4.4 Legal risk - Scor

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20.1.6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 20.1.6.1 NOTE 1 - ACCOUNTING PRINCIPLES AND METHODS (A) GENERAL INFORMATION SCOR SE (“the Company”) is a European Company (Societas Europaea) domiciled in France and governed by the provisions of French law relating to European Companies as well as by the French corporate law provisions applicable to Sociétés Anonymes where this is not contrary to the specific provisions applicable to European Companies. SCOR’s shares are publicly traded on the Eurolist by Euronext Paris stock market and on the SIX Swiss Exchange (formerly known as the SWX Swiss Exchange). The principle activities of the Company and its subsidiaries (“the Group” or “SCOR”) are Life and Non-Life reinsurance. The consolidated financial statements were presented by Group Management to the Audit Committee. The Management and the Audit Committee report to the Board of Directors, which authorized the consolidated financial statements on 5 March 2013. The consolidated financial statements as at and for the year ended 31 December 2012 will be presented for approval at the Annual General Meeting which will take place on 25 April 2013. (B) BASIS OF PREPARATION SCOR’s consolidated financial statements for the years ended 31 December 2012, 2011 and 2010 have been prepared in compliance with IFRS issued by the International Accounting Standards Board (IASB) as adopted by the European Union (“EU”) and effective as at 31 December 2012. The term “IFRS” refers collectively to International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) and to Interpretations of the Interpretations Committees (Standing Interpretations Committee (SIC) and IFRS Interpretations Committee (IFRIC)) mandatorily applicable as at 31 December 2012. Refer to Note 1 (D) below for a detail overview on the new and amended International Financial Reporting Standards adopted by the Group as endorsed by the European Union applicable in 2012 and the standards which have been issued by the IASB during the period but have not been adopted by the European Union. Reclassifications As part of implementing one consistent general ledger across Group entities in 2012, certain general ledger accounts were remapped at consolidation level. The remapping has not had any material impact on the consolidated financial statements. Certain reclassifications have been made to 2010 financial information to conform to the current year and 2011 presentation. The changes are related to the new cost allocation methodology of the Group which was refined in the preparation of segment information, resulting in a new corporate cost center being created, Group Functions. For further detail refer to Note 2 – Segment Information. Use of estimates The preparation of the consolidated financial statements requires management to make certain judgments, assumptions and estimates. These affect the reported amounts of revenue, expenses, assets and liabilities, and the disclosure of contingent assets and liabilities at the reporting date. Management reviews these estimates and assumptions periodically, based on past experience and other factors. The actual outcome and results could differ substantially from estimates and assumptions made. The most material financial statement captions for which the Group uses estimates and assumptions are reinsurance reserves, receivables and liabilities relating to reinsurance operations, the fair value and impairment of financial instruments, intangible assets, retirement and other defined benefit plans and deferred taxes. Allocation of expenses by function In conformity with IAS 1 - Presentation of Financial Statements, the Group has opted to present expenses by function in the statement of income. The costs are allocated to four categories (acquisition and administrative expenses, claims settlement expenses, investment management expenses and other current operating expenses) based on allocation keys which are determined based on management’s judgment. Hub shared service costs are allocated to the divisions based on a headcount allocation key. (C) BASIS OF CONSOLIDATION All material entities, in which SCOR owns directly or indirectly more than 50% of outstanding voting rights or has otherwise power of control, are fully consolidated. Control is the authority to direct financial and operational policies in order to obtain benefits from their operations. Special Purpose Entities (SPE) are consolidated where the substance of the relationship is that the SPE is controlled by the Group. The Group sponsors a number of catastrophe bond notes issued by Atlas Special Purpose Vehicles (SPVs). The SPVs allow the retrocession of catastrophe losses financed by the issuance of catastrophe bonds. In accordance with 198
SIC 12 Consolidation - Special Purpose Entities, these vehicles are not consolidated by the Group as SCOR does not control these entities and is not liable for any residual <strong>risk</strong>s or benefits of ownership. Subsidiaries are consolidated from the time the Group takes control until the date control is transferred outside the Group or control ceases. Certain subsidiaries have been included within the Group financial statements under the equity method and are not fully consolidated on a line by line basis as they are immaterial to the Group consolidated financial statements. The Group’s investments in associated companies are recorded using the equity method. Associated entities are companies in which the Group exercises significant influence but not control. Significant influence generally occurs when the Group owns, directly or indirectly, between 20% and 50% of the outstanding voting rights. Joint ventures, where there is joint control, are accounted for using the equity method. Mutual funds and real estate entities are fully consolidated or recorded using the equity method in accordance with the afore-mentioned rules. The non-controlling interest in fully consolidated mutual funds are stated under other liabilities as the third party holders have an unconditional right to sell their holdings to SCOR. The financial statements of the material subsidiaries are prepared for the same accounting period as that of the parent company. All material intra-Group balances and transactions including the results of inter-company transactions are eliminated. The Group’s consolidated financial statements are presented in Euros (EUR) and all values are rounded to the nearest EUR million except where stated otherwise. The other key currencies in which the Group conducts business and the exchange rates used for the preparation of the 2012 financial statements are as follows: Currency Ending rate 2012 Average rate 2012 USD 0.7579 0.7754 GBP 1.2253 1.2331 CAD 0.7612 0.7758 Currency Ending rate 2011 Average rate 2011 USD 0.7729 0.7148 GBP 1.1972 1.1475 CAD 0.7567 0.7227 Currency Ending rate 2010 Average rate 2010 USD 0.7484 0.7585 GBP 1.1618 1.1691 CAD 0.7506 0.7334 (D) IFRS STANDARDS EFFECTIVE DURING THE PERIOD AND IFRS STANDARDS NOT YET EFFECTIVE The Group has adopted the following amended International Financial Reporting Standard as adopted by the European Union applicable as at 31 December 2012 resulting in no material impact on the Group’s consolidated financial statements: • Amendments to IFRS 7 – Enhanced Derecognition Disclosure Requirements which became effective for any period beginning on or after 1 July 2011, require additional disclosures of financial assets that have been derecognized but in which the entity has a ‘Continuing Involvement’. The application of these amendments has not had a material impact on the Group’s consolidated financial statements. The following standards have been issued by International Financial Reporting Standards Board during the period but are not yet effective or have not been adopted by the European Union: • Amendments to IAS 1 – Presentation of Financial Statements was issued in June 2011 and requires entities to separate items presented in Other Comprehensive Income into two groups based on whether or not they are able to be recycled to profit or loss in the future. The European Union endorsed the amendments to IAS 1 on 5 June 2012. The application of these amendments which has become effective for annual periods beginning on or after 1 July 2012 is not expected to have a material impact on the Group’s consolidated financial statements. • Amendments to IAS 12 – Recovery of Underlying Assets introduces an exception to the measurement principles of deferred tax assets and liabilities arising from assets measured using the fair value model under IAS 40, Investment Property. The European Union endorsed the amendments to IAS 12 on 11 December 2012. The application of these amendments becomes effective for annual periods beginning on or after 1 January 2013. The application of these amendments is not expected to have a material impact on the Group’s consolidated financial statements. 199
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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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4.4.2 INCONSISTENT APPLICATION OF E
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See “Appendix B - II. Internal co
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5.1 History and development of the
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proportion of the voting rights hel
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Gerling Global Re Group, which deve
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5.2 Investments 5.2.1 PRINCIPAL INV
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6.1 Primary activities 53 6.2 Princ
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The targets of the strategic plan a
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B. Proportional and non-proportiona
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payment of commercial debts. Surety
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Long-Term Care Long-Term Care (“L
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with local lines of business and po
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transfer solutions (e.g., catastrop
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Retrocession procedures are central
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The portion invested in fixed incom
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6.2 Principal markets SCOR is chara
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On 6 March 2010, STOXX announced SC
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The premiums up for renewal, which
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75 ORGANIZATIONAL STRUCTURE
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E U R O P E 7 ORGANIZATIONAL STRUCT
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7.1.1.2 Project "New SCOR" In conne
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7.2 List of issuer’s significant
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8.1 Major existing or planned prope
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86 OPERATING AND FINANCIAL REVIEW
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9 OPERATING AND FINANCIAL REVIEW Th
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year ended 31 December 2012 down fr
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In 2011, SCOR was affected by the f
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31 March 2014. This transaction suc
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Net investment income and investmen
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IFRS classification In EUR million
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Combined ratio For detailed calcula
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10.1 Capital 103 10.2 Cash flow 103
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FINANCIAL LEVERAGE As at 31 Decembe
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11.1 Research and development activ
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studies and publications produced o
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12.1 Most significant trends in pro
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SCOR Global Life expects business o
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114 PROFIT FORECASTS OR ESTIMATES
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116 ADMINISTRATIVE AND MANAGEMENT B
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14 ADMINISTRATIVE AND MANAGEMENT BO
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Name Date of Birth Other principal
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Clariden Leu and from 10 January 20
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Name Age Current Position Executive
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of Alea Europe from 1999 to 2006, w
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134 REMUNERATION AND BENEFITS
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15 REMUNERATION AND BENEFITS 15.1 A
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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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Page 164 and 165: Shareholders meeting and Company's
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Page 168 and 169: 17.4.2 DEFINED BENEFITS PENSION SCH
Page 170 and 171: 18.1 Significant shareholders known
Page 172 and 173: Distribution of capital (number of
Page 174 and 175: On 4 July 2012, Alecta Pensionsför
Page 176 and 177: 19.1 Related party transactions 177
Page 178 and 179: Amendment #7 to the retrocession ag
Page 180 and 181: The Board of Directors of SCOR SE,
Page 182 and 183: absorption of its wholly owned subs
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Page 186 and 187: adjusted on the date of departure b
Page 188 and 189: 188 FINANCIAL INFORMATION CONCERNIN
Page 190 and 191: 20 FINANCIAL INFORMATION CONCERNING
Page 192 and 193: LIABILITIES AS AT 31 DECEMBER In EU
Page 194 and 195: 20.1.3 CONSOLIDATED STATEMENTS OF C
Page 196 and 197: 20.1.5 CONSOLIDATED STATEMENTS OF C
Page 200 and 201: • Amendments to IAS 19 - Employee
Page 202 and 203: Intangible assets The cost of intan
Page 204 and 205: (e) Cash and cash equivalents Cash
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Page 208 and 209: available and the reserves are adju
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Page 212 and 213: together with actuarial assumptions
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Page 216 and 217: CASH FLOWS BY SEGMENT The cash flow
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Page 220 and 221: PRO FORMA STATEMENT OF INCOME 2011
Page 222 and 223: 2009 In EUR million (1) Provisional
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Page 226 and 227: 20.1.6.6 NOTE 6 - INSURANCE BUSINES
Page 228 and 229: (B) MOVEMENTS IN LEVEL 3 FINANCIAL
Page 230 and 231: Financial lease contracts The Group
Page 232 and 233: At 31 December 2012 and 2011, the u
Page 234 and 235: MORTALITY SWAPS On 1 January 2008,
Page 236 and 237: 20.1.6.10 NOTE 10 - ASSUMED AND CED
Page 238 and 239: Issued share capital The number of
Page 240 and 241: CAPITAL MANAGEMENT POLICY, OBJECTIV
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Page 244 and 245: SCOR has entered into a cross-curre
Page 246 and 247: 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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