4.4 Legal risk - Scor

9 OPERATING AND FINANCIAL REVIEW
The financial data of the SCOR Group is presented in “Paragraph 3 – Selected financial data” and in “Paragraph 20.1 –
Historical financial information: consolidated financial statements.” The commentary below is based on the financial data
presented in the aforementioned paragraphs.
Refer also to “Paragraph 20.1.6 – Notes to the consolidated financial statements, Note 1 – Accounting principles and
methods and Note 26 – Insurance and financial risks.”
9.1 Financial position
The 2012 results and balance sheet strength demonstrate the effectiveness of SCOR’s strategy which relies on high
business and geographical diversification, focusing on traditional reinsurance activity with very limited exposure to
reinsurance liabilities with economic activity risks and no material off balance sheet exposure. For the January 2013
renewals, SCOR was well-positioned to benefit from its improved industry position to combine strong premium growth and
positive price changes.(Refer to “Paragraph 12 – Trend information”).
After dividend 2012 payments, shareholders’ equity increased from EUR 4,410 million at 31 December 2011 to EUR 4,810
million at 31 December 2012. In 2011, SCOR’s shareholders’ equity increased by 5.8 % before the impact of dividends and
after the EUR 76 million increase in capital corresponding to an increased number of outstanding shares of 4.3 million
following the triggering of the Contingent Capital first tranche on 6 July 2011 (consolidated shareholders’ equity was EUR
4,352 million at 31 December 2010).
Total investment and cash, amounted to EUR 22.6 billion at 31 December 2012 as compared to EUR 21.4 billion and EUR
20.9 billion at 31 December 2011 and 2010, respectively.
SCOR maintained its conservative asset management policy whilst executing a prudent inflection program directed to
improve the return of its invested assets whilst keeping a strong focus on liquidity management. As indicated in
September 2010 in the “Strong Momentum” strategic plan, and confirmed in the version "Strong Momentum" season 3
presented on 6 September 2012, the Group maintained a “rollover investment strategy" for its fixed income portfolio in order
to have significant financial cash flows to reinvest in the event of a sudden change in the economic and financial
environment, whilst seizing market opportunities.
The Group’s liquidity, defined as cash, cash equivalent and short term investments, which is well diversified across a limited
number of banks and placed primarily in government securities and short-term investments with maturities less than 12
months, stands at EUR 2.7 billion at the end of 2012, down from EUR 3.1 billion at the end of 2011 (EUR 1.3 billion at
31 December 2010).
Positive operating cash flow amounted to EUR 761 million in 2012, compared to EUR 530 million in 2011 (and EUR 656
million in 2010) with strong contributions from both Life and P&C operations. The increase in 2012 cash flow was positively
impacted by lower than expected payments for 2011 catastrophe losses by SCOR Global P&C. The 2012 operating cash
flows were also impacted by tax payments and retro recoveries from prior years. The reduction in 2011 cash flow, was
mainly due to SCOR Global P&C payments in respect of catastrophe losses and to timing of cash flows for SCOR Global
Life.The Group has a financial debt leverage position of 19.9% at 31 December 2012, as compared to 17.8 % at
31 December 2011 and 9.8% at 31 December 2010. This ratio is calculated as the percentage of subordinated debt (1)
compared to total shareholders’ equity plus subordinated debt. The increase in the debt leverage ratio over 3 years is
primarily due to debt issuances in 2011 and 2012. On 20 January 2011, SCOR successfully placed on the Swiss franc
market, perpetual subordinated notes, with a first call date in August 2016, for an aggregate total amount of CHF 400
million. In addition, on 11 May 2011, SCOR reopened this note and issued an additional amount of CHF 250 million. On 10
September 2012, the Group placed perpetual subordinated notes, with a first call date in June 2018, for an aggregate total
amount of CHF 250 million. Furthermore, on 24 September 2012, SCOR increased this perpetual subordinated notes by
CHF 65 million. In addition, SCOR actively managed its liabilities, buying back in 2012 an existing debt for 80% of its EUR
50 million par value.
Book value per share (2) stands at EUR 26.18 at 31 December 2012 as compared to EUR 23.83 and EUR 23.96 at
31 December 2011 and 2010, respectively.
(1) The calculation of the leverage ratio excludes accrued interest from debt and includes the swaps effect related to the CHF 650 million and CHF 315 million
subordinated debt issuance. As at 31 December 2011, the calculation of debt taken into account in the ratio did not exclude accrued interest and therefore the
ratios published in the 2011 Registration Document and previous financial reporting was 18.1% as at 31 December 2011 and 9.9% as at 31 December 2010.
(2) Refer to “Paragraph 9.2.6 – Ratios’ calculation of financial ratios”.
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