited UK 2019 PLC UK 2018 PLC PCC Limited
On June 1, 2019, SCOR successfully sponsored a new catastrophe bond, Atlas Capital UK 2019 PLC, which provides the Group with multi-year risk transfer capacity of USD 250 million to protect itself against US named storms, US and Canada earthquake events and windstorms in Europe. The risk period for Atlas Capital UK 2019 runs from June 1, 2019, to May 31, 2023. The instrument is accounted for as a derivative instrument.
On June 1, 2018, as part of its policy of diversifying its capital protection tools, SCOR sponsored a catastrophe bond, Atlas Capital UK 2018 PLC, which provides the Group with multi-year risk transfer capacity of USD 300 million to protect itself against named storms in the US, earthquakes in the US and Canada, and windstorms in Europe. The risk period for Atlas Capital UK 2018 runs from June 1, 2018, to May 31, 2022.
The contract has been accounted for as a reinsurance contract in accordance with IFRS 4 – Insurance Contracts.
SCOR benefited in 2019 of an additional recovery of USD 13 million (EUR 12 million) with regards to Atlas IX 2015-1, following the exceptional series of large natural catastrophes that occurred during the second half of 2017. In 2018, the recovery related to Atlas IX 2015-1 amounted to USD 26 million (EUR 23 million). The recoveries are recognized in other operating income and expenses. The instrument is accounted for as a derivative instrument.
Provisions, contingent assets and contingent liabilities are assessed at the acquisition date for the entities acquired.
Positions taken for the initial accounting are subject to adjustment during the measurement period, which does not exceed one year from the acqusition date. Any revision after the initial accounting is finalized, is recognized in accordance with IFRS 3 – Business Combinations.
The AgroBrasil acquisition secures access to a growing and profitable market for SCOR’s P&C reinsurance and specialty insurance activities.
The purchase agreement includes both put and call options for the 40% remaining interest to be exercised in the first quarter of 2023. The interest subject to the put and call options is deemed to have been acquired at the date of acquisition. No non-controlling interest is recognized from the business combination.
The identifiable assets acquired and liabilities assumed have been recorded at their provisional fair values for purposes of the opening balance sheet and included in the consolidated accounts of SCOR using the Group’s accounting principles in accordance with IFRS. The net assets amounted to BRL 1 million (EUR 0.2 million, based on the EUR/BRL exchange rate at the acquisition date).
The resulting goodwill of EUR 12 million is recognized as goodwill arising from insurance activities.
The purchase price was allocated based on the fair value of assets acquired and liabilities assumed at the date of acquisition, determined in accordance with IFRS 3 – Business Combinations. This resulted in a goodwill of EUR 11 million recognized in the balance sheet on the acquisition date as goodwill arising from noninsurance activities.
On July 17, 2017, SCOR signed an agreement with the Fédération Nationale de la Mutualité Française and Matmut to acquire of 100% of the shares of MutRé S.A. The ratification of the agreement by MutRé’s other shareholders (which represent approximately 15% of MutRé’s capital) was finalised during October 2017.
The transaction, which was subject to the authorization of ACPR and the relevant competition authorities, received approval from all regulatory bodies.
The purchase price has been allocated based on an estimate of the fair value of assets acquired and liabilities assumed at the date of acquisition. The assets acquired and liabilities assumed are recorded at their fair values for purposes of the opening balance sheet and included in the consolidated accounts of SCOR using the Group’s accounting principles in accordance with IFRS from January 1, 2018.
The fair value of the assets acquired and liabilities assumed as of January 3, 2018 is as follows: MutRé – Fair value of the assets acquired and liabilities assumed
The VOBA has been estimated based on the best estimate of expected future profits using a discount rate including an appropriate risk premium. This intangible asset is amortized over the lifetime of the underlying treaties, in line with expected emergence of profits.
This transaction was subject to SUSEP (Brazilian regulatory body) prior and final approvals, respectively received on September 18, 2017 and on January 2, 2018, which led to the effective control of M&S Brazil by the Group.
Group Functions is not an operating segment and does not generate revenues. Costs relating to Group Functions are not directly attributable to either the SCOR Global P&C or SCOR Global Life segments. Group Functions is the corporate cost center which includes the costs of departments fulfilling duties for the benefit of the whole Group, such as the costs for Group Internal Audit, Group Finance Departments (Group Tax, Group Accounting, Group Consolidation and Reporting, Financial Communication, Treasury and Capital Management, Financial Planning and Analysis), Group Chief Operating Departments (Group Legal, Group Communication, Group Human Resources, Information Technology) and Group Chief Risk Officer functions (Group Actuarial, Group Risk Management, Prudential Affairs, Internal Modeling).
Gross commission on earned premiums (1,203) (1,643) - (2,846) (1,326) (1,543) - (2,869) (1,332) (1,454) - (2,786)
Change in ceded unearned premiums reserves - (16) - (16) - 61 - 61 - 35 - 35
Other income and expense excl. revenues associated with financial reinsurance contracts (2) (36) - (38) 6 (56) - (50) (14) (51) - (65)
Capital gains/(losses) on the sale of investments 62 134 - 196 9 77 - 86 (2) 129 - 127
EUR 283 million relates to the life reinsurance business in the U.S. and EUR 31 million relate to all other markets, net of retrocession and before tax.
Note•5.1 GROSS WRITTEN PREMIUMS AND INSURANCE CONTRACT LIABILITIES BY GEOGRAPHIC REGION
The distribution of gross written premiums by geographic region for SCOR Global Life, based on market responsibility, is as follows: In EUR millions 2020 2019 2018
In 2019, the market responsibility for one portfolio was reallocated from the Americas to EMEA. The gross written premiums for SCOR Global Life previously reported in the 2018 Registration Document for Americas were EUR 4,375 million for the year ended
The distribution of gross written premiums by geographic region for SCOR Global P&C, based on the country in which the ceding company operates for treaty business and location of the insured for facultative business, is as follows: In EUR millions 2020 2019 2018
For SCOR Global P&C, contract liabilities, allocated on the same basis as gross written premiums, and share of retrocessionaires in contract liabilities, based on the location of the retrocessionaire, are as follows: In EUR millions
Goodwill arising from insurance activities 45 755 800 45 743 788
Assets and liabilities by geographic region are based on the location of the entities and can be broken down as follows: In EUR millions
Net cash flows provided by/(used in) operations (18) 1,006 988 101 740 841 299 592 891
Net cash flows provided by/(used in) financing activities 205 (246) (41) (135) (238) (373) (145) (493) (638)
In EUR millions Goodwill arising from insurance activities Goodwill arising from non insurance activities
The carrying amount of goodwill allocated to SCOR Global P&C and SCOR Global Life is disclosed in Note 5 – Segment information.
In order to estimate the value in use 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 for the reportable segment over a five-year period. The first two years are based on the assumptions from the Quantum Leap strategic plan and the last three years are extrapolated using a conservative 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 changes in ultimate net reserves together with assumptions as to the average time to payment of existing reserves and future business. Future cash flows beyond this period are extrapolated using a growth rate of 4%. SCOR uses risk-free interest rates for each currency as well as the Group’s estimated weighted average cost of capital of 5.99%, derived from the Group Capital Asset Pricing Model (CAPM) and a risk-free rate based on the currencies used in the P&C business unit.
The goodwill impairment test conducted annually shows recoverable amounts in excess of the respective total carrying amounts for the financial years ended December 31, 2020, 2019 and 2018. Risk-free rate is a key assumption used in the model, and depends on macroeconomic environment, on which SCOR does not have influence. A 0.5 pts decrease in the risk-free rate would decrease the discounting effect on existing reserves, which in turn would lead to a decrease in the value in use of the P&C business unit. However, this movement in the risk-free rate would not change the conclusion that no impairment is needed.
The goodwill impairment test conducted annually shows recoverable amounts in excess of the respective total carrying amounts for the financial years ended December 31, 2020, 2019 and 2018. Management believes that any reasonably possible change in the key assumptions on which SCOR Global Life recoverable amounts are based would not cause their carrying amount to exceed their recoverable amount.
Consequently, no goodwill impairment charges were recognized on goodwill arising from insurance activities.
As of December 31, 2020, a change of 0.5 point in the post-tax risk adjusted discount rate or in the growth rate applied beyond the plan would not lead to the recognition of an impairment loss.
The IFRS 4 liability adequacy testing, which includes VOBA recoverability, showed no indicators of impairment for the financial years ended 190 UNIVERSAL REGISTRATION DOCUMENT SCOR 2020
Categories of financial assets Available-for-sale financial assets Available-for-sale financial assets include non-derivative assets that are either classified as available-for-sale or not allocated to any another category. They are carried at fair value. Unrealized gains and losses are recorded directly in shareholders’ equity. Changes in foreign exchange rates relating to non-monetary available-for-sale assets are recorded directly in shareholders’ equity while those relating to monetary available-for-sale assets are recorded in income.
Interest on debt instruments is calculated in accordance with the effective interest rate 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, net of any amounts previously recorded in income.
Available-for-sale investments include EUR 79 million of investments which are measured at cost (December 31, 2019: EUR 71 million). These investments primarily include equity securities and funds which are not listed.
Valuation of financial assets The fair value of financial instruments that are traded in an active financial market is determined by reference to quoted market bid prices, at the close of business on the reporting date. If quoted market prices are not available, reference can also be made to broker or dealer price quotations. As the Group is responsible for determining the fair value of its investments, regular analysis is performed to assess whether prices received from third parties are reasonable estimates of fair value. The Group’s analysis includes: (i) a review of price changes made in the investment management systems; (ii) a regular review of pricing deviations between dates exceeding predefined pricing thresholds per investment category; and (iii) a review and approval of valuation changes made on an exceptional basis. The Group may conclude that the prices received from third parties are not reflective of current market conditions. In those instances, SCOR may request additional pricing quotes or apply internally developed valuations. Similarly, the Group may value certain derivative investments using internal valuation techniques based on observable market data.
• Level 3: valuation inputs for the asset or liability which are not based on observable market data (unobservable inputs).
For securities not considered to be traded on an active and liquid market, especially investments in closed-end funds, SCOR performs a line-by-line analysis based on the expected lifecycle of these instruments and their business model. A security is considered impaired if: • there is a magnitude of decline of more than 50%; or • there is a duration of decline of more than 48 months without recovery in net asset value being observable; and • the net asset value has not recovered to at least its initial purchase price after an additional 12-month period.
A subsequent increase in value of an impaired available-for-sale equity instrument is not recognized in the statement of income. A subsequent increase in value of an impaired available-for-sale debt security is recorded through income as a reversal of impairment if the increase in fair value of the instrument can be objectively related to an event occurring after the impairment losses were recognized.
Note•8.3 MOVEMENTS IN FINANCIAL INSTRUMENTS CATEGORIZED WITHIN LEVEL 3 OF THE FAIR VALUE HIERARCHY
Income and expense recognized in statement of income - - - (48) (1) (48)
Cumulative depreciation and impairment at December 31, 2019 (143) - (143)
Real estate financing is presented in Note 14.2 – Real estate financing.
As part of its real estate investment activities described above, SCOR leases its investment properties. The leases generally conform to the local market conditions and have annual indexation clauses for the rental payments. The estimated minimum future rental income is as follows: In EUR millions
As part of its real estate investment activities, the Group committed to purchasing several properties through contracts of sale before completion. As at December 31, 2020, SCOR has off balance sheet commitments of EUR 11 million related to such contracts (December 31, 2019: EUR 21 million). The decrease compared to 2019 is mainly due to the final works on 2 buildings.
TOTAL AVAILABLE FOR SALE AND FAIR VALUE THROUGH INCOME 19,875 515 20,194 325
(1) During 2020 and 2019, SCOR had no exposure to the sovereign debt of Portugal, Ireland, Italy, Greece.
The net unrealized gain (loss) on equity securities as at December 31, 2020 is comprised of EUR 50 million of unrealized gains and EUR 34 million of unrealized losses (as at December 31, 2019: EUR 51 million of unrealized gains and EUR 27 million of unrealized losses).
As at December 2020, total reserves of EUR 315 million (as at December 2019: EUR 214 million) also include: • tax effects on available-for-sale securities net unrealized gains and losses of EUR (115) million (2019: EUR (73) million); • net of tax foreign exchange gains and losses of EUR 3 million (2019: EUR 4 million); • net of tax shadow accounting impacts of EUR (109) million (2019: EUR (51) million); • elimination of assets under management for external clients net unrealized gains and losses in other liabilities of EUR 12 million (2019: 6 EUR million); • investments in associates net unrealized gains and losses of EUR 0 million (2019: EUR 0 million); • net of tax unrealized gains and losses relating to funds withheld of EUR 9 million (2019: EUR 3 million).
The table below presents the estimated maturity profiles of financial assets, for which the Group is expected to generate cash inflows to meet cash outflows on financial and reinsurance contract liabilities.
Short-term investments include EUR 183 million that are carried at fair value at December 31, 2020 (December 31, 2019: EUR 97 million). Other loans and receivables are carried at cost, which approximates their fair value at December 31, 2020 and 2019.
A material embedded derivative is separated from the host contract and is recognized as a derivative when: • its economic features and risks are not closely linked to the economic features of the host contract; • the embedded instrument has the same conditions as a separate derivative instrument; and • the hybrid instrument is not measured at fair value through income.
Hedging instruments A hedging instrument is a designated derivative instrument or, in the case of a foreign currency hedge, a designated non-derivative asset or liability for which the fair value or cash flows offset changes in the fair value or cash flows of the hedged item.
Atlas Re 2020, Atlas UK 2019 & Atlas IX 2016-1 (1) 100 85 - - (46) (38) - -
In 2020, SCOR has sponsored a new catastrophe bond (“cat bond”), Atlas Capital Reinsurance 2020 DAC, which provides the
Group with multi-year risk transfer capacity of USD 200 million to protect itself against storms in the U.S. and earthquakes in the U.S. and Canada. The risk period for Atlas Capital Reinsurance 2020 DAC will run from April 30, 2020, to May 31, 2024.
These instruments are recognized as a derivatives and valued using a cumulated expected loss model that is based on a combination of market inputs to the extent that trades in this instrument are active and catastrophe modeling tools developed by a third-party service provider (AIR).
The significant unobservable inputs used in the valuation model are: Unobservable inputs Atlas Capital UK 2019 PLC Atlas capital Re 2020 DAC
Expected loss US named storm based on AIR model 6.94% 5.46%
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 related notional amount is USD 750 million as at December 31, 2020 (December 31, 2019: USD 625 million). The fair value of cross currency swaps is EUR 42 million as at December 31, 2020 (EUR 79 million as at December 31, 2019). No ineffectivness was identified on the remaining swap during 2020.
The outstanding contracts at December 31, 2020 and 2019, converted into EUR at the closing rates, were as follows: In EUR millions
Estimated premiums receivable from cedents, net of commission 3,496 2,630 6,126 2,913 2,865 5,778
Accounts receivable from assumed insurance and reinsurance transactions 3,542 3,022 6,564 3,425 3,299 6,724
Liabilities for cash deposits from retrocessionaires (72) (317) (389) (245) (351) (596)
Accounts payable on ceded reinsurance transactions (564) (666) (1,230) (623) (808) (1,431)
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 the Universal Registration Document in Section 3.2.5 – Management of credit risks.
Note•10 MISCELLANEOUS ASSETS Miscellaneous assets consist of: In EUR millions As at December 31, 2020 As at December 31, 2019
Other intangible assets include all intangible assets except for goodwill and VOBA which are presented on separate balance sheet line items (refer to Note 6 – Goodwill and Note 7 – Value of business acquired).
Other intangible assets include other intangible assets with finite useful lives as at December 31, 2020 for a net value of EUR 304 million (December 31, 2019: EUR 245 million) and other intangible asset with indefinite useful life for EUR 153 million (December 31, 2019: EUR 153 million).
Similar to the increase of EUR 54 million net of amortization during the year ended December 31, 2019, the increase of EUR 59 million net of amortization during the year ended December 31, 2020 mainly relates to the capitalization of software development costs relating to the Group’s accounting system and technical accounting system.
EUR 29 million, EUR 8 million, and EUR 19 million, for the years ended
The other intangible assets with indefinite useful life mainly include EUR 136 million relating to Château Mondot trademark. Château Mondot trademark was tested for impairment with the result that no impairment charge needs to be recognized (refer to Note 6 – Goodwill, for details). They also include the intangible assets associated with Lloyd’s syndicate participations acquired through the Converium business combination. The Lloyd’s intangible assets with a carrying amount of EUR 4 million as at December 31, 2020 (as at December 31, 2019: EUR 4 million) are deemed to have an indefinite useful life due to the ability to realize cash for these contractual rights through the Lloyd’s auction process.
Cumulative depreciation and impairment at January 1, 2019 (98) (96) (1) (1)
Cumulative depreciation and impairment at December 31, 2019 (120) (118) (1) (1)
CARRYING VALUE AS AT JANUARY 1, 2019 88 86 1 1
Total cash outflow for leases is EUR 27 million as of December 31, 2020 (2019: EUR 30 million).
Repair and maintenance costs are charged to the statement of income during the financial period in which they are incurred. All costs directly associated with purchases or construction of property are capitalized. All subsequent value-enhancing capital expenditures are classified as acquisition costs and capitalized when it is probable that the future economic benefits related to the item will flow to the Group.
Tangible assets as at December 31, 2020 amounted to EUR 747 million compared to EUR 738 million as at December 31, 2019 and primarily relate to own use property, office furniture and equipment, and building fixtures and fittings.
The increase in 2020 is mainly related to work in progress and to improvement costs for office space for a total of EUR 53 million. The increase is partially offset by the disposal of not fully amortized tangible assets (furniture and office equipment) of EUR 48 million.
Changes in foreign exchange rates (32) (46) (78) 2 11 13 18 7 25
(1) Cash and cash equivalents include cash held by the Group on behalf of third parties as part of its asset management activity for a total amount of EUR 165 million on December 31, 2020 (December 31, 2019: EUR 211 million).
The following table reconciles consolidated net income to net cash flows provided by/(used in) operations as presented in the consolidated statement of cash flows: In EUR millions 2020 2019 2018
Change in fair value of financial instruments recognized at fair value through income (excluding cash and cash equivalents) 130 (68) 71
Dividend and interest cash receipts relating to investments held during the year were EUR 20 million (2019: EUR 30 million and 2018: EUR 20 million) and EUR 460 million (2019: EUR 551 million and 2018: EUR 551 million), respectively.
Tax cash outflows during the year was EUR 137 million (2019: outflow of EUR 97 million and 2018: outflow of EUR 252 million).
Dividends Dividends declared on ordinary shares are recognized as a liability when such dividends have been approved by shareholders at the relevant Annual Shareholders’ Meeting.
The number of ordinary shares which were issued and fully paid in circulation as at December 31, 2020, 2019 and 2018 was as follows: Share capital decrease – decision of the Board (509,135) (6,545,416) (1,692,602)
Share capital increase – exercise of stock options – during the year 189,700 509,135 1,278,077
In 2020, the movements are due to the following operations: • the Board of Directors’ meeting held on April 28, 2020 decided to reduce the Group’s share capital by cancellation of 509,135 treasury shares for EUR 21 million (EUR 4 million in share capital and EUR 17 million in additional paid-in capital); and
In 2018, the movements are due to the following operations: • the Board of Directors’ meeting held on April 26, 2018 decided to reduce the Group’s share capital by cancellation of 1,692,602 treasury shares for EUR 50 million (EUR 13 million in share capital and EUR 37 million in additional paid-in capital); and
In line with SCOR’s shareholder remuneration policy and given the Group’s performance in 2019, the Board of Directors of SCOR SE, at its meeting of February 26, 2020, had decided to propose to the
In the context of Covid-19, the Annual Shareholders’ Meeting, postponed to June 16, 2020, approved the subsequent proposal of the Board of Directors of SCOR SE, which had met on May 25, 2020, that no dividend will be distributed for the 2019 fiscal year and that the entire net income for 2019 will be allocated to distributable earnings.
The objective of the Group’s overall capital management process is the setting of target risk adjusted rates of return for business units, which are aligned with performance objectives and promote the creation of shareholder value.
of new shares, without exceeding 10% of SCOR’s share capital, when the aggregate amount of (i) the estimated ultimate net losses resulting from eligible natural catastrophes incurred by the Group (in its capacity as an insurer/reinsurer) between January 1, 2020 and December 31, 2022 or (ii) the ultimate net claims amount recorded by SCOR Group Life segment (in its capacity as an insurer/ reinsurer) over two consecutive semesters over the period from July 1, 2019 and December 31, 2022 reaches certain contractual thresholds subject to review by SCOR’s Statutory Auditors. In addition, subject to no drawdown having already been conducted under the facility, if SCOR’s daily volume-weighted average share price falls below EUR 10, an individual tranche of EUR 150 million will be drawn down out of the EUR 300 million facility.
The main objective of insurance and reinsurance regulators is protecting the interests of policyholders. They ensure that the Group maintains an adequate solvency position to meet unforeseen liabilities arising from economic shocks or natural disasters.
Failure of an operating company to meet the local regulatory capital requirements of the jurisdiction in which it operates could lead to supervision or administration of the activities of the operating company by the local regulator.
Lease liabilities are included in the balance sheet item Other Financial Liabilities. Interest expense on the lease liability are recognized in the income statement, in accordance with the effective interest rate method.
SCOR’s subordinated debt is classified as financial liabilities as under the terms and conditions of the issuance contracts SCOR does not have an unconditional right to avoid delivering cash to settle contractual obligations and based on projected cash flows the instruments do not have an equity component.
On December 17, 2019, SCOR issued perpetual deeply subordinated notes on the “Regulation S” USD market in the amount of USD 125 million. These new notes are assimilated and form a single series with the existing USD 625 million perpetual deeply subordinated notes issued on March 13, 2018. The new issued notes bear the same terms and conditions as the original notes. The coupon has been set at 5.25%, until the first call date of March 13, 2029, and resets every 5 years thereafter at the prevailing 5-year US Treasury yield plus 2.37% (no step-up).
On December 7, 2015, SCOR issued EUR 600 million in dated subordinated notes on the Euro market, redeemable by SCOR at each interest payment date, from June 8, 2026. The coupon has been set to 3% (until June 8, 2026, the first call date), and resets every 10 years at the prevailing 10-year EUR mid-swap rate +3.25% (until June 8, 2046, final redemption date).
On May 27, 2016, SCOR issued EUR 500 million in dated subordinated notes on the Euro market, redeemable by SCOR at each interest payment date, from May 27, 2028. The coupon has been set to 3.625% (until May 27, 2028, the first call date), and resets every 10 years at the prevailing 10-year EUR mid-swap rate +3.90% (until May 27, 2048, final redemption date).
On September 17, 2020, SCOR issued fixed-term level 2 subordinated bonds for an amount of EUR 300 million. The interest rate served was set at 1.375% until September 17, 2031 and will be revised every 10 years at the 10-year EUR mid-swap rate + 2.6% (until September 17, 2051, final redemption date).
The other real estate financing is used to finance other property owned by the Group and bears fixed-rate interest or interest indexed to 3-monthEuribor covered by interest rate swaps and redeemable between 2020 and 2026. Interest rate swaps related to this financing have been accounted for as cash flow hedges (for further details, see Note 8 – Insurance business investments – Derivative instruments).
The majority of real estate financing contracts contain accelerated repayment clauses and other debt covenants. Such covenants define certain ratios to comply with, among which loan to value (LTV) ratio, defined as the relation between the carrying amount of the financing and the market value of the real estate being financed, interest coverage rates (ICR), representing the percentage at which interest expenses are covered by rental income, and debt service coverage ratio (DSCR), representing the percentage at which debt amortization and interest expenses are covered by rental income. Under existing financing contracts, LTV ratio vary between 20% and 70% and ICR/DSCR between 123% and 730%. As at December 31, 2020, the Group is in compliance with the LTV and ICR/DSCR covenants with respect to its banking partners.
The amount of lease liabilities corresponds to the application of the IFRS 16 standard on lease contracts. In 2020, the increase compared to 2019 is mainly due to the recognition of two new real estate rental contracts in Switzerland and the United States.
Interest rate ranges < 1 year 1-5 years > 5 years * Total **
The post-employment benefits granted by the Group vary based on legal obligations and local requirements. Group employees are entitled to short-term benefits, recognized as an expense for the period by the different entities of the Group (paid leave, sick leave and profit sharing), and long-term benefits and postemployment benefits classified as defined benefit or defined contribution plans (pensions).
For defined contribution plans the employer pays fixed contributions to an external institution, with no legal or constructive obligation to pay further contributions. As a result, only contributions paid or due for the financial year are charged to the Group’s statement of income as overhead expenses. The payments made by the Group are expensed during the period in which the expense is incurred.
Defined benefit plans are those where an amount is paid to the employee upon retirement, which is dependent upon one or several factors such as age, years of service and salary. Defined benefit obligations and contributions are calculated annually by independent qualified actuaries using the projected unit credit method on the basis of information provided by the Group, taking into consideration actuarial assumptions, salary increase, retirement age, mortality, turnover and discount rates. Assumptions defined are based on the macroeconomic environment of each country where the Group operates. Modifications to actuarial assumptions or differences between these assumptions and actual outcomes give rise to actuarial differences which are recorded in other comprehensive income during the period in which they occur, in accordance with Group accounting principles. The obligation recognized on the balance sheet represents the present value of the defined benefit obligation at reporting date, less the market value of any plan assets as defined by IAS 19, where appropriate.
Other long-term benefits In some countries, the Group rewards employees for length of service by granting them a lump sum after certain periods of service. The primary country providing this benefit is France. For such benefits in France, the present value of the obligation is calculated annually by an independent actuary using the projected unit credit method and is recognized on the balance sheet.
The amounts paid under defined contribution plans were EUR 29 million, for the year ended December 31, 2020 (2019: EUR 28 million; 2018: EUR 29 million). Contributions to these plans are recognized in the period to which they relate.
An employer’s obligation under a defined benefit plan is to provide the agreed amount of benefits to current and future beneficiaries.
As at December 31, 2020 and 2019, the sensitivities of provisions to a change in discount rate are as follows: In EUR millions
Impact of increase in discount rate by 0.25 bp (18) (18)
The average duration of plans by geographical area is disclosed in the table below: Switzerland UK Euro Zone US Canada Global
Amortization of actuarial gains and losses through profit and loss for other long term benefits - - - - 1 - 1 - - - - -
The actual returns on plan assets were EUR 13 million for the year ended December 31, 2020 (2019: EUR 25 million and 2018: EUR (4) million).
Actuarial (gains)/losses due to change in assumptions (1) 24 8 6 10 56 25 19 12 7 (7) 19 (5)
Interest income on plan assets 3 - 1 2 5 2 1 2 4 1 1 2
Fair value of plan assets as at December 31 281 182 35 64 266 174 35 57 248 159 30 59
TOTAL FUNDED STATUS AS AT DECEMBER 31 – DEFICIT 194 33 123 38 237 43 149 45 202 28 134 40
(1) Actuarial (gains)/losses due to changes in assumptions include for 2020 actuarial (gains)/losses due to changes in financial assumptions for EUR 25 million (EUR 51 million in 2019) and actuarial (gains)/losses due to change in demographic assumptions for EUR 0 million (EUR 5 million in 2019).
Accrued/(Prepaid) as at January 1 237 43 149 45 202 28 134 40 182 28 112 42
ACCRUED/(PREPAID) AS AT DECEMBER 31 194 33 123 38 237 43 149 45 202 28 134 40
Claim reserves for losses and claims settlement expenses are recognized for payment obligations from reinsurance losses that have occurred but have not yet been settled. They are recognized under reserves for reinsurance losses reported before the reporting date and reserves for IBNR claims, and are calculated on the basis of their ultimate cost, undiscounted, except for workers’ compensation claims in the US, payment in annuity on Motor Liability and Medical Malpractice which are discounted.
Total gross insurance contract liabilities 14,330 15,832 30,162 14,680 16,233 30,913
Refer to Note 2 – Significant events and Covid-19 for information on the impact of the Covid-19 pandemic.
Ceded claims reserves & estimates – end of year (1) 412 765 690 629 619 634 660 1,175 1,283 1,300 971
Gross UPR – end of year 1,384 1,516 1,683 1,663 1,938 2,239 2,261 2,270 2,496 2,980 2,831
Gross DAC – end of year 278 325 359 379 441 536 551 560 615 735 665
Ceded DAC – end of year 1 5 7 8 10 14 13 9 25 34 27
Net DAC – end of year 277 320 352 371 431 522 538 551 590 701 638
Revaluation of opening balance at current year end exchange rates (573) 180
Net claims reserves and claims estimates as at January 1 – revalued 11,380 11,712
Net claims incurred relating to the current calendar year 2,063 2,339
Ceded claims reserves and claims estimates as at December 31 (971) (1,300)
GROSS CLAIMS RESERVES AND CLAIMS ESTIMATES AS AT DECEMBER 31 13,001 13,253
Change in reserves from portfolio movements and actuarial calculation (726) (301)
Change in reserves from portfolio movements and actuarial calculation 34 126
NET MATHEMATICAL RESERVES AS AT DECEMBER 31 7,050 7,917 226 UNIVERSAL REGISTRATION DOCUMENT SCOR 2020
Total collateral from retrocessionaires in favor of SCOR (1) - 39 425 24 - 659 1,147
In EUR millions AAA AA A BBB < BBB Not rated Total as at
The Group has established various long-term compensation plans (stock options and free shares allocations) in favor of some of its employees and Corporate Executive Officers. The terms of these plans are defined, and approved or agreed by its Board of Directors at the grant date. The plans are equity settled only.
The total expense for 2020 relating to share-based payments is EUR 32 million (2019: EUR 32 million, 2018: EUR 43 million), with EUR 1 million (2019: EUR 1 million, 2018: EUR 1 million) relating to stock options granted under the 2016 to 2020 plans (2019: 2015 to 2019, 2018: 2014 to 2018) and EUR 31 million (2019: EUR 31 million, 2018: EUR 42 million) relating to free shares allocated under the
New shares issued subject to option plans 228 UNIVERSAL REGISTRATION DOCUMENT SCOR 2020
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 during 2020, 2019 and 2018: November 5, 2020 Plan
Fair value at grant date (in EUR) 1.22 2.59 2.29 2.18 1.61 1.88
All shares granted under the “LTIP” plans of November 5, 2020 are subject to a 6-year presence condition and to performance conditions which are based on the strict compliance with the Group's ethical principles as set out on the Group's code of conduct (the "Group Code of Conduct"), on the fulfilment of the corporate social responsibility (CSR) training obligation, on the solvency ratio, on the SCOR Group’s ROE and on the Total Shareholder Return (TSR) of SCOR among a panel of peers between 2020 and 2025.
Vesting period 3 years 6 years 3 years 3 years 6 years 3 years
The main components of corporate income taxes for the years ended December 31, 2020, 2019 and 2018 are presented below: In EUR millions 2020 2019 2018
Changes in deferred taxes due to changes in tax rates or tax law (16) - (5)
The main reconciling items are due to the difference between the local corporate income tax rate of each taxable entity and the French tax rate, permanent differences reported by each entity, reduced tax rates for certain transactions and other specific items.
Income before income tax (excluding share in results of associates) 337 570 505
Theoretical income tax at 32.02% (for 2020), 34.43% (for 2019) and 34.43% (for 2018) (108) (196) (174)
Differences between French and local corporate income tax rates 38 63 77
Write-down and reversal of previous write-down of deferred tax assets - (1) -
The progressive decrease in corporate income tax rate results in a global French corporate income tax rate of 32.02% for 2020 and 28.41% for 2021 respectively. From 2022 onwards, the tax rate is 25.83%.
In 2020, USD 16 million (EUR 14 million) BEAT expense was recognized as part of the current income tax (USD 25 million, EUR 22 million in 2019).
Items that will not be reclassified subsequently to profit and loss (16) 4 (12) (31) 7 (24) (24) 6 (18)
Revaluation of available-for-sale assets 199 (40) 159 660 (144) 516 (511) 111 (400)
Net gains/(losses) on cash flow hedges 22 (6) 16 30 (8) 22 (6) 3 (3)
Unrealized revaluations and temporary differences on investments (36) (3) (68) (4) (1) (112) (4) (38) (12) 10 (156)
Unrealized revaluations and temporary differences on investments 85 15 (56) 5 - 49 10 (3) 12 (3) 65
In accordance with IFRS deferred tax netting rules, the amount of deferred tax liabilities and deferred tax assets stated in the balance sheet are as follows: In EUR millions 2020 2019 2018
The retrocession results of SCOR Global Life in the reporting periods reflect changes in the retrocession portfolio, the claims development over the 3 year-period, correlated reserving adjustments and experience refund calculations.
Other operating and administrative expenses include expenses incurred by the Group, excluding gross commissions, as follows: In EUR millions 2020 2019 2018
These expenses are further allocated into categories by function as follows: In EUR millions 2020 2019 2018
Basic and diluted earnings per share are calculated as follows for the years ended December 31, 2020, 2019 and 2018 respectively: In EUR millions
Stock options and share-based compensation (2) - 1,674 - - 1,880 - - 2,255 -
Net income attributable to ordinary shareholders and estimated conversions 234 187,917 1.25 422 187,638 2.25 322 189,596 1.70
Transactions with associates for the financial years ended December 31, 2020, 2019 and 2018 were carried out on an arm’s length basis and their volume is not material.
(3) Contributions paid to the defined contribution plans and service cost on the defined benefit plans. The total commitment of the Group for defined benefit retirement plans in France, Germany, the UK, the US and Switzerland for Executive Committee members (including the Chairman and Chief Executive Officer) as at December 31, 2020 amounts to EUR 46 million (EUR 41 million as at December 31, 2019 and EUR 57 million as at December 31, 2018), i.e. 10% of the total commitment of the Group for pension plans of EUR 475 million.
In EUR millions As at December 31, 2020 As at December 31, 2019
SCOR has pledged financial assets to ceding companies, regulators, financial institutions and pension plans for a total amount of EUR 4,466 million (2019: EUR 4,847 million).
In addition, SCOR pledges assets to the benefit of its consolidated subsidiaries as collateral for its internal retrocessions. As at December 2020, the amount of assets pledged internally is EUR 2,149 million (as at December 2019: EUR 2,047 million).
The total carrying amount of financial assets pledged to the benefit of SCOR as collateral is EUR 1,375 million (2019: EUR 1,107 million). These amounts include securities pledged by retrocessionaires for a total amount of EUR 624 million (2019: EUR 949 million) detailed in Note 16 – Net contract liabilities. The remaining amount relates to pledged assets received on assumed reinsurance.
As at December 31, 2020, SCOR has an outstanding letter of credit capacity of EUR 231 million (as at December 31, 2019: EUR 161 million), recognized as a commitment received from banks. This outstanding capacity can be used to provide collateral on the forthcoming underwritten business.
Letters of credits received from external retrocessionaires are recognized as a commitment received for EUR 137 million (as at December 31, 2019: EUR 161 million) and are detailed in Note 16 – Net contract liabilities.
Please see Section 3.1.3 – Market risks and Section 3.2.4 – Management of market risks.
Please see Section 3.1.4 – Credit risks and Section 3.2.5 – Management of credit risks.
The State Attorney (Abogado del Estado) representing the CNC has appealed the AN judgment to the Supreme Court (Tribunal Supremo) in January 2013. The Supreme Court has accepted the State attorney’s appeal on October 10, 2013.
As announced in SCOR’s press release dated January 29, 2019, the gravity of the facts brought to the attention of SCOR and its governance bodies relating to the misconduct committed to the detriment of SCOR, in the context of the preparation and submission by Covéa, on August 24, 2018, of its unsolicited takeover proposal for SCOR, compelled SCOR to initiate legal actions against Thierry Derez, Covéa SGAM, Covéa Coopérations and Barclays.
In the civil proceedings before the Commercial Court of Paris (“Tribunal de commerce de Paris”) against Thierry Derez, the Commercial Court of Paris ruled on November 10, 2020 that Thierry Derez had violated his legal and fiduciary duties and obligations as a director of SCOR in his personal capacity (regarding loyalty, conflicts of interest and confidentiality), by disclosing confidential SCOR information and documents to Covéa and its advisors with the aim of wrongfully favoring the preparation and execution of an unsolicited takeover bid for SCOR by Covéa. Thierry Derez was ordered to pay the amount of EUR 479,376, plus interest, in compensation for the damage caused to SCOR. The Court also ruled that Covéa SGAM and Covéa Coopérations had participated and benefited in full knowledge of the misconduct committed by Thierry Derez, and that the public communication of their unsolicited takeover bid for SCOR had been wrongful. Thierry Derez, Covéa SGAM and Covéa Coopérations are ordered in solidum to pay the sum of EUR 19,603,191, plus interest, in compensation for the damage caused to SCOR. Thierry Derez, Covéa SGAM and Covéa Coopérations have appealed against the judgment of November 10, 2020.
The holdings held directly by SCOR SE are detailed in the following sections: • Section 1.2.3 – Organizational structure of SCOR; • Appendix B – 5 – Notes to the corporate financial statements, Note 2 – Investments – Subsidiaries and affiliates.
As at December 31, 2020, 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 income or loss. These holdings are listed below: Registered office Type of business % Capital
SCOR Reinsurance Company 28 Liberty Street, Suite 5400 – 10005 New York – United States Reinsurance 100%
MAZARS Represented by Maxime Samoen and Guillaume Wadoux Tour Exaltis – 61, rue Henri Regnault 92075 Paris-La Défense cedex, France CRCC of Versailles
KPMG SA Represented by Pierre Planchon and Antoine Esquieu Tour EQHO – 2, avenue Gambetta 92400 Courbevoie, France CRCC of Versailles
Pursuant to Article L. 823-3-1 of the French Commercial Code, modified by the Law n°2016-1691 of December 9, 2016, the term of office of both titular Statutory Auditors of SCOR SE would have expired at the end of the 2026 General Meeting. In order to phase these changes, it has been decided to replace ERNST & YOUNG Audit as early on as the 2020 General Meeting, held on June 16, 2020.
4.8.4. FEES PAID BY THE GROUP TO THE AUDITORS See Section 4.6.21 – Notes to the consolidated financial statements, Note 21 – Other operating and administrative expenses for a breakdown of audit fees.
04CONSOLIDATED FINANCIAL STATEMENTS Auditing of historical consolidated financial information 4.9. AUDITING OF HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
• The report of the Statutory Auditors on the consolidated financial statements for the financial year ended December 31, 2018 published on pages 249 to 254 of the Registration Document filed with the AMF on March 4, 2019 under Number D.19-0092 (and from pages 249 to 254 of the free translation into English of such Registration Document, such translation being available on SCOR’s website www.scor.com).
The report of the Statutory Auditors on the consolidated financial statements for the financial year ended December 31, 2020 is reproduced below.
This is a translation into English of the auditors’ report on the consolidated financial statements of the Company issued in French and it is provided solely for the convenience of English speaking users.This auditors’ report includes information required by European regulation and French law, such as information about the appointment of the auditors or verification of the management report and other documents provided to shareholders.This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.
Justification of Assessments – Key Audit Matters Due to the global crisis related to the Covid-19 pandemic, the financial statements of this period have been prepared and audited under specific conditions. Indeed, this crisis and the exceptional measures taken in the context of the state of sanitary emergency have had numerous consequences for companies, particularly on their operations and their financing, and have led to greater uncertainties on their future prospects. Those measures, such as travel restrictions and remote working, have also had an impact on the companies' internal organization and the performance of the audits.
As stated in note 16 of the notes to the Consolidated financial statements, the Group uses in determining the amount of technical reserves related to its Non-Life business, actuarial techniques that take into account quantitative loss experience data, together with qualitative factors, where appropriate.
To cover the risk on the measurement of technical reserves, our audit approach was the following: • we obtained an understanding of the report of the Group chief actuary on the global adequacy of reserves; • we updated our understanding of the procedures and methods of measurement used in determining the technical reserves; • we obtained an understanding of the internal controls framework and tested the efficiency of key controls established by management in order to assess the completeness and reliability of the data and of the implemented models; • we appreciated the actuarial methods and parameters used as well as the assumptions chosen for a selection of contracts; • we performed procedures to analyze differences between expected claims and occurred claims in order to control subsequently the quality of estimates produced by the management; • we performed, with our Non-Life actuarial specialists integrated in the audit team, a recalculation using our own assumptions and tools, of technical reserves for the most sensitive actuarial segments reserves; • for Non-Life business, we analyzed the documentation supporting measurement of reserves related to catastrophes, both manmade and natural; • For Life and Non-Life businesses, we analyzed the documentation supporting the impact of Covid-19 in the measurement of technical reserves; • we included within our team members with specific skills in IT systems to perform procedures aiming at evaluating the internal control environment of the systems used by the management and test the functioning of several automated processes as well as general IT controls that support those processes; • We examined the methodology and outputs of the liability adequacy tests carried out by management.
To cover the risk on the measurement of reinsurance premiums, we implemented the following audit approach: • We obtained an understanding of the internal controls framework on processes related to Life and Non-Life premium estimates and we tested the efficiency of key controls established by management; • We examined the consistency of premium estimates over the period, comparing them both to the operational plan prepared by management and approved by the Board of Directors and to premiums actuals from previous financial years and we investigated, if any, significant differences identified; • We performed, for a selection of contracts, a deep analysis of underlying assumptions taking into account the activity, the records of reinsurance accounts received, and any new information received from ceding companies; • For new contracts underwritten in 2020, we performed on a sampling basis, controls on the consistency of premium estimates based on new business information available at the underwriting department; • We examined the documentation and tests performed by the group regarding the classification of contracts between insurance contracts and financial contracts; • We included within our team members with specific skills in IT systems to perform procedures aiming at evaluating the internal control environment of the systems used by the management and test the functioning of several automated processes, as well as general IT controls that support those processes.
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 which is calculated as the difference between the consideration transferred and the net fair value of identifiable assets and assumed liabilities at the acquisition date. Their fair value depends on forecasts and budgets established by the management.
As part of the yearly impairment testing on goodwill, the Group assesses whether the recoverable amount of cash generating units (CGU) to which the goodwill is allocated, is at least equal to their total carrying value, as stated in note 6 of the notes to the Consolidated financial statements. If it is determined that an impairment exists, the total carrying amount is adjusted to the recoverable value.
Estimates performed to determine the recoverable value of the Group CGUs are based on assumptions and extrapolations involving a significant part of judgement. Furthermore, any negative deviation of expected future results could have an impact on the recoverable value and lead to an impairment of the goodwill.
Including our Life Actuarial Specialists in the audit team, we have completed the following procedures: • we assessed the application of internal procedures on the evaluation of VoBAs, as well as their amortization patterns; • in order to analyze the valuation of VoBAs and their correct amortization, we examined the expected cash flows on the relevant portfolios; • we assessed the recoverability of the VoBAs taking into consideration the liability adequacy test.
With team members with specific tax skills, our audit approach consisted in performing the following procedures on the main entities contributing to the Group’s deferred tax assets on losses carried forward: • we obtained an understanding of the internal controls framework on processes of the tax department related to the deferred tax measurement; • we examined the documentation prepared annually by the tax department on deferred tax assets.
• we examined the business plans used and the probability that tax losses will be utilized in the future. We notably appreciated the tax rates used as well as the profits’ forecasts and underlying assumptions, with specific attention to the legal expiry periods in force in certain countries.
Format of the presentation of the consolidated financial statements intended to be included in the annual financial report
In accordance with Article 222-3, III of the AMF General Regulation, the Company’s management informed us of its decision to postpone the presentation of the consolidated financial statements in compliance with the European single electronic format as defined in the European Delegated Regulation No 2019/815 of 17 December 2018 to years beginning on or after January 1st, 2021. Therefore, this report does not include a conclusion on the compliance with this format of the presentation of the consolidated financial statements intended to be included in the annual financial report mentioned in Article L. 451-1-2 I of the French Monetary and Financial Code (code monétaire et financier).
As at December 31, 2020, MAZARS and KPMG Audit were in the 31st year and 1st year of total uninterrupted engagement.
Responsibilities of Management and Those Charged with Governance for the consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS accounting principles as adopted in the European Union and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
As specified in Article L.823-10-1 of the French Commercial Code (Code de commerce), our audit does not include assurance on the viability of the Company or the quality of management of the affairs of the Company.
OTHER INFORMATION AUDITED BY THE STATUTORY AUDITORS The Universal Registration Document as a whole is the subject of a completion letter sent by the Statutory Auditors to SCOR.
of the Registration Document filed with the AMF on March 4, 2019 under the number D.19-0092, were the subject of reports by the Statutory Auditors, featured respectively in Appendix B of this Universal Registration Document, in Appendix C of the Universal Registration Document filed with the AMF on March 13, 2020 under the number D.20-0127 and in Appendix C of the Registration Document filed with the AMF on March 4, 2019 under the number D.19-0092.
Notes 1, 2, 3, 4, 5 and 6 of this Universal Registration Document relate to the non-financial performance statement. The information published in this section has been reviewed by one of the Statutory Auditors whose report is presented in section 6.
04 CONSOLIDATED FINANCIAL STATEMENTS Auditing of historical consolidated financial information 252 UNIVERSAL REGISTRATION DOCUMENT SCOR 2020
05 SCOR SHARES, SHARE CAPITAL AND GENERAL INFORMATION SCOR shares 5.1. SCOR SHARES 5.1.1. TRENDS IN THE SCOR SE SHARE PRICE THROUGHOUT 2020 The following table presents the volume of transactions and trends in the SCOR SE share price on the Euronext Paris stock market throughout the financial year 2020: Month Volume Value
5.1.2. LISTING In 1989, the Company and UAP Réassurances, a subsidiary of the state-owned Société Centrale de l’Union des Assurances de Paris, combined their Non-Life and Life reinsurance businesses. Following a reverse merger with Compagnie Générale des Voitures, the Company listed its ordinary shares on the Paris stock exchange and changed its name to SCOR SA and to SCOR in 1996. In the same year, UAP Réassurances sold its 41% stake in SCOR through an IPO. SCOR’s American depositary receipts (ADRs) were also listed on the New York stock exchange at that time.
Following the delisting by SCOR of its American Depositary Receipts from the New York Stock Exchange (NYSE) in 2007, the final listing of the ADRs on the NYSE occurred on June 4, 2007 and the Company’s securities were deregistered with the US Securities and Exchange Commission (SEC) on September 4, 2007.
Since this date, the ADRs are traded on the US over-the-counter market under the code SCRYY. In addition, SCOR announced on May 24, 2007 to maintain its ADRs program managed by The Bank of New York Mellon as a sponsored level 1 facility. ADRs holders have been able to choose to hold their ADRs following the delisting from the NYSE and the end of the registration of the Company at the US Securities and Exchange Commission (SEC).
05SCOR SHARES, SHARE CAPITAL AND GENERAL INFORMATION Share capital & shareholders 5.2. SHARE CAPITAL & SHAREHOLDERS
(4) As at December 31, 2020, employee shareholdings, as defined in Article L. 225-102 of the French Commercial Code, amount to 1.64% of the capital.
As at December 31, 2019 Number of shares % of capital % voting rights (1)
(4) As at December 31, 2019, employee shareholdings, as defined in Article L. 225-102 of the French Commercial Code, amount to 1.29% of the capital.
To SCOR’s knowledge, there is no shareholder agreement, or other agreement, among Company shareholders pursuant to which they act in concert.
To the Company’s knowledge, there have been no transactions between executives, corporate officers, or shareholders holding more than 5.0% of the Company’s share capital, or of the company controlling them, and the Company on terms other than market terms.
To its knowledge, except as disclosed above, the Company is not directly or indirectly owned or controlled by any other corporation, foreign government or any other natural or legal person jointly or severally and it is not aware of any contractual arrangements that may at a subsequent date result in a change of control of the Company.
December 31, 2020 (December 31, 2019: 4.25% of the capital and 4.27% of the voting rights).
SCOR discloses below the threshold declarations sent by the significant shareholders in 2020. SCOR is not responsible for ensuring the completeness of these declarations.
Public threshold notifications of Allianz Global Investors received in 2020 On January 6, 2020, Allianz Global Investors GmbH declared to have exceeded the threshold of 5.0% of the capital and voting rights in SCOR SE and that it held 9,371,027 shares or 5.01% of the capital and 9,371,027 voting rights or 5.01% of the voting rights in SCOR SE.
On January 23, 2020, Allianz Global Investors GmbH declared that its shareholding fell below the threshold of 5.0% of the capital and voting rights in SCOR SE and that it held 9,275,061 shares or 4.96% of the capital and 9,275,061 voting rights or 4.96% of the voting rights in SCOR SE.
On March 24, 2020, Allianz Global Investors GmbH declared to have exceeded the threshold of 5.0% of the capital and voting rights in SCOR SE and that it held 9,397,246 shares or 5.02% of the capital and 9,397,246 voting rights or 5.02% of the voting rights in SCOR SE.
On November 9, 2020, Allianz Global Investors GmbH declared that its shareholding fell below the threshold of 5.0% of the capital and voting rights in SCOR SE and that it held 9,247,369 shares or 4.95% of the capital and 9,247,369 voting rights or 4.95% of the voting rights in SCOR SE.
On July 30, 2020, Norges Bank declared to have exceeded the threshold of 5.0% of the capital and voting rights in SCOR SE and that it held 9,349,001 shares or 5.01% of the capital and 9,349,001 voting rights or 5.01% of the voting rights in SCOR SE.
On August 10, Norges Bank declared to have exceeded the threshold of 5.0% of the capital and voting rights in SCOR SE and that it held 9,390,138 shares or 5.03% of the capital and 9,390,138 voting rights or 5.03% of the voting rights in SCOR SE.
On August 19, Norges Bank declared to have exceeded the threshold of 5.0% of the capital and voting rights in SCOR SE and that it held 9,408,442 shares or 5.04% of the capital and 9,408,442 voting rights or 5.04% of the voting rights in SCOR SE.
On August 21, Norges Bank declared that its shareholding fell below the threshold of 5.0% of the capital and voting rights in SCOR SE and that it held 8,810,186 shares or 4.72% of the capital and 8,810,186 voting rights or 4.72% of the voting rights in SCOR SE.
On August 25, Norges Bank declared to have exceeded the threshold of 5.0% of the capital and voting rights in SCOR SE and that it held 9,487,462 shares or 5.08% of the capital and 9,487,462 voting rights or 5.08% of the voting rights in SCOR SE.
On August 28, Norges Bank declared to have exceeded the threshold of 5.0% of the capital and voting rights in SCOR SE and that it held 9,488,232 shares or 5.08% of the capital and 9,488,232 voting rights or 5.08% of the voting rights in SCOR SE.
On August 31, Norges Bank declared that its shareholding fell below the threshold of 5.0% of the capital and voting rights in SCOR SE and that it held 8,864,230 shares or 4.75% of the capital and 8,864,230 voting rights or 4.75% of the voting rights in SCOR SE.
On November 10, Norges Bank declared that its shareholding fell below the threshold of 5.0% of the capital and voting rights in SCOR SE and that it held 9,215,963 shares or 4.94% of the capital and 9,215,963 voting rights or 4.94% of the voting rights in SCOR SE.
On November 24, Norges Bank declared that its shareholding fell below the threshold of 5.0% of the capital and voting rights in SCOR SE and that it held 9,152,806 shares or 4.90% of the capital and 9,152,806 voting rights or 4.90% of the voting rights in SCOR SE.
On December 14, Norges Bank declared that its shareholding fell below the threshold of 5.0% of the capital and voting rights in SCOR SE and that it held 9,144,027 shares or 4.90% of the capital and 9,144,027 voting rights or 4.90% of the voting rights in SCOR SE.
Stock buyback program in force on the date of filing this Universal Registration Document (program authorized by the Ordinary and Extraordinary Shareholders’ Meeting of June 16, 2020) On June 16, 2020, the Shareholders’ Meeting, in its 16th resolution, authorized the Board of Directors, with the option to subdelegate, to trade on the Company’s shares in the framework of the 2020-2021 annual share repurchase program. The program allows to buy, sell and transfer Company shares pursuant, inter alia, to the provisions of Regulation (EU) No. 596/2014 of the European Parliament and of the Council of April 16, 2014, Articles L. 225-210 et seq. and L. 22-10-62 et seq. of the French Commercial Code and to the General Regulation (Règlement général) of the French Financial Markets Authority (Autorité des marchés financiers).
The maximum number of shares that may be bought back under this authorization was set at 10% of the number of shares comprising the Company share capital as of the date of such purchases, it being specified that (i) when the shares are purchased to enhance liquidity of shares in the conditions set forth by applicable laws and regulations, the number of shares taken into account for calculation of the 10% limit shall correspond to the number of shares purchased less the number of shares resold during the period covered by the authorization, and (ii) the number of treasury shares shall be taken into account so that the Company never holds shares in excess of 10% of its share capital.
Such transactions are carried out, under the conditions authorized by the stock exchange authorities, by any means, including on a regulated market, on a multilateral trading facility, via a systematic internalizer or over-the-counter, including, inter alia, by buying or selling blocks, by applying derivative financial instruments, listed on a regulated stock exchange or over-the-counter, or by the implementation of optional strategies and, if applicable, by any third party authorized for such purpose by the Company.
Such transactions are be carried out in accordance with applicable regulations, at any time, in one or several times. By way of exception, the Board of Directors shall not, unless previously authorized by the Shareholders’ Meeting, use this authorization during any public bid initiated by a third party on Company shares until the end of the offer acceptance period; it is however specified in this respect that the Company shall remain authorized to carry out the transactions covered by this resolution (i) if the public offering in question is to be completed entirely in cash and (ii) for the strict requirement of compliance with any undertakings made by the Company prior to the filing of the public offering in question, concerning the servicing or coverage of all stock options, other share allocations and, generally speaking, all forms of allocation in favor of employees and/or corporate officers (mandataires sociaux) of the Company and/or of any companies related thereto. Regarding the authorization granted under the conditions set out at (i) and (ii) above, it is also specified that should the transactions in question be liable to cause the public offering considered to fail, their implementation must be the subject of authorization or confirmation from the Shareholders’ Meeting.
Summary of the transactions carried out by SCOR SE on its own shares in the course of the financial year 2020 In the context of the abovementioned buyback program, SCOR carried out, between January 1, 2020 and December 31, 2020: • the purchase of 4,059,626 treasury shares, including (1); • the purchase of 4,563,633 call options (European and American call options); • the sale of 3,023,889 treasury shares; • the transfer of 937,468 treasury shares; • the cancellation of 509,135 treasury shares.
On December 31, 2020, on the basis of the 3,392,107 call options (European call options) purchased during 2019, • 170,037 options were exercised during 2019 (1) ; • 610,214 options are null and void.
On December 31, 2020, SCOR held 259,567 shares compared with 668,058 shares at December 31, 2019. The par value of these treasury shares is EUR 2,044,602.07 and their book value is EUR 7,962,992.45. The average purchase price is EUR 25.57. The average sale price is EUR 26.02. The amount of fees is EUR 106,760.82.
Description of the new share repurchase program 2021/2022 submitted for authorization to the Ordinary and Extraordinary Shareholders’ Meeting which will approve the accounts for the financial year ending December 31, 2020 The stock buyback authorization described in the above paragraph will expire on December 15, 2021 at the latest, unless the Shareholders’ Meeting which will approve the accounts for the financial year ending December 31, 2020 approves the resolution described below, in accordance with the provisions of Articles L. 225-210 et seq. and L. 22-10-62 and subsequent of the French Commercial Code.
This resolution is intended to authorize a new share repurchase program under the following conditions: This authorization would allow the Board of Directors, with the option to sub-delegate under the conditions provided for by applicable regulation, to buy, sell and transfer Company shares pursuant, inter alia, to the provisions of Regulation (EU) No. 596/2014 of the European Parliament and of the Council of April 16, 2014, Articles L. 225-210 et seq. and L. 22-10-62 et seq. of the French Commercial Code and to the General Regulation (Règlement général) of the French Financial Markets Authority (Autorité des marchés financiers).
Such transactions on securities would be carried out for any purposes permitted or which would become authorized under applicable laws and regulations, including for purposes of the following objectives: • stimulation of the secondary market or provision of liquidity to the Company’s shares by an investment service provider through a liquidity contract in accordance with a code of practice recognized by the regulation; • setting-up, implementation or hedging of any stock option plans, other plans for allocation of shares and, generally, any form of allocation to employees and/or corporate officers (mandataires sociaux) of the Company and/or of affiliated companies, including hedging of any Company stock option plan pursuant to the provisions of Articles L. 225-177 et seq. and L. 22-10-56 et seq. of the French Commercial Code, allocation of free shares of the Company in conjunction with the provisions of Articles L. 225-197-1 et seq. and L. 22-10-59 et seq. of the French Commercial Code, allocation of Company shares pursuant to a profit sharing scheme (participation aux fruits de l’expansion de l’entreprise) or allocation or transfer of Company shares within the framework of any employee savings plan (plan d’épargne salariale), including in conjunction with the provisions of Articles L. 3321-1 et seq., and L. 3332-1 et seq., of the French Labor Code; • purchase of Company shares for retention and subsequent remittance in exchange or as payment, in particular in conjunction with financial or external growth transactions, without exceeding the limit set by paragraph 6 of Article L. 2210 -62 of the French Commercial Code in conjunction with a merger, spin-off or contribution; 258 UNIVERSAL REGISTRATION DOCUMENT SCOR 2020
• compliance with all obligations related to the issuance of securities granting access to capital; • cancellation of any shares repurchased, within the limits established by law, in conjunction with a reduction in share capital approved or authorized by the Shareholders’ Meeting.
Such transactions would be carried out, under the conditions authorized by the stock exchange authorities, by any means, including on a regulated market, on a multilateral trading facility, via a systematic internalizer or over-the-counter, including, inter alia, by buying or selling blocks, by applying derivative financial instruments, listed on a regulated stock exchange or over-the-counter, or by the implementation of optional strategies and, if applicable, by any third party authorized for such purpose by the Company.
05SCOR SHARES, SHARE CAPITAL AND GENERAL INFORMATION Share capital & shareholders 5.2.1.5. EXISTENCE OF NON-EQUITY SHARES Not applicable.
Reduction of the share capital by cancellation of self-owned shares to neutralize the dilutive effect resulting from the exercise of stock-options according to the decision of the Board of Directors on April 27,
Reduction of the share capital by cancellation of self-owned shares to neutralize the dilutive effect resulting from the exercise of stock-options according to the decision of the Board of Directors on April 26,
Increase of the share capital resulting from the exercise of stockoptions as from January 1 to 31 December 2018
Increase of the share capital resulting from the exercise of stockoptions as from January 1 to 31 December 2019
Reduction of the share capital by cancellation of self-owned shares to neutralize the dilutive effect resulting from the exercise of stock-options 2020 by the
Increase of the share capital resulting from the exercise of stockoptions as from January 1 to 31 December 2020
See Section 4.6.24 – Notes to the consolidated financial statements, Note 24 – Commitments received and given.
(1) The free share allocation plans currently in force only allocate outstanding shares. (2) Authorization granted by the Shareholders’ Meeting of June 16, 2020 in its 27th resolution (stock options).
If, nonetheless, free shares were taken into account in the calculation of the potential volume of new shares from outstanding share-based compensation, this theoretical volume (which corresponds to outstanding shares or new shares to be issued) would stand at 13,342,387 on December 31, 2020, due to the addition of (i) outstanding free share allocation plans (shares allocated but not vested on December 31, 2020, i.e. 5,712,423 shares) and, (ii) the unused part of the authorization granted by the Shareholders’ Meeting of June 16, 2020 in its 28th resolution concerning the free allocation of outstanding shares (1,743,335 shares).
05SCOR SHARES, SHARE CAPITAL AND GENERAL INFORMATION Share capital & shareholders
(1) The free share allocation plans currently in force only allocate outstanding shares. (2) 18,700,051 shares underlying the warrants issued on December 3, 2019 under the contingent capital facility with an exercise period starting on January 1, 2020 and expiring on May 1, 2023.
If, despite the absence of the dilutive effect mentioned above, free shares were taken into account in the calculation of the potential volume of new shares from outstanding share-based compensation plans and unused part of authorizations, the fully diluted share capital would stand at 217,461,840 on December 31, 2020.
If free shares were taken into account in the calculation of the potential volume of new shares from outstanding sharebased compensation plans and unused part of the authorizations and in the calculation of the fully diluted share capital, this theoretical volume (which corresponds to outstanding shares or new shares to be issued) would stand at 6.14% of the fully diluted share capital on December 31, 2020.
05 SCOR SHARES, SHARE CAPITAL AND GENERAL INFORMATION Share capital & shareholders 5.2.4. FINANCIAL AUTHORIZATIONS
05SCOR SHARES, SHARE CAPITAL AND GENERAL INFORMATION Share capital & shareholders 5.2.4.2. NUMBER OF SHARES INITIALLY AUTHORIZED AT THE DATE OF THE SHAREHOLDERS’ MEETING AND NUMBER OF OUTSTANDING SHARES AUTHORIZED AT THE DATE OF THE UNIVERSAL REGISTRATION DOCUMENT
DELEGATIONS OF AUTHORITY GRANTED BY THE EXTRAORDINARY SHAREHOLDERS' MEETING OF JUNE 16, 2020 17th resolution (Delegation of authority granted to the Board of Directors in order to take decisions with respect to capital increase by capitalization of retained earnings, reserves or share premium) 25,390,466 shares 25,390,466 shares 26 months 18th resolution (Delegation of authority granted to the Board of Directors for the purpose of deciding upon the issuance of shares and/or of securities granting access immediately or at term to ordinary shares to be issued, with preferential subscription rights) (1) 74,616,150 shares 74,616,150 shares 26 months 19th resolution (Delegation of authority granted to the Board of Directors for the purpose of deciding the issuance, in the framework of a public offering, except in the case of an offering referred to in paragraph 1 of Article L. 411-2 of the French Monetary and Financial Code, of shares and/or securities granting access immediately or at term to ordinary shares to be issued, with cancellation of preferential subscription rights and with compulsory priority) (1) 18,654,037 shares 18,654,037 shares 26 months 20th resolution (Delegation of authority granted to the Board of Directors for the purpose of deciding the issuance, in the framework of an offer referred to in paragraph 1° of Article L. 411-2 of the French Monetary and Financial Code, of shares and/or securities granting access immediately or at term to ordinary shares to be issued, with cancellation of preferential subscription) (1) 18,654,037 shares 18,654,037 shares 26 months 21th resolution (Delegation of authority granted to the Board of Directors for the purpose of deciding the issuance, in consideration for securities contributed to the Company in the framework of any exchange tender offer initiated by the Company, of shares and/or securities granting access immediately or at term to ordinary shares to be issued, with cancellation of preferential subscription rights) (1) 18,654,037 shares 18,654,037 shares 26 months 22th resolution (Delegation of authority granted to the Board of Directors for the purpose of issuing shares and/or securities granting access immediately or at term to ordinary shares to be issued, as cp,soderatop, fpr securities contributed to the Company in the framework of contributions in kind limited to 10% of its share capital, without preferential subscription rights) (1) 18,654,037 shares 18,654,037 shares 26 months 24th resolution (Delegation of authority granted to the Board of Directors for the purpose of issuing warrants for the issuance of ordinary shares of the Company, with cancellation of shareholders’ preferential subscription rights to the benefit of categories of entities meeting specific characteristics, with a view to implementing a contingent capital program) (1) 18,654,037 shares 18,654,037 shares 18 months 25th resolution (Delegation of authority granted to the Board of Directors for the purpose of issuing warrants for the issuance of ordinary shares of the Company, with cancellation of shareholders’ preferential subscription rights to the benefit of a categories of entities meeting specific characteristics, with a view to implementing an ancillary own funds program) (1) 18,654,037 shares 18,654,037 shares 18 months
(1) Included for the calculation of the overall ceiling referred to in the 30th resolution of the Ordinary and Extraordinary Shareholders' Meeting held on
5.2.5. AMOUNT OF CONVERTIBLE SECURITIES, EXCHANGEABLE SECURITIES OR SECURITIES WITH SUBSCRIPTION WARRANTS
5.2.6. INFORMATION ABOUT AND TERMS AND CONDITIONS OF ANY ACQUISITION RIGHTS AND/OR OBLIGATIONS OVERSUBSCRIBED BUT UNISSUED CAPITAL OR AN UNDERTAKING TO INCREASE THE CAPITAL
Note 13 – Information on share capital, capital management, regulatory framework and consolidated reserves; • Section 4.6 – Notes to the consolidated financial statements, Note 15 – Provisions for employee benefits; • Section 4.6 – Notes to the consolidated financial statements, Note 17 – Stock options and share allocations; • Appendix B – Notes to the corporate financial statements, 5.3.5 – Stock options; and
• Appendix B – Notes to the corporate financial statements, 5.2.3 – Shareholders’ equity.
05SCOR SHARES, SHARE CAPITAL AND GENERAL INFORMATION Share capital & shareholders 5.2.7. INFORMATION ABOUT THE CAPITAL OF ANY MEMBER OF THE GROUP WHICH IS UNDER OPTION OR IS TO BE PUT UNDER OPTION AND CHARACTERISTICS OF SUCH OPTIONS
05 SCOR SHARES, SHARE CAPITAL AND GENERAL INFORMATION General information 5.3. GENERAL INFORMATION
LEI Code: 96950056ULJ4JI7V3752 5.3.1.3. DATE OF INCORPORATION AND TERM OF THE ISSUER The Company was incorporated on August 16, 1855, as a limited partnership (société en commandite), under the name Compagnie Impériale des Voitures de Paris. In 1866, the Company was converted into a joint stock company (société anonyme) under the name Compagnie Générale des Voitures de Paris. The Company changed its name to SCOR SA on October 16, 1989 and in 1990, absorbed the Société Commerciale de Réassurance, created in 1970, and took over the reinsurance business of the latter. On
5.3.1.4. DOMICILE AND LEGAL FORM OF THE ISSUER, LEGISLATION GOVERNING ITS ACTIVITIES, COUNTRY OF INCORPORATION, ADDRESS AND TELEPHONE NUMBER OF ITS REGISTERED OFFICE
Registered office and contact information of issuer SCOR SE 5, avenue Kléber 75116 Paris France
Data protection regulation The General Data Protection Regulation (GDPR) (EU 2016/679) of April 27, 2016, applicable since May 25, 2018, has updated the principles of personal data processing within the European Union. The main objectives of the reform are (i) the strengthening of individuals’ rights in order to give them more control over their personal data and facilitate their access to it, (ii) a harmonization of the applicable laws within the European Union as well as a system of one-stop shop resulting in closer cooperation between the Data protection authorities, and finally (iii) a stricter application regime under which data protection authorities will be able to pronounce fines of up to 4% of the annual global turnover of a company infringing the European regulation. The Group has terminated in 2018 its project aiming to globally comply with the Regulation and is closely monitoring the various local regulations across the world that are currently being developed.
5.3.2.1. CORPORATE PURPOSE OF THE ISSUER (ARTICLE 3 OF THE BYLAWS) As set forth in Article 3 of the bylaws (statuts), the 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; UNIVERSAL REGISTRATION DOCUMENT SCOR 2020 269
• 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, movable property 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 movable 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.
For further details, see Section 2.1 – Corporate Governance principles, shareholders’ meetings, Corporate officers, executives, employees, information required by Article L 22-10-11 of the French Commercial Code.
French corporate law and the Company’s bylaws provide for prior approval and verification of agreements, entered into directly or indirectly, between the Company and one of its directors, Chief Executive Officer, Deputy Chief Executive Officer (directeur général délégué), any of its shareholders holding more than 10% of the registered capital or of the voting rights or, if a legal entity, the company controlling it within the meaning of Article L. 233-3 of the French Commercial Code and, or any entity in which any of these persons is at the same time an owner, partner with unlimited liability, manager, director, member of the supervisory board or an executive officer, unless pursuant to the provisions set forth Article L. 225-39 (1) of the Commercial Code: (i) the agreement is entered into in the ordinary course of business and under normal terms and conditions; and/or (ii) those agreements reached between two companies, one of which holds, directly or indirectly, all of the other’s capital, where applicable, minus the minimum number of shares required to fulfil the requirements of Article 1832 of the Civil Code or Articles L. 225-1 (2) and L. 226-1 of the Commercial Code. Article L. 225-38 of the French Commercial Code also provides that the prior approval of the Board of Directors must be justified by the interest for the Company of the agreement, in particular by specifying the financial conditions related thereto. The Board of Directors implements a procedure to assess, on a regular basis, if the agreements relating to ordinary transactions entered into at arm’s length conditions actually comply with these requirements.
The directly or indirectly interested party must inform the Board of Directors as soon as it is aware of the existence of the related party agreement, and a majority of the non-related directors must approve the agreement for it to be valid.
Under Article L. 225-43 of the French Commercial Code, the directors, other than legal entities, Chief Executive Officer and Deputy Chief Executive Officers (directeurs généraux délégués) may not borrow money or obtain a guarantee from the Company. Any such loan or guarantee would be void and may not be relied upon by third parties.
(1) According to Ordinance n°2020-1142 dated September 16, 2020, the new numbering of the article is L. 22-10-12. It will be proposed to the 2021 Combined General Meeting to update the numbering of the concerned articles of the French Commercial Code in the Articles of association.
(2) According to Ordinance n°2020-1142 dated September 16, 2020, the new numbering of the article is L. 22-10-2. It will be proposed to the 2021 Combined General Meeting to update the numbering of the concerned articles of the French Commercial Code in the Articles of association.
The Shareholders’ Meeting may distribute all or part of the discretionary reserves in the form of a full or partial dividend or as a special dividend. In this case, the resolution shall expressly indicate the sums to be deducted from each line item of reserves.
Liquidating dividend (Article 22 of the bylaws) If the Company is liquidated, its assets remaining after payment of its debts, liquidation expenses and all of its remaining obligations will be distributed in full first to repay the nominal value of the ordinary shares, then the surplus, if any, will be distributed prorata among the holders of ordinary shares in proportion to the nominal value of their shareholdings and subject to any special rights granted to holders of preferred shares, if any.
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. 22-10-54 of the French Commercial Code or for certain persons in the context of contributions in kind in application of Article L. 22-10-53 of the French Commercial Code.
5.3.2.4. ACTIONS REQUIRED TO MODIFY SHAREHOLDERS’ RIGHTS Shareholders’ rights are set forth in the Company bylaws. Under Article L. 22-10-31 Paragraph 1 of the French Commercial Code, amendments to the bylaws must be approved by the Extraordinary Shareholders’ Meeting by a two-thirds majority of the shareholders present or represented.
At an Ordinary Shareholders’ Meeting, a simple majority of the votes cast is required to pass a resolution. At an Extraordinary Shareholders’ Meeting, a two-thirds majority of the votes cast is required, except for Extraordinary Shareholders’ Meetings where an increase in share capital is proposed through incorporation of reserves, profits or share premiums, in which case, a simple majority is sufficient.
05 SCOR SHARES, SHARE CAPITAL AND GENERAL INFORMATION General information 5.3.2.5. CONDITIONS FOR CALLING ANNUAL SHAREHOLDERS’ MEETINGS AND EXTRAORDINARY SHAREHOLDERS’ MEETINGS (ARTICLE 19 OF THE BYLAWS)
Upon application by a competent European Union authority, the ACPR may raise objections during a three-month period to any acquisition of a stake liable to have the consequences referred to in the previous paragraph. The three-month time limit may be extended by the EU Council’s decision.
AMF regulations generally require, subject to limited exemptions granted by the AMF, any individual or entity that acquires, alone or in concert with others, shares representing 30% or more of SCOR’s share capital or voting rights, to initiate a public tender offer for all remaining outstanding securities of the Company (including, for these purposes, all ordinary shares and all securities convertible into or exchangeable for or otherwise giving access to equity securities).
5.3.3.2. INFORMATION FROM THIRD PARTIES The Company certifies that the following information in this Universal Registration Document and received from third parties has been accurately reproduced and that as far as the Company is aware and is able to ascertain from information published by said third party, no facts have been omitted, which would render the reproduced information inaccurate or misleading: • data issued from the AM Best Special Report Reinsurance (2020
Edition) and relating to the ranking on reinsurance market participants quoted in Section 1.1.1 – Group key figures and Section 1.3.4 – Information on SCOR‘s competitive position; • ratings issued by the Standard & Poor’s, Fitch Ratings, AM Best and Moody’s rating agencies quoted in Section 1.2.4 – Ratings information and Section 3.3 – Internal control and risk management procedures; • 2019 Society of Actuaries (SOA) and Munich Re Life survey of U.S. life reinsurance, published in 2020, quoted in Section 1.3.5.3 – SCOR Global Life.
October 27, 2021 Quarterly 3 revenues 5.3.5. MATERIAL CONTRACTS Not applicable.
05 SCOR SHARES, SHARE CAPITAL AND GENERAL INFORMATION General information 276 UNIVERSAL REGISTRATION DOCUMENT SCOR 2020
6.1.1. BRIEF DESCRIPTION OF THE GROUP’S BUSINESS ACTIVITIES SCOR, the world’s fourth largest reinsurer, is established in around 30 countries and provides services to over 4,400 clients worldwide. It is chiefly active via two reinsurance (1) business units (Life and P&C) and a business unit specialized in proprietary investments and third-party asset management.
The Group is a three-engine group driven by SCOR Global Life, SCOR Global P&C and SCOR Global Investments. The Group’s organizational decisions are guided by the principles of skills and expertise mobilization, operating efficiency, structural simplicity, clear reporting lines and balance between teams from the Group’s different entities.
6.1.1.1. REINSURANCE BUSINESS The reinsurance industry has a specific feature to be structurally exposed to shocks. Major risks, which are the raw material of reinsurance, result in shocks whose origins, scale and impacts vary depending on the economies and populations concerned.
In this context, reinsurers create diversified risk portfolios. This is achieved through the aggregation of major risks that, as a reinsurer, SCOR pools by business line and geographical area. The Group thereby builds a portfolio with a more regular risk profile. It also limits its exposure by transferring part of these risks through their retrocession and their securitization.
Reinsurance is therefore a business that involves deliberately taking calculated risks. It enables the Group’s clients to cover their risks by transferring a portion of them, so that they can be pooled worldwide. In return for a premium that it invests to generate investment income, reinsurance absorbs the financial consequences of the events and damages to which it is exposed.
The Group is active in two reinsurance segments via its business units: • SCOR Global P&C operates in three business areas: Reinsurance
The Group’s reinsurance activities and the types of reinsurance it engages in are presented in greater detail in Sections 1.2.5.1, 1.2.5.2 and 1.2.5.3 of the Universal Registration Document. Additional information about developments in the life and non-life reinsurance market is provided in Section 1.3.1 of the Universal Registration Document.
SCOR Global Investments, its organizational structure and vehicles open to third parties are presented in Sections 1.2.3.1 and 1.2.5.6 of the Universal Registration Document. Additional information about developments in the financial markets is provided in Section 1.3.1 of the Universal Registration Document.
06NON-FINANCIAL PERFORMANCE STATEMENT Business model 6.1.2. RESEARCH AND RISK MANAGEMENT Risk management is at the heart of the Group’s reinsurance and investment activities. It is underpinned by a risk appetite framework built around four concepts (1): Risk Appetite, Risk Preferences, Risk Tolerances and “Footprint” scenarios.
Reinsurance requires a robust risk management system, strong modeling capabilities in order to assess, quantify and actively manage risks (e.g. through risk pooling and hedging), and a skilled workforce able to combine theoretical and analytical considerations with empirical experience.
At the forefront of risk modeling, particularly for extreme risks in Life and P&C business, the Group devotes significant resources to fundamental applied research and the promotion of scientific risk management techniques in various disciplines.
SCOR and the SCOR Foundation also organize Actuarial Awards in Europe (France, Germany, Italy, Spain & Portugal, Sweden, Switzerland and the United Kingdom) and in Asia (Singapore). The Group places great importance on the development of actuarial science and each year awards prizes for the best academic papers in this field.
The consideration of social and environmental risks related to the Group’s business activities and operations, and more generally the Group’s CSR policy, are guided by involvement in UN global initiatives and by the multi-stakeholder orientations set out in the corporate mission statement of SCOR: “offer its clients an optimum level of security, create value for its shareholders, and contribute to the welfare and resilience of society by helping to protect insureds against the risks they face”.
These initiatives provide a general reference framework and useful principles for addressing social and environmental issues, given that the Group conducts business in countries with legal and governance environments characterized by varying degrees of maturity in these areas: • at cross-sector level, as part of its longstanding participation in the United Nations Global Compact, SCOR is pursuing the integration the 10 principles set out therein, covering human rights, international labor standards, environmental protection, and the fight against corruption, in a framework tailored to its sphere of influence ; • at the level of the (re)insurance sector, SCOR, as part of its (re)insurance activities, has been a founding member since 2012 of the Principles for Sustainable Insurance, and is a member of the Principles for Responsible Investment as an institutional investor (2019) as well as via its asset management subsidiary, SCOR Investment Partners (2017). These initiatives provide a multi-stakeholder and partnership framework for the integration of risks and opportunities arising from environmental, social and societal issues, including the development of expertise and solutions to address issues relevant to the business activities under consideration. On May 27, 2020, SCOR also joined the
Net-Zero Asset Owner Alliance, an international initiative bringing together investors who are committed to transitioning their investment portfolios to carbon neutrality by 2050.
The principles adopted in this general reference framework are also translated into operational form via internal guidelines setting out the rules of conduct and the procedures to be respected in the exercise of the Group’s business activities (e.g. anti-corruption policy, ESG underwriting guide for the Group’s P&C insurance activities).
Under the conditions defined by the Board’s Internal Charter, four specialized committees of the Board of Directors provide regular supervision of the initiatives conducted by the Group’s Management within the general framework of its CSR policy and, in particular, in the management of the non-financial risks identified in this statement: • the Corporate Social and Societal Responsibility and
The composition of these committees, the combination of skills brought together within them, the preparatory work conducted by each of them ahead of Board meetings, and the regular interactions with Executive Management and the Executive Committee provide a structured environment for the analysis of social and environmental issues, from both a financial materiality standpoint and a social and environmental materiality standpoint.
Regularly informed of these analyses by its advisory committees (see above), which also hold specific focus sessions during their meetings, the Board of Directors approved the Group’s current strategic plan, “Quantum Leap”, following a review by the Strategic Committee. The orientations formulated under this plan emphasize the Group’s ability to contribute to the resilience of societies. Several of the incremental focal points developed over the course of the plan address longer-term social and environmental issues and the related risks and opportunities. Four challenges in particular influenced the orientations announced in the strategic plan, some of which are related to the risks presented in Section 6.1.3.4 of this statement and, more generally, to the Group’s CSR policy: • social issues linked to attracting and retaining talent: the nature of the Group’s business activities and the corresponding competitive environment require skills in several specialized disciplines in a narrow labor market concentrated over a few locations worldwide, where some labor markets are highly competitive. In this context, the ability to attract and retain talent is important given the importance of human capital in the Group’s business model; • environmental issues, including climate change: against the backdrop of climate disruption, which, may have short-, medium-, and long-term implications depending on the risks considered, the strategic plan includes orientations designed to support the energy transition, develop solutions for adapting to the physical risks associated with climate change (through the activities of the Group’s P&C business unit), finance a sustainable world, and reduce and offset the carbon impact of the Group’s operations; • challenges linked to prevention, health, welfare and insurance access in this field: in a context of changing morbidity and mortality causes, contributing to the collective understanding of the causes behind these risks and to the effectiveness of prevention and treatment, and translating this risk knowledge into impacts through the development of products, providing greater protection for a larger number of people, is an integral part of the strategic plan for the Group’s Life business unit. Other aspects of this business unit’s development plan encompass the ability of the business to promote lifestyles with a positive impact on human health, and to build solutions with its partners that address the needs of vulnerable populations (e.g. due to health conditions); • societal issues arising from the digitalization of the economy and societies: accelerating the Group’s transformation via greater use of new technologies (e.g. artificial intelligence, robots, blockchain, big data, multi-cloud, satellite imaging), with a view to expanding its product and service offering, providing added value to its clients in their own digital transformation, and bridging the protection gap, is a key focus of the “Quantum Leap” plan. It is supported by dedicated policies for the protection of the Group’s information systems and the data (particularly the personal data) it manages.
Additional information on the Group’s strategic plan is on SCOR's website in its 2019 and 2020 investor day presentations.
6.1.3.4. MANAGEMENT OF NON-FINANCIAL RISK: PRESENTATION OF RISKS AND ANALYSIS The non-financial performance statement provides a current view of the assessed non-financial risks arising from the Company’s business activities, based on the information categories referred to in Articles 225-102-1 III and L. 22-10-36 of the French Commercial Code.
These issues and the associated risks have been cross-checked against the results produced by other mechanisms for identifying existing risk factors within the Group (e.g. megatrends and emerging risks, operational risks). Non-financial risks have been assessed qualitatively by specialists based on their frequency, severity, the Group’s ability to influence them and their impact on its activities, particularly in financial, reputational and operational terms. This analysis, which was carried out on the basis of the internal methodology developed in previous years, took place in several stages using a process involving the Board’s Corporate Social and Societal Responsibility and Environmental Sustainability Committee.
The main risks identified as a result of this review are: • risks of diminished appeal to potential talent, in particular as a result of reputational and operational factors, which may arise through an inadequate compensation policy, a lack of skills development, or insufficient consideration of diversity; • risks associated with business ethics, particularly legal, reputational and financial risks which may arise from issues relating to economic sanctions programs, anti-corruption, antimoney -laundering and anti-terrorism regulations, personal data protection and security, and regulatory tax requirements, including tax evasion matters; • risks relating to ethics in data, especially in the context of an increased use of artificial intelligence; • risks arising from society’s expectations of financial companies in terms of ESG integration and high-impact products and services, particularly with regard to reputation, and more particularly in this area, risks related to climate change, including operationsrelated emissions given the corresponding commitments made by the Group in this field, and expectations in terms of support for the energy transition; • risks associated with the digitalization of the economy, including legal, reputational, operational, financial risks, potentially caused by incidents linked to cybercrime, with possible ramifications for other non-financial risks mentioned above, such as personal data protection.
These risks, and the associated policies or programs and performance indicators, are presented in Sections 6.1.3.4 to 6.2.1.2 of this statement.
Group’s executive corporate officer has, since 2015, expressly been based on personal CSR objectives. These objectives, their attainment and their achievement rates are set out in the report on corporate governance included in the 2020 Universal Registration Document; • since 2020, a portion of the short-term variable compensation of the members of the Executive Committee is also based on CSR objectives; • all the beneficiaries of long-term compensation components (performance shares and stock options) must satisfy the CSRbased allocation conditions, and in particular, since 2012, comply with ethical principles as provided for in the Code of Conduct, and since 2017 complete CSR training. In 2020, this CSR criterion consisted of completing the online training module on the recognition of unconscious biases; • finally, as part of its Annual Appraisal and Development Interviews, in 2019 SCOR introduced the option for managers and their employees to set specific CSR-related goals (e.g. diversity, well-being at work, environmental performance, integration of ESG issues into the Group’s business activities).
06NON-FINANCIAL PERFORMANCE STATEMENT Social impact of SCOR’s activity 6.2. SOCIAL IMPACT OF SCOR’S ACTIVITY
SCOR’s Human Resources strategy is based on unifying values that reflect its commitment to its clients, employees and shareholders. Alongside financial capital, human capital is an essential resource for a reinsurer such as the Group. Financial capital ensures solvency, while human capital ensures profitability. In this sense, one of SCOR’s competitive edges lies in its ability to attract, mobilize, optimize and retain talented, competent people to achieve excellence in its expertise. An inadequate compensation policy, lack of skills development, or insufficient consideration of diversity may contribute to an operational risk of a failure to attract and retain key people (see Section 3.1.6.2 – Risks related to staff and Section 6.1.3 – Governance system for social and environmental issues and risks). Conscious of this risk, human capital management, overseen by the Group Chief Human Resources Officer, strives to retain the individuals working in the Group, particularly through its compensation policy, and through constructive measures designed to develop employees’ skills (SCOR University) and promote diversity, well-being in the workplace and community engagement (#WorkingWellTogether).
The programs implemented in these areas and the associated performance indicators are described in the following sections.
Thanks to the many initiatives taken in the recruitment process and its strong employer brand, the Group identifies the best candidates available in the market and facilitates their integration. Once hired, new employees are supported throughout their SCOR career. The Group pays particular attention to recognizing the contribution of each individual's performance to the Group’s strategic objectives, thanks to a compensation structure that is identical throughout the world and aligned with shareholders’ interests, regulatory and prudential (e.g. Solvency II) requirements and labor market practices in the reinsurance industry. The Group also offers employees the opportunity to develop their individual skills based on business needs, and encourages professional mobility.
Proposing an innovative and dynamic working environment, SCOR promotes the acquisition of knowledge and know-how through the implementation of dedicated development programs and the definition of succession plans.
It is governed by the regulations specific to the insurance sector (e.g. Solvency II) and asset management (e.g. CRD IV and AIFMD) as well as by specific local requirements, and aligned to the Group Fit & Proper policy.
SCOR reviews base salaries on a yearly basis, to reward individual performance, and when the employee takes on new responsibilities. An automatic adjustment to account for inflation is not applied, except in the few countries where it is legally required.
For employees who are not Partners, the SCOR cash bonus rewards individual performance over the previous year (2).
In addition, the Group (3) has adopted an employee share ownership policy, which resulted in share allocations to all employees (based on their performance) in 2010, 2011, 2013,
(2) SCOR Channel does not have a partnership scheme. A specific short-term incentive plan based upon individual and collective performance applies to all staff. (3) For SCOR Channel, a specific long-term incentive plan (based on two main elements, one related to the performance of SCOR Channel and the other linked to the price of SCOR shares) is in place to reward and retain senior staff and key individuals.
The Company has a formal procedure for appointing and promoting Partners, which is conducted every year at an Executive Committee meeting. Candidates for an appointment or promotion to the Partnership must have consistently demonstrated their skills, leadership and commitment.
SCOR Partners are also eligible to receive free shares and stock options. However, this does not mean that an allocation occurs every year or that every Partner will receive them. In addition, the Group has set up a Long-Term Incentive Plan (LTIP), a complementary scheme to retain some of its key employees. The individual allocation process for free shares and stock options process is supervised by the Compensation and Nomination Committee.
Further to decisions of the Shareholders' Meeting and the Board of Directors of SCOR SE, the vesting of these share-based compensation plans is now subject to the completion of Corporate Social Responsibility (CSR) training. The addition of this requirement builds on the Group’s CSR commitments and the shareholder dialogue it is actively pursuing. In 2020, the CSR training requirement consisted of an online module on cognitive bias. This module aims to raise employee awareness on the existence of unconscious biases that can influence the ability to make rational decisions, enabling employees to overcome the different forms of bias and ensuring an inclusive work environment.
(1) Excluding SCOR Channel and SCOR’s corporate officer. Total compensation is calculated on the basis of 2,990 employees as at
(3) Amount calculated, for each plan, by multiplying the number of shares allocated by the fair value of the share in the plan, which is calculated in accordance with IFRS.
In addition to the Diversity and Inclusion policy, the Group built on its commitment in this area in 2020 with third-party contractors (including SCOR service providers and other providers), by requiring them to adhere to SCOR's sustainable development charter (unless the third parties already apply equivalent internal principles or charters), including the Global Compact principles such as Principle 6 on the elimination of discrimination in respect of employment and occupation.
In order to achieve pay parity between men and women and comply with associated relevant legal and regulatory requirements, SCOR has developed a proprietary tool in order to start performing gap analyses in the main countries where the Group operates.
The promotion of diversity and gender equality is also based on a global program, #WorkingWellTogether, which seeks to create a working environment suitable for developing an inclusive culture that promotes well-being and engagement among the Group’s employees. This program takes the form of various local interactive events (e.g. workshops, conferences, digital training modules) designed to fully engage employees and unite the Group under this initiative, as is the case with the inclusion and diversity weeks. In order to ensure its full promotion within the Group, SCOR has set up a communication plan that includes a brand (#WorkingWellTogether), a corporate identity and a local embodiment based on testimonials and ambassadors. To establish a shared and inclusive culture, the "Diversity and Inclusion" section of the intranet site has been completely revamped with more dynamic content for employees to learn about these issues more effectively.
Alongside diversity issues, well-being at work is #WorkingWellTogether’s second pillar and more recently, engagement in favor of communities was added as the program’s third pillar.
First #WorkingWellTogether pillar: diversity and inclusion In this section, aspects related to the Group’s policy to achieve a gender equality are set out, but also more widely aspects promoting cultural and intergenerational diversity and the integration of disabled individuals. These aspects are covered in the #WorkingWellTogether program.
SCOR’s Diversity and Inclusion policy builds on the commitments undertaken in the past by the Group to achieve equal treatment between men and women. While this has been key principle of the Group, specific targets and commitments in this area were made in the Group’s Europe region, and then adopted Group wide in 2016 via a global charter. In addition to the cultural development enacted through the #WorkingWellTogether program, the Diversity and Inclusion policy and charter are integrated more broadly into a comprehensive diversity and inclusion strategic plan that was submitted in 2020 to the Corporate Social and Societal Responsibility and Environmental Sustainability Committee of SCOR's Board of Directors. Under the objectives established in the corresponding appendix to the Internal Charter of the Board of Directors, this Committee aims to “ensure that the executive corporate officers implement a policy of non-discrimination and diversity, notably with regard to the balanced representation of men and women on the governing bodies” and it “reports to Board of Directors”.
This comprehensive diversity and inclusion strategic plan, will be adapted to local levels, intends to define a common framework to ensure the implementation of an increasingly inclusive organization through three pillars: • "Connect": creating a working environment free from prejudice and discrimination, where every employee is accountable. • "Educate": anchoring our diversity and inclusion culture by leveraging partnerships and building internal training pathways. • "Act": implementing impactful actions throughout the employee's career cycle.
In particular, this framework includes the actions of the 2017-2020 roadmap on gender equality, which identifies 24 actions that contribute to the development of a balanced and more diverse talent pool, leading to a more balanced representation within management bodies and senior positions. This roadmap includes measures in the areas of recruitment, training and development, pay increases, appointments and promotions within the Partners program (see Section 6.2.1.1 – Aligning stakeholder interests and retaining talent through a merit based compensation policy of this non-financial performance statement), as well as coaching in view of leadership positions for high-potential employees identified during the Group's annual talent review (Leadership & Organizational Reviews).
At the end of 2020, 10% of the Group’s Executive Committee are women, and women account for 19% of the expanded scope corresponding to GP to EGP Partners. They also represent 31% (1)
of the Group’s Partners. In comparison, at the end of 2016, there were no women on the Executive Committee, and they represented 18% and 27% of the expanded scope corresponding to GP to EGP Partners, respectively.
At the same time, measures are being taken to encourage women to become members of the Board of Directors within SCOR subsidiaries, as evidenced by the open exchange session hosted by the SIGN network in the presence of one of the female independent directors of the Board of Directors of SCOR SE.
• Mentoring: the mentoring of women is an integral area of the roadmap and included in the CSR action plan, which is subject to quarterly reporting to the Social Responsibility, Societal Responsibility and Sustainable Development Committee of the SCOR Board of Directors. Initially developed in 2017 as part of the SIGN network (see above), this program was integrated into the Group's human capital management processes and extended to men as well. The objective of this program is to help accelerate the career of participants by pairing them with a mentor from top management.
Group's youngest talents. In 2020, 37% of the participants of these training programs were women. In addition, the Group continued its efforts to train and raise awareness of issues related to discrimination and harassment. These modules, designed for all Group employees, and tackling a broader scope of issues than simply gender diversity, help to create the conditions for an inclusive culture that respects differences.
• Performance benchmarking: the Group’s commitment to continuously improve its policy is also reflected in its involvement in associations working towards the advancement of women in careers in the financial industry, such as Financi'Elles (France), the Women’s Insurance Network (London), and Advance (Zurich). In addition to the networking opportunities provided by these networks, SCOR, through its involvement, is able to rate its performance in diversity and female representation in highresponsibility positions by comparing them to their industry counterparts. In this regard, pursuant to French law, SCOR’s index of professional equality between men and women in France stood at 90/100, a level higher than local requirements: a great recognition of SCOR’s policy on compensation, promotion, processes of returning from maternity leave, and gender equality among the ten highest compensated employees.
(1) Due to local laws, the age of the employees working in the Americas Hub has not been taken into account in these figures.
Personal coaching and support for older employees, along with pension schemes tailored to employees’ personal situation, are also set up locally such as in Cologne.
SCOR has stepped up its support for the employment of people with disabilities. It therefore focuses on internal and proactive communication regarding disability in order to change negative and subconscious attitudes, inform employees with disabilities about their rights and provide them with the tools and solutions to ensure their full integration.
In 2020, this commitment took on a whole new meaning in light of the global health crisis, requiring the implementation of specific measures to protect the physical and mental health of each of our employees.
• The Group has made every effort to minimize the possible negative consequences of this situation on the working conditions of its employees. The risks in terms of work-life balance, feelings of isolation and organizational difficulties associated with working remotely have been specifically taken into account.
• Due to its geographical footprint and local regulations, the Group complies with all International Labour Organization provisions. The topics related to the “Elimination of discrimination in respect of employment and occupation” and to the “Freedom of association and the effective recognition of the right to collective bargaining” are addressed in the paragraph on “Equal treatment between men and women and balanced representation in senior positions” and in Section 6.2.1.4 – Fostering social dialogue. Within the Group, the social climate can be considered good. In 2020, 33 meetings were held with the Group’s employee representatives to discuss local health and safety conditions across various countries (6 meetings in France, 1 in Switzerland, 1 in Italy, 3 in Brazil, 11 in Colombia, 9 in Mexico, and 2 in Germany).
• Local specific events were organized to raise awareness on employees’ well-being and health, such as training courses, wellbeing week, professional health awareness initiatives and information meetings. Examples include the launch of the Good Life mobile health application developed by SCOR Global Life's actuarial teams, the "Movember" initiatives focused on male diseases, the introduction of Sharing Groups (Paris) and mental health awareness initiatives. These are key opportunities for employees and the Group to discuss the importance of achieving a work-life balance.
In addition, "Pulse" surveys were regularly sent out to assess employee well-being. Between April and July 2020, they considered that the support offered by the Group to respond to the health crisis (remote work training, information and advice, technical support, psychological support, etc.) was very satisfactory (average of 81/100).
• In some countries, employees can gift their own paid vacation days to other employees facing a personal emergency (e.g if their child is sick). In Paris, a system has been set up to support employees helping a family member who is facing a loss of autonomy (disability, disease, old age, etc.). The initiative was presented at a dedicated conference.
• In 2020, the Group rolled out a new digital employee survey solution to assess the satisfaction, motivation and commitment of Group employees and define relevant action plans where necessary. The global employee survey implemented in 2020 confirmed that employees were proud to work for SCOR and felt a strong sense of belonging, all in a highly appreciated working environment. Global and tailor-made action plans are currently being developed to respond to employee feedback focusing on recognition, evaluation and compensation.
The Group’s absenteeism rate (the number of days of absence in 2020 including sick leave and paternity, maternity, parental, sabbatical and exceptional leave divided by the total theoretical number of days worked in the year) decreased between 2019 (1) and 2020, from 4.10% to 3.16%. The share of sickness absence (number of days of absence in the year including sick leave, divided by the total theoretical number of days worked in the same year) followed the same trend year on year, decreasing from 1.92% to 1.43%.
This platform, run by a network of employee volunteers, enables the Group to offer volunteering activities (skills-based or field volunteering) and to organize fundraising and goods collections in all Group sites. For the launch of the platform, engagement initiatives were adapted to factor in Covid-19 and related local charity needs.
6.2.1.3. DEVELOPING SKILLS AND PREPARING FOR FUTURE NEEDS Developing the expertise, knowledge and career paths of employees is a key condition to ensure employee motivation and well-being, and ultimately the Group’s performance. In this regard, a whole range of tools have been implemented to support and assist employees in their professional development.
For this purpose, 100% of employees participated in at least one training course in 2020 (85% excluding mandatory e-learning training modules).
1 – Developing individual performance The Annual Appraisal and Development Interview gives employees annual objectives and a concrete appraisal of their contribution over the past year. It provides them with the means by which to make the most of their skills. This interview is a key element in the human capital management policy in terms of individual career management, training and salary increases.
In addition, since 2019 and for 2020, employees and managers have been invited to set CSR (Corporate Social Responsibility) objectives. These objectives are optional (except for the Executive
Committee members, for whom at least one CSR objective is mandatory) and confirm SCOR’s commitment to CSR matters. They include civic engagement, well-being and diversity in the workplace, topics developed during the #WorkingWellTogether program, environmental protection, and the integration of social and environmental issues in our work. In addition, since 2020, employees and managers have also been invited to define technological and expertise objectives, in order to enhance the development of innovative and high value-added digital solutions for the Group, in line with the new "Quantum Leap" strategic plan.
06 NON-FINANCIAL PERFORMANCE STATEMENT Social impact of SCOR’s activity 3 – Identifying the Group’s strategic needs and skills and supporting and assisting each employee The Leadership and Organizational Reviews bring together the top management of each company department and the Human Resources Department. These reviews (1) are organized by activity in four steps: review of the organizational structure and the business challenges, individual skills and career prospects analysis, definition of action plans (training, professional development, compensation etc.), definition of succession plans.
• Digitalization of the training offering, with the deployment of LinkedIn Learning, a new digital learning solution providing unlimited access to 15,000 expert-led online courses and video tutorials covering technical subjects, business expertise and professional efficiency. In 2020, SCOR employees completed 1,800 LinkedIn Learning courses and 47,000 LinkedIn Learning videos.
• Launch of a digital on-boarding learning path for SCOR new hires accessible via My Learning Platform and split into three modules (global, business, regional) to facilitate and accelerate the integration of new employees.
• For the first time in 2020, the DiSCORvery integration program was held virtually over four half-days, bringing together 180 new hires from the EMEA region, 100 from the Americas and 50 from the Asia-Pacific region.
• In compliance with the Group's values and business requirements, SCOR University proposes a set of solutions to reduce the risks taken by the employees in their daily operational activities: digital training on the prevention of cyber risk and phishing, as well as training modules on the SCOR Code of Conduct, business continuity management and unconscious bias were launched in 2020.
6.2.1.4. FOSTERING SOCIAL DIALOGUE One of SCOR’s ambitions is to establish a coherent and harmonized social dialogue aimed at sharing the Group's main principles with all employees.
As a European Company (Societas Europaea), SCOR has set up a European committee covering all its European subsidiaries and branches including the one located in Switzerland, corresponding to around 60% of worldwide workforce. The SCOR Common European Companies Committee (CECC) is made up of employee representatives from all SCOR European subsidiaries, who meet to share information concerning the Group and maintain an on-going dialogue between employees and Management.
• The Covid-19 crisis was managed through close social dialogue with employee representatives under the conditions applicable in the various countries. For example, several meetings took place between March and December 2020 with the Social and Economic Committee and at the European level with the CECC regarding the health crisis.
• The Company specifically informed and consulted the employee representatives as soon as necessary concerning the health crisis, and particularly on the matters of successive e-working and lockdown plans, the procedure for returning to the office and the procedure for handling potential or confirmed Covid-19 cases among SCOR employees. The Group also worked with the occupational doctor and the General Services Department to ensure the effectiveness and robustness of our health and safety measures.
• In addition to these meetings held at European level, social dialogue takes place at local level too. In 2020, 70 meetings (83 in 2019) were held with employee representatives worldwide (24 meetings in France (1), 16 meetings in Switzerland, 12 meetings in Germany, 12 meetings in the United Kingdom, and 6 meetings in Brazil).
6.2.2. SOCIAL INDICATORS AND NOTE ON METHODOLOGY The items mentioned in the document below pertain to the entire Group (SCOR SE and all its subsidiaries consolidated through full integration) except ReMark (149 employees), ESSOR (84 employees), Telemed (45 employees), AgroBrasil (34 employees), Coriolis (7 employees), MRM (5 employees), Château Mondot SAS (21 employees) and Les Belles Perdrix de Troplong Mondot EURL (11 employees, fully consolidated entity).
Breakdown of employees by gender Breakdown of employees by status (2)
(1) The “Group Functions and Support” unit includes the departments reporting to the CFO, CRO and COO of the Group as well as the departments directly managed by the Chairman and Chief Executive Officer.
Methodology: the definitions of “fixed-term contract” and “trainee” may vary from one country to another. A “fixed-term contract” is a signed employment contract mentioning a termination date, a “trainee” is an employee paid by the company under a tripartite agreement between the company, the school and the student.
Methodology: employees on fixed-term contracts are considered to have definitively left SCOR when their contracts expire. Therefore, the seven employees who signed a permanent contract in 2020 at the end of their fixed-term contract are not included in the indicator “End of fixed-term contract”.
Headcount is calculated on the basis of employees registered at December 31, on fixed-term contracts (employment contract signed directly between SCOR and the individual with a defined end date) or permanent contracts (employment 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.
Average fixed compensation is calculated on the basis of the annual reference compensation paid to employees, prorated to actual hours worked. The average bonus includes the profit-sharing scheme for France and takes into account bonuses equal to zero for unsatisfactory performance. Average shares allocated takes into account persons who have not been allocated shares.
The length of absence includes sick leave, injury leave, maternity/ paternity leave, sabbatical leave and exceptional leave.
Number of training hours is the total number of hours of training received by all the employees during the year. These training hours are directly managed by SCOR or by an external training organization appointed by SCOR. For collective training, the number of hours of training is multiplied by the number of participants.
Daily checks are performed by the local HR managers and the Group HR Department to ensure the reliability of the information in the Group database. An additional detailed check of the data is performed annually (in December) by the Group HR Department and the local HR managers.
06 NON-FINANCIAL PERFORMANCE STATEMENT Business conduct and compliance 6.3. BUSINESS CONDUCT AND COMPLIANCE
As a trusted partner SCOR places a strong focus on business ethics and compliance matters. In addition to the specific measures detailed in the various sections of this non-financial performance statement, the Group focuses on compliance with economic sanctions programs, anti-corruption, anti-money laundering and anti-terrorism regulations, data privacy and protection, as well as regulatory tax requirements, including those relating to tax evasion.
As stated in its Code of Conduct – and further detailed in its various compliance related policies – the Group emphasizes the importance of complying with all applicable laws and regulations. The Code of Conduct emphasizes integrity, ethics, compliance, professionalism and responsibility in all aspects of business conduct.
The Code of Conduct is incorporated into the Group’s human capital management cycles, for instance as part of the annual Appraisal and Development Interview, described in Section 6.2.1.3 of this statement, as well as through training provided to new employees and periodically to existing employees.
The Group Compliance Policy, inseparable from the Group Code of Conduct, defines several principles to support the compliance framework. One of the major principles is the respect of a risk-based approach to compliance in accordance with the SCOR Group Policy on Risk Management. This approach consists of identifying compliance risks existing in SCOR’s business activities, prioritizing dedicated efforts and resources to manage those risks, taking into account both their severity and probability, and establishing ongoing procedures aimed at preventing, detecting and remedying these risks.
The Group Compliance Policy also defines the roles and responsibilities of key stakeholders, in particular the compliance teams. The compliance teams carry-out a risk assessment annually (developed in conjunction with Group Risk Management Department), and the results of that risk assessment are used to guide the annual Group Compliance Plan. This plan is approved by the Executive Committee of SCOR SE annually and is also submitted to the Audit Committee of the Board of Directors of SCOR SE.
In light of technological developments, the protection of personal data is a crucial component of the respect for fundamental rights, as illustrated in Article 8 of the EU Charter of Fundamental Rights.
In accordance with the regulation, the Group appointed a Data Protection Officer who is in charge of building and maintaining a comprehensive data protection framework. The Data Protection Officer works primarily with local compliance teams, legal counsels and IT security teams worldwide.
As part of the global training program for employees, data protection and the GDPR have been included in the training sessions conducted by the legal and compliance teams worldwide. During these sessions, employees are trained on data protection obligations, the GDPR and any local obligations that may be applicable to participants. The training sessions are hands on and include case studies to help participants identify the issues that may arise in the course of their work and the best practices to resolve them.
In accordance with the French Sapin II law (1), the Group conducts a thorough risk assessment annually to identify the countries, sectors and activities that, within the context of SCOR’s business, expose the Group to a particular risk of corruption, as well as indications of corruption that may be present in any country, sector or activity.
This corruption risk assessment also identified the employees that are most exposed to corruption or fraudulent activity as part of their duties or activities within the Group. As well as reminders sent to all Group employees concerning the need for constant vigilance with respect to compliance with anti-corruption regulations, employees most exposed to this risk receive periodic anti-corruption training.
In addition to training and reminders, SCOR has implemented popup reminders in the technical accounting systems that indicate the “red-flags” of possible corrupt activity whenever a transaction is processed relating to a country identified as at-risk in the aforementioned risk assessment.
06 NON-FINANCIAL PERFORMANCE STATEMENT Business conduct and compliance 6.3.5. SANCTIONS AND EMBARGOES It is SCOR’s policy to comply with all applicable laws and regulations regarding financial and trade sanctions. In that respect, the Group’s compliance teams have developed and implemented a comprehensive framework to ensure the Group’s compliance with all applicable laws and regulations in this area. This framework includes: • a risk-based analysis, differentiated between the Life, P&C and investments business units. This analysis is updated regularly and guides employees as to (1) when the legal team must be consulted, (2) sectors subject to sanctions, such as military and nuclear goods, and (3) when screening is required; • a risk-based Know-Your-Customer process for the evaluation of new business partners; • a risk-based sanctions screening protocol; • a clear definition of roles and responsibilities and a dedicated process for escalation, blocking and remediation if the screening procedure results in an alert.
The Group continues to work on a project to automate many of the screening processes in order to enhance them. SCOR already screens its main technical accounting system on a weekly basis and other databases on a monthly or quarterly basis depending on the nature of the database and the frequency of its updates.
In addition, employees are prohibited from directly or indirectly carrying out any transactions in SCOR’s securities during certain sensitive periods that the Group identifies and notifies affected persons about or during any period preceding a significant event affecting SCOR and likely to influence the share price (“blackout periods”). SCOR emphasizes to employees the need to observe the rules on insider trading through regular awareness campaigns and reminders in Group communications concerning blackout periods.
Compliance with tax regulations is an integral part of SCOR’s operating principles. It is Group policy to comply with the applicable tax laws wherever it operates. The Group Tax Department ensures that the various Group entities comply with the applicable tax laws and regulations wherever they operate. All key entities have a designated tax manager who ensures that they comply with their tax obligations. Tax compliance is managed by the business process owners in accordance with the principles governing the Group’s internal control system framework.
In line with the Group Code of Conduct, the business process owners concerned shall not engage in tax planning or tax schemes that do not reflect economic reality. Internal control processes ensure that a tax analysis is conducted and documented before entering into a transaction. The quarterly tax reporting process provides the Group with a complete analysis of the tax expense for the period as well as the tax account balance in the balance sheet of each Group entity.
Transfer pricing processes ensure a complete review and documentation of the most significant intragroup transactions each year (for which the principal Group entities are required to submit a compulsory transfer pricing report – the “local transfer pricing file” – with their local tax administration every year).
Lastly, other reporting obligations provide further transparency on the Group’s operations. Country by Country Reporting provides an overall map of the profit, activities and taxes paid by the Group worldwide. Furthermore, the “DAC6” Directive makes the disclosure of potentially aggressive tax schemes compulsory, beginning with transactions which occurred after June 2018.
06NON-FINANCIAL PERFORMANCE STATEMENT Considerations of environmental and social issues in the Group’s business activities 6.4. CONSIDERATIONS OF ENVIRONMENTAL AND SOCIAL ISSUES IN THE GROUP’S BUSINESS ACTIVITIES
These initiatives are described separately for investment activities (Section 6.4.1) and for insurance and reinsurance activities (Section 6.4.2). They are supported by companion programs such as #WorkingWellTogether (diversity, well-being and engagement), support for a knowledge society (SCOR Foundation for Science, dissemination of risk knowledge, etc.), as described in the previous sections of this statement, and GreenSCOR (Section 6.4.3), which concerns the Group's internal environmental performance.
The management of investment risks is holistic and covers various factors through a comprehensive approach. Over the past few years, SCOR has developed a transversal corporate culture of risk management by applying an ERM (Enterprise Risk Management) approach to all its activities. Environmental, social and governance risks fall naturally into this approach and are subject to robust governance at the various levels of the Group: • SCOR's Board of Directors, assisted by its Corporate Social and
Societal Responsibility and Environmental Sustainability Committee, is regularly informed of initiatives undertaken in the context of the action plan relating to the ESG strategy for investments, as well as regulatory changes and stakeholder demands. SCOR's Group Investment Risk and Sustainability (GIRS) Department reports directly to the Committee on actions taken to apply ESG factors in its investment decisions and on how the Group’s asset management takes climate change risks into account. The Risk Committee assists the Board of Directors in approving risk appetite and risk tolerance limits; (1) This section describes the Group's sustainable investment initiatives, in accordance with the disclosure requirements set forth in the decree implementing Article 173 VI of French Law No. 2015-992 of August 17, 2015 for the Energy Transition for Green Growth.
06 NON-FINANCIAL PERFORMANCE STATEMENT Considerations of environmental and social issues in the Group’s business activities
• the Group's Executive Committee, through its specialized committees (notably the Group CSR Committee) approves the ESG strategy for investments, and the Group Investment Committee approves normative and thematic exclusions, as well as major portfolio reallocations related to risk management, particularly for climate risks. During the meetings of the Group Investment Committee, SCOR Global Investments reports on the portfolio’s exposure in relation to the risk limits laid down in the strategic plan and operating plans, including those relating to ESG criteria; • on an operational management level, the internal CSR Committee coordinates the Group’s actions in terms of social and societal responsibility and sustainable development, in order to foster a cross-functional approach to CSR, harmonize the initiatives taken by the Group, and ensure that the various action plans prepared by each business unit are consistent. In addition, the Mandate Investment Committee, which brings together the Group Investment Risk and Sustainability (GIRS) Department and representatives from the SCOR Investment Partners teams, SCOR’s principal asset manager, regularly analyzes portfolio positions at a more operational and granular level. This committee discusses strategic choices in light of the Group’s sustainable investing strategy. In addition to its role of monitoring the compliance of all investment decisions with the various risk limits set by the Group (e.g. risk appetite and tolerance), the GIRS is also responsible for developing the ESG strategy for investments, which is submitted to the Group Executive Committee. In addition, the GIRS Department’s risk management team factors in ESG ratings, exclusion lists and operational implementation of the CSR action plan when monitoring the portfolio.
More detailed information on the investment policy governance in general, and the Group's sustainable investment policy in particular, can be found in the aforementioned Sustainable Investment report.
The understanding, modeling and management of climate risks are at the heart of SCOR's business. In its sustainable investment approach, SCOR pays particular attention to climate risks and supports initiatives to better assess climate change risks. The Group pursues a dynamic and progressive approach from a dual perspective, systematically adopting best practices, advances in terms of the knowledge of physical risks, regulatory transition risks and reputational risks, and testing new analytical methodologies. In addition to purely environmental aspects, ESG scores and controversial issues are also analyzed to detect potentially risky positions at an early stage.
(1) On the basis of work of Moody's Investor Service, SCOR has identified the sectors most exposed to transition risk according to different investment horizons and quantified the risk according to the maturity of the securities held.
(2) The detailed results of this analysis were published in the 2019 ESG Report on Investments “Focus on climate risk – Resilient together” which is available on the Group’s website.
In addition, as part of its sustainable investment policy, the Group has defined the priority themes of its voting policy. They concern: (i) the independence of the Board of Directors, (ii) its diversity, (iii) compensation, (iv) lobbying transparency, and (v) the Company's general behavior in terms of sustainable development.
As highlighted in the previous sections, SCOR, through its reinsurance activities, pays particular attention to climate change issues. As such, the Group is investing in the transition to a resilient low-carbon economy.
With this in mind, the Group takes a proactive approach to the environmental certification of its real estate investment portfolio. In addition to office buildings acquired for SCOR’s own use (see below), the real estate portfolio contains assets purchased solely for investment purposes, most of which are undergoing renovation works with the aim of obtaining environmental or energy efficiency certification. In addition to its tertiary real estate business, the Group invests in real estate debt funds and infrastructure debt funds, most of which aim to provide funding for the transition to a low-carbon economy and energy efficient buildings. These assets, together with investments in green bonds, represented 7.3% of invested assets at the end of 2020, a percentage significantly higher than the recommendation of Christiana Figueres, one of the main contributors to COP 21, to devote at least 1% of investments to green finance.
The Group's institutional commitment to consider the impact of climate change naturally leads it to participate in collective initiatives, by involving its experts in the work undertaken by a number of institutions.
In the field of investments, the Group participates in several forums: • the European Commission's Technical Expert Group on
Sustainable Finance, in which SCOR's experts have participated. They have been involved in the revision of the non-binding guidelines on non-financial reporting and have contributed to the reflection on a taxonomy for sustainable activities; • the Climate and Sustainable Finance Commission of the financial markets authority (Autorité des marchés financiers – AMF), which supports its regulatory and supervisory work on sustainable finance.
6.4.2. INSURANCE AND REINSURANCE ACTIVITIES Aware of the social and environmental added value of its Life and Non-Life reinsurance activities, of society's expectations in terms of protection, and of its ability to contribute to a more resilient society, SCOR has identified several social and environmental issues that reinsurance can address at its own level. Issues relating to climate change mitigation and adaptation, health and, to ensure inclusion, access to insurance, have therefore been integrated into the Group's development plan.
Group has also joined the European Insurance and Occupational Pensions Authority's working group to discuss how the trends observed can be integrated into current natural disaster modeling techniques.
The Group has made a commitment not to offer facultative insurance or reinsurance that would specifically encourage the development of new thermal coal or lignite mines or new plants. This policy was further strengthened in April 2019 with the decision to also exclude the construction of new coal-fired power plants, irrespective of the technologies, the construction, and quality of the coal.
Furthermore, in order to submit all other projects to a more rigorous selection process, this Group’s P&C business unit has adopted an environmental, social and governance practices internal assessment procedure for operations closely linked to coal. This is based on a specific scoring grid for each activity subject to this assessment.
In addition to the implementation of sectoral guidelines for industries with high coal exposure, the Group integrates other ESG aspects into the Scor Business Solutions (SBS) underwriting policy. In 2018, the Group thus confirmed its commitment to exclude the tobacco industry from its business activities on both on the asset and liabilities side. In addition, the Group associated itself with the PSI/WWF/UNESCO declaration on the protection of the world heritage sites.
As illustrated by the strategic orientations set out in the Quantum Leap plan, exclusion policies are not the only way that SCOR strives to take social and environmental issues into consideration in its core business, in both Non-Life and Life reinsurance.
Life reinsurance activities The Group's Life business unit has defined three key areas of focus as part of the “Quantum Leap” strategic plan: (i) offering more insurance solutions to reduce the protection gap, (ii) helping people live longer and healthier lives, and (iii) sharing knowledge. To achieve these goals, the Group is leveraging its multiple partnerships with academics and innovative companies as well as the expertise developed by its Life R&D and medical underwriting teams worldwide. SCOR also draws on the expertise of its data scientists and on the expansion of its data pool with the integration of additional external and internal data sources into its infrastructure. All these R&D efforts are then translated into new products and solutions, developed in partnerships with its clients: The Life business unit is bringing more protection to more people through: • The development of solutions for under-insured populations: among other examples, SCOR co-developed a mortality cover for cancer survivors in Hong Kong last year, followed by the launch of the first artificial intelligence-based cancer product in Korea in 2020, offering personalized cover and prevention. SCOR offers digital solutions for people with type-II diabetes (first launched in Hong Kong, then in Germany). A new pricing tool was also made available to SCOR’s clients to insure women who have been affected by breast cancer. The tool was developed using machine learning on large public databases, and was widely supported by the academic world. In November 2020, SCOR also launched VITAE, a new biometric risks calculator which uses machine learning and new sources of data to better serve people in poor health, fueling the development of a more inclusive offering. Finally, SCOR partnered with Wamberg Genomic Advisors in the US to build personalized cancer programs for policyholders; (1) Difference between economic losses in a catastrophe-hit country and what is actually covered by insurance.
• SCOR accelerated the development of digital solutions for a faster and easier purchasing experience with better value for the end consumer. As such, in 2020 SCOR launched a new health insurance platform in Korea, providing a comprehensive offering thanks to a wide network of health and technology providers. Insurance companies that are SCOR’s direct clients can use this platform to offer additional services to their end-consumers. With its subsidiary ReMark, SCOR is also pushing to make life insurance easier to purchase through a faster, straightforward digital distribution process.
• When the Covid-19 pandemic broke out, the Life business unit shared its latest research on Covid-19. SCOR’s Data Analytics Solutions (DAS) team developed an SEIR model to forecast the development of the pandemic, and an easy-to-use app that provides key figures and trends relating to the virus.
6.4.3. THE GROUP’S OPERATIONS Although reinsurance is not an industrial activity with a significant impact on the environment, SCOR strives to control the environmental impacts stemming from the management of its operational processes, which include the operation of the buildings it occupies, business travel and, to a far lesser extent, office equipment supply.
As part of the French Business Climate Pledge signed in November 2017, SCOR maintained its objective of reducing the carbon intensity (1) of management operational processes on the first two perimeters of the GHG protocol by 15% per employee by 2020. At the end of 2020, the reduction in the Group's carbon intensity reached 35% compared to 2019.
While SCOR takes environmental considerations into account in its extension or relocation projects, the Group also promotes ecoresponsible operations by rolling out environmental management systems where possible. In 2020, the management and maintenance of the Paris offices were certified ISO 14001. At the end of 2020, 53.8% of the Group's employees falling within the scope of the environmental reporting process were covered by an environmental management system (53% in 2019).
06NON-FINANCIAL PERFORMANCE STATEMENT Considerations of environmental and social issues in the Group’s business activities 6.4.3.2. MANAGEMENT OF ENERGY CONSUMPTION SOURCES AND RENEWABLE ENERGY USE
The Group consumed close to 14.3 GWh in 2020 to operate the premises occupied by its staff (lighting, heating, cooling – including data centers – and power for operating various equipment). Most of the energy consumed by the Group’s sites participating in the environmental survey comes from electricity (65%). The proportion of renewable energies now accounts for 68% of electricity purchases compared with 67% in 2019.
(2) Of which electricity (66%), fuel and gas (9%), other heating sources (6%) and other cooling sources (19%).
06 NON-FINANCIAL PERFORMANCE STATEMENT Adaptation to the digital economy 6.5. ADAPTATION TO THE DIGITAL ECONOMY
The Group’s strategic plan aims to create the reinsurance company of tomorrow. To this end, the Group’s transformation is based on the use of new technologies – such as artificial intelligence, robots, blockchain, big data, multi-cloud and satellite imagery – to innovate, expand its product and services offering and increase its efficiency, for the benefit of its clients throughout the world.
The digitalization of the economy is a source of opportunities for the Group, given the accompanying need for protection and the contribution of new technologies in terms of access to insurance and reduction of the protection gap.
In addition to the new risks that come with the digitalization of the economy, including cyber risk, for which SCOR has developed its own expertise and an underwriting policy proportionate to its risk appetite, new technologies and the data processing they enable, offer new possibilities for reducing the protection gap.
The use of new technologies for this purpose is a dimension developed as part of the Group's new strategic plan. The use of these technologies supports a number of initiatives described in Section 6.4.2.3 of this statement, including the development of parametric reinsurance solutions as an alternative to indemnity mechanisms, in order to contribute to climate change adaptation strategies, or to develop inclusive insurance products to cover vulnerable populations.
Aligned with the Group's business strategy, SCOR's IT strategy focuses on the security of information systems and data protection, and is focused on: • strengthened security and data protection governance across all levels of the organization; • the implementation of “security and privacy by design”
Developed by combining best-in class international standards such as NIST, Cobit 5, and the IEC's critical security controls to assess cyber risk mitigation measures, the framework specifies procedures for controlling the security of information systems.
The SCOR security framework details how to detect, log, contain, recover, eradicate and prevent recurrence of IT related incidents. It covers 20 or so areas related to the prevention of cyber risks and their impacts, including malware protection, access management, incident response and management, data protection and data recovery.
06NON-FINANCIAL PERFORMANCE STATEMENT Adaptation to the digital economy 6.5.3. SUPPORTING THE DIGITAL TRANSFORMATION AMONGST EMPLOYEES SCOR invests in the development of its employees and their expertise to ensure that the Group is able to seize new opportunities in a sustainable way. In this respect, drawing on the success of its SCOR University concept, the Group focuses on developing employees’ knowledge on digital topics, with three objectives: (i) leverage the capabilities provided by collaborative and mobility tools in terms of increasing productivity, (ii) develop the digital culture linked to emerging trends, new methodologies and their impact on wider society and the insurance industry, and (iii) acquire digital expertise and new skills.