4.4 Legal risk - Scor

Intangible assets
The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Following
initial recognition intangible assets are carried at cost less any accumulated amortization and any accumulated impairment
losses.
The useful lives of intangible assets are assessed to be either finite or indefinite.
Intangible assets with finite lives are amortized over the expected useful economic life and assessed for impairment
whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization
method for intangible assets with finite useful lives are reviewed annually. Changes in the expected useful life or the
expected pattern of future economic benefits are accounted for prospectively by changing the amortization period or method
as appropriate and are treated as changes in accounting estimates. The amortization expense on intangible assets with
finite lives is recognized in the statement of income in the expense category consistent with the intangible asset.
Intangible assets with indefinite useful lives are tested for impairment annually. The useful life of an intangible asset with an
indefinite life is reviewed annually to determine whether the indefinite life assumption continues to be appropriate. If not, the
change in the useful life assessment from indefinite to finite is made on a prospective basis.
Gains or losses arising from the de-recognition of an intangible asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset and are recognized in the statement of income when the asset is
derecognized.
(a) Value of business acquired (VOBA) in life business
VOBA relates to life reinsurance portfolios acquired in a business combination. VOBA is capitalized as the present value of
the stream of expected future cash flows. These estimates include the future technical result, and the future investment
income less deductions for future administration expenses. The present value calculations are based on assumptions and
risk discount factors relevant at the date of acquisition. The VOBA is amortized over the lifetime of the underlying
reinsurance portfolio and is subject to impairment testing. The amortization pattern of VOBA is reviewed annually.
VOBA also includes the intangible asset related to the acquisition of the business portfolio of ReMark Group BV (“ReMark”)
to reflect the substance of the stream of expected future profits.
(b) Other intangible assets
Other intangible assets consist primarily of customer related intangibles arising from non-life business combinations and
purchased or development expenditure related to software.
(G) REAL ESTATE INVESTMENTS
Investment properties and own-use properties
Real estate currently held by the Group is classified as investment property when it is held to earn rentals, or for capital
appreciation or both. Other properties are classified as tangible assets. Some buildings may be partially occupied by entities
of the Group. Properties, including properties used by the Group, are recognized at cost, net of accumulated depreciation
and impairment losses. Depreciation is recorded on a straight-line basis over the useful lives of the assets as follows:
Category
Land
Buildings
Building structure and exterior
Insulation
Technical installations
Fixtures and fittings
Useful life
Indefinite (not depreciated)
30 – 80 years
30 years
20 years
10 to 15 years
Repairs and maintenance costs are charged to the statement of income during the financial period in which they are
incurred. All costs directly associated with purchases or constructions of properties are capitalized. All subsequent value
enhancing capital expenditures are capitalized when it is probable that future economic benefits related to the item will flow
to the Group.
Every 5 years, each investment property is subject to an in-depth analysis of its market value by an independent appraiser,
having recent experience in the location and category of investment property assessed and approved by the domestic
regulators (l’Autorité de Contrôle Prudentiel in France). Annually, the appraised market value is updated by the same
independent appraiser according to the changes of the local market and/or the property rental and technical situation.
At the end of each reporting period properties are assessed to determine whether there is any indication of impairment. One
such indicator is that the building’s market-value is below the carrying value. If any such indicators are found to exist, the
Group assesses the recoverable amount of the building in question. The recoverable amount is the higher of the property’s
202