Registered Office: 5 avenue Kléber - 75016 Paris Trade and Company register (RCS) Paris No. 562 033 357.
Pursuant to Article 28 of Regulation (EC) 809/2004 of 29 April 2004 of the European Commission implementing the Directive 2003/71/CE (the “Regulation (EC) 809/2004”), the following information is included by reference in this registration document (the “Registration Document”):  SCOR SE’s corporate and consolidated financial statements for the financial year ended 31 December 2013 and the report of the statutory auditors regarding said financial statements as presented in SCOR SE’s registration document filed with the AMF on 5 March 2014 under number D.14-0117.
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
In 2010, the US congress enacted the Dodd Frank Wall street reform and consumer protection act (“Dodd Franck Act”), which could have an adverse impact on SCOR’S business 40 4.4.7 Changes in current accounting practices and future pronouncements may materially impact SCOR’s reported financial results 40 4.4.8 Capital and liquidity may not be completely fungible between different regulated legal entities, which may have negative consequences for the legal entities 40 4.4.9 SCOR is exposed to certain litigation matters 40
4.4.10 SCOR’s tax positions are subject to audit and approval by tax authorities 40 4.5 Other risks 41 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 41 4.6 Insurance of specific operational risks (excluding reinsurance activity) 41 4.7 Risk and litigation: Reserving methods 42 5 Information about the issuer 45 5.1 History and development of the issuer 45 5.1.1 Legal name and commercial name of the issuer 45 5.1.2 Place and registration number of the issuer 45 5.1.3 Date of incorporation and length of life of the issuer 45 5.1.4 Domicile and legal form of the issuer, legislation governing its activities, country of incorporation, address and telephone number of its registered office 45 5.1.5 Important events in the development of the issuer’s business 47 5.2 Investments 51 5.2.1 Principal investments made over the past three financial years 51 5.2.2 Principal investments in progress 51 5.2.3 Principal future investments 51 6 Business overview 54 6.1 Primary activities 55 6.1.1 The reinsurance business 55 6.1.2 Breakdown of the Group’s business 57 6.1.3 Underwriting, distribution, catastrophe risk, claims and reserves 60 6.1.4 Capital shield policy 65 6.1.5 Investments 67 6.2 Principal markets 69 6.2.1 Breakdown of gross premiums by division 70 6.2.2 Distribution by geographic area 70 6.3 Extraordinary events influencing the principal business and markets 70 6.4 Dependency of the issuer with respect to patents or licenses, industrial, commercial or financial contracts and new manufacturing processes 71 6.5 Information on SCOR’s competitive position 71 6.5.1 Non-Life reinsurance 71 6.5.2 Life reinsurance 73 7 Organizational structure 77 7.1 Brief description of the Group and of the position of the issuer 78 7.1.1 Group operating companies 78 7.2 List of issuer’s significant subsidiaries 81 8 Property, plant and equipment 84 8.1 Major existing or planned property, plant and equipment 84 8.2 Environmental issues that may affect the utilization of property, plant and equipment 84 9 Operating and financial review 87 9.1 Financial position 87 9.2 Operating results 88 9.2.1 Consolidated operating results 88 9.2.2 SCOR Global P&C 89 9.2.3 SCOR Global Life 91 9.2.4 Capital shield policy 92 9.2.5
Administrative and Management bodies 153 17.2.1 Number of shares held by Directors and Senior managers 153 17.2.2 Stock options held by the members of the Executive Committee and other Company officers as at
(articles 8 and 19 of the Bylaws) 297 21.2.7 Provisions that could delay, defer or prevent a change in control or in the shareholding of the
 The historical financial information included in the Registration Document was certified by the auditors and their reports are reproduced in Section 20.2 and Appendix A of this document as well as the historical financial information is incorporated by reference for financial years 2013 and 2012, in section 20.2 and Appendix A of the 2013 and 2012 Registration Documents. The audit report on the 2013 corporate financial statements includes a comment.
MAZARS Represented by Messrs. Jean-Claude Pauly and Antoine Esquieu Tour Exaltis - 61, rue Henri Regnault 92075 Paris-La Défense cedex, France CRCC de Versailles
On the date of the Shareholders’ Meeting called to approve the financial statements of the financial year ending
ERNST & YOUNG Audit Represented by Mr. Guillaume Fontaine Tour First -1, Place des saisons 92037 Paris-La Défense cedex, France CRCC of Versailles
Tour Exaltis – 61, rue Henri Regnault 92075 La Défense Cedex CRCC of Versailles
3.1 Group key figures SCOR SE and its consolidated subsidiaries (“SCOR” or the “Group”), compose the world’s 5th largest reinsurer ( 1) serving more than 4,000 clients from its five organizational hubs located in Paris, Zurich / Cologne and London for Europe, Singapore for Asia and New York / Charlotte / Kansas City for the Americas Hub.
The new Hub Zurich / Cologne combines the existing Hubs in these two cities with a view of strengthening the organizational structure of SCOR in Europe. It was established on the 1 October 2014 and should be fully operational by the first quarter of 2015. The solid 2014 year end results and strength of the balance sheet demonstrate the effectiveness of SCOR’s strategy, based on high business and geographical diversification and focused on traditional reinsurance activity.
The financial strength ratings of the Group are currently “A+” with a positive outlook from Standard & Poor’s “S&P”, “A1” with a stable outlook from Moody’s, “A+” with a positive outlook from Fitch, and “A” with a stable outlook from A.M. Best.
(1) By Net Reinsurance premiums written, source: “S&P Global Reinsurance Highlights 2014” (excluding Lloyd’s of London) (2) Source: Fitch press release, 20 August 2014 (3) Source: S&P Insurance Markets, Research Update, 21 November 2013
In EUR million 2014 2013 2012 Consolidated SCOR Group Gross written premiums 11,316 10,253 9,514 Net earned premiums 9,991 9,066 8,399 Operating result . 825 783 632 Consolidated Net income – Group share 512 549 418 Net investment income .(1) 576 509 564 Group cost ratio ((1)) 5.0% 5.1% 5.3%
Basic earnings per share (in EUR) .(4) 2.75 2.96 2.28 Book value per share (in EUR) .(1) 30.60 26.64 26.16
Share price (in EUR) .(5) 25.20 26.57 20.41 Operating cash flow 894 897 761 Total assets 37,166 34,161 32,676 Liquidity .(6) 940 2,120 2,715 Shareholders' equity 5,729 4,980 4,807
Gross written premiums 4,935 4,848 4,650 Net combined ratio .(1) 91.4% 93.9% 94.1% Division SCOR Global Life Gross written premiums 6,381 5,405 4,864 SCOR Global Life technical margin .(1) (8) 7.1% 7.4% 7.7%
(1) Refer to Section 9.2.6 – Calculation of financial ratios, for detailed calculation (2) The return on invested assets’ calculation method was adjusted to exclude revenues from Life reinsurance contracts that do not transfer significant reinsurance risk (presented in the investment income line of the 2013 Registration Document). The ratios previously reported in the 2013 Registration Document were 2.6% and 3.0% for the years ended December 31, 2013 and 2012, respectively
(3) The ROE calculation method was adjusted to take into account material foreign exchange rates movements that do not occur evenly through the reporting period. A daily weighted average is applied for the currency or currencies that experienced such movements and simple weighted average is applied for the other currencies. The ratios previously reported in the 2013 Registration document were 11.5% and 9.1% for 2013 and 2012, respectively
(4) 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
All risks described in Section 4 are managed through a variety of mechanisms in SCOR’s ERM Framework.
In addition, the fixed-income markets can experience a period of extreme volatility that has negatively impacted market liquidity conditions. These volatile conditions have affected a broad range of mortgage and asset-backed and other fixed-income securities, including those rated investment grade, the US and international credit and interbank money markets generally, and a wide range of financial institutions and markets, asset classes and sectors. As a result, the market for fixed-income securities has experienced decreased liquidity, increased price volatility, credit downgrade events, increased probability of default and lower than expected recovery rates. Securities that are less liquid are more difficult to value and may be challenging to dispose of.
Factors such as government and consumer spending, business investment, the volatility and strength of both debt and equity markets, and inflation, all affect the business and economic environment and ultimately, the size and profitability of SCOR’s business. In an economic downturn characterized by higher unemployment, lower household income, lower corporate earnings, lower business investment and lower consumer spending, the demand for SCOR’s and its clients’ products could be adversely affected. In addition, the Group may experience an elevated incidence of claims or be impacted by a decrease in demand for reinsurance and increased surrenders of policies from the cedents (see paragraph on Lapsation in Section 4.1.1.B – Life Reinsurance) 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 its share price. See Appendix B – II. Internal control and risk management procedures, B. Identification and assessment of risks for information on risk mitigation actions.
This legislation and other proposals or actions may then have other consequences, including material effects on interest rates and foreign exchange rates, and in particular, the future viability of the European currency or the European Monetary Union, which could materially affect SCOR’s investments, 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 Supervision and Resolution Authority (Autorité de Contrôle Prudentiel et de Résolution, or “ACPR”) which regulates among other categories of entities the insurance and reinsurance companies, and other regulators. 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 and submit them to reinforced measures of control and higher capital requirements.
All of these risks could materially affect its business, present and future revenues, net income, cash flows, financial position, and potentially, its share price.
In addition, the Group could also be exposed to 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, nanotechnology, cyber-risks, climate change, solar storms and anti-microbial resistance.
SCOR’s property business underwritten by its property and casualty division, which it refers to in this Registration Document as “SCOR Global P&C”, “Non-Life” or its “Non-Life division”, is exposed to multiple insured losses arising from a single or multiple events, which can be catastrophic, being either caused by nature (e.g. hurricane, typhoon, windstorm, flood, hail, severe winter storm, earthquake, etc.) or by the intervention of a man-made cause (e.g. explosion, fire at a major industrial facility, act of terrorism, etc.). Any such catastrophic event can generate insured losses in one or several of SCOR’s lines of business.
The insured losses may be covered under various lines of business within the property business such as fire, engineering, aviation, space, transport and agriculture.
SCOR produces its Non-Life business both through brokers and through direct relationships with insurance company clients. For the year ended 31 December 2014, approximately 58% of Non-Life gross premiums were produced through brokers (for the year ended 31 December 2013: 63%). In 2014, SCOR had two brokers that accounted for approximately 36% of its Non-Life gross premiums (in 2013: 34%). Refer to Section 6 – Business overview, 6.1.3.2 Distribution by Production Source. The risk for SCOR is mainly the significant concentration of premiums written through a limited number of brokers. A significant reduction in the business generated through these brokers could potentially reduce premium volume and net income.
The assessment of biometric risks is at the center of underwriting in life reinsurance. These are risks which result from adverse developments in mortality, morbidity, longevity or from epidemic/pandemic shock claims. These risks are evaluated by the actuaries, research centers and medical underwriters of SCOR Global Life, who analyze and use information from SCOR Global Life’s own portfolio experience, from the ceding companies as well as relevant information available in the public domain, such as mortality or disability studies and tables available from various sources, e.g. actuarial associations or medical research bodies.
Morbidity Risk Products such as critical illness, short-term and long-term disability and long-term care, which all contain morbidity risk, are subject to the risk of negative trends in health, as well as to the consequences of improved medical diagnoses capabilities which increase the number of claims due to conditions that otherwise would possibly have remained undetected. Medical progress may in the future enable better treatment, resulting in higher claims, since certain diseases would have otherwise led to a much shorter life expectancy of insured. Products providing cover for medical expenses are in particular subject to the risk of higher than expected incidence and inflation of medical costs. Longevity Risk 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. This risk could have an impact on longevity swaps, annuity and long-term care covers and on other longevity protection products.
Pandemic In Life reinsurance, a severe pandemic is a major risk. In the past century, three major outbreaks of influenza occurred and claimed millions of lives. The occurrence of a similar event could cause large losses to SCOR due to an increased mortality far beyond the usual volatility. Experts closely monitor current influenza virus strains and those of infectious diseases. A lethal virus strain not only of influenza but of any other communicable disease could lead to a heavy increase in mortality rates and increased medical costs which could significantly affect SCOR’s results.
SCOR Global Life is also exposed to risks related to policyholder behavior. This includes risks such as lapsation, antiselection at policy issue, resale or purchase of policies by third parties with no insurable interest, actual exercising of policy options by the policyholder different from expected, and fraudulent applications.
This might lead to a portfolio composition which differs from the one assumed during pricing and might imply lower than expected profits for both the direct insurer and reinsurer. Purchase or resale without insurable interest In general, for most individual life covers, the policyholder and the insured person are identical. The pricing of these policies is based on this assumption. However, policyholders may sell their polices (for more than the cash surrender value) and the eventual death benefit to third parties who continue to pay the premium. Under “Stranger Owned Life
Insurance (STOLI)” or “Investor Owned Life Insurance (IOLI)” policies, primarily between 2003 and 2008 in the US, policies were purchased with the intention to sell them to a third party who has no insurable interest in the life of the insured. This practice can lead to deviations between actual and expected lapse rates and mortality experience which can be a risk to the insurer and reinsurer of the cover. Most states as well as virtually all life insurance financial underwriting practices currently prohibit STOLI/IOLI transactions at the time of sale.
For further details, refer to Section 4.1.2 – SCOR is exposed to losses from catastrophic events. See also Section 6.1.3.4 – Catastrophe (cat) Risk and Exposure Controls.
Such guarantees may be explicitly or implicitly covered by the reinsurer under the reinsurance contract and, if so, expose the reinsurer to the risk of adverse developments which increase the value of the guarantee and thereby necessitate respective increases in benefit reserves.
The level of availability and cost of collateral, including letters of credit, asset trusts and other credit facilities, could adversely affect SCOR’s operations and financial condition.
SCOR might, over time, retrocede certain XXX-related cash flows and reserves to such affiliated or unaffiliated reinsurers that are authorized in the ceding company‘s domicile or provide collateral of an amount equal to the reinsured reserves. Such collateral must be provided in the form of funds withheld, approved commercial bank letters of credit meeting the requirements of the ceding company’s domiciliary state, the placement of assets in qualifying trusts for the ceding company’s benefit, or by other means pre-approved by the ceding company’s regulator. Based on the assumed rate of growth in SCOR’s current US life 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. In connection with these reserve requirements, SCOR faces the following risks:  The availability of collateral and the related cost of such collateral in the future could affect the type and volume of business it reinsures and could increase costs.
 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 changes in the current retrocession and/or captive structures, SCOR may be required to increase regulatory reserves. In turn, this reserve increase could 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. Regulatory changes could materialize in the form of revised captive accreditation standards or reserve standards for new business which may adversely impact the volume and cost of reinsurance going forward.
Non-Life and Life reinsurance activities take place in two different market environments. They are subject to heterogeneous external constraints, which generally benefit from a high diversification effect. The overall balance between the two business areas within the Group hence provides stability. However, in some cases, evolutions of the Non-Life and Life activities are linked to each other as well as to those of the financial markets. This exposes SCOR to risks of accumulation between its lines of business and/or asset classes, which are difficult to quantify. Unforeseen events, such as natural catastrophes, can cause significant damage. These types of risk primarily affect Non-Life business areas. However, in cases where SCOR faces a large number of casualties, the possibility of the losses also affecting its Life lines of business cannot be excluded. Similarly, unforeseen events such as terrorist attacks may materially impact the Non-Life business area, but also the Life business area, in the case of attacks resulting in many fatalities.
Economic risks are related to slowdowns in economic growth or recessions in the major markets. This may lead households and companies to take out less insurance, to suspend certain premium payments, or to terminate the insurance policies underlying the existing Non-Life and Life treaties earlier than anticipated.
There is no guarantee that SCOR is protected from unexpected changes in Life or Non-Life claims frequency or severity or erroneous assumptions in the underwriting and pricing, or from unexpected levels of correlations across its Non-Life, Life, and asset risks. These variations could have a material adverse impact on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
See Section 20.1.6 – Note 26, Insurance and financial risk – Interdependence of the Non-Life and Life Reinsurance businesses for information on risk mitigation actions.
Although the Group attempts to limit its exposure to acceptable levels, it is possible that multiple concurrent catastrophic events could have a material adverse effect on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price. See Section 6.1.3.4 – Catastrophe (Cat) risk and exposure controls for information on risk mitigation actions.
4.1.3 SCOR COULD BE SUBJECT TO LOSSES AS A RESULT OF ITS EXPOSURE TO TERRORISM
The Group has actively supported the creation of insurance and reinsurance pools involving insurance and reinsurance companies as well as public authorities in order to spread the risks of terrorist activity among the members of these pools. Pools have been created in countries such as but not limited to: France (GAREAT), Germany (Extremus), the Netherlands (NHT), Austria (VVO) and Belgium (TRIP), which also benefit from varying levels of state support. The Group participates in some of these pools. In the US, the Terrorism Risk Insurance Act, and subsequent successive legislation, requires that insurers provide coverage for terrorist acts. It establishes a federal program to help insurance companies cover claims related to terrorist acts. Beyond the legal requirements in the USA and other countries, market practice frequently also requires that reinsurers or insurers provide terrorism coverage.
See Appendix B – II. Internal control and risk management procedures, B. Identification and assessment of risks for information on risk mitigation actions.
4.1.4 SCOR COULD BE SUBJECT TO INCREASED RESERVES FROM BUSINESS THAT IT DOES NOT ACTIVELY UNDERWRITE
Like most reinsurance companies, SCOR is exposed to environmental pollution and asbestos related risks, particularly in the US. Insurers are required under their contracts to notify the relevant reinsurer of any claims or potential claims that they are aware of. However, the Group often receives notices from insurers of potential claims related to environmental and asbestos risks that are not precise enough, as the primary insurer may not have fully evaluated the loss at the time it notifies the Group of the claim. Due to the nature of these claims, the uncertainty surrounding the extent of coverage under insurance policies and whether or not particular claims are subject to any limit, the number of occurrences and new developments regarding the insured and insurer liabilities, SCOR, like other reinsurers, can only give a very approximate estimate of its potential exposure to environmental and asbestos claims that may or may not have been reported.
SCOR Global Life has in its books legacy retrocession liabilities with regard to Guaranteed Minimum Death Benefit (GMDB) rider options attached to variable annuity policies written in the US. This GMDB business indirectly exposes SCOR Global Life to asset risk on the variable annuity policyholders’ funds. These funds are not held by SCOR Global Life, the assets remain with the originating ceding companies.
Business of this type is not within the usual scope of the SCOR Global Life underwriting policy, and no GMDB new business is being underwritten. These treaties are all in run-off and, as at 31 December 2014, cover in total approximately 0.5 million policies. There are some risks which are specific to the GMDB portfolio, such as developments on the financial markets, fluctuations in interest rates, and the implied volatility on equity options. The liability is also dependent on policyholder behavior. As a retrocessionaire, SCOR Global Life is exposed to uncertainties concerning data received from its retrocedents and the original ceding companies and also due to the inherent reporting lag. SCOR Global Life is also exposed to risks inherent to the model used for the assessment of the liability under its portfolio.
There can be no assurance that SCOR’s GMDB portfolios will not deteriorate in the future, which could have an adverse effect on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
See Section 20.1.6 – Notes to the consolidated financial statements, Note 16, Net Contract liabilities – (A) Guaranteed Minimum Death Benefit (GMDB) for information on risk mitigation actions.
SCOR Non-Life’s US operations include both on-going and run-off portfolios. The latter principally consists of risks arising from various classes of insurance and reinsurance business written in the US from the middle of the 1990’s to 2002 by SCOR Reinsurance Company (SCOR Re U.S.") and General Security National Insurance Company (“GSNIC”), each a SCOR Group owned insurance company domiciled in the State of New York, and by Commercial Risk Partners Ltd. (“CRP”), a Bermuda company absorbed by GSNIC in 2009. There can be no assurance that SCOR’s US 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 activities of the Group.
The SCOR Group is required to maintain reserves to cover its estimated ultimate liability for losses and loss adjustment expenses with respect to reported and unreported claims, incurred as at the end of each accounting period, net of estimated related recoveries. Its reserves are established both on the basis of information it receives from its cedent insurance companies, particularly their own reserving levels, as well as on the basis of its knowledge of the risks, the studies it conducts and the trends it observes on a regular basis. As part of the reserving process SCOR reviews, with the concerned insurers and co-insurers, available historical data and it tries to anticipate the impact of various factors such as change in laws and regulations and judicial decisions that may affect potential losses from claims, changes in social and political attitudes that may increase exposure to losses and trends in mortality and morbidity, or evolution in general economic conditions. As stated before, the Group’s reserves and policy pricing are based on a number of assumptions and on information provided by third parties, which, if incorrect and/or incomplete, could have an adverse effect on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price. Despite the audits it carries out on the companies with which it does business and its frequent contacts with these companies, the Group is still dependent upon such companies’ risk evaluations in establishing its reserves.
Another factor of uncertainty resides in the fact that some of SCOR’s activities are long-tail in nature, in particular longterm care, whole life products, term assurance, longevity, workers compensation, general liability, medical malpractice or those linked to environmental pollution or asbestos exposure. For some of these activities, it has, in the past, been necessary for SCOR to revise estimated potential loss exposure and, therefore, to reinforce the related loss reserves.
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 US.
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 negatively impact its business, present and future revenues, net income, cash flows, financial position, and potentially, its share price.
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. 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 SCOR, greater financial resources, state backing, and, in certain cases, higher ratings from the rating agencies.
Furthermore, the Group’s reputation is sensitive to reinsurance sector information and can be affected by adverse events concerning competitors. For example competitors’ bad results could have a significant impact on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
4.1.8 CONSOLIDATION IN THE INSURANCE AND REINSURANCE INDUSTRIES COULD ADVERSELY IMPACT SCOR
Insurance industry participants may seek to consolidate through mergers and acquisitions. These consolidated entities may use their enhanced market power and broader capital base to negotiate price reductions for SCOR’s products and services, and reduce their use of reinsurance, and as such, the Group may experience price declines and possibly write less business. Reinsurance industry consolidation could happen as well, with SCOR’s competitors undertaking mergers or acquisitions. Such external growth activity of SCOR’s competitors could potentially enhance these players’ competitive position, e.g. in terms of being able to offer greater capacity or broader product offerings, which could permit them to gain market shares at SCOR’s expense.
In addition, if SCOR’s rating deteriorates, certain stand-by letter of credit facilities would require a higher level of collateralization, which would increase their cost. The timing of any review of the Group’s financial ratings by the rating agencies is also very important to its business since the Non-Life contracts and treaties are renewed at various set times throughout the year.
Regarding the subordinated notes issued by SCOR, an equity credit has been assigned to certain notes in line with S&P current methodology. A change in this methodology could lead to (i) a disqualification for equity credit of the notes and (ii) force SCOR to exercise the option that is offered in such case to redeem the notes. More information about subordinated debt is included in Section 20.1.6 - Notes to the consolidated financial statements, Note 14 - Financial Debt.
Many of SCOR’s reinsurance treaties, notably in the US and in Asia, and also increasingly in Europe, contain clauses concerning the financial strength of the Company and/or its operating subsidiaries having the contracts and benefiting from the Group rating, and provide for the possibility of early termination for its cedents if the rating of such subsidiaries is downgraded, or when its net financial position falls below a certain threshold, or if it carries out a reduction in share capital. Accordingly, such events could allow some of SCOR’s cedents to terminate their contract commitments, which could have a material adverse effect on its revenues, net income, cash flow, financial position, and potentially, on its share price.
Banks providing such facilities usually ask SCOR to post collateral. Its value retained by the bank, which can be different from the market value since it includes haircuts, is at maximum equal to the amount of the LOC facility. In the case of a LOC being drawn by a cedent, the bank has the right to request a cash payment from this collateral, up to the amount drawn by the cedent. It enforces this right by drawing on the collateral the Group posted to such bank. In the case of a large number of LOCs being drawn simultaneously, SCOR could encounter difficulties in providing the total amount of required cash or fungible assets, i.e. exposing it to a liquidity risk.
Moreover, some of SCOR’s facilities contain conditions about its financial situation which, if not met, constitute a default and might result in the suspension of the use of current credit facilities and/or a prohibition on obtaining new lines of credit or result in the need to negotiate new LOC facilities under adverse conditions, which could have an adverse effect on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
For more details about the Group’s lines of credit, refer to Section 10 - Capital resources.
SCOR, as every company, must comply with laws and regulations. Furthermore, as an international group, it must take into account national and international laws and regulations. The level of legal or regulatory requirements depends on the country and the legal structure of the entity etc.
For direct business, SCOR is subject to the laws, regulations and tax rules governing direct insurance which can create specific compliance risks (i.e. different from those relating to reinsurance business). The risk is that it might not respect the level of required compliance appropriate to each location and legal structure. Any violation of such laws and regulations could expose SCOR to legal risks or class actions. Its reputation could be affected.
An operational risk failure, in particular the failure of internal control procedures, could have an adverse impact on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
In addition, acquisitions may expose SCOR to operational challenges and various risks, including:  the ability to integrate the acquired business operations and data with its systems;  the ability to integrate, retain or recruit required personnel for the proper functioning of the acquired business;  the availability of funding sufficient to meet increased future capital needs;  the obligation to comply with new regulatory requirements;  the ability to fund cash flow shortages that may occur if anticipated cash flows are not realized or are delayed, whether by general economic or market conditions or unforeseen internal difficulties; and
 the possibility that the value of investments acquired in an acquisition, may be lower than expected or may diminish due to credit defaults or changes in interest rates and that liabilities assumed may be greater than expected (due to, among other factors, less favorable than expected mortality, morbidity or lapse experience, or increase reserving of long tail lines of business).
B. An insolvency of AEGON might impair the value of business acquired (VOBA) of SCOR Global Life
This risk applies also to loan transactions performed by the Group. The borrowers’ solvency deterioration may lead to a diminution of the value of the loans, and possibly a partial or total loss of the coupons and the nominal invested by SCOR.
Moreover, the Group is exposed to a credit risk in the event of a payment default by the retrocessionaires of the balance of the profit and loss retrocession account due in respect of its cession.
Multiple defaults of companies (or in the event of the default of a major company) on which the ceding companies are exposed could have a material adverse impact on SCOR’s business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
Firstly, the payment of future profits expected under Life reinsurance contracts requires that the cedent is solvent: for this reason, SCOR risks a reduction in the value of its portfolio of Life contracts in the event of a deterioration in the financial strength of the cedent. In such a case, it is possible that the value of business acquired (“VOBA”) and deferred acquisition costs (“DAC”) may need to be written down and its shareholders’ equity would be reduced accordingly. In particular this affects the US book of business acquired in the course of the Transamerica Re acquisition. The majority of these reinsurance contracts flow to SCOR via retrocession from AEGON companies. An AEGON insolvency might lead to premiums from clients no longer being passed on to SCOR, and thus potentially impair the VOBA. Secondly, a reduction in the value of future profits could arise from a material unexpected lapsation of policies following a deterioration of the cedent’s financial rating or standing or an event which has a negative effect on the cedent’s reputation. The Group therefore has exposure to credit risk linked to the financial situation and the reputation of its cedents, which could have an adverse impact on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price. For further details on the impact of the assessment of intangible assets upon SCOR’s results, see 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 and Section 20.1.6 – Notes to the consolidated financial statements, Note 4 – Intangible Assets.
SCOR participates, for certain risk categories that are material (particularly terrorist risks), in various groups of insurers and reinsurers (“pools”) aimed at pooling the relevant risks among the members of each group. In the event of a total or partial default by one of the members of a group, it could be required to assume, in the event of joint liability of the members, all or part of the liabilities of the defaulting member. In such a case, this could adversely impact its business, present and future revenues, net income, cash flows, financial position, and potentially, its share price. For further details, refer to Section 4.1.3 – SCOR could be subject to losses as a result of its exposure to terrorism.
Some capacities SCOR offers are not achievable solely with its current available capital. These capacities (mainly catastrophic and large industrial risks) rely on retrocession whereby it purchases, mainly on a one-year basis, additional resources that allow the Group to provide capacity to its clients. SCOR tries to reduce its dependence vis-à-vis the traditional reinsurance market by entering into alternative risk transfer solutions (e.g. the multi-year securitization of catastrophic and pandemic risk in the form of Insurance-Linked Securities ("ILS"), mortality swaps and the issuance of contingent capital facilities). For more information on SCOR’s securitization of catastrophic risk and issuance of contingent capital facilities, see Section 6.1.4 Capital shield policy. Nevertheless, SCOR is exposed to the risk that it may not be able to retrocede liabilities on economically viable terms and conditions.
4.1.16 SCOR IS EXPOSED TO A HIGHER RATE OF GENERAL INFLATION
The Group’s liabilities are exposed to an increase in the rate of general inflation (prices and salaries) which would require an increase in the value of Non-Life reserves, in particular in respect of long-tail business, e.g., general liability (medical among others) and motor bodily injury claims. In addition, SCOR is exposed to claims inflation over and above general inflation and in particular to the inflation of court awards in respect of general liability and bodily injury claims.
4.2 Risk related to Financial Markets 4.2.1 SCOR FACES RISKS RELATED TO ITS FIXED INCOME INVESTMENT PORTFOLIO
option and can borrow at lower interest rates. Consequently the probability of needing to reinvest the proceeds at lower interest rates is increased.
Credit spread variations have a direct impact on the market value of the fixed-income securities, and as a consequence, on the unrealized capital gains or losses of the fixed-income securities held in portfolio. Credit spreads vary notably due to changes in the counterparty risk of an issuer and in the liquidity of the securities. Some securities’ valuations, like corporate bonds or structured products, rely on assumptions and estimations which can fluctuate from one period to another due to market conditions. See Section 4.1.14 – SCOR is exposed to losses due to counterparty default risks or credit risks – A. Bond and Loan portfolios.
SCOR is also exposed to equity price risk. A widespread and sustained decline in the equity markets could result in an impairment of its equity portfolio. Such an impairment could affect its net income.
The Group’s exposure to the equity market results from direct purchases or investments in convex equity strategies such as convertible bonds or mean variance strategies, and through certain (re)insurance products including GMDB business. See Section 4.1.4 – SCOR could be subject to increased reserves from business that it does not actively underwrite.
Equity prices are likely to be affected by risks which affect the market as a whole (uncertainty on economic conditions in general, such as anticipated changes in growth inflation, fluctuations of interest rates, sovereign risk, etc.) and/or by risks which influence a single asset or a small number of assets (specific or idiosyncratic risk).
SCOR is, therefore, exposed to a risk of capital losses on its equity exposures - if it were to occur - which could adversely impact its business, present and future revenues, net income, cash flows, financial position, and potentially, its share price.
See Section 20.1.6 – Notes to the consolidated financial statements, Note 26, Insurance and financial risk – Market risk for information on risk mitigation actions.
Some financial instruments do not have a sufficient and recurrent number of transactions to allow valuation with reference to a market price and therefore need to be valued using appropriate models. There is a risk that the price provided by the model is noticeably different from the price which would be observed in the event of rapid disposal of the financial instrument, which could have an adverse effect on SCOR’s financial position. This risk is higher for non-listed assets, structured products (e.g. asset backed securities, collateralized debt obligations (“CDO”), collateralized loan obligations (“CLO”), collateralized mortgage obligations (“CMO”), commercial mortgage backed securities (“CMBS”), residential mortgage backed securities, structured notes, etc.) for the loans and for the alternative investment portfolio (e.g. hedge funds, infrastructure, commodities, private equity, etc.).
For further details on valuation, refer to Section 20.1.6 – Notes to the consolidated financial statements, Note 6 – Insurance Business 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 value of property assets, owned directly or through funds, is exposed to changes both in rental revenues and in the investment market itself (changes in interest rates, liquidity) but potentially also to the risk of regulatory obsolescence of properties (regulatory developments related to the accessibility of buildings for people with disability, on the reduction of energy consumption and the production of carbon dioxide, etc.) which would lead to losses of value in the event of a sale of the assets or to additional expenditure to restore the value of the property.
SCOR invests in corporate loans, real estate loans and infrastructure loans. These are medium to long-term investments. Some investments may not allow for a change in strategy to adapt to the environment, before their final maturity.
The occurrence of one or more of the above risks could have a material adverse impact on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price. See Section 20.1.6 – Notes to the consolidated financial statements, Note 26, Insurance and financial risk – Market risk for information on risk mitigation actions.
Some events, such as catastrophes, can have an impact on the matching of assets and liabilities in a currency, which can generate a temporary unmatched position which is not covered by currency contracts or hedges. For the consolidated net position of assets and liabilities by currency, and for an analysis of sensitivity to exchange rates, refer to Section 20.1.6 – Notes to the consolidated financial statements, Note 26 – Insurance and Financial Risk.
The recognition of deferred tax assets, i.e., the likelihood of recognizing sufficient profits in the future to offset losses, depends on applicable tax laws and accounting methods as well as the performance of each entity concerned. The occurrence of events, such as changes in tax legislation or accounting methods, operational earnings lower than currently projected or losses continuing over a longer period than originally planned could lead to the derecognition of part or all of the deferred tax assets. Acquisition costs, including commissions and underwriting costs, as well as the VOBA for Life reinsurance, and the contractual rights with clients are recognized as assets subject to the profitability of the contracts. They are amortized on the basis of the residual term of the contracts in Non-Life, and on the basis of the pattern of recognition of future margins for Life contracts. As a result, the assumptions considered concerning the recoverable nature of the deferred acquisition costs are affected by factors such as operating results and market conditions. If the assumptions for recoverability of DAC or VOBA are no longer appropriate, it would be necessary to accelerate amortization. Details of intangible assets, related impairment testing policy and recent acquisitions is included in Section 20.1.6 – Notes to the consolidated financial statements, Note 1 – Accounting Principles and Methods; Note 3 – Acquisitions and Disposals; Note 4 – Intangible Assets; and Note 19 – Income Tax. 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 its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
Information on the Group’s liquid assets is included in Section 20.1.6 – Notes to consolidated financial statements, Note 6 – Insurance Business Investments.
Some facilities SCOR uses to grant letters of credit to cedents require 100% collateral in case of non-compliance with financial covenants or in case of a decrease in the Group’s financial strength rating. Significant changes in the Group’s solvency or rating could force it to collateralize these facilities at 100%, which would thus result in a deterioration of its liquidity level.
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 its share price.
Additional information on the timing of repayments is included in Section 20.1.6 – Notes to the consolidated financial statements, Note 26 – Insurance and Financial Risk.
In the event current internal and/or external resources do not satisfy its liquidity 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 decreases 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.
Disruptions, uncertainty or volatility in the capital and credit markets may also limit the Group’s access to capital required to operate its business, most significantly its insurance operations. Such market conditions may limit its ability to:  replace, in a timely manner, maturing liabilities;  satisfy statutory capital requirements;  generate fee income and market-related revenue to meet liquidity needs;  access the capital needed to grow its business.
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, and make some operations from the Group and its subsidiaries subject to prior approval from the supervisory authorities. The Group is exposed to the risk of non-approval or rejection, by supervisory authorities, of the corresponding operations (including in particular the approval of the Group Internal Model and some intra-group operations).
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 could make the protection of policyholders and policy beneficiaries prevail over shareholders or creditors of a reinsurer. 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”) dated 16 November 2005, by ordinance n. 2008-556 of 13 June 2008 and application decrees n. 2008-711 of 17 July 2008 and n. 2008-1154 of 7 November 2008, as well as a regulation (arrêté) of 7 November 2008. The 2005 Directive prescribes the application of a “single passport” and confers the supervision of EU reinsurance companies upon the supervisory authorities of the company home office. 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 States of the European Union, and gives national legislators the option to set more stringent requirements. The national provisions adopted for the implementation of this Directive and their interpretations, as well as other legislative or regulatory changes, increase the harmonization of regulations governing reinsurers with the regulations governing insurers. These new regulations may increase solvency margin obligations, thereby restricting SCOR’s underwriting capacity.
The Group must comply with all applicable economic sanctions, anti-bribery as well as anti-terrorism laws and regulations applicable to its operations, including those of the United Nations, the European Union and the United States.
United States laws and regulations, when applicable to the Group, include the economic trade sanctions laws and regulations administered by the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) as well as certain laws administered by the United States Department of State. Over recent years, the number of sanctions programs, their scope and complexity have increased substantially. Such sanctions programs may also be subject to frequent updates at irregular intervals. In addition, the Group may be subject to the Foreign Corrupt Practices Act (FCPA) and other anti-bribery laws such as the UK Bribery Act that generally bar corrupt payments or unreasonable gifts to foreign governments or officials.
have in order to cover the risks to which they are exposed and the principles that should guide insurers' and reinsurers' overall risk management and reporting.
The new regime represents a significant change in the basis for regulating insurance and reinsurance business in Europe. SCOR has to review its regulatory capital structures and implement the systems, processes and cultural changes necessary to meet the new requirements.
See Appendix B – II. Internal control and risk management procedures, C. Principal activities and participants of risk control for information on risk mitigation actions.
In November 2014, the Financial Stability Board (“FSB”) confirmed the designation of nine direct insurers as systemic (“G-SIIs”) according to their interconnectedness and their exposures to activities considered as non-traditional or noninsurance. The FSB stated its intention to consider the designation of systemic reinsurers as well, according to the same methodology designed for insurers. There is a risk that SCOR will receive such a designation. The impact of receiving such a designation is as yet unclear, notably as corresponding regulatory measures are not fully defined yet. There is a risk of higher capital charges and greater regulatory burdens such as the establishment of resolution plans. On the other hand, there is a possibility that G-SIIs could benefit from a market perception of an implicit state guarantee. Were SCOR’s competitors to receive such a designation and SCOR were not, there could be a risk of SCOR’s market perception weakening relative to these peers. In the meantime, the International Association of Insurance Supervisors (“IAIS”) has been developing a framework for global capital standards to be imposed on G-SIIs and, more generally, internationally active insurance groups (“IAIGs”). In a first step, a Basic Capital Requirement will be applied to G-SIIs in 2015. Higher loss absorbency (“HLA”) capital addons will then be applied to G-SIIs in 2019. At the same time, it is the IAIS’s intention to develop Insurance Capital Standards (“ICSs”) to be applied to all IAIGs from 2019. There is a risk that SCOR will be designated a G-SII, and SCOR expects to be included amongst IAIGs. HLA and ICS rules are less well developed and there is a risk that these rules could have an impact on capital management aspects.
4.4.6 IN 2010, THE US 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
to be designated for more stringent regulation. The Dodd-Frank Act also authorizes the federal preemption of certain state insurance laws in limited instances, including assisting the Treasury Department in negotiating covered agreements. The FSOC and FIO are authorized to study, monitor and report to Congress on the US insurance industry and the significance of global reinsurance to the US insurance market, which could result in additional legislative or regulatory action.
4.4.7 CHANGES IN CURRENT ACCOUNTING PRACTICES AND FUTURE PRONOUNCEMENTS MAY MATERIALLY IMPACT SCOR’S REPORTED FINANCIAL RESULTS
Unanticipated developments in accounting practices may require SCOR to incur considerable additional expenses to comply with such developments, particularly if it is required to prepare information relating to prior periods for comparative purposes or to apply the new requirements retroactively. The impact of potential changes in accounting practices cannot be predicted but may affect the calculation of net income, net equity and other relevant financial statement line items and the timing of when impairments and other charges are tested or taken. In particular, recent guidance and ongoing projects put in place by standard setters globally have indicated a possible move away from the current insurance accounting models toward more “current fulfillment value” based models which could introduce significant volatility in the earnings of insurance industry participants. This could have a material adverse impact on its business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
SCOR may be involved in legal and arbitration proceedings. For information on this issue, refer to Section 20.1.6 – Notes to the consolidated financial statements, Note 27 - Litigation.
4.4.10 SCOR’S TAX POSITIONS ARE SUBJECT TO AUDIT AND APPROVAL BY TAX AUTHORITIES
There are also specific rules governing the taxation of policyholders. SCOR will be unable to accurately predict the impact of future changes in tax law on the taxation of life insurance in the hands of policyholders. Amendments to existing legislation (particularly if there is the withdrawal of any tax relief or an increase in tax rates) or the introduction of new rules may affect the future long-term business and the decisions of policyholders. The impact of such changes upon the Group might depend on the mix of business in force at the time of such change and could have a material adverse effect on its business, results of operations and/or financial condition. The design of Life insurance products by SCOR’s Life insurance companies takes into account a number of factors, including risks, benefits, charges, expenses, investment returns (including bonuses) and taxation. The design of longterm insurance products is based on the tax legislation in force at that time. Changes in tax legislation or in the interpretation of tax legislation may therefore, when applied to such products, have a material adverse effect on the financial condition of the relevant long-term business fund of the entity in which the business was written and have a material adverse impact on SCOR’s business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
4.7 Risk and litigation: Reserving methods Refer to Section 20.1.6 – Notes to the consolidated financial statements, Note 1 – Accounting principles and methods.
5.1 History and development of the issuer 5.1.1 LEGAL NAME AND COMMERCIAL NAME OF THE ISSUER
The Company expires on 25 April 2112 unless otherwise extended or previously dissolved.
SCOR SE 5, avenue Kléber www.scor.com E-mail: scor@scor.com 5.1.4.2 Legal form and applicable legislation
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 proportion of the voting rights held by each shareholder in the Company has not been affected by the conversion into a European Company.
The conversion in itself did not have any impact on the value of the SCOR SE shares. The number of shares issued by the Company was not changed as a result of the conversion and the shares of the Company, remain listed on the Eurolist market of Euronext Paris. As at the date of this Registration Document, the SCOR SE shares are also listed on the SIX Swiss Exchange (formerly SWX Swiss Exchange) in Zurich since 8 August 2007. The Company’s American Depositary Shares which had been listed on the New York Stock Exchange since 11 October 1996 were delisted on 14 June 2007 and the Company’s securities were deregistered with the Securities and Exchange Commission (SEC) on 4 September 2007.
The Group is subject to the following regulations in the main countries in which it operates: Europe
Specific provisions apply to the reinsurance activity of SCOR. Under the Reinsurance Directive 2005/68/EC dated 16 November 2005, implemented into French law by ordinance n. 2008-556 of 13 June 2008 and application decrees n. 2008-711 of 17 July 2008, and n. 2008-1154 of 7 November 2008, as well as regulation (arrêté) of 7 November 2008, reinsurance companies and their subsidiaries situated in a country within the European Economic Area ("EEA"), are subject to state control, under the conditions defined by Book III of the French Insurance Code. The Reinsurance Directive also states rules for the offsetting of underwriting reserves by assets and the rules of acceptability of assets.
In Switzerland (which is neither a member of the EU nor of the EEA), the Group subsidiary that conducts reinsurance activities there is subject to the federal law dated 1 January 2006 as amended “Insurance Supervision Act” and the federal law dated 22 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).
SCOR was established as a reinsurance company in 1970, at the initiative of the French government and with the participation of the Paris insurance market place, to create a reinsurance company of international stature under the name of Société Commerciale de Réassurance. SCOR rapidly developed in various world markets, building up a substantial international portfolio. At the beginning of the 1980s, the French government’s stake in its share capital, held through the Caisse Centrale de Réassurance, was progressively reduced in favor of insurance companies that were active on the French market. (For more details, refer to Section 5.1.3 – Date of incorporation and length of life of the issuer). In 1989, the Group and UAP Reassurances, a subsidiary of the state-owned Société Centrale de l’Union des Assurances de Paris, combined their Property and Casualty and Life reinsurance businesses as part of a restructuring of SCOR share capital. The Company listed its Ordinary Shares on the Paris stock exchange after completion of a reverse merger with Compagnie Générale des Voitures, listed on the Paris Stock Exchange and changed its name to SCOR S.A. on 16 October 1989 and to SCOR on 13 May 1996. The withdrawal of Compagnie UAP, which held 41% of the share capital, was completed in October 1996 via an international public offering at the time of SCOR listing on the New York Stock Exchange.
In 2002, SCOR’s subsidiary, Investors Insurance Corporation, or "IIC", signed a cooperation agreement in the life reinsurance business with the Legacy Marketing Group of California for the distribution and management of annuity products in the US. IIC was sold in July 2011.
In August 2007, SCOR acquired, Converium (which became SCOR Holding (Switzerland) AG (“SCOR Holding Switzerland”)). SCOR also listed its Ordinary Shares to trading in Swiss Francs on the SWX Swiss Exchange (which later became the SIX Swiss Exchange) in Zurich, thereby enabling Converium shareholders who tendered their Converium shares to SCOR (in exchange for SCOR’s Ordinary Shares) in the context of the acquisition to keep their assets in the same currency and on the same stock exchange. Following the acquisition of Converium's control, SCOR became the world’s fifth-largest global multi-line reinsurer (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”. Following its integration of Revios and Converium, SCOR restructured its operations around six regional management platforms, or “Hubs.” Each of the Hubs has local, regional and Group responsibilities, with the heads of each Hub reporting to the Group Chief Operating Officer. Each Hub includes the following functions: a Legal and Compliance Officer, a Head of Information Systems, a Head of Finance, a Head of Human Resources and a Risk Manager.
The Hubs were progressively implemented:  on 5 May 2008 for the Cologne Hub (combined with the Zurich Hub from 1 October 2014);  on 20 May 2008 for the London Hub;  on 18 June 2008 for the Americas Hub;  on 27 June 2008 for the Singapore Hub;  on 27 January 2009 for the Zurich Hub (combined with the Cologne Hub as from 1 October 2014);  on 24 February 2009 for the Paris Hub.
On 10 April 2008, SCOR announced that it has been admitted as a Property and Casualty reinsurer in Brazil. In addition, SCOR completed the formalities for SCOR Global Life US Re Insurance Company to operate as an admitted Life reinsurer in Brazil.
On 21 April 2008, SCOR incorporated its first South-African subsidiary, SCOR Africa Ltd, located in Pretoria, to develop its Life and Non-Life reinsurance business. On 31 July 2008, SCOR SE entered into an agreement with the Malakoff Médéric Group, the leading group in the French social protection market (providing supplementary retirement, health insurance and contingency plans), in order to acquire 100% of the share capital and voting rights of Prévoyance et Réassurance and its Life and Health reinsurance subsidiary Prévoyance Ré. This acquisition was completed on 24 October 2008, and gave rise to the contribution by SCOR SE to the Malakoff Médéric Group of 3,459,075 of its treasury Ordinary Shares. In addition, Malakoff Médéric Group, in accordance with its commitment, acquired on the market, as from November 2008, an additional number of SCOR SE shares enabling it to hold 3% of the share capital and voting rights of SCOR SE. Malakoff Médéric Group was later appointed as a director on the Board of Directors of the Company. Through this acquisition, SCOR increased its leading role in the French Life and Health reinsurance market and the social protection reinsurance market. On 29 October 2008, SCOR announced its decision to create SCOR Global Investments SE, its asset management company (société de gestion de portefeuille) and third operational entity within the Group along with SCOR Global P&C
SE and SCOR Global Life SE. This new company, incorporated on 2 February 2009, carries the asset management of SCOR’s investment portfolio and implements the investment strategy as determined by the Group’s Investment Committee chaired by the Group Chairman and Chief Executive Officer. SCOR Global Investments SE was approved by the French market regulator (Autorité des marchés financiers or “AMF”) as a portfolio management company with effect from 15 May 2009. As a regulated asset management company, SCOR Global Investments SE carries out its activities on an arms-length basis and with the operational independence required under Article L. 214-9 of the French monetary and financial code.
On 1 November 2010, Lloyd’s Market Franchise Board gave its “in principle” approval to the creation of Channel Syndicate 2015. SCOR is the sole capital provider for Channel Syndicate, which in 2011 had an initial annual stamp capacity of GBP 75 million. Underwriting by the Channel Syndicate began on 5 January 2011. The portfolio of Channel Syndicate focuses on direct insurance business in markets, including property, marine, accident and health, financial institutions and professional civil liability. On 21 December 2010, the Mexican Ministry of Finance granted SCOR Global Life SE a license to set up a representative office in Mexico, under the name of SCOR Global Life SE Oficina de Representación en Mexico. This office supports the activity of SCOR Global Life SE on the Mexican, Central American and Caribbean markets. Effective opening of these offices occurred in January 2011.
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, for USD 57 million. With the sale of IIC, SCOR substantially exited the US fixed annuity business, which was a direct insurance business.
On 25 July 2011, SCOR Global Life, which already held 50% of the capital of SOLAREH SA, acquired the remaining 50% by purchasing shares from Solareh International Inc. As part of the integration of SOLAREH SA into SCOR, the company was renamed REHALTO SA in September 2011. On 9 August 2011, SCOR finalized the acquisition of the mortality portfolio of Transamerica Re, a part of AEGON N.V. The transaction also includes the acquisition of an Irish legal entity, which underwrites Transamerica Re business. The total consideration for the acquired business amounted to USD 919 million, including a statutory capital of USD 497 million for the Irish entity at the closing date. This acquisition was financed without issuance of new shares. Transamerica Re was the world’s 3rd largest Life reinsurer in the US based on the volume of its business in 2009 and the 7th largest reinsurer based on its net earned premium in 2010. SCOR Global Life and Transamerica Re business have been merged into a new entity SCOR Global Life in North America: SCOR Global Life Americas Reinsurance Company (“SCOR Global Life Americas”). On 31 August 2011, SCOR launched Atropos SICAV-SIF (“Atropos”), ILS fund dedicated to insurance risks, which was previously managed by its former subsidiary SCOR Alternative Investments SA and now by SCOR Global investments SE, and domiciled in Luxembourg. This fund enables institutional investors to benefit from extreme natural catastrophe market risks, such as hurricanes, earthquakes and storms. ILS investments are 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.
In June 2012, SCOR Global P&C created a branch in Argentina. On 10 September 2012, SCOR successfully placed on the Swiss franc market perpetual subordinated notes with a first call date in June 2018, for an aggregate total amount of CHF 250 million.
On 24 September 2012, SCOR successfully increased its recently placed perpetual subordinated notes by CHF 65 million to a cumulated issuance of CHF 315 million, following the strong market demand.
With effect on 14 January 2013, the CSSF approved the fund, SCORLUX SICAV-SIF, established by SCOR Global Investments SE in Luxembourg and dedicated to investments in SICAV funds. On 4 March 2013, with effective date 1 January 2013, SCOR Global Life entered into a VIF (Value of In-Force) monetization transaction with BBVA Seguros, a Spanish leading insurance company, to reinsure a whole block of life risk insurance policies written by BBVA Seguros until 31 December 2012. SCOR Global Life Reinsurance Ireland PLC pays circa EUR 630 million of reinsurance commission to write this business and receives the current reserves of the acquired block at the inception of the treaty.
On 1 April 2014, SCOR announced that it had obtained approval from Lloyd’s, the Financial Conduct Authority and the Prudential Regulatory Authority of the UK to launch a Managing Agent at Lloyd’s. The new Managing Agency, “The Channel Managing Agency Limited”, will act as Managing Agent for SCOR’s own Lloyd’s syndicate, Channel 2015, with effect from 1 April 2014.
SCOR's success relies on the consistent implementation of the four principles on which its strategic plans, “Dynamic Lift”, “Strong Momentum” and now “Optimal Dynamics” are based: a strong franchise, a high diversification, a controlled risk appetite and a robust capital shield. Success in implementing such a strategy requires that, at regular intervals, the Group assesses whether opportunities which may present themselves relating to the optimization of its business portfolio via acquisitions and cessions and which would be likely to deliver value for its shareholders are in line with this consistent set of principles. Thus, the closing of such operations should only occur within this consistent framework, in the best interest of SCOR SE.
6.3 Extraordinary events influencing the principal business and markets 70 6.4 Dependency of the issuer with respect to patents or licenses, industrial, commercial or financial contracts and new manufacturing processes 71 6.5 Information on SCOR’s competitive
6 BUSINESS OVERVIEW Between 2002 and 2014, SCOR developed and implemented five three-year strategic plans to strengthen its balance sheet and achieve its profitability goals through an underwriting policy focused on profitability, including optimum capital allocation throughout the business cycle, and by maintaining its strong customer base and franchise in its core geographical areas, Europe, North & Latin America, Asia Pacific and focusing on developing countries for the rest of the world. The Group's acquisitions of Revios (in 2006), Converium (in 2007), Transamerica Re (in 2011) and Generali U.S. (in 2013) contributed to the diversification strategy by balancing the proportion of the consolidated premiums written between its Non-Life and Life divisions.
In September 2013, SCOR launched a new three-year strategic plan, “Optimal Dynamics,” which followed the previous strategic plan for 2010-2013, “Strong Momentum.”
The two specific targets of “Optimal Dynamics” are:  a ROE of 1000 basis points above the three-month risk-free rate over the cycle;  a solvency ratio in the 185-220% range (percentage of SCR, according to the Group Internal Model) (1)
During its annual Investors’ Day held on the 10th of September 2014 in London, SCOR’s Executive Management team, led by Denis Kessler, presented an overview of the successful achievement of the “Optimal Dynamics” strategic plan in its first year and set forth why the company’s business model is fit for today’s environment.
The plan respects the SCOR’s four strategic cornerstones, which are:  a strong franchise, achieved by: - deepening its presence in the local Property & Casualty and Life markets in which SCOR operates by strengthening client relationships and through best-in-class services and product innovation, and by; - expanding into new markets through organic growth;  high diversification, achieved both by Non-Life and Life business diversification and by geographical presence, providing higher stability of results and robust required capital diversification benefits;  a controlled risk-appetite, on both sides of the balance sheet, and;  a robust “Capital Shield” policy, with a four layer-framework that is optimized according to severity and frequency levels of risks: - traditional retrocession, which includes a combination of proportional / non-proportional, per-event and aggregate covers; - alternative risk-transfer solutions, which include the securitization of catastrophic risk in the form of catastrophe bonds and a Mortality risk transfer contract (see Section 6.1.3 Underwriting, Distribution, Catastrophe Risk, Claims and Reserves and Section 20.1.6 - Notes to the consolidated financial statements, Note 8 - Derivative instruments) and provide multiyear protection that is not dependent on short-term market fluctuations; - solvency buffer, defined as the amount of capital above the Solvency Capital Requirement (SCR) having an annual probability of total erosion of 1 in 33 (3%); - contingent capital facilities, which are designed as tools of last resort. See Section 20.1.6 - Notes to the consolidated financial statements, Note 8 - Derivative instruments - Contingent capital facility.
SCOR’s risk appetite framework is an integral part of the Group’s strategic plan. It is approved by the Board of Directors in connection with the review of new strategic plans, based on recommendations from the Group’s Executive Committee and the Risk Committee of the Board of Directors (the “Risk Committee”). The Board of Directors may vary the amount and the composition of risk that the Group is prepared to take.
SCOR’s risk appetite framework encompasses four concepts: Risk Appetite, Risk Preferences, Risk Tolerances, and “footprint” scenarios: Risk Appetite Risk 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 (low risk-low return) and extreme risk taker (high risk-high return). SCOR uses a target solvency ratio as well as a target expected profitability. These two components provide a comprehensive definition of its risk appetite. The Group actual solvency ratio and the retained profitability profile are regularly reported to the Board of Directors via the Risk Committee.
Reinsurance provides four essential functions:  it offers the direct insurer greater security for its equity and solvency, as well as protection against the potentially high volatility of results when abnormally high frequency or severity of losses or events occur, by covering the direct insurer above certain contractually set amounts per event or in the aggregate;  it allows insurers to increase the maximum amount they can insure for a given loss or series of losses by enabling them to underwrite a greater number of risks, or larger risks, without excessively raising their need to cover their solvency margin and, therefore, to increase their shareholders’ equity;  it gives access to substantial available liquidity to insurers in the event of major loss events, and;  it provides insurers with efficient substitute capital solutions.
Reinsurance, however, does not discharge the ceding company from its liability to policyholders. Reinsurers themselves may feel the need to transfer some of the risks underwritten and/or some of the accumulated exposures derived from such risks to other reinsurers (known as retrocessionaires). In addition, reinsurers may also provide advisory services to ceding companies by:  defining their reinsurance needs and devising the most effective reinsurance program to better plan their capital needs and solvency margin;  supplying a wide panel of support services, particularly in terms of the sharing of know-how, best practices and risk assessment, modeling and management tools;  providing expertise in certain highly specialized areas such as the analysis of complex risks and risk pricing; and
Reinsurers, including SCOR, are usually compensated for the provision of such advisory services through the cedents’ reinsurance premiums, rather than through fee-based compensation.
The SCOR Global P&C division operates in four business areas being: Property and Casualty Treaties; Specialty Lines (including Credit & Surety, Inherent Defects Insurance, Aviation, Space, Marine, Engineering, Agriculture and Alternative Solutions); Business Solutions (large corporate accounts underwritten essentially on a facultative reinsurance basis and occasionally as direct insurance for industrial groups and services companies); and Business Ventures and Partnerships. The SCOR Global Life division underwrites Life reinsurance in the following business areas: Protection (which provides protection for Mortality, Disability, Long-Term Care, Critical Illness, Health and Personal Accident), Financial Solutions (which enables cedents to fund growth, stabilize earnings and optimize solvency) and Longevity (which alleviates the risk of insured clients' living longer).
Casualty SCOR's casualty treaties typically cover original risks of general liability, products liability or professional indemnity. Accordingly, they include treaties covering motor liability and general third-party liability. Motor liability reinsurance covers property damage, bodily injuries and other risks arising from the coverage of both drivers and passengers in private vehicles and commercial fleets.
The Group’s main Specialty reinsurance activities include Credit & Surety, Inherent Defects, Aviation, Space, Marine, Engineering, Agricultural Risks and Alternative Solutions.
Credit & Surety Under credit insurance, the insurer covers the risk of losses from the non-payment of commercial debts. Surety insurance is a contract under which a guarantor makes a commitment to a beneficiary to perform the obligation to ensure payment by or to pay the debt of the secured debtor. Political risk insurance covers the risk of losses due to measures taken by a government or similar entity which endangers the existence of a sales contract or commitment made by a public or private citizen of the country in which the covered operations are performed.
Inherent Defects According to French, Italian and Spanish laws as well as laws in other jurisdictions, or by contractual obligation, inherent defects insurance must be purchased to cover major structural defects and collapse for a certain period, typically ten years after completion of construction.
Aviation Aviation insurance covers damages caused to aircraft, injuries to persons transported and to third parties caused by aircraft or air navigation, as well as losses resulting from products manufactured by companies in the aerospace sector.
C. Business Solutions (large corporate accounts underwritten essentially on a facultative reinsurance basis and occasionally as direct insurance)
The Group's activity in the Business Solutions area covers all insurable risks of industrial groups and services companies. These risks are underwritten through facultative insurance and reinsurance contracts by SCOR's specialized teams deployed as an international network around two main business departments: “Natural Resources” and “Industrial & Commercial Risks.”
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.
Protection encompasses traditional Life reinsurance business on living and death benefits. Main risks undertaken are mortality, morbidity and behavioral risks for individuals and groups of individuals. Protection is predominantly
underwritten in the form of proportional treaties (quota share, surplus basis or a combination of both). Quota share treaties include straight structures whereby SCOR Global Life’s exposure is identical to those of its clients, and riskbased premium structures whereby treaty conditions differ from those of the underlying policies. A minority of the portfolio is underwritten in form of non-proportional contracts: excess of loss per person, catastrophe excess of loss or stop loss.
The Protection reinsurance market, as well as SCOR Global Life’s Protection portfolio, are characterized by the dominance of long-term contractual relationships. SCOR Global Life also writes short-term Protection business, in markets and lines in which this is a common practice.
Protection covers the following products and risks in reinsurance arrangements: Mortality Mortality protection represents more than 60% of the SCOR Global Life portfolio based on gross written premiums as at 31 December 2014. SCOR Global Life actively underwrites mortality risk in all the geographical markets it operates. 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 US Business of this type is not within the usual scope of SCOR Global Life’s underwriting policy and these treaties are all in run-off. The reinsurance portfolios acquired in 2013 in the Generali U.S. purchase and in 2011 from Transamerica Re predominantly cover mortality risk. Disability Disability insurance mitigates the loss of income when the insured is totally or partially unable, by reason of sickness or accident, to follow his or her professional occupation or any occupation for which he or she is suited. Long-Term Care Long-Term Care (“LTC”) insurance covers policyholders unable to perform predefined activities of daily living, and as a result, needing constant assistance from another person. Critical Illness Critical Illness (“CI”) insurance pays a lump sum benefit, to be used at discretion, if the insured person suffers from a serious condition and survives a defined period. Health Health insurance covers medical and surgical expenses incurred by the insured person.
Financial Solutions typically combine traditional Life reinsurance with financing components providing liquidity, balance sheet and/or income statement improvements to the client. This type of treaty is typically used by cedents to fund growth, stabilize earnings or optimize solvency (capital relief). Financial Solutions cover also traditional biometric risk.
Consistent with the Group's strategy of selective market and business division development, SCOR seeks to maintain a portfolio of business risks that is strategically diversified both geographically and by line and class of business. The Group's insurance risk exposure is also mitigated by diversification across a large portfolio of reinsurance contracts. The volatility of risks is also reduced by careful business selection, implementation of underwriting guidelines, the use of retrocession and other risk transfer arrangements and proactive claims handling as well as underwriting, claims and administration audits at ceding companies.
SCOR's underwriting covers reinsurance in Non-Life and Life and occasionally direct insurance in Non-Life. Such underwriting is conducted through duly authorized subsidiaries and branches of the Group, as well as from “The Channel Managing Agency Limited”, which acts as Managing Agent for SCOR’s own Lloyd’s syndicate, Channel 2015, with effect from 1 April 2014.
Underwriting, actuarial, modeling Cat events, claims, accounting and other support staff are located in the Group’s five Hubs as well as in local subsidiaries and branches. However, SCOR's overall exposure and control to particular risks and in particular geographic zones is centrally monitored thanks to a unique integrated Group IT system. Non-Life Business In order to mitigate its property exposure, the Group retrocedes a portion of the risks it underwrites. See Section 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 frequency and/or 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 or annual aggregate 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 catastrophe bonds and the issuance of a new side car facility). See Section 6.1.4 Capital shield policy. SCOR's underwriting guidelines are more restrictive regarding certain areas with difficult or uncertain legal environments.
The Property and Casualty Treaty underwriters manage client relationships and offer reinsurance support after a careful review and assessment of the cedents’ underwriting policy, portfolio profile, exposures and management procedures. They are responsible for writing treaty business as well as associated support on 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. The underwriting teams are supported by the SCOR Global P&C Underwriting Management function, located in the Group’s Paris Hub and represented in Singapore’s and Zurich/Cologne's Hubs. This function provides worldwide treaty and facultative underwriting guidelines, policies regarding the delegation of capacity, underwriting support to specific lines of business or individual risks when required, ceding company portfolio analysis and risk surveys and is responsible for monitoring and referral of non-standard business and for authorizing exceptions to the underwriting guidelines.
The Property and Casualty Treaty and Specialty Lines underwriting teams are also supported by the SCOR Global P&C actuarial pricing function, headed from Zurich. This function is responsible for the pricing methods and tools to be applied by the pricing actuaries, who team up with underwriters and modelers by market or by lines of business.
Most of SCOR's facultative underwriters work in the Business Solutions domain of SCOR Global P&C, which operates worldwide. This business area is dedicated to large corporate businesses and is geared to provide the clients of SCOR Global P&C with solutions for coverage of large conventional risks.
Underwriting guidelines in place within SCOR Global P&C specify (i) the underwriting rules and principles to be complied with, (ii) underwriting capacities delegated to the underwriters in each of the markets and lines of business in which the Group operates, as well as (iii) the relevant maximum acceptable commitments per risk and per event. They are reviewed and updated annually by the Underwriting Management function and approved by the Chief 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 and/or Finance 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 Officer of SCOR Global P&C. Pricing guidelines and parameters are set to provide consistency and continuity across the organization but also to take into account differences between markets and lines of business as well as the geographical location of the client and the risks insured. Parameters are revised at least once a year to consider, as the case may be, the changing market conditions and environment. Contracts that meet certain risk thresholds are subject to mandatory peer reviews that have to be performed and documented before the pricing is completed. SCOR Global P&C employs a data system which allows management to monitor and review the results from the pricing tools.
 Biometric risks are diversified on a geographic and a product basis. A significant part of the reinsured premium in respect of Disability, Long Term Care (LTC) and Critical Illness (CI) products includes premium adjustment clauses. In the case of LTC, the premium adjustments are designed to offset potentially worsening incidence or improving longevity of disabled and active lives. In the case of CI, premium adjustments mitigate potential
negative impacts on future claims patterns due to a general deterioration in health and improved medical diagnosis.
 Anti-selection risks are mitigated through careful product design and a well-defined medical and financial underwriting selection process.
Life reinsurance treaties are underwritten by life reinsurance experts familiar with the specific features of their markets. The Life business is underwritten following internal underwriting and pricing 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 five dedicated Research & Development centers within the Life Actuarial & Risk Department to analyze and assess the key factors underlying mortality, longevity, LTC, policyholder behavior, CI and disability risks. The SCOR Global Life Research & Development Centers provide recommendations for the implementation of the research results into the pricing, underwriting control and determination of exposure limits.
Reinsurance can be written through professional reinsurance brokers or directly from ceding companies. The involvement of a broker in the placement of a reinsurance contract is a decision belonging to the ceding company, which depends on local market practices, the cedent’s worldwide reinsurance market knowledge, the complexity of the risks the cedent intends to transfer and the corresponding available reinsurance capacity in the market, the cedent’s capability and resources to structuring 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.
The relative amount of brokered and direct business written by the Group’s subsidiaries varies according to market and cedent practices.
For the year ended 31 December 2014, Non-Life wrote approximately 58% of gross written premiums through brokers and 42% through direct business, while Life wrote approximately 8% through brokers and approximately 92% through direct business.
Non-life The Group's P&C Claims & Commutations function, located in its five Hubs, is in charge of the implementation and overview of the overall claims handling policy for SCOR Global P&C, implementing worldwide control and reporting procedures and managing commutation of portfolios and commitments.
multiple events, provides the information required to determine the level of retrocession and other alternative risk transfer solutions (e.g., catastrophe bonds) that are needed to ensure that the net aggregate exposure is optimized for the group’s risk appetite and remains within predefined tolerance limits. The probabilistic catastrophe modeling approach captures the uncertainty related to the likelihood of a given event occurring (frequency uncertainty) as well as the uncertainty associated with the amount of loss, given that a particular event has occurred (severity uncertainty). A sound understanding of the uncertainties associated with the model’s key parameters is essential for the interpretation of the model outcome and thus for decision-making. The outcomes for each model describe a bandwidth of loss estimates and not a unique value. In order to identify and stress-test the key parameters, systematic sensitivity analyses are carried out. For peril or 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.
This method is validated by the Research & Development Cat team, who performs comparative studies with other peril/zones of similar hazard and vulnerability characteristics. See Section 9 - Operating and Financial review for certain data regarding SCOR's catastrophe loss experience
Maximum underwriting capacities are defined to limit SCOR Global Life’s exposure on various types of treaties underwritten, proportional and non-proportional, covering individual or Group policies. These capacities are revised each year, taking into account the capacities obtained by the retrocession coverage purchased by the Group. These limits include: maximum commitment per life accumulated for all SCOR exposures, maximum annual commitments for nonproportional cover per life or per event, maximum commitment per country for non-proportional exposures by event. Aggregate portfolio exposures are continually monitored. Specialized information technology software, developed by SCOR allows an inventory of insured persons across SCOR Global Life’s markets and is fed with single risk information as received by the client companies. Through this system, an accumulation control is carried out and risks under which the accumulated exposure exceeds SCOR Global Life’s retention are identified and retroceded to a pool of retrocessionaires. The retention limits are revised regularly.
When a claim is reported to the ceding company, its claims department establishes a reserve corresponding to the estimated amount of the ultimate settlement for the claim. The estimate is based on the cedent’s own methods of evaluation. The ceding company reports the claim and its suggested reserve amount to the Group entity with which it concluded its contract of reinsurance. The Group records the ceding company's suggested reserve and is free to establish greater or smaller reserves based on the review and analysis by the Group's claims division. Such greater or smaller potential reserves are based upon the consideration of many factors, including the level of the commitments, seriousness of the claims and the Group's assessment of the ceding company's claims' management.
The mathematical reserves are generally calculated as the present value of projected future payments to cedents less the present value of projected premiums still payable by cedents. The calculation includes assumptions relating to mortality, morbidity, disability, lapse and expected future interest rates.
Claim reserves for losses and claims settlement expenses are recognized for payment obligations from reinsurance losses that have occurred but have not yet been settled. They are recognized under reserves for reinsurance losses reported before the reporting date and reserves for reinsurance losses that have already been incurred but not yet reported (IBNR). SCOR regularly reviews and updates its methods for determining outstanding claims reserves and IBNR Reserves.
A table showing changes in the mathematical reserves in Life reinsurance is provided in Section 20.1.6 - Notes to the consolidated financial statements, Note 16 – Net Contract liabilities. As a consequence of the uncertainties described above regarding the correct reserving of risks and their annual revision in Life and Non-Life, there can be no certainty that the Group will not have to increase its reserves in the future, or that the reserves constituted by the Group will be sufficient to meet all its future liabilities, which could materially impact its current and future revenues, net income, cash flow, financial position, and potentially, the SCOR share price.
Reinsurers typically purchase reinsurance to cover their own risk exposures. Reinsurance of a reinsurer’s business is called retrocession. SCOR retrocedes a portion of the risks it underwrites 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 on an ongoing basis. The financial condition is
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 2014 and 2013 is presented in Section 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.
The Group seeks to reduce its dependence on traditional retrocession and diversify its strategy in light of a potentially continued volatile retrocession market by using alternative risk transfer solutions, which includes the securitization of catastrophic risk in the form of catastrophe bonds. Accordingly, on 19 February 2009, three multi-year property catastrophe agreements were concluded between SCOR and Atlas V Capital Limited (“Atlas V") and provided the Group with additional protection of USD 200 million for exposures to earthquakes and hurricanes in the US and Puerto Rico. Events were covered for the risk period from 20 February 2009 to 19 February 2012.
On 12 December 2011 SCOR placed a catastrophe bond, Atlas VI Capital Limited Series 2011-1 and 2011-2, which provides the Group with USD 270 million of protection against US 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 US series and 31 March 2015 for the European series.
On 1 November 2012, SCOR successfully placed a catastrophe 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.
Atlas Reinsurance VII Limited is an Irish reinsurance vehicle. Aon Benfield Securities Inc., Natixis and BNP Paribas managed the transaction and the book on the deal. Standard & Poor's rates Atlas VII Class A Notes at BB-, and Atlas VII Class B Notes at BB.
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, using the PERILS index. These Atlas VII catastrophe retrocession agreements have been accounted for as reinsurance contracts in 2013 (See Section 20.1.6 – Notes to the consolidated financial statements, Note 1 (N) Accounting principles and methods specific to reinsurance activities).
On 20 December 2013, SCOR put in place a new contingent capital facility with UBS providing the Group with EUR 200 million coverage in case of extreme natural catastrophe or life events. In addition, subject to no drawdown having already been conducted under the facility, if the price of SCOR shares fall below EUR 10 an individual tranche of EUR 100 million will be drawn down out of the EUR 200 million facility. This equity line facility replaced, as at 1 January 2014, the former EUR 150 million contingent capital facilities which came to an end on 31 December 2013. See Section 20.1.6 - Notes to the consolidated financial statements, Note 8 - Derivative instruments - Contingent capital facility.
The Group equity selection is predominantly based on a bottom up fundamental analysis with the goal to develop a diversified portfolio of stocks, ETF, mutual funds and convertible bonds. Due to inherent higher volatility of equities, this asset class (direct positions and mutual funds) is monitored on a daily basis, facilitating quick arbitrage or portfolio reallocation decisions. On a Group level, the equity exposure is decided and reviewed at least quarterly by the Group Investment Committee. The equity risk is also controlled by the definition of maximum exposures per stock or mutual fund and is reviewed regularly (e.g., exposure to large-cap stocks will generally be greater than exposure to mid-cap stocks). The control ratios on mutual funds are also reviewed regularly, based on the mutual fund’s holdings. At 31 December 2014, SCOR’s total investments and cash were EUR 25,837 million (EUR 23,786 million as at 31 December 2013). The 2014 increase in total investments and cash as compared to 2013 was mainly due to foreign exchange movements and the investment of the Group’s strong operating cash flows. The portion invested in equities increased from EUR 1,056 million at 31 December 2013 to EUR 1,143 million at 31 December 2014 as a result of tactical allocation. Most of the equity investments were in European companies with large market capitalization. The portion invested in fixed income investments increased from EUR 11,380 million at 31 December 2013 to EUR 13,991 million at 31 December 2014. As set forth in “Optimal Dynamics”, SCOR progressively and selectively increased the duration of its fixed income portfolio while maintaining a strong focus on the 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 2015 and beyond continues to be extremely uncertain, with various possible future outcomes (e.g., low growth, inflation regime, deflation or a progressive or sudden rise in interest rates). SCOR's investment strategy is designed to immunize the Group as much as possible from the negative consequences of these shocks.
The duration of SCOR’s fixed income portfolio including short-term investment increased from 3.4 years at 31 December 2013 to 4.0 years at 31 December 2014. In terms of credit quality, despite the downgrade of several sovereign and private issuers, the Group maintained the quality of its fixed income portfolio including short-term investments, to a high level with an average rating of "AA-" as at 31 December 2014, the same as last year. In this Registration Document, when the Group refers to the ratings of securities held in its investment portfolio, or the counterparty credit rating of the issuers of such securities, it uses an average of available ratings of the relevant securities and/or issuer published by the applicable nationally recognized statistical rating organizations. SCOR's total exposure to government bonds and assimilated in its investment portfolio was EUR 5,364 million at 31 December 2014, (compared to EUR 4,449 million at 31 December 2013) of which EUR 1,645 million was invested in government bonds of countries within the EU (EUR 1,709 million at 31 December 2013), primarily Germany, France, the Netherlands and the UK. As at 31 December 2014, SCOR had no government bonds exposure to Greece, Ireland, Portugal, Hungary, Spain or Italy.
In EUR million 2014 2013 2012 By division SCOR Global P&C 4,935 44% 4,848 47% 4,650 49% SCOR Global Life 6,381 56% 5,405 53% 4,864 51% TOTAL 11,316 100% 10,253 100% 9,514 100% By sub-division Non Life reinsurance Treaties 2,709 55% 2,623 54% 2,502 54% Business Solutions (facultative) 614 12% 635 13% 616 13% Specialties 1,036 21% 1,030 21% 935 20% Joint-Ventures & Partnerships 576 12% 560 12% 597 13% TOTAL SCOR Global P&C 4,935 100% 4,848 100% 4,650 100% Life reinsurance Protection 5,088 80% 4,407 82% 4,255 88% Financial Solutions 1,047 16% 863 16% 555 12% Longevity 246 4% 135 2% 54 - TOTAL SCOR Global Life 6,381 100% 5,405 100% 4,864 100%
In 2014, SCOR generated approximately 42% of its gross written premiums in EMEA (2013: 47%), with significant market positions in France, Germany, Spain and Italy, 43% of its gross written premiums in the Americas (2013: 39%) and 15% of its gross written premiums in Asia (2013: 14%). The following table shows the breakdown by gross volume of Life and Non-Life premiums written by geographic area based on the country in which the ceding company operates for treaty business and location of the insured for facultative business: Total SCOR Global Life SCOR Global P&C In EUR million 2014 2013 2012 2014 2013 2012 2014 2013 2012 EMEA 4,754 4,792 4,568 2,103 2,068 1,954 2,651 2,724 2,614 Americas 4,853 4,007 3,697 3,498 2,744 2,462 1,355 1,263 1,235 Asia 1,709 1,454 1,249 780 593 448 929 861 801 Total 11,316 10,253 9,514 6,381 5,405 4,864 4,935 4,848 4,650 6.3 Extraordinary events influencing the principal business and markets Please refer to for a summary of SCOR's ratings. On 20 August 2014, Fitch has raised to “positive” the outlook on the “A+” rating of SCOR SE and its main subsidiaries to reflect, according to Fitch, “SCOR’s improved profitability, strong solvency and financial leverage for its risk profile”.
On 21 November 2013, Standard & Poor's raised the outlook on the "A+" rating of SCOR SE and its main subsidiaries to "positive" as, according to S&P's statement, "capital and earnings expected to rise due to very strong ERM".
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 9 May 2012, Moody's Investors Service upgraded the insurance financial strength ratings (IFSR) of SCOR SE (SCOR) and various guaranteed subsidiaries to A1 from A2, and SCOR's subordinated debt rating to A3 from Baa1. All ratings have a "stable outlook". On 2 May 2012, A.M. Best upgraded the Issuer Credit Ratings (ICR) of SCOR SE and its main subsidiaries from "a" to "a+". They also affirmed the Financial Strength Ratings of "A" (Excellent). The outlook for all ratings is stable.
6.4 Dependency of the issuer with respect to patents or licenses, industrial, commercial or financial contracts and new manufacturing processes Please refer to Section 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 cedents, 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 cyber risks, are inherent to SCOR’s business, 4.2.1 – SCOR faces risks related to its fixed income investment portfolio, 4.2.2 – SCOR faces risks related to its equity-based portfolio, 4.3 – Liquidity risk, 4.6 – Insurance of specific operational risks (excluding reinsurance activity), 11- Research and development, patents and licenses.
SCOR SE and its consolidated subsidiaries has been the world’s 5th largest reinsurer (1) in 2014 and 2013, serving more than 4,000 clients.
This continued footprint expansion of SCOR Global P&C has been achieved while maintaining expected net technical profitability stable overall, thanks to its highly diversified portfolio, as shown in the following key performance indicators:  Quasi-stable prices, at -0.2% on average, with variations in primary insurance prices largely compensating those of reinsurance prices;  A stable expected return on risk-adjusted allocated capital;  Better than expected conditions on the retrocession market, generating savings representing a 0.6% positive impact on the combined ratio with slightly improved cat coverage. This nearly neutralized an expected increase in the gross underwriting ratio of 0.9%;  The projected net combined ratio of the contracts written in the January 2014 renewals was expected to remain flat compared to the January 2013 renewals.
As anticipated and communicated during the 2013 annual Monte-Carlo conference, the January 2014 renewals were characterized by a challenging market environment with:  A number of large and even mid-size insurers reconsidering their protection strategies and reinsurance buying policies, and restructuring their reinsurance programs; (1) By Net Reinsurance premiums written, source: “S&P Global Reinsurance Highlights 2014” (excluding Lloyd’s of London)
 The reinsurance market witnessing a tiering of players, to the benefit of the larger and most diversified ones, operating as true multi-liners in terms of pricing and underwriting capabilities, with a global approach to client relationships.
In this context, SCOR Global P&C has been successful in expanding its franchise and crystalizing new business opportunities, while keeping a disciplined underwriting approach, pushing back unsatisfactory terms & conditions and accepting the non-renewal of underpriced business. The premiums up for renewal at 1 January represent 71% of the total annual volume of treaty premiums and are distributed between P&C Treaties (72%) and Specialty Treaties (28%).
During the April 2014 renewals, SCOR Global P&C recorded premium growth of 8.5% at constant exchange rates with regard to the EUR 318 million of premiums up for renewal at 1 April 2014. The premiums up for renewal at 1st April represented around 10% of the total annual volume of treaty premiums, with the main countries renewing being Japan, India and the US.
SCOR Global P&C confirmed its leading position in key markets such as Japan and India, achieving strong premium growth and overall expected profitability well within targets.
The premium income growth bears witness to the depth and breadth of the SCOR Global P&C franchise in Asia-Pacific, both in mature and emerging economies, globally across Treaty P&C business and Treaty Specialty lines:  in Japan, SCOR Global P&C managed to maintain the stability of its P&C Treaty book of business in an otherwise shrinking reinsurance market, characterized by reduced cession levels and the unification of reinsurance programs following mergers and acquisitions realized on this market;  in India, SCOR Global P&C reaped the fruits of a strong presence on this market, providing a full range of services and engaging in genuine partnerships with cedents. This enabled SCOR Global P&C to seize meaningful opportunities generally speaking, and more specifically in Specialty lines such as Agriculture, Credit & Surety.
The expected technical performance measured in terms of gross underwriting ratio deteriorated by just under 2 percentage points compared to April 2013, while return on allocated capital deteriorated by just under 3 percentage points. The expected profitability trend observed in April 2014 was largely driven by the Japanese market, where nonproportional prices in the Property CAT segment returned to their pre-Tohoku (2011) levels. Excluding the price reductions affecting the non-proportional Property CAT segments, the overall price level was broadly stable.
The June-July renewals represent approximately 10% of the total annual volume of SCOR Global P&C premiums, with renewals notably in the USA, Australia and the Latin American countries. An overall written premium volume increase of 4.6% was achieved. The main business line developments in the June-July 2014 renewals are as follows:  for P&C Treaties: gross premiums increased by 5.1% at constant exchange rates, to EUR 290 million. This growth came from the Americas and was mainly driven by new business with existing and new clients thanks to SCOR Global P&C’s Tier 1 position;  for Specialty Treaties: gross premiums increased by 3.5% at constant exchange rates, to EUR 126 million, mainly driven by positive business developments in Credit & Surety and Marine.
SCOR Global P&C benefits from its well diversified book of business, with around 60% of the premiums renewed in June-July 2014 relating to proportional business, which benefits from more favorable current primary insurance trends:  the overall price decrease was 3.2% driven by a 7.3% price decrease on non-proportional business, partly compensated by quasi-stable proportional prices (-0.3%);  excluding the price reductions affecting the non-proportional Property CAT segments, the overall price decrease would only have been 0.8%; the expected technical performance measured in terms of underwriting ratio deteriorated by around 1 percentage point compared to July 2013, while return on risk-adjusted allocated capital deteriorated by 2.5 percentage points. The expected profitability of the overall book renewed in June-July 2014 remained nonetheless above SCOR Global P&C targets and contributed to improving the 2014 year-to-date profitability expectation.
2014 was the first full year of operation of our combined businesses in the US following the acquisition of 100% of Generali U.S. Holdings, Inc. (“Generali U.S.”), the holding company of Generali's U.S. life reinsurance operations in October 2013. SCOR Global Life has a strong leadership in the US Life reinsurance market ( 2 ), the largest life reinsurance market in the world. During the year, SCOR Global Life has finalized the integration of Generali U.S. and put in place a project to create one common operations platform in North America across multiple sites (Charlotte, Kansas City, Montréal and Toronto).
SCOR Global Life continues to expand its Latin American business. In Brazil the SCOR Global Life branch obtained its local reinsurance license in August 2014.
In 2014, SCOR Global Life increased its new business premiums as compared to 2013, with strong growth in Asia, Australia and Latin America from new clients and increased new business with existing clients.
 Health represents a small proportion of SCOR Global Life’s portfolio. It is a major product line in the markets of the Middle East and is written selectively in Asia, Continental Europe and the Americas.
 Personal Accident also represents a small proportion of SCOR Global Life’s portfolio. A main source of Personal Accident business for SCOR Global Life is obtained through its distribution services company, ReMark, which provides direct global marketing of life insurance products to insurers, financial institutions and affinity partners.
Overall in 2014, the solid operating profitability of SCOR Global Life was maintained thanks to a robust technical performance across most regions and business areas. In November 2014, SCOR Global Life announced several promotions, underlying a number of structural changes. SCOR Global Life is organized around three regions: EMEA (Europe, Middle East and Africa), Asia /Pacific and Americas; and two product lines (Global Financial & Longevity Solutions and Global Distribution Solutions) The three regions will ensure operating consistency across markets that have common commercial and operational stakes. This structure will help SCOR Global Life be more effective and efficient in supporting its clients and leveraging its know-how, while remaining well –grounded in the local markets. The Global Financial & Longevity Solutions product line will enable SCOR Global Life to ensure global efforts efficiently connect market potential with SCOR Global Life’s risk appetite and Optimal Dynamics commitments, while increasing its win rate and lowering transaction risk by working globally with a common toolkit for complex deals. This global product line will work closely with local market managers, relying on their deep market understanding and client franchise.
In Distribution Solutions, SCOR Global Life has successfully deployed a number of innovative and tailored client services which aim to help insurers expand and develop their own client bases (SCOR Telemed, ReMark, Velogica and Rehalto). This new product line will implement a unified strategy to continue the successful development of these services.
7 ORGANIZATIONAL STRUCTURE The main operational entities of the Group are presented in the chart below:
The Life division operations are conducted under the supervision and management of SCOR Global Life. The latter carries out its operations through branches of SCOR Global Life SE in Germany, the UK, Italy, Spain, Switzerland, Austria, Netherlands, Sweden, Canada and in Asia, representative office in Belgium as well as through SCOR Global Life Americas in the US, SCOR Global Life Reinsurance Ireland as well as composite Non-Life/Life subsidiaries and branches of SCOR SE in Russia, South Africa, China, South Korea and Brazil and subsidiaries in Europe, Australia and South Africa.
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 of applications and data exchange platforms, which allows local access to centralized risk analysis, underwriting or pricing databases and also gives 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 nonFrench subsidiaries and branch offices, the Group encourages professional development and training of underwriters, actuaries, modelers, claims experts and risk controllers across its various geographic markets and business lines.
On 29 October 2008, SCOR announced the creation of SCOR Global Investments SE, which manages, directly or indirectly, the global investment portfolio of all the Group’s legal entities. SCOR Global Investments SE was approved by the AMF as a portfolio management company as from 15 May 2009. On 8 July 2011, SCOR Alternative Investments SA, was registered by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg as a company in charge of the management of the portfolio of assets specialized in the asset class, known as “Insurance-Linked Securities” (ILS). SCOR Global Investments SE having then obtained the approval from the CSSF to manage its ILS portfolios, SCOR Alternative Investments SA has been sold on 17 April 2014. On 31 August 2011, SCOR launched Atropos SICAV-SIF (“Atropos”), an ILS fund dedicated to insurance risks, which was formerly managed by SCOR Alternative Investments SA and now by SCOR Global investments SE and domiciled in Luxembourg.
SCOR SE wholly owns its operating subsidiaries (excluding the shares held by Directors). SCOR SE also makes loans to its subsidiaries and issues them guarantees 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 and its subsidiaries are presented in:  Section 19 – Related Party Transactions; and in
In connection with the second phase of the New SCOR project, SCOR announced on 4 July 2006, the conversion of SCOR into a Societas Europaea and the formation of a Societas Europaea at the level of SCOR Global P&C, through the merger by absorption of SCOR Deutschland Rückversicherung AG and SCOR Italia Riassicurazioni SpA by SCOR Global P&C. At the same time, SCOR Vie became SCOR Global Life SE through the merger with SCOR Global Life Rückversicherung AG (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 Italy, in Spain, in United Kingdom, in Switzerland and in Germany through its branches, as does SCOR Global Life SE. SCOR Global P&C SE has been the first company in Europe to complete a tripartite merger involving three different jurisdictions in the formation of a Societas Europaea.
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 12 investment real estate properties, for offices purposes in their great majority, in Paris and in the Ile-de-France region (suburbs adjacent to Paris). SCOR reinforced its real estate structure by creating SCOR Properties, an investment vehicle primarily devoted to real estate with a variable capital and registered with the AMF since 27 May 2011 managed by SCOR Global Investments.
Following the acquisition of Revios by SCOR VIE on 21 November 2006, SCOR began restructuring the Life Reinsurance entities of SCOR VIE (whose corporate name was changed to SCOR Global Life) in the United States, at the same time as it merged the Revios and SCOR VIE offices in Asia and Europe. This restructuring was completed in November 2007 for the North American activities of SCOR Global Life, regrouped in New York (NY) and in Dallas (Texas). During December 2013, the legal entity in Texas was redomiciled to Delaware. 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 Partners Ltd and Commercial Risk Re-Insurance Company – have been consolidated. The process required an amalgamation of Commercial Risk Partners Ltd and Commercial Risk Re-Insurance Company with GSNIC. The assets, liabilities and surplus of Commercial Risk Partners Ltd and Commercial Risk Re-Insurance Company have been added
to GSNIC in their entirety and the shares of GSNIC held by SCOR SE have been contributed to SCOR US Corporation on 30 September 2010.
Management reviews the operating results of the Non-Life and Life divisions individually for the purpose of assessing the operational performance of the business and to allocate resources. For more information on SCOR’s divisions, see Section 20.1.6 - Notes to the consolidated financial statements, Note 2 - Segment Information.
On 23 June 2014, SCOR has announced the creation of a new Hub by combining the existing Cologne and Zurich Hubs, to further strengthen its organizational structure in Europe. The new Hub has been effective since 1 October 2014 and is expected to be fully completed in the first quarter of 2015.
(1) Paris Hub: South Africa, Russia and Europe other than Germany, Austria, Ireland, Switzerland, Sweden and the UK; Zurich-Cologne Hub: Switzerland, Germany, Austria and Israel and one subsidiary in Argentina; London Hub: UK, Ireland and Sweden; Singapore Hub: Asia, Australia; Americas Hub: North America and South America
7.2 List of issuer’s significant subsidiaries Refer to:  Section 7 – Organizational structure;  Appendix A – 1.5 – Notes to the corporate financial statements, Note 2.3 – Subsidiaries and 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 2014;  Section 20.1.6 – Notes to the Consolidated financial statements, Note 3 – Acquisitions and disposals as concerns the share of the entities acquired in 2014 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 Managers of the issuer;  Section 7.1 – Brief description of the Group and of the position of the issuer as concerns the economic organization of the Group;  Section 19.3 – Special report of the Auditors on related agreements and commitments, and;  Section 20.1.6 – Notes to the Consolidated financial statements, Note 3 – Acquisitions and disposals for a description of the operations, of the relevant interim management balances and of the strategic economic assets of the main subsidiaries.
8.1 Major existing or planned property, plant and equipment 84 8.2 Environmental issues that may affect the utilization of property, plant and equipment 84
8.2 Environmental issues that may affect the utilization of property, plant and equipment Refer to the environmental report in Appendix D - Note 4 – Environmental impact of SCOR’s activity.
Total investment and cash, amounted to EUR 25.8 billion at 31 December 2014 as compared to EUR 23.8 billion and EUR 22.6 billion at 31 December 2013 and 2012, respectively. SCOR maintained its conservative asset management policy while executing a prudent inflection program directed to improve the return of its invested assets while keeping a strong focus on liquidity management.
The Group’s liquidity, defined as cash, cash equivalents, short-term government bonds with maturities above three months and below twelve months and bank overdrafts, which is well diversified across a limited number of banks, stands at EUR 0.9 billion at the end of 2014, down from EUR 2.1 billion at the end of 2013 (EUR 2.7 billion at 31 December 2012) due to progressive and selective reallocation towards the strategic asset allocation. Positive operating cash flows remained stable from EUR 897 million in 2013 (and EUR 761 million in 2012) to EUR 894 million in 2014.
The Group has a financial debt leverage position of 23.1% at 31 December 2014, as compared to 21.2% at 31 December 2013 and 20.0% at 31 December 2012. This ratio is calculated as the percentage of subordinated debt (1) compared to total shareholders’ equity plus subordinated debt. The increase in the debt leverage ratio over three years is primarily due to debt issuances in 2012, 2013 and 2014. On 24 September 2014, SCOR successfully placed perpetual subordinated notes on the Swiss franc market, with a first call date on 20 October 2020, for an amount of CHF 125 million. On 25 September 2014, SCOR successfully placed perpetual subordinated notes on the Euro market, with a first call date on 1 October 2025, for a total amount of EUR 250 million. On 10 September 2013, SCOR successfully placed perpetual subordinated notes on the Swiss Franc market, with a first call date on 30 November 2018, for an aggregate total amount of CHF 250 million. On 10 September 2012, the Group placed perpetual subordinated notes, with a first call date in June 2018, for an aggregate total amount of CHF 250 million. Furthermore, on 24 September 2012, SCOR increased these perpetual subordinated notes by CHF 65 million. In addition, SCOR actively managed its liabilities, in 2014 buying back a portion of an existing debt for an average price below 93% of its USD 10 million par value, in 2013 buying back a portion of an existing debt for less than 90% of its USD 46 million total par value and in 2012 buying back existing debt for 80% of its EUR 50 million par value. On 1 October 2013, SCOR entered into a short-term financing agreement with a principal amount of USD 228 million, maturing 14 July 2014 to partly finance the acquisition of Generali U.S. This short-term financing facility was entirely repaid during the first quarter of 2014. The total level of financial debt which includes real estate financing and a short-term loan increased to EUR 2,232 million from EUR 2,053 million in 2013 (2012: EUR 1,648 million).
Book value per share (2) stands at EUR 30.60 at 31 December 2014 as compared to EUR 26.64 and EUR 26.16 at 31 December 2013 and 2012, respectively.
(1) The calculation of the leverage ratio excludes accrued interest from debt and includes the swaps effect related to the CHF 650 million, CHF 315 million and CHF 250 million subordinated debt issuance
9.2 Operating results This paragraph includes comments on both the current year operating results and comparisons to prior years.
Gross written premium for the financial year ended 31 December 2014 amounted to EUR 11,316 million, an increase of 10.4% compared to EUR 10,253 million in 2013. The overall increase in gross written premium of EUR 1,063 million in 2013 is due to an increase for SCOR Global P&C of EUR 87 million and to an increase of EUR 976 million for SCOR Global Life primarily driven by the business acquisition of the mortality portfolio of Generali U.S. on 1st October 2013 with a twelve months contribution in 2014, as well as Longevity and Financial Solutions contracts signed in 2014.
Gross written premium for the financial year ended 31 December 2013 amounted to EUR 10,253 million, an increase of 7.8% compared to EUR 9,514 million in 2012. The overall increase in gross written premium of EUR 739 million in 2013 was due to an increase for SCOR Global P&C of EUR 198 million and to an increase of EUR 541 million for SCOR Global Life primarily driven by the business acquisition of the mortality portfolio of Generali U.S., which in the three month period after the acquisition on 1 October 2013 contributed EUR 209 million to 2013 gross written premiums.
Net earned premium for the year ended 31 December 2014 amounted to EUR 9,991 million as compared to EUR 9,066 million and EUR 8,399 million for the years ended 31 December 2013 and 2012, respectively. The overall increase in net earned premium of EUR 925 million from 2013 to 2014 and EUR 667 million from 2012 to 2013 is consistent with the increase in gross written premiums.
The impact of alternative retrocession coverage, Atlas VI (SCOR Global P&C) and Atlas IX (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.
The Group cost ratio (1) calculated as the total of all management expenses less certain non-controllable expenses (e.g. bad debts), legal settlements, brokerage commissions and amortizations, divided by gross written premium, was 5.0%
The 2013 operating income benefitted from the strong technical performance of SCOR Global Life and the robust profitability of SCOR Global P&C. The 2012 operating income 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 512 million in 2014, compared to EUR 549 million and EUR 418 million respectively for the years ended 31 December 2013 and 2012
In 2014, SCOR benefited from a strong underlying performance and a prudent asset management policy which safeguarded shareholders’ interests while delivering solid returns and a rather benign year in terms of natural catastrophes. In 2014, the effective tax rate was 24.5%.
SCOR Global P&C is a leading P&C reinsurer with a worldwide footprint. The business comprises traditional reinsurance business: Treaty, Business Solutions, and Specialty Lines. SCOR Global P&C capitalizes on a long-standing franchise, experience, and an extensive data base comprising multi-line expertise.
In 2014, SCOR Global P&C continued to actively execute its P&C treaty business portfolio management strategy by further expanding property proportional, motor proportional and casualty proportional businesses and by improving geographic diversification towards areas such as Asia and the Americas.
In 2013, SCOR Global P&C continued to actively execute its P&C treaty business portfolio management strategy by further expanding liability proportional and non-proportional business and its Specialty book of business and by improving geographic diversification towards areas such as Asia and Latin America.
In 2014, this ratio reflects very strong technical results, driven by the year-on-year improvement of the attritional ratio 56.9% (versus 57.7 % in 2013) and the lower impact of Natural catastrophes compared to 2013. Natural catastrophes had a 4.2% impact on the Group net combined ratio for year end 2014 compared to a 6.4% impact in 2013 and a 7.6% impact in 2012.
Losses and loss adjustment expenses due to catastrophes, gross 231 (8) 333 (6) 355 (4)
Losses due to catastrophes, net of retrocession .(2) 179 (8) 272 (6) 307 (4)
Group net loss ratio .(1) 61.1% (8) 64.1% (6) 65.5% (4) Group net loss ratio excluding catastrophes 56.9% (8) 57.7% (6) 57.8% (4)
(1) Loss ratios are calculated on the basis of Non-Life claims, expressed as a percentage of Non-Life premiums earned (2) Net of recoveries and reinstatement premiums (assumed and retrocession) (3) Excluding floods in Thailand (2011 event) and including: Hurricane Sandy, Dagmar Storm in Norway, Tornadoes in Southern United States, May Earthquakes
(20 & 29 May 2012) in Italy, Montreal Rainstorm, Alberta Hail Storm in Canada, Typhoon Bolaven, Costa Rica Earthquake (4) Thailand floods 2011 event’s development impact is included in 2012 cat ratio (5) Including Saint Jude Storm, Andreas, Manni and Ernst Hailstorms in Germany, European Floods, South Africa and Xaver Hailstorms, Hurricane Manuel and
In 2013, SCOR was affected by the following catastrophes which resulted in total net estimated losses of EUR 259 million as at 31 December 2013: In EUR million
Adjusted estimated loss net of retrocession as at 31 December 2014 European Floods June 2013 62 60 Andreas Hailstorm July 2013 51 66 Alberta Floods June 2013 44 37 Saint Jude Storm October 2013 35 41
Adjusted estimated loss net of retrocession as at 2014 Earthquake in Italy 20 May 2012 26 33 32 Earthquake in Italy 29 May 2012 21 23 23 Dagmar Storm (Norway) Late December 2011 11 12 13 Alberta Hailstorm (Canada) August 2012 12 11 10 Hurricane Sandy (USA) October 2012 137 141 137 Other natural catastrophes (less than EUR 10 million) 2012 25 26 26 9.2.3 SCOR GLOBAL LIFE
It operates via its unified global organization with a specialized market approach in EMEA (Europe, Middle East and Africa), Asia/Pacific and Americas.
(1) In 2013, in the context of Optimal Dynamics, SCOR Global Life’s nine lines of business previously reported were grouped into three business areas
Protection encompasses traditional Life reinsurance business on living and death benefits. Main risks undertaken are mortality, morbidity and behavioral risks for individuals and groups of individuals. Financial Solutions typically combine traditional Life reinsurance with financing components providing liquidity, balance sheet and/or income statement improvements to the client. Longevity refers to products covering the risk of negative deviation from expected results due to the insured or annuitant living longer than assumed in the pricing of insurance covers provided by insurers or pension funds.
During 2014, Asia/Pacific remained a market with significant growth opportunities both in terms of premiums and profitability.
In 2014, SCOR Global Life successfully continued to integrate the mortality risk reinsurance business acquired from Generali U.S. into its existing business operations. This process of consolidation of US domestic organizations and activities within one operating unit allowed SCOR Global Life to strengthen its market position in the US, Canada and Latin America and maintain the leadership position.
The gross written premium development is driven by new business produced by SCOR Global Life’s distribution channels as well as new premiums from the in-force portfolio and the acquisition of the Generali U.S. reinsurance portfolio with a twelve months contribution in 2014.
Atlas X is an Irish-domiciled special purpose reinsurance vehicle. Atlas X and SCOR Global P&C SE have entered into a quota share retrocession agreement, effective 1 January 2014, under which Atlas X reinsures a proportional share of SCOR’s diversified property catastrophe portfolios in specific countries. This agreement is accounted for as reinsurance contract.
On 20 December 2013, SCOR put in place a new contingent capital facility with UBS, providing the Group with EUR 200 million coverage in case of extreme natural catastrophe or life events. In addition, subject to no drawdown having already been conducted under the facility, if the price of SCOR shares fall below EUR 10, an individual tranche of EUR 100 million will be drawn down out of the EUR 200 million facility. This equity line facility replaced, as at 1 January 2014, the previous EUR 150 million contingent capital facilities which came to an end on 31 December 2013. Also refer to Section 20.1.6 – Notes to the consolidated financial statements – Notes 8 – Derivative Instruments - Contingent capital facility.
In line with the SCOR Group policy of diversifying its capital protection tools, SCOR Global Life entered into a mortality risk transfer contract with Atlas IX Capital Limited (“Atlas IX”) on 11 September 2013, providing the Group with protection against extreme mortality events in the US, such as pandemics, natural catastrophes and terrorist attacks. The risk transfer contract provides USD 180 million of extreme mortality protection, for a risk period extending from 1 January 2013 to 31 December 2018.
For detailed calculation of net investment income, return on investments and invested assets, refer to tables below: In EUR million 2014 2013 2012 Average investments .(1) 22,697 21,559 21,078 Total net investment income 576 509 564 Return on investment asset (ROI) 2.5% 2.4% 2.7%
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 these and IFRS figures as presented in Section 20.1 Historical financial information: consolidated financial statements.
In EUR million 2014 2013 2012 Investment revenues on invested assets 334 303 315 Realized gains/(losses) on fixed income 89 81 65 Realized gains/(losses) on loans - 1 - Realized gains/(losses) on equities 26 18 10 Realized gains/(losses) on real estate 17 33 41 Realized gains/(losses) on other investments 3 (3) 45 Realized gains/(losses) on invested assets 135 130 161 Impairments on fixed income - (4) 9 Impairments on loans - - - Impairments on equities (3) (64) (69) Impairments / amortization on real estate (28) (24) (25) Impairments on other investments 0 (5) (1) Impairments / amortization on invested assets (31) (97) (86) Fair value through income on invested assets .(1) 8 44 12 Financing costs on real estate .(2) (10) (11) (10) Total investment income on invested assets 436 369 392 Interests income and expenses on funds withheld and contract deposits 180 176 202 Investment management expenses (40) (36) (30) Total net investment income (3) 576 509 564 Foreign exchange gains/(losses) 11 (10) 23 Income on technical items - (2) (4) MRM S.A. gain from bargain purchase (net of acquisition costs) - (27) - Financing costs on real estate .(2) 10 11 10 IFRS INVESTMENT INCOME NET OF INVESTMENT MANAGEMENT EXPENSES 597 481 593
The net investment income previously reported in the 2013 Registration Document were EUR 512 million and EUR 566 million for the years ended December 31, 2013 and 2012, respectively
(1) Including Atlas cat bonds and FX derivatives (2) Other Loans and Receivables excluded from invested assets are certificates of deposit (CDs) maturing in more than three months and less than twelve months included in short-term investments as well as infrastructure loans and real estate loans. (3) Assets invested by third parties in mutual funds and non-controlling investments real estate fully consolidated by SCOR (4) Fair value less carrying value of real estate investments excluding amounts of EUR 7 million attributable to third party investors (5) Real estate financing related to real estate investments (buildings owned for investment) excluding amounts of EUR 53 million attributable to third party investors
(1) Including Atlas cat bonds, mortality swap and FX derivatives (2) Other Loans and Receivables excluded from invested assets are certificates of deposit (CDs) maturing in more than three months and less than twelve months included in short-term investments as well as infrastructure loans and real estate loans in addition with funds withheld. (3) Assets invested by third parties in mutual funds and non-controlling investments real estate fully consolidated by SCOR (4) Fair value less carrying value of real estate investments excluding amounts of EUR 6 million attributable to third party investors (5) Real estate financing related to real estate investments (buildings owned for investment) excluding amounts of EUR 60 million attributable to third party investors
(3) 97 (39) 25 Revaluation of assets available for sale and others (1) 63 (16) 97 Weighted average shareholders' equity 5,196 4,832 4,606 ROE 9.9% (3) 11.4% (3) 9.1% (3)
In EUR million 2014 2013 2012 Gross earned premiums 6,363 5,401 4,867 Ceded earned premiums (659) (591) (531) Net earned premiums 5,704 4,810 4,336 Net technical result (1) 247 202 158 Interest on deposits net 158 155 178 Technical result 405 357 336 LIFE TECHNICAL MARGIN (1) 7.1% 7.4% 7.7%
(1) The technical result calculation method was adjusted to include revenues from Life reinsurance contracts that do not transfer significant reinsurance risk (presented in the investment income line of the 2013 Registration Document). The ratios previously reported in the 2013 Registration Document were 7.3% and 7.7% for the years ended December 31, 2013 and 2012, respectively. The net technical results previously reported in the 2013 Registration Document were EUR 199 million and EUR 156 million for the years ended December 31, 2013 and 2012, respectively.
10.3 Borrowing conditions and financing structure 102 10.4 Restrictions on the use of capital 103 10.5 Sources of financing relating to future investments by the Company and to its property, plant and equipment 103
On 20 December 2013, following the authorization granted by SCOR’s shareholders in April 2013, SCOR arranged a new contingent capital facility with UBS, as described in Section 20.1.6 – Notes to the consolidated financial statements, Note 13 – Information on share capital, capital management, regulatory framework and shareholders' equity. This equity line facility replaced, as at 1 January 2014, the previous contingent capital facilities which had ended on 31 December 2013. Under this new EUR 200 million arrangement, SCOR raised its protection by EUR 50 million.
10.2 Cash flow Refer to Section 20.1.4 – Consolidated statements of cash flows and Section 20.1.6. - Notes to the consolidated financial statements, Note 2 – Segment information for an analysis of the main cash flow statement items.
Refer to Section 20.1.6 – Notes to the consolidated financial Statements, Note 14 - Financial debts for a description of the financial debts of the Group. Refer to Section 19 – Related party transactions.
MAJOR CREDIT FACILITIES OF THE GROUP The Group has been granted credit facilities from several companies of the banking sector to guarantee the reinsurance activities of various subsidiaries for a global issued amount of USD 3.5 billion as at 31 December 2014. These last credit facilities are stand-by letters of credit that the banking counterparty agrees to issue in the form acceptable to the American National Association of Insurance Commissioners (NAIC) or other appropriate regulatory body. The Group aims at reducing the portion of those credit facilities which is collateralized and regularly adapt and renews those facilities successfully with banks to support the business needs.
The Group actively monitors the liquidity of its balance sheet and has decided not to renew its overdraft credit facility of EUR 150 million, effective 31 December 2014.
SCOR uses real estate and other financial debt mainly for real estate financing and general corporate purposes. Operational leverage is subject to asset and liability matching with little to no risk that the assets will be insufficient to service and settle the liabilities. Debt used for operational leverage is treated as operational debt and excluded by the rating agencies from financial leverage calculations. SCOR’s debt positions are non-recourse, the debtors’ claims are limited to assets underlying the financing. As at 31 December 2014, real estate financing and other financial debt amounted to EUR 469 million and EUR 20 million, respectively (31.12.2013: EUR 497 million and EUR 177 million, respectively). This includes the real estate debt of MRM S.A. (company acquired by SCOR on 25 May 2013, refer to 20.1.6.3 - Acquisitions and disposals) in the amount of EUR 132 million (EUR 181 million as at acquisition date).
11.1 Research and development activities Biometric risks such as mortality, longevity, disability and long-term care are at the heart of underwriting in Life reinsurance. Since these risks are subject to shocks and various trends, SCOR Global Life closely monitors their current developments in five Research & Development (“R&D”) Centers:  R&D Center for Longevity and Mortality Insurance: carrying out mortality studies on life and annuity portfolios and providing support in pricing assumptions for new business, in particular new products;  R&D Center for Long-Term Care (LTC) Insurance: providing support in the development of LTC products (definitions, pricing, guidelines) and the monitoring of LTC portfolios;  R&D Center for Disability and Critical Illness: dedicated to the analysis of disability and critical illness risks; two complex risks due to multiple definitions, cover types and socio-economic environments;  R&D Center for Medical Underwriting and Claims Management: evaluating the impact on insurance of new medical advances, for both known pathologies and the most recently discovered ones; advising clients on the pricing of substandard risks; and
 R&D Center for Policyholder Behavior: providing support mainly in modeling, and pricing lapse behavior within protection products.
SCOR also organizes Actuarial Awards in Europe (Germany, France, Italy, Spain and Portugal, Switzerland and the United Kingdom), and in Asia (Singapore). The Group places great importance on the development of actuarial science in Europe and each year rewards the best academic papers in the field of actuarial science with prizes. These prizes are designed to promote actuarial science, to develop and encourage research in this field and to contribute to the improvement of risk knowledge and management. The SCOR Actuarial Awards are recognized as a measure of
competence in the insurance and reinsurance industries. The winning papers are selected on the basis of criteria including an excellent command of actuarial concepts, the use of high-quality analysis instruments, and subjects that could have a practical application in the world of risk management. In addition to the above, scientific risk management techniques are promoted, and knowledge spread, via the following:  Involvement in collective studies through the Geneva Association and the teaching of insurance and scientific risk management techniques in schools and universities (e.g. the 218 Master’s at Paris Dauphine, the Zurich ETH, the University Ca’Foscari in Venice Italy and the Enass MBA).
 The SCOR Global Risk Center, created in 2010, is devoted to Life insurance risks, Non-Life insurance risks and economic and financial environment risks. It 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.). The series of SCOR Papers has reached the number of 30 and represents a reference in the theory of actuarial science and insurance economics. SCOR Deutschland has also published a 135 page brochure with the contribution of various scientists on the development of metrics to measure insurance and reinsurance performance.
The focus in 2014 was again on strengthening SCOR’s front office applications to improve risk selection, anticipation and reactivity in markets and products, and simulations of results. A number of projects have been commenced in recent years which will continue through 2015. Accounting forecasts are developed from underwriting plans and comparative analysis is produced in standard reports. New reserving and financial modeling tools have been implemented over the last years. Non-Life pricing is closely managed using xAct, the global in-house standard treaty pricing tool, which uses standardized models, and profitability analysis, then providing full visibility into proportional and non-proportional business. The underwriting and pricing process of large industrial or specialty risks is now supported by new inhouse solutions like ForeWriter or Pacman, embedding the SCOR professionals’ expertise. Control of exposure to natural catastrophes and pricing has been improved through the ongoing joint development of the Cat Platform with RMS which monitors all liabilities and accumulations through the use and calibration or the model combination deemed as most efficient. 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 providing underwriting solutions to our clients in different countries. In the US market in particular, new underwriting solutions are proposed to SCOR's Life clients.
During the last four years, SCOR also launched a number of projects related to asset management, including the implementation of the SimCorp Dimension market software package, and the deployment of the Cadis market solution for data control and integrity. All investment portfolios of the Group have been centralized in SimCorp Dimension. This same Dimension solution has largely been deployed for front and middle office investment functions. In 2014, SGI has launched a strategic review. The first achievement has been the outsourcing of middle and back office activities related to asset management to BNP Paribas Securities Services in Q4 2014. This decision aims at leveraging
on their expertise in the post-trade execution activities. A specific internal organization and related new procedures have been put in place to monitor the performance and the operational risks of this outsourcing.
The Group is promoting a paperless environment. Internally, global document-sharing processes have been set up for the Life and Non-Life divisions. With its clients, SCOR is able to automatically process claims, reinsurance and financial accounts received electronically in the standard formats edited by ACORD, an association created for the development of e-processing in insurance and reinsurance, without having to re-enter them. The Group is also chairing the Ruschlikon Initiative, launched with the major brokers and reinsurers to develop e-administration in the reinsurance industry.
Finally, the IT strategy is aligned with the SCOR business objectives. The mandate of SCOR IT under the past strategic plan has been largely completed with new solutions in the back-office and front-end areas to ensure operational excellence and business development. The new strategic plan, “Optimal Dynamics”, has identified new directions for SGP&C, SGL, SGI and the Corporate Functions, which have been analyzed to define the new strategy for the SCOR Information System. This new strategy, launched as part of “Optimal Dynamics”, will help in materializing the ambitious “Digital SCOR” program, key initiative for the digital transformation of SCOR.
12.1 Most significant trends in production, sales, inventory, costs, and selling prices since the end of the last financial year 12.1.1 NON-LIFE REINSURANCE
In an increasingly competitive market environment, SCOR Global P&C has capitalized on the quality of its franchise and the active management of its portfolios, completing January renewals that bear witness to its strong competitive position, as illustrated by the main performance indicators set out below:  A pricing decrease contained at -0.7% across the entire renewed portfolio, which has benefited from primary insurance price increases, being mainly composed of proportional reinsurance;  Deterioration in the gross underwriting ratio limited to just 0.2 percentage points, thereby confirming that the teams have successfully achieved their targets in terms of slowing down the deterioration in expected profitability. Moreover, SCOR Global P&C successfully resisted the broader loosening of terms and conditions, particularly certain contract clauses, thanks to a technical and consistent underwriting approach that has notably enabled it to contain the extension of hour clauses and to maintain event aggregation conditions within acceptable limits for non-proportional contracts;  Improved outward retrocession conditions that provide SCOR Global P&C with broader and more efficient protection, and enable it to confirm its net combined ratio assumption of 94% for the second year of “Optimal Dynamics”.
The premiums up for renewal at 1 January represent 70% of the total annual volume of treaty premiums and are distributed between P&C treaties (72%) and Specialty treaties (28%).
This growth can be seen in most lines of business except engineering, which has been the object of fierce competition on the international markets, and on which SCOR Global P&C has sometimes had to reduce its shares in order to maintain profitability. US nat cat business records volume growth of 3%, notably thanks to successful renewals with global clients as part of the strategic plan initiative, and to SCOR Global P&C’s favorable signings on overplaced programs.
The Life reinsurance market, as well as SCOR Global Life’s portfolio, is characterized by the dominance of long-term contractual relationships. Over the year 2014, new business pricing has remained, in the vast majority of markets, in line with SCOR’s profitability target.
The major part of SCOR Global Life’s portfolio consists of pure mortality cover. Moreover, SCOR Global Life does not currently underwrite either variable or fixed annuities. Indeed, SCOR Global Life’s Longevity Business area only covers the biometric risk attached to the annuities business.
Protection In the Protection business area, SCOR Global Life continues to offer traditional Life and Health reinsurance products based on proportional or non-proportional risk sharing models, applying SCOR’s pricing assumptions to meet the company’s profitability target. Most Protection business is long-term in nature, with a regular flow of opportunities throughout the year. In North America and Europe, SCOR Global Life has managed to maintain or reinforce its competitive position, writing new business with both existing and new clients. In Asia Pacific, the markets are generally characterized by growing economies and continued to display vigorous development in the Life and Health reinsurance businesses.
SCOR Global Life also writes short-term Protection business, in markets and lines in which it is a common practice, for instance in Spain, Italy and the Middle East, and in Group Life and Health reinsurance on a global basis. For short-term business, most of the contracts up for renewal in 2014 as well as new renewable contracts have been underwritten, overall in line with expectations, at pricing levels matching SCOR Global Life’s profitability target.
In Latin America, SCOR Global Life has entered into several Financial Solutions transactions with underlying pension funds business.
14.1 Information on the members of the Board of Directors and Senior Management 14.1.1 INFORMATION CONCERNING THE MEMBERS OF THE BOARD OF DIRECTORS
In accordance with European law governing Societas Europaea and applicable French law, the principal responsibility of the Board of Directors is to determine the guiding principles of the Company’s business plan and strategy and to monitor their application. The Chairman and Chief Executive Officer (Président et Directeur Général) of SCOR SE has full executive authority to manage the business of the Company, subject to the prior authorization of the Board of Directors or the Company’s shareholders for certain decisions as required by law pursuant to the Company’s bylaws (“statuts”).
The term of the office of the directors appointed or renewed from 25 April 2013 inclusive, such as set forth in SCOR SE's bylaws shall not exceed four years. Under SCOR SE’s bylaws, directors may hold office until the age of 77. A Director reaching the age of 77 while in office has to retire at the expiration of the term of his or her office, as determined at the Shareholders’ Meeting. Non-employee directors are elected by the shareholders and serve until the expiration of their respective term, or until their resignation, death or removal, with or without cause, by the shareholders. Vacancies on the Board of Directors may, under certain conditions, be filled by the Board of Directors, pending the next Shareholders’ Meeting. Directors are required to comply with applicable law and SCOR SE’s bylaws. Under French law, Directors are liable for violations of French legal or regulatory requirements applicable to Societas Europaea, violation of a company’s bylaws (“statuts”) or mismanagement (“faute de gestion”). Directors may be held liable for such actions both individually and jointly with the other directors.
For further information, please refer to the report of the chairman of the Board of Directors in Appendix B of the Registration Document. The table below lists directors (including the Employee Director), 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.
Other Offices and positions: Director: - Bolloré SA*(France) - Dassault Aviation SA (France)* - Dexia SA* (Belgium) - Fonds Stratégique d’Investissement (France)
Other Positions: France: Chairman of the Board of Directors: - Europ Assistance Holding - Generali France Assurances
Out of France: Chairman of the Board of Directors: - Europ Assistance (Italy)
Permanent Representative of MACIF: - on the Board of Directors of MACIF Participations - on the Supervisory Board of MUTAVIE - on the Supervisory Board of GPIM
Director: - Compagnie Foncière de la MACIF - Foncière de Lutèce - UGM Couleurs Mutuelles - OFI SMIDCAP (SICAV) - Fondation MACIF
Chairman of the Supervisory Board: - Capa Conseil SAS, as MACIF representative
Permanent representative of OFI Holding: - on the Board of Directors of OFI Alliance
Out of France: Permanent representative of MACIF at the Board of Directors and Vice Chairman: - Atlantis Seguros (Spain) (unitil June 2014) - Atlantis Vida (Spain) (until June 2014)
Permanent representative of MACIF at the Board of Directors: - Eurosa Holding (until June 2014)
Principal Position: Chairman of the Management Board and CEO of UNIQA Insurance Group AG
Out of France: Chairman of the Supervisory Board of: - UNIQA Asigurari SA - UNIQA Asigurari de Viata SA - UNIQA Bulgaria - UNIQA Life Bulgaria - UNIQA Zivotno osiguranje a.d.o. - UNIQA Non-Life, Ukraine - UNIQA Life, Ukraine - UNIQA Assicurazioni SpA - UNIQA Zivotno
Member of the Supervisory Board of: - CEESEG Aktiengesellschaft - Wiener Börse AG - Claris Vita SpA - UNIQA Protezione SpA - UNIQA Osiguranje d.d. - UNIQA Life Insurance Podgorica - UNIQA pojist'ovna a.s.
Chairman of the Board of Directors of: - Assurances Mutuelles de France - Covéa Coopérations - GMF Assurances - MAAF Assurances SA - MMA IARD - MMA IARD Assurances Mutuelles - MMA Vie - MMA Vie Assurances Mutuelles
Permanent Representative of Assurances Mutuelles de France at the Board of Directors of: - Gespré Europe
Out of France: Chairman of the Board of Directors: - Assurances Mutuelles d'Europe - AME Lux
Director: - Zurich , Companhia de Seguros SA (Portugal) - Deliciel AG (Switzerland)
Professional Address: GaveKal Research Limited Suite 3101, 31st Floor Central Plaza, 18 Harbour Road Wanchai Hong Kong
Offices expired during the last five years date of first nomination
Professional Address: Groupe Malakoff Médéric 21 rue Laffitte 75317 Paris cedex 9 France
Chairman of the Board of Directors: - Viamédis SA - Quatrem SA - Auxia SA - Auxia assistance SA - Fédéris Gestion d'actifs SA
Member of the Supervisory Board: - Fédéris Gestion d’Actifs SA - Société Editrice du Monde SA - Holding Fondateurs SAS (until 23 September 2014) - Holding Accueil Mutuelles SAS (until 23 September 2014)
Permanent Representative of Malakoff Médéric Prévoyance to the Board of Directors of: - BPI SA - Korian
Director: - Petro Canada - CHC Helicopter Corporation - AXA Assurances Inc - Bank of Montreal
Other offices (including within SCOR group) held in France or in a foreign country
Out of France: Director: - BILT Paper* (and Chairman of the Compensation and Nomination Board and of the CSR Committee) (India)
Member: - of the Board of the Batten School of Leadership University of Virginia (USA) - of the Board of HMG Ministry of Justice (UK)
_________________________________________________________ (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 organized market 14.1.2 BIOGRAPHICAL INFORMATION ON MEMBERS OF THE BOARD OF DIRECTORS
Gérard Andreck, a French citizen, was Chairman of the MACIF Group between June 2006 to June 2014. Prior to his election as the Chairman of the Board, he held the position of the Chief Executive Officer of the Group since June 1997. Mr. Andreck has a deep interest in the mutual company and insurance sector, and he served as President of CJDES (Centre des Jeunes Dirigeants de l’Economie Sociale) from 1991 to 1993 and of CEGES (Conseil des Entreprises, Employeurs et Groupements de l'Economie Sociale) from May 2009 to Decembre 2011. On 1 July 2008, he was appointed Chairman of the Groupement des Entreprises Mututelles d’Assurances (GEMA) for three years. He was reelected in 2011 for 3 years. In November 2010, he was appointed to the Conseil Economique et Social et Environnemental (CESE).
Andreas Brandstetter, an Austrian citizen, received a master`s degree (1992) and a doctoral degree (1994) in Political Science from the University in Vienna. He started his professional career in 1993 in the Federal Chancellery, Republic of Austria, where he served in the office of the Vice-Chancellor. In 1994 he was appointed managing director of the Austrian Peoples Party (ÖVP), in 1995 he became head of the office at the European Union, Brussels, of the Austrian Raiffeisen association. In 1997, Mr. Brandstetter was appointed assistant to the CEO of BARC Insurance Group (later UNIQA), in 2000 General secretary. In 2002, he received an executive MBA from the California State University,
Hayward (CSUH/ IMADEC). From 2002 to mid-2011 he was serving as member of the management board of UNIQA Insurance Group, from mid-2011 onwards as CEO in the same group.
Peter Eckert, a Swiss citizen, has an international experience in risk management, insurance and life insurance, asset management, banking and technologies. He was member of the Group Executive Board (1991-2007) and Chief Operating Officer (2002-2007) of Zurich Financial Services, member of the Swiss Federal Banking Commission EBK between 1 July 2007 and 31 December 2008, and Deputy Chairman of the Board of the new Swiss Financial Market Supervising Authority (FINMA) from 1 January 2008 to 31 December 2008. From 1 January 2009 until 14 November 2011, he was Chairman of the bank Clariden Leu and from 10 January 2012 until 31 March 2012, he was appointed by the FINMA as an agent with executive authority of the insurer CPT at Berne (Switzerland).
Kevin J. Knoer, an American citizen, has 33 years of insurance experience, including risk control & engineering and industrial risk underwriting. He holds a Bachelor of Science degree and an MBA and has served as a submariner in the United States Navy. Since joining SCOR in 1996, he has held various Treaty and Facultative Underwriting positions in the United States. From 2007 to 2010, he was the Deputy Regional Manager for SCOR Business Solutions (SBS) in Asia/Pacific. He is currently a Vice President/Senior P&C Underwriter for SBS in New York.
Fields Wicker-Miurin, an American and British citizen, has degrees from the Institut d'Etudes Politiques de Paris, the University of Virginia and the Johns Hopkins University. Fields Wicker-Miurin began her career in banking, before joining Strategic Planning Associates (now Oliver Wyman) as a senior partner where she was the main advisor to Lloyd’s of London. In 1994, she became Chief Financial Officer and Director of Strategy of the London Stock Exchange where she led the restructuring of the LSE and the London equity markets. She was subsequently a member of the Nasdaq Technology Advisory Council, the Panel of Experts advising the European Parliament on financial markets harmonization, and the board of the UK Department of Business, where she chaired the investment committee responsible for all government subsidies to business. In 2002, she was one of the founders of Leaders' Quest, a global social enterprise that works with leaders from all sectors of society and from around the world interested in responsible and relevant leadership. In 2007 she was awarded the OBE - Officer of the British Empire. She is also a director of BNP Paribas and BILT Paper, and is a member of the ministerial board of the UK Ministry of Justice.
The Executive Committee is composed of executive officers of the Company and of its subsidiaries. It is responsible for implementing the strategy defined by the Board of Directors, under the Chief Executive Officer‘s authority.
2002 Refer to Section 14.1.1 - Information concerning the Members of the Board of Directors.
Paolo De Martin 45 Chief Executive Officer of SCOR Global Life 2007 (1) Director: SCOR Global Life SE (France) SCOR Global P&C SE (France) SCOR Holding (Switzerland) AG (Suisse) SCOR Switzerland AG (Suisse) SCOR Services Switerland AG (Suisse) SCOR Global Life Reinsurance Company of Delaware (US) SCOR Global Life Americas Reinsurance Company (US) SCOR Global Life USA Reinsurance Company (US)
Permanent Representative: SCOR Global Life SE at SCOR Properties’s Board (France)
Frieder Knüpling 45 Group Chief Risk Officer 2010 Chairman of the Board of Directors: SCOR Global Life Reinsurance Ireland Ltd (Ireland)
Director: SCOR Financial Services Limited (Ireland) SCOR Global Life SE (France) SCOR Global P&C SE (France) SCOR Services Switzerland AG (Switzerland) SCOR Switzerland AG (Switzerland) SCOR Holding (Switzerland) AG (Switzerland)
Director: SCOR Holding (Switzerland) AG (Switzerland) (until 12 May 2014) SCOR Switzerland AG (Switzerland) (until 12 May 2014) SCOR Perestrakhovaniye (Russia) (until 1st June 2014) SCOR Global Life Re Insurance Company of Delaware (US) (until 14 February 2014) SCOR Global Life USA Reinsurance Company (US) (until 14 February 2014) SCOR Global Life Americas Reinsurance Company (US) (until 14 February 2014) SCOR Reinsurance Asia/Pacific PTE Ltd (Singapore) ReMark Japan K. K. (Japan)
Simon Pearson 48 Deputy Chief Executive Officer of SCOR Global Life 2014 Chairman of the Board of Directors: SCOR Financial Services Limited (Ireland)
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, Paolo De Martin was promoted to Executive Manager for GE Capital Europe, before joining GE Insurance Solutions as Financial Planning and Analysis Manager for Global Property and Casualty Reinsurance. In 2003, he was appointed Chief Financial Officer of GE Frankona Group before becoming Chief Financial Officer of Converium Holding AG in July 2006. In September 2007, Paolo De Martin was appointed Group Chief Financial Officer of SCOR. In January 2014, Paolo De Martin, after a short sabbatical period, was appointed Chief Executive Officer of SCOR Global Life.
Mark Kociancic, a Canadian citizen, is a graduate of the University of Toronto and holds a Bachelor of Commerce degree. He also holds a Chartered Accountant (CA) designation and a Chartered Financial Analyst (CFA) designation. Upon graduation in 1992, Mark joined Ernst & Young within its Life and P&C insurance practice and has subsequently held progressively senior positions within the insurance industry with St Paul Guarantee, Avalon Risk Associates and Tokio Marine, prior to joining SCOR US as Senior Vice President & Chief Financial Officer in May 2006. He was
Victor Peignet, a French citizen, a Marine & Offshore Engineer and graduate of the Ecole Nationale Supérieure des Techniques Avancées (ENSTA), joined SCOR’s Facultative Department in 1984 from the offshore Oil & Gas contracting industry. He has more than 15 years’ underwriting and management experience in Energy & Marine insurance at SCOR. He has been at the head of the Group’s Corporate Business Division (Business Solutions) since its creation in 2000, first as Executive Vice President and as Managing Director from April 2004. Since July 2005, he has been the Chief Executive Officer of SCOR Global P&C, which is one of the Group’s two operational entities and which manages the Group’s Non-Life business worldwide.
François de Varenne, a French citizen, is a graduate of the Ecole Polytechnique and a civil engineer of the Ponts et Chaussées. He holds a PhD in finance and graduated as an actuary from the Institut de Science Financière et d’Assurances (ISFA). François de Varenne joined the Fédération Française des Sociétés d’Assurances (FFSA) in 1993 as Manager of Economic and Financial Affairs. In London beginning in 1998, he served successively as Insurance Strategist with Lehman Brothers, Vice-President for asset management solutions and structured transactions, a specialist in insurance and reinsurance companies at Merrill Lynch, and then at Deutsche Bank. In 2003, he became Managing Partner of Gimar Finance & Cie. He joined the Group in 2005 as Director of Corporate Finance and Asset Management. On 3 September 2007, he was named Group Chief Operating Officer. On 29 October 2008, he was appointed Chief Executive Officer of SCOR Global Investments.
(1) Gilles Meyer was a member of the Executive Committee until 5 November 2014 as Deputy Chief Executive Officer of SCOR Global Life SE
There is no arrangement or agreement concluded with shareholders, clients, suppliers or others pursuant to which any member of the Board of Directors or any member of the senior management of the Company have been appointed. To our knowledge, there are no conflicts of interest between the duties of the Directors and members of senior management with regard to SCOR and their private interests.
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 2014 145
The approved principles and rules for setting compensation and benefits granted to Board members are provided in Appendix B - Report of the Chairman of the Board of Directors – Part I – Terms and Conditions for preparing and organizing the work of the Board of Directors – (F) Principles and rules states for the determination of compensation and in-kinds benefits for corporate officers.
Fees paid to directors for 2014 and 2013 are broken down as follows: In EUR 2014 2013 Mr. Denis Kessler .(1) 44,000 48,000 Mr. Gérard Andreck 52,000 54,000 Mr. Andreas Brandstetter 46,000 39,000 Mr. Thierry Derez 62,000 51,000 Mr. Peter Eckert 70,000 72,000 Mr. Charles Gave 56,000 70,000 Mr. Kevin J. Knoer 38,000 38,000 Malakoff Médéric Group, represented by Guillaume Sarkozy 42,000 52,000 Mrs. Guylaine Saucier 72,000 82,000 Mrs. Kory Sorenson 70,000 51,000 Mr. Claude Tendil 70,000 68,000 Mr. Daniel Valot 78,000 80,000 Mrs. Fields Wicker-Miurin 68,000 49,000 Mr. Georges Chodron de Courcel .(2) NA 18,000 Mr. Daniel Lebègue .(2) NA 28,000 Mrs. Monica Mondardini .(2) NA 14,000 Mr. Jean-Claude Seys .(2) NA 26,000 TOTAL 768,000 840,000
15.1.2 REMUNERATION OF THE MEMBERS OF THE COMEX AND OF THE EXECUTIVE CORPORATE OFFICER IN 2014
(2) The amount corresponds to the IFRS 2 Share-based Payment fair value as described in Section 20.1.6 - Notes to the consolidated financial statements, Note 18 – Stocks options and Share awards
In addition, the Chairman and Chief Executive Officer is entitled to the following benefits in kind:  a health insurance policy under the terms of a contract dated 16 September 1988;  an “all causes” death or permanent disability insurance policy for Company Executives, dated 30 June 1993, and an insurance for death or permanent disability resulting from an accident, especially underwritten for the executives of the Group on 1 January 2006. These collective insurances are renewed on an annual basis. Consequently the Chairman and Chief Executive Officer will benefit from any policies that may replace the existing ones.
(A) SCOR financial strength by S&P rating must be maintained (minimum) “A” on average over the two prior years; (B) SCOR Global P&C’s net combined ratio must be less than or equal to 102% on average over the two prior years; (C) SCOR Global Life’s technical margin must be higher than or equal to 3% on average over the two prior years; (D) The SCOR group’s ROE must be higher than (or equal to) 300 points above the risk-free rate on average over the two prior years.
The following table presents the summary of gross compensation paid to the Corporate Officer during fiscal years 2014, 2013 and 2012: In EUR Fixed compensation (4) Variable compensation Director's fees Gross compensation Additional benefits 2014 1,200,000 1,314,500 44,000 2,558,500 Company Car 2013 1,200,000 950,000 48,000 2,198,000 Company car 2012 1,200,000 865,500 48,000 2,113,500 Company car
Valuation of options as per method used in the consolidated accounts In
Performance shares granted during the period to the Corporate Officer by the issuer or by another company of the Group Date of plan
Performance share acquired during the period by the Corporate Officer by the issuer or by another company of the Group (nominative list)
Document) (2) Group CFO since 15 May 2013. The compensation is paid in USD, the exchange rate used is: 1 EUR = 1.2454 USD (official average quarterly exchange rates of
The following table presents the components of the gross compensation for fiscal years 2014, 2013 and 2012 for the members of the Executive Committee (other than the Chairman and Chief Executive Officer).
(1) 498,795 393,449 34 616 (2) 926,860 498,795 414,798 Frieder Knüpling 400,000 339,520 360 739,880 400,000 332,640 Mark Kociancic (Paid USD)
(3) 639,554 542,853 8,969 1,191,376 350,434 544,643 Paolo De Martin (Paid CHF)
(1) 819,087 950,961 34 616 (2) 1,804,664 353,313 371,544 Simon Pearson (Paid in GBP)
The following table presents the components of the actual gross compensation paid in 2014, 2013, 2012 to the members of the Executive Committee (other than the Chairman and Chief Executive Officer).
(official average quarterly exchange rates of Q4 2014 of the Registration Document)
(2) Those allowances cover business expenses (3) Group CFO since 15 May 2013. The compensation is paid in USD, the exchange rate used is: 1 EUR = 1.2454 USD (official average quarterly exchange rates of
Q4 2014 of the Registration Document) (4) Group CFO until 15 May 2013. In sabbatical (not paid) from 1 July 2013 to 6 January 2014. Chief Executive Officer of SCOR Global Life SE since 17 January 2014. (5) This amount includes an expatriation bonus for 2012 (6) This amount includes an expatriation bonus for 2013 (7) This amount includes an expatriation bonus for 2014 (8) Deputy CEO of SCOR Global Life SE since 10 November 2014. The compensation is paid in GBP, the exchange rate used is: 1 EUR = 0.7903 GBP (official average quarterly exchange rates of Q4 2014 of the Registration Document
Gross compensation 17,308 (2) 909,319 706,626 540,613 44,759 (2) (5) 1,291,997 NA NA NA NA NA NA
(2) Those allowances cover business expenses (3) Group CFO since 15 May 2013. The compensation is paid in USD, the exchange rate used is: 1 EUR = 1.2454 USD. (official average quarterly exchange rates of Q4 2014 of the Registration Document) (4) Group CFO until 15 May 2013. In sabbatical (not paid) from 1 July 2013 to 6 January 2014. Chief Executive Officer of SCOR Global Life SE since 17 January 2014 (5) This amount includes a payroll adjustment of CHF 12,000 (EUR 9,963) for the years 2011 and 2010 (6) Deputy CEO of SCOR Global Life SE since 10 November 2014. The compensation is paid in GBP, the exchange rate used is: 1 EUR = 0.7903 GBP (official average quarterly exchange rates of Q4 2014 of the Registration Document)
Refer to Section 17.2 – Information on shareholdings and stock options or Company stock purchases by members of administrative and management bodies.
15.2 Total amounts set aside or accrued to provide pension, retirement, or similar benefits for financial year 2014 Like all the Group’s senior executives based in France and employed by the Group at 30 June 2008, the Chairman and Chief Executive Officer benefits from pension coverage to 50% of the average last salaries, less any pension benefits acquired under other collective and mandatory pension schemes. Thus, the amount of SCOR pension coverage shall in no case exceed 45% of his reference compensation as for the AFEP-MEDEF recommendation. The rights to this pension are calculated on the basis of the average compensation received over the last five years with the Group. This average compensation amounts at EUR 2,033,300 as at 31 December 2014. The right to a supplementary pension is only acquired under the condition notably that the beneficiary is a corporate officer or an employee of the Company when he claims his rights for the pension, according to the rules in force at that time.
The total commitment of the Group for defined benefits retirement plans for the Executive Committee members (including the Chairman and Chief Executive Officer) amounts at EUR 47 million (1) as at 31 December 2014, i.e. 13% of the total commitment of the Group for pension plans of EUR 358 million.
Refer also to Section 20.1.6 – Notes to the consolidated financial statements, Note 24 – Related party transactions and Appendix A – 1.5 – Notes to the corporate financial statements, Note 6 – Contingency reserves.
16.1 Date of expiration of the current term of office 148 16.2 Information on service contracts of members of Administrative and senior officers 148 16.3 Information on the Audit
Committee and the Compensation and Nomination Committee 148 16.4 Corporate governance regime 149
Name Term in Office Date of expiration (1) First appointment date
Executive Officer 2017 4 November 2002 NA Gérard Andreck Director 2015 18 March 2008 (2) No Andreas Brandstetter Director 2015 25 April 2013 No Thierry Derez Director 2017 25 April 2013 NA Peter Eckert Director 2015 15 April 2009 Yes Charles Gave Director 2015 4 May 2011 No Kevin J. Knoer Director 2016 3 May 2012 NA Malakoff Médéric Group Director 2017 15 April 2009 NA Guylaine Saucier Director 2015 4 May 2011 No Kory Sorenson Director 2015 25 April 2013 Yes Claude Tendil Director 2017 15 May 2003 NA Daniel Valot Director 2015 15 May 2003 No Fields WickerMiurin Director 2015 25 April 2013 Yes
Complementary information on the corporate governance regime is disclosed in the report of the Chairman of the Board of Directors in Appendix B.
17.1 Number of employees The total number of employees of the Group increased from 2,450 as at 31 December 2013 to 2,555 as at 31 December 2014. The distribution of personnel covers the various geographical areas to meet the strategic principles of the Group.
The following table sets forth the distribution of employees at the dates indicated: Distribution by Hub (1)
As at 31 December 2014 2013 2012 Paris .(2) 765 743 713 Americas .(3) 725 707 628 Zurich/Cologne .(4) 453 446 447 London .(5) 251 224 189 Singapore .(6) 223 195 173 Total excluding Remark 2,417 2,315 2,150 Remark .(7) 138 135 134 TOTAL 2,555 2,450 2,284
As at 31 December 2014 2013 2012 SCOR Global P&C (10) 784 742 712 SCOR Global Life .(8) 830 948 848 SCOR Global Investments 52 59 51 Group Functions and Support .(9) 751 566 539 Total excluding Remark 2,417 2,315 2,150 ReMark .(7) 138 135 134 Total 2,555 2,450 2,284
(1) Each Hub covers a region and may encompass several countries. (2) Paris Hub covers France, Spain, Italy, Belgium, the Netherlands, Russia and South Africa. (3) Americas Hub covers United States, Mexico, Brazil, Canada, Chile, Colombia and Argentina. In 2011, the former Transamerica Re employees were mostly included in the Hub Americas. Since 2013, the former Generali U.S. employees are included in the Hub Americas. (4) Zurich/Cologne Hub covers Switzerland, Israel, Germany and Austria. (5) London Hub covers United Kingdom, Ireland and Sweden. (6) Singapore Hub covers China, Hong-Kong, India, Japan, Korea, Malaysia, Singapore, Taiwan and Australia. (7) 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. (8) For 2012 and 2013 the former Transamerica Re employees are included in the SCOR Global Life division. Starting from 2014, the former Transamerica Re employees are included in the divisions according to the global organization of the Group. For 2012, 2013 and 2014, Rehalto (27 employees at 31 December 2014) and Telemed (43 employees at 31 December 2014), subsidiaries (100%) of SCOR Global Life SE, are managed independently from the Group in terms of human resources and are not aggregated in the division.
(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 Executive Officer.
Directors and Officers Operations made in 2014 for a greater amount than
(1) The options exercised were in the context of a full donation. The shares have not been sold by the Corporate Officer. (2) Simon Pearson is member of the Executive Committee since 10 November 2014, as Deputy CEO of SCOR Global Life SE
The options granted during financial year ended 31 December 2003 and after are options to subscribe stocks.
Moreover, the exercise of stock options by the Chairman & CEO is subject to clearance to deal in securities of SCOR SE by the General Secretariat.
Number of shares underlying the stock options granted during the financial year by the issuer and by any company included in the scope of allocation of the options to the ten employees of the issuer and of any company included in such scope, whose number of shares thus purchased or granted is the highest (aggregate information)
(3) This collective free shares Plan to the employees of the Company that are France residents, under the collective agreement signed on July 3rd 2014 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 for an identical allocation of five free shares without a presence condition nor a performance condition
The attribution of shares since 2008 is subject to the satisfaction of performance conditions. Thus, a third of the number of shares awarded on 07 May 2008, and half of the shares awarded on 16 March 2009 and all the shares awarded since 2 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 Section 17.3 of this Registration Document and the registration documents of SCOR filed with the Autorité des marchés financiers on 5 March 2014 and 6 March 2013 under number D.14-0117 and D.13-0106 for the details of the performance conditions applicable to the allocated free shares.
Reminder of the specific award conditions applicable to the Corporate Officer in respect of the principles AFEP/MEDEF: The Company's Board of Directors of 3 April 2007 decided that for all the grants subsequent to that date, the Corporate Officer is required to retain as registered shares at least 10% of the shares issued from the exercise of stock options granted and at least 10% of the performance shares granted until the termination of his duties. In addition to these conditions specified above, the Company's Board of Directors decided that for all the grants from 2009 plans and following, the Corporate Officer is required to hold a number of shares equal to 5% of the number of performance shares granted as soon as these shares may be sold. Finally, in compliance with the AFEP and MEDEF recommendation applicable to the Executive Corporate Officer, he also made a formal commitment not to resort to the use of hedging instruments on the stock options and/or performance shares which have been granted to him for the whole duration of the term of his office.
The potential volume of new shares from outstanding equity-based compensation plans stood at 19,159,467 shares as of 31 December 2014, split as follows: (1) New authorizations given by the General Meeting of the Shareholders cancel and replace authorizations still outstanding.
Potential volume of new shares from outstanding equity-based compensation plans 19,159,467 - of which number of new shares from outstanding options (options allocated but not vested + options vested but not exercised) 7,234,382 - of which number of new shares from outstanding free shares (free shares allocated but not vested)
- of which number of new shares from outstanding warrants 0 - of which unused volume under all authorizations still outstanding (1) 4,776,510
Fully diluted issued share capital 232,464,902 - of which total shares outstanding 192,691,479 - of which number of new shares from outstanding options 7,234,382 - of which number of new shares from outstanding free shares 7,148,575 - of which number of new shares from outstanding warrants 0 - of which potential shares from other securities convertible or redeemable in new shares 25,390,466
17.3 Plans providing employee participation in Company Refer to Section 20.1.6 – Notes to the consolidated financial statements, Note 17 - Provisions for Employee Benefits and Appendix A – 1.5 – Notes to the corporate financial statements, Note 13 – Employee Share-ownership Plans.
On 25 April 2013, the General Shareholders’ meeting of the Company's Board of Directors had authorized, in its twentysecond resolution, the Company's Board of Directors, under the provisions of Articles L.225-177 to L.225-186-1 of the Commercial Code, to grant upon proposal of the Compensation and Nominations Committee, on one or more occasions for the benefit of members of staff and the corporate officers, of the Company and companies or groups linked to it in terms of Article L.225-180 of the Commercial Code, options entitling to the subscription of new ordinary shares of the Company in issue as to increase its capital, as well as options entitling to purchase shares of the Company from acquisitions made by it as provided by law within the limits of a number of options giving right to a maximum of one million (1,000,000) of shares. This authorization was given for a period of 24 months from 25 April 2013 and had canceled and replaced, for the unused portion thereof, the previous authorization as at 3 May 2012. On 6 May 2014, the General Shareholders’ meeting of the Company's Board of Directors had authorized, in its twentythird resolution, the Company's Board of Directors, under the provisions of Articles L.225-177 to L.225-186-1 of the Commercial Code, to grant upon proposal of the Compensation and Nominations Committee, on one or more occasions for the benefit of members of staff and the corporate officers, of the Company and companies or groups linked to it in terms of Article L.225-180 of the Commercial Code, options entitling to the subscription of new ordinary shares of the Company in issue as to increase its capital, as well as options entitling to purchase shares of the Company from acquisitions made by it as provided by law within the limits of a number of options giving right to a maximum of one million (1,000,000) of shares. The envelope volume is defined and optimized taking into account both the annual allocations as per our Compensation policy and the potential needs in case of acquisition as to ensure our key employees’ retention. This authorization was given for a period of 24 months from 6 May 2014 and canceled and replaced, for the unused portion thereof, the previous authorization as at 25 April 2013.
The exercise of all of the stock options allocated in 2014 is subject to performance conditions. The performance conditions will be deemed satisfied if, in addition to the mandatory condition (5) below, at least three out of the four other conditions listed below are met:
The Chairman and CEO, under the authority given by the Board of Directors held on 5 November 2014 for the implementation of this plan, allocated 9,000 stock options to three Partners (Executive and Senior Global Partners) on 1 December 2014.
The exercise of all of the options granted is subject to the same performance conditions as those set forth for the 20 March 2014 Stock Option Plan (for the description of the performance conditions, refer to Section 17.3.1 – Stock Option Plans – 20 March 2014 Stock Option Plan).
The table below presents the total number of stock options allocated in 2013 and 2014 by category within the Group: Total number of stock options allocated in 2014
Total number of beneficiaries in 2013 Corporate Officer (*) 100,000 1 100,000 1 Members of the Executive Committee 320,000 7 336,000 8 Partners 283,875 61 475,000 62 Total 703,875 69 911,000 71
SCOR Group’s ROE achievement above the risk-free rate (average over two financial years)
On 25 April 2013, the Shareholders’ Meeting of the Company, in its twenty-third resolution, had authorized the Company’s Board of Directors, under the provisions of Articles L.225-197-1 to L.225-197-6 of the Commercial Code, to grant, upon proposal of the Compensation and Nominations Committee, on one or more occasions, to the staff members or to the corporate officer of the Company and of companies or groups affiliated with it pursuant to Article L. 225-197-2 of the French Commercial Code, free allotments of existing or yet-to-be-issued shares of the Company and resolved that the Company's Board of Directors of the Company would determine the identity of the beneficiaries of the allotment and the conditions and criteria for the allotment of the shares.
The Shareholders’ Meeting also decided that (i) the total number of free shares granted under this authorization may not exceed 4,000,000 Shares (the envelope volume is defined and optimized taking into account both the annual allocations as per our Compensation policy and the potential needs in case of acquisition as to ensure our key employees’ retention), (ii) the allocation of shares to their beneficiaries will be definitive only after a vesting period of a minimum set at two years for tax residents of France and a minimum of four years for beneficiaries non tax residents of France, (iii) the beneficiaries will be subject, where appropriate, to an obligation to retain shares in a period of two years from the end of the vesting period for tax residents of France and that the retention period for beneficiaries non tax residents of France would be deleted, and (iv) the Company's Board of Directors of the Company will have the authority to increase the lengths of the acquisition period and the holding obligation period.