2010 REGISTRATION DOCUMENT (3.4 Mo) - Groupe Casino

231 DECEMBER 2010Risk Factors and Insuranceregulatory authorities. Provisions are taken to cover these proceedingswhen the Group has a legal, contractual or constructive obligationtowards a third party at the year-end, it is probable that an outflowof resources embodying economic benefits will be required to settlethe obligation, and the amount of the obligation can be reliablyestimated.Information on claims and litigation is provided in notes 26.1 and 33to the consolidated financial statements.As of the Registration Document filing date, the Company is not andhas not been involved in any other governmental, legal or arbitrationproceedings (including any such proceedings that are pending orthreatened of which the Company is aware) during a period coveringat least the previous 12 months which may have, or have had in therecent past, significant effects on the financial position or profitabilityof the Company and/or the Group.Within the framework of litigation with the Baud family, however, asnoted on page 31 in the section on Shareholder Pacts, the Court ofArbitration had not yet ruled on the question of interest on the pricepaid by Casino for Franprix-Leader Price shares as well as an eventualright to dividends for the years 2006 and 2007. On 4 February 2011,the Court rejected out of hand the Baud family’s claim for paymentof Franprix and Leader Price dividends for 2006 and 2007. As aresult of this decision, Casino will be required to pay only €34 million,corresponding to the Franprix and Leader Price dividends for 2008 andto additional consideration for the Franprix and Leader Price sharespreviously acquired. This amount of €34 million is significantly lessthan the €67 million provision that had been booked in the CasinoGroup’s accounts.2.7.4. INSURANCE—RISK COVERAGEGeneral policyAs in previous years, the main objective of the Group’s insurance policyin 2010 was to protect its assets, customers and employees.The Insurance Department, which reports to Group Finance, isresponsible for:■■■■■managing centralised insurance programmes covering all Frenchoperations (including Mercialys, a listed subsidiary);identifying and quantifying insurable risks;ensuring that subsidiaries comply with the prevention measuresrecommended by the insurance company’s technical departments,particularly those related to facilities open to the public;implementing and monitoring insurance policies and/or selfinsurance;overseeing insurance brokers’ claims management.The Group is assisted by international brokers specialising in majorrisks and also uses the services of insurers specialising in industrialrisks.The Insurance Department oversees the local insurance programmestaken out by foreign subsidiaries where they are not covered by theGroup’s global master policies.Assessment of insurance coverrequirements and related costsSelf-insurance and insurance budgetTo smooth its insurance costs whilst controlling risks, the Groupcontinued to self-insure a large proportion of its high-frequencyclaims in 2010, mainly but not exclusively for property damage andliability.As well as the application of low traditional deductibles, self-insurancealso includes deductibles per claim capped by underwriting year.These capped deductibles mainly concern major risks such asproperty damage, business interruption and liability. They are pooledat Group level by all subsidiaries insured under the Group’s globalinsurance programme.As well these deductibles, the Group continues to reinsure aportion of its property damage risk through its Luxembourg-basedcaptive reinsurance company, which is consolidated by the Groupand managed locally in compliance with the regulations applicableto this type of company. A stop loss policy is taken out to protectthe captive reinsurer’s interests by capping its commitment andtransferring the financial cost to the insurance market above a certainlevel of claims.Deductibles are managed by insurance brokers and overseen(depending on the type and amount of claim) by the Group as wellas the insurers under their contractual policy obligations.The Group’s total annual insurance budget (premiums and deductibles)for 2010, excluding group death and disability plans, totalledan estimated €57 million, representing less than 0.20% of 2010consolidated net revenue.Summary of insurance coverThe insurance cover described below summarises the main policiesvalid during 2010 and as of the date of this report. It cannot in anyway be considered as permanent. It may be changed at any timein accordance with developments in business operations and withthe Group’s choices to take account of insurance market capacity,available cover and rates.Property damage and business interruptionThis policy is designed to protect the Group’s assets.It is a ’named exclusion’ policy (i.e. it covers all losses exceptthose explicitly excluded) based on cover available in the insurancemarket.Insured risks include but are not limited to fire, explosion, naturaldisasters, subsidence and electrical damage.The maximum sum insured is €220 million per claim for major claims(fire and explosion), including direct damage and business interruption.There are certain sub-limits for named risks, including natural events,subsidence and theft.The premium payable on 1 July 2010 went up due to the riots andsocial unrest in Thailand in April 2010 which resulted in serious firedamage to a Bangkok shopping centre, and to the floods in theVar département of France in June 2010. However, the increasewas contained thanks to the Group’s effective self-insuranceprogramme.No major claims had occurred by the year-end which could have anadverse effect on the programme’s renewal on 1 July 2011, either interms of overall cost (premiums and deductibles) or the cover itself.42 Casino Group | Registration Document 2010