4.4 Legal risk - Scor

Details of intangible assets, related impairment testing policy and recent acquisitions is included in “Section 20.1.6 –
Notes to the financial statements, Note 1 – Accounting Principles and Methods; Note 3 – Acquisitions; Note 4 –
Intangible Assets; and Note 19 – Income Tax.”
Considering the above, SCOR is exposed to the risks related to the assessment of impairment of intangible assets and
derecognition of deferred tax assets, given that such assessments are notably based on assumptions and subjective
opinions. Those assessments, if they were to be revised, could have a material adverse impact on SCOR’s business,
present and future revenues, net income, cash flows, financial position, and potentially, on the price of its securities.
4.3 Liquidity risk
The Group undertakes specific reviews of its liquidity risk and considers it is able to face forthcoming settlement dates.
Forthcoming settlement dates are estimated based on reasonable hypotheses and are composed of the following:
incurred and future claims, re-insurance commissions, profit sharing granted to cedants, payments to suppliers,
operating expenses, and other settlements, for which related amounts are not material for the analysis of the liquidity
risk.
4.3.1 SCOR FACES LIQUIDITY REQUIREMENTS IN THE SHORT TO MEDIUM TERM IN ORDER TO COVER, FOR
EXAMPLE, CLAIMS PAYMENTS, OPERATIONAL EXPENSES AND DEBT REDEMPTIONS. IN THE CASE OF
CATASTROPHE CLAIMS, IN PARTICULAR, IT MAY NEED TO SETTLE AMOUNTS WHICH EXCEED THE AMOUNT
OF AVAILABLE LIQUIDITY
SCOR needs liquidity to pay its operating expenses, interest on its debt and dividends on its capital stock, and replace
certain maturing liabilities. Without sufficient liquidity, the Group may be forced to curtail its operations, and business will
suffer. The principal internal sources of the Group’s liquidity are insurance premiums, cash flow from its investment
portfolio and other assets, consisting mainly of cash or assets that are readily convertible into cash.
Liquidity risk is increased in situations of market disruption as SCOR may need to sell a significant portion of its assets
quickly and at unfavorable terms. Additional information on the Group’s liquid assets is included in “Section 20.1.6 –
Notes to financial statements, Note 6 – Insurance Business Investments.”
Some facilities SCOR uses to grant letters of credit to cedants require a 100% collateral in case of non-compliance with
financial covenants or in case of a decrease in the Group’s financial strength rating. Significant changes in the Group’s
solvency or rating could force it to collateralize these facilities at 100%, which would thus result in a deterioration of its
liquidity level. Additional information on SCOR’s letter of credit facilities is included in “Section 20.1.6 - Notes to financial
statements, Note 25 – Commitments Received and Granted.”
Considering the above, SCOR is exposed to risks of short-term or medium-term payouts, and it cannot be guaranteed
that it will not be exposed to such risks in the future, which could have a material adverse impact on its business,
present and future revenues, net income, cash flows, financial position, and potentially, on the price of its securities.
Additional information on the timing of repayments is included in “Section 20.1.6 – Notes to the consolidated financial
statements, Note 26 – Insurance and Financial Risk.”
4.3.2 ADVERSE CAPITAL AND CREDIT MARKET CONDITIONS MAY SIGNIFICANTLY AFFECT SCOR’S ABILITY
TO ACCESS CAPITAL AND/OR LIQUIDITY OR INCREASE THE COST OF CAPITAL
The capital and credit markets have been experiencing extreme volatility and disruption. In some cases, the markets
have exerted downward pressure on availability of liquidity and credit capacity for certain issuers.
External sources of liquidity in normal markets include a variety of short- and long-term instruments, including
repurchase agreements, commercial paper, medium- and long-term debt, junior subordinated debt securities, capital
securities and stockholders’ equity.
In the event current internal and/or external resources do not satisfy its needs, SCOR may have to seek additional
financing. The availability of additional financing will depend on a variety of factors such as market conditions, the
general availability of credit, the volume of trading activities, the overall availability of credit to the financial services
industry, its credit ratings and credit capacity, as well as the possibility that customers or lenders could develop a
negative perception of its long- or short-term financial prospects if the Group incurs large investment losses or if the level
of its business activity decrease due to a market downturn. Similarly, access to funds may be impaired if regulatory
authorities or rating agencies take negative actions against SCOR. Internal sources of liquidity may prove to be
insufficient, and in such case, SCOR may not be able to successfully obtain additional financing on favorable terms, or
at all.
Disruptions, uncertainty or volatility in the capital and credit markets may also limit the Group’s access to capital required
to operate its business, most significantly its insurance operations. Such market conditions may limit its ability to :
• replace, in a timely manner, maturing liabilities;
• satisfy statutory capital requirements;
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