4.4 Legal risk - Scor

and amortization expenses related to goodwill and other intangible assets, all of which could materially adversely affect
SCOR’s businesses, financial condition and results of operations. Future acquisitions may have a dilutive effect on the
ownership and voting percentages of existing shareholders. The Group may also finance future acquisitions with debt
issuances or by entering into credit facilities, each of which could adversely affect its business, present and future
revenues, net income, cash flows, financial position, and potentially, the price of its securities.
In addition, acquisitions may expose SCOR to operational challenges and various risks, including:
• the ability to integrate the acquired business operations and data with its systems;
• the availability of funding sufficient to meet increased capital needs;
• the obligation to comply with new regulatory requirements;
• the ability to fund cash flow shortages that may occur if anticipated revenues are not realized or are delayed,
whether by general economic or market conditions or unforeseen internal difficulties; and
• the possibility that the value of investments acquired in an acquisition, may be lower than expected or may
diminish due to credit defaults or changes in interest rates and that liabilities assumed may be greater than
expected (due to, among other factors, less favorable than expected mortality or morbidity experience, or
increase reserving of long tail lines of business).
A failure to successfully manage the operational challenges and risks associated with or resulting from acquisitions
could adversely affect SCOR’s business, present and future revenues, net income, cash flows, financial position, and
potentially, the price of its securities.
The businesses SCOR has recently acquired are described in “Section 5 – Information about the issuer, 5.1.5 Important
events in the development of the issuer’s business.”
Specific risks relating to the acquired businesses are as follows:
A. The integration of the acquired activities may prove to be difficult
The success of SCOR’s business combinations will be assessed with regards to the success of the integration within the
Group. Subsequently, integrations may take longer or may be more difficult than expected. The success of integrations
will depend, notably, on the ability to maintain the former client base to coordinate development efforts effectively, at the
operational and commercial levels among others, and to streamline and/or integrate the information systems and
internal procedures and the ability to retain key employees. Difficulties encountered in integrations could entail higher
integration costs and/or less significant savings or fewer synergies than expected.
SCOR is also exposed to risks relating to the integration of the underlying data of newly acquired companies into its
operating and financial accounting systems.
B. An insolvency of AEGON might impair the value of business acquired (value-of inforce) of SCOR Global Life
Since August 2011, the majority of the mortality reinsurance business in the United States of the former Transamerica
Reinsurance Co. ("Transamerica Re") flows into SCOR via retrocession from AEGON companies. As long as underlying
reinsurance agreements between cedants and AEGON companies are not novated, an AEGON insolvency might lead to
premiums from clients no longer being passed on to SCOR, and thus potentially impair the value of business acquired
(“VOBA”) (value of inforce) and have a significantly negative impact on SCOR’s business, present and future revenues,
net income, cash flows, financial position, and potentially, on the price of its securities.
C. Certain risks relating to acquired companies may not yet be known
Due notably to the size and complexities of acquisitions and despite pre-acquisition due diligence work carried out
(SCOR not having always been granted complete access to exhaustive data at the time of the acquisition) and the
integration work performed to date, there is a risk that all financial elements may not have been fully and/or correctly
evaluated or unknown or unexpected financial risks emerge, which may have significant consequences on the initially
estimated impact of the relevant acquisition on the combined Group.
D. SCOR could be exposed, due to acquired companies, to certain litigation matters
SCOR could have to assume the burden of the litigation matters of acquired companies or relating to those acquisitions.
The costs of these litigation matters could have an adverse effect on its future operating income and an unfavorable
outcome to one or more of these litigation matters could have a material adverse effect on revenues, net income, cash
flow and financial position. For further details, refer to “Section 20.1.6 – Notes to the financial statements, Note 27 –
Litigation” and “Section 4.4.7 – SCOR is exposed to certain litigation matters.”
SCOR remains committed to exploring acquisition opportunities which may present themselves and which would be
likely to deliver value for shareholders, and will rely on the consistent application of its strategic plans.
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