A European Company with share capital of EUR 1,516,681,107.50 Registered Office: 5 avenue Kléber - 75016 Paris
This registration document was filed on 6 March 2013 with the French Autorité des Marchés Financiers (AMF) in accordance with Article 212-13 of its general regulation. It can be used as a support document for a financial transaction only if presented together with a securities information note (note d’opération) approved by the AMF. This registration document was prepared by the issuer and is the responsibility of the person whose signature appears therein.
1.1 Name and title of person responsible 10 1.2 Declaration by person responsible 10 2 Statutory Auditors 13 2.1 Auditors 13 2.1.1 Principal Auditors 13 2.1.2 Alternate Auditors 13 2.2 Resignation or non-renewal of Auditors 13 3 Selected financial information 14 3.1 Group key figures (under current consolidation scope) 16 4 Risk factors 19 4.1 Risk related to the business environment 21 4.1.1 SCOR is exposed to diverse risk factors in the Non-Life and Life reinsurance businesses 21 4.1.2 SCOR is exposed to losses from catastrophic events 24 4.1.3 SCOR could be subject to losses as a result of its exposure to terrorism 25 4.1.4 SCOR could be subject to increased reserves from Business that it does not actively underwrite 25 4.1.5 If SCOR’s reserves prove to be inadequate, its net income, cash flow and financial position may be adversely affected 26 4.1.6 SCOR may be adversely affected by its cedents, retrocessionaires, insurers or members of pools in which it participates do not respect their obligations 27 4.1.7 SCOR operates in a highly competitive sector and would be adversely affected by losing competitive advantage or if adverse events affect the reinsurance industry 27 4.1.8 Consolidation in the insurance industry could adversely impact SCOR 27 4.1.9 Financial ratings play an important role in SCOR’s business 28 4.1.10 A significant portion of SCOR’s contracts contain provisions relating to financial strength which could have an adverse effect on its portfolio of contracts and its financial position 28 4.1.11 Operational risks, including human errors or computer system failure, are inherent in SCOR’s business 28 4.1.12 SCOR’s risk management policies and procedures may leave it exposed to unidentified or unanticipated risk, which could negatively affect its business 29 4.1.13 SCOR is exposed to risks related to its acquisitions 29 4.1.14 SCOR is exposed to losses due to counterparty default risks or credit risk 31 4.1.15 SCOR is exposed to the risk of no longer being able to retrocede liabilities on economically viable terms and conditions 32 4.1.16 SCOR is exposed to an increase in the rate of general inflation and to increased inflationary expectations 33 4.2 Market risk 33 4.2.1 SCOR faces risks related to its fixed income investment portfolio 33 4.2.2 SCOR faces risks related to its equity-based portfolio 34 4.2.3 SCOR is exposed to other risks arising from the investments it owns 34 4.2.4 SCOR is exposed to foreign currency rate fluctuations 35 4.2.5 The valuation of SCOR’s intangible assets and deferred tax assets may significantly affect its shareholders’ equity and the price of its securities 35 4.3 Liquidity risk 36 4.3.1 SCOR faces liquidity requirements in the short to medium term in order to cover, for example, claims payments, operational expenses and debt redemptions. In the case of catastrophe claims, in particular, it may need to settle amounts which exceed the amount of available liquidity 36 4.3.2 Adverse capital and credit market conditions may significantly affect SCOR’s ability to access capital and/or liquidity or increase the cost of capital 36 4.4 Legal risk 37 4.4.1 SCOR is exposed to risks related to legislative and regulatory changes and political, legislative, regulatory or professional initiatives concerning the insurance and reinsurance sector, which could have adverse consequences for its business and its sector 37 4.4.2 Inconsistent application of EU directives by regulators in different EU member states may place SCOR’s business at a competitive disadvantage to other European financial services groups 38 4.4.3 Changes in current accounting practices and future pronouncements may materially impact SCOR’s reported financial results 38 4.4.4 In 2010, the U.S. congress enacted the Dodd Frank Wall Street reform and consumer protection act (“Dodd Frank Act”), which could have an adverse impact on SCOR’s business 38 4.4.5 Capital and liquidity may not be completely fungible between different regulated legal entities, which may have negative consequences for the legal entities 38 4.4.6 SCOR is exposed to risks linked with Solvency II implementation 39 4.4.7 SCOR is exposed to certain litigation matters 39 4.4.8 SCOR’s positions on tax accounts are subject to audit and approval by tax authorities 39 4.5 Other risk 40 4.5.1 SCOR’s ordinary shares price could be volatile and could drop unexpectedly and investors may not be able to sell their ordinary shares at or above the price they paid 40 4.6 Insurance of specific operational risks (excluding reinsurance activity) 40 4.7 Risk and litigation: Provisioning methods 40
5 Information about the issuer 43 5.1 History and development of the issuer 43 5.1.1 Legal name and commercial name of the issuer 43 5.1.2 Place and registration number of issuer 43 5.1.3 Date of incorporation and length of life of issuer 43 5.1.4 Domicile and legal form of issuer, legislation governing its activities, country of incorporation, address and telephone number of its registered office 43 5.1.5 Important events in the development of the issuer’s business 45 5.2 Investments 48 5.2.1 Principal investments made over the past three financial years 48 5.2.2 Principal investments in progress 48 5.2.3 Principal future investments 48 6 Business overview 51 6.1 Primary activities 53 6.1.1 The reinsurance business 53 6.1.2 Breakdown of the Group’s business 54 6.1.3 Underwriting, distribution, catastrophe risk, claims and reserves 58 6.1.4 Capital shield policy 63 6.1.5 Investments 65 6.2 Principal markets 68 6.2.1 Breakdown of gross premiums by division 68 6.2.2 Distribution by geographic area 68 6.3 Extraordinary events influencing the principal business and markets 69 6.4 Dependency of the issuer with respect to patents or licenses, industrial, commercial or financial contracts and new manufacturing processes 70 6.5 Information on SCOR’s competitive position 70 6.5.1 Non-Life reinsurance 70 6.5.2 Life reinsurance 73 7 Organisational structure 77 7.1 Brief description of the Group and of the position of the issuer 79 7.1.1 Group operating companies 79 7.2 List of issuer’s significant subsidiaries 81 8 Property, plant and equipment 83 8.1 Major existing or planned property, plants and equipment 85 8.2 Environmental issues that may affect the utilization of property, plants and equipment 85 9 Operating and financial review 88 9.1 Financial position 88 9.2 Operating results 89 9.2.1 Consolidated operating results 89 9.2.2 SCOR Global P&C 90 9.2.3 SCOR Global Life 92 9.2.4 Capital shield policy 94 9.2.5
Committee 146 16.4 Corporate governance regime 147 17 Employees 148 17.1 Number of employees 150 17.2 Information on shareholdings and stock options or Company stock purchases by members of
Administrative and Management bodies 151 17.2.1 Number of shares held by Directors and Senior managers 151 17.2.2 Stock options held by the members of the Executive Committee and other Company officers as at 31 December 2012 152 17.2.3 Free allocation of shares to Executive Committee members and other company officers as at 31
1.1 Name and title of person responsible 10 1.2 Declaration by person responsible 10
MAZARS Represented by Messrs. Michel Barbet-Massin and Antoine Esquieu Tour Exaltis – 61, rue Henri Regnault 92075 La Défense Cedex CRCC of Versailles
The financial strength ratings of the Group were upgraded during 2012 and currently are ‘A+’ stable outlook from
Standard & Poor’s ‘S&P’, ‘A1’ stable outlook from Moody’s, ‘A+’ stable outlook from Fitch and ‘A’ stable outlook from AM
Best. A.M. Best also upgraded in 2012 the Issuer Credit Ratings (ICR) of SCOR SE and its main subsidiaries from "a" to 2011 comparative disclosures include the results generated by Transamerica Re during the period from 9 August 2011, the date of acquisition by SCOR, up to 31 December 2011. 2012 includes twelve months of the results generated by
(6) Earnings per share are calculated as net income divided by basic number of shares. The basic number of shares includes the average number of closing shares, shares issued during the period and time-weighted treasury shares
(8) Liquidity is defined as cash and cash equivalents and short term investments comprised primarily of government bonds maturing less than 12 months from date of purchase
4.1 Risk related to the business environment 21 4.6 Insurance of specific operational risks (excluding reinsurance activity) 40 4.7 Risk and litigation: Reserving methods 40
These sections describe the risk management measures, processes and hedging positions planned or implemented by the Group in order to identify, assess and mitigate the risks. The Group conducted a review of the risks that could have a negative impact on its activity, its financial situation or its results (or capacity to reach objectives), and considers that no other significant risk than those disclosed exists.
The Group’s results of operations could be materially affected by the global capital markets conditions and the economy generally, in France, other countries in continental Europe, the United Kingdom (“the U.K.”), the United States of
European Central Bank, the financial situation in many countries of the Eurozone remains unstable and new downgrades of some states' financial rating have occurred (including downgrade to AA+ from AAA of France’s government debt rating by Standard & Poor's in January 2012 and by Moody's in November 2012). While SCOR does not currently own any securities issued by the governments of Greece, Italy, Spain, Ireland or Portugal, it cannot predict whether any of the other government securities that it holds in its investment portfolio will be adversely affected in the future by ratings downgrades, the continuing debt crisis or other developments. For further information on investments, refer to “Section 6 – Business Overview – 6.1.5 Investments” and “Section 20.1.6 – Notes to the financial statements,
claims or surrenders of policies that could affect the current and future profitability of its business. Although written premiums have seen steady growth in prior years, a prolonged economic crisis could result in lower written premiums in the future. These adverse changes in the economy could affect earnings negatively and could have a material adverse effect on SCOR’s business, present and future revenues, net income, cash flows, financial position, and potentially, on the price of its securities.
Governmental initiatives intended to alleviate the financial crisis that have been adopted may not be effective and, in any event, are expected to be accompanied by other initiatives, including new capital requirements, fiscal or other regulations, that could materially affect SCOR’s results of operations, financial condition and liquidity in ways that it cannot predict
In a number of countries in which the Group operates, legislation has been passed in an attempt to stabilize the financial markets, including bank stabilization programs by the Government and Bank of England in the U.K. and similar programs under the Emergency Economic Stabilization Act of 2008 in the U.S., as well as the Financial and Banking
Regulation Act of 2010 in France and the Basel III agreements reached by the Basel Committee on Banking
Supervision. Additionally, the EU has established the European Financial Stability Facility (EFSF) to assist European governments with their budgetary deficits and to stabilize the sovereign debt markets in the Euro-zone. Such legislation or similar proposals, as well as accompanying actions, such as monetary or fiscal actions, of comparable authorities in the U.S., U.K., Euro-zone and other countries, may fail to stabilize durably the financial markets. This legislation and other proposals or actions may also have other consequences, including material effects on interest rates and foreign exchange rates, and in particular the future viability of the European currency or the European Monetary Union, which could materially affect SCOR’s investments, results of operations and liquidity in ways that it cannot predict. The failure to effectively implement this legislation and related proposals or actions could also result in a material adverse effect, notably increased constraints on the liquidity available in the banking system and financial markets and increased pressure on stock prices, any of which could materially and adversely affect the Group’s results of operations, financial condition and liquidity. In the event of future material deterioration in business conditions, it may need to raise additional capital or consider other transactions to manage its capital position or liquidity.
In addition, SCOR is subject to extensive laws and regulations that are administered and enforced by a number of different governmental authorities and non-governmental self-regulatory agencies, including the French prudential control Authority (Autorité de Contrôle Prudentiel, or “ACP”) which regulate among other categories of entities the insurance and reinsurance companies, and other regulators. Since the bigining of the 2007 financial crisis, some of these authorities are considering or may in the future consider enhanced or new regulatory requirements intended to prevent future crises or otherwise assure the stability of institutions under their supervision. These authorities may also seek to exercise their supervisory or enforcement authority in new or more assertive ways. All of these possibilities, if they occurred, could affect the way SCOR conducts its business and manages its capital, and may require it to satisfy increased capital requirements, any of which in turn could materially affect its business, present and future revenues, net income, cash flows, financial position, and potentially, the price of its securities.
SCOR is exposed to uncertainty of the effects of emerging claim and coverage issues
SCOR takes into consideration the numerous changes to the environment in which the Group operates, examples being : the professional practices, the legal, jurisdictional, regulatory, social, political, economic, financial and environmental conditions. These emerging or latent risks may adversely affect SCOR’s business due to either an interpretation of the contracts leading to an extension of coverage beyond its underwriting anticipation (e.g. through inapplicability of treaty clauses) or by increasing the frequency and /or severity of claims. This would have an adverse effect on business, present and future revenues, net income, cash flows, financial position, and potentially, on the price of securities.
Generally, SCOR’s ability to increase or maintain its portfolios of reinsurance risks in its Non-Life and Life divisions may depend on external factors such as economic risks and political risks.
explosion, fire at a major industrial facility, act of terrorism, etc.). Any such catastrophic event can generate insured losses in one or several of SCOR’s lines of business.
For SCOR’s casualty business, the frequency and severity of claims and the related indemnification payment amounts can be affected by several factors. The most significant factors are the changing legal and regulatory environment, including changes in civil liability law and jurisprudence. Additionally, due to the length of amicable, arbitral and court claims settlement procedures, the casualty business is exposed to inflation risks regarding the assessment of claim amounts. Additional exposure could arise from so-called emerging risks, which are risks considered to be new or subject to constant evolution, and thus particularly uncertain in their impact. Examples of such risks are electromagnetic fields or nanotechnology.
The primary consequences of these factors are to reduce or increase the volume of Non-Life reinsurance premiums on the market, to make the reinsurance market more competitive, and also to favour the operators who are most attentive to the specific needs of the cedants. This could lead potentially to a loss of competitive advantage for SCOR.
(d) SCOR Global P&C faces concentration risks related to its broker business
SCOR produces its Non-Life business both through brokers and through direct relationships with insurance company clients. For the year ended 31 December 2012, approximately 65% of Non-Life gross premiums were produced through brokers. In 2012, SCOR had two brokers that accounted for approximately 35% of its Non-Life gross premiums. Refer to
See “Section 20 – Note 26, Insurance and financial risk – Non-Life reinsurance risks” for further information on risk mitigation actions.
Mortality risk is the risk of negative deviation from expected results due to higher than anticipated death rates resulting from either the inherent volatility, an adverse long-term trend or a mortality shock event in the reinsured portfolio.
Longevity risk refers to the risk of a negative deviation from expected results due to the insured or annuitant living longer than assumed in the pricing of the insurance cover. This risk exists within annuity and long-term care covers and within other longevity protection products.
Regulatory reserve requirements in various jurisdictions in which SCOR operates may be significantly higher than the reserves required under IFRS. A regulation in the U.S. (NAIC Model Regulation XXX or Valuation of Life Insurance
Policies Model Regulation), commonly referred to as Regulation XXX (or Triple X) and adopted by most U.S. states as at 1 January 2000, requires a relatively higher level of regulatory, or statutory, reserves that U.S. life insurance and life reinsurance companies must hold on their statutory financial statements for various types of life insurance business, primarily certain level premium term life products. The reserve requirements under Regulation XXX increase over time and are normally in excess of reserves required under IFRS in other jurisdictions. The increase and the ultimate level of
XXX reserves will depend upon the mix of business and future production levels in the U.S.
SCOR might over time retrocede certain XXX-related cash flows and reserves to such affiliated or unaffiliated reinsurers that are authorized in company‘s domicile or provide collateral of an amount equal to the reinsured reserves. Such collateral must be provided in the form of withheld funds, NAIC (National Association of Insurance Commissioners)
Based on the assumed rate of growth in SCOR’s current U.S. business plan, and the increasing level of XXX reserves associated with this business, it expects the amount of required XXX reserves, retrocession and required collateral to grow significantly. With regard to retrocession to affiliates, SCOR would be required to secure such collateral.
 If its affiliated or not affiliated retrocessionaires, are unable to obtain or provide sufficient collateral to support their statutory ceded reserves or if regulatory changes lead to change the current retrocession structures, it may be required to increase regulatory reserves. In turn, this reserve increase could significantly reduce statutory capital levels and adversely affect SCOR’s ability to satisfy required regulatory capital levels that apply, unless it is able to raise additional capital to contribute to its operating subsidiaries.
statutory reserve requirements or higher costs of reinsurance they face, may result in a significant loss of volume in their life insurance operations, which could, in turn, adversely affect life reinsurance operations.
See “Section 20 – Note 26, Insurance and financial risk – Life reinsurance” for further information on risk mitigation actions.
Non-Life and Life reinsurance activities take place in two different market environments. They are subject to heterogeneous external constraints, which generally have only very limited correlation with each other. This diversification and the overall balance between the two business areas provide stability. However, in some cases, evolutions of the Non-Life and Life activities are linked together as well as to those of the financial market risks. This exposes SCOR to accumulation and/or correlation risks which are difficult to quantify.
market, primarily because of the insurance obligation created by the law. In addition to the commitments described above, SCOR does reinsure, from time to time, terrorist risks, usually limiting by event and by year of insurance the coverage that ceding companies receive for damage caused by terrorist acts.
Beyond the potential impact on its non-life book, a terror event could also affect the Group’s life portfolio. Although the insured losses from past events have been comparatively small in relation to the non-life losses, a future terrorist act, such as a “dirty bomb”, could claim a substantial amount of insured lives.
As a result, future terrorist acts, whether in the U.S. or elsewhere, could cause SCOR significant claims payments, and could have a significant effect on its business, present and future revenues, net income, cash flows, financial position, and potentially, on the price of its securities.
Notes to the financial statements, Note 16 – Contract Liabilities.” Data related to the reserves arising from the risks related to asbestos and environmental pollution are also in “Section 4.1.5 – If SCOR’s reserves prove to be inadequate, its net income, cash flow and financial position may be adversely affected.”
In connection with its October 2007 acquisition of Converium Holdings AG (“Converium”), SCOR Global Life inherited certain retrocession liabilities with regard to Guaranteed Minimum Death Benefit (“GMDB”) rider options attached to variable annuity policies written in the U.S. Its GMDB business indirectly exposes SCOR Global Life to asset risk on the variable annuity policyholders’ funds. SCOR Global Life must pay, in the event of death, the excess of the GMDB over the account balance or the excess of the GMDB over the cash surrender value, depending on the definition of the underlying reinsurance agreements. A fall in the value of the variable annuity policies’ funds therefore leads to higher expected claims amounts. The variable annuity policyholders invest their funds in a wide variety of U.S. equity, other equity, fixed interest, money market, balanced and other funds. Hence SCOR Global Life is exposed to losses, through higher death claims, if these funds fall in value. These funds are not held by SCOR Global Life. The assets remain with the originating ceding companies.
Life will be released from the risk when the beneficiary reaches this age limit. See “Section 20.1.6 – Notes to the financial statements, Note 16 – Contract Liabilities.”
There can be no assurance that SCOR’s GMDB portfolios will not deteriorate in the future, which could have a adverse effect on SCOR’s business, present and future revenues, net income, cash flows, financial position, and potentially, on the price of its securities.
C. SCOR is exposed to risks arising from its U.S. Non-Life subsidiaries
(“GSNIC”), each a SCOR Group owned insurance company domiciled in the State of New York and in the Bermuda through Commercial Risk Partners Ltd. (“CRP”), a company absorbed by GSNIC in 2009. There can be no assurance that SCOR’s U.S. Non-Life subsidiaries will not face financial difficulties in the future. Today, discontinued business portfolios do not represent a material liability that is any greater than those associated with other entities of the Group.
audits it carries out on the companies with which it does business, and its frequent contacts with these companies, the
Other factors of uncertainty, some of which have been mentioned above, are linked to changes in the law, regulations, case law and legal doctrines, as well as developments in class action litigation, particularly in the U.S.
As a consequence of the difficulties described above regarding the reserving of risks and their annual revision in Life and Non-Life, there can be no assurance that SCOR will not have to increase its reserves in the future, or that the reserves it constituted will be sufficient to meet all its future liabilities, which could materially impact its business, present and future revenues, net income, cash flows, financial position, and potentially, on the price of its securities.
SCOR is subject to a risk of possible non-payment of premiums due by the cedants and/or to the possible non-respect by one or several of its commercial partners, of their commitments to the Group.
SCOR is exposed to losses due to counterparty default risks or credit risks – B. Receivables from retrocessionaires.”
Reinsurance is a highly competitive sector. As is the case for all other reinsurers, SCOR’s position in the reinsurance market is based on several factors, such as its financial strength as perceived by the rating agencies, its underwriting expertise, reputation and experience in the lines written, the countries in which it operates, the premiums charged, as well as the quality of the proposed reinsurance structures, the services offered among others in terms of claims payment. Nonetheless, the Group competes for business in the European, American, Asian and other international markets with numerous international and domestic reinsurance companies, some of which have a larger market share than ours, greater financial resources and, in certain cases, higher ratings from the rating agencies.
S&P existing methodology. A change in this methodology could lead to (i) a disqualification for equity credit of the notes and (ii) force SCOR SE to exercise the option that is offered in such case to redeem the notes. More information about subordinated debt appears in “Section 20.1.6 - Notes to the financial statements, Note 14 - Financial Debt."
SCOR. This could lead to a loss of competitive advantage which, in turn, could significantly impact SCOR’s revenues, net income, cash flow, financial position, and potentially, the price of its securities.
(“LOC”) provisions, if the financial strength rating of the Company and/or its subsidiaries subsidiaries having the contracts and beneficiating from the Group rating deteriorates, the cedant has the right to draw down on a LOC issued by a bank in SCOR’s name.
For more details about the Group’s lines of credit, refer to “Section 10 - Capital resources.”
The Group believes its modeling, underwriting, price calculation and information technology and application systems are critical to the operation of its businesses. Moreover, its proprietary technology and applications are an important part of the Group’s underwriting and claims management processes and are a contributing factor to its competitiveness. It is, therefore, exposed to a major breakdown in its IT systems, outages, disruptions due to viruses, attacks by hackers and theft of data. SCOR is also exposed to risks relating to the integration of the underlying data of newly acquired companies into its operating and financial accounting IT systems.
An operational risk failure, in particular the failure of internal control procedures, could have an adverse impact on the
Acquisitions could also result in the incurrence of additional indebtedness, costs, contingent liabilities, and impairment
Group. Subsequently, integrations may take longer or may be more difficult than expected. The success of integrations will depend, notably, on the ability to maintain the former client base to coordinate development efforts effectively, at the operational and commercial levels among others, and to streamline and/or integrate the information systems and internal procedures and the ability to retain key employees. Difficulties encountered in integrations could entail higher integration costs and/or less significant savings or fewer synergies than expected.
C. Certain risks relating to acquired companies may not yet be known
Litigation” and “Section 4.4.7 – SCOR is exposed to certain litigation matters.”
4.1.16 SCOR IS EXPOSED TO AN INCREASE IN THE RATE OF GENERAL INFLATION AND TO INCREASED INFLATIONARY EXPECTATIONS
Interest rate fluctuations have direct consequences on the market value of SCOR’s fixed income investments and therefore on the level of unrealized capital gains or losses of the fixed-income securities held in its portfolio. The return on the securities held also depends on changes in interest rates. Interest rates are very sensitive to a number of external factors, including monetary and budgetary policies, the national and international economic and political environment, and the risk aversion of economic agents.
On the other hand, an increase in interest rates and/or fluctuations in the capital markets could lead to a fall in the market value of fixed income securities that SCOR holds. In the case of a need for cash, SCOR may be obliged to sell fixed income securities, possibly resulting in capital losses to the Group.
Credit spreads vary notably due to changes in the counterparty risk of an issuer and in the liquidity of the securities.
Equity prices are likely to be affected by risks which affect all of the market (uncertainty on economic conditions in general, such as changes in gross domestic product (“GDP”), inflation, interest rates, sovereign risk, etc.) and/or by risks which influence a single asset or a small number of assets (specific or idiosyncratic risk).
Investments.” See also “Section 4.2.5 – The valuation of SCOR’s intangible assets and deferred tax assets may significantly affect its shareholders’ equity and the price of its securities.”
The rental income of the property portfolio is exposed to the variation of the indices on which the rents are indexed ( for instance in France, the Construction Cost Index) as well as risks related to the rental market (changes in supply and demand, changes in vacancy rates, impact on market rental values or rent renewals) and the default of lessees.
The value of property assets, owned directly or through funds, is exposed to changes in the investment market itself
Fluctuations in exchange rates can have consequences on SCOR’s reported net income because of the conversion results of transactions expressed in foreign currencies, the settlement of balances denominated in foreign currencies and the lack of perfect matching between monetary assets and liabilities in foreign currencies.
Considering the above, SCOR is exposed to the risks related to the assessment of impairment of intangible assets and derecognition of deferred tax assets, given that such assessments are notably based on assumptions and subjective opinions. Those assessments, if they were to be revised, could have a material adverse impact on SCOR’s business, present and future revenues, net income, cash flows, financial position, and potentially, on the price of its securities.
4.3.1 SCOR FACES LIQUIDITY REQUIREMENTS IN THE SHORT TO MEDIUM TERM IN ORDER TO COVER, FOR EXAMPLE, CLAIMS PAYMENTS, OPERATIONAL EXPENSES AND DEBT REDEMPTIONS. IN THE CASE OF CATASTROPHE CLAIMS, IN PARTICULAR, IT MAY NEED TO SETTLE AMOUNTS WHICH EXCEED THE AMOUNT OF AVAILABLE LIQUIDITY
Considering the above, SCOR is exposed to risks of short-term or medium-term payouts, and it cannot be guaranteed that it will not be exposed to such risks in the future, which could have a material adverse impact on its business, present and future revenues, net income, cash flows, financial position, and potentially, on the price of its securities.
In the event current internal and/or external resources do not satisfy its needs, SCOR may have to seek additional financing. The availability of additional financing will depend on a variety of factors such as market conditions, the general availability of credit, the volume of trading activities, the overall availability of credit to the financial services industry, its credit ratings and credit capacity, as well as the possibility that customers or lenders could develop a negative perception of its long- or short-term financial prospects if the Group incurs large investment losses or if the level of its business activity decrease due to a market downturn. Similarly, access to funds may be impaired if regulatory authorities or rating agencies take negative actions against SCOR. Internal sources of liquidity may prove to be insufficient, and in such case, SCOR may not be able to successfully obtain additional financing on favorable terms, or at all.
As such, SCOR may be forced to delay raising capital, issue shorter term securities than it prefers, or bear an unattractive cost of capital which could decrease its profitability and significantly reduce its financial flexibility. The group’s results of operations, financial condition, cash flows and statutory capital position could be material ly adversely affected by disruptions in the financial markets.
The operations of the Group and its subsidiaries are subject to regulatory requirements within the jurisdictions where they operate. Such regulations not only prescribe the approval and monitoring of activities, but also impose certain restrictive provisions (e.g., statutory capital adequacy) to meet unforeseen liabilities as these arise, in order to minimize the risk of default and insolvency.
As at this date, SCOR is subject to comprehensive and detailed regulations and to the supervision of the insurance and reinsurance regulatory authorities in all countries in which it operates. Changes in existing laws and regulations may affect the way in which it conduct its business and the products it may offer or the amount of reserves to be posted, including on claims already declared. Insurance and reinsurance supervisory authorities have broad administrative power over many aspects of the reinsurance industry and SCOR cannot predict the timing or form of any future regulatory initiatives. Furthermore, these authorities are concerned primarily with the protection of policyholders and policy beneficiaries, rather than shareholders or creditors. The diversity of the regulations to which the Group is subject has been substantially reduced by the implementation into French law of Directive n. 2005/68/EC (the “2005 Directive”)
Directive prescribes the application of a “single passport” and confers the supervision of EU reinsurance companies upon the supervisory authorities of the headquarters of the company. This should simplify and clarify the supervisory conditions applicable to the Group, in the EU at least. Moreover the 2005 Directive, implemented into national law, establishes regulations relating to reserves and to the Life and Non-Life solvency margins applicable to the Group as at 2008 in France and in all European countries. The 2005 Directive defines minimal conditions common to all member
The reinsurance sector has been exposed in the past –and may be in the future – to involvement in legal proceedings, regulatory inquiries and actions by various administrative and regulatory authorities, as well as to regulation concerning certain practices used in the insurance sector. This involvement notably concerned agreements over the payment of
In addition to this, the public authorities in the U.S. and the rest of the world are closely examining the potential risks presented by the reinsurance sector as a whole, as well as their consequences on commercial and financial systems in general.
Adverse changes in laws or regulations or an adverse outcome of these proceedings could have adverse effects on
U.S. insurance market, which could result in additional legislative or regulatory action.
SCOR’s business could be materially and possibly adversely affected by changes to the U.S. system of insurance regulation or its designation or the designation of insurers or reinsurers with which it does business as systemically significant non-bank financial companies. This could have a material adverse impact on SCOR’s business, present and future revenues, net income, cash flows, financial position, and potentially, on the price of its securities.See “Appendix B
The new regime represents a significant change in the basis for regulating insurance and reinsurance business in
Although it is of course not possible to quantify the impact of these requirements, nor their scope, it is very likely that r isk management and control measures will be reinforced for reinsurers in the near future, which may in turn result in an increase in regulatory capital requirements (or a reduction in the underwriting capacity) and increase their operating costs. This could have a material adverse impact on SCOR’s business, present and future revenues, net income, cash flows, financial position, and potentially, on the price of its securities.
regime is still ongoing. The published Solvency II Directive will be amended by the Omnibus II Directive which is still being negotiated between European co-legislators. When this is concluded, the European Commission will have to adopt Level 2 delegated acts and the European Insurance and Occupational Pensions Authority (EIOPA) will be in a position to consult on technical standards that are necessary to make the Solvency II regime effective. Delays in the application of Solvency II may increase the costs of implementation. Inversely, a fast implementation of certain aspects of the new regime could also take place, with a yet another risk of increased cost for SCOR. This could have a material adverse impact on SCOR’s business, present and future revenues, net income, cash flows, financial position, and potentially, on the price of its securities
SCOR is involved in legal and arbitration proceedings in certain jurisdictions, particularly in Europe and in the U.S. For more information on this issue, refer to “Section 20.1.6 – Notes to the financial statements, Note 27 - Litigation.”
SCOR is exposed to specific operational risks. See “Section 4.1.11 – Operational risks, including human errors or computer system failure, are inherent in SCOR’s business.”, some of which are transferred in whole or in part to direct insurers as follows:  The properties and other assets of SCOR and its subsidiaries are covered locally through property and fire damage as well as IT risk policies.
Company or Societas Europaea, pursuant to Articles 1 §1, 2 §4 and 37 of the SE Regulation, and Article L. 225-245-1 of the Commercial Code, thereby becoming, on 25 June 2007, the first French listed company to adopt the Societas
The conversion had no impact upon the rights of the Company’s shareholders or bondholders who automatically became shareholders and bondholders of SCOR SE without any action being required on their part. They remain shareholders and bondholders in proportion to their rights acquired prior to the completion of the conversion. Thus, the financial liability of each shareholder of SCOR SE is limited to the amount of his subscription prior to the conversion. The mailto:scor@scor.com
EURONEXT 100. The SBF 120 and 250 consist of the 120 most actively traded French stocks and the 250 largest stocks by capitalization. The SBF 80 is made up of the SBF120 stocks not included in the CAC 40 index, which are the most traded on the continuous segments. EURONEXT 100 index comprises the 100 largest and most liquid stocks traded on Euronext. The CAC All-shares index is composed of all the stocks listed on Euronext Paris for which annual velocity ratio exceeds 5% of their shares. The CAC Next 20 index includes the most representatives stocks in terms of free float adjusted capitalization and turnover not included in the CAC 40 index. The CAC Large 60 index is composed of the constituents of the CAC 40 and CAC Next 20 indices.
 reinsurers authorized in France and their branches are monitored by the prudential control Authority. The role of this body is to ensure that at any point, these entities are able to conform to the commitments that they have entered into with reinsurance companies and that they fulfill the regulatory solvency margin demands.
In Switzerland (which is neither a member of the EU nor the EEA), the Group subsidiary is subject to the federal law dated 17 December 2004 as amended “Insurance Supervision Act” and the federal law dated 20 June 2007 on Financial
Market Supervision (FINMA), as amended, governing the oversight of insurance companies, which also governs reinsurance companies and stipulates that an insurance company must have sufficient assets, free of any predictable commitment, for all its activities (solvency margin).
complies with the local regulation in each of the countries in which it operates. Industry regulation across the region typically focuses on financial stability and the basis for calculating solvency, reserves and policyholder liabilities. In many of the markets across the region, regulators have the power to revoke operating licenses, regulate shareholder structures and the participation in and the payment of dividends. Markets within the region are developing quickly with an increasing focus on governance and conduct of business.
Treaties (including Credit & Surety business). Large Corporate Accounts and Construction reinsurance to Société
Putéolienne de Participations, a French subsidiary wholly owned by SCOR,whose corporate name was changed to
SE announced that it held 98.67% of the share capital of ReMark. Since 2009, SCOR Global Life SE holds 100% of the share capital of ReMark. Established in 1984, ReMark is an important player of the direct global marketing of Life insurance products.
In August 2007, SCOR acquired, Converium (which became SCOR Holding (Switzerland) AG (“SCOR Holding
(excluding Lloyd’s of London), based on the 2009 pro forma gross written premiums of SCOR’s operating entities according to“Standard & Poor’s Global Reinsurance Highlights 2010,”
The acquisition closed on 4 December 2009. The acquisition helped SCOR Global Life SE strengthen its services in the mortality protection field and reinforce its position in the U.S. Life reinsurance market.
Syndicate 2015. SCOR is the sole capital provider for Channel Syndicate, which in 2011 had an initial annual stamp capacity of GPB 75 million. Underwriting by the Channel Syndicate began on 5 January 2011. The portfolio of Channel
Syndicate focuses on shorter tail lines of direct insurance business in markets outside the US, including property, marine, accident and health, financial institutions and professional liability. On 21 December 2010, the Mexican Ministry of Finance granted SCOR Global Life SE a licence to set up a representative office in Mexico, under the name of SCOR
On 11 May 2011, SCOR successfully placed CHF 225 million additional perpetual subordinated notes on the Swiss franc market. These notes are interchangeable with those of the placement announced on 20 January 2011, and the conditions are similar to those of this placement.
On 18 May 2011, SCOR Global Life opened a subsidiary in Sydney, Australia for the Australian and New Zealand markets, after the Australian Prudential Regulation Authority granted SCOR Global Life Australia Pty Limited the authorisation to conduct reinsurance business in the Australian market.
Commission de Surveillance du Secteur Financier (CSSF) in Luxemburg as a company in charge of the management of the portfolio of assets specialized in the asset class, known as “Insurance-Linked Securities” (ILS).
On 18 July 2011, SCOR closed the sale of its subsidiary Investors Insurance Corporation (IIC) to Athene Holding Ltd., as initially announced on 16 February 2011. This sale of its US fixed annuity business, for USD 57 million, is in line with the Group’s strategy to develop Life reinsurance activities around biometric risks, as set out in the Group’s strategic plan for the period 2010-2013, “Strong Momentum”. See “Section 6.1 - Business Overview” for further information about
Strong Momentum and the Group’s other historical strategic plans. SCOR define biometric risks as those risks which could result from adverse developments in mortality, morbidity, longevity or epidemic/pandemic claims for direct insurers and reinsurers. With the sale of IIC, SCOR substantially exited the U.S. fixed annuity business, which was a direct insurance business.
As part of the integration of SOLAREH SA into SCOR, the company was renamed REHALTO SA in September 2011.
On 31 August 2011, SCOR launched Atropos SICAV-SIF (“Atropos”), ILS fund dedicated to insurance risks, which is managed by its subsidiary SCOR Alternative Investments SA and domiciled in Luxemburg. This fund enables institutional investors to benefit from extreme natural catastrophe market risks, such as hurricanes, earthquakes and storms. This asset class, known as “Insurance-Linked Securities” (ILS), is not correlated to the financial markets, offers high historical yields and facilitates real investment portfolio diversification. With USD 100 million in seed capital provided by the Group, Atropos marks the Group’s entry into the business of third-party asset management. From the end of 2011, the Group opened to external clients an important number of its funds handled by SCOR Global
Investments or SCOR Alternative Investments. In June 2012, SCOR Global P&C created a branch in Argentina
With effect on 14 January 2013, the Commission de Surveillance du Secteur Financier ("CSSF") approved the fund,
fixed annuity business, and the latest (at the time) financial and economic developments. SMV1.1 confirmed the three main targets to be achieved during the 2010-2013 business cycle:  Optimization of the Group’s risk profile
continuously seeks to “optimize” its risk profile and has further decided to gradually and moderately increase its risk appetite in the belly (rather than in the tail) of its target profit/loss probability distribution.
As compared to the previous strategic plan "Dynamic Lift", "Strong Momentum" therefore targets slightly higher expected returns coupled with slightly higher earnings volatility. The Group believes an increase in risk appetite is appropriate given its increased size and stronger balance sheet and risk management as compared to the prior three-year plan period.
financial strength rating, based on Standard & Poor’s financial strength rating scale. Such level of security is currently estimated with its Group Internal Model GIM-SMV1.1 on the basis of a 0.05% probability of default (which corresponds to the average of Moody's and Standard & Poor's expected default statistics). Although SCOR's objective is to provide an AA level of security, the Group cannot commit on behalf of the rating agencies to be rated AA.
 Profitability of 1,000 basis points above the three-month risk-free rate over the cycle
The weighted average used for this calculation is based on the percentage of SCOR's managed assets denominated in the currency of these assets.
SCOR aims to achieve this goal through higher technical profitability (defined as profitability related to underwriting), increased investment income, generating new fee income streams and higher productivity and efficiency.
On 6 September 2012, SCOR presented to the public an update of its Strong Momentum plan, called "Strong
In spite of an increasingly uncertain environment with high market volatility, low yields and economic stagnation, "Strong
Momentum Season Three" demonstrated that SCOR's operational performance is consistent with the assumptions and objectives of its strategic plan "Strong Momentum V1.1":  SCOR's return on equity is in line with its "Strong Momentum V1.1" target
 SCOR Global Life delivers a technical performance consistent with "Strong Momentum V1.1" assumptions, with the successful integration of the ex-Transamerica Re.
The targets of the strategic plan are supported by the consistent application of the four cornerstones of SCOR's business model, which are:  a strong franchise, achieved by deepening its presence in the local property and casualty and li fe markets in which SCOR operates by strengthening client relationships and through best-in-class service and product innovation, and by expanding into new markets through organic growth and through acquisitions, such as the acquisition of the mortality reinsurance business of Transamerica Re;  high diversification, achieved both by Non-Life business area and Life lines of business diversification and by geographical presence , providing better stability of results and robust required capital diversification benefits;  a controlled risk appetite, on both sides of the balance sheet, respecting a moderate risk appetite; and
“Paragraph 20.1.6 - Notes to the financial statements, Note 8 - Derivative assets”) and provide multiyear protection that is not dependent on short-term market fluctuations; - buffer capital, defined as the amount of capital above the required capital having an annual probability of total erosion of 1 in 33 (3%); - contingent capital securities, which are designed as tools of last resort. See "Paragraph 20.1.6
Risk appetite defines the quantity of risk that SCOR wishes to accept to achieve a desired level of profitability. This determines where the Group wishes to position itself on the assumed risk-expected return spectrum, between extremely risk averse (i.e. low risk-low return) and an extreme risk taker (i.e. high risk-high return). SCOR uses a target retained risk profile (probability distribution of economic profits and losses) and target expected profitability to provide a complete definition of its risk appetite. The Group actual retained risk profile and profitability are regularly reported to the
SCOR uses various risk measures to verify that its exposures remain within these limits. These measures can take several forms depending on the technical constraints or the level of information available and are based on either internal model outputs or expert opinions.
 enabling ceding companies to build up their business with less upfront capital requirement, particularly when launching new products requiring heavy investment or financing.
With respect to proportional (or quota share) reinsurance, the reinsurer, in return for a predetermined portion or share of the insurance premium charged by the ceding company, indemnifies the ceding company against a predetermined portion of the losses of the ceding company under the covered insurance contract or contracts. In the case of reinsurance written on a non-proportional, through an excess of loss or a stop loss, basis, the reinsurer indemnifies the ceding company against all or a specified portion of the losses sustained, on a claim by claim basis or in the aggregate over the contract period, in excess of a specified amount, known as the ceding company’s retention or reinsurer’s attachment point, and up to a negotiated reinsurance contract limit.
Premiums payable by the ceding company to a reinsurer for excess of loss reinsurance are not directly proportional to the premiums that the ceding company receives because the reinsurer does not assume a directly proportionate risk. In contrast, premiums that the ceding company pays to the reinsurer for quota share reinsurance are proportional to the premiums that the ceding company receives, consistent with the proportional sharing of risk. In addition, in quota share reinsurance, the reinsurer generally pays the ceding company a ceding commission. The ceding commission is usually based on the ceding company’s cost of acquiring the business being reinsured, including commissions, premium taxes, assessments and miscellaneous administrative expense, and also may include a profit factor for producing the business.
Financing Reinsurance; Disability; Long Term Care; Critical Illness; Health; Annuities; Personal Accident and Longevity.
SCOR also writes a small amount of direct insurance, primarily on a business-to-business basis to cover certain non-life large industrial risks through the Business Solutions business area of SCOR Global P&C. For a description of products and services, see Paragraph 6.1.2.1 – Non-Life reinsurance. Before the sale of Investors Insurance Corporation SCOR
As at 1 January 2011, the cost allocation estimation methodology of the Group was refined, including with respect to the preparation of division information, resulting in the creation of a new cost center, which is referred to in this Registration
Group Functions includes the cost of departments fulfilling duties for the benefit of the whole Group, such as the costs for Group Internal audit, Group Chief Financial Officer functions (Group Tax, Group Accounting, Group Consolidation and Reporting), Group Chief Operating Officer functions (Group Legal, Group Communication, Group Human
Resources) and Group Chief Risk Officer expenses. The segment financial information included in this Registration
The Group organizes its operations around six regional management platforms, or Hubs located in Paris, Zurich,
SCOR Global P&C SE, which has branches in Spain, Italy, Switzerland, the U.K. and Germany and a network of dedicated subsidiaries, branches and representative offices in the U.K., the Americas and Asia-Pacific, as well as composite subsidiaries and branches (which also operate in the Life division) in Russia, South Africa, China, Hong Kong and South Korea. SCOR Global Life also carries out its operations through a European Company (Societas Europaea)
Life SE was transferred to the new Stockholm branch of the company.
Insurance for the space sector cover the launch preparation, launch, and the in-orbit life operation of satellites, primarily commercial telecommunication and earth observation satellites. SCOR underwrites these risks through treaties and facultative insurance and reinsurance.
Specialty Line, SCOR underwrites these risks mainly through treaties and occasionally through facultative reinsurance.
Business Solutions is aimed at risk managed enterprises and professional buyers seeking global risk financing solutions. The risks shared with the ceding and/or captive companies are high-value industrial or technically complex risks. In property and casualty lines, such as Property Damage & Business Interruption, Construction All Risks, Erection
All Risks, Comprehensive General Liability, Product Liability or Professional Indemnity, the risks involve insured amounts which typically are beyond the ceding companies’ own means.
Channel 2015, which SCOR is the sole capital provider. SCOR also offers professional indemnity insurance to the members of MDU (Medical Defence Union), a leading medical defense organization based in the U.K., under a joint venture agreement. See Paragraph 20.1.6 Note 4 – Intangible assets for further information. In 2012, SCOR has taken a participation in La Réunion Aerienne aviation insurance pool.
SCOR's Life reinsurance business covers the mortality risk of individuals and is predominantly underwritten in the form of proportional treaties (quota share or surplus basis or a combination of both), and less frequently on the basis of excess of loss per person, or catastrophe excess of loss or stop loss. Longevity reinsurance is reported as part of the
In connection with the October 2007 acquisition of Converium, SCOR Global Life inherited certain retrocession liabilities with regard to Guaranteed Minimum Death Benefit "GMDB" rider options attached to variable annuity policies written in the U.S. Business of this type is not within the usual scope of the SCOR Global Life underwriting policy. These treaties are all in run-off and, as at 31 December 2012, cover in total approximately 0.6 million policies written by two cedants.
The reinsurance portfolio acquired in 2011 from Transamerica Re predominantly covers mortality risk of individuals via yearly renewable term, coinsurance, modified coinsurance or other typical reinsurance agreements.
The other eight lines of business currently underwritten by SCOR's Life division are: Life Financing reinsurance
SCOR has exclusively usined in this line of business coming from the UK pension skim market. This portfolio is the most dynamic part of SCOR’s UK portfolio.
In order to mitigate its property exposure, the Group retrocedes a portion of the risks it underwrites. See “Paragraph 6.1.4 Capital shield policy” below for a description of the use of retrocession. SCOR's Non-Life retrocession mainly deals with, but is not limited to, natural catastrophes and large corporate risks for which the Group purchases protection beyond certain levels of severity of losses or impact of events. In particular, it has a global retrocession program, which is revised annually, and which provides partial coverage for catastrophic events, on an occurrence basis. The retrocession program includes both traditional retrocession as well as the use of alternative risk transfer solutions (e.g., the multi-year securitization of catastrophic risk in the form of ILS and mortality swaps and the issuance of contingent capital securities). See “Paragraph 6.1.4 Capital shield policy”
With regard to its casualty business, the Group allocates proportionately less capacity to business of this type than to property. Furthermore, SCOR's underwriting guidelines restrict its shares of casualty reinsurance programs and are more restrictive regarding certain areas with difficult or uncertain legal environments.
The Group's Property and Casualty Treaties underwriters manage client relationships and offer reinsurance support after a careful review and assessment of the cedants’ underwriting policy, portfolio profile, exposures and management procedures. They are responsible for writing treaty business as well as associated support small and medium size facultative risks in their respective territories within the limits of their individually delegated underwriting authority and the scope of underwriting guidelines.
Executive Officer and Chief Risk Officer of SCOR Global P&C. Any request for deviations from the underwriting guidelines is subject to special referral procedures at two key levels. At the first level, the request is submitted by the underwriting units to the Underwriting Management function, and where applicable, to the Legal Department. At the second level, for exposures exceeding certain thresholds or with specified characteristics, the request is submitted by the Underwriting Management function to the Group Risk Management function of SCOR, and to the Chief Executive
In order to reduce risks linked to potential behavior of insured persons , SCOR Global Life carries out a thorough assessment of the client, the client’s target clientele, the market and the design of the insurance product.
The underwriting of life business within the Group is under the worldwide responsibility of SCOR Global Life. The clients are life, pension or accident and health insurance companies worldwide. They are served by SCOR's specialized underwriters and actuaries who are familiar with the specific features of the markets in which they operate, in particular
with local lines of business and policy conditions as well as the technical specifics such as mortality tables, morbidity incidence rates and persistency. In the Life underwriting process, consideration is typically given to the quality of the client’s medical and financial underwriting standards, the target clientele of the ceding company as well as past experience to the extent credible data is available.
Furthermore, they set out the retention of SCOR Global Life for various risks and types of covers. They are approved by the Chief Executive Officer and Chief Risk Officer of SCOR Global Life. Business opportunities going beyond the stipulations of these guidelines are subject to a special referral procedure at two key levels in order to ensure that the business respects defined risk-adjusted return criteria and risk tolerance limits. These cases are examined at the SCOR
Global Life level by the Life Central Actuarial and Underwriting Department and by the Risk Management Department and, where applicable, the Finance Department. These departments are located in Charlotte, Cologne, Paris and Zurich.
Risk Management function. Thresholds or conditions for a referral to Group Risk Management are defined in specific guidelines.
In order to ensure that SCOR Global Life is continually kept up-to-date with biometric trends and scientific developments, SCOR Global Life uses the expertise of four dedicated technical research centers within the Life Central
Care and disability risks. The SCOR Global Life Research Centers provide recommendations for the implementation of the research results into the pricing, underwriting control and determination of exposure limits.
Global Life launched a project to integrate teams, processes and systems to create a uniform business platform and significant progress was achieved during 2012 with a move to offices for the SCOR Global Life teams in Charlotte, a uniform organizational structure for the Americas life markets fully integrated into the global and group-wide organization and processes, reallocation of portfolios between entities to be closer to clients and continuous system projects with a target implementation in 2013.
The activities of Non-Life and Life reinsurance take place in two different market environments. They are subject to heterogeneous external constraints, which generally have only very limited correlation with each other. The diversification and the overall balance between these two business areas provide stability. However, in some extreme scenarios Non-Life and Life risks and financial market and credit risks could accumulate. This exposes SCOR to accumulation and/or correlation risks which are difficult to quantify.
SCOR takes into account the effect of the diversification between Life and Non-Life in its internal model by setting parameters for the interdependence of the various lines of business.
Reinsurance can be written through professional reinsurance brokers or directly from ceding companies. The involvement of a broker in the placement of a reinsurance contract is a decision belonging to the ceding company, which depends on local market practices, the cedant’s worldwide reinsurance market knowledge, the complexity of the risks the cedant intends to transfer and the corresponding available reinsurance capacity in the market, the cedant’s capability and resources to structuring a market submission data, placing risks and administrating the placements. In most of the cases, reinsurance programs are syndicated to several reinsurers, which follow a leader, and in some instances a coleader.
For the year ended 31 December 2012, for Life the largest brokers SCOR wrote gross premiums written with were AON
The claims handling function is performed by local claims teams, located among other cities in Paris, Charlotte, Zurich,
Since 2011, SCOR has operationally used the RMS modelling results format as its common framework for assessing accumulations of natural catastrophe risk, including catastrophe risk management controls (Capacity Monitoring) and provision of data to its internal capital models, and retrocession department.
transfer solutions (e.g., catastrophe bonds) that are needed to ensure that the net aggregate exposure remains within predefined tolerance limits.
For peril/zones where neither internal nor external models are available, the following approaches are used:  Pricing is performed based on actuarial techniques using historical losses and other benchmarks.
level of the commitments, seriousness of the claims and the Group's assessment of the ceding company's claims'
 the estimated cost variation on claims already reported to the Group.
In determining the amount of its reserves, the Group generally uses actuarial techniques that take into account quantitative loss experience data, together with qualitative factors, where appropriate. The reserves are also adjusted to reflect reinsurance treaty terms and conditions, the variety of claims processing that may potentially affect the Group's commitment over time. With the exception of the reserves for worker’s compensation in the USA and most of the reserves of Commercial Risk Partners ("CRP"), the former Bermudan entity of the Group now in run-off and merged within GSNIC, which are discounted pursuant to American and Bermudan regulations, the Group does not discount Non-
The Group continues to pursue the active commutations policy of its portfolios initiated in 2003, the main goals being to reduce the volatility of claims reserves, to reduce the administrative costs particularly the oldest, and to allow the reallocation of capital. This policy will be continued by focusing efforts on the U.S. run-off activities, business exposed to
In determining its best estimates, the Group takes into consideration its past experience, current internal data, external market indices and benchmarks and other relevant information. The contracts’ liabilities established by the Group with respect to individual risks or classes of business may be greater or less than those established by ceding companies due to the use of different mortality tables or other assumptions. Actual events in a given period may be more costly than projected and, therefore, may adversely affect SCOR's operating results for such period.
A table showing changes in the mathematical reserves in Life reinsurance is provided in Paragraph 20.1.6 - Notes to the consolidated financial statements, Note 16 – Net Contract liabilities.
Reinsurers typically purchase reinsurance to cover their own risk exposures. Reinsurance of a reinsurer’s business is called a retrocession. SCOR retrocedes a portion of the risks it underwrite in order to limit its exposures and losses, and it pays premiums based upon the risks and exposures of its facultative and treaty portfolios, subject to such retrocession cover. Retrocession cover is subject to collectability in all cases where the original business underwritten suffers from a loss that falls into the retrocession contractual scope. SCOR remains primarily liable to the direct insurer on all risks reinsured although the retrocessionaire is liable to the Group to the extent of the cover limits purchased. SCOR monitors the financial condition, including ratings, of its retrocessionaires regularly on an ongoing basis. The financial condition is monitored upon receipt of any information on retrocessionaires and automatic feeding of retrocessionaires rating on a quarterly basis, paying particular attention to the retrocessionaires’ default risk in the treaty renewal period. The Group meets with the security departments of two large reinsurance brokers at least twice a year as part of this monitoring. It also analyzes external studies prepared by the security departments of these two reinsurance brokers. It reviews its retrocession arrangements periodically, to ensure that they fit closely to the development of its business, and revise its global retrocession program annually. Furthermore, to reduce the credit risk arising from its retrocessionaires, SCOR
An analysis of the share of retrocessionaires in contract liabilities by rating of the retrocessionaires and collateral from retrocessionaires in favor of SCOR at 31 December 2012 and 2011 is presented in Paragraph 20 – Financial information concerning the issuer's assets and liabilities, financial position and profits and losses, Note 16 – Net Contract liabilities and Note 21 - Net results of retrocession.
successfully placed a new cat bond, Atlas VI Capital Limited Series 2010-1, which provides the Group with EUR 75 million of protection against European windstorms and Japanese earthquakes for a risk period extending from 10 December 2010 to 31 March 2014. This transaction succeeds Atlas IV, which matured on 31 December 2010 and provided similar geographical cover of EUR 160 million. On 12 December 2011 the Group successfully placed a new cat bond, Atlas VI Capital Limited (“Atlas VI”) Series 2011-1 and 2011-2, which provides SCOR with USD 270 million of protection against U.S. hurricanes and earthquakes and EUR 50 million of protection against European windstorms, for a risk period extending from 13 December 2011 to 31 December 2014 for the U.S. series and 31 March 2015 for the
European series. This transaction succeeded Atlas V, which matured on 24 February 2012 and provided geographical cover that is similar to that covered by Series 2011-1 of Atlas VI.
On 1 November 2012 SCOR successfully places a new catastrophe bond (“cat bond”), Atlas Reinsurance VII Limited, which provides the Group with twofold protection of USD 60 million (“Class A Notes”) against US hurricanes and earthquakes, and EUR 130 million (“Class B Notes”) against European windstorms, for a risk period extending from 1
The loss payments covered by the Class A Notes are based on market share factors applied to the market insured loss, as reported by PCS for the US on an annual aggregate basis. Class B Note losses are covered on per-occurrence basis,
Global Life extended the protection offered by the 1st tranche by arranging an additional tranche with a lower attachment point. The Mortality Swaps reduced SCOR’s exposure to major mortality shock events. The agreements, which ran for a risk period from 1 January 2008 to 31 December 2011 and 1 January 2009 to 31 December 2011 respectively, matured
Fixed income investments are managed by SCOR Global Investments SE or by external managers monitored by SCOR.
Paragraph 20.1.6 – Notes to the consolidated financial statements, Note 26 – Insurance and Financial Risks – Credit
The portion invested in equities decreased from EUR 1,247 million at 31 December 2011 to EUR 1,176 million at 31 December 2012 given the macro-economic and financial environment. Most of the equity investments were in
The portion invested in fixed income investments increased from EUR 8,372 million at 31 December 2011 to
EUR 9,707 million at 31 December 2012. As set forth in SMV1.1, SCOR maintains a “rollover investment strategy” for its fixed income portfolio in order to have significant financial cash flows to reinvest in the event of a sudden change in the economic and financial environment, while seizing market opportunities. The outlook for the world economy in 2013 and beyond continues to be extremely uncertain, with various possible future outcomes (e.g., a double-dip scenario, a return of inflation or a progressive or sudden rise in interest rates). Its investment strategy is designed to immunize itself as much as possible from the negative consequences of these shocks.
SCOR's total exposure to government bonds and assimilated in its investment portfolio was EUR 3,601 million at 31 December 2012 of which EUR 1,449 million was invested in government bonds of countries within the EU, primarily
The liquidity, defined as cash, cash equivalent and short term investments, has decreased from EUR 3,055 million at 31 December 2011 to EUR 2,735 million at 31 December 2012.
For further detail on the investment portfolio for the years ended 31 December 2012 and 2011 see “Paragraph 20.1.6 -
SCOR is exposed to credit risk on the fixed income securities in its investment portfolio. See Paragraph 4.1.14 SCOR is exposed to losses due to counterparty default risks or credit risk. See also Paragraph 20.1.6 – Notes to the financial statements, Note 26 – Insurance and Financial Risks – Credit Risk. SCOR mitigates these risks by implementing a policy of geographic and sector diversification. Limits by counterparty exposure and by rating are also defined. An expost analysis is performed at a minimum, on a quarterly basis (sector, geographical area, counterparty, rating) and enables critical risks to be identified and evaluated in order to take appropriate actions.
See “Paragraph 20.1.6 - Notes to the financial statements, Note 6 - Insurance Business Investments” for a breakdown of fixed incomes securities included in the Group’s portfolio by remaining maturity at 31 December 2012 and 2011.
Non-Life reinsurance. The portfolio business volume split for the year ended 31 December 2012, was approximately 51% for Life reinsurance and 49% for Non-Life reinsurance based on gross written premiums.
 the geographic diversification of the Group’s business by: - operating in a large number of countries, both mature and emerging; - maintaining its policy of positioning itself in strong-growth markets as Asia-Pacific and Latin America; - operating as a composite reinsurer in China based on the license received in 2011, enabling SCOR
to add Life & Health reinsurance services to the existing Non-Life activities.
Life reinsurance by business area (Property and Casualty Treaties, Specialty Treaties, Business Solutions
(large corporate accounts underwriting essentially on a facultative business/occasionally direct insurance) and
See “Paragraph 20.1.6 - Notes to the financial statements, Note 2 - Segment information, for further detail on the results of the divisions.
In 2012, SCOR generated approximately 42% of its gross written premiums in Europe (2011: 49%), with significant market positions in France, Germany, Spain and Italy, 39% of its gross written premiums in North America, including
Bermuda and the Caribbean region (2011: 31%) and 19% of its gross written premiums in Asia and in the rest of the
On 5 June 2012, Standard & Poor's upgraded to "A+" from "A" the insurance financial strength ratings (IFSR) and longterm counterparty credit of SCOR SE (SCOR) and various guaranteed subsidiaries. All ratings have a "stable outlook".
On 15 December 2011, Moody's Investors Service affirmed the A2 insurance financial strength ratings (IFSR) of SCOR
SE (SCOR) and various guaranteed subsidiaries, and SCOR's Baa1 (hyb) subordinated debt rating. The rating outlook remained positive.
On 28 October 2011, Standard & Poor's Ratings Services reaffirmed its 'A' Financial Strength Rating and Counterparty
On 3 May 2011, Fitch Ratings affirmed SCOR's Long-term Issuer Default Ratings (IDRs) and Insurer Financial Strength
(IFS) ratings at 'A', respectively. The Outlook on the IDR and IFS remained positive
On 26 April 2011, Moody's Ratings affirmed its A2 insurance financial strength, outlook positive and its rated subsidiaries after the acquisition of the life mortality business of Transamerica Re.
On 7 October 2010, Moody’s raised the outlook on the “A2” Insurer Financial Strength Rating (IFSR) of SCOR SE and its main subsidiaries from “stable” to “positive”. According to the rating agency, this decision reflected “SCOR’s good franchise, diverse book of reinsurance business, excellent asset quality, and relatively low financial leverage.
“stable” to “positive”. According to the rating agency, “the outlook revision reflected our view of the positive momentum in
SCOR's financial profile. This mainly stems from the group's improved earnings, strong capitalization, and a strong enterprise risk management (ERM) program.”
Total SCOR Global Life SCOR Global P&C In EUR million 2012 2011 2010 2012 2011 2010 2012 2011 2010
Please refer to “Paragraph 4.1.1 – SCOR is exposed to diverse risk factors in the Non-Life and Life reinsurance businesses, 4.1.6 – SCOR may be adversely affected if its cedants, retrocessionaires, insurers or members of pools in which it participates do not respect their obligations, 4.1.10 – A significant portion of SCOR's contracts contains provisions relating to financial strength which could have an adverse effect on its portfolio of contracts and its financial position, 4.1.11 – Operational risks, including human errors or computer system failure, are inherent in SCOR business, 4.2.1 – SCOR faces risks related to its fixed income investment portfolio, 4.2.2 – SCOR faces risks related to its equitybased portfolio, 4.3 – Liquidity risks, 4.6 – Insurance of specific operational risks (excluding reinsurance activity), 11-
SCOR SE, and its consolidated subsidiaries has been the world’s 5th largest reinsurer (1) in 2012 and 2011, serving more than 4,000 clients.
The 1 January 2012 renewals confirmed the trend observed in 2011 towards the recovery of the insurance and reinsurance markets. In this environment, SCOR strengthened its positions by demonstrating a strict underwriting policy and prudent pricing. These renewals meant that SCOR was able to confirm the commitments set out in its strategic plan
Its risk management and capital shield strategy has enabled SCOR to absorb major shocks and approach the renewals under favorable conditions. The success of these renewals is due to SCOR’s extensive knowledge of the Group’s markets and clients, and to its ability to benefit from confirmed market fragmentation whilst seizing profitable growth opportunities.
The key takeaways of the 1 January 2012 renewals for SCOR were as follows:  Total premium growth of 13.9%. P&C Treaty business was up by 12%, while Specialty Treaties were up by 18%;  The weighted average pricing level was up by 2.2%, all else being equal. Price levels for P&C Treaties, weighted by variations in exposures and economic parameters, were up 2.9%, while Specialty Treaty price levels had only increased by 0.6% under the combined impact of competition in certain specialty lines (e.g.
By Net Reinsurance premiums written, source: “S&P Global Reinsurance Highlights 2012” (excluding Lloyd’s of London)
On a business segment level, the main developments were as follows: In the Non-Life Treaty segment:  70% of premiums were up for renewal;  Written premiums increased by 12% to EUR 1,717 million, compared to EUR 1,528 million up for renewal;  Private transactions represented 4 percentage points of global premium growth;  Proportional motor business (notably in the UK, China and the Netherlands) experienced particularly strong growth;  The geographical diversification of business increased, with the American continent now representing 21% of premiums and Asia representing 11%.
In the Specialty Treaty segment:  56% of premiums were up for renewal;  Written premiums increased by 18% to EUR 616 million, compared to EUR 520 million up for renewal;  The taking up of a strategic position in Aviation insurance resulted in 8 percentage growth points;  Pricing in lines exposed to economic uncertainties (Credit, Construction/Erection All Risks, Marine) remained particularly prudent.
In accordance with the “Strong Momentum” plan, the Group continued to re-balance its natural catastrophe portfolio by increasing its exposure to natural catastrophes in the United States, a market that benefitted from a relatively more favorable pricing dynamic of around +13.2%, compared to an increase of +4.6% in Europe.
continued to actively manage its risk portfolio, enabling it to achieve an average weighted price increase of 7% whilst reinforcing the quality of its portfolios: 7% of the business up for renewal were cancelled or restructured.
Asia, and more specifically in Japan and India. These two countries represented three quarters of the treaty premiums renewed at 1 April 2012, and each recorded growth of 25%. Premiums underwritten in Asia benefited from sharp price increases and significant improvements to coverage conditions, in both direct insurance and reinsurance.
Finally, SCOR achieved growth of 26% in EMEA, benefiting from pricing conditions up by 3.8% and expanding its business franchise with new cedants.
These renewals benefitted from the Group’s excellent franchise and market positions, which were reinforced by the recent rating upgrades. On a year-to-date basis, prices were up 3%, and the expected operational performance from renewed and newly underwritten business met all internal profitability targets.
 The June-July renewals were particularly important for the Latin American & Caribbean region, with close to half of the area’s business up for renewal. This region witnessed growth of nearly 14%, with improving expected returns thanks to a focused underwriting approach.
Specialty Line Treaties: premiums were up by 23% to EUR 242 million, with prices increasing on average by around 2%.
Key drivers of this growth were:  Credit & Surety, with premium growth of 28%, led by a significant treaty in China, and positive development in
 US CAT, with premium growth of 25%, on the back of price increases of +6%. SGPC continued to re-profile its overall CAT portfolio towards more US exposures for better balance and diversification, and its US CAT book towards large regional and national companies.
Starting in early 2012, SCOR Global Life novated and transferred portfolios included in the 2011 Transamerica Re business acquisition related to cedants and risks in Europe, Asia/Pacific and Latin America to its local representative units in line with the global market structure in order to harmonize customer relationships.
In Europe, SCOR Global Life (SGL) continued its strategy of implementing a simplified legal structure combined with operational optimizations. SGL initiated a project to integrate the business of Sweden Re in the legal entity SCOR Global
Global Life Reinsurance Ireland Ltd.. As per 1 January 2013, both legal restructurings took place.
Latin America, Asia/Australia), Central and Eastern Europe, Canada and UK/Ireland as the main contributors. The longevity team created in London in 2011 in order to participate in the attractive market segment was one main contributor to the UK premium growth in 2012 from treaties generated in 2011 and 2012.
August 2011 supported by the favorable foreign exchange rate development in this line of business.
The evolution of life reserves follows SCOR Global Life’s portfolio movements with a total increase of gross reserves by
7.1 Brief description of the Group and of the position of the issuer 79 7.2 List of issuer’s significant subsidiaries 81
Representative office of SCOR SE: Russia 25,68% SCOR Lime Street Ltd
SCOR Properties France 5 avenue Kléber SAS France 7 ORGANIZATIONAL STRUCTURE
The Life division operations are conducted primarily under the supervision and management of the SCOR Global Life SE.
The latter carries out its operations through branches in Germany, the U.K., Italy, Spain, Switzerland, Austria, Netherlands,
SCOR Global Life Reinsurance Ireland as well as composite Non-Life/Life subsidiaries and branches in Russia, South
The corporate functions of SCOR Global Life SE, SCOR Global P&C SE and of the Group in Paris, in Zurich and in Cologne
(mainly) define the underwriting policies and monitor its standard application, control the changes in natural catastrophe risk accumulation and control claims.
The Group’s subsidiaries, branches and offices are connected through a backbone network, applications and data exchange platforms, which allow local access to centralized risk analysis, underwriting or pricing databases and also give access to information on local market conditions, to be shared among the Group’s subsidiaries, branches and offices. In addition, through regular exchanges of personnel between the Group’s head offices in Paris and its non-French subsidiaries and branch offices, the Group encourages professional development and training of underwriters, actuaries, modellers, claims experts and risk controlers across its various geographic markets and business lines.
(CSSF) in Luxemburg as a company in charge of the management of the portfolio of assets specialized in the asset class, known as “Insurance-Linked Securities” (ILS).. On 31 August 2011, SCOR launched Atropos SICAV-SIF (“Atropos”), ILS
fund dedicated to insurance risks, which is managed by its subsidiary SCOR Alternative Investments SA and domiciled in
Luxemburg. SCOR SE wholly owns its operating subsidiaries (excluding the shares held by Directors). SCOR SE also makes loans to its subsidiaries and issues them guaranties so that they can underwrite under favorable conditions, especially by letting them benefit from its financial ratings. SCOR SE provides support in actuarial, accounting, legal, administrative, systems, internal audit, investment, and human resources to Group subsidiaries. Finally, SCOR SE acts, as needed, as retrocessionaire for its two operational subsidiaries through quota share treaties renewed annually which form the instrument for internal control within the Group through the annual allocation of capital to the operating subsidiaries based on the profitability expected from their underwriting. The contracts that formalize the relationships between SCOR SE
Treaties, Business Solutions (facultative) and Major Corporate Accounts to Société Putéolienne de Participations (the corporate name of which was changed to SCOR Global P&C), a French subsidiary wholly owned by SCOR. This contribution was approved on 16 May 2006, by the Combined Shareholders’ Meeting of the Company, effective retroactively
In connection with the second phase of the New SCOR project, SCOR announced on 4 July 2006, the conversion of SCOR
(formerly Revios Rückversicherung AG) by SCOR VIE. SCOR SE so became the first publicly traded French company to adopt the Societas Europaea form. Since the completion of the merger, SCOR Global P&C SE conducts its operations in
The Societas Europaea statute enables SCOR to strengthen its European and transnational identity, facilitate acquisitions in
On 18 July 2006, the Group announced that it had consolidated its real estate investments within a single real-estate company, SCOR Auber, a wholly owned subsidiary of SCOR SE. This consolidation enables these investments to be more dynamically managed, simplifies the legal structures of the Group’s real estate asset management, and reduces the management expenses, related to these investments. As at the date of this Registration Document, SCOR Auber holds 17 investment real estate properties, for offices purposes in their great majority, in Paris and in the Ile-de-France region
In 2009, the three Group Non-Life run-off companies based in the Americas dedicated to the run-off of the Non-Life portfolios following the termination of the activities in the concerned fields and segments – namely GSNIC, Commercial Risk
On 18 July 2011, SCOR finalised the sale of its subsidary Investors Insurance Corporation (IIC) to Athene Holding Ltd., as initially announced on 16 February 2011. This sale of SCOR’s US fixed annuity business, for USD 55 million, is in line with the Group’s strategy to develop its Life reinsurance activities around biometric risks, as set out in the Group’s strategic plan for the period 2010-2013, “Strong Momentum”. The transaction is also freeing up significant regulatory and rating capital.
Global Life reorganised its activities in the U.S. Thus, on 20 September 2011, the merger of SCOR Global Life Reinsurance
The Hubs are not responsible for underwriting or claims management. The local underwriting and claims management teams have direct reporting lines within the respective Non-Life and Life divisions. Hub shared service costs are allocated to the divisions based on a headcount allocation key.
SCOR’s decision to implement the Hub structure stemmed from the desire to realign its organizational structure following the successful consolidation of Revios and Converium. The Hub structure was designed to facilitate access to local markets through a network of local subsidiaries, branches and sales offices, provide better identification of profit centers in each major reinsurance market, obtain a deeper understanding of the specific features of local risks and develop local management and underwriting expertise, in order to provide better customer service and maintain relationships with ceding companies. The Hub structure was implemented in Cologne on 5 May 2008, in London on 20 May 2008, in New York on 18
Affiliates;  Section 20.1.6 – Notes to the Consolidated Financial Statements – Note 24: Related party transactions;  Section 25 – Information on Holdings;  Section 7.1.1 – Group operating companies as concerns the role of SCOR towards its subsidiaries;  Section 20.1.6 – Notes to the Consolidated Financial Statements Note 3 – Acquisitions and disposals as concerns the financial equation of the acquisitions of entities in 2012;  Section 20.1.6 – Notes to the Consolidated Financial Statements, Note 3 – Acquisitions and disposals as concerns the share of the entities acquired in 2012 income included in the Group’s consolidated income;  Section 14 – Administrative and management bodies as concerns the duties carried out in the subsidiaries by the
8.1 Major existing or planned property, plant and equipment 85 8.2 Environmental issues that may affect the utilization of property, plants and equipment 85
SCOR owns offices in Paris (France), Cologne (Germany), London (U.K.), Singapore and Madrid (Spain), where its local entities and subsidiaries have their corporate offices. Any surplus space is leased to third parties as part of SCOR's investment management business. The Group leases office space for its other business locations. It leases space separate from its head office for the purpose of safeguarding its data storage facilities for business continuity planning purposes. The
Paris 16, held by its OPCI (French real estate UCIT) SCOR-Properties, and occupied at 85% by SCOR, the remaining area being rented to a third party (See section 20.1.6.5 Tangible assets and real estate investments). On 28 December 2012, the lease of SCOR's former headquarters (La Défense, Paris), was terminated. Nevertheless, The Group is continuing to lease one floor for IT projects.
Refer to the environmental report in Appendix D - Paragraph 4 – Environmental impact of SCOR’s activitie.
The financial data of the SCOR Group is presented in “Paragraph 3 – Selected financial data” and in “Paragraph 20.1 –
Historical financial information: consolidated financial statements.” The commentary below is based on the financial data presented in the aforementioned paragraphs.
Refer also to “Paragraph 20.1.6 – Notes to the consolidated financial statements, Note 1 – Accounting principles and methods and Note 26 – Insurance and financial risks.”
After dividend 2012 payments, shareholders’ equity increased from EUR 4,410 million at 31 December 2011 to EUR 4,810 million at 31 December 2012. In 2011, SCOR’s shareholders’ equity increased by 5.8 % before the impact of dividends and after the EUR 76 million increase in capital corresponding to an increased number of outstanding shares of 4.3 million following the triggering of the Contingent Capital first tranche on 6 July 2011 (consolidated shareholders’ equity was EUR
Total investment and cash, amounted to EUR 22.6 billion at 31 December 2012 as compared to EUR 21.4 billion and EUR
The Group’s liquidity, defined as cash, cash equivalent and short term investments, which is well diversified across a limited number of banks and placed primarily in government securities and short-term investments with maturities less than 12 months, stands at EUR 2.7 billion at the end of 2012, down from EUR 3.1 billion at the end of 2011 (EUR 1.3 billion at
Life.The Group has a financial debt leverage position of 19.9% at 31 December 2012, as compared to 17.8 % at 31 December 2011 and 9.8% at 31 December 2010. This ratio is calculated as the percentage of subordinated debt (1)
CHF 65 million. In addition, SCOR actively managed its liabilities, buying back in 2012 an existing debt for 80% of its EUR
(1) The calculation of the leverage ratio excludes accrued interest from debt and includes the swaps effect related to the CHF 650 million and CHF 315 million subordinated debt issuance. As at 31 December 2011, the calculation of debt taken into account in the ratio did not exclude accrued interest and therefore the ratios published in the 2011 Registration Document and previous financial reporting was 18.1% as at 31 December 2011 and 9.9% as at 31 December 2010.
(2) Refer to “Paragraph 9.2.6 – Ratios’ calculation of financial ratios”.
Gross written premium for the year ended 31 December 2012 amounted to EUR 9,514 million, an increase of 25.1% at compared to EUR 7,602 million in 2011. The overall increase in gross written premium of EUR 1,912 million in 2012 is due to an increase for SCOR Global P&C of EUR 668 million and an increase of EUR 1,244 million for SCOR Global Life, primarily driven by the business acquisition of the mortality portfolio of Transamerica Re that in 2012 contributed EUR 1,693 million to gross written premiums (compared to EUR 677 million of gross written premiums for the five months period after the acquisition in 2011).
Gross written premium for the year ended 31 December 2011 amounted to EUR 7,602 million, an increase of 13.6% at compared to EUR 6,694 million in 2010. The overall increase in gross written premium of EUR 908 million in 2011 is due to an increase for SCOR Global P&C of EUR 323 million. An increase of EUR 585 million for SCOR Global Life was primarily driven by the premium from the acquired mortality business of Transamerica Re. This more than offset the negative FX
Net earned premium for the year ended 31 December 2012 amounted to EUR 8,399 million as compared to EUR 6,710 million and EUR 6,042 million for the years ended 31 December 2011 and 2010, respectively. The overall increase in net earned premium of EUR 1,689 million from 2011 to 2012 and EUR 668 million from 2010 to 2011 is consistent with the increase in gross written premiums.
The net return on invested assets in 2012 was 3.0% as compared to 3.7% in 2011 and 4.0 % in 2010.
Gross benefits and claims paid were EUR 6,613 million, EUR 5,654 million and EUR 4,791 million in 2012, 2011 and 2010, respectively(4).
The net results of the Group’s retrocession program were EUR (189) million, EUR (7) million and EUR (160) million in 2012,
However, the impact of alternative retrocession coverage, Atlas V, Atlas VI (SCOR Global P&C) and the mortality swaps
(SCOR Global Life) (see below in note 9.2.4 Capital shield policy) are not included in the net cost of retrocession as the products are accounted for as derivatives.
VII series placed in November 2012 accounted for as a reinsurance contract starting 2013, beginning of the coverage period
(1) Refer to “Paragraph 9.2.6 – Calculation of financial ratios”. (2) Net investment income better reflects the performance of assets invested by SCOR and therefore has replaced the investment income disclosed in the 2011
Registration Document and previous financial reporting. (3) The net return on investments published in the 2010 Registration Document was 3.2 % for 2010. The difference is due to a new presentation by segment following the creation of a new cost center unit (see “Paragraph 20.1.6.2 – Segment information”). (4) Gross benefits and claims paid were EUR 4,782 in 2010 The difference is due to the creation of a new cost center unit (see “Paragraph 20.1.6.2 – Segment information”). (5) Refer to “Paragraph 9.2.6 – Calculation of financial ratios”.
Operating income for the year ended 31 December 2012 amounted to EUR 645 million as compared to EUR 323 million in 2011 and EUR 490 million in 2010. The 2012 operating income has benefitted from the strong technical performance of
SCOR Global Life, the robust profitability of SCOR Global P&C even though impacted by higher than expected natural catastrophes losses, particularly in the fourth quarter of 2012 and the solid performance of SCOR Global investments, in spite of a low-yield environment.
SCOR generated a net income of EUR 418 million in 2012, compared to EUR 330 million and EUR 419 million respectively for the years ended 31 December 2011 and 2010. Although 2012 was impacted by higher than expected natural catastrophes (Earthquakes in Italy and Hurricane Sandy) especially in the last quarter of the year, the net income was positively influenced by the strong underlying technical performances both SCOR Global Life and SCOR Global P&C and the prudent asset management policy of SCOR Global Investments which safeguarded shareholders’ interests whilst delivering solid returns. In 2012, the effective tax rate was 20.4%. This results from a positive geographical rate mix partially offset by a negative EUR 12 million impact from the additional contribution to the 2010 exit tax on the capitalization reserve in France.
Return on equity(2) was 9.1%, 7.7% and 10.2% for the years ended 31 December 2012, 2011 and 2010 respectively. Basic earnings per share were EUR 2.27, EUR 1.80 and EUR 2.32 for the years ended 31 December 2012, 2011 and 2010.
In 2012, SCOR Global P&C continued to actively execute its P&C treaty business portfolio management strategy by further expanding property proportional, natural catastrophes and casualty businesses and by improving geographic diversification towards Asia and the Americas.
In 2012, gross premium written increased by 17% compared to 2011, of which 6% points were linked to foreign exchange impact (particularly due to the appreciation of the US Dollar). At constant exchange rate the growth was 11%, above the 9%10 % gross written premium increase announced in Strong Momentum. The growth was mainly driven by the improved performances of lines of business in P&C treaties and natural catastrophes and by improved geographical diversification towards Asia and the Americas.
(1) The Group cost ratio published in the 2010 Registration Document was 5.6 % as at 31 December 2010. The total expense base previously published was EUR
404 million in 2010. The difference is due to the creation of a new cost center unit (see “Paragraph 20.1.6.2 – Segment information”). (2) Refer to “Paragraph 9.2.6 – Calculation of financial ratios”.
In 2011, gross written premiums have increased by 8.8% at current exchange rate to EUR 3,982 million versus EUR 3,659 million in 2010. SCOR Global P&C strong January, April and July 2011 renewals confirmed SCOR’s excellent position in the reinsurance industry, as well as the validity of its hypotheses on the evolution of the reinsurance environment released in
SCOR Global P&C achieved a net combined ratio(1) of 94.1 % in 2012 against 104.5 % in 2011 and 98.7 % in 2010 (2). The improvement of the combined ratio was in line with expectations in spite of the main events in 2012 mostly hurricane Sandy,
Costa Concordia shipwreck, worldwide climate disturbances impacting agriculture in the United States and Brazil, and developments on the floods in Thailand. Natural catastrophes had a 7.6% impact on the Group net combined ratio for year end 2012 compared to a 18.5% impact in 2011.
The following table highlights losses due to catastrophes for the years 2012, 2011, and 2010: At 31 December
Number of catastrophes occurred during the financial year (1) 10 (7) 15 (5) 17 (4)
Losses and loss adjustment expenses due to catastrophes, gross 355(8) 949 346
(1) SCOR defines a catastrophe as a natural event involving several risks and causing pre-tax losses, net of retrocession, totaling EUR 3 million or more (2) Loss ratios are calculated on the basis of Non-Life claims, expressed as a percentage of Non-Life premiums earned (3) Net of recoveries and reinstatement premiums (assumed and retrocession) (4) Earthquakes in Chile, Haïti and New Zealand, floods in Saudi Arabia, Eastern Europe, China, Pakistan, Poland, Germany and Australia, storm Xynthia, Typhoon
Center Property insurers against the Aviation insurers (7) Excluding floods in Thailand (2011 event) and including : Hurricane Sandy, Dagmar Storm, Oklahoma Tornadoes, Tornadoes in Southern United States, May
Earthquakes (20 & 29/05/2012) in Italy, Montreal Rainstorm, Alberta Hail Storm, Typhoon Bolaven, Costa Rica Earthquake (8) Thailand floods 2011 event’s development impact is included in 2012 cat ratio
In 2012, SCOR was affected by the following catastrophes which resulted in net estimated losses greater than EUR 10 million as at 31 December 2012: Cat losses Date of loss Estimated losses as at 31 December 2012
(1) Refer to “Paragraph 9.2.6 – Calculation of financial ratios”. (2) The net combined ratio published in the 2010 Registration Document was 98.9 %. The difference is due to the creation of a new cost center unit (see Section 20.1.6.2 – Segment information).
In 2011, SCOR was affected by the following catastrophes which resulted in net estimated losses greater than EUR 10 million as at 31 December 2011: Cat losses Date of loss
Other natural catastrophes (less than EUR 10 million) 2011 41 42
(*) Resulting from best apportionment recoveries from Annual Aggregate cover based on expected payment patterns and subject to further adjustment depending upon actual payment patterns (**) Late information received from cedents in 2011
Floods in Poland and Germany August 2010 10 12 11 2010 earthquake in New Zealand/ Floods in Australia
September 2010/ December other natural catastrophes (less than EUR 10 million)
Important events in the development of the issuer’s business”, and “Paragraph 20.1.6.3 acquisitions and disposals”). With this acquisition and the consolidation of its position in the United-states, SCOR Global Life improved its position in the mortality-protection field.
In 2012, SCOR Global Life successfully continued to integrate the business acquired from Transamerica Re into its existing business operations, through the transfer and novation of the non-US domestic portfolios acquired to the appropriate SGL
1,693 to gross written premiums (compared to EUR 677 million of gross written premiums for the five month period after acquisition in 2011).
This increase was also accentuated by EUR 264 millions of positive exchange rate impact on premiums.
Business has developed by double-digit growth in critical illness, disability and personal accident. Longevity showed significant growth.
Life technical margin(1) in 2012 was 7.7 % compared to 8.1% in 2011 and 5.4% in 2010 on a comparative basis(2).
As part of its policy of diversifying its capital protection tools, on 1 November 2012 SCOR successfully placed a new catastrophe bond (“cat bond”), Atlas Reinsurance VII Limited, which provides the Group with twofold protection of USD 60 million (“Class A Notes”) against US hurricanes and earthquakes, and EUR 130 million (“Class B Notes”) against European windstorms, for a risk period extending from 1 January 2013 to 31 December 2015.
Due to the absence of ultimate loss clause, contracts with Atlas V Capital Limited, Atlas VI Capital Limited Series 2010-1, 2011-1 and 2011-2 have been accounted for as derivatives and are considered as balance sheet protection.
Refer to “Paragraph 4.4.1 – SCOR is exposed to risks related to legislative and regulatory changes and political, legislative, regulatory or professional initiatives concerning the insurance and reinsurance sector, which could have adverse consequences for its business and its sector”.
For detailed calculation of book value per share, refer to the table below: Return On Investments and Return On Invested assets
Return on investment and return on invested assets are calculated based on investments as defined for management purposes. The following table is a reconciliation of this and IFRS figures as presented in Paragraph 20 – Financial information concerning the issuer’s assets and liabilities, financial position and profits and losses: As at 31 December 2012
For detailed calculation of cost ratio refer to table below: (1) Total expenses are Investment management expenses, Acquisition and administrative expenses and other current operating expenses as presented in Paragraph 20 – Financial information concerning the issuer’s assets and liabilities, financial position and profits and losses
Return on equity is based on the Group’s share of net income divided by average shareholders’ equity (calculated as shareholders’ equity at the beginning of the period adjusted for the effect of all movements during the period, pro rata temporis)
(2) Pro-rata of 50%: linear acquisition throughout the period in 2012 and 2010, TARe impact pro-rata temporis in 2011
Effect of changes in foreign exchange rates (2) (10) 41 68
Change in fair value of investments (Untill 2011) 0 (5) 3
shares in an aggregate amount of EUR 75 million. Accordingly, SCOR issued 4,250,962 new ordinary shares on 11 July 2011, at an issuance price of EUR 17.643 per share.
On 16 May 2012, SCOR extended the cover level provided by its existing contingent capital facility by EUR 75 million with
UBS, as described in Section 20.1.6 – Notes to the consolidated financial statements, Note 13 - Information on share capital, shareholders' equity and capital management.
On 27 September 2012, SCOR re-purchased the entire tranche of its EUR 50 million perpetual subordinated Notes, as described in Section 20.1.6 – Notes to the consolidated financial statements, Note 14 – Financial debt.
– Notes to the consolidated financial statements, Note 14 – Financial debt.
Refer to Section 20.1.6 – Notes to the consolidated financial statements, Note 8 – Derivative instruments
As at 31 December 2012, the Group’s financial leverage was 19.9% as compared to 18,1% at 31 December 2011. This ratio is calculated as the percentage of subordinated debt (1) compared to total shareholders’ equity plus subordinated debt. The increase in 2012 is due to the placements of perpetual subordinated notes described above under Section 10.1.
The total liquidity of the Group of EUR 2.735 billion (comprised of cash and cash equivalents and short term investments)
Refer to Section 4.3.1 with respect to the risk related to letters of credit granted by SCOR to cedants which require a 100%
Within the strict respect of the criteria defined by its strategic plan, SCOR is watchful to dispose of a large access to any available and appropriate sources of financing in order to ensure the permanent display of its activities and strategy.
EUR, and matures on 8 June 2018. The calculation of the ratio includes the effect of these swaps.
Singapore and they are active world-wide on request of the local teams in charge of business development and client relationships.
Theoretical research helps the Group to understand its environment better and to take decisions. SCOR supports research, for example through the following organisations:  The Geneva association, composed of insurers and reinsurers, which aims at supporting research related to risks in insurance and reinsurance environment;  The university Paris Dauphine via its Master 218 of and the Ecole nationale d'assurances (ENASS) with its MBA;  Superior Institute of Reinsurance.
 Finance convention, in cooperation with Jean-Jacques Laffont foundation based in Toulouse, deals with risk management, long term investment, company governance and asset management strategy. For SCOR, the cost is
SCOR organizes Actuarial Awards in many countries: Germany, France, Italy, Spain and Portugal, Switzerland, and the
In 2010, as part of the Group’s strategic plan for Strong Momentum, SCOR created the SCOR Global Risk Center which is committed to the knowledge and science of risks in both the actuarial and other fields. The SCOR Global Risk Center is devoted to life insurance risks, non-life insurance risks and economic and financial environment risks and brings together
studies and publications produced or supported by SCOR, as well as all of the resources that SCOR wishes to reference for all those interested in risk. The Global Risk Center deals with all disciplines concerned by risk (mathematics, actuarial, physics, chemistry, geophysics, climatology, sociology, law, economics, finance, etc.).
SCOR was one of the first reinsurers to implement a uniform international information system. This policy has historically been reaffirmed during the integration periods following acquisitions, when the Group has aimed to rapidly return to a global international information system, and when launching new projects. In the accounting, consolidation and financial reporting domain, SCOR has delivered its global SAP solution, with a unique chart of accounts and standard processes, in most of its hubs throughout the Group. All accounting teams have been mobilized over the two last years, along with IT, to build this new global system at high stakes for SCOR.
Omega, thereby capitalizing on its existing strength. The project, which mixes technical modernization and development of functional evolutions, has now been launched and is expect to be completed in 2014.
RMS to monitor all liabilities and accumulations, including integration of market solutions. In the Life business, the embedded value calculation has been revised and integrated with the internal model. Other front-office solutions have been developed for SCOR Global Life for harmonizing and reinforcing substandard risks underwriting and tele-underwriting in different countries. Thanks to the acquisition of Transamerica Re, new underwriting solutions are proposed to SCOR's Life clients in America
The Group continues to work on extending and automating its Asset and Liability Management tool. After the implementation of the Non-Life module, the Life risks modeling module was developed during the last two years. This internal model will be central in the Solvency II compliance process, in which the information technology group, SCOR IT, is deeply involved.
SCOR IT is playing a key role in implementing the Group’s “Green SCOR” policy, and drives a number of elements of this multi-year plan, including data center consolidation, server virtualization, new low-energy desktops and laptops, and reduction in printing. Mobility has again been improved in line with the last standard PC deployment. It is still being enhanced through ongoing developments in line with technological and business needs evolutions, requiring a more permanent connection with the company, and compliance with security standards.
Finally, the Group’s IT strategy is aligned with its growth objectives. The mandate of SCOR IT under SMV1.1 is to complete the e-transformation of SCOR leading to competitive edge. In line with its goal of global tools, SCOR’s ambition is to implement a comprehensive real time system in full alignment with already identified or new business requirements. SCOR
12.1 Most significant trends in production, sales, inventory, costs, and selling prices since the end of the last financial year 111 12.2 Known trends, uncertainties, demands, commitments and events reasonably likely to have a material effect on the issuer’s prospects 111
SCOR Global P&C announced on the 7 February 2013, that during the January 2013 renewals it recorded a 9% increase in gross written premiums (to EUR 2.507 billion) with an expected 1.3% improvement in technical profitability for total contracts renewed and a price rise of 1.9% net of general inflation.
SCOR Global P&C continued to strengthen its competitive position during these renewals, both with its existing clients and with new cedants. The rating upgrades to “A+” which happened in the course of 2012 recognised this business franchise and its constant reinforcement, as well as provided a catalyst for new opportunities that strengthen SCOR Global P&C’s position at the very forefront of the reinsurance industry.
Gross written premiums increased by 9% to EUR 617, driven by a good performance in the Marine branch (+11 %). This branch benefited from a significant improvement in pricing conditions (notably +14.5% for non-proportional contracts, of which the portfolio share increased), following a year marked by exceptional losses in 2012. The year opened with the shipwreck of the Costa Concordia, and closed on Hurricane Sandy, which had a considerable impact on the Marine branch.
Moreover, prices for specialty treaties rose by more than 1% overall, showing strong resilience in branches sensitive to the economic cycle such as credit reinsurance and construction reinsurance, where rates remained stable (+0.7% and +0.4%
respectively). Moreover, while conditions remained difficult for the Aviation reinsurance market, SCOR Global P&C
Over all markets SCOR Global Life negotiates with its business partner on sophisticated business solution transactions with different motivations such as portfolio risk diversification.
Israel and Mexico opened in 2011, reinforcing its organizational structure in Latin America, (ii) developing the new subsidiary in Australia established in 2011 covering the Australian and New Zealand markets for continued growth in the
In 2012 SCOR Global Life successfully continued to integrate the business acquired from Transamerica Re into its existing business operations, through the transfer and novation of the non-US domestic portfolios acquired to the appropriate business units. This process, and the consolidation of US domestic organisations and activities within in one operating unit, are in line with SGL’s global market structure approach. In December 2012 SCOR Global Life Americas announced to offer an innovative solution for the rapid underwriting of simplified issue life insurance products.
An increasing demand can be seen for Family Takaful products, i.e. Islamic life insurance products and SCOR strengthens the efforts to participate in market growth.
In accordance with European law governing Societas Europaea and applicable French law, the principal responsibility of the
Company to the shareholders and convenes the shareholders’ meetings of the Company (the “Shareholders’ Meeting”). In addition, the Board of Directors reviews and monitors SCOR’s economic, financial and technical strategies. SCOR’s bylaws
(statuts) provide that the Board of Directors is composed of no fewer than nine and no more than eighteen members. The actual number of Directors may be modified by the shareholders at the Shareholders’ Meetings. The Board of Directors cannot by itself increase the number of its members.
Directors). Pursuant to French law and the Company's bylaws, the Shareholders' Meeting may appoint up to four Non-
Under SCOR’s bylaws (statuts), each director must own at least one Ordinary Share for the duration of his or her entire term of office. Under French law, a director may be an individual or a legal entity for which an individual is appointed as permanent representative, except for the Chairman, who must be an individual. Pursuant to article L. 225-20 of the French
Commercial Code, the permanent representative of a legal entity is subject to the same conditions, obligations and civil and criminal liabilities as if he or she were director in his or her own name, without prejudice to the joint and several liabili ty of the legal entity he or she represents. 12 of the 13 members of the Board of Directors are individuals and one director, Malakoff
The table below lists Directors (including the Employee Director) and Non-Voting Member, their date of birth, positions with
SCOR and principal business activities, the dates of their initial appointment as Directors and the expiration dates of their term of office.
Offices within the Group: Chairman of the Board: -SCOR Global P&C SE (France) -SCOR Global Life SE (France) - SCOR Global Life Americas Reinsurance Company (ex-SCOR Global Life U.S. Re Insurance Company) (US) - SCOR Reinsurance Company (US) - SCOR US Corporation (US) - SCOR Global Life Re Insurance Company of Texas (US) - SCOR Holding Switzerland AG (Switzerland) - SCOR Services Switzerland AG (Switzerland) - SCOR Switzerland AG (Switzerland) - SCOR Perestrakhovaniye (Russia)
France : Director: - BNP Paribas S.A. (France)* - Bolloré SA (France)* - Dassault Aviation SA (France)* - Fonds Stratégique d’Investissement (France)
Principal positions: Chairman and Chief Executive Officer: - Generali France (France) - Generali Vie (France) - Generali IARD (France)
Chairman of the Board of Directors: - Europ Assistance Holding - Generali France Assurances
Permanent Representative: - of Europ Assistance Holding at the board of Europ Assistance (Spain)
Vice-Chairman of the Board: - SCOR Global Life Rückversicherung Schweiz AG - FINMA (Switzerland)
Principal Position: Chairman of the Institut Français des Administrateurs (IFA, French Society of Directors) (France)
Other positions: France: Chairman: - Institut du Développement Durable et des Relations Internationales (IDDRI) (association) - Transparency-International France - Observatoire de la Responsabilité Sociétale de l’Entreprise (ORSE) - Epargne Sans Frontière
Director: - Alcatel-Lucent* - Crédit Agricole S.A.* - Gaz de France* - SCOR VIE - Technip SA*
Prévoyance to the Board of Directors: Out of France: Director: - Vida Caixa Grupo (Spain)
Chairman of the Board of Directors: - Institut Diderot (Fonds dotation) - THOT (Fonds dotation) - Dream It (Fondation
Chief Executive Officer: - MMA IARD (SAM) - MMA VIE (SAM) - COVEA (SGAM)
Chairman of the Board of Directors: - MMA IARD (SA) - MMA VIE (SA) - MMA Coopérations (SA)
Out of France: Director: - Covéa Lux (Luxembourg) - SCOR Global Life Rückversicherung AG (Switzerland)
Director: - CASER (Spain) - SCOR Switzerland AG - SCOR Holding (Switzerland) AG (Switzerland)
Other positions: France Director: - Bouygues SA* - Alstom SA* - Nexans SA* - Société Foncière Financière et de Participations (FFP)* - Verner Investissements SAS
Director: - CNP (Companie Nationale Portefeuille) (Belgium) - Erbé S.A. (Belgium) - GBL (Groupe Bruxelles Lambert) (Belgium)
_________________________________________________________ (1) Member of the Strategic Committee (2) Member of the Risk Committee (3) Member of the Audit Committee (4) Member of the Compensation and Nomination Committee (*) Companies which shares are listed on a regulated or organised market 14.1.2 BIOGRAPHICAL INFORMATION ON MEMBERS OF THE BOARD OF DIRECTORS
Denis Kessler, a French citizen, is a graduate of HEC business school (Ecole des Hautes Etudes Commerciales) and holds a PhD in economics and advanced degrees in economics and social sciences. He was Chairman of the Fédération
Française des Sociétés d’Assurance (FFSA), CEO and member of the Executive Committee of the AXA Group and
Claude Tendil, a French citizen, began his career at the Union des Assurances de Paris in 1972. He joined the Drouot
Group in 1980 as Chief Operating Officer; he was promoted in 1987 to Chief Executive Officer, and in 1987 was appointed
Entreprises Mututelles d’Assurances (GEMA) for three years. He was re-elected in 2011 for 3 years. . In November 2010, he was appointed to the Conseil Economique et Social et Environnemental (CESE).
of Zurich Financial Services, member of the Swiss Federal Banking Commission EBK between 1 July 2007 and 31
Charles Gave, a French citizen, has been researching tactical asset allocation for over forty years. In 1974, after three years as a financial analyst with a French investment bank, he created CECOGEST, an independent research firm through which he serviced a wide portfolio of clients across the world for 12 years. In 1986, Charles Gave stepped away from pure research to move into money management: he co-founded Cursitor-Eaton Asset Management where he was in charge of investment policy and managed over 10 billion U.S. dollars of institutional money on a global asset allocation mandate.
Cursitor was sold in 1995 to Alliance Capital which Charles finally left in 1998 to create GaveKal where he currently serves as Chairman. Today, he is a member of the board of directors of Marshall-Wace, Grace Financial and the chairman of the
Kevin J. Knoer, an American citizen, has 30 years of insurance experience, including risk control & engineering and industrial risk underwriting. He holds a Bachelor of Science degree and an MBA and has served as a submariner in the
Monica Mondardini, an Italian citizen, holds a degree in Economic and Statistical Sciences from the University of Bologna.
Head of the “Hachette livre” international division based in Paris. In 1998 she joined the Generali group as CEO of Europ
Since January 2009, she is the CEO of Gruppo Editoriale L’Espresso S.p.A. She is also a director of Credit Agricole, Atlantia
Committee on Corporate Governance (CICA, CDNX & TSX), created in 2000 , acted as Chairman of the Board of Directors of CBC/Radio-Canada and as Chairman of the "Institut canadien des comptables agréés". She was also the first woman to serve as President of the Quebec Chamber of Commerce. She became a Member of the Order of Canada in 1989 and a
Jean-Claude Seys, a French citizen, has spent his career in the insurance and banking industry. He was Chairman and
Daniel Valot, a French citizen, former student of the Ecole Nationale d’Administration and Counsellor to the French
Accounting Office (Cour des Comptes), was also in particular Technical Cooperation Counselor to the French Embassy in
Director: SCOR Global Life SE (France) SCOR Global P&C SE (France) SCOR Holding (Switzerland) AG (Switzerland) SCOR Switzerland AG (Switzerland) SCOR Services Switzerland AG (Switzerland) SCOR Alternative Investments (Luxembourg)
Chairman of the Board of Directors: SCOR Holding (UK) Ltd (U.K.) SCOR Insurance (UK) Ltd (U.K.) SCOR UK Company Ltd (U.K.) SCOR (UK) Group Ltd (UK) SCOR Lime Street Limited (U.K.)
2006 Chairman of the Board of Directors: REHALTO Prévoyance Ré (France) - Untill 28 June 2012
Permanent Representative: - SCOR Global Life SE at MUTRE S.A.’s Board (France)
Director: SCOR Holding (Switzerland) AG (Switzerland) SCOR Reinsurance Asia-Pacific PTE Ltd (Singapore) SCOR Global Life Re Insurance Company of Texas (U.S.)
2004 Director : SCOR UK Company Ltd. (U.K) SCOR UK Group Ltd. (U.K) SCOR Channel Ltd. (Guernsey) Arisis Ltd. (Guernsey) General Security Indemnity Company of Arizona (U.S.) General Security National Insurance Company (U.S.) SCOR Reinsurance Company (U.S.) SCOR Canada Reinsurance Company (Canada) SCOR Reinsurance Asia-Pacific Pte Ltd (Singapore) Finimo Realty Pte Ltd (Singapore) SCOR Reinsurance Company (Asia) Ltd (Hong Kong) SCOR Services International Ltd (Hong Kong) Arope Insurance SAL (Lebanon) SCOR Switzerland AG (Switzerland) SCOR Holding (Switzerland) AG (Switzerland) Blue Star Syndicate Management Limited (U.K.)
Paul Rutledge 59 President and Chief Executive Officer of SCOR Global Life Americas
Director : SCOR Global Life SE (France) SCOR Global P&C SE (France) SCOR Holding (Switzerland) AG (Switzerland)
François de Varenne 46 Chief Executive Officer of SCOR Global Investments SE
Director : SCOR Alternative Investments SA (Luxembourg) SCOR ILS Fund SA, SICAV-SIF (Luxembourg)
(1) Prior to joining the Company, Paolo de Martin was an executive officer of Converium Holdings AG since 2006. (2) Benjamin Gentsch was an executive officer of Converium Holdings AG since 2002 14.1.4 BIOGRAPHICAL INFORMATION ON THE MEMBERS OF THE EXECUTIVE COMMITTEE
Paolo De Martin, an Italian citizen, graduated from Ca’ Foscari University, Italy, with a degree in Business Economics. He subsequently spent two years in the optical business as founder and managing partner of an eyewear manufacturer. He joined General Electric Company (GE) in 1995 as a finance trainee in London. In 1997, he joined GE’s internal auditing & consulting Group, charged with assignments in multiple GE businesses in the Americas, Europe and Asia-Pacific. In 2001,
Company, where from 1990 to 1998 he directed treaty underwriting in Asia and Australia. In 1998, he joined Zürich Re as head of international underwriting responsible for strengthening the company’s position in Asia, Australia, Africa and Latin
President in charge of Specialty Treaties. In September 2007, he was appointed Chief Executive Officer of SCOR
(Deutschland) AG in May 2009. In July 2010, he was appointed Deputy Chief Executive Officer of SCOR Global Life SE. He is a fellow of the German Association of Actuaries (DAV). As at 1st October 2012, he is promoted Deputy Group Chief Risk
Baloise in Basel. After 23 years of experience in facultative and treaty reinsurance, Gilles Meyer was Chief Executive Officer
of Alea Europe from 1999 to 2006, where he was in charge of property-casualty reinsurance and Life reinsurance, and was
Manager of group underwriting from 2005 to 2006. He joined the Group in January 2006 and has managed the Germanspeaking markets of SCOR Global P&C based in Hanover, Basel, and Winterthur. He was named head of Business Unit 1 of SCOR Global Life and a member of the Group Executive Committee in November 2006, then Deputy Chief Executive
Executive Officer and then, beginning in April 2004, as Chief Executive Officer. On 5 July 2005, Victor Peignet was appointed manager of all property reinsurance operations at SCOR Global P&C. He is currently Chief Executive Officer of
Northeastern University for graduate studies in Actuarial Science. He is a Fellow of the Society of Actuaries and a Member of the American Academy of Actuaries. Paul Rutledge has more than 30 years of experience in the insurance industry. He was president of Transamerica Re, a position he has held since joining the organization in 1998 until August 2011. He also served on the boards of directors for Transamerica International Re (Bermuda) Ltd. and Transamerica International
Officer of SCOR Global Life Americas and the Deputy Chief Executive Officer of SCOR Global Life SE.
Philippe Trainar, a French citizen, is a former student of the Ecole Nationale d’Administration and has a BA in Economics.
“Commission économique de la nation.” Philippe Trainar has also carried out many scientific works on the risk, insurance and solvency as well as economy, which have been published in scientific journals such as the Journal of Risk and
François de Varenne, a French citizen, is a graduate of the Ecole Polytechnique, a civil engineer of the Ponts et Chaussées and holds a doctorate in economic sciences. He graduated as an actuary from the Institut de Science Financière et d’Assurances (ISFA). François de Varenne joined the Fédération Française des Sociétés d’Assurances (FFSA) in 1993 as
15.1 Amount of remuneration paid and benefits in-kind 136 15.2 Total amounts set aside or accrued to provide pension, retirement, or similar benefits for financial year 2012 143
Appendix B - Report of the Chairman of the Board of Directors on the terms and conditions for preparing and organising the work of the Board of Directors and on internal control and risk management procedures in compliance with Article L. 225-37 of the French Commercial Code – Part I – Conditions for preparing and organising the work of the Company’s Board of
Directors – f) Principles and rules for the determination of compensation and in-kinds benefits for corporate officers.
Fees paid to directors for 2012 and 2011 are broken down as follows: Mr. Gérard Andreck 58,000 47,100
Moreover, certain SCOR directors participate, or have participated, on the Boards of Directors of the Group’s subsidiaries and received directors’ fees in 2012 and/or 2011 as follows: SCOR Holding (Switzerland) AG
Gross compensation paid in 2012 to the Group Executive Committee members (including the Chairman and Chief Executive
The Board of Directors of SCOR has decided, during the meeting of 12 December 2008, to apply the AFEP (Association of
(1) In Section 15.1.2 Executive Committee members remuneration, the exchange rates used (official exchange rates of the Registration Document) are : 1
In the event of termination of the Chairman and Chief Executive Officer Office, the benefits he may be allocated would be determined depending on the following situations:  In the event that the Chairman and Chief Executive Officer is dismissed for misconduct or following a notoriously negative performance of the Company (non-achievement of the performance condition (C_n) as described below for at least two years over the three previous ones) no compensation will be due.
 In case his departure is imposed or if he is dismissed ad nutum, for difference of opinion regarding the Group's strategy for instance, the Chairman and Chief Executive Officer will benefit from a cash payment equal to the amount of fixed and variable compensations paid to him by the Group for the two financial years prior to his departure. This payment is subject to the satisfaction of the performance condition (C_n) defined below for at least two out of the three years preceding the date of departure of the Chairman and Chief Executive Officer.
 In case of imposed departure or dismissal resulting from a hostile takeover bid leading to a change in control of
SCOR, the Chairman and Chief Executive Officer will benefit from a cash payment equal to the amount of fixed and variable compensations paid to him by the Group for the two financial years prior to his departure. This payment is subject to the satisfaction of the performance condition (C_n) as defined below for at least two out of the three years preceding the date of his departure. Furthermore, the performance shares and stock-options which have been granted prior to his departure will be subject, in totality, to the performance conditions of each plan as approved by the Board of Directors at the time of the grant.
The criteria of the performance conditions can be found in the management report of the Board of Directors.
The following table presents a summary of the total compensation including gross compensation, shares and stock options granted to the Corporate Officer for fiscal years 2012, 2011 and 2010:
of the performance and free shares granted until the termination of his duties.
The following table presents the summary of gross compensation paid to the Corporate Officer during fiscal years 2012,
In accordance with the AFEP/MEDEF corporate governance code of listed corporations, the following tables present for the
Executive and Corporate Officer the stock options granted and exercised during the fiscal year as well as the grants and performance shares vested during the fiscal year.
Denis Kessler 3 May 2012 125,000 2,063,750 4 May 2014 4 May 2016
Paolo De Martin (Paid in CHF (1)) 1,290,859 1,290,281 1,261,331 1,216,715 1,233,029 1,215,595
Members of the Executive Committee 7,443,384 6,655,540 5,909,191 5,715,294 5,255,148 4,926,898
The Compensation and Nomination Committee proposes to the Board of Directors the variable compensation attributed to the members of the Executive Committee (other than the Chairman and Chief Executive Officer) in agreement with the
Paolo De Martin (Paid in CHF (1)) 705,687 550,436 34,736(2) 1,290,859 673,292 552,348 (6)
(1) The compensation is paid in CHF, the exchange rate used is: 1 EUR = 1.2045 CHF (the exchange rate of reference for the DDR) (2) Those allowances cover business expenses (3) The compensation is paid in USD since 10 August 2011, the exchange rate used is: 1 EUR = 1.2843 USD (the exchange rate of reference for the DDR) (4) This amount includes an expatriation premium related to fiscal year 2010 (5) The compensation is paid in CHF from 1 October 2011. The compensation is paid in CHF, the exchange rate used is: 1 EUR = 1.2045 CHF. (6) This amount includes a specific bonus of CHF 120,000 for the Transamerica Re acquisition (7) This amount includes an expatriation premium related to fiscal year 2011 (8) Frieder Knüpling is member of the COMEX since 1 July 2010. He is Deputy Chief Risk Officer since 1 October 2012 (9) Philippe Trainar is member of the COMEX since 1 April 2010 as Chief Risk Officer (10) This amount includes an expatriation bonus for 2012
(1) The compensation is paid in CHF, the exchange rate used is: 1 EUR = 1.2045 CHF (the exchange rate of reference for the DDR) (2) Those allowances cover business expenses (3) This amount includes an expatriation premium related to fiscal year 2010 (4) The compensation is paid in USD since 10 August 2011, the exchange rate used is: 1 EUR = 1.2843 USD (the exchange rate of reference for the DDR) (5) The compensation is paid in CHF from 1 October 2011. The compensation is paid in CHF, the exchange rate used is: 1 EUR = 1.2045 CHF. (6) Frieder Knüpling is member of the COMEX since 1 July 2010. He is Deputy Chief Risk Officer since 1 October 2012 (7) Philippe Trainar is member of the COMEX since 1 April 2010 as Chief Risk Officer (8) This amount includes a payroll adjustment of CHF 12,000 (EUR 9,963) for the years 2011 and 2010
For additional information on stock options held by members of the Executive Committee, refer to Sections 17.2.2 - Stock options held by members of the Executive Committee and other company officers as at 31 December 2012 and 17.2.3 –
Free allocation of shares to COMEX members and other company officers as at 31 December 2012.
B - Report of the Chairman of the Board of Directors on the terms and conditions for preparing and organising the work of the Board of Directors and on internal control procedures in compliance with Article L. 225-37 of the French Commercial
a cash payment compensating him for his inability to definitively acquire Ordinary Shares granted to him for free prior to his departure and which he would be unable to acquire due to the terms and conditions of the applicable free share allocation plan. The amount of this cash payment is equal to the product of the number of shares concerned by the average value of the opening prices of the Ordinary Shares of SCOR SE in the Paris Stock exchange during the twenty trading days preceding the date of the change in the structure.
The pension benefits offered to the members of the Executive Committee who are not French citizens are comparable to the pension benefits offered to those who are French citizens.
Appendix A – Unconsolidated corporate financial statements of SCOR SE, Note 6 – Contingency reserves.
Gérard Andreck Director 2013 (*) 18 March 2008 (1) tbc (2)
Company or one of its subsidiaries providing for benefits upon termination of such agreement.
SE include French legal provisions, as well as rules dictated by its market authorities. SCOR believes that its application of corporate governance principles is appropriate and is in compliance with the best practices of corporate governance in effect in France in consideration with AMF rules.
17.1 Number of employees 150 17.2 Information on shareholdings and stock options or Company stock purchases by members of Administrative and Management bodies 151 17.3 Plans providing employee participation in Company 157 17.4 Defined pension schemes 167
The total number of employees of the Group increased from 2,184 as at 31 December 2011 to 2,284 as at 31 December 2012. The distribution of personnel covers the various geographical areas to meet strategic principles of the Group.
Americas (4) Zurich Hub covers Switzerland and Israel (5) Köln Hub covers Germany and Austria (6) London Hub covers United Kingdom, Ireland and Sweden (7) Singapore Hub covers China, Hong-Kong India, Japan, Korea, Malaysia, Singapore, Taiwan and Australia (8) SCOR Global Life SE controls 100% of the capital of ReMark. Due to its specific activity, its own business model and its own organization, ReMark is managed independently from the Group in terms of human resources (9) "Group Functions and Support" includes the Group Finance, Risk and Operations departments as well as the departments directly managed by the Chairman and Chief
December 2012) and Telemed (29 employees at 31 December 2012) are 100% subsidiaries of SCOR Global Life SE, managed independently from the Group in terms of human resources and not aggregated in the division.
17.2 Information on shareholdings and stock options or Company stock purchases by members of administrative and management bodies 17.2.1 NUMBER OF SHARES HELD BY DIRECTORS AND SENIOR MANAGERS
Mr Charles Gave Acquisition of shares for a total amount of EUR 10,000
Mrs Guylaine Saucier Acquisition of shares for a total amount of EUR 10,000
Non-voting Director Mr. Georges Chodron de Courcel Acquisition of shares for a total amount of EUR 10,000
17.2.2 STOCK OPTIONS HELD BY THE MEMBERS OF THE EXECUTIVE COMMITTEE AND OTHER COMPANY OFFICERS AS AT 31 DECEMBER 2012
The table below presents the stock options and stock purchase allocation plans awarded to the members of the Executive Committee on 31 December 2012: Options exercised
Potential transaction volume (EUR) Exercise period 02/27/2013 06/02/2013 08/25/2014 09/15/2015 09/14/2016 09/12/2017 05/21/2018 03/22/2019 03/18/2020 03/23/2015 to 03/22/2021 03/23/2022 12/14/2016 09/12/2017 09/09/2018 03/22/2019 03/18/2020 03/22/2021 03/23/2022 09/12/2017 05/21/2018 03/22/2019 03/18/2020 03/23/2022 09/12/2017 05/21/2018 03/22/2019 03/19/2014 to 03/18/2020
Potential transaction volume (EUR) Exercise period 03/22/2021 03/23/2022 09/14/2016 09/12/2017 05/21/2018 03/22/2019 03/18/2020 03/22/2021 02/27/2013 06/02/2013 08/25/2014 09/15/2015 09/14/2016 09/12/2017 05/21/2018 03/22/2019 03/18/2020 03/22/2021 03/23/2022 09/01/2021 23/03/2012 09/14/2016 09/12/2017 09/09/2018 03/22/2019 03/18/2020 03/22/2021 03/23/2022
The table below presents the share allocation plans awarded to the members of the Executive Committee on 31 December 2012: Plan Share award rights
Total 202,005 1,485,220 François de Varenne 2005 Plan 7,000 17.97 125,790 09/01/2007
(*) In addition, in 2011, a limited number of executive members of Transamerica Re received, as a special measure in the course of the completion of the acquisition of Transamerica Re, a specific Integration Deferred Bonus paid in SCOR shares (141,500 free shares and performance shares for 15 Partners including 24,000 performance shares for Paul Rutledge) All these shares, potentially transferable on 11 August 2013, are subject to the satisfaction of performance and presence conditions. (1) This collective free shares Plan to the employees of the Company that are France residents, under the collective agreement signed on 20 July 2012 as part of the negotiations with the social partners of France, concerning the profit-sharing arrangement established by the 28 July 2011 law which relates to financing for social security in 2011. This plan provides an identic allocation of 5 free shares without a presence condition nor a performance condition.
March 2010 are subject to the satisfaction of performance conditions. However all the shares allocated since 16 March 2009 to the Chief Executive Officer are subject to the satisfaction of performance conditions. Please refer to 17.3 of this
Registration Document and the registration documents of SCOR filed with the Autorité des marchés financiers on 8 March 2012 and 8 March 2011 under number n. D.12-0140 and D.11-0103 for the details of the performance conditions applicable to the stock-options.
Code, to grant upon proposal of the Compensation and Nominations Committee, on one or more occasions for the benefit of staff members and the corporate officer, of the Company and companies or groups linked to it in terms of Article L.225-180 of the Commercial Code, options entitling to the subscription of new ordinary shares of the Company in issue as to increase its capital, as well as options entitling to purchase shares of the Company from acquisitions made by it as provided by law within the limits of a number of options giving right to a maximum of three million (3,000,000) of shares. This authorization was given for a period of eighteen months from 4 May 2011 and had canceled and replaced, for the unused portion thereof, the previous authorization as at 28 April 2010.
On 3 May 2012, the General Shareholder’s meeting of the Company's Board of Directors had authorized, in its eighteenth resolution, the Company's Board of Directors, under the provisions of Articles L.225-177 to L.225-185 of the Commercial
Code, to grant upon proposal of the Compensation and Nominations Committee, on one or more occasions for the benefit of members of staff and the corporate officers, of the Company and companies or groups linked to it in terms of Article L.225-
180 of the Commercial Code, options entitling to the subscription of new ordinary shares of the Company in issue as to increase its capital, as well as options entitling to purchase shares of the Company from acquisitions made by it as provided by law within the limits of a number of options giving right to a maximum of one million (1,000,000) of shares. This authorization was given for a period of 18 months from 3 May 2012 and had canceled and replaced, for the unused portion thereof, the previous authorization as at 4 May 2011.
“Partners”). Partners are given specific responsibilities in terms of significant achievements, high impact project management and leadership. Therefore, they benefit from a specific and selective program in terms of information sharing, career development and compensation schemes. Partners represent approximately 25% of the total number of staff.
The Company's Board of Directors of 19 March 2012, on the proposal of the Compensation and Nominations Committee of 19 March 2012, decided to allocate on 23 March 2012 125,000 stock options to the Chairman and Chief Executive Officer and 304,000 stock options to the others members of the Executive Committee.
Those options can be exercised at the earliest four years after the grant date, if the presence condition (4 years) is respected. The exercise price is calculated without discount, based on the weighted average price of SCOR’s shares on the
Company's Board of Directors to make, on one or more occasions, the staff members or to the corporate officer of the
Company and of companies or groups affiliated with it pursuant to Article L. 225-197-2 of the French Commercial Code, free allotments of existing or yet-to-be-issued shares of the Company and resolved that the Company's Board of Directors of the
The Shareholders’ Meeting also decided that (i) the total number of free shares granted under this authorization may not exceed 3,000,000 Shares, (ii) the allocation of shares to their beneficiaries will be definitive only after a vesting period of a minimum set at two years for tax residents of France and a minimum of 4 years for beneficiaries not tax residents of France,
This authorization was given for a period of eighteen months from 4 May 2011 and had canceled and replaced, for the unused portion thereof, the previous authorization as at 28 April 2010.
The Shareholders’ Meeting also decided that (i) the total number of free shares granted under this authorization may not exceed 4,000,000 Shares, (ii) the allocation of shares to their beneficiaries will be definitive only after a vesting period of a minimum set at two years for tax residents of France and a minimum of 4 years for beneficiaries not tax residents of France,
France would be deleted, and (iv) the Company's Board of Directors of the Company will have the authority to increase the lengths of the acquisition period and the holding obligation period.
All the shares awarded to the Executive Committee members and Senior Global Partners and half of the allocations awarded to the other (less Senior Global Partners) beneficiaries, are subject to the satisfaction of performance conditions.
Following the authorization by the Shareholders' Meeting on 3 May 2012, the Company's Board of Directors of 3 May 2012, on the proposal of the Compensation and Nominations Committee of 19 March 2012, decided to grant performance shares to the Chairman and Chief Executive Officer.
Following the authorization by the Shareholders' Meeting on 3 May 2012, the Board of Directors of 26 July 2012, on the proposal of the Compensation and Nominations Committee of 26 July 2012, has set forth a collective free shares Plan to the employees of the Company that are France residents, under the collective agreement signed on 20 July 2012 as part of the negotiations with the social partners of France, concerning the profit-sharing arrangement established by the 28 July 2011 law which relates to financing for social security in 2011. This plan provides an identic allocation of 5 free shares without a presence condition nor a performance condition. Following this decision 3,180 free shares were allocated on 26 July 2012 to each employee of the Company that is France resident (except the Chairman and Chief Executive Officer)
Following the authorization by the Shareholders' Meeting on 3 May 2012, the Company's Board of Directors of 26 July 2012, on the proposal of the Compensation and Nominations Committee of 26 July 2012, implemented a SCOR Long Term
Group long term development. The LTIP plan is entirely based on SCOR performance shares.
The Chairman and CEO, under the authority given by the Board of Directors held on 26 July 2012 for the implementation of this plan, allocated on 26 July 2012 108,500 performance shares to 23 Partners of the Company.
All the shares made under the LTIP are subject to the satisfaction of the same performance conditions as those set for the 19 March 2012 performance shares plan (for the description of the performance conditions, refer to paragraph “19 March 2012 performance shares ”) and also to a market condition based on the comparison of the Total Shareholder Return (TSR)
of SCOR with its main peers over two periods of respectively three and six years (respectively between 2012 and 2015 and
Following the authorization by the Shareholders' Meeting on 3 May 2012, the Company's Board of Directors of 30 October 2012, on the proposal of the Compensation and Nominations Committee of 30 October 2012, decided to grant performance shares to certain Partners hired after 19 March 2012.
The Chairman and CEO, under the authority given by the Board of Directors held on 19 March 2012 for the implementation of this plan, allocated on 30 October 2012 98,400 performance shares to 24 Partners.
Partners) beneficiaries, are subject to the satisfaction of performance conditions (for the description of the performance conditions, refer to paragraph “19 March 2012 performance shares”).
The table below presents the total number of shares allocated in 2011 and 2012 by category within the Group : Total number of LTIP shares allocate in 2012
Total number of shares allocated in 2012 (excludin g LTIP and PPP)
Total number of beneficiar ies in 2012 (excludin g LTIP and PPP)
(1) Chairman and Chief Executive Officer (2) Including employees of Transamerica Re (3) In addition, in 2011, a limited number of executive members of Transamerica Re received, as a special measure in the course of the completion of the acquisition of
Transamerica Re, a specific Integration Deferred Bonus paid in SCOR shares (141,500 free shares and performance shares for 15 Partners including one member of the Executive Committee). All these shares, potentially transferable on 11 August 2013, are subject to the satisfaction of performance and presence conditions
From 30 October 2012 to 30 October 2016 included No holding period
From 26 July 2012 to 26 July 2020 included No holding period
Requirement of presence at the company as at 19 March 2014 Performance conditions
From 19 March 2012 to 19 March 2014 included 2 years
From 1 September 2011 to 1 September 2019 No holding period
From 12 October 2010 to 12 October 2014 included No holding period
Group employees (excluding directors and officers) may invest in the Employee Savings Plan. An agreement specifies the principle, financing, and conditions of the Plan. The Employee Savings Plan has four mutual investment funds, two of which are entirely dedicated to SCOR. An employer’s contribution is expected on two funds. The funds may receive several types of deposits: sums received from profit-sharing plans, collective incentive plans, or any other voluntary contributions.
Code, who are participants in savings plans and/or any mutual funds, eliminating the pre-emptive right they have. This new authorization replaces the authorization granted by the General Shareholders’ Meeting of 28 April 2010.
Payment of the pension benefits is based on the duration of affiliation to the Pension Scheme. The pension schemes serve the purpose of supplying benefits to the employees in their retirement and in the event of occupational (Professional) disability, as well as at ensuring provisions in case of an employee’s death
(1) This scheme regroups a limited number of beneficiaries (with an executive status). It was closed to new entrants as at 30 June 2008
Distribution of capital (number of shares, % of capital and voting rights) – (i) shareholders having more than 2.5 % of the registered capital and/or voting rights and (ii) shareholders represented on the Board of Directors (on the basis of a study of identifiable share bearers ("Titres aux Porteurs Identifiables" – "TPI") conducted by the Company as at 31 December 2012): As at 31 December 2012 Number of shares % of capital % voting rights (1)
(1) The percentage of voting rights is determined on the basis of the number of shares at closure, excluding the company’s own treasury shares (2) Source: TPI and Ipreo
Distribution of capital (number of shares, % of capital and voting rights) – (i) shareholders having more than 2.5 % of the registered capital and/or voting rights and (ii) shareholders represented on the Board of Directors (on the basis of a study of identifiable share bearers ("Titres aux Porteurs Identifiables" – "TPI") conducted by the Company as at 31 December 2011): As at 31 December 2011 Number of shares % of capital % voting rights (1)
Distribution of capital (number of shares, % of capital and voting rights) – (i) shareholders having more than 2.5 % of the registered capital and/or voting rights and (ii) shareholders represented on the Board of Directors (on the basis of a study of identifiable share bearers ("Titres aux Porteurs Identifiables" – "TPI") conducted by the Company as at 31 December 2010) : As at 31 December 2010 Number of shares % of capital % voting rights (1)
To SCOR knowledge, there was no other shareholder than those indicated in the table above holding more than 2.5% of the share capital or voting rights of the Company as at 31 December 2012, 31 December 2011 and 31 December 2010.
SCOR regularly conducts TPI searches to find out the number and identity of its bearer shareholders. The results of those analyses are presented in the following table: TPI Date December 2009 December 2010 December 2011 December 2012
To SCOR’s knowledge, the percentage of share capital and voting rights held by its Directors and officers was 3.78% as at
On 21 February 2011, Black Rock Ine., on behalf of funds and its clients, declared that it had exceeded on 15 February 2011, the thresholds of 5% of the capital and voting rights in SCOR and that it held 9,391,701 representing 5.00% of the capital in SCOR.
On 24 March 2011, BlackRock Inc., on behalf of funds and its clients, declared that it had fallen below the thresholds of 5%
On 10 June 2011, BNP Paribas Asset Management declared, on behalf of CamGestion, Fundquest France and of the affiliates of Fortis Investments integrated into BNP Paribas Investment Partners for the FCP, SICAV, Mandates and FCPE, that it had exceeded the registered thresholds of 2.5% of the capital and voting rights in SCOR and that it held 5,633,484 shares representing 2.5263% of the capital in SCOR. On 14 June 2011, it announced that it had fallen below the registered thresholds of 2.5% of the capital and voting rights in SCOR and that it held 5,557,905 shares representing 2.4999% of the capital in SCOR. On 16 June 2011, it announced that it had exceeded the registered thresholds of 2.5% of the capital and voting rights in SCOR and that it held 5,581,456 shares representing 2.5026% of the capital in SCOR.
On 4 July 2012, Alecta Pensionsförsäkring declared that it had fallen below the registered thresholds of 5% of the capital and voting rights in SCOR and that they held 9,400,000 shares representing 4.90% of the capital and voting rights in SCOR.
As at 31 December 2012:  SCOR held 8,930,686 treasury shares;  The total number of voting rights amounted to 192,384,219 (including the voting rights attached to treasury shares).
19.1 Related party transactions 177 19.3 Special report of the auditors on regulated agreements and commitments 177
Regulated agreements and commitments in accordance with Articles L. 225-38 and following of the French Commercial Code appear in the Auditors special report in Section 19.3.
In our capacity as statutory auditors of your company, we hereby report on certain related party agreements and commitments.
However, we are required, if any, to inform you in accordance with Article R. 225-31 of the French commercial code (Code de Commerce) and the Article R.322-7 of the French insurance code (Code des assurances) concerning the implementation of the agreements and commitments which were already approved by the shareholders’ meeting.
Nature and purpose Retrocession agreement signed between SCOR SE and SCOR Global P&C SE on 4 July 2006, as amended.
Terms At its meeting of 3 May 2012, the Company's Board of Directors authorized and approved, pursuant to Article L. 225-38 of the French Commercial Code, the signature of amendments #6 and #7 to the retrocession agreement signed between SCOR SE and SCOR Global P&C SE on 4 July 2006. Amendment #6 to the retrocession agreement aims at modifying the commission paid by SCOR SE to SCOR Global P&C SE from 1.5% to 3% on premiums (excluding the premium on reinsurance contracts relating to the protection of the balance sheet of the Group SCOR companies) paid to the retrocessionnaire.
Amendment #7 to the retrocession agreement aims to: яБо allow SCOR Global P&C SE to yearly rebill SCOR SE 50% of its expenses linked to catastrophic obligations sponsored by SCOR Global P&C SE already issued as well as all future issuances of catastrophic obligations which SCOR Global P&C SE could conclude on behalf of the Group; allow SCOR SE to benefit from the protection from catastrophic obligations in the event of a circumstance outlined in the issuance of obligations of ATLAS IV.
The obligations resulting from amendment #7 to the retrocession agreement took effect on 1 January 2012.
2. With BNP Paribas Related Persons Mr. Denis Kessler as Chairman and Chief Executive Officer of SCOR SE and as member of the board of directors of BNP Paribas.
Terms On 30 October 2012, the Board of Directors of SCOR SE authorized the signature by SCOR SE of the amendment #4 to the Facility Agreement concluded on 23 December 2008 with BNP Paribas in order to subrogate SCOR Global Life Reinsurance Ireland PLC to the rights and obligations of SCOR International Reinsurance [Ireland] PLC resulting from the merger of these two companies taking effect on 1 January 2013.
The Facility Agreement, as amended, gave rise to the payment of USD 275,000 during the 2012 financial year.
3. With Mr. Denis Kessler, Chairman and Chief Executive Officer of your company Related Persons Mr. Denis Kessler as Chairman and Chief Executive Officer of SCOR SE.
Terms The Board of Directors, at its meetings of 4 May and 27 July 2011, in accordance with articles L. 225-38 and L. 225-421 of the French Commercial Code, and upon the recommendation of the Compensations and Nominations Committee, renewed the commitments for the benefit of the Chairman and Chief Executive Officer, which had been decided by the Board of Directors on 21 March 2006 and amended on 12 December 2008. These commitments to the Chairman and Chief Executive Officer have been approved under the fifth resolution adopted at the Mixed Shareholders' Meeting of 3 May 2012, and are described in Appendix B - Report of the Chairman of the Board of Directors on the conditions for preparing and organizing the work of the Board and on internal control procedures and risk management in accordance with Article L. 225-37 of the French Commercial Code.
Pursuant to a decision dated 26 July 2012, taken in accordance with Article L. 225-42-1 of the French Commercial Code and with the provisions of Article L. 225-40 of the French Commercial Code, the Board of Directors of the Company has authorized, based on the recommendations of the Compensations and Nominations Committee of 25 July 2012, and in accordance with the decision of the Board of Directors dated 3 May 2012 and the subsequent commitments made by the Chairman and Chief Executive Officer during the Mixed Shareholder's Meeting of 3 May 2012, the adoption of an amendment to the regulated agreement relating to the commitments made for the benefit of the Chairman and Chief Executive Officer, the terms of which are outlined below, with respect notably to the compensation elements taken into account for the indemnity to be granted to Mr. Denis Kessler in case of his forced departure from the SCOR Group, as well as the performance conditions which this indemnity is subject to.
In the event of a forced departure or a revocation ad nutum typically due to diverging views on the strategy of the Group, the Chairman and Chief Executive Officer will benefit from an indemnity limited to the amount of fixed and variable compensation paid to him during the last twenty-four months preceding the date of his departure from the Group. The payment of this indemnity shall be subject to the satisfaction of the performance condition (C_n) defined below for at least two of the last three fiscal years preceding the date of departure of the Chairman and Chief Executive Officer.
In the event that the Chairman and Chief Executive Officer is dismissed or his departure is imposed due to a hostile offer resulting in a change of control in the SCOR Group, the Chairman and Chief Executive Officer will benefit from an indemnity limited to the amount of fixed and variable compensation paid to him by the Group during the last twenty-four
The payment of the indemnity is subject to the satisfaction of the performance condition (C_n) defined below for at least two of the last three years preceding the date of departure of the Chairman and Chief Executive Officer.
In addition, the performance stock and stock options granted to the Chairman and Chief Executive Officer before his departure shall be subject, in their totality, to the only performance conditions of each plan as validated by the Board of Directors at the time of attribution: thereby focusing on the common interest to add value to the Group in the scope of the offer.
1. With SCOR Global P&C SE Related Persons Mr. Denis Kessler as Chairman and Chief Executive Officer of SCOR SE and as Chairman of the board of directors of SCOR Global P&C SE.
On 15 April 2009, for these same reasons and taking into account the 2009 U.K. reorganization, i.e.: the creation of a branch of SCOR Global P&C SE in London and the business transfer from SCOR UK Company Ltd to this branch, the Board of Directors approved a new addendum to the retrocession agreement to exclude the business written by the newly created branch in London of the scope of the retrocession agreement.
2. With Mr. Denis Kessler, Chairman and Chief Executive Officer of your company Related Persons Mr. Denis Kessler as Chairman and Chief Executive Officer of SCOR SE.
Terms The terms of this agreement are previously described in Part 1 of this report (on agreements and commitments authorized during the year).
Nature and purpose Authorization to issue a First Demand Guarantee within the framework of the Stand-By Letter of Credit Facility.
The companies which are a party to the Stand-By Letter of Credit Facility Agreement with Société Générale are SCOR SE, SCOR Global P&C SE, SCOR Global Life SE, SCOR Switzerland AG and SCOR Rückversicherung (Deutschland) AG (absorbed by SCOR Global Life SE on 19 October 2010). The other companies within the Group could equally benefit from this agreement.
Nature and purpose Agreement of financial cover of U.S. regulations “Triple X” with CALYON.
This Agreement and this parent company guarantee were part of a transaction intended to provide SCOR Global Life U.S. Re (“SGLR”) with additional financial resources so that it could meet the financial coverage requirements stipulated by the American “triple X” prudential regulations.
At its meeting of 7 November 2006, the Board of Directors authorized, pursuant to Article L. 225-38 of the French Commercial Code, the extension (i) of the term of the parent company guarantee dated 19 December 2005, issued by SCOR to ten years; and (ii) the amount of the SCOR guarantee to USD 400 million, in line with the new term of coverage by the letter of credit and the new amount of the CALYON global commitment under the terms of the Agreement.
As a result of this transfer, at its meeting of 4 February 2010, the Board of Directors authorized, pursuant to Article L.225-38 of the French Commercial Code, the reiteration in favour of Crédit Agricole Corporate and Investment Bank (formerly CALYON) of the guarantee issued previously within the framework of SFS-CALYON Letter of Credit Agreement.
It gave rise to no payment during the 2011 financial year and during the 2012 financial year.
Terms In 2006, despite SCOR contributing of its Non-Life reinsurance operations to SCOR Global P&C SE, SCOR SE remained a reinsurance company, mainly because of the retrocessions established between SCOR Global Life SE and SCOR Global P&C SE as the retroceding companies, and SCOR SE as the retrocessionaire. These retrocessions back the Group's debt carried by SCOR SE for maintaining the aggregate Group’s solvency and sustaining its rating.
The signature of the retrocession framework agreement between SCOR SE and SCOR Global Life SE (then named SCOR Vie) was authorized by the Board on 16 May 2006, pursuant to the provisions of Article L.225-38 of the French Commercial Code. The contract was signed on 4 July 2006 with retroactive effect on 1 January 2006.
absorption of its wholly owned subsidiary SCOR Global Life Rückversicherung AG (formerly named Revios Rückversicherung AG).
At its meeting of 13 November 2007, the Board of Directors of SCOR SE authorized and approved, pursuant to Article L.225-38 of the French Commercial Code, the signature of the amendments to the retrocession contract signed by SCOR SE and its subsidiary SCOR Global Life SE on 4 July 2006.
Therefore, the amendment aims to:  amend the terms of the agreement in order to modify the accounting approach and turn as of 2010 to the clean-cut accounting principle instead of the run-off accounting principle, which will lead to a decrease in costs;  review the commissions’ conditions in order to decrease the results’ volatility;  exclude the portofolio of the SCOR Global Life SE’s U.K., Netherlands and Labuan branches from the scope of the agreement.
During the 2012 financial year, the retrocession agreement, as amended, gave rise to the payment by SCOR SE to SCOR Global Life SE of EUR 115,278,280.
6. With BNP Paribas Related Persons Mr. Denis Kessler as Chairman and Chief Executive Officer of SCOR SE and as member of the board of directors of BNP Paribas.
Terms At its meeting of 13 November 2007, the Board of Directors authorized the signature of an agreement with BNP Paribas to establish a notional cash-pooling between SCOR and the European entities of the Group.
This agreement between SCOR and BNP Paribas was signed on 20 October 2008. It gave rise to the payment by SCOR SE to BNP Paribas of non-material amounts during the 2011 financial year and 2012.
b) Nature and purpose Contract between SCOR SE and its subsidiaries participating in the notional cash-pooling agreement.
Terms The Board of Directors’ meeting held on the 18 March 2008 and the 26 August 2008 authorized the signature by its Chief Executive Officer, pursuant to Article L.225-38 of the French Commercial Code, with the power of delegation, of
legal documentation relating to the notional cash-pooling agreement and in particular, the Intragroup Cash Management
d) Nature and purpose Stand-By Letter of Credit Facility Agreement with BNP Paribas dated 23 December 2008, as amended.
In order to guarantee its obligations under the terms of the Facility Agreement, each Group companies which is a party
On 28 April 2010, the Company’s Board of Directors authorized the signature by SCOR SE of the amendment #1 to the Facility Agreement with BNP Paribas dated 23 December 2008, in order to include the letter of credit dated 8 August 2008 regarding the "Initial Letters of Credit" subscribed by SCOR Global Life SE, increase the maximum amount to USD 550 million, update the regulatory references with regard to the pledge of financial instruments.
Within the framework of this amendment SCOR SE has to renew its financial instruments account agreement into which assets a minimum EUR 5,000 assets have to be deposited.
The companies party to this agreement, as amended, are SCOR SE, SCOR Global P&C SE, SCOR Global Life SE, SCOR Switzerland AG and SIRI. The other companies within the Group could equally benefit from this agreement, as amended.
7. With SCOR Global Life SE, SCOR Global P&C SE, SCOR Switzerland AG Related Persons Mr. Denis Kessler as Chairman and Chief Executive Officer or SCOR SE and as Chairman of the boards of directors of SCOR Global P&C SE, SCOR Global Life SE and SCOR Switzerland AG.
Terms At its meeting of 27 July 2011, the Company’s Board of Directors authorized, pursuant to Article L.225-38 of the French Commercial Code, the signature of an a agreement (“Facility Agreement”), finalized with Commerzbank, for the issue of stand-by letter of credit (“SBLC”), with regard to the Group’s insurance and reinsurance activity for a maximum amount of USD 250,000,000.
 allow SCOR entities, party to this agreement, to request issue of letters of credit;  allow the accession of SCOR International Reinsurance Ireland Ltd (“SIRI”) (formerly known as Transamerica International Reinsurance Ireland Ltd) as client after the closing of its acquisition;  put in place SCOR SE’s joint several liability regarding the commitments under this agreement of the other SCOR entities, party to this agreement, for a maximum amount of USD 250,000,000.
This Facility Agreement was executed on 27 July 2011 and gave rise to the payment of USD 179,166.67 during the financial year 2011 and USD 116,995.83 in 2012.
Mr. Peter Eckert as member of the Board of Directors of SCOR SE and as member of the board of directors of SCOR Switzerland AG.
This guarantee is issued for a maximum amount of USD 287.5 million plus interests, costs and accessories as a guarantee of the commitments of SCOR SE, SCOR Global P&C SE, SCOR Global Life SE, SCOR Switzerland AG and SCOR International Limited Ireland Limited (“SIRI”) (previously Transamerican International Reinsurance Ireland Limited). This guarantee is issued for a period of 4 years ending 31 January 2015.
Nature and purpose Amendment to the additional pension plan subject to Article 39 of the French Tax Code (Code Général des Impôts).
Terms At its meeting of 18 March 2008, the Company’s Board of Directors authorized pursuant to the Article L.225-38, the execution of an additional pension plan, which was ultimately executed on 15 May 2008.
On 27 July 2011 the Company’s Board of Directors approved an amendment to the additional pension scheme concerning the condition of age and retirement rate (62 years minimum or full retirement, vs 60 previously).
Terms At its meeting of 7 March 2011, the Company’s Board of Directors authorized, pursuant L.225-38 of the French Commercial Code, the remuneration (i) of the parent company guarantees issued or to be issued by SCOR SE and of the upstream guarantees issued or to be issued to the benefit of SCOR SE, at a rate of 1 for one thousand, on a basis related to technical reserves. The amounts due under the upstream guarantees will be able to be compensated with amounts due under the parental guarantees granted by SCOR SE. This decision amends the terms of the authorizations rendered during its 18 March 2008 Board meeting.
20.1 Historical financial information: consolidated financial statements 190 20.2 Auditing of historical consolidated financial information 288 20.3 Sources of financial information not extracted from the audited Financial Statements of the issuer and indication of such absence of audit 290 20.4 Date of most recently audited financial 20.5 Interim and other financial information 290 20.6 Dividend distribution policy 290 20.7 Litigation and arbitration procedures 290 20.8 Material change in financial or commercial situation 290
The consolidated financial statements for the year ended 31 December 2012 are presented below: 20.1.1 CONSOLIDATED BALANCE SHEETS
Share of retrocessionaires in insurance and investment contract liabilities Note 16 1,322 1,251
Acquisitions of consolidated entities, net of cash acquired - (48) -
Disposals of consolidated entities, net of cash disposed of (1) (3) 9 -
Cash flows provided by (used in) investing activities (438) (580) (730)
Cash flows generated by (used in) financing activities (146) 272 (314)
Effect of change in foreign exchange rates on cash and cash equivalents 8 52 70
Cash and cash equivalents at 1 January Note 12 1,281 1,007 1,325
(1) Settlement of certain contingencies in 2012 related to the US Fixed Annuity Business sold in 2011 – refer to Note 3 – Acquisitions and disposals (2) Acquisitions and disposals of other insurance business investments also include movements relating to bonds and other short term investments which have a maturity date of < 3 months, and are classified as cash equivalents
Actuarial losses not recognized in income - - - (5) - - - - (5)
Dividends paid - (3) - (198) - - - - (201) SHAREHOLDERS’ EQUITY 31 DECEMBER 2011 1,513 835 (178) 1,961 (121) 330 63 7 4,410
(1) Includes the reclassification of share-based payments of EUR 30 million related to vested option plans to retained earnings.
Net income for year ended 31 December 2012 - - - - - 418 - - 418
Losses on cash flow hedges - - - (25) - - - - (25)
Actuarial losses not recognized in income - - - (17) - - - - (17)
Dividends paid - - - (203) - - - - (203) SHAREHOLDERS’ EQUITY 31 DECEMBER 2012 1,515 840 66 2,082 (163) 418 45 7 4,810
The consolidated financial statements as at and for the year ended 31 December 2012 will be presented for approval at the
SCOR’s consolidated financial statements for the years ended 31 December 2012, 2011 and 2010 have been prepared in compliance with IFRS issued by the International Accounting Standards Board (IASB) as adopted by the European Union
(“EU”) and effective as at 31 December 2012. The term “IFRS” refers collectively to International Accounting Standards
The changes are related to the new cost allocation methodology of the Group which was refined in the preparation of segment information, resulting in a new corporate cost center being created, Group Functions. For further detail refer to
Group. The Group sponsors a number of catastrophe bond notes issued by Atlas Special Purpose Vehicles (SPVs). The
The Group’s consolidated financial statements are presented in Euros (EUR) and all values are rounded to the nearest EUR
The following standards have been issued by International Financial Reporting Standards Board during the period but are not yet effective or have not been adopted by the European Union:  Amendments to IAS 1 – Presentation of Financial Statements was issued in June 2011 and requires entities to separate items presented in Other Comprehensive Income into two groups based on whether or not they are able to be recycled to profit or loss in the future. The European Union endorsed the amendments to IAS 1 on 5 June 2012. The application of these amendments which has become effective for annual periods beginning on or after 1 July 2012 is not expected to have a material impact on the Group’s consolidated financial statements.
 Amendments to IAS 12 – Recovery of Underlying Assets introduces an exception to the measurement principles of deferred tax assets and liabilities arising from assets measured using the fair value model under IAS 40,
Investment Property. The European Union endorsed the amendments to IAS 12 on 11 December 2012. The application of these amendments becomes effective for annual periods beginning on or after 1 January 2013. The application of these amendments is not expected to have a material impact on the Group’s consolidated financial statements.
Instead, net interest expense will be calculated on a net funding basis. This will result in an overall increase of the net periodic pension cost in future periods. However, the profit and loss impact to SCOR is not expected to be material. In addition, actuarial gains and losses must be recorded directly under other comprehensive income. This method is already applied by SCOR and therefore this amendment to IAS 19 does not impact the Group’s consolidated financial statements.
 Amendments to IFRS 7 – Offsetting financial assets and financial liabilities require an entity to disclose information about rights to set-off related arrangements (e.g., collateral agreements). The disclosures would provide users with information that is useful in evaluating the effect of netting arrangements on an entity’s financial position. The new disclosures are required for all recognized financial instruments that are set off in accordance with IAS 32 Financial
IFRS 13 could affect some of the fair value of certain assets and liabilities. The Group is currently assessing the impact that this standard will have on its financial position and performance.
 IFRS 10 – Consolidated Financial Statements replaces the portion of IAS 27 Consolidated and Separate Financial
Companies. SCOR has no material joint arrangements. As such the adoption of this standard is expected to have no impact on the financial statement of the Group.
IAS 31 and IAS 28 Investment in Associates. A number of new disclosures are added to the existing requirements such as the judgments made to determine whether control of another entity exists. The European Union endorsed
 As a consequence of the new IFRS 11 and IFRS 12, IAS 28 has been renamed IAS 28 Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates. The European Union endorsed the amendments to IAS 28 on 11 December 2012. The amendments
 IFRS 9 Financial Instruments: Classification and Measurement reflects the first phase of the IASB’s work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities.
The standard is effective for annual periods beginning on or after 1 January 2015. In subsequent phases, the IASB
Where the functional currency of an entity is not the same as the reporting currency used to present the Group’s consolidated financial statements, assets and liabilities of the entity are translated using the exchange rate at the balance sheet date and the statement of income is translated using the average exchange rate for the period. Translation differences are recognized directly in shareholders’ equity as “translation adjustments”. The foreign exchange rate used for this purpose are stated under Note 1 (C). Transactions denominated in foreign currencies (currencies other than the functional currency)
are translated into the functional currency at the rate of exchange at the date of the transaction (for practical purposes, an average rate is used). These rates may differ from the rates used to translate functional currency into reporting currency as mentioned above.
At each period end, the entity must translate the items on its balance sheet which are denominated in a foreign currency into the functional currency, using the following procedures:  monetary items and non-monetary items classified as fair value through income are translated at end of period exchange rates and the resulting gains and losses are recorded in the statement of income;  other non-monetary items are translated: - at the exchange rates in effect on the transaction date for items valued at historical cost; or - at end of period exchange rates if they are valued at fair value; and - to the extent that any gains or losses arise, these are directly recorded in shareholders’ equity. In particular this affects foreign exchange differences for available for sale equity securities and exchange differences resulting from the conversion of these items are also directly recorded in shareholders’ equity;  the gains and losses resulting from the translation of net foreign investment hedges are recorded in shareholders’
Intangible assets with finite lives are amortized over the expected useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for intangible assets with finite useful lives are reviewed annually. Changes in the expected useful life or the expected pattern of future economic benefits are accounted for prospectively by changing the amortization period or method as appropriate and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of income in the expense category consistent with the intangible asset.
At the end of each reporting period properties are assessed to determine whether there is any indication of impairment. One such indicator is that the building’s market-value is below the carrying value. If any such indicators are found to exist, the
fair value less cost to sell and its value in use. The value in use is assessed using an internal discounted cash flow model based on current market assumptions and considers rental status, completeness of construction and renovation work, as well as recent developments within the local real estate market. If the recoverable amount is greater than 20% below the carrying amount, the resulting impairment loss is recognized in the statement of income.
Own-use properties are assessed for impairment whenever there is an indication that the property may be impaired.
This category includes financial assets held for trading purposes and those designated at fair value through income upon initial recognition in the financial statements. Gains and losses from changes in the fair value of financial assets classified under this category are recognized in the statement of income in the period in which they occur.
Cash and cash equivalents comprise cash, net bank balances and short-term deposits or investments with a maturity less than or equal to three months at the date of purchase or deposit. Money market funds are also classified as cash equivalent, though only to the extent that fund invested assets qualify as cash equivalents, or there are strict fund management policies and limits that lead the funds to qualify as cash equivalents.
This caption includes primarily debt relating to financial lease agreements. Debt under financial lease contracts is recorded at fair value less directly attributable transaction costs. After initial recognition, they are measured at amortized cost using the effective interest rate method where this method has a significant impact compared to the nominal contractual rate method.
Amounts taken to other comprehensive income are transferred to the income statement when the hedged transaction effects the income statement, such as when hedged financial income or financial expense is recognised or when the forecast sale or purchase occurs.
The Group has certain investments which are valued based on models prepared by internal and external third parties using market inputs. These primarily comprise structured products, other than securities issued by government agencies for which the market is considered active, as well as hybrid, tier 1 and tier 2 corporate debt and hedge funds.
The Group may conclude the prices received from third parties are not reflective of current market conditions. In those instances, SCOR may request additional pricing quotes or apply internally developed valuations. Similarly, the Group values certain derivative investments, namely the mortality and real estate swaps, using internal valuation techniques based on observable market data.
If an available-for-sale financial asset is impaired and a decline in the fair value of this asset has been recognized in other comprehensive income, the cumulative loss is reclassified from equity to the statement of income. The cumulative loss is computed as the difference between the cost of the asset (net of any principle repayment and amortization) and its current fair value, less any impairment previously recognized in the statement of income.
Any impairment reversals in respect of equity instruments classified as available-for-sale are not recognized in the statement of income. Reversals of impairment losses on fixed income securities classified as available-for-sale are reversed through the statement of income if the increase in fair value of the instrument can be objectively related to an event occurring after the impairment losses were recognized in the statement of income.
Basic earnings per share is calculated by dividing net income available to ordinary shareholders by the weighted average number of ordinary shares in issue during the year, excluding the average number of ordinary shares purchased by the
available and the reserves are adjusted if necessary. Management considers many factors when establishing reserves, including:  information from ceding companies;  historical developments, such as reserve patterns, claims payments, number of claims to be paid and product mix;  internal methods to analyze the Group’s experience;  most recent legal interpretations concerning coverage and commitments;  economic conditions;  biometric developments such as mortality and morbidity; and
Claim reserves for losses and claims settlement expenses are recognized for payment obligations from reinsurance losses that have occurred but have not yet been settled. They are recognized for reserves for reinsurance losses reported before the reporting date and reserves for reinsurance losses that have already been incurred but not yet reported (IBNR).
Non-Life gross premiums written and earned are based upon reports received from ceding companies, supplemented by the
The reserve for unearned premiums represents the portion of premiums written that relate to the unexpired terms of contracts and policies in force. Such reserves are computed by pro-rata methods based on statistical data or reports received from ceding companies. Reinstatement premiums are estimated after the occurrence of a significant loss and are recorded in accordance with the contract terms based upon paid losses and case reserves reported in the period.
In reinsurance, the costs directly associated with the acquisition of new contracts, mainly comprising commissions, are recorded as assets on the balance sheet, to the extent that contracts are profitable. They are amortized on the basis of the residual term of the contracts in Non-Life, and on the basis of the expected recognition of future margins for Life contracts.
IFRS 4 provides for the separation of embedded derivatives in insurance contracts, when these hybrid contracts are not assessed at fair value through income, and when the features of the embedded derivatives are not closely linked with the features and risks of the host contract, and when the embedded derivative meets the definition of a derivative instrument.
Management assesses provisions, contingent assets and contingent liabilities and the likely outcome of pending or probable events, for example from lawsuits or tax disputes, on an ongoing basis. The outcome depends on future events that are by nature uncertain. In assessing the likely outcome of events, management bases its assessment on external legal assistance and established precedents.
The Group offers stock option plans to certain of its employees. The fair value of the services received in exchange for the granting of options is recognized as an expense. The total amount that is recognized over the vesting period is established by reference to the fair value of options granted, excluding conditions of attribution that are not linked to market conditions
The dilutive effect of outstanding options is reflected in the calculation of the diluted earnings per share.
For management purposes the Group is organized into two operating segments and one corporate cost center Group
Life segment offers the following lines of business: Life (treaties with mainly mortality risks); Life Financing Reinsurance; Critical Illness; Disability; Long Term Care; Health; Annuities; Personal Accident and Longevity.
Group, such as the costs for Group Internal audit, Group Chief Financial Officer functions (Group Tax, Group Accounting,
Group Consolidation and Reporting), Group Chief Operating Officer functions (Group Legal, Group Communication, Group
Change in gross unearned premiums 3 (150) - - (147) (7) (180) - - (187) 2 (111) - - (109)
Gross benefits and claims paid (3,780) (2,833) - - (6,613) (2,615) (3,038) - (1) (5,654) (2,386) (2,405) - - (4,791)
Gross commission on earned premiums (953) (956) - - (1,909) (804) (773) - - (1,577) (694) (714) - - (1,408)
Other income and expense from reinsurance operations 3 (39) - - (36) (34) (19) - (2) (55) (3) (18) - (2) (23)
The following table sets forth the operating income for each of the Group’s operating segments as presented previously before refining the cost allocation methodology for the financial year ended 31 December 2010.
Asia Pacific / Rest of world 245 85 69 750 608 450
The increase of gross written premiums of SCOR Global Life in 2012 is mainly due to the acquisition of the mortality reinsurance business of Transamerica Re which was completed on 9 August 2011.
Share of retrocessionaires in insurance and investment contract liabilities 1,028 285 9 1,322 1,196 49 6 1,251
As part of the acquisition, SCOR also purchased from AEGON one Irish entity, Transamerica International Reinsurance
Net cash flows from operations 534 227 761 402 128 530 457 199 656
Net cash flows from financing activities 11 (157) (146) (68) 340 272 (281) (33) (314)
TRANSAMERICA RE: FAIR VALUE OF ASSETS AND LIABILITIES ACQUIRED AS AT 9 AUGUST 2011
The provisional accounting for the acquisition of Transamerica Re generated a gain from bargain purchase of
In March 2012, SCOR agreed with AEGON on the conclusion of the settlement for the acquired business and received a closing payment in May 2012.
(1) Based on the EUR/USD average exchange rate (2) Gain from bargain purchase valued at the average EUR/USD exchange rate of 0.7148 for the year ended 31 December 2011
 The pro forma statement of income presented below has been prepared in accordance with SCOR Group’s accounting principles and corresponds to the following:The 2011 statement of income of the SCOR Group excluding Transamerica Re (first column in the pro forma statement of income presented below);  The 2011 statement of income of Transamerica Re before pro forma adjustments, presented in accordance with
For the purpose of presenting pro forma information, acquisition related costs of the Transamerica Re acquisition totaling
For the purpose of presenting pro forma information, acquisition related debt interest expenses that have been incurred by
For the purpose of presenting pro forma information, deferred taxes that have been incurred by SCOR Group to effect the
Cumulative amortization and impairment at 31 December 2010 (181) (346) (74) (601)
Cumulative amortization and impairment at 31 December 2011 (181) (392) (82) (655)
Cumulative amortization and impairment at 31 December 2012 (181) (432) (88) (701)
Goodwill, which represents the excess of the cost of each business combination over SCOR’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities acquired, was EUR 788 million as at 31 December 2012 and
In order to estimate the fair value of SCOR Global P&C for the purpose of impairment testing, SCOR uses a discounted cash flow model comprised of an earnings model, which considers forecasted earnings and other financial ratios of the reportable segment over a five year period. The first three years are based on Board approved business plans and the last two are extrapolated using an approach based on past experience. Business plans include assessments of gross and net premium expectations, expected loss ratios and expected expense ratios together with actuarial assumptions such as the coefficient of variation on ultimate net reserves together with assumptions as to the mean time to payment of existing reserves and future business. Cash-flows beyond this period are extrapolated using a growth rate of 5%. SCOR uses risk free interest rates per currency and the estimated SCOR Group cost of capital 7.92% as derived from the Capital Asset
For SCOR Global Life, goodwill is tested for impairment with reference to the inputs and methodology that SCOR applies in calculating the embedded value of the segment. Market Consistent Embedded Value (MCEV) is a measure of the consolidated value of shareholders’ interests in the covered business. The MCEV represents the present value of shareholders’ interests in the earnings distributable from assets allocated to the covered business after sufficient allowance for the aggregate risks in the covered business. The allowance for risk is calibrated to match the market price for risk where reliably observable. The MCEV consists of the Shareholder Net Worth (market value basis of equity), and value of in-force covered business (VIF). The VIF is composed of Present Value of Future Profits, projected over the life of the portfolio and based on contractual cash-flows. Key assumptions are morbidity, mortality and lapse rates.
Management believes that any reasonably possible change in the key assumptions on which SCOR Global P&C and SCOR
As part of the impairment testing, SCOR assesses whether the recoverable amount of operating units is at least equal to the total carrying value of operating units (including goodwill). If it is determined that an impairment exists, the total carrying value is adjusted to current fair value. Any impairment charge is recorded in income in the period in which it is determined.
received indications that this agreement would be terminated. As a result management decided to impair the intangible to its recoverable value of EUR 6 million.
The Group conducted its annual assessment of the amortization period and amortization method of these finite life intangible assets and has concluded that both the amortization period and existing amortization methodology are appropriate.
The amortization charge associated with other intangible assets with finite lives was EUR 9 million, EUR 8 million, and
Paris. The SCOR head office was moved to the Kléber office building at the beginning of 2012. This transaction resulted in an increase of the Group’s fixed assets of EUR 344 million, and financial debts of EUR 170 million in 2011.
The additions to tangible assets in 2012 are mainly related to the EUR 31 million acquisition in relation to a building in
Payments for operating leases concern in particular rents for offices and business premises of the Group. They include extension options as well as restrictions regarding the agreement of subleases. In the period under review, minimum lease payments of EUR 29 million (2011: EUR 26 million; 2010: EUR 27 million) were recognised as an expense, net of sublease payments of EUR (6) million (2011: EUR (4) million; 2010: EUR (4) million). The largest lease contract is for SCOR Zurich office where during 2011 the lease term has been extended until December 2016. The minimum payments are as follows (1): In EUR million Minimum payments Minimum payments
(1) 2011 minimum lease payments comprised the largest lease contracts from SCOR Zurich and SCOR Paris, whereas 2012 minimum lease payments comprise all SCOR entities. The increase in 2012 is mainly due to two newly signed lease contracts in Charlotte and Texas.
In December 2003, the Group sold its headquarters in Paris La Défense but remained as tenant of this building until
On 29 June 2012, SCOR SE, German branch became owner of a new 6,500 square meters building at Goebenstrasse 1 in
Cologne which was under construction since 2009. The Cologne HUB head office has moved to Goebenstrasse 1 beginning of March 2012. This resulted in an additional increase of the Group’s fixed assets of EUR 11 million in 2012. In 2011
EUR 26 million of the total purchase price of EUR 37 million including fixtures and fittings were already capitalized as asset in progress. In January 2012, the Group partially funded the cost of the purchase with a financial debt of EUR 18 million.
Loans and receivables Note 7 (also Note 6 – (A)) 9,535 9,872
Derivative instruments (2) Note 8 (also Note (A), (B)) 112 158
(1) Liabilities of EUR 40 million arising from derivative financial instruments are disclosed in the liability section of the consolidated balance sheet (2011: EUR 52 million).
Investments and cash as at 31 December 2012 22,580 12,109 1,466 83 8,922
Included within this category are financial investments that are measured by direct reference to published quotes within an active market. Financial instruments are included within this category if quoted prices or rates represent actual and regular ly occurring transactions that are available from an exchange, dealer or broker. These comprise listed equities, mostly government, covered and agency bonds, as well as short term investments.
Group values certain derivative investments, namely the mortality and real estate swaps using internal valuation techniques based on market inputs. Further detail on the valuation of these derivative instruments is included within Note 8 – Derivative
Available for sale investments included approximately EUR 72 million of investments which are measured at cost (2011: EUR 64 million). These investments include primarily equities and funds which are not listed.
In 2012 and 2011 respectively, there were no material gains or losses realized on the disposal of available for sale investments which were previously carried at cost.
During the year ended 31 December 2012, there were EUR 6 million net transfers out of Level 3 fair value measurement category.
(1) Movements in derivative instruments mainly due to the change in fair value of ATLAS V and VI catastrophe bonds
(1) Movements in derivative instruments mainly due to the change in fair value of ATLAS V and VI catastrophe bonds (2) Mainly purchase of ATLAS VI series 2011-1 and 2011-2 catastrophe bonds
(1) Movements in derivative instruments mainly due to the change in fair value of ATLAS V and VI catastrophe bonds (2) Purchase of the second tranche of ATLAS VI catastrophe bonds
Purchases Sales Transfer into / out of level 3 fair value measurement
subsidiary of SCOR SE or by SCOR Properties, a 100% subsidiary of Group entities including SGP&C, SGL and SSAG.
They consist of office buildings, which the Group owns and leases, and one office building capitalized under finance lease contracts. The movements in the real estate investments and finance leases are analyzed as follows: In EUR million Real estate investments Finance Leases Total
In 2012, SCOR Auber sold 4 buildings for a total sale price of EUR 83 million providing a total capital gain of EUR 39 million.
SCOR Properties acquired 2 buildings, through 2 dedicated SPVs, SAS Pershing and SAS Coligny, one in Paris 17, and the other in Saint Quentin en Yvelines in state of future completion, for EUR 163 million out of which EUR 143 million have been booked at 31 December 2012 (see below, “Property related commitments and guarantees”). These acquisitions were financed by SCOR through the use of own funds.
The Group holds a finance lease which contains an option to purchase an investment property in Paris at the end of the lease term. The lease was extended until 25 June 2013 by an addendum in 2011. The amount of the minimum payments and their discounted values are as follows: In EUR million Minimum payments
As part of its real estate investment activities described above, SCOR leases its investment buildings. The leases generally conform to the local market conditions and have annual indexation clauses for the rental payments. The estimated minimum rental income is as follows: In EUR million Minimum rental income Minimum rental income
SCOR signed in 2012 a contract of sale before completion (VEFA) to acquire a building in Saint-Quentin-en-Yvelines. Total costs for building and land are EUR 93 million. Total cost of the land and finished portion of the building (EUR 72 million)
was capitalised as at 31 December 2012, as transfer of ownership is contingent upon progress of construction work. As at 31 December 2012, SCOR has not the right to use the building. This right is contingent upon the delivery of the building.
Total fixed income securities as at 31 December 2012 3,120 2,767 1,944 1,146 605 125 9,707
The table below presents the estimated maturity profiles of financial assets, which are expected to generate cash inflows to meet cash outflows on financial liabilities: Less than one year
The change in the valuation of the available-for-sale portfolio affecting shareholders’ equity is as follows: Net unrealized gains (losses) net of tax 1 January (178) 56 37
Change in unrealized gains and losses (including investments purchased during the period) (1) 169 (215) (56)
Net unrealized gains (losses) net of tax 31 December 66 (178) 56
At 31 December 2012 and 2011, the unrealized gains and losses on available-for-sale investments can be analyzed as follows: In EUR million Unrealized gains Unrealized losses
(1) Unrealized gains and losses on available for sale investments analyzed above exclude:  Gains and losses relating to foreign exchange of EUR 7 million (2011: EUR (12) million);  Shadow accounting of EUR 30 million (2011: EUR 38 million);  Non-controlling interest on mutual funds of EUR 3 million (2011: Nil); and
Total impairment losses recognised in 2012 amounted to EUR 72 million (2011: EUR 51 million), of which EUR 81 million
Total unrealized losses on available-for-sale equity securities analyzed on a line-by-line basis - (1) (34) (35)
In 2012, the decrease of EUR 337 million during the year results from sales of short term investments and increased funds held by ceding companies.
On 19 February 2009, SCOR reopened the market for catastrophe bonds (an insurance-linked security) with the issue of the three series “Atlas V" catastrophe bonds. The multi-year property catastrophe agreements concluded between SCOR and
Atlas V Capital Limited (“Atlas V") provided the Group with additional protection of USD 200 million for exposures to earthquakes and hurricanes in the U.S. and Puerto Rico. Events were covered for the risk period from 20 February 2009 to
provides EUR 75 million of protection against European windstorms and Japanese earthquakes risks until 31 March 2013.
Reinsurance Limited, which matured on 31 December 2010 and provides similar geographical cover of EUR 160 million.
Capital Limited, which matured on 24 February 2012 and provides similar geographical cover as Series 2011-1 for an amount of USD 200 million.