The SBF 120 index consists of the 120 most actively traded French stocks. The SBF TOP 80 EW is an equal weighted index that reflects the performance of the 80 French stocks which are the most traded of the continuous segments not included in the CAC 40 index. The CAC Next 20 index includes the most representative stocks in terms of free float-adjusted capitalization and share turnover not included in the CAC 40 index. The CAC Large 60 index is composed of the constituents of the CAC 40 and CAC Next 20 indices. The CAC Large 60 EW is an equal weighted index that reflects the performance of the 60 largest and most actively traded shares listed on Euronext Paris. The CAC All-Shares index is composed of all the stocks listed on Euronext Paris with an annual velocity ratio of over 5%. The CAC All Tradable index includes all the stocks of the Euronext Paris market with a free float of at least 20%. The CAC Financials index is composed of the stocks included in the CAC All Tradable index belonging to the financial sector. The Euronext FAS IAS index is composed of the stocks included in the CAC All Tradable index that fulfill the following conditions: at least 3% of the capital is controlled by employees, a minimum of 25% of the workforce in France shall own shares of the company and a minimum of 15% of the overall workforce shall own shares of the company. The Euronext 100 index comprises the 100 largest and most liquid stocks traded on Euronext. The Euronext France Next 40 EW is composed of companies ranked from 41 to 80 in the SBF 120 index in terms of free float market capitalization. The Euronext Europe Sustainable 100 EW is an equal weighted index that reflects the performance of the top 100 stocks based on their traded value, ESG performance and 1 year drawdown, out of the 500 Largest stocks in terms of free float market capitalization, admitted to listing on the main markets of Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and of the United Kingdom. The Euronext France Energy Transition Leaders 40 is an index that reflects the performance of the top 40 stocks, based on their performance in terms of transition to a low-carbon economy, out of the CAC Large 60 Index. Euronext Vigeo® Eurozone indice is composed of the highest-ranking listed companies of Eurozone as evaluated by the Vigeo-Eiris agency in term of their performance in corporate responsibility. The ESI Europe indices universe is composed of companies included in the Russell Developed Europe Index that display the best performance in the field of Corporate Social Responsibility. The Ethibel family (ESI) consists of two variants: one
regular and one “Multiplier” version whereby a factor between 0.5 and 1.5 is applied in order to align the sector weights of the ESI Europe index with the sector distribution of the Russell Developed Europe. Inclusion in the regular ESI Europe index means automatic inclusion in the ‘Multiplier’ version. The SBFT 50 ESG EW is an equal weighted index that contains the 50 highest-ranking companies based on their ESG performance, as evaluated by the Vigeo-Eiris agency, among the 80 highest ranking companies in terms of free float market capitalisation that are expected to be included in the SBF120. The CAC® Large 60 Responsible Investment SW consists of all the companies that are expected to be included in the CAC Large 60, whereby the weighting is based on the Responsible Investment score as provided by Mirova/ISSoekom. The Euronext Europe 500 tracks the performance of a portfolio of 500 stocks in Europe, ranked by the highest free float in value as a percentage of market capitalization. The Euronext Europe 300 tracks the performance of a portfolio of 300 stocks in Eurozone, ranked by the highest free float in value as a percentage of market capitalization. The Euronext Eurozone 150 EW is an equal weighted index that reflects the performance of the top 150 stocks in Eurozone, based on the highest free float in value as a percentage of market capitalization. The Euronext Eurozone Next 100 EW is an equal weighted index that reflects the performance of the Eurozone stocks ranked from 51 to 150 ranked by the highest free float in value as a percentage of market capitalization. The Euronext Eurozone 100 ESG tracks the performance of the top 100 stocks in Eurozone, based on ESG score as determined by Vigeo-Eiris. The Euronext Core Europe 100 ESG EW is an equal weighted index that reflects the performance of the top 100 stocks, based on Vigeo ESG score, from Belgium, France, Germany, Luxembourg, and the Netherlands.
The Solvency II regulation covers, among other matters, valuation of assets and liabilities, the treatment of insurance and reinsurance groups, the definition of capital and the overall level of required capital. A key aspect of Solvency II is that the assessment of the Group’s risks and capital requirements are aligned more closely with economic capital methodologies.
See Section 1.1.4. – Current strategic plan for a description of the Quantum Leap plan (2019-2021).
In treaty reinsurance, the ceding company is contractually bound to cede, and the reinsurer is bound to assume a specified, contractually defined portion of a type or category of risks insured by the ceding company. Treaty reinsurers, including SCOR, do not separately evaluate each of the individual risks assumed under their treaties and, consequently, after a review of the ceding company’s underwriting practices, they are dependent on the original underwriting decisions made by the ceding company’s primary policy writers.
Information about the SCOR Group SCOR GROUP01 19SCOR Universal Registration Document 2019
Mortality Mortality protection represents 58% of the SCOR Global Life portfolio based on gross written premiums for the year ended December 31, 2019. SCOR Global Life actively underwrites mortality risk in all the geographical markets in which it operates.
Since 2015, SCOR has also been organizing, with the partnership of the French Institute of Actuaries, an actuarial symposium in Paris. In November 2015, the theme was centered around “Actuarial and Data Science”, followed by “Scientific laws and mathematical models: from physics to actuarial science” in December 2016, “Will Artificial Intelligence revolutionize actuarial science?” in December 2017, “Macroeconomic and Financial instabilities” in December 2018, and most recently “Actuarial Science and Game Theory” in December 2019.
Non-Life reinsurance is a cyclical market estimated by various analysts at USD 160 to 190 billion of premium globally, covering property, casualty, financial, and specialty lines. The sector is exposed to volatility in the form of development of past reserves and large natural and man-made losses.
The Autorité de Contrôle Prudentiel et de Résolution (ACPR) confirmed its non-opposition to this merger on March 20, 2019, and the Group obtained all required regulatory authorizations for the Group's branches and foreign subsidiaries.
1.3.5.1. Operating result SCOR is characterized by its strategic positioning aimed at diversifying its exposures. To this end, the Group seeks to preserve: • the diversification of its business by maintaining a broadly balanced split between its Life and Non-Life reinsurance activities. The business volume split for the year ended December 31, 2019 was approximately 56% for Life reinsurance and 44% for Non-Life reinsurance based on gross written premiums; • the geographic diversification of the Group’s business by: — operating in a large number of countries, both mature and emerging, — maintaining its policy of being positioned on strong-growth markets such as Asia-Pacific and Latin America, — operating as a mixed Non-Life and Life reinsurer in China using the license received in 2011, enabling SCOR to add Life reinsurance services to the existing Non-Life activities; and
Expenses The Group cost ratio (1), calculated as the total of all management expenses less certain non-controllable expenses (e.g. bad debts), legal settlements, acquisition expenses and amortization, divided by gross written premiums, was 4.7% for the year ended December 31, 2019, decreased from 5.0% in 2018 and 2017. Management expenses for the years ended December 31, 2019, 2018 and 2017 were EUR 937 million, EUR 893 million, and EUR 858 million respectively, on a comparative basis.
1.3.5.2. SCOR Global P&C SCOR Global P&C is a leading P&C reinsurer with a worldwide footprint.
Number of catastrophes occurred during the financial year In EUR millions 901779 1,363Losses and loss adjustment expenses due to catastrophes, gross 768Losses due to catastrophes, net of retrocession 681616
Market and financial review SCOR GROUP01 32 SCOR Universal Registration Document 2019
The return on invested assets in 2019 was 3.0% as compared to 2.8% in 2018 and 3.5% in 2017. The evolution of investment income in 2019 is essentially driven by strong investment revenues and by the active portfolio management strategy implemented by SCOR Global Investments, which translated into substantial realized capital gains of EUR 93 million, mostly achieved on the real estate portfolio and to a lesser extent on the fixed income portfolio.
11(24)Fair value through income on invested assets (4) (5) (7) 20
• Keeping SCOR Investment Partners’ strong momentum in thirdparty asset gathering through a comprehensive product offering and best-in-class returns.
Investments at fair value through income - 1,3511,099 1,351252 1,351- -
Market and financial review SCOR GROUP01 36 SCOR Universal Registration Document 2019
Investments at fair value through income 1,245 1,245- 979- 266 1,245 -
1.3.6. FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES The strength of the 2019 results and balance sheet demonstrates the effectiveness of SCOR’s strategy, which is based on extensive business and geographical diversification, focusing on traditional reinsurance activity with reinsurance liabilities with very limited exposure to economic activity risks, and no material off balance sheet exposure.
For information on the Group’s solvency scale, refer to Section 1.3.7. – Solvency and Section 4.6. – Notes to the consolidated financial statements, Note 12 – Information on share capital, capital management, regulatory framework and consolidated reserves.
• Director of Crédit Logement Assurance (France) • Director of l’Association pour la promotion de la retraite et de l’épargne des français (PERF) (France)
• Director of Institut Pasteur (France) • Director of Aviva Insurance Limited (UK) • Director of Uniqa Insurance Group AG (Austria)* • Director of Prometic (Canada)*
• Chairman of the Board of Directors of Generali IARD (France)
• Director of Bank of China Insurance Company (China) • Director of Trust Mutual Life Insurance Company (China)
Terms of office duration The term of office of the directors appointed or renewed, as set forth in SCOR SE's bylaws, shall not exceed four years. Under SCOR SE’s bylaws, directors may hold office until the age of 77. A director who reaches the age of 77 while in office has to retire at the expiration of his or her term of office, as determined at the Shareholders’ Meeting. Except the employee directors, the directors are elected by the shareholders and serve until the expiration of their respective term, or until their resignation, death or removal, with or without cause, by the shareholders. Vacancies on the Board of Directors may, under certain conditions, be filled by the Board of Directors, pending the next Shareholders’ Meeting. The appointment is then submitted for ratification at the next Shareholders’ Meeting.
Independence of directors The independence of the directors is assessed on the basis of the following criteria. Accordingly, an independent director: 1. must not currently be or have been within the last five (5) years, an employee or a corporate officer of SCOR or an employee or a director of a company consolidated by the Company. However, a director who has been, during the last five (5) years, director of a subsidiary which is consolidated by the Company can be qualified as an independent director of the Company if the mandate in the subsidiary was terminated before April 15, 2020; 2. must not have received, in any form, compensation greater than EUR 100,000 from the Company within the last five years, except for compensation received as a director; 3. must not be an executive corporate officer of a company in which the Company holds, directly or indirectly, a directorship, or in which an employee designated as such or an executive corporate officer of the company (current or in the last five years) holds a directorship; 4. must not be a significant customer, supplier, investment or commercial banker, consultant of SCOR or its Group, or for whom SCOR or its Group represent a significant part of such person’s business activities. For the quantitative assessment, a business relationship is deemed significant if it amounts to an annual sum of more than 5% of SCOR’s consolidated revenues, or more than 5% of the turnover, consolidated as necessary, of the director or the company with which he is affiliated. For the qualitative assessment, the criteria to qualify that a business relationship is deemed significant will be notably duration and continuity, economic dependence, exclusivity. The evaluation of how significant the relationship is with SCOR or its Group must be debated by the Board in consideration of the Compensation and Nomination Committee’s report; 5. must not have a close family relationship with one of the Company’s corporate officers; 6. must not have been an auditor for the Company within the last five years; 7. must not have been a director of the Company for more than twelve (12) years (the loss of independent director status in this regard will occur on the date at which this period of twelve years is reached); 8. must not represent a significant shareholder of the Company with the stipulation that: — a shareholder is deemed significant if he holds more than 5% of the shares or voting rights (calculation consolidating his various holdings),
Limitations and restrictions on trading in SCOR securities The Board Internal Charter sets out the main recommendations of the market authorities with regard to directors trading in the securities of the Company.
The conclusions of the assessment were presented by Fields Wicker-Miurin during the meeting of the Compensation and Nomination Committee on February 25, 2020, the non-executive directors’ session on February 26, 2020 and the Board of Directors meeting held on the same day.
Zhen Wang 100 100Fields Wicker-Miurin * Member of the Risk Committee from April 26, 2019. He was absent and excused to one meeting of the Risk Committee due to other commitments made prior to his appointment.
The Chairman and Chief Executive Officer attends the sections of the Compensation and Nomination Committee’s meetings dealing with appointments and those dealing with compensation matters not related to him.
The Board of Directors of SCOR also has a Lead Independent Director who may include any subject he deems necessary on the agenda of the Board of Directors’ meetings and can convene a Non-Executive Directors’ session as often as is required.
The benchmark study conducted by Mercer in 2019 for the Compensation and Nomination Committee concludes that the compensation package of the Chairman and Chief Executive Officer (all compensation items included) is aligned with market practice. More specifically, the Chairman and Chief Executive Officer’s 2018 total compensation was equal to 114% of the median (among a list of peers including the main global reinsurers selected by premium income and for which information on the pay of top management is available, i.e. Alleghany, Arch Capital Group, Axis Capital Holdings Limited, Everest Re, Great West Lifeco, Hannover Re, Munich Re, Reinsurance Group of America and Swiss Re).
These performance shares will be acquired on February 20, 2022, provided that he remains a corporate officer of SCOR Group until February 19, 2022 inclusive, except as otherwise stated by the Plan, and are 100% subject to the same conditions as those for the stock options. The stock options and performance shares granted to the executive corporate officer in 2019 represent 0.120% of the share capital, 7.37% of the total allocations in 2019, and 64% of his overall compensation.
Regarding the Group's investments: • formalization of a sustainable investment policy; • zero-net carbon commitment by 2050; • strengthening of the exclusion policy in the coal sector and extension of the exclusions to other fossil fuels (oil sands and arctic drilling) over the course of the “Quantum Leap” plan; • provision of climate experts to European authorities (Technical Expert Group of the European Commission, EFRAG Lab, EIOPA).
Number of options exercised during the period Exercise priceDate of plan
Achievement of performance conditions In 2019, the Compensation and Nomination Committee acknowledged the partial achievement of the performance conditions attached to the February 23, 2016 performance share plan, bringing the share acquisition rate to 85%. In addition to the performance conditions described below, the strict compliance with Group’s ethical principles as described in the Code of Conduct of SCOR Group was required.
In 2017, the Compensation and Nomination Committee acknowledged the partial achievement of the performance conditions attached to the September 1, 2011 Long Term Incentive Plan, bringing the share acquisition rate to 95%. In addition to the performance conditions described below, the strict compliance with Group’s ethical principles as described in the Code of Conduct of SCOR Group was required.
Average compensation paid or granted on a full-time equivalent basis to the Group employees other than the executive corporate officer 142,709(2) 139,146
USD 27,000USDKory Sorenson 27,000 SCOR Global Life Americas Reinsurance Company 27,000 27,000USDKory Sorenson USD SCOR Global Life USA Reinsurance Company Kory Sorenson USD27,000 27,000USD
Consequently, market studies are regularly conducted by an external company for the Compensation and Nomination Committee, in order to put into perspective the amount and structure of the Chairman and Chief Executive Officer’s compensation compared to a panel of peers made up of the main global reinsurers selected by premium income and for which information on the pay of top management is available (Alleghany, Arch Capital Group, Axis Capital Holdings, Everest Re, Great West Lifeco, Hannover Re, Munich Re, Reinsurance Group of America and Swiss Re). The last benchmark conducted by Mercer has been made in 2019 based on available data from the previous year. The Chairman and Chief Executive Officer’s 2018 total compensation was equal to 114% of the median.
It should be noted that the Chairman and Chief Executive Officer does not receive compensation for his other mandates as Director of subsidiaries of the SCOR Group.
• If the observed average ROE is lower or higher than the Target ROE, the shares will be acquired/the stock options may be exercised based on the sliding scale set out in the table below: Proportion of the shares definitively acquired / options that could be exercised under this criterionRatio between the observed average ROE and the Target ROE
• If the observed average solvency ratio is lower than the “Target Solvency Ratio”*, the shares will be acquired/the stock options may be exercised according to the sliding scale set out in the table below: Difference between the average solvency ratio and the Target Solvency Ratio*
Benefits in kind As the Company representative, the Chairman and Chief Executive Officer is granted a company car with a shared driver. The insurance, maintenance, fuel and all costs related to the driver are paid by the Company. The Chairman and Chief Executive Officer also benefits from a health insurance policy under the terms of a contract dated September 16, 1988.
Denis Kessler 125,000-03/23/2009125,000 03/23/2013 -03/18/2010125,000 03/19/201418.40 03/18/2020to 125,000 to -100,00003/20/2014100,000 03/21/201825.06 03/20/2024 -31.5803/10/2016 to03/11/2020 -03/10/202625,000 -03/10/2017100,000 03/11/202133.78 03/10/2027to 35. 10 03/08/2028to --03/08/2018100,000 03/09/2022 03/07/2019 to03/08/2023 -03/07/2029100,000 -38.66 -03/23/200915,000 03/23/201314.92 03/22/2019to
Romain Launay - 03/05/2022-5,0002014-2022 Long Term Incentive Plan - --20,000 02/20/20252019-2025 Long Term Incentive Plan 2011 -2019 Long Term Incentive Plan 34.95 09/02/2019
Those options can be exercised four years after the grant date at the earliest, if the presence condition (four years) is respected. The exercise price is calculated without a discount, based on a twentyday average opening share price of SCOR SE’s shares before the grant date. The stock options can be exercised on one or more occasions from the beginning of the exercise period on October 26, 2023 until October 25, 2029 inclusive. After this date, exercise rights shall expire.
Under no circumstances will the application of these performance conditions lead to a number of exercisable options higher than the initial award, and the outperformance of the ROE criterion cannot offset under-performance of the solvency criterion.
(1) If the strategic plan sets a target or "optimal" range, the lower end of this range is considered for calculation purposes as being the Target Solvency Ratio.
February 19, 2019 Long Term Incentive Plan Pursuant to a decision taken by the Board of Directors on February 19, 2019 following a proposal from the Compensation and Nominations Committee at its February 19, 2019 meeting, in accordance with the authorization granted to it by the Combined Shareholders’ Meeting of April 26, 2018, 205,000 performance shares were awarded on February 19, 2019 to members of the Executive Committee in a qualified Long Term Incentive Plan (LTIP).
The provisions of the plan provide for a vesting period of six years for all beneficiaries.
100%+33 percentage pointsDifference between the average Solvency Ratio over 2016-2018 and the average Target Solvency Ratio
In 2019, the Compensation and Nomination Committee acknowledged the partial validation of the performance conditions attached to 2013 Long Term Incentive Plan, bringing the share acquisition rate to 95%. In addition to the performance conditions described below, the strict compliance with Group’s ethical principles as described in the Code of Conduct of SCOR Group was required.
Increase of the share capital resulting from the exercise of stock-options as from January 1 to 31 December 2017
The authorization is limited to existing shares (2) 24 months 82,194,704 shares26th resolution (Aggregate ceiling of the capital increases) 101,042,895 shares 126, 433,361 SHARES -TOTAL 107,585,170 SHARES
Within each of these categories, specific risks are listed in a decreasing order of importance in terms of likelihood of occurrence and negative impact, after taking into account mitigation measures implemented by the Group in terms of risk mitigation and management.
There has been no significant M&A activity in 2019, but challenging business conditions, sub-par performance of some players, the continued convergence of alternative and traditional capital, as well as other challenges, could result in further mergers in the next few years.
Another factor of uncertainty resides in the fact that some of SCOR’s activities are long-tail in nature, such as long-term care, whole Life products, longevity, worker’s compensation, general liability or medical malpractice, etc. It has, in the past, been necessary for SCOR to revise estimated potential loss exposure on such lines of business.
3.1.3.3. Credit spread risks Credit spread risk on invested assets is the risk of incurring a financial loss arising from the change in the market assessment of the counterparty risk of financial instruments or counterparties. Credit spread variations could have a direct impact on the market value of the fixed-income securities and loans, and as a consequence, on the realized or unrealized capital gains or losses of the fixed-income securities held in the portfolio.
• Risks specific to the administration of contracts are subject to checks performed at the subsidiary and branch level. SCOR’s Group Information System includes multiple automatic checks and additional tools.
• A quarterly review of technical results is performed by business area (Reinsurance, Specialty Insurance, Business Ventures and Partnerships) and region. The review enables the analysis of technical results by underwriting year, by nature and by line of business.
Management of credit risks related to bond and loan portfolios SCOR mitigates the credit risk related to bond and loan portfolios by careful analysis and selection of issuers, and by a policy of geographic sector diversification. SCOR maintains its investment policy in high-quality assets and in countries with the lowest sovereign risk.
• the appropriateness of the composition of the assets in terms of nature, duration and liquidity in order to meet obligations as they fall due.
Miscellaneous assets 1,413Note 9 1,280 1,597Note 10 1,501Deferred acquisition costs 1,435Cash and cash equivalents 1,175Note 11 44,38346,878TOTAL ASSETS
For the year ended December 31 2019 2017In EUR millions 2018 16,341 14,78915,258Gross written premiums (446) (191)(203)Change in unearned premiums reserves 14,598Note 4 15,895 15,055Gross earned premiums (42)Other income and expenses (54)(31)
Consolidated statement of income CONSOLIDATED FINANCIAL STATEMENTS04 159SCOR Universal Registration Document 2019
(2) Reduction of treasury shares of EUR 284 million mainly due to the cancellation of shares related to the share-buy-back program. (3) Issuance of shares related to the exercise of stock options of EUR 9 million (EUR 3 million in share capital and EUR 6 million in additional paid-in capital). This resulted in the creation of 509,135 shares during the year ended December 31, 2019. These movements were offset by a reduction in Group capital through the cancellation of treasury shares of EUR 248 million (EUR 51 million in share capital and EUR 197 million in additional paid-in capital).
Consequences of the United Kingdom’s referendum to leave the European Union The impact of the referendum on the United Kingdom’s membership in the European Union has led to heightened financial market volatility and increased political and economic uncertainty. The terms of the Brexit are still uncertain at year end 2019. To prepare for Brexit the Group has set up a new entity, SCOR Europe SE. With effect from January 1, 2019, SCOR Europe SE, a 100%-owned subsidiary of SCOR SE, underwrites all new and renewed business relating to risks located in the EEA that can no longer be accepted by SCOR UK Company Ltd. after the Brexit date. SCOR Europe SE will also take over all commitments from policies previously issued by SCOR UK Company Ltd. if the latter can no longer honor these following Brexit.
As at December 31, 2019, 2018 and 2017, the Group has one net investment hedge in place.
Accounting principles and methods specific to reinsurance activities Certain specific reinsurance accounting principles are described directly within Notes 8. – Accounts receivable from and payable on assumed and ceded insurance and reinsurance transactions, 10. – Deferred acquisition costs, 15. – Net contract liabilities, and 19. – Net retrocession result. Further accounting principles and methods related to reinsurance activities are described below: Classification and accounting of reinsurance contracts The contracts assumed and retroceded by the Group are subject to different IFRS accounting rules depending on whether they fall within the scope of IFRS 4 – Insurance Contracts or IAS 39 – Financial Instruments: Recognition and Measurement.
The identifiable assets acquired, and liabilities assumed have been recorded at their fair value for purposes of the opening balance sheet and included in the consolidated accounts of SCOR using the Group’s accounting principles in accordance with IFRS during the third quarter of 2019. The net assets amounted to GBP 2 million (EUR 3 million, based on the EUR/GBP exchange rate at the acquisition date).
Total liabilities 400 Fair value of net assets 141 Consideration paid 68 47Fair value of the 33% previously held
Other assets and liabilities Other assets and liabilities have been recorded at their estimated fair value.
Americas and EUR 9,070 million for EMEA. The share of retrocessionaires in contract liabilities previously reported was EUR 262 million for Americas and EUR 341 million for EMEA for the year ended December 31, 2018.
Change in scope of consolidation 1, 838Gross value at December 31, 2019 Cumulative amortization and impairment at December 31, 2017 (469) Foreign exchange rate movements 1 57 (1)Amortization for the period -Impairment for the period 81Shadow accounting
Fair value hierarchy The Group provides disclosures on the measurements of financial instruments held at fair value using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The level in the fair value hierarchy is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement. Assessing the significance of a particular input to the fair value measurement requires judgment, considering factors specific to the asset or liability. At each reporting date, the Group considers the classification relevancy of financial instruments that are measured at fair value. The valuation methodology of financial instruments is regularly monitored to identify potential reclassifications. The fair value hierarchy has the following levels: • Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
(23)1,816United States (2)2,590 -16 -11Japan 1718China 6684 40Total government bonds & similar 4,6645,655 (17) Covered bonds & Agency MBS 1,600 (27)1,885 17
Similar to the increase of EUR 27 million net of amortization during the year ended December 31, 2018, the increase of EUR 54 million net of amortization during the year ended December 31, 2019 mainly relates to the capitalization of software development costs relating to the Group’s accounting system and technical accounting system.
Notes to the consolidated financial statements CONSOLIDATED FINANCIAL STATEMENTS04 200 SCOR Universal Registration Document 2019
(26)Depreciation for the period Impairment for the period - -Reclassification 13Disposals
Net cash flows provided by/(used in) operations, excluding changes in working capital 1,310942 740 Change in accounts receivable and payable 118(171) (54)
(1) Includes EUR 38 million in accrued interest at December 31, 2019 (December 31, 2018: EUR 38 million). (2) These debts are not publicly traded. Therefore, the carrying amounts are reflective of their fair value.
Foreign exchange rate movements 24Adjusted discount rate 24- --Acquisition of a subsidiary 17Current year provision 3215 (6)(15) (21)Used reserves --Reversal of unused reserves -
Notes to the consolidated financial statements CONSOLIDATED FINANCIAL STATEMENTS04 212 SCOR Universal Registration Document 2019
Gross claims reserves & estimates – end of year (1) 11,75011,088
0.0%0.1%Net % of Group Non-Life claims paid 0.0%0.2% Actual number of claims notified under non-proportional and facultative treaties (in units) 11,04311,176 8,5838,612 21,11021,533 5,072Average cost per claim (in EUR) (1) 5,223
Notes to the consolidated financial statements CONSOLIDATED FINANCIAL STATEMENTS04 225SCOR Universal Registration Document 2019
Transactions with key management personnel Key management personnel are those individuals having responsibility and authority for planning, directing and controlling the activities of the Group. The Group considers that the members of the Executive Committee and the Board constitute key management personnel for the purposes of IAS 24.
The total carrying amount of financial assets pledged to the benefit of SCOR as collateral is EUR 1,107 million (2018: EUR 1,262 million). These amounts include securities pledged by retrocessionaires for a total amount of EUR 949 million (2018: EUR 930 million) detailed in Note 15 – Net contract liabilities. The remaining amount relates to pledged assets received on assumed reinsurance.
Letters of credit As security for the Group’s technical liabilities, various financial institutions have provided sureties for the Group in the form of letters of credit. The total amount, not included in the table above, as at the reporting date was EUR 1,364 million (2018: EUR 1,394 million). 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.
In addition to the litigation described above, SCOR is involved in court, arbitration and other formal or informal dispute resolution proceedings in its normal course of business. Based on Management’s assessment these current proceedings are not expected to have a significant negative impact on the consolidated financial statements.
As at December 31, 2019, SCOR SE held indirectly shares or units in the companies representing at least 10% of the consolidated net assets or generating at least 10% of the consolidated net income or loss. These holdings are listed below: Type of business % CapitalRegistered office
The review of flow projections and assumptions used involve a significant part of judgement and uncertainties. Furthermore, it significantly impacts the amortization schedule of VoBA. In these circumstances we consider the valuation of intangible assets to be a key audit matter.
Including our Life Actuarial Specialists, we have completed the following procedures: • we assessed the application of internal procedures on the evaluation of VoBAs, as well as their depreciation schedules; • in order to analyze the valuation of VoBAs and their correct amortization, we examined the expected cash flows on the relevant portfolios; • we assessed the recoverability of the VoBAs taking into consideration the liability adequacy test.
Statutory distribution of earnings (Article 20 of the bylaws) 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.
The court may be requested to appoint an agent either by shareholder(s) holding at least 5% of the share capital, or a duly authorized association of shareholders holding their ordinary shares in registered form for at least two years and jointly owning a certain percentage of voting rights (computed on the basis of a formula related to capitalization which on the basis of the Company’s outstanding share capital as at December 31, 2019, would represent approximately 1% of voting rights) or by any interested party, including the Works’ Council in urgent situations.
One or several shareholder(s), together holding a certain percentage of SCOR’s voting rights (computed on the basis of a formula related to capitalization which, on the basis of outstanding share capital as at December 31, 2019, would represent approximately 0.5% of voting rights), the Works’ Council or a duly authorized association of shareholders holding ordinary shares in registered form for at least two years and holding together a certain percentage of the voting rights (calculated on the basis of a formula relating to capitalization which on the basis of the outstanding share capital as at December 31, 2019, would represent approximately 1% of SCOR SE’s voting rights) may, within 10 days of such publication, propose resolutions to be submitted for approval by the shareholders at the Shareholders’ Meeting.
The bylaws of the Company are described in this Universal Registration Document and can be found on the Company’s website. The other legal documents relating to the Company can be consulted at the Company’s registered offices pursuant to the applicable rules and regulations.
Social data: methodology6.6.2. 284 2846.6.3. Environmental data: methodology 2866.7. REPORT BY THE INDEPENDENT THIRD PARTY, ON THE EXTRAFINANCIAL PERFORMANCE DECLARATION INCLUDED IN THE MANAGEMENT REPORT
The Group is active in two reinsurance segments via its business units: • SCOR Global P&C operates in three business areas: Specialty insurance (e.g. Business Solutions, Managing General Agencies, SCOR Channel), reinsurance (e.g. Property, Casualty, Credit and Surety, Decennial Insurance, Transport, Construction, Agriculture risks and Natural Catastrophes), and P&C Partners (alternative solutions and new products); • SCOR Global Life covers Life and Health insurance risks through three product lines – Protection, Longevity and Financial Solutions – with a strong focus on biometric risks.
Additional information on the Group’s strategic plan is available on its website in its 2019 investor day presentation.
The roadmap submitted to the Corporate Social and Societal Responsibility and Environmental Sustainability Committee is based on an analysis of the men-women paths observed in the Partners program during the past five years, and a projection of those to determine, on one hand, the time horizon of a balanced representation in senior positions and, on the other hand, identify realistic measures to facilitate the conditions under which they will be achieved. This roadmap capitalizes on various mechanisms experienced during the past few years that have gradually shown effects, as illustrated in the representations’ evolution within the Partners program and the Group’s Executive Committee.
2019 achievements: • Due to its geographical footprint and local regulations, the
SCOR is globally conducting sponsorship actions that lead its entities and teams to get involved in the communities’ lives. Locally driven in order to be as close to the needs as possible, the Group’s entities strive to develop and deploy their social engagement program while taking into consideration the cultural and/or regulatory specifics of the countries from which they operate.
From an operational point of view, these solutions enable the Group to meet key business needs: having the right talent in the right place, developing skills and preparing for future needs.
2019 achievements: Promoting a learning culture based on skills and autonomy, 2019 was a year marked by developing and digitalizing training programs as well as structuring Leadership programs, linked with the Group’s talents development policy: • Roll out of a new platform, “My Learning Platform”, easing the access to all learning & development programs, contents and resources for all Group employees worldwide. This new multimedia platform simplifies the access to training, offering learning solutions that combine presential and digital trainings.
6.2.1.4. Fostering social dialogue One of SCOR’s ambitions is to establish a coherent and harmonized social dialogue aimed at sharing the Group's main principles with all employees.
• In addition to these meetings held at European level, social dialogue takes place at local level too. In 2019, 85 meetings (78 in 2018) were held with staff representatives (24 meetings in France (1), 1 meeting in Italy, 27 meetings in Switzerland, 17 meetings in Germany, 5 meetings in Sweden, and 11 meetings in Brazil).
• 9 collective agreements were signed within the Group in 2019 (6 for France, 1 in Germany, 2 in Brazil). These collective agreements are intended to improve the economic performance of SCOR and the working conditions of employees, in particular by associating them more significantly with the Company's performance and improving employee benefits.
Breakdown by business unit “Grenelle II” Indicator: Total Headcount (by business unit)
The Code of Conduct is embedded in the Group’s human capital management cycles, for instance, as part of the annual Appraisal and Development Interview described in Section 6.2.1.3 of this statement, as well as through training for new employees and periodically for existing employees.
SCOR maintains multiple guidelines and policies that relate to or impact some aspects of data privacy and/or protection: • Group Data Protection Guideline, which establishes a common minimum standard to be applied by SCOR for processing Personal Data; • Group Data Breach Response Guideline, which establishes a response process to help staff identify and escalate a potential data breach, to ensure an appropriate and timely company response; • Group Information Security Policy, which establishes SCOR’s commitment to IT security and defines the IT security governance.
The management of investment risks is designed to be holistic and to cover various factors through a global approach. Over the past few years, SCOR has developed a transversal corporate culture of risk management by applying an ERM (Enterprise Risk Management) approach to all its activities. Environmental, social and governance risks fall naturally into this approach and are subject to structured governance at the various levels of the Group: • SCOR's Board of Directors, assisted by its Corporate Social and Societal Responsibility and Environmental Sustainability Committee, is regularly informed of regulatory changes, developments, stakeholder demands and initiatives undertaken in the context of the action plan relating to the ESG strategy for investments. SCOR's Investment Risk and Sustainability Group (IRSG) reports directly to the Committee on actions taken to apply ESG criteria to its investment strategy and on how the Group’s asset management takes climate change risks into account. The Risk Committee assists the Board of Directors in approving risk appetite and risk tolerance limits; • the Group's Executive Committee, through its specialized committees (notably the Corporate Social and Societal Responsibility and Environmental Sustainability Committee) approves the ESG strategy for investments, and the Group Investment Committee approves normative and thematic exclusions, as well as major asset reallocations related to risk management, particularly for climate risks. During the meetings of the Group Investment Committee, SCOR Global Investments reports on the portfolio’s exposure in relation to the risk limits laid down in the strategic plan and operational plans, including to risks arising from ESG criteria; • on an operational management level, the internal CSR Committee coordinates the Group’s actions in terms of social and societal responsibility and sustainable development, in order to foster an overarching approach to CSR, to merge the initiatives taken by the Group, business lines and asset management, and to ensure that the various action plans prepared by each business unit are consistent. In addition, the Mandate Investment Committee, which brings together the Investment Risk and Sustainability Group (IRSG) and
the areas of health (e.g. manufacture and distribution of opioids, animal testing), the environment (e.g. palm oil production, dam construction) and human rights (e.g. textiles and forced labor). For the sectors identified, the underwriting teams are invited to integrate these issues into the "Know Your Customer" procedure. In the event of doubt about the ESG quality of the proposed case, teams are invited to forward the file to their managers and to the SBS underwriting manager for arbitration.
While SCOR takes environmental considerations into account in its extension or relocation projects, the Group also promotes ecoresponsible operation by rolling out environmental management systems where possible. In 2019, the management and maintenance of the Paris offices were certified ISO 14001, this international standard being preferred over the High Environmental Quality certification previously used. At the end of 2019, 53% of the Group's employees falling within the scope of the environmental reporting process were covered by an environmental management system (50% in 2017).
Among the other measures implemented by the Group to protect itself against cyber risks, and in response to the widespread practice of phishing, SCOR has installed a feature facilitating the transmission by its employees of suspicious messages received to the teams in charge of information systems security. This alert process enables these teams, when the message is a proven phishing attempt, to take the appropriate measures to block the source of these attempts. In addition, in order to make Group employees aware of this type of threat, the security teams conduct tests by conducting campaigns of fake phishing attempts to help them identify the signs of an attempt. The Group has conducted four campaigns of this kind since its inception at the end of 2018.
Risk description Section 6.1.3.4 – Non-financial risk management, presentation of the risks and analysis
In our capacity as independent third party and certified by COFRAC under number 3-1058 (scope of accreditation available at www.cofrac.fr), we hereby report to you on the extra-financial performance declaration for the year ended December 31, 2019, included in the management report (hereinafter named the "Declaration"), pursuant legal provisions and regulation of article L. 225-102-1, R. 225-105 et R. 225-105-1 of the French Commercial Code (Code de commerce).
These three documents are rolled out across all SCOR entities to ensure consistency across the Group. Together, these documents set the rules to be applied by all internal and external asset managers on behalf of the legal entities.
Group; • limited and automatized mappings between systems; • extended capabilities for Reporting (including drilldown from financial to source system data); • enhanced audit trail.
The financial statements used as a basis for the merger agreement and the calculation of the merger profit are the quarterly financial statements as at September 30, 2019 of SCOR SE and SHS.
Under the new arrangement, like in previous facilities, protection would be triggered in case of natural catastrophes and in case of extreme life events.
3265.3.3. Analysis of general expenses by type and non-recurring income or loss 5.3.4. 327Analysis of income tax Stock options5.3.5. 328 3305.3.6. Employee share ownership plans 3315.3.7. Compensation of the corporate officer Analysis of commitments given and received 333Post balance sheet events5.3.9.
5.1.3. PROPERTY, PLANT AND EQUIPMENT Items included in this caption are recorded at their historical cost.
5.1.4. ACCOUNTS RECEIVABLE An allowance for bad debts relating to accounts receivable from reinsurance transactions and other receivables is recorded to the extent that recoverability is uncertain.
• outgoing or incoming claim portfolios in consideration of all other underwriting reserves. These portfolio transfers are included in benefits and costs paid in the income statement.
Switzerland AG; • EUR 94 million with SCOR Capital Partners SAS; • USD 40 million (EUR 35 million) with SCOR Reinsurance Asia-
• SCOR US CORPORATION 199 Water Street, New York, NY 10038-3526 USA
• SCOR REINSURANCE ASIA PACIFIC PTE LTD 143 Cecil Street, 20-01 / GB Building Singapore, 69542 Singapour
Besides the impact of the 3SE merger which explains EUR 14,430 million out of a EUR 14,757 million evolution, the gross underwriting reserves increase by EUR 327 million. For gross technical reserves (Non-Life) the increase of EUR 1,596 million is mainly due to the increase in outstanding loss reserves for
Deferred commissions received from reinsurers (Non-Life) 57133 - 9 142 57 - -
It breaks down into non-recurring income for EUR 13 million and non-recurring expenses for EUR (23) million. The transfer of assets from the London branch to SCOR Services UK Ltd impacts both the expenses and the income for EUR 8 million.
The technical reserves of your company amount to EUR 4,313 million for Life reinsurance and EUR 13,457 million for Non-Life reinsurance as at December 31, 2019.
As specified in Article L.823-10-1 of the French Commercial Code (Code de commerce), our statutory audit does not include assurance on the viability of the Company or the quality of management of the affairs of the Company.
• Evaluates the overall presentation of the financial statements and assesses whether these statements represent the underlying transactions and events in a manner that achieves fair presentation.
NET COMBINED RATIO Sum of the Non-Life net attritional ratio, natural catastrophe ratio, commission ratio and the management expense ratio.
1.2.1. FIVE-YEAR FINANCIAL SUMMARY Pursuant to the provisions of Article R. 225-102 of the French Commercial Code, the following table presents a summary of SCOR SE’s operating results for each of the last five financial years: I. Financial position at the end of the year 1,521 1,524 1,517 1,518a) Social capital (in EUR millions) 1,473 - - - -c) Number of convertible bonds to shares -
(5) 647 844d) Net profit after taxes, depreciations and reserves 908 499
Main characteristics of the internal control and risk management procedures Appendix A
The annual evolution of the remuneration, of the company's performance, of the average remuneration on a full-time equivalent basis of the company's employees, other than executives, and of the ratios referred to in 6°, over at least the five most recent financial years, presented together and in a manner that allows for comparison
Agreements entered into, directly or through an intermediary, between a corporate officer and a company which share capital is held, directly or indirectly, at more than 50% by the Company
Appendix B 3011.1. Name and title of person responsible Person responsible for the Annual Report
Restrictions on the use of capital resources that have materially affected or could materially affect, directly or indirectly, the issuer's operations 1.3.6 Financial position, liquidity and capital resources 1.3.6 Financial position, liquidity and capital resources 8.5.
Information on SCOR’s competitive position & Revenues and earnings summary 27 to 37