A hedging instrument is a designated derivative instrument or, in the case of a foreign currency hedge, a designated non-derivative asset or liability for which the fair value or cash flows offset changes in the fair value or cash flows of the hedged item.
The hedged item may be an asset, a liability, a firm commitment, a highly probable scheduled transaction or a net investment in a foreign operation exposing the Group to fluctuations in fair value or future cash flows, and which is designated as being hedged.
A derivative instrument designated as a cash flow hedge is initially recognized at fair value on the date on which the derivative contract is entered into. The effective portion of gains or losses on the hedging instrument is recognized in other comprehensive income in the cash flow hedge reserve, while the ineffective portion is recognized in the statement of income. Amounts taken to other comprehensive income are transferred to the statement of income when the hedged transaction is reflected in the statement of income, such as when financial income or financial expenses related to the hedge are recognized or when the forecast sale or purchase occurs.
Expected loss US and Canadian Earthquake based on AIR model 3.25% 3.85%
A significant catastrophic event (US or Canadian Earthquake or a US Named Storm) covered by Atlas IX Series 2015-1 or Atlas IX Series 2016-1 and occurring during the coverage period of the respective bonds, would lead to an increase in the fair value of the derivative instrument.
The asset is disclosed as a level 3 investment within insurance business investments (see Note 7.1 above).
Cash-flow hedge accounting is applied when the hedging relationship is determined to be highly effective throughout the term of the hedge. Effectiveness testing is performed at the inception of the hedging relationship and at each reporting 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 income from the date the hedge relationship ceases to be effective. As at December 31, 2016, the fair value of the interest rate swaps was a liability of EUR 11 million (December 31, 2015: liability of EUR 23 million). The amount recognized in other comprehensive income in 2016 is EUR 12 million (2015: EUR 6 million). The amount recognized in the statement of income in 2016 is not material (2015: EUR 1 million).
SCOR purchases and sells forward currency contracts to reduce its overall exposure to foreign exchange balances held in currencies other than the functional currencies of its subsidiaries. The contracts are recorded at their fair value from valuations provided by banking counterparties using market inputs.
The outstanding contracts at December 31, 2016 and 2015, converted into EUR at the closing rates, were as follows: In EUR million
SCOR contracts with Atlas vehicles which meet the criteria of risk transfer according to IFRS 4 are accounted for as reinsurance ceded.
Accounts receivable from assumed insurance and reinsurance transactions 3,313 2,861 6,174 2,614 2,689 5,303
Accounts payable on ceded reinsurance transactions (641) (665) (1,306) (567) (628) (1,195)
The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following initial recognition intangible assets are carried at cost less any accumulated amortization and impairment losses.
Gains or losses arising from the derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of income when the asset is derecognized.
The Group amortizes its other intangible assets with a finite life using the straight-line method over a one to ten year period.
Gross value at December 31, 2014 260 Foreign exchange rate movements 9
Cumulative amortization and impairment at December 31, 2015 (114) Foreign exchange rate movements 5
(1) Disposals and amortization of 2015 mainly include the scrapping of fully amortized software (EUR 19 million).
The increase during the year ended December 31, 2016 of EUR 31 million mainly comprises the capitalization of software development costs relating to the Group’s accounting system, technical accounting system and internal model.
The Group conducted its annual assessment of the amortization periods and amortization methods of these finite useful life intangible assets and concluded that both the amortization periods and existing amortization methodology are appropriate.
The amortization expense recognized against other intangible assets with finite useful lives was EUR 17 million, EUR 14 million, and EUR 7 million, for the years ended December 31, 2016, 2015, and 2014 respectively.
Owner-occupied property is classified as tangible assets. Some buildings may be partially occupied by entities of the Group. Properties are recognized at cost, net of accumulated depreciation and impairment losses. Depreciation is recorded on a straight-line basis over the useful lives of the assets as follows: Category Useful life
The increase in tangible assets in 2016 is mainly related to the continuation of the construction of the Singapore office, to the acquisition of a new office in Paris and to improvements to other properties for a total of EUR 63 million. These increases were partially offset by the disposal of fully amortized assets (furniture and office equipment).
The increase in tangible assets in 2015 mainly related to the acquisition, in June 2015, of the Asia House building, located in London. The total purchase price amounted to EUR 32 million (GBP 24 million), including directly attributable costs. Other increases correspond to the ongoing construction of the Singapore office in which SCOR purchased four additional units and to leasehold improvements in other properties. These increases were partially offset by the disposal of fully amortized assets (furniture and office equipment).
December 31, 2016, SCOR did not have the right to use the building, which is contingent on completion of construction and fitting, expected to take place before June 2017.
Change in scope of consolidation and contract portfolio exchanges - - - - - - - - -
Other changes (including change in shadow accounting) 10 - 10 15 - 15 (15) - (15)
Cash and cash equivalents comprise cash, net bank balances and short-term deposits or investments with a maturity less than three months at the date of purchase or deposit. Money market funds are also classified as cash and cash equivalents, though only to the extent that the fund assets qualify as cash equivalents, or there are strict fund management policies and limits that allow the funds to qualify as cash equivalents.
In EUR million 2016 2015 in 2016 n●52% Cash on hand 872 765 n●48% Short-term deposits and investments 816 861
(1) Cash and cash equivalents include cash held by the Group on behalf of third parties as part of its asset management activity for a total amount of EUR 177 million on December 31, 2016 (EUR 81 million on December 31, 2016).
The Group’s liquidity, defined as cash, cash equivalents, bank overdrafts and short-term government bonds with maturities above three months and below twelve months, which is well diversified across a limited number of banks, amounts to EUR 2,282 million as at December 31, 2016 (December 31, 2015: EUR 2,034 million).
The table below shows the split by currencies of the Group’s cash and cash equivalents balance.
Net cash flows provided by/(used in) operations, excluding changes in working capital 860 1,019 784
NOTE 12. INFORMATION ON SHARE CApITAL, CApITAL MANAGEMENT, REGuLATORY FRAMEWORK AND CONSOLIDATED RESERVES
A breakdown of the movements in the various reserves is provided in Section 4.5 – Consolidated statement of changes in shareholders’ equity.
External costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax from the proceeds of the issue in the line “Additional paid-in capital”.
The number of ordinary shares which were issued and fully paid in circulation as at December 31, 2016, 2015 and 2014 was as follows: Share capital decrease – decision of the board (672,638) (1,260,227) (777,454)
In 2016, the movements are due to the following operations: ●● the Board of Directors’ meeting held on April 27, 2016 decided to reduce the Group’s share capital by cancellation of 672,638 treasury shares for EUR 16 million (EUR 5 million in share capital and EUR 11 million in additional paid-in capital); ●● the issuance of new shares relates to the exercise of stock options for EUR 10 million (EUR 4 million in share capital and EUR 6 million in additional paid-in capital). This resulted in the creation of 554,112 new shares throughout the year.
SCOR’s Ordinary and Extraordinary Shareholders’ Meeting of April 27, 2016 resolved to distribute, for the 2015 financial year, a dividend of one euro and fifty cents (EUR 1.50) per share, being an aggregate amount of dividend paid of EUR 278 million, calculated on the basis of the number of shares eligible for dividend as at the payment date. The ex-dividend date was April 28, 2016 and the dividend was paid on May 2, 2016.
●● maintain strong credit ratings and healthy capital ratios in order to support its business objectives and maximize shareholder value; ●● ensure a high degree of capital fungibility; ●● retain financial flexibility by maintaining strong liquidity and access to a range of capital markets; ●● allocate capital efficiently and support the development of business by ensuring returns on capital employed meet the requirements of regulators and shareholders; and
SCOR uses catastrophe bonds, mortality bonds and side-cars to protect the Group against catastrophic and extreme mortality events.
(1) Based on a 5-year rolling average of 5-year risk-free rates. (2) Ratio of Available Capital over SCR (Solvency Capital Requirements) according to the internal model.
SCOR’s solvency is actively monitored and managed through a solvency scale coupled with a clear escalation process. The solvency scale includes an optimal solvency range targeted by the Group as a solvency ratio between 185% and 220%, as well as the management responses which could be carried out to steer the solvency position back to the optimal range if need be.
On December 20, 2013, SCOR had arranged a EUR 200 million contingent capital facility line with UBS and issued 12,695,233 warrants in favor of UBS. Under this arrangement, the protection was triggered in case of extreme life events, as well as natural catastrophe events included within the last facilities. Each warrant committed UBS to subscribe to two new SCOR shares (maximum amount of EUR 200 million available per tranche of EUR 100 million each, including issuance premium) when the aggregated amount of (i) the estimated ultimate net losses resulting from eligible natural catastrophes incurred by the Group (in its capacity as an insurer/reinsurer) or (ii) the ultimate net claims amount recorded by SCOR group life segment (in its capacity as an insurer/reinsurer) reached certain contractual thresholds between January 1, 2014 and December 31, 2016. In addition, subject to no drawdown having already been conducted under the facility, if SCOR’s share price had fallen below EUR 10 an individual tranche of EUR 100 million would have been drawn down out of the EUR 200 million facility.
This contingent capital facility, which ended on December 31, 2016, was replaced since January 1, 2017, by a new contingent capital arrangement which increases SCOR’s protection from EUR 200 million to EUR 300 million.
Therefore, on December 14, 2016, SCOR arranged a contingent capital facility with BNP Paribas taking the form of a contingent equity line, providing the group with EUR 300 million coverage in case of extreme natural catastrophes or life events impacting mortality. Under this new arrangement, SCOR issued 9,599,022 warrants in favor of BNP Paribas; each warrant giving BNP Paribas the right to subscribe to two new SCOR shares. BNP Paribas has undertaken to exercise accordingly the number of warrants necessary for the subscription of up to EUR 300 million (issuing premium included) of new shares, without exceeding 10% of SCOR’s share capital, when the aggregate amount of (i) the estimated ultimate net losses resulting from eligible natural catastrophes incurred by the Group (in its capacity as an insurer/reinsurer) between January 1, 2017 and December 31, 2019 or (ii) the ultimate net claims amount recorded by SCOR group Life segment (in its capacity as an insurer/reinsurer) over two consecutive semesters over the period from July 1, 2016 and December 31, 2019 reaches certain contractual thresholds as reviewed by SCOR’s Statutory Auditors. In addition, subject to no drawdown having already been conducted under the facility, if SCOR’s daily volume-weighted average share price falls below EUR 10 an individual tranche of EUR 150 million will be drawn down out of the EUR 300 million facility.
Regulators are primarily interested in protecting the interests of policyholders. They ensure that the Group maintains an adequate solvency position to meet unforeseen liabilities arising from economic shocks or natural disasters.
Such regulations not only prescribe approval and monitoring of activities, but also impose obligations related to maintaining a certain level of capital (e.g. capital adequacy) to cover the risk of default and insolvency on the part of the reinsurance companies and insurance companies and meet unforeseen liabilities.
Failure of an operating company to meet the local regulatory capital requirements of the jurisdiction in which it operates could lead to regulatory supervision or administration of the activities of the operating company.
The following table sets out an overview of the debt issued by the Group: In EUR million Maturity
(1) Includes EUR 39 million in accrued interest at December 31, 2016 (December 31, 2015: EUR 39 million). (2) These debts are not publicly traded. Therefore the carrying amounts are reflective of their fair value.
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 redemption of the notes in cash. Accordingly, the entire issue is considered as a financial liability.
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 income of EUR 53.4 million.
On July 28, 2016, SCOR redeemed the remaining balance of the EUR 350 million subordinated note of EUR 257 million.
In 2011, SCOR issued CHF 400 million in perpetual subordinated notes, redeemable by SCOR each quarter on each interest payment date from August 2, 2016. The coupon has been set at 5.375% (until August 2, 2016) and 3-month CHF LIBOR plus a margin of 3.7359% thereafter.
SCOR has entered into a cross-currency swap which exchanges the principal of the first tranche for EUR and exchanges the CHF coupon on the notes for fixed-rate EUR 6.98% and matures on August 2, 2016. See Note 7 – Insurance business investments (Derivatives instruments).
SCOR has entered into a cross-currency swap which exchanges the principal of the second tranche for EUR and exchanges the CHF coupon on the notes for fixed-rate EUR 6.925% and matures on August 2, 2016. See Note 7 – Insurance business investments (Derivatives instruments).
On October 1, 2014, SCOR issued EUR 250 million in perpetual subordinated notes, redeemable by SCOR on each interest payment date from October 1, 2025. The coupon has been set at 3.875% (until October 1, 2025), and resets every 11 years at the prevailing 11-year EUR mid-swap rate + 2.7%.
(1) The amounts presented in other financial liabilities include certain letter of credit charges, custodian and overdraft fees, amortization of issuance fees and other bank charges (commissions, etc.), as well as gains on debt repurchase of EUR 0 million in 2016 (EUR 0 million in 2015 and EUR 0,5 million in 2014).
Provisions are recognized when the Group has a present legal, contractual or constructive obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made.
The Group provides retirement benefits to its employees, in accordance with the laws and practices of each country. The main plans are in France, Switzerland, the US and Germany. Group employees in certain countries receive additional pension payments, paid as an annuity or in capital upon retirement. The benefits granted to Group employees are either in the form of defined contribution or defined benefit plans. Plan assets are generally held separately from the Group’s assets.
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 employee 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 departure 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.
These benefits amounted to EUR 197 million and EUR 165 million at December 31, 2016 and 2015 respectively, and include postemployment benefits related to pension plans of EUR 195 million (2015: EUR 163 million) and provisions for other long-term benefits of EUR 2 million (2015: EUR 2 million).
The defined benefit pension plans and other long-term benefits relate mainly to Switzerland, North America, France and Germany. These locations represent 44%, 24%, 15% and 12% respectively, as at December 31, 2016, (40%, 28%, 16% and 11%, respectively, as at December 31, 2015), of the Group’s obligation under defined benefit plans.
Service cost, net of plan amendments 10 4 6 - 11 5 6 - (3) 1 (1) (3)
Interest income on plan assets (5) (1) (1) (3) (6) (1) (2) (3) (7) (1) (3) (3)
Amortization of actuarial gains and losses through profit and loss for other long term benefits - - - - - - - - 1 1 - -
The following table reconciles movements in the balance sheet amounts for the years ended December 31, 2016, 2015 and 2014: In EUR million Total 2016 Europe Switzerland North
Actuarial (gains)/losses due to change in assumptions (3) 28 15 10 3 1 (7) 12 (4) 50 20 13 17
Fair value of assets as at January 1 243 29 137 77 209 27 111 71 179 25 97 57
Interest income on plan assets 5 1 1 3 6 1 2 3 7 1 3 3
(2) During the year, the US plans beneficiaries had the opportunity to decide to settle their benefit by perceiving a lump sum instead of annuities. The election period ended on December 31, 2016.
NET DEFINED BENEFIT OBLIGATION AS AT DECEMBER 31 – DEFICIT 197 112 41 44 165 101 28 36 149 101 19 29
The following table summarizes the movements in accrued (prepaid) balances recorded in the consolidated balance sheet as at December 31, 2016, 2015 and 2014: In EUR million Total 2016 Europe Switzerland
Accrued/(Prepaid) as at December 31 197 112 41 44 165 101 28 36 149 101 19 29
The following table includes the allocation of plan assets as at December 31, 2016 and 2015: In EUR million Total Europe Switzerland North America
At December 31, 2016, other provisions comprised EUR 64 million in provisions mainly covering contingent liabilities related to the Generali U.S. acquisition in 2013 (2015: EUR 121 million). In 2016, a contingent liability has been reversed as it was no longer deemed relevant. The other provisions also included provisions related to litigations for EUR 11 million (2015: EUR 9 million).
The Group maintains reserves to cover its estimated liability for future claims and benefit payments resulting from reinsurance treaties known and incurred but not reported (IBNR). Reserves are reviewed by management during the year, using new information as soon as it is available, and are adjusted if necessary. Management considers many factors when establishing reserves, including: ●● information from ceding companies; ●● historical developments, such as reserve patterns, claims payments, number of claims to be paid and product mix; ●● internal methods to analyze the Group’s experience; ●● most recent legal interpretations concerning coverage and commitments; ●● economic conditions; ●● biometric developments such as mortality, morbidity and longevity; and
Reserves for investment or financial reinsurance contract liabilities are recognized for reinsurance contracts that do not meet the risk transfer criteria described in IFRS 4.
Derivatives embedded in reinsurance contracts that do not meet the definition of an insurance contract are separated, measured at fair value in accordance with IAS 39, with changes in their fair value recognized in income.
Total gross insurance contract liabilities 14,468 14,045 28,513 13,744 13,989 27,733
Ceded claims reserves & claims expense reserves (466) (660) (1,126) (346) (634) (980)
Ceded claims reserves & estimates – end of year (2) 490 598 467 473 412 765 690 629 619 634 660
Ceded UPR – end of year 18 39 40 40 51 84 93 101 142 187 167
Net DAC – end of year 108 228 226 238 277 320 352 371 431 522 538
Gross cumulative inception to date incurred losses as at December 31, 2016 (2) 5,275 9,176 9,028 8,844 10,092 10,860 11,151 11,005 11,898 12,837 -
Ceded cumulative inception to date incurred losses as at December 31, 2016 (2) 418 685 566 444 449 883 783 694 726 729 -
Net cumulative inception to date incurred losses as at December 31, 2016 (2) 4,857 8,491 8,462 8,400 9,643 9,977 10,368 10,311 11,172 12,108 -
Gross UPR – end of year 575 1,108 1,099 1,135 1,384 1,516 1,683 1,663 1,938 2,239 2,261
(1) The table includes reserves for Converium for years from 2007 onwards only. Figures for 2007 reflect the completion of the initial accounting of the business combination with Converium.
Ceded claims reserves and claims estimates as at January 1 (634) (619)
Net claims reserves and claims estimates as at January 1 11,116 10,469
Revaluation of opening balance at current year end exchange rates (248) 546
Net claim reserves and claims estimates as at December 31 11,124 11,116
Ceded claims reserves and claims estimates as at December 31 (660) (634)
GROSS CLAIMS RESERVES AND CLAIMS ESTIMATES AS AT DECEMBER 31 11,784 11,750
Net % of Group Non-Life claims paid 0.8% 0.5% 0.1% 0.1%
Change in reserves from portfolio movements and actuarial calculation (215) 188
Total collateral from retrocessionaires in favor of SCOR - 129 639 34 - 473 1,275
Share of retrocessionaires contract liabilities - 339 818 33 1 67 1,258
Total collateral from retrocessionaires in favor of SCOR - 142 624 39 - 526 1,331
Share of retrocessionaires contract liabilities net of collateral (1) - 197 194 (6) 1 (459) (2) (73)
The total expense for 2016 relating to share-based payments is EUR 28 million (2015: EUR 45 million), with EUR 1 million (2015: EUR 2 million) relating to stock options granted under the 2012 to 2016 plans (2015: 2012 to 2015) and EUR 27 million (2015: EUR 43 million) relating to free shares allocated under the 2011 to 2016 plans (2015: 2011 to 2015).
The terms and conditions of the stock option plans of March 10, 2016 and December 1, 2016, which are similar to those previously granted by SCOR, provide that the options allocated to Partners can be exercised at the earliest four years after the grant date, if the presence condition is met in addition to the satisfaction of certain performance conditions, which are based on the strict observance of the principles set forth in the SCOR Code of Professional Conduct, on the solvency ratio and the SCOR Group’s ROE (in 2016 and 2017 for the March 10, 2016 plan and in 2016, 2017 and 2018 for the December 1, 2016 plan).
The fair value of options is estimated by using the Black & Scholes method which takes into account the terms and conditions under which the options were granted. The following table lists the characteristics used at the end of 2016, 2015 and 2014:
The Group also allocates free shares to its employees under the following terms: Date of grant Date of vesting Number of shares originally granted Estimated price on grant date 09/01/2011 (LTIP) 09/02/2017 415,500 EUR 16.68 09/01/2011 (LTIP) 09/02/2019 297,500 EUR 16.68 07/26/2012 (LTIP) 07/27/2018 57,500 EUR 19.27 07/26/2012 (LTIP) 07/27/2020 51,000 EUR 19.27 03/05/2013 (LTIP) 03/06/2019 85,500 EUR 22.22 03/05/2013 (LTIP) 03/06/2021 232,500 EUR 22.22 03/04/2014 (LTIP) 03/05/2020 31,500 EUR 24.70 03/04/2014 (LTIP) 03/05/2022 88,500 EUR 24.70 03/04/2015 (LTIP) 03/05/2021 40,000 EUR 29.36 12/18/2015 (LTIP) 12/19/2021 106,432 EUR 34.59 02/23/2016 (LTIP) 02/24/2022 257,732 EUR 31.82
All grants under the performance share plans of February 23, 2016 and December 1, 2016 (except LTIP), to the Chairman and Chief Executive Officer, to the members of the Executive Committee, to the Executive Global Partners and to the Senior Global Partners and half of the allocation to the other beneficiaries (below 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, on the solvency ratio and the SCOR Group’s ROE in 2016, 2017 and 2018.
All shares granted under the “LTIP” plans of February 23, 2016 and are subject to performance conditions which are based on the strict observance of the principles set forth in the SCOR Code of Professional Conduct, on the solvency ratio and the SCOR Group’s ROE between 2016 and 2021.
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 2016, 2015 and 2014: 12/01/2016 Plan 02/23/2016 Plan 02/23/2016 Plan (LTIP)
Non-French residents 3 years 3 years - 3 years 6 years 2 years 03/04/2015 Plan (LTIP)
12/01/2014 Plan 11/05/2014 Plan 07/30/2014 Plan 03/04/2014 Plan 03/04/2014 Plan (LTIP)
Non-French residents 6 years 5 years 4 years 2 years 4 years 8 years
The main components of corporate income taxes for the years ended December 31, 2016, 2015 and 2014 are presented below: In EUR million 2016 2015 2014
Changes in deferred taxes due to changes in tax rates or tax law (62) - (1)
CORPORATE INCOME TAX (EXPENSE)/BENEFIT REPORTED IN STATEMENT OF INCOME (166) (227) (166)
(1) The effective tax rate calculation method has been adjusted to exclude the share in results of associates from the income before tax. The effective tax rate previously reported in the 2014 Registration Document was 24.5%.
Differences between French and local corporate income tax rates 84 114 106
Write-down and reversal of previous write-down of deferred tax assets - - (1)
The French Finance bill for 2017 has amended the corporate income tax rate which will be reduced to 28% starting 2018 for the first EUR 0.5 million fraction of taxable income and from 2020 irrespective of the amount of the taxable income. The impact of this amendment, calculated based on the available realization forecasts of the French fiscal group deferred taxes, amounts to EUR 57 million and relates to most of the deferred tax asset (mainly the losses carryforward) and liability categories.
Income tax risk provisions have been reviewed and adjusted as part of the regular tax risk provisioning process.
The standard tax rates for the primary locations in which the Group has operations are as follows: NOTE 17.3. CORpORATE INCOME TAx EFFECTS RELATING TO OTHER COMpREHENSIVE INCOME
Items that will not be reclassified subsequently to profit and loss (38) 8 (30) (7) 2 (5) (43) 7 (36)
Items that will be reclassified subsequently to profit income 117 (3) 114 276 11 287 556 (38) 518
Elimination of internal capital gains - - - - - -
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 December 31 In EUR million 2016 2015 2014
The table below shows the net retrocession result for the years ended December 31, 2016, 2015 and 2014: In EUR million
Change in ceded unearned premium reserves (2) (12) (14) 1 28 29 1 30 31
The decrease of the net results of retrocession of SCOR Global Life is due to inforce optimization actions as well as claims and lapse experience which had impacted the 2015 result.
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 by management’s judgment.
Other operating and administrative expenses include expenses incurred by the Group, excluding gross commissions, as follows: In EUR million 2016 2015 2014 in 2016 n●3% Taxes other than income taxes 22 12 9
Basic and diluted earnings per share are calculated as follows for the years ended December 31, 2016, 2015 and 2014 respectively: In EUR million
Net income attributable to ordinary shareholders 603 185,022 3.26 642 185,668 3.46 512 186,070 2.75
There is no shareholder meeting the criteria of a related party according to IAS 24 for the years ended December 31, 2016, 2015 and 2014.
The total gross compensation of key management personnel, allocated or paid, which includes short-term employee benefits, postemployment benefits, other long-term benefits, termination benefits and share-based payments, for the years ended December 31, 2016, 2015, and 2014 is outlined below: Fixed cash compensation 5,974,813 5,856,849 4,857,600
(1) It should be noted that the figures stated above do not represent paid compensation but correspond to actuarial estimates in line with AFEP-MEDEF corporate governance code for the allocation of free shares and subscription options during the reference period. The value is calculated according to the same assumptions as those used for the Group accounts (IFRS 2).
A commitment received is recognized for potential sources of liquidity such as unused lines of credit, unused loans capacity or unused letters credit purchased to financial institutions but not provided to ceding companies.
(1) Accounting principles for letters of credit have been changed in 2016. SCOR now considers that the commitments related to the letters of credit given to ceding companies are born by the financial institutions to which SCOR has purchased the letters of credit. The amount disclosed in the commitment table of the 2015 Registration Document was EUR 1,638 million. The unused portion of the letters of credit purchased to financial institutions is now considered as a commitment received by SCOR for a total amount of EUR 410 million as at December 31, 2016 (EUR 413 million as at December 31, 2015).
In addition, SCOR pledges assets to the benefit of its consolidated subsidiaries as collateral for its internal retrocessions. As at December 2016, the amount of assets pledged internally is EUR 2,338 million (EUR 2,256 million as at December 2015).
The total carrying amount of financial assets pledged to the benefit of SCOR as collateral is EUR 755 million (EUR 817 million in 2015). These amounts include securities pledged by retrocessionaires for a total amount of EUR 425 million (2015: EUR 498 million) detailed in Note 15 – Net contract liabilities. The remaining amount relates to pledged assets received on assumed reinsurance.
As security for the Group’s technical liabilities, various financial institutions have furnished sureties for our company in the form of letters of credit. The total amount, not included in the table above, as at the balance sheet date was EUR 1,503 million (EUR 1,638 million in 2015). In accordance with the terms of these letter of credit facilities, the Group must meet certain minimum requirements relating to net worth. The Group currently meets all such requirements.
As at December 31, 2016, SCOR has an outstanding letter of credit capacity of EUR 410 million (EUR 413 million in 2015), recognized as a commitment received banks. This outstanding capacity can be used to provide collateral on the forthcoming underwritten business.
SCOR also owns a call option on the remaining shares of a non-core business entity currently consolidated under the equity method, which it may exercise between March and September 2017. SCOR would obtain control over this entity upon exercising this option.
Contingent liabilities are disclosed in Note 14 – Employee benefit and other provisions, paragraph 2 “Other provisions”.
The Supreme Court has accepted the State attorney’s appeal on October 10, 2013.
MAZARS Represented by Jean-Claude Pauly and Guillaume Wadoux Tour Exaltis – 61, rue Henri Regnault 92075 Paris-La Défense Cedex, France CRCC de Versailles 06/22/1990
Date of the Shareholders’ Meeting called to approve the financial statements for the financial year ending 12/31/2019
See Section 4.6 – Notes to the consolidated financial statements, Note 20 – Other operating and administrative expenses for a breakdown of audit fees.
CONSOLIDATED FINANCIAL STATEMENTS Auditing of historical consolidated financial information < #4 4.9. AUDITING OF HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
●● The report of the Statutory Auditors on the consolidated financial statements for the financial year ended December 31, 2014 published on pages 289 to 290 of the Registration Document filed with the AMF on March 20, 2015 under Number D.15-0181 (and from pages 279 to 280 of the free translation into English of such Registration Document, such translation being available on SCOR’s website www.scor.com).
The report of the Statutory Auditors on the consolidated financial statements for the financial year ended December 31, 2016 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.
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: ●● Note 7 to the consolidated financial statements describes the principles and methods used to estimate the valuation and impairment of investments and derivative instruments.
●● Notes 5, 6 and 9 to the consolidated financial statements describe the principles and methods used to assess the valuation of goodwill, the value of business acquired attached to the Life reinsurance portfolios and the value of other intangible assets. These notes describe the amortization methods used as well as the methods used to carry out the related annual impairment tests.
We have examined the approaches used in the amortization policies and in the impairment tests, the cash flow forecasts and the consistency of the assumptions used in this framework and we have verified that the information described in Notes 5, 6 and 9 to the consolidated financial statements is appropriate.
We have examined the approaches used in this impairment test, the forecasted future taxable income and the assumptions made. We have verified that the information described in Note 17 to the consolidated financial statements is appropriate.
●● As stated in Notes 1 – “Basis of preparation – Accounting principles and methods specific to reinsurance activities”, 7, 8, 10 and 15 to the consolidated financial statements, the technical accounts specific to reinsurance are estimated on the basis of reinsurance commitments or on statistical and actuarial bases, particularly in the case of accounts received from cedents recognized as assumed and ceded receivables, assumed and ceded technical reserves, and deferred acquisition costs. The methods used to calculate these estimates are described in the notes to the consolidated financial statements.
We have checked that appropriate information is given in the notes to the consolidated financial statements.
SCOR SE’s corporate accounts for the financial years ended December 31, 2016, 2015 and 2014, included respectively in Appendix C of this Registration Document, in Appendix C of the Registration Document filed with the AMF on March 4, 2016 under the number D.160108 and in Appendix A of the Registration Document filed with the AMF on March 20, 2015 under the number D.15-0181, were the subject of reports by the Statutory Auditors, featured respectively in Appendix C of this Registration Document, in Appendix C of the Registration Document filed with the AMF on March 4, 2016 under the number D.16-0108 and in Appendix A of the Registration Document filed with the AMF on March 20, 2015 under the number D.15-0181.
5.1. CHARTER AND BYLAWS 226 5.1.1. Corporate purpose of the issuer (article 3 of the bylaws) 226 5.1.2. Summary of the bylaws and internal regulations of the Company concerning the members of its administrative, management and supervisory bodies 226 5.1.3. Rights, privileges and restrictions attached to existing shares 227 5.1.4. Actions required to modify shareholders’ rights 228 5.1.5. Conditions for calling Annual General Meetings and Extraordinary Shareholders’ Meetings (articles 8 and 19 of the bylaws) 230 5.1.6. Provisions that could delay, defer or prevent a change in control or in the shareholder structure 230 5.1.7. Disclosure thresholds 231 5.1.8. Conditions governing modifications to the share capital (other than legal provisions) 231 5.2. DESCRIPTION OF SCOR’S SHARE CAPITAL 232 5.3. THIRD-PARTY INFORMATION AND STATEMENTS BY EXPERTS AND DECLARATIONS OF ANY INTEREST 234 5.3.1. Expert’s report 234 5.3.2. Information from third parties 234 5.4. PUBLISHED INFORMATION 234 5.5. MATERIAL CONTRACTS 234
5.1.1. CORpORATE puRpOSE OF THE ISSuER (ARTICLE 3 OF THE BYLAWS)
Under Article L. 225-43 of the French Commercial Code, the directors, other than legal entities, Chief Executive Officer and Chief Operating Officers may not borrow money or obtain a guarantee from the Company. Any such loan or guarantee would be void and may not be relied upon by third parties.
After approval of the financial statements and recognition of the existence of distributable funds in the form of earnings for the financial year less prior losses plus, if applicable, any profit carried forward, the Shareholders’ Meeting shall distribute them as follows: ●● sums to be transferred to reserves pursuant to legal requirements; ●● 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 among all shares in proportion to their unredeemed paid-up value, it being stipulated that for a period of two years starting from the reverse split operation on the Company’s shares pursuant to the seventeenth resolution of the Ordinary and Extraordinary Shareholders’ Meeting of May 16, 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.
If 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.
Under French law, there are two types of Shareholders’ Meetings: ordinary and extraordinary.
The Shareholders’ Meeting’s decisions are taken by a majority (either a simple majority for Ordinary Shareholders’ Meetings or a two-thirds majority for Extraordinary Shareholders’ Meetings)
ADDITIONAL INFORMATION #5 of the votes validly cast. Abstentions by those present in person or by correspondence or represented by proxy is not deemed as a vote against the resolution submitted to a vote.
In addition to rights to certain information regarding SCOR SE, any shareholder may, between the convening of the meeting and the date of the meeting, submit to the Board of Directors written questions relating to the agenda for the meeting. The Board of Directors must respond to such questions during the meetings, subject to confidentiality concerns.
5.1.5. CONDITIONS FOR CALLING ANNuAL GENERAL MEETINGS AND ExTRAORDINARY SHAREHOLDERS’ MEETINGS (ARTICLES 8 AND 19 OF THE BYLAWS)
The authorization granted to the acquisition or increase of stakes, whether directly or indirectly, may be subject to the compliance with commitments made by one or several of those requesting approval.
For further details, see Section 4.6 – Notes to the consolidated financial statements, Note 12 – Information on share capital, capital management, regulatory framework and consolidated reserves and to Appendix C – 5 Notes to the corporate financial statements, Note 5 – Shareholders’ equity.
The Company certifies that the following information in this Registration Document and received from third parties has been accurately reproduced and that as far as the Company is aware and is able to ascertain from information published by said third party, no facts have been omitted, which would render the reproduced information inaccurate or misleading: ●● data issued from the AM Best Special Report Reinsurance (2016 Edition) and relating to the ranking on reinsurance market participants quoted in Section 1.1.1 – Group key figures and Section 1.3.4 – Information on SCOR‘s competitive position; ●● ratings issued by the Standard & Poor’s, Fitch Ratings, AM Best and Moody’s rating agencies quoted in Section 1.2.4 – Ratings information and Appendix A – 2 – Internal control and risk management procedures; ●● 2015 Society of Actuaries (SOA) and Munich Re Life survey of U.S. life reinsurance, published in 2016, quoted in Section 1.3.5.3 – SCOR Global Life.
APPENDIX A – REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS 236 1 Terms and conditions for preparing and organizing the work of the Board of Directors 236 2 Internal control and risk management procedures 237 3 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 247
APPENDIX C – UNCONSOLIDATED CORPORATE FINANCIAL STATEMENTS OF SCOR SE 249 1 Significant events of the year 249 2 Balance sheet 250 3 Income statement 252 4 Off-balance sheet commitments 254 5 Notes to the corporate financial statements 255 6 Certification of audit of historical financial information 277
1 Social impact of SCOR’s activity 279 2 SCOR’s Environmental and Climate Policy 288 3 Information related to societal commitments in support of sustainable development 294 4 Statutory Auditor’s report on the review of selected SCOR SE environmental and social indicators 299
APPENDIX G – COMMISSION REGULATION OF APRIL 29, 2004 – CORRESPONDENCE TABLE 311
In accordance with the provisions of Article L. 225-37 of the French Commercial Code (Code de commerce), this report sets forth the composition of the Board of Directors and the implementation of the principle of gender balance among its members, the terms and conditions for the preparation and organization of the work of the Company’s Board of Directors, as well as the internal control and risk management procedures that have been implemented by the Company.
This report was approved by the Board of Directors on February 21, 2017.
France) of December 2008 and updated in April 2010, June 2013, November 2015 and November 2016 (“AFEP-MEDEF corporate governance code”) as its reference code, in accordance with the act of July 3, 2008 (act no. 2008-649 aimed at providing various provisions regarding the adaptation of French company law to EU law, amending Articles L. 225-37 and L. 225-68 of the French Commercial Code).
Details of this code can be found on the Company’s website www.scor.com or alternatively on AFEP’s website www.afep.fr.
The drafting of the Chairman of the Board’s report requires preparatory work involving: ●● the Risk Department; ●● the Finance Department; ●● the Group Operations Department.
For information on the powers of the corporate officers and specific limitations to the powers of the Chairman and Chief Executive Officer, see Section 2.1.1 – Corporate governance principles.
For information on the corporate officers’ compensation and benefits, see Section 2.2.1 – Compensation of the executive corporate officer and directors.
This report was prepared with the contribution of the Group Risk Management Department, the risk management departments of the operational entities, the Group Internal Audit Department, the General Secretariat and the Finance Department. It was presented to the Audit Committee on February 20, 2016 and approved by the Board of Directors of SCOR SE (the “Company”) on February 21, 2016.
8. Ensuring monitoring of the risk management and internal control systems.
The structure of this report is based on these components corresponding to the framework implemented by SCOR: ●● components 1 and 2 are addressed in the “Internal environment” and “Setting of objectives” sections; ●● components 3, 4 and 5 are described in the section “Identification and assessment of risks”; ●● components 6, 7, and 8 are respectively addressed in the “Principal activities and participants of risk control”, “Information and communication”, and “internal control system monitoring” sections; ●● the elements concerning accounting and financial reporting are separate and are presented in the last section.
Each component is composed of several complementary mechanisms. These mechanisms are adapted to Divisions and legal entities when appropriate. Indeed some mechanisms are only relevant at Group or Division level and are not implemented specifically at the legal entity level in line with materiality principles.
Global functions • Actuarial & Risks • Finance • Operations • Strategy &
Within this environment, control responsibilities are exercised as follows: ●● SCOR SE’s Board of Directors relies on several dedicated committees, including, but not limited to, the Audit Committee and the Risk Committee to exercise its control responsibility over the objectives it has set for the Company. These two committees are both chaired by independent directors; ●● SCOR SE’s Board of Directors, following a recommendation made by the Compensation and Nomination Committee, decided that a number independent directors of SCOR SE should be members of the Boards of some of the main subsidiaries in various countries with a view to enhancing the Group’s oversight of local operations; ●● the Group’s Executive Committee is chaired by the Chairman and Chief Executive Officer of SCOR SE and meets on a weekly basis. The Executive Committee defines the procedures for implementing the strategy decided by the SCOR SE’s Board of Directors in line with the principles set out in Group policies, approved by the Board of Directors, for its main areas of activity (e.g. investment, finance, risk management) and for certain topics, such as the underwriting plan and the allocation and management of resources. The Executive Committee also supervises the functioning of the Group and the Hubs by monitoring, on a quarterly basis, the bodies contributing to the sound administration of the Group. In addition to the Chairman and Chief Executive Officer, the Executive Committee is currently made up of: – the Group Chief Financial Officer (CFO),
Group business standards and practices are governed by Group policies and underlying guidelines established in a common format, by the three divisions and the central functions such as the Group Internal Audit Department and the functions managed by the Group Chief Financial Officer, the Group Chief Operating Officer and the Group Chief Risk Officer respectively. Group policies are approved by the Group Executive Committee and for certain topics are submitted regularly to the relevant committees of the Board and, ultimately, to the Board of Directors of the Company. These Group policies are not intended to enumerate all the rules governing SCOR’s activities in the different countries in which the Group operates, but rather to establish certain principles intended to ensure that SCOR Group companies and employees share a common understanding of the Group’s standards and that they work in compliance with these standards. When approved, these documents are all made available to employees on the SCOR intranet on a dedicated page.
In 2016, a number of Group policies were reviewed for accuracy, completeness and reliability.
To promote the latest Group policies in force and other businessrelated legal and compliance requirements (e.g. anti-fraud, antibribery, anti-money laundering, sanctions compliance, anti-trust/ competition law), training sessions for certain staff are scheduled and conducted both in person and via e-learning modules on an annual basis in line with an annual compliance plan.
The Group Risk Management Department is supported in these tasks by the departments in charge of risk management at SCOR Global P&C, SCOR Global Life and SCOR Global Investments. In addition, the Hub risk managers are involved in promoting a risk aware culture and implementing the appropriate measures at a local level. Compliance with local regulations and constraints is ensured by Hub General Counsels.
For several years, SCOR has implemented and formalized threeyear strategic plans. SCOR launched its three-year strategic plan (2016 to 2019), Vision in Action, in September 2016. ‘Vision in Action’ is largely a continuation of SCOR’s previous strategic plan, ‘Optimal Dynamics’, and although some refinements have been made, it builds on the success achieved by leveraging its proven principles and cornerstones.
The clarity and detailed description of strategic objectives and their implementation within the Group support the identification, evaluation and control of risks, whatever their nature (e.g. underwriting risk, market risk, and operational risk), possibly caused by these objectives.
Several processes and tools for identifying and assessing risks have been implemented to approach risk from different angles and to deal with them in an exhaustive manner. These include: ●● a risk information process: every quarter, the Group Risk Committee reviews the ”Group Risk Dashboard“ which describes and assesses the major risks the Group is exposed to. This report assembles various risk assessments from different identification and assessment processes for all risk categories; ●● a process for the monitoring of risk exposures compared to risk tolerances, i.e. the limits established in order to ensure that the Group’s risk profile remains aligned with the risk level validated by SCOR SE’s Board of Directors. The Group uses various risk measures to define these exposures, which are measured based on either model outputs and/or expert opinions, depending on the technical constraints and the level of information available. This includes: – the ”risk driver“ system enables the Group to manage the annual aggregate exposure to each major risk. The objective is to avoid overconcentration of risk and hence maximize diversification benefits. For the majority of SCOR’s risk drivers, the amount of post-tax retained annual exposure per main risk driver (with a probability of 1 in 200 years) is limited to a percentage of the Group’s available capital. Other risk drivers have limits expressed in terms of reduction in the Group’s solvency ratio or duration for invested assets,
– an ”extreme scenario“ system designed to avoid the Group’s over-exposure to one single event. The amount of post-tax retained exposure to each defined extreme scenario (with a probability of 1 in 200 years) is limited to 10% of available capital,
– limits per risk are set in the underwriting and investment guidelines; ●● a “footprint scenarios” process: this process aims to review and assess the potential impact on the Group of selected deterministic scenarios. This process provides an alternative perspective on the Group’s exposures. Working groups dedicated to specific subjects are composed of experts across the Group, and coordinated by the Group Risk Management Department with the support of the divisional Chief Risk Officers. These groups perform quantitative studies which are summarized in specific reports; ●● an Emerging Risks process: This process is part of SCOR’s ERM Framework and is linked to other risk management processes such as the “footprint scenarios” process. The process, governance, roles and responsibilities are set out in dedicated guidelines and reviewed on an annual basis. Emerging risks within SCOR are overseen by an ad-hoc Committee composed of the CROs of the operating divisions and the Head of Group Risk Management. The individual risk assessments are carried out by a dedicated team of experts from SCOR Global P&C, SCOR Global Life and the Group functions. Critical emerging risks are reported to SCOR’s Executive Management. SCOR, as a member of the CRO Forum, also actively participates and contributes to the CRO Forum Emerging Risks Initiative alongside other major insurers and reinsurers.
●● the internal model, which is deeply embedded in SCOR’s risk management system and contributes to the assessment of risks. SCOR uses its internal model for determining economic capital. Its results are used to implement SCOR’s underwriting and asset management policies and guidelines.
●● Control of the Group information system is overseen by the Group IT Department at two complementary levels: specific IT processes and business processes all covered by IT solutions. For specific IT processes, a special unit of the Group IT Department deals with all issues of information system security.
Periodic audits of information security applications and procedures are conducted. For a number of years, SCOR has been improving its control procedures based on the COBIT (Control objectives for information and technology) guidelines covering the risks listed in its major processes, in particular relating to the development, advancement and use of all solutions, and access to systems and databases. The IT continuity plan has been strongly reinforced with regards to the private cloud of the Group, which hosts all production applications and processes and ensures a systematic replication of all databases to a second remote site. In addition, employees can be temporarily moved to any other Group Hub office, or even work from home with their laptop or personal computer.
●● The General Secretariat contributes to the management of the following functions: – legal and functional governance of the Group; – compliance, alongside the Group Chief Compliance Officer reporting to the General Secretariat (special attention is given to anti-trust/competition law, anti-money laundering and terrorism financing, sanctions and embargoes, anti-bribery, anti-fraud, data protection and privacy, insider trading and conflicts of interest); – management of the regulatory supervision of the Group and coordination at legal entity level with the relevant legal departments; – the Group’s insurance policies, in particular with respect to D&O and professional liability.
Within the General Secretariat, the Group Legal Department exercises a control function in areas such as the entry into agreements and the supervision of major disputes. This department is also involved where relevant in the aforementioned control with regards to underwriting of reinsurance business. It also monitors compliance with the Group’s filing obligations, including toward the AMF and the Six Swiss Exchange (SWX).
●● The budgetary control system for general expenses is organized and managed by the Group Cost Control and Budget Department.
●● The Group Treasury Department manages the Group’s operating cash flow, directly or indirectly and prepares a weekly centralized report of the Group’s cash situation.
●● The IFRS Center of Excellence (IFRS CoE) determines IFRS accounting policies and handles the accounting of complex transactions.
●● The Group Risk Management Department’s primary focus is to develop and manage ERM mechanisms, promote ERM concepts throughout the Group and perform a second-level control over reinsurance underwriting as mentioned above.
●● The Prudential and Regulatory Affairs Department monitors the prudential regulations and advises the Group. It ensures the Group actively positions itself vis a vis the different jurisdictions and requirements to which it is exposed or could be exposed notably by coordinating SCOR’s actions to comply with regulatory requirements for the supervision of (re)insurance companies and Groups in France and SCOR’s interactions with the Autorité de Contrôle Prudentiel et de Résolution (ACPR) and by monitoring SCOR’s interactions with (re)insurance supervisors worldwide through regular contacts with the SCOR teams in charge locally. It also coordinates the Group’s efforts to adapt to new major prudential regulations, such as Solvency II or ComFrame.
The Group invests in assets through its SCOR Global Investments Division composed of an asset management company regulated by the French Autorité des marchés financiers (SCOR Investment Partners SE) and a Group Investment Office (GIO).
The Group has harmonized the principles governing the management of its assets: the Group Policy on Invested Assets defines the Group’s governance in terms of asset management and the Manual of Group Investment Guidelines determines the limits for concentration risk as well as limits of exposure to different asset classes. The Manual of Group Investment Guidelines thus determines the conditions in which SCOR Global Investments will implement the Group investment policy as defined by the Group Investment Committee. These two documents are rolled out locally to ensure consistency across the Group.
The investment strategy at SCOR is risk based and the portfolio positioning is derived from the risk appetite allocated by the Group to invested assets as well as the Group risk tolerance.
The primary investment objective of SCOR is to generate recurring financial income in accordance with the risk appetite framework of the Group, and to ensure that the Group: ●● is able to meet its claims and expense payment obligations at all times; and
As a general principle, and in compliance with local regulations, legal entities of SCOR appoint the Group to supervise and implement the investment and reinvestment of all of their invested assets. This relationship is put in place through an Investment Management Agreement (“IMA”) which includes local investment guidelines.
SCOR delegates to SCOR Investment Partners the implementation of the investment strategy for its invested assets as determined by the Group Investment Committee. This relationship is put in place through a Master Investment Management Agreement (“MIMA”) which includes the list of invested assets portfolios and legal entities and their respective investment guidelines. In case of local regulatory restrictions or due to the size of some investment portfolios, some legal entities may not be included in this framework. They should delegate to external asset managers the management of their invested assets through a strong selection process. When possible, SCOR Investment Partners acts as an investment advisor to these legal entities.
●● Financial communication: The establishment and centralization of all financial information – particularly press releases, intended for the market, investors, financial analysts, and the press – are the responsibility of the Corporate Communications Department and the Investor Relations Department, which respects a formalized process. Financial information intended for rating agencies is the responsibility of the Rating Agencies Department. All of this information is ultimately controlled by General Management.
SCOR has increased the use of collaborative sites enabling it to share and retain archived documents or to collect and centralize information specific to certain subjects (e.g. emerging risks) from various sources.
SCOR also operates an “Internal Control System Competence Center” (ICS-CC) which reports to the Group Risk Management Department. The core objective of this competence center is to pool the ICS expertise in order to foster a consistent ICS approach and application of ICS standards across the Group. The ICS-CC consists of experts, who are dedicated to coordinating the internal control formalization activities within the Group, its divisions and entities, and supporting the business process owners where necessary. The ICS standards are applied based on the principle of proportionality. ICS processes have been documented accordingly, focusing on those considered the most critical. The ICS documentation is being progressively deployed across the Group and regularly reviewed for continuous improvement.
Furthermore, the Group Internal Audit Department must inform the Executive Committee and the Audit Committee of any unsatisfactory conditions or risks.
When the Group Internal Audit Department concludes that the management has accepted a level of risk that may be unacceptable to the organization, it must discuss the matter with the Executive Committee. If the Head of Group Internal Audit determines that the matter has not been resolved, he/she must communicate the matter to the Audit Committee.
The Group Internal Audit Department develops a multi-year internal audit plan (revised at least annually) in a risk-based manner, taking the organization’s risk management framework and including risk appetite levels set by management for the different activities, or parts of the organization, into account. The expectations of senior management and the Audit Committee are considered in this process. Once reviewed and approved by the Audit Committee, it is communicated internally and summaries are published on the SCOR intranet.
The accounting and finance function is the responsibility of the Chief Financial Officer, who manages all financial areas in order to have an overall view of the Group’s technical and financial results.
The Chief Financial Officer does not, however, exercise direct control over all accounting information systems and relies on the accounting departments of operating companies, which provide him with quarterly consolidation packages, as well as on the accounting departments of SCOR Global P&C, SCOR Global Life and SCOR Global Investment which assist him in coordinating aspects relative to the processes, methods and reporting.
The implementation of the new information system enabling the booking, valuation and monitoring of all assets owned by Group entities has substantially improved the investment accounting model. These accounting tools have been substantially deployed throughout the Group’s principal subsidiaries. The completion of this project in early 2011 improved the investment accounting organization, definition of roles, responsibilities and processes.
At the end of 2009, SCOR decided to fully review all its finance applications by launching a Group wide “one ledger” program. The main objective of this program was to simplify, through an innovative approach based around SAP, and vastly improve the accounting functions for all SCOR entities. This program includes: ●● the use of a single chart of accounts (with minimum local specificities, aligned with existing source systems); ●● one system for one IT solution; ●● streamlined, integrated and standardized processes across the Group; ●● limited and automatized mappings between systems; ●● extended capabilities for Reporting (including drilldown from financial to source system data); ●● enhanced audit trail.
In our capacity as Statutory Auditors of SCOR SE and in accordance with Article L. 225-235 of the French Commercial Code (Code de commerce), we hereby report to you on the report prepared by the Chairman of your Company in accordance with Article L. 225-37 of the French Commercial Code (Code de commerce) for the year ended December 31, 2016.
It is the Chairman’s responsibility to prepare and submit for the Board of Directors’ approval a report on internal control and risk management procedures implemented by the Company and to provide the other information required by Article L. 225-37 of the French Commercial Code (Code de commerce) relating to matters such as corporate governance.
Our role is to: ●● report on any matters as to the information contained in the Chairman’s report in respect of the internal control and risk management procedures relating to the preparation and processing of the accounting and financial information; and
●● confirm that the report also includes the other information required by Article L. 225-37 of the French Commercial Code (Code de commerce). It should be noted that our role is not to verify the fairness of this other information.
The professional standards require that we perform the necessary procedures to assess the fairness of the information provided in the Chairman’s report in respect of the internal control and risk management procedures relating to the preparation and processing of the accounting and financial information. These procedures consist mainly in: ●● obtaining an understanding of the internal control and risk management procedures relating to the preparation and processing of the accounting and financial information on which the information presented in the Chairman’s report is based and of the existing documentation; ●● obtaining an understanding of the work involved in the preparation of this information and of the existing documentation; ●● determining if any material weaknesses in the internal control procedures relating to the preparation and processing of the accounting and financial information that we would have noted in the course of our work are properly disclosed in the Chairman’s report.
We confirm that the report prepared by the Chairman of the Board of Directors also contains the other information required by Article L. 225-37 of the French Commercial Code (Code de commerce).
●● I have obtained an audit completion letter from the Statutory Auditors, in which they indicate that they have verified the information concerning the financial situation and the accounts provided in this Registration Document, and have read the entire Registration Document.
Pursuant to Article 28 of Regulation (EC) No. 809/2004 of the European Commission, the following information is included by reference in this Registration Document: (i) the corporate financial statements for the year ended December 31, 2015 and the Statutory Auditors’ report pertaining thereto published on pages 262 to 291 and 292 to 293, respectively, of the Registration Document filed with the AMF on March 4, 2016 under number D. 16-0108 and from pages 249 to 278 and from pages 279 to 280, respectively, of the free translation into English of the Registration Document filed with the AMF with such translation being available on SCOR’s website www.scor.com; (ii) the corporate financial statements for the year ended December 31, 2014 and the Statutory Auditors’ report pertaining thereto published on pages 325 to 357 and 358 to 359, respectively, of the Registration Document filed with the AMF on March 20, 2015 under number D. 15-0181 and from pages 314 to 344 and from pages 345 to 346, respectively, of the free translation into English of the Registration Document filed with the AMF with such translation being available on SCOR’s website www.scor.com.
On May 27, 2016, SCOR SE issued EUR 500 million in dated subordinated notes, redeemable as at interest payment dates from
Redemption of the outstanding amount of the EUR 350 million subordinated bonds
The redemption of this debt was prefunded thanks to the issuance of a dated subordinated notes on the Euro market in the amount of EUR 600 million in December 2015.
On April 28, 2016, SCOR SE granted a USD 125 million loan to SCOR Reinsurance Company. The interest rate of 5.156% is fixed until its term on April 28, 2036.
(1) Data for financial years 2016 and 2015 are before appropriation of net income.
Expenses for Life reinsurance and other underwriting reserves 39 - 39 34
Internal and external investment management expenses and interest expenses (10) - (10) (10)
Internal and external investment management expenses and interest expenses (127) (119)
> Off-balance sheet commitments uNCONSOLIDATED CORpORATE FINANCIAL STATEMENTS OF SCOR SE #C
Various financial institutions provide sureties for our Company in the form of letters of credit to collateralize SCOR SE’s technical liabilities. The total amount that benefits to cedents, not included in the table above, is EUR 4 million in 2016 (EUR 6 million in 2015) as at the balance sheet date.
For active reinsurance companies, the fair value is estimated based on consolidated net assets, excluding goodwill and before elimination of shares, plus unrealized capital gains or losses and by the Embedded Value for Life Reinsurance and forecasts of future profits for Non-Life Reinsurance, net of tax. It does not include the value of future Life Reinsurance business.
At each reporting date, if the carrying amount of an investment in affiliates is below its historical cost, an analysis is conducted in order to determine if an impairment loss should be recorded. The assumptions and outcome of this analysis, conducted as at December 31, 2016, are detailed in Note 5.2.1.
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.
Provision for liquidity risk on underwriting commitments (“Provision pour risque d’exigibilité”)
Based on the calculations performed, no such reserve was required or recorded in the financial statements for 2016 or 2015.
Equipment, furniture and fixtures are depreciated on a straight-line or sliding scale basis depending on their estimated useful lives: Category Useful life
– updated mortality tables for the various plans, with turnover data for managers and salary increases; ●● long-term service awards: CNC Opinion 2004-05 dated March 25, 2004 requires the recognition of a provision for long-term service awards as from 2004.
This caption includes the various subordinated or unsubordinated notes issued by the Company as described in Note 5.2.3.
Pursuant to the provisions of Article 152.1 of Statement 2015-11 dated November 26, 2015 of the French standard-setter (Autorité des Normes Comptables – ANC), accounts not yet received from ceding companies at the end of the financial year are estimated, in order to better reflect SCOR’s reinsurance commitments in the financial statements. This method applies to most contracts underwritten during the current financial year and to prior-year contracts where relevant.
Estimates of premiums and commissions not yet received from ceding companies at period end are recorded in the income statement with a counter entry in the balance sheet under “Accounts receivable from reinsurance transactions”.
As at December 31, 2016, SCOR SE has not any such treaty underwritten.
The Company is required to have adequate reserves to cover its commitments after consideration of estimated investment returns, mortality, morbidity and lapse rates, and other assumptions.
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. SCOR applies the rules relating to the accounting of transactions in foreign currencies by entities subject to the rules of the Insurance Code as required by the CNC in its Opinion No 2002-09 dated December 12, 2002.
The foreign currency differences on off-balance sheet positions (forward financial instrument contracts) and the related accounts represent unrealized foreign currency gains or losses. These differences are recorded in the balance sheet in the accounts “Net translation adjustments” and “Regularization of forward financial instrument contracts”, based on the underlying strategy.
NOTE 1.11. pRINCIpLES RELATING TO THE pRESENTATION OF THE FINANCIAL STATEMENTS
Such instruments may include foreign currency and interest rate swaps; caps and floors; forward currency contracts; puts and calls on equity securities and other rate options.
Shares in and advances to land and real estate companies 207 - 78 - 285
The EUR 78 million increase is driven by the reclassification of SCOR SE’s cash advance to OPCI SCOR Properties II, created in December 2015, from “Other investments” to “Shares in and advances to land and real estate companies”.
At December 31, 2016, provisions against such investments can be analyzed as follows: ●● SCOR US Corporation: EUR 0 million in 2016 compared to EUR 104 million in 2015.
For the DCF method, evaluations were made on the basis of projections of 5 year provisional results. The first three years are based on the assumptions from the Vision in Action strategic plan and the last two are extrapolated using a conservative approach based on past experience; These projections have been updated starting from risk-free rates (5-year maturity) provided by EIOPA for the last 5 years, weighted by the values of currency in actuarial liabilities for each investment, as well as SCOR’s estimated cost of capital.
On April 28, 2016, SCOR SE granted a USD 125 million loan (EUR 117 million) to SCOR Reinsurance Company. On January 15, 2016, SCOR SE granted a EUR 22 million loan to SCI Noratlas, an affiliate of MRM.
SCOR SE granted a EUR 15 million cash advance to OPCI SCOR Properties.
On September 23, 2016, SCOR SE granted a USD 14 million (EUR 13 million) cash advance to SCOR Reinsurance Asia-Pacific Pte Ltd.
During the year, the change in other investments was mainly due to the EUR (819) million net decrease in fixed deposits and the EUR (34) million net decrease in quoted and unquoted shares together with the EUR 110 million net increase in mutual funds and the EUR 487 million net increase in bonds.
Unrealized gains and losses 1 – Real estate investments and real estate investments in process 285 284 330 45 2 – Shares and other variable-income securities (other than mutual fund units) 3,916 3,912 6,906 2,995 3 – Mutual funds units (other than those in 4) 3 3 3 4 – Mutual fund units exclusively invested in fixed-income securities 247 247 247 5 – Bonds and other fixed-income securities 572 572 568 (4)
7 – Other loans and similar bills 2,212 2,212 2,212 9 – Cash deposits (other than those in 8) and security deposits 81 81 81 -
●● investments and forward instruments issued in OECD countries 8,320 8,314 11,330 3,016 ●● investments and forward instruments issued in non-OECD countries 771 771 792 21
The loans and advances contracted by SCOR SE with its subsidiaries amount to EUR 16.1 million. Their breakdown as of December 31, 2016 is as follows: ●● EUR 12.3 million with SCOR Investment Partners SE; ●● EUR 3.5 million with SGF SAS; ●● EUR 0.3 million with SCOR Global Life SE.
As of December 31, 2015, the breakdown was as follows: ●● EUR 10 million with SCOR Investment Partners SE; ●● EUR 3.5 million with SGF SAS; ●● EUR 0.3 million with SCOR Global Life SE.
●● SCOR GLOBAL LIFE SE 5 avenue Kléber, 75116 PARIS, France EUR 287 605 99.99% 471 471 832 186 5,053 3,645 103 200
●● SCOR GLOBAL P&C SE 5 avenue Kléber, 75116 PARIS, France EUR 582 1,599 99.99% 1,615 1,615 701 401 3,952 2,715 321 277
●● MRM 5 avenue Kléber, 75116 PARIS, France EUR 44 61 59.90% 56 56 22 - - 13 6 3
●● SCOR AFRICA LTD 2nd Floor, West Tower, Maude Street, Nelson Mandela Square, Sandton 2196, South Africa ZAR - 192 100.00% 12 12 - 6 6 1,164 (38) -
●● SCOR INVESTMENT PARTNERS 5 avenue Kléber, 75116 PARIS, France EUR 3 11 100.00% 2 2 - 5 - - 3 2
●● SCOR AUBER S.A.S (France) 5 avenue Kléber, 75116 PARIS, France EUR 47 44 100.00% 149 149 88 13 - - 17 13
●● ASEFA S.A. Avda Manoteras 32 Edificio A 28050 Madrid, Spain EUR 38 3 19.97% 8 7 - - - - 2 -
●● SCOR BRAZIL PARTICIPAÇOES LTDA Avenida Paisagista José Silva de Azevedo Neto, 200 – Bloco 4 – Sala 404 Barra de Tijuca – Rio de Janeiro – Brazil BRL 102 - 99.90% 33 33 - - - - - -
(1) Data based on 2016 IFRS accounts. (2) SCOR guarantees with limits as to the amounts listed above, the underwriting liabilities of its subsidiaries pertaining in particular to their obligations relative to the payment of claims. In return, SCOR GLOBAL P&C SE and SCOR GLOBAL LIFE SE guarantee, on behalf and for the benefit of SCOR SE, the full and prompt performance of SCOR SE’s payment obligations under all insurance, reinsurance and financial contracts entered into by SCOR SE.
As at December 31, 2016, the number of shares held as treasury shares amounted to 7,679,482 shares (3.99% of capital) for a total value of EUR 223,310,647. These shares were acquired in the context of anticipated awards to Company employees and corporate officers as part of share allocation plans.
Cash deposits with ceding companies 1,717 - - 1,717 1,653 - - 1,653
Accounts receivable from reinsurance transactions 533 - 192 725 289 - 205 494
Accrued income and deferred expenses 82 - 169 251 60 - 266 326
Cash deposits received from retrocessionaires 389 - - 389 159 - 1 160
Deferred income and accrued expenses 75 - 18 93 63 - 10 73
●● CHF 315 million in fixed rate perpetual subordinated notes was issued in two pari-passu ranking placements on September 10 and September 24, 2012. The notes are redeemable by SCOR each quarter at interest payment dates as from June 8, 2018 with a first call date of June 8, 2018. The coupon has been set at 5.25% (until June 8, 2018) and 3-month CHF LIBOR plus a margin of 4.8167% thereafter. The notes are hedged by a cross-currency swap detailed in Note 5.3.8 – Financial instruments received and given, in the analysis of commitments given and received.
●● 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 2.70% thereafter.
On July 28, 2016, SCOR SE fully redeemed the remaining balance of EUR 257 million of a perpetual super-subordinated notes (Tier 1 type) issued on July 28, 2006 in an aggregate principal amount of EUR 350 million to finance the acquisition of Revios Rückversicherung AG.
This debt was reduced to EUR 257 million after the repurchase of EUR 93 million during 2009. The bond issuance is represented by lowest ranking subordinated bearer notes with a nominal value of EUR 50,000 each bearing interest at an initial rate of 6.154% per annum, a floating-rate indexed to 3-month EURIBOR plus a margin of 2.90%, payable quarterly. No fixed redemption date was set.
●● On June 5, 2015, SCOR SE issued EUR 250 million in dated subordinated notes, redeemable at interest payment dates from June 5, 2027. The coupon has been set at 3.25% (until June 5, 2027), and will be reset every 10 years at the prevailing 10-year EUR mid-swap rate +3.20%.
●● Debt of a branch for EUR 16 million (EUR 16 million as of December 31, 2015).
(1) Mainly related to loans of subsidiaries described in Note 5.2.1 and the subordinated notes described under financial liabilities.
The analysis of accrued income and deferred expenses at December 31, 2016 is as follows: In EUR million
Due and accrued interests on rental income 31 25 - -
The breakdown of the reinsurance estimates – assumed that have been reclassified is as follows as at December 31, 2016: ●● reinsurance estimates – assumed – Life (EUR 42 million) includes premiums for EUR 472 million, commissions payable of EUR (109) million and claims payable amounting to EUR (336) million, and EUR 15 million of accrued interest on the cash deposit; ●● reinsurance estimates – assumed – Non-Life (EUR 580 million net) includes premiums for EUR 1,195 million, commissions payable of EUR (406) million and claims payable for EUR (234) million and EUR 25 million of accrued interest on the cash deposit.
The share capital comprising 192,534,569 shares with a par value per share of EUR 7.8769723 amounted to EUR 1,516,589,467 as at December 31, 2016.
In EUR million equity before allocation Income allocation Other movements during the period 2016 Shareholders' equity before allocation
In EUR million Opening balance Increase Use over the period Reversal without use Closing balance
Contingency reserves amount to EUR 148 million, of which: ●● EUR 41 million for free share allocation plans with the following expiry: EUR 16 million at 2017, EUR 15 million at 2018, EUR 7 million at 2019, EUR 3 million at 2020 and beyond; ●● EUR 80 million in reserves for post-employment benefits: retirement provisions (EUR 38 million), supplementary retirement (EUR 41 million), long-service awards (EUR 1 million); ●● EUR 27 million in other provisions.
SCOR SE premiums are the result of the implementation of four internal quota share retrocession treaties entered into jointly with SCOR Global P&C SE, SCOR Global Life SE, SCOR South Africa and SCOR Perestrakhovaniye, non-proportional retrocession from the Argentinian branch of SCOR Global P&C SE and from SCOR Switzerland AG as well as the Chinese branch’s activity.
It breaks down into non-recurring income for 0.1 million and non-recurring expenses for EUR (4.1) million.
Total tax losses of the consolidated French tax Group were EUR 1,133 million as at December 31, 2016.
The corporate tax gain of EUR 45.9 million relate mainly to: ●● the contribution of subsidiaries that are consolidated for tax purposes of EUR 73.2 million, including impacts of tax audits; ●● tax expenses for the tax group for EUR (14.2) million; ●● tax expenses for previous financial years for EUR (4.1) million; ●● additional contribution on income distributed for EUR (8.3) million; ●● income tax from the branches for EUR (0.7) million.
In addition, on January 3, 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 par value of EUR 0.78769723 per share.
The table below summarizes the status of the various stock option plans in force in 2016: Plan Date of General
Corporate officers Date of availability of options Plan expiration date Subscription of purchase price
The amount of 2016 profit-sharing payouts has been estimated in the accounts and set aside for EUR 2,4 million.
As of January 1, 2015 the personal training account (“Compte Personnel de Formation” – CPF) replaces the individual training entitlement (Droit Individuel à la Formation – DIF), in accordance with Law No. 2014-288 of March 5, 2014 relating to professional training, employment and social democracy. It should be noted that the CPF is managed externally by the Caisse des dépôts et consignations.
Confirmed credits, letters of credit and guarantees given 406 402 12 12
Cross-currency swaps are used to hedge foreign exchange and interest rate risks of perpetual notes in CHF issued in 2012: the instruments convert the principal of 2012 placements for a total of CHF 315 million into EUR and the coupon on the CHF 250 million tranche to 6.2855% and on the CHF 65 million tranche to 6.235%. Both instruments mature on June 8, 2018.
This report also includes information relating to the specific verification of information given in the management report and in the documents addressed to the shareholders.
In compliance with the assignment entrusted to us by your Annual General Meeting, we hereby report to you, for the year ended December 31, 2016, on: ●● the audit of the accompanying financial statements of SCOR SE; ●● the justification of our assessments; ●● the specific verifications and information required by law.
Our work consisted in assessing the data and assumptions on which the estimates are based, with regard to the experience of your Company, the regulatory and economic environment, as well as the overall consistency of these assumptions. We ensured that the financial statements contained appropriate disclosures.
> Certification of audit of historical financial information uNCONSOLIDATED CORpORATE FINANCIAL STATEMENTS OF SCOR SE #C
Grenelle II Indicator: Breakdown of employees by geographical area in 2016
(1) Headcount is calculated on the basis of employees registered as at December 31. Each Hub covers a region and may encompass several countries. For example, the Paris/London Hub covers France, the UK, Spain, Italy, Belgium, the Netherlands, Russia, Ireland and South Africa. As temporary workers and external service providers are managed according specific rules in each site, this data is not mentioned in the headcounts for this year. For a breakdown of countries per Hub, see Section 2.1.5.
(1) Definition of Partner: see Note 1.2.8 – Total compensation: elements of compensation policy. The executive corporate officer is included in this population. This figure includes the decisions taken during the 2017 Partners promotions and nominations process which took place at the end of 2016.
in 2016 n●3% SCOR Global Investments 70 61 52 n●30% Group Functions and Support (2) 803 787 751
(1) Starting from 2014, the former Transamerica Re employees were included in the divisions according to the global organization of the Group. From 2014 to 2016, Réhalto (32 employees at December 31, 2016) and Telemed (27 employees at December 31, 2016), wholly-owned subsidiaries of SCOR Global Life SE, were managed independently from the Group in terms of human resources and are not aggregated financially (or from an HR perspective) at level of the division.
(2) The “Group Functions and Support” division includes the Group’s Finance, Risk and Operations Departments as well as the departments directly managed by the Chairman and Chief Executive Officer. SCOR SE holds 59.9% of the capital of MRM (5 employees at December 31, 2016). Due to its specific activity, business model and organization, MRM’s human resources are managed independently from the Group.
Methodology: the definitions of “fixed-term contract” and “trainee” may vary from one country to another. SCOR defines “fixed-term contract” as a signed working contract mentioning a termination date and “trainee” as an employee paid by the Company under a tripartite agreement between the Company, school and student employee.
End of Fixed-term Contract 11 7 18 8 14 22 6 8 14
All employees have access to a full description of the Group’s compensation policy on the Company intranet. This policy is consistent across all the Hubs and applies to the entire Group worldwide. In accordance with the Group’s values, one of the policy’s objectives (beyond retaining employees and rewarding performance) is to discourage excessive risk -taking.
There are four main Partner levels: Associate Partners (AP), Global Partners (GP), Senior Global Partners (SGP), and Executive Global Partners (EGP). With the exception of the EGPs, these levels are then sub-divided into two levels, to take into account seniority or special achievement promotions.
Bonuses are calculated based on annual gross salary. The components of the Partners’ bonuses are linked to their partnership level.
The Partners of SCOR are also eligible for free shares and stock options. However, this does not mean that an allocation occurs every year or that every Partner will receive them. In addition, free shares are allocated to some partners based on their performance measured over six years. The goal of this compensation scheme, the Long Term Incentive Plan (LTIP), is to retain certain key employees over the long term. The process is supervised by the Compensation and Nomination Committee which consists only of independent members of the Board of Directors who are informed of all the individual share and option grants.
Hub In EUR thousands 2016 2015 2014 1.2.10. DISTRIBuTION BY AGE
The standard annual working time in the Group is 206 days for employees with “cadre” status in France, 210 days for the employees with “non-cadre” status in France, 216 days in Spain, 221 days in Italy, 219 days in Belgium, 221 days in the Netherlands, 247 days in Russia, 223 days in South Africa, 226 days in Ireland, 228 days in the UK, 248 days in Sweden, 226 days in Switzerland, 230 days in Israel, 222 days in Germany, 233 days in the USA, 241 days in Brazil, 242 days in Argentina, 242 days in Colombia, 243 days in Canada, 251 days in Mexico, 248 days in Chile, 231 days in Australia, 225 in China, 226 days in Hong Kong, 221 days in India, 231 days in Malaysia, 229 days in South Korea, 234 days in Singapore, 225 days in Japan and 229 days in Taiwan.
Organization of employee / management dialogue 55 meetings were held with staff representatives in Europe (31 meetings in France (1), 1 in Italy, 7 in Switzerland, 12 in Germany, and 4 in Sweden).
In France, one agreement was signed on February 24, 2016 (“Renouvellement de l’accord GPEC”). It reinforces the information on the strategic orientations of the Group for the employees and organizes the adequacy between these orientations and the jobs, skills and careers management. Another agreement was signed on July 4, 2016 (“Procès-Verbal de la Négociation Annuelle Obligatoire”). It defines a framework to monitor the employees’ individual salary review process by taking in account their performance and the evolution of the responsibilities during the year. It also defines the minimum amount for the French “prime de vacances”. A third agreement was signed on December 16, 2016 (“Contrat de generation”). Through this agreement, SCOR is committed to hire young people aged 29 and over, to maintaining employment for employees over 55, to hire people aged over 47 years and to organize the transmission of Intergenerational knowledge. One agreement was signed in Germany on October 17, 2016 on the time management (“Pilot project Arbeitszeitmanagement”). This agreement on the modernization and flexibility of the working time allows a better regulation between the work-life balance of the employees and enhances the employer branding. Two collective work agreements were signed in Brazil for the states of Rio de Janeiro and São Paulo: “Convenção Coletiva de Trabalho do Estado de Rio de Janeiro” (February 4, 2016) and “Convenção Coletiva de Trabalho do Estado de São Paulo” (February 3, 2016). These are general agreements establishing annual inflation salary adjustment and negotiate certains benefits such as pharmacy, life insurance, child care, vacancies, weekly hours and others. No collective agreement related to health and safety in the workplace was signed in 2016.
“Grenelle II” Indicator 25 meetings were held with the Group’s staff representatives to discuss local health and safety conditions (7 meetings in France, 1 in Italy, 1 in Germany, 2 in Brazil, 13 in Colombia, 1 in Mexico).
7 occupational accidents at the workplace without sick leave were recorded as at December 31, 2016 (5 in France, 1 in Germany, 1 in Switzerland) (3).
In 2016, a number of measures for health protection/prevention were implemented: ●● In Germany, a variety of medical services is offered in cooperation with the Company doctor (e.g. eye examinations, vaccinations, massages, nutritional advice offer, organization of a “health day”), offer of ergonomic keyboard/ mouse). A Health and Safety Committee is in place.
●● In Switzerland, specific actions have been undertaken to support employees with stress management (including yoga and fitness classes, membership of sports clubs), and solutions have been implemented to improve ergonomics at the workstation and to take care of employees’ health (e.g. promoting a balanced diet).
●● In the United Kingdom, employees benefit from eye test and work station assessments, pre-employment screening, medicals offered to staff after one year with the Company.
●● In Ireland and in Sweden, health screening is offered to employees.
The training policy forms part of the “SCOR University” concept, which extends training to the international level and harnesses the synergies of existing training schemes. The concept is structured around three pillars: Business, Management & Leadership, and Excellence.
Description of the training policy 47,188 (1) training hours were provided by the Group in 2016. 22,028 training hours (EUR 1,052,523 (2), 2,667 training participants) were provided in the Paris/London Hub, 10,674 training hours (EUR 510,578, 1,394 training participants) were provided in the Zurich/Cologne Hub, 5,753 training hours (SGD 461,985, 728 training participants) were provided in the Singapore Hub, 8,733 training hours (USD 488,625, 1,280 training participants) were provided in the Americas Hub.
In 2016, on average, approximately 18 hours of training were given per employee (including the global e-learning programs).
(1) For the Paris/London Hub and the Zurich/Cologne Hub, the number of training hours is calculated on the basis of attendance sheets. For the other Hubs, the number of training hours is calculated on the basis of the information mentioned in the invoices sent by the providers. (2) For technical reasons, this amount excludes taxes for France.
A Code of Conduct was introduced in 2009, in which SCOR committed to providing a work environment free from discrimination and/or harassment based on gender, sexual orientation, race, religion, disability, or acting as a staff representative or participating in a trade union. ●● In 2016, for the first time, SCOR has organized a Global Diversity Week to promote the diversity within the Group (following the Gender Diversity Day implemented in 2015). Through a both humoristic and pedagogical global campaign on cultural diversity awareness and local actions on a specific type of diversity (age, culture, gender, etc.), the main objectives was to favor good working relationships.
●● A continued effort was made to reduce the pay gap between men and women and to apply the principles of professional equality (the agreement signed for France was renewed on February 4, 2014 for three years).
●● In Switzerland, a discussion around “inter-age diversity” has been organized with the support of an external theatre group.
SOCIAL AND ENVIRONMENTAL INFORMATION Social impact of SCOR’s activity < #D
The Group has 33 employees with disabilities (1): two in Germany, two in Switzerland, twenty-five in France, two in Italy, two in the United-States.
In Germany, the whole building has been adapted to be accessible to people with disabilities. An integration management program aiming to provide the right conditions to help certain employees return to work after long-term sick leave is also in place.
In France, SCOR places particular importance on the subject of disability and implements practical actions to allow equal access to all positions and to support the entry and retention of workers with disabilities. The following actions to promote the integration of employees with disabilities have been taken within the Paris site: ●● The building was built and designed taking into consideration all the arrangements required to facilitate the integration of staff with disabilities.
●● Specific monitoring of employees with disabilities is handled by the Occupational Health Department to work in coordination with the HR Department of the Paris Hub (including adapting the organization of work and/ or working conditions).
●● Specific training was implemented for employees with impaired hearing eligible for teleworking. ●● Individual training dedicated to the new retirement scheme was implemented for employees with impaired hearing.
●● In Belgium, the office building is disability-friendly. ●● In Italy, specific measures have been taken to improve the ergonomics of workstations for some employees.
●● Employees on fixed-term contracts are considered as definitively leaving SCOR when their contracts expire. Employees who signed a permanent contract in 2016 at the end of their fixed-term contract are not included in the fixed -term contract endings.
●● For employees who signed several similar working contracts during the year, only the initial hiring and the final departure are counted.
●● 2016 Group staff turnover is calculated as follows: number of departures in 2016 (excluding dismissals, deaths, Company transfers and trainees)/headcount as at December 31, 2015.
●● Daily checks are performed by the local HR managers and the Group HR Department to ensure the reliability of the information in the Group data base. An additional detailed check of the data is performed annually (in December) by the Group HR Department and the local HR managers.
The information below, which relates to the environmental impact of SCOR’s business, is presented in accordance with the regulatory provisions set out in Article 225 of law no. 2010-788 of July 12, 2010 on France’s national commitment in favor of the environment (loi portant engagement national pour l’environnement). This report also includes the new requirements of transparency set forth by the law n°2015-992 on the energy transition for the green growth (loi relative à la transition énergétique pour la croissance verte), notably the information required by the article 173 on the “low carbon” strategy.
The Group’s environmental policy is decentralized at Hub level (in Europe, Paris/London and Cologne/Zurich, in Asia Pacific, Singapore and in the Americas, Charlotte/New York/Kansas City) and monitored at Group level by the head of CSR who, besides being responsible for compliance with environmental information disclosure requirements under the law on the national commitment in favor of the environment, encourages, coordinates and mandates locally implemented environmental initiatives.
Besides the management of its direct impact and its natural catastrophes reinsurance activities, other initiatives related to climate change mitigation and adaptation are carried out in its investment activities as well as in its institutional engagement.
Being mindful of reducing its direct environmental footprint and thereby contributing to climate change mitigation according to its means, the Group pursues an environmental and climate policy that it applies to the management of its main offices. To do so, SCOR has been implementing complementary measures in the following areas: ●● environmental quality of offices design and construction; ●● certification of Environmental management system; ●● energy consumption and renewable energy use; ●● business travel steering; ●● waste management and water consumption; ●● Green House Gas emissions monitoring.
With the acquisition of tertiary buildings meeting the aforementioned standards, the environmental quality of the Group’s property portfolio hosting its employees has significantly improved since 2009.
One of the two sites in London is BREEAM (BRE Environmental Assessment Method) certified whilst SCOR’s office premises in Cologne have a European environmental label. In Paris, the headquarters is HQE (Haute Qualité Environnementale) certified for the design and the construction phase. In 2013, the Group acquired two floors in a building still under construction in Singapore and purchased four units of an additional floor in 2014. This building will be Green Mark Platinum certified by the Building Construction Authority of Singapore. The building will be delivered in mid-2017. More recently, in the context of its extension the Group has acquired a new building in Paris. Using the “Haute Qualité Environnementale” standard, the design of this building has been rated excellent.
The Group not only integrates environmental considerations in its projects of extension or relocalization (see above) but is also promoting an ecoresponsible management of its office premises through the implementation of environmental management systems where feasible. SCOR’s employees are regularly informed of the measures taken by the Group to protect the environment.
In addition to the Zurich office whose operations are certified ISO 14001, Cologne and Paris have decided to implement respectively the following standards: EMAS (“Eco-Management and Audit Scheme”) and HQE operation. More recently the environmental management system of one of the Group’s location in London has been certified BREEAM in-use (BRE Environmental Assessment Method in-use) following the audit of certification that took place at the end of 2016. 52% of SCOR’s employees covered by the environmental reporting processes are covered by a certified environmental management system (43% in 2015).
So as to develop an ecoresponsible culture and use of office premises, employees are informed about the Group’s environmental actions through various different channels. The Group’s Code of Conduct is the primary source in terms of information and raising awareness. An entire section of the Code is devoted to the United Nations Global Compact and to the “Principles for sustainable insurance”.
This information is supplemented by regular communications via internal corporate media as well as in some of the Group’s locations through internal environmental themed events. For instance, a specific event is organized every year in Paris during the Sustainable Development week. In Switzerland, SCOR’s employees were introduced to urban agriculture techniques in 2016.
In the context of its “low carbon” approach, the Group focuses on the steering of its energy consumption and the purchase of energy produced from renewable sources.
The streamlining of business travel, which another major source of energy consumption, is sought through the roll-out of highly sophisticated and efficient high definition video presence rooms, and the implementation of a travel policy setting out principles and rules for a proportionate use of transportation.
Most of the sites surveyed in 2016 reported on “paper waste” and to a lesser extent on other waste (IT & electronic, bulbs, toner, batteries, others), notably for the latter in its smallest locations.
In 2016, sorted and recycled “paper waste” amounted to 183.9 tons. Paper recycling is a practice implemented in most of the locations surveyed. The volume of paper sorted and collected for recycling is higher than the volume of paper purchased over the year (68.2 tons). This difference is mainly due to recurring archive clean-ups and to the inclusion of other waste in the “paper waste” category such as cardboard and newspapers.
As part of the French Business Climate Pledge announced in November 2015, SCOR has reaffirmed its commitment to keep contributing to climate change mitigation and in this respect set an indicative objective of reduction of its greenhouse gas emissions intensity by 2020.
(1) As water consumption may be included in rental charges, it is not possible to identify the true consumption for some of the locations included in the scope of reporting. In these situations, the consumption is estimated by application of a standard ratio set out in the environmental reporting protocol (50 liters per employee and contractor per day on the basis of 220 business days). The share of water consumption estimated accounts for 15% of the quantity reported above. Moreover, condensed water used for the cooling of the data center on very few of the locations subject to the environmental reporting is excluded from the scope of reporting.
Amongst the six gases taken into account by the Kyoto Protocol, carbon dioxide is the main gas emitted by the Group. SCOR monitors its greenhouse gas emissions since 2009 with a focus on the most significant sources of emissions, specifically energy purchase, the consumption of fossil fuel linked to employees’ business travel, and emissions stemming from paper consumption although for the latter the volume of emissions is insignificant.
On this occasion, the Group reaffirmed its intention to play its part in financing the energy transition, a commitment taken when it joined the French Business Climate Pledge. By the end of its strategic plan timeline, SCOR forecasts additional investments up to EUR 500 million in renewable energies and in energy efficient buildings.
For years now SCOR has been taking a proactive approach to the environmental certification of its real estate investment portfolio. Besides its investments in office buildings for its own use (see above), the real estate asset portfolio also includes pure investment assets. The Group thus owns one of the first positive energy tertiary sector buildings of its size (23,000 m2) in Meudon la Forêt in France. This kind of investment is supplemented by far-reaching renovation program aiming to upgrade the environmental performance of the real estate investment portfolio through environmental certification or energy efficiency label. In addition to its tertiary sector real estate activities, the Group develops real estate and infrastructure debt funds activities through its asset management subsidiary. Environmental objectives have been gradually integrated in these funds. SCOR Real Estate Loan II, launched in October 2015 favors environmentally certified underlying assets whilst in the infrastructure debt funds investments in renewable energies are twice as much higher than investments in conventional energies.
These themed investments are supplemented by an exclusion policy. Thus, on November 30, 2015, the Group announced its divestment of companies deriving more than 50% of their turnover from coal and has undertaken, across its entire asset portfolio, to make no new financial investments in such companies in the future.
Beyond climate change mitigation, SCOR plays also actively its part in supporting climate change adaptation strategy through conceiving, trading and investing in financial products that provide additional capacities for the coverage of natural catastrophes (“Cat bonds Insurance Linked Securities”). This activity is developed by its asset management subsidiary which is a signatory of the Principles for Responsible Investment since late 2016.
The Group’s institutional engagement in furthering the understanding of the potential effects of climate change and thereby strengthening the resilience of our societies is multifold. In addition to the initiatives mentioned in the Section “Framework and general organization” and the French Business Climate Pledge, SCOR is also a signatory of “United for Climate Resilience”.
Climate risks modelling, the impact of climate change on populations and economies, is a pivotal axis of SCOR’s institutional engagement. In this respect, the Group is one of the earliest supporters of OASIS, a British non-profit organization developing an open source platform for modelling climate events. The Group has also joined Climate KIC, one of the largest public-private partnerships operating to fight climate change.
Insurance and reinsurance can indeed contribute to climate change adaptation, as long as it is restrained. Expanding insurance coverage to the most vulnerable developing countries is a primary focus of Insurance Development Forum’s work, a multi-stakeholder group gathering insurers, reinsurers, international institutions and other stakeholders. SCOR’s Chairman and Chief Executive Officer is a member of its steering committee whilst SCOR’s teams contribute to its reflections as they participate in its working groups.
The threshold of 30 employees is not applicable for the calculation of the environmental impact due to air travel. Although information for all of the sites falling within the data collection scope is not available at this stage and since Remark Group is excluded, data relating to the use of air travel covers 94.5% of the employees of the legal entities fully consolidated in the financial statements in terms of headcount. 99.7% of them were able to report on this indicator.
Lastly, besides Channel Syndicate employees who are included in this environmental report, several sites surveyed include other tenants’ energy and water consumption and to a lesser extent waste production. Therefore the environmental impact of the Group is overestimated. Channel Syndicate employees and other tenants’ employees hosted by these sites account for 20% of the employees of the legal entities fully consolidated in the financial statements as defined in the Section “Scope of environmental data collection”. Channel Syndicate’s business travel data are consolidated.
Energy consumption is expressed in kWh/m2, water consumption in m3/employee, and paper consumption in kg/employee. For some data, the ratio takes into account the contractors and other tenants located in the premises occupied by the staff managed by the Group.
SOCIAL AND ENVIRONMENTAL INFORMATION SCOR’s Environmental and Climate Policy < #D
The Group has not made any provisions or guarantees covering environmental risks, since SCOR has not been subject to any convictions or litigation involving its civil liability.
This category is not material due to the nature of the Group’s business (i.e. financial services). Greenhouse gas emissions are covered in the Section entitled “Greenhouse gas emissions”. Due to the nature of its business, other discharges in air, water or ground seriously affecting the environment are not significant and are covered by environmental management systems at the Group’s affiliate sites where they are the main operator/manager.
This category is not material due to the nature of the Group’s business (i.e. financial services). The Group has no tangible influence on food wastefulness. However, in some of the Group’s locations, notably where collective catering is provided to its employees, some measures may be taken in this respect in collaboration with the service provider. This is notably the case at the headquarters where awareness raising campaigns on this issue may be conducted.
(1) Printed documents ordered from printing companies are excluded from the scope of reporting. * Relationships between the Group and people and organizations affected by its business, particularly non-profit employment agencies, educational establishments, environmental protection agencies, consumer associations and neighboring residents.
Although this category of information is not material due to the nature of the Group’s business (i.e. financial services), some of the Group locations contribute in their own way to protecting the surrounding biodiversity. For example, Paris and London have installed bee hives on their roofs and ecoroofs and gardens made of diversified plant species and varieties (Paris).
3 INFORMATION RELATED TO SOCIETAL COMMITMENTS IN SUPPORT OF SUSTAINABLE DEVELOPMENT
In addition to the stakeholders mentioned above and existing relationships with a number of institutions, in the context of partnerships concluded in the interests of promoting actuarial science, SCOR is making a particular effort to establish relationships with educational establishments.
The Group’s French subsidiaries also work with sheltered workshops with respect to the procurement of a number of office furniture. This kind of collaboration is designed to promote integration and employment access for the disadvantaged.
The SCOR Global Life Research Centers have established a number of scientific partnerships in the past. Active partnerships are the following: the Assmann Foundation on cardiovascular diseases (EUR 100,000 annually), the Erasmus University on the impact of cancer detection (EUR 58,000 over 3 years), and the Pierre and Marie Curie University at the Pitié Salpêtrière hospital on VIH developments (EUR 30,000 annually).
Founded in partnership with Nanyang Technological University in March 2011 and part of Nanyang Business School, The Insurance Risk and Finance Research Center (IRFRC) sponsors and conducts primary research on insurance and insurance-related risk management in the Asia-Pacific region. In 2015, after a successful fourth annual conference devoted to the most recent trends in the field of risk and risk management research in emerging countries, the IRFRC was selected to conduct the Cyber Risk Test Bed Project, a research program sponsored by the Monetary Authority of Singapore (MAS). This project aims to enhance cyber risk insurability, notably by setting up a collaborative and data sharing platform. The data gathered should, for example, help companies to understand their potential cyber risk exposures and losses.
The creation of the SCOR Corporate Foundation for Science in 2012 marked a new phase in SCOR’s commitment to scientific disciplines, and beyond this, to its contribution to society as a whole. Registered in the Official Journal of Associations and Foundations in July 2012, the Foundation is supported by a Board of Directors chaired by André Levy Lang. The Foundation is also supported by a very high-level interdisciplinary and international scientific board, which helps it to define its strategic priorities and to select projects to support.
Since its very early days, the Foundation has been financing seminars and colloquiums on various scientific subjects such as emerging infectious diseases, longevity risk for our modern retirement schemes, or economic agents’ expectations in an economic crisis. In 2015, the Foundation joined forces with the Toulouse School of Economics and the Geneva Association to organize an international scientific seminar on the issue of the anticipation and insurability of climate risks. This seminar, which received COP 21 certification, was held in SCOR’s Parisian office and attended by economists, climatologists, natural catastrophe modelling experts, actuaries and insurance and reinsurance professionals. Drawing on the success of this very first seminar, the Foundation has decided to keep organizing such event with the organization in collaboration with the Geneva Association of an upcoming seminar on natural events advanced modelling techniques.
Also part of its working program, the Foundation funds research and technical cooperation programs. In 2016, the Foundation’s Board of Directors and SCOR’s Board of Directors selected two new projects: (i) a project led by the French Institute for Demographic Studies (INED) on the modelling of life expectancy beyond 90 years old in Belgium, France and Quebec and the related trends since 1980, and (ii) a project entitled assessing the feasibility and development of an innovative satellite-based forage insurance scheme in Canada (University of Ontario). These new projects add to the commitments taken by the Foundation over the last few years: a project on the modelling of life expectancy at older ages (University of South Denmark), a project on the development of a Global Forecast Earthquake System with a potential set up of early warning systems (ETH Zurich Foundation), a project on risk management behavior by insurance companies located in the United States (HEC Montreal Foundation/Campus Montreal Foundation), EUR 1 million over 5 years to the Foundation for research on Alzheimer’s disease, and a project aiming to promote the development of actuarial science in Africa through the creation of a training network with the (ISFA of the University Claude Bernard in Lyon).
Besides, the SCOR corporate Foundation financially supports young scientists with a number of awards in several different academic areas. Beyond the actuarial prize above mentioned, the Foundation sponsors the Young European Researcher Prize on Alzheimer’s disease in the frame of the above mentioned project. In 2016, the Foundation joined forces with the Foundation Institute Europlace de Finance through the Best Young Researcher Award in Finance which was awarded during the ninth financial risk international forum.
In France, SCOR has been a supporter of the Ticket for Change program since it was founded in 2014 through its financial contribution and supply of volunteers. This initiative, renewed in 2015 and in 2016 which consists of encouraging young people to be entrepreneurs and agents of change, received the Google Impact Challenge prize in its second year. Apart from providing financial support, SCOR employees are encouraged to become personally involved by providing mentorship to young people in the process of developing their project. Furthermore, SCOR has decided to financially support one of the projects developed during the first year. “Stagiaires sans frontières”, an innovative concept that proposes internships divided between private companies and not-for-profit organizations. Apart from providing financial support during the first year of this partnership, SCOR now regularly hires interns working within this framework. In 2016, three interns were able to divide their time between SCOR and the associative sector.
SCOR is also a longstanding partner of culture and the arts, notably in France (Orchestre de Paris), Germany (Walfart Contemporary Art Museum) and the United States where the staff of SCOR Global Life America, based in Charlotte, North Carolina are involved in fundraising campaigns for the Art & Science Council.
SOCIAL AND ENVIRONMENTAL INFORMATION Information related to societal commitments in support of sustainable development < #D
Compact, and sets out the Group’s expectations with regard to its suppliers and subcontractors in the fields of labor relations, health and safety conditions, the environment, ethics and the way in which they must integrate these expectations into the design of their products and services.
SCOR is committed to carrying on its business in a manner reflecting a high degree of integrity, professionalism and responsibility. SCOR is a member of the United Nations Global Compact and is in line with this UN corporate initiative. SCOR’s Code of Conduct forbids all forms of bribery to public officials, clients, business partners and others in the private sector and to government and other officials.
SCOR maintains other relevant group policies and guidelines supporting the group anti-bribery policy including group guidelines on anti-fraud, group fraud incident management processes, group policy on conflicts of interest, anti-money laundering & combating terrorism financing guidelines, group guidelines on reporting concerns and further operational policies and guidelines such as group delegation of authority policy, group fees policy and group travel policy.
The group compliance framework is regularly updated to reflect tougher requirements or other developments. The breadth and scope of the anti-bribery program will be reviewed for accuracy, and completeness in light of the new requirements laid down by the so-called law Sapin 2 in France.
A Group Compliance Policy, annually revised was issued in 2013 summarizing SCOR’s compliance approach. The Policy, which focuses on measured to prevent, detect and respond to the risk of non-compliance, consolidates the overarching principles, requirements, tools and processes stated in the Group Compliance Policies and Guidelines and also contributes to SCOR’s efforts towards a more formalized/documented approach which regulators and others increasingly require. The Policy shall also contribute to the efficient coordination of compliance activities between Group and Hub/locations as it documents current practices on interactions and reporting of Group/Hub and local compliance functions.
To embed the Group Compliance Policy and other legal & compliance requirements (e.g. anti-fraud, anti-bribery, anti money laundering and sanctions compliance, anti-trust/competition law) and latest developments in those areas into the organization, training sessions targeted for underwriters, claims and accounting staff were also held during 2016 in the Hubs.
Not applicable given the activity of the Group’s business to business services.
Moreover, in the context of CRO Forum, SCOR participated in the drafting of a brainstorming paper in human rights and insurance. The purpose of this document published in 2014 is to build an understanding of why the insurance industry must make respect for human rights part of its risk management framework and how it can address human rights issues in its business relationships with other corporations.
SOCIAL AND ENVIRONMENTAL INFORMATION Statutory Auditor’s report on the reviewof selected SCOR SE environmentaland social indicators < #D
4 STATUTORY AUDITOR’S REPORT ON THE REVIEW OF SELECTED SCOR SE ENVIRONMENTAL AND SOCIAL INDICATORS
Report by the independent third party, on the consolidated CSR information included in the management report
The Board of Directors is responsible for preparing a Company’s management report including the CSR Information required by article R. 225-105-1 of the French Commercial Code in accordance with the protocols used by the Company (hereinafter the “Guidelines”), summarised in the management report and available on request from the Company’s head office.
On the basis of our work, our responsibility is to: ●● attest that the required CSR Information is included in the management report or, in the event of non-disclosure, that an explanation is provided in accordance with the third paragraph of article R. 225-105 of the French Commercial Code (Attestation regarding the completeness of CSR Information); ●● express a limited assurance conclusion that the CSR Information taken as a whole is, in all material respects, fairly presented in accordance with the Guidelines (Conclusion on the fairness of CSR Information).
We performed our work in accordance with the professional standards and with the order dated 13 May 2013 defining the conditions under which the independent third party performs its engagement and with ISAE 3000 (2) concerning our conclusion on the fairness of CSR Information.
On the basis of interviews with the individuals in charge of the relevant departments, we obtained an understanding of the Company’s sustainability strategy regarding human resources and environmental impacts of its activities and its social commitments and, where applicable, any actions or programs arising from them.
Regarding the CSR Information that we considered to be the most important (1): ●● At parent entity level, we referred to documentary sources and conducted interviews to corroborate the qualitative information (organization, policies, actions), performed analytical procedures on the quantitative information and verified, using sampling techniques, the calculations and the consolidation of the data. We also verified that the information was consistent and in agreement with the other information in the management report; ●● At the level of a representative sample of entities selected by us (2) on the basis of their activity, their contribution to the consolidated indicators, their location and a risk analysis, we conducted interviews to verify that procedures are properly applied and we performed tests of details, using sampling techniques, in order to verify the calculations and reconcile the data with the supporting documents. The selected sample represents on average 20% of headcount and between 23% and 49% of quantitative environmental data disclosed.
(1) Headcount on the last day of the period by gender, Hub, status and type of contract; Hirings by contract type; Departures; Total compensation; Average fixed remuneration; Average bonus; Total granted shares; Distribution of Group employees on working time; Number of meetings with staff representatives; Number of European Committee meetings; Number of collective agreements signed; Number of meetings with staff representatives to discuss health and safety conditions; Number of collective agreements signed regarding health and safety at work; Number of training hours; Measures to promote equality between women and men; Number of employees with disability; Volume of sorted and recycled paper waste; Water consumption; Energy consumption; Greenhouse gas emissions; Actions to prevent corruption.
Insurance company, mutual society or insurance provider that transfers (or “cedes”) a part of the risk it has underwritten to a reinsurer.
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.
Amounts which may be deposited with the ceding company to guarantee the reinsurer’s liability. Income from securities deposited accrues to the reinsurer.
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 administrative expenses.
Actual and estimated premiums to be received for the period from the ceding companies. Gross premiums represent revenues for the accounting period.
Amount related to the expenses for actual or estimated claims expenses (declared or not declared yet) that occurred in the accounting year.
Amount that a Life insurance or capitalization company must set aside and capitalize in order to meet its commitments to the insured.
Return on equity is based on the Group’s share of net income divided by average shareholders’ equity (calculated as shareholders’ equity at the beginning of the period adjusted for the effect of all movements during the period, prorata temporis).
A legal entity created to fulfill specific or temporary objectives (conduct defined activities or hold assets, etc.). SPV’s are typically used by companies to isolate the financial risk from the firm.
The maximum amount that an insurance or reinsurance company can underwrite. The limit is generally determined by the Company’s retained earnings and investment capital. Reinsurance serves to increase a company’s underwriting capacity by reducing its exposure to particular risks.
The aggregate of policy acquisition costs, including commissions, and the portion of administrative, general and other expenses attributable to underwriting activities.
In accordance with the AMF Guide for compiling Registration Documents updated as at April 13, 2015, statements and information pertaining to the management report on the Company’s and the Group’s activities in 2016, as approved by the Board of Directors on February 21, 2017 (the “Report”), are included and presented in the 2016 Registration Document which will be submitted as such to the Shareholders’ Meeting convened to approve the financial statements for the financial year ended December 31, 2016.
Therefore, the sections of the Registration Document referred to in the correspondence table set forth under Section 7 hereafter, are fully incorporated in this Report of which they are deemed to be an integral part.
Statements and information relating to: ●● the resolutions submitted to the Shareholders’ Meeting, pursuant to the provisions of Article R. 225-83, 4° of the French Commercial Code; ●● the 2016 stock option plans; and
The total assets of SCOR SE as at December 31, 2016 amounted to EUR 11,274,418,934.
Shareholders’ equity stood at EUR 3,737,931,653 and other capital base at EUR 894,260,108. Liabilities amounted to EUR 1,541,338,302 including other loans of EUR 1,394,038,732.
Pursuant to the provisions of Article L. 441-6-1 of the French Commercial Code, except in specific situations (such as litigation regarding invoices received), suppliers’ invoices are paid upon receipt or within 30 days of the end of the month.
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 2016 totals EUR 89,211 and the amount of taxation borne by the Company due to the non-deductibility of such charges should amount to a total of EUR 30,715.
b) Net Profit before taxes, depreciations and reserves 507 802 355 240 188 d) Net Profit after taxes, depreciations and reserves 647 844 387 227 208
III. Profit and loss per share: a) Net Profit after taxes, and before depreciations and reserves 2.87 4.16 1.92 1.25 1.03 b) Net Profit after taxes, depreciations and reserves 3.36 4.38 2.01 1.18 1.08
(1) Subject to adjustment based on 2017 Shareholders’ Meeting’s decision regarding the allocation of 2016 income.
Over the three previous financial years, the amounts distributed by SCOR SE as dividends were as follows: Fiscal year ended on: 12/31/2015 12/31/2014 12/31/2013
Amount eligible for the deduction allowance specified by Article 158-3 of the French General Tax Code(2) EUR 1.50 EUR 1.40 EUR 1.30
(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.
> Trends in the SCOR SE share price throughout 2016#F 2 TRENDS IN THE SCOR SE SHARE PRICE
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 2016: Month Volume Value
ADDITIONAL INFORMATION RELATING TO THE MANAGEMENT REpORT OF THE COMpANY AND THE GROup – CORRESpONDENCE TABLE
Additional information provided in the management report of the Company and the Group – correspondence table < #F ADDITIONAL INFORMATION RELATING TO THE MANAGEMENT REpORT
STATEMENTS DEALING WITH THE MANAGEMENT OF THE COMPANY IN 2016: Analysis of the Group’s business development, results and financial position (including the debt situation)
●● Transactions performed by the Company in its own shares Section 2.3.1
●● Elements which could have an impact in case of a public offer Sections 2.3.1, 5.1 and 5.2
Undertakings of any kind made by the Company for the benefit of its executive officers, corresponding to items of compensation, indemnities or benefits due or expected to be due as a result of the commencement or termination of these duties or to changes in these duties, or post duties Sections 2.2.1, 2.2.2 and 2.2.3
Recent developments and prospects Sections 1.3.3, 1.3.4, 1.3.5 and Appendix C – 5 Note 16
> Additional information provided in the management report of the Company and the Group – correspondence table #F Management report Registration Document
Collective agreements concluded within the Company and the impact on the economic performance and work conditions of the employees Appendix D-1
Table of results of the Company in the last 5 years Appendix F – 1.2.1
Loans of up to 2 years granted by the Company, as an incidental basis to the principal activity, to micro-enterprises, SMEs or medium-sized companies with which it maintains economic ties which justify it None
Subsidiaries’ business overview in 2016 Sections 1.2.3, 1.2.5, 1.3.1, 1.3.5, 1.3.6, 1.3.9 and Appendix C – 5 Note 2
The report of the Board of Directors on the say on pay resolution required by article L. 225-37-2 of the French Commercial Code will be made available in the convening brochure of the shareholders’ meeting.
Headings as listed in Appendix 1 of European Commission Regulation N° 809/2004 Paragraph Pages 1 Person responsible 1.1 Name and title of person responsible Appendix B Person responsible for the Annual Report 1.2 Declaration by person responsible Appendix B Person responsible for the Annual Report 2 Statutory Auditors 2.1 Auditors 4.8 Statutory Auditors 222 2.2 Resignation or non-renewal of Auditors 4.8 Statutory Auditors 222 3 Selected financial information 1.1 Selected financial information 5 to 7 4 Risk factors 3 Risk factors and risk management mechanisms 5 Information about the issuer 5.1 History and development of the issuer 1.2.1 & 1.2.2 Introduction & history and development of SCOR
COMMISSION REGuLATION OF ApRIL 29, 2004 – CORRESpONDENCE TABLE Additional information provided in the management report of the Company and the Group – correspondence table < #G
Headings as listed in Appendix 1 of European Commission Regulation N° 809/2004 Paragraph Pages 17 Employees 17.1 Number of employees 2.1.5 Number of employees 68 17.2 Information on shareholdings and stock options or Company stock purchases by members of administrative and management bodies 2.2.3 Stock options and performance shares 17.3 Employee profit sharing plans 2.2.3 Stock options and performance shares 18 Principal shareholders 18.1 Significant shareholders known to SCOR 2.3.1 Capital ownership 100 to 107 18.2 Statement as to the absence of differences between the voting rights of various shareholders 2.3.1 Capital ownership 100 to 107 18.3 Direct or indirect control by a shareholder 2.3.1 Capital ownership 100 to 107 18.4 Agreement which could result in a subsequent change in control 2.3.1 Capital ownership 100 to 107 19 Related party transactions 19.1 Related party transactions 2.3.2 Related party transactions and agreements 19.2 Related party agreements 2.3.2 Related party transactions and agreements 19.3 Special report of the Auditors on related party agreements and commitments 2.3.3 Special report of the Statutory Auditors on related party agreements and commitments 20 Financial information concerning the issuer’s assets and liabilities, financial position and profits and losses 20.1 Historical financial information: consolidated financial statements 4 Consolidated financial statements 143 to 224 20.2 Pro forma financial information N/A N/A N/A
20.7 Dividend distribution policy 1.1.3 Dividend distribution policy 7 20.8 Litigation and arbitration procedures 4.6 Note 25 Notes to the consolidated financial statements – Note 25 – Litigation 20.9 Material change in financial or commercial situation 4.6 Note 26 Notes to the consolidated financial statements – Note 26 – Subsequent events 21 Additional information 21.1 Share capital 5.2 Description of SCOR’s share capital 21.2 Charter and Bylaws 5.1 Charter and Bylaws 226 to 231 22 Material contracts N/A N/A N/A
23 Third-party information and statements by experts and declarations of any interest 23.1 Expert’s report 5.3.1 Expert’s report 234 23.2 Information from third parties 5.3.2 Information from third parties 234 24 Documents on display 1.3.11 Documents on display 42 25 Information on holdings 4.7 Information on holdings 221
Report by the Chairman on the conditions for preparing and organizing the Board of Directors’ work as well as the internal control procedures implemented by the Company
Statutory Auditors’ report on the consolidated financial statements 4.9 223 and 224