In October 2013, SCOR entered into an agreement to acquire two floors in a building still under construction in Singapore and has since purchased eight additional units located on two floors. The total estimated acquisition price, including fees, was SGD 87 million as at December 31, 2016 (SGD 86 million as at December 31, 2015). As at December 31, 2016, SGD 78 million (EUR 54 million) were recognized in the balance sheet
SCOR purchased in November 2016 a contract of sale before completion to acquire a building vis à vis the Paris head office for a total cost of EUR 28 million. The total cost of the land and the finished portion of the building (EUR 26 million, including acquisition costs) were recognized in the balance sheet as at December 31, 2016. The building delivery occurred in 2017.
Capitalization of new contracts over the period/Change over the year 233 602 835 160 553 713 153 526 679
Other changes (including change in shadow accounting) (6) - (6) 10 - 10 15 - 15
The following table reconciles consolidated net income to net cash flows provided by/(used in) operations as presented in the consolidated statement of cash flows: In EUR million 2017 2016 2015
Net cash flows provided by/(used in) operations, excluding changes in working capital 1,310 860 1,019
The caption “Share-based payments” is used to offset the cost of services received in exchange for the granting of shares or stock options to Group employees. As the instruments granted are subordinated to the fulfillment of a vesting period by the employee, the increase in equity is initially recognized at the grant date in the line “Share-based payments”. Once the shares are fully vested, they are recognized as ordinary shares under “Share capital” and “Additional paid-in capital”.
The authorized share capital of the Company at December 31, 2017 was 193,500,317 shares with a par value of EUR 7.8769723 each compared with authorized share capital of 192,534,569 shares with a par value of EUR 7.8769723 at the end of 2016 and with authorized share capital of 192,653,095 shares with a par value of EUR 7.8769723 at the end of 2015.
In 2017, the movements are due to the following operations: ●● the Board of Directors’ meeting held on April 27, 2017 decided to reduce the Group’s share capital by cancellation of 554,112 treasury shares for EUR 14 million (EUR 5 million in share capital and EUR 9 million in additional paid-in capital); ●● the issuance of new shares relates to the exercise of stock options for EUR 27 million (EUR 12 million in share capital and EUR 15 million in additional paid-in capital). This resulted in the creation of 1,519,860 new shares throughout the year.
The number of shares held as treasury shares by the Group and or its subsidiaries at December 31, 2017 amounted to 5,866,249 shares compared to 7,203,282 shares at the end of 2016. These treasury shares are not entitled to dividends.
The primary source of capital used by the Group is shareholders’ equity and subordinated debt. The leverage ratio as at December 31, 2017 is 25.7%. For a description of the leverage ratio, see Registration Document, Section 1.3.6 – Financial position, liquidity and capital resources.
The Group is subject to regulatory requirements in each of the jurisdictions in which it conducts business, particularly in France, Ireland, Switzerland, the UK, the US, Canada, Singapore, Hong Kong, Australia and China. Local authorities have broad supervisory and administrative powers over many aspects of the insurance and reinsurance industries.
Such regulations not only prescribe approval and monitoring of activities, but also impose obligations related to maintaining a certain level of capital (e.g. capital requirement) to cover the risk of default and insolvency on the part of the reinsurance companies and insurance companies and meet unforeseen liabilities.
It should be noted that regulatory filings in the majority of countries in which the Group operates are not prepared on an IFRS basis.
The following table sets out an overview of the debt issued by the Group: As at December 31, 2017 As at December 31, 2016
(1) Includes EUR 38 million in accrued interest at December 31, 2017 (December 31, 2016: EUR 39 million). (2) These debts are not publicly traded. Therefore the carrying amounts are reflective of their fair value.
SCOR has entered into a cross-currency swap which exchanges CHF 250 million of the principal for EUR and exchanges the CHF coupon on the notes for EUR 6.2855% and matures on June 8, 2018. SCOR has entered into a second cross-currency swap which exchanges CHF 65 million of the principal for EUR and exchanges the CHF coupon on the notes for fixed-rate EUR 6.2350% and matures on June 8, 2018. See Note 7 – Insurance business investments (Derivative instruments).
On September 30, 2013, SCOR issued CHF 250 million in perpetual subordinated notes, redeemable by SCOR each quarter on each interest payment date from November 30, 2018. The coupon has been set at 5.00% until November 30, 2018 and 3-month CHF Libor plus a margin of 4.0992% thereafter.
On October 20, 2014, SCOR issued CHF 125 million in perpetual subordinated notes, redeemable by SCOR on each interest payment date from October 20, 2020. The coupon has been set at 3.375% (until October 20, 2020), and resets every 6 years at the prevailing 6-year CHF mid-swap rate + 3.0275%.
On October 1, 2014, SCOR issued EUR 250 million in perpetual subordinated notes, redeemable by SCOR on each interest payment date from October 1, 2025. The coupon has been set at 3.875% (until October 1, 2025), and resets every 11 years at the prevailing 11-year EUR mid-swap rate + 3.7%.
Some provisions in the terms and conditions of notes allow for early redemption under certain conditions other than the liquidation of the issuer (e.g. tax, accounting and regulatory reasons). However, these early redemption cases are (i) always at the option of the issuer and no reimbursement can be imposed on the issuer by the noteholders; and (ii) always subject to prior approval by the relevant supervisory authority.
Real estate financing relates to the acquisition of investment property through bank loans of EUR 479 million (December 31, 2016: EUR 491 million), including real estate financing related to MRM property for EUR 74 million (December 31, 2016: EUR 75 million). The main real estate financing amounts to EUR 158 million and is used to finance the Group’s head office in Paris, avenue Kléber. It bears floating-rate interest indexed to the 3-month Euribor rate plus 1.35% and matures in June 2018. SCOR entered into three interest rate swaps which cover its exposure to the variable interest rates whereas SCOR pays a fixed rate of 2.97% and receives interest at 3-month Euribor. The interest rate swaps have been accounted for as cash flow hedges (for further details, see Note 7 – Insurance business investments – Derivative instruments). The other real estate financing bears fixed-rate interest or interest indexed to 3-month Euribor covered by interest rate swaps and redeemable between 2018 and 2026. They are used to finance other property owned by the Group.
Certain real estate financing contracts contain accelerated repayment clauses and other debt covenants. Such covenants define certain ratios to comply with, among which loan to value (LTV) ratios, defined as the relation between the carrying amount of the financing and the market value of the real estate being financed, interest coverage rates (ICR), representing the percentage at which interest expenses are covered by rental income, and debt service coverage ratios (DSCR), representing the percentage at which debt amortization and interest expenses are covered by rental income. Under existing financing contracts LTV ratios vary between 55% and 70% and ICR/DSCR between 130% and 300%. As at December 31, 2017, the Group is in compliance with the LTV and ICR/DSCR covenants with respect to its banking partners.
In 2017, the net decrease of real estate financing is related to the partial reimbursement of several debts for a total amount of EUR 31 million partially offset by new debts for a total amount of EUR 19 million.
In 2016, the sales of investment properties have generated the reimbursement of the related real estate financing for a total of EUR 80 million. The purchases of two own-use properties were financed by two additional debts for a total amount of EUR 49 million.
The amounts presented in other financial liabilities include certain letter of credit charges, custodian and overdraft fees, amortization of issuance fees and other bank charges (commissions, etc.).
Provisions amounted to EUR 182 million and EUR 197 million at December 31, 2017 and 2016 respectively, and include postemployment benefits related to pension plans of EUR 177 million (2016: EUR 192 million) and provisions for other long-term benefits of EUR 5 million (2016: EUR 5 million).
The defined benefit pension plans and other long-term benefits are mainly located in Switzerland, North America, France and Germany. These locations represent 43%, 24%, 16% and 12% respectively, as at December 31, 2017, (44%, 24%, 15% and 12%, respectively, as at December 31, 2016), of the Group’s obligation under defined benefit plans.
Discount rates are defined with reference to high quality long-term corporate bonds with maturities consistent with the duration of the obligations evaluated. Management considers “AAA”, “AA” and “A” rated bonds to be high quality.
An increase in the discount rate of 0.25% would result in a decrease in the estimated defined benefit obligation of approximately EUR 16 million (2016: EUR 18 million) with the offsetting impact recorded in other comprehensive income.
A decrease in the discount rate of 0.25% would result in an increase in the estimated defined benefit obligation of approximately EUR 16 million (2016: EUR 16 million) with the offsetting impact recorded in other comprehensive income.
Duration as at December 31, 2017 11 years 18 years 13 years 27 years 9 years 15 years
Interest income on plan assets (4) (1) (1) (2) (5) (1) (1) (3) (6) (1) (2) (3)
In EUR million As at December 31, 2017 As at December 31, 2016 As at December 31, 2015
The following table reconciles movements in the balance sheet amounts for the years ended December 31, 2017, 2016 and 2015: In EUR million Total 2017 Europe Switzerland North America Total 2016 Europe Switzerland North America Total 2015 Europe Switzerland North America
Actuarial (gains)/losses due to change in assumptions (2) (4) 1 (10) 5 28 15 10 3 1 (7) 12 (4)
Asset gains/(losses) due to experience 13 2 7 4 (1) 1 2 (4) - - 3 (3)
Fair value of assets as at December 31 242 30 154 58 238 28 148 62 243 29 137 77
Funded status as at December 31 – deficit 120 64 20 36 133 62 33 38 111 60 21 30
Unfunded obligation as at December 31 62 48 8 6 64 50 8 6 54 41 7 6
Actuarial (gains)/losses immediately recognized in other comprehensive income (OCI) (12) (2) (11) 1 39 17 13 9 7 (1) 7 1
The following table includes the allocation of plan assets as at December 31, 2017 and 2016: In EUR million Total Europe Switzerland North America
As at December 31, 2017, employer contributions for the year ahead were expected to amount to EUR 16 million (2016: EUR 13 million).
The next table of the section provides Non-Life claims development information per underwriting year and reporting period. Compared to the table presented last year, this presentation benefited from refinement with the neutralization of the fluctuations in foreign exchange rates.
Ceded UPR – end of year 39 40 40 51 84 93 101 142 187 167 160
The table below presents a reconciliation of the opening and closing liability for claims reserves and claims estimates of SCOR Global P&C for the years ended December 31, 2017 and 2016.
Ceded claims reserves and claims estimates as at January 1 (660) (634)
Net claim reserves and claims estimates as at December 31 11,143 11,124
Net % of Group Non-Life claims paid 0.3% 0.8% 0.3% 0.1%
Change in reserves from portfolio movements and actuarial calculation 344 (215)
Change in reserves from portfolio movements and actuarial calculation (166) 18
Share of retrocessionaires contract liabilities net of collateral (1) - 362 610 2 2 (282) (2) 694
In EUR million AAA AA A BBB < BBB Not rated Total as at
Share of retrocessionaires contract liabilities - 304 908 32 1 117 1,362
In addition, the Group offers free shares to certain of its employees. These awards result in the recognition of personnel charges with a corresponding increase in equity over the vesting period.
The total expense for 2017 relating to share-based payments is EUR 33 million (2016: EUR 28 million), with EUR 2 million (2016: EUR 1 million) relating to stock options granted under the 2013 to 2017 plans (2016: 2012 to 2016) and EUR 31 million (2016: EUR 27 million) relating to free shares allocated under the 2011 to 2017 plans (2016: 2011 to 2016).
The share-based payment plans are described below. There have been no cancellations or modifications to any of the plans during 2017.
The terms and conditions of the stock option plans of March 10, 2017 and December 1, 2017, which are similar to those previously granted by SCOR, provide that the options allocated to Partners can be exercised at the earliest four years after the grant date, if the presence condition is met in addition to the satisfaction of certain performance conditions, which are based on the strict observance of the principles set forth in the SCOR Code of Professional Conduct, on the solvency ratio and the SCOR Group’s ROE (in 2017, 2018 and 2019 for the March 10, 2017 plan and in 2017, 2018 and 2019 for the December 1, 2017 plan).
The average weighted remaining life of the options for 2017 and 2016 was 5.30 and 5.04 years respectively.
Vesting period 4 years 4 years 4 years 4 years 4 years 4 years
The terms and conditions of the performance share plans of February 21, 2017 and December 1, 2017 provide that for all beneficiaries, the final vesting of these shares will be subject to the condition of presence of three years and to the satisfaction of performance conditions.
The fair value of the free shares corresponds to the market value adjusted for dividends and non-transferability costs, estimated using a forward acquisition/disposal method. The following table lists the characteristics used at the end of 2017, 2016 and 2015: December 1, 2017 Plan
French residents 3 years 6 years 3 years 6 years 3 years 3 years
Non-French residents 3 years 6 years 3 years 6 years 3 years 3 years
French residents 6 years 3 years 6 years 2 years -
CORPORATE INCOME TAX (EXPENSE)/BENEFIT REPORTED IN STATEMENT OF INCOME (56) (166) (227)
A reconciliation of the income tax expense, obtained by applying the French tax rate of 44.43% for 2017, 34.43% for 2016 and 38.00% for 2015 to income (loss) before corporate income taxes and excluding share in results of associates, to the actual corporate income tax expense recorded in the consolidated statement of income is presented in the table below. The effective tax rate in 2017 is 16.3% (2016: 21.7% and 2015: 26.0%).
Theoretical corporate income tax at 44.43% (for 2017), 34.43% (for 2016) and 38.00% (for 2015) (152) (264) (332)
Differences between French and local corporate income tax rates 67 84 114
Write-down and reversal of previous write-down of deferred tax assets 1 - -
SCOR is currently reviewing the TCJA to assess its potential future implications, in particular with respect to certain complex provisions including the BEAT. There is a high level of uncertainty surrounding the practical and technical applications of many of these provisions. The format, scope and timeframe in which future clarifications from the US Treasury may be obtained, such as on the application of BEAT to inward affiliate retrocession, on effectively connected income definition and application and on BEAT implications for modified coinsurance, are still unknown.
The standard tax rates for the primary locations in which the Group has operations are as follows: NOTE 17.3. CORPORATE INCOME TAX EFFECTS RELATING TO OTHER COMPREHENSIVE INCOME
Effects of changes in foreign exchange rates (521) (6) (527) 75 (4) 71 316 8 324
Net gains/(losses) on cash flow hedges 5 - 5 3 1 4 35 (12) 23
Items that will be reclassified subsequently to profit income (486) (10) (496) 117 (3) 114 276 11 287
Deferred tax assets and liabilities and the related expense or benefit as at and for the year ended December 31, 2017, were generated by the following items: In EUR million Opening Balance
Unrealized revaluations and temporary differences on investments (48) (1) (15) 8 1 (55)
Unrealized revaluations and temporary differences on investments 67 (2) (2) (1) (2) 60
Interest income on funds withheld and contract deposit 187 194 196
The table below shows the net retrocession result for the years ended December 31, 2017, 2016 and 2015: In EUR million
The increase of the net retrocession result of SCOR Global Life is driven by the negative claims experience from the underlying business and the correlated development in the experience refund settlement.
In accordance with IAS 1 – Presentation of Financial Statements, the Group has opted to present expenses by function in the statement of income. The costs are allocated to four categories (acquisition and administrative expenses, claims settlement expenses, investment management expenses and other current operating expenses) based on allocation keys defined by management.
Other operating and administrative expenses include expenses incurred by the Group, excluding gross commissions, as follows: In EUR million 2017 2016 2015 in 2017
These expenses are further allocated into categories by function as follows: In EUR million 2017 2016 2015 in 2017
Basic and diluted earnings per share are calculated as follows for the years ended December 31, 2017, 2016 and 2015 respectively: In EUR million
At December 31, 2017 At December 31, 2016 At December 31, 2015
Net income attributable to ordinary shareholders and estimated conversions 286 189,663 1.51 603 188,275 3.20 642 190,153 3.38
(2) The total commitment of the Group for defined benefit retirement plans in France, Germany, the US, the UK and Switzerland for Executive Committee members (including the Chairman and Chief Executive Officer) amounts to EUR 58 million as at December 31, 2017 (EUR 53 million as at December 31, 2016 and EUR 49 million as at December 31, 2015), i.e. 14% of the total commitment of the Group for pension plans of EUR 424 million.
The general reinsurance environment requires that underwriting liabilities be collateralized, either directly through the reinsurance treaty with the ceding company, or indirectly through the requirements of local regulators of the countries where SCOR’s entities operate. These collateral arrangements can take the form of cash deposits to ceding companies, which are booked on the balance sheet, of pledged assets which generate a commitments granted and are disclosed in the table below, or of letters of credit in which a financial institution provides the ceding company with a guarantee against the default of SCOR. Reciprocally, SCOR receives collaterals from its retrocessionaires which are booked as commitments received to the exception of deposits which are recognized on the balance sheet.
A commitment received is recognized for potential sources of liquidity such as unused lines of credit, unused loans capacity or unused letters of credit purchased to financial institutions but not provided to ceding companies.
In EUR million As at December 31, 2017 As at December 31, 2016
SCOR has pledged financial assets to ceding companies, regulators, financial institutions and pension plans for a total amount of EUR 4,172 million (2016: EUR 4,540 million).
The total carrying amount of financial assets pledged to the benefit of SCOR as collateral is EUR 834 million (2016: EUR 755 million). These amounts include securities pledged by retrocessionaires for a total amount of EUR 527 million (2016: EUR 425 million) detailed in Note 15 – Net contract liabilities. The remaining amount relates to pledged assets received on assumed reinsurance.
As at December 31, 2017, SCOR has an outstanding letter of credit capacity of EUR 199 million (As at December 31, 2016: EUR 410 million), recognized as a commitment received from banks. This outstanding capacity can be used to provide collateral on the forthcoming underwritten business.
Letters of credits received from external retrocessionaires are recognized as a commitment received for EUR 151 million (As at December 31, 2016: EUR 159 million) and are detailed in Note 15 – Net contract liabilities.
SCOR also owned in 2016 a call option on the remaining shares of a non-core business entity consolidated under the equity method. On April 10, 2017, SCOR exercised the option and obtained control of Château Mondot S.A.S.. Refer to Note 3 – Acquisitions and disposals.
On November 12, 2009, and following an administrative sanctioning procedure, the Spanish competition authority (Comisión Nacional de la Competencia, or the “CNC”) sanctioned SCOR Global P&C SE Ibérica Sucursal, a branch of SCOR Global P&C, and a number of other insurance and reinsurance companies for an alleged infringement of Article 1 of Law 15/2007, of July 3, 2007, on Competition (the “Competition Act” which prohibits agreements and concerted practices that may have as an object or effect the restriction of competition in the market). The infraction would have consisted in an agreement to set the minimum price and other commercial conditions applied to customers in the market for decennial insurance for constructions in Spain. Pursuant to such decision, SCOR was sentenced to pay a fine of EUR 18.6 million. Other insurers and reinsurers were also fined in relation to the same matter.
Subsequent events relate to relevant and material events that occur between the reporting date and the date when the financial statements are approved for issue by the Board of Directors. Such events lead to: ●● an adjustment of the consolidated financial statements if they provide evidence of conditions that existed at the reporting date, and if relevant and material; ●● additional disclosure if they relate to conditions which did not exist at the reporting date, and if relevant and material.
On July 17, 2017, SCOR signed an agreement with the Fédération Nationale de la Mutualité Française and Matmut with a view to the acquisition of 100% of the shares of MutRé S.A. The ratification of the agreement by MutRé’s other shareholders (which represent approximately 15% of MutRé’s capital) was finalised during October 2017.
The consideration paid by SCOR for the additional 67% share at January 3, 2018 is EUR 70 million. The control was obtained on the same date. The assets and liabilities acquired will be recorded at their fair values for purposes of the opening balance sheet and included in the consolidated accounts of SCOR using the Group’s accounting principles in accordance with IFRS during the first quarter of 2018.
Due to the preliminary estimates of MutRé, the acquisition is not material when comparing the balance sheet total of MutRé of EUR 1,253 million with SCOR’s total balance sheet (approximately 3%) and comparing the net assets of MutRé of EUR 134 million with the SCOR’s shareholders’equity (approximately 2%) as at December 31, 2017.
The purchase price is being allocated based on an estimate of the fair value of assets acquired and liabilities assumed at the date of acquisition determined in accordance with IFRS 3 – Business Combinations. The accounting of the acquisition of MutRé must be finalized within 12 months of the effective acquisition date.
On February 13, 2018, the Boards of Directors of SGL SE and MutRé approved the merger of the two entities with a retroactive effect on January 1, 2018. The merger is subject to the approval of the ACPR.
The company was initially created in 2011 by SCOR and MAF and started its insurance operations in December 2012. The Group has held 49% of the company since 2011.
CONSOLIDATED FINANCIAL STATEMENTS 04 Information on holdings 4.7. INFORMATION ON HOLDINGS
As at December 31, 2017, SCOR SE held indirectly shares or units in the companies representing at least 10% of the consolidated net assets or generating at least 10% of the consolidated net income or loss. These holdings are listed below: Registered office Type of business % Capital
Date of the Shareholders’ Meeting called to approve the financial statements for the financial year ending December 31, 2019 4.8.2. ALTERNATIVE AUDITORS
The date of the most recently audited financial information is December 31, 2017.
The report of the Statutory Auditors on the consolidated financial statements for the financial year ended December 31, 2017 is reproduced below.
In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the Company as at December 31, 2017 of the Group consisting of the persons and entities included in the consolidation and of the results of its operations for the year then ended in accordance with IFRS accounting principles as adopted in the European Union.
These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on specific items of the financial statements.
The net insurance contract liabilities amount to EUR 29,006 million and to EUR 27,591 million net of deferred acquisition costs at 2017 year-end. These liabilities are established to cover the Group's commitments and the payment of benefits relating to reported events or events incurred but not yet reported.
As stated in Note 15 of the notes to the Consolidated financial statements, the Group uses in determining the amount of technical reserves related to its Non-life business, actuarial techniques that take into account quantitative loss experience data, together with qualitative factors, where appropriate.
Tecnical reserves related to Life business are estimated using actuarial methods based on the present value of projected future payments to cedents less the present value of projected future premiums to be paid by cedents.
The entities of the Group record accounts transmitted by ceding companies upon receipt. Accounts not yet received from ceding companies at the end of the financial year are estimated, in order to better reflect the Group’s reinsurance commitments in the financial statements.
Written and earned reinsurance premiums are also estimated. As stated in Note 1 of the notes to the Consolidated statements: gross written and earned premiums are based upon reports received from ceding companies, supplemented by the Group’s own estimates of premiums for which ceding companies’ reports have not yet been received.
In these circumstances, we considered the measurement of reinsurance premiums to be a key audit matter.
To cover the risk on the measurement of reinsurance premiums, we implemented the following audit approach: ●● we obtained an understanding of the internal controls framework on processes related to Life and Non-Life premium estimates and we tested the efficiency of key controls established by management; ●● we examined the consistency of premium estimates over the period, comparing them both to the operational plan prepared by management and approved by the Board of Directors and to premiums actuals from previous financial years and we investigated, if any, significant differences identified; ●● we performed, for a selection of contracts, a deep analysis of underlying assumptions taking into account the activity, the records of reinsurance accounts received, and any new information received from ceding companies; ●● for new contracts underwritten in 2017, we performed on a sampling basis, controls on the consistency of premium estimates based on new business information available at the underwriting department; ●● we included, within our team, members with specific skills in IT systems, to perform procedures aimed at testing automated computations and controls of Non-Life premium estimates.
Valuation of Goodwill and Value of business acquired (VoBA) on Life reinsurance portfolios
We examined the methodology used by management to determine whether the potential impairment of the CGUs has been properly applied: We evaluated the models and calculations of the Group company in: ●● comparing multiples and discount rates used per country with our internal databases; ●● comparing the expected turnover growth with the economic data of the reinsurance sector; ●● analyzing the quality of the process of preparing and approving budgets and forecasts established by management and presented to the Board of Directors; ●● analyzing the consistency of information and assumptions used in these models: on the one hand, with the budgets and forecasts abovementioned, on the other hand, with our knowledge of the sector, developed notably during the review of the strategic plan, through interviews with members of the executive committee and studies of the Group's budget process.
Value of Business Acquired (VoBA) represents the value of Life reinsurance portfolios acquired in a business combination. It corresponds to the present value of expected future cash flows for the assumed and the retroceded reinsurance business. As stated in Note 6 of the notes to the Consolidated financial statements, VoBA is amortized over the lifetime of the underlying reinsurance portfolio based on schedules derived from the run-off patterns of expected profit. These projections are assessed and updated regularly.
(Please refer to Note 17 of the notes to the consolidated financial statements)
With the assistance of team members with specific tax skills, our audit approach consisted in performing the following procedures on the main entities contributing to the Group’s deferred tax assets on losses carried forward: ●● we obtained an understanding of the internal controls framework on processes of the tax department related to the deferred tax measurement; ●● we examined the documentation prepared annually by the tax department on deferred tax assets; ●● we examined the business plans used and the probability that tax losses will be utilized in the future. We notably checked the tax rates used as well as the profits’ forecasts and underlying assumptions, with specific attention to the legal expiry periods in force in certain countries.
With the assistance of our US tax specialists, we performed following procedures: ●● we obtained an understanding of the procedures performed by Group to identify the impacts of the “Tax Cuts and Jobs Act” as of December 31, 2017; ●● we checked the correct calculation of the impact of federal corporate income tax decrease, on deferred tax assets related to US tax losses carried forward; ●● we assessed the information relating to the US tax reform disclosure in the notes to the consolidated financial statements in light of the procedures performed by Group in terms of impact assessment and action plans evaluated and the discussions we held with management.
We have also performed, in accordance with professional standards applicable in France, the specific verifications required by French law regarding Group related information, given in the management report of Board of Directors, reminded that it is not our responsibility to conclude on the fair presentation and consistency with the financial statements of the solvency related information required by article L. 356-23 of the French Insurance Code (Code des assurances).
As at December 31 2017, MAZARS and ERNST & YOUNG Audit were in the 28th year and 22nd year of total uninterrupted engagement.
●● Obtains an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control.
●● Evaluates the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management in the consolidated financial statements.
●● Evaluates the overall presentation of the consolidated financial statements and assesses whether these statements represent the underlying transactions and events in a manner that achieves fair presentation.
We also provide the Audit Committee with the declaration provided for in Article 6 of Regulation (EU) N° 537/2014, confirming our independence within the meaning of the rules applicable in France such as they are set in particular by Articles L. 822-10 to L. 822-14 of the French Commercial Code (Code de commerce) and in the French Code of Ethics (Code de déontologie) for auditors. Where appropriate, we discuss with the Audit the risks that may reasonably be thought to bear on our independence, and the related safeguards.
5.1.1. CORPORATE PURPOSE OF THE ISSUER (ARTICLE 3 OF THE BYLAWS)
5.1.2. SUMMARY OF THE BYLAWS AND INTERNAL REGULATIONS OF THE COMPANY CONCERNING THE MEMBERS OF ITS ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY BODIES
For further details, see Section 2.1 – Corporate officers, executives and employees.
The interested party must inform the Board of Directors as soon as it is aware of the existence of the related party agreement, and a majority of the non-related directors must approve the agreement for it to be valid.
Any related party agreement reached without the prior consent of a majority of the non-related directors can be voided by a court, if we incur a loss as a result. In addition, an interested related party may be held liable on this basis.
Following an amendment to the Company bylaws approved by the Shareholders’ Meeting on April 30, 2015, no double voting rights, as referred to in the provisions of Article L. 225-123 of the French Commercial Code, introduced by Act No. 2014-384 of March 29, 2014, may be attributed to or benefit, in any manner whatsoever, any Company shares.
A certificate shall also be issued to any shareholder wishing to take part in person in the Shareholders’ Meeting and who has not received his or her entry card by T-0 (Paris time) on the second trading day preceding the Shareholders’ Meeting.
Proxies may be granted by a shareholder or, under certain conditions, by his/her intermediary, to his or her spouse, another shareholder, or by sending a proxy in blank to the Company without appointing a representative. In the latter case, the Chairman of the Shareholders’ Meeting will vote the ordinary shares covered by blank proxies in favor of all resolutions proposed or approved by the Board of Directors and against all others.
Upon application by a competent EU authority, the ACPR may raise objections during a three-month period to any acquisition of a stake liable to have the consequences referred to in the previous paragraph. The three-month time limit may be extended by the EU Council’s decision.
ADDITIONAL INFORMATION05 Description of SCOR’s share capital 5.2. DESCRIPTION OF SCOR’S SHARE CAPITAL
For further details, see Section 4.6 – Notes to the consolidated financial statements, Note 12 – Information on share capital, capital management, regulatory framework and consolidated reserves and to Appendix C – 5.2.3 Notes to the corporate financial statements – Shareholders’ equity.
ADDITIONAL INFORMATION 05Description of SCOR’s share capital 5.2. DESCRIPTION OF SCOR’S SHARE CAPITAL
The bylaws of the Company are described in this Registration Document and can be found on the Company’s website. The other legal documents relating to the Company can be consulted at the Company’s registered offices pursuant to the applicable rules and regulations.
APPENDIX A: *INTERNAL CONTROL AND RISK MANAGEMENT PROCEDURES 252 1. Internal environment 253 2. Setting of objectives 255 3. Identification and assessment of risks 256 4. Main control activities 257 5. Information and communication 259 6. Monitoring of the internal control and risk management system 260 7. Financial reporting 261 8. Conclusion on the control procedures implemented 262
APPENDIX B: PERSON RESPONSIBLE FOR THE ANNUAL REPORT 263 1. Name and title of person responsible 263 2. Declaration by the person responsible 263
APPENDIX D: SOCIAL AND ENVIRONMENTAL INFORMATION 300 1. Social impact of SCOR’s activity 300 2. SCOR’s Environmental and Climate Policy 311 3. Information related to societal commitments in support of sustainable development 317 4. Statutory Auditor’s report on the review of selected SCOR SE environmental and social indicators 321
APPENDIX G: REGULATION (EC) OF APRIL 29, 2004 – CORRESPONDENCE TABLE 335
The Group has identified the following categories of risks, as described in Section 3 – Risk factors and Risk Management Mechanisms: ●● strategic risks; ●● underwriting risks related to the Non-Life and Life reinsurance business; ●● market risks; ●● credit risks; ●● liquidity risks; ●● operational risks.
The risk management system covers the following components: 1. Defining the internal environment; 2. Ensuring objectives are set; 3. Performing a risk identification; 4. Performing a risk evaluation; 5. Defining a risk response; 6. Documenting and formalizing control activities; 7. Presenting the information and communication process; 8. Ensuring monitoring of the risk management and internal control systems.
The Group is organized around three engines comprising two main reinsurance businesses and one asset management activity: SCOR Global P&C division, SCOR Global Life and SCOR Global Investments.
• Group Treasury • Group Controlling • Corporate Finance • Investor Relations • Rating Agencies • Group Capital
Development 3 Market regions: Asia Pacific, EMEA and Americas 2 transversal lines: Global distribution solutions, Global financing solutions & longevity
For the latest Group policies in force and other business-related legal and compliance requirements, training sessions for certain staff are scheduled and conducted both in person and via e-learning modules on an annual basis in line with an annual compliance plan.
For several years, SCOR has implemented and formalized threeyear strategic plans. On September 7, 2016, SCOR publicly presented “Vision in Action”, its latest three-year strategic plan (2016 to 2019). “Vision in Action” is largely a continuation of SCOR’s previous strategic plan, “Optimal Dynamics”, representing in particular the Group’s core objectives: ●● a return on equity (ROE) equal to or greater than 800 basis points above the 5-year risk-free rate over the cycle (1); and
●● a solvency ratio in the optimal 185% – 220% range (2).
(2) This solvency target is unchanged from that under the previous strategic plan, Optimal Dynamics.
Potential physical and transition climate change risks are monitored amongst other risks through this mechanism whilst the Group is gradually implementing “low carbon” initiatives as described in the Appendix D of this Registration Document. The scientific consensus is that a continued rise in global warming could account for an increasingly large share of natural catastrophe losses although the timing and severity of physical effects which may impact underwriting activities are difficult to estimate. As an institutional investor, the asset portfolio may also be exposed to potential physical and transition risk over a longer timeframe; ●● the ORSA process (Own Risk Solvency Assessment), which provides the Group’s Board and those of the legal entities, the Group Executive Committee and senior management of legal entities, with forward-looking information on SCOR’s risks and capital position; ●● SCOR’s internal model, which is deeply embedded in SCOR’s risk management system and contributes to the assessment of risks. SCOR uses its internal model for determining economic capital. Its results are used to implement SCOR’s underwriting and asset management policies and guidelines.
●● Control of the Group information system is overseen by the Group IT Department at two complementary levels: specific IT processes and business processes all covered by IT solutions. For specific IT processes, a special unit of the Group IT Department deals with all issues of information system security. Periodic audits of information security applications and procedures are conducted. For several years, SCOR has been improving its control procedures based on the COBIT (Control objectives for information and technology) guidelines covering the risks listed in its major processes, in particular relating to the development, advancement and use of all solutions, and access to systems and databases. The IT continuity plan has been strongly reinforced thanks to the private cloud of the Group, which hosts all production applications and processes and ensures a systematic replication of all databases to a second remote site. In addition, employees can be temporarily moved to any other Group Hub office, or even work from home with their laptop or personal computer.
– the Group’s insurance policies, in particular with respect to D&O and professional liability.
●● The Human Resources department controls all processes related to the management of human capital.
●● The budgetary control system for general expenses is organized and managed by the Group Cost Control and Budgeting Department.
●● The Group Financial Planning & Analysis Department establishes an annual financial plan for the Group by company and monitors actual data in relation to this plan on a quarterly basis. The purpose of the plan is to enable effective management and control of the business to achieve the strategic targets set by the Group. Detailed annual financial plans are developed by the business engines at a company level, by geographic market and line of business, and incorporated into a Group-wide plan against which an in-depth analysis of the actual quarterly results is conducted. The results and analyses are presented to the Executive Committee every quarter, highlighting variations compared with expectations to allow identification of appropriate management actions. The plan, and the quarterly results against the plan, are additionally reported in detail to the Board.
●● The Group Risk Management Department’s primary focus is to develop and manage ERM mechanisms, promote ERM concepts throughout the Group and to provide risk management challenge and support for reinsurance underwriting and asset management.
●● The Group Actuarial Department provides quarterly approval on the adequacy of the reserves held for both the Life and P&C Divisions, provides an opinion on the underwriting policy and the retrocession arrangements, and validates the Internal Model results. The Actuarial department also contributes to the effective implementation of risk management throughout the Group.
The Group has harmonized the principles governing the management of its assets: the Group Policy on Invested Assets defines the Group’s governance in terms of asset management and the Manual of Group Investment Guidelines determines the limits for concentration risk as well as limits of exposure to different asset classes. The Manual of Group Investment Guidelines thus determines the conditions in which SCOR Global Investments will implement the Group investment policy as defined by the Group Investment Committee. These two documents are rolled out across all SCOR entities to ensure consistency across the Group.
Local investment guidelines complement the Group guidelines and set the rules to be applied by all internal and external asset managers on behalf of the legal entities.
The primary investment objective of SCOR is to generate recurring investment income in accordance with the risk appetite framework of the Group, and to ensure that the Group: ●● is able to meet its claims and expense payment obligations at all times, and
●● preserving the Group liquidity and level of solvency; ●● protecting the capital; ●● allowing the Group to operate on a day-to-day basis as well as over the long term; ●● in compliance with: legal entities investment regulations, risk appetites and regulatory capital requirements (level of capital and type of admissible assets), and Group and local investment guidelines; ●● being committed to Environmental, Social and Governance (ESG) investing, for which the SCOR Group prioritises investments that have a positive sustainability impact.
The Group Investment Office monitors, on an ex ante and ex post basis, the compliance of the portfolio positioning with regard to the Group risk appetite and investment guidelines. The GIO is also in charge of reporting processes related to invested assets. The GIO provides SCOR with regular reports used for the monitoring of the asset portfolios. Breaches are escalated to the Group Investment Committee as well as to the Group and Board Risk Committees. Investments falling outside of the scope of the Manual of Group Investment Guidelines are subject to special referral procedures managed by the Group Risk Management Department.
Internal communication: SCOR strives to make all documents deemed important available to all SCOR employees on SCOR’s intranet.
SCOR is implementing regular and dedicated ad-hoc educational programs across the Group aimed at maintaining and developing the skills of all SCOR’s staff in accordance with the strategy and the objectives of the Group.
SCOR implements dedicated processes and tools to identify, assess and monitor its risk exposures on a regular basis. See Section 3 – Identification and assessment of risks.
In addition, SCOR implements dedicated risk management mechanisms in both the Life and P&C divisions in order to evaluate the appropriateness and effectiveness of controls and propose risk-management and mitigation measures. See Section 3.3 – Underwriting risks related to the Life and P&C reinsurance businesses for further details on these risk management mechanisms.
Group Internal Audit provides independent, objective assurance and consulting services designed to assess the adequacy, effectiveness and efficiency of SCOR’s governance, policies and guidelines, risk management and internal control system, as well as compliance of operations with applicable policies and guidelines, in order to ensure the safeguarding and integrity of SCOR’s assets (e.g. financial assets, human resources, systems and data), the effective use of resources and identify opportunities for process improvement.
INTERNAL CONTROL AND RISK MANAGEMENT PROCEDURES AFinancial reporting 7. FINANCIAL REPORTING
●● internal monitoring of changes in legislation and accounting standards, together with the Group’s external consultants and auditors; ●● the work of the IFRS Center of Excellence, whose objectives are to (1) communicate developments in accounting standards to all contributors, (2) determine IFRS accounting policies and (3) coordinate justification and documentation of accounting treatment for complex operations; ●● an audit performed by external auditors as at December 31, and a review as at June 30.
The roll-out of this solution in all locations was finalized in 2015.
●● I confirm that, to the best of my knowledge, the financial statements have been drawn up in accordance with applicable accounting standards and accurately show the position of the assets and liabilities, the financial position and the net income or loss of the Company and of all businesses and firms included within the scope of the consolidated group, and that the management report, mentioned in Appendix F, accurately reflects the evolution of the business, the results and the financial position of the Company and of all businesses and firms included within the scope of the consolidated group, and describes the main risks and contingencies which they are faced with.
SCOR SE’s corporate financial statements for the financial year ended December 31, 2017 are presented below: 1. SIGNIFICANT EVENTS OF THE YEAR
On May 4, 2017, SCOR SE paid a EUR 308 million dividend to its shareholders.
Under the new arrangement, the protection would be triggered not only in case of natural catastrophes, like in previous facilities, but also in case of extreme life events.
UNCONSOLIDATED CORPORATE FINANCIAL STATEMENTS OF SCOR SE CSignificant events of the year
During the financial year, SCOR SE proceeded with two capital increases in its subsidiary SCOR Africa Ltd.
Following the sale of a Paris investment property owned by SCOR Auber SAS, SCOR SE received a EUR 325 million partial repayment of the treasury advance granted to SCOR Auber SAS. The outstanding balance of this treasury advance as of December 31, 2017 amounts to EUR 40 million.
The year has been particularly eventful in modifications of the corporate tax rate.
For this year, two exceptional contributions raised the 2017 corporate tax rate to 44.43%. The impact of this raise stands at only EUR (0.3) million in view of the low taxable income.
The Conseil Constitutionnel (Constitutional Court) ruled that the Contribution on Distributed Incomes was unconstitutional. This contribution has been reimbursed to SCOR SE with interest for a total of EUR 42 million (included EUR 32.7 million on previous years).
Due and accrued interests on rental income 32 - 32 31
UNCONSOLIDATED CORPORATE FINANCIAL STATEMENTS OF SCOR SE CBalance sheet 2.2. BALANCE SHEET – LIABILITIES
5.1. ACCOUNTING POLICIES 273 5.1.1. Intangible assets 273 5.1.3. Property, plant and equipment 274 5.1.4. Accounts receivable 274 5.1.5. Retirement commitments and similar benefits 274 5.1.6. Financial liabilities 274 5.1.7. Recording of reinsurance transactions 274 5.1.8. Underwriting reserves 275 5.1.9. Acquisition costs of reinsurance transactions 275 5.1.10. Transactions conducted in foreign currencies 275 5.1.11. Principles relating to the presentation of the financial statements 276 5.1.12. Derivatives instruments received and given 276 5.2. ANALYSIS OF KEY BALANCE SHEET ITEMS 277 5.2.2. Other assets 282 5.2.3. Shareholders’ equity 282 5.2.4. Subordinated liabilities and financial liabilities 283 5.2.5. Maturity of assets and liabilities 284 5.2.6. Contingency reserves 284 5.2.7. Gross underwriting reserves 285 5.2.8. Accrued income and deferred expenses 285 5.2.9. Transactions with subsidiaries, affiliates and others 286 5.2.10. Assets – liabilities by currency 287 5.3. ANALYSIS OF KEY INCOME STATEMENT ITEMS 287 5.3.1. Breakdown of premiums and commissions 287 5.3.2. Analysis of investment income and expenses by nature 288 5.3.3. Analysis of general expenses by type and non-recurring income or loss 289 5.3.4. Analysis of income tax 289 5.3.5. Stock options 290 5.3.6. Employee share ownership plans 292 5.3.7. Compensation of the corporate officer 292 5.3.8. Analysis of commitments given and received 292 5.3.9. Post balance sheet events 294
UNCONSOLIDATED CORPORATE FINANCIAL STATEMENTS OF SCOR SE CNotes to the corporate financial statements 5.1. ACCOUNTING POLICIES
Intangible assets consist of: ●● software acquired or created by the Company which is capitalized and amortized over a period ranging from one to five years; ●● goodwill depreciable over 10 years.
At each reporting date, if the carrying amount of an investment in affiliates is below its historical cost, an analysis is conducted in order to determine if an impairment loss should be recorded. The assumptions and outcome of this analysis, conducted as at December 31, 2017, are detailed in 5.2.1.
Equity securities and other variable-income securities are recorded at cost, excluding expenses. The realizable value as at the reporting date is determined according to regulation No. 2015-11 dated November 26, 2015 of the French standard-setter (Autorité des Normes Comptables – ANC). For listed securities, it corresponds to the share price at the reporting date. For unlisted securities, fair value is based on net assets.
The remuneration of the cash deposits is contractually stipulated and at each closing date accrued interest on the cash deposited with ceding companies is recorded in the item “ Accounts receivable from reinsurance transactions ” on the asset side of the balance sheet.
Based on the calculations performed, such reserve was neither required nor recorded in the financial statements for 2017 or 2016.
UNCONSOLIDATED CORPORATE FINANCIAL STATEMENTS OF SCOR SEC Notes to the corporate financial statements 5.1.3. PROPERTY, PLANT AND EQUIPMENT
●● Retirement indemnities: employees benefit from additional retirement benefits paid in full upon retirement. The evaluation of these indemnities depends on several factors such as age, years of service and salary; ●● senior management pension obligations (Article 39): the valuation of the reserve for senior management pension obligations is based on the following actuarial assumptions: – discount rate: 1.48%, defined with respect to high quality long-term corporate bonds with maturities consistent with the duration of the obligations evaluated,
– updated mortality tables for the various plans, with turnover data for managers and salary increases; ●● long-term service awards: CNC (“Conseil National de la Comptabilité”) Opinion No. 2004-05 dated March 25, 2004 requires the recognition of a provision for long-term service awards as from 2004.
In its Opinion No. 2008-17 dated November 6, 2008 relating to the accounting of stock options and free share allocation plans, the CNC (“Conseil National de la Comptabilité”) redefined the accounting of such benefits granted to employees and the accounting for impairment of treasury shares held for such plans. In the event of delivery of existing shares, the expense should be recognized over the vesting period if the attribution of the shares is subject to the employee remaining with the Company over the vesting period. Consequently, at each period end, a provision for risk is recorded for the estimated cost (calculated as the difference between the cost to acquire the shares and nil value) to which a pro rata is applied, from the grant date, to the end of the vesting period, over the entire vesting period.
Assumed reinsurance is recorded upon receipt of accounts transmitted by ceding companies.
Pursuant to the provisions of Article 152-1 of regulation No. 2015-11 dated November 26, 2015 of the French standard-setter (Autorité des Normes Comptables – ANC), accounts not yet received from ceding companies at the end of the financial year are estimated, in order to better reflect SCOR’s reinsurance commitments in the financial statements. This method applies to most contracts underwritten during the current financial year and to prior-year contracts where relevant. Estimates of premiums and commissions not yet received from ceding companies at period end are recorded in the income statement with a counter entry in the balance sheet under “Accounts receivable from reinsurance transactions”.
Deposits with ceding companies are recorded as assets on the balance sheet.
Finite reinsurance treaties, as defined under Article L. 310-1-1 of the French Insurance Code, have to be accounted for under the provisions of regulation No. 2015-11 dated November 26, 2015 of the French standard-setter (Autorité des Normes Comptables – ANC).
As at December 31, 2017, SCOR SE has no such treaty underwritten.
At each reporting date, items in foreign currencies are converted into Euros by allocating the underlying transactions as follows: ●● transactions relating to assets and liabilities generating a “structural” foreign currency position, primarily investments in subsidiaries and related impairments; ●● other transactions generating an “operational” foreign currency position.
The objective of the “Net translation adjustments” balance sheet account is to ensure symmetrical treatment with the accounting of the exchange difference generated by the underlying instrument: ●● when the derivative is linked to a structural element, the “Net translation adjustments” account remains on the balance sheet until the structural element is realized; ●● when the derivative relates to an investment strategy, the “Net translation adjustments” account remains on the balance sheet until the investment is made; ●● when the derivative relates to an operational item, in the context of a strategic divestiture or investment, or the derivative is linked to a non-structural financial liability, the “Net translation adjustments” account is reclassified to income.
Income and losses in the form of premiums or interest are recorded on a pro rata basis over the life of the contract. Commitments given and received recorded at the reporting date reflect the nominal amount of ongoing transactions.
Impact of foreign exchange on opening balances Acquisitions creations Disposals Closing balancesIn EUR million
Shares in and advances to land and real estate companies 285 - 24 - 309
The EUR 24 million increase is mainly driven by the reclassification of the EUR 22 million loan to SCI Noratlas, an affiliate of MRM, from “Loans (related and associated companies)” to “Shares in and advances to land and real estate companies”.
At December 31, 2017, provisions against such investments can be analyzed as follows: ●● ASEFA: EUR 1 million in 2017 (EUR 1 million in 2016); ●● SGF SAS: EUR 3 million in 2017 (EUR 3 million in 2016).
At December 31, 2017, cash deposited with ceding companies breaks down as follows: ●● SCOR Global Life SE: EUR 1,398 million compared to EUR 1,324 million in 2016; ●● SCOR Global Life SE Milan: EUR 271 million compared to EUR 312 million in 2016; ●● SCOR Global Life SE Madrid: EUR 29 million compared to EUR 29 million in 2016; ●● SCOR South Africa: EUR 56 million compared to EUR 50 million in 2016; ●● SCOR Perestrakhovaniye.O.O.O: EUR 7 million compared to EUR 2 million in 2016.
●● The EUR 100 million cash advance to SCOR Global Life SE was completely reimbursed.
●● During the year, the cash advance with SCOR Auber SAS increased by EUR 287 million and was partly reimbursed for EUR 335 million.
●● During the year, the cash advance with SCOR Capital Partners SAS increased by EUR 3 million.
During the year, the change in other investments was mainly due to the EUR 378 million net increase in fixed deposits and the EUR 294 million net increase in bonds together with the EUR 185 million net decrease in mutual funds.
7 − Other loans and similar bills 1,781 1,781 1,781 9 − Cash deposits (other than those in 8) and security deposits 452 452 452 -
●● investments valued according to Article R. 343-13 - - - -
Foreign currency hedging: Forward trades Yield less than 1 year 17 16 1 (14)
Foreign currency hedging: Cross currency swaps Yield less than 1 year 20 - (3) (8)
On March 6, 2017, SCOR SE has reduced its share in ASEFA from 19,97% to 9,97% and holds an option to sell the remaining share to the buyer.
●● ASEFA S.A. Avda Manoteras 32 Edificio A 28050 Madrid, Spain EUR 38 1 9.97% 4 3 - - - - (3) -
●● SCOR AFRICA LTD 2nd Floor, West Tower, Maude Street, Nelson Mandela Square, Sandton 2196, South Africa ZAR - 265 100.00% 21 21 - 16 19 1,409 (81) -
●● SCOR INVESTMENT PARTNERS SE 5 avenue Kléber, 75116 Paris, France EUR 3 13 100.00% 2 2 - 3 - - 4 2
●● SCOR US CORPORATION 199 Water Street, New York, NY 10038-3526 USA USD 330 830 100.00% 1,315 1,315 - - - - 45 26
●● MRM 5 avenue Kléber, 75116 Paris, France EUR 44 53 59.90% 56 56 22 - - 11 (4) 3
●● SCOR BRAZIL PARTICIPAÇOES LTDA Avenida Paisagista José Silva de Azevedo Neto, 200 – Bloco 4 – Sala 404 Barra de Tijuca – Rio de Janeiro – Brazil BRL 102 - 99.90% 34 34 - - 8 380 5 -
UNCONSOLIDATED CORPORATE FINANCIAL STATEMENTS OF SCOR SEC Notes to the corporate financial statements 5.2.2. OTHER ASSETS
●● The EUR 647 million net income for 2016 was allocated to dividends for EUR 308 million, to the legal reserve for EUR 32 million and to the retained earnings for EUR 307 million.
●● During 2017, the Board decided upon a share capital and additional paid-in capital reduction by cancellation of a total of 554,112 treasury shares for a total amount of EUR 13.4 million.
●● SCOR SE launched a new 3-year contingent capital facility on January 1, 2014. It takes the form of a guaranteed equity line, providing SCOR SE with EUR 200 million coverage in case of extreme natural catastrophe or life events. This facility came to an end on December 31, 2016. It is replaced with a new 3-year facility with EUR 300 million coverage in case of extreme natural catastrophe or life events from January 1, 2017.
●● CHF 315 million in fixed rate perpetual subordinated notes was issued in two pari-passu ranking placements on September 10 and September 24, 2012. The notes are redeemable by SCOR each quarter at interest payment dates as from June 8, 2018 with a first call date of June 8, 2018. The coupon has been set at 5.25% (until June 8, 2018) and 3-month CHF LIBOR plus a margin of 4.8167% thereafter. The notes are hedged by a cross-currency swap detailed in 5.3.8 – Financial instruments received and given, in the analysis of commitments given and received.
●● On May 27, 2016, SCOR issued EUR 500 million in dated subordinated notes, redeemable as at interest payment dates from May 27, 2028. The coupon was set at 3.625% (until May 27, 2028), and will be reset every 10 years at the prevailing 10-year EUR mid-swap rate +3.90%.
●● Loans granted to SCOR SE by its subsidiaries EUR 11 million. Their breakdown as of December 31, 2017 is as follows:
As of December 31, 2016, the breakdown was as follows: – EUR 12.3 million with SCOR Investment Partners SE; – EUR 3.5 million with SGF SAS; – EUR 0.3 million with SCOR Global Life SE.
For 2017, SCOR SE recognized EUR 62.9 million in financial income from loans with related companies and EUR 0.04 million in interest expenses on borrowings with related companies.
Contingency reserves amount to EUR 164 million, of which: ●● EUR 54 million for free share allocation plans with the following expiry EUR 21 million at 2018, EUR 23 million at 2019, EUR 4 million at 2020, EUR 6 million at 2021 and beyond; ●● EUR 82 million in reserves for post-employment benefits: retirement provisions (EUR 36 million), supplementary retirement (EUR 46 million); ●● EUR 28 million in other provisions.
The analysis of accrued income and deferred expenses at December 31, 2017 is as follows: In EUR million
The breakdown of other accruals mainly consists of, as at December 31, 2017: ●● cross currency swaps for EUR 20 million and FX derivative instruments for EUR 17 million as assets; ●● FX derivative instruments for EUR 16 million as liabilities.
UNCONSOLIDATED CORPORATE FINANCIAL STATEMENTS OF SCOR SEC Notes to the corporate financial statements 5.2.9. TRANSACTIONS WITH SUBSIDIARIES, AFFILIATES AND OTHERS
In EUR million Related companies Other affiliates Other Total Related companies Other affiliates Other Total
Shares other than variable income securities and bonds 3,916 - 1,351 5,267 3,912 - 907 4,819
Cash deposits with ceding companies 1,761 - - 1,761 1,717 - - 1,717
Accrued income and deferred expenses 74 - 140 214 82 - 169 251
Cash deposits received from retrocessionaires 431 - 1 432 389 - - 389
Dividends received from subsidiaries amount to EUR 81 million and include SCOR US Corporation (USD 31 million or EUR 26 million), SCOR Holding Switzerland AG (EUR 27 million), SCOR Auber SAS (EUR 22 million), MRM (EUR 3 million), SCOR Investment Partners SE (EUR 2 million) and OPCI SCOR Properties II (EUR 1 million).
UNCONSOLIDATED CORPORATE FINANCIAL STATEMENTS OF SCOR SE CNotes to the corporate financial statements 5.3.3. ANALYSIS OF GENERAL EXPENSES BY TYPE AND NON-RECURRING INCOME OR LOSS
Total tax losses of the consolidated French tax Group were EUR 1,091 million as at December 31, 2017 (EUR 1,133 million as at December 31, 2016).
The corporate tax gain of EUR 101.1 million relate mainly to: ●● the contribution of subsidiaries that are consolidated for tax purposes of EUR 66 million; ●● tax profit for the tax Group for EUR 1.2 million; ●● tax profit for previous financial years for EUR 2.2 million, including tax audit settlements; ●● refund of the additional contribution on income distributed on previous years for EUR 32.7 million; ●● income tax from the branches for EUR (1) million.
UNCONSOLIDATED CORPORATE FINANCIAL STATEMENTS OF SCOR SEC Notes to the corporate financial statements 5.3.5. STOCK OPTIONS
October 12, 2010 vested on October 12, 2014, 34,000 options exercised under the stock option plan of March 22, 2011 vested on March 22, 2015, 2,000 options exercised under the stock option plan of September 1, 2011 vested on September 1, 2015 and 79,000 options exercised under the stock option plan of March 23, 2012 vested on March 23, 2016.
The amount of 2017 profit-sharing payouts has been estimated in the accounts and set aside for EUR 0.4 million.
As of January 1, 2015 the personal training account (Compte Personnel de Formation – CPF) replaces the individual training entitlement (Droit Individuel à la Formation – DIF), in accordance with Law No. 2014-288 of March 5, 2014 relating to professional training, employment and social democracy. It should be noted that the CPF is managed externally by the Caisse des dépôts et consignations.
The Total pension benefits commitments relating to the corporate officer amount is EUR 23 million.
Confirmed credits, letters of credit and guarantees given 195 406 11 12
Various financial institutions provide sureties for our company in the form of letters of credit to collateralize SCOR SE’s technical liabilities. The total amount that benefits to cedents, not included in the table above, is EUR 4 million in 2017 (EUR 4 million in 2016) as at December 31, 2017.
UNCONSOLIDATED CORPORATE FINANCIAL STATEMENTS OF SCOR SEC Notes to the corporate financial statements
In compliance with the engagement entrusted to us by your Annual General Meeting, we have audited the accompanying financial statements of SCOR SE for the year ended December 31, 2017.
In our opinion, the financial statements give a true and fair view of the assets and liabilities and of the financial position of the Company as at December 31, 2017 and of the results of its operations for the year then ended in accordance with French accounting principles.
We conducted our audit engagement in compliance with independence rules applicable to us, for the period from January 1, 2017 to the date of our report and specifically we did not provide any prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No 537/2014 or in the French Code of ethics (Code de déontologie) for Statutory Auditors.
(see Notes 5.1.8 and 5.2.7 of the notes to the corporate financial statements)
The technical reserves of the company SCOR SE amount to EUR 612 million for Life reinsurance and EUR 3,781 million for Non-Life reinsurance as at December 31, 2017.
As stated in Note 5.2.7 of the notes to the corporate financial statements, the technical activity of the company SCOR SE is primarily related to internal reinsurance treaties implemented as part of the Group dedicated program. The technical reserves of the company SCOR SE are therefore predominantly a reflection of technical reserves in accordance with reinsured contracts. These reserves are estimated based on the methodology described below.
As explained in Note 5.1.8 of the notes to the corporate financial statements, the Non-Life technical reserves are determined at year-end at a level that covers the estimated amount of its commitments as well as estimated claims management costs for both reported and unreported claims. Ultimate claims cost for a contract is estimated based on statistical experience for similar policies.
Technical reserves for Life reinsurance are submitted by ceding companies and completed by estimates calculated by Life actuaries using statistics based on historical data and information provided by underwriters. The Company is required to have adequate reserves to cover its commitments after consideration of estimated investment returns, mortality, morbidity and lapse rates, and other assumptions. These estimates include significant uncertainties and require a significant degree of judgement from management. In this context, we considered the measurement of technical reserves as a key audit matter.
(see Notes 5.1.7 and 5.3.1 of the notes to the corporate financial statements)
Accounts not received from ceding companies at the year-end are estimated, as stated in the Note 5.1.7 of the notes to corporate financial statements. Overall, the premiums recorded for the year (premiums reported in the accounts received from cedents and estimated premiums) correspond to the estimated premium expected at the time the policy was underwritten.
We examined the reciprocity of premiums booked with the financial statements of reinsured affiliates.
On December 31, 2017, investments in affiliates were recorded for a net book value of EUR 7,457 million, representing 70% of the total balance sheet. They are initially measured at historical acquisition cost. Subsequently, their value is determined based on their nature and holding period: i. For active reinsurance companies, the fair value is the revaluated net assets value including the value of Life reinsurance portfolio and the forecasts of future profits of Non-Life reinsurance, net of taxes. At each reporting date, if the fair value of an investment in affiliates is below its historical cost, an analysis is conducted in order to determine if an impairment loss should be recorded. The assumptions and outcome of this analysis, conducted as at December 31, 2017, are detailed in 5.2.1 of the notes to the corporate financial statements.
Given the weight of investments in affiliates, the complexity of models used and their sensitivity to changes in data and assumptions, we considered the measurement of investments in affiliates as a key audit matter.
We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given in the management report of the Board of Directors and in the other documents provided to shareholders with respect to the financial position and the financial statements reminded that it is not our responsibility to conclude on the fair presentation and consistency with the financial statements of the solvency related information required by article L. 355-5 of the French Insurance code (Code des assurances).
As specified in Article L. 823-10-1 of the French Commercial Code (Code de commerce), our statutory audit does not include assurance on the viability of the Company or the quality of management of the affairs of the Company.
As part of an audit conducted in accordance with professional standards applicable in France, the Statutory Auditor exercises professional judgment throughout the audit and furthermore: ●● Identifies and assesses the risks of material misstatement of the financial statements, whether due to fraud or error, designs and performs audit procedures responsive to those risks, and obtains audit evidence considered to be sufficient and appropriate to provide a basis for the audit opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
●● Evaluates the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management in the financial statements.
●● Evaluates the overall presentation of the financial statements and assesses whether these statements represent the underlying transactions and events in a manner that achieves fair presentation.
We also provide the Audit Committee with the declaration provided for in Article 6 of Regulation (EU) N° 537/2014, confirming our independence within the meaning of the rules applicable in France such as they are set in particular by Articles L. 822-10 to L. 822-14 of the French Commercial Code (Code de commerce) and in the French Code of Ethics (Code de déontologie) for Statutory Auditors. Where appropriate, we discuss with the Audit Committee the risks that may reasonably be thought to bear on our independence, and the related safeguards.
This appendix has been prepared in accordance with the regulations referred to in Article 225 of law No. 2010-788 of July 12, 2010 on France’s national commitment to the environment (Grenelle II). The presentation also takes into account Recommendation No. 2013-18 of the AMF published on November 5, 2013 and available on the AMF’s website. It describes how the Group (“SCOR” or the “Group”) accounts for the direct effects of its activity on its employees and outlines the policies, actions and programs it has implemented in response, both at SCOR SE and its subsidiaries in France and abroad.
This chapter is divided into two sections. The first section presents a series of Human Resources indicators that are consistent across the Group. The second section provides additional information and studies in further detail the actions and programs implemented within the Group.
“Grenelle II” Indicator: Breakdown of employees by geographical area in 2017
(2) SCOR Global Life SE holds 100% of the capital of ReMark. Due to its specific activity, its own business model and its own specific organizational structure, ReMark’s human resources are managed independently from the Group.
SOCIAL AND ENVIRONMENTAL INFORMATIOND Social impact of SCOR’s activity 1.2.4. BREAKDOWN BY DIVISION
(1) From 2014 to 2017, the Lloyd’s Channel Syndicate (132 employees at December 31, 2017) is a subsidiary of SCOR Global P&C SE, managed independently from the Group in terms of human resources and therefore not aggregated in the Group figures.
(2) Starting from 2014, the former Transamerica Re employees were included in the divisions according to the global organization of the Group. From 2014 to 2017, Réhalto (45 employees at December 31, 2017) and Telemed (28 employees at December 31, 2017), wholly-owned subsidiaries of SCOR Global Life SE, are managed independently from the Group in terms of human resources and are not aggregated financially (or from an HR perspective) at level of the division.
(4) SCOR Global Life SE holds 100% of the capital of ReMark. Due to its specific activity, business model and organization, ReMark’s human resources are managed independently from the Group.
(1) SCOR considers all employees paid under a tripartite relationship between the Company, a school and the student as trainees. SCOR had 136 trainees as at December 31, 2017 (44 in France, 15 in Switzerland, 22 in Germany, 6 in the US, 1 in Canada, 20 in the United Kingdom, 3 in Russia, 2 in Spain, 1 in Brazil, 7 in China, 4 in Hong Kong, 2 in South Korea, 7 in Singapore, 2 in Australia). The trainees’ employment contracts differ depending on the country and training objectives. All trainee programs aim to introduce the students to the world of work, whether through work-study programs or vocational training courses for specific professions.
Methodology: employees on fixed-term contracts are considered to have definitively left SCOR when their contracts expire. Therefore, the 23 employees who signed a permanent contract in 2017 at the end of their fixed-term contract are not included in the indicator “End of fixed-term contract”.
(1) The executive corporate officer is not included. Total compensation is calculated on the basis of 2,800 employees as at December 31, 2017.
(2) Average fixed compensation is based on the annual base salary paid to the employee, prorated to actual hours worked.
Base salaries are set according to criteria that consider a variety of factors, such as conditions on the local labor market, education and professional experience before joining SCOR, expertise acquired, and the present position and responsibilities of the employee.
There are four main Partner levels: Associate Partners (AP), Global Partners (GP), Senior Global Partners (SGP), and Executive Global Partners (EGP). With the exception of the EGPs, these levels are then sub-divided into two levels, to take into account seniority or special achievements.
* 2017 Group staff turnover: number of departures in 2017 (excluding dismissals, deaths, company transfers and trainees)/headcount as at December 31, 2016.
For Partners, the SCOR bonus system is linked directly to the individual performance appraisal (corresponding to pre defined ranges linked to individual performance) and also to the ROE that SCOR achieved in the past financial year.
SOCIAL AND ENVIRONMENTAL INFORMATION DSocial impact of SCOR’s activity 1.2.11. BREAKDOWN BY TYPE OF WORKING TIME
The standard annual working time in the Group is 206 days for employees with “cadre” status in France, 210 days for employees with “non-cadre” status in France, 215 days in Spain, 217 days in Italy, 218 days in Belgium, 220 days in the Netherlands, 247 days in Russia, 221 days in South Africa, 215 days in Kenya, 226 days in Ireland, 227 days in the UK, 246 days in Sweden, 223 days in Switzerland, 227 days in Israel, 219 days in Germany, 231 days in the USA, 245 days in Brazil, 241 days in Argentina, 241 days in Colombia, 242 days in Canada, 249 days in Mexico, 245 days in Chile, 230 days in Australia, 226 in China, 228 days in Hong Kong, 227 days in India, 227 days in Malaysia, 226 days in South Korea, 233 days in Singapore, 228 days in Japan and 229 days in Taiwan.
(1) Sick leave, accident, maternity/paternity leave, sabbatical leave, exceptional leave are included.
The Common European Companies Committee (Comité Commun des Sociétés Européennes – CCSE) met 5 times in 2017 (in Paris) on January 19, March 28, June 22, September 28, November 22.
Organization of employee/ management dialogue 5 collective agreements were signed within the Group in 2017. These collective agreements are intended to improve the economic performance of SCOR and the working conditions of employees, notably by associating them more significantly with the Company's performance and improving employee benefits.
2 agreements were signed in France. The first one was signed in France on February 24, 2017 (“Droit à la déconnexion”). It describes the rights of the employees to disconnect from professional tools during rest periods. The second one was signed on March 31, 2017 (“Procès-Verbal de la Négociation Annuelle Obligatoire”). It defines a framework to monitor the employees’ individual salary review process by taking into account their performance and the evolution of their responsibilities during the year.
1 agreement was signed in Italy on February 22, 2017 covering the reinsurance/insurance companies. It defines a global frame describing the organization of the work and the management of some elements of remuneration.
(1) For France, this figure includes works councils meetings and employee representative meetings (“délégués du personnel”).
SOCIAL AND ENVIRONMENTAL INFORMATION DSocial impact of SCOR’s activity 1.3.3. HEALTH AND SAFETY (1)
“Grenelle II” Indicator 27 meetings were held with the Group’s staff representatives to discuss local health and safety conditions (7 meetings in France, 1 in Italy, 1 in Germany, 2 in Brazil, 15 in Colombia, 1 in Mexico).
Health and safety 3 occupational accidents (2) at the workplace with sick leave were recorded as at December 31, 2017 (2 in France, 1 in Argentina) (3).
18 occupational accidents at the workplace without sick leave were recorded as at December 31, 2017 (11 in France, 1 in Germany, 6 in the United Kingdom) (3).
Due to its geographical locations and applicable local laws, the Group complies with all the provisions of the International Labor Organization. The themes related to the "Elimination of discrimination in respect of employment and occupation" and "Freedom of association and the effective recognition of the right to collective bargaining" are described, in particular, in Section 1.3.5 – Diversity and equal opportunities and in Section 1.3.2 – Labor relations. Labor relations within the Group can be considered as good. A good social dialogue exists in each Hub and at the European level.
SOCIAL AND ENVIRONMENTAL INFORMATIOND Social impact of SCOR’s activity 1.3.4. PROFESSIONAL TRAINING
The training policy forms part of the "SCOR University" concept, which extends training to the international level and harnesses the synergies of existing training schemes. The concept is structured around three pillars: Business, Management & Leadership, and Excellence.
Description of the training policy 56,301 (1) training hours were provided by the Group in 2017. 36,639 training hours (EUR 1,765,246 (2), 8,283 training participants) were provided in the EMEA Hub, 7,663 training hours (SGD 470,810, 1,674 participants) were provided in the Asia-Pacific Hub, 11,999 training hours (USD 440,429, 2,724 training participants) were provided in the Americas Hub.
(1) For the EMEA Hub, the number of training hours is calculated on the basis of attendance sheets. For the other Hubs, the number of training hours is calculated on the basis of the information mentioned in the invoices sent by the providers.
A Code of Conduct was introduced in 2009, in which SCOR committed to providing a work environment free from discrimination and/or harassment based on gender, sexual orientation, race, religion, disability, or acting as a staff representative or participating in a trade union. ●● In 2017, for the second time, SCOR organized a Global Diversity Week to promote diversity in all its forms within the Group, to encourage a global culture within the different locations and to emphasize good working relationships. Through a both humoristic and pedagogical global campaign on cultural diversity awareness and local actions on a specific type of diversity (age, culture, gender, etc.), the main objective was to favor good working relationships.
●● The “SCOR International Gender Network” (SIGN), launched on November 4, 2016, has been implemented to promote gender diversity, which is a key factor in a company’s performance. It includes the proposition of a mentoring program and several workshops to favor networking and to provide women with new development opportunities.
●● A European charter for gender equality was signed on January 29, 2015 at the European level by the Management and the members of the European Committee. It offers innovative features and actions to promote diversity. A global charter was signed by the CEO on November 4, 2016. It broadens the scope of the European charter and offers a set of values and commitments for all countries in which the SCOR group has a presence.
●● A continued effort was made to reduce the pay gap between men and women and to apply the principles of professional equality.
●● SCOR promotes its female talent, notably through the Group’s participation in the Women in Insurance Awards (Trophées de la Femme dans l’Assurance) in France since 2014.
●● In the US, the Equal Employment Opportunity report is completed annually, as required by the law.
●● In Singapore, during the Diversity Week, a diversity lunchtime talk has been implemented to better identify the expectations of the Millennials (employees born between 1980 and 2000) and to better interact with them. More globally, playful events have been implemented to promote intergenerational diversity within the Company.
●● In Australia, team building activities have been implemented to ensure good relationships within the Australian team. Teams were defined by taking into account the diversity of the members.
The Group has 18 employees with disabilities: 3 in Germany, 2 in Switzerland, 11 in France, 2 in Italy. Employment and integration of employees with disabilities
In Switzerland, support can be offered to employees with disabilities returning to the Company after a long period of sick leave, which implies progressively introducing objectives, adapted to their situation.
In Sweden, the office building is disability-friendly and special offices can be adapted to individual disabilities, as appropriate.
In France, SCOR places particular importance on the subject of disability and implements practical actions to allow equal access to all positions and to support the entry and retention of workers with disabilities. The following actions to promote the integration of employees with disabilities have been taken within the Paris site: ●● the building was built and designed taking into consideration all the arrangements required to facilitate the integration of staff with disabilities; ●● specific monitoring of employees with disabilities is handled by the Occupational Health Department in coordination with the human resources team in Paris (including adapting the organization of work and/ or working conditions); ●● specific training was implemented for an employee with impaired hearing eligible for teleworking; ●● individual training dedicated to the new retirement scheme was implemented for employees with impaired hearing; ●● in 2017, participation to the “Officiel du Handicap” (national initiative led by public authorities, companies and associations specialized in this domain) and to the “Mission Handicap” (promotion of jobs for the disabled employees).
In Italy, specific measures have been taken to improve the ergonomics of workstations for some employees.
●● Headcount is calculated on the basis of employees registered at December 31, on fixed-term contracts (employment contract signed directly between SCOR and the individual with a defined end date) or permanent contracts (employment contract signed directly between SCOR and the individual for an unlimited period). Trainees are employees paid by the Company under a tripartite agreement between the Company, a school and the student.
●● Employees on fixed-term contracts are considered as definitively leaving SCOR when their contracts expire. Employees who signed a permanent contract in 2017 at the end of their fixedterm contract are not included in the fixed term contract endings.
●● Annual working time: annual period of time (calculated in days) that an individual spends at work. This definition is based on the legal (or conventional) approach and does not take into account absences for sick leave, maternity leave, sabbatical leave, etc.
●● Number of training hours: total number of hours of training received by all the employees during the year. These training hours are directly managed by SCOR or by an external training organization at the behest of SCOR. For collective training, the number of hours of training is multiplied by the number of participants.
●● Checks are performed by the local HR managers and the Group HR Department regularly to ensure the reliability of the information in the Group database. An additional detailed check of the data is performed annually (in December) by the Group HR Department and the local HR managers.
SOCIAL AND ENVIRONMENTAL INFORMATION DSCOR’s Environmental and Climate Policy 2. SCOR’S ENVIRONMENTAL AND CLIMATE POLICY
The information below, which relates to the environmental impact of SCOR’s business, is presented in accordance with the regulatory provisions set out in Article 225 of law no. 2010-788 of July 12, 2010 on France’s national commitment to the environment (loi portant engagement national pour l’environnement). This report also includes the requirements of transparency set forth by the law n° 2015-992 of August 17, 2015 on the energy transition for green growth (loi relative à la transition énergétique pour la croissance verte), notably the information required by Article 173 on the “low carbon” strategy.
The Group’s Climate policy sets out the main components of SCOR’s “low-carbon” strategy, as well as its objectives. It identifies the means to achieve them and specifies the Group’s organization in order to ensure proper implementation. The Group’s Climate policy also outlines the level of actions that contribute to address climate change: ●● climate risk management: it notably draws on (i) the promotion of climate-related risk management research and (ii) the development of solutions contributing to climate change adaptation and mitigation; ●● the environmental impact of operational processes: the measures taken aim notably to reduce the carbon intensity stemming from office management, control business travel, and implement a carbon offsetting program; ●● targeted sectoral exclusions: the sectors from which the Group has announced its withdrawal or a strengthening of its selection criteria are outlined in these guidelines.
The monitoring of issues related to the Group’s environmental strategy is embedded in SCOR’s system of governance, i.e. (i) at the Board of Directors through a dedicated Corporate Social Responsibility Committee created in October 2017, the working sessions of which will start in February 2018, and (ii) at the Group Executive Committee through the Group Chief Operating Officer.
Climate risk management research, notably in terms of climate risk modeling techniques and climate risk transfer mechanisms, contributes to a better understanding of climate change challenges and adaptation. In this respect, SCOR provides insitutional and financial support to targeted institutions involved in the aforementioned areas whilst enhancing its own tools and expertise.
Beyond its institutional commitment and the continuous enhancement of its own natural catastrophe modeling tools,
Through the provision of a wide range of covers, and its risk rating and pricing function, the insurance and reinsurance industry plays a significant role in improving societies’ climate resilience and is amongst the solutions to climate change adaptation. Indeed, natural catastrophes are a key risk in SCOR’s Property and Casualty business. SCOR provides effective reinsurance protection against natural catastrophes which creates significant benefits for Society particularly at a time of increased extreme events partly driven by climate change. Furthermore, it contributes on its own level to climate change mitigation policies, through providing reinsurance coverage to projects participating in the energy transition and developing related expertise.
The Group’s investment activities also contribute to the fight against climate change and to the energy transition. In the context of its strategic plan “Vision in Action” (2016-2019), SCOR reaffirmed its commitment to finance the energy transition through an additional investment of up to EUR 500 million in renewable energy sources and energy-efficient buildings. Moreover, SCOR is involved in strategies for adapting to climate change through its asset-management company, which is a signatory of the Principles for Responsible Investment (PRI). This company designs, trades and invests in financial products that provide capacities for the coverage of natural catastrophes (in the form of “Cat bonds” and “Insurance Linked Securities”). The marketing of real-estate and infrastructure debt funds in which environmental considerations are embedded contributes to the transition to a low-carbon economy. By way of illustration, the SCOR Infrastructure Loans III fund, launched in November 2017, has been awarded the EETC label (“Energy and Ecological Transition for Climate”). Launched in 2015 by the French Ministry of Environment, Energy and Marine Affairs, this label guarantees that a fund invests most of its assets in environmentally-friendly activities and that it excludes nuclear and fossil fuel businesses as well as companies involved in controversial environmental or social practices. Further information is available in the ESG report on investments, prepared in compliance with Article 173 of the French law on energy transition for green growth, and published on the Group’s website in June 2017.
Whether it be in its projects of extension or relocation, the Group integrates environmental considerations when selecting its offices, notably office buildings it intends to acquire. The Group favors so-called sustainable or ecoresponsible construction. SCOR is attentive to obtaining of either an energy efficiency, or environmental certification, as far as design and construction or renovation are concerned. These considerations may be subject to a tradeoff with other constraints such as the localization of the office or its availability.
This approach is gradually expanding to office premises in which the Group is a tenant.
The Group not only integrates environmental considerations in its projects of extension or relocation (see above) but it also promotes an ecoresponsible management of its office premises through the implementation of environmental management systems where feasible. SCOR’s employees are regularly informed of the measures taken by the Group to protect the environment. At the end of 2017, 50% of the Group’s employees in the scope of the environmental reporting processes are covered by a certified environmental management system (43% in 2015).
Moreover, so as to develop an ecoresponsible use of office premises, employees are regularly informed about the Group’s environmental actions through various channels of communication. The Group’s Code of Conduct is the first source of information and awareness raising: an entire section of the Code is devoted to the United Nations Global Compact and to the Principles for Sustainable Insurance.
Due to the global nature of SCOR’s activities, business travel, notably by air, constitute an important source of energy consumption and a major share of the Group’s greenhouse gas emissions. In 2017, almost 42.6 million kilometers were travelled either by plane (95%) or by train (5%).
The streamlining of business travel is sought through a high definition videoconferencing and telepresence network and the implementation of a travel policy which sets out principles and rules for a reasonable and ecoresponsible use of transportation. Besides, the Group has started the deployment of a centralized transportation booking platform which will streamline and expand the information available.
In 2017, sorted and recycled “paper waste” amounted to 133.8 tons. Paper recycling is a practice implemented in most of the locations surveyed. The volume of paper sorted and collected for recycling is higher than the volume of paper purchased over the year (68.3 tons). This difference is mainly due to recurring archive clean-ups and to the inclusion of other waste in the “paper waste” category such as cardboard and newspapers.
Although SCOR’s offices are located in urban areas not subject to particular water stress, SCOR includes water consumption to its environmental reporting process. The Group’s total water consumption (2) was 44,615 m3 in 2017. Water consumption mainly stems from employees own consumption, air conditioning systems and in a few cases from the maintenance of green spaces.
As part of the French Business Climate Pledge signed in November 2017, SCOR maintained its objective of reducing its carbon intensity by 15% per employee for 2020 on the first two scopes of the GHG protocol. Moreover, whilst the Group strives to actively manage business travel emissions, a pilot offsetting program has been launched by SCOR in 2017 on part of these emissions. This program includes the purchase of certified carbon credits originating from agroforestry projects. To involve the whole Group in this initiative, two proposed forest protection projects, one in Zimbabwe and one in Peru, were submitted to a vote by SCOR employees throughout the world. In the end both projects received a similar number of votes and they were both selected. These carbon credits are not deducted from the amount of greenhouse gas emissions reported below.
Other sources of emissions may be significant in the context of the Group’s operations management but for pragmatic reasons SCOR only focuses on the sources which provide a more immediate lever of control. Information on these other significant sources of greenhouse gas emissions that have been left out of the environmental reporting process are available in Section 2.5 – Methodology of this report.
In 2017, the Group’s emissions related to its operational processes, and calculated as outlined in the Section 2.5 of this environmental report, amounted to 21,456 tons of CO2 equivalent or 7.3 tons of CO2 equivalent per employee. These emissions are divided by SCOR’s employees only, although the ones produced by the service providers and other tenants hosted on some of SCOR’s locations are included in the figure. This tends to an overestimation of the calculated carbon intensity of the Group.
Most of these emissions were driven by business transportation representing around 83% of the Group’s emissions of which air transportation accounted for 98%. The emission rate retained includes the upstream phase (extraction, refining and transport of the fuel) and the combustion phase. With regard to air transport, gases outside of the Kyoto protocol are also taken into account (mainly water vapor generated by jet engines). Stripping out gases not included in the Kyoto Protocol, the Group’s emissions fall to 13,580 tons of CO2 equivalent of which air transportation accounts for 70%.
In the frame of the French Business Climate Pledge signed in November 2017, SCOR has confirmed the previously announced development of a coal policy in its underwriting activities as well as a strengthening of the commitments taken with respect to its investments in 2015. These policies set out the frame in which the Group proceeds to targeted exclusion in the coal-related industry.
Moreover, in order to reinforce its selection process of all its other projects, the P&C division has decided to implement an internal scrutiny process that helps evaluate environmental, social and governance practices in the coal-intensive industry.
SOCIAL AND ENVIRONMENTAL INFORMATION DSCOR’s Environmental and Climate Policy 2.5. METHODOLOGY
The threshold of 30 employees is not applicable for the calculation of the environmental impact due to air travel. Data relating to the use of air travel covers 94.3% of globally consolidated employees due to the exclusion of Remark Group from the environmental reporting process and 99.6% of them were able to report on this indicator, even though information for all of the sites falling within the data collection scope is not available and the Remark Group is excluded.
A table has been included providing an overview of the rate of coverage for a selection of indicators.
Due to the unavailability of data for the full year for some of the locations included in the environmental report, an extrapolation has been carried out to estimate missing consumption data. Moreover, depending on the surface area occupied, the information collected entails different parameters, in particular with regards to the consolidation or not of the energy consumption derived from the use of services located in shared areas of the building. Where SCOR is the sole or main tenant (i.e. more than 50% of the surface area occupied by the Group’s staff), the data includes SCOR’s share of the energy consumption for the shared area. Below this threshold, this share is not included in the data collected.
Lastly, besides Channel Syndicate employees who are included in this environmental report, several sites surveyed include other tenants’ energy and water consumption and to a lesser extent waste production. Therefore the environmental impact of the Group is overestimated. Channel Syndicate employees and other tenants’ employees hosted by these sites account for 20.5% of the employees of the legal entities fully consolidated in the financial statements as defined in the section “Scope of environmental data collection”. Channel Syndicate’s business travel data are consolidated.
Energy consumption is expressed in kWh/m², water consumption in m3/employee, and paper consumption in kg/employee. For some data, the ratio takes into account the service providers and other tenants located in the premises occupied by the staff managed by the Group.
The main sources of greenhouse gas emissions of the Group may also include emissions stemming from investment for which indicative metrics are presented in the ESG report on investments. This report prepared in compliance with Article 173 of the French law on energy transition for green growth, was published on the Group’s website in June 2017.
This category is not material due to the nature of the Group’s business (i.e. financial services). Greenhouse gas emissions are covered in the section entitled “Greenhouse gas emissions”. Due to the nature of its business, other discharges in air, water or ground seriously affecting the environment are not significant and are covered by environmental management systems at the Group’s affiliate sites where they are the main operator/manager.
Raw materials consumption and measures taken to improve their efficiency of use
Financial services activities do not directly consume raw materials, but indirectly through their procurement of furniture, office equipment, and information technology (IT) and office equipment. In areas where the Group has a centralized function dedicated to the purchase of office supplies such as IT equipment, environmental standards are taken into account in the selection of equipment. This also holds true for the acquisition of commercial property, where a clear focus has been put on green credentials (i.e. environmental certification of the design and construction phases).
Otherwise, furniture and office equipment are managed locally and green standards are progressively integrated in various areas such as paper ream purchases (1) which came to 68.3 tons in 2017. Recycled paper and paper carrying the FSC or PEFC label represented around 84% of these purchases.
This category is not material due to the nature of the Group’s business (i.e. financial services). Ground use is limited to the surface area of office buildings hosting Group employees.
(1) Printed documents ordered from printing companies are excluded from the scope of reporting.
SOCIAL AND ENVIRONMENTAL INFORMATION DInformation related to societal commitments in support of sustainable development 3. INFORMATION RELATED TO SOCIETAL COMMITMENTS IN SUPPORT OF SUSTAINABLE DEVELOPMENT
The information below, which relates to the Group’s societal commitments in support of sustainable development, are presented in accordance with the provisions set out in Article 225 of law no. 2010-788 of July 12, 2010 on France’s national commitment to the environment. The sections are presented in the same order as Decree No. 2012-557 of April 24, 2012 relating to corporate transparency requirements in social and environmental matters. Unless otherwise specified, the information below applies to the Group and its direct impact.
SCOR employs 2,801 staff worldwide (excluding Remark, MRM, Rehalto, Channel Syndicate and SCOR Telemed as well as other companies that were integrated during 2017), including 788 in the greater Paris region (France).
The Group’s French subsidiaries also work with sheltered workshops with respect to the procurement of pieces of office furniture. This kind of collaboration is designed to promote integration and employment access for the disadvantaged.
The SCOR Global Life R&D Centers have established various scientific partnerships in the past. Active partnerships are the following: the Assmann Foundation on cardiovascular diseases (EUR 100,000 annually), The ADERA (Association for the development of teaching and research in universities, research centers and businesses of Aquitaine – INSERM) on the long-term care risk (EUR 100,000 annually) and the Pierre and Marie Curie University at the Pitié- Salpêtrière hospital on HIV developments (EUR 30,000 annually).
SCOR’s commitment to science also involves its corporate foundation too. Registered in the Official Journal of Associations and Foundations in July 2012, the SCOR Corporate Foundation for Science is supported by a Board of Directors chaired by André LevyLang. The Foundation is also supported by a very high-level interdisciplinary and international scientific board, which helps it to define its strategic priorities and to select projects to support.
The foundation also co-organises scientific seminars. Following the success of its first international scientific seminar on the question of the anticipation and insurability of climate risks in 2015, the Foundation organized a second conference in partnership with the Geneva Association in March 2017 on “How will risk modeling shape the future of risk transfer?”. During this event scientists and insurance industry representatives focused on risk modeling. They discussed the contribution of catastrophe risk models to the (re)insurance industry over the last 25 years, the way in which the latest development/advances in climate and earth observations could be harnessed for designing the next generation of forward-looking models and on how these models could provide the overall population with a better insurance coverage. Furthermore, the Foundation teamed up in 2017 with the Inserm (Institut de la santé et de la recherche médicale – Institute of health and medical research) within the framework of an international conference on infectious diseases and pandemic risks which will be held in 2018.
Besides, the SCOR Corporate Foundation for Science financially supports young scientists with various awards in a variety of areas. Beyond the actuarial prize aformentioned, the Foundation rewards every year a young scientist in the field of Alzheimer’s disease research, as part of its financial support which it grants to the Alzheimer Research Foundation (cf. supra). In 2017, the Foundation renewed for the second consecutive year its commitment to the Institut Europlace de Finance by awarding the Best Young Researcher Prize in Finance and Insurance, during the Financial Risk International Forum.
SOCIAL AND ENVIRONMENTAL INFORMATION DInformation related to societal commitments in support of sustainable development
Apart from the involvement described above in the development and diffusion of scientific knowledge, SCOR runs several sponsorship programs throughout the world that get its offices and teams involved in the life of the local population. Steered locally in order to be as close as possible to the needs of the communities, the Group entities strive to develop and roll out their own societal commitment program, with due consideration for the specific cultural and/or regulatory features of the countries from which they conduct their activities.
In the context of its worldwide activities, SCOR endeavors to adopt best practices in each of its locations.
Scope of subcontracting and consideration in relation with suppliers and subcontractors of their social and environmental responsibility
SCOR’s Code of Conduct, which was updated in 2017 to comply with the Sapin II law (Law No. 2016-1691 of December 9, 2016 on transparency, the fight against corruption and the moralization of economic life), forbids all forms of bribery or intimidation, in France and in other countries, in both private and public sectors.
SCOR maintains other relevant Group policies and guidelines supporting the Group policy on Anti-bribery, including anti-fraud policy, policy on conflicts of interest, anti-money laundering & combating terrorism financing guidelines, guidelines on reporting concerns and further operational Group policies and guidelines such as the management expenses policy and travel policy.
The Group compliance framework is regularly updated to reflect new regulatory and statutory provisions or other trend developments over time.
In order to ensure proper dissemination of other compliance requirements (e.g. anti-fraud, anti-bribery, anti money laundering and sanctions & embargoes compliance, anti-trust/competition law) among SCOR employees, as well as to keep them informed about the latest development on those issues, training sessions addressed to the underwriting, claims handling and technical accounting departments are regularly held across Hubs.
Not applicable due to the nature of the Group’s business to business activities in the financial services industry.
Aside from the processing of personal data relating to its employees, SCOR’s activities may lead to the processing of other personal data, which notably implies compliance with European Directive 95/46/EC of October 24, 1995 on personal data protection and with the French Law No. 78-17 of January 6, 1978 on Information Technology, Data Records, and Freedoms, amended several times since its first inception.
Pending the European Regulation 2016/679 on data privacy due to come into force in May 2018, the Group set up a action plan and since 2011 has notably appointed a Data Protection Officer (DPO) in charge of personal data protection which the Group’s four European companies (SCOR SE, SCOR Global P&C SE, SCOR Global Life SE and SCOR Global Investment Partner SE) have designated as Data Protection and Fredoom correspondent (Correspondant Informatique et Libertés). This employee is responsible for the relations of the Group with the French Data Protection Authority (Commission nationale de l’informatique et des libertés – CNIL), as well as for the monitoring of data processing within the Group; the DPO independently monitors compliance with the law and is responsible for: ●● providing information, advising and making recommendations to those responsible for data processing; ●● updating a list of processed data and the accessibility of this list; ●● spreading a culture of data protection and freedom; ●● sounding any alarms as necessary; ●● mediation and coordination in terms of informing people of their rights regarding access, rectification and opposition.
SCOR is fully aware of society’s growing awareness regarding the role businesses should play in the defence and promotion of Human Rights. In order to meet such expectations, SCOR published in 2017 a Statement on slavery and human trafficking following the United Kingdom’s adoption of the Modern Anti-Slavery Act. Even though not all sites of the Group are legally subject to this British law, the statement was published by the parent company, SCOR SE, as a means to show its commitment to the promotion of human rights and ethics at a Group level; it is thus applicable to the whole Group. This declaration, which was approved by SCOR SE’s Board of Directors, is published on the Group’s website.
In our capacity as independent third party and certified by COFRAC under number 3-1058 available at www.cofrac.fr, we hereby report to you on the consolidated human resources, environmental and social information for the year ended December 31, 2017, included in the management report (hereinafter named “CSR Information”), pursuant to Article L. 225-102-1 of the French Commercial Code (Code de commerce).
Our independence is defined by regulatory texts, the French Code of ethics (Code de déontologie) of our profession and the requirements of Article L. 822-11-3 of the French Commercial Code. In addition, we have implemented a system of quality control including documented policies and procedures regarding compliance with the ethical requirements, French professional standards and applicable legal and regulatory requirements.
On the basis of our work, our responsibility is to: ●● attest that the required CSR Information is included in the management report or, in the event of non-disclosure of a part or all of the CSR Information, that an explanation is provided in accordance with the third paragraph of Article R. 225-105 of the French Commercial Code (Attestation regarding the completeness of CSR Information); ●● express a limited assurance conclusion that the CSR Information taken as a whole is, in all material respects, fairly presented in accordance with the Guidelines (Conclusion on the fairness of CSR Information).
We performed our work in accordance with the professional standards and with the order dated May 13, 2013 defining the conditions under which the independent third party performs its engagement and with ISAE 3000(1) concerning our conclusion on the fairness of CSR Information.
We believe that the sampling methods and sample sizes we have used, based on our professional judgement, are sufficient to provide a basis for our limited assurance conclusion; a higher level of assurance would have required us to carry out more extensive procedures. Due to the use of sampling techniques and other limitations inherent to information and internal control systems, the risk of not detecting a material misstatement in the CSR information cannot be totally eliminated.
(1) Headcount on the last day of the period by gender, Hub, status and type of contract; Hirings by contract type; Departures; Total compensation; Average fixed remuneration; Average bonus; Total granted shares; Distribution of Group employees on working time; Number of meetings with staff representatives; Number of European Committee meetings; Number of collective agreements signed; Number of meetings with staff representatives to discuss health and safety conditions; Number of collective agreements signed regarding health and safety at work; Number of training hours; Measures to promote gender equality; Number of employees with disability; Volume of sorted and recycled paper waste; Water consumption; Energy consumption; Greenhouse gas emissions related to operational processes; Actions to prevent corruption.
(3) Energy consumptions and Greenhouse gas emissions related to operational processes.
This glossary is a list of selected reinsurance terms. It is not a complete list of terms used in this Registration Document in the insurance or reinsurance industry.
The sum of all risks which are correlated such that a single insured event will affect these risks or all the underwritten lines relating to the same risk.
The amount of losses above which an excess of loss reinsurance contract becomes operative.
The capital shield strategy articulates the Group’s risk appetite. This strategy is based on an economic approach and aims to protect the Group against potential shock losses, some of which are not immediately recognized from a pure accounting view. The policy builds on the following four concepts: traditional retrocession, capital market solution, buffer capital and contingent capital.
A high performance bond which is generally issued by an insurance or reinsurance company. If a predefined occurrence takes place (such as an earthquake, tsunami, hurricane, etc.), the bondholder loses all or part of his investment in the bond. This type of insurance-linked security allows insurance and reinsurance companies to transfer peak risks (such as those arising from natural catastrophes) to capital markets, thereby reducing their own risks.
A transaction through which insurers or reinsurers surrender all rights and are relieved from all obligations under the insurance or reinsurance contract in exchange for a single current payment.
Credit insurance provides insurance coverage against loss to a supplier caused by customers’ failure to pay for goods or services supplied. Surety insurance relates to sureties and guarantees issued to third parties for the fulfillment of contractual liabilities.
Costs associated with the acquisition of new contracts, mainly commissions, are recorded as assets and amortized on the basis of the residual term of the contracts for Non-Life business and on the basis of the recognition of future margins for Life contracts. DAC is subject to impairment testing conducted within the scope of the liability adequacy test.
The GMDB guarantees investors in a variable annuity that if the owner passes away while the market value is low, they would never get back less than their original principal.
The leverage ratio is calculated by dividing subordinated debt by the sum of shareholders’ equity and subordinated debt. The calculation excludes accrued interest and includes the impact of swaps related to subordinated debt issuances. This ratio is used to determine how much lenders are financing the Group’s activities over shareholders.
The estimated anticipated maximum loss, taking into account ceding company and contract limits, caused by a single catastrophe affecting a broad contiguous geographical area, such as that caused by a hurricane or earthquake of such a magnitude that it is expected to recur once during a given period, such as every 50, 100 or 200 years.
Lloyd’s accounting practice based on a three-year accounting process for Lloyd’s syndicates. The syndicate underwriting account is closed at the end of the third year by means of reinsurance into the following year, which reinsures all future liabilities for the closed year and all previous years.
Transaction in which the reinsurer transfers (or cedes) all or part of the risks it has assumed to another reinsurer (the retrocessionaire), in return for payment of a premium.
The return on invested assets is used to assess the return on the Group’s invested assets excluding funds withheld by cedents. This percentage, return is calculated by dividing the total investment income on invested assets by the average invested assets (calculated as the quarterly averages of the total invested assets).
The return on investment is used to assess the profitability of the Group’s investments, including funds withheld by cedents and other deposits less cash deposits. This percentage return is calculated by dividing the total net investment income by the average investments (calculated as the quarterly averages of the total investments).
The rate of interest that remunerates assets with no counterparty risk. Usually, the weighted five-year daily interest rates of treasury bills (T-bills) in the Eurozone, the US, UK, Canada and Switzerland averaged over the period under consideration are used as proxies for the risk-free (interest) rate. The weighted average used for this calculation is based on the percentage of reserves denominated in the currency of each such reserve.
This refers to life reinsurance portfolios acquired in a business combination. It is calculated as the present value of the stream of expected future cash flows including estimates of future technical results, future investment income less future administrative expenses. The present value calculation is based on assumptions and risk discount factors relevant at the date of acquisition. VOBA is amortized over the lifetime of the underlying reinsurance portfolio and is subject to impairment testing as part of the LAT.
Shareholders’ equity stood at EUR 3,439,456,014 and subordinated liabilities at EUR 2,210,632,502. Liabilities amounted to EUR 504,559,150 including other loans of EUR 26,856,415.
Article D. 441 I.2: Unpaid issued bills at the end of the financial year whose term is expired
Total amount of concerned bills without taxes 37 - - - 1 1 55 5 1 - 21 27
Percentage of total expenses of the year, without taxes 18.12% 0.01% 0.04% - 0.60% 0.64%
Total amount of excluded bills - - - - - - - - - - - -
(C) Reference payment term used (contractual or legal term – article L. 441-6 or article L. 443-1 of the commercial law)
Pursuant to Article 223 quarter of the French General Tax Code, we remind you that the amount of the expenses and charges referred to in Article 39.4 of said Code for 2017 totals EUR 92,278 and the amount of taxation borne by the Company due to the non-deductibility of such charges should amount to a total of EUR 41,000.
Pursuant to the provisions of Article R. 225-102 of the French Commercial Code, the following table presents a summary of SCOR SE’s operating results for each of the last five financial years: I. Financial position at the end of the year a) Social capital (in EUR million) 1,524 1,517 1,518 1,518 1,518 c) Number of convertible bonds to shares - - - - -
III. Profit and loss per share: a) Net profit after taxes, and before depreciations and reserves 0.05 2.87 4.16 1.92 1.25 b) Net profit after taxes, depreciations and reserves (0.02) 3.36 4.38 2.01 1.18
IV. Salaries: c) Amount of paid employees benefits (Healthy contribution, others benefits, etc.) 33 29 27 26 29
(1) Subject to adjustment based on 2018 Shareholders' Meeting’s decision regarding the allocation of 2017 income.
(2) For natural persons only: the dividend paid in 2015, 2016 and 2017 for the financial years 2014, 2015 and 2016 gave entitlement to a 40% deduction (except where the beneficiary opted for fixed-rate taxation on dividends (prélèvement libératoire forfaitaire, where applicable)).
F ADDITIONAL INFORMATION RELATING TO THE MANAGEMENT REPORT OF THE COMPANY AND THE GROUP – CORRESPONDENCE TABLE Trends in the SCOR SE share price throughout 2017 2. TRENDS IN THE SCOR SE SHARE PRICE THROUGHOUT 2017
The following table presents the volume of transactions and trends in the SCOR SE share price on the Euronext Paris stock market throughout the financial year 2017: Month Volume Value
5. INFORMATION RELATED TO SOCIETAL COMMITMENTS IN SUPPORT OF SUSTAINABLE DEVELOPMENT
F ADDITIONAL INFORMATION RELATING TO THE MANAGEMENT REPORT OF THE COMPANY
Analysis of the Company’s and the Group’s business development, results and financial position (including the debt situation)
Results of the activity of the Company, its subsidiaries and the companies under its control Sections 1.1.1, 1.1.2, 1.3.1, 1.3.5, 1.3.6, 1.3.9, 4.1, 4.2, 4.3, 4.4, 4.5, 4.6 and 4.9
Research and development activities within the Group and SCOR SE Section 1.2.6
Indications on the use of financial instruments, and the Company’s objectives and policy in terms of financial risk management and market risks Sections 3.4 and 3.5
Indication on the financial risks related to the effects of the climate change and presentation of the means taken by the Company to reduce them by implementing a low-carbon strategy at all stage of its activity Appendix D – 2.2
●● Adjustment of the conversion basis for securities granting access to the share capital Section 2.3.1.6
Collective agreements concluded within the Company and the impact on the economic performance and work conditions of the employees Appendix D – 1
Choice of the Board related to the means of conservation by the officers of shares granted freely and/or shares resulting from the exercise of stock options Section 2.2.1.1
Implementation of the principle of balanced representation of women and men within the Board Section 2.1.2.2
Summary table of the delegations in course of validity granted by the Shareholders’ Meeting for increasing the share capital Section 2.3.1.6
Specific means for the participation of the shareholders to the Shareholders’ Meeting or provisions of the articles of association providing for such means Sections 2.1.1.2 and 5.1.5
Direct or indirect shareholding interests in the Company of which it is aware pursuant to Articles L. 233-7 (threshold crossing) and L.233-12 (cross-shareholding) Sections 2.3.1.1 and 2.3.1.3
Control mechanism provided for in a potential employee shareholding scheme, when the voting rights are not exercised by the latter Section 2.2.3.4
Rules applicable to the nomination and the replacement of the members of the Board as well as the modification of the articles of association of the Company Sections 2.1.2, 5.1.4 and 5.1.5
Powers of the Board in particular with respect to the issuance or the redemption of shares Sections 2.3.1.6 and 5.1.3
Agreements providing for damages to the members of the Board or the employees, if they resign or are dismissed without cause or if their employment is terminated because of a cash tender offer or an exchange tender offer Sections 2.3.3 and 2.2.2.1
Headings as listed in Appendix 1 of European Regulation n°809/2004 Paragraph Pages 1 Person responsible 1.1 Name and title of person responsible Appendix B Person responsible for the Annual Report 263 1.2 Declaration by person responsible Appendix B Person responsible for the Annual Report 263 2 Statutory Auditors 2.1 Auditors 4.8 Statutory Auditors 233 2.2 Resignation or non-renewal of Auditors 4.8 Statutory Auditors 233 3 Selected financial information 1.1 Selected financial information 5 to 7 4 Risk factors 3 Risk factors and risk management mechanisms 121 to 152 5 Information about the issuer 5.1 History and development of the issuer 1.2.1 & 1.2.2 Introduction & History and development of SCOR 8 to 11 5.2 Investments 1.2.6 SCOR investments in tangible and intangible assets 20 to 23 6 Business overview 6.1 Primary activities 1.2.5 Business overview 14 to 20 6.2 Principal markets 1.3.1 & 1.3.2 Reinsurance market developments & Financial market developments 24 6.3 Extraordinary events influencing the principal business and markets 1.3.3 Significant events of the year 6.4 Dependency of the issuer with respect to patents or licenses, industrial, commercial or financial contracts and new manufacturing processes 1.2.6.2 Research and development, patents and licenses 6.5 Information on SCOR’s competitive position 1.3.4 Information on SCOR’s competitive position 25 7 Organizational structure 7.1 Brief description of the Group and of the position of the issuer 1.2.3 Organizational structure of SCOR
Headings as listed in Appendix 1 of European Regulation n°809/2004 Paragraph Pages 8.2 Environmental issues that may affect the utilization of property, plant and equipment 1.2.6 SCOR investments in tangible and intangible assets 20 to 23 9 Operating and financial review 9.1 Financial position 1.3.6 Financial position, liquidity and capital resources 36 to 37 9.2 Operating results 1.3.5 Revenues & earnings summary 25 to 35 10 Capital resources 10.1 Capital 1.3.6 Financial position, liquidity and capital resources 36 to 37 10.2 Cash flow 1.3.8 Cash flows 38 10.3 Borrowing conditions and financing structure 1.3.6 Financial position, liquidity and capital resources 36 to 37 10.4 Restrictions on the use of capital 1.3.6 Financial position, liquidity and capital resources 36 to 37 10.5 Sources of financing relating to the future investments by the Company and to its property, plant and equipment 1.3.6 Financial position, liquidity and capital resources 11 Research and development, patents and licenses 11.1 Research and development activities 1.2.6 SCOR investments in tangible and intangible assets 20 to 23 11.2 Information technologies 1.2.6 SCOR investments in tangible and intangible assets 20 to 23 12 Trend information 12.1 Most significant trends in production, sales, inventory, costs, and selling prices since the end of the last financial year 1.3.4 & 1.3.5 Information on SCOR’s competitive position & revenues and earnings summary 25 to 35 12.2 Known trends, uncertainties, demands, commitments and events reasonably likely to have a material effect on the issuer’s prospects 1.3.4 & 1.3.5 Information on SCOR’s competitive position & Revenues and earnings summary 25 to 35 13 Profit forecasts or estimates N/A N/A N/A
23 Third-party information and statements by experts and declarations of any interest 23.1 Expert’s report 5.3.1 Expert’s report 250 23.2 Information from third parties 5.3.2 Information from third parties 250 24 Documents on display 1.3.11 Documents on display 41 25 Information on holdings 4.7 Information on holdings 232
Information about share buybacks (Article L. 225-211, paragraph 2, of the French Commercial Code) 2.3.1.6 108 to 115
Statutory Auditors’ report on the report on the corporate governance prepared in accordance with article L. 225-37 of the French Commercial Code