4.4 Legal risk - Scor

(K) SHARE CAPITAL AND SHAREHOLDERS’ EQUITY
Share capital
Ordinary shares are classified in shareholders’ equity when there is no contractual obligation to transfer cash or other
financial assets to the holders.
Share issue costs
Incremental external costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax from
the proceeds of the issue.
Treasury shares
Treasury shares and any directly related costs are recorded as a deduction from shareholders’ equity. When treasury
shares are subsequently sold or reissued any consideration received is included in consolidated shareholders equity net of
any directly related costs and tax effects. Accordingly there is no related income, gain or loss recognized in the statement of
income.
Dividends
Dividends declared on ordinary shares are recognized as a liability when such dividends have been approved by
shareholders at the relevant annual general meeting.
(L) EARNINGS PER SHARE
Basic earnings per share is calculated by dividing net income available to ordinary shareholders by the weighted average
number of ordinary shares in issue during the year, excluding the average number of ordinary shares purchased by the
Group and held as treasury shares.
For the calculation of diluted earnings per share, the weighted average number of shares in issue is adjusted to assume
conversion of all potentially dilutive ordinary shares.
Potential or contingent share issuances are treated as dilutive when their conversion to shares would decrease net earnings
per share.
(M) SUBSEQUENT EVENTS
Subsequent events relate to relevant and material 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.
• Such events result in additional disclosure if indicative of conditions that arose after the balance sheet date, and if
relevant and material.
(N) ACCOUNTING PRINCIPLES AND METHODS SPECIFIC TO REINSURANCE ACTIVITIES
Classification and accounting of reinsurance contracts
The treaties and facultative 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.
Assumed and ceded reinsurance transactions are those contracts that transfer significant reinsurance risk at the inception of
the contract. Reinsurance risk is transferred when the Group agrees to compensate a cedant if a specified uncertain future
event (other than a change in financial variable) adversely affects the cedant. Any contracts not meeting the definition of a
reinsurance contract under IFRS 4 - Insurance Contracts are classified as investment contracts or derivative contracts as
appropriate.
Assumed and ceded reinsurance transactions that do not transfer significant risk are recognized in the accounts in
accordance with IAS 39 - Financial Instruments: Recognition and Measurement, which means that amounts collected are no
longer recognized as premiums, reserves and deferred acquisition expenses recorded as assets or liabilities on the balance
sheet and are reclassified as “financial contract liabilities” and “financial contract assets”. These deposits are assessed only
on the basis of financial flows and no longer on the basis of estimated ultimate results as required by accounting principles
applicable to insurance transactions. Income from these transactions is equal to SCOR’s net fee or spread and is recorded
under “other operating income” on the statement of income.
Reinsurance reserves
The Group maintains reserves to cover its estimated liability for claims related to known events or events incurred but not
yet reported (IBNR). The reserves are reviewed by management during the year, using new information as soon as it is
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