This category is comprised of bonds issued by the Group as follows: OCEANE Borrowing EUR 200 million: On 21 June 2004, the Board of Directors approved the issuance of a bond represented by SCOR OCEANE bonds, as approved at the Combined Shareholders’ General Meeting on 18 May 2004, and delegated to its Chairman the authority required to carry out such transactions. Issued on 2 July 2004, the nominal value of this bond issuance is EUR 200 million represented by 10 million OCEANE’s with a nominal value of EUR 20 each. The bonds earn interest at a rate of 4.125% payable upon maturity on 1st January of each year. The loan has a term of 5 years and 183 days.
The fair-value of the Oceane security debt amounts to EUR 204 million as at 31st December 2008 (compared to EUR 237 million at 31 December 2007).
On 21 June 2007, SCOR reimbursed at maturity an unsubordinated bond totalling EUR 200 million, issued in 2002.
Other fi nancial debt relates primarily to the acquisition of investment properties through fi nancial leases and other bank loans.
Finance costs for 2008 and 2007 were incurred as follows: In EUR million 2008 2007
Acquisition of a subsidiary 22 61 83 Current year provision 3 6 9 Used/released reserves - (6) (6) Reversal of unused reserves - - Foreign exchange rate movements (3) - (3) Adjusted discount rate - - -
Retirement employee benefi t: These benefi ts amount to EUR 74 million and EUR 63 million at 31 December 2008 and 2007, respectively and include post-employment benefi ts such as pension plans EUR 69 million (EUR 59 million in 2007) and Long service awards provisions EUR 4 million (EUR 4 million in 2007).
Total gross insurance contract liabilities 9,803 8,783 10,226 10,435 20,029 19,219 Reserves for fi nancial contracts 29 (6) 182 188 211 182
The table below is a reconciliation of the beginning and ending liability for unpaid claims reserves and unpaid claims expenses of SCOR Global P&C for the years ended 31 December 2008 and 2007.
Gross claims reserves and claims estimates as at 1st January 9,325 5,791 Ceded claims reserves and claims estimates as at 1st January (598) (490) Net claim reserves and claims estimates as at 1st January 8,727 5,301 Revaluation of opening balance at current year end exchange rates (233) (182) Net claims reserves and claims estimates as at 1st January – revalued 8,494 5,119 Net claims expense relating to the current underwriting year 1,239 910 Net claims expense for prior underwriting years 753 400 Total net claims expenses 1,992 1,310 Net claims settlements for the current underwriting year (40) (129) Net claims settlements for prior underwriting years (1,766) (1,026) Total net claim settlements (1,806) (1,155) Change in scope of consolidation (1) - 3,444 Effect of other foreign exchange rate movements (20) 9 Net claim reserves and claims estimates as at 31 December 8,660 8,727 Ceded claims reserves and claims estimates as at 31 December (467) (598) Gross claims reserves and claims estimates as at 31 December 9,127 9,325
(1) The reserves of Converium as well as changes in segment allocation (to align to the segments as defi ned in note 1), are included in “change in scope of consolidation”.
An analysis of the credit rating of the reinsurance recoverable asset from ceded reinsurance together with an aging analysis of the reinsurance asset is also included in Note 27 – Insurace and fi nancial risk.
Gross cumulative inception to date incurred losses as at 31 December 2008 (2) 11,904 10,717 8,087 7,088 6,985 6,176 10,111 -
Ceded cumulative inception to date incurred losses as at 31 December 2008 (2) 2,289 1,816 882 782 673 411 631 -
Unearned premium reserve (UPR) Gross UPR – end of year 1,664 1,617 1,124 978 637 575 1,108 1,099 Ceded UPR – end of year 253 130 76 40 24 18 39 39 Net UPR - end of year 1,411 1,487 1,048 938 613 557 1,069 1,060
(1) The table includes balance sheet reserves for Converium for 2007 and 2008 only. Figures for 2007 refl ect the completion of the initial accounting of the business combination with Converium. Figures for 2007 and 2008 align to the segments as defi ned in Note 1. Alignment to segment defi nition has not be applied to 2006 and prior year fi gures.
The next section of the table shows the portion of the initial year-end net reserves that was paid (claims paid) as of the end of subsequent calendar year. Claims paid are converted to EUR at the average foreign exchange rates during the year of payment and are not revalued at the initial rates at which the reserves were established.
Average cost per claim (1) (in EUR) 13,954 12,520 3,693 4,033
SCOR Global Life inherited from Converium retrocession liabilities with regard to Guaranteed Minimum Death Benefi t (GMDB) rider options attached to variable annuity policies written in the US. This type of business, which carries during fi nancial crisis a specifi c economic risk is not within the usual scope of the SCOR Global Life underwriting policy. These treaties are all in run-off and cover in total approximately 0.9 million policies that were issued mainly in the late 1990’s and which incorporate various benefi t types. Claims occur in the event of death and if a policy is “in the money ”, which means that the GMDB exceeds the insured’s account balance. Under these circumstances, the difference between the GMDB and the account balance or the GMDB and the cash surrender value becomes due, depending on the defi nition of the underlying reinsurance agreements.
Different types of Guaranteed Minimum Death Benefi ts are covered, including: Return of premium: The GMDB is the amount of total deposits adjusted for partial withdrawals, if any.
The GMDB Liability is determined periodically based on the information provided to SCOR Global Life by its retrocedent companies. The current account value, the guaranteed death benefi t and details of the covered benefi t types are taken into consideration for the eva-
luation of the net amount at risk and the expected future liability. For the evaluation of the liabilities, SCOR Global Life uses an actuarial model that considers 1,000 investment performance scenarios.
As part of the retrocession programs, SCOR and its subsidiaries have received approximately EUR 93 million (EUR 68 million in 2007) in securities pledged from retrocessionaires and hold EUR 645 million (EUR 610 million in 2007) in deposits. In addition,
The short-term benefi ts granted are recognised as an expense for the period by the different entities of the Group.
Defi ned contribution plans include plans whereby an employer makes periodic contributions to an external plan which manages all administrative and fi nancial aspects. These external plans relieve the employer of all future obligations and manage the payment to employees of all amounts which are due (e.g. National insurance pension scheme, complementary pension scheme (AGIRC/ ARRCO), defi ned contribution retirement plans).
The amounts paid under defi ned contribution plans were EUR 6 million and EUR 5 million for the years ended 31 December 2008 and 2007, respectively.
An employer’s obligation under a defi ned benefi t plan is to provide the agreed amount of benefi ts to current and future benefi ciaries.
As part of the fi nalisation of the accounting for the Converium acquisition, SCOR strengthened SCOR Global Life’s GMDB run-off Life reserves (See Note 3 – Acquisitions).
The main pension plans relate to Switzerland, North America and France. These locations represent 41%, 19% and 20%, respectively, as at 31 December 2008, (42%, 19%, and 17%, respectively, at 31 December 2007), of the Group’s obligation under defi ned benefi t plans.
Discount rates are defi ned with respect to high quality long term government bond (rated AA or AAA) with a duration in line with the duration of the obligations evaluated.
Liability (gains)/losses due to experience (2) 2 (4) - (2) 1 - (3)
Reconciliation of fair value of plan assets Fair value of assets as at 1st January 92 11 51 30 39 9 0 30 Expected return on plan assets 6 1 3 2 4 1 1 2
Unfunded obligation as at 31 December 23 21 - 2 20 20 - -
Total funded status as at 31 December- defi cit 78 45 21 12 62 41 13 8
Accrued / (Prepaid) as at 1st January 62 42 13 7 47 34 - 13
Benefi ts paid by employer - - - - - - - -
Actuarial (gains)/losses immediately recognised in SORIE 18 3 8 7 (8) (7) 2 (3)
Accrued / (Prepaid) as at 31st December 74 44 19 12 62 42 13 7
Employer contributions for 2009 are expected to amount to EUR 9 million.
The table below presents the changes and the current stock option plans at the end of the year along with the average corresponding exercise price.
Options granted during the period 1,478,000 15.63 1,417,000 17.58 Options exercised during the period 109,445 10.90 - Options expired during the period 79,977 216.90 - Options cancelled during the period 461,674 18.32 49,554 27.36
The Group also awards bonus shares to its employees under the following terms: Date of grant
Unrealised revaluations and temporary differences on investments - (34) 12 (8)
The main components of income taxes for the years ended 31 December 2008 and 2007 are presented below: In EUR million 2008 2007 (1)
A reconciliation of the corporate income tax, obtained by applying the French tax rate of 34.43% for 2008 and 2007 to income (losses) before taxes, minority interest and income (losses) from associated companies consolidated under the equity method, to the actual charge recorded in the income statement (effective rate of (15.85)% and 21.88% in 2008 and 2007, respectively), is presented in the table below.
The tables below show the break down by type of investment income and break down by category of fi nancial assets: BREAK-DOWN BY TYPE
Real estate investments 30 34 Available for sale investments 126 429 Investments at fair value through income (10) 5 Loans and receivables 245 219 Derivative instrument 3 11 Other (mainly cash and cash equivalents), net of other investment expenses 73 29
The Group’s related parties include: Key management personnel, close family members of key management personnel, and entities which are controlled, signifi cantly infl uenced by, or for which signifi cant voting power is held by key management personnel or their close family members.
As noted above transactions between SCOR and its subsidiaries meet the defi nition of related party transactions. Where these transactions are eliminated on consolidation they are not disclosed in the group’s fi nancial statements. A list of the Group’s subsidiaries, associates and joint venture is shown below.
Key management personnel are those individuals having responsibility and authority for planning directing and controlling the activities of the group. The group considers that the members of the COMEX and the board constitute key management personnel for the purposes of IAS 24.
The total compensation of key management personnel for 2008 and 2007 is outlined in Section 15 of the 2008 Registration Document which includes these consolidated fi nancial statements.
SCOR provides loans to Group companies in the normal course of business.
SCOR Holding (UK) Ltd United Kingdom 100.00 100.00 98.06 98.06 Full
SCOR London Management Ltd United Kingdom 100.00 100.00 98.06 98.06 Full
Converium IP Management Ltd, merged with SCOR Switzerland AG Switzerland - - 98.06 98.06 Full
SCOR Finance (Bermuda) Ltd Bermuda 100.00 100.00 98.06 98.06 Full Remark Group BV Netherland 98.67 98.67 98.67 98.67 Full ReMark International BV Netherland 98.67 98.67 98.67 98.67 Full
SCOR P&C Ireland Holding Limited Ireland 100.00 100.00 100.00 100.00 Full SCOR Global P&C Ireland Ireland 100.00 100.00 100.00 100.00 Full SCOR Reinsurance Asia Pacifi c Pte Limited Singapore 100.00 100.00 100.00 100.00 Full SCOR Reinsurance Company (Asia) Ltd Hong Kong 100.00 100.00 100.00 100.00 Full SCOR Canada Reinsurance Company Canada 100.00 100.00 100.00 100.00 Full SCOR U.S. Corporation United States 100.00 100.00 100.00 100.00 Full Cal Re Management Inc. United States 100.00 100.00 100.00 100.00 Full SCOR Reinsurance Company United States 100.00 100.00 100.00 100.00 Full General Security National Insurance Company United States 100.00 100.00 100.00 100.00 Full
Commercial Risk Partners Ltd Bermuda 100.00 100.00 100.00 100.00 Full Commercial Risk Reinsurance Company Bermuda 100.00 100.00 100.00 100.00 Full Commercial Risk Re-insurance Company United States 100.00 100.00 100.00 100.00 Full Revios Canada Holding Corp. Ltd. Canada 100.00 100.00 100.00 100.00 Full Revios U.S. Holdings Inc. United States 100.00 100.00 100.00 100.00 Full
SCOR Global Life Reinsurance International (Barbados) Ltd., Bridgetown Barbados 100.00 100.00 100.00 100.00 Full
SCOR Global Life Reinsurance (Barbados) Ltd., Bridgetown Barbados 100.00 100.00 100.00 100.00 Full
Sweden Reinsurance Co. Ltd Sweden 100.00 100.00 100.00 100.00 Full Revios Reinsurance Canada Ltd Canada 100.00 100.00 100.00 100.00 Full SCOR Global Life Rückversicherung Schweiz AG Switzerland 100.00 100.00 100.00 100.00 Full
Commercial Risk Services United States - - 100.00 100.00 Full ALFINANZASIA Singapore 100.00 100.00 Full SCOR Perestrakhovaniye Russia 100.00 100.00 Full Prévoyance Ré France 100.00 100.00 Full Real Estate Businesses FERGASCOR France 100.00 100.00 100.00 100.00 Full SCOR Auber France 100.00 100.00 100.00 100.00 Full SCOR Hanovre France 100.00 100.00 100.00 100.00 Full Finimo Realty Pte Ltd Singapore 100.00 100.00 100.00 100.00 Full Financial Activity Europe MidCap Luxembourg 100.00 100.00 100.00 100.00 Full SCOR Picking Luxembourg 100.00 100.00 100.00 100.00 Full
Associates and Joint Ventures ASEFA SA Seguros y reaseguros Spain 39.97 39.97 39.97 39.97 Equity interest MUTRE SA France 33.33 33.33 33.33 33.33 Equity interest SCOR Channel Limited Guernsey 99.86 99.86 99.86 99.86 Equity interest SCOR Gestion Financière France 100.00 100.00 100.00 100.00 Equity interest
(1) Adjusted for the completion of the initial acquisition accounting of the Converium and ReMark acquisitions. See Notes 1 and 3 to the consolidated fi nancial statements.
Letters of credit granted were EUR 1,403 million which includes guarantees given to ceding insurers and reinsurers to cover the underwriting reserves on the assumed business.
In order to guarantee the letters of credit granted to us by fi nancial institutions, assets which have been pledged to them including investment securities (“OAT”), real estate and shares in associates for a total amount of EUR 2,708 million.
Minimum payments under operating lease commitments are included in Note 27: Insurance and fi nancial risk.
As part of its real estate investment activities (see Note 5 – Real estate investments), SCOR leases or subleases its investment buildings and warehouses. The leases generally conform to the local market conditions and have annual indexation clause for the rental payments.
The estimated minimum rental income is as follows: In EUR million
154.8 million. The second trigger is hit when modeled losses reach USD 176.2 million. It then pays out according to a sliding scale of modeled losses up to USD 276.2 million.
Concentrations of gross written premium by geographical location, both based on subsidiary location and the location of the ceding company, is included in Note 2 – Segment Information.
Concentrations of Non-Life reinsurance risks are included in the 2008 Registration Document in Section 4.1.2 – We are exposed to losses from catastrophic events.
Credit risk is the risk that one party to a fi nancial instrument or other asset (such as estimated retrocession balances) will cause a fi nancial loss to the other party by failing to discharge an obligation.
The carrying amounts of the Group’s fi nancial assets exposed to credit risk by counterparty credit quality, excluding consideration of collateral held or other credit enhancements is included in Note 6 – Insurance business investments (for fi xed income securities ) and Note 16 – Contract liabilities (for the share of retrocessionaires in insurance and fi nancial liabilities).
The following table provides an overall analysis of the aging of fi nancial assets as at 31 December 2008: In EUR million Current 1-12 months 12-24 months months > 36 months Total
Liquidity risk is the risk that an entity will encounter diffi culty in meeting obligations associated with fi nancial instruments. SCOR does not face liquidity issues in the short term due to limited obligations related to financial instruments and the significant level of cash and short term investments, EUR 3.7 billion at 31 December 2008.
Liquidity risk is described in the 2008 Registration Document in Section 4.3.1– We face liquidity requirements in the short to medium term.
The technical reserves of SCOR Global P&C are established on an undiscounted basis (except workers compensation in the USA and CRP. The table below includes the estimated maturity profi les of the Non-Life insurance liabilities based on payment patterns derived from historical data.
Non-Life insurance liabilities In EUR million 1-5 years 6-10 years > 10 years Total
Maturity profiles have been prepared based on undiscounted contractual maturities and include contractual interest payments. In the case of perpetual debt, or debt which is subject to multiple redemption dates, the analysis below assumes such debt is redeemed on the fi rst possible redemption date. Of the amounts below, EUR 263 million (2007: EUR 288 million) relates to variable rate debt.
At 31 December 2008, based on the actual maturity dates of the debt, the fi rst principal payments are due in 2010 for EUR 200 million (OCEANE debt). The 2008 table is based on the IFRS 7 disclosure requirement and does does not represent the intention of the Company to call the debt back before maturity.
Less interest expenses (9) 13 0 Discounted value of minimum payments 12 12 16 16 Less current (< 1 year) portion of fi nancial lease contracts (5) (5) (4) (4) Outstanding liability of fi nancial lease contracts 7 7 12 12
Market risk is the risk that the fair value or future cash fl ows of a fi nancial instrument will fl uctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and price risk.
The Group has certain life insurance contracts which are sensitive to fl uctuations in interest rates.
For Long Term Care products in France, ceding companies use valuation interest rates established by French regulators which are linked to some extent, to market rates. Reserve movements reported by ceding companies are infl uenced by numerous factors, including interest assumptions, where are not distinguished separately. SCOR does not actively revise the valuation interest rates during its reserving process. Due to lack of direct data, the interest rate sensitivity cannot be precisely analysed.
All investments, whether held directly or in mutual funds, are aggregated and valued on a daily basis. This approach allows for the monitoring of changes in the portfolio and the identifi cation of investments with higher than average volatility. The Group’s exposure is reviewed at regular Investment Committee meetings.
Additional information is included in the 2008 Registration Document in Section 4.2.2 – We face risks related to our equitybased portfolio.
The following table summarises the accounting sensitivity of the Group’s consolidated income and consolidated equity (on a pre-tax basis) to market risks based on reasonably possible movements in key variables with all other variables held constant. The assumptions included are: Interest
The interest sensitivities include the movements on the debt security portfolio, cash and cash equivalents, structured notes, the impact of changes in interest rates on variable rate fi nancial debt and the GMDB and annuity business of the life operations in the US.
(1) The sensitivity analyses have been improved in 2008 to include a more detailed analysis of the investment sensitivities. (2) The impact of interest rate sensitivity on income relates to fi nancial debt at variable rates.
Equity impact In EUR million Currency movement 2008 2007 adjusted (1)
(1) Figures for 2007 are adjusted and estimated following the same methodology as 2008 and based on improved visibility given new processes, systems and the completion of the initial accounting of Converium acquisition.
Company (“Allianz”). Beginning in October 2001, various claims were brought in U.S. Federal District Court in New York to resolve whether the 11 September 2001 WTC attack constituted one or two occurrences, as well as other coverage disputes (“WTC Litigation”). Allianz, as SCOR’s 100% fronting company, was a named party to the WTC Litigation. SCOR, as the financially interested reinsurer, associated in the defence and control of the claim against Allianz. On 6 December 2004, a jury determined that the 11 September 2001 WTC attack constituted two occurrences under the terms of the property insurance policy issued by Allianz. On 18 October 2006, the U.S. Court of Appeals for the Second Circuit affirmed the jury’s verdict. The twooccurrence verdict against Allianz did not determine the amount of damages owed by Allianz under its policy. That determination was the subject of the ongoing coverage litigation, as well as a separate court-supervised appraisal proceeding.
In April 2006, the Silverstein Parties announced their intent to transfer certain WTC reconstruction rights to The Port Authority of New York and New Jersey (“Port Authority”) thereby extinguishing the Silverstein Parties’ right to recover replacement costs for the transferred rights pursuant to the terms of Allianz’s coverage. After Allianz refused to waive Allianz’s rights under its policy, the Silverstein Parties and the Port Authority initiated a separate lawsuit against Allianz and other insurers in New York state court disputing that the partial transfer extinguished the insurers’ obligation to pay replacement costs for the transferred rights. In September 2006, the New York state court ordered all parties to take part in a global settlement mediation in an effort to resolve the claim.
On 23 May 2007, over SCOR’s stated objection as the 100% fronted reinsurer, Allianz accepted a final settlement with the Silverstein Parties and the Port Authority resolving all pending litigation. Under the settlement, Allianz agreed to pay two full limits of coverage, USD 710 million, with the unpaid balance payable in increments through 2010, and conceded a number of valuation and coverage positions that Allianz had been advancing on SCOR’s behalf under the Allianz policy, including Allianz’s position that any prior or future transfers of development rights by the Silverstein Parties extinguished potential replacement cost claims for the transferred rights. In objecting to the settlement, SCOR advised Allianz that the settlement, by waiving critical coverage and valuation positions under the Allianz policy and 20.1.6.28 NOTE 28 – LITIGATION
foreclosing SCOR from obtaining a merits-based resolution of the claim, did not comply with the terms and conditions of the reinsurance certificate between SCOR and Allianz and contained ex gratia components.
On 27 September 2007, SCOR initiated claims against Allianz in an arbitration proceeding challenging both Allianz’s issuance of a policy prior to the loss that did not conform to the terms of coverage agreed by SCOR, as well as Allianz ’s 23 May 2007 settlement of the claim over SCOR’s objection. The arbitration is underway and expected to be completed in 2009. The arbitration will determine SCOR’s total indemnity obligation in connection with this claim, which amount could be significantly greater or less than SCOR’s current gross reserve of USD 550 million (USD 247 million net). Shortly before its 23 May 2007 settlement, Allianz unilaterally increased its reserves to assume a total incurred loss of USD 710 million, plus an additional USD 39 million in expenses, and thereby obtained from SCOR increased letters of credit securing those reserves, as provided in the SCOR-Allianz fronting arrangement. During the pendency of the arbitration, Allianz has drawn on SCOR’s letters of credit to cover settlement payments made by Allianz to the Silverstein Parties and the Port Authority, as well as alleged loss adjustment expenses incurred by Allianz. As at 31 December 2008, the total amount of letters of credit outstanding was USD 250 million. SCOR continues to assess on an ongoing basis the amount of its reserves in light of developments regarding the WTC claim, including with respect to the pending arbitration against Allianz.
On 29 April 2006, a fire occurred at Huntsman Corporation ’s Aromatics and Olefins Plant. Huntsman Corporation (“Hunstman”) was insured by its “captive” insurer, International Risk Insurance Company (“IRIC”), and IRIC was 100% reinsured by various reinsurers, including SCOR UK Company. On 30 August 2007, certain reinsurers, including SCOR UK Company, brought suit in Federal Court in the Southern District of Texas (“Reinsurers Action”) seeking to compel Huntsman and IRIC to arbitrate their disputes regarding certain coverage and quantum issues that had arisen with reinsurers, and alternatively seeking a declaratory judgment from the Court regarding these issues. Both Huntsman and IRIC filed motions to dismiss the Reinsurers Action. Huntsman later filed suit in Texas State Court against IRIC (“Huntsman Action”), who then filed a third-party action against reinsurers in the same matter. Reinsurers sought to remove the Huntsman Action from State Court to Federal Court in the Eastern District of Texas. On 21 September 2007, reinsurers were then successful in getting the
Huntsman Action transferred to the Federal Court in the Southern District of Texas (where the Reinsurers Action is now pending). On 4 February 2008, Huntsman filed a motion to have the Huntsman Action sent back to State Court. On 26 September 2008, the Court denied Huntsman and IRIC’s motions to dismiss the Reinsurers Action and refused to send Huntsman Action back to State Court. Arbitrability discovery has been ordered and will be conducted absent an agreed resolution of the arbitrability issue.
In addition, as a result of its acquisition of Converium (which has since become SCOR Holding (Switzerland)), SCOR now assumes the burden of the following litigation matters: On 4 October 2004, the first of several putative securities class action complaints was filed in the United States District Court for the Southern District of New York (the “Court”) against Converium and several of its officers and directors. The complaints were subsequently consolidated and Public Employees’ Retirement System of Mississippi and Avalon Holdings Inc. were appointed lead plaintiffs (the “Lead Plaintiffs”).
for leave of Court to file a proposed Consolidated Second Amended Class Action Complaint, to amend their complaint to add, among other things, Securities Act claims based on Converium’s 1st March 2006 restatement of its financial accounts from 1998 through 2005.
On 24 August 2007, Lead Plaintiffs filed a Motion for Preliminary Approval of Proposed Settlement with ZFS. Under the terms of the Proposed Stipulation of Settlement, ZFS is to pay USD 30 million in cash for the benefit of a Settlement Class. The Settlement Class includes persons who purchased American Depositary Shares and Swiss shares purchased on the Swiss Stock Exchange, including persons who reside abroad, during the period 11 December 2001 through 2 September 2004.
On 14 September 2007, the Court issued an opinion rejecting certain additional arguments raised by Converium and the officer defendants in their motion to dismiss with regard to Lead Plaintiffs’ Exchange Act claims that it had not ruled on in its initial decision or its reconsideration decision.
By Orders dated 6 March and 19 March 2008, the Court certified a class of plaintiffs consisting of all U.S. residents who purchased Converium Securities on the SWX Swiss Exchange and all persons who purchased Converium or in the American Depository Shares (“ADSs”) on the New York Stock Exchange (NYSE) from 7 January 2002 through 2 September 2004 (the “Class”). The Court specifically excluded from the Class all non-US purchasers of Converium Securities on the SWX Swiss Exchange.
On 19 May 2008, SCOR Holding (Switzerland) commenced arbitration proceedings in Switzerland against its D&O carriers. On 11 July 2008, a resolution of SCOR Holding (Switzerland)’s claims with certain of its D&O carriers was agreed to and pursuant to which it will receive the aggregate amount of CHF 65 million. Arbitration proceedings remain pending against the remaining D&O carriers.
On 25 July 2008, SCOR Holding (Switzerland) executed a definitive settlement agreement in the U.S. class action. On 12 December 2008, the U.S. Court issued an Order and Final Judgment approving the settlements as fair, reasonable and adequate and dismissing with prejudice all claims against the defendants in the action, including those asserted against SCOR Holding (Switzerland) and certain of its former officers and directors.
SCOR Holding (Switzerland) consented to the issuance of the Order without admitting or denying any wrongdoing. There were no fines, disgorgement payments or financial remedies associated with the settlement.
In addition, the accounting audit led to an adjustment (taxes and interest for late payment) of EUR 70,915 in relation to tax on salaries.
9 June 2007, according to which Mr. Martin Ebner, Patinex and BZ Bank AG had acted in concert with SCOR in connection with the Offer, SCOR refutes this characterisation and reaffirms that such physical person and legal entities did not act in concert with SCOR in connection with the Offer. On 13 September 2007, SCOR has filed an appeal against this decision before the Federal Administrative Court (Bundesverwaltungsgericht ) in accordance with applicable legal and regulatory provisions.
In its decision dated 23 December 2008, the Federal Administrative Court concluded that it did not have to decide in the merits, as the Offer had been consummated and the period for the application of the best price rule had expired on 26 January 2008. In its report dated 22 April 2008 (with supplement dated 13 May 2008), the independent review body Ernst & Young had confirmed that SCOR had complied with all its obligations in connection with the Offer even if Martin Ebner and the persons directly or indirectly controlled by him had been deemed to be acting in concert with SCOR. Accordingly, the appeal was written off without judgment on the merits due to the interests in the appeal having fallen away during the procedure and the appeal therefore having become abstract. None of the parties filed an appeal against this decision of the Federal Administrative Court.
On 14 January 2008, SCOR Global Life received notification of a tax accounting audit for the period 1st January 2005 through 31 December 2006. The tax audit started in early 2008 and is still going on at present. In order to avoid the statute of limitation for fiscal year 2005, the tax administration has sent an interim assessment notice for fiscal year 2005. Up to now, the contemplated assessments arrived at consist most significantly in timing differences and, due to the tax loss position of the French tax Group in France, they will not lead to a significant impact on the consolidated results of the Group.
On 29 January 2008, the Spanish competition authority (Comisión Nacional de la Competencia, the “CNC”) opened a sanctioning procedure against SCOR Global P&C SE Ibérica Sucursal, a branch of SCOR Global P&C, and a number of other insurance and reinsurance companies for alleged antitrust practices to set the commercial conditions applied to customers in relation to the decennial insurance to construction that could result in an infringement of Article 1 of Law 15/2007, of 3 July 2007, on Competition (the “Competition Act”) (which prohibits agreements and concerted practices that may have as an object or effect the restriction of competition in the market).
At present, it is difficult to predict the outcome of the procedure, since the alleged infringement under investigation is considered to be serious under the Competition Act.
On 19 February 2009, SCOR announced having closed the three series of its cat bonds which provides the Group with protection of USD 200 million for exposures to earthquakes and hurricanes in the USA and Puerto Rico. It consists in multiyear property catastrophe (“CAT”) agreements between Atlas V Capital Limited (“Atlas V”) and SCOR Global P&C.
Atlas V is a special-purpose company incorporated under the laws of Ireland. The agreement in place with SCOR Global P&C SE in the form of a derivative is fully funded by the proceeds of Atlas V. The Atlas V notes were placed with institutional investors around the world. Events are covered for the risk period from 20 February 2009 to 19 February 2012.
With regard to the finalisation of the reverse stock-split that was initiated in 2007, the terms of which are, ten existing shares being exchangeable for one new share, the new shares corresponding to the existing shares, a reverse stock-split of which had not been requested by their shareholders on 3rd January 2009, were sold by SCOR on the stock exchange, resulting in the voidance of the corresponding existing shares.
In application of the EC Commission Regulation No. 809/2004, the following information is included by reference in this Registration Document: (i) The report from the Statutory Auditors on the consolidated fi nancial statements for the fi nancial year ending 31 December 2007 published pages 292 to 295 of the registration document fi led with the Autorité des marchés fi nanciers on 28 March 2008 under Number D.08-0154.
The report from the Statutory Auditors on the consolidated fi nancial statements for the fi nancial year ended 31 December 2008 is reproduced below: Report of the Statutory Auditors on the consolidated fi nancial statements
In compliance with the assignment entrusted to us by your Annual General Meeting, we have audited the accompanying consolidated fi nancial statements of SCOR for the year ended 31 December 2008.
These consolidated fi nancial statements have been approved by the Board of Directors at their meeting on 3 March 2008. Our role is to express an opinion on these fi nancial statements, based on our audit.
We conducted our audit in accordance with the professional standards applicable in France, those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated fi nancial statements are free of material misstatement. An audit includes verifying, by audit sampling and other selective testing procedures, evidence supporting the amounts and disclosures in the consolidated fi nancial statements. An audit also includes assessing the accounting principles used, the signifi cant estimates made by the management, and the overall fi nancial statements presentation. We believe that the evidence we have gathered in order to form our opinion is adequate and relevant.
In our opinion, the fi nancial statements give a true and fair view of the assets, liabilities, fi nancial position and results of the consolidated group in accordance with the accounting rules and principles applicable under IFRS, as adopted by the European Union.
Part 20.1.6.1 “intangible assets” and “corporate combinations and goodwill” and Note 3 and 4 to the fi nancial statements describe the principles and methods used to assess the valuation of goodwill and the value of business acquired for the Life and Non-Life reinsurance portfolios. The methods used to carry out these annual impairment tests are described in Note 4 to the fi nancial statements.
We have examined the approaches used in the impairment tests, the future cash fl ows and the consistency of the assumptions used. We have verifi ed that the information described in note 4 to the consolidated fi nancial statements is appropriate.
Part 20.1.6.1, “Taxes” and notes 19 to the consolidated fi nancial statements describe the principles and methods used to perform the valuation of deferred tax assets as well as the deferred tax assets impairment test.
Part 20.1.6.3 “Acquisition of Prévoyance et Réassurance” describes the methods and assumptions used for the provisional valuation of net assets, and by comparison with the acquisition price, of the negative goodwill following the acquisition of Prévoyance et Réassurance and its subsidiary Prévoyance Ré. Part 20.1.6.3 “Acquisition of Converium Holding AG” and “Acquisition of ReMark Group BV” describes the methods and assumptions used to determine the fi nal net assets, and by comparison with the acquisition price, the goodwill recorded following the acquisition of Converium Group and ReMark Group BV.
We examined the Group’s procedures to identify these risks, to evaluate and refl ect them in the fi nancial statements.
Part 20.1.6.1 “pension obligations and related benefi ts” and Notes 15 to the fi nancial statements specify the valuation methods applied to pension obligations and other related obligations.
These assessments were made as part of our audit of the consolidated fi nancial statements taken as a whole and therefore served in forming our audit opinion expressed in the fi rst part of this report.
We have also verifi ed the information given in the group management report as required by French law.
The Registration Document as a whole is the subject of an audit completion letter sent by the statutory auditors to SCOR.
20.6 Dividend distribution policy The resolution to be presented to the Annual General Meeting to approve, during the fi rst half of 2009, the accounts for the fi nancial year 2008, sets out the distribution of a dividend of EUR 0.80 per share for the fi nancial year 2008.
The statute of limitations for dividends is 5 years. Dividends whose payment has not been requested shall be allocated to the administration de domaines.
20.8 Material change in fi nancial or commercial situation No material change has occurred in the Group’s fi nancial or commercial situation since the end of the fi nancial year 2008.
The reverse stock-split took place on 3 January 2007 by an automatic exchange of ten (10) Old Shares for one (1) New Share. A residual proportion of the share capital, corresponding to the fractional Old Shares in the respective portfolios of the shareholders, initially continued to be listed and traded on the Eurolist by Euronext Paris S.A. market in the form of Old Shares to enable holders of Old Shares to sell or obtain a whole number of shares. The corresponding New Shares were held by the Company and could be exchanged on request by holders of Old Shares until 3 January 2009. The Old Share listing line was closed on 3 July 2007. The New Shares corresponding to the Old Shares the combination of which had not been requested by their holders on 3 January 2009 have been sold on 21 ADDITIONAL INFORMATION
Date Amount of capital subscribed (In EUR) Number of shares outstanding the market by SCOR, and the corresponding Old Shares have been cancelled.
Pursuant to the fourth resolution passed by the Extraordinary Shareholders’ Meeting of the Company on 18 May 2004, which decided to authorize the Board of Directors to grant officers and employees of the Company options carrying the right to subscribe to new shares in the Company, or to purchase existing shares of the said Company and granting the Board with the powers to note where applicable, at its first meeting from the close of the Company’s financial year, the number and amount of new shares issued during the said fiscal year as a result of the exercise of options, the Board of Directors of SCOR noted, on 3 March 2009, the capital increase of SCOR of EUR 1,020,375.11 through the issue of 129,539 new shares, each with a par value of EUR 7.8769723.
Refer to Section 20.1.6.26 – Note 26 – Commitments received and granted for a description of the pledges on the Company’s assets.
Authorisations for share issues granted by the Shareholders’ Meeting of 7 May 2008 16th resolution (Authorisation granted to the Board of Directors for the purpose of increasing the number of shares issued in the event of over-subscription to the share capital increase, with or without cancellation of preferential subscription rights)
19th resolution (Authority to issue shares for stock option plans) 3,000,000 actions (7 may 2008) 1,522,000 shares (Date of the Registration Document)
20th resolution (Authority to issue shares under free share allotment plans)
21st resolution (Share capital increase reserved for employees of the Group)
The delegations of powers granted by the Shareholders’ Meeting of 7 May 2008 are each granted for a twenty-six (26) months duration as from the date of the Shareholders’ Meeting, i.e. until 7 July 2010, date on which it will be deemed expired if the Board of Directors did not use it.
The description of the stock buyback program implemented under the 6th resolution of the Annual Shareholders’ Meeting of 7 May 2008 was published by the Company on 19 May 2008. The report of the Board of Directors of the Company to the Annual Shareholders ’ Meeting to be held in the fi rst half of 2009 on the use of the 6th resolution will be made available to SCOR shareholders under the conditions set forth by law.
Moreover, SCOR reactivated on 3 October 2008 the liquidity agreement concluded with Exane BNP Paribas and allocated to this agreement 200,000 SCOR’s shares and EUR 3,000,000 (in liquid assets). As at 31 December 2008, 250 385 SCOR SE’s shares and EUR 2,858,054 were allocated to the liquidity agreement.
In the context of the above mentioned buyback program and this liquidity agreement were as follows: SCOR proceeded, during the fi nancial year 2008, to: the purchase of 7,489,852 treasury shares, the sale of 4,542,613 treasury shares, the transfer of 1,701,321 treasury shares.
On 21 June 2004, the Board of Directors of the Company approved an issue, represented by bonds convertible and/or exchangeable for new or existing shares of SCOR (OCEANEs), on the authority granted by the Combined Shareholders’ Meeting of 18 May 2004, and sub-delegated to its Chairman the powers required for this purpose. Issued on 2 July 2004, on the decisions of the Chairman-Chief Executive Offi cer on 23 and 24 June 2004, the nominal amount of this issue was EUR 200 million, represented by 10 million OCEANEs with a par value of EUR 20. The bonds bear interest at 4.125% payable on 1 January of each year. The issue has a term of 5 years and 183 days.
The share allocation ratio was initially one share per OCEANE. Following the capital increase of 12 December 2006 and the reverse stock-split of 3 January 2007 at a ratio of 1 new share with a par value of EUR 7.8769723 for 10 existing shares with a par value of EUR 0.78769723; this ratio was adjusted and now equals 0.1047 share per OCEANE. The conversion of all OCEANEs into shares would result in the creation of 10,470,000 shares.
In order to exercise the share allotment right, bondholders must forward their request through the intermediary which holds their securities accounts. These transactions are cleared by BNP Paribas Securities Services.
Refer also to Section 20.1.6 – Notes to the Consolidated Financial Statements – Note 14: Financial debt.
Section 17.2 – Information on equity interests and stock options for members of the administrative and management bodies,
21.2.1 CORPORATE PURPOSE OF THE ISSUER (ARTICLE 3 OF THE BYLAWS)
The purpose of the Company, either directly or indirectly, in all countries, is as follows: a. 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, organisation, entity or association, and creation, acquisition, rental, lease, installation and operation of any undertaking related to these activities; b. the construction, lease, operation or purchase of any and all properties; c. 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; d. acquisition of equity investments or interests in any industrial, commercial, agricultural, fi nancial, securities or real estate companies, the formation of any company, participation in any capital increases, mergers, demergers and spin-offs; e. 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; f. implementation and management of centralised cash resource management within the group and the provision of services, to any group company concerned, relating to the management and operations of centralised cash resources; and generally all such industrial, commercial and fi nancial transactions, or transactions involving moveable property and real estate, as may pertain directly or indirectly to the above stated corporate purpose or as may be related to or facilitate the implementation or pursuit thereof.
The Shareholders’ Meeting may decide to offer shareholders a choice between payment of the dividend in cash or in shares for all or a portion of the dividend or interim dividend to be distributed, in compliance with applicable law and regulatory provisions. Dividends will be deemed forfeited after the legally prescribed period (i.e. after fi ve years) and revert to the French government.
Where the shares are held by a benefi cial owner, the voting rights attached to those shares belong to the benefi cial owner at ordinary shareholders’ meetings, and to the bare owner at extraordinary shareholders’ meetings.
After approval of the fi nancial statements and recognition of the existence of distributable funds consisting of the earnings for the fi scal year, less prior losses and plus, if applicable, any profi t car21. 2 Charter and Bylaws 21 | ADDITIONAL INFORMATION
The Shareholders’ Meeting which decides or authorizes a capital increase may, under Article L.225-135 of the French Commercial Code, eliminate the pre-emptive subscription right for the entire capital increase or for one or more segments of said increase and may allow or not allow a priority subscription period for shareholders. When the issue is carried out through a public offering without pre-emptive subscription rights, the issue price must be set according to Article L.225-136 of the French Commercial Code.
The Shareholders’ Meeting may also reserve it for shareholders of another company that is the target of a public exchange offer initiated by the Company pursuant to Article L.225-148 of the French Commercial Code or for certain persons in the context of contributions in kind in application of Article L.225-147 of the French Commercial Code.
Subject to legal provisions concerning voting rights in meetings and the right to communication conferred on shareholders, shares are not divisible with regard to the Company, so that joint coowners are required to be represented with the Company by one of said co-owners or by a single agent, appointed by the Court in the event of disagreement.
The rights of shareholders are set forth in the bylaws of the Company. Under Article L.225-96 par. 1 of the French Commercial Code, amendments to the bylaws must be approved by the Extraordinary Shareholders’ Meeting, by a majority vote of two-thirds of the shareholders present or represented.
Meetings are held at corporate head offi ces, or elsewhere as indicated in the notice of meeting.
All shareholders may attend the Meetings, in person or through an agent, with proof of identity and of the ownership of shares, either in the form of registration in his name or a certifi cate from an authorised intermediary designated as account holder.
Under these guarantees, which took effect on 22 November 2005 for SCOR Global Life Reinsurance Ireland Limited and on 25 November 2005, for the other subsidiaries concerned, SCOR Global Life Rückversicherung AG will unconditionally assume the commitments of the aforesaid subsidiaries with regard to reinsurance contracts agreed by them upon a payment default remaining uncured for more than 30 days.
Stand-by letter of credit facility agreement executed on 25 June 2007, between SCOR Switzerland AG (formerly Converium AG) a bank syndicate comprised of ABN AMRO Bank N.V., Niederlassung Deutschland, Bayerische Hypo Und Vereinsbank, Deutsche Bank AG, Luxembourg Branch, Commerzbank, Crédit Suisse, Barclays Bank, and JP Morgan Chase Bank
A credit facility agreement dated 25 June 2007, was executed between SCOR Switzerland AG (formerly Converium AG) and a bank syndicate comprised of ABN AMRO Bank N.V., Niederlassung Deutschland, Bayerische Hypo Und Vereinsbank, Deutsche Bank AG, Luxembourg Branch, Commerzbank, Crédit Suisse, Barclays Bank, and JP Morgan Chase Bank. The purpose of the agreement is to guarantee the performance of the obligations of SCOR Switzerland under its reinsurance transactions. This revolving stand-by letter of credit agreement for up to USD 1,500 million was executed for a period of use from 25 June 2007, to 25 June 2010, with an option to be extended to 25 June 2012.
By an amendment dated 30 October 2007, Crédit Suisse and Barclays Bank withdrew from the bank syndicate and the amount of the facility was reduced to USD 1,070 million.
Collateralised swap executed on 22 February 2008 between SCOR Global Life SE and JP Morgan Ventures Corporation
SCOR, SCOR Global Life SE and SCOR Global P&C SE on one side and Deutsche Bank on the other side executed, on 23 October 2008, a stand-by letter of credit facility agreement.
The issuance of SBLCs pursuant to this agreement is subject to the execution of (i) a pledge over a fi nancial instruments account to the benefi t of Deutsche Bank, composed of U.S. treasury bills under the terms and conditions required by the agreement and of (ii) a fi rst demand guarantee to the benefi t of Deutsche Bank up to a maximum amount of USD 162,500,000.
A stand-by letter of credit facility agreements dated 23 October 2008, was executed between SCOR, SCOR Global P&C SE, SCOR Global Life SE, SCOR Switzerland AG and SCOR Rückversicherung (Deutschland) AG on one side and Natixis on the other side. Natixis agreed to issue SBLCs to guarantee the reinsurance activities of the above mentioned companies up to a maximum of USD 200,000,000 in a form acceptable to the NAIC, as from 23 October 2008 until 16 October 2011.
Stand-by letter of credit facility agreements executed on 23 December 2008 between BNP Paribas on one side and SCOR SE, SCOR Global Life SE and SCOR Global P&C SE on the other side
24 DOCUMENTS ON DISPLAY Throughout the period of validity of the Registration Document, the bylaws and any other document required by law may be consulted and are freely available upon request from the registered offi ce of the Company at 1 avenue du Général de Gaulle, 92800 Puteaux.
25 INFORMATION ON HOLDINGS Section 20.1.6 – Notes to the Consolidated Financial Statements – Note 25 – Information on related parties.
25.1 Increase of the stake in the capital of Prevoir Vietnam Life Insurance Company On 17 December 2007, SCOR Global Life subscribed for USD 1,300,000 to the capital increase in the amount of USD 13,000,000 of Prévoir Vietnam Life Insurance Company Limited (“Prévoir Vietnam”), a company governed by Vietnamese law.
Groupe Prévoir was distinguished with the Trophée International Assurance et Prévoyance for its dynamic growth in Europe and Asia, awarded on 6 February 2006, by Mrs. Christine Lagarde, at this time French Vice-Minister of Foreign Trade. Since February 2006, Groupe Prévoir started its business activity under a partnership between its subsidiary Prévoir Vietnam and Vietnam Postal Services. This exclusivity agreement executed for a ten year term enables the distribution of Life insurance products in 3,000 post offi ces in the country. The sale of these products started on 10 February 2006, in Hanoi initially, and then in the 64 provinces of Vietnam. During 2006, the entire population of Vietnam had access to the products of Prévoir Vietnam. At the end of 2007, the market share of Prévoir Vietnam was 5.6% with 25,000 new contracts signed in 2007. The number of Prévoir Vietnam contracts signed in 2007 rose 150% compared to 2006 and the new insurance premiums collected rose by more than 65% year-on-year.
GECIMED is a listed subsidiary of GECINA specialised in the holding of private clinic and hospital structures. SCOR Global P&C stake acquisition occurred as part of a private placement with a number of institutional investors in order to support GECINA in the development of this health market real estate company which has decided to remain a Société d’Investissement Immobilier Cotée (SIIC) statute as from the year started 1 April 2007.
On 29 December 2008, GECINA concluded with ISM a share purchase agreement on 9.40% of the share capital of GECIMED, thus increasing the holdings of GECINA from 38.6% à 48%. In this occasion of the selling of the whole holding of ISM in GECIMED, SCOR Global P&C SE also concluded with ISM a share purchase agreement on 2,714,758 GECIMED’s shares, i.e. 4.61% of the share capital of GECIMED, within the same terms and conditions as those of the purchase made by GECINA, by over the counter transactions.
Information published on the Securities and Exchange Commission (SEC) website (www.sec.gov)
18 April 2008 Disclosure of trading in own shares by the Company 8 April 2008 Disclosure of trading in the Company’s shares by members of the Board of Directors (Daniel Valot)
28.3 Information published on the Securities and Exchange Commission (SEC) website (www.sec.gov) 28.3.1 FOR SCOR SE
Date Subject 27 May 2008 Schedule 13E – 3 – Going private transaction by certain issuers, amendment No. 4 (SCOR Holding (Switzerland) Ltd.) 18 April 2008 Schedule 13E – 3 – Going private transaction by certain issuers, amendment No. 3 (SCOR Holding (Switzerland) Ltd.) 11 March 2008 Schedule 13E – 3 – Going private transaction by certain issuers, amendment No. 2 (SCOR Holding (Switzerland) Ltd.) 29 January 2008 Schedule 13E – 3 – Going private transaction by certain issuers, amendment No. 1 (SCOR Holding (Switzerland) Ltd.) 25 January 2008 Schedule 13E - 3 – Going private transaction by certain issuers (SCOR Holding (Switzerland) Ltd.)
28.4 Information published on SCOR’s company website (www.scor.com) All press releases and offering circulars published on the AMF site (point A.) are simultaneously published on SCOR’s website. In addition, the following were published on the SCOR’s website: Date Subject 4 March 2009 SCOR records solid results with a net income of EUR 315 million, supported by an outstandind liquidity position of EUR 3,7 billion – Press release 24 February 2009 SCOR implements the Paris Hub – The Hub: an innovative concept becomes a reality – Press release
Information relating to the total number of voting rights and shares comprising the share capital (Article L.233-8-II of the French Commercial Code and 223-16 of the General Regulation of the Autorité des Marchés Financiers) – Update 19 February 2009 SCOR reopens market for catastrophe bonds, setting new innovative standard with its USD 200 million cat cover – Press release
Pursuant to Article 28 of Regulation (EC) No. 809/2004 of the European Commission, the following information is included by reference in this Registration Document: (i) The corporate fi nancial statements for the year ended 31 December 2007 and the Auditors’ Report pertaining thereto published on pages 147 to 185 and 289 to 292, respectively, of the registration document fi led with the Autorité des marchés fi nanciers on 28 March 2008 under number D. 08-0154.
Accordingly, on 24 October 2008, SCOR acquired 100% of the share capital and voting rights of Prévoyance et Réassurance and (directly and indirectly) of Prévoyance Ré, for an amount of EUR 53 million, paid by delivery of SCOR treasury shares.
On 28 December 2008, following the termination without liquidation (“dissolution sans liquidation”) of Prévoyance et Réassurance, resulting in the transfer of all its assets and liabilities (“Transmission Universelle de Patrimoine”) to SCOR, SCOR directly became the sole shareholder of Prévoyance Ré’s share capital.
Share of retrocessionaires in underwriting reserves Note 4 6 6 77 Reinsurance reserves (Life) Loss reserves (Life) Unearned premiums reserves (Non-Life) Loss reserves (Non-Life) 6 6 77 Other underwriting reserves (Non-Life)
Accounts receivable from reinsurance transactions 58 58 141 Other accounts receivable 230 230 173
Gross underwriting reserves Note 4 1,705 1,529 Reinsurance reserves (Life) 308 259 Loss reserves (Life) 124 116 Unearned premiums reserves (Non-Life) 163 211 Loss reserves (Non-Life) 793 652 Other underwriting reserves (Non-Life) 317 291 Equalisation reserves (Non-Life) - -
Other liabilities Note 4 1,503 1,564 Liabilities arising from reinsurance operations 16 5 Convertible bond issue 200 208 Debts to credit institutions 10 Negotiable debt securities issued by the company 10 11 Other loans, deposits and guarantees received 1,171 1,296 Other liabilities 96 44
Accrued liabilities Note 4 - Deferred commissions received from reinsurers (Non-Life) (1) (1) Estimate of reinsurance – Retrocession (7) 1 Other accruals 8 Net translation adjustment - 1
(1) Other underwriting reserve expense corresponds to the reserve for increasing risks.
Benefi ts and costs paid (278) (278) (227) Claims reserve expense (5) (5) (23)
Investment expenses (156) (192) Internal and external investment management costs and interest expense (118) (97) Other investment expenses (6) (16) Realised losses from investments (32) (79)
Caps and fl oors 75 75 75 Asset swaps Underwriting commitments
Other commitments given 226 226 260 Securities pledged with ceding companies 24 24 Marketable securities pledged with fi nancial institutions 80 Investments in subsidiaries and affi liates pledged to fi nancial institutions Mortgages Other guarantees given to fi nancial institutions 1 1 24 Contract termination indemnities 5 5 3 Foreign currency forward sales 196 196 153 Real estate lease
Impact of new branches (SCOR Beijing, SCOR Direktion, and SCOR UK)
Three new branches have been created by SCOR SE this year, SCOR Beijing (Non-Life reinsurance activities) SCOR Direktion (Germany) and SCOR UK (Service Company) branches with a retroactive effect as from 1st January 2008.
Net premium earned Net claims expenses Net acquisition and administration costs
The fair value of investments in associates is assessed as their value in use, which is based on the utility of the investment for the Company as well as its share price, revalued shareholders’ equity, results and future prospects.
For active reinsurance companies, the fair value is estimated as the consolidated net assets, excluding goodwill and before elimination of shares, increased by unrealised capital gains or losses and by the Embedded Value of Life Reinsurance and forecasts of future profi ts from Non-life Reinsurance, net of tax. It does not include the value of future business of Life companies.
When the realisable value is more than 30% below the initial cost for more than six consecutive months, a detailed line-by-line analysis performed to determine whether the impairment is permanent. In accordance with the Notice of 18 December 2002 (amended of 15 December 2008) issued by the Emergency Committee of the French National Accounting Commission, an impairment provision is recorded on a line-by-line basis for securities which are considered permanently impaired.
No impairment is recognised for differences between net book value, as decreased or increased by the amortisation of any premium or discount, and the realisable value. An impairment provision is recorded only in the event of default of the issuer.
Upon disposal, any the realised gain or loss is allocated to the capitalisation reserve.
Based on the calculations performed, no such reserve was recorded in the fi nancial statements for 2007 and 2008.
Equipment, furniture and fi xtures are depreciated on a straightline or sliding scale basis depending on their estimated useful lives: Offi ce equipment and furniture 5 to 10 years General fi xtures 10 years Transport equipment 4 to 25 years
The Company records all liabilities relating to employee benefi ts on its balance sheet.
End of career indemnities (IFC) and retirement indemnities (IDR): employees benefi t from additional retirement benefi ts paid in full upon retirement. The evaluation of these indemnities depends on several factors such as age, number of year’s service and salary.
Senior management pension obligations (Article 39): The valuation of the reserve for senior management pension obligations is based on the following actuarial assumptions: - Discount rate: 5.50% for the IBoxx Corporate AA bonds 10Y+ rates at 31 December 2008.
Long-service awards: The CNC Notice 2004-05 dated 25 March 2004 requires the recognition of a provision for long-service awards as from 2004.
This fi nancial statement caption includes the various subordinated or unsurbordinated bonds issued by the Company as described in Note 4.
Issuance expenses on loans are amortised over the duration of the respective loans. Interest on fi nancial debt is included in fi nancing expenses.
An unearned premium reserve is calculated either pro rata temporis on a contract-by-contract basis, or using a statistical method when the results do not differ signifi cantly from the contract-by-contract method.
The mathematical reserves for the Life reinsurance are submitted by ceding companies and completed by estimates calculated by Life actuaries using l statistics based on historical date and information provided by underwriters.
An provision for increased risk (“risque croissant“) is recorded for long term care and disability. This risk increases with the age of the insured although the premiums are typically constant. It is equale to the difference between the discounted values of respective commitments of the insured and insurer.
The costs associated with the acquisition of new contracts, essentially commissions, are recorded as assets within the limits of contract profi tability. They are amortised over the duration of the Non-Life contracts.
Pursuant to the provisions of article R.341-7 of the French Insurance Code, foreign currency transactions of the Company are recorded in their original currency. For purposes of fi nancial statement presentation, balance sheet amounts are converted into Euros using the end of period exchange rates or the rate of the closest date immediately prior to the end of the period.
The objective of the « exchange differences » account on the balance sheet is to ensure symmetrical treatment with the accounting of the exchange difference generated by the underlying instrument: when the IFT is linked to a structural element, the “exchange differences” account is maintained on the balance sheet until the structural element has been realised; when the IFT relates to a strategic investment, the “exchange differences“ account is maintained until the date of the investment; when the IFT is related to an operational item, in the context of a strategic divestiture or investment, or the is linked to a nonstructural fi nancial debt, the “exchange differences” account is recorded in income.
Interest differences relating to forward contracts are amortised to interest expense or income over the effective life of the hedged operation.
Previously, the accounting method for completed transactions included recording exchange differences in income. For unsettled transactions, the differences were recorded in “exchange differences ” on the balance sheet as either an asset or liability. Any net asset position was subject to a provision for foreign exchange loss.
The impact of the change in accounting method was calculated retrospectively at the beginning of the period and recorded directly to retained earnings. The impact of the change in method on opening balances has been estimated at EUR 1 million.
In accordance with the Decree of 8 June 1994 and the Order of 20 August 1994 which set forth the rules and accounting principles for reinsurance companies, general expenses, previously recorded by type, are allocated to the following fi ve functions: acquisition costs, claims settlement expenses, administrative expenses, investment portfolio management expenses, and other underwriting expenses.
(1) EUR 78 million increase in equity interests including: • EUR 36 million relating to the cancellation squeeze out of minority interests in SCOR Holding Switzerland (formerly Converium). • EUR 40 million relating to the acquisition of the shares of Prévoyance Réassurance, after the “transmission universelle de patrimoine” (TUP) described in 3.1. • Cession of IRP Holding Ltd (EUR 15 million) and capitalised loan (EUR 83 million) to SCOR Global P&C for EUR 113 million. • Creation of new subsidiaries: SCOR Moscow (EUR 6 million) and SCOR Africa (EUR 11 million).
The loan to IRP Holdings Ltd was capitalised prior to the cession of the shares to SCOR Global P&C.
At 31 December 2008, provisions against equity investments can be analysed as follows: - SCOR U.S. Corporation: EUR 585 million ; - CRP: EUR 358 million.
The shares held in SCOR U.S. Corporation were valued using the following methods and assumptions: - Enterprise value was assessed based on revaluated net assets increased for the creation of future value determined using Discounted Cash Flows (DCF).
- SCOR GLOBAL LIFE (1) EUR 250 282 1, Avenue du Général de Gaulle 92800 PUTEAUX - SCOR GLOBAL P&C EUR 310 586 1, Avenue du Général de Gaulle 92800 PUTEAUX
- FERGASCOR (France) EUR 38 53 1, Avenue du Général de Gaulle 92800 PUTEAUX - SCOR REINSURANCE ASIA-PACIFIC (Singapore) USD 49 34 143 Cecil Street HEX 20-01 GB Building SINGAPORE 069542 - COMMERCIAL RISK PARTNERS (Bermuda) USD 1 -28 The Waterfront 96 Pitts Bay Road P.O.Box HM 440 - HAMILTON - SCOR U.S. CORP (Etats-Unis) USD 196 398 199 Water Street, NEW YORK, NY 10038-3526 USA - SCOR CANADA REINSURANCE (Canada) CAD 50 121 BCE Place 161 Bay Street TORONTO Ontario M5J 2S1 - SCOR AUBER (France) EUR 47 102 1, Avenue du Général de Gaulle 92800 PUTEAUX
(1) Temporary datas. (2) SCOR guarantees in full, without amount limits, the underwriting liabilities of its subsidiaries pertaining in particular to their obligations relative to the payment of claims.
Other intangible assets (excluding goodwill) 1 1 Equipment, furniture, fi ttings and fi xtures 5 2 0 7
All the assets and liabilities of Prévoyance et Réassurance were transferred to SCOR by way of a “transmission universelle de patrimoine ” or “TUP” on 28 December 2008. This transfer resulted in the elimination of the shares of Prévoyance et Réassurance (EUR 26 millions) and the recording of all assets and liabilities of the company in the accounts of SCOR. A badwill of EUR 3.7 million was recorded in connection with this transaction.
EUR 100 million 20-year subordinated bonds, issued on 6 July 2000 callable by SCOR quarterly as from the tenth year following their issuance. These fl oating-rate bonds bear interest basedon the 3-month Euribor plus (i) 1.15% for the fi rst ten years, and (ii) 2.15% thereafter.
Reinsurance reserves (Life) 259 308 Loss reserves (Life) 116 124 Unearned premiums reserves (Non-Life) 211 163 Loss reserves (Non-Life) 652 793 Other underwriting reserves (Non-Life) 291 317 Gross underwriting reserves 1,529 1,705
The reinsurance activity of SCOR is comprised of two treaties: a quota share with SCOR Global P&C and SCOR Global Life and a facultative contract with Allianz which is 100% retroceded to SCOR Global P&C.
The maturity of debt at 31 December 2008 is as follows: In EUR million Less than 1 year 1-5 years +5 years Total
The maturity of investments, debt, (other than fi nancial debt), and receivables is less than one year.
The share capital, comprising 184 246 437 shares with par value of EUR 7.8769723 totalled EUR 1,451,304,080 as at 31 December 2008.
The capital increase of EUR 20 million on 5 June 2008 and issuance of shares relating to the exercise of options for a total of EUR 1 million on 31 December 2008 were allocated to the share capital of the Company for EUR 12 million and to additional paid-in capital for EUR 9 million.
These share capital increases resulted in the issuance of 1,420,408 new shares relating to the cancellation of the minority interests in Conveirum and the exercise of options resulted in the creation of 99 035 shares.
8.1 - BREAKDOWN OF PREMIUMS BY GEOGRAPHIC REGION (COUNTRY WHERE CEDENT IS LOCATED)
The loan to CRP was written down to the subsidiary’s total negative net asset position, i.e., EUR 23 million.
Currency losses were EUR -4 million in 2008 compared to a gain of EUR 20 million in 2007.
NOTE 10 - ANALYSIS OF GENERAL EXPENSES BY KIND AND NON RECURRING RESULT
Non-recurring result The exceptional result of EUR 12 millions was generated by the following: Estimated recovery, under a D&O policy, of fees paid relating to the litigation with Highfi eld amounting to EUR 23 million.
The SCOR Group in France is consolidated for tax purposes with SCOR as the parent company of the Group, and SCOR Global P&C, SCOR Global Life, SCOR Gestion Financière, FERGASCOR, and SCOR Auber as subsidiaries. Under the tax agreement, SCOR benefi ts from the defi cits of its subsidiaries, and tax benefi ts are transferred back to the individual subsidiary concerned, if the entity becomes profi table in the future.
The table below summarises the status of the various stock option plans for 2008: Plan Date of General Meeting
These calculations were performed individually and plan by plan, and rounded up to the nearest unit. The new basis for exercising the rights attached to the share subscription and purchase option plans has been calculated after consideration of the value of the preferential subscription right and the value of the share excluding this right, determined based on the average of the opening prices for all trading days included in the subscription period.
Under these agreements, employees of SCOR and certain subsidiaries are entitled to invest the amounts due to them under the profi t-sharing and incentive plans in a closed-end investment fund entirely invested in SCOR stock. New profi t-sharing and incentive plan agreements were signed in 2007.
The following table presents the actual gross compensation paid in 2007 and 2008 to the Chairman & CEO: Chairman and CEO
The following table presents the actual gross compensation paid in 2007 and 2008 to the administrator and council of the Chairman: Chairman and CEO’s advisor
Fixed compensation paid 410,000 410,000 Variable compensation paid 348,500 Directors ’ fees - 82,200 Total compensation paid 758,500 492,200
Total commitments for pension benefi ts of corporate offi cers which meet the admissibility criteria amount to EUR 5,508,770.
Other commitments given and received (note 15.1.3) 9 9 11 13 15.1 – COMMITMENTS RECEIVED AND GIVEN IN THE ORDINARY COURSE OF BUSINESS
15.1.2 - Confi rmed credits, letters of credit, and guarantees received and given
Investments in subsidiaries and affi liates pledged to fi nancial institutions
The commitments received in terms of capacity to issue letters of credit amounted to EUR 310 million, corresponding mainly to contracts signed with the banks: BNP Paribas:USD 235 million (EUR 168 million) including USD 49 million (EUR 35 million) for the World Trade Center (WTC) loss,
Deutsche Bank:USD 75 million (EUR 54 million) for the WTC loss,
Total commitments received from banks relating to the WTC amount to EUR 178 million.
The guarantee given in consideration for underwriting commitments under the ACE Trust was EUR 24 million. In 2008, this guarantee was in the form of securities pledged to ceding companies whereas in 2007 in was in the form of a cash deposit.
Commercial paper Performance bond Mortgages Leases for leased buildings Guarantees and securities 9 9 8 8 Underwriting commitments Assets pledged to ceding companies Contract termination indemnities 3 5 Real estate lease 15.2 - COMMITMENTS GIVEN AND RECEIVED IN RESPECT OF HYBRID TRANSACTIONS
No facts in connection with the aforementioned commitments given and received have come to our knowledge, which may have an adverse impact on cash fl ows, cash positions or on our liquidity requirements. To the best knowledge of the Company, as at 31 December 2008, there were no other signifi cant outstanding fi nancial commitments requested by a Group entity within the context of the procedures described above.
The following litigation matters shall be mentioned: In the United States: In August 2006, Highfi elds Capital LTD, Highfi elds Capital I LP and Highfi elds Capital II LP (the “Highfi elds Funds”), as former minority shareholders of IRP Holdings Limited, a company incorporated in Ireland, commenced an action against SCOR in the Superior Court of the Commonwealth of Massachusetts (the “Highfi elds Lawsuit”). The complaint in the Highfi elds Lawsuit, which was served upon SCOR on 18 October 2006, included claims for common-law fraud, negligent misrepresentation and violations of a Massachusetts consumer protection statute arising out of the Highfi elds Funds’ purchase of an equity interest in IRP Holdings Limited in December 2001, and the conditions for setting the price at which the Highfi elds Funds subsequently sold their interest to SCOR in 2005, a transaction which was highly profi table to the Highfi elds Funds. The Highfi elds Lawsuit is similar to a previous lawsuit fi led by the Highfi elds Funds in March 2004 before the U.S. District Court for the District of Massachusetts and which was dismissed for lack of subject matter jurisdiction on 16 August 2006. On 21 March 2007, the Superior Court of the Commonwealth of Massachusetts granted SCOR’s motion to dismiss the Highfi elds Funds’ claims under the Massachusetts consumer protection law but denied SCOR’s motion to dismiss the remaining claims. On 10 April 2007, the Court denied SCOR’s Motion for Summary Judgment on Statute of Limitations Grounds, and on 17 September 2007, the Court denied SCOR’s Motion for Partial Summary Judgment seeking dismissal of the Highfi elds Funds’ claim for negligent misrepresentation.
The current fact discovery deadline in the Highfi elds Lawsuit is in principle 17 April 2009. No proceedings beyond that date are presently scheduled. Discovery is now under way.
SCOR maintains that Highfi elds’ action is without merit and intends to continue to defend itself vigorously. At this stage of the proceedings, we cannot estimate the likelihood or potential amount of any adverse judgment.
In April 2006, the Silverstein Parties announced their intent to transfer certain WTC reconstruction rights to The Port Authority of New York and New Jersey (“Port Authority”) thereby extinguishing the Silverstein Parties’ right to recover replacement costs for the transferred rights pursuant to the terms of Allianz ’s coverage. After Allianz refused to waive Allianz’s rights under its policy, the Silverstein Parties and the Port Authority initiated a separate lawsuit against Allianz and other insurers
in New York state court disputing that the partial transfer extinguished the insurers’ obligation to pay replacement costs for the transferred rights. In September 2006, the New York state court ordered all parties to take part in a global settlement mediation in an effort to resolve the claim.
On 23 May 2007, over SCOR’s stated objection as the 100% fronted reinsurer, Allianz accepted a fi nal settlement with the Silverstein Parties and the Port Authority resolving all pending litigation. Under the settlement, Allianz agreed to pay two full limits of coverage, USD 710 million, with the unpaid balance payable in increments through 2010, and conceded a number of valuation and coverage positions that Allianz had been advancing on SCOR’s behalf under the Allianz policy, including Allianz’s position that any prior or future transfers of development rights by the Silverstein Parties extinguished potential replacement cost claims for the transferred rights. In objecting to the settlement, SCOR advised Allianz that the settlement, by waiving critical coverage and valuation positions under the Allianz policy and foreclosing SCOR from obtaining a meritsbased resolution of the claim, did not comply with the terms and conditions of the reinsurance certifi cate between SCOR and Allianz and contained ex gratia components..
The Group is involved in one legal proceeding concerning past environmental claims in Texas. Based on information available to us as at the date of the consolidated fi nancial statements, the Group believes the provisions it has reserved are suffi cient to cover this matter.
In addition, as a result of its acquisition of Converium (which has since become SCOR Holding (Switzerland)), SCOR now assumes the burden of the following litigation matters: On 4 October 2004, the fi rst of several putative securities class action complaints was fi led in the United States District Court for the Southern District of New York (the “Court”) against Converium and several of its offi cers and directors. The complaints were subsequently consolidated and Public Employees’ Retirement System of Mississippi and Avalon Holdings Inc. were appointed lead plaintiffs (the “Lead Plaintiffs”).
On 23 September 2005, the lead plaintiffs fi led a consolidated amended class action complaint (the “Complaint”). In addition to Converium and certain of its offi cers and directors, the Complaint also names as defendants Zurich Financial Services (“ZFS”); UBS AG; and Merrill Lynch International. The Complaint generally alleges that a class of shareholders who purchased shares of Converium between 11 December 2001 and 1st September 2004 were damaged because Converium did not establish adequate loss reserves to cover claims by policyholders; Converium announced reserve increases prior to 20 July 2004 that were insuffi cient; and, as a result of the foregoing, Converium’s earnings and assets were materially overstated. The Complaint asserts claims for violations of Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Sections 11, 12 and 15 of the Securities Act of 1933 (the “Securities Act”). The Complaint seeks unspecifi ed monetary damages and other relief.
On 12 January 2007, Lead Plaintiffs fi led a motion for reconsideration of the Court’s 28 December 2006 order. On 9 April 2007, the Court granted Lead Plaintiffs’ motion for reconsideration in part and denied it in part. The Court granted Lead Plaintiffs’ motion to reconsider its dismissal of Exchange Act claims arising out of the IPO. The Court denied Lead Plaintiffs ’ motion to reconsider the dismissal of the Securities Act claims, as well their motion to fi le a Consolidated Second Amended Class Action Complaint.
On 4 September 2007, the Court preliminarily approved the settlement. If the settlement obtains fi nal approval, it would resolve the claims of the Settlement Class asserted against ZFS (and against certain other defendants as set forth in the Stipulation of Settlement, including all of Converium’s former directors). A fairness hearing on the settlement has not yet been scheduled.
By Orders dated 6 March and 19 March 2008, the Court certifi ed a class of plaintiffs consisting of all U.S. residents who purchased Converium Securities on the SWX Swiss Exchange and all persons who purchased Converium or in the American Depository Shares (“ADSs“) on the New York Stock Exchange (NYSE) from 7 January 2002 through 2 September 2004 (the “Class”). The Court specifi cally excluded from the Class all non-US purchasers of Converium Securities on the SWX Swiss Exchange.
On 6 May 2008, following several mediation sessions before the Honorable Daniel Weinstein (Ret.), a Memorandum of Understanding was entered to pursuant to which the Lead Plaintiffs and SCOR Holding (Switzerland) will settle the claims and/or potential claims of the certifi ed Class before the U.S. Court and the claims of non-U.S. purchasers of Converium securities in a proceeding in the Netherlands for an aggregate amount of USD 115 million (pre tax and before D&O recoveries).
SCOR Holding (Switzerland) is in the process of negotiating a defi nitive agreement for the settlement of the claims of nonU. S. purchasers of Converium securities.
SCOR Holding (Switzerland) consented to the issuance of the Order without admitting or denying any wrongdoing. There were no fi nes, disgorgement payments or fi nancial remedies associated with the settlement.
In Europe : SCOR Global Life (formerly SCOR VIE), as the reinsurer of an insurance company, is involved in a lawsuit in connection with a life insurance policy in the amount of approximately EUR 4.5 million. The benefi ciary of the policy was killed in 1992. In June 2001, a Spanish court ordered the ceding company to pay approximately EUR 16 million under the policy, which amount included accumulated interest since 1992 as well as damages. Following this decision, SCOR VIE booked a technical provision of EUR 17.7 million in its accounts for the 2001 fi nancial year. In May 2002, the Barcelona Court of Appeals found in favor of the ceding company. The representatives of the deceased have now appealed the case to the Spanish Supreme Court. In June 2007, the Spanish Supreme Court confi rmed the decision by the Court of Appeals in favor of the cedent and, as a result, SCOR decided to re-absorb the provision booked for this litigation. However, the benefi ciaries of the insurance policy fi led a “recours d’amparo” (individual protection claim) before the Spanish Constitutional Court. The cedent has therefore decided to maintain its provision.
Starting February 2005, SCOR was the subject of a tax accounting audit covering the period 1st January 2002 through 31 December 2003, which ended with a fi nal adjustment notice on 15 January 2008. This tax audit resulted in the base for corporate income tax being raised by EUR 101,067,063, as well as long term unrealised losses by EUR 68,880,000. These various adjustments have no fi nancial consequence in the form of additional tax paid to the French Treasury. They concern the premiums and fees pertaining to proportional treaties and in excess of loss covers granted by SCOR to its subsidiary SCOR U.S. Corporation and the provisioning of equity investments with said subsidiary. Since some adjustments create “discrepancies ” and since compensation is made during the year following the audited period, the decrease in net loss carry-forwards is EUR 64,492,071, corresponding to taxation of EUR 22,206,769 attributable to deferred taxes carried over and without effect on the cash of the Company.
Concerning the Swiss Federal Banking Commission’s decision dated 13 July 2007, confi rming the position expressed by the Swiss Takeover Board in its Recommendation IV dated 9 June 2007, according to which Mr. Martin Ebner, Patinex and BZ Bank AG had acted in concert with SCOR in connection with the Offer, SCOR refutes this characterisation and reaffi rms that such physical person and legal entities did not act in concert with SCOR in connection with the Offer. On 13 September 2007, SCOR has fi led an appeal against this decision before the Federal Administrative Court (Bundesverwaltungsgericht) in accordance with applicable legal and regulatory provisions.
After an initial investigatory phase, the Directorate of Investigation of the CNC has confi rmed its initial accusation and has sent the fi le to the Council of the CNC for a fi nal decision. The Council must issue its decision on the fi le before 29 June 2009.
In compliance with the assignment entrusted to us by your Annual General Meeting, we hereby report to you, for the year ended 31 December 2008, on: the audit of the accompanying annual fi nancial statements of SCOR SE, the justifi cation of our assessments, the specifi c verifi cations and information required by French law.
We conducted our audit in accordance with the professional standards applicable in France; those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes verifying, by audit sampling and other selective testing procedures, evidence supporting the amounts and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used, the signifi cant estimates made by the management, and the overall fi nancial statements presentation. We believe that the evidence we have gathered in order to form our opinion is adequate and relevant.
In our opinion, the fi nancial statements present fairly, in all material respects, the fi nancial position of the company at 31 December 2008 and the results of its operations for the year then ended, in accordance with the accounting rules and principles applicable in France.
Notes 1.2, 1.10, 1.12, 2 and 15.1.1 to the annual fi nancial statements describe the principles and methods used to estimate the valuation and impairment of investments and derivative instruments.
In the specific context of the financial crisis, we examined the control system in place relative to the inventory of direct and indirect exposures, and the system in place for their assessment, as well as the valuation methods and write-down policies applicable to certain fi nancial instruments. We have obtained assurance that the information provided in the aforementioned notes is appropriate, and that the approaches and policies described were properly applied by the company.
We have also performed the specifi c verifi cations required by law in accordance with professional standards applicable in France.
We have no matters to report regarding the following: the fair presentation and the conformity with the fi nancial statements of the information given in the directors’ report and in the documents addressed to the shareholders with respect to the fi nancial position and the fi nancial statements; the fair presentation of the information given in the directors’ report in respect of remunerations and benefi ts granted to the relevant directors and any other commitments made in their favour in connection with, or subsequent to, their appointment, termination or change in current function.
Statutory auditors’ report, prepared in accordance with article L.225-235 of the Commercial Code, on the report prepared by the President of the Board of SCOR SE
APPENDIX B: REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS ON THE TERMS AND CONDITIONS FOR PREPARING AND ORGANISING THE WORK OF THE BOARD OF DIRECTORS AND ON INTERNAL PROCEDURES IN ACCORDANCE WITH ARTICLE L.225-37 OF THE FRENCH COMMERCIAL CODE I. Terms and conditions for preparing and organising the work of the board of directors
In accordance with the provisions of article L.225-37 of the French Commercial Code, this report serves to set forth the terms and conditions for the preparation and organisation of the work of the Company’s Board of Director’s, in addition to the internal auditing procedures that have been implemented by the Company.
This report has been approved by the Board of Directors on 3 March 2009.
During its meeting on 12 December 2008, the Company’s Board of Directors designated the consolidated corporate governance code listed corporations of the AFEP-MEDEF (Association Française des Entreprises Privées – Mouvement des Entreprises de France) of December 2008 as its reference code, according to the implementation of this law on 3 July 2008 (act no.2008-649 aimed at providing various provisions regarding the adaptation of French company law with the European Community law changing articles L.225-37 and L.225-68 of the French Commercial Code).
Details of this code can be found on the Company’s website www. scor.com or alternatively on MEDEF’s website www.medef.fr.
Conditions for the preparation and organisation of projects of the Company’s Board of Directors
The Board of Directors is composed of 14 Directors and one Nonvoting Director. Of these 14 members of the Board, 10 are independent: MM. Carlo Acutis, Gérard Andreck, Antonio Borgès,
The main conclusions drawn from this analysis are the following: The responses are complete, constructive and positive. The feedback reflects an able and strong Board, composed of varied personalities, experimenting and participating in an active and constructive manner in carrying out proceedings. The responses highlight the effi cacy of the Boards, notably the Audit Committee and the Strategy Committee and the ability of the Board to follow
The following were identifi able as reoccurring areas for improvement in the responses: the need to send fi les earlier; the completion of risk analyses more thoroughly within the Risk Committee; the improvement of formalities for the Remuneration and Nomination Committee.
The average attendance rate of the Members of the Boards was 87% in 2008.
Daniel Lebègue 65 French 15/05/2003 2009 André Lévy-Lang 71 French 15/05/2003 2009 Luc Rougé 56 French 24/05/2007 2009 Herbert Schimetschek 71 Austrian 15/05/2003 2011 24/05/2007
Jean-Claude Seys 70 French 15/05/2003 2009 Jean Simonnet 72 French 02/03/1999 2008 (2) 31/05/2005
Patrick Thourot 60 French 24/05/2007 2009 Daniel Valot 64 French 15/05/2003 2011 24/05/2007
(1) Co-option as Director by the Meeting of the Board of Directors on 18 March 2008, in replacement of Jean Simonnet. (2) M. Simonnet resigned from his offi ce on 18 March 2008.
Pursuant to the Internal Regulations, the Board of Directors of the Company determines the policies of the Company’s businesses, oversees their implementation and supervises the management’s administration. The Board meets at least four times a year. In accordance with legal provisions, it settles the fi nancial statements, proposes dividends and makes investment and fi nancial policy decisions. The Board also determines the amount and the nature of the sureties, securities and guarantees, which can be granted by the Chairman and Chief Executive Offi cer on behalf of the Company.
The application of the notion of director independence is assessed on the basis of the following primary criteria, derived from the recommendations of the AFEP/MEDEF report. An independent director: 1 must not currently be or have been within the last fi ve years an employee or corporate offi cer of SCOR; The corporate governance code of listed corporations of AFEP/ MEDEF also considers that, in order to be qualifi ed as independent, a Director must not be or have been within the last fi ve years an employee or corporate offi cer of a company consolidated by the parent company.
However, SCOR considers that an external Director, member of the Board of Directors of SCOR as well as member of the Board of Directors of subsidiaries of SCOR, such as SCOR Holding (Switzerland) or SCOR Reinsurance Company, who satisfi es all the other criteria shall be considered as being independent.
2 must not have received remuneration greater than EUR 100,000 per year from SCOR within the last fi ve years, excluding that received as directors’ fees; 3 must not be an offi cer in a company in which SCOR directly or indirectly is a director, or in which an employee has been appointed as such, or in which an offi cer of SCOR (currently or within the last fi ve years) is a director; 4 must not be a signifi cant client, supplier, investment banker, commercial banker of SCOR or of its group (the “Group”) or for which SCOR or its Group represents a signifi cant share of the turnover. A signifi cant share is a contribution to the turnover equal to the lesser of the following two amounts: more than 2% of the Company’s consolidated turnover, or an amount greater than EUR 100 million; 5 must not have a close family relationship with an officer of SCOR; 6 must not have been an auditor of the company within the last fi ve years; 7 must not have been a Director of SCOR for a period exceeding twelve years 8 must not represent a shareholder of the Company owning more than 5% of the share capital or voting rights.
The following table presents an analysis of the independence of each director with regard to the criteria stated above: Denis Kessler No No No Yes Yes Yes Yes Yes No Carlo Acutis Yes Yes Yes Yes Yes Yes Yes Yes Yes Gérard Andreck Yes Yes Yes Yes Yes Yes Yes Yes Yes Antonio Borgès Yes Yes Yes Yes Yes Yes Yes Yes Yes Allan Chapin Yes Yes Yes Yes Yes Yes Yes Yes Yes Daniel Havis Yes Yes Yes Yes Yes Yes Yes Yes Yes Daniel Lebègue Yes Yes Yes Yes Yes Yes Yes Yes Yes André Lévy-Lang Yes Yes Yes Yes Yes Yes Yes Yes Yes Luc Rougé No Yes Yes Yes Yes Yes Yes Yes No Herbert Schimetschek Yes Yes Yes Yes Yes Yes Yes Yes Yes Jean-Claude Seys Yes Yes Yes Yes Yes Yes Yes Yes Yes Claude Tendil Yes Yes Yes Yes Yes Yes Yes Yes Yes Patrick Thourot No No No Yes Yes Yes Yes Yes No Daniel Valot Yes Yes Yes Yes Yes Yes Yes Yes Yes
The Internal Regulations require that candidates for Director inform the Board of the position they currently hold as Director or Offi cer in other entities, as the Board has the duty to ensure compliance with the rules regarding the accumulation of position as Director. Once appointed, Directors must inform the Board of any appointment they hold as a company offi cer within a period of fi ve days following the event. Finally, Directors must inform the Board of the position they have held as Director in other entities during the course of the fi nancial year within a period of one month following the end of this fi nancial year.
The Internal Regulations set out the primary recommendations of the market authorities concerning the Directors trading the securities of the Company.
Following this, the Internal Regulations insist that the Directors register as owners of SCOR equities that they themselves or their un-emancipated minor children hold at the time they enter offi ce, in addition to those acquired subsequently. Finally, certain restrictions are enforced by the Internal Regulations concerning trading SCOR securities: fi rstly, Directors are prohibited from trading in SCOR securities while in possession of information which, when made public, is likely to have an impact on the share price. The restriction remains in place two days after this information has been made public by a press release, secondly, they are prohibited, directly or indirectly, from carrying out any transaction in the Company’s securities during unstable periods, which they are made aware of by the Company or during any period preceding a major event affecting the Company, likely to infl uence its market price.
Finally, Directors are obliged to declare all transactions carried out concerning the Company’s securities, directly or by an intermediary, on their behalf or on behalf of a third party, by their spouse, or by a third party holding a power of attorney, to SCOR
The following table displays the attendance of the members of the Board of Directors during 2008: Board Members Attendance rate (%)
The Strategy Committee is composed of Denis Kessler, Chairman, Carlo Acutis*, Gérard Andreck* (from the 7 May 2008), Antonio Borgès*, Allan Chapin*, George Chodron de Courcel (Non-Voting Director), Daniel Havis*, Daniel Lebègue*, André Levy -Lang*, Jean-Claude Seys*, Jean Simmonet* (until the 18 March 2008), Herbert Schimetscheck*, Claude Tendil*, Patrick Thourot and Daniel Valot*, appointed by the Board of Directors and selected among the members of voting and non-voting Directors. The term of their mandates coincide with their term of offi ce on the Board of Directors.
The Chairman of the Committee may convene any individual likely to provide relevant information for a clear understanding of a given point; the presence and information provided by this individual being limited to the relevant items on the agenda. The Chairman of the Strategy Committee must exclude the non-independent members of the Committee from the review of the discussions which might create an ethical problem or a confl ict of interest.
The following table states the attendance rates of the members of the Strategy Committee in 2008: Committee Members Attendance rate (%)
Denis Kessler 100 Carlo Acutis 75 Gérard Andreck (1) 33 Antonio Borgès 100 Allan Chapin 100 Georges Chodron de Courcel, Non voting Director 100 Daniel Havis 50 Daniel Lebègue 100 André Lévy-Lang 50 Jean-Claude Seys 100 Herbert Schimetschek 100 Jean Simonnet (2) 100 Claude Tendil 100 Patrick Thourot 100 Daniel Valot 100
(1) Mr Andreck has been a Board Member since 7th May 2008. (2) Mr Simmonet resigned from offi ce on 18th March 2008.
The Audit Committee is composed of Daniel Lebègue*, Chairman, André Lévy-Lang*, Antonio Borgès* and Daniel Valot*. According to its Internal Regulations, the Committee comprises between three and fi ve members appointed by the Board of Directors of the Company and selected among the members of voting and non-voting Directors and, in compliance with the AFEP and MEDEF corporate governance code of listed corporations of December 2008, it is composed of a majority of independent Directors. The term of their mandates coincide with their term of offi ce on the Board of Directors.
It is responsible for reviewing the fi nancial situation of the Group, its compliance with internal policies, in addition to audits and reviews carried out by the auditors and by the internal control unit. It ensures the quality and transparency of the Group’s fi nancial statements.
The Audit Committee has adopted a set of Internal Regulations, setting forth two imperative missions: Accounting mission, including the analysis of periodic fi nancial documents, the review of the relevance of choices and correct application of accounting methods, the review of the accounting treatment of any material transaction, review of the scope of consolidation, review of off-balance sheet commitments, control of the selection and remuneration of statutory auditors, oversight of any accounting and fi nancial reporting documents before they are made public; it may consult the Group’s Chief Financial and Accounting Offi cer, the Chief Internal Auditor and external auditors on these issues.
Ethical and internal control responsibilities. In this context, the Audit Committee is responsible for ensuring that internal procedures relating to the collection and auditing of data, guarantee the quality and reliability of SCOR’s fi nancial statements. The Audit Committee is also in charge of reviewing agreements with related parties (“conventions réglementées”), analysing and responding to questions from employees with regard to internal controls, the preparation of fi nancial statements and the treatment of internal accounting books and records.
The Chairman of the Committee may convene any individual likely to provide relevant information for a clear understanding of a given point; the presence and information provided by this individual being limited to the relevant items on the agenda. The Internal Regulations of SCOR’s Audit Committee, has been approved by the Board of Directors of the Company on 18 March 2005.
During its six meetings in 2008, the Audit Committee discussions focused primarily on the following matters: review of the quarterly and annual fi nancial statements.
The following chart states the attendance of the Audit Committee’s members in 2008: Committee Members Attendance rate (%)
The Compensation and Nomination Committee members are Allan Chapin*, André Lévy-Lang*, Georges Chodron de Courcel, Non-Voting Director, Claude Tendil* Chairman and Daniel Valot*. According to its Internal Regulations, the Committee is composed of between three and fi ve members appointed by the Board of Directors of the Company and chosen among the members of voting and Non-Voting Directors. In compliance with its internal regulations, the members are in majority chosen amongst the independent Directors, the Chairman of Board of Directors and the Chief Executive Offi cer. The term of their mandate coincides with their term of offi ce within the Board of Directors or Non-Voting Director.
The Risk Committee members are Antonio Borgès*, Daniel Havis *, Daniel Lebègue*, Chairman, André Lévy-Lang*, Jean-Claude Seys*, Claude Tendil* and Daniel Valot*.
The following chart states the attendance of the members of the Risk Committee in 2008: Committee Members Attendance rate (as%)
Antonio Borgès 100 Daniel Havis 50 Daniel Lebègue, Chairman 100 André Lévy-Lang 50 Jean-Claude Seys 50 Daniel Valot 50 Claude Tendil 25 e) Principles and rules stated for the determination of compensation and in-kind benefi ts for corporate offi cers
Every year, the conditions of remuneration for corporate offi cers and Directors are made public through the documents released for the Annual General Shareholders’ Meeting. The General Shareholders ’ Meeting that took place on 31 May 2005 set the Directors’ fees at a maximum of EUR 800,000 per year. This limit has not been changed since this date. Within the limits of this amount and upon the submission of the Compensation and Nomination Committee, the Board of Directors fi xed the conditions of the allotment, in order to encourage the attendance of the Directors. It was thus decided to award the Directors’ fees, payable to each voting or non-voting Director as a fi xed part, equal to EUR 20,000, payable in fourths and another part based on attendance by voting and non-voting Directors, amounting to EUR 1,700 per meeting and participant. The payment of the Directors fees is made at the end of each quarter. Moreover, each Director receives the single sum of EUR 10,000 that must be used to purchase Company’s shares, that the Director commits to keep until the end of his appointment.
– 50% on the basis of the achievement of fi nancial objectives, defi ned annually at the beginning of each year by the Board of Directors of the company on the recommendation of the Compensation and Nomination Committee.
The variable compensation for year n will be paid in year n+1, as soon as the fi nancial statement of the Company for year n are approved by the Board of Directors.
As the Company representative, the Chairman and Chief Executive Offi cer is granted with a company car with a driver. The insurance, maintenance, fuel and all costs related to the driver are paid by the Company.
Moreover, the Chairman and Chief Executive Officer receives benefi ts in kind, of the following nature: (a) a health insurance policy under the terms of a contract dated 16 September 1988; (b) an “all causes” death or permanent disability insurance policy for Company Executives, dated 30 June 1993. The Company is currently re-negotiating this contract and it is specifi ed that the Chairman and Chief Executive Offi cer will benefi t from any policy that may replace the existing policy; and
Denis Kessler joined the Group on 4 November 2002 with the goal to sort it out as it was facing a very diffi cult fi nancial situation. The Board of Directors considered that, in order to achieve such mission, it was preferable to entrust the powers of Chairman and of Chief Executive Offi cer to Denis Kessler.
No limitation on the powers of the Chairman and Chief Executive Offi cer, other than those stipulated by law, is included in the bylaws or any decision of the Board of Directors of the Company.
II. Internal control procedures In application of the provisions of article L. 225-37 of the French commercial Code, the purpose of this report is to report the term and conditions for preparing and organizing the work of the Board of Directors and an internal procedures implemented by the Company.
Further to the successive acquisition of two large groups, SCOR considered how to strengthen the Enterprise Risk Management (ERM) framework in the Group by integrating the internal control system within it. The internal control system is the responsibility of the Group’s General Management.
This report was prepared with the contribution of the Group Internal Audit Department, the Group Risk Management Department, the General Secretary’s Department and the Finance Department. It was presented to the Accounting and Audit Committee on 2 March 2009 and to the Board of Directors of the Company on 3 March 2009.
SCOR’s functional responsibilities cover a broad area extending to all of the Group’s activities. The heads of both the Finance Department (the Chief Financial Offi cer (CFO)) and the Group Risk Management Department (the Chief Risk Offi cer (CRO)) report to the Chairman and Chief Executive Offi cer and are members of SCOR’s Executive Committee (Group Comex). The Group Internal Audit Department reports to the Chairman and Chief Executive
Offi cer. The other departments, namely Information Systems Department, General Secretary and Corporate Legal and Reinsurance Legal Departments, Human Resources Department, Corporate Communications Department and Group Cost Control & Budget Department, report to the Chief Operating Offi cer (COO).
Operating activities are divided between: SCOR Global P&C SCOR Global Life SCOR Global Investments
Each of the two reinsurance companies includes functional departments, including a Risk Management Department.
SCOR Global Investments will be responsible for the investment portfolios of all the Group’s legal entities and will be regulated by the French regulatory body (AMF), from whom it should receive approval at the beginning of second quarter 2009.
Within this environment, control responsibilities are exercised as follows: SCOR’s Board of Directors relies on the Accounting and Audit Committee and the Risk Committee to exercise its control responsibility over the objectives it has set for the Company; SCOR’s Executive Committee defi nes the procedures for implementing the strategy decided by the Board of Directors, the underwriting policy, the financial policy, the retrocession policy, and the claims management policy. It meets on a weekly basis and is currently made up of the Senior Managers of the Group: the Chairman and Chief Executive Offi cer of SCOR, the Chief Executive Offi cer of SCOR Global P&C and his deputy, the Chief Executive Offi cer of SCOR Global Life and his deputy, the Chief Executive Offi cer of SCOR Global Investments, the Chief Risk Offi cer and the Chief Financial Offi cer. SCOR SE is represented in the governance bodies of its principal subsidiaries; the Group functional departments and those of SCOR Global P&C and SCOR Global Life invested with a control responsibility have the task of defi ning and controlling the implementation of rules pertaining to the areas of their responsibility and applicable to all of the Group’s entities. These rules, and the participants, are described in detail in part c) of this report on control activities; the subsidiaries as well as the branches and offi ces, must apply the rules defi ned by the functional departments of SCOR Global P&C and SCOR Global Life, the Group Treasury Department and the Group functional departments. The subsidiaries and branches carry out all of the fi rst-level controls related to business management and ensure compliance with local regulatory, accounting and fi scal laws.
To this end, the Group Risk Management Department coordinates some twenty transversal projects which aim to structure and promote ERM within the Group. One of these projects concerns the furthering of a harmonised, formalised and structured internal control system in the Group to comply with Group standards. The scope of this project and the necessity of large-scale coordination prompted SCOR to create, in 2008, the position of Head of Internal Control Standards, reporting to the Group Risk Management Department. In addition, experts are dedicated to the coordination of internal control initiatives within SCOR Global P&C and SCOR Global Life and support the managers if necessary.
SCOR’s objective in having a worldwide information system integrating underwriting operations, accounting (technical, general, consolidated), fi nancial management and marketing (constitution of a database of SCOR’s clients) is crucially important in terms of
internal control. The decision taken in 2007 to embark on a vast two-year integration programme for back offi ce applications in 2008 and front offi ce applications in 2009, will strengthen the internal control procedure: by allowing all Group entities to benefi t from numerous controls embedded in the systems deployed, by ensuring that all business teams adopt common rules for administration, accounting and analysis of results, by creating a single environment which enables the control procedures and the use of Group control tools/ standard reports to be harmonised in a more effi cient manner.
Thus, in 2008, Group principles relative to delegations of powers, to the use of the double signature in documents which bind SCOR and to the Group IT security policy were created and implemented. The anti-money laundering and anti-fraud procedures, which existed in SCOR Global Life, have been revised in order for them to also cover the activities of SCOR Global P&C.
When approved, these documents are made available for Group employees on the SCOR intranet.
Emerging risks are subject to a specifi c process of identifi cation and analysis. Indeed, a collaborative, dedicated site has been created on the Group’s intranet allowing designated Observers, who are experts in their fi eld, to collate market information, articles or studies on risk subjects. In addition, a special website allows all Group employees to submit information, which is processed by the Group Risk Management Department. When the Executive Committee or Risk Committee deems it important, a specifi c study is launched on certain emerging risks.
This process is currently being deployed and aims to review, for each critical process, the risk that the objectives of the process will not be fulfilled and the key controls to deal with these risks.
All these initiatives and processes are coordinated by the Group Risk Management Department, supported by the Risk Offi cers of SCOR Global P&C and SCOR Global Life.
All the resulting conclusions and studies are summarised in a report submitted each year to the Chief Risk Offi cer who decides which steps to take.
Furthermore, the Group Risk Management Department coordinates an ERM coordination committee, made up of representatives of SCOR Global P&C, SCOR Global Life, SCOR Global Investments and the Group functional departments. This committee discusses the major risks identifi ed within each Group entity.
The Chief Risk Offi cer relates the key points to the Executive Committee and the Risk Committee. The Executive Committee then decides on the action to be taken for the identifi ed risks.
SCOR’s control procedures are currently grouped in the following fi elds of activity: i) activities related to reinsurance ii) asset management, iii) accounting management, iv) “support” functions.
The operating and control procedures concerning underwriting, administration of reinsurance contracts and claims management are validated by SCOR Global P&C and SCOR Global Life and are applied to all underwriting segments of the company in question, regardless of location. The following steps strengthen internal controls in this area: SCOR uses a model for determining fi nancial capital managed by the Group Risk Management Department, necessary to implement its underwriting and asset management policies. Economic capital is allocated to SCOR Global P&C and SCOR Global Life and constitutes the reference for deciding and verifying the profi tability expected for each of them; Underwriting plans, both qualitative (description of the environment ) and quantitative (activity budget), are established for respectively SCOR Global P&C and SCOR Global Life and approved annually by the Group’s General Management; A quarterly review of technical results is performed for: – SCOR Global P&C, by sector (P&C Treaties, Specialties, Business Solutions) and region (Europe and Rest of the World, America, Asia). The review enables to analyse technical results by underwriting year, by nature and by line of business,
lations. A “CAT” committee meets annually to approve the allocation of CAT capacities by country. Earthquake and storm risks are managed by market models (Eqecat, AIR and RMS) in the regions considered to be the most exposed; – for SCOR Global Life, scenarios are established in conjunction with the Risk Management Department of SCOR Global Life in order to defi ne the need for retrocession coverage; Risks specifi c to the administration of contracts are subject to controls performed at the level of the subsidiaries and branches. SCOR’s Group Information System, rolled out to all entities in 2008, includes multiple automatic controls and additional control tools.
The Chief Actuary performs a centralised control of the methods and reserving tools and ensures that reserves are adequate for P&C and Life activities. His role is to implement standardised methods for reserving losses for the entire Group, and to ensure the consistency of the reserving policies within the Group, in liaison with the internal actuaries and any external actuaries. The Chief Risk Offi cer, assisted by the Chief Actuary, supervises the reserves for all the subsidiaries and branches and reports to the Accounting and Audit Committee of the Board of Directors of the Company.
specially appointed to deal with all issues of information system security. Periodic audits of information security applications and procedures are conducted. Since 2005, SCOR has been improving its control procedures by basing them on the COBIT guidelines (Control objectives for information and technology) to cover risks, listed in the 12 major processes of COBIT, relating to the development of programmes, changes in programmes, operation and access to data programmes. An IT contingency plan has been established, including an emergency and back-up centre located outside of SCOR’s head office. Because of the current migration of the reinsurance technical information system, this contingency plan was applied to all Group entities in 2008, in terms of Group systems; the budgetary control system for general expenses is organised by the Group Cost Control & Budget Department as follows: an orientation letter is sent by General Management to each member of the Executive Committee, for his scope of responsibility, setting forth the general guidelines to be followed under the strategy adopted for the Group. A budget is established for each hub and for each legal entity in relation with the Senior Managers of the entities. Meetings to validate and approve the forecasts are then held, involving the Senior Managers of the entities and the Executive Committee. Quarterly monitoring of budget consumption is provided for each hub, for each Group legal entity, and by type of general expense at the Holding level; the Group Financial Planning & Analysis Department establishes an annual fi nancial plan for the Group by company and monitors actual data in relation to this plan on a quarterly basis. A presentation of the results of the analysis is made to the Executive Committee every quarter; to deal more effectively with tax issues, in 2008 the decision was made to strengthen tax expertise at the group level. This resulted in the recruitment of a Group Tax Director. The objective of the Group Tax Department is to ensure that the various entities of SCOR meet their tax obligations and promote the use of best practices in this domain; The General Secretary and Group’s Legal Departments exercise control at various levels. It is their responsibility to ensure compliance, both with the laws and regulations and with internal rules, decisions, commitments and practices of SCOR. This task particularly affects the legal organisation of the Group’s entities, the entry into agreements, and supervision of major disputes. They also monitor compliance with the Group’s fi ling obligations. In addition, in order to minimise compliance and reputation risks, the new position of Group Compliance Offi cer was created in 2008, reporting to the General Secretary, to ensure that the various aspects of regulatory and legal compliance are properly identifi ed and managed.
Concerning the Registration Document, a specifi c process has been implemented to ensure the contribution of all relevant departments and the consistency of the information provided. A fi nal edit is made by members of the Executive Committee.
Monitoring of the internal control procedures falls under the remit of General Management which is supported by two departments: the Group Risk Management Department and the Group Internal Audit Department with the aim of optimising resources and having regular, formalised reporting of the state of documentation and structuring of internal control procedures. Furthermore, the Finance Department has developed the “management representation letters” process, detailed in part f) on fi nancial reporting, which also incorporates certain points relative to internal control of accounting and fi nancial reporting.
vities. Should the level of maturity of one of these topics not be considered suffi cient, an action plan is required. This process shall be rolled out in 2009.
General accounting for SCOR subsidiaries is supported by two main auxiliary group of accounting systems, namely (1) technical reinsurance accounting: premiums, claims, commissions, technical reserves, interest on funds held; and (2) fi nancial asset accounting: securities, bank accounts, investment income and expenses.
Concerning reinsurance accounting, numerous regular controls are conducted directly (automatic and systematic, or for consistency or by testing) by the Technical accounting teams located in the subsidiaries using both Group tools and Group or specifi c control reports. Quarterly inventories are also subject to specifi c control procedures.
Finally, reinsurance technical results are analysed quarterly by the fi nance departments of SCOR Global P&C and SCOR Global Life. At year-end, the Group Chief Actuary establishes a report on the adequacy of the reserves of SCOR Global P&C and SCOR Global Life.
Regarding the process of aggregating and consolidating accounting data by the Group Accounting Department, current internal control is ensured: B | REPORT OF THE CHAIRMAN
Control of the quarterly consolidation procedure under IFRS is provided in particular through: use of a market recognised consolidation software package (“Magnitude”) and common to all Group entities, which ensures the whole consolidation process through automated and formalised controls; the formalisation of the reconciliations between the systems or auxiliary accounting methods with the general and consolidation accounting systems; at least three levels of control of the consistency and completeness of the consolidation package, one by the entity in question, another by the fi nance departments of SCOR Global P&C and SCOR Global Life and the third by the Group Finance Department; systematic analyses of the results, shareholders’ equity, taxation and cash fl ow; internal monitoring of changes in legislation and accounting standards, together with the Group’s external consultants and auditors.
Since 2007, SCOR has embarked on a vast project to structure and formalise risk management, coordinated and managed by the Group Risk Management Department. Furthermore, SCOR is engaged in an ongoing process to improve its internal control standards and their implementation. As the scope of SCOR’s operations has recently changed signifi cantly, SCOR’s objective is to ensure that the Group’s internal control procedures are adapted, as illustrated by the decision to migrate the various reinsurance information systems to a single system in 2008 and to undertake a global project to improve the internal control system.
In our capacity as statutory auditors of SCOR SE, and in accordance with article L.225-235 of the Commercial Code, we report to you on the report prepared by the President of your company in accordance with article L.225-37 of the Commercial code for the year ended 31 December 2008.
It is the chairman’s responsibility to prepare and submit for the board of directors’ approval a report on internal control and risk management procedures implemented by the company and to provide other information required by article L.225-37 of the French commercial code (Code de Commerce) relating to matters such as corporate governance.
Information on internal control procedures relating to the preparation and processing of accounting and fi nancial information
The professional standards require that we perform the necessary procedures to assess the fairness of the information provided in the chairman’s report in respect of internal control procedures relating to the preparation and processing of accounting and fi nancial information. These procedures consist mainly in: obtaining an understanding of the internal control procedures relating to the preparation and processing of accounting and fi nancial information on which the information presented in the chairman’s report is based and the existing documentation; obtaining an understanding of the work involved in the preparation of this information and of the existing documentation; determining if any material weaknesses in internal control procedures relating to the preparation and processing of accounting and fi nancial information that we would have noted in the course of our work are properly disclosed in the chairman’s report.
III. Statutory Auditors’ report, prepared in accordance with article L.225-235 of the Commercial Code, on the report prepared by the President of the Board of SCOR SE
Consumption of water, raw materials, and energy in 2008: Water consumption: 17,809 m3
Waste processing and preventive measures: Removal agreement accompanied by a certifi cate of assumption of responsibility for used oil from Electricity Generation Groups; Recycling of lights bulbs and light tubes with return to our suppliers for waste processing (eco-participation); Removal of industrial waste (obsolete IT components, oil) by a specialised supplier; Bacteriological treatment of the canteen’s fryer in order to reduce frequency of oil change; Specifi c container for the removal of lighting tubes by a specialist company; Specifi c container for the removal of industrial waste (energy saving bulbs, fl uorescent tubes, old information technology materials) by a specialist company; Implementation of a network to detect leaks in hydraulic and hydrocarbon networks (fuel, oil); Installation of a retention basin to hold acids or chlorine used for the descaling of certain materials or the treatment of channels, in the local technical sub-soil; Installation of an oil retention basin in local electricity generation groups; Implementation of selective waste sorting (oils, wood, gravel, soiled barrels, food, paper).
Aerial emissions of greenhouse gases, substances contributing to acidifi cation, eutrophisation or photochemical pollution or long-lasting organic compounds: Recovery of gas (heat pumps, cold chambers, etc.) for reprocessing; Continuation of the program to replace HCFC compressors running at R22 with equipment that operates with replacement gases for HFC; Campaign to replace heat pumps operating at R22 by devices using R 407C.
This registration document was fi led on 5 March 2009 under number D.09-0099 with the French Autorité des Marchés Financiers (AMF) in accordance with Article 212-13 of the AMF general regulation. It can be used as a support document for a fi nancial transaction only if presented together with a securities information note (note d’opération) approved by the AMF (1).
Pursuant to Article 28 of Regulation (EC) 809/2004 of the European Commission, the following information is included by reference in this registration document: - SCOR’s corporate and consolidated fi nancial statements for the fi nancial year ended 31 December 2007 and the report of the statutory auditors regarding said fi nancial statements as presented in SCOR’s registration document fi led with the AMF on 28 March 2008 under number D.08-0154, and - SCOR’s corporate and consolidated fi nancial statements for the fi nancial year ended 31 December 2006 and the report of the statutory auditors regarding said fi nancial statements as presented in SCOR’s registration document fi led with the AMF on 10 April 2007 under number D.07-0294.
Postal address 1, avenue du Général de Gaulle 92074 Paris La Défense Cedex France www.scor.com
Postal address 1, avenue du Général de Gaulle 92074 Paris La Défense Cedex France www.scor.com 40% of the SCOR 2008 Annual Report is printed on paper sourced from sustainably and equitably managed forests, and 60% on recycled paper.