On 6 May 2014, the Shareholders’ Meeting of the Company, in its twenty-fourth resolution, had authorized the Company’s Board of Directors, under the provisions of Articles L.225-197-1 to L.225-197-6 of the Commercial Code, to grant, upon proposal of the Compensation and 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.
Moreover, it should be noted that SCOR is committed to the neutral impact of each performance share allocation in terms of dilution. To achieve this, performance share allocation plans are covered through the allocation of existing shares taken from the treasury shares held by the Company in the context of its share buyback program, and not via the creation of new shares. Thus, there is no dilution regarding the granting of performance shares.
Following the authorization by the Shareholders' Meeting on 25 April 2013, the Company's Board of Directors of 4 March 2014, on the proposal of the Compensation and Nominations Committee of 25 February 2014, decided to grant performance shares to the Chairman and Chief Executive Officer, the other members of the Executive Committee and the other Partners.
The Chairman and CEO, under the authority given by the Board of Directors held on 4 March 2014 for the implementation of this plan, allocated 1,260,280 performance shares to the other Partners (623 Partners) and 199,750 free shares to Non Partners of the Company (1,484 Non Partners) on 4 March 2014.
SCOR Group. These principles, which are designed to protect the interests of clients, are the pillars of SCOR’s sustainable development and therefore of its performance.
Therefore, in case of actual misconduct as per the Code of Conduct (condition (5)), for instance in the event of fraud, the beneficiary will lose all of his/her performance shares benefits (clawback policy).
Following the authorization by the Shareholders' Meeting on 25 April 2013, the Company's Board of Directors of 4 March 2014, on the proposal of the Compensation and Nominations Committee of 25 February 2014, reproduced a SCOR Long Term Incentive Plan (the “LTIP”), for selected managers and executives of the Group in order to ensure retention of key employees. The performance measurement of this plan of LTIP is set to six years.
The Chairman and CEO, under the authority given by the Board of Directors held on 4 March 2014 for the implementation of this plan, allocated on 4 March 2014 120,000 performance shares to 41 Partners of the Company. All the shares made under the LTIP are subject to the satisfaction of the performance conditions. The performance conditions are defined as follows: - on one hand, in addition to the mandatory condition (5), at least three of the four other conditions listed below will have to be met: (1) The solvency ratio at the end of each quarter must not be lower than 150% for the years 2014 and 2015; (2) SCOR Global P&C’s combined ratio must be less than 100% on average in 2014 and 2015; (3) SCOR Global Life’s technical margin must be higher than or equal to 3% on average in 2014 and 2015; (4) The SCOR Group’s ROE for the financial years ending 31 December 2014 and 31 December 2015 must be higher than 300 points above the risk-free rate on average.
(5) Absolute compliance with the Group’s ethical principles as described in the Code of Conduct of the SCOR Group. These principles, which are designed to protect the interests of clients, are the pillars of SCOR’s sustainable development and therefore of its performance.
- and on the other hand, to the comparison of a financial market condition of SCOR with its main peers.
Therefore, in case of actual misconduct as per the Code of Conduct (condition (5)), for instance in the event of fraud, the beneficiary will lose all of his/her performance shares benefits (clawback policy). The conditions of the LTIP plan are a vesting period of six years for the tax residents in France (and an obligation to retain shares for a period of two years after the end of the vesting period), and of eight years for the beneficiaries not tax resident in France.
Following the authorization granted by the Shareholders’ Meeting of 6 May 2014, the Company’s Board of Directors of 30 July 2014, on the proposal of the Compensation and Nomination Committee of 29 July 2014, decided to implement a collective free shares Plan for Group employees with French employment contracts. This decision was taken under the terms of the collective bargaining agreement signed on 3 July 2014, as part of the negotiations with the social partners in France concerning the profit sharing arrangement established by the 28 July 2011 law on social security financing in 2011. The plan includes an identical attribution of 5 free shares, with no conditions relating to presence or performance. Following this decision, 3,490 free shares were allocated on 30 July 2014 to 698 Group employees with French employment contracts (except the Chairman and Chief Executive Officer).
Following the authorization by the Shareholders' Meeting on 6 May 2014, the Company's Board of Directors of 5 November 2014, on the proposal of the Compensation and Nominations Committee of 5 November 2014, decided to grant performance shares to certain Partners employed after 4 March 2014.
The conditions of this plan are similar to those SCOR usually decides (notably with regards to the presence condition), with a vesting period of four years for all beneficiaries who are not tax residents in France and a vesting period of two years for beneficiaries who are tax residents in France (and an obligation to retain shares for a period of two years after the end of the vesting period).
All the shares awarded to the Senior Global Partners and half of the allocations awarded to the other (below Senior Global Partners) beneficiaries, are subject to the satisfaction of performance conditions (for the description of the performance conditions, refer to Section 17.3.2 – Free Share Allocation Plans – 4 March 2014 performance shares).
Following the authorization by the Shareholders' Meeting on 6 May 2014, the Company's Board of Directors of 5 November 2014, on the proposal of the Compensation and Nominations Committee of 5 November 2014, has approved the implementation of a specific plan for free shares promised at hiring in order to attract employee of Designate Partner status.
The conditions of this plan are specific (i.e. extension to three years for the presence condition), with a vesting period of three years for tax residents in France (and an obligation to retain shares for a period of two years after the end of the vesting period), and of five years for the beneficiaries not tax residents in France.
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 on 1 December 2014 28,000 performance shares to 11 Partners of the Group.
The table below presents the total number of shares allocated in 2013 and 2014 by category within the Group: Total number of LTIP shares allocated in 2014
Total number of shares allocated in 2013 (excluding LTIP and PPP)
The following table shows the free shares plans currently in force within the Group: Shareholders meeting and Company's
Requirement of presence at the company as at 4 March 2016
Requirement of presence at the company as at 18 December conditions Treasury shares
Requirement of presence at the company as at conditions Treasury shares included No holding period 11 49,000
Requirement of presence at the company as at 7 March 2013 Performance conditions Treasury shares
Requirement of presence at the company as at 2 March 2012 Performance conditions Treasury shares
From 7 May 2008 to 7 May 2012 included / No holding period
During the 2014 allocation, the rights vested into shares by the ten employees of the Company and of any company included in its consolidation whose number of shares thus obtained is the highest represent 415,000 shares. Those rights concerned, for the tax residents of France, the Free Share Plan of 19 March 2012, 3 May 2012 and 30 October 2012 whose transfer occurred on 20 March 2014, 4 May 2014 and 31 October 2014 and, for the not tax resident in France, the Free Share Plan of 2 March 2010 whose transfer occurred on 3 March 2014.
On 6 May 2014, the Combined Shareholders’ Meeting of the Company in its twenty-fifth resolution delegated its authority to the Company’s Board of Directors in order to increase the share capital by issuing shares reserved for employees of the company and of French and foreign companies affiliated with it pursuant to Article L. 225-180 of the French Commercial Code, who are participants in savings plans and/or any mutual funds, eliminating the pre-emptive right they have. This new authorization replaces the authorization granted by the General Shareholders’ Meeting of 25 April 2013. As at the date of the Registration Document, the Company’s Board of Directors has not exercised this authorization. This authorization was granted for a period of eighteen months as at the date of the Combined Shareholders’ Meeting on 6 May 2014.
17.4 Defined pension schemes Several defined contributions and benefits pensions schemes are settled in the Group and presented below.
Executive Committee members benefit from collective pension plans that are in place in their own entity and do not have any specific scheme.
Additional pension payment providing, depending on length of service and under the retirement conditions in force at SCOR, between 5% and 50% (by a maximum of 5% per year) of the average of the last five salaries, less any pension benefits acquired under other collective and mandatory pension schemes. Thus, the amount of the SCOR pension shall in no case exceed 45% of the reference compensation. This plan has been closed since 2008.
(1) This scheme regroups a limited number of beneficiaries (with an executive status). It was closed to new entrants as at 30 June 2008 (2) This pension scheme has been closed on 31 December 2013
(1) The percentage of voting rights is determined on the basis of the number of shares at closure, excluding the Company’s own treasury shares (2) Member of the Board (3) Including sold or transferred employee shares Source: TPI and Thomson One
There is not any covenant stipulating preferential terms for the sale or purchase of Ordinary Shares eligible for trading, or for which application is pending, on a regulated stock market and representing 0.5% or more of our share capital or voting rights that has been notified to the AMF. No ordinary shares have been pledged.
SCOR discloses below the thresholds declarations sent by the significant shareholders. SCOR is not responsible of ensuring of the completeness of these declarations. On 14 March 2012, BNP Paribas Group declared that it had exceeded the registered thresholds of 2.5% of the capital and voting rights in SCOR and that it held 8,338,596 shares or 4.34% of the capital and 8,338,596 voting rights or 4.34% of voting rights in SCOR. On 3 May 2012, Amundi Asset Management declared that the three portfolio management companies of Group Amundi, i.e. Amundi, Societe Generale Gestion and Etoile Gestion further to an acquisition made on 2 May 2012, had exceeded the registered thresholds of 2.5% of the capital and voting rights in SCOR and that they held in their OPCVM 6,553,079 shares, which represent a 3.4% of the voting rights.
On 26 September 2012, Malakoff Mederic Assurances declared that it had exceeded the registered thresholds of 2.5% of the capital and voting rights in SCOR due to the acquisition, outside the market, of 5,335,996 shares from Malakoff Mederic Prevoyance. This transaction was part of an internal reclassification exercise within the Malakoff Mederic Group.
On 22 September 2014, Generali VIE declared that it had fallen below the registered threshold of 2.5% of the capital and voting rights in SCOR and that it held 4,449,774 shares or 2.31% of the capital and 4,449,774 voting rights or 2.31% of the voting rights in SCOR.
As at 31 December 2014:  SCOR held 6,593,132 treasury shares;  The total number of voting rights amounted to 192,691,479 (including the voting rights attached to treasury shares).
Pursuant to Article 8 (“Rights attached to each share”) of the bylaws (statuts), each Ordinary Share gives its owner the right to one vote at the Shareholders’ Meetings. Pursuant to the new provisions of the third paragraph of Articles L. 225123 of the French commercial code (Code de Commerce) under Law N° 2014-384 of 29 March 2014, double voting rights are granted to all fully paid-up shares registered in the name of the same holder for at least two years, in accordance with the proportion of the share capital that such shares represent. Moreover, the duration of the registration shall start from the entry into force of the law on 2 April 2014, insofar as the bylaws (statuts) of SCOR do not contain any provisions on double voting rights. Furthermore, the bylaws (statuts) do not stipulate any limitation of voting rights. Therefore, the shareholders of the Company do not currently have different voting rights.
19.3 Special report of the auditors on regulated agreements and commitments To the Shareholders,
In our capacity as statutory auditors of your company, we hereby report on certain related party agreements and commitments. We are required to inform you, on the basis of the information provided to us, of the terms and conditions of those agreements and commitments indicated to us, or we would have identified performing our role. We are not required to comment as to whether they are beneficial or appropriate or to ascertain the existence of any such agreements and commitments. It is your responsibility, in accordance with Article R. 225-31 of the French commercial code (Code de Commerce to evaluate the benefits resulting from these agreements and commitments prior to their approval.
Mr. Denis Kessler as Chairman and Chief Executive Officer of SCOR SE and as Member of the Board of Directors of BNP Paribas and Mrs. Fields Wicker-Miurin as Member of the Board of Directors of SCOR SE and BNP Paribas.
Amendment to the additional pension plan subject to Article 39 of the French Tax Code (Code Général des Impôts).
Agreements and commitments already approved by previous Annual General Meeting of the shareholders
Mr. Denis Kessler as Chairman and Chief Executive Officer of SCOR SE.
The Board of Directors, at its meetings of 4 May and 27 July 2011, in accordance with articles L. 225-38 and L. 225-421 of the French Commercial Code, and upon the recommendation of the Compensations and Nominations Committee, renewed the commitments for the benefit of the Chairman and Chief Executive Officer, which had been decided by the Board of Directors on 21 March 2006 and amended on 12 December 2008. These commitments to the Chairman and Chief Executive Officer have been approved under the fifth resolution adopted at the Mixed Shareholders' Meeting of 3
At its meeting of 30 July 2014, the Company's Board of Directors authorized and approved, pursuant to Article L. 225-38 of the French Commercial Code, the signature of amendment #6 to the Multicurrency Revolving Letter of Credit Facility Agreement signed between SCOR SE and BNP Paribas on 23 December 2008 and amended on 24 June 2010, 5 September 2011, 14 November 2011, 20 December 2012 and 7 June 2013 (hereinafter as amended, the Convention) in order to modify the financial covenants contained in the Convention.
Amendment #6 principally aims at extending the maturity date of the Convention to 31 December 2016 and at modifying some of the financial conditions of the Convention due to the evolution of the Group.
The companies party to the amendment #6 are SCOR SE, SCOR Global P&C SE, SCOR Global Life SE, SCOR Switzerland AG and SCOR Global Life Reinsurance Ireland LTD. The amendment # 6 was not yet signed. The Convention, as modified by subsequent amendments, gave rise to remuneration in compliance with market practices.
The performance condition (C_n) established by the Board of Directors on the recommendation of the Compensations and Nominations Committee will be achieved for the year n is at least three of the four conditions below are satisfied: (A) SCOR's financial rating by S&P must be maintained to a minimum “A” on average in the years n-1 and n-2; (B) SCOR Global P&C’s net combined ratio must be less than or equal to 102% on average in the years n-1 and n-2; (C) SCOR Global Life’s technical margin must be higher than or equal to 3% on average in the years n-1 and n-2; (D) The SCOR Group’s return on equity "ROE" must be higher by 300 base points than the risk-free rate on average in the years n-1 and n-2.
In case of recognition of the achievement of the performance condition (C_n) by the Board of Directors, based on the recommendation of the Compensations and Nominations Committee, the indemnity for the last two events mentioned above will be paid to the Chairman and Chief Executive Officer as soon as possible.
At its meeting of 13 November 2007, the Board of Directors authorized the signature of an agreement with BNP
This agreement between SCOR and BNP Paribas was signed on 20 October 2008. It gave rise to the payment by SCOR SE to BNP Paribas of non-material amounts during the 2012, 2013 and 2014 financial year.
The Board of Directors’ meeting held on the 18 March 2008 and the 26 August 2008 authorized the signature by its Chief Executive Officer, pursuant to Article L.225-38 of the French Commercial Code, with the power of delegation, of legal documentation relating to the notional cash-pooling agreement and in particular, the Intragroup Cash Management. Agreement contract signed on 20 October 2008, by which participating companies give the power to SCOR SE for the management of cash-pooling.
The following entities of the Group have been authorized to participate in the cash-pooling scheme during a first phase:  SCOR SE,  SCOR Global P&C SE,
 SCOR Global P&C Rappresentaza generale per l’Italia (branch)  SCOR Global Life Iberica Sucursal (branch),
 SCOR Global Life Reinsurance UK Ltd (which became SCOR Global Life SE UK Branch) (branch),  SCOR Global Life Reinsurance Services UK Ltd,
Authorization to execute a Master Trust Agreement with BNP Paribas and/or one of its subsidiaries (trustee), SCOR SE and SCOR Global Life SE (grantors, jointly and severally liable) and Transamerica Corp. (beneficiary). Related Persons
At its meeting of 22 March and 27 July 2011, the Company’s Board of Directors authorized, pursuant to Article L.225-38 of the French Commercial Code, the signature of a Master Trust Agreement with BNP Paribas and/or one of its subsidiaries on market conditions. On the same Board meeting, SCOR SE accepted to be jointly and severally liable with
Stand-By Letter of Credit Facility Agreement with BNP Paribas dated 23 December 2008, as amended by successive amendments. Related Persons
Mr. Denis Kessler as Chairman and Chief Executive Officer of SCOR SE and as member of the Board of Directors of BNP Paribas regarding the original agreement and its amendments #1 to # 4 and Mr. Denis Kessler as Chairman and Chief Executive Officer of SCOR SE and as member of the Board of Directors of BNP Paribas, and Mrs. Fields WickerMiurin as member of the Board of Director of SCOR SE and BNP Paribas, regarding amendment # 5. Terms
As its meeting of 26 August 2008, the Company’s Board of Directors authorized, pursuant to Article L. 225-38 of the French Commercial Code, the signature of the Stand-By Letter of Credit Facility Agreement (the “Facility Agreement”), finalized with BNP Paribas, for the issue of stand-by letters of credit (“SBLC”), with regard to the Group’s insurance and reinsurance activity for a maximum amount up to USD 400,000,000.
Under the terms of the Facility Agreement, BNP Paribas made a credit line available to the concerned Group’s companies, under the conditions stipulated in the Facility Agreement, in a maximum principal amount of USD 400,000,000 to be made available through the issuance of SBLC or counter-guarantees intended to allow the concerned company to guarantee the execution of its commitments under its insurance and reinsurance operations, for a period of use running from 2 January 2009 to 31 December 2011. In order to guarantee its obligations under the terms of the Facility Agreement, each Group companies which is a party to the Facility Agreement granted/will grant a senior pledge on a financial instruments account to BNP Paribas under the terms of a pledge agreement entered/to be enter into with BNP Paribas (and the related pledge declaration) and pledged/will pledge (i) on the date of the signature of the pledge agreement, a number of OATs for a minimum amount equal to EUR 5,000; (ii) on 2 January 2009, an additional number of OATs for an amount equivalent to the value in EUR of 55% of the SBLCs (corresponding to the letters of credit issued under the old credit agreement and assumed and extended by BNP Paribas); and (iii) to pledge before each new utilization a number of OATs for an amount equivalent to the value in EUR of 55% of the amount of the new utilization.
The bank fees stipulated under the Facility Agreement are in line with market standards for this type of transaction. On 28 April 2010, the Company’s Board of Directors authorized the signature by SCOR SE of the amendment #1 to the Facility Agreement with BNP Paribas dated 23 December 2008, in order to include the letter of credit dated 8 August 2008 regarding the "Initial Letters of Credit" subscribed by SCOR Global Life SE, increase the maximum amount to USD 550 000 000, update the regulatory references with regard to the pledge of financial instruments.
The companies party to this amendment are SCOR SE, SCOR Global P&C SE, SCOR Global Life SE, SCOR Switzerland AG et SCOR Rückversicherung (Deutschland) AG (absorbed by SCOR Global Life SE on 19 October 2010). The other companies within the Group could equally benefit from this agreement as amended.
At its meeting of 22 March and 27 July 2011, the Company’s Board of Directors authorized, pursuant to Article L. 225-38 of the French Commercial Code, the amendment #2 to the Facility Agreement with BNP Paribas in order to allow the accession of SCOR International Reinsurance Ireland Ltd (“SIRI”) (formerly known as Transamerica International Reinsurance Ireland Ltd) as additional borrower after the closing of its acquisition, allow to put in place SCOR Global Life SE’s joint and several liability for the benefit of SIRI, exclude SCOR Rückversicherung (Deutschland) AG (absorbed by SCOR Global Life SE on 19 October 2010) from the scope of the Facility Agreement, update the list of existing guarantees and securities. The companies party to this amendment are SCOR SE, SCOR Global P&C SE, SCOR Global Life SE and SCOR Switzerland AG. The other companies within the Group could equally benefit from this agreement as amended.
Amendment #2 to the Facility Agreement was signed on 5 September 2011. Pursuant to an accession letter dated 19 September 2011 SIRI benefitted from the Facility Agreement. SCOR Global Life Reinsurance Ireland PLC has been subrogated into the rights and obligations of SCOR International Reinsurance Ireland
On 25 April 2013, the Board of Directors of SCOR SE authorized and approved the signature by SCOR SE, pursuant to Article L. 225-38 of the French Commercial Code, of the amendment #5 to the agreement of credit with BNP Paribas on 23 December 2008 and amended on 24 June 2010, 5 September 2011, 14 November 2011 and 20 December 2012, to modify the financial conditions applicable to the convention .
Amendment #5 mainly aims at extending the maturity date of the Convention to 31 December 2015 and at modifying some of the financial conditions of the Convention due to the evolution of the Group.
Terms On 25 April 2013, the Board of Directors of SCOR SE authorized the signature by SCOR SE, pursuant to Article L. 22538 of the French Commercial Code, of a Short-term Facility Agreement signed between SCOR SE, BNP Paribas and Deutsche Bank, in the context of the financing of the acquisition of Generali U.S.A Life Reassurance Company, with a 16 month duration, and a total amount of USD 500,000,000. The Facility Agreement was signed on 15 July 2013.
The Convention gave rise to a remuneration in accordance with market practice during the financial year 2014.
French original signed by the Statutory Auditors by the Company for the benefit of:  managers of the Group (cadres de direction) within the meaning of the professional agreement of 3 March 1993, who were exercising their activity within the Group on the date on which the additional pension plan took effect;  executives of the Group, who had entered into an employment contract but were subject to France's general social security regime and to the additional pension benefits of ARRCO and AGIRC and were discharging their duties on the date on which the additional pension plan took effect.
 The consolidated financial statements as at 31 December 2012 are included from pages 197 to 299 and the auditors’ report on these consolidated financial statements as at 31 December 2012 is included from pages 300 to 302 of the Registration Document filed with the Autorité des marchés financiers on 6 March 2013 under Number D.13-0106, (and from pages 190 to 287 and from pages 288 to 289, respectively, of the free translation into English of the above mentioned Registration Document. The translation is available on SCOR’s website www.scor.com).
SHAREHOLDERS' EQUITY AND LIABILITIES As at 31 DECEMBER In EUR million 2014 2013 Shareholders’ equity - Group share Note 13 5,694 4,940 Share capital 1,518 1,518 Additional paid-in capital 841 842 Revaluation reserves 174 21 Consolidated reserves 2,754 2,119 Treasury shares (139) (142) Net Income for the year 512 549 Equity based instruments 34 33 Non-controlling interests 35 40
In EUR million 2014 2013 2012 Gross written premiums Note 2 11,316 10,253 9,514 Change in unearned premiums (178) (75) (147) Gross earned premiums 11,138 10,178 9,367 Other income and expense (49) (65) (34) Investment income Note 20 637 517 623 Total income from ordinary activities 11,726 10,630 9,956 Gross benefits and claims paid (7,835) (7,054) (6,613) Gross commission on earned premiums (2,028) (1,929) (1,909) Net results of retrocession Note 21 (385) (453) (189) Investment management expenses Note 22 (40) (36) (30) Acquisition and administrative expenses Note 22 (414) (373) (349) Other current operating expenses Note 22 (153) (155) (177) Total other current operating income and expenses (10,855) (10,000) (9,267)
CURRENT OPERATING RESULT 871 630 689 Other operating expenses (71) (49) (50) Other operating income 26 - 6
In EUR Earnings per share (Basic) Note 23 2.75 2.96 2.28 Earnings per share (Diluted) Note 23 2.72 2.91 2.24
In EUR million 2014 2012 Consolidated net income 509 549 418 Other comprehensive income 482 (216) 207 Items that will not be reclassified subsequently to profit or loss
(36) 6 (8) Remeasurements of post-employment benefits (43) 9 (16) Taxes recorded directly in equity Note 19 7 (3) 8 Items that will be reclassified subsequently to profit and loss 518 (222) 215 Revaluation - Available-for-sale financial assets 236 (89) 331 Shadow accounting (36) 29 8 Effect of changes in foreign exchange rates 361 (163) (20) Net gains / (losses) on cash flow hedges (8) 8 (25) Taxes recorded directly in equity Note 19 (38) 12 (81) Other changes 3 (19) (1) 2
COMPREHENSIVE INCOME, NET OF TAX 991 333 625 Attributable to: Non-controlling interests (3) - - Group share 994 333 625
(1) Of which EUR (15) million related to adjustments requested by ASEFA’s local regulator
FOR THE YEAR ENDED 31 DECEMBER In EUR million 2014 2013 2012 Net cash flow provided by / (used in) operations Note 12 894 897 761
Cash flows provided by / (used in) investing activities (1,397) (666) (438)
(1) In 2014, mainly related to the acquisition of two private equity investments, accounted for as investments in associates (2) Acquisitions and disposals of other insurance business investments also include movements relating to bonds and other short-term investments which have a maturity date of < 3 months, and are classified as cash equivalents (3) Of which EUR (2) million of dividends paid by MRM to non-controlling interests (4) Includes the repurchase of subordinated debt of USD (46) million (EUR (35) million), the redemption of MRM S.A. debt of EUR (33) million (including EUR
(73) Remeasurements of postemployment benefits 2 Comprehensive income, net of tax 625 Share-based payments -
(1) Fair value of non-controlling interest in MRM S.A. of EUR 36 million, adjustment of EUR (2) million and EUR (1) million for dividends relating to minority shareholders of CPP (2) Movements presented above relate to the issuance of shares on the exercise of stock options for EUR 20 million (EUR 10 million in share capital and
Net income for year ended 31 December 2014 - - - - - 512 - (3) 509 Other comprehensive income net of tax
The consolidated financial statements as at and for the year ended 31 December 2014 will be presented for approval at the Annual General Meeting which will take place on 30 April 2015.
SCOR’s consolidated financial statements for the years ended 31 December 2014, 2013 and 2012 have been prepared in compliance with IFRS issued by the International Accounting Standards Board (IASB) as adopted by the European Union (“EU”) and effective as at 31 December 2014. The term “IFRS” refers collectively to International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) and to Interpretations of the Interpretations Committees (Standing Interpretations Committee (SIC) and IFRS Interpretations Committee (IFRIC)) mandatorily applicable as at 31 December 2014. Refer to Note 1 (D) below for a detailed overview on the new and amended International Financial Reporting Standards that are relevant to SCOR and adopted by the Group as endorsed by the European Union applicable in 2014 and the standards which have been issued by the IASB during the period but have not been adopted by the European Union. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, and financial instruments (including derivative instruments) at fair value through profit or loss.
Certain reclassifications and revisions have been made to the financial information of the prior year to conform to the current year presentation. Revenues from Life reinsurance contracts that do not meet the risk transfer criteria were previously presented in “Investment income” and have been reclassified to “Other income and expenses” for all periods presented. Amounts reclassified were EUR 3 million and EUR 2 million for the years ended 31 December 2013 and 2012 respectively.
In accordance with IAS 1 - Presentation of financial statements, the Group has opted to present expenses by function in the statement of income. The costs are allocated to four categories (acquisition and administrative expenses, claims settlement expenses, investment management expenses and other current operating expenses) based on allocation keys which are determined considering management’s judgment. Hub shared service costs are allocated to the divisions using a headcount allocation key.
Critical judgments in applying SCOR’s accounting policies are required for consolidation of entities in which the Group holds less than 50% of the voting rights. SCOR consolidated funds in which it is the majority shareholder even if holding less than 50% of the voting rights, and acts as principal, i.e. it uses its decision making authority over the funds and its aggregated economic interest exposes SCOR to a variability of returns that indicates control.
The Group sponsors a number of catastrophe bond (“Cat bond”) notes issued by Atlas Special Purpose Vehicles (SPVs). The SPVs allow the retrocession of catastrophe losses and of extreme mortality events in the US, financed by the issuance of Cat bonds. In accordance with IFRS 10, these vehicles are not consolidated by the Group as SCOR does not control them and is not liable for any residual risks or benefits of ownership. For information on the extent of SCOR’s interest in the unconsolidated structured entities Atlas V, VI and IX refer to Note 8 – Derivative Instruments. Subsidiaries are consolidated from the time the Group takes control until the date control is transferred outside the Group or control ceases. Certain subsidiaries have been included within the Group financial statements under the equity method and are not fully consolidated on a line by line basis as they are immaterial to the Group consolidated financial statements.
EUR per foreign Ending rate Average rate currency unit As at 31 December 2013 Q4 2013 Q3 2013 Q2 2013 Q1 2013 USD 0.7251 0.7329 0.7582 0.7623 0.7602 GBP 1.1995 1.1955 1.1705 1.1708 1.1695 CAD 0.6816 0.6940 0.7379 0.7455 0.7491
 As a consequence of the new IFRS 11 and IFRS 12 standards, IAS 28 has been renamed IAS 28 - Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates. The amendments to IAS 28 do not impact the Group’s financial position or performance.
The following standards relevant to SCOR and expected to have a significant impact on its consolidated financial statements have been issued by the International Financial Reporting Standards Board but are not yet effective or have not been endorsed by the European Union:  On 24 July 2014 the IASB published IFRS 9 – Financial Instruments. The final version of IFRS 9 replaces the previously published versions of IFRS 9 on classification and measurement and hedge accounting. It also replaces IAS 39 – Financial Instruments: Recognition and measurement and covers classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018 with earlier application permitted. IFRS 9 requires financial assets to be classified based on the business model for managing the financial assets and their contractual cash flow characteristics. Based on their classification financial assets will be measured at amortized cost, fair value though OCI or fair value through profit or loss. The new impairment model requires recognition of expected credit losses based on available historical, current and forecast information. The hedging model included in IFRS 9 aligns hedge accounting more closely with risk management but does not fundamentally change the types of hedging relationships or the requirements to measure and recognize hedge effectiveness. The European Union has not yet endorsed IFRS 9. Its application will affect the classification and measurement of the Group’s financial assets as more financial assets are expected to be accounted for at fair value through profit or loss. SCOR’s impairment policies will also be affected as impairments will be recognized based on expected credit losses and no longer based on incurred credit losses only. There are no significant changes expected for the hedge accounting as applied by SCOR. The Group will determine the impacts of IFRS 9 on its financial position and performance as well as on disclosures in more detail.
Goodwill is initially measured at cost being the excess of the cost of the business combination over the fair value of the Group’s share of the net assets of the acquired company and is included in intangible assets. If the business combination is achieved in stages, the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.
A gain from bargain purchase is generated when the fair value of the net assets acquired by the Group exceeds the acquisition price and is recognized in the statement of income from the date of acquisition. After initial recognition, goodwill is measured at cost less any accumulated impairment. At least annually, goodwill is tested for impairment.
The VOBA is amortized over the lifetime of the underlying reinsurance portfolio based on schedules derived from the run-off patterns of expected profits calculated for future closing dates. Cash flow projections for the acquired portfolio and non-economic assumptions are assessed regularly and updated in the actuarial calculations. The review of cash flow projections recognizes changes in the portfolio from special events like withdrawals or recaptures of treaties. The subsequent measurement of VOBA is consistent with the measurement of the related reserves. VOBA amortization schedules are adjusted consistently. VOBA is subject to impairment testing performed via the liability adequacy test.
VOBA also includes the intangible asset related to the acquisition of the business portfolio of ReMark Group BV (“ReMark”) to reflect the substance of the stream of expected future profits.
Other intangible assets consist primarily of customer related intangible assets arising from Non-Life business combinations and purchased software or development expenditure related to software. Amortization for other intangible assets with finite lives is calculated using the straight line method.
Investment properties acquired through financial lease agreements are recorded on the balance sheet as assets based on the present value of future rental payments and any purchase option. Subsequent to the initial recognition, they are accounted for as investment properties at cost, net of accumulated depreciation and impairment losses. The corresponding debt is recorded under “financial liabilities” and is amortized based on the effective interest rate method. The Group does currently not hold finance leases.
Available-for-sale assets include non-derivative assets that are either classified as available for sale or not allocated to another category.
Available-for-sale financial assets are recorded at their fair value. Unrealized gains and losses and the respective foreign exchange resulting from variations in the fair value of a non-monetary available-for-sale asset are recorded directly in shareholders’ equity. Variations due to foreign exchange for monetary available-for-sale assets are recorded through income. When an asset is sold, the accumulated gains and losses included in equity are transferred to realized gains and losses from the sale of investments in the statement of income, net of any amounts previously recorded through income.
(b) Financial assets at fair value through income This category includes financial assets held for trading purposes and those designated at fair value through income upon initial recognition in the financial statements. Gains and losses from changes in the fair value of financial assets classified under this category are recognized in the statement of income in the period in which they occur.
An embedded derivative is a component of a hybrid instrument which includes a non-derivative host contract, which causes part of the hybrid instrument’s cash flow to vary in the same way as that of a freestanding derivative. A material embedded derivative is separated from the host contract and is recognized as a derivative:  when its economic features and risks are not closely linked to the economic features of the host contract;  where the embedded instrument has the same conditions as a separate derivative instrument; and  where the hybrid instrument is not assessed at fair value through the statement of income.
(b) Hedging instruments A hedging instrument is a designated derivative instrument or, in the case of a single foreign currency hedge, a designated non-derivative asset or liability for which the fair value or cash flows offset variations in the fair value or cash flows of the hedged item.
A derivative instrument designated as cash flow hedge is initially recognized at fair value on the date on which the derivative contract is entered into. The effective portion of the gain or loss on the hedging instrument is recognized in other comprehensive income in the cash flow hedge reserve, while the ineffective portion is recognized in the income statement. Amounts taken to other comprehensive income are transferred to the income statement when the hedged transaction effects the income statement, such as when hedged financial income or financial expense is recognized or when the forecast sale or purchase occurs.
The fair value of financial instruments that are actively traded in organized financial markets is determined by reference to quoted market bid prices, at the close of business on the balance sheet date. If quoted market prices are not available, reference can also be made to broker or dealer price quotations.
The level in the fair value hierarchy within which the fair value measurement is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement. Assessing the significance of a particular input to the fair value measurement requires judgment, considering factors specific to the asset or liability. If a fair value measurement uses observable inputs that require significant adjustments based on unobservable inputs, then this measurement is a Level 3 measurement.
For available-for-sale equity securities which are listed on an active market, a line-by-line analysis is performed when there has been a decline in fair value as compared to the initial purchase price of more than 30%, or a consistent unrealized loss over a period of more than 12 months. The different factors considered in this analysis include the existence or inexistence of significant adverse changes in the technological, market, economic or legal environment in which the issuer operates. After consideration of these factors if a security remains unimpaired, the Group ultimately considers objective evidence of impairment, as per IAS 39, by reference to three further key criteria being the existence or not of:  a consistent decline of more than 30% for 12 months; or
Share capital Ordinary shares are classified in shareholders’ equity when there is no contractual obligation to transfer cash or other financial assets to the holders.
Dividends Dividends declared on ordinary shares are recognized as a liability when such dividends have been approved by shareholders at the relevant annual general meeting.
liability development to the same degree in the future. Thus, actual losses and policy benefits may deviate, perhaps significantly, from estimates of reserves reflected in the Group’s consolidated financial statements.
In the Life business, policy linked liabilities include mathematical reserves, unearned premium reserves and claim reserves.
Mathematical reserves are calculated underwriting reserves relating to expected claims and benefits of ceding companies in Life reinsurance. Mathematical reserves are estimated using actuarial methods on the basis of the present value of future payments to cedents less the present value of premium still payable by cedents. The calculation includes assumptions relating to mortality, morbidity, longevity, disability, lapses, expected future interest rates and expenses. Actuarial principles used allow an adequate safety margin for the risks of change, error and random fluctuation. 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).
Shares of retrocessionaires in the insurance and investment liabilities are calculated according to the contractual conditions on the basis of gross reserves. Allowances are established for estimated credit risks.
The reserve for unearned premiums represents the portion of premiums written that relate to the unexpired terms of contracts and policies in force. Such reserves are computed by pro-rata methods based on statistical data or reports received from ceding companies. Reinstatement premiums are estimated after the occurrence of a significant loss and are recorded in accordance with the contract terms based upon paid losses and case reserves reported in the period. Reinstatement premiums are earned when written.
In reinsurance, the costs directly associated with the acquisition of new contracts, mainly comprising commissions, are recorded as assets on the balance sheet, to the extent that contracts are profitable. They are amortized on the basis of
the residual term of the contracts in Non-Life, and on the basis of the expected recognition of future margins for Life contracts.
For the Non-Life segment, the test is performed in the event the ultimate underwriting combined ratio is in excess of 100% to the unearned premium reserve, net of deferred acquisition costs. The liability adequacy test is performed on the level of the actuarial segment and then aggregated at the entity level.
Premiums payable in respect of reinsurance ceded are recognized in the period in which the reinsurance contract is entered into and includes estimates where the amounts are not determined at the balance sheet date. Ceded premiums are expensed over the period of the reinsurance contract in the same manner as assumed business. A reinsurance asset is recognized to reflect the amount estimated to be recoverable under the reinsurance contracts in respect of the outstanding claims reported under reinsurance liabilities assumed. The amount recoverable from reinsurers is initially valued on the same basis as the underlying claims provision except in the case of non-proportional retrocession whether by risk or by event, where it is SCOR policy to only recognize case or IBNR recoveries upon confirmation of the occurrence of a loss booked which triggers the retrocession contract.
For the measurement of deferred acquisition costs, value of business acquired and reserves recognized for different insurance portfolios, SCOR applies the shadow accounting principles stipulated in IFRS 4. As the amortization of DAC (for Life) and VOBA is calculated using expectations for estimated revenues from investments and the measurement of reserves is based on the discount rate reflecting directly the performance of assets, relevant parts of the recognized unrealized gains and losses from financial investments are considered as shadow DAC, shadow VOBA and shadow reserves and offset directly in equity. Impairment of shadow DAC and shadow VOBA for the life business is included within the liability adequacy testing conducted by SCOR Global Life.
IFRS 4 provides for the separation of embedded derivatives in insurance contracts when these hybrid contracts are not assessed at fair value through income, and when the features of the embedded derivatives are not closely linked with the features and risks of the host contract, and when the embedded derivative meets the definition of a derivative instrument. Embedded derivatives which meet the definition of an insurance contract are not separated from the contract in the financial statements.
In assessing the Group’s liability for these plans, the Group uses external actuarial valuations which involve critical judgments and estimates of mortality rates, rates of employment turnover, disability, early retirement, discount rates, future salary increases and future pension increases. These assumptions may differ from actual results due to changing economic conditions, higher or lower withdrawal rates or longer or shorter life spans of participants. These differences may result in variability of pension income or expenses recorded in future years. Actuarial gains and losses arising from experience adjustments and the effects of changes in actuarial assumptions are reflected in shareholders’ equity.
Changes in past service costs resulting from the adoption or modification of a defined benefit plan are fully and immediately recorded as income or expense.
Management assesses provisions, contingent assets and contingent liabilities and the likely outcome of pending or probable events, for example from lawsuits or tax disputes, on an ongoing basis. The outcome depends on future events that are by nature uncertain. In assessing the likely outcome of events, management bases its assessment on external legal assistance and established precedents. Provisions, contingent assets and contingent liabilities have also been assessed at the acquisition date for the entities acquired. Such positions are subject to revision as at the acquisition date while the initial accounting is not final. Any revision after the initial accounting is final is recognized in the statement of income in accordance with IFRS 3 – Business Combinations.
The current income tax charge is calculated on the basis of tax laws enacted or substantively enacted at the end of the reporting period in countries where the Group’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns. Assessing the outcome of uncertain tax positions requires judgments to be made regarding the result of negotiations with, and enquiries from, tax authorities in a number of jurisdictions. Provisions for tax contingencies require management to make judgments and estimates in relation to tax issues and exposures. Amounts provided are based on management’s interpretation of country specific tax law and the likelihood of settlement. Tax benefits are not recognized unless the tax positions are probable of being sustained. In arriving at this position, management reviews each material tax benefit to assess whether a provision should be taken against full recognition of the benefit on the basis of potential settlement through negotiation and/or litigation. Deferred taxes are recognized using the balance sheet liability method, for all temporary differences at the balance sheet date between the tax base of assets and liabilities and their carrying value on the balance sheet.
Deferred taxes are not provided in respect of temporary differences arising from the initial recognition of goodwill, or from goodwill for which amortization is not deductible for tax purposes, or from the initial recognition of an asset or liability in a transaction which is not a business combination and affects neither accounting profit nor taxable profit or loss at the time of the transaction. Deferred tax assets are recognized on net operating losses carried forward to the extent that it is probable that future taxable profit will be available to utilize those net operating losses carried forward. Management makes assumptions and estimates related to income projections to determine the availability of sufficient future taxable income. SCOR uses a discounted cash flow model comprised of an earnings model, which considers forecasted earnings, and other financial ratios of legal entities based on board approved business plans, which incorporate key drivers of the underwriting results. Business plans include assessments of gross and net premium expectations, expected loss ratios and expected expense ratios, together with actuarial assumptions. To the extent that net operating losses carried forward cannot be utilized or expire, there may be deferred income tax expenses recorded in the future.
Deferred tax assets and liabilities are offset, if a legally enforceable right exists to set off current tax assets and liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority. Deferred tax assets and liabilities are assessed at the tax rate applicable in the fiscal year in which the asset will be realized or the liability settled, based on the tax rates (and tax regulations) that have been enacted or substantially enacted at the balance sheet date.
Group Functions is not an operating segment and does not generate revenues. The costs in Group Functions are Group related costs that are not directly attributable to either the Non-Life or Life segments. Group Functions includes the cost of departments fulfilling duties for the benefit of the whole Group, such as the costs for Group Internal audit, Group Chief Financial Officer functions (Group Tax, Group Accounting, Group Consolidation and Reporting), Group Chief Operating Officer functions (Group Legal, Group Communication, Group Human Resources) and Group Chief Risk Officer expenses.
The following table sets forth the operating income for each of the Group’s operating segments and its corporate cost center for the financial years ended 31 December 2014, 2013, and 2012.
Other income and expenses excl. Revenues associated with financial reinsurance contracts
(7) 18 - - 11 (15) 5 - - (10) (2) 25 - - 23 Investment income 292 345 - - 637 245 272 - - 517 273 348 - 2 623 Investment management expenses (9) (25) (6) - (40) (10) (21) (5) - (36) (10) (15) (5) - (30) Acquisition and administrative expenses (204) (191) (19) - (414) (183) (178) (12) - (373) (165) (176) (8) - (349) Other current operating expenses 291 687 (107) - 871 203 511 (84) - 630 214 574 (101) (3) 689 Other operating expenses (15) (56) - - (71) (4) (45) - - (49) - (50) - - (50) Other operating income 9 17 - - 26 - - - - - 6 - - - 6 OPERATING RESULT (BEFORE IMPACT OF ACQUISITIONS)
The distribution by geographic region, based on the localization of the ceding company for treaty business and localization of the insured for facultative business, is as follows: FOR THE YEAR ENDED 31 DECEMBER SCOR Global Life SCOR Global P&C In EUR million 2014 2013 2012 2014 2013 2012 Gross written premiums 6,381 5,405 4,864 4,935 4,848 4,650 EMEA 2,103 2,068 1,954 2,651 2,724 2,614 Americas 3,498 2,744 2,462 1,355 1,263 1,235 Asia 780 593 448 929 861 801
The increase in gross written premiums of SCOR Global Life in 2013 and 2014 is mostly due to the acquisition of Generali U.S. which was completed on 1 October 2013.
Global P&C Total Goodwill 45 743 788 45 743 788 Value of business acquired 1,455 - 1,455 1,393 - 1,393 Insurance business investments 11,853 13,124 24,977 10,276 11,996 22,272 Cash and cash equivalents 655 205 860 885 629 1,514 Share of retrocessionaires in insurance and investment contract liabilities 434 761 1,195 410 730 1,140 Total assets 17,712 19,454 37,166 16,410 17,751 34,161 Contract liabilities (12,694) (13,145) (25,839) (11,850) (12,487) (24,337)
Americas Asia Total Insurance business investments 20,336 3,319 1,322 24,977 18,614 2,787 871 22,272 Share of retrocessionaires in insurance and investment contract liabilities 949 229 17 1,195 886 239 15 1,140 Total assets 29,792 5,073 2,301 37,166 27,856 4,291 2,014 34,161 Contract liabilities (19,187) (4,920) (1,732) (25,839) (18,439) (4,356) (1,542) (24,337)
The cash flows, by segment, are presented as follows: FOR THE YEAR ENDED 31 DECEMBER
Cash and cash equivalents at 1 January 885 629 1,514 680 786 1,466 576 705 1,281 Net cash flows from operations 286 608 894 296 601 897 227 534 761 Net cash flows from investing activities (233) (1,164) (1,397) (593) (73) (666) 26 (464) (438) Net cash flows from financing activities (355) 120 (235) 545 (652) (107) (157) 11 (146) Effect of changes in foreign exchange rates 72 12 84 (43) (33) (76) 8 - 8 Cash and cash equivalents at 31 December 655 205 860 885 629 1,514 680 786 1,466 20.1.6.3 NOTE 3 - ACQUISITIONS AND DISPOSALS
On 1 October 2013, SCOR Global Life Americas Holding Inc., a subsidiary of SCOR Global Life SE, acquired 100% of Generali U.S. Holdings, Inc. (“Generali U.S.”), the holding company of Generali's U.S. life reinsurance operations. The transaction encompassed the stock purchase of Generali U.S. and its operating subsidiaries, including Generali USA Life Reassurance Company (“Generali USA”) and the recapture of the retrocession agreements between Generali USA and Generali Spa. The transaction resulted in a gain from bargain purchase of EUR 197 million and was financed by SCOR through the use of own funds and a limited debt issuance, including a short-term financing agreement of USD 228 million, without the issuance of new shares. The short-term financing agreement was fully repaid during the first quarter of 2014.
GENERALI U.S.: FAIR VALUE OF ASSETS AND LIABILITIES ACQUIRED AS AT 1 OCTOBER 2013 Provisional and final
Assets Value of business acquired 453 Investments 867 Share of retrocessionaires in insurance and investments contract liabilities 96 Other assets 87 Cash and cash equivalents 583 TOTAL ASSETS 2,086 Liabilities Contract liabilities 1,046 Other liabilities 256 TOTAL LIABILITIES 1,302 Fair value of net assets 784 Consideration paid (573) Impact of foreign exchange (14) Gain from bargain purchase (2) 197
(1) Based on the EUR/USD exchange rate at the date of acquisition (2) Gain from bargain purchase valued at the 1 October EUR/USD exchange rate of 0.740192
Share of retrocessionaires in insurance and investments contract liabilities and contract liabilities
OPERATING RESULT (BEFORE IMPACT OF ACQUISITIONS) 12 Acquisition related expenses - Gain from bargain purchase -
The pro forma financial information as at 31 December 2013 is presented to illustrate the effect on the Group’s statement of income of the Generali U.S. acquisition as if the acquisition had occurred on 1 January 2013. The Generali U.S. information is based on the estimated revenues and net income of the acquired business for the twelve month period ended 31 December 2013 and includes estimates for the impact of purchase accounting. The pro forma financial information is not necessarily indicative of what would have occurred had the acquisition and related transactions been made on the dates indicated, or of the future results of the Group. The main assumptions included in the retrospective calculation relate to the following items: Investment income
Acquisition costs of EUR 9 million incurred before the close of the transaction were eliminated for pro-forma purposes. Additional EUR 7 million of acquisition related costs are included in pro forma adjustments.
Acquisition related gain from bargain purchase resulting from the fair value of net assets acquired exceeding the consideration paid was recognized as at 1 January 2013. This gain is shown as a pro forma adjustment.
The tax rates applied are 35 % for adjustments that occurred in the US and 12.5% for that occurred in Ireland. The total corporate income tax effect related to the afore-mentioned pro forma adjustments amounted to EUR 7 million, including the impact of the non-taxable gain from bargain purchase.
Forma In EUR million Generali U.S. Gross written premiums 10,044 854 - 10,898 Change in unearned premiums (75) - - (75) Gross earned premiums 9,969 854 - 10,823 Other income and expense (65) - - (65) Investment income 513 21 (3) 531 Total income from ordinary activities 10,417 875 (3) 11,289 Gross benefits and claims paid (6,893) (678) - (7,571) Gross commission on earned premiums (1,910) (79) - (1,989) Net results of retrocession (438) (42) - (480) Investment management expenses (36) (1) - (37) Acquisition and administrative expenses (367) (26) - (393) Other current operating expenses (155) - - (155) Total other current operating income and expense (9,799) (826) - (10,625)
OPERATING RESULT (BEFORE IMPACT OF ACQUISITION) 569 49 (3) 615 Acquisition related expenses (6) - (17) (23) Gain from bargain purchase 30 - 197 227
OPERATING RESULT 593 49 177 819 Financing expenses (130) - (10) (140) Share in results of associates (13) - - (13)
The fair value of the assets acquired and liabilities assumed as at 29 May 2013 were as follows: MRM S.A.: FAIR VALUE OF ASSETS AND LIABILITIES ACQUIRED AS AT 29 MAY 2013 Provisional and final In EUR million Assets Real estate investments 259 Other assets 12 Cash and cash equivalents 57 TOTAL ASSETS 328 Liabilities Real estate financing 181 Other financial debt 11 Contingency reserves 2 Other liabilities 15 TOTAL LIABILITIES 209 Fair value of net assets 119 Consideration paid (53) Fair value of non-controlling interests (36) Gain from bargain purchase 30
Acquisition related expenses of EUR 3 million have been stated separately on the face of the consolidated statements of income for the year ended 31 December 2013.
The consolidated statement of cash flows includes the following impacts related to the MRM S.A. acquisition: In EUR million Acquisition of consolidated entity (53) Change in scope of consolidation 57 Cash used to redeem financial debt (26) Interest paid on financial debt (8)
Goodwill, which represents the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized, was EUR 788 million as at 31 December 2014 and 2013. The net book value of goodwill allocated to SCOR Global P&C and SCOR Global Life is disclosed in Note 2 – Segment information.
For the purposes of impairment testing, goodwill acquired in a business combination is allocated by SCOR to the groups of cash generating units that are expected to benefit from the profitability and synergies of the business combination. SCOR groups its CGUs by its operating segments, SCOR Global P&C and SCOR Global Life. This is consistent with the way that SCOR manages and monitors its business and cash flows. In order to estimate the fair value of SCOR Global P&C for the purpose of impairment testing, SCOR uses a discounted cash flow model comprised of an earnings model, which considers forecasted earnings and other financial ratios of the reportable segment over a five year period. The first two years are based on Board-approved business plans and the last three are extrapolated using an approach based on past experience. Business plans include assessments of gross and net premium expectations, expected loss ratios and expected expense ratios together with actuarial assumptions such as the coefficient of variation on ultimate net reserves together with assumptions as to the mean time to payment of existing reserves and future business. Premium income beyond this period is extrapolated using a growth rate of 8%. SCOR uses risk free interest rates per currency. The estimated Group cost of capital is 7.33% as derived from the Capital Asset Pricing Model (CAPM). For SCOR Global Life, goodwill is tested for impairment with reference to the inputs and methodology that SCOR applies in calculating the embedded value of the segment. Market Consistent Embedded Value (MCEV) is a measure of the consolidated value of shareholders’ interests in the covered business. The MCEV represents the present value of shareholders’ interests in the earnings distributable from assets allocated to the covered business after sufficient allowance for the aggregate risks in the covered business. The allowance for risk is calibrated to match the market price for risk where reliably observable. The MCEV consists of the Shareholder Net Worth (market value basis of equity), and Value of In-Force covered business (VIF). The VIF is comprised of Present Value of Future Profits, projected over the life of the portfolio and based on contractual cash-flows. Key assumptions are morbidity, mortality and lapse rates. Mortality/morbidity are based on external tables, adjusted based on internal past experience. Lapses are also based on internal past experience. SCOR calculates and publishes an MCEV in line with the principles of the CFO Forum. For the 2013 embedded value, discount rates used were based on par swap rates ranging between 0.09% and 12.28% depending on the currency and the duration adjusted for credit risk and extrapolation. Management believes that any reasonably possible change in the key assumptions on which SCOR Global P&C and SCOR Global Life recoverable amounts are based would not cause their carrying amount to exceed their recoverable amount. As part of the impairment testing, SCOR assesses whether the recoverable amount of operating units is at least equal to the total carrying value of operating units (including goodwill). If it is determined that an impairment exists, the total carrying value is adjusted to the recoverable amount. Any impairment charge is recorded in income in the period in which it arises.
The annual goodwill impairment tests conducted for both SCOR Global P&C and SCOR Global Life segments show recoverable amounts in excess of the respective total carrying values. Consequently, no goodwill impairment charges were recognized for the years ended 31 December 2014, 2013 and 2012.
The Group amortizes its other intangible assets with a finite life over a one to ten year period dependent on the specific circumstances of each arrangement. The additions during the year ended 31 December 2014 of EUR 30 million comprise mainly software development cost capitalized relating to the Group’s general ledger, technical accounting system and internal model of the Group.
Intangible assets with an indefinite life are tested for impairment annually. The price of the Lloyd’s syndicate participations from the Lloyd’s auction process are key inputs to the impairment tests conducted, which demonstrated that there are no indicators of impairment.
The additions to tangible assets in 2013 were mainly related to the acquisition of an additional unit in the Madrid office (SGL SE) and to the acquisition of office space in Singapore in a building in state of future completion.
(1) Including EUR 16 million reversal of amortization due to intangible assets disposals.
of EUR 17 million. These additions are partially offset by the sale of office space in a building also located in Singapore, on November 17th 2014.
In October 2013, SCOR Reinsurance Asia Pacific PTE Ltd. entered into contract to acquire two floors in a building still under construction in Singapore and has purchased four units of an additional floor in 2014. The total acquisition price estimated, including fees, is SGD 76 million as at 31 December 2014 (SGD 67 million as at 31 December 2013). As at 31 December 2014, SGD 24 million (EUR 16 million) were recognized in the balance sheet. As at 31 December 2014, SCOR Reinsurance Asia Pacific PTE Ltd. did not have the right to use the building, which is contingent on completion of construction and fitting, expected to take place mid-2017. In 2014, SCOR has committed to acquire an office building in London. This acquisition is contingent on completion of construction and building delivery. In 2014, SCOR has paid a GBP 10 million deposit.
The insurance business investments of the Group can be analyzed as follows: Net book value as at 31 December In EUR million 2014 2013 Real estate investments Note 6 – (A), (C) 845 861 Equities Note 6 – (A) 726 734 Fixed income Note 6 – (A), (D) 13,958 11,333 Available-for-sale financial assets Note 6 – (A) 14,684 12,067 Equities Note 6 – (A) 417 322 Fixed income Note 6 – (A), (D) 33 47
The total amount of assets under management for third parties were EUR 789 million and EUR 307 million as at December 2014 and 2013 respectively, of which:  EUR 549 million (31 December 2013: EUR 225 million) are eliminated in Other liabilities for consolidation purposes. Of this amount, EUR 521 million (31 December 2013: EUR 200 million) represent insurance business investments.
Investments at fair value through income - Designated as such for their initial recognition 369 110 259 - - Loans and receivables 8,881 606 - - 8,275 Derivative instruments Note 6 – (B) 94 - 35 59 - TOTAL INSURANCE BUSINESS INVESTMENTS 22,272 11,380 1,621 59 9,212 Cash and cash equivalents 1,514 1,514 - - - INVESTMENTS AND CASH AS AT 31 DECEMBER 2013 23,786 12,894 1,621 59 9,212 Percentage 100% 54% 7% - 39%
The Group has certain investments which are valued based on models prepared by independent external third parties using market inputs. These instruments are primarily comprised of structured products, other than agencies, for which the market is considered active, private placements, inflation linked government assimilated bonds and specific alternative investments. Further detail on the valuation of these derivative instruments is included within Note 8 – Derivative Instruments.
Level 3: Investments at fair value determined using valuation technique not (or partially) based on market data Included within this category are those instruments whose fair value is not based on observable market inputs. These instruments are neither supported by prices from observable current market transactions in the same instrument, nor are they based on available market data. As at 31 December 2014 and 2013, the main asset class within the Level 3 fair value measurement category consists of derivative instruments primarily relating to the Atlas catastrophe and mortality bonds. Further detail on the valuation of these derivative instruments is included within Note 8 - Derivative Instruments.
Available for sale investments include EUR 68 million of investments which are measured at cost (2013: EUR 76 million). These investments include primarily equities and funds which are not listed. In 2014 and 2013 respectively, there were no material gains or losses realized on the disposal of available for sale investments which were previously carried at cost.
There have been no material transfers between Level 1 and Level 2 in 2014 and 2013 respectively. There were also no changes in the purpose of any financial asset that subsequently resulted in a different classification of that asset. The movement in Level 3 investments since 31 December 2013 is mainly due to foreign exchange impacts and the change in fair value of Atlas vehicles.
At 31 December 2014 In EUR million Equities - - - - - - - Fixed income - - - - - - - Available-for-sale financial assets - - - - - - - Derivative instruments 59 (40) (1) - - - - 19 Investments 59 (40) - - - - 19
Equities - - - - - - - Fixed income 2 - - - - (2) - Available-for-sale financial assets 2 - - - - (2) - Derivative instruments 81 (46) (1) - 24 (2) - - 59 Investments 83 (46) - 24 - (2) 59
Available-for-sale financial assets 8 - - - (6) - 2 Derivative instruments 133 (50) (1) - - (2) - 81 Investments 141 (50) - - (8) - 83
The EUR (40) million total losses recorded in the statement of income in 2014, represents EUR (40) million of change in fair value (2013: EUR (46) million; 2012: EUR (50) million) and no realized gains/losses (2013: Nil; 2012: Nil).
The properties held by the Group and considered as investment property are owned either by wholly-owned subsidiaries of SCOR, or by MRM S.A., a real estate investment trust, owned at 59.9% by SCOR SE. They consist of office buildings (wholly-owned subsidiaries and MRM S.A.), and retail buildings (MRM S.A.). The movements in the real estate investments and finance leases are analyzed as follows: In EUR million Real estate investments Finance Leases Total
Gross value at 31 December 2012 566 91 657 Foreign exchange rate movements - - - Additions 69 - 69 Disposal (36) - (36) Reclassification 91 (91) - Change in scope of consolidation 259 - 259 Gross value at 31 December 2013 949 - 949 Foreign exchange rate movements - - - Additions 60 - 60 Disposal (49) - (49) Reclassification - - - Change in scope of consolidation - - - Gross value at 31 December 2014 960 - 960 Cumulative depreciation and impairment at 31 December 2012 (39) (34) (73) Depreciation for the period (23) - (23) Impairment for the period - - - Disposal 8 - 8 Reclassification (34) 34 - Cumulative depreciation and impairment at 31 December 2013 (88) - (88) Depreciation for the period (25) - (25) Impairment for the period (3) - (3) Disposal 1 - 1 Reclassification - - - Cumulative depreciation and impairment at 31 December 2014 (115) - (115) Carrying value as at 31 December 2012 527 57 584 Carrying value as at 31 December 2013 861 - 861 Carrying value as at 31 December 2014 845 - 845
Fair value as at 31 December 2012 591 91 682 Fair value as at 31 December 2013 972 - 972 Fair value as at 31 December 2014 973 - 973
In 2014, SCOR Auber and MRM S.A. sold three buildings, resulting in a gain on sales of EUR 15 million. On 29 May 2013, SCOR acquired a 59.9% stake in the capital of MRM S.A., a listed real estate company, which resulted in a EUR 259 million increase in the gross book value of real estate investments. See Note 3 – Acquisitions and disposals for the detail of the MRM S.A. acquisition. In 2013, SCOR acquired a building located in Gentilly for EUR 38 million.
In 2013, SCOR sold one building and parking space in Paris for a total sale price of EUR 50 million providing a capital gain of EUR 30 million and MRM S.A. sold one of its buildings for a total sale price of EUR 10 million providing a capital gain of EUR 3 million. The Group exercised its option to purchase an investment property in Paris previously held under a finance lease at the end of the lease term on 25 June 2013. Net book value was EUR 57 million.
In 2012, SCOR acquired one building in Saint-Quentin-en-Yvelines in state of future completion. The asset was delivered in September 2013 (the lease started simultaneously) and is recorded at 31 December 2013 at a gross value of EUR 93 million (EUR 72 million as at 31 December 2012).
As at 31 December 2014 and 2013, the Group does not hold any investment property under a finance lease. Real-Estate financing is presented within Note 14 – Financial Debt.
(1) Discounted Cash Flows (DCF) approach might also be used for some real estate investments
As part of its real estate investment activities described above, SCOR leases its investment buildings. The leases generally conform to the local market conditions and have annual indexation clauses for the rental payments. The estimated minimum rental income is as follows: 2014 2013 In EUR million Minimum rental income Minimum rental income Less than one year 40 46 From one to five years 114 125 More than five years 31 50 TOTAL MINIMUM RENTAL INCOME 185 221
The rental income related to investment property was EUR 48 million in 2014 (2013: EUR 50 million) and the related direct operating expenses EUR 16 million (2013: EUR 15 million).
As at 31 December 2014 Available-for-sale 2,832 5,703 2,753 1,438 910 322 13,958 Fair value through income - - 33 - - - 33 Total fixed income securities as at 31 December 2014 2,832 5,703 2,786 1,438 910 322 13,991 As at 31 December 2013 Available-for-sale 2,417 4,669 2,205 1,113 729 200 11,333 Fair value through income 3 - 44 - - - 47 Total fixed income securities as at 31 December 2013 2,420 4,669 2,249 1,113 729 200 11,380
Net book value Net unrealized gains / (losses) Net book value Net unrealized gains / (losses) Government bonds & assimilated France 289 5 237 (4) Germany 5,364 29 4,449 (52) Covered bonds & Agency MBS 1,940 60 1,507 3 Corporate bonds 5,674 133 4,609 64 Structured & securitized products 1,013 (6) 815 - Total fixed income securities (2) 13,991 216 11,380 15
Unrealized gains and losses on available-for-sale investments (gross of tax) (1) 376 (104) 272 200 (140) 60
(1) Unrealized gains and losses on available for sale investments analyzed above exclude: • Gains and losses relating to foreign exchange of EUR (0.5) million (2013: EUR (12) million); • Shadow accounting of EUR (37) million (2013: EUR (1) million); • Non-controlling interests on mutual funds of EUR 6 million (2013: EUR 3 million); • Tax effects on above stated items of EUR (62) million (2013: EUR (16) million) • Unrealized gains and losses relating to funds withheld of EUR (5) million (2013: EUR (13) million)
As at 31 December 2014 Duration of decline in months Magnitude of decline < 12 12-18 18-24 > 24 Total ≤ 30% (7) - - - (7) > 30% ≤ 40% (1) - - - (1) > 40% ≤ 50% - - - - - > 50% - - - - - Total unrealized losses subject to an in-depth analysis
(1) - - - (1) Unrealized gains and other (1) - - - - 46 Net unrealized gains / (losses)
(1) Other includes two listed investments showing an unrealized loss of EUR 9 million and an unrealized gain of EUR 1 million (2013: unrealized loss of EUR 6 million).
On 9 December 2010, SCOR placed a Cat bond, Atlas VI Capital Limited Series 2010-1, which provided the Group with EUR 75 million of protection against European windstorms and Japanese earthquakes for a risk period extending from 10 December 2010 to 31 March 2014.
On 12 December 2011, SCOR placed a Cat 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 to 31 March 2015 for the European series. Atlas VI is a special-purpose vehicle incorporated under the laws of Ireland and its notes are placed with various institutional investors. In accordance with IAS 39 - Financial Instruments Recognition and Measurement, due to the absence of an ultimate net loss clause, the contract concluded between SCOR and this vehicle has been recognized as a derivative instrument. It is considered as balance sheet protection.
These transactions are recorded as derivative assets recognized at fair value through P&L and as other liabilities representing the value of interest payments. Atlas VI catastrophe bonds are valued using a cumulated expected loss model that is based on a combination of market inputs to the extent that trades in these instruments are active and catastrophe modeling tools developed by third party companies (AIR / RMS). These assets are disclosed as level 3 investments within insurance business investments (see Note 6 – Insurance Business Investments).
The significant unobservable inputs used in the valuation model are: Unobservable inputs Atlas VI Series 2011-2 (EUR 50 million) Expected loss related to European windstorms based on RMS / AIR model 1.74%
A significant catastrophic event (Europe windstorm) covered by the Atlas VI Series 2011-2 and occurring during the remaining coverage period of the bond, would have an increasing impact on the expected loss and on the fair value of the Atlas derivative instrument recorded.
The mortality RTC is based on a US population mortality index that has been weighted by age and gender in order to reflect SCOR Global Life’s portfolio in the US.
According to the structure of the RTC, a payment will be triggered if, at any time during the risk period, the observed index value exceeds the defined attachment point of 102%. At any index level between the attachment point and the exhaustion point of 104%, Atlas IX Capital Limited will pay to SCOR a pro-rata amount of the notional USD amounts.
The asset is disclosed as level 3 investment within insurance business investments (see Note 6 – Insurance Business Investments). Amounts recorded in the statement of income include transaction costs that are expensed at inception as financing expense. The changes in fair value through income as presented above are recognized as other operating expenses or other operating income.
Cash-flow hedge accounting is applied when the hedging relationship is determined to be highly effective. Effectiveness testing is performed at the inception of the hedging relationship and at each balance sheet date throughout the term of the hedge relationship. Where hedge effectiveness is not attained, the hedging instrument (interest rate swap) is measured at fair value through profit and loss from the date the hedge relationship ceases to be effective. As at 31 December 2014, the fair value of the interest rate swaps was a liability of EUR 30 million (2013: liability of EUR 26 million). The amount recognized in other comprehensive income in 2014 is EUR (4) million (2013: EUR 9 million). The amount recognized in the statement of income in 2014 is not significant (2013: EUR 1 million).
Cash-flow hedge accounting is applied. The fair value of the swaps is obtained from the banking counterparty using market inputs. As part of the usual analysis of accounts processes these third party valuations are checked for reasonableness against internal models. The total relating notional amount is CHF 1,215 million as at 31 December 2014 and 2013. Fair value of the swaps is EUR 16 million as at 31 December 2014 (EUR 3 million as at 31 December 2013). EUR (4) million of the fair value movement during the year 2014 was debited to the statement of income (2013: EUR (5) million) whereas EUR (4) million was debited to other comprehensive income (2013: EUR (1) million).
Included in the forward sales contracts at 31 December 2014 and 2013 respectively is a forward sale contract which has been designated as a hedge of a net investment (see Note 13 – Information on Share Capital, capital management, regulatory framework and shareholders’ equity).
The Group has investments that are accounted for using the equity method and are not individually material to the Group. The following table provides a summary of the aggregate amount of SCOR’s share of these investments.
Aggregate amount of the reporting entity’s share of net income (5) (13)
Accounts receivable from and payable to cedents and retrocessionaires are mostly due in less than one year. A complete aging of financial assets is included in Note 26 – Insurance and financial risk.
In EUR million 2014 2013 Cash and cash equivalents 599 794 Short-term deposits and investments 261 720 Cash and cash equivalents 860 1,514
The following table reconciles consolidated net income to net cash flow provided by (used in) operations as presented on the statement of cash flows: For the year ended 31 December In EUR million 2014 2013 2012 Consolidated Group net income 512 549 418 Realized gains and losses on investment disposals (181) 25 (54) Change in accumulated amortization and other provisions 108 (127) 55 Changes in deferred acquisition costs (120) (97) (97) Net increase in contract liabilities 533 487 256 Change in fair value of financial instruments recognized at fair value through income 33 7 57 Other non-cash items included in operating results (101) 66 34 Net cash flow provided by operations, excluding changes in working capital 784 910 669 Change in accounts receivable and loans 212 8 181 Cash flows from other assets and liabilities 3 - - Change in taxes receivables and payables (105) (21) (89) Net cash flow provided by operations 894 897 761
The number of ordinary shares which were issued and fully paid in circulation as at 31 December 2014, 2013 and 2012 were as follows: 2014 2013 2012 As at 1 January 192,757,911 192,384,219 192,021,303 Share capital increase – exercise of stock options – 31 January 2012 - - 17,486 Share capital increase – exercise of stock options – 29 February 2012 - - 20,112 Share capital increase – exercise of stock options – 31 March 2012 - - 131,447 Share capital increase – exercise of stock options – 30 April 2012 - - 6,359 Share capital decrease – decision of the Board of Directors – 3 May 2012 - - (216,250) Share capital increase – exercise of stock options – 31 May 2012 - - 2,500 Share capital increase – exercise of stock options – 30 June 2012 - - 1,568 Share capital increase – exercise of stock options – 31 July 2012 - - 4,000 Share capital increase – exercise of stock options – 31 August 2012 - - 38,559 Share capital increase – exercise of stock options – 30 September 2012 - - 186,490 Share capital increase – exercise of stock options – 31 October 2012 - - 113,322 Share capital increase – exercise of stock options – 30 November 2012 - - 5,566 Share capital increase – exercise of stock options – 31 December 2012 - - 51,757 Share capital increase – exercise of stock options – 31 January 2013 - 158,984 - Share capital increase – exercise of stock options – 28 February 2013 - 54,500 - Share capital increase – exercise of stock options – 31 March 2013 - 260,224 - Share capital decrease – decision of the Board of Directors – 25 April 2013 - (880,470) - Share capital increase – exercise of stock options – 30 April 2013 - 276,408 - Share capital increase – exercise of stock options – 31 May 2013 - 40,005 - Share capital increase – exercise of stock options – 30 June 2013 - 85,458 - Share capital increase – exercise of stock options – 31 July 2013 - 11,500 - Share capital increase – exercise of stock options – 31 August 2013 - 70,784 - Share capital increase – exercise of stock options – 30 September 2013 - 77,762 - Share capital increase – exercise of stock options – 31 October 2013 - 30,163 - Share capital increase – exercise of stock options – 30 November 2013 - 56,045 - Share capital increase – exercise of stock options – 31 December 2013 - 132,329 - Share capital increase – exercise of stock options – 31 January 2014 113,077 - - Share capital decrease – decision of the Board of Directors – 4 march 2014 (777,454) - - Share capital increase – exercise of stock options – 31 March 2014 114,194 - - Share capital increase – exercise of stock options – 30 April 2014 134,038 - - Share capital increase – exercise of stock options – 31 May 2014 47,725 - - Share capital increase – exercise of stock options – 30 June 2014 115,145 - - Share capital increase – exercise of stock options – 31 August 2014 43,127 - - Share capital increase – exercise of stock options – 30 September 2014 51,329 - - Share capital increase – exercise of stock options – 31 October 2014 5,160 - - Share capital increase – exercise of stock options – 30 November 2014 43,885 - - Share capital increase – exercise of stock options – 31 December 2014 43,342 - - As at 31 December 192,691,479 192,757,911 192,384,219 Average nominal price per share in EUR 7.8769723 7.8769723 7.8769723 Share capital in EUR 1,517,825,443 1,518,348,726 1,515,405,164
In 2012, the movements were due to the following operations:  After recording the creation of 216,250 new ordinary shares further to the exercise of stock options between 1 March 2011 and 30 April 2012, the Board of Directors held on 3 May 2012 decided to reduce the share capital by cancellation of 216,250 treasury shares for a total value of EUR 2 million.
In 2013, the movements were due to the following operations:  The Board of Directors held on 25 April 2013 decided to reduce the Group capital by cancellation of 880,470 treasury shares for EUR (15) million (EUR (7) million in share capital and EUR (8) million in additional paid-in capital).
The shares issued in 2014, 2013 and 2012 were issued at a nominal price of EUR 7.8769723 per share.
In the context of a contingent capital facility program, SCOR issued 9,521,424 warrants on 17 December 2010 to UBS, each warrant committing UBS to subscribe for two new SCOR shares (maximum amount of EUR 150 million - including issuance premium available per tranche of EUR 75 million each - including issuance premium) when the aggregated amount of the estimated ultimate net losses resulting from eligible natural catastrophes incurred by the Group (in its capacity as an insurer/reinsurer) reaches certain contractual thresholds in any given calendar year between 1 January 2011 and 31 December 2013 or if no drawdown already took place in the context of the agreement and SCOR’s share price drops below EUR 10.
Tranches not triggered have no impact on the dilutive earning per share, as related increase in capital did not take place.
The Group also holds buffer capital in addition to the solvency capital required to support the retained (after retrocession) risk profile. The aim of this extra economic capital is to absorb a significant amount of inherent volatility, thereby limiting the frequency of turning to the market to maintain the Group’s available capital above the required solvency capital. The primary source of capital used by the Group is equity shareholders’ funds and borrowings.
The Group also considers alternative sources of capital including reinsurance and securitization, as appropriate when assessing its deployment and usage of capital. The objective of the capital management policy is sustained and ensured through regular updates of forecasts and an annual strategic and financial planning process. The Group’s Board and Executive Management team regularly review the Group’s risk profile to ensure that the its risk appetite remains aligned with the Group’s strategy. The capital management process is ultimately subject to approval by the Board after a formal presentation to its risk committee.
Capitalization and indebtedness was comprised of the following: As at 31 December 2014 As at 31 December 2013 In EUR million Book value Book value Subordinated debts 1,743 1,379 Shareholders' equity at book value 5,729 4,980 Capitalization and indebtedness 7,472 6,359
(1) This is the ratio of Available Capital over SCR (Solvency Capital Requirements)
The Group actively monitors the regulatory capital requirements of each of its operating subsidiaries within this capital management framework. The Group is subject to applicable government regulation in each of the jurisdictions in which it conducts business, particularly in France, Switzerland, the US, the UK, Singapore, Hong Kong, Ireland, and Germany. Regulatory agencies have broad supervisory and administrative powers over many aspects of the insurance and reinsurance industries.
Under the Reinsurance Directive 2005/68/EC of 16 November 2005, adopted in France in late 2008, reinsurance companies and their subsidiaries situated in a country within the European Economic Area ("EEA"), are subject to state control of the head office country. The Group calculated its solvency based on consolidated IFRS financial statements adjusted to be consistent with French Generally Accepted Accounting Procedure (GAAP) requirements. This was first performed by the Group in 2008 and subsequently an update was performed each year at year end. The results of these assessments confirm that the Group meets the requirements of the “Solvency I” directive. The results for the 2014 assessment are not currently available since the Group performs such assessments to coincide with statutory filing requirements which fall due after the publication of this document.
INFORMATION ON RESERVES INCLUDED IN THE CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
The translation adjustment records the differences in exchange rates resulting from the conversion of the financial statements of foreign subsidiaries and branches. The movement in the translation adjustment is primarily due to the translation of accounts of the subsidiaries and branches not using EUR as the functional currency. In 2014, the Group hedged itself against certain movements in the net asset value of its US dollar denominated subsidiaries. These hedges were effective in 2014. As at 31 December 2014, the Group has one hedge of net investment remaining in place.
The Group reviews the functional currency of its entities on an ongoing basis to ensure they appropriately reflect the currency of the primary economic environment in which they operate. As at 1 January 2012, the functional currencies of two of the Group’s subsidiaries, Finimo Realty Pte Ltd and SCOR Reinsurance Asia Pacific Pte Ltd, were changed with prospective application from USD to SGD and from USD to KRW respectively. Also as at 1 January 2012, Zurich branch of SCOR SE changed its functional currency with prospective application from CHF to EUR. As at 1 January 2013, the functional currency of one group subsidiary, SCOR GLOBAL LIFE Reinsurance Ireland Ltd, was changed with prospective application from EUR to USD.
A breakdown of the movements in the various reserves is provided in Section 20.1.5 – Consolidated statements of changes in shareholders’ equity.
SCOR’s Combined General Meeting of 25 April 2013 resolved to distribute, for the 2012 fiscal year, a dividend of one euro and twenty cents (EUR 1.20) per share, being an aggregate amount of dividend paid of EUR 223 million, calculated
USD 100 million (1) 6/25/2029 9 9 15 15 EUR 100 million (1) 7/5/2020 93 93 93 93 EUR 350 million Perpetual 262 278 262 275 CHF 650 million Perpetual 551 572 542 561 CHF 315 million Perpetual 268 285 263 276 CHF 250 million Perpetual 208 223 204 211 CHF 125 million (1) Perpetual 103 103 - - EUR 250 million Perpetual 249 254 - - Total subordinated debt (2) 1,743 1,817 1,379 1,431 Investments properties financing 287 287 311 311 Own-use properties financing 182 182 186 186 Total real estate financing (1) 469 469 497 497 Other financial debt (1) (3) 20 20 177 177 TOTAL FINANCIAL DEBT 2,232 2,306 2,053 2,105
(1) Amounts are not publicly traded. Therefore the net book values are reflective of the fair value (2) Includes EUR 31 million accrued interests (31 December 2013: EUR 28 million) (3) A USD 228 million short-term funding line which financed in part the Generali U.S. acquisition was early repaid during the first quarter 2014.
 The liquidation or the complete sale or dissolution of the Company pursuant to the merger, consolidation or amalgamation with a third party, if such party fails to assume all obligations of the Company under the notes.
On 28 July 2006 SCOR issued a perpetual super-subordinated debt security (Tier 1 type) in an aggregate principal amount of EUR 350 million to finance the acquisition of Revios Rückversicherung AG. The bond issue, comprised of last-rank subordinated bearer certificates with a face value of EUR 50,000 bearing interest at an initial rate of 6.154% per annum then a floating rate indexed on the 3-month EURIBOR plus a margin of 2.90%, payable quarterly. There is no fixed redemption date but SCOR reserves the right to redeem, in part or in whole, the bonds as from 28 July 2016.
The debt includes a clause for mandatory settlement in cash if regulatory authorities or applicable legislation modify their ability to cover the solvency margin or equivalent. If this clause becomes applicable, the issuer must pay interest in cash even if no dividend has been paid, or proceed with the reimbursement of the notes in cash. Accordingly, the entire issue is considered as a financial debt. During 2009, the Group provided liquidity to both its perpetual super-subordinated debt security (Tier 1 type) (TSSDI EUR 350 million) and its EUR 100 million subordinated debt issuance (call date July 2010) resulting in acquisition of own debt of EUR 99 million at an average price of 46.5%. The purchase of this debt at a discount gave rise to a consolidated pre-tax profit of EUR 53.4 million.
On 2 February 2011, SCOR issued CHF 400 million perpetual subordinated notes, redeemable by SCOR each quarter as at payment of interest dates from 2 August 2016. The coupon has been set to 5.375% (until 2 August 2016) and 3month CHF LIBOR plus a margin of 3.7359% thereafter. SCOR has entered into a cross-currency swap which exchanges the principal into EUR and exchanges the CHF coupon on the notes to EUR 6.98% and matures on 2 August 2016. Refer to Note 8 – Derivative Instruments.
On 10 September 2012, SCOR issued CHF 250 million perpetual subordinated notes, redeemable by SCOR each quarter as at payment of interest dates from 8 June 2018. The strong market demand observed prompted the Group to extend its placements from CHF 250 million to a total of CHF 315 million on 24 September 2012. The settlement of the notes took place on 8 October 2012. The coupon has been set to 5.25% (until 8 June 2018) and 3-month CHF LIBOR plus a margin of 4.8167% thereafter.
On 10 September 2013, SCOR issued CHF 250 million perpetual subordinated notes, redeemable by SCOR each quarter as at payment of interest dates from 30 November 2018. The settlement of the notes took place on 30 September 2013. The coupon has been set to 5.00% until 30 November 2018 and 3-month CHF LIBOR plus a margin of 4.0992% thereafter. SCOR has entered into a cross-currency swap which exchanges CHF 250 million of the principal into EUR and exchanges the CHF coupon on the notes to EUR 5.8975% and matures on 30 November 2018. Refer to Note 8 – Derivative Instruments.
On 24 September 2014, SCOR placed CHF 125 million perpetual subordinated notes, redeemable by SCOR as at payment of interest dates from 20 October 2020. The settlement of the notes took place on 20 October 2014. The coupon has been set to 3.375% (until 20 October 2020), and resets every 6 years at the prevailing 6-year CHF midswap rate + 3.0275%.
On 25 September 2014, SCOR placed EUR 250 million perpetual subordinated notes, redeemable by SCOR as at payment of interest dates from 1 October 2025. The settlement of the notes took place on 1 October 2014. The coupon has been set to 3.875% (until 1 October 2025), and resets every 11 years at the prevailing 11-year EUR mid-swap rate + 2.7%.
On 29 May 2013, SCOR acquired a 59.9% stake in the capital of MRM S.A., a listed real estate company. This resulted in a EUR 181 million increase in real estate financing. EUR 33 million of these debts were redeemed during 2013 (including EUR 26 million done in the context of the acquisition by SCOR). As at 31 December 2014 real estate financing related to MRM S.A. properties amounts to EUR 132 million.
(3) (3) (4) Interest on perpetual subordinated debt (82) (70) (56) Atlas VI (set up costs) - (2) (2) Atlas IX (set up costs) - (1) - Finance lease - (1) (2) Real estate financing (17) (17) (18) Other financial costs (1) (43) (36) (24) TOTAL (145) (130) (106)
(1) The amounts presented in other financial costs include certain other Letter Of Credit charges, custodian and overdraft fees, amortization of issuance fees and other bank charges (commissions, etc.), and a gain on debt repurchase of EUR 0.5 million in 2014 (EUR 4 million in 2013 and EUR 10 million in 2012)
MATURITY The maturity profile of financial debt is included in Note 26 – Insurance and financial risk.
Reserves for post employment benefits Other reserves Total At 1 January 2013 113 9 122 Acquisition of a subsidiary 10 140 150 Current year provision 15 1 16 Used reserves (9) - (9) Reversal of unused reserves - - - Foreign exchange rate movements (2) (3) (5) Adjusted discount rate (9) - (9) At 31 December 2013 118 147 265 Acquisition of a subsidiary - - - Current year provision 1 (5) (4) Used reserves (15) (9) (24) Reversal of unused reserves - - - Foreign exchange rate movements 2 15 17 Adjusted discount rate 43 - 43 At 31 December 2014 149 148 297
These benefits amount to EUR 149 million and EUR 118 million at 31 December 2014 and 2013 respectively, and include post-employment benefits related to pension plans of EUR 146 million (2013: EUR 111 million) and long service awards provisions of EUR 3 million (2013: EUR 7 million).
Contract liabilities are subject to the use of estimates. Payments linked to these reserves are not usually fixed, either by amount or by due date. Liquidity information related to contract liabilities is included in Note 26 – Insurance and financial risk. An aging analysis of reinsurance assets is also included in Note 26 – Insurance and financial risk.
The next section of the table shows the portion of the initial year-end net reserves that was paid (claims paid) as at the end of subsequent calendar year. Claims paid are converted to EUR at the average foreign exchange rates of the period during which the payments are made and are not revalued to the initial foreign exchange rates at which the reserves were established. Additionally, payments include losses covered by unearned premium reserves.
The net incurred losses section is the sum of the paid claims and the change in claims reserves and IBNR at the average foreign exchange rate of the period.
A significant portion of SCOR Global P&C reserves relates to liabilities payable in currencies other than the euro. The fluctuations of the euro to those currencies are embedded in the data in the below table. The following tables present the consolidated ten-year loss development of our Non-Life operations on an IFRS basis and a three-year reconciliation of beginning and ending reserve balances on an IFRS basis. The IFRS loss development data is presented on a calendar year basis, as well as the reserve reconciliation data represents our allocation of incurred and paid losses and loss adjustment expenses between current and prior years on a calendar year basis.
The table below is a reconciliation of the beginning and ending liability for claims reserves and claims expenses of SCOR Global P&C for the years ended 31 December 2014 and 2013.
10,501 10,315 8,426 8,387 Average cost per claim (in EUR) (1) 17,827 15,134 3,971 3,484
The change in Life mathematical reserves for the years ended 31 December 2014 and 2013 was as follows: In EUR million 2014 2013 Gross mathematical reserves as at 1 January 7,834 7,238 Change in scope of consolidation - 812 Change in reserves from portfolio movements and actuarial calculation 43 (108) Impact of foreign exchange movements 288 (108) Gross mathematical reserves as at 31 December 8,165 7,834 Reinsurance Recoverable - - Ceded mathematical reserves as at 1 January (106) (257) Change in scope of consolidation - (9) Change in reserves from portfolio movements and actuarial calculation 39 172 Impact of foreign exchange movements 15 (12) Ceded mathematical reserves as at 31 December (52) (106) Net mathematical reserves as at 1 January 7,728 6,981 Net mathematical reserves as at 31 December 8,113 7,728
There can be no assurance that SCOR’s GMDB portfolios will not deteriorate in the future, which could have an adverse effect on SCOR’s business, present and future revenues, net income, cash flows, financial position, and potentially, on its share price.
Share of retrocessionaires contract liabilities - 352 805 28 12 -2 1,195 Securities pledged - 9 32 - - 414 455 Deposits received - 79 525 36 - 47 687 Letters of credit - 58 53 - - 23 134 Total collateral from retrocessionaires in favor of SCOR - 146 610 36 - 484 1,276 Share of retrocessionaires contract liabilities net of collateral
Securities pledged - 57 27 - - 428 512 Deposits received - 88 475 40 - 25 628 Letters of credit - 61 29 - - 82 172 Total collateral from retrocessionaires in favor of SCOR
- 206 531 40 - 535 1,312 Share of retrocessionaires contract liabilities net of collateral
(1) To limit credit risk related to retrocessionaires, certain unrated retrocessionaires are obliged to pledge assets to the value of their maximum potential contract liability, even though the actual retrocessionaire liability to SCOR recorded in the balance sheet is lower.
The post-employment benefits granted by the Group vary based on legal obligations and local requirements. Group employees are entitled to short-term benefits (paid leave, sick leave and profit sharing) and long-term benefits and postemployment benefits classified as defined benefit or defined contribution plans (pension).
The short-term benefits granted are recognized as an expense for the period by the different entities of the Group.
A plan amendment to the “congés de fin de carrière” and the “médailles du travail” in France occurred in the second quarter of 2014. The amendments concern the termination of the “congés de fin de carrière” on 1 January 2017 and the termination of the “médailles du travail” as at 14 July 2019. In addition, a temporary scheme called "compte senior" was implemented during the second quarter of 2014 and will be active to 31 December 2020. This scheme aims to provide, under conditions, a premium to employees going into retirement. The plan amendment resulted in a reduction of the defined benefit obligation. The corresponding income is recorded as a reduction of past service cost.
Generali: 5.42% 4.55% 2.36% 4.90% 3.24% Salary increase - - 2.00% 3.50% 2.50% Assumptions as at 31 December 2012 Discount rate 4.14% 4.30% 2.10% 5.30% 3.24% Salary increase - - 2.00% 3.50% 2.50%
Discount rates are defined with reference to high quality long-term corporate bonds with duration in line with the duration of the obligations evaluated. Management considers “AAA”, “AA” and “A” rated bonds to be high quality. An increase in the discount rate of 0.25% would result in a decrease in the estimated defined benefit obligation of EUR 13 million (2013: EUR 9 million) with the offsetting impact recorded in other comprehensive income.
A decrease in the discount rate of 0.25% would result in an increase in the estimated defined benefit obligation of EUR 13 million (2013: EUR 10 million) with the offsetting impact recorded in other comprehensive income.
(1) Actuarial (gains) / losses due to change in assumptions include for 2014 actuarial (gains) / losses due to change in financial assumptions for EUR 49 million (EUR (4) million in 2013) and actuarial (gains) / losses due to change in demographic assumptions for EUR 1 million (EUR 1 million in 2013).
America 2014 2013 2012 Accrued / (Prepaid) as at 1 January 118 78 18 22 113 73 22 18 93 59 23 11 Total pension
Benefits paid by employer - - - - - - - - - - - - Employer contribution (15) (3) (5) (7) (9) (3) (5) (1) (11) (5) (5) (1) Acquisitions/dive stitures - - - - 10 - - 10 - - - - Actuarial (gains) / losses immediately recognized in other comprehensive income (OCI) 43 21 8 14 (9) 2 (5) (6) 16 11 (2) 7 Effect of foreign exchange 2 1 (1) 2 (2) (2) - - 1 - 1 - Accrued / (Prepaid) as at 31 December 149 101 19 29 118 78 18 22 113 73 22 18
As at 31 December 2014, employer contributions for the year ahead are expected to amount to EUR 8 million (2013: EUR 12 million).
The total expense for the 2014 relating to share based payment is EUR 33 million (2013: EUR 35 million), with EUR 2 million (2013: EUR 3 million) relating to share options granted from 2010 to 2014 plans (2013: 2009 to 2013) and EUR 31 million (2013: EUR 32 million) relating to free shares granted from 2011 to 2014 plans (2013: 2009 to 2013).
The share-based payment plans are described below. There have been no cancellations or modifications to any of the plans during 2014.
The Group grants its employees options or share subscription plans under the following terms: Plan Date of award by the Board Options exercisable on Date of expiration of plan Exercise price in EUR
New shares issued subject to option plans 2004 25 August 2004 26 August 2008 25 August 2014 10.90 486,251 2005 16 September 2005 16 September 2009 15 September 2015 15.90 623,269 2006 14 September 2006 15 September 2010 14 September 2016 18.30 795,771 2006 14 December 2006 15 December 2010 14 December 2016 21.73 394,500 2007 13 September 2007 13 September 2011 12 September 2017 17.58 1,417,000 2008 22 May 2008 22 May 2012 21 May 2018 15.63 279,000 2008 10 September 2008 11 September 2012 10 September 2018 15.63 1,199,000 2009 23 March 2009 23 March 2013 22 March 2019 14.92 1,403,500 2009 25 November 2009 25 November 2013 25 November 2019 17.12 88,500 2010 18 March 2010 19 March 2014 19 March 2020 18.40 1,378,000 2010 12 October 2010 13 October 2014 13 October 2020 17.79 37,710 2011 22 March 2011 23 March 2015 23 March 2021 19.71 701,500 2011 1 September 2011 2 September 2015 2 September 2021 15.71 308,500 2012 23 March 2012 24 March 2016 24 March 2022 20.17 938,000 2013 21 March 2013 22 March 2017 22 March 2023 22.25 716,000 2013 2 October 2013 3 October 2017 3 October 2023 24.65 170,000 2013 21 November 2013 22 November 2017 22 November 2023 25.82 25,000 2014 20 March 2014 21 March 2018 20 March 2024 25.06 694,875 2014 1 December 2014 2 December 2018 1 December 2024 24.41 9,000
EUR per share Outstanding options at 1 January 7,324,168 18.23 8,094,030 17.77 Options granted during the period 703,875 25.05 911 22.80 Options exercised during the period 711,022 16.52 1,251,162 16.04 Options expired during the period 6,911 10.90 223,219 32.91 Options forfeited during the period 75,728 18.23 206,481 17.87 Outstanding options at 31 December 7,234,382 19.07 7,324,168 18.23 Exercisable at 31 December 3,914,507 16.97 3,397,668 16.35
All grants of the performance share plan of 4 March 2014 (except LTIP), 5 November 2014 and 1 December 2014 to the Chairman and Chief Executive Officer, to the other members of the COMEX, to the Executive Global Partners and to the Senior Global Partners and half of the allocation to the other Partner beneficiaries (less Senior Global Partners), are subject to performance conditions which are based on the strict observance of the principles set forth in the SCOR Code of Professional Conduct and on the solvency ratio, SCOR Global P&C’s combined ratio, SCOR Global Life’s technical margin and the SCOR group’s ROE in 2014 and 2015. The grants of the share plan of 4 March 2014 to the Non Partners are not subject to performance conditions. All the LTIP plan of 4 March 2014 shares are subject to the same performance conditions as described above, and to the comparison of a financial market condition of SCOR with its main peers.
The fair value of the free shares corresponds to the market value adjusted for dividends and non-transferability costs, estimated using a forward acquisition/disposal method. The following table lists the characteristics used at the end of 2014, 2013 and 2012: 4 March 2014 Plan (LTIP)
Non-French residents 5 years 4 years 4 years 4 years 8 years Dividend 5.03% 5.03% 5.03% 5.03% 5.03% Risk-free interest rate 1.139% 0.777% 0.879% 0.688% 1.23%
INCOME TAX (EXPENSE) / BENEFIT REPORTED IN EQUITY (31) 9 (73)
Further to the 2014 Finance Bill which triggered an increase of the exceptional contribution on income tax (“contribution exceptionnelle sur l’impôt sur les sociétés”) which had led the overall French income tax rate to increase from 36.10% to 38.00% and which was expected to be applicable in 2013 and 2014, a new finance bill passed in 2015 extended the application of this surcharge for one additional year. As a result, the income tax rate of 38.00% will be applicable for fiscal years 2013 to 2015 and will be 34.43% again from fiscal year 2016 onwards. This temporary tax rate change is not expected to have a material impact on the net deferred tax assets of the French tax group and, consequently, it has not been taken into account for the measurement of deferred taxes.
The reduction in differences between French and local tax rates in 2014 as compared to 2013 reflects the change in the tax rate mix for the Group.
Income taxes from prior years are mainly due to the finalization of income tax returns.
In accordance with IFRS deferred tax netting rules, the amount of deferred tax liabilities and deferred tax assets stated in the balance sheet are as follows: BALANCE SHEET AMOUNTS AS AT 31 DECEMBER 2014 2013 2012 Deferred tax liabilities (388) (366) (331) Deferred tax assets 825 813 689 NET DEFERRED TAX ASSETS (LIABILITIES) 437 447 358
Recognition of deferred tax assets on tax losses carried forward is assessed on the availability of sufficient future taxable income and local tax rules - i.e. unlimited carry forward in France and 20 year carry forward period in the United States. Under French Tax Law on tax loss carry forward, the utilization of tax losses is capped to EUR 1 million plus 50% of the remaining current year taxable result. The forecast of taxable income is based on the main assumptions described in Note 1 - Accounting principles and methods. SCOR expects to utilize all recognized tax loss carry forwards before expiry.
In EUR million 2014 2013 2012 Interest income on investments 275 232 247 Dividends 14 26 34 Rental income from real estate 48 50 38 Other income (including cash and cash equivalents) 12 9 11 Other investments expenses (15) (14) (14) Investment revenues 334 303 316 Interest income on funds withheld and contract deposit 193 191 213 Interest expense on funds withheld and contract deposit (13) (15) (11) Interest on deposits 180 176 202 Realized gains and losses on investments 135 130 161 Change in fair value of investments 8 15 8 Investment impairment (3) (74) (72) Real estate amortization and impairment (28) (23) (15) Change in investment impairment and amortization (31) (97) (87) Currency gains / (losses) 11 (10) 23 INVESTMENT INCOME 637 517 623
Investment income excludes income from life reinsurance contracts that do not meet the risk transfer criteria (presented in the investment income line of the 2013 Registration Document). The net investment income previously reported in the 2013 Registration Document were EUR 512 and 566 million for the years ended December 31, 2013 and 2012, respectively.
P&C Total Ceded written premiums (660) (518) (1,178) (591) (532) (1,123) (531) (445) (976) Change in ceded unearned premiums 1 30 31 - 11 11 - 8 8 Ceded earned premiums (659) (488) (1,147) (591) (521) (1,112) (531) (437) (968) Ceded claims 438 167 605 258 237 495 458 177 635 Ceded commissions 108 49 157 112 52 164 95 49 144 Net results of retrocession (113) (272) (385) (221) (232) (453) 22 (211) (189)
These expenses are further allocated into categories by function as follows: In EUR million 2014 2013 2012 Acquisition and administrative expenses 414 373 349 Investment management expenses 40 36 30 Claims settlement expenses 42 35 32 Other current operating expenses 153 155 177 OTHER OPERATING AND ADMINISTRATIVE EXPENSES 650 599 588
Basic and diluted earnings per share are calculated as follows for the years ended 31 December 2014, 2013 and 2012 respectively: At 31 December 2014 At 31 December 2013 At 31 December 2012
(1) Average number of shares during the period. See Note 1 of the consolidated financial statements (2) Calculated assuming all options are exercised where the average SCOR share price for the year exceeds the option exercise price
The exercise of stock options has consistently led to treasury shares being cancelled as decided by the General Meeting of the Company in order to avoid any dilutive effect of such exercise upon the share capital.
Parties are considered to be related if one party has the ability to directly or indirectly control the other party or exercise significant influence over the other party in making financial or operational decisions. The Group’s related parties include:  Key management personnel, close family members of key management personnel, and entities which are controlled, significantly influenced by, or for which significant voting power is held by key management personnel or their close family members;  Subsidiaries, joint ventures and associates; and  Post-employment benefit plans for the benefit of the Group’s employees.
SCOR SE is the ultimate parent of the Group. As noted above transactions between SCOR SE and its subsidiaries meet the definition of related party transactions. Where these transactions are eliminated in consolidation they are not disclosed in the Group’s financial statements. A list of the Group’s subsidiaries, associates and joint venture is shown below.
The total gross cash compensation of key management personnel for 2014, 2013, and 2012 financial years is presented below: In EUR 2014 2013 2012 Fixed compensation 4,857,600 5,018,427 5,378,043 Variable compensation 4,140,922 3,723,473 3,173,762 Profit sharing 19,910 28,820 28,534 Premiums / allowances 96,936 106,196 140,702 TOTAL CASH COMPENSATION 9,115,368 8,876,916 8,721,041
Each member of the Executive Committee benefits from the use of a vehicle for business purposes. The Chairman and Chief Executive Officer has a company car (with a shared driver).
(ii) paid as soon as the Company’s financial statements for prior year are settled by the Board of Directors. In the event of termination of the Chairman and Chief Executive Officer, the benefits he may be allocated would be determined according to the following situations:  In the event that the Chairman and Chief Executive Officer is dismissed for misconduct or following a notoriously negative performance of the Company (non-achievement of the performance condition (C_n) as described below, and for at least two years during the three previous) no compensation will be due;  Where his departure is imposed or a dismissal ad nutum mainly for typical difference of opinion regarding the Group's strategy, the Chairman and Chief Executive Officer will benefit from a cash payment equal to the amount of fixed and variable compensations paid to him by the Group for the two financial years prior to his departure. This payment is subject to the satisfaction of the performance condition (C_n) defined below for at least two out of the three years preceding the date of departure of the Chairman and Chief Executive Officer.
(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.
In the event of a change in the structure of the share capital of the Company, if a member of the Executive Committee is dismissed (except for reason of serious or gross misconduct) or if he decides to resign, he will benefit from: (i) a cash payment equal to the amount of fixed and variable compensations paid to him by the Group for the two financial years prior to his departure,
(iii) a cash payment compensating him for his inability to definitively acquire Ordinary Shares of SCOR SE granted to him for free prior to his departure and which he would be unable to acquire due to the terms and conditions of the applicable free share allocation plan. The amount of this cash payment is equal to the product of the number of shares concerned by the average value of the opening prices of the Ordinary Shares of SCOR SE in the Paris Stock exchange during the twenty trading days preceding the date of the change in the structure.
SCOR SE provides parental guarantees to a number of operating subsidiaries. These guarantees cover all of these subsidiaries' payment obligations under the insurance and reinsurance contracts issued by them. These guarantees are unconditional and continuing and shall be binding upon SCOR SE as guarantor and its successors and assigns. The owners of the insurance and reinsurance contracts issued by these subsidiaries are express third party beneficiaries of these guarantees. The obligations of SCOR SE as guarantor under these guarantees rank pari passu with all other unsecured indebtedness of SCOR SE. The subsidiaries which benefitted from the SCOR SE parent guarantee in 2014 are the following:  In Europe: SCOR Global Life SE; SCOR Global P&C SE; SCOR Switzerland AG; SCOR Global P&C Ireland Ltd.; SCOR Channel Ltd.; SCOR Financial Services Ltd.; SCOR Global Life Ireland Ltd.; SCOR UK Company Ltd.; SCOR Perestrakhovaniye.
 In the United States and Canada: SCOR Reinsurance Company (US); General Security Indemnity Company of Arizona; General Security National Insurance Company; SCOR Canada Reinsurance Company; SCOR Global Life Reinsurance Company of Delaware; SCOR Global Life Americas Reinsurance Company; SCOR Life Reassurance Company; SCOR Life Assurance Company; SCOR Global Life USA Reinsurance Company (formerly Generali USA Life Reassurance Company).
SCOR Global Life Reinsurance Ireland Ltd. Ireland 100 100 100 100 Full SCOR Global Life USA Reinsurance Company US 100 100 100 100 Full SCOR Life Insurance Company (SLAC) US 100 100 100 100 Full SCOR Life Reassurance Company (SLRC) US 100 100 100 100 Full Quantitative Data Solutions US 100 100 100 100 Full SCOR Global P&C SE and its subsidiaries SCOR Global P&C SE France 100 100 100 100 Full SCOR Canada Reinsurance Company Canada 100 100 100 100 Full SCOR Reinsurance Asia Pacific Pte Ltd. Singapore 100 100 100 100 Full SCOR Reinsurance Company (Asia) Ltd. Hong Kong 100 100 100 100 Full SCOR Global P&C Ireland Ltd. Ireland 100 100 100 100 Full SCOR Underwriting Ltd. UK 100 100 100 100 Full SCOR UK Company Limited UK 100 100 100 100 Full SCOR Holding (Switzerland) AG and its subsidiaries SCOR Holding (Switzerland) AG Switzerland 100 100 100 100 Full SCOR Holding (UK) Ltd. UK 100 100 100 100 Full SCOR Services Switzerland AG Switzerland 100 100 100 100 Full SCOR Switzerland AG Switzerland 100 100 100 100 Full Real Estate Businesses MRM S.A. France 59.90 59.90 59.90 59.90 Full SCOR Auber France 100 100 100 100 Full
In EUR million 2014 2013 Commitments received Unused lines of credit (1) - 150 Letters of credit - retrocessionaires (2) 134 172 Endorsements, sureties 4 - Other commitments received 105 - TOTAL COMMITMENTS RECEIVED 243 322 Commitments given Letters of credit (3) 1,521 1,466 Pledged securities 3,231 3,789 Endorsements, sureties 37 10 Other commitments given 203 55 TOTAL COMMITMENTS GIVEN 4,992 5,320 Collateral received from retrocessionaires TOTAL COLLATERAL RECEIVED FROM RETROCESSIONAIRES (4) 1,276 1,312
(1) Unused lines of credit represent those facilities available to the Group to enable it to meet its liquidity requirements. These include overdrafts and lines of credit, but exclude letter of credit facilities. The Group has total letter of credit facilities available to it of USD 598 million, composed of several bilateral lines with international banks. The Group actively monitors the liquidity of its balance sheet and has decided not to renew its overdraft facility of EUR 150 million.
Assets including investment securities, real estate and shares in associates for a total amount of EUR 3,231 million (2013: EUR 3,789 million) have been pledged to certain ceding companies and financial institutions. Minimum payments under operating lease commitments, estimated minimum rental income amounts received by SCOR as part of its real estate investment activities and commitments to purchase properties are included within Note 5 – Tangible assets and property related commitments and Note 6 - Insurance business investments. Parental guarantees provided by SCOR SE to a number of operating subsidiaries have been presented within Note 24 – Related party transactions.
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 and pricing actuaries 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 Financial 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.
The Group tracks natural catastrophe accumulation (earthquakes, wind and flood perils…) for all exposed countries worldwide. Depending on the region of the world and the peril in question, it uses a variety of techniques to evaluate and manage its total exposure. The Group quantifies this exposure in terms of a maximum commitment. It defines this maximum commitment, taking into account policy limits, as the potential maximum loss caused by a catastrophe affecting a geographic area, such as a storm, hurricane or earthquake, and occurring within a given return period. SCOR estimates that its potential maximum losses for catastrophes, before retrocession, come from windstorms in Europe, hurricanes in the US, typhoons in Japan or earthquakes in Japan or the US.
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.
Fixed income investments are managed by SCOR Global Investments SE or by external managers monitored by SCOR. In all cases, investment guidelines are provided to managers and strict monitoring is carried out over the global portfolio by the respective Group entities. Whether managed internally or externally, each entity monitors, either directly or via an intermediary, the changes in value of the investment assets. In general, the tactical allocation of the global portfolio is defined by the Group Investment Committee which meets each quarter at least. It is chaired by the Group’s Chief Executive Officer and is composed of the Group Chief Financial Officer, the Group Chief Risk Officer, the Chief Economist, the Chief Executive Officer of SCOR Global P&C and the Chief Executive Officer of SCOR Global Life, the Chief Executive Officer of SCOR Global Investments SE and other representatives of SCOR Global Investments.
SCOR maintains its investment policy in high-quality assets and in countries with the lowest sovereign risk. SCOR has no assets linked to sovereign risk in Greece, Ireland, Portugal, Italy, Hungary or Spain.
SCOR’s underwriting policy is particularly prudent in this area. SCOR specifically monitors its main exposures in this sector. In addition, SCOR benefits from the expertise of its specialized cedents in terms of risk prevention, since the cedents continuously adjust their own exposure levels based on changes in the financial strength of the debtors they are insuring.
In the context of its business, SCOR may be exposed to claims arising from the consequences of terrorist acts. These risks, the potential significance of which can be illustrated by 11 September 2001 attack on the World Trade Center (“WTC”) in the US, can affect both individuals and property. For more details refer to section 4.1.3 – SCOR Could Be Subject to Losses as a Result of its Exposure to Terrorism. After the attack of 11 September 2001, the Group adopted underwriting rules designed to exclude or limit its exposure to risks related to terrorism in its reinsurance contracts, in particular in those countries and/or for the risks expected to be most exposed to terrorism. However, it has not always been possible to implement these measures, particularly in its principal markets. For example, certain European countries do not permit the exclusion of terrorist risks from insurance policies.
The carrying amounts of the Group’s financial assets exposed to credit risk by counterparty credit quality, excluding consideration of collateral held or other credit enhancements is included in Note 6 - Insurance business investments (for fixed income securities) and Note 16 – Net Contract Liabilities (for the share of retrocessionaires in insurance and financial liabilities).
The following table provides an overall analysis of the aging of financial assets as at 31 December 2014: In EUR million Current 1-12 months Total Available-for-sale financial assets 14,682 2 - - - 14,684 Financial assets at fair value through income 450 - - - - 450
Derivative instruments 51 - - - - 51 Loans and receivables 8,947 - - - - 8,947 Share of retrocessionaires in technical provisions 1,195 - - - - 1,195
The following table provides an overall analysis of the aging of financial assets as at 31 December 2013: In EUR million Current 1-12 months Total Available-for-sale financial assets 12,067 - - - - 12,067 Financial assets at fair value through income 369 - - - - 369
Derivative instruments 94 - - - - 94 Loans and receivables 8,881 - - - - 8,881 Share of retrocessionaires in technical provisions 1,140 - - - - 1,140
income categories presented above include fixed income securities and equity securities. For fixed income securities, amounts are only presented as non-current if the security has not been redeemed on the date of maturity and therefore the amount receivable is past due. For equity securities, due to the absence of a contractual date of redemption, these instruments are presented as current. Other assets presented in the above aging analysis, including derivative instruments, loans and receivables, cash and cash equivalents and other accounts receivable, are presented in a similar manner as those instruments described above, depending on the existence of a redemption date. Impairment information relating to financial assets is included in Note 6 – Insurance Business Investments, Note 7 - Loans and receivables, and Note 10 – Assumed and ceded insurance and reinsurance receivables and payables and Note 20 - Investment income.
The projections for insurance liabilities of the Life segment have been prepared on a best estimate basis. The amounts below represent the estimated maturity profile of the gross liabilities. For long-term life reinsurance, benefit payments are typically settled net of premiums (for treaties with periodic premium payments). Where liabilities are deposited with the client, the settlement normally also includes certain other account items, primarily the release of the deposits. For contracts where funds withheld are used to offset the amounts settled between SCOR and its cedents, funds withheld to cover the life insurance liabilities in the table below mature at the same date as the respective life insurance liabilities.
Maturity profiles have been based on undiscounted contractual maturities and include contractual interest payments (including those from cross currency and interest rate swaps). In the case of perpetual debt, or debt which is subject to multiple optional reimbursement dates, the analysis below has been prepared based on the assumption that the Company does not make use of any of the early optional reimbursement dates. Perpetual debt is classified within the column “greater than 5 years” due to an absence of a maturity date. Of the amounts below, EUR 258 million (1) (2013: EUR 451 million (1)) relate to variable rate debt.
Total Subordinated debt 2.04% - 6.98% 79 265 1,434 1,778 Real estate debt 1.38% - 4.50% 39 419 117 575 Other financial debt 0.61% - 1.57% 173 3 3 179 TOTAL 291 687 1,554 2,532
Maturity analyses of financial assets that are held for managing liquidity risk are presented within Note 6 - Insurance Business Investments. Various entities in the Group rent their office headquarters. The minimum payments relating to these operating leases are presented within Note 5 - Tangible assets and property related commitments.
The Group has certain life insurance contracts which are sensitive to fluctuations in interest rates.
Although in general all long-term liabilities are discounted, in most cases there is no immediate accounting impact from a 100 basis point change in interest for the following reasons:  For the German, Italian, Swiss and Austrian markets, valuation interest rates are typically locked-in at the minimum interest rate guaranteed by the ceding companies on the deposited assets covering the liabilities.
There is no requirement for a material change in reserves for life products with guaranteed minimum death benefit (GMDB) in the event of a 100 basis point change in interest rates. These treaties are in run-off. For Long-Term Care Products in France, ceding companies use valuation rates established by French regulators which are based on a prudent proportion of the moving average of long-term government rates. The bulk of the reserves are deposited. The interests on these deposits are often linked to the assets of the ceding companies and minimum interest rates on deposits are at least the valuation rate. Ceding companies are usually doing a proper matching of assets and liabilities. Hence a 100 basis point decrease in interest rates would have an insignificant impact.
In general, equity movements have no impact on the reported liabilities of the Life business as the underlying policies and reinsurance contracts are typically unrelated to equity prices. For some risk premium treaties (where the underlying insurance policies are unit-linked or universal life) the sums at risk and thus the expected claims, vary with the movement of the underlying assets. However, under almost all reinsurance programs, premiums are also linked to the sums at risk such that the liability would not materially change. The premiums on the Guaranteed Minimum Death Benefit (GMDB) business underwritten by the SCOR Group in the US market vary with the value of the underlying assets rather than the sum at risk. Thus, premiums would decrease under a decline of the equity values whereas the expected claims would increase thus leading to an increase in the liability. Nevertheless, there is no requirement for a material change in reserves in the event of a 10% change in equity values.
The interest sensitivities for equity presented in the table below include the movements on the debt security portfolio, cash and cash equivalents, structured notes, the impact of changes in interest rates on variable rate financial debt and the GMDB business. The interest sensitivities for profit & loss presented in the table below show the impact of changes in fair value of financial assets at fair value through profit & loss held at closing date, and change in income on variable rate financial assets held at closing date, following an increase/decrease in interest rates of 100 basis points. An estimate of the impact on the future profit & loss following a change of 100 basis points is therefore included. However, SCOR does not include in this analysis the impact that changes in interest rates might have on the reinvestment of future cash flows, as future cash flows of our business are difficult to predict and asset allocations might change over time.
SCOR conducted an analysis of the sensitivity of the impairment of equity securities, by applying the accounting policy and application guidance set out in Note 1 (H) to theoretical future market value changes. SCOR estimates that, excluding any impairment arising to duration, a further uniform decline of 10% from 31 December 2014 market values would generate a further impairment of equity securities of EUR 1 million (2013: EUR 1 million; 2012: EUR 12 million). It should be noted that this figure should not be scaled up or down as the impairment rules are not a linear function of market value. For example, a scenario with a market value decline of 20% would not double the potential further equity impairment.
For currency translation risk (1), the following sensitivity analysis considers the impact in equity of a 10% movement in the exchange rates of the Group’s two largest translation risk currency exposures, USD and GBP relative to EUR.
Highfields directors and officers insurance policy: On 18 June 2009, SCOR commenced an action before the Commercial Court of Nanterre against an insurance company with respect to the recovery of the attorneys’ fees and costs arising from the Highfields Capital LTD, Highfields Capital I LP and Highfields Capital II LP litigation covered by the directors and officers insurance policy. The proceedings were dismissed on 24 October 2012. On 23 November 2012, SCOR filed an appeal before the Court of Appeal of Versailles. On 18 March 2014, the Court of appeal of Versailles partially reversed the decision of the Commercial Court and, ruling anew, rejected SCOR SE’s application. After a legal analysis of the decision of the Appeal Court, SCOR SE filed an appeal before the Supreme Court on 29 July 2014. These proceedings are ongoing.
On the basis of the two directors and officers insurance policies in excess coverage, SCOR also commenced two distinct procedures on 10 January 2012 and 22 June 2012 before the Commercial Court of Nanterre and the Commercial Court of Paris against two insurance companies with respect to the recovery of the attorneys’ fees and costs and a portion of the settlement amount relating to the litigation with Highfields Capital LTD, Highfields Capital I LP and Highfields Capital II LP covered by its excess policies. Both proceedings are ongoing.
(ii) The report from the Statutory Auditors on the consolidated financial statements for the financial year ending 31 December 2012 published from pages 300 to 302 of the Registration Document filed with the Autorité des marchés financiers on 6 March 2013 under Number D.13-0106 (and from pages 288 to 289 of the free translation into English of such Registration Document, such translation being available on SCOR’s website www.scor.com).
The report from the Statutory Auditors on the consolidated financial statements for the financial year ended 31 December 2014 is reproduced below.
This is a free translation into English of the statutory auditors’ report on the consolidated financial statements issued in French and it is provided solely for the convenience of English-speaking users. The statutory auditors’ report includes information specifically required by French law in such reports, whether modified or not. This information is presented below the audit opinion on the consolidated financial statements and includes an explanatory paragraph discussing the auditors’ assessments of certain significant accounting and auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the consolidated financial statements taken as a whole and not to provide separate assurance on individual account balances, transactions or disclosures. This report also includes information relating to the specific verification of information given in the group’s management report. This report should be read in conjunction with and construed in accordance with French law and professional auditing standards applicable in France.
Statutory auditors’ report on the consolidated financial statements To the Shareholders,
In accordance with the requirements of article L. 823-9 of the French commercial code (Code de commerce) relating to the justification of our assessments, we bring to your attention the following matters:  Notes 1- “(G) Real estate investments”, 1 - “(H) Financial instruments”, 5, 6 and 8 to the consolidated financial statements describe the principles and methods used to estimate the valuation and impairment of investments and derivative instruments.
 Notes 1 - “(F) Intangible assets” and 4 to the consolidated financial statements describe the principles and methods used to assess the valuation of goodwill, the valuation of customer relationship intangible asset and the value of business acquired for the Life and Non-Life reinsurance portfolios. The methods used to carry out these annual impairment tests are described in note 4 to the consolidated financial statements.
As required by law, we have also verified, in accordance with professional standards applicable in France, the information presented in the group’s management report.
Other information audited by the legal controllers The Registration Document as a whole is the subject of a review completion letter sent by the statutory auditors to SCOR.
20.4 Date of most recently audited financial information 20.5 Interim and other financial information
The statute of limitations for dividends is 5 years. Dividends whose payment has not been requested shall be allocated to the administration de domains. See also Section 20.1.6 – Notes to the consolidated financial statements, Note 23 – Earnings per share.
Please see Section 20.1.6 – Notes to the consolidated financial statements, Note 27 – Litigation.
According to the decisions of the Extraordinary Shareholders General Meetings of the Company dated (i) 18 May 2004, in its fourth resolution, (ii) 31 May 2005 in its sixth resolution and (iii) 16 May 2006 in its fifth resolution to authorize the Board to grant to officers and employees options to subscribe for or purchase of shares and to acknowledge, if necessary, at its first meeting following the year end of the Company, the number and amount of new shares issued during that period following the exercise of options, the Board of Directors of SCOR SE acknowledged, on 3 May 2012, the capital increase of EUR 1,085,494.04 by creation of 137,806 shares with a nominal value of EUR 7.8769723 each.
(1) This figure corresponds to the share capital and to the number of shares as acknowledged by the Board of Directors on 5 March 2014 and stated in the bylaws of the Company as at 31 December 2014. It does not take into account the shares that could have been issued between 6 May 2014 and 31 December 2014 due to the exercise of stock options. The figures that take these shares into account are referred to in Section 20.1.6 – Notes to the consolidated financial statements, Note 13 – Information on share capital, capital management, regulatory framework and shareholders’ equity.
191,980,457 ordinary shares. The reason for such decision of capital reduction is to avoid any dilutive effect of the exercise of stock options upon the share capital.
To the Company’s knowledge, there is no significant pledge on the SCOR SE’s shares. Refer to Section 20.1.6 – Notes to the consolidated financial statements, Note 25 – Commitments received and granted for a description of the pledges on the Company’s assets.
Document Date of availability of the warrants Expiration date 20 Dec. 2013 - 25,390,466 25,390,466 20/12/2013 28/04/2017
Delegation of powers granted by the Extraordinary Shareholders' Meeting of 6 May 2014 14th resolution (Delegation of powers to the Board of Directors for the purpose of deciding upon the incorporation of profits, reserves or premiums into the share capital)
(Date of the Registration Document) 15th resolution (Delegation of authority granted to the Board of Directors for the purpose of deciding on the issuance of shares and/or of securities granting access to capital or giving entitlement to a debt instrument, without cancellation of preferential subscription rights)
16th resolution (Delegation of authority granted to the Board of Directors for the purpose of deciding on the issuance, in the context of a public offering, of shares and/or of securities granting access to capital or giving entitlement to a debt instrument, with cancellation of preferential subscription rights)
18th resolution (Delegation of authority granted to the Board of Directors for the purpose of making determinations with respect to the issuance of shares and/or securities granting access to the Company’s capital or entitling the holder to a debt instrument, as remuneration for shares contributed to the Company in the context of any public exchange offer launched by the Company, with cancellation of preferential subscription rights)
25th resolution (Delegation of authority granted to the Board of Directors in order to carry out an increase in share capital by the issuance of shares reserved to the members of savings plans (plans d’épargne), with cancellation of preferential subscription rights to the benefit of such members)
Authorizations for share issues granted by the Extraordinary Shareholders’ Meeting of 6 May 2014 20th resolution (Authorization granted to the Board of Directors for the purpose of increasing the number of shares issued in accordance with 15th and 16th resolutions in the event of over-subscription to the share capital increase, with or without cancellation of preferential subscription rights)
24rd resolution (Authority to issue shares under free share allotment plans)
Except for the delegations granted pursuant to the 21th and 25th resolutions, which are granted for 18-month duration, the delegations of powers granted by the Shareholders' Meeting of 6 May 2014 are each granted for a 26-month duration as from the date of the Shareholders’ Meeting, i.e. until 6 July 2016, date on which it will be deemed expired if the Board of Directors did not use it.
The description of the stock buyback program implemented under the 12th resolution of the Annual Shareholders' Meeting of 6 May 2014 was published by the Company on 6 May 2014. The report of the Board of Directors of the Company to the Annual Shareholders’ Meeting to be held in the first half of 2015 on the use of the 12th resolution will be made available to SCOR shareholders under the conditions set forth by law.
Number of shares purchased Number of shares sold January 2014 25.12 25.24 36,193.47 911,384 339,647 February 2014 24.99 25.12 - 269,460 281,697 March 2014 24.89 25.01 - 197,080 236,108 April 2014 25.67 25.72 3,777.29 244,367 178,040 May 2014 25.62 25.78 - 247,118 228,154 June 2014 25.44 25.54 10,790.37 352,325 226,103 July 2014 24.55 24.61 5,312.54 227,982 215,195 August 2014 23.40 23.52 8,612.99 338,250 131,667 September 2014 24.22 24.15 25,017.91 488,381 164,000 October 2014 23.80 23.79 18,869.90 561,619 300,086 November 2014 24.39 24.50 - 138,260 163,163 December 2014 23.29 24.80 - 223,261 233,193
In EUR Percentage of share capital 1. Stimulation of the secondary market or the liquidity of the Company's shares by an investment services provider through a liquidity agreement compliant with a professional ethics charter recognized by the Financial Markets Authority 103,668 - 816,590 0.05% 2. Setting-up, implementation or hedging of any stock option plans, other plans for allocation of shares and, generally, any form of allocation to employees and/or corporate officers (mandataires sociaux) of the Company and/or of affiliated companies, including hedging of any Company stock option plan pursuant to the provisions of Articles L. 225-177 et seq. of the French Commercial Code, allocation of Company shares at no cost in the context of the provisions of Articles L. 225-197-1 et seq. of the French Commercial Code, allocation of Company shares as participation in profits generated by the expansion of business (participation aux fruits de l’expansion de l’entreprise) or allocation or transfer of Company shares within the framework of any employee savings plan (plan d’épargne salariale), in particular in the context of the provisions of Articles L. 3321-1 et seq., and L. 3332-1 et seq., of the French Labor Code 6,489,464 (777,454) 51,117,328 3.37% 3. Purchasing of shares for keeping and later remittal for exchange or as payment within the framework of possible external growth operations without exceeding the limit set by paragraph 6 of Article L. 225-209 of the French Commercial Code in the context of a merger, spin-off or contribution - - - - 4. Respect of all obligations linked to the issuance of securities granting access to capital - - - - 5. Cancellation of the shares bought back in this way, within the limits established by law in the context of a reduction in share capital approved or authorized by the shareholders - 777,454 - -
Refer to:  Section 15.1.3 – Remuneration in the form of options and share allocation;  Section 17.2 – Information on shareholding and stock options or Company stock purchases by members of the
Refer to:  Section 15.1.3 – Remuneration in the form of options and share allocation;  Section 17.2 – Information on shareholding and stock options or Company stock purchases by members of the Administrative and Management bodies;  Section 17.3 – Plans providing employee participation in Company;  Appendix A – 1.5 – Notes to the corporate financial statements, Note 12 – Stock Options;  Section 20.1.6 – Notes to the consolidated financial statements, Note 17 – Provisions for employee benefits,  Section 20.1.6 –Notes to the consolidated financial statements, Note 18 – Stock options and share awards;  Section 21.1.1 – Amount of issued capital and additional information, and;  Section 21.1.4 – Amount of convertible securities, exchangeable securities or securities with subscription warrants.
As set forth in Article 3 of the bylaws (statuts), our corporate purpose includes the following:  insurance, reinsurance, cession or retrocession of business of any nature in all classes and in all countries, the assumption in any form of reinsurance contracts or liabilities of any French or foreign company, organization, entity or association, and creation, acquisition, rental, lease, installation and operation of any undertaking related to these activities;  the construction, lease, operation or purchase of any and all properties;  the acquisition and management of all securities and other equity rights by any means including but not limited to subscription, transfer or acquisition of shares, bonds, corporate rights, partnerships and other equity rights;  acquisition of equity investments or interests in any industrial, commercial, agricultural, financial, securities or real estate companies, the formation of any company, participation in any capital increases, mergers, demergers and spin-offs;  administration, management and control of any company or other undertaking, direct or indirect participation in all transactions carried out by such companies or undertakings by any means including, but not limited, to participation in any company or equity investment;  implementation and management of centralized cash resource management within the Group and the provision of services, to any Group company concerned, relating to the management and operations of centralized cash resources, and; generally all such industrial, commercial and financial transactions, or transactions involving moveable property and real estate, as may pertain directly or indirectly to the above stated corporate purpose or as may be related to or facilitate the implementation or pursuit thereof.
For further detail please refer to the report of the Chairman of the Board of Directors in Appendix B of the Registration Document.
Any related party transaction concluded without the prior consent of a majority of the non related Directors can be voided by a court, if we incur a loss as a result. In addition, an interested related party may be held liable on this basis. Article L. 225-39 of the French commercial code, as amended by the ordinance (ordonnance) aforementioned, now provides that the regime referred to above does not apply anymore to transactions entered into between two companies, when one of which, directly or indirectly, holds the entire capital of the other, and as the case may be, net of the
After approval of the financial statements and recognition of the existence of distributable funds consisting of the earnings for the fiscal year, less prior losses and plus, if applicable, any profit carried forward, the Shareholders’ Meeting shall distribute them as follows:  All sums transferred to reserves pursuant to the law;  All or part of the profit available for distribution may be transferred by the Shareholders’ Meeting to any discretionary, ordinary or extraordinary reserves or carried forward, as deemed appropriate;  Any remaining balance shall be distributed on all the shares in proportion to their unredeemed paid-up value, it being stipulated that during a period of two years starting from the reverse split operation on the shares of the Company, pursuant to the seventeenth resolution of the Ordinary and Extraordinary Shareholders’ Meeting of 16 May 2006, shares which have been subject to the reverse split shall be entitled to an amount ten times greater than the amount to which shares which have not been subject to the reverse split shall be entitled.
The Company’s bylaws (statuts) also provide that profits available for distribution can be allocated to one or more optional or statutory reserves or distributed as dividends, as may be determined by the Shareholders’ Meeting.
Dividends are distributable to shareholders pro rata their respective holdings of Ordinary Shares. Dividends are payable to holders of Ordinary Shares outstanding on the date of the Shareholders’ Meeting approving the distribution of dividends or, in the case of interim dividends, on the date of the meeting of the Board of Directors approving the distribution of interim dividends. The actual dividend payment date and the modalities of such payment are determined by the Shareholders’ Meeting approving the declaration of the dividends or by the Board of Directors in the absence of such determination by the shareholders. The payment of the dividends must occur within nine months of the end of the fiscal year. Dividends not claimed within five years of the date of payment revert to the French Government. According to the bylaws (statuts), shareholders may decide in an ordinary general meeting to give each shareholder the option of receiving all or part of a dividend or interim dividend in the form of Ordinary Shares. The determination of the portion, if any, of the annual dividend that each shareholder will have the option to receive in Ordinary Shares is also made at the ordinary general meeting of shareholders following a recommendation by the Board of Directors.
In the event the Company is liquidated, its assets remaining after payment of its debts, liquidation expenses and all of its remaining obligations will be distributed in full first to repay the nominal value of the Ordinary Shares, then the surplus, if any, will be distributed pro rata among the holders of Ordinary Shares in proportion to the nominal value of their shareholdings and subject to any special rights granted to holders of preferred shares, if any.
Article 7 of SCOR SE’s bylaws (statuts) provides that Ordinary Shares may be held in registered or bearer form, at the option of the shareholder.
The Company’s bylaws (statuts) permit us to request from Euroclear France at any time the identity, address and citizenship of the holders of Ordinary Shares held in bearer form, as well the number of Ordinary Shares held by such persons and information regarding any restrictions that may be attached to the Ordinary Shares.
An owner of Ordinary Shares residing outside France may trade such shares on Euronext. Should such owner, or the broker or other agent through whom a sale is completed, require assistance in this connection, an accredited intermediary should be contacted. Prior to any transfer of Ordinary Shares held in registered form on Euronext, such shares must be inscribed in an account maintained by an accredited intermediary. Dealings in Ordinary Shares are initiated by the owner giving instructions (through an agent, if appropriate) to the relevant accredited intermediary. A fee or commission is payable to the French broker, accredited intermediary or other agent involved in the transaction (whether within or outside France).
The court may be requested to appoint an agent either by shareholder(s) holding at least 5% of our share capital, or a duly authorized association of shareholders holding their Ordinary Shares in registered form for at least two years and holding together a certain percentage of our voting power (computed on the basis of a formula related to capitalization which on the basis of the Company’s outstanding share capital as at 31 December 2014, would represent approximately 1% of our voting power) or by any interested party, including the Workers’ Council (“Comité d’entreprise”) in cases of urgency.
Attendance and exercise of voting rights at ordinary general meetings and extraordinary general meetings of shareholders are subject to certain conditions. In accordance with French law and the Company’s bylaws (statuts), the right to participate in Shareholders’ Meetings is subject to registration of shares in the name of the shareholder or of the approved intermediary acting on his or her behalf, by T-0 (Paris time) on the second trading day prior to the Shareholders’ Meeting, either in the nominative share registers held on the Company's behalf by the Company’s agent or in the bearer share accounts held by an authorized intermediary.
The general meeting’s decisions are taken by a majority (either a simple majority for ordinary general meetings or a twothirds majority for extraordinary general meeting) of the votes validly cast. Abstention by those present in person or by correspondence or represented by proxy is not deemed a vote against the resolution submitted to a vote.
Shareholders’ Meetings shall be called and conducted in accordance with French law. They shall consist of all shareholders, regardless of the number of shares held. Pursuant to Article 8 ("Rights attached to each share") of the bylaws (statuts), in the two year period from the Group’s reverse stock split on 3 January 2007, each Old Share was entitled to one vote and any New Share to ten votes, so that the number of votes attached to each share was proportionate to the share capital they represented. From 3 January 2009, the date of the cancellation of old shares, each share is entitled to one vote.
25 INFORMATION ON HOLDINGS As concerns the holdings held directly by SCOR, refer to:  Section 7 – Organizational Structure;  Appendix A – 1.5 - Notes to the corporate financial statement, Note 2.3 – Subsidiaries and affiliates;  Section 20.1.6 – Notes to the consolidated financial statements, Note 24 – Related party transactions.
– 4th Floor, Block C, Whitaker Court – 28-29 Sir John
One Seaport Plaza – 199 Water Street, Suite 2100 – New
27 FEES PAID BY THE GROUP TO THE AUDITORS Refer to Section 20.1.6 – Notes to the consolidated financial statements, Note 22 – Other operating and administrative expenses for the detail of audit fees.
28 PUBLISHED INFORMATION The bylaws of the Company are described in this Registration Document and can be looked at on the Internet website of the Company. The other legal documents relating to the Company can be looked at the Company registered offices pursuant to the applicable rules and regulations.
The Registration Document of the Company filed with the l’Autorité des marchés financiers, as well as the press releases of the Company, its annual and half-year reports, its annual and consolidated financial statements as well as the information relating to the transactions upon treasury shares and to the total number of shares and voting rights can be looked at on the Company's Internet web site at the following address: www.scor.com.
1.1 Significant events of the year 316 1.4 Off-balance sheet commitments 322 1.5 Notes to the corporate financial 1.6 Certification of audit of historical financial information 345 1.7 Reconciliation of French GAAP to IFRS 347
SCOR’s unconsolidated corporate financial statements for the financial year ended 31 December 2014 are shown below: 1.1 Significant events of the year “Significant Events Of The Year” are an integral part of the notes to the unconsolidated corporate financial statements. This year, SCOR SE carried out the following significant transactions: Dividends received During 2014, SCOR SE earned EUR 355 million in dividends from its affiliates: EUR 125 million from SCOR Global Life SE, EUR 97 million from SCOR Global P&C SE, EUR 61 million from SCOR Holding Switzerland, EUR 40 million from SCOR AUBER SA, EUR 7 million from SCOR Global Investments SE, EUR 3 million from MRM SA and USD 28 million from SCOR US.
Issuance of EUR 250 million perpetual subordinated notes On 25 September 2014, SCOR issued EUR 250 million perpetual subordinated notes, redeemable by SCOR as at payment of interest dates from 1st October 2025. The settlement of the notes took place on 1st October 2014. The coupon has been set to 3.875% (until 1 October 2025), and resets every 11 years at the prevailing 11-year EUR midswap rate + 2.7%.
Issuance of CHF 125 million perpetual subordinated notes On 24 September 2014, SCOR issued CHF 125 million perpetual subordinated notes, redeemable by SCOR as at payment of interest dates from 20 October 2020. The settlement of the notes took place on 20 October 2014. The coupon has been set to 3.375% (until 20 October 2020), and resets every 6 years at the prevailing 6-year CHF midswap rate + 3.0275%.
Increase of the Treasury Advance from SCOR Global P&C SE In December 2014, the Treasury Advance from SCOR Global P&C has been increased to EUR 400 million at Euribor 1 month +0.4%. In the same time, SCOR SE issued a perpetual loan with the same amount at the rate of 3.875% to SCOR Global P&C.
Investments Notes 2 & 4 6,404 190 6,214 5,545 Real estate investments 207 1 206 206 Investments in associates 5,849 186 5,663 5,174 Other investments 348 3 345 165
Share of retrocessionaires in underwriting reserves Note 4 25 - 25 28 Reinsurance reserves (Life) - - Loss reserves (Life) - - - -
Other assets Note 3 280 22 258 366 Property, plant and equipment 102 22 80 178 Cash and cash equivalents 38 - 38 45 Treasury shares 140 - 140 143
In EUR million 2014 2013 Shareholders' equity and reserves /(1) Note 5 2,794 2,650 Share capital 1,518 1,518 Additional paid-in capital 813 813 Revaluation reserve - - Unavailable reserve - - Other reserves 53 53 Capitalization reserve 3 3 Retained earnings 5 21 Net income of the year 387 227 Regulated reserves 15 15
(1) Data for financial years 2014 and 2013 are before appropriation of results
Earned premiums 1,227 (11) 1,216 924 Written premiums 1,283 (11) 1,272 979 Change in unearned premiums (56) - (56) (55)
Claims expenses (767) 3 (764) (617) Benefits and costs paid (731) 9 (722) (503) Claims reserve expenses (36) (6) (42) (114)
transactions Retroceded transactions 2014 net transactions 2013 net transactions UNDERWRITING ACCOUNT, LIFE
Investment expenses (15) - (15) (17) Internal and external investment management expenses and interest expenses (10) - (10) (10)
Other investment expenses (1) - (1) (3) Realized losses from investments (4) - (4) (4)
Investment revenues 470 408 Investment income 403 352 Other investment income 59 46 Realized gains 8 10
Other investment expenses (10) (27) Realized losses from investments (34) (33)
Endorsements, sureties and credit guarantees given - 7 7 14 Endorsements, sureties - 1 1 9 Letters of credit - 6 6 5
Other commitments on investment securities, assets or revenues - 973 973 973 Rate swaps - - - - Rate and currency swaps (cross-currency swaps) - 973 973 973 Underwriting commitments - - - -
Other commitments given 10,367 357 10,724 354 Securities pledged to ceding companies - 12 12 13 Marketable securities pledged to financial institutions - 2 2 - Contract termination indemnities - 1 1 8 Foreign currency forward sales 148 342 490 333 Parental guarantees 10,219 - 10,219 - COLLATERAL RECEIVED FROM RETROCESSIONAIRES - - - -
1.5 Notes to the corporate financial statements NOTE 1 - ACCOUNTING POLICIES
The corporate financial statements for the year ended 31 December 2014 are presented in accordance with the European Directive of 19 December 1991, the French Decree 94-481 of 8 June 1994, and the Order of 20 June 1994 as amended by the Order of 28 July 1995, for which the application has been extended to include reinsurance companies. The income statement was split between the Non-Life underwriting statement, the Life underwriting statement and the non-underwriting statement. In addition to reinsurance operations, the underwriting accounts include general expenses and income from investments relating to reinsurance activities. Income from invested shareholders’ equity is recorded in the non-underwriting account.
Intangible assets consist of:  software acquired or created by the Company which are capitalized and amortized over a period ranging from one to five years;  non-depreciable goodwill.
Bonds and other fixed-income securities are recorded at cost, excluding accrued interests. In compliance with article R. 332-19 of the French Insurance Code, the difference between cost and redeemable par value is amortized to income over the remaining period until maturity using the effective interest rate method.
No impairment is recognized for differences between net book value, as decreased or increased by the amortization of any premium or discount, and the realizable value. An impairment provision is recorded only in the event of issuer default. Upon disposal, any realized gain or loss is allocated to the capitalization reserve.
An impairment allowance is recorded for loans or other accounts receivable due in more than one year if the fair value is below historical cost.
A liquidity risk reserve is recorded for the possible need to liquidate assets in order to make immediate payment on major claims. This reserve is included in underwriting reserves and is recorded when the total net book value of assets, excluding bonds and other fixed income securities (investments valued according to article R. 332-19 of the French Insurance Code), exceeds their fair value. The fair value corresponds to the market price for listed shares, the net asset value for unlisted shares and the net realizable value for investments in subsidiaries as described in Note 2.1. Based on the calculations performed, no such reserve was required or recorded in the financial statements for 2014 and 2013.
 End retirement indemnities: employees benefit from additional retirement benefits paid in full upon retirement. The evaluation of these indemnities depends on several factors such as age, years of service and salary.
In Opinion 2008-17 dated 6 November 2008 relating to the accounting of stock options and free share allocation plans, the CNC redefined the accounting of such benefits granted to employees and the accounting for impairment of treasury shares held for such plans. In the event of delivery of existing shares, the expense should be recognized over the vesting period if the attribution of shares is based on the employee remaining with the company over the vesting period. As such, at each period end, a provision for risk is recorded for the estimated cost (calculated as the difference between the cost to acquire the shares and nil value) to which a pro rata is applied, from the date of attribution, to the end of the vesting period, over the entire vesting period.
This financial statements caption includes the various subordinated or unsubordinated bonds issued by the Company as described in Note 4.1.
Pursuant to the provisions of article R.332-18 of the French Insurance Code, accounts not yet received from ceding companies at the end of the financial year are estimated, in order to better reflect SCOR’s reinsurance commitments in the financial statements. This method applies to most contracts underwritten during the current financial year and to prior-year contracts where relevant. Estimates of premiums and commissions not yet received from ceding companies at period end are recorded in the income statement and shown on the balance sheet under “Accounts receivables from reinsurance transactions”.
Cash deposits received from retrocessionaires are shown within liabilities on the balance sheet. Securities pledged as collateral by reinsurers to guarantee their commitment are presented off balance sheet at their fair value.
Finite reinsurance treaties, as defined under article L. 310-1-1 of the French Insurance Code, have to be accounted for under the provisions of opinion 2009-12 dated 1 October 2009 issued by the CNC.
The mathematical reserves for Life reinsurance are submitted by ceding companies and completed by estimates calculated by Life actuaries using statistics based on historical date and information provided by underwriters. Additionally, estimated claims are included in the provisions for claims payable.
The costs associated with the acquisition of new Non-Life contracts, essentially commissions, are recorded as assets within the limits of contract profitability. They are amortized over the acquisition period of the premiums. The acquisition costs of Life reinsurance operations are usually not deferred.
In accordance with the Decree of 8 June 1994 and the Order of 20 August 1994 which set forth the rules and accounting principles for reinsurance companies, general expenses, previously recorded by type, are allocated to the following five functions: acquisition costs, claims settlement expenses, administrative expenses, investment portfolio management expenses, and other underwriting expenses.
The use of and accounting for financial instruments comply with European Directive 2005/68/CE (also known as the Reinsurance Directive) ; with the French General Statement of Accounting Principles (“Plan Comptable Général”) of 1982 ; and with French Decree No 2002-970 dated 4 July 2002, relating to the use of forward financial instruments by French insurance companies.
Income and losses in the form of interest or premiums are recorded on a pro rata basis over the life of the contract. Commitments given and received recorded at the balance sheet date reflect the nominal amount of open transactions.
In case of unrealized loss positions on swaps not defined as hedging strategy, a provision for loss risks on swaps is recognized in the accounts.
The loan granted by SCOR SE to SCOR Global Life for EUR 530 million for the financing of the Transamerica International Reinsurance Ireland acquisition was converted into a perpetual loan in December 2014. The interest rate has been set to 6.96% until 2 August 2016, floating thereafter. For the financing of the Transamerica International Reinsurance Ireland acquisition, a USD 74 million treasury advance was done (USD 24 million as at 31 December 2014, i.e. EUR 19 million). As a consequence, the total financing amounts to EUR 549 million in 2014 (EUR 584 million in 2013). In December 2014, SCOR SE granted a CHF 125 million loan to SCOR Holding Switzerland at 3.375% fixed-interest. This loan is due on 20 October 2020. 327
SCOR SE granted a EUR 400 million perpetual loan to SCOR Global P&C SE at 3.875% until 1 October 2025, floating thereafter. Meanwhile, SCOR SE has received a treasury advance for EUR 400 million from SCOR Global P&C SE at 1month EURIBOR rate plus a margin of 0.40%.
 ASEFA: EUR 6 million in 2014 compared to EUR 0 million in 2013
Unrealized gains and losses 1 - Real estate investments and real estate investments in process 207 206 327 121 2 - Shares and other variable-income securities (other than mutual fund shares) 4,323 4,134 6,913 2,779 3 - Mutual funds shares (other than those in 4) 3 3 3 - 4 - Mutual fund shares exclusively invested in fixed-income securities 16 16 16 5 - Bonds and other fixed-income securities 17 17 17 - 6 - Mortgage loans - - - - 7 - Other loans and similar bills 1,502 1,502 1,502 - 8 - Deposits with ceding companies 28 28 28 - 9 - Cash deposits (other than those in 8) and security deposits 308 308 308 10 - Unit-linked investments - - - - Sub-total 6,404 6,214 9,114 2,900 11 - Other forward instruments - - - - - Investment or divestment strategy - - - - - Anticipation of investment - - - - - Yield strategy - - - - - Other transactions 39 39 39 - - Amortization premium/discount - - - - 12 - Total lines 1 to 11 6,443 6,253 9,153 2,900 a) including: - investments valued according to article R.332-19 17 17 17 - - investments valued according to article R.332-20 6,387 6,197 9,097 2,900 - investments valued according to article R.332-5 - - - - - Forward instruments 39 39 39 - b) including: - investments and forward instruments issued in OECD countries 6,038 5,848 8,763 2,915 - investments and forward instruments issued in non-
Loans granted to SCOR SE by its subsidiaries amounted to EUR 507.1 million (including EUR 0.3 million from SCOR Global Life SE, EUR 95.4 million from SCOR HOLDING SWITZERLAND and EUR 400 million from SCOR Global P&C SE) compared to EUR 328 million as at 31 December 2013 (including EUR 47 million from SCOR Global Life SE, EUR 126 million from SCOR HOLDING SWITZERLAND and EUR 136 million from SCOR Global P&C SE). For 2014, SCOR SE recognized EUR 56.1 million in financial income from loans with related companies and EUR 3.7 million in interest expense on borrowings with related companies.
Share capital /(1) Reserves /(1) Share of capital Gross book value Net book value Loans and advances
(Amounts in EUR million) (OC)* (OC)* (OC)* (EUR) (EUR) (EUR) (EUR) (EUR) (OC)* (OC)* (EUR) A-RELATED ENTITIES: DETAILED INFORMATION - SCOR GLOBAL LIFE SE EUR 287 645 99.99% 471 471 751 42 2,224 2,826 123 125 5 avenue Kléber, 75116 PARIS, France - SCOR GLOBAL P&C SE EUR 582 1,621 99.99% 1,615 1,615 400 - 2,112 3,170 261 97 5 avenue Kléber, 75116 PARIS, France - SCOR US CORPORATION USD 330 796 100.00% 1,315 1,139 - 2 - - 22 22 199 Water Street, NEW YORK, NY 10038- - MRM EUR 44 72 59.90% 56 56 - - - 15 (7) 3 5 avenue Kléber, 75116 PARIS, France - SCOR AUBER S.A. (France) EUR 47 88 100.00% 149 149 135 5 - 4 32 40 5 avenue Kléber, 75116 PARIS, France - SCOR Holding (Switzerland) AG EUR 382 1,269 40.68% 788 788 104 - - - 133 61 General Guisan-Quai 26, 8022 Zurich, Switzerland - ASEFA S.A. EUR 38 (7) 39.97% 15 9 - - - - (15) - Avda Manoteras 32 Edificio A 28050 Madrid, Spain 10 Nikolskaya Street, 109012, Moscou, Russian Federation - SCOR AFRICA LTD ZAR - 223 100.00% 11 11 - 12 15 953 43 - 2nd Floor, West Tower, Maude Street, Nelson Mandela Square, Sandton 2196, South Africa - SCOR GLOBAL INVESTMENTS S.E. EUR 3 4 100.00% 3 3 - - - - 3 7 5 avenue Kléber, 75116 PARIS, France - SCOR BRAZIL RESSEGUROS S.A Avenida Paisagista José Silva de Azevedo Neto, 200 - Bloco 4 - Sala 404 Barra de Tijuca - Rio de Janeiro – Brazil
TOTAL A 4,478 4,296 1,390 61 4 ,362 355 B- ENTITIES WITH EQUITY INTEREST - In France 43 39 110 - - TOTAL 4,521 4,335 1,500 61 4,362 355
GROSS VALUES 197 2 (93) 106 Intangible assets 4 - - 4 Goodwill - - - - Set-up costs - - - - Other intangible assets 4 - - 4 Tangible assets 193 2 (93) 102 Deposits and security bonds 93 - (93) - Equipment, furniture, fittings and fixtures 100 2 - 102 DEPRECIATION AND ALLOWANCES (15) (7) - (22) Other intangible assets (excluding goodwill) - - - - Equipment, furniture, fittings and fixtures (15) (7) - (22)
The other loans, initially classified within “Deposits and security bonds” of tangible assets are reclassified in “other investments”. The opening amount (EUR 93 million) is included in the column “disposals”.
Loans 1,501 - 309 1,810 1,122 - - 1,122 Cash deposits with ceding companies 28 - - 28 - - - - Share of retrocessionaires in underwriting reserves 25 - - 25 28 - - 28
Accounts receivable 2,018 - 232 2,250 126 - 74 200 Accounts receivable from reinsurance transactions 1,903 - 150 2,053 5 - 26 31
Accrued income and deferred charges 40 - 111 151 1,863 - 157 2,020 Accrued interests and rent 3 - 1 4 3 - - 3 Deferred acquisition costs - assumed (Non-Life) 33 - 75 108 31 - 55 86
Other liabilities 540 - 205 745 387 - 347 734 Liabilities arising from reinsurance operations 1 - 1 2 - - - -
Reinsurance estimates - Retrocession - - - - - - 1 1 Other accruals - - - - 2 - 3 5
Other debts 32 - 85 117 60 - 54 114 Treasury advances granted 7 - - 7 31 - - 31 Miscellaneous 25 - 85 110 29 - 54 83 4.1 OTHER EQUITY AND FINANCIAL LIABILITIES
In EUR million Maturity Net book value Fair value Net book value Fair value Other capital base EUR 350 million Perpetual 262 278 262 275 CHF 650 million Perpetual 552 573 541 561 CHF 315 million Perpetual 268 285 263 275 CHF 250 million Perpetual 208 223 204 211 CHF 125 million Perpetual 103 103 - - EUR 250 million Perpetual 249 254 - - Total other capital base 1,642 1,716 1,270 1,322 Financial liabilities USD 100 million 06/06/2029 9 10 15 15 EUR 100 million 05/07/2020 93 93 93 93 Total Financial liabilities 102 103 108 108
 CHF 315 million fixed rate perpetual subordinated notes issued in two pari-passu ranking placements on 10 September and 24 September 2012. The notes are redeemable by SCOR each quarter as at payment of interests date as from 8 June 2018 with a first call date of 8 June 2018. The coupon has been set at 5.25% (until 8 June 2018) and 3-month CHF LIBOR plus a margin of 4.8167% thereafter. The notes are hedged with
a cross-currency swap detailed in Note 15.1.1 - Financial instruments received and given, in the analysis of commitments given and received.
 EUR 250 million fixed rate perpetual subordinated notes issued on 1 October 2014. The notes are redeemable by SCOR from 1 October 2025 on a quarterly basis on the payment of interest dates. The coupon has been set at 3,875% until 1 October 2025 and resets every 11 years at the prevailing 11-year EUR mid-swap rate plus a margin of 2.70% thereafter.
 Initial USD 100 million, reduced to USD 67 million after repurchase of USD 33 million in 2011, subsequently reduced to USD 20.8 million after repurchase of USD 46.2 million in 2013 and finally reduced to USD 10.8 million after repurchase of USD 10 million in 2014, 30-year subordinated bonds issued on 7 June 1999, callable by SCOR quarterly as from the tenth year. These floating-rate bonds bear interest based on the 3month Libor rate plus (i) 0.80% for the first ten years of the issue, and (ii) 1.80% thereafter.
 Initial EUR 100 million (EUR 93 million after repurchase of EUR 7 million during 2009) 20-year subordinated bonds, issued on 6 July 2000 callable by SCOR quarterly as from the tenth year following their issuance. These floating-rate bonds bear interest based on the 3-month Euribor plus (i) 1.15% for the first ten years, and (ii) 2.15% thereafter.
The reinsurance activity of SCOR SE comprises four internal quota share retrocession treaties, one with SCOR Global P&C SE, another with SCOR Global Life SE, a third with SCOR South Africa and a fourth with SCOR Perestrakhovaniye; non-proportional retrocession from the Argentinian branch of SCOR Global P&C SE; and the business underwritten by the Beijing branch.
(*) Mainly related to loan of subsidiaries described in Note 2.3
The item « Reinsurance estimates – assumed » is from now on reclassified to “Accounts receivable from reinsurance transactions”, whereas the item “”Reinsurance estimates – ceded” is reclassified to “Liabilities arising from reinsurance operations”. The breakdown of the reinsurance estimates – assumed that have been reclassified is as follows as at 31 December 2014:  The reinsurance estimates ─ assumed ─ Life (EUR 647 million) includes premiums for EUR 298 million, commissions payable of EUR (64) million and claims payable amounting to EUR 413 million.
 The reinsurance estimates ─ assumed ─ Non-Life (EUR 1,328 million net) includes premiums for EUR 862 million, commissions payable of EUR (180) million and claims to repay for EUR 646 million.
In EUR million 2013 shareholders' equity before allocation Income allocation Other movements during the period 2014 Shareholders' equity before allocation Capital 1,518 - - 1,518 Additional paid-in capital 813 - - 813 Capitalization reserves 3 - - 3 Other reserves (legal reserve) 53 - - 53
 The EUR 227 million gain for 2013, combined with a portion of retained earnings of EUR 16 million, were allocated to dividends for EUR 243 million.
On 16 May 2012, SCOR SE issued 2,248,448 additional warrants to UBS, each warrant committed UBS to subscribe for two new shares (maximum amount of EUR 75 million). As a result of the extension of the existing EUR 75 million facility, the aggregate amount available under the combined facility upon the occurrence of natural catastrophe related trigger event was EUR 150 million.
Retirement provisions 51 21 - - 72 Free share allotment plans 21 7 - - 28
Long-term awards 2 - - (1) 1 Other provisions 22 2 - - 24 TOTAL 96 30 - (1) 125
 EUR 73 million in reserves for post-employment benefits: retirement provisions (EUR 29 million), supplementary retirement (EUR 43 million), long-term service awards (EUR 1 million).
In EUR million 2014 2014 2014 2013 Euro 7,893 6,622 1 271 1,269 US Dollar 438 641 (203) (170) Pounds sterling 7 3 4 4 Swiss francs 115 1,130 (1 015) (981) Japanese yen (5) 4 (9) (20) Australian dollar (3) 10 (13) (18) Yuan 409 437 (28) (51) New-Zealand dollar (11) 10 (21) (40) Other currencies 46 32 14 7 TOTAL 8,889 8,889 - -
In EUR million 2014 2013 France 349 362 North America 84 73 South America 49 35 Asia 573 411 Europe 381 350 Africa 65 62 Rest of world 85 76 TOTAL 1,586 1,369
Premiums 62 1,520 1,582 96 1,271 1,367 Portfolio entries 2 20 22 10 23 33 Portfolio transfers (12) (6) (18) (15) (16) (31) Movements (10) 14 4 (5) 7 2 TOTAL 52 1,534 1,586 91 1,278 1,369 8.3 CHANGE IN COMMISSIONS
Revenues from securities 355 2 357 321 - 321 Revenues from other investments 77 11 88 44 29 73 Other revenues 62 3 65 51 - 51 Realized gains - 2 2 - 11 11 TOTAL INVESTMENT INCOME 494 18 512 416 40 456 Management and financial costs 9 91 100 9 86 95 Other investment expenses 9 2 11 - 30 30 Realized losses (6) 36 30 - 37 37 TOTAL INVESTMENT EXPENSES 12 129 141 9 153 162
Currency losses were EUR (2.9) million in 2014 compared to a loss of EUR (2.2) million in 2013.
In EUR million 2014 2013 Salaries 105 77 Retirement 4 5 Benefits 16 17 Other 6 7 Total personnel expenses 131 106 Other general expenses 157 150 TOTAL GENERAL EXPENSES BY KIND 288 256 Workforce Executives - Paris 223 210 Employees / Supervisors - Paris 26 20 Employees / branches 399 361 TOTAL CURRENT WORKFORCE 648 591
The non-recurring loss amounts to EUR (5.6) million and is mainly due to the following items:  Impairment of EUR 5 million on a receivable ;  French legal provision on acquisition costs by EUR 0.6 million.  EUR 0.5 million write-off of SCOR Alternative Investments S.A. debt.
 EUR 0.5 million gain realized on the partial repurchase of USD 10 million external subordinated debt (USD 21 million).
The SCOR SE Group in France is consolidated for tax purposes and is composed of SCOR SE as the parent company of the Group, SCOR Global P&C SE, SCOR Global Life SE, SCOR Global Investments SE, SGF, SCOR Auber SA, DB Caravelle, ReMark France, SAS Mobility and Rehalto SA as subsidiaries. Under the tax agreement, SCOR SE benefits from the tax loss carry-forwards of its subsidiaries, and tax benefits are transferred back to the individual subsidiary concerned, if the entity becomes profitable in the future. Total tax losses of the consolidated French tax Group were EUR 1,285 million as at 31 December 2014.
The table below summarizes the status of the various stock option plans for 2014: Plan
These calculations were performed individually and plan by plan, and rounded up to the nearest unit. The new basis for exercising the rights attached to the share subscription and purchase options have been calculated by entering the value of the preferential subscription right on the one hand, and the value of the share after detachment of this right on the other, as determined from the average of the opening prices during all the trading days included in the subscription period. In addition, on 3 January 2007, the company carried out a reverse stock split of shares comprising the capital of SCOR SE with the exchange of one new share with a par value of EUR 7.8769723 for 10 old shares with a nominal value of EUR 0.78769723 per share. The stock option plans for the years 2003 to 2011 are share subscription plans that may give rise to a share capital increase. The other plans are share purchase options.
In 2013, 1,251,162 rights of options were exercised: 70,591 rights of options exercised under the stock option plan of 25 August 2004 vested on 26 August 2008, 105,835 options exercised under the stock option plan of 16 September 2005 vested on 16 September 2009, 143,936 options exercised under the stock option plan of 14 September 2006 vested on 14 September 2010, 29 500 options exercised under the stock option plan of 14 December 2006 vested on 14 December 2010, 240,500 options exercised under the stock option plan of 13 September 2007 vested on 13 September 2011, 274,950 options exercised under the stock option plan of 10 September 2008 vested on 10 September 2012, 60,000 options exercised under the stock option plan of 22 May 2008 vested on 22 May 2012, 314,850 options exercised under the stock option plan of 23 March 2009 vested on 23 March 2013 and 11,000 options exercised under the stock option plan of 25 November 2009 vested on 25 November 2013.
In EUR thousands 2013 2012 2011 2010 2009 Amount distributed under the profit-sharing plan 1,247 1,153 815 1,115 1,609
The amount of 2014 profit-sharing payouts have been estimated in the accounts and set aside for EUR 1.7 million.
In EUR thousands 2014 2013 2012 2011 2010 Profit sharing * 722 619 373 501 777 Net voluntary payments 442 392 303 263 208 Total payments 1,164 1,011 676 764 985 NET MATCHING PAYMENTS 480 422 346 300 235
(*) Paid out in the financial year for the previous financial year
The number of hours accrued by the employees of SCOR SE was 20,269 on 31 December 2014.
In 2013, SCOR entered into a cross-currency swap which exchanges CHF 250 million of the principal into EUR and exchanges the CHF coupon on the notes to EUR 5.8975% and which matures on 30 November 2018. In 2014, Currency forward purchases and sales generated an unrealized gain of EUR 10 million.
In EUR million 2014 2013 2014 2013 Confirmed credit - - - - Letter of credit 461 580 6 5 Securities pledged to financial institutions - - 2 -
Investments in subsidiaries and affiliates pledged to financial institutions - - - -
The commitments received in terms of capacity to issue letters of credit amounted to EUR 461 million, corresponding mainly to contracts signed with the banks:  BNP Paribas: USD 182 million (EUR 147 million),  Deutsche Bank: USD 120 million (EUR 97 million),
 JP Morgan: USD 4 million (EUR 3 million),  Helaba: USD 80 million (EUR 65 million),
 CACIB: USD 95 million (EUR 77 million)  Citibank: USD 30 million (EUR 24 million)
On 18 June 2009, SCOR commenced an action before the Commercial Court of Nanterre against an insurance company with respect to the recovery of the attorneys fees and costs arising from the Highfields Capital LTD, Highfields Capital I LP and Highfields Capital II LP litigation covered by the directors and officers insurance policy. The proceedings were dismissed on 24 October 2012. On 23 November 2012, SCOR filed an appeal before the Court of Appeal of Versailles. On 18 March 2014, the Court of Appeal of Versailles partially reserved the decision of the Commercial Court and, ruling anew, rejected SCOR SE’s application. After a legal analysis of the decision of the Appeal Court, SCOR SE filed an appeal before the Supreme Court on 29 July 2014.These proceedings are ongoing.
In our opinion, the financial statements give a true and fair view of the assets and liabilities and of the financial position of the company as at December 31, 2014 and of the results of its operations for the year then ended in accordance with French accounting principles.
 Notes 1.5 and 6 to the financial statements specify the valuation methods applied to pension obligations and other related obligations.
We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given in the management report of the board of directors and in the documents addressed to the shareholders with respect to the financial position and the financial statements.
1.7 Reconciliation of French GAAP to IFRS The main reconciling items between French GAAP on a statutory basis and IFRS of SCOR SE on a consolidated basis stated in the tables below relate to the consolidation of subsidiaries in the IFRS consolidated financial statements (whereas such subsidiaries are accounted for at cost less impairment in the stand alone French GAAP Parent Company financial statements) and to deferred taxes that are not recognized under French GAAP.
Net income in French GAAP (statutory basis) 387 227 Dividends from subsidiaries (355) (322) Deferred taxes under IFRS (6) 14
Gain from bargain purchase (net of acquisition costs) - 202 Other consolidation adjustments 486 428
III Statutory auditors’ report, prepared in accordance with article L. 225-235 of the Commercial code, on the report prepared by the Chairman of the Board of Directors of SCOR SE 383
British 25/04/2013 2015 N/A (1) Guillaume Sarkozy represents Malakoff Médéric Group, member of the Board of Directors (2) Mr. Charles Gave lives in Hong Kong
The Board of Directors is composed of 46,2% foreigners, of 53.8% of Directors having past experience in the insurance or reinsurance industry and of 91.7% Independent Directors (the employee representative is not included in the percentage).
In accordance with the provisions of the regulation governing the election of an employee candidate for the position of director of SCOR adopted by the SCOR Board of Directors on 3 April 2007, the Board of Directors of SCOR has an employee representative, elected by the Annual General Meeting, on the proposal of the Board of Directors. A two-round election by universal suffrage, involving all of the Group’s employees has been organized. The post of employee representative has been occupied by Kevin J. Knoer since 3 May 2012. His mandate was renewed for a two years period at the vote of the shareholders at the Annual General Meeting of 6 May 2014.
The Board of Directors held on 31 March 2004 has adopted a new Board Internal Charter (the “Board Internal Charter”) in order to enhance or specify the missions of the Board. This Board Internal Charter was amended by the Board of Directors on 2 November 2005, 4 July 2006, 4 November 2010, 4 May 2011, 19 March 2012, 5 November 2013 and 4 March 2015. The main provisions of the Board Internal Charter are provided below:  Mission of the Board of Directors of the Company
The table below presents the results of the detailed review, criterion by criterion, of the independence of each director made by the Board of Directors in 2015, based on the proposal of the Compensation and Nomination Committee, with regard to the criteria stated above: Criteria 1 2 3 4 5 6 7 8 Independent Denis Kessler No No No Yes No Yes Yes Yes No Gérard Andreck Yes Yes Yes Yes Yes Yes Yes Yes Yes Andreas Brandstetter Yes Yes Yes Yes Yes Yes Yes Yes Yes Thierry Derez Yes Yes Yes Yes Yes Yes Yes Yes Yes Peter Eckert Yes Yes Yes Yes Yes Yes Yes Yes Yes Charles Gave Yes Yes Yes Yes Yes Yes Yes Yes Yes Kevin J. Knoer No No Yes Yes Yes Yes Yes Yes No Guillaume Sarkozy (1) Yes Yes Yes Yes Yes Yes Yes Yes Yes Guylaine Saucier Yes Yes Yes Yes Yes Yes Yes Yes Yes Kory Sorenson Yes Yes Yes Yes Yes Yes Yes Yes Yes Claude Tendil Yes Yes Yes Yes Yes Yes Yes Yes Yes Daniel Valot Yes Yes Yes Yes Yes Yes Yes Yes Yes Fields Wicker-Miurin Yes Yes Yes Yes Yes Yes Yes Yes Yes
 Thierry Derez, Chairman and Chief Executive Officer of Covea (2.03 % of SCOR capital and 2.10 % of voting rights as of 31 December 2014)
As they hold less than 5% of SCOR capital, the Board of Directors, upon the recommendation of the Nomination and Compensation Committee, stated that these three directors can be considered as independent.
He convenes the non-executive directors as often as needed. The Lead Independent Director of the Company chairs the Non-executive Directors Session.
The Board Internal Charter requires that candidates for Director inform the Board of Directors of the position they currently hold as director or officer in other entities in France and other countries (including membership in the Board committees of these companies), as the Board of Directors has the duty to ensure compliance with the rules regarding the accumulation of position as director, and especially to ensure that the candidates hold no more than four other mandates in listed companies, including foreign companies, outside of the Group. Once appointed, Directors must inform the Board of Directors of any appointment they hold as a company officer within a period of five days following the appointment (including membership in the Board committees of these companies). They undertake to hold no more than four (4) other mandates in listed companies, including foreign companies, outside of the Group). Finally, Directors must inform the Board of Directors of the position they have held as director in other entities during the course of the financial year within a period of one month following the end of this financial year. Information concerning the positions held by the SCOR Directors is provided in Section 14.1.1 Information concerning the members of the Board of Directors.
First and foremost, the Board Internal Charter sets out the legal and regulatory provisions requiring confidentiality with regard to privileged information of which Directors could have knowledge while performing their functions.
Then, the Board Internal Charter requires Directors to register as owners of SCOR’s equities that they themselves or their minor children are holding at the time they enter office or those acquired subsequently. In addition, the Board Internal Charter lays down certain restrictions on trading SCOR’s securities: - first, it is forbidden to trade in SCOR’s securities while in possession of information which, when made public, is likely to have a significant impact on the share price. This restriction remains in effect two days after this information has been made public by a press release; - in addition, it is forbidden to directly or indirectly conduct any transaction with regard to SCOR’s securities during certain sensitive periods that the Group notifies to the Directors or during any period preceding an important event affecting SCOR and likely to influence its market price.
Through the Board Internal Charter of the Board of Directors, each Director undertakes not to seek or accept any function, benefit or situation from the Company or from the Group, directly or indirectly, that could jeopardize his or her independence of analysis, judgment or action, during the course of his or her functions as Director. He or she will also dismiss any direct or indirect pressure from other Directors, specific group of shareholders, creditors, suppliers or other third party. The Board of Directors decided, in order to protect the corporate interests, to implement an internal control program to prevent risks of conflict of interest through: 1. a review by the Audit Committee of related party transactions; 2. an annual review of each Director’s situation, in order to analyze his or her independent status and potential existing conflicts of interests; 3. its Board Internal Charter, according to which any Director in a situation of conflict of interests undertake to resign from his or her position if the conflict situation is not solved; 4. the adoption of a Code of Conduct that was communicated to all employees in 2010 and to all new hired employees. This code establishes reinforced requirements as regards the prevention of situations with risks of conflict of interests. It is completed by a policy defining the alert procedures (“whistleblowing”), and which are reported to the Audit Committee.
The average attendance rate of the members of the Board was 89.2%.
The following table displays the attendance of the members of the Board of Directors during 2014: Board members Attendance rate (%) Denis Kessler 100 Gérard Andreck 100 Andreas Brandstetter 80 Thierry Derez 100 Peter Eckert 100 Charles Gave 80 Kevin J. Knoer 100 Guillaume Sarkozy (1) 40 Guylaine Saucier 100 Kory Sorenson 100 Claude Tendil 100 Daniel Valot 80 Fields Wicker-Miurin 80
The average attendance rate of the Committee Members was 86.11 %. The following table states the attendance rates of the members of the Strategic Committee in 2014:
Board members Attendance rate (%) Denis Kessler, Chairman 100 Gérard Andreck 100 Andres Brandstetter 33.33 Thierry Derez 100 Peter Eckert 100 Charles Gave 66.67 Guillaume Sarkozy (1) 66.67 Guylaine Saucier 100 Kory Sorenson 100 Claude Tendil 100 Daniel Valot 66.67 Fields Wicker-Miurin 100
The Compensation and Nomination Committee is composed of Claude Tendil (Chairman), Charles Gave, Guylaine Saucier, Daniel Valot, Fields Wicker-Miurin and, since 4 March 2015, Kevin J. Knoer, employee representative. Each of its members is independent, except Kevin J. Knoer.
The Committee met four times in 2014. Its work dealt with the renewal of the Board of Directors, the share plans, as well as the modalities of remuneration of the Chairman and Chief Executive Officer and other members of the Executive Committee (COMEX) of the Group. The Committee focused on the renewal and composition of the Board of Directors. The Committee also worked on the general organization and the remuneration policy, and on the succession scheme of the key officers of the Group. Finally, it does an annual review of the director’s fees and expenses for the all Directors within the Group and a review of the professional and salary equity between men and women.
The Crisis Management Committee meets only when necessary and as many times as it deems necessary. Depending on the agenda, the Lead Independent Director who chairs this Committee, may exclude the Chairman and CEO from the discussions of the Crisis Management Committee. The Chairman and CEO must, moreover, be disqualified from such discussions if the crisis is linked to a subject that personally concerns him.
Certain Directors of SCOR are also members of the Boards of Directors for the Group’s subsidiary companies and as a result of this, received Directors’ fees in 2014. See Section 15.1.1 of the Registration Document.
With the exception of the Chairman of the Board of Directors and the director representing the employees, the members of the Board are not entitled to stock option plans for the subscription or the purchase of shares nor stock allotment plans from the Company.
There is no employment contract between Mr. Denis Kessler and the Company. Following the recommendation of the Compensation and Nomination Committee on 25 February 2014, the meeting of the Board of Directors on 4 March 2014 decided that the Chairman and Chief Executive Officer:  will receive a fixed gross annual sum of EUR 1,200,000 payable in twelve monthly installments, which has not changed since 1 January 2008; and
 will receive a target variable annual compensation of EUR 1,000,000 determined as follows: - 50% on the basis of the achievement of personal objectives, defined annually at the beginning of each year by the Board of Directors of the Company on the recommendation of the Compensation and Nomination Committee; and - 50% on the basis of the achievement of financial objectives, defined annually at the beginning of each year by the Board of Directors of the company on the recommendation of the Compensation and Nomination Committee.
Moreover, the Group policy states that, for participation and strong involvement in the success of specific strategic projects, an additional and exceptional bonus (“Exceptional Contribution Bonus” - ECB) may be granted; the ECB can reach a maximum of 25% of the target variable annual compensation of the Chairman and Chief Executive Officer.