15 Remuneration and benefits 124 15.1 Amount of remuneration paid and benefits in-kind 126 15.1.1 Directors’ fees as of 31 December 2009 126 15.1.2 Executive Committee members remuneration 127 15.1.3 Remuneration in the form of options and share allocation 132 15.2 Total amounts set aside or accrued to provide pension, retirement, or similar benefits for financial 16 Board practices 133 16.1 Date of expiration of the current term of office 135 16.2 Information on service contracts of members of Administrative and Management bodies 135 16.3 Information on the Audit Committee and the compensation and Appointment Committee 135 16.4 Corporate governance regime 136 17 Employees 137 17.1 Number of employees 139 17.2 Information on shareholdings and stock options or Company stock purchases by members of
B Report of the Chairman of the Board of Directors 335
SCOR Global Life Division Gross written premiums 3,118 2,701 2,432 SCOR Global Life operating margin 5.8% 6.0% 7.4% (1) Source: “S&P Global Reinsurance Highlights 2009” (excluding Lloyd’s of London) (2) Comparative figures have been adjusted for the completion of the initial acquisition accounting of the Converium acquisition. See Section 20.1.6 – Notes to the consolidated financial statements, Notes 1 and 3 in the 2008 Reference Document. (3) Operating income is defined as result before financial expenses, share in results of associates, restructuring costs, negative goodwill and taxes. (4) Investment expenses include EUR 8 million incurred by SCOR Global Investment. (5) Return on equity is based 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 linear effect of all movements during the period). (6) Earnings per share is calculated as net income divided by basic number of shares. The basic number of shares includes the average number of closing shares, shares issued during the period and time-weighted treasury shares. (7) Liquidity is defined as cash and cash equivalents and short term investments comprised primarily of government bonds maturing less than 12 months from date of purchase. (8) Claims supporting capital is defined as the sum of IFRS shareholders’ equity, subordinated debt and debt securities (including OCEANE for EUR 191 million repayable on 1 January 2010). (9) The 96.8% net combined ratio in 2009 excludes non-recurring costs of the Highfields settlement and related legal expenses (pre tax, EUR 12 million, net of expected recoveries), certain other expenses as disclosed in the 2008 reference document and the exceptional impact of the outcome of the arbitration with Allianz in respect of the World Trade Center (EUR 39 million after tax). The 2009 net combined ratio, including the outcome of the World Trade Center arbitration, is 98.8%. The unadjusted net combined ratio is 99.5%. Refer also to 9.2.2, “SCOR Global P&C.”
Variations in the Group’s retained risk profile may occur due to a change in the underlying asset and liability portfolios and changes in the level of riskiness of certain parts of the asset and liabilities eg due to rapid or slowly emerging changes in the economic, financial, social, legal and regulatory environments.
The same losses may be covered under various different lines of business within Property such as fire, engineering, aviation, space, marine, energy and agricultural.
Pricing guidelines and parameters are set to provide consistency and continuity across the organisation but also taking account of the differences between lines of business as well as the geographical location of the client and the risks insured. Parameters are revised at least once a year to consider, as the case may be, the market conditions and environment. Contracts that meet certain risk thresholds are subject to mandatory peer reviews that have to be performed and documented before the pricing is completed. SCOR Global P&C employs a data system which allows management to monitor and review the results from the pricing tools.
With regard to its Casualty business SCOR allocates proportionately less capacity to new business of this type than to Property. Furthermore, the underwriting guidelines restrict SCOR's shares of Casualty reinsurance programs and are particularly restrictive regarding certain areas (Florida, California, etc).
As a result, future terrorist acts, whether in the U.S. or elsewhere, could cause us significant claims payments and could have a significant effect on our current and future revenues, net income, cash flow and financial position.
Like other reinsurance companies, we are exposed to environmental pollution and asbestos related risks, particularly in the United States. Insurers are required under their contracts to notify us of any claims or potential claims that they are aware of. However, we often receive notices from insurers of potential claims related to environmental and asbestos risks that are not precise enough, as the primary insurer may not have fully evaluated the loss at the time it notifies us of the claim. Due to the imprecise nature of these claims, the uncertainty surrounding the extent of coverage under insurance policies and whether or not particular claims are subject to any limit, the number of occurrences and new developments regarding the insured and insurer liabilities, we can, like other reinsurers, only give a very approximate estimate of our potential exposure to environmental and asbestos claims that may or may not have been reported.
As stated before, our reserves and policy pricing are based on a number of assumptions and on information provided by third parties, which, if incorrect and/or incomplete, could have an adverse effect on our results of operations. Despite the audits carried out by us on the companies with which we do business, and our frequent contacts with these companies, we are still dependent upon their evaluation of the risk with regard to the establishment of our own reserves.
In addition, if the rating of the Group deteriorates, certain stand-by letter of credit facilities would require a higher level of collateralisation.
Moreover, to the extent that our retrocessionaires belong to the same business sector, unfavourable events affecting the sector may affect all participants in the sector. In other words, risks to which we are exposed could also become systemic risks.
In addition to the use of traditional retrocession, SCOR seeks to reduce its dependence on its retrocessionaires by using alternative retrocession agreements such as the securitisation of catastrophic risk or mortality swaps. Alternative retrocession agreements are described in more detail in Section 4.1.2 – We are exposed to losses from catastrophic events
In order to reduce such risks, SCOR's exposure on each cedant is limited through its underwriting policy defined each year. An internal assessment of the cedant and its rating is also taken into consideration when concluding new business.
For further details on the impact of the assessment of our intangible assets upon our results, see Section 4.2.5 – Our shareholders equity and net income are sensitive to the valuation or our intangible assets and deferred tax assets.
We are also exposed to equity price risk. A widespread and sustained decline in the equity markets would result in an impairment of our equity portfolio. Such an impairment could affect our net income.
Additional information on the timing of payments is included in Section 20.1.6 - Notes to the consolidated financial statements, Note 27 - Insurance and financial risk.
Specific provisions apply to the reinsurance activity of SCOR. Under the reinsurance Directive 2005/68/EC dated 16 November 2005 (the “Reinsurance Directive”), implemented into French law by ordinance n. 2008-556 of 13 June 2008 and application decrees n. 2008-711 of 17 July 2008, and n. 2008-1154 of 7 November 2008, as well as regulation (arrêté) of 7 November 2008, reinsurance companies and their subsidiaries situated in a country within the European Union, are subject to state control, under the conditions defined by Book III of the French Insurance Code. The Reinsurance Directive also states rules for the off setting of underwriting reserves by assets and the rules of acceptability of assets. The main provisions are: French companies, whose exclusive business is reinsurance, can only practise after having obtained an administrative license, issued by the Committee for Insurance Companies and published in the Official Journal. The licenses for SCOR SE, SCOR Global Life SE (“SCOR Global Life SE”) and SCOR Global P&C SE (“SCOR Global P&C SE”) were validated by virtue of the decision, dated 15 July 2008.
In 1998, SCOR SE and SOLAREH incorporated SOLAREH SA, which is now held equally by SCOR Global Life SE and SOLAREH International. Its corporate purpose is to facilitate the reintegration to society of the disabled by re-education, prevention and training services granted to French insurers which are reinsured by the Group.
In 2002, SCOR SE signed a cooperation agreement in the Life reinsurance business with the Legacy Marketing Group of California, for the distribution and management of annuity products in the U.S..
5.2 Investments 5.2.1 PRINCIPAL INVESTMENTS MADE OVER THE PAST THREE FINANCIAL YEARS
With the acquisition of Prévoyance Ré from Malakoff Médéric Group, SCOR has further complemented its Life and Health business. The transaction was signed on 24 October 2008. Prévoyance Ré’s primary clients consist of provident institutions and other mutual insurance organisations.
These contracts cover property damage, such as dwellings, industrial and commercial goods, vehicles, ships, stored or transported merchandise or operating losses caused by fires or other events, including accidents or natural catastrophes as well as damages caused to third parties under civil liability coverage. Accordingly, they include treaties covering automobile liability and general civil liability. Auto liability covers property damage, injuries and other risks arising from the coverage of both drivers and passengers in private vehicles and commercial fleets.
SCOR Global Life's reinsurance services can also enable its clients to finance their development (e.g. product launching costs, portfolio acquisition). Thanks to its experience in prospective risk analysis, SCOR Global Life has the resources to combine risk acceptance and the management of financial variations in order to provide its clients with tailor-made, effective financing solutions over the medium or long term.
Reaffirmation of the strength and depth of SCOR’s business franchise, with minimal cedant attrition of 1%.
Strong franchise leveraging on Treaty P&C and Specialty Lines as demonstrated by the increase of 13% in Specialty Treaties lines that benefited from the mobilisation of the SCOR network and improved terms and conditions.
SCOR SE wholly owns its operating subsidiaries (excluding the shares held by Directors). SCOR SE also makes loans to its subsidiaries and issues them guaranties so that they can underwrite under favourable conditions, especially by letting them benefit from its financial ratings. SCOR SE provides support in actuarial, accounting, legal, administrative, systems, internal audit, investment, and human resources to Group subsidiaries. Finally, SCOR SE acts, as needed, as retrocessionaire for its two operational subsidiaries through quota share treaties renewed annually which form the instrument for internal control within the Group through the annual allocation of capital to the operating subsidiaries based on the profitability expected from their underwriting. The contracts that formalise the relationships between SCOR SE and its subsidiaries are presented in: Section 19 – Related Party Transactions, and in
On 8 September 2006, concurrently with the announcement of the upgrade of the rating of the Group’s companies by AM Best, the Group announced a change in its Non-Life reinsurance structures in the United States. This change, which was completed on 31 December 2006, is two-fold: first, SCOR Reinsurance Company acquired 100% of the capital of GSINDA, a company specialising in underwriting “surplus lines”, with a primary insurance license in the United States and, secondly, SCOR acquired GSNIC, an entity entirely dedicated to run-off, from SCOR Reinsurance Company (a subsidiary indirectly wholly owned by SCOR). In this restructuring, SCOR contributed USD 80 million to SCOR Reinsurance Company.
9.1 Financial position The 2009 results and balance sheet strength demonstrate the effectiveness of SCOR’s strategy which relies on high business and geographical diversification, focussing on traditional reinsurance activity with very limited exposure of reinsurance liabilities to economic activity risks and no material off balance sheet exposure. For the January 2010 renewals, SCOR was well-positioned to benefit from its improved industry position to combine premium growth and an improvement in expected technical profitability with an increase in premium rates (Refer to Section 12 – Trend information).
In 2009, SCOR was affected by the following catastrophes which resulted in estimated losses greater than EUR 10 million as at 31 December 2009: Wind storm Klaus (January 2009) in Europe and particularly in France ; The original cost of the claim, net of retrocession and reinstatement premium amounted to EUR 62.3 million
The impact of other natural catastrophes (less than EUR 10 million) which occurred in 2009 amounted to EUR 67.1 million at 31 December 2009.
Additionally, in 2009, there was only one non natural catastrophe loss in excess of EUR 10 million. This was a business solutions claim which resulted in an impact of EUR 18.1 million, gross and net of retrocession.
The gross written premium development is driven by the long-term nature of in-force life reinsurance business and new business acquired in the reporting year. In 2009, SCOR Global Life’s gross written premiums increased 15.4% to EUR 3,118 million, compared to EUR 2,701 million in 2008 (EUR 2,432 million in 2007). This increase was primarily achieved by a strong growth of Equity Indexed Annuity (EIA) in the U.S., new significant contracts in Europe, Middle East and Asia and positive effects of the acquisition of Prévoyance Ré.
10.2 page 83 Cash flow 10.3 page 83 Borrowing conditions and financing structure 10.4 page 83 Restrictions on the use of capital 10.5 page 84 Sources of financing relating to the future investments by the Company and to its property, plant and equipment
The combination of the IT operations of SCOR, Revios and Converium has generated the definition of an extensive action plan at the level of the information systems governance, already materialised in 2008, by evolutions in the areas of budget preparation, of project portfolio and project follow-up, of technical standards, and of first elements of the IT internal control, complemented with change management processing rules in 2009.
In the Middle East and Africa, business volume increases by 19% to EUR 135 million, thanks to new developments in the Middle East (e.g. Saudi Arabia) and in South Africa on short-tail business.
The natural catastrophe Property book, which represents around 15% of SCOR’s total Treaty P&C volume, shows a significant increase of 9%, rising from EUR 175 million in 2009 to EUR 192 million in 2010 thanks to a positive balance between premium income growth in countries benefiting from a favourable pricing trend (such as France and Spain) and a reduction in territories offering less attractive terms (e.g. the Caribbean & South America).
Aviation & Space Treaty business (excluding GAUM) benefits from better pricing, notably on proportional, and increases its volume by 11% to EUR 29 million.
Document Offices held during the last five years: Vice-Chairman of the Board of Directors: - OFI Holding (ex OFI INSTIT)
Other offices and positions held in any company in France and abroad as at the date of the Registration Document Offices held during the last five years: Jean-Claude SEYS (1) (2) ** Director
Chairman of the SAS: - Covéa Part - Covéa Technologies - Covéa Groupe ** In connection with the Crédit Lyonnais/Executive Life case, Jean-Claude Seys entered into a transaction with the California State Prosecutor under the terms of which he is subject to five years probation, during which he may not go to the United States without special authorisation.
Other offices and positions held in any company in France and abroad as at the date of the Registration Document Offices held during the last five years: Birth Date: 24 August 1944
Director: - Banca Nazionale del Lavoro (Italy) - BNP Paribas Suisse S.A.(Switzerland) - BNPP ZAO (Russia)
Guillaume Sarkozy, French, is an engineer by training and a graduate of the Ecole Spéciale des Travaux Publics (ESTP). He began his professional career in 1974 at the Office of Public Safety in the Ministry of the Interior, before joining IBM France as a large corporate accounts manager in 1977. He has been a company leader in the textile and services industries since 1979. Until June 2006, Guillaume Sarkozy exercised a number of responsibilities at the head of professional associations, notably the French Textile Industries’ Union (from September 1993 to May 2006), the Industrial Federations Group (2004 to July 2006), the CNPF and the Medef (1994-2006). Guillaume Sarkozy joined Médéric in June 2006 and was appointed Group General Manager on 1 September 2006. He was appointed CEO of the Malakoff Médéric Group on 1 July 2009.
Gilles Meyer 52 Chief Executive Officer of SCOR Global Life SE
The approved principles and rules for setting compensation and benefits granted to Board members are provided in Appendix B - Report of the Chairman of the Board of Directors on the terms and conditions for preparing and organising the work of the Board of Directors and on internal control procedures in compliance with Article L. 225-37 of the French Commercial Code – Part I – Conditions for preparing and organising the work of the Company’s Board of Directors – e) Principles and rules for the determination of compensation and in-kinds benefits for corporate officers.
The shareholders meeting of the Company held on 31 May 2005 resolved that the annual maximum aggregate amount of Directors fees shall not exceed EUR 800,000. This amount has not been modified since then. Upon the proposal of the Compensation and Nomination Committee and within the limit of this amount, the Board of Directors set the terms and conditions of the allocation to encourage the presence of the Directors. It has been decided to allocate the Directors fees, which are payable to each Director or Non-voting Director, in one fixed sum of EUR 20,000, payable by quarter and a variable sum, depending on the presence of the Directors at the meetings of the Board of Directors and to its Committees, equal to EUR 1,700 per Board or Committee meeting at which they are present. The payment of the Directors fees is paid at the end of each quarter. Moreover, each Director receives the single sum of EUR 10,000 that must be used to purchase Company’s shares, that the Director commits to keep until the end of his appointment.
Requirement of presence at the company as of 30 April 2010 Performance conditions
(Professional) disability, as well as of ensuring provisions in case of an employee’s death
At its meeting of 29 July 2009, 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 to the opening contract for accessible credit through the issue of a credit letter (“Facility Agreement”) concluded on 23 December 2008 with BNP Paribas.
The contribution, net of any liabilities or any charge whatsoever, was consented, accepted and completed through the issue of 78,297,700 new shares of SCOR Global P&C SE in favour of SCOR SE, with nominal value of EUR 3 each, fully paid.
The following entities of the Group have been authorised to participate in the cash-pooling scheme during a first phase: SCOR SE, SCOR Global P&C SE, SCOR Global Life SE, SCOR Auber, GIE Informatique, SCOR Global Life Deutschland (branch), SCOR Global P&C Deutschland (branch), SCOR Rückversicherung AG, SCOR Global Life Rappresentanza generale per l’Italia (branch), SCOR Global P&C Rappresentanza Generale per l’Italia (branch), SCOR Global Life Iberica Sucursal (branch), SCOR Global P&C Iberica Sucursal (branch), SCOR Global Life Reinsurance UK Ltd (which became SCOR Global Life SE – UK Branch) (branch), SCOR Global Life Reinsurance Services UK Ltd, SCOR Global Life Reinsurance Ireland Ltd, SCOR Global P&C Ireland Ltd.
The aim of this plan is to specify the terms and conditions for the application of an additional pension scheme, put into place by the Company, for the benefit of: the Executive Managers, by virtue of the professional agreement of 3 March 1993, who demanded their activity within the Group, from the day that the beneficiary plan of measures of this additional pension scheme took effect; the Senior Managers of the Group, who do not have an employment contract but who nevertheless fall within the ARRCO and the AGIRC general social security scheme and supplementary pension schemes, that are in operation in SCOR, from the day that the present scheme takes effect.
The transaction was finalised at the end of December 2005. At its meeting of 7 November 2006, the Board of Directors authorised, pursuant to Article L. 225-38 of the French Commercial Code, the extension (i) of the term of the parent company guarantee dated 19 December 2005, issued by SCOR to ten years; and (ii) the amount of the SCOR’s guarantee to USD 400 million, in line with the new term of coverage by the letter of credit and the new amount of the CALYON global commitment under the terms of the Agreement.
This agreement was not concluded on 2009 and did not give rise to any payment in 2009.
At its meeting of 29 July 2009, the Company’s Board of Directors authorized, pursuant to Article L. 225-38 of the French Commercial Code, the contribution of SCOR by 74,811,626 shares of SCOR Holding (Switzerland) SE to the benefit of SCOR Global P&C SE, representing 51% of its share capital and voting rights.
These parent company guarantees, drawn up by SCOR Global P&C SE and SCOR Global Life SE, regard SCOR SE’s engagements, pursuant to the insurance contracts, reinsurance contracts and financial contracts.
The participant who leaves the Company, in order to enter into retirement, will have the right to a supplemental pension if he/she fulfils some criteria on the date of his/her departure.
Only Prévoyance Ré’s engagements, pursuant to the insurance and/or reinsurance contracts, are covered by this parent guarantee.
Contract liabilities 21,126 20,240 Insurance contract liabilities Note 16 20,961 20,029 Investment contract liabilities Note 16 165 211
Other income from reinsurance operations 7 11 Investment income Note 20 503 467 Total income from ordinary activities 6,856 6,237
Special Purpose Entities (SPE) are consolidated where the substance of the relationship is that the SPE is controlled by the Group. The Group sponsors a number of catastrophe bond notes issued by Atlas Special Purpose Vehicles (SPV). The SPVs allow the retrocession of catastrophe losses financed by the issuance of CAT Bonds. In accordance with SIC 12 Consolidation—Special Purpose Entities, these vehicles are not consolidated by the Group as SCOR does not control these Vehicles and does not support any residual risks or benefits of ownership.
(D) IFRS STANDARDS ADOPTED EARLY, EFFECTIVE DURING THE PERIOD AND ACCOUNTING STANDARDS AND INTERPRETATIONS PUBLISHED BUT NOT YET EFFECTIVE
These items comprise the various subordinated or unsubordinated bonds issued by the Group. These loans are classified as financing debts, in accordance with IAS 32.
For available-for-sale equity securities which are listed on an active market, a line-by-line analysis is performed when there has been a fall in fair value as compared to the initial purchase price of more than 30%, or a consistent unrealised loss over a period of more than twelve months. The different factors considered in this analysis include the existence or not of significant adverse changes in the technological, market, economic or legal environment in which the issuer operates. After consideration of these factors if a security remains unimpaired the Group ultimately considers objective evidence of impairment, as per IAS 39, by reference to three further key criteria being the existence or not of: a consistent decline of more than 30% for twelve months; or a magnitude of decline of more than 50%; or a duration of decline of more than twenty-four months.
The liability adequacy test for the life segment compares the carrying value of the technical reserves less deferred acquisition costs and value of business acquired with the fair value of the liabilities from the reinsurance portfolio recognised. The fair value is calculated as the present value of the projected future cash flow using current actuarial assumptions and parameters. In case of deficiency SCOR would impair deferred acquisition costs and value of business acquired and increase technical reserves.
Interests on deposits 145 42 - 187 187 28 215 Realised capital gains/(losses) on investments 41 136 - 177 6 81 87 Change in fair value of investments 12 7 - 19 (42) (3) - (45)
Net book value at 31 December 2008 787 607 70 1,464
SCOR has entered into two real estate swap contracts, with ABN AMRO. This dual-swap transaction has been concluded for 5 years commencing in 2007 and running until 2011. The two separate swaps are calculated and settled annually April of each year: SCOR swaps the French offices total return for 1Y Euribor + 2.20%
Diversify SCOR’s real estate direct allocation to other real estate sectors, especially residential, with geographical diversification through other country exposures.
20.1.6.10 NOTE 10 - ACCOUNTS RECEIVABLES AND DEBTS WITH cedantS AND RETROCESSIONAIRES
Liquidity is defined as cash and cash equivalents (as presented above) and short term investments comprised primarily of government bonds maturing less than 12 months from date of purchase (as presented within note 7). Total liquidity as at 31 December 2009 is EUR 1,655 million (2008: EUR 3,711 million).
Change in accumulated amortisation and other provisions 16 331 Changes in deferred acquisition costs (118) (27) Net increase in contract liabilities 889 721 Change in fair value of financial instruments recognised at fair value through income (1) 46 Other non-cash items included in operating results (163) (877) Net cash flow provided by operations, excluding changes in working capital 1 102 420 Change in loans and accounts receivable (234) 346 Cash flows from other assets and liabilities - - Net tax (paid)/received (17) 13 Net cash flow provided by operations 851 779
A breakdown of the movements in the various reserves is provided in Section 20.1.4 - Statement of changes in shareholders’ equity.
Normal amortisation: the bonds will be fully amortised on 1st January 2010 at a price of EUR 2 per bond.
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 during the year, as presented within Note 13. SCOR reimbursed the remaining bondholders in cash at maturity 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 payable of EUR 191 million represents principal plus interest for the year.
The table below is a reconciliation of the beginning and ending liability for claims reserves and claims expenses of SCOR Global P&C for the years ended 31 December 2009 and 2008.
Benefits paid by employer (1) (1) - - - - - - Employer contribution (9) (2) (3) (4) (13) (5) (5) (3) Acquisitions/divestitures - - - - - - - - Actuarial (gains)/losses immediately recognised in other comprehensive income (OCI) 3 4 (2) 1 18 3 8 7 Effect of foreign exchange 1 1 - - (1) (3) 1 1 Accrued / (Prepaid) as at 31 December 77 50 17 10 74 43 19 12
The Group grants its employees options or share subscription plans under the following terms: Plan Date of award by the board Options exercisable on Date of expiration of plan Exercise price in EUR
The Group also awards 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
Real estate investments 40 30 Available for sale investments 222 126 Investments at fair value through income 12 (10) Loans and receivables 190 245 Derivative instrument 4 3 Other (mainly cash and cash equivalents), net of other investment expenses 35 73
Acquisition and administrative expenses 221 192 Investment management expenses 35 36 Claims settlement expenses 17 22 Other current operating expenses (1) 116 124 OTHER OPERATING AND ADMINISTRATIVE EXPENSES 389 374 (1) The amounts presented above include Highfields settlement and related legal expenses of EUR 12 million, net of expected recoveries.
SCOR SE provides services and benefits to its subsidiary companies operating in France and worldwide as follows: Provision of technical support in relation to risk management information technology and reinsurance services. Services are charged for annually on an arms length basis.
(1) The maturity profile patterns presented above have been revised to most appropriately reflect the basis of the Group’s management of claims liabilities.
Financial debt is not carried at fair value. For the Group, interest rate risk is limited to the interest paid on variable rate debt.
The arbitration is underway and a final ruling is not expected before the end of March 2010.
As stated in notes 1 - “(B) Use of estimates”, 1 - “(N) Accounting principles and methods specific to reinsurance business”, 7, 10, 11 and 16 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 not received from cedants recognised as receivables, technical reserves, and deferred acquisition costs. The methods used to calculate these estimates are described in the notes to the consolidated financial statements.
As a result, on the date of the Registration Document, the share capital of SCOR was EUR 1,457,885,613.93 divided into 185,081,978 shares each with a par value of EUR 7.8769723.
Authorisations for share issues granted by the Extraordinary Shareholders’ Meeting of 15 April 2009 19th resolution (Authorisation granted to the Board of Directors for the purpose of increasing the number of shares issued in the event of over-subscription to the share capital increase, with or without cancellation of preferential subscription rights)
23 December 2009 Disclosure of trading in the Company’s shares by members of the Board of Directors (Daniel Valot)
28.2 Information published in the Bulletin des Annonces Légales Obligatoires (BALO) [Bulletin of required legal notices publications] (www.journalofficiel. gouv.fr/balo/index.php)
A new branch was created by SCOR SE in 2009, SCOR Zweignierderlassung Zurich, with a retroactive effect as from 1st January 2009.
Investment expenses (481) (156) Internal and external investment management costs and interest expense (80) (118) Other investment expenses (30) (6) Realised losses from investments (371) (32)
Cash deposited with ceding companies (related & associated companies) - - - - Loans (related and associated companies) 560 (1) 169 357 371
DEPRECIATION AND IMPAIRMENT Depreciation/ allowances at beginning of the financial year
The CRP loan of USD 65 million and impaired for USD 32 million was capitalised prior to the merger of CRP with GSNIC.
EUR 200 million loan represented by SCOR OCEANEs issued on 2 July 2004 as authorised by the Combined Shareholders’ General Meeting of 18 May 2004. This loan is represented by 100 million OCEANEs with par value of EUR 2 each. The bonds earn interest at the rate of 4.125% payable 1st January each year. The loan has a term of 5 years and 183 days. At any time after 2 July 2004 and until the seventh day preceding the normal or early redemption date, bondholders may request conversion or exchange of the bonds for shares at the rate of 0.117 shares for one bond. The Company may, at its discretion, provide newly issued shares and/or existing shares.
SCOR Holdings Switzerland (SHS) repurchased part of the subordinated perpetual debt (350 million) for EUR 93 million. This repurchase resulted in the cancellation of the debt (EUR 93 million) on 27 July 2009. In the SCOR SE accounts, this decrease in debt resulted in a new internal loan to SHS for EUR 93 million with the same interest rate conditions.
Total at the beginning of the financial year Increases Decreases Total at the end of the financial year
Total personnel expenses 55 56 Other general expenses 113 87 TOTAL GENERAL EXPENSES BY KIND 168 143
The exceptional result of EUR(12.4) million was generated by the following: Estimated recovery, under a D&O policy, of fees and indemnities paid relating to the litigation with Highfield amounting to EUR 6.3 million.
I. page 336 Terms and conditions for preparing and organising the work for the board of directors
During its meeting held on 28 October 2009, the Compensation and Nomination Committee deeply reviewed the composition of the Board and of the Committees in the framework of the duties ending on 2011. In particular, it expressed its will that the future Board be younger, more feminine, with more diversified competences and continues to be international. Its works will be underway during 2010.
At their meeting on 15 May 2003, the Board of Directors created four consultative Committees, responsible for preparing Board meeting discussions and making recommendations in specific areas.
Every year, the conditions of remuneration for corporate officers and Directors are made public through the documents released for the Annual General Shareholders’ Meeting. The General Shareholders’ Meeting that took place on 31 May 2005 set the Directors' fees at a maximum of EUR 800,000 per year. This limit has not been changed since this date. Within the limits of this amount and upon the submission of the Compensation and Nomination Committee, the Board of Directors fixed the conditions of the allotment, in order to encourage the attendance of the Directors. It was thus decided to award the Directors' fees, payable to each voting or non-voting Director as a fixed part, equal to EUR 20,000, payable in fourths and another part based on attendance by voting and non-voting Directors, amounting to EUR 1,700 per meeting and participant. The payment of the Directors fees is made at the end of each quarter. Moreover, each Director received in 2009 the single sum of EUR 10,000 that must be used to purchase Company’s shares, that the Director commits to keep until the end of his appointment. The paid amounts have been properly used to that effect.
No limitation on the powers of the Chairman and Chief Executive Officer, other than those stipulated by law, is included in the bylaws or any decision of the Board of Directors of the Company.
Several processes 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 Enquiry process
Emerging risks are subject to a specific process of identification and analysis. A dedicated collaborative site has been created on the Group’s intranet allowing designated observers, who are experts in their field, to collate market information, articles or studies on topics that might constitute emerging risks. In addition, a special email address allows all Group employees to submit information. This information is processed by a Committee composed of members of the risk management departments of the SCOR Group.
Underwriting and pricing guidelines, defined respectively by SCOR Global P&C and SCOR Global Life, specify the underwriting capacities delegated to each entity, as well as the underwriting rules and principles to be complied with. They are approved each year by the Group Chief Risk Officer. Business opportunities going beyond the stipulations of the guidelines thus defined are subject to special referral procedures at two key levels. These cases are examined respectively: for SCOR Global P&C, by its Underwriting Management Department; for SCOR Global Life, by the Central Actuarial & Underwriting Department and where applicable the Risk Management Department and the Finance Department of SCOR Global Life; Cases which may have a significant impact on the balance sheet (thresholds and/or conditions defined in a procedure or specific guidelines) must be reviewed by the Group Risk Management Department; Concerning claims management for SCOR Global P&C, the definition of a global claims and commutations management policy for all Treaty, Facultative and Specialty business of SCOR Global P&C is carried out by the Claims & Commutations Department of SCOR Global P&C; this department manages major, serial, contentious and latent claims. In addition, audits of the clients’ claim departments are conducted by claim experts from the principal entities of SCOR in order to review important files and to provide technical support to these cedants; for SCOR Global Life, claims exceeding a predefined threshold are reviewed by the Central Actuarial & Underwriting Department of SCOR Global Life; A “Large Loss” Committee, common to both SCOR Global P&C and SCOR Global Life, meets on a regular basis to review the Group’s large losses; Catastrophe risk accumulations are monitored as follows: for SCOR Global P&C, the Risk Modelling & Global Natural Hazards Department is in charge of monitoring accumulations. A “CAT” committee meets regularly to review the accumulation reporting package and decide or arbitrate the allocation of CAT capacities by country. Earthquake and storm risks are managed by market models (Eqecat, AIR and RMS) in the regions considered to be the most exposed; for SCOR Global Life, scenarios are established in conjunction with the Risk Management Department of SCOR Global Life in order to define the need for retrocession coverage; Risks specific to the administration of contracts are subject to controls performed at the level of the subsidiaries and branches. SCOR’s Group Information System includes multiple automatic controls and additional control tools; The Group Chief Actuary performs a centralised control of the methods and reserving tools and ensures that reserves are adequate for P&C and Life activities. His role is to implement standardised methods for reserving losses for the entire Group, and to ensure the consistency of the reserving policies within the Group, in liaison with the internal actuaries and any external actuaries. The Chief Risk Officer, assisted by the Group Chief Actuary, supervises the reserves for all the subsidiaries and branches and reports to the Accounting and Audit Committee of the Board of Directors of the Company; The Group Retrocession Department establishes and implements the external retrocession plan for P&C and Life activities. This department is responsible for its proper application, for monitoring the solvency of the retrocessionaires, the related counterparty risks and, when necessary, for the collection of balances due.
Finally, reinsurance technical results are analysed quarterly by the finance departments of SCOR Global P&C and SCOR Global Life. At year-end, the Group Chief Actuary establishes a report on the adequacy of the reserves of SCOR Global P&C and SCOR Global Life.
At the end of 2009 SCOR decided to finalise its information systems integration by launching a Group wide “one ledger” project. This project aims at providing a complete finance system integration by promoting consistency, quality visibility and control with the use of one general accounting software and one chart of accounts for the Group.
ADDITIONAL RESERVE Reserves for claims are recorded in the accounting system for the amount communicated by the cedants. They can be supplemented with additional amounts calculated according to past experience, in order to take into considerations estimated future adverse developments.
LIQUIDATION BONUS Profit earned on liquidation of technical reserves on settlement of a claim or expiration of a Treaty.
The shareholders' equity of SCOR SE is amounting to EUR 2,437,998,687 and other equities are amounting to EUR 319,637,084. The debts amounted to EUR 1,557,052,434 including other loans of EUR 1,289,008,495 and the convertible bonds of EUR 191,615,423.
2. FLUCTUATION OF SCOR SE QUOTATION THROUGHOUT 2009 The following statements present the volume of transactions and the fluctuation of SCOR SE quotation on the Euronext Paris stock market by Euronext NYSE throughout the financial year 2009: TOTAL OF TRANSACTIONS EXTREME MARKET PRICE