consolidated fin tory auditors ith the AMF on consolidated fin tory auditors ith the AMF on h are not expre with share cap u Général de ny register (RC
The 2010 year end results and balance sheet strength demonstrate the effectiveness of SCOR’s strategy which is based on high business and geographical diversification and focuses on traditional reinsurance activity.
Unforeseen events, such as natural catastrophes or terrorist attacks, can cause significant damage. These types of risk primarily affect the Non-Life operations. However, in cases where SCOR faces a large number of casualties, the possibility of the losses also affecting Life reinsurance as well cannot be excluded.
SCOR's insurance risk exposure is mitigated by diversification across a large portfolio of insurance and reinsurance contracts as well as geographical areas. The volatility of risks is also reduced by careful business selection, implementation of underwriting guidelines, the use of retrocession and other risk transfer arrangements, proactive claims handling as well as underwriting, claims and administration audits at ceding companies.
As a result of the above, CRP’s exposure emanating from these legacy contracts has been significantly reduced and at the end of December 2009, all activities in Bermuda and Vermont ceased and the remainder of their legacy related contracts were transferred to GSNIC. Since then, the SCOR U.S. run-off portfolio resides entirely in SCOR Re and GSNIC.
However, the Group is subject to all of the factors of uncertainty mentioned above and, in consequence, to the risk that its reserves are inadequate compared to its liabilities. Therefore, if its claims reserves prove to be inadequate, its net income, cash flow and financial position may be adversely affected.
As a consequence of the difficulties described above regarding the correct reserving of risks and their annual revision in Life and Non-Life, there can be no assurance that the Group will not have to increase its reserves in the future, or that the reserves constituted by the Group will be sufficient to meet its future liabilities, which could materially impact its current and future revenues, net income, cash flow, financial position, and potentially, the SCOR share price.
SCOR reduces concentration risk by defining counterparty exposure limits. Furthermore the Group selects bank counterparties according to their rating and quality of their credit. The Group also considers the public assistance (e.g. loans, guarantees of deposits, nationalisations) certain banks may benefit from during the financial crisis, as they are important in the economy of their country.
Secondly, a reduction in the value of future profits could arise from a massive unexpected lapsation of policies following a deterioration of the cedant’s financial rating or an event which has a negative effect on its image.
Some capacities offered by SCOR are not achievable solely with the Group’s current available capital. These capacities (mainly Catastrophic and Large Risks) rely on retrocession whereby SCOR purchases, mainly on a one year basis, additional resources (retrocession) that will allow the Group to provide capacity to its clients. SCOR tries to reduce its dependence vis-à-vis the traditional reinsurance market by entering into alternative reinsurance solutions. Today, roughly one third of SCOR’s catastrophic capacity is purchased from alternative markets (Capital Markets) as Cat Bonds which have a risk period of mainly 3 years.
The equity risk is controlled and measured:  On a Group level, exposure is decided and reviewed at least quarterly by the Group Investment Committee.
However, in spite of the measures to control and reduce the exposure of the Group to fluctuations of exchange rates of major currencies, such fluctuation could have a material adverse impact on the business of the Group, its present and future revenues, its net income, its cash flows, its financial position, and potentially, on the SCOR share price.
Nevertheless, these insurance covers could prove insufficient or the insurance company could possibly contest their liability and towards SCOR. This could have a material adverse impact on the revenues, cash flow, net income, financial position of the Group, and potentially, on the SCOR share price.
On 19 February 2007, SCOR SE announced that it had irrevocably secured 32.94% of the capital of Converium. The acquisition of the 32.94% stake in Converium was achieved through market purchases (8.3%) and the acquisition of blocks of shares from Patinex AG (“Patinex”) and Alecta pensionsförsäkring, ömsesidigt (“Alecta”), representing respectively 19.8% and 4.8% of Converium’s share capital. These blocks were acquired by purchase and contributions in kind pursuant to share purchase agreements (the “Share Purchase Agreements”) and contribution treaties (the “Contribution Treaties”) executed between SCOR SE and Patinex, on the one hand, dated 16 February 2007, and between SCOR SE and Alecta, on the other hand, dated 18 February 2007, with compensation consisting of 80% SCOR SE shares and 20% cash.
The second version of the strategic plan, "Dynamic Lift V2”, was presented on 4 September 2007 and is based on the results of the analyses of Converium’s portfolios made possible since 8 August 2007. The acquisition and integration of Converium aimed to deliver the following objectives over the following 3 years:  to secure a ROE of 900 bps above risk free rate over the cycle;  to provide an "A+" level of security to clients by 2010;  to self-finance the current business plan of the Group;  to return excess capital to shareholders through various means.
“Strong Momentum” has set three main objectives:  Optimisation of the Group’s risk profile;  “AA” level of financial security;  Profitability of 1,000 basis points above the risk-free rate over the cycle.
In facultative reinsurance, the ceding company cedes and the reinsurer assumes all or part of the risk covered by a single specific insurance policy. Facultative reinsurance is negotiated separately for each insurance contract that is reinsured. Facultative reinsurance normally is purchased by ceding companies for individual risks not covered by their reinsurance treaties, for amounts in excess of the monetary limits of their reinsurance treaties and for unusual risks. Underwriting expenses and, in particular, personnel costs, are higher relative to premiums written on facultative business because each risk is individually underwritten and administered. The ability to separately evaluate each risk reinsured, however, increases the probability that the underwriter can price the contract to more accurately reflect the risks involved.
6.5 Information on SCOR’s competitive position Among the major reinsurance groups, SCOR pertains to the “traditional” or “continental” reinsurers as opposed to the socalled “Bermudan” model. The latter are characterised by the fact that they give priority to the underwriting of a type of risk and/or a geographic region – generally highly volatile natural catastrophe risks and to the American region. Conversely, SCOR is characterised by its strategic positioning aimed at underwriting risks so as to diversify exposure. To this end, the Group seeks to preserve: (i) The diversification of its business by maintaining a balanced business segment split between Life and Non-Life reinsurance. The portfolio business volume split at the end of 2010 was approximately 45% for Life reinsurance and 55% for Non-Life reinsurance.
The Group’s short term liquidity position, which is well diversified across a limited number of banks and placed primarily in government securities and short-term investments with maturity less than 12 months, stands at EUR 1.3 billion at the end of 2010 down from EUR 1.7 billion at the end of 2009 (EUR 3.7 billion at 31 December 2008).
The Group had average investments of EUR 20.3 billion in 2010 as compared to EUR 19.4 billion in 2009. The investment yield in 2010 on average assets was 3.2% compared to 2.5% in 2009. The return on net invested assets excluding funds withheld by ceding companies was 3.8% and 2.7% in 2010 and 2009, respectively.
In 2010, SCOR was affected by the following catastrophes which resulted in estimated losses greater than EUR 10 million as at 31 December 2010:  Earthquake in Haïti (January 2010) : estimated loss at EUR 18 million;  Earthquake in Chile (February 2010) for which the net loss is estimated at EUR 106 million;  Wind storm Xynthia (February 2010) in Europe and particularly in France. The cost of the claim, net of recoveries and reinstatement premiums estimated at EUR 17 million;  Scandinavian winter losses (February 2010) estimated at a net EUR 12 million;  The impact of floods in Eastern Europe ( May 2010) : the loss is estimated at EUR 28 million;
In 2008, SCOR recorded five losses with an estimated impact greater than EUR 10 million. The largest losses were caused by hurricane Ike, hitting the South East United States in September 2008 (EUR 83 million), heavy snowstorms affecting China during February 2008 (EUR 25 million), Australian floods occurring in January and February 2008 (EUR 29 million), the Maiunwetter Storm occurring in Germany in May 2008 (EUR 14 million) and the Indiana floods occurring in the United States in June 2008 (EUR 13 million). In addition, other significant non catastrophe losses were incurred during 2008: the Eurotunnel fire (EUR 28 million net of retrocession) and the Apache incident (EUR 14 million). As at 31 December 2010, there have been no further material developments in these losses.
10.3 Borrowing conditions and financing structure Refer to Section 20.1.6 – Notes to the consolidated financial statements – Note 12 – Cash and cash equivalents for information on the Group’s cash positions.
As at 31 December 2010, the Group’s financial leverage was 9.9% as compared to 14.6% at 31 December 2009. This ratio is calculated as the percentage of debt securities issued and subordinated debt to total shareholders’ equity. The improvement in 2010 is due to the conversion and repayment of a EUR 0.2 billion of a convertible debt ( OCEANE) that came to maturity on 1 January 2010, 8% of the debt (OCEANE) has been converted and 92% repaid on the due date.
Member of the Supervisory Board:- SCOR Deutschland (Germany) - SCOR Global Life Rückversicherung AG (Germany)
Member of the Executive Committee: - SIEM Non-Voting Director: - OFI Trésor (SICAV)
Others - non-voting member at the Management Board of EURESA - Member of the Board of ICMIF - Chairman of the Board of POLITAS - Permanent Representative of FNMF on the General Meeting of the Groupe Hospitalier de la Mutualité Française (French Mutual Insurance’s Hospital Group) - Vice-Chairman of the Supervisory Board of VISOMUT
AFEP/MEDEF governance code for listed companies. These grants are subject to presence conditions and, for some grants, to performance conditions. Please refer to the sections 17.3 of this Registration Document and the registration documents of SCOR filed with the Autorité des marchés financiers on 3 March 2010 and 5 March 2009 under number n. D.10-0085 and D.09-0099 for the details of the performance conditions applicable to the shares and stock-options granted to the Executive and Corporate Office.
Philippe Trainar**** 436,960 321,203 Not concerned Not concerned Not concerned Not concerned
(*) The compensation is paid in CHF, the exchange rate used is: 1 EUR = 1.3732CHF (the exchange rate of reference for the DDR). (**) Those allowances cover business expenses. (***) This amount includes an expatriation premium related to fiscal year 2010. (****) This amount includes an expatriation premium related to fiscal year 2009. (*****) This amount includes an expatriation premium related to fiscal year 2008. (******) This amount includes an expatriation premium related to fiscal year 2008 and an expatriation premium related to fiscal year 2009. (*******) This amount includes an expatriation premium related to fiscal year 2007 and paid in 2008.
Mr. Gérard Andreck 620 Mr. Allan Chapin 1,645 M. Peter Eckert 426
The parent guarantee was signed on 22 January 2010. It gave rise to no payment during the 2010 financial year..
On 15 April 2009, for these same reasons and taking into account the 2008 UK reorganisation, i.e. the creation of a branch of SCOR Global Life SE in London and the business transfer from SCOR Global Life Reinsurance UK Ltd to this branch, the Board of Directors approved a new addendum to the retrocession agreement to exclude the business written by the newly created branch in London of the scope of the retrocession agreement.
At its meeting of 3 December 2010, the Company’s Board of Directors authorised, pursuant to Article L. 225-38 of the French Commercial Code, the signature by SCOR SE, of an amendment n°5 to the retrocession agreement signed by SCOR and SCOR Global P&C SE on July 4, 2006.
We performed those procedures which we considered necessary to comply with professional guidance issued by the national auditing body (Compagnie Nationale des Commissaires aux Comptes) relating to this type of engagement. These procedures consisted of verifying that the information provided to us is consistent with the documentation from which it has been extracted.
Related person: Denis Kessler as Chairman and Chief Executive Officer of your company and as administrator of BNP Paribas a) Nature and purpose
SCOR Global Life Rappresentanza generale per l’Italia (branch), SCOR Global P&C Rappresentanza
(ii) The consolidated financial statements as at 31 December 2008 are included from pages 154 to 251 and the auditors’ report on these consolidated financial statements as at 31 December 2008 is included from pages 252 to 254 of the registration document filed with the Autorité des Marchés Financiers on 5 March 2009 under Number D. 09-0099.
Revaluation - Assets available for sale 87 480 Shadow accounting (67) (82) Effect of changes in foreign exchange rates 136 (21) Taxes recorded directly in equity Note 19 5 (104) Actuarial gains/losses not recognised in income (14) (8) Other changes 2 3
Cash and cash equivalents at 1 January Note 12 1,325 1,783
This caption includes primarily debt relating to the acquisition of real estate and financial lease agreements. Debt under financial lease contracts is recorded at fair value less directly attributable transaction costs. After initial recognition, they are measured at amortised cost using the effective interest rate method where this method has a significant impact compared to the nominal contractual rate method.
Subsequent events relate to events that occur between the balance sheet date and the date when the financial statements are approved for issue:  Such events lead to an adjustment of the consolidated financial statements if they provide evidence of conditions that existed at the balance sheet date, and if relevant and material.
Net income from reinsurance operations 20 (180) 0 (160) (28) (108) 0 (136)
Funds held by ceding companies (1) 7,481 7,629 Short term investments 259 330 Loans secured against collateral 31 31 Other loans maturing in more than one year (1) 79 56 Deposits 48 26
During the year the Group has received and paid out operational cash relating to investment income and taxes. Dividend and interest cash receipts relating to investments held during the year were EUR 40 million (2009: EUR 31 million) and EUR 399 million (2009: EUR 297 million). Tax cash outflows during the year were EUR 13 million (2009: outflow of EUR 17 million).
Capitalisation of new contracts for the period 51 280 331 154 239 393 Change in scope of consolidation and contract portfolio exchanges - - - - - -
The authorised share capital of the Company at 31 December 2010 was 187,795,401 shares with a nominal value of EUR 7.8769723 each compared with authorised share capital of 185,213,031 shares with a nominal value of EUR 7.8769723 at the end of 2009.
On 17 December 2010 SCOR issued 9,521,424 warrants to UBS to provide the Group with additional capital in the event of natural catastrophes. Each warrant commits UBS to subscribe for two new SCOR shares. The issuance of the shares will be automatically triggered when the aggregated amount of the estimated ultimate net losses resulting from natural catastrophes incurred by the Group (in its capacity as an insurer/reinsurer) reaches certain thresholds in any given calendar year between 1 January 2011 and 31 December 2013 or SCOR’s share price drops below EUR 10. Under the transaction, SCOR will benefit from a contingent capital equity line for a maximum amount of EUR 150 million (including issuance premium), which depending on the level of ultimate net losses will either be available in full or in two separate tranches of EUR 75 million each (including issuance premium). In the absence of any triggering event, no shares will be issued under the facility.
In December 2009, certain bondholders exercised their option to convert the OCEANE bonds into shares, leading to an increase of EUR 16 million in share capital and premium. The EUR 16 million increase in share capital and premium was recognised during the year ended 31 December 2009, as stated in Note 13. SCOR reimbursed the remaining bondholders in cash on 4 January 2010. As at 31 December 2009, due to the change in nature of this bond in comparison to the remaining debt, the amount outstanding has been presented below financial debt on the Consolidated Balance Sheet. The total amount repaid in cash during 2010 was EUR 184 million excluding accrued interest (EUR 191 million including interest).
Net claim reserves and claims estimates as at 1 January 8,683 8,660
A reconciliation of the income tax expense, obtained by applying the French tax rate of 34.43% for 2010 and 2009 to income before income taxes, minority interest and income (losses) from associated companies consolidated under the equity method, to the actual charge recorded in the income statement is presented in the table below. The effective rate in 2010 is 7.8% (2009: (14.7)%).
Real estate investments 37 40 Available for sale investments 501 222 Investments at fair value through income 5 12 Loans and receivables 178 190 Derivative instruments (1) 4 Other (including cash and cash equivalents), net of other investment expenses (30) 35 20.1.6.21 NOTE 21 - RESULTS OF RETROCESSION
The general reinsurance regulatory environment requires that underwriting liabilities be collateralised by pledged assets, cash deposits or letters of credit.
Assets including investment securities, real estate and shares in associates for a total amount of EUR 3,691 million (2009: EUR 2,874 million) have been pledged to financial institutions and cedants, in order to guarantee the letters of credit granted to SCOR
Although in general all long term liabilities are discounted, in most cases there is no immediate accounting impact from a 100 basis point change in interest for the following reasons:  For the German, Italian, Swiss and Austrian markets, valuation interest rates are typically locked-in at the minimum interest rate guaranteed by the ceding companies on the deposited assets covering the liabilities.
An estimate of the impact on the future profit & loss following a change of 100bps is not included as SCOR’s active investment management includes measures to partially mitigate such changes depending on factors such as the part of the yield curve affected, levels of cash and maturity reinvestment, the change on inflation expectations, the effectiveness of hedging instruments, etc.
The Registration Document as a whole is the subject of a review completion letter sent by the statutory auditors to SCOR.
21.1.5 INFORMATION ABOUT AND TERMS OF ANY ACQUISITION RIGHTS AND/OR OBLIGATIONS OVER AUTHORISED BUT UNISSUED CAPITAL OR AN UNDERTAKING TO INCREASE THE CAPITAL
The risk swap is indexed against a weighted combination of US and European population mortality, measured over two consecutive calendar years. According to the structure of the arrangement, a payment will be triggered if, at any time during the period covered, the index exceeds 115%. At any index level between the trigger point of 115% and the exhaustion point of 125%, JPMorgan Ventures Corporation will pay to SCOR Global Life SE a pro-rata amount of the notional swap amount of USD 100 million plus EUR 36 million.
 End retirement indemnities: employees benefit from additional retirement benefits paid in full upon retirement. The evaluation of these indemnities depends on several factors such as age, number of year’s service and salary.
 Initial EUR 350 million (reduced to EUR 257 million after repurchase of EUR 93 million during 2009) undated deeply subordinated notes (Tier 1 type) issued on 28 July 2006 in connection with the financing of the acquisition of Revios Ruckversicherung AG. The bond issuance is represented by last-rank subordinated bearer notes with a par value of EUR 50,000 each bearing interest at an initial rate of 6.154% per annum, a floating rate indexed on the 3-month EURIBOR plus a margin of 2.90%, payable quarterly. No fixed redemption date is set but SCOR SE reserves the right to redeem the bonds in full or in part as from 28 July 2016
 The gain for 2009, i.e., EUR 199 million, combined with a portion of retained earnings (EUR 2 million), was allocated to other reserves for EUR 10 million and to dividends for EUR 185 million. Dividends of EUR 136 millions have been paid out in cash and the remaining balance converted to shares (scrip dividends) by issuance of 2,647,517 new shares for a total of EUR 21 million (plus EUR 21 million in additional paid capital) and EUR 7 million in retained earnings.
 EUR 15.4 million for retirement provisions relating to employees of the Suiss branch.
In EUR million Prior years 2009 Total Prior years 2010 Total 8.3 CHANGE IN COMMISSIONS
In 2010, 145 254 rights of options were exercised: 70,552 rights of options exercised under the stock option plan of 25 August 2004, vested on 26 August 2008, 66,366 options exercised under the stock option plan of 16 September 2005, vested on 17 September 2009 and 8 366 options exercised under the stock option plan of 14 September 2006, vested on 14 September 2010.
The guarantee given in consideration for underwriting commitments with the cedant ACE was EUR 17 million. This guarantee was in the form of securities pledged to ceding companies.
In accordance with French law, we have ensured that the required information concerning the purchase of investments and controlling interests and the names of the main shareholders has been properly disclosed in the directors’ report.
Pursuant to the Internal Regulations, the Board of Directors of the Company determines the policies of the Company’s businesses, oversees their implementation and supervises the management’s administration. The Board meets at least four times a year. In accordance with legal provisions, it settles the financial statements, proposes dividends and makes investment and financial policy decisions. The Board also determines the amount and the nature of the sureties, securities and guarantees, which can be granted by the Chairman and Chief Executive Officer on behalf of the Company. The Board realized in particular: (i) a study, within the frame of the Compensation and Remuneration Committee, of Senior Management a succession plan, (ii) the appointment of a woman as Board member in 2010, (iii) the improvement of transparency of the internal charter, in particular in relation to the Audit Committee and Risk Committee, and (iv) the improvement of the preparation of the work of the Board by sending the documentation one week in advance
The following table presents the results of the review of the independence of each Director made by the Board of Directors in 2010, based on the proposal of the Compensation and Nomination Committee, with regard to the criteria stated above: Denis Kessler No No No Yes Yes Yes Yes Yes No
During its four meetings in 2010, the Audit Committee discussions focused primarily on the following matters: review of the quarterly and annual financial statements, management of the Group’s debt, impact of the financial crisis upon the Group’s assets, strategy plan, embedded value, impact of the litigations upon the financial statements.
The AFEP MEDEF code of corporate governance advises that outside Board members from the Company meet on a regular basis without inside Board members. Considering that the members of the Compensation and Remuneration Committee are Board members outside of the Company (neither Managing Directors, nor employees), 3 of 4 members are independent, and that the meetings of outside Board members provided by the AFEP MEDEF code on corporate governance would duplicate with the mandates assigned to the Compensation and Remuneration Committee, during 2010, the outside Board members did not find it necessary to organise such a meeting.
(c) death or permanent disability insurance for an accident, underwritten on 1 January 2006; it is specified that the Chairman and Chief Executive Officer will benefit from any policy that may replace the existing one.
Furthermore SCOR is closely monitoring the potential impacts of the Solvency II Directive. SCOR’s Executive Committee decided in December 2009 to conduct a first comprehensive assessment of the situation in relation to the Solvency II requirements. The result of this process was imparted to SCOR’s Solvency 2 project initiated in 2010, addressing the anticipated requirements with specific work streams, all of which sponsored by a member of SCOR’s Executive Committee.
Because of its activities, SCOR is exposed to many risks: reinsurance related risks, market risks and other risks (e.g. liquidity, rating). These risks, as well as the main procedures implemented by SCOR to control or mitigate them are detailed in the part 4 – Risk Factors of the 2010 Reference Document. This report does not detail these risks, but aims at summarising the principal activities and participants of Risk Control for the following important areas.
 Preventive maintenance: monitoring of lost debits from air treatment plant.
Objectives assigned by the Company to its foreign subsidiaries:  The consumption of water resources, raw materials, and energy with any measures taken to improve energy efficiency and use of renewable energy, land use conditions, emissions into the air, water, and soil which significantly affect the environment and for which the list will be determined by order of the ministers responsible for the environment and industry, sound or odor nuisances, and waste;  Measures taken to limit threats to the biological equilibrium, the natural environment, and protected animal and plant species;  Evaluation or certification measures taken in environmental matters;  All measures taken to ensure conformance of the company’s activities to applicable legislative and regulatory provisions;  Expenses incurred to prevent the company’s activities having consequences on the environment;  The existence within the company of internal environmental management services, training, and related employee information resources dedicated to reducing environmental risk, as well as the organisation to address pollution accidents with consequences beyond the company’s site.
Transaction whereby a reinsurer agrees to cover part of a risk already underwritten or accepted by an insurer. The opposite of ceded business.
The cessation of all underwriting of new business on a risk portfolio. As a result, all reserves are “run off” over time until their complete extinction. Run off may take up to several decades depending on the class of business.
FTC 6.78 Training / work experience contracts 26.67 Trainees pursuant to agreements 22.75 3.3. Information concerning plans to reduce the number of employees and protect jobs, reclassification efforts, reemployment, and support measures
(1) The Company did not hold any cross shareholding in 2010. (2) To our knowledge, there is no element which could have an impact in the event of a tender offer.