This registration document was filed on March 4, 2016 with the French Autorité des marchés financiers (AMF) in accordance with Article 212-13 of its general regulation. It can be used as a support document for a financial transaction only if presented together with a securities information note (note d’opération) approved by the AMF. This registration document was prepared by the issuer and is the responsibility of the person whose signature appears therein.
APPENDIX A: REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS .................................................... 234 APPENDIX B: PERSON RESPONSIBLE FOR THE ANNUAL REPORT ................................................................... 248 APPENDIX C: UNCONSOLIDATED CORPORATE FINANCIAL STATEMENTS OF SCOR SE ................................ 249 APPENDIX D: SOCIAL AND ENVIRONMENTAL INFORMATION ............................................................................. 281 APPENDIX E: GLOSSARY ......................................................................................................................................... 303 APPENDIX F: ADDITIONAL INFORMATION RELATING TO THE MANAGEMENT REPORT OF THE COMPANY AND THE GROUP – TABLE OF COMPLIANCE ........................................................................................................ 309 APPENDIX G: COMMISSION REGULATION OF APRIL 29, 2004 – CORRESPONDENCE TABLE ......................... 313 APPENDIX H: ANNUAL FINANCIAL REPORT – CORRESPONDENCE TABLE ...................................................... 315
1.1 Selected financial information 4 1.1.1 Group key figures 4 1.1.3 Dividend distribution policy 6 1.2 Information about SCOR Group 7 1.2.2 History and development of SCOR 9 1.2.3 Organizational structure of SCOR 11 1.2.6 SCOR investments in tangible and intangible assets 22 1.3 Market and financial review 26 1.3.1 Reinsurance market developments 26 1.3.2 Financial market developments 26 1.3.3 Significant events of the year 26 1.3.4 Information on SCOR competitive position 27 1.3.5 Revenues & earnings summary 27 1.3.6 Financial position, liquidity and capital resources 37 1.3.9 Calculation of financial ratios 40 1.3.11 Documents on display 42
The solid 2015 year end results and strength of the balance sheet demonstrate the effectiveness of SCOR’s strategy, based on high business and geographical diversification and focused on traditional reinsurance activity. 2013 disclosures include the results generated by Generali U.S. during the period from October 1, 2013, the date of acquisition by SCOR, up to December 31, 2013. 2014 and 2015 disclosures include twelve months of the results generated by Generali U.S.
7.2% 7.1% 7.4% (1) Refer to Section 1.3.9 – Calculation of financial ratios, for detailed calculation (2) The return on invested assets’ calculation method was adjusted to exclude revenues from Life reinsurance contracts that do not transfer significant reinsurance risk (presented in the investment income line of the 2013 Registration Document). The ratio previously reported in the 2013 Registration Document was 2.6% for the year ended December 31, 2013
(5) Closing stock price on December 31, 2015 (2014, 2013) (6) The Group’s liquidity is defined as cash, cash equivalent, short-term government bonds with maturities above three months and below 12 months and bank overdrafts (7) The technical result calculation method was adjusted in 2014 to include revenues from Life reinsurance contracts that do not transfer significant reinsurance risk (presented in the investment income line of the 2013 Registration Document). The ratio previously reported in the 2013 Registration Document was 7.3% for the year ended December 31, 2013
* Return on equity is based on the Group’s share of net income divided by average shareholders’ equity (calculated as shareholders’ equity at the beginning of the period adjusted for the effect of all movements during the period using a prorata temporis)
Shareholders' equity, debt and leverage ratio* (in %) In EUR million
* The net combined ratio is calculated by taking the sum, net of retrocession, of incurred losses, commissions and management expenses and then dividing them by earned premium net of retrocession * Life technical margin is calculated as a percentage of net technical result plus income from funds held by ceding companies and the net of gross and ceded earned premiums. The net technical result represents the result of the net reinsurance operations of the Life division including income and expenses either implied in the reinsurance and retrocession arrangements or fully related to these arrangements ** The technical result calculation method was adjusted in 2014 to include revenues from Life reinsurance contracts that do not transfer significant reinsurance risk (presented in the investment income line of the 2013 Registration Document). The ratio previously reported in the 2013 Registration Document was 7.3% for the year ended December 31, 2013. This change has no impact on the ratios for 2011 and 2012 1.1.3 DIVIDEND DISTRIBUTION POLICY
The Company was incorporated on August 16, 1855, as a limited partnership company, under the name Compagnie Impériale des Voitures de Paris. In 1866, the Company took the form of a limited liability company under the name Compagnie Générale des Voitures de Paris. The Company changed its name to SCOR S.A. on October 16, 1989. In 1990, SCOR S.A. absorbed the Société Commerciale de Réassurance created in 1970 and carried on the reinsurance business of the latter. On May 13, 1996, SCOR SA changed its name to SCOR. On June 25, 2007, SCOR changed its Company form to a European Company (Societas Europaea) and became SCOR SE. In 2012, the Company relocated from Paris-La Défense to Paris. On April 25, 2013, the Company’s length of life was extended for 99 years by decision of the Extraordinary General Meeting. The Company expires on April 25, 2112 unless otherwise extended or previously dissolved.
In 1989, the Company and UAP Reassurances, a subsidiary of the state-owned Société Centrale de l’Union des Assurances de Paris, combined their Property and Casualty and Life reinsurance businesses. Following a reverse merger with Compagnie Générale des Voitures, the Company listed its ordinary shares on the Paris stock exchange and changed its name to SCOR S.A. and to SCOR in 1996. UAP Reassurances sold its 41% stake in SCOR in an IPO in 1996. SCOR’s American depositary shares were listed on the New York stock exchange at that time as well. They were delisted in 2007 and the Company’s securities were deregistered with the US Securities and Exchange Commission (SEC) on September 4, 2007.
Following the reorganization of Euronext indices on January 3, 2005, the ordinary shares are now included notably in the following indices: SBF 80, SBF 120, CAC All-Shares, CAC LARGE 60, CAC Next 20, CAC Financials, CAC All Tradable and EURONEXT 100. The SBF 120 and 250 consist of the 120 most actively traded French stocks and the 250 largest stocks by capitalization. The SBF 80 is made up of the SBF 120 stocks not included in the CAC 40 index, which are the most traded on the continuous segments. EURONEXT 100 index comprises the 100 largest and most liquid stocks traded on Euronext. The CAC All-shares index is composed of all the stocks listed on Euronext Paris for which annual velocity ratio exceeds 5% of their shares. The CAC Next 20 index includes the most representative stocks in terms of free float adjusted capitalization and turnover not included in the CAC 40 index. The CAC Large 60 is composed of the constituents of the CAC 40 and CAC Next 20 indices. The CAC All Tradable index includes all the stocks of the Euronext Paris market with a free float over 20%.
Since September 14, 2012, SCOR SE is included in the ASPI (Advanced Sustainable Performance Indices) Eurozone® index.
Many regulators worldwide develop new solvency regulatory framework similar to the Solvency II regulation as developed and implemented by the European Union. For example, the Chinese regulator (“CIRC”) has recently initiated the implementation of “C-Ross”, a regulatory regime imposing new solvency requirements and heightened governance on the branches of foreign companies subject to CIRC supervision. For a detailed description of the statutory impact of these Group’s initiative, refer to section 3.2.1.3 paragraph B.
SCOR was established as a reinsurance company in 1970, at the initiative of the French government and with the participation of the Paris insurance market place, to create a reinsurance company of international stature under the name of Société Commerciale de Réassurance. SCOR rapidly developed in various world markets, building up a substantial international portfolio. At the beginning of the 1980s, the French government’s stake in its share capital, held through the Caisse Centrale de Réassurance, was progressively reduced in favor of insurance companies that were active on the French market. (For more details, refer to Section 1.2.1 – Introduction). In 2003, the Group reorganized its Life reinsurance business. The Group transferred to SCOR Vie and its subsidiaries all of the Group’s Life reinsurance business throughout the world. SCOR Vie, whose corporate name was changed to SCOR Global Life in 2006, and which became a European Company (Societas Europaea) in 2007, along with its subsidiaries, are all directly or indirectly wholly owned by its parent company, SCOR SE.
On May 16, 2006, SCOR transferred all of its Non-Life reinsurance business in Europe, including Property & Casualty Treaties (including Credit & Surety business), large Corporate Accounts and Construction reinsurance to Société Putéolienne de Participations, a French subsidiary wholly owned by SCOR, whose corporate name was changed to SCOR Global P&C, effective retroactively to January 1, 2006. In 2007, SCOR Global P&C adopted the European Company (Societas Europaea) statute via a merger by absorption of SCOR Deutschland Rückversicherungs AG and SCOR Italia Riassicurazioni SpA.
On November 21, 2006, SCOR completed the acquisition of Revios Rueckversicherung AG (“Revios”), enabling it to form a top worldwide Life reinsurer. Based in Cologne (Germany), Revios was the former Life reinsurance unit of Gerling Global Re Group, which developed successfully autonomously from 2002 onward. Revios had since developed into one of the leading European reinsurers specializing in Life reinsurance, established in 17 countries. The combination of Revios and SCOR Vie created SCOR Global Life SE. SCOR Global Life SE is now one of SCOR’s three primary operational entities (along with SCOR Global P&C SE and SCOR Global Investments SE, which became SCOR Investment Partners SE, described below), with responsibility for the Life reinsurance business.
Following its integration of Revios and Converium, SCOR restructured its operations around six regional management platforms, or “Hubs.” The Hubs were progressively implemented:  on May 5, 2008, for the Cologne Hub (combined with the Zurich Hub from October 1, 2014);  on May 20, 2008, for the London Hub (combined with the Paris Hub from April 15, 2015);  on June 18, 2008, for the Americas Hub;  on June 27, 2008, for the Singapore Hub;  on January 27, 2009, for the Zurich Hub (combined with the Cologne Hub from October 1, 2014);  on February 24, 2009, for the Paris Hub (combined with the London Hub from April 15, 2015).
In 2011, the Lloyd’s Market Franchise Board approved the creation of Channel Syndicate 2015. SCOR is the sole capital provider for Channel Syndicate, which in 2011 had an initial annual stamp capacity of GBP 75 million. Underwriting by the Channel Syndicate began on January 5, 2011. The portfolio of the syndicate focuses on direct insurance business in markets, including property, marine, accident and health, financial institutions and professional civil liability. On August 9, 2011, SCOR acquired the mortality portfolio of Transamerica Re, a part of AEGON N.V., for an amount of USD 919 million. The transaction also included the acquisition of an Irish legal entity, which underwrites Transamerica Re risk of business. SCOR Global Life and Transamerica Re business have been merged into a new entity SCOR Global Life in North America: SCOR Global Life Americas Reinsurance Company (“SCOR Global Life Americas”).
On April 1, 2014, SCOR announced that it had obtained approval from Lloyd’s, the Financial Conduct Authority and the Prudential Regulatory Authority of the UK to launch a Managing Agent at Lloyd’s. The new Managing Agency, “The Channel Managing Agency Limited”, acts as Managing Agent for SCOR’s own Lloyd’s syndicate, Channel 2015, with effect from April 1, 2014.
On August 27, 2015, the English subsidiary SCOR UK Company Limited created a Canadian branch (SCOR Insurance – Canadian branch) whose activities started at the beginning of 2016.
The main operational entities of the two Group’s segments are presented in the chart below:
1.2.3.1 BRIEF DESCRIPTION OF THE GROUP AND OF THE POSITION OF THE ISSUER
The Group is a three engine group driven by SCOR Global Life, SCOR Global P&C and SCOR Global Investments. Mobilization of skills and expertise, a balance among teams from different entities of the Group, operating efficiency, simplicity of structures, and clarity of reporting lines were the principles that guided the Group's organizational choices.
SCOR Global P&C, the Group’s P&C division, operates worldwide through branches of two main global reinsurance companies (SCOR Global P&C SE and SCOR SE) and the branches of a global insurance company (SCOR UK Limited) as well as insurance and reinsurance subsidiaries in Spain, Italy, Switzerland, the UK, Germany, South Africa, Russia, the Americas and Asia/Pacific, including China, India, South Korea, Hong-Kong and Singapore.
SCOR Global Life, the Group’s Life division, operates worldwide through branches of two main global reinsurance companies (SCOR Global Life SE and SCOR SE) as well as insurance, reinsurance, and distribution solutions subsidiaries in Germany, the UK, Italy, Spain, Switzerland, Austria, Netherlands, Sweden, Canada, Asia, Belgium, the US, Latin America, Ireland, Russia, South Africa, China, South Korea, Australia and South Africa. On October 29, 2008, SCOR announced the creation of SCOR Global Investments SE (which became SCOR Investment Partners SE), SCOR’s 3rd engine, which manages, directly or indirectly, the global investment portfolio of all the Group’s legal entities. SCOR Global Investments SE (which became SCOR Investment Partners SE) was approved by the AMF as a portfolio management company as from May 15, 2009. On July 8, 2011, SCOR Alternative Investments SA, was registered by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg as a company in charge of the management of the portfolio of assets specialized in the asset class, known as “InsuranceLinked Securities” (ILS). SCOR Global Investments SE (which became SCOR Investment Partners SE) having thus obtained the approval from the CSSF to manage its ILS portfolios, sold SCOR Alternative Investments SA on April 17, 2014. On August 31, 2011, SCOR launched Atropos SICAV-SIF (“Atropos”), an ILS fund dedicated to insurance risks, which was formerly managed by SCOR Alternative Investments SA and now by SCOR Global Investments SE (which became SCOR Investment Partners SE) and domiciled in Luxembourg.
In connection with the implementation of the New SCOR project, which was announced in June 2005, SCOR first transferred all of its Non-Life reinsurance business in Europe to Société Putéolienne de Participations (which became later SCOR Global P&C), a French subsidiary wholly owned by SCOR. Secondly, SCOR SE, SCOR Global P&C SE and SCOR Global Life SE (formerly known as SCOR Vie) adopted the European Company statute (Societas Europaea) respectively on June 25, August 3 and July 25, 2007.
branches, rather than local subsidiaries. The Group is thereby demonstrating its ambition to be a company with European roots and global reach.
SCOR has restructured its operations around several regional management platforms, or Hubs: the Paris / London Hub (effective April 15, 2015), the Zurich / Köln Hub (effective October 1, 2014), the Americas Hub and the Singapore Hub. Each of the Hubs has local, regional (1) and Group responsibilities, with the heads of each Hub reporting to the Group Chief Operating Officer. Each Hub typically includes the following functions: a Legal and Compliance Officer, a Head of Information Systems, a Head of Finance, a Head of Human Resources and a Risk Manager. This organization enables:  SCOR’s operational structures and support functions to be optimized by creating service entities in charge of managing pooled resources, including information systems, human resources, legal and others in the Group’s main locations;  Several Group functions to be carried out in a geographical location other than Paris in order to benefit fully from the competencies within different hubs. The Hubs are not responsible for underwriting or claims management. The local underwriting and claims management teams have direct reporting lines within the respective Non-Life and Life divisions. Hub shared service costs are allocated to the divisions based on a headcount allocation key; and
 Section 2.1.2 – Board of directors as concerns the duties carried out in the subsidiaries by the managers of the Company;  Section 2.1.4 – Executive Management as concerns the duties carried out in the subsidiaries by the managers of the Company; and
 Section 2.3.3 – Special report of the auditors on regulated agreements and commitments.
(1) Paris / London Hub: South Africa, Russia and Europe other than Germany, Austria, and Switzerland; Zurich / Cologne Hub: Switzerland, Germany, Austria and Israel and one subsidiary in Argentina; Singapore Hub: Asia, Australia; Americas Hub: North America and South America
The Company and certain of its insurance subsidiaries are rated by recognized rating agencies.
On November 21, 2013, S&P raised the outlook on the “A+” Financial Strength Rating of SCOR SE and its main subsidiaries to "positive" as, according to S&P's statement, "capital and earnings expected to rise due to very strong ERM".
Since 2002, SCOR has defined its strategy and principle orientations through the creation of several three-year plans: “Back on Track” (2002-2004), “Moving Forward” (2004-2007), “Dynamic Lift” (2007-2010), “Strong Momentum” (20102013 ) and “Optimal Dynamics” (2013-2016). The success of its various plans, along with the Group's acquisitions of Revios (in 2006), Converium (in 2007), Transamerica Re (in 2011) and Generali U.S. (in 2013) has contributed to the diversification strategy by balancing the proportion of the consolidated premiums written between its Non-Life and Life segments and has enabled the Group to preserve both its solvency and its profitability. In September 2013, SCOR launched its current three-year strategic plan, “Optimal Dynamics”. This plan covers the period mid-2013 to mid-2016. It respects the SCOR’s four strategic cornerstones, which are:  a strong franchise, achieved by: - deepening its presence in the local Property & Casualty and Life markets in which SCOR operates by strengthening client relationships and through best-in-class services and product innovation, and by; - expanding into new markets through organic growth; (1) Sources: www.standardandpoors.com; www.ambest.com; www.moodys.com and www.fitchratings.com
 high diversification, achieved both by Non-Life and Life business diversification and by geographical presence, providing higher stability of results and robust required capital diversification benefits;  a controlled risk-appetite, on both sides of the balance sheet; and
SCOR’s risk appetite framework is an integral part of the Group’s strategic plan. It is approved by the Board of Directors in connection with the review of new strategic plans, based on recommendations from the Group’s Executive Committee and the Risk Committee of the Board of Directors (the “Risk Committee”). The Board of Directors may vary the amount and the composition of risk that the Group is prepared to take. SCOR’s risk appetite framework encompasses four concepts: Risk Appetite, Risk Preferences, Risk Tolerances, and “footprint” scenarios: Risk Appetite
Risk preferences are qualitative descriptions of the risks which SCOR is willing to accept. The Group aims to cover a wide range of reinsurance risks and geographical areas. On the other hand, it has no desire to take operational, legal, regulatory, tax and reputational risks. This does not mean that the Group is immune to these risks. These risk preferences determine the risks to be included in the Group’s underwriting guidelines.
Risk Tolerances are the limits required by SCOR’s stakeholders (e.g., clients, shareholders, regulators etc.). The Board of Directors defines and approves risk tolerance limits for the Group in terms of solvency, by risk driver, and extreme scenario in order to ensure that the Group’s risk profile remains aligned with its risk appetite framework. SCOR uses various risk measures to verify that its exposures remain within these limits. These measures can take several forms depending on the technical constraints or the level of information available and are based on either internal model outputs, scenarios or expert opinions.
(1) Ratio between the available capital and the Solvency Capital Requirement (SCR)
In facultative reinsurance, the ceding company cedes and the reinsurer assumes all or part of the risks covered by a particular specified insurance policy or by insurance policies related to a specific ultimate group insured in the same program. Facultative reinsurance is negotiated separately for each insurance contract that is reinsured. Facultative reinsurance is normally purchased by ceding companies for individual risks not covered by their reinsurance treaties, for amounts in excess of the monetary limits of their reinsurance treaties and for unusual risks. Underwriting expenses and, in particular, personnel costs, are higher relative to premiums written on facultative business because each risk is individually underwritten and administered. The ability to separately evaluate each risk reinsured, however, increases the probability that the underwriter can price the contract more accurately to reflect the risks involved.
With respect to proportional (or quota share) reinsurance, the reinsurer, in return for a predetermined portion or share of the insurance premium charged by the ceding company, indemnifies the ceding company against the same portion of the losses of the ceding company under the covered insurance contract(s). In the case of reinsurance written on a nonproportional, through an excess of loss or a stop loss, basis, the reinsurer indemnifies the ceding company against all or
The SCOR Global P&C segment operates in four business areas being: Property and Casualty Treaties; Specialty Lines (including Credit & Surety, Inherent Defects Insurance, Aviation, Space, Marine, Engineering, Agriculture and Alternative Solutions); Business Solutions (large corporate accounts underwritten essentially on a facultative reinsurance basis and occasionally as direct insurance for industrial groups and services companies); and Business Ventures and Partnerships. The SCOR Global Life segment underwrites Life reinsurance in the following product lines: Protection (which provides protection for Mortality, Disability, Long-Term Care, Critical Illness, Medical and Personal Accident), Financial Solutions (which enables cedents to fund growth, stabilize earnings and optimize solvency) and Longevity (which alleviates the risk of insured clients' living longer). For a description of products and services see Section 1.2.5.3 – Life reinsurance.
SCOR Global Life carries out its global operations through the subsidiaries an branches of its two main global reinsurance entities (SCOR Global Life SE and SCOR SE), as well as insurance, reinsurance, distribution and distribution solutions branches in Germany, the UK, Italy, Spain, Switzerland, Austria, the Netherlands, Sweden, Canada, Asia, Belgium, the US, Latin America, Ireland, Russia, China, South Korea, Australia and South Africa.
Insurance for the space sector covers the launch preparation, launch, and the in-orbit life operation of satellites, primarily commercial telecommunication and earth observation satellites.
The Group provides insurance/reinsurance solutions in the field of multiple peril crop, aquaculture, forestry and livestock insurance.
The Group's activity in the Business Solutions area covers all insurable risks of industrial groups and services companies (large corporate accounts). These risks are underwritten through facultative insurance and reinsurance contracts, and occasionally as direct insurance, by SCOR's specialized teams deployed as an international network around two main business departments: “Natural Resources” and “Industrial & Commercial Risks.”
Natural Resources provides coverage to midstream and downstream business (main business sectors being oil and gas, refining, petrochemicals, liquefaction, gasification, power generation and distribution, new energy sources and mining), and to upstream business (oil and gas exploration and production, offshore construction) and shipbuilding industrial groups and oil services companies.
SCOR's Business Ventures and Partnerships business area historically included the provision of capital to third party businesses, including Lloyd’s syndicates. SCOR contributes to several Lloyds syndicates with various participations, including Channel 2015, for which SCOR is the sole capital provider.
SCOR Global Life segment underwrites Life reinsurance business in the following product lines:  Protection  Financial Solutions
Protection encompasses traditional Life reinsurance business on living and death benefits. Main risks undertaken are mortality, morbidity and behavioral risks for individuals and groups of individuals. Protection is predominantly underwritten in the form of proportional treaties (quota share, surplus basis or a combination of both). Quota share treaties include straight structures whereby SCOR Global Life’s exposure is identical to those of its clients, and riskbased premium structures whereby treaty conditions differ from those of the underlying policies. A minority of the portfolio is underwritten in form of non-proportional contracts: excess of loss per person, catastrophe excess of loss or stop loss.
Disability insurance mitigates the loss of income when the insured is totally or partially unable, by reason of sickness or accident, to follow his or her professional occupation or any occupation for which he or she is suited.
Long-Term Care (“LTC”) insurance covers policyholders unable to perform predefined activities of daily living, and as a result, needing constant assistance from another person.
Personal Accident insurance pays a lump sum benefit if the insured person dies or suffers from a serious injury as a result of an accident.
Financial Solutions combine traditional Life reinsurance with financial components providing liquidity, balance sheet and/or income statement improvements to the client. This type of treaty is typically used by cedents to fund growth, stabilize earnings or optimize solvency position (capital relief). Financial Solutions cover also traditional biometric risk.
Reinsurance can be written through professional reinsurance brokers or directly from ceding companies. The involvement of a broker in the placement of a reinsurance contract is a decision belonging to the ceding company, which depends on local market practices, the cedent’s worldwide reinsurance market knowledge, the complexity of the risks the cedent intends to transfer and the corresponding available reinsurance capacity in the market, the cedent’s capability and resources to structuring market submission data, placing risks and administrating the placements. In most of the cases, reinsurance programs are syndicated to several reinsurers, which follow a leader, and in some instances a co-leader.
and other representatives of SCOR Global Investments. The Group Investment Committee meets at least each quarter and defines the strategic and tactical asset allocation as well as the risk appetite of the Group.
SCOR Global Investments is the SCOR Group’s division dedicated to asset management and consists of two dedicated entities: (i) a Group Investment Office and (ii) a regulated asset management company, SCOR Investment Partners.
The Group Investment Office manages the interaction between the SCOR Group and SCOR Investment Partners in managing the risk appetite, monitoring investment risks and setting investment guidelines. It is also responsible for portfolio monitoring and reporting, development of the Group’s strategic and operating plans, financial forecasts and performance analytics around SCOR’s investments.
Based on the expertise initially developed for the management of the SCOR Group’s invested assets, SCOR Investment Partners decided in 2012 to open some of its investment strategies to third-party investors. While this business currently remains in the development phase, SCOR Investment Partners maintains a good momentum and is increasing its third party assets, which stand at EUR 1,549 million as at December 31, 2015 (including undrawn commitments).
SCOR Investment Partners benefits from third party asset management through management and performance fees on the Assets under Management. SCOR Investment Partners has eight investment strategies which are open to third parties with key products such as High Yield, Private Debt (corporate, infrastructure and real estate loans), ILS and Convertible Bonds.
SCOR owns offices in Paris (France), Cologne (Germany), London (UK), Singapore and Madrid (Spain), where its local entities and subsidiaries have their corporate offices. Any surplus space is leased to third parties as part of SCOR's investment management business. The Group leases office space for its other business locations. It leases space separate from its head office for the purpose of safeguarding its data storage facilities for business continuity planning purposes. The Group believes that the Group’s offices are adequate for its current needs. SCOR owns in London at 10 Lime Street a 5,000 m² office and retail leasehold building. As at December 31, 2015, the building was occupied at 53% by SCOR for its London Hub office. The remaining space was rented to third parties. In June 2015, a second building at 32 Lime Street with an area of 1,800 m² was delivered to SCOR which had committed to acquire it for its operational needs in 2014.
SCOR Reinsurance Asia Pacific PTE LTD, signed in October 2013 a sale and purchase agreement to acquire in state of future completion two floors with an area of 2,000 m² for its operational needs in a leasehold building under construction in Singapore. In 2014, four units of an additional floor were acquired in the same building with an area of 500 m². In 2015, four additional units of another floor were acquired. In November 2014, the floors formerly occupied by SCOR in another building were sold and were rented waiting for the delivery of the new building, expected in 2017. The Madrid office with an area of 1,700 m² is fully occupied by SCOR for its operational needs.
For more information on the Group’s real estate, refer to Section 4.6 – Notes to the corporate financial statements, Note 6 – Tangible assets and property related commitments and Note 7 – Insurance business investments.
Biometric risks such as mortality, longevity, disability and long-term care are at the heart of underwriting in Life reinsurance. Since these risks are subject to shocks and various trends, SCOR Global Life closely monitors their current developments in six Research & Development (“R&D”) Centers:  R&D Center for Mortality Insurance: carrying out mortality studies on life portfolios, enhancing modelling for pricing, reserving and capital modelling and providing support in setting assumptions for new business, in particular new products, and reserving;  R&D Center for Longevity Insurance: carrying out mortality studies on pension and annuity portfolios, enhancing risk modelling for pricing, reserving and capital modelling and providing support in setting assumptions for new business, in particular new products, and reserving;  R&D Center for Long-Term Care (LTC) and Disability Insurance: providing support in the development of LTC and disability products (definitions, pricing, guidelines) and the monitoring of the corresponding portfolios;  R&D Center for Critical Illness: dedicated to the analysis of critical illness risks; two complex risks due to multiple definitions, cover types and socio-economic environments;  R&D Center for Medical Underwriting and Claims Management: evaluating the impact on insurance of new medical advances, for both known pathologies and the most recently discovered ones; advising clients on the pricing of substandard risks; and
The Centers have entered into many scientific partnerships over the years, the current ones being with: the Assmann Foundation on cardiovascular diseases (EUR 100 000 annually), the Erasmus University over the incidence impact of cancer screening programs (EUR 58 000 over three years ending in 2016) and the Pierre et Marie Curie University at the Pitié-Salpêtrière Hospital over HIV developments (EUR 30 000 annually). The R&D Centers are part of SCOR Global Life’s range of services: analyses and risk projections produced by the Centers are used by SCOR Global Life’s teams to advise their clients on the implementation and monitoring of their life and health insurance products. The Centers provide input at the product development stage, giving advice on definitions, underwriting standards, pricing and reserving. They contribute to the monitoring of biometric risks by carrying out experience studies on portfolio data and by undertaking prospective risk modeling. The R&D Centers are part of the Actuarial & Risk department of SCOR Global Life. Their employees are based in Paris, Cologne, Dublin, Charlotte, Kansas City, Chicago and Singapore and are active worldwide, responding to requests from the local teams in charge of business development and client relationships. At the forefront of the risk modeling field, particularly extreme risks in Life and Non-Life businesses, the Group devotes considerable resources to fundamental research and the promotion of scientific risk management techniques in various disciplines. As well as prize-winning internal research projects, conducted with the assistance of students from renowned schools and universities, SCOR has signed partnership agreements with the following institutions:  The Risk Foundation, in collaboration with the IDEI of Toulouse University and Paris Dauphine University, is dedicated to the risk market and to value creation. For SCOR, it implies costs of EUR 1.5 million allocated over five years;  A Research Chair in Finance, in cooperation with Jean-Jacques Laffont Foundation based in Toulouse, deals with risk management, long-term investment, corporate governance and asset management strategy. For SCOR, the cost is EUR 1.5 million allocated over five years;
 The Paris School of Economics, which conducts research in the field of economic analysis and modeling in order to improve the forecasting of economic and financial risks over the medium to long-term. For SCOR, the cost is EUR 510,000 allocated over three years.
Alongside these partnership agreements, the Group develops scientific research in the field of risks through sponsorship operations conducted by its corporate foundation, the SCOR Corporate Foundation for Science. SCOR also organizes Actuarial Awards in Europe (Germany, France, Italy, Spain and Portugal, Sweden, Switzerland and the United Kingdom), and in Asia (Singapore). The Group places great importance on the development of actuarial science in Europe and each year rewards the best academic papers in the field of actuarial science with prizes. These prizes are designed to promote actuarial science, to develop and encourage research in this field and to contribute to the improvement of risk knowledge and management. The SCOR Actuarial Awards are recognized as a measure of competence in the insurance and reinsurance industries. The winning papers are selected on the basis of criteria including an excellent command of actuarial concepts, the use of high-quality analysis instruments, and subjects that could have a practical application in the world of risk management.
SCOR was one of the first reinsurers to implement a uniform global information system. This strategy is reaffirmed each time the Group runs through an integration after a new acquisition. SCOR then aims to rapidly return to a global integrated information system. In the accounting, consolidation and financial reporting domain, SCOR has delivered its global SAP solution, embedding a unique chart of accounts and standard processes, in all its hubs throughout the Group. All accounting teams have been mobilized over the last years, along with IT, to build this new global finance system at high stakes for SCOR.
The Group continues to work on extending and automating its Asset and Liability Management tool. This internal model will be central in the Solvency II compliance process, in which the SCOR’s information technology group is deeply involved.
The Group is promoting a paperless environment. Internally, global document-sharing processes have been set up for the Life and Non-Life divisions. With its clients, SCOR is able to automatically process claims, reinsurance and financial accounts received electronically in the standard formats edited by ACORD, an association created for the development of e-processing in insurance and reinsurance, without having to re-enter them. SCOR is also chairing the global Ruschlikon Initiative, launched with the major brokers and reinsurers to develop e-administration in the reinsurance industry.
Refer to Section 4.6.26 – Note 26 - Insurance and financial risk for the detailed ranking by maturity of fixed-term investments in the Group’s portfolio as at December 31, 2015.
The global reinsurance industry can be split into two markets: a Life reinsurance market and a P&C reinsurance market, with different and common markets dynamics. In 2015, the global reinsurance market was impacted by macroeconomic uncertainties, market consolidation, change in demand patterns and regulatory evolutions.
The Life reinsurance market is a concentrated industry with high regulatory and operational barriers to entry. Most global life reinsurers are based in developed markets (e.g. the US, Europe) where the regulatory frameworks are demanding. The global Life reinsurers have over the years developed strong underwriting, pricing, claims management and product development capabilities, as well as long-term partnerships with their clients.
The P&C reinsurance market has been mainly impacted by pressure on prices and development of the alternative capital market. P&C reinsurance is a cyclical business. The P&C reinsurance market is driven by a large number of players and allows opportunity for start-ups, new types of players and new initiatives in general. P&C reinsurance premiums have particularly remained under pressure during 2015, in soft market conditions explained by excess capital, a benign catastrophe environment and a weak global economy. The environment has been competitive on the supply side, and increasingly restricted by budgets on the demand side. Moreover, commissions have been under pressure in proportional business across the board, with more cedents taking advantage of the soft market and the low claims activity to push for higher fixed commissions.
The alternative capital market continues to weight on the P&C reinsurance business albeit to a lesser extent than in the past. The diversification and yield provided by insurance-linked investments continues to prove attractive to investors, producing an over-supply of capital and placing downward pressure on rates. Whilst alternative capital has largely been focused on the non-proportional catastrophe business, this new capital seems set to expand into other reinsurance lines. These trends are bound to continue, despite the absence of a major catastrophe event that would provide a true test of the resilience of ILS structures. Moreover, the penetration of alternative capital is far greater in the retrocession market than in the reinsurance market.
Finally, the global reinsurance industry is undergoing considerable regulatory change, including Solvency II in Europe, C-ROSS in China and the G-SII framework for globally systemically important insurers.
Sector-wise, the energy, metals and mining sectors were heavily affected by the China slowdown and the slump in oil prices. In Europe, those sectors were down 10% or more. On the contrary, the insurance sector was among the top performers with positive returns of nearly 10%.
Subsequent to year-end 2015, SCOR sponsored, as part of its policy of diversifying its capital protection tool a new catastrophe bond, Atlas IX Series 2016-1, which will provide the Group with multi-year risk transfer capacity of USD 300 million to protect itself against US Named Storm and US and Canada Earthquake events. The risk period for Atlas IX 2016-1 runs from January 13, 2016 to December 31, 2019.
On June 2, 2015, SCOR successfully placed a dated subordinated notes issued on the Euro market in the amount of EUR 250 million. The coupon has been set to 3.25% (until June 5, 2027), and resets every 10 years at the prevailing 10-year EUR mid-swap rate +3.20%. The proceeds of the issue are used for general corporate purposes. SCOR also called the balance of the USD subordinated step-up floating rate notes due 2029, and of the EUR subordinated step-up floating rate notes due 2020, on June 25 and July 6, 2015, respectively.
On March 3, 2015, the Group announced that SCOR Global Life has entered into a longevity insurance transaction with Sun Life Assurance Company of Canada (Sun Life). On February 5, 2015, SCOR announced that, as part of its policy of diversifying its capital protection tools, SCOR has successfully sponsored a new catastrophe bond (“cat bond”), Atlas IX Series 2015-1, which provides the Group with multi-year risk transfer capacity of USD 150 million for US Named Storm and US and Canada Earthquake events.
SCOR competes for business in the European, American, Asian and other international markets with numerous international and domestic reinsurance and insurance companies, some of which have a larger market share than its own, greater financial resources and, in certain cases, higher ratings from the rating agencies. Competition in the types of reinsurance and insurance that the Group underwrites is based on many factors, including financial strength as perceived by the rating agencies, customers and their brokers, underwriting expertise, reputation and experience in the lines of reinsurance and insurance written, country of operation, premiums charged, the quality of the proposed reinsurance structures, the services offered and the speed at which claims are paid. SCOR’s competitors include independent and state-owned reinsurance companies, subsidiaries or affiliates of established worldwide insurance companies, and reinsurance departments of certain primary insurance companies. Among the Group’s major competitors there are European reinsurers (for example, Swiss Re, Munich Re and Hannover Re) and US/Bermudian reinsurers (for example, Partner Re, RGA, Ace, Axis Capital, Transatlantic Re, Odyssey Re, General Re and Everest Re). Also Lloyd’s of London is recognized as a major competitor.
The Group's financial data are presented in Section 1.1 – Selected financial information and in Section 4 – Consolidated financial statements. The commentary below is based on the financial data presented in the aforementioned sections.
SCOR is characterized by its strategic positioning aimed at underwriting risks so as to diversify exposure. To this end, the Group seeks to preserve:  The diversification of its business by maintaining a broadly balanced business division split between Life and Non-Life reinsurance. The portfolio business volume split for the year ended December 31, 2015 was approximately 57% for Life reinsurance and 43% for Non-Life reinsurance based on gross written premiums;  The geographic diversification of the Group’s business by: - operating in a large number of countries, both mature and emerging; - maintaining its policy of positioning itself in strong-growth markets as Asia/Pacific and Latin America; - operating as a mixed Non-Life and Life reinsurer in China based on the license received in 2011, enabling SCOR to add Life reinsurance services to the existing Non-Life activities; and
(1) By Net Reinsurance premiums written, source: “S&P Global Reinsurance Highlights 2015”
TOTAL SCOR Global Life 7,698 100% 6,381 100% 5,405 100% (1) In 2015, SCOR Global Life’s individual treaties have been reallocated based on review of product line definition. The gross written premiums in Protection and Financial Solutions previously reported in the 2014 Registration Document were EUR 5,088 million and EUR 1,047 million respectively for the year ended December 31, 2014 and EUR 4,407 million and EUR 863 million for the year ended December 31, 2013
In 2015, SCOR generated approximately 41% of its gross written premiums in Europe, Middle East and Africa (2014: 42%), with significant market positions in France, Germany, Spain and Italy, 43% of its gross written premiums in the Americas (2014: 43%) and 16% of its gross written premiums in Asia (2014: 15%).
(1) In 2015, SCOR Global Life’s individual treaties have been reallocated based on a review of region allocation. The gross written premiums for SCOR Global Life in EMEA, Americas and Asia Pacific previously reported in the 2014 Registration Document were EUR 2,103 million, EUR 3,498 million and EUR 780 million, respectively for the year ended December 31, 2014 and EUR 2,068 million, EUR 2,744 million and EUR 593 million for the year ended December 31, 2013
Net earned premium for the year ended December 31, 2015 amounted to EUR 11,984 million as compared to EUR 9,991 million and EUR 9,066 million for the years ended December 31, 2014 and 2013, respectively. The overall increase in net earned premium of EUR 1,993 million from 2014 to 2015 and EUR 925 million from 2013 to 2014 is consistent with the increase in gross written premiums.
Gross benefits and claims paid were EUR 9,499 million, EUR 7,835 million and EUR 7,054 million in 2015, 2014 and 2013, respectively. The level of gross benefits and claims paid for SCOR Global P&C increased to EUR 3,135 million during 2015 from EUR 2,788 million in 2014 (2013: EUR 2,967 million). For SCOR Global Life the level of gross benefits and claims paid increased to EUR 6,364 million in 2015 from EUR 5,047 million in 2014 (2013: EUR 4,087 million).
In 2015, SCOR benefited from a strong underlying performance, a prudent asset management policy which safeguarded shareholders’ interests while delivering solid returns and a rather benign year in terms of natural catastrophes. In 2015, the effective tax rate was 26.0%.
The net investment income previously reported in the 2013 Registration Document was EUR 512 million for the year ended December 31, 2013 (3) The return on invested assets’ calculation method was adjusted in 2014 to exclude revenues from Life reinsurance contracts that do no transfer significant reinsurance risk (presented in the investment income line of the 2013 Registration Document). The ratio previously reported in the 2013 Registration Document was 2.6% for the year ended December 31, 2013
Return on equity was 10.6%, 9.9% and 11.4% for the years ended December 31, 2015, 2014 and 2013 respectively. Basic earnings per share were EUR 3.46, EUR 2.75 and EUR 2.96 for the years ended December 31, 2015, 2014 and 2013 respectively.
The business comprises traditional reinsurance business: Treaty, Business Solutions, and Specialty Lines. SCOR Global P&C capitalizes on a long-standing franchise, experience, and an extensive data base comprising multi-line expertise.
In 2015, gross written premiums increased by 16% compared to 2014. At constant exchange rates the growth is 4.9%, in line with expectations projected at the beginning of the year.
In 2014, gross written premiums increased by 1.8% compared to 2013. At constant exchange rates the growth was 2.7%, in line with the assumption of EUR 5 billion annual gross written premiums indicated in the January 2014 renewals disclosure.
In 2013, gross written premiums increased by 4.3% compared to 2012. At constant exchange rates the growth was 8.3% (particularly due to the appreciation of the Euro) and led to achievement of the target growth of the “Strong Momentum” plan over the 3 years period (32.5% at current exchange rates, 35% at constant exchange rates). The growth was mainly driven by the performances of lines of business in P&C treaties and Specialties business (particularly Lloyds, Aviation and Agriculture) and by improved geographical diversification towards Asia, in particular China, India and SIT (Singapore, Indonesia, Thailand) and the Latin American area (Central America, Latin America and Caribbean).
SCOR Global P&C achieved a net combined ratio (1) of 91.1% in 2015 against 91.4% in 2014 and 93.9% in 2013.
In 2015, this ratio reflects very strong technical results, with a stable net attritional loss ratio (56.8% compared to 56.9% in 2014) despite some significant man-made losses and the lower impact of natural catastrophes compared to 2014. Natural catastrophes had a 2.2% impact on the Group net combined ratio for year end 2015 compared to a 4.2% impact in 2014 and a 6.4% impact in 2013.
(1) Loss ratios are calculated on the basis of Non-Life claims, expressed as a percentage of Non-Life premiums earned (2) Net of recoveries and reinstatement premiums (assumed and retrocession) (3) Including UK Flooding, Chennai Floods (India), US Northeast Winterstorms, Storm Niklas, US South & Midwest Weather, Chile Earthquake 2015, Typhoon
Rainbow/Mujigae, Italy Snow & Windstorm, South Carolina Floods, Chilean Storm & Mudslides and Texas & Oklahoma Heavy Rain (4) Including European Hails (Ela), Japan Snowstorm, USA Floods (Warren Michigan), Cyclone Hudhud, Hurricane Odile, Chile Earthquake, Southern Alberta
Estimated loss net of retrocession as at Cat losses Date of loss December 31, 2015 UK Flooding - Dec 2015 12/01/2015 29 Chennai Floods 10/01/2015 19 US Northeast Winterstorms 02/01/2015 19 Storm Niklas 03/01/2015 10 Other natural catastrophes (less than EUR 10 million) - 34
SCOR Global Life operates through its unified global organization with a specialized market approach in three regions: Americas, EMEA (Europe, Middle East and Africa) and Asia Pacific. It underwrites life reinsurance business in the following product lines:  Protection
Protection encompasses traditional Life reinsurance business for living and death benefits. Main risks undertaken are mortality, morbidity and behavioral risks for individuals and groups of individuals. Financial Solutions typically combine traditional Life reinsurance with financing components providing liquidity, balance sheet, solvency and/or income statement improvements to the client. Longevity refers to products covering the risk of negative deviation from expected results due to the insured or annuitant living longer than assumed in the pricing of insurance covers provided by insurers or pension funds.
In the EMEA region, SCOR Global Life reinforced its franchises in key European markets such as France, the UK, and Nordic countries. SCOR Global Life is also expanding into the large South African market. Asia Pacific has remained a region with significant growth opportunities both in terms of premiums and profitability. Premiums development in Asia Pacific was driven by higher Protection business volumes in Australia, China and South Korea. Within the Protection business area, Mortality is the main risk underwritten and the main driver of growth in Protection in 2015:  Mortality: more than 60% of SCOR Global Life’s portfolio is traditional mortality reinsurance business, based on 2015 gross written premiums. SCOR Global Life has maintained or reinforced its strong positions in Mortality in the US, as well as in the major European markets.
 Critical Illness: SCOR Global Life is a market leader in the UK. It also leverages its experience and expertise from the UK to expand into selected Asian markets and into South Africa.
ReMark, which provides direct global marketing of life insurance products to insurers, financial institutions and affinity partners
Longevity SCOR Global Life has established itself as a recognized leading longevity reinsurer. The Longevity Solutions product line accounts for 7% of SCOR Global Life’s gross written premiums in 2015 and is one of the main drivers of premium growth (+127% gross written premiums in 2015). To date the main active market for SCOR Global Life is the UK, focusing on longevity risk transfer transactions for large in-payment portfolios, including two large new transactions in the UK in 2015. In February 2015, SCOR Global Life has entered into the first longevity transaction in the Canadian market. The associated liabilities are approximately CAD 5 billion, which makes this transaction one of the largest pension scheme longevity insurance transactions completed globally. SCOR Global Life is assuming a significant part of this risk.
Net investment income for the year ended December 31, 2015 amounted to EUR 666 million as compared to EUR 576 million and EUR 509 million for the years ended December 31, 2014 and December 31, 2013, respectively.
Realized gains/(losses) on loans - 1 Realized gains/(losses) on equity securities
Realized gains/(losses) on invested assets 170 135 130 Impairments on debt securities
In this context, SCOR decided to increase its liquidity, defined as cash, cash equivalents and short term investments, from EUR 940 million at the end of 2014 to EUR 2,034 million at the end of 2015. SCOR decided to momentarily pause the progressive and selective rebalancing strategy of its investment portfolio and to maintain the duration of the fixed income portfolio broadly stable at 3.9 years at the end of 2015 compared to 4.0 years at the end of 2014. The fixed income portfolio continues to represent a significant portion of SCOR’s invested assets with over 78% invested within this asset class (2014: 81%). Despite the downgrade of several sovereign and private issuers the average rating of the fixed income portfolio was maintained at "AA-" at the end of 2015. SCOR’s exposure to equity securities increased marginally to EUR 515 million as at December 31, 2015, representing 3% of invested assets (as at December 31, 2014: EUR 511 million, representing 3% of invested assets). This exposure is essentially made of common equities and convertible bonds. The real estate portfolio slightly increased to EUR 793 million as at December 31, 2015, primarily as a result of market value appreciation, and stands at 4% of invested assets (as at December 31, 2014: EUR 776 million, 5% of invested assets). Other investments, comprising mainly of ILS, private equity and infrastructure funds and non-listed equities have slightly increased to EUR 482 million as at 31 December 2015 and represent 3% of invested assets (as at December 31, 2014: EUR 432 million, 3% of invested assets). The following table is a reconciliation of this and IFRS figures as presented in Section 4 - Consolidated financial statements:
Total IFRS classification 726 Debt securities 13,958 Available-for-sale financial assets 657 Debt securities 33 Investments at fair value through income 690 Loans and receivables (2)
25,217 Cash and cash equivalents 860 TOTAL INSURANCE BUSINESS INVESTMENTS AND CASH AND CASH EQUIVALENTS
The strength of the 2015 results and balance sheet demonstrates the effectiveness of SCOR’s strategy which relies on high business and geographical diversification, focusing on traditional reinsurance activity with very limited exposure to reinsurance liabilities with economic activity risks and no material off balance sheet exposure.
The Group reconciles its strategic objectives with the protection of its capital via its “capital shield” policy, which articulates the Group’s risk appetite. This policy is based on an economic approach and aims to protect the Group against potential shock losses. The policy is built on the following four concepts: traditional retrocession, capital markets solutions, solvency buffer and contingent capital facility.
For more information on the Capital shield policy, refer to Section 3.3.2.5 – Retrocession and other risk mitigation techniques.
For information on financial debts, including their related covenants, refer to Section 4.6 – Notes to the consolidated financial statements, Note 14 – Financial debt.
For a description of the derivatives used to hedge the risks related to financial debts, refer to Section 4.6 – Notes to the consolidated financial statements, Note 9 – Derivative instruments
On December 2, 2015, SCOR has successfully placed a dated subordinated notes issued on the Euro market in the amount of EUR 600 million. On June 2, 2015, SCOR has successfully placed a dated subordinated notes issued on the Euro market in the amount of EUR 250 million. SCOR also called the balance of the USD subordinated step-up floating
During 2014 and 2013, SCOR actively managed its liabilities, providing liquidity to its outstanding debts by acquiring a total face value of USD 10 million at an average price below 93% to par, and a total face value of USD 46 million at an average price below 90% to par, respectively.
The Group has a financial debt leverage position of 27.5% at December 31, 2015, as compared to 23.1% at December 31, 2014 and 21.2% at December 31, 2013. This ratio is calculated as the percentage of subordinated debt compared to total shareholders’ equity plus subordinated debt. The calculation of the leverage ratio excludes accrued interest from debt and includes the swaps effect related to the CHF 650 million, CHF 315 million and CHF 250 million subordinated debt issuances. In September 2014 and December 2015, SCOR issued two subordinated notes for EUR 250 million and EUR 600 million, respectively, and it is SCOR’s current intention, subject to the evolution of market conditions and to prior regulatory approval, to refinance through the proceeds of these two notes the optional redemptions of the remaining balance of the 6.154% undated deeply subordinated EUR 350 million notes callable in July 2016 and of the 5.375% fixed to floating rate undated subordinated CHF 650 million notes callable in August 2016. The proceeds of these notes may also be used for general corporate purposes. Had these redemptions been effective on December 31, 2015, the leverage ratio would have amounted to 20.6%.
SCOR maintained its conservative asset management policy while executing a prudent inflection program directed to improve the return of its invested assets while keeping a strong focus on liquidity management. Refer to Section 4.6 – Notes to the consolidated financial statements, Note 12 – Cash and cash equivalents and cash flows.
The “Solvency II” European Directive, related to the solvency standards applicable to insurers and reinsurers lays down, at the level of individual companies and at the level of groups, the minimum amounts of financial resources that insurers and reinsurers operating in the European Economic Area will be required to have in order to cover the risks to which they are exposed and the principles that should guide insurers' and reinsurers' overall risk management and reporting.
Positive operating cash flows amounted to EUR 795 million in 2015 (EUR 894 million in 2014 and EUR 897 million in 2013), in line with a normalized operating cash flow of about EUR 200 million per quarter. Cash flow from financing activities amounted to EUR 417 million in 2015 (EUR (235) million in 2014). These amounts principally reflect the dividend payment, the issuance of two subordinated debts as well as the repayment of two existing debts in 2015. The Group’s liquidity, defined as cash, cash equivalents, short-term government bonds with maturities above three months and below twelve months and bank overdrafts, which is well diversified across a limited number of banks, stands at EUR 2.0 billion at the end of 2015, up from EUR 0.9 billion at the end of 2014 (EUR 2.1 billion at December 31, 2013) due to the temporary pause in its rebalancing strategy of shifting the portfolio towards the strategic asset allocation set out in its strategic plan “Optimal Dynamics” from the second quarter of the year.
(1) Solvency ratio based on Solvency II requirements. The expressed estimated solvency ratio may differ from the Group solvency final results which are to be filed to supervisory authorities by July 2016
(2) The 211% adjusted solvency ratio allows for the intended calls of the two debts callable in Q3 2016 (EUR 257 million notes callable in July 2016 and the 5.375% fixed to floating rate undated subordinated CHF 650 million notes callable in August 2016) subject to the evolution of market conditions and supervisory approval. The solvency ratio based on Solvency II requirements is 231% at year-end 2015
For a detailed calculation of book value per share, refer to the table below: In EUR million As at December 31, 2015 As at December 31, 2014 As at December 31, 2013 Group shareholders' equity 6,330 5,694 4,940 Shares issued as at closing date 192,653,095 192,691,479 192,757,911 Treasury shares as at closing date (6,661,000) (6,593,132) (7,343,237) Basic number of shares 185,992,095 186,098,347 185,414,674 BASIC BOOK VALUE PER SHARE 34.03 30.60 26.64 1.3.9.2 RETURN ON INVESTMENTS AND RETURN ON INVESTED ASSETS
For detailed calculation of return on investments and return on invested assets, refer to the tables below: In EUR million
Total expenses as per profit & loss account (1) (725) (607) (565) Unallocated loss adjustment expenses (ULAE)
Return on equity is based on the Group’s share of net income divided by average shareholders’ equity (calculated as shareholders’ equity at the beginning of the period adjusted for the effect of all movements during the period, pro-rata temporis).
(1) In 2014, the technical result calculation method was adjusted to include revenues from Life reinsurance contracts that do not transfer significant reinsurance risk (presented in the investment income line of the 2013 Registration Document). The ratio previously reported in the 2013 Registration Document was 7.3% for the year ended December 31, 2013. The net technical results previously reported in the 2013 Registration Document was EUR 199 million for the year ended December 31, 2013
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 office of the Company at 5 avenue Kléber, 75016 Paris. The information published by SCOR within the last 12 months (from March 21, 2015 to March 4 2016) is available for downloading from the following sites:  Autorité des marchés financiers (AMF):  Bulletin des Annonces Légales Obligatoires (BALO):  SCOR:  L’info financière:
SCOR considers that a director of SCOR SE who holds a term in a Group’s subsidiary can be qualified as independent subject to not participating in the decisions of the Board of Directors of SCOR SE in case of conflict of interest with the subsidiary in which he/she has the term.
Denis Kessler joined the Group on November 4, 2002, with the objective of turning the company around in the face of a very difficult financial situation. The Board of Directors considered that, in order to achieve this, it was preferable to entrust him with the powers of Chairman of the Board of directors and of Chief Executive Officer. When his mandate was renewed in May 2011, the Board of Directors considered that Denis Kessler had demonstrated the relevance of simultaneously holding the offices of Chairman of the Board of Directors and Chief Executive Officer during the turnaround period experienced by SCOR between 2003 and 2007, and then during the economic crisis between 2007 and 2011. The Board of Directors thus felt it was is in the best interests of SCOR, its shareholders and all its employees, for Denis Kessler to be re-appointed to all of the offices held by him and to pursue the development of the Group. Since 2011, SCOR’s results have demonstrated the success of this form of governance.
The combined offices of Chairman & Chief Executive Officer give the Company a faster decision-making process and strategic alignment in terms of its governance bodies, which were particularly useful in the recent acquisitions in the United States in 2011 and 2013.
Moreover, several elements of SCOR’s governance enable it to ensure a good balance of powers. Thus, in 2015, all of the directors, except the Chairman and Chief Executive Officer and the employee director, were independent. The Board of Directors of SCOR also has a lead independent director who may include any subject he deems necessary on the agenda of the Board of Directors meetings and can convene the Non-executive Director Session as often as needed.
Furthermore, according to the Board’s Internal Charter, the directors may ask to invite the Company’s principal executives to attend meetings of the Board of Directors so as to interview them on topics related to the exercise of their functions, including when the Chairman & Chief Executive Officer is absent.
During its meeting held on March 4, 2015, the Board of Directors of the Company limited the powers of the Chairman and Chief Executive Officer by stipulating in the Board’s Internal Charter the need for prior Board approval for the following operations:  organic growth investments and major internal structuring operations;  any significant operation falling outside of the strategy announced by the Group;  any project regarding a sale or acquisition, merger or asset contribution higher than one hundred million euros.
Company’s assets must be submitted to the General Meeting of shareholders, as recommended by the AFEPMEDEF Code.
The modalities of the participation of the shareholders to the General Meetings and, more specifically, the mode of operation, the main powers of the shareholders’ General Meetings, the description of the shareholders’ rights as well as the modalities of the exercise of the voting rights are set forth by the Article 19 of the Company’s bylaws, an electronic version of which is available on SCOR’s web site (www.scor.com).
2.1.1.3 INFORMATION REQUIRED BY ARTICLE L.225-100-3 OF THE FRENCH COMMERCIAL CODE
In accordance with European law governing Societas Europaea and applicable French law, the principal responsibility of the Board of Directors is to determine the guiding principles of the Company’s business plan and strategy and to monitor their application. The Chairman and Chief Executive Officer (“Président et Directeur Général”) of SCOR SE has full executive authority to manage the business of the Company, subject to the prior authorization of the Board of Directors or the Company’s shareholders for certain decisions as required by law and by the Company’s bylaws (“statuts”). SCOR SE’s bylaws provide that the Board of Directors is composed of no fewer than nine and no more than eighteen members. The actual number of Directors may be modified by the shareholders at the Shareholders’ Meetings. The Board of Directors cannot by itself increase the number of its members. Under SCOR SE’s bylaws, each director must own at least one ordinary share for the duration of his or her entire term of office. Under French law, a director may be an individual or a legal entity for which an individual is appointed as permanent representative, except for the Chairman, who must be an individual. Pursuant to article L. 225-20 of the French Commercial Code, the permanent representative of a legal entity is subject to the same conditions, obligations and civil and criminal liabilities as if he or she was director in his or her own name, without prejudice to the joint and several liability of the legal entity he or she represents. 11 of the 12 members of the Board of Directors are individuals and one director, Malakoff Médéric Group, is a corporation (represented by Guillaume Sarkozy as permanent representative).
Directors are required to comply with applicable law and SCOR SE’s bylaws. Under French law, Directors are liable for violations of French legal or regulatory requirements applicable to Societas Europaea, violation of a company’s bylaws (“statuts”) or mismanagement (“faute de gestion”). Directors may be held liable for such actions both individually and jointly with the other directors.
Denis Kessler Chairman and Chief Executive Officer Chairman of the Strategic Committee Member of the Crisis Management Committee
 Director of BNP Paribas SA (France)*  Director of Invesco Ltd (US)*
 Director of Bolloré SA (France)*  Director of Dassault Aviation SA (France)*  Director of Fonds Stratégique d’Investissement (France)  Member of the Supervisory Board of Yam Invest N.V. (Netherlands)
Denis Kessler, a French citizen, is a graduate of HEC business school (Ecole des Hautes Etudes Commerciales), holds a PhD in economics and advanced degrees in economics and social sciences, and is a Fellow of the French Institute of Actuaries. He was Chairman of the Fédération Française des Sociétés d’Assurance (FFSA), Senior Executive Vice‐President and member of the Executive Committee of the AXA Group and Executive Vice‐President of MEDEF (Mouvement des Entreprises de France). He joined SCOR as Chairman and Chief Executive Officer on 4 November 2002. In January 2016, he was elected to join the French Institute’s Academy of Moral and Political Sciences.
 Chairman of the Board of Directors of Generali France (France)  Chairman of the Board of Directors of Generali Vie (France)  Chairman of the Board of Directors of Generali IARD (France)  Chairman of the Board of Directors of Generali France Assurances (France)
 Director of Europ Assistance Holding (France)  Director of ERAMET* (France)
 Chief Executive Officer of Generali France (France)  Chief Executive Officer of Generali Vie (France)  Chief Executive Officer of Generali IARD (France)  Chairman of the Board of Directors of Europ Assistance Holding (France)  Director of Assicurazioni Generali SpA (Italy)*  Member of the Supervisory Board of Generali Investments SpA (Italy).  Chairman of the Board of Directors of Europ Assistance Italie (Italy).  Permanent representative of Europ Assistance Holding at the Board of Directors of Europ Assistance (Spain)
 Chairman of the SAS and Chairman of the Board of Directors of S-Money (France)  Chairman of the SAS and Chairman of the Board of Directors of ISSORIA (France)  Director of BPCE IOM (France)  Director of Natixis Coficine (France)  Director of Maisons France Confort (France)  Permanent Representative of BPCE and Director of COFACE (France)  Permanent Representative of BPCE and Director of Banque Palatine (France)
Domaines (France)  Chairman of Meilleurtaux (France)  Chairman of Oterom Holding (France)  Chairman of ISSORIA International Trading (France)  Permanent Representative of BPCE, Chairman of ISSORIA (France)  Permanent Representative of BPCE, Chairman of ISSORIA International Trading (France)  Permanent Representative of BPCE, Member of the Supervisory Board of FLCP (France)  Permanent Representative of GCE Participations, Director of Demain SA (France)
Marguerite Bérard-Andrieu, a French citizen, is a graduate of the Institut d’Etudes Politiques de Paris, of Princeton University (Woodrow Wilson School of International and Public Affairs), and a former student at the Ecole Nationale d’Administration (ENA). She began her career in 2004 as an auditor at the French Treasury in the Inspection Générale des Finances. From 2007 to 2010, she was an advisor to the President of the French Republic on employment and social affairs. From 2010 to 2012, she was the Chief of Staff of the French Minister for social affairs. In June 2012, Marguerite Bérard-Andrieu joined Groupe BPCE, and was appointed Deputy CEO, Member of the Management Committee in charge of Strategy, legal affairs and compliance, and general secretary. In 2015, Marguerite BérardAndrieu joined the Board of SCOR SE and the Steering Committee of the Institut Montaigne.
Thierry Derez Director Member of the Strategic Committee, Risk Committee, Compensation and Nomination Committee and Crisis Management Committee
COVEA 86 rue Saint Lazare CS 10020 75320 Paris Cedex 09, France
 Chairman of the Board of Directors and Chief Executive Officer of Garantie Mutuelle des Fonctionnaires (France)
 Chairman of the Board of Directors and Chief Executive Officer of MAAF Assurances (France)  Chairman of the Board of Directors of Assurances Mutuelles de France (France)
 Chairman of the Board of Directors of MMA IARD Assurances Mutuelles (France)
 Chairman of the Board of Directors of MMA Vie (France)
 Chairman of the Board of Directors of MMA Vie Assurances Mutuelles (France)  Chairman of the Board of Directors of Covéa Coopérations (France)
Assistance Protection Juridique (France)  Permanent Representative of Azur-GMF Mutuelles Assurances Associées at the Board of Directors of esanté (France)  Permanent Representative of Azur-GMF Mutuelles Assurances Associées at the Board of Directors of
Grands Millésimes de France (France)  Permanent Representative of Azur-GMF Mutuelles Assurances Associées at the Board of Directors of La
(France)  Permanent Representative of Assurances Mutuelles de France at the Board of Directors of Assistance
(France)  Permanent Representative of la Sauvegarde at the Board of Directors of AME Réassurance (France)
Peter Eckert Director Chairman of the Risk Committee Member of the Strategic Committee, Audit Committee and Crisis Management Committee
 Member of the Supervisory Board of Château Mondot (France)  Director of SCOR UK Company Ltd (UK) **  Director of SCOR Switzerland AG (Switzerland) **  Director of SCOR Holding Switzerland AG (Switzerland) **  Director of Banken Beratungszentrum AG (Switzerland)  Member of the Investment Committee of Fondation Leifheit, Nassau (Germany)  Director of Zurich Companhia de Seguros Vida SA (Portugal)
 Chairman of the Banque Clariden Leu AG, Zurich (Switzerland)  FINMA agent with executive authority of the insurer CPT Assurances (Switzerland)  Director of Deliciel AG (Switzerland)  Member of the Advisory Board of Accenture AG (Switzerland)  Director of Zurich, Companhia de Seguros SA (Portugal)
Peter Eckert, a Swiss citizen, has a large international experience in risk management, insurance, asset management, banking and technologies. He was a member of the Management Board (1991-2007) and Chief Operating Officer (2002-2007) of Zurich Financial Services, a member of the Swiss Federal Banking Commission EBK between July 1, 2007 and December 31, 2008, and Deputy Chairman of the Board of the new Swiss Financial Market Supervising Authority (FINMA) from January 1, 2008 to December 31, 2008. From January 1, 2009 to November 14, 2011 he was Chairman of the bank Clariden Leu and from January 10, 2012 to March 31, 2012 he was appointed by the Swiss Financial Market Supervisory Authority (FINMA) as an agent with executive authority of the insurer CPT at Berne (Switzerland).
Kevin J. Knoer, an American citizen, has 34 years of insurance experience, including risk control & engineering and industrial risk underwriting. He holds a Bachelor of Science degree and an MBA and has served as a submariner in the United States Navy. Since joining SCOR in 1996, he has held various Treaty and Facultative Underwriting positions in the United States. From 2007 to 2010, he was the Deputy Regional Manager for SCOR Business Solutions (SBS) in Asia-Pacific. He is currently a Vice President and Senior P&C Underwriter for SBS in New York.
 Director and Member of the Executive committee of Simont Braun (Belgium)  Lecturer and research assistant at the Université libre de Bruxelles (Belgium)
Vanessa Marquette, a Belgian citizen, holds a law degree and an economic law degree from the Université Libre de Bruxelles. She also studied law at the University of Michigan Law School and at Davis University and Berkeley University. She has practiced as a lawyer of the Brussels bar since 1995. She specializes in Banking Law and Financial Law and has particular expertise in the areas of Corporate Law, in Insolvency Law and Security Interests and in Private International Law. She is the managing partner of the business law firm Simont Braun, which she joined in 2005 after having practiced law at the Brussels’ offices of Freshfields Bruckhaus Deringer and Stibbe Simont Monahan Duhot. Vanessa Marquette is a lecturer at the Université Libre de Bruxelles where she teaches International Financial Law.
 Chairman of Macifilia Courtage (France)  Chief Executive Officer of Macifilia (France)  Chairman and Member of the Directory of Macifin’ (France)  Member of the Management Board of Mutavie (France)  Director of Sferen (France)  Director of Macif Mutavie Finance (GIE) (France)  Director of Macifilia (Permanent Representative of Macif) (France)  Director of Socram Banque (France)  Director of BPCE Assurances (Permanent Representative of Macif) (France)  Director of Ofi Asset Management (France)  Director of Ofivalmo Partenaires (Permanent Representative of Macif) (France)  Member of the Executive Committee of Siil (France)  Member of the Steering Committee of Sipemi (Permanent Representative of Macif) (France)  Chairman and director of Thémis (France)  Director of Thémis (Permanent representative of Macifilia) (France)  Director of Euresa Holding (into liquidation) (Luxembourg)
 Chairman and Director of Média Aéroports de Paris (France)  Director of Régie Autonome des Transports Parisiens (RATP) (France)  Member of the Board of Directors of la Société de Distribution Aéroportuaire (SDA) (France)  Member of the Executive Committee of Relay@ADP (France)  Chairman of the Board of Directors of Airport Council International (ACI) Europe (Belgium)  Director and Vice-Chairman of the Board of Directors of TAV Havalimanlari Holding A.S. (TAV Airports)
(Turkey)  Director and Vice-Chairman of the Board of Directors of TAV Yatirim Holding A.S. (TAV Investment)
(Turkey)  Director and Vice-Chairman of the Board of Directors of TAV Tepe Akfen Yatirm Insaat Ve Isletme A.S.
 Chairman of the Board of Directors of Egis (France)  Chairman of the Board of Directors of Fonds Stratégique d’investissement (France)  Chairman of the Supervisory Board of la Société Nationale Immobilière (France)  Chairman of the Directory of Fonds de réserve des retraites (France)  Vice-Chairman of the Board investors of InfraMed (France)  Director of Musée du Louvre-Lens (France)  Director of OSEO (France)  Director of Veolia Environnement (France)*  Director of FSI-PME portefeuille (France)  Director of CNP Assurances (France)*  Director of CDC Entreprises (France)  Chief Executive Officer of Caisse des dépôts et consignations (France)  Permanent Representative of Caisse des dépôts et consignations at the Board of Directors of la Poste
(France)*  Member of the Board of Les prélèvements obligatoires (France)  Director of Dexia (Belgium)*  Member of the Supervisory Board of NV Luchthaven Schiphol (Netherlands)
Groupe Malakoff Médéric 21, rue Lafitte 75 317 Paris Cedex 9, France
(France)  Permanent Representative of Malakoff Médéric Assurances at the Board of Directors of La Banque Postale
Kory Sorenson, a British citizen, was born in the US and currently resides in France. She speaks fluent French and has a DESS in corporate finance from the Institut d’Etudes Politiques de Paris, a master’s degree in applied economics from the University of Paris Dauphine, a bachelor’s degree in econometrics and political science from the American University in Washington, D.C. and a certificate in governance from Harvard Executive Education. Kory Sorenson has over twenty years of experience in financial services, most of which has been focused on insurance and banking. She was Managing Director, Head of Insurance Capital Markets of Barclays Capital from 2005 to 2010 and also held senior positions in the capital markets or financial institutions divisions of Credit Suisse, Lehman Brothers and Morgan Stanley. She began her career in the treasury of Total SA in Paris. Kory Sorenson is currently a non-executive director of several major companies and of a non-profit foundation. She became Chairman of the Audit Committee of SCOR in April 2015.
Leaders’ Quest Ltd 204 Lauderdale Mansions Lauderdale Road London W9 1NQ United Kingdom
 Director of BNP Paribas (France)*  Non-executive Member of the Board of the Department of Culture, Media and Sports of the UK Government
 Director of Savills plc (UK)*  Director of CDC Group Plc (UK)  Member of the Board of the King’s College London (UK)  Member of the Board of HMG Ministry of Justice (UK)  Director of Ballarpur Industries (India)
Fields Wicker-Miurin, an American and British citizen, studied in France, at the Institut d'Etudes Politiques de Paris and then in the United States and Italy. She graduated from the University of Virginia and Johns Hopkins University. Fields Wicker-Miurin began her career in banking, before joining Strategic Planning Associates (Mercer Management Consulting) as a senior partner where she was the main advisor to Lloyd’s of London. In 1994, she became Chief Financial Officer and Head of Strategy of the London Stock Exchange. She was a member of the Nasdaq Technology Advisory Council and advised the European parliament on financial markets harmonization. In 2002, she was one of the founders of Leaders' Quest, whose activity is to organize programs to exchange experiences that allow international leaders from all sectors to meet actors from business and civil society in emerging countries. In 2007 she was awarded the OBE - Officer of the British Empire. She is also a director of BNP Paribas and BILT Paper and a nonexecutive Member of the Board of the Department of Culture, Media and Sports of the UK Government where she chairs the Audit and Risk Committees.
The Board meets at least four times a year. In accordance with legal provisions, it approves the financial statements, proposes dividends, and makes investment and financial policy decisions. Beyond the cases provided by law, some operations are subject to the prior approval of the Board: any major organic growth investments or internal restructuring operations, any significant operation falling outside of the strategy announced by the Group and any project regarding a sale or acquisition, merger or asset contribution higher than one hundred million euros (EUR 100 million). The Board’s duties and responsibilities are set out in SCOR SE’s bylaws (statuts).
2. Must not have received, in any form, remuneration greater than EUR 100,000 from the Company within the last five years, excluding that received as directors’ fees; 3. Must not be a corporate officer in a company in which SCOR directly or indirectly is a director, or in which an employee has been appointed as such, or in which one of SCOR’s corporate officers (currently or within the last five years) is a director; 4. Must not be a significant customer, supplier, or investment or corporate banker of SCOR or its Group, nor shall SCOR or its Group represent a significant part of such person’s business activities. A business relationship is deemed significant if it amounts to an annual sum of more than 5% of SCOR’s consolidated turnover, or more than 5% of the turnover, consolidated as necessary, of the director or the company with which he is affiliated. The evaluation of how significant the relationship is with SCOR or its Group must be debated by the Board on consideration of the Compensation and Nomination Committee’s report; 5. Must not have a close family relationship with one of the Company’s officers; 6. Must not have been an auditor for the Group within the last five years; 7. Must not have been one of SCOR’s Directors for a period exceeding twelve years (pursuant to the AFEPMEDEF Governance Code, loss of the status of independent director on the basis of this criterion occurs only upon expiry of the term of office during which the 12-year limit is reached); 8. Must not represent a significant shareholder of the Company with the stipulation that: - A shareholder is deemed significant if he holds more than 5% of the shares or voting rights (calculation consolidating his various holdings); - Below this threshold, the Board, based on a report of the Compensation and Nomination Committee, systematically takes into account the structure of the Company’s capital and the existence of a potential conflict of interest when evaluating independence.
The table below presents the results of the detailed review, criterion by criterion, of the independence of each director made by the Board of Directors in 2016, based on the proposal of the Compensation and Nomination Committee, with regard to the criteria stated above: Denis Kessler, Chairman of the Board No No No Yes No Yes Yes Yes No Marguerite Bérard-Andrieu Yes Yes Yes Yes Yes Yes Yes Yes Yes Thierry Derez Yes Yes Yes Yes Yes Yes Yes Yes Yes Peter Eckert Yes Yes Yes Yes Yes Yes Yes Yes Yes Kevin J. Knoer No No Yes Yes Yes Yes Yes Yes No Vanessa Marquette Yes Yes Yes Yes Yes Yes Yes Yes Yes Jean-Marc Raby Yes Yes Yes Yes Yes Yes Yes Yes Yes Augustin de Romanet Yes Yes Yes Yes Yes Yes Yes Yes Yes Guillaume Sarkozy (1) Yes Yes Yes Yes Yes Yes Yes Yes Yes Kory Sorenson Yes Yes Yes Yes Yes Yes Yes Yes Yes Claude Tendil Yes Yes Yes Yes Yes Yes Yes Yes Yes Fields Wicker-Miurin Yes Yes Yes Yes Yes Yes Yes Yes Yes
The Board of Directors, upon the recommendations of the Compensation and Nomination Committee, has especially studied the criteria relating to any significant business ties that directors might have with the Company as a customer, supplier, or investment or corporate banker. In particular, it has checked that none of the current directors have business activities with SCOR greater than the threshold indicated in the Board Internal Charter.
Directors undertake to hold no more than four other mandates in listed companies, including foreign companies, outside of the Group. They are required to consult the Lead Independent Director and the Chairman of the Compensation and Nomination Committee prior to their prospective appointment date as Director, Chairman and/or CEO, member of a Supervisory Board or executive board or Chairman of an executive Board that they hold in other companies, whether the head of office of such companies is located in France or abroad.
The Board Internal Charter sets out the main recommendations of the market authorities with regard to Directors trading the securities of their company. First and foremost, the Board Internal Charter sets out the legal and regulatory provisions requiring confidentiality with regard to privileged information of which Directors could have knowledge while performing their functions.
Then, the Board Internal Charter requires Directors to register as owners of SCOR’s equities that they themselves or their minor children are holding at the time they enter office or those acquired subsequently. In addition, the Board Internal Charter lays down certain restrictions on trading SCOR’s securities:  First, it is forbidden to trade in SCOR’s securities while in possession of information which, when made public, is likely to have a significant impact on the share price;  In addition, it is forbidden to directly or indirectly conduct any transaction with regard to SCOR’s securities during certain sensitive periods that the Group notifies to the Directors or during any period preceding an important event affecting SCOR and likely to influence its market price.
The average attendance rate of the members of the Board was 94% (1). The following table displays the attendance of the members of the Board of Directors during 2015: Board members
Mrs. Fields Wicker-Miurin, member of the Compensation and Nomination Committee, managed this assessment by sending a questionnaire to the Directors and by leading in-depth individual interviews with them. The questionnaire was about the composition of the Board, its organization, its functioning and the functioning and composition of its Committees. All the directors completed this questionnaire. Mrs. Fields Wicker-Miurin presented her report during the meetings of the Compensation and Nomination Committee and of the Board of Directors held on February 9 and 23, 2016.
Overall, the directors expressed their satisfaction on the organization, functioning and composition of the Board and its Committees.
They noted that several of the changes they had suggested in the course of the 2014 assessment had been taken into account. They especially welcomed the improved format of the offsite Strategic Seminar and the establishment of a dedicated tool for the Committees and Board documentation.
2.1.2.6 NEGATIVE DISCLOSURES ABOUT MEMBERS OF THE BOARD OF DIRECTORS AND THE EXECUTIVE COMMITTEE
 No director and no member of the Executive Committee has been the subject of an accusation or official public sanction issued by statutory or regulatory authorities.
No loans or guarantees have been granted or established in favor of the Directors by SCOR or by any other Group company. There is no arrangement or agreement concluded with shareholders, clients, suppliers or others pursuant to which any member of the Board of Directors or any member of the Executive Committee of the Company have been appointed.
SCOR’s Board of Directors has established five committees in order to examine specific topics, to prepare the Board’s proceedings and to make recommendations to it.
The Strategic Committee is composed of Denis Kessler (Chairman), Marguerite Bérard-Andrieu, Thierry Derez, Peter Eckert, Vanessa Marquette, Jean-Marc Raby, Augustin de Romanet, Guillaume Sarkozy (as representative of Malakoff Médéric Group), Kory Sorenson, Claude Tendil and Fields Wicker-Miurin. The Committee’s mission is to examine the development strategy, including investments in organic growth and major internal restructuring operations, plus any significant operation falling outside of the strategy announced by the Group and to examine any acquisition, merger, asset contribution or disposal in an amount in excess of EUR 100 million. The Chairman of the Strategic Committee must exclude the non-independent members of the Committee from the review of the discussions which might create an ethical problem or a conflict of interest.
Its work dealt with various aspects of the strategy of the Group.
The average attendance rate of the Committee Members was 96.3 %(1). The following table states the attendance rates of the members of the Strategic Committee in 2015: Board members Attendance rate (%)
Denis Kessler, Chairman 100 Gérard Andreck ** 100 Marguerite Bérard-Andrieu *** 100 Andreas Brandstetter ** 0 Thierry Derez 100 Peter Eckert 100 Charles Gave ** 100 Vanessa Marquette *** 100 Jean-Marc Raby *** 100 Augustin de Romanet *** 100 Guillaume Sarkozy * 60 Guylaine Saucier ** 100 Kory Sorenson 100 Claude Tendil 100 Daniel Valot ** 100 Fields Wicker-Miurin 100 * Representing Malakoff Médéric Group, Director ** Member of the Strategic Committee until April 30, 2015 *** Member if the Strategic Committee from April 30, 2015 2.1.3.2 THE AUDIT COMMITTEE
The Committee may consult the Chief Financial Officer, the Head of Internal Audit, the Heads of the actuarial and compliance functions and the external auditors on these issues, including when SCOR executives are not present. It may also call upon outside experts. During the financial year 2015, and for each meeting, it met with the auditors, the Group Chief Financial Officer (during the review of the financial statements) and the Head of Internal Audit. The review of the financial statements has been completed by a presentation made by the auditors underlying the main results of their works and the accounting options retained, as well as with a presentation made by the Group Chief Financial Officer describing risks exposure and material off-balance sheet liabilities.
The average attendance rate of the Committee Members was 80% (1). The following chart states the attendance of the Audit Committee’s members in 2015: Board members Attendance rate (%)
Kory Sorenson, Chairman 100 Marguerite Bérard-Andrieu *** 33 Peter Eckert 100 Vanessa Marquette *** 67 Guillaume Sarkozy */** 0 Guylaine Saucier ** 100 Daniel Valot ** 100 Fields Wicker-Miurin 100 * Representing Malakoff Médéric Group, Director ** Member of the Audit Committee until April 30, 2015 *** Member of the Audit Committee from April 30, 2015 2.1.3.3 THE RISK COMMITTEE
The average attendance rate of the Committee Members was 100% (1). The following chart states the attendance of the members of the Risk Committee in 2015: Board members Attendance rate (%)
The Compensation and Nomination Committee is composed of Claude Tendil (Chairman), Thierry Derez, Kevin J. Knoer (employee director), Augustin de Romanet and Fields Wicker-Miurin. Except the employee director, each of its members is independent.
The Committee submits recommendations concerning compensation packages for the executive corporate officers and members of the Executive Committee of the Group, pensions, stock allotment plans and stock option plans or stock subscription plans to the Board of Directors and examines proposals related to the composition, organization and operation of the Board of Directors and its Committees. Its missions are described in the Board Internal Charter.
Compensation of the Chairman and Chief Executive Officer and of the other members of the Executive Committee, review of the say on pay, HR review and outlook, review of the succession plan of the key executive officers of the Group, review of the rules for granting directors’ fees.
 On governance matters: Renewal of the Board of directors of SCOR SE, process for the selection of new directors, review of the independence, fitness and properness of the directors, assessment of the Board and its Committees and follow-up, review of the cost of the governance within the Group in 2014, renewal of the D&O program, designation of persons effectively running SCOR SE and the Group as per the Solvency 2 directive, review of the Board Internal Charter, review of the Corporate governance manual of SCOR SE and the Group, review of the fit & proper policy, timeline for the election of the employee director, review of professional gender equality and equal pay.
The average attendance rate of the Committee Members was 93% (1). The following chart states the attendance of the members of the Compensation and Nomination Committee in 2015: Board members Attendance rate (%)
This session met twice in 2015, under the chairmanship of the Lead Independent Director, and has especially enabled discussions on the follow-up of the annual evaluation of the Board, on the setting up of meetings between the Lead Independent Director and each Director, as well as on the agenda of the offsite seminar of the Strategic Committee of the Board in September 2015.
The Executive Committee is composed of executive officers of the Company and of its subsidiaries. It is responsible for implementing the strategy defined by the Board of Directors, under the Chief Executive Officer‘s authority. The Chief Executive Officer (CEO) has full executive authority to manage the business, subject to the prior authorization of the Board of Directors or the shareholders for certain decisions as required by law and by the Company’s bylaws. The Chief Executive Officer has authority to act on the Group’s behalf and to represent SCOR in dealings with third parties, subject only to those powers expressly reserved by law to the Board of Directors or the shareholders. The Chief Executive Officer determines, and is responsible for, the implementation of SCOR’s goals, strategies and budgets, which are reviewed and monitored by the Board of Directors. The Board of Directors has the power to appoint and remove, at any time and with or without cause, the Chief Executive Officer, as well as to appoint separate persons to hold the positions of Chairman of the Board (Président du Conseil d’administration) and Chief Executive Officer (Directeur Général). Upon a proposal made by the Chief Executive Officer, the Board of Directors may also appoint a Deputy Chief Executive Officer (Directeur Général Délégué) to assist the Chief Executive Officer in managing the business.
Company, where from 1990 to 1998 he directed treaty underwriting in Asia and Australia. In 1998, he joined Zürich Re as head of international underwriting responsible for strengthening the company’s position in Asia, Australia, Africa and Latin America. He also supervised the “Global Aviation” reinsurance department and developed its “Global Marine” department. In September 2002, Benjamin Gentsch was appointed Chief Executive Officer of Converium Zürich, then Executive Vice President in charge of Specialty Treaties. In September 2007, he was appointed Chief Executive Officer of SCOR Switzerland and Deputy Chief Executive Officer of SCOR Global P&C.
Mark Kociancic, a Canadian citizen, is a graduate of the University of Toronto and holds a Bachelor of Commerce degree. He also holds a Chartered Professional Accountant (CPA) designation and a Chartered Financial Analyst (CFA) designation. Upon graduation in 1992, Mark joined Ernst & Young within its Life and P&C insurance practice and has subsequently held progressively senior positions within the insurance industry with St Paul Guarantee, Avalon Risk Associates and Tokio Marine, prior to joining SCOR US as Senior Vice President & Chief Financial Officer in May 2006. He was appointed SCOR Americas Hub CFO in June 2008 and was promoted to Executive Vice President in July 2010. He was appointed Deputy CFO of SCOR Group in October 2012 and in May 2013 became Group Chief Financial Officer.
Romain Launay, 36, is a graduate of the Ecole Polytechnique, the Ecole des Mines de Paris and the Centre des Hautes Etudes de l’Assurance. Having occupied various positions at the French Ministry for the Economy and Finance between 2004 and 2009, he became Technical Advisor to the Prime Minister’s Office in 2009. He joined SCOR in February 2012 as Senior Advisor to the Chairman and Chief Executive Officer, before becoming Group General Secretary in May 2014. In February 2016, he becomes Chief Operating Officer and member of the Executive Committee.
François de Varenne, a French citizen, is a graduate of the Ecole Polytechnique and a civil engineer of the Ponts et Chaussées. He holds a PhD in finance and graduated as an actuary from the Institut de Science Financière et d’Assurances (ISFA). François de Varenne joined the Fédération Française des Sociétés d’Assurances (FFSA) in 1993 as Manager of Economic and Financial Affairs. In London, beginning in 1998, he served successively as Insurance Strategist with Lehman Brothers, Vice-President for asset management solutions and structured transactions specialist in insurance and reinsurance companies at Merrill Lynch and then at Deutsche Bank. In 2003, he became Managing Partner of Gimar Finance & Cie. He joined the Group in 2005 as Director of Corporate Finance and Asset Management. On September 3, 2007, he was named Group Chief Operating Officer. On October 29, 2008, he was appointed Chief Executive Officer of SCOR Global Investments.
Total 2,706 2,555 2,450 (1) Each Hub covers a region and may encompass several countries (2) Paris Hub covers France, Spain, Italy, Belgium, the Netherlands, Russia, South Africa, United Kingdom, Ireland and Sweden (3) Americas Hub covers United States, Mexico, Brazil, Canada, Chile, Colombia and Argentina (4) Zurich/Cologne Hub covers Switzerland, Israel, Germany and Austria (5) Singapore Hub covers China, Hong-Kong, India, Japan, Korea, Malaysia, Singapore, Taiwan and Australia (6) SCOR Global Life SE controls 100% of the capital of ReMark. Due to its specific activity, its own business model and its own organization, ReMark is managed independently from the Group in terms of human resources (7) For 2013, 2014 and 2015, the Lloyd's Channel Syndicate (100 employees at December 31, 2015) is a subsidiary of SCOR Global P&C SE, managed independently from the Group in terms of human resources and not aggregated financially (and then socially) in the division (8) For 2013 the former Transamerica Re employees are included in the SCOR Global Life division. Starting from 2014, the former Transamerica Re employees are included in the divisions according to the global organization of the Group. For 2013, 2014 and 2015, Rehalto (29 employees at December 31, 2015) and Telemed (39 employees at December 31, 2015), subsidiaries (100%) of SCOR Global Life SE, are managed independently from the Group in terms of human resources and are not aggregated financially (and then socially) in the division
(9) The “Group Functions and Support” division includes the Group’s Finance, Risk and Operations departments as well as the departments directly managed by the Chairman and Chief Executive Officer. SCOR SE controls 59.9% of the capital of MRM (5 employees at December 31, 2015). Due to its specific activity , its business model and its organization, MRM’s human resources are managed independently from the Group
2.2.1.1 PRINCIPLES AND RULES STATED FOR THE DETERMINATION OF COMPENSATION AND IN-KIND BENEFITS OF THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
In compliance with the AFEP and MEDEF recommendation applicable to the Chairman and Chief Executive Officer, there is no employment contract between Mr. Denis Kessler and the Company.
The Corporate Officer, on the proposal of Compensation and Nomination Committee and validation of the Board of Directors, is eligible on an annual basis to stock-options and performance shares programs.
Moreover, the Chairman and Chief Executive Officer receives additional benefits, such as a life insurance, a health insurance policy, a specific life insurance, an individual insurance to complement the “all causes” death or permanent disability and a death or permanent disability insurance in case of an accident.
Following the recommendation of the Compensation and Nomination Committee, at its February 23, 2015 meeting, the Board of Directors at its March 4, 2015 meeting decided that the Chairman and Chief Executive Officer would receive a target variable annual compensation of EUR 1,200,000 (100% of his fixed gross annual amount). The Board of Directors has set this level to better balance the various components of the global compensation of the Chairman and Chief Executive Officer and to align his target cash bonus with his peers, based on a benchmark study conducted by Mercer in 2014 which showed a component of variable compensation lower than the median (the peer group includes Arch Capital Group, Axis Capital Holdings Limited, Endurance Specialty, Everest Re, Hannover Re, Munich Re, Partner Re, Reinsurance Group of America, Swiss Re, Transatlantic Holding – Alleghany, Validus Holdings). This decision also ensues from the assessment of the over performance of SCOR compared to its peers during the last few years, notably with two important successful acquisitions in the US, the positioning of the Group as a Tier 1 reinsurer and regular upgrades of the rating by the agencies. This variable annual compensation is determined as follows:  50% on the basis of the achievement of financial objectives, defined annually at the beginning of each year by the Board of Directors on the recommendation of the Compensation and Nomination Committee; and
 50% on the basis of the achievement of personal objectives, defined annually at the beginning of each year by the Board of Directors on the recommendation of the Compensation and Nomination Committee.
has obtained the approval of its internal model on November 17, 2015, after having filed more than 20,000 pages of documentation on May 22, 2015. SCOR's internal model is comprehensive and holistic. It covers all risks to which the Group is exposed, including Life and P&C underwriting risk, market and credit risk as well as operational risk.
 Rating (obtain the upgrade of the financial rating of the Group from at least one rating agency): two rating upgrades (Standard and Poor's on September 7: AA- and Fitch on July 21: AA-) and two positive outlooks (AM Best on September 11 and Moody’s on December 15) have been obtained by SCOR in 2015.
 Solvency (achieve a solvency ratio within the optimum range defined in the Strategic Plan “Optimal Dynamics”): the solvency ratio of SCOR, as defined by the internal model 2014 and adjusted for the early repayment of maturing debt in the third quarter 2016, amounted to 211% at end-2015, in
Amounts or accounting valuation Description the optimal range between 185% and 220% provided for in the plan "Optimal Dynamics".
 Operational efficiency (achieve a cost ratio of less than or equal to 5%): the cost ratio for 2015 was 5.0%.
 CSR (actively participate to the COP21) : SCOR, and its Chairman and Chief Executive Officer in particular, have taken significant actions and commitments on environmental matters as part of the COP21: - Since May 2015, Denis Kessler co-chairs the working group set up by the Geneva Association on extreme events and climate risks.
- On November 26, 2015, SCOR has engaged with major French companies to actively fight against climate change (Climate Manifesto) with a commitment to reduce the carbon intensity of its operations by 15% per employee by 2020.
NA The Group remuneration policy does not provide for multi-year variable compensation.
Amounts or accounting valuation Description than 150% for the years 2015 and 2016; (2) SCOR Global P&C’s combined ratio must be less than 100% on average in 2015 and 2016; (3) SCOR Global Life’s technical margin must be higher than or equal to 3% on average in 2015 and 2016; (4) The SCOR Group’s ROE for the financial years ending December 31, 2015 and December 31, 2016 must be higher than 1,000 points above the risk-free rate on average; (5) Absolute compliance with the Group’s ethical principles as described in the Code of Conduct of the SCOR Group. These principles, which are designed to protect the interests of clients, are the pillars of SCOR’s sustainable development and therefore of its performance. The performance conditions will be deemed satisfied if, in addition to the mandatory condition (5), at least three of the four other conditions listed above are met. Nevertheless, if condition (4) is not met and, in addition, one of the three performance conditions (1), (2) or (3) is considered not to have been met, only a reduced percentage of the initial stock options allocation, in accordance with the table below, will be granted: Therefore, in case of actual misconduct as per the Code of Conduct (condition 5), for instance in the event of fraud, the beneficiary will lose all of his/her stock options benefits (clawback policy). Following the authorization by the Shareholders' Meeting on May 6, 2014 in its twenty-fourth resolution, the Company's Board of Directors of March 4, 2015, on the proposal of the Compensation and Nominations Committee of February 23, 2015, decided to grant performance shares to the Chairman and Chief Executive Officer and to the other members of the Executive Committee. The Company's Board of Directors of March 4, 2015, on the proposal of the Compensation and Nominations Committee of February 23, 2015, decided to allocate 125,000 performance shares to the Chairman and Chief Executive Officer. These performance shares are subjected to 100% performance conditions which are the same than those for the stock options. The stock options and performance shares granted to the Corporate Officer in 2015 represent a percentage of 0.117% of the share capital, a percentage of 8.23% compared to the total of 2015 allocations; and a percentage of 57% compared to his global remuneration. It should be noted that SCOR is committed to the neutral impact of each stock option and performance share allocation in terms of dilution. To achieve this, SCOR’s policy is to systematically neutralize, insofar as possible, the potential dilutive impact that could result from the issuance of new Ordinary Shares following the exercise of stock
Amounts or accounting valuation Description options, by covering the exposure resulting from the issuance of stock options through the purchase of Ordinary Shares in the context of its share buyback program, at a price close to the exercise price, and by cancelling the treasury shares thus acquired as the options are exercised. Moreover, performance share allocation plans are covered through the allocation of existing shares taken from the treasury shares held by the Company in the context of its share buyback program, and not via the creation of new shares. Thus, there is no dilution regarding the granting of performance shares. Finally, in compliance with the AFEP and MEDEF recommendation applicable to the Executive Corporate Officer, he also made a formal commitment not to resort to the use of hedging instruments on the stock options and/or performance shares which have been granted to him for the whole duration of the term of his office.
As the Company representative, the Chairman and Chief Executive Officer is granted with a company car with a shared driver. The insurance, maintenance, fuel and all costs related to the driver are paid by the Company. Moreover, the Chairman and Chief Executive Officer benefits from a health insurance policy under the terms of a contract dated September 16, 1988. Moreover, in accordance with the decision taken by the Board of Directors on March 21, 2006, repeated on December 12, 2008, May 4, 2011 and July 30, 2014, the Chairman and Chief Executive Officer benefits from specific life insurance to cover the risks inherent in the duties of Chairman and Chief Executive Officer of the Company, in an amount equivalent to three years of fixed and variable compensation; the insurance is obtained by the Company. To this end, an individual insurance has been underwritten to complement the “all causes” death or permanent disability insurance policy for Company Executives, dated June 30, 1993, as renewed or renegotiated annually, and whose last version is compliant with the collective and compulsory welfare plan, specific to SCOR, such as modified with effect on July 1, 2014, which benefits from now on to an objective category of employees having an annual gross basis remuneration equal to or exceeding 3 social security ceilings. It is specified that these individual and collective “all causes” death insurances are renewed or renegotiated on an annual basis so that the Chairman and Chief Executive Officer will benefit from any policies that may replace the existing ones. Moreover, the Chairman and Chief Executive Officer benefits from a death or permanent disability insurance in case of an accident, also underwritten for the executives of the Company, among others, on January 1, 2006. It is specified that this collective insurance is renewed or renegotiated on an annual basis so that the Chairman and
Severance pay (*) No amount is payable in respect of the year ended December 31, 2015
The Shareholders’ Annual General Meeting of May 3, 2012, in its 5th resolution, approved in accordance with the arrangements of Article L 225-42-1 of the “Code du commerce”, the following commitments taken by the Board of Director to the benefit of the Chairman & Chief Executive Officer: In the case of departure of the Chairman and Chief Executive Officer during financial current year:  all the variable part of his compensation for prior year will be payable during current year as soon as the Company’s financial statements for prior year are settled by the Board of Directors;  in addition, in the case of dismissal, the amount of the variable part of his compensation for current year will be (i) determined on the basis of the variable compensation for prior year and prorated on the basis of the departure date for the current year, and (ii) paid as soon as the Company’s financial statements for prior year are settled by the Board of Directors.
No amount is payable in respect of the year ended December 31, 2015
(*) Compensation, indemnities or benefits due or that may become due in respect of the closed fiscal year which are or have been submitted to the Company’s General meeting of shareholders in accordance to the rules applicable to regulated agreements and undertakings
Subscription and share purchase options granted to the Executive Corporate Officer by the issuer or by another company of the Group
Performance shares granted to the Executive Corporate Officer by the issuer or by another company of the Group
March 7, 2013 and performance conditions 2.2.1.3 DIRECTORS’ FEES AND NUMBER OF SHARES HELD BY DIRECTORS
The Shareholders’ Meeting of the Company held on May 6, 2014 resolved that the annual maximum aggregate amount of Directors’ fees shall not exceed EUR 1,152,000. Upon the proposal of the Compensation and Nomination Committee and within the limit of this amount, the meeting of the Board of Directors held on July 28, 2015 set the terms and conditions of the allocation to encourage the attendance of the Directors and in order to be compliant with the AFEPMEDEF Code which sets that director’s compensation should include a significant variable portion. It was decided to allocate the directors fees partly in one fixed sum of EUR 28,000 annually payable in fourths at the end of each quarter and partly based on the effective presence of the directors at the meetings of the Board of Directors and of its Committees, in an amount equal to EUR 3,000 per Board or per Committee meeting they attend, except for the Chairmen of the Audit Committee, Risk Committee and Compensation and Nomination Committee who receive an amount equal to EUR 6,000 for each meeting of the Committee that they chair. Moreover, the individual independent members of the Board received on September 17, 2015, EUR 10,000 in SCOR shares. With the exception of the Chairman of the Board of Directors and the employee director, the members of the Board are not entitled to stock option plans for the subscription or the purchase of shares nor stock allotment plans from the Company. No retirement contribution (or commitment) has been paid for the benefit of the Directors.
2015 2014 Mr. Denis Kessler (1) 63,000 44,000 Mrs. Marguerite Bérard-Andrieu
Malakoff Médéric Group, represented by Guillaume Sarkozy 44,000 42,000 Mrs. Kory Sorenson
(2) Directors appointed by the Combined General Meeting of the Shareholders of April 30, 2015 (3) Directors whose appointment ended on April 30, 2015
Moreover, certain current SCOR directors are, or have been, members of the Boards of Directors of subsidiaries of the Group and received directors’ fees for 2015 and/or 2014 as follows: SCOR Holding (Switzerland) AG Peter Eckert CHF 5,000 CHF 5,000
SCOR Global Life Americas Reinsurance Company Kory Sorenson USD 27,000 USD 27,000
2.2.2.1 PRINCIPLES AND RULES STATED FOR THE DETERMINATION OF COMPENSATION AND IN-KIND BENEFITS FOR THE COMEX MEMBERS (OTHER THAN THE CHAIRMAN AND CEO)
The Compensation and Nomination Committee proposes to the Board of Directors the variable compensation attributed to the members of the Executive Committee (other than the Chairman and Chief Executive Officer) in agreement with the Chairman and Chief Executive Officer. The variable portion of the compensation depends, on one hand, on the achievement of individual objectives and, on the other hand, on the achievement of the Group’s earnings objectives, which are based on return on equity (or ROE).
years prior to his departure, (ii) a cash payment compensating him for his inability to exercise stock options granted prior to his departure date and which he would be unable to exercise due to the vesting period conditions set forth in the applicable stock option plan, in an amount to be determined by an independent expert using the “Black-Scholes” pricing model, and (iii) a cash payment compensating him for his inability to definitively acquire Ordinary Shares of SCOR SE granted to him for free prior to his departure and which he would be unable to acquire due to the terms and conditions of the applicable free share allocation plan. The amount of this cash payment is equal to the product of the number of shares concerned by the average value of the opening prices of the Ordinary Shares of SCOR SE in the Paris Stock exchange during the twenty trading days preceding the date of the change in the structure.
The amount of the additional pension guaranteed by the Group varies from 5% to 50% (by a growth of maximum 5% per year) of the average compensation over the last five years, depending on seniority acquired in the Group at retirement. The additional pension guaranteed by the Group is defined after deductions of the pensions paid out through the compulsory schemes thus this additional pension shall in no case exceed 45% of the reference compensation.
The total commitment of the Group for defined benefits retirement plans defined in France, Germany, United States and Switzerland for the Executive Committee members (including the Chairman and Chief Executive Officer) amounts at EUR 49 million as at December 31, 2015, i.e. 12% of the total commitment of the Group for pension plans of EUR 408 million.
The following table presents the gross compensation related to fiscal years 2015, 2014 and 2013 and paid in 2015, 2014 and 2013 to the members of the Executive Committee, in aggregate: In EUR
Amount due Amount paid Amount due Amount paid Amount due Amount paid Fixed compensation 4,635,392 4,656,849 3,706,797 3,657,600 3,818,427 3,818,427 Variable compensation 161,963 161,962 96,966 96,936 106,195 106,196 Gross compensation of the COMEX members excluding the Chairman and CEO
For information on stock options held by members of the Executive Committee, refer to Section 2.2.3 – Stock options and performance shares.
2.2.3.1 STOCK OPTIONS HELD BY THE MEMBERS OF THE EXECUTIVE COMMITTEE AND EXECUTIVE COMPANY OFFICER AS AT DECEMBER 31, 2015
(1) The options exercised were in the context of a full donation. The shares have not been sold by the Executive Corporate Officer
The allocation of stock options since 2008 is subject if necessary to the satisfaction of performance conditions. Thus, a third of the number of options awarded on May 22, 2008, half of the options awarded on March 23, 2009 and all the options awarded since March 18, 2010 are subject to the satisfaction of performance conditions. However all the options allocated since March 23, 2009 to the Chief Executive Officer are subject to the satisfaction of performance conditions. Please refer to Section 2.2.3.4 of this Registration Document and to Section 17.3 of the 2014 and 2013
Stock options granted to the top ten nonofficer employees and exercised by them
Number of shares underlying the stock options held on the issuer and on the companies referred to above and exercised during the financial year by the ten employees of the issuer or these companies, whose number of options thus purchased or subscribed is the highest (aggregate information) 287,780 17.18
2.2.3.2 FREE ALLOCATION OF SHARES TO THE MEMBERS OF THE EXECUTIVE COMMITTEE AND EXECUTIVE COMPANY OFFICER AS AT DECEMBER 31, 2015
The table below presents the stock-options plans granted to the Chairman and to the COMEX members still active within the Group as of December 31, 2015: Plan
(1) This collective free shares Plan to the employees of the Company that are France residents, under the collective agreement signed on July 20, 2012 as part of the negotiations with the social partners of France, concerning the profit-sharing arrangement established by the July 28, 2011 law which relates to financing for social security in 2011. This plan provides for an identical allocation of five free shares without a presence condition nor a performance condition
The potential volume of new shares from outstanding equity-based compensation plans stood at 7,952,876 shares as of December 31, 2015, split as follows: Potential volume of new shares from outstanding equity-based compensation plans linked to Group executive and employee remuneration instruments 7,952,876 - of which number of new shares from outstanding options (options allocated but not vested + options vested but not exercised)
6,498,126 - of which number of new shares from outstanding free shares (free shares allocated but not vested)
Notably, no new shares will be issued in relation to outstanding equity-based compensation in the form of free shares, these shares being derived exclusively from the purchase of existing shares and not from the issue of new shares. If, nonetheless, free shares were taken into account in the calculation of the potential volume of new shares from outstanding equity-based compensation, this theoretical volume (which corresponds to outstanding shares or new shares to be issued) would stand at 16,723,726 at 31 December 2015, due to the addition of (i) outstanding free shares (shares allocated but not vested at 31 December 2015, i.e. 6,392,931 shares) and, (ii) the unused part of the authorization granted by the Shareholders’ Meeting of 18 December 2015 in its first resolution concerning the free allocation of outstanding shares (2,377,919 shares). The company's fully diluted issued share capital, as defined below, stood at 224,541,687 shares as of December 31, 2015, split as follows: Fully diluted issued share capital 224,541,687 - of which total shares outstanding 192,653,095 - of which number of new shares from outstanding options 6,498,126 - of which number of new shares from outstanding free shares (1)
On May 6, 2014, the General Shareholders’ meeting of the Company's Board of Directors had authorized, in its twentythird resolution, the Company's Board of Directors, under the provisions of Articles L.225-177 to L.225-186-1 of the Commercial Code, to grant upon proposal of the Compensation and Nominations Committee, on one or more occasions for the benefit of members of staff and the corporate officers, of the Company and companies or groups linked to it in terms of Article L.225-180 of the Commercial Code, options entitling to the subscription of new ordinary shares of the Company in issue as to increase its capital, as well as options entitling to purchase shares of the Company from acquisitions made by it as provided by law within the limits of a number of options giving right to a maximum of one million (1,000,000) shares. The envelope volume is defined and optimized taking into account both the annual allocations as per our Compensation policy and the potential needs in case of acquisition as to ensure our key employees’ retention. This authorization was given for a period of 24 months from May 6, 2014 and cancelled and replaced, for the unused portion thereof, the previous authorization as at April 25, 2013.
The exercise of all of the stock options allocated in 2015 is subject to performance conditions. The performance conditions will be deemed satisfied if, in addition to the mandatory condition (5) below, at least three out of the four other conditions listed below are met: (1) The solvency ratio at the end of each quarter must not be lower than 150% for the years 2015 and 2016; (2) SCOR Global P&C’s combined ratio must be less than 100% on average in 2015 and 2016; (3) SCOR Global Life’s technical margin must be higher than or equal to 3% on average in 2015 and 2016; (4) The SCOR group’s ROE for the financial years ending December 31, 2014 and December 31, 2015 must be higher than 1,000 points above the risk-free rate on average; (5) Absolute compliance with the Group’s ethical principles as described in the Code of Conduct of the SCOR Group. These principles, which are designed to protect the interests of clients, are the pillars of SCOR’s sustainable development and therefore of its performance.
Nevertheless, if condition (4) is not met and, in addition, one of the three performance conditions (1), (2) or (3) is considered not to have been met, only a reduced percentage of the initial option allocation, in accordance with the table below, will be granted: Therefore, in case of actual misconduct as per the Code of Conduct (condition (5)), for instance in the event of fraud, the beneficiary will lose all of his/her options benefits (clawback policy).
The Company's Board of Directors of December 18, 2015, on the proposal of the Compensation and Nominations Committee of November 2, 2015, decided to allocate 40,000 stock options to a new member of the Executive Committee on December 18, 2015.
The Chairman and CEO, under the authority given by the Board of Directors held on December 18, 2015 for the implementation of this plan, allocated 5,250 stock options to 2 Partners (Executive and Senior Global Partners) on December 18, 2015.
Aside from the mandatory conditions (1) and (2), if the observed average ROE (condition (3)) is lower or higher than the Target ROE without being lower than 300 points above the risk-free rate, the shares will be acquired in accordance with the progressive scale set out in the table below: Ratio between the observed average ROE and the Target ROE Proportion of the shares definitively acquired via this criteria From 125% 150% Between 120% and 124.99% 140% Between 110% and 119.99% 120% Between 100% and 109.99% 100% Between 80% and 99.99% 90% Between 70% and 79.99% 70% Between 60% and 69.99% 50% Between 50% and 59.99% 25% Below 50% 0%
The final acquisition of the remaining half of the shares is subject to the fulfilment of the following conditions: (1) that the beneficiary respects the Group’s ethical principles as described in its Code of Conduct; (2) that the average solvency ratio over 2 years (from January 1, 2015 to December 31, 2016) is at least equal to the average of the SCOR Solvency strategic target over the period (the "Target Solvency Ratio" (1)).
Proportion of the shares definitively acquired in line with this criteria higher than or equal to 0 percentage points 100% between 0 and up to -35 percentage points linear degressive scale lower than or equal to -35 percentage points 0%
The table below presents the total number of stock options allocated in 2014 and 2015 by category within the Group: Total number of stock options allocated in 2015 Total number of beneficiaries in 2015
In 2015, the Compensation and Nomination Committee observed the validation of 100% of performance conditions attached to the 2013 options plans as defined in the 2013 Registration document.
On May 6, 2014, the Shareholders’ Meeting of the Company, in its twenty-fourth resolution, had authorized the Company’s Board of Directors, under the provisions of Articles L.225-197-1 to L.225-197-6 of the Commercial Code, to grant, upon proposal of the Compensation and Nomination Committee, on one or more occasions, to the staff members or to the corporate officer of the Company and of companies or groups affiliated with it pursuant to Article L. 225-197-2 of the French Commercial Code, free allotments of existing or yet-to-be-issued shares of the Company and resolved that the Company's Board of Directors of the Company would determine the identity of the beneficiaries of the allotment and the conditions and criteria for the allotment of the shares. The Shareholders’ Meeting also decided that (i) the total number of free shares granted under this authorization may not exceed 4,000,000 shares (the envelope volume is defined and optimized taking into account both the annual allocations as per our Compensation policy and the potential needs in case of acquisition as to ensure our key employees’ retention), (ii) the allocation of shares to their beneficiaries will be definitive only after a vesting period of a minimum set at two years for tax residents of France and a minimum of four years for beneficiaries non tax residents of France, (iii) the beneficiaries will be subject, where appropriate, to an obligation to retain shares in a period of two years from the end of the vesting period for tax residents of France and that the retention period for beneficiaries not tax residents of France would be deleted, and (iv) the Company's Board of Directors of the Company will have the authority to increase the lengths of the acquisition period and the holding obligation period. This authorization was given for a period of twenty-four months from May 6, 2014 and had canceled and replaced, for the unused portion thereof, the previous authorization as at April 25, 2013.
(1) If the strategic plan sets a target or "optimal" interval, the measurement below this interval is considered for calculation purposes as being the Target Solvency Ratio
as per our Compensation policy and the potential needs in case of acquisition as to ensure our key employees’ retention), (ii) the allocation of shares to their beneficiaries will be definitive only after a vesting period of a minimum set at three years, (iii) the beneficiaries won’t be subject anymore to an obligation to retain shares, and (iv) the Company's Board of Directors of the Company will have the authority to increase the length of the acquisition period.
Following the authorization by the Shareholders' Meeting on May 6, 2014 the Company's Board of Directors of 4 March 2015, on the proposal of the Compensation and Nomination Committee of February 23, 2015, decided to grant performance shares to the Chairman and Chief Executive Officer, the other members of the Executive Committee and the other Partners. The Company's Board of Directors of March 4, 2015, on the proposal of the Compensation and Nomination Committee of February 23, 2015, decided to allocate 125,000 performance shares to the Chairman and Chief Executive Officer and 240,000 performance shares to the non-French tax resident members of the Executive Committee. The conditions of the plan are similar to those previously settled on by SCOR (notably with regards to the presence condition), with a vesting period of two years for the tax residents in France (and an obligation to retain shares for a period of two years after the end of the vesting period), and of four years for beneficiaries not tax residents in France. All the shares awarded to the Chairman and Chief Executive Officer and to the other Executive Committee members are subject to the satisfaction of performance conditions. The performance conditions will be deemed satisfied if, in addition to the mandatory condition (5) below, at least three out of the four other conditions listed below are met: (1) The solvency ratio at the end of each quarter must not be lower than 150% for the years 2015 and 2016; (2) SCOR Global P&C’s combined ratio must be less than 100% on average in 2015 and 2016; (3) SCOR Global Life’s technical margin must be higher than or equal to 3% on average in 2015 and 2016; (4) The SCOR Group’s ROE for the financial years ending December 31, 2015 and December 31, 2016 must be higher than 1,000 points above the risk-free rate on average.
Nevertheless, if condition (4) is not met and, in addition, one of the three performance conditions (1), (2) or (3) is considered not to have been met, only a reduced percentage of the initial performance share allocation, in accordance with the table below, will be granted: Therefore, in case of actual misconduct as per the Code of Conduct (condition (5)), for instance in the event of fraud, the beneficiary will lose all of his/her performance shares benefits (clawback policy).
All the shares made under the LTIP are subject to the satisfaction of a presence condition and of performance conditions. The performance conditions are defined as follows. The final acquisition of half of the shares granted is subject to the fulfilment of the following conditions: (1) that the beneficiary respects the Group’s ethical principles as described in its Code of Conduct; (2) that the average SCOR ROE over 6 years (from January 1, 2015 to December 31, 2020) is equal to the average of SCOR ROE strategic target (the “Target ROE”) over the period without being lower than 300 points above the risk-free rate.
In agreement with the Board of Directors, the Chairman and CEO has granted, as a non-qualified plan, on December 18, 2015, 808,014 performance shares to the other non-French tax resident Partners of the Group (462 Partners) and 112,320 free shares to the non-French tax resident Non Partners (1,158 Non Partners), under the collective Plan.
The performance conditions are defined as follows. The final acquisition of all shares granted for Executive Global Partners or Senior Global Partners and half of the shares granted for other Partners (below Senior Global Partners) is subject to the fulfilment of the following conditions: (1) that the beneficiary respects the Group’s ethical principles as described in its Code of Conduct; (2) that the average SCOR ROE over 2 years (from January 1, 2015 to December 31, 2016) is equal to the average of SCOR ROE strategic target (the “Target ROE”) over the period without being lower than 300 points above the risk-free rate.
The final acquisition of remaining half of the shares is subject to the fulfilment of the following conditions: (1) that the beneficiary respects the Group’s ethical principles as described in its Code of Conduct; (2) that the average solvency ratio over 2 years (from January 1, 2015 to December 31, 2016) is at least equal to the average of the SCOR Solvency strategic target over the period (the "Target Solvency Ratio" (1)).
Proportion of the shares definitively acquired in line with this criteria higher than or equal to 0 percentage point 100% between 0 and up to -35 percentage points linear degressive scale lower than or equal to -35 percentage points 0%
The level of this performance condition will be assessed and validated annually by the Compensation and Nomination Committee. Aside from the mandatory conditions (1) and (2), if the observed average ROE (condition (3)) is lower or higher than the Target ROE without being lower than 300 points above the risk-free rate, the shares will be acquired according the progressive scale set out in the table below: Ratio between the observed average ROE and the Target ROE Proportion of the shares definitively acquired via this criteria From 125% 150% Between 120% and 124.99% 140% Between 110% and 119.99% 120% Between 100% and 109.99% 100% Between 80% and 99.99% 90% Between 70% and 79.99% 70% Between 60% and 69.99% 50% Between 50% and 59.99% 25% Below 50% 0%
The final acquisition of remaining half of the shares is subject to the fulfilment of the following conditions: (1) that the beneficiary respects the Group’s ethical principles as described in its Code of Conduct; (2) that the average solvency ratio over 6 years (from January 1, 2015 to December 31, 2020) is at least equal to the average of the SCOR Solvency strategic target over the period (the "Target Solvency Ratio" (1)).
Aside from the mandatory conditions (1) and (2), if the observed average solvency ratio (condition (3)) is lower or higher than the Target Solvency Ratio, the shares will be acquired according the progressive scale set out in the table below: Difference between the average solvency ratio and the Target Solvency Ratio
The conditions of the LTIP plan are a vesting period of six years for all beneficiaries. There is no obligation anymore to retain shares after the vesting period for the tax residents in France.
Corporate Officer - - 125,000 1 - - 125,000 1 Members of the Executive Committee
It should be noted that the source of shares to be allocated to these plans is treasury shares.
Presence condition until Performance 30,752 From 18/12/2015 to 18/12/2021 included Na 11 29,252 12/18/2021 Yes
From 04/03/2015 to 04/03/2017 included 2 years 1 - 03/04/2017 Yes
From 18/12/2013 to 18/12/2016 included 2 years 5 9,500 12/18/2016 Yes
From 05/11/2013 to 05/11/2015 included 2 years 7 61,200 11/05/2015 Yes
From 05/03/2013 to 05/03/2019 included 2 years 11 83,500 03/05/2019 Yes
From 30/10/2012 to 30/10/2014 included 2 years 12 73,000 10/30/2014 Yes
From 26/07/2012 to 26/07/2018 included 2 years 12 52,500 07/26/2018 Yes
From 26/07/2012 to 26/07/2014 included 2 years 636 50 na na
From 12/12/2011 to 12/12/2013 included 2 years 2 11,000 12/12/2013 Yes
From 01/09/ 2011 to 01/09/2013 included 2 years 4 15,800 09/01/2013 Yes
From 07/03/2011 to 07/03/2013 included 2 years 148 269,500 03/07/2013 Yes
For the list of the stock options plans currently in force within the Group refer to Appendix C – 5. Notes to the corporate financial statements, Note 12 – Stock Options.
Every quarter, SCOR conducts "TPI" ("Titres aux Porteurs Identifiables") searches to find out the number and identity of its bearer shareholders.
Distribution of capital (number of shares, % of capital and voting rights) – (i) shareholders having more than 2.5% of the registered capital and/or voting rights and (ii) shareholders members of the Board of Directors (on the basis of a study of identifiable share bearers (TPI) conducted by the Company as at December 31, 2015): As at December 31, 2015
Distribution of capital (number of shares, % of capital and voting rights) – (i) shareholders having more than 2.5% of the registered capital and/or voting rights and (ii) shareholders members of the Board of Directors (on the basis of a study of identifiable share bearers ("Titres aux Porteurs Identifiables" – "TPI") conducted by the Company as at December 10, 2014; there has been no significant change in the distribution of capital between December 10, 2014 and December 31, 2014): As at December 31, 2014
(1) The percentage of voting rights is determined on the basis of the number of shares at closure, excluding the Company’s own treasury shares (2) Member of the Board (3) Employee shares eligible to vote, excluding sold or transferred employee shares
(1) The percentage of voting rights is determined on the basis of the number of shares at closure, excluding the Company’s own treasury shares (2) Member of the Board (3) Including sold or transferred employee shares (4) This shareholding notably includes performance shares held as registered shares by employees as at December 31, 2013. Employee shareholdings, as defined in Article L.225-102 of the French Commercial Code, amount to 0.31% of the capital and 0.32% of voting rights Source: TPI and Ipreo
Pursuant to the shareholders’ notifications received by SCOR, there was no shareholder other than those indicated in the table above holding, directly or indirectly, alone or in concert, more than 2.5% of the share capital or voting rights of the Company as at December 31, 2015, December 31, 2014 and December 31, 2013. According to Nasdaq share analysis on December 31, 2015, December 31, 2014 and December 31, 2013 - some of these companies are in addition shareholders via mutual funds and other investment funds.
There is not any covenant stipulating preferential terms for the sale or purchase of ordinary shares eligible for trading, or for which application is pending, on a regulated stock market and representing 0.5% or more of our share capital or voting rights that has been notified to the AMF. No ordinary shares have been pledged.
To SCOR’s knowledge, the percentage of share capital and voting rights held by its Directors and Executive Committee members was 3.91% as at December 31, 2015 (December 31, 2014: 3.83%).
SCOR discloses below the thresholds declarations sent by the significant shareholders in 2015. SCOR is not responsible of ensuring of the completeness of these declarations. On December 22, 2015, Allianz Global Investors GmbH declared that it had exceeded the registered threshold of 2.5% of the voting right in SCOR SE and that it held 4,824,354 shares or 2.51% of the capital and 4,824,354 voting rights or 2.51% of the voting rights in SCOR SE. On November 19, 2015, Blackrock, Inc declared that its aggregated position had exceeded the registered threshold of 5% of the capital and voting rights in SCOR SE and that it held 9,765,830 shares or 5.07% of the capital and 9,765,830 voting rights or 5.07% of the voting rights in SCOR SE. On November 16, 2015, Blackrock, Inc declared that its aggregated position had fallen below the registered threshold of 5% of the capital and voting rights in SCOR SE and that it held 9,465,901 shares or 4.92% of the capital and 9,465,901 voting rights or 4.92% of the voting rights in SCOR SE. On November 10, 2015, Allianz Global Investors GmbH declared that it had fallen below the registered threshold of 2.5% of the voting right in SCOR SE and that it held 4,685,035 shares or 2.43% of the capital and 4,685,035 voting rights or 2.43% of the voting rights in SCOR SE. On November 6, 2015, Blackrock, Inc declared that its aggregated position had exceeded the registered threshold of 5% of the capital and voting rights in SCOR SE and that it held 9,638,849 shares or 5.01% of the capital and 9,638,849 voting rights or 5.01% of the voting rights in SCOR SE. On June 8, 2015, Tweedy, Browne Company LLC declared that it had fallen below the registered threshold of 5% of the voting right in SCOR SE and that it held 9,570,259 shares and 9,221,949 voting rights in SCOR SE.
On April 20, 2015, Sompo Japan Nipponkoa Holdings, Inc. declared that it had exceeded the registered threshold of 5% of the capital and voting rights in SCOR SE and that it held 15,000,000 shares and 15,000,000 voting rights in SCOR SE.
On March 11, 2015, Patinex AG declared that it had sold its entire position in SCOR SE.
Pursuant to Article 8 (“Rights attached to each share”) of the bylaws (statuts), modified by the Company’s Combined Shareholders’ Meeting on April 30, 2015 in its twenty-eighth resolution, each share entitles its holder to one vote at General Shareholders' Meetings and the voting rights attached to shares of the Company are in direct proportion to the proportion of the capital thereby represented and no double voting rights, as described by Article L. 225-123 of the French Commercial Code, can be allocated to, or be enjoyed in any manner by, any share whatsoever. Therefore, the shareholders of the Company do not currently have different voting rights.
2.3.1.4 AGREEMENT WHICH COULD RESULT IN A SUBSEQUENT CHANGE IN CONTROL
According to the decisions of the Extraordinary Shareholders General Meetings of the Company dated (i) May 15, 2003 in its second resolution, (ii) May 18, 2004, in its fourth resolution, (iii) May 31, 2005 in its sixth resolution, (iv) May 16, 2006 in its fifth resolution, (v) May 24, 2007 in its 21st resolution, (vi) May 7, 2008 in its 19th resolution and (vii) April 15, 2009 in its 22nd resolution to authorize the Board to grant to officers and employees options to subscribe for or purchase of shares and to acknowledge, if necessary, at its first meeting following the year end of the Company, the number and amount of new shares issued during that period following the exercise of options, the Board of Directors of SCOR SE acknowledged, on April 25, 2013, the capital increase of EUR 2,479,072.23 by creation of 314,724 shares with a nominal value of EUR 7.8769723 each.
According to the decision of the Shareholders General Meeting of the Company dated April 25, 2013 in its 21st resolution, the Board of Directors of the Company decided on March 4, 2014 the share capital reduction of EUR 6,123,983.62 by cancellation of 777,454 treasury shares to reduce the share capital from EUR 1,518,348,725.55 to EUR 1,512,224,741.93, divided by 191,980,457 ordinary shares. The reason for such decision of capital reduction is to avoid any dilutive effect of the exercise of stock options upon the share capital.
According to the decisions of the Extraordinary Shareholders General Meetings of the Company dated (i) May 18, 2004, in its fourth resolution, (ii) May 31, 2005 in its sixth resolution, (iii) 16 May 16, 2006 in its fifth resolution, (iv) May 24, 2007 in its 21st resolution, (v) May 7, 2008 in its 19th and (vi) April 15, 2009 in its 22nd resolution to authorize the Board to grant to officers and employees options to subscribe for or purchase of shares and to acknowledge, if necessary, at its first meeting following the year end of the Company, the number and amount of new shares issued during that period following the exercise of options, the Board of Directors of SCOR SE acknowledged, on March 4, 2015, the capital increase of EUR 5,600,700.60 by creation of 711,022 shares with a nominal value of EUR 7.8769723 each.
According to the decisions of the Extraordinary Shareholders General Meetings of the Company dated (i) May 18, 2004, in its fourth resolution, (ii) May 31st, 2005 in its sixth resolution, (iii) May 16, 2006 in its fifth resolution, (iv) May 24, 2007 in its 21st resolution, (v) May 7, 2008 in its 19th resolution, (vi) April 15, 2009 in its 22nd resolution and (vii) April 28, 2010 in its 19th resolution to authorize the Board to grant to officers and employees options to subscribe for or purchase of shares and to acknowledge, if necessary, at its first meeting following the year end of the Company, the number and amount of new shares issued during that period following the exercise of options, the Board of Directors of SCOR SE acknowledged, on April 30, 2015, the capital increase of EUR 4,326,073 by creation of 549,205 shares with a nominal value of EUR 7.8769723 each.
Refer to Section 4.6.25 – Notes to the consolidated financial statements, Note 25 – Commitments received and granted.
Document Date of availability of the warrants Expiration date December 20, 2013 25,390,466 - 25,390,466 December 20, 2013 April 28, 2017
Delegation of powers granted by the Extraordinary Shareholders' Meeting of April 30, 2015 16th resolution (Delegation of powers to the Board of Directors for the purpose of deciding upon the incorporation of profits, reserves or premiums into the share capital)
18th resolution (Delegation of authority granted to the Board of Directors for the purpose of deciding on the issuance, in the context of a public offering, of shares and/or of securities granting access to capital or giving entitlement to a debt instrument, with cancellation of preferential subscription rights)
20th resolution (Delegation of authority granted to the Board of Directors for the purpose of making determinations with respect to the issuance of shares and/or securities granting access to the Company’s capital or entitling the holder to a debt instrument, as remuneration for shares contributed to the Company in the context of any public exchange offer launched by the Company, with cancellation of preferential subscription rights)
21th resolution (Delegation of authority granted to the Board of Directors for the purpose of the issuance of shares and/or securities granting access to the Company’s capital or giving entitlement to a debt instrument, as remuneration for shares contributed to the Company in the context of contributions in kind within a limit of 10% of the share capital, without preferential subscription rights)
Authorizations granted by the Extraordinary Shareholders’ Meeting of April 30, 2015 22nd resolution (Authorization granted to the Board of Directors for the purpose of increasing the number of shares issued in accordance with 17th, 18th and 19th resolutions in the event of over-subscription to the share capital increase, with or without cancellation of preferential subscription rights)
Except for the delegation granted pursuant to the 26th resolution, which is granted for 18-month duration, the delegations of powers granted by the Shareholders' Meeting of April 30, 2015 are each granted for a 26-month duration
as from the date of the Shareholders’ Meeting, i.e. until June 30, 2017, date on which it will be deemed expired if the Board of Directors did not use it. Except for the authorization granted pursuant to the 22nd resolution, which is granted for a 26-month duration, the authorizations granted by the Shareholders’ Meeting of April 30, 2015 are each granted for 24-month duration as from the date of the Shareholders’ Meeting, i.e. until April 30, 2017, date on which it will be deemed expired if the Board of Directors did not use it.
The authorization granted to the board of directors to issue shares under free share allotment plans pursuant to the 1st resolution of the Shareholders’ Meeting of December 18th, 2015 is granted for 24-month duration as from the date of the Shareholders’ Meeting, i.e. until December 17th, 2017. It replaces the authorization granted under the 25th resolution approved by the Shareholders’ Meeting of April 30, 2015.
The description of the stock buyback program implemented under the 14th resolution of the Annual Shareholders' Meeting of April 30, 2015 was published by the Company on April 30, 2015. The report of the Board of Directors of the Company to the Annual Shareholders’ Meeting to be held in the first half of 2016 on the use of the 14th resolution will be made available to SCOR shareholders under the conditions set forth by law.
In the context of a contingent capital facility program, SCOR issued 12,695,233 warrants (“Warrants”) on December 20, 2013 to UBS, each warrant committing UBS to subscribe for two new SCOR shares (maximum amount of EUR 200 million - including issuance premium available per tranche of EUR 100 million each - including issuance premium) when the aggregated amount of the estimated ultimate net losses resulting from eligible natural catastrophes or extreme events Life incurred by the Group (in its capacity as an insurer/reinsurer) reaches certain contractual thresholds in any given calendar year between January 1, 2014 and December 31, 2016 or if no drawdown already took place in the context of the agreement and SCOR’s share price drops below EUR 10.
Information about and terms of any acquisition rights and/or obligations over authorized but unissued capital or an undertaking to increase the capital
Information about any capital of any member of the group which is under option or agreed conditionally or unconditionally to be put under option and characteristics of such options
Transactions with related parties as required by the regulations adopted under EC regulation No. 1606/2002, entered into by the Group appear in Section 4.6.24 Note 24 – Related party transactions.
In accordance with article L. 225-40 of the French commercial Code (Code de commerce) we have been advised of certain related party agreements and commitments which received prior authorization from your Board of Directors.
Authorization to purchase a subscription agreement for the issuance and the placement of subordinated notes (known as “Bugatti”)
Mr Denis Kessler, as Chairman and Chief Executive Officer of your Company and as member of the Board of Directors of BNP Paribas, and Ms Fields Wicker-Miurin, as member of the Board of Directors of your Company and BNP Paribas.
The Board of Directors, at its meeting of May 5, 2015, in accordance with Article L.225-38 of the French Commercial Code (Code de commerce) authorized the signature of a subscription agreement for the issuance and the investment of subordinated notes, characterized as follows:  issuance currency: in euros, British pounds, US dollars and/or Swiss francs;  total amount of the issue or issues: maximum MEUR 250 or the equivalent of the currencies referred here above at the pricing date;  subscribers profile: institutional investors on the international market, and, if appropriate, public offer in
Switzerland only;  interest rate: scalable interest rate (i) variable with step-up from the first call date, (ii) fixed then variable (3month LIBOR or 3-month EURIBOR…) plus a margin from the First Call Date or (iii) fixed then revised (based on the conditions of fixed/variable rate SWAP for the related period) plus a margin from the First Call Date.
 compliance with regulatory requirement for the proceed of the issuance can be to the extent possible, in full or in part, qualified as regulatory equity of the Company and/or the Group regarding Solvency II regulatory framework.
A standard Agency Agreement can be finalized with BNP Paribas Securities Services, regarding the financial servicing of the notes issued.
Following the issuance of June 5, 2015, a commission of EUR 216,250 has been paid to BNP Paribas.
Your Board of Directors has determined this agreement as follows: “it is considered appropriate to take advantage of these exceptional market conditions and to issue or several lines of undated subordinated notes or Tier 2 for a total amount of MEUR 250.”
 compliance with regulatory requirement for the proceed of the issuance can be to the extent possible, in full or in part, qualified as regulatory equity of the Company and/or the Group regarding Solvency II regulatory framework
 joint lead managers: BNP Paribas, Deutsche Bank AG, London Branch, Crédit Agricole Corporate and Investment Bank and Citigroup Global Markets Limited as joint leader managers.
 possibility, according to the market conditions, to hedge all or part of the debt issue or issues by one or several swap contracts so as to protect the company from variations in interest rates and/ or foreign exchange rates.
Furthermore, a standard agency agreement contract is finalized with BNP Paribas Securities Services, regarding the financial servicing of the notes issued.
The companies party to this contract are SCOR and the joint lead managers part of the bank syndicate (including BNP Paribas).
By a resolution of November 30, 2015, the Board of Directors of your Company has decided to increase the ceiling from MEUR 300 to MEUR 600, the other terms and conditions of this issue relating to the resolution of November 30, 2015 remained unchanged.
Following the issuance of December 7, 2015, a commission of EUR 350,000 has been paid to BNP Paribas.
In accordance with article R. 225-30 of the French commercial Code (Code de commerce), we have been advised that the implementation of the following agreements and commitments which were approved in prior years by the General Meeting remained current during the year, either with respect to the duration of the Convention or by the effect of an extension.
The Board of Directors, at its meetings of May 4 and July 27, 2011, in accordance with articles L. 225-38 and L. 225-421 of the French Commercial Code (Code de commerce), and upon the recommendation of the Compensations and Nominations Committee, renewed the commitments for the benefit of the Chairman and Chief Executive Officer, which had been decided by the Board of Directors on March 21, 2006 and amended on December 12, 2008. These commitments to the Chairman and Chief Executive Officer have been approved under the fifth resolution adopted at the Mixed Shareholders' Meeting of May 3, 2012, and are described in Appendix A - Report of the Chairman of the Board of Directors on the conditions for preparing and organizing the work of the Board and on internal control procedures and risk management in accordance with Article L. 225-37 of the French Commercial Code (Code de commerce). Pursuant to a decision dated July 26, 2012, taken in accordance with Article L. 225-42-1 of the French Commercial Code (Code de commerce) and with the provisions of Article L. 225-40 of the French Commercial Code (Code de commerce), the Board of Directors of the Company has authorized, based on the recommendations of the Compensations and Nominations Committee of July 25, 2012, and in accordance with the decision of the Board of Directors dated May 3, 2012 and the subsequent commitments made by the Chairman and Chief Executive Officer
during the Mixed Shareholders’ Meeting of May 3, 2012, the adoption of an amendment to the regulated agreement relating to the commitments made for the benefit of the Chairman and Chief Executive Officer, the terms of which are outlined below, with respect notably to the compensation elements taken into account for the indemnity to be granted to Mr. Denis Kessler in case of his forced departure from the SCOR Group, as well as the performance conditions which this indemnity is subject to. In the event that the Chairman and Chief Executive Officer is dismissed for fault or following a manifestly negative performance of the Company (the non-realization of the performance condition (C_n) defined below for at least two of the three preceding years), no indemnity will be paid to the Chairman and Chief Executive Officer. In the event of a forced departure or a revocation ad nutum typically due to diverging views on the strategy of the Group, the Chairman and Chief Executive Officer will benefit from an indemnity limited to the amount of fixed and variable compensation paid to him during the last twenty-four months preceding the date of his departure from the Group. The payment of this indemnity shall be subject to the satisfaction of the performance condition (C_n) defined below for at least two of the last three fiscal years preceding the date of departure of the Chairman and Chief Executive Officer.
In the event that the Chairman and Chief Executive Officer is dismissed or his departure is imposed due to a hostile offer resulting in a change of control in the SCOR Group, the Chairman and Chief Executive Officer will benefit from an indemnity limited to the amount of fixed and variable compensation paid to him by the Group during the last twenty-four months preceding the date of his departure from the Group. The payment of the indemnity is subject to the satisfaction of the performance condition (C_n) defined below for at least two of the last three years preceding the date of departure of the Chairman and Chief Executive Officer.
At its meeting of November 13, 2007, the Board of Directors authorized the signature of an agreement with BNP Paribas to establish a notional cash-pooling between SCOR and the European entities of the Group.
The Board of Directors’ meeting held on the March 18, 2008 and the August 26, 2008 authorized the signature by its Chief Executive Officer, pursuant to Article L. 225-38 of the French Commercial Code (Code de commerce), with the power of delegation, of legal documentation relating to the notional cash-pooling agreement and in particular, the Intragroup Cash Management.
 SCOR Rückversicherung AG,  SCOR Global Life Rappresentaza generale per l’Italia (branch),
 SCOR Global Life Iberica Sucursal (branch),  SCOR Global P&C Iberica Sucursal (branch),
 SCOR Global Life Reinsurance UK Ltd (which became SCOR Global Life SE UK Branch) (branch),
 SCOR Global Life Reinsurance Services UK Ltd,  SCOR Global Life Reinsurance Ireland Ltd,
This agreement gave rise to the payment by SCOR SE to BNP Paribas of non-material amounts during the 2013, 2014 and 2015 financial years.
Authorization to execute a Master Trust Agreement with BNP Paribas and/or one of its subsidiaries (trustee), SCOR SE and SCOR Global Life SE (grantors, jointly and severally liable) and Transamerica Corp. (beneficiary).
At its meeting of March 22 and July 27, 2011, the Board of Directors of the Company authorized, pursuant to Article L.225-38 of the French Commercial Code (Code de commerce), the signature of a Master Trust Agreement with BNP Paribas and/or one of its subsidiaries on market conditions. On the same Board meeting, your Company accepted to be jointly and severally liable with SCOR Global Life SE within the Master Trust Agreement.
The bank fees stipulated under the Facility Agreement are in line with market standards for this type of transaction.
On April 28, 2010, the Company’s Board of Directors authorized the signature by SCOR SE of the amendment #1 to the Facility Agreement with BNP Paribas dated December 23, 2008, in order to include the letter of credit dated August 8, 2008, regarding the "Initial Letters of Credit" subscribed by SCOR Global Life SE, increase the maximum amount to USD 550 000 000, update the regulatory references with regard to the pledge of financial instruments. The companies party to this amendment are SCOR SE, SCOR Global P&C SE, SCOR Global Life SE, SCOR Switzerland AG et SCOR Rückversicherung (Deutschland) AG (absorbed by SCOR Global Life SE on October 19, 2010). The other companies within the Group could equally benefit from this agreement as amended. Amendment #1 to the Facility Agreement was signed on June 24, 2010.
The companies party to this amendment are SCOR SE, SCOR Global P&C SE, SCOR Global Life SE and SCOR Switzerland AG. The other companies within the Group could equally benefit from this agreement as amended.
The companies party to this agreement, as amended, are your Company, SCOR Global P&C SE, SCOR Global Life SE, SCOR Switzerland AG and SCOR Global Life Reinsurance Ireland PLC. The other companies within the Group could equally benefit from this agreement, as amended.
On October 30, 2012, the Board of Directors of the Company authorized the signature by SCOR SE of the amendment #4 to the Facility Agreement concluded on December 23, 2008, with BNP Paribas in order to subrogate SCOR Global Life Reinsurance Ireland PLC to the rights and obligations of SCOR International Reinsurance Ireland PLC resulting from the merger of these two companies taking effect on January 1, 2013. Amendment #4 to the Facility Agreement was signed on December 20, 2012.
On April 25, 2013, the Board of Directors of the Company authorized and approved the signature, pursuant to Article L. 225-38 of the French Commercial Code (Code de commerce), of the amendment #5 to the Facility Agreement signed by our Company and BNP Paribas on December 23, 2008 and amended on June 24, 2010, September 5, 2011, November 14, 2011 and December 20, 2012, to modify the financial conditions applicable to the agreement.
Amendment #5 mainly aims at extending the maturity date of the Convention to December 31, 2015 and at modifying some of the financial conditions of the Convention due to the evolution of the Group.
On July 30, 2014, the Board of Directors of the Company authorized and approved the signature ,pursuant to Article L. 225-38 of the French Commercial Code (Code de commerce), of the amendment #6 Multicurrency Revolving Letter of Credit Facility Agreement signed by your Company and BNP Paribas on December 23, 2008 and amended on June 24, 2010, September 5, 2011, November 14, 2011, December 20, 2012 and June 7, 2013, to modify the financial conditions applicable to the Facility Agreement.
Amendment #6 principally aims at extending the maturity date of the convention to December 31, 2016 and at modifying some of the financial conditions of the convention due to the evolution of the Group. The companies party to the amendment #6 are your Company, SCOR Global P&C SE, SCOR Global Life SE, SCOR Switzerland AG and SCOR Global Life Reinsurance Ireland LTD.
This additional pension plan purports to determine the terms and conditions of additional pension plan benefits granted by the Company for the benefit of:  managers of the Group (cadres de direction) within the meaning of the professional agreement of March 3, 1993, who were exercising their activity within the Group on the date on which the additional pension plan took effect;  executives of the Group, who had entered into an employment contract but were subject to France's general social security regime and to the additional pension benefits of ARRCO and AGIRC and were discharging their duties on the date on which the additional pension plan took effect.
The compensation used to calculate pension benefits due to an eligible person is based on the average compensation of such person during the last five years of his or her employment (or professional activity, as the case may be), as adjusted on the date of departure by the evolution of the INSEE’s annual average index for consumer prices. The eligible person who retired from Company is entitled to additional benefits under this pension plan if he or she complies with the terms and conditions of the additional pension plan on the date of his or her departure, including a seniority of at least five years at the time of departure and obtaining the implementation of his or her pension benefits under the mandatory pension plans.
 the progressive increase in beneficiaries' rights at 5% of the reference salary per year, as required by the AFEP-MEDEF Code.
We have been advised of the following related party agreement authorized during the financial year 2014 but not subject to the authorization of the General Meeting called to approve the 2014 financial statements.
RISK FACTORS 3.1 Introduction 115 3.2 SCOR’s main risk factors 116 3.2.2 Underwriting risks related to the P&C and Life reinsurance business 121 3.2.4 Counterparty default risks 127 3.3 SCOR’s main risk management mechanisms 133 3.3.1 Management of strategic risks 133 3.3.2 Management of underwriting risks related to the PC and Life reinsurance business 134 3.3.3 Management of market risks 139 3.3.4 Management of counterparty default risks 140 3.3.5 Management of liquidity risks 141 3.3.6 Management of operational risk 142
The Group regularly conducts reviews of the risks that could have a material adverse effect on its activity, its financial situation or its results (or capacity to reach objectives), and considers that no other significant risk than those disclosed in the section below exists. This section corresponds to the management’s current view of SCOR’s main risks and main risk management mechanisms currently in place.
The Group has identified the following categories of risks:  Strategic risks
 Operational risks If the risks disclosed in this section were to occur, such occurrence may have a significant effect on SCOR’s business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
 Appendix A - Report of the chairman on the internal control for a description of the Group risk management organization as well as the role and functioning of each administrative and management bodies and teams involved in risk management and relevant control activities.
Although risk management mechanisms have been designed and rolled out across the Group in order to prevent all risk factors from having a significant impact on the Group, there is no guarantee that these risk management mechanisms achieve their intended objective. Many of SCOR’s methods for managing risk and exposures are based upon the use of observed historical market behavior, of statistics based on historical models, or the use of expert judgment. As a result, these methods may not fully predict future exposures, which can be significantly greater than what the historical measures indicate, particularly in unusual markets and environments. Other risk management methods depend upon the evaluation of information regarding markets, clients, catastrophe occurrence or other matters that is publicly available or otherwise accessible to SCOR. This information may not always be accurate, complete, up-to-date or properly evaluated.
SCOR may also be exposed to emerging risks, which include new threats but also evolving risks, and are characterized by a very high degree of uncertainty. They may arise from the numerous changes to the environment in which the Group operates, such as changes in professional practices, changes in legal, jurisdictional, regulatory, social, political, economic, financial and/or environmental conditions. Emerging risks may adversely affect SCOR’s reinsurance business due to either a change in interpretation of the contracts or by increasing the frequency and/or severity of claims. Such risks may also lead to higher fluctuations than expected in macro-economic indicators such as interest rates and price level, or disruptions in financial markets, further impacting SCOR’s business. In addition, emerging risks may also have a direct impact on SCOR’s operations, for instance by generating unexpected additional expenses. Examples of emerging risks include: cyber-attacks, noncontrolled bio-experiments, climate change, electromagnetic fields, extreme social unrest and Eurozone break-up. Therefore, the Group cannot exclude the possibility of exceeding SCOR’s risk tolerance limits due to an incorrect estimation of its risks and exposures. This may induce an adverse impact on SCOR’s business, present and future revenues, net income, cash flows, financial position, and potentially, on SCOR’s share price.
Refer to Section 4.6 – Notes to the consolidated financial statements, Note 7 – Insurance Business Investments, which includes analyses of unrealized and realized investment losses.
The Group’s liabilities are exposed to a significant increase in the rate of general inflation (prices and salaries) which would require an increase in the value of Non-Life reserves, in particular in respect of long-tail business, e.g., general liability (medical among others) and motor bodily injury claims. In addition, SCOR is exposed to claims inflation over and above general inflation and in particular to the inflation of court awards in respect of general liability and bodily injury claims.
SCOR’s assets are exposed to increased inflation or inflationary expectations, which would be accompanied by a rise in the yield curve with a consequent reduction in the market value of the fixed income portfolios. Increased inflation could also have an unfavorable impact on the solvency of bond issuers; a widening of credit spreads would lead to a loss of value for the issuers’ bonds. Finally, depending on the macroeconomic environment, an increase in inflation could also reduce the value of SCOR’s equity portfolio. Any negative fluctuations in equity values would lead to a similar decrease in the shareholders’ equity.
Conversely, the Group’s liabilities could be exposed to a protracted period of deflation which could exert a negative pressure on reinsurance prices and decrease the value of new premiums.
A protracted period of deflation would induce a decrease of interest rates all along the yield curve and may therefore negatively impact the returns on SCOR’s fixed income assets. In addition, the value of SCOR’s equity portfolio might be reduced as deflation could reduce the future cash flows of the companies whose stocks are part of the Group’s portfolio.
Governmental initiatives intended to alleviate the financial crisis that have been adopted may not be effective and, in any event, are expected to be accompanied by other initiatives, including new capital requirements, or other regulations that could materially affect SCOR’s results of operations, financial condition and liquidity in ways that it cannot predict. In a number of countries in which the Group operates, legislation has been passed in an attempt to stabilize the financial markets, including bank stabilization programs in the UK, the US(1), and in France(2) as well as the Basel III agreements reached by the Basel Committee on Banking Supervision. Additionally, the EU has established the European Stability Mechanism (ESM) to assist European governments with their budgetary deficits and to stabilize the sovereign debt markets in the Eurozone.
These initiatives and other proposals or actions may then have other consequences, including material effects on interest rates and foreign exchange rates, and in particular, the future viability of the European currency or the European Monetary Union, which could materially affect SCOR’s investments, liquidity and results in ways that it cannot predict. The failure to effectively implement these changes could also result in a material adverse effect, notably increased constraints on the liquidity available in the banking system and financial markets and increased pressure on stock prices, any of which could materially and adversely affect the Group’s results of operations, financial condition and liquidity. In the event of future material deterioration in business conditions, SCOR may need to raise additional capital or consider other transactions to manage its capital position or liquidity.
The initiatives listed above or similar proposals, as well as accompanying actions, such as monetary or fiscal actions, of comparable authorities in the US, UK, Euro-zone and other countries, may fail to stabilize durably the financial markets. Although the European sovereign debt crisis has receded, public finances are far from equilibrium and public debt in some Eurozone countries is following an unsustainable path. Thus, tensions on some sovereign issuers could reappear, in particular when long-term interest rates are on the rise again.
(1) Under the Emergency Economic Stabilization Act of 2008 (2) Financial and Banking Regulation Act of 2010
Furthermore, the Group’s reputation is sensitive to reinsurance sector information, it can be affected by adverse events concerning competitors but also by its own business activity, for example financial difficulties following a major market event. Loss of reputation due to internal risks would also weaken SCOR’s competitive position.
3.2.1.3 RISKS RELATED TO CAPITAL AND TO LEGAL AND REGULATORY DEVELOPMENTS
SCOR’s regulated legal entities must satisfy local regulatory capital requirements. There could potentially be some local regulatory constraints, which in certain circumstances could affect SCOR’s ability to transfer capital from one legal entity to another, and in particular from one subsidiary or a branch to another, or to the parent legal entity. This may have negative consequences for the legal entity concerned and could have a material adverse impact on SCOR.
In addition, ongoing regulatory developments and discussions for global standards may impact SCOR in the future.
Disruptions, uncertainty or volatility in the capital and credit markets may also limit the Group’s access to capital required to operate its business, most significantly its insurance operations. Such market conditions may limit its ability to:  replace, in a timely manner, maturing debts;  access the capital needed to grow its business;  satisfy statutory capital requirements and maintain a solvency ratio in line with its risk appetite framework.
SCOR is subject to comprehensive and detailed regulations and to the supervision of the insurance and reinsurance regulatory authorities in all countries in which it operates. Some of these authorities, especially in non-European countries are considering or may in the future consider enhanced or new regulatory requirements intended to prevent future crises or otherwise assure the stability of institutions under their supervision and submit them to reinforced measures of control and higher capital requirements. These changes could affect the calculation of the local solvency position and have a material adverse impact on the Group. Insurance and reinsurance supervisory authorities have broad administrative power over many aspects of the reinsurance industry and SCOR cannot predict the timing or form of any future regulatory initiatives.
The Solvency 2 regime entered into force on January 1, 2016 (1). The impact and scope of the corresponding new requirements could vary depending on their actual interpretation and implementation by supervisory and regulatory authorities (e.g. the decision of authorities to comply or not with the non-binding EIOPA guidelines).
Furthermore, supervisory and regulatory authorities could make the protection of policyholders and financial stability prevail over shareholders or creditors of a reinsurer when designing new regulations especially in developing countries. These new regulations may then increase solvency margin obligations, thereby restricting SCOR’s underwriting capacity.
More generally, other adverse change in laws or regulations or an adverse outcome of any legal proceeding could have an adverse impact on SCOR. For further details on SCOR’s current litigations, refer to Section 4.6 – Notes to the consolidated financial statements, Note 27 – Litigations.
The Group’s Life reinsurance activities and the Business Solutions (large corporate accounts underwritten essentially on a facultative basis and occasionally as direct insurance) business area in Non-Life reinsurance are particularly sensitive to the way its existing and prospective clients perceive its financial strength notably through its ratings.
The businesses SCOR has recently acquired are described in Section 1.2.2 – History and development of the SCOR Group. Specific risks relating to the acquired businesses are as follows: The integration of the acquired activities may prove to be difficult
Due notably to the size and complexities of acquisitions, despite pre-acquisition due diligence work carried out (SCOR not having always been granted complete access to exhaustive data at the time of the acquisition) and the integration work performed to date, there is a risk that not all financial elements may have been fully and/or correctly evaluated or unknown or unexpected financial risks emerge, which may have significant consequences on the initially estimated impact of the relevant acquisition on the combined Group.
SCOR could be exposed to certain litigation matters related to acquired companies
3.2.1.6 THE VALUATION OF SCOR’S INTANGIBLE ASSETS AND DEFERRED TAX ASSETS MAY SIGNIFICANTLY AFFECT ITS SHAREHOLDERS’ EQUITY AND THE PRICE OF ITS SECURITIES
A significant portion of SCOR’s assets consists of intangible assets, the value of which depends on its expected future profitability and cash flows. The valuation of intangible assets is, to a large extent, based on subjective and complex judgments concerning items that are uncertain by nature. If a change were to occur in the assumptions underlying the
valuation of its intangible assets (including goodwill, Value of Business Acquired and Deferred Acquisition Costs), SCOR would have to reduce their value, in whole or in part, thereby reducing shareholders’ equity and its results. The recognition of deferred tax assets, i.e., the likelihood of recognizing sufficient profits in the future to offset losses, depends on the performance of each entity concerned as well as applicable tax laws, regulatory requirements and accounting methods. The occurrence of events, such as operational earnings lower than currently projected or losses continuing over a longer period than originally planned or changes in tax legislation, regulatory requirements, or accounting methods could lead to the derecognition of part of the deferred tax assets for accounting and/or regulatory purposes. Details of intangible assets, related impairment testing policy and recent acquisitions is included in Section 4.6 – Notes to the consolidated financial statements, Note 1 – Accounting Principles and Methods; Note 3 – Acquisitions and Disposals; Note 5 – Intangible Assets; and Note 19 – Income Tax.
3.2.2 UNDERWRITING RISKS RELATED TO THE P&C AND LIFE REINSURANCE BUSINESS
SCOR’s property business underwritten by SCOR Global P&C is exposed to multiple insured losses arising from a single or multiple events, which can be catastrophic, being either caused by nature (e.g. hurricane, typhoon, windstorm, flood, hail, severe winter storm, earthquake, etc.) or man-made (e.g. explosion, fire at a major industrial facility, act of terrorism, etc.). Any such catastrophic event can generate insured losses in one or several of SCOR’s lines of business (e.g. property, engineering, aviation, space, transport and agriculture). The most material catastrophes facing SCOR’s risk profile are resulting from natural events, mainly tropical cyclones, windstorms, earthquakes and floods arising in North America and Europe.
Beyond the potential impact on its non-life portfolio, a terrorist event could also have an impact on the Group’s life portfolio. For further details on interdependence and accumulation risks between the Life and Non-Life reinsurance business, please refer to section 3.2.2.3 – Interdependence and risks of accumulation risks between of the Non-Life and Life reinsurance businesses.
Non-Life insurance and reinsurance businesses are cyclical. Historically, reinsurers have experienced significant fluctuations in operating income due to volatile and unpredictable developments, many of which are beyond the control of the reinsurer including primarily frequency or severity of catastrophic events, levels of capacity offered by the market, general economic conditions and the level of competition with regards to pricing.
In addition, depending on the frequency and nature of losses, the speed with which claims are made and the terms of the policies affected, it may be required to make large claim payments within a short period. SCOR may be forced to fund those obligations by liquidating investments in distressed market conditions, or by raising funds under unfavorable conditions. For further information on such risks, see section 3.2.5 - Liquidity risks.
SCOR also holds in its investment portfolio some securities related to insurance risks (e.g. ILS). These securities can be indexed bonds ("CAT bonds"), Over-The-Counter (“OTC”) i.e. Insurance Loss Warranty (“ILW”) or collateralized reinsurance. Such securities could be impacted by the occurrence of underwriting risks as described in the above paragraphs (e.g. natural catastrophe, mortality etc.) that could significantly result in changes in value, or even possibly the full loss of the invested amount. These risks could also have a significant impact on the liquidity of these securities.
Credit spread risk is the risk of deterioration of the credit assessment of an issuer or a borrower which may lead to a decline of the bonds it has issued or the loan SCOR owns. Credit spread variations have a direct impact on the market value of the fixed-income securities and loans, and as a consequence, on the unrealized capital gains or losses of the fixed-income securities held in portfolio. See Section 3.2.4 – Counterparty default risks for more information on credit risk.
For further information on such risks, please see section 3.2.1.1 – Risks related to the macro-economic environment.
SCOR’s main non-French legal entities are located in Ireland, Switzerland, the Americas, the UK and Asia. The shareholders’ equity of these entities is denominated mainly in Euros, US dollars, British pounds and Canadian dollars. As a result, changes in the exchange rates used to convert foreign currencies into Euros, particularly the fluctuation of the US dollar against the Euro, have had and may have in the future, an adverse effect on the Group’s consolidated shareholders’ equity. SCOR does not fully hedge its exposure to this risk. The impact of the fluctuation in the exchange rates used to translate foreign currencies into Euros on its consolidated shareholders’ equity is described in Section 4.5 – Consolidated Statements of Changes in Shareholders’ Equity.
SCOR has issued debt instruments in currencies other than the Euro, currently Swiss Francs, and to the extent that these are not used as a hedge against foreign currency investments, it may be similarly exposed to fluctuations in exchange rates. Most debts are fully hedged. For more information on the forward sales and purchases and swaps of currencies used to hedge these risks refer to Section 4.6 – Notes to the consolidated financial statements, Note 9 – Derivative Instruments. For more information on debts issued in different currencies, refer to Section 4.6 – Notes to the consolidated financial statements, Note 14 – Financial debt.
SCOR conducted an analysis of the sensitivity of the impairment of equity securities, by applying the accounting policy and application guidance set out in Section 4.6 – Notes to the consolidated financial statements, Note 7 - Insurance business investments to theoretical future market value changes. SCOR estimates that, excluding any impairment arising to duration, a further uniform decline of 10% from December 31, 2015 market values would generate a further impairment of equity securities of EUR 1 million (2014: EUR 1 million; 2013: EUR 1 million). It should be noted that this figure should not be scaled up or down as the impairment rules are not a linear function of market value. For example, a scenario with a market value decline of 20% would not double the potential further equity impairment.
(1) Excludes investments in hedge funds which normally do not have a uniform correlation to equity markets and securities where SCOR has a strategic investment including where the Group has a substantial shareholding but does not meet the “significant influence” criteria in IAS 28
(1) This analysis excludes the impact of hedging activity 3.2.4 COUNTERPARTY DEFAULT RISKS
This risk applies also to loan transactions in which the Group invests. The borrower’’ solvency deterioration may lead to a partial or total loss of the coupons and the nominal invested by SCOR.
SCOR transfers part of its risks to retrocessionaires via retrocession programs in exchange for the payment of premiums. The retrocessionaires then assume the losses related to claims covered by the retrocession contracts. If a retrocessionaire defaulted, SCOR could lose part or all of the coverage provided by its retrocessionaire whereas it would retain its liability to the cedent for the payment of all claims covered under the reinsurance contract. SCOR could also lose receivables from the defaulting retrocessionaire (receivables are due to a timing difference between statement accounts received and real payment due for positive balances of retrocessionaire accounts).
The retrocessionaires’ part in the reserves split by retrocessionaires’ financial rating is included in Section 4.6 – Notes to the consolidated financial statements, Note 16 – Net Contract Liabilities.
SCOR may be exposed to credit risk in relation to amounts deposited with ceding companies in respect of reserves which cover its current and future liabilities. However, depositing these amounts does not a priori discharge the Group of its liability towards the cedent in case it is not able to recover these amounts in the event of default of that cedent. Hence it is possible that the Group will remain liable for paying claims without being able to offset the corresponding deposit.
SCOR participates, for certain risk categories, such as Terrorism, Nuclear, Aviation or Pollution, in various groups of insurers and reinsurers (“pools”) aimed at pooling the relevant risks among the members of each group. In the event of a total or partial default by one of the members of a group, it could be required to assume, in the event of joint liability of the members, all or part of the liabilities of the defaulting member.
The following table provides an overall analysis of the aging of financial assets as at December 31, 2015: In EUR million Current 1-12 months Total Available-for-sale financial assets 15,381 - - - - 15,381 Financial assets at fair value through income 744 - - - - 744
The following table provides an overall analysis of the aging of financial assets as at December 31, 2014: In EUR million Current 1-12 months Total Available-for-sale financial assets 14,682 2 - - - 14,684 Financial assets at fair value through income 690 - - - - 690
Derivative instruments 51 - - - - 51 Loans and receivables 8,947 - - - - 8,947 Insurance receivables 4,501 212 30 12 28 4,783 Tax receivables 127 - - - - 127 Other assets 277 - - - - 277 Cash and cash equivalents 860 - - - - 860 Total 30,135 214 30 12 28 30,419
SCOR needs liquidity to pay claims, operating expenses, interest payments and redemptions on its debts and declared dividends on its share capital. In the case of catastrophe claims, in particular, it may need to settle in a reduced timeframe amounts which exceed the amount of available liquidity. SCOR’s ability to access external sources of liquidity may be subject to adverse capital and credit market conditions. Without sufficient liquidity, the Group may be forced to curtail its operations, and business will suffer.
 Investments in loans: SCOR invests in corporate loans, real estate loans and infrastructure loans. These are medium to long-term investments. Some investments may not allow for a change in strategy to adapt to the environment before their final maturity.
The availability of additional financing will depend on a variety of factors. These notably include market conditions, the general availability of credit, the volume of trading activities, the overall availability of credit to the financial services industry, its credit ratings and credit capacity, as well as the possibility that customers or lenders could develop a negative perception of its long- or short-term financial prospects if the Group incurs large investment losses or if the level of its business activity decreases due to a market downturn. Similarly, access to funds may be impaired if regulatory authorities or rating agencies take negative actions against SCOR. The liquidity of several asset classes owned by SCOR may also be negatively impacted by a change in regulation or by the evolutions of non-conventional monetary policies. Eventually, these factors could prevent SCOR from successfully obtaining additional financing on favorable terms, or at all. Liquidity risks could also arise from increased collateral requirements. Some facilities SCOR uses to grant letters of credit to cedents require 100% collateral in case of non-compliance with financial covenants or in case of a decrease in the Group’s financial strength rating, which would result in a deterioration of the Group’s liquidity level. Collateral arrangements are also used by SCOR when operating business in jurisdictions that demand a higher level of reserves than under IFRS in other jurisdictions. This is especially the case in the US for business falling under the NAIC Model Regulation XXX or Valuation of Life Insurance Policies Model Regulation, commonly referred to as Regulation XXX (or Triple X). Letters of Credit carry the risk of a duration mismatch, i.e. that short-term Letters of Credit are covering longterm business and might have to be renewed at less favorable conditions, creating additional cost.
Information on SCOR’s letter of credit facilities, including related financial covenants, is included in Section 4.6 – Notes to consolidated financial statements, Note 25 – Commitments Received and Granted.
Considering the above, SCOR is exposed to risks of short-term or medium-term payouts, and it cannot be guaranteed that it will not be exposed to such risks in the future.
The analysis of the balance sheet reserve movements, including net paid losses is included in Note 4.6.16 – Net Contract Liabilities.
Maturity profiles have been based on undiscounted contractual maturities and include contractual interest payments (including those from cross currency and interest rate swaps). In the case of perpetual debt, or debt which is subject to multiple optional reimbursement dates, the analysis below has been prepared based on the assumption that the Company does not make use of any of the early optional reimbursement dates. In September 2014 and December 2015, SCOR issued two subordinated notes for EUR 250 million and EUR 600 million, respectively. It is SCOR’s current intention, subject to the evolution of market conditions and to prior regulatory approval, to refinance through the proceeds of these two notes the optional redemptions of the remaining balance of the 6.154% undated deeply subordinated EUR 350 million notes callable in July 2016 and of the 5.375% fixed to floating rate undated subordinated CHF 650 million notes callable in August 2016. The proceeds of these notes may also be used for general corporate purposes. Of the amounts below, EUR 98 million (1) (2014: EUR 258 million (1)) relate to variable rate debt.
Maturity analyses of financial assets that are held for managing liquidity risk are presented within Section 4.6 – Notes to the consolidated financial statements, Note 7 – Insurance Business Investments. Various entities in the Group rent their office headquarters. The minimum payments relating to these operating leases are presented within Section 4.6 – Notes to the consolidated financial statements, Note 6 – Tangible assets and property related commitments.
Risks related to staff can arise as follows:  The failure to attract or retain key personnel or the loss crucial information/skills concentrated in a single person, or of a whole team.
 Incidents due to mistakes or non-respect of instructions, guidelines or policies.
 Internal staff mandated by SCOR having authorized access to SCOR’s offices or systems taking advantage of SCOR's assets for personal gain e.g. through misappropriation of assets, tax evasion, intentional mismarking of positions or bribery.
 Intentional damage to SCOR's assets (including data) necessary to perform its operations by internal or external staff could lead to significant additional remediation costs (to rebuilt databases or systems).
Risks related to systems can arise as follows:  A malfunction or a major breakdown in SCOR’s IT systems, outages, disruptions due to viruses, attacks by hackers and theft of data. This can occur within SCOR’s own environment or to a third party providing services or data to SCOR;  Interruption of any of SCOR’s IT systems leading to loss of data, delays in service or in a loss of efficiency of teams, which could lead to remediation costs, loss of contracts or damage to the Group’s reputation. In addition, these incidents could increase other operational risks such as external fraud or human error (e.g. delay in the recognition of adverse business development). The interruption of these systems could damage commercial activities including underwriting, pricing, reserving, premium and claims payment, commercial support, and asset management;  In addition, the facilities in which SCOR operates might be impacted by natural or man-made perils. The offices might need to be closed for a period of time potentially generating a loss of productivity and business opportunity, as well as remediation costs; 3.2.6.3 RISKS COMING FROM PROCESSES
Since SCOR remains responsible for commitments or services contracted, an inappropriate client relationship management or inadequate level of service and/or product quality provided by SCOR to its clients or breach of contract may lead to a loss of profitable business relationships.
In addition, SCOR may be involved in legal and arbitration proceedings due to non-protective terms of a contract, denounced either by third parties or internally which could lead to an unfavorable outcome. There are no governmental, judicial or arbitration proceedings, including any proceedings SCOR would be aware of, pending or which SCOR could be threatened with, likely to have or having significant impact on SCOR's financial situation or profitability over the last 12 months. For information on this issue, refer to Section 4.6 – Notes to the consolidated financial statements, Note 27 – Litigations.
SCOR is also exposed to external fraud which is characterized by the fraudulent misappropriation of certain SCOR's assets by third parties. External frauds may be perpetrated with various means including cyber-attacks and usually target cash, or data. Should they succeed in bypassing the controls, or protection measures, this could generate a direct loss for the Group. SCOR is exposed to cyber-attacks which can be very diverse in their sophistication and execution. The main targeted elements are system functions, data and cash management.
Some of the above operational risks which are transferred in whole or in part to direct insurers (1) as follows:  The properties and other assets of SCOR and its subsidiaries are covered locally through property and fire damage as well as IT risk policies.
3.3 SCOR’s main risk management mechanisms 3.3.1 MANAGEMENT OF STRATEGIC RISKS
SCOR monitors the legal and supervisory developments which could have an impact on the Group, ensuring in particular that it takes an active position vis-à-vis the requirements to which it is exposed or could be exposed in the different jurisdictions where it operates and that it prepares in due time for their implementation. In particular, developments in prudential regulations (such as Solvency II, ComFrame or the regulations on systemic risk) are monitored at Group level by the Prudential Affairs department. Regulations relating to corporate law and business compliance are monitored by the General Secretariat and, within it, the Legal department.
SCOR follows high internal standards for acquisition process, governance and integration, based on an approach approved by its executive committee. SCOR retains outside legal, accounting, tax, actuarial, regulatory and financial counsel for its due diligence, valuation and integration assessments and execution, led by experienced employees in various multi-jurisdictional disciplines, including but not limited to underwriting, structuring, valuation, accounting, tax, actuarial, risk management, legal, audit, strategy, claims management, regulatory, rating agencies, and asset management. SCOR’s governance requires a Group Steering Committee, chaired by its CEO and including various members of SCOR’s executive committee. All progress, assessments and any offers made to third parties are generally presented and approved by the Strategic Committee of SCOR’s Board of Directors.
All acquisition projects that may have an impact on SCOR’s risk profile are reviewed in collaboration with SCOR’s risk management teams. Integration is typically started during due diligence phase and is carefully planned in concert with SCOR and the personnel of acquired companies. SCOR integration plans typically take into account all systems, procedures, commitments and constraints, as well as employees, clients, suppliers and contractual third parties, and focuses on pre-closing, closing day and post-closing objectives. While SCOR has experience in managing acquisitions and takes care in planning and executing such operations, the outcomes may not always meet expectations.
3.3.2 MANAGEMENT OF UNDERWRITING RISKS AND OTHER RISKS RELATED TO THE P&C AND LIFE REINSURANCE BUSINESS