4.4 Legal risk - Scor

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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 <strong>risk</strong>s.” 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 <strong>risk</strong>s 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”. 88
9.2 Operating results This paragraph includes comments on both the current year operating results as well as comparisons to prior years. 9.2.1 CONSOLIDATED OPERATING RESULTS Gross written premium Gross written premium for the year ended 31 December 2012 amounted to EUR 9,514 million, an increase of 25.1% at compared to EUR 7,602 million in 2011. The overall increase in gross written premium of EUR 1,912 million in 2012 is due to an increase for SCOR Global P&C of EUR 668 million and an increase of EUR 1,244 million for SCOR Global Life, primarily driven by the business acquisition of the mortality portfolio of Transamerica Re that in 2012 contributed EUR 1,693 million to gross written premiums (compared to EUR 677 million of gross written premiums for the five months period after the acquisition in 2011). Gross written premium for the year ended 31 December 2011 amounted to EUR 7,602 million, an increase of 13.6% at compared to EUR 6,694 million in 2010. The overall increase in gross written premium of EUR 908 million in 2011 is due to an increase for SCOR Global P&C of EUR 323 million. An increase of EUR 585 million for SCOR Global Life was primarily driven by the premium from the acquired mortality business of Transamerica Re. This more than offset the negative FX impact in 2011, and reduction in premium from the US Equity Index Annuity Business (EIA) due to the sale of SCOR’s US fixed annuity business on 19 July 2011. SCOR Global Life did not write any EIA business in 2011 compared to EUR 32 million in 2010. Net earned premium Net earned premium for the year ended 31 December 2012 amounted to EUR 8,399 million as compared to EUR 6,710 million and EUR 6,042 million for the years ended 31 December 2011 and 2010, respectively. The overall increase in net earned premium of EUR 1,689 million from 2011 to 2012 and EUR 668 million from 2010 to 2011 is consistent with the increase in gross written premiums. Net investment income Net investment income (1) for the year ended 31 December 2012 amounted to EUR 566 million as compared to EUR 624 million and EUR 690 million for the years ended 31 December 2011 and 2010, respectively (2) . The net return on investments in 2012 was 2.7% compared to 3.2% in 2011 and 3.4% in 2010 (3) . The decrease in investment income is mainly due to the low yield environment and higher impairments on equity portfolio. With 2012 markets characterised by high volatility and erratic behaviour, SCOR decided to continue its rollover strategy with a relatively short duration fixed income portfolio and a high liquidity level. The net return on invested assets in 2012 was 3.0% as compared to 3.7% in 2011 and 4.0 % in 2010. Gross benefits and claims paid Gross benefits and claims paid were EUR 6,613 million, EUR 5,654 million and EUR 4,791 million in 2012, 2011 and 2010, respectively (4) . Net results of retrocession The net results of the Group’s retrocession program were EUR (189) million, EUR (7) million and EUR (160) million in 2012, 2011 and 2010, respectively. However, the impact of alternative retrocession coverage, Atlas V, Atlas VI (SCOR Global P&C) and the mortality swaps (SCOR Global Life) (see below in note 9.2.4 Capital shield policy) are not included in the net cost of retrocession as the products are accounted for as derivatives. The total cost recorded in 2012 in other operating expenses related to Atlas Cat Bonds were EUR 50 million excluding Altas VII series placed in November 2012 accounted for as a reinsurance contract starting 2013, beginning of the coverage period (2011: EUR 31 million including the Atlas VI 2011 series placed in December 2011, excluding one-time set up costs for the 2011 series of EUR 3 million included as financing expenses). Expenses The Group cost ratio (5), calculated as the total of all management expenses less certain non-controllable expenses (e.g. bad debts), legal settlements, brokerage commissions and amortizations, divided by gross written premium, was 5.3 % for the (1) Refer to “Paragraph 9.2.6 – Calculation of financial ratios”. (2) Net investment income better reflects the performance of assets invested by SCOR and therefore has replaced the investment income disclosed in the 2011 Registration Document and previous financial reporting. (3) The net return on investments published in the 2010 Registration Document was 3.2 % for 2010. The difference is due to a new presentation by segment following the creation of a new cost center unit (see “Paragraph 20.1.6.2 – Segment information”). (4) Gross benefits and claims paid were EUR 4,782 in 2010 The difference is due to the creation of a new cost center unit (see “Paragraph 20.1.6.2 – Segment information”). (5) Refer to “Paragraph 9.2.6 – Calculation of financial ratios”. 89
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NOTICE Certain statements contained
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1 Person responsible 8 1.1 Name and
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13 Profit forecasts or estimates 11
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8 PERSON RESPONSIBLE
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1 PERSON RESPONSIBLE 1.1 Name and t
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2.1 Auditors 13 2.2 Resignation or
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14 SELECTED FINANCIAL INFORMATION
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3 GROUP KEY FIGURES (UNDER CURRENT
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4.1 Risk related to the business en
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claims or surrenders of policies th
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B. Life reinsurance The main catego
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statutory reserve requirements or h
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B. SCOR is exposed to Guaranteed Mi
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4.1.9 FINANCIAL RATINGS PLAY AN IMP
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and amortization expenses related t
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F. Deposits with custodians As part
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4.2.2 SCOR FACES RISKS RELATED TO I
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Details of intangible assets, relat
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Page 40 and 41: See “Appendix B - II. Internal co
Page 42 and 43: 5.1 History and development of the
Page 44 and 45: proportion of the voting rights hel
Page 46 and 47: Gerling Global Re Group, which deve
Page 48 and 49: 5.2 Investments 5.2.1 PRINCIPAL INV
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Page 52 and 53: The targets of the strategic plan a
Page 54 and 55: B. Proportional and non-proportiona
Page 56 and 57: payment of commercial debts. Surety
Page 58 and 59: Long-Term Care Long-Term Care (“L
Page 60 and 61: with local lines of business and po
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Page 64 and 65: Retrocession procedures are central
Page 66 and 67: The portion invested in fixed incom
Page 68 and 69: 6.2 Principal markets SCOR is chara
Page 70 and 71: On 6 March 2010, STOXX announced SC
Page 72 and 73: The premiums up for renewal, which
Page 75 and 76: 75 ORGANIZATIONAL STRUCTURE
Page 77: E U R O P E 7 ORGANIZATIONAL STRUCT
Page 80 and 81: 7.1.1.2 Project "New SCOR" In conne
Page 82 and 83: 7.2 List of issuer’s significant
Page 84 and 85: 8.1 Major existing or planned prope
Page 86 and 87: 86 OPERATING AND FINANCIAL REVIEW
Page 90 and 91: year ended 31 December 2012 down fr
Page 92 and 93: In 2011, SCOR was affected by the f
Page 94 and 95: 31 March 2014. This transaction suc
Page 96 and 97: Net investment income and investmen
Page 98 and 99: IFRS classification In EUR million
Page 100 and 101: Combined ratio For detailed calcula
Page 102 and 103: 10.1 Capital 103 10.2 Cash flow 103
Page 104 and 105: FINANCIAL LEVERAGE As at 31 Decembe
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Page 108 and 109: studies and publications produced o
Page 110 and 111: 12.1 Most significant trends in pro
Page 112 and 113: SCOR Global Life expects business o
Page 114 and 115: 114 PROFIT FORECASTS OR ESTIMATES
Page 116 and 117: 116 ADMINISTRATIVE AND MANAGEMENT B
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Page 120 and 121: Name Date of Birth Other principal
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Page 130 and 131: Name Age Current Position Executive
Page 132 and 133: of Alea Europe from 1999 to 2006, w
Page 134 and 135: 134 REMUNERATION AND BENEFITS
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and analysts; deepening of the empl
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Subscription and share purchase opt
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Year 2011 Year 2010 Premium/ Gross
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144 BOARD PRATICES
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16 BOARD PRATICES 16.1 Date of expi
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148 EMPLOYEES
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17 EMPLOYEES 17.1 Number of employe
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17.2.2 STOCK OPTIONS HELD BY THE ME
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Options exercised Number of stock o
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Plan Share award rights Price per s
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180 of the Commercial Code, options
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(5) Absolute appliance of Group’s
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The following table shows the free
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Shareholders meeting and Company's
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and, for the not tax resident of Fr
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17.4.2 DEFINED BENEFITS PENSION SCH
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18.1 Significant shareholders known
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Distribution of capital (number of
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On 4 July 2012, Alecta Pensionsför
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19.1 Related party transactions 177
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Amendment #7 to the retrocession ag
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The Board of Directors of SCOR SE,
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absorption of its wholly owned subs
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to the Facility Agreement granted/w
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adjusted on the date of departure b
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188 FINANCIAL INFORMATION CONCERNIN
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20 FINANCIAL INFORMATION CONCERNING
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LIABILITIES AS AT 31 DECEMBER In EU
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20.1.3 CONSOLIDATED STATEMENTS OF C
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20.1.5 CONSOLIDATED STATEMENTS OF C
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20.1.6 NOTES TO THE CONSOLIDATED FI
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• Amendments to IAS 19 - Employee
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Intangible assets The cost of intan
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(e) Cash and cash equivalents Cash
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Impairment of financial assets At e
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available and the reserves are adju
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Shadow accounting For the measureme
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together with actuarial assumptions
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The following table sets forth the
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CASH FLOWS BY SEGMENT The cash flow
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SCOR recognised the redemption rece
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PRO FORMA STATEMENT OF INCOME 2011
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2009 In EUR million (1) Provisional
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The Group conducted its annual asse
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20.1.6.6 NOTE 6 - INSURANCE BUSINES
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(B) MOVEMENTS IN LEVEL 3 FINANCIAL
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Financial lease contracts The Group
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At 31 December 2012 and 2011, the u
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MORTALITY SWAPS On 1 January 2008,
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20.1.6.10 NOTE 10 - ASSUMED AND CED
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Issued share capital The number of
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CAPITAL MANAGEMENT POLICY, OBJECTIV
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Share-based payments The caption
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SCOR has entered into a cross-curre
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SCOR Global P&C The table below sho
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The table below is a reconciliation
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(C) SHARE OF RETROCESSIONAIRES IN C
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(c) Defined benefits pension cost 2
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The following table summarizes the
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The table below presents the change
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The performance conditions will be
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In 2010 the tax rate change impact
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Applying the deferred tax netting m
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These expenses are further allocate
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In the event of termination of the
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SIGNIFICANT SUBSIDIARIES, INVESTMEN
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20.1.6.25 NOTE 25 - COMMITMENTS REC
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and documented before the pricing i
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(iv) Pandemic In Life reinsurance,
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Different types of GMDBs are covere
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(b) Receivables from retrocessionai
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(i) Default of pool members SCOR pa
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Additional information on the timin
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On the other hand, an increase in i
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The market sensitivities of the Gro
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20.2 Auditing of historical consoli
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Other information audited by the le
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21.1 Share capital 293 21.2 Charter
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Directors of SCOR SE decided on 28
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Number initially authorized (date o
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Objective 1. Stimulation of the sec
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21.1.7 HISTORY OF THE COMPANY’S S
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Board of Directors’ borrowing pow
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maintained by BNP on our behalf. Ea
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Proxies may be granted by a shareho
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Shareholders’ Meeting that may ta
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22 MATERIAL CONTRACTS None. 310
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23.1 Expert’s report 313 23.2 Inf
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314 DOCUMENTS ON DISPLAY
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316 INFORMATION ON HOLDINGS
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318 NON FINANCIAL INFORMATION
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320 FEES PAID BY THE GROUP TO THE A
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322 PUBLISHED INFORMATION
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28 PUBLISHED INFORMATION 28.1 Infor
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Date Subject Marchés Financiers 27
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328
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1.1 Significant events of the year
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1.2 Balance sheet 1.2.1 BALANCE SHE
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1.3 Income statement In EUR million
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In EUR million NON-UNDERWRITING ACC
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1.5 NOTES TO THE CORPORATE FINANCIA
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1.7 RECORDING OF REINSURANCE TRANSA
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1.12 FINANCIAL INSTRUMENTS RECEIVED
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Name Original currency Share capita
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NOTE 4 - TRANSACTIONS WITH SUBSIDIA
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(b) Financial liabilities • Initi
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• EUR 44 million in reserves for
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NOTE 10 - ANALYSIS OF GENERAL EXPEN
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Number of which to Group directors
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NOTE 15 - ANALYSIS OF COMMITMENTS G
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Appeal of Versailles. On the basis
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aforementioned notes is appropriate
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362 APPENDIX B: REPORT OF THE CHAIR
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APPENDIX B: REPORT OF THE CHAIRMAN
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Pursuant to the Internal Charter, t
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Lastly, Directors are required to i
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The Audit Committee is composed of
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Every year, the conditions of remun
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Moreover, the Chairman and Chief Ex
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The Group SCOR consists of the pare
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Within this environment, control re
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organization, training sessions tar
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For SCOR Global Life: - an internal
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(D) INFORMATION AND COMMUNICATION
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• enhanced audit trail. The initi
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Other information We confirm that t
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APPENDIX C: GLOSSARY* *This glossar
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D DECENNIAL INSURANCE Decennial ins
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M MARINE AND AVIATION INSURANCE ALS
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RETROCESSION Transaction in which t
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elevant at the date of acquisition.
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1 Operating and financial review of
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1.2 Operating results of SCOR SE du
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3.2 Group social indicators 3.2.1 D
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As a global company organised into
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3.2.10 Distribution by age Indicato
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in cooperation with the company doc
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- The items pertain to the entire G
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• Two approaches have been develo
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POLLUTION AND WASTE MANAGEMENT Info
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BIODIVERSITY PROTECTION formation r
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The Group’s French subsidiaries a
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5.5 OTHER ACTIONS TAKEN IN SUPPORT
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7 STATUTORY AUDITORS’REPORT ON TH
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426 APPENDIX E: CROSS REFERENCE TAB
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European Company With a share capit
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4.4 Legal risk - Scor

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