The corporate financial statements for the year ended December 31, 2019 are presented in accordance with the accounting provisions grouped under title IV of book III of the Insurance Code and with the French standard-setter (Autorité des Normes Comptables – ANC) regulation No. 2015-11 of November 26, 2015 approved by the Order of December 28, 2015, relative to the annual accounts of insurance undertakings, as amended by the ANC regulation No. 2016-12 of December 12, 2016. In the absence of specific provisions in the aforementioned ANC regulation No. 2015-11, the provisions of ANC regulation No. 2014-03 relating to the general accounting plan (Plan Comptable Général – PCG) are applicable.
5.1.1. INTANGIBLE ASSETS Intangible assets consist of: • software acquired or created by the Company which is capitalized and amortized over a period ranging from one to five years; • Non-Life goodwill is depreciable over 10 years. • Life goodwill relating to the value of life business acquired in mergers is not amortized but impaired if the carrying value is higher than the net present value of the portfolio. An impairment test is performed annually; • renewal rights acquired from SCOR Switzerland AG.
Investments in affiliates Investments in affiliates are initially recorded at historical acquisition cost, including expenses. The fair value of investments in affiliates is an estimated value based on the usefulness of the investment to the Company and on its market value (in light of its actual share price, revalued shareholders’ equity, actual results and future outlook).
Bonds and other fixed-income securities Bonds and other fixed-income securities are recorded at cost, excluding accrued interest. In compliance with Article 122 – 1 of regulation No. 2015-11 dated November 26, 2015 of the French standard-setter (Autorité des Normes Comptables – ANC), the difference between cost and redeemable par value is amortized to income over the remaining period until maturity using the effective interest rate method.
Other assets An impairment provision is recorded for loans or other accounts receivable due in more than one year if the fair value is below historical cost.
Based on the calculations performed, such reserve was neither required nor recorded in the financial statements for 2019 or 2018.
Equipment, furniture and fixtures are depreciated on a straight-line or sliding scale basis depending on their estimated useful lives: Category Useful life Office equipment and furniture 5 to 10 years General fixtures 10 years Transport equipment 4 to 5 years
In its Opinion No. 2008-17 dated November 6, 2008 relating to the accounting of stock options and free share allocation plans, the CNC (“Conseil National de la Comptabilité”) redefined the accounting of such benefits granted to employees and the accounting for impairment of treasury shares held for such plans. In the event of delivery of existing shares, the expense should be recognized over the vesting period if the attribution of the shares is subject to the employee remaining with the Company over the vesting period. Consequently, at each period end, a provision for risk is recorded for the estimated cost (calculated as the difference between the cost to acquire the shares and nil value) to which a pro rata is applied from the grant date to the end of the vesting period over the entire vesting period.
Overall, the premiums recorded for the year (premiums reported in the accounts received from cedents and estimated premiums) correspond to the estimated premium expected at the time the policy was underwritten.
The retrocessionaires’ share in estimates of assumed premiums and commissions is shown in liabilities under “Liabilities arising from reinsurance operations”. Technical provisions ceded to retrocessionaires are shown within assets on the balance sheet.
Cash deposits received from retrocessionaires are shown within liabilities on the balance sheet.
Finite reinsurance Finite reinsurance treaties, as defined under Article L. 310-1-1 of the French Insurance Code, have to be accounted for under the provisions of regulation No. 2015-11 dated November 26, 2015 of the French standard-setter (Autorité des Normes Comptables – ANC).
Non-Life business An unearned premium reserve is calculated either prorata temporis on a contract-by-contract basis or using a statistical method when the results do not differ significantly from the contract-by-contract method.
A provision for claims handling expenses was recorded for EUR 9.6 million in 2019.
Pursuant to the provisions of Article R. 341-7 of the French Insurance Code, foreign currency transactions of the Company are recorded in their original currency. For presentation purposes, balance sheet amounts are converted into euros using the year-end exchange rates or the rate of the closest prior date.
Allocation of expenses by function General expenses, previously recorded by type, are allocated to the following five functions: acquisition expenses, claims settlement expenses, administrative expenses, investment portfolio management expenses, and other underwriting expenses.
Such instruments may include cross-currency swaps, caps and floors, forward currency contracts, puts and calls on equity securities and other rate options.
Accounting The fair value of Cat bond Atlas IX Series 2016-1 and Atlas Capital UK 2019 PLC is presented in "Other receivables" in the balance sheet and the payment of interests in “Other liabilities”. The change in fair value is recorded in "Other expenses/Other operating income".
The recovery impacts are recognized in other operating income and expenses.
Accounting The contract has been accounted for as a reinsurance contract.
Cash deposited with ceding companies (related and associated companies) 1,758 463 (3) - 1,618 600 Loans (related and associated companies) 1,576 (543) - 318 558 793
Shares in and advances to land and real estate companies 1 2 - -
Shares in and advances to land and real estate companies The increase recorded on real estate investments during the year corresponds mainly to merger contributions from SCOR Global P&C SE for EUR 248 million and SCOR Global Life SE for EUR 126 million.
Investments in affiliates The increase in investments in affiliates during the year is mainly driven by contributions from SCOR Global P&C SE and SCOR Global Life SE following the merger for EUR 1,895 million; by contributions from SHS following the merger for EUR 1,440 million; by the capital increase of SCOR SE in its subsidiary SCOR Global Life America (SGLA) for USD 423 million (EUR 371 million) and the capital increase of SCOR SE in its subsidiary SCOR Investment Partners SE for EUR 13 million.
On November 12, 2019, SCOR SE sold 100% of SGF shares to its subsidiary SCOR Capital Partners for EUR 4 million.
At December 31, 2019, provisions against such investments can be analyzed as follows: • EUR 1,398 million from the merger with SCOR Switzerland Holding; • EUR 25 million from the merger with SCOR Global P&C SE and SCOR Global Life.
Cash deposited with ceding companies At December 31, 2019, cash deposited with ceding companies breaks down as follows: • Claims for cash deposited contributed by the merger amounted to EUR 6,247 million
• SCOR Reinsurance Company: EUR 81 million ; • SCOR RE (ASIA) Hong Kong: EUR 13 million ; • SCOR Global Life Australia: EUR 54 million.
Global Life America has been converted into capital. • The cash advance to SCOR GIE Informatique increased by
EUR 86 million. • The cash advance to SGLA Reinsurance Company increased by
EUR 19 million. • The cash advance to SCOR Capital Partners SAS increased by
During the year, the change in “Other investments” was mainly explained by the mergers contribution for EUR 4,308 million, and a net increase of EUR 434 million mainly due to an increase in shares and other variable income securities for EUR 165 million, bonds and similar listed securities for EUR 229 million and treasury bills for EUR 41 million and a decrease in unsecured loans for EUR 2 million.
Unrealized gains and lossesIn EUR millions 626 623 866 2431 – Real estate investments and real estate investments in process 2 – Shares and other variable-income securities (other than mutual fund 3 – Mutual funds units (other than those in 4) 271 270 314 44 1,540 1,722 1824 – Mutual fund units exclusively invested in fixed-income securities 1,541 5 – Bonds and other fixed-income securities 3,800 3,794 3,840 46 794 -7 – Other loans and similar bills 794 794 109 109 109 -9 – Cash deposits (other than those in 8) and security deposits
Subsidiaries and affiliates Investments in affiliates On June 13, 2019, SCOR SE carried out a new participation in SCOR Realty Singapore for SGD 10 million (EUR 6.5 million).
Pacific Pte LTD; • SGD 18 million (EUR 12 million) with SCOR Realty Singapore Pte LTD; • EUR 9 million with ReMark Group BV; • SGD 8 million (EUR 5 million) with SCOR Services Asia-Pacific Pte
As of December 31, 2018, loans and advances granted by SCOR SE to its subsidiaries amounted to EUR 1,576 million, breaking down as follows: • EUR 732 million with SCOR Global Life SE; • EUR 400 million with SCOR Global P&C SE; • EUR 199 million with SCOR GIE Informatique; • CHF 125 million (EUR 110 million) with SCOR Holding
Pacific Pte LTD; • SGD 8 million (EUR 5 million) with SCOR Services Asia-Pacific Pte
LTD; • USD 1 million (EUR 1 million) with GIE Colombus.
• SCOR GLOBAL LIFE REINSURANCE IRELAND DAC 28,29 Sir John Rogersons Quay 2 Dublin, Ireland
• SCOR GLOBAL LIFE AUSTRALIA Level 33, O' Connell Street NSW, Sydney NSW 2000, Australia
• SCOR MANAGEMENT SERVICES IRELAND LTD 6th floor, 2 Grand Canal Square, Dublin 2
• SCOR REALTY SINGAPORE PTE LTD 160 Robinson Road, SBF Center, Singapore 068914
• SCOR SERVICES SWITZERLAND AG General Guisan-Quai 26, 8022 Zurich, Switzerland
• SCOR AFRICA LTD 2nd Floor, West Tower, Maude Street, Nelson Mandela Square, Sandton 2196, South Africa
• SCOR INVESTMENT PARTNERS SE 5 avenue Kléber, 75116 Paris, France
• REMARK GROUP BV World Trade Centre Zuidplein 214, Amsterdam, 1077XV Amsterdam, Pays-Bas
• SCOR CANADA REINSURANCE COMPANY BCE Place TD Canada Trust Power 161, Bay Street, Suite 5000 PO Box 615 Toronto, ONTARIO M5J 2S1
• REVIOS CANADA HOLDING CORP. LTD c/o Lang Michener, Brookfield Place, 181 Bay street, suite 2500, M51 2T7 Toronto, Canada
• SCOR REINSURANCE COMPANY ASIA LTD 3201-3210 Shui On Centre, 6-8 Harbour Road, Wanchai, Hong Kong
CNotes to the corporate financial statements UNCONSOLIDATED CORPORATE FINANCIAL STATEMENTS OF SCOR SE
(56) (3) (9) 8 (60)Equipment, furniture, fittings and fixtures * Mergers contributions from SCOR Global Life, SCOR Global P&C and SCOR Holding Switzerland.
Mergers contributions after eliminations* Income allocation * Mergers contributions from SCOR Global LIFE SE, SCOR Global P&C SE and SCOR Holding Switzerland AG.
• The EUR 499 million net income for 2018 was allocated to dividends for EUR 325 million and to retained earnings for EUR 174 million.
• The issuance of shares resulting from the exercise of stock options until December 31, 2019 for a total of EUR 10 million was allocated to share capital of the Company for EUR 4 million and to additional paid-in capital for EUR 6 million. The exercise of options resulted in the creation of 509,135 shares.
• On December 3, 2019, SCOR SE launched a new 3-year contingent capital facility with J. P. Morgan AG for EUR 300 million and issued 9,350,025 warrants in favor of JP Morgan AG. This equity line facility replaces, as of January 1, 320 SCOR Universal Registration Document 2019
2020, the previous contingent capital facility which came to an end on December 31, 2019.
Under the new arrangement, like in previous facilities, the protection would be triggered in case of natural catastrophes and in case of extreme life events.
Net book valueIn EUR millions Fair valueMaturity Net book value Fair value
The balance includes EUR 44 million of accrued interest (as at December 31, 2018: EUR 38 million).
• EUR 250 million in fixed rate perpetual subordinated notes was issued on October 1, 2014. The notes are redeemable by SCOR from October 1, 2025 on an annual basis on the interest payment dates. The coupon has been set at 3.875% until October 1, 2025 and will be reset every 11 years at the prevailing 11-year EUR mid-swap rate plus a margin of 3.70% thereafter.
• USD 625 million in fixed rate perpetual subordinated notes was issued on March 13, 2018. The notes are redeemable by SCOR from March 13, 2029 on an annual basis on the interest payment dates. The coupon has been set at 5.25% until March 13, 2029 and will be reset every 5 years thereafter at yield for U.S. Treasury Securities at constant Maturity (for a designated maturity of 5 years) plus the margin of 2.37%. The notes are hedged by a cross-currency swap.
• USD 125 million in fixed rate perpetual subordinated notes was issued on December 17, 2019. The notes are redeemable by SCOR from March 13, 2029 on an annual basis on the interest payment dates. The coupon has been set at 5.25% until March 13, 2029 and will be reset every 5 years thereafter at yield for U.S. Treasury Securities at constant Maturity (for a designated maturity of 5 years) plus the margin of 2.37%. The notes are hedged by a cross-currency swap.
• A subordinated debt of EUR 16 million originally set up between SCOR Global P&C and SCOR Global P&C Ireland Ltd in December 1, 2014, with an interest rate of 3.875%.
• A subordinated loan of EUR 232 million between the German branch of SCOR SE and SCOR Switzerland Asset Services (initial principal amount: EUR 365 million out of which EUR 134 million were repaid), with a fixed interest rate of 6.20%, of which EUR 1 million in accrued interest at year-end.
Financial liabilities • Debt of the German branch for EUR 15 million (EUR 15 million as of December 31, 2018).
EUR 193 million. Their breakdown as of December 31, 2019 is as follows: — EUR 97 million with SCOR Switzerland AG; — EUR 81 million with SCOR Auber SAS; — EUR 10 million with SCOR Investment Partners SE; — EUR 5 million with SCOR Europe SE.
Contingency reserves amount to EUR 246 million, of which: • EUR 43 million for free share allocation plans with the following maturities: EUR 18 million at 2020, EUR 15 million at 2021, EUR 10 million at 2022 and beyond; • EUR 148 million in reserves for post-employment benefits: retirement provisions (EUR 61 million), supplementary retirement (EUR 87 million); • EUR 55 million in other provisions.
GROSS UNDERWRITING RESERVES 4,39314,43017,770 3,013 * Mergers contributions from SCOR Global Life, SCOR Global P&C and SCOR Holding Switzerland.
EUR 1,389 million, part of loss reserves (Non-Life). For gross technical reserves (Life), the decrease of EUR 1,269 million is mainly driven by the decrease in outstanding loss reserves for EUR 1,176 million.
5.2.8. ACCRUED INCOME AND DEFERRED EXPENSES The analysis of accrued income and deferred expenses at December 31, 2019 is as follows: In EUR millions
Due and accrued interests on rental income 41 30 - - - -Deferred acquisition costs – Non-Life 335 153
Deferred commissions received from reinsurers - - 142 57 9116 51Other accruals 48
The breakdown of the reinsurance estimates – assumed is as follows as at December 31, 2019: • reinsurance estimates ─ assumed ─ Life (EUR (9) million) includes premiums for EUR 1,043 million, commissions payable for EUR (273) million, claims payable amounting to EUR (857) million, and EUR 78 million of accrued interest on the cash deposit; • reinsurance estimates ─ assumed ─ Non-Life (EUR 1,328 million) includes premiums for EUR 2,257 million, EUR (495) million of commissions payable, claims payable for EUR (485) million and EUR 51 million of accrued interest on the cash deposit.
1,048Shares other than variable ─ income securities and bonds 1,758 - 108Cash deposits with ceding companies 1,866600 - 5,958 6,558 3,210 -- 595Share of retrocessionaires in underwriting reserves 595998 -2,212 - 903Accounts receivable from reinsurance transactions 2,470358 - 1,834 2,192 1,567 444 -48 492 156- 78Accrued income and deferred expenses 234 56 - 97Deferred acquisition costs ─ assumed (NonLife )
1,051 -- 420Cash deposits received from retrocessionaires 420227 -824 - 606Liabilities arising from reinsurance operations 3,534443 - 642 1,085 2,928 133 190 9- 57Deferred income and accrued expenses 6657 -
Derivative instrument liabilities for Atlas Cat bonds -- - 92 92 324 SCOR Universal Registration Document 2019
In EUR millions 2019 2018 1,541 675Commissions – assumed (538) (176)Commissions – retroceded 1,003 499TOTAL
C Notes to the corporate financial statements UNCONSOLIDATED CORPORATE FINANCIAL STATEMENTS OF SCOR SE
Related companiesIn EUR millions Other Total Related companies Other Total 1,681 787249 7461,432 41Total investment income 197TOTAL INVESTMENT EXPENSES 398 21875 21323
Foreign currency hedging strategy The corporate financial statements are prepared in original currencies and converted into euros. Fluctuations in the exchange rates used to convert the accounts might generate a significant foreign exchange impact. To limit the exchange rate exposure, foreign currency forward transactions are entered into to hedge main currency surpluses in the balance sheet and are adjusted during the year for material arbitrage transactions involving currencies. Hedges include foreign currency spot trades, forward trades and options.
Total personnel expenses 219 170 Other general expenses 432 227 397TOTAL GENERAL EXPENSES BY TYPE 651
5.3.4. ANALYSIS OF INCOME TAX The Group in France is consolidated for tax purposes and is composed of SCOR SE as the parent company of the tax group, SCOR Investment Partners SE, SCOR Europe SE, ReMark France SAS, SCOR Auber SAS and its subsidiaries: Mondot Immobilier SAS, Marbot Real Estate SAS and SAS DB Caravelle, SCOR Capital Partners SAS and its subsidiaries: Marbot Management SAS, Château Mondot SAS and Les Belles Perdrix de Trolong Mondot EURL. 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 in the case of future profits.
2016In EUR thousands 20152019 2018 2017 Amount distributed under the profit-sharing plan 769 182 1,665 1,216 1,055
Amount paid into the Company employee saving plan 602 630 509NET EMPLOYER CONTRIBUTION(3) 5281,465
Total pension benefits for the corporate officer amount to EUR 24.7 million.
Commitments givenCommitments received 2019 2018 2019 2018In EUR millions 2,072 678 2,045 676Currency forward purchases/sales
Cross-currency swaps are used to hedge foreign exchange and interest rate risks of perpetual notes in USD issued in 2019: the instruments convert the principal of 2019 placements for a total of USD 750 million into EUR and the coupon on the USD 400 million tranche to 2.945%; on the USD 225 million tranche to 2.955% and on the USD 125 million tranche to 3.115%. All instruments will mature on
Commitments givenCommitments received 2018In EUR millions 2019 2018 2019 47 - -Letters of credit (unused portion) 155
Various financial institutions provide sureties for the Company in the form of letters of credit to collateralize SCOR SE’s technical liabilities. The total amount that benefits to cedents, not included in the table above, is EUR 755 million, of which EUR 664 million coming from the merger as of December 31, 2019 (EUR 4 million in 2018).
Confirmed credit On December 26, 2018, SCOR SE received from BNP PARIBAS SA a EUR 150 million commitment as an overdraft facility. This commitment remains at December 31, 2019.
5.3.9. POST BALANCE SHEET EVENTS SCOR SE exercised the options to buy 170,037 of its own shares from BNPP that matured on January 6, 2020.
Statutory Auditors' report on the financial statements To the Annual General Meeting of SCOR SE,
Independence We conducted our audit engagement in compliance with independence rules applicable to us, for the period from January 1, 2019 to the date of our report and specifically we did not provide any prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No 537/ 2014 or in the French Code of ethics (Code de déontologie) for Statutory Auditors.
Justification of Assessments - Key Audit Matters In accordance with the requirements of Articles L.823-9 and R.823-7 of the French Commercial Code (Code de commerce) relating to the justification of our assessments, we inform you of the key audit matters relating to risks of material misstatement that, in our professional judgment, were of most significance in our audit of the financial statements of the current period, as well as how we addressed those risks.
As explained in Note 5.1.8 of the notes to the corporate financial statements, the Non-Life technical reserves are determined at yearend at a level that covers the estimated amount of its commitments as well as estimated claims management costs for both reported and unreported claims. Ultimate claims cost for a contract is estimated based on statistical experience for similar policies.
To cover the risk related to the technical reserves estimation, our audit approach was as follows: • we obtained an understanding of the report of the group chief actuary, as well as reports from life and non-life divisions actuaries, on the global adequacy of reserves; • we updated our understanding of the procedures and methods of measurement used in determining the technical reserves; • we obtained an understanding of the internal controls framework and tested the efficiency of key controls established by management in order to assess the completeness and reliability of the data and of the implemented models; • we appreciated, for a selection of contracts, the actuarial methods and parameters used and the assumptions chosen; • we performed procedures to analyze differences between expected claims and occurred claims in order to control subsequently the quality of estimates performed by the management; • we realized, with our Non-Life actuarial specialists integrated in the audit team, a recalculation using our own assumptions and tools of technical reserves for the most sensitive actuarial segments reserves; • for Non-Life business, we analyzed the documentation supporting the measurement of reserves related to catastrophes, both manmade and natural; • we included within our team members with specific skills in IT systems to perform procedures aiming at reviewing the internal control environment of the systems used by the management and test the functioning of several automated processes.
Accounts not received from ceding companies at the year-end are estimated, as stated in the Note 5.1.7 of the notes to the corporate financial statements. Overall, the premiums recorded for the year (premiums reported in the accounts received from cedants and estimated premiums) correspond to the estimated premium expected at the time the policy was underwritten.
Your company periodically reviews its assumptions and estimates based on experience as well as various other factors. Actual premiums can turn out to be different from management estimates.
To cover the risk on the measurement of reinsurance premiums, we implemented the following audit approach: • we obtained an understanding of the internal controls framework on processes related to Life and Non-Life premium estimates and we tested the efficiency of key controls established by management; • we examined the consistency of premiums estimates over the period, comparing them both to the operational plan prepared by management and approved by Board of Directors and to premiums actuals from previous financial years and we investigated, if any, significant differences identified; • we performed, for a selection of contracts, a deep analysis of underlying assumptions taking into account the activity, the records of reinsurance accounts received, and any new information received from ceding companies; • for new contracts underwritten in 2019, we performed on a sampling basis, controls on the consistency of premium estimates based on new business information available at the underwriting department; • we included within our team members with specific skills in IT systems to perform procedures aiming at evaluationg the internal control environment of the systems used by the management and test the functioning of several automated processes.
To cover the risk related to the measurement of investments in affiliates, our audit approach was as follows: • examining the estimates determined by management and analyzing the valuation methodology and the figures used, based on the information communicated to us; • comparing, on a sample basis, the data used in the impairment tests of investments in affiliates to source data per entity as well as results of work on these affiliates, if appropriate; • examining, on a sample basis, the calculation of recoverable values used by the Company.
Concerning the information given in accordance with the requirements of Article L. 225-37-3 of the French Commercial Code (Code de commerce) relating to remunerations and benefits received by, or attributed to, the directors and any other commitments made in their favor, we have verified its consistency with the financial statements, or with the underlying information used to prepare these financial statements and, where applicable, with the information obtained by your Company from companies controlled by you and which are included in the scope of consolidation. Based on this work, we attest the accuracy and fair presentation of this information.
Other information In accordance with French law, we have verified that the required information concerning the purchase of investments and controlling interests and the identity of the shareholders and holders of the voting rights has been properly disclosed in the management report.
CCertification of audit of historical financial information UNCONSOLIDATED CORPORATE FINANCIAL STATEMENTS OF SCOR SE
The financial statements were approved by the Board of Directors of SCOR SE.
As part of an audit conducted in accordance with professional standards applicable in France, the Statutory Auditor exercises professional judgment throughout the audit and furthermore: • Identifies and assesses the risks of material misstatement of the financial statements, whether due to fraud or error, designs and performs audit procedures responsive to those risks, and obtains audit evidence considered to be sufficient and appropriate to provide a basis for the audit opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
BEST ESTIMATES An actuarial “best estimate" refers to the expected value of future potential cash flows (probability weighted average of distributional outcomes) related to prior underwritten business. Best estimates are based upon available current and reliable information and take into consideration the characteristics of the underlying portfolio.
CEDING COMPANY (ALSO CALLED CEDENT) Insurance company, mutual society or insurance provider that transfers (or “cedes”) a part of the risk it has underwritten to a reinsurer.
CREDIT AND SURETY INSURANCE Credit insurance provides insurance coverage against loss to a supplier caused by customers’ failure to pay for goods or services supplied. Surety insurance relates to sureties and guarantees issued to third parties for the fulfillment of contractual liabilities.
DECENNIAL INSURANCE Decennial insurance provides insurance coverage to building owners and construction companies against losses caused by structural defects in new buildings resulting from inherent defects in design, construction or the materials used. In a number of countries, including France, such coverage is required as a matter of law. It is generally granted for a period of ten years following the completion of the construction.
DEFERRED TAX ASSET Defined under IAS 12 as amounts of income tax recoverable in future accounting periods due to temporary differences or Net Operating Losses (NOL) carried forward.
EMBEDDED VALUE Frequently used measure of the value of expected future cash flows in life insurance and life reinsurance from the shareholder’s point of view, expressed as the value of net assets plus the present value of expected profits on the insurance portfolio diminished by the cost of capital and overhead expenses.
LOSS RATIO The loss ratio is calculated by dividing Non-Life claims (including claims arising from natural catastrophes) by Non-Life premiums earned. This ratio is net of retrocession.
NET WRITTEN PREMIUM Gross premiums diminished by the portion of premiums paid for retrocession, as opposed to gross written premiums.
P&C MANAGEMENT EXPENSE RATIO The P&C management expense ratio is calculated by dividing management expenses incurred for Non-life reinsurance operations by Non-Life premiums earned. This ratio is net of retrocession.
PERILS PERILS provides index values which can be used in industry-lossbased ILS transactions. The underlying data for the index is thereby directly collected from insurance companies underwriting property business in the affected areas and is processed in a standardized procedure to estimate industry-wide insured losses, which then form the basis of the PERILS index service.
PROPORTIONAL (PRO RATA) REINSURANCE Reinsurer’s share of claims carried by the reinsurer in proportion to its share of premiums received. Proportional reinsurance is generally written as a quota share of business or as surplus reinsurance.
RETROCESSION Transaction in which the reinsurer transfers (or cedes) all or part of the risks it has assumed to another reinsurer (the retrocessionaire), in return for payment of a premium.
RISK-FREE (INTEREST) RATE The rate of interest that remunerates assets with no counterparty risk. Usually, the weighted five-year daily interest rates of treasury bills (T-bills) in the Eurozone, the US, UK, Canada and Switzerland averaged over the period under consideration are used as proxies for the risk-free (interest) rate. The weighted average used for this calculation is based on the percentage of reserves denominated in the currency of each such reserve.
SCOR GLOBAL LIFE (SGL) AND SCOR GLOBAL LIFE SE SCOR Global Life refers to the operating segment recording all business underwritten by entities in the Life operating segment. SCOR Global Life SE refers to the legal entity.
VALUE OF NEW BUSINESS (VNB) A measure of total economic profit (or loss) after risk margin and taxes resulting from underwriting or renewing reinsurance contracts measured on a Solvency basis at the point of sale. It is calculated as the discounted present value of all the expected future Solvency cashflows (e.g. premiums, claims, commissions, expenses, collateral costs, cost of cat bonds etc…) and the cost of Solvency risk capital required for the new business, as at the point of sale. The VNB growth is driven by new business premium volume growth, underwriting profitability, operating efficiency and capital efficiency.
The statements and information pertaining to the management report on the Company’s and the Group’s activities in 2019, as approved by the Board of Directors on February 26, 2020 (the “Report”), are included and presented in the 2019 Universal Registration Document (URD) which will be submitted as such to the Shareholders’ Meeting convened to approve the financial statements for the financial year ended December 31, 2019.
Shareholders' equity stood at EUR 4,055,021,707 and subordinated liabilities at EUR 2,840,903,043. Liabilities amounted to EUR 1,295,270,577 including other loans of EUR 210,091,017.
The technical result of SCOR SE as at December 31, 2019 was EUR 99,591,534 while the financial result was EUR 1,299,341,346.
(B) Excluded bills from (A) related to debts and contested claims unaccounted -- - -Total amount of excluded bills -- - -- -- -
Total amount of exceptional expenditures Pursuant to Article 223 quarter of the French General Tax Code, we remind you that the amount of the expenses and charges referred to in Article 39.4 of said Code for 2019 totals EUR 232,324 and the amount of taxation borne by the Company due to the non-deductibility of such charges should amount to a total of EUR 79,989.
Add-back of general expenditures In application of paragraph 5 of Article 39 of the French General Tax Code, EUR 5,190,339 of expenses are considered as nondeductible for tax income 2019. The related amount of taxation due by the Company adds up to EUR 1,787,034.
b) Net profit before taxes, depreciations and reserves 971 508 (90) 507 802
(1) Subject to adjustment based on 2019 Shareholders' Meeting’s decision regarding the allocation of 2019 income.
(1) Number of shares of the Company, with a par value of EUR 7.8769723, outstanding at the time of distribution of the related dividend, including treasury shares. (2) For natural persons only: the dividend paid in 2017, 2018 and 2019 for the financial years 2016, 2017 and 2018 gave entitlement to a 40% deduction (except where the beneficiary opted for fixed-rate taxation on dividends (prélèvement libératoire forfaitaire, where applicable)).
The following table presents the volume of transactions and trends in the SCOR SE share price on the Euronext Paris stock market throughout the financial year 2019: Volume Value (in EUR millions) Lower (in EUR)Higher (in EUR)Month
May 24, 2007 to maintain its ADRs program managed by The Bank of New York Mellon as a sponsored level 1 facility. ADRs holders have been able to choose to hold their ADRs following the delisting from the NYSE and the end of the registration of the Company at the US Securities and Exchange Commission (SEC).
The following information and statements are fully incorporated into this Report, of which they are an integral part, in the various sections of the Universal Registration Document referred to in the correspondence table below: Management report Universal registration document
Situation and activity of the Company and the Group during the past year Sections 1.1.1, 1.1.2, 1.3.1, 1.3.5, 1.3.6,
Results of the activity of the Company, its subsidiaries and the companies under its control
Table of the Company’s results in the course of the five last financial years Appendix E – 1.2.1
Section 1.2.6Research and development activities within the Group and SCOR SE
Sections 3.1.3, 3.1.4, 3.3.4 and 3.3.5Indications on the use of financial instruments, and the Company’s objectives and policy in terms of financial risk management and market risks
Section 2.3.1• Transactions performed by the Company in its own shares in the framework of Articles L. 225-208, L. 225-209 and L. 225-209-2 of the French Commercial Code -(1)• Notice of holding more than 10% of the share capital of another joint-stock company – Disposal of cross shareholdings
Section 2.3.1.6• Adjustment of the conversion basis for securities granting access to the share capital
Foreseeable evolution Sections 1.3.3, 1.3.4, 1.3.5 and Appendix C – 5.3.9
Collective agreements concluded within the Company and the impact on the economic performance and work conditions of the employees (included in the Non- financial performance declaration of the Group and SCOR SE)
Sections 2.2.1.2, 2.2.1.3 and 2.2.3For each of the corporate officers Total remuneration and advantages of any kind paid or granted in respect of the mandate during the financial year by the Company, the controlled companies or the company controlling it (L. 233-16), distinguishing between fixed, variable and exceptional items, including in the form of equity securities, debt securities or securities giving access to the capital or entitling the holder to the grant of debt securities of the Company, as well as the main conditions for exercising rights, in particular the price and date of exercise and any change in these conditions
The relative proportion of fixed and variable compensation Sections 2.2.1.2 and 2.2.1.3
Exercise of the option to request the return of variable remuneration None
E ADDITIONAL INFORMATION RELATING TO THE MANAGEMENT REPORT OF THE COMPANY AND THE GROUP – CORRESPONDENCE TABLE
Section 2.2.1.4The manner in which the vote of the last ordinary general meeting provided for in II of Article L. 225-100 was taken into account
Section 2.2.1.1Any deviation from the procedure for implementing the remuneration policy and any waiver applied in accordance with the second paragraph of III of Article L. 225-37-2, including an explanation of the nature of the exceptional circumstances and an indication of the specific elements to which a waiver is applied
Commitments of any kind taken by the Company to the benefit of its corporate officers, corresponding to remuneration items, damages or advantages owed or likely to be owed with respect to the taking up, the termination or the change of their functions or after the exercise of such functions, mentioning the precise methods for determining these commitments and the estimated amount of the sums likely to be paid in respect thereof
Information related to the composition, the operation and the powers of the Board
Composition, conditions of preparation and organization of the works of the Board Sections 2.1.2, 2.1.3 and 2.1.4
Description of the procedure implemented by the company pursuant to the second paragraph of Article L. 225-39 and its implementation
Limitations brought by the Board of Directors to the powers of the Chief Executive Officer Section 2.1.1.1
Items likely to have an influence in the case of a tender offer
Restrictions to the exercise of the voting rights and the transfer of shares pursuant to the articles of association or provisions of the agreements brought to the knowledge of the Company in accordance with Article L. 233-11 of the French Commercial Code
Section 2.3.1.2List of the persons holding titles comprising special control rights and description thereof
Section 2.2.3.4Control mechanism provided for in a potential employee shareholding scheme, when the voting rights are not exercised by the latter
Rules applicable to the nomination and the replacement of the members of the Board as well as the modification of the articles of association of the Company
Powers of the Board in particular with respect to the issuance or the redemption of shares Sections 2.3.1.6, 5.1.3 and 5.1.2
(1) The Company did not hold any cross shareholdings in 2019.
F CORRESPONDENCE TABLE – DELEGATED REGULATION (EC) OF MARCH 14, 2019
239 to 2402.1 Auditors 4.8 Statutory Auditors 4.8 Statutory Auditors 239 to 2402.2 Resignation or non-renewal of Auditors 3 RISK FACTORS
3 Risk factors and risk management mechanisms 129 to 1553.1 Material risks specific to the issuer 4 INFORMATION ABOUT THE ISSUER
Reinsurance market developments & Financial market developments 25 to 265.2. Principal markets 1.3.1 & 1.3.2 5.3.
Important events in the development of the issuer's business 1.3.3 Significant events of the year 26 to 27 1.1.4,
Dependency of the issuer with respect to patents or licenses, industrial, commercial or financial contracts and new manufacturing processes 1.2.6 Research and development, patents and licenses 5.5.
Financial position 1.3.6 38 to 39 Financial position, liquidity and capital resources7.1 28 to 377.2 Operating results 1.3.5 Revenues & earnings summary 8 CAPITAL RESOURCES
Sources of financing relating to the material investments in progress and for which firm commitments have already been made 9 REGULATORY ENVIRONMENT
Regulatory environment that the issuer operates in 1.2.1 Introduction 11 to 139.1 353SCOR Universal Registration Document 2019
BOARD PRACTICES14 46 to 70Board of Directors2.1.3Date of expiration of the current term of office14.1
Information on shareholdings and stock options or Company stock purchases by members of administrative and management bodies
Employee profit sharing plans15.3 102 to 115Stock options and performance shares2.2.3 354 SCOR Universal Registration Document 2019
Auditing of historical consolidated financial information4.9Auditing of historical annual financial information18.3
ADDITIONAL INFORMATION19 5.2Share capital19.1 254Description of SCOR’s share capital 248 to 253Charter and Bylaws5.1Charter and Bylaws19.2
43DOCUMENTS ON DISPLAY DOCUMENTS ON DISPLAY21 1.3.11 355SCOR Universal Registration Document 2019
In order to assist readers of the Annual Financial Report, the following table cross-references the information required by
Report of the Board of Directors on the corporate governance 2.4Statutory Auditors’ report on the report on the corporate governance prepared in accordance with article L. 225-37 of the French Commercial Code 127
SCOR SE European Company With a share capital of EUR 1,473,383,816.88 RCS Paris B 562 033 357 Corporate Office 5 avenue Kléber 75116 Paris France Mail address 5 avenue Kléber 75795 Paris Cedex 16 France