6-K
 

 
 
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
April 11th, 2006
SCOR
(Exact name of Registrant as specified in its chapter)
1, Avenue du Général de Gaulle
92074 Paris — La Défense Cedex, France
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F þ      Form 40-F o
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes o       No þ
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not Applicable.
 
 

 


 

Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: April 11th, 2006
         
  SCOR
(Registrant)
 
 
  By:     /s/ MARCEL KAHN    
    Marcel Kahn,   
    Chief Financial Officer   

- 2 -


 

(LOGO)
FINANCIAL REPORT 2005
 
REFERENCE DOCUMENT

Page 1 of 184


 

NOTE
The data contained in this “document de reference” (reference document) may contain information on SCOR objectives or forward-looking statements, particularly in the sections 8.1 – “Strategy” and 8.3 “Recent Trends.” This information is sometimes identified by the use of the future tense or the conditional mood, and terms such as “think,” “are expected to,” “should,” “presume”, “believe,” or “might.”
This information is not historical data and must not be interpreted as guarantees that the stated facts and data will occur or that the objectives will be met. Because of their nature, these objectives might not be met and the assumptions on which they are based may be erroneous. We advise readers of this reference document to not place absolute confidence in the achievement of these objectives or on the accuracy of these forward-looking statements because actual events and results might differ significantly from the stated objectives or results implied by the forward-looking information contained in this reference document.
The Company confirms that the information from third parties, contained in this Reference Document in Sections 2.3 - (SCOR 18-month share performance, 7.13 - Securities Giving Access to Share Capital, 7.17 - Ownership of Share Capital and 8.5 Products and Markets – Competitive Position of our Life Insurance and Non-Life Insurance Activities, has been, to our knowledge, faithfully reported and that, with the publication of the data in this reference document, no material fact has been omitted that would cause the information contained herein to be inexact or incorrect.

Page 2 of 184


 

     
1      GROUP ORGANIZATIONAL CHART
  5
2      SCOR SHARES
  6
2.1           STOCK LISTING
  6
2.2           PER SHARE DATA
  6
2.3           SCOR 18-MONTH SHARE PERFORMANCE
  7
2.4           DIVIDENDS
  7
3      ACTIVITIES OF THE GROUP
  8
4      GROUP KEY FIGURES
  10
5      CONSOLIDATED FINANCIAL STATEMENTS
  11
5.1           CONSOLIDATED BALANCE SHEET
  11
5.2           CONSOLIDATED STATEMENT OF INCOME
  13
5.3           CONSOLIDATED STATEMENT OF CASH FLOWS
  14
5.4           CHANGE IN SHAREHOLDERS’ EQUITY
  15
5.5           SEGMENT INFORMATION
  16
5.6           SIGNIFICANT EVENTS OF THE YEAR
  18
5.7          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
  21
5.8           STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
  70
6      SCOR PARENT COMPANY FINANCIAL STATEMENTS
  72
6.1           SIGNIFICANT EVENTS OF THE YEAR
  72
6.2           BALANCE SHEET — (SCOR SA FINANCIAL STATEMENTS)
  73
6.3           STATEMENT OF INCOME (SCOR SA CORPORATE FINANCIAL STATEMENTS)
  75
6.4           OFF-BALANCE SHEET ITEMS (SCOR SA CORPORATE FINANCIAL STATEMENTS)
  78
6.5           NOTES TO PARENT COMPANY FINANCIAL STATEMENTS
  79
6.6           GENERAL REPORT OF THE STATUTORY AUDITORS ON THE NON-CONSOLIDATED FINANCIAL STATEMENTS
95
7      GENERAL INFORMATION ABOUT THE COMPANY AND ITS SHARE CAPITAL
  97
7.1           REGISTERED NAME AND CORPORATE HEADQUARTERS
  97
7.2           REGULATORY ENVIRONMENT AND APPLICABLE LEGISLATION
  97
7.3           DATE OF FORMATION AND DATE OF EXPIRATION
  98
7.4           CORPORATE PURPOSE (ART. 3 OF THE BYLAWS)
  98
7.5           COMPANY REGISTRATION
  98
7.6           CONSULTATION OF CORPORATE DOCUMENTS
  98
7.7           FISCAL YEAR (ARTICLE 19 OF THE BYLAWS)
  98
7.8           STATUTORY DISTRIBUTION OF PROFITS (ART. 19 OF THE BYLAWS)
  98
7.9           SHAREHOLDERS’ MEETINGS
  99
7.10         REPURCHASE OF SHARES BY THE CORPORATION
  99
7.11         INFORMATION CONCERNING THE COMMON STOCK
  102
7.12         AUTHORIZED SHARE CAPITAL
  102
7.13         SECURITIES GIVING ACCESS TO SHARE CAPITAL
  102
7.14         PERFORMANCE OF “OCEANE” BONDS SINCE THEIR ISSUANCE
  103
7.15         SCOR SHARE SUBSCRIPTION OPTIONS
  104
7.16         CHANGES IN THE SHARE CAPITAL OF SCOR OVER THE LAST FIVE YEARS
  105
7.17         OWNERSHIP OF SHARE CAPITAL
  106
7.18         EMPLOYEE SHAREHOLDING
  107
7.19         IRP
  107
8      INFORMATION ABOUT THE GROUP’S ACTIVITIES
  109
8.1           STRATEGY
  109
8.2           HISTORICAL BACKGROUND
  109
8.3           RECENT DEVELOPMENTS
  110
8.4           THE REINSURANCE BUSINESS
  110
8.5           PRODUCTS AND MARKETS
  112
8.6           DISTRIBUTION BY GEOGRAPHIC AREA
  114
8.7           FINANCIAL RATINGS
  114
8.8           GROUP EMPLOYEES
  115
8.9           RISK FACTORS AFFECTING THE COMPANY
  115
8.10         UNDERWRITING, RISK MANAGEMENT AND RETROCESSION
  123
8.11         RESERVES
  126
8.12         INVESTMENTS
  128
8.13         BUSINESS OPERATIONS
  129
8.14         PROPERTY AND EQUIPMENT
  130
8.15         INFORMATION TECHNOLOGY
  130
8.16         EXCEPTIONAL EVENTS AND LITIGATION
  130
8.17         REFERENCE SYSTEM
  132
9      CORPORATE GOVERNANCE
  133
9.1           INFORMATION CONCERNING THE MEMBERS OF THE BOARD OF DIRECTORS
  133
9.2           BIOGRAPHICAL INFORMATION ON MEMBERS OF THE BOARD OF DIRECTORS
  142
9.3           TERMS AND CONDITIONS FOR THE PREPARATION AND ORGANIZATION OF WORK OF THE BOARD OF DIRECTORS
  143
9.4           COMMITTEES OF THE BOARD
  143
9.5           EXECUTIVE COMMITTEE
  143
9.6           BIOGRAPHICAL INFORMATION ON THE MEMBERS OF THE EXECUTIVE COMMITTEE
  145
9.7           STATEMENTS ON THE COMPANY’S CORPORATE GOVERNANCE
  146
9.8           COMPENSATION AND BENEFITS OF GROUP DIRECTORS, OFFICERS AND MEMBERS OF THE EXECUTIVE COMMITTEE
  146

Page 3 of 184


 

     
9.9           STOCK OPTIONS HELD BY THE MEMBERS OF THE EXECUTIVE COMMITTEE AT DECEMBER 31, 2005
  151
9.10         OTHER STOCK COMPENSATION
  154
9.11         STOCK OPTIONS GRANTED TO THE TOP TEN NON-OFFICER EMPLOYEES AND EXERCIZED BY THEM DURING FISCAL YEAR 2005
  156
9.12         NUMBER OF SHARES HELD BY DIRECTORS AND EXECUTIVE OFFICERS AT DECEMBER 31, 2005
  156
9.13         REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS ON THE TERMS AND CONDITIONS FOR PREPARING AND ORGANIZING THE WORK OF THE BOARD OF DIRECTORS AND ON INTERNAL CONTROL PROCEDURES IN COMPLIANCE WITH ARTICLE L.225-37 OF THE FRENCH COMMERCIAL CODE
  157
9.14         STATUTORY AUDITORS’ REPORT, PREPARED IN ACCORDANCE WITH ARTICLE L. 225-235 OF THE FRENCH COMMERCIAL CODE, ON THE REPORT PREPARED BY THE CHAIRMAN OF THE BOARD OF DIRECTORS OF SCOR, ON INFORMATION GIVEN ON THE INTERNAL CONTROL PROCEDURES RELATING TO THE PREPARATION AND PROCESSING OF FINANCIAL AND ACCOUNTING INFORMATION
  170
10       AGREEMENTS
  171
10.1         RELATED PARTY-AGREEMENTS SIGNED IN 2005 AS DEFINED BY ARTICLES L.225-38 ET SEQ. OF THE FRENCH COMMERCIAL CODE
  171
10.2         AGREEMENTS APPROVED IN PRIOR FISCAL YEARS AND CONTINUED OR TERMINATED IN 2005
  174
11       ANNUAL INFORMATION DOCUMENT
  176
11.1         PUBLISHED INFORMATION
  176
11.2         INFORMATION AVAILABILITY
  180
12       PERSON RESPONSIBLE FOR THE DOCUMENT
  180
12.1         CERTIFICATION
  180
12.2         INDEPENDENT AUDITORS RESPONSIBLE FOR THE CONTROL OF THE ACCOUNTS
  180
12.3         FEES PAID BY SCOR GROUP TO THE AUDITORS
  181
12.4         FINANCIAL INFORMATION
  181
12.5         INFORMATION INCORPORATED BY REFERENCE
  181
13            CONCORDANCE TABLE
  182

Page 4 of 184


 

1. GROUP ORGANIZATIONAL CHART
SCOR GROUP ORGANIZATIONAL CHART ON DECEMBER 31, 2005
(FLOW CHART)

Page 5 of 184


 

2.       SCOR SHARES
2.1.  STOCK LISTING
SCOR’s shares are listed on the Paris Stock Exchange, on the New York Stock Exchange in the form of American Depositary Shares (ADS), and on the Frankfurt Unlisted Securities Market.
SCOR’s shares are included in the following indexes:
       
       
SBF 80
    DOW JONES EUROPE STOXX 600 INDEX
       
SBF 120
    DOW JONES EURO STOXX INDEX
       
SBF 250
    DOW JONES EUROPE STOXX INSURANCE INDEX
       
CAC MID 100
    DOW JONES EURO STOXX INSURANCE INDEX
       
CAC MID & SMALL 190
    DOW JONES EUROPE STOXX SMALL CAP INDEX
       
EURONEXT PARIS FINANCIERES
    DOW JONES EURO STOXX SMALL CAP INDEX
       
EURONEXT PARIS ASSURANCE
     
       
EURONEXT NEXT 150
     
       
EURONEXT NEXT PRIME
     
       
The most significant trading takes place on the Paris Stock Exchange. The average monthly volume of transactions stood at 118.5 million shares from January through December 2005 inclusive and at 140 million shares from January through March 20, 2006 inclusive.
2.2. PER SHARE DATA
                                   
       
2001

   
2002

   
2003

   
2004

   
2005

 
                                   
 
Number of shares in circulation as of December 31
    41,244,216     136,544,845     136,544,845     819,269,070     968,769,070  
 
Share equivalents:
                               
 
Treasury stock
    (3,630,417)         (489,500)     (9,298,085)     (9,110,915)  
 
Options calculated via “treasury stock method”
    292,065                 1,699,062  
 
Convertible or exchangeable bonds
    4,025,000         (1)     105,485,232     100,000,000  
 
Number of diluted shares as of December 31
    41,930,864     136,544,845     136,055,345     915,456,217     1,061,357,213  
                                   
 
Average number of diluted shares
    38,288,065     136,591,766     136,300,095     529,159,021     989,324,565  
                                   
 
Share Price (in )*
                               
 
high
    58.20     46.80     2.86 (3)     1.80     1.89  
 
low(2)
    24.47     3.42     1.15     1.00     1.38  
 
at December 31 (2)
    35.41     5.05     1.31     1.39     1.82  
                                   
 
Market capitalization at December 31
(in millions of euros)
    1,460     689     1,073(4)     1,139     1,763(5)  
                                   
 
Diluted Price/ Income ratio (in )
                               
 
high
    N.S     N.S     N.S     20     12  
 
low
    N.S     N.S     N.S     11     9  
 
at December 31
    N.S     N.S     N.S     15     11  
                                   
 
Yield at December 31
                               
 
net of tax credit
    0.8%     N.S     N.S     2.2%     2.7%  
 
with tax credit – individuals
    1.3%     N.S     N.S     2.2%     2.7%  
 
with tax credit – other shareholders
    1.0%     N.S     N.S     2.2%     2.7%  
                                   
(1)   At the end of 2003, taking into account the share price and the conversion price, the convertible or exchangeable bonds and the stock options no longer have a dilutive effect on the calculation of income and net asset per share. (2) After detachment of the preferential subscription rights, SCOR’s share price at closing was at its lowest on December 22, 2003, which was the closing date of the share capital increase subscription period. (3) After application of the adjustment coefficient of 0.45046. (4) After the share capital increase, the number of shares in circulation stood at 819,269,070. (5) After the share capital increase of June 30, 2005, the number of shares in circulation stood at 968,769,070.
The EPS calculation is defined in Note 26 of the consolidated financial statements.

Page 6 of 184


 

2.3 SCOR 18-MONTH SHARE PERFORMANCE
Source Euronext
The SCOR share data presented below comprise data concerning OTC trading.
                                               
                TOTAL TRANSACTIONS

    HIGH/LOW

   
                        Capital

    High

    Low

   
  Year     Month     Volume     (millions )     (In )     (In )    
           
 
2000
      N/A     31,170,203       1,504       60       40.05    
 
2001
      N/A     20,995,851       927       58.2       24.47    
 
2002
      N/A     61,661,310       1,033       29.09       3.42    
 
2003
      N/A     313,568,011       1,062       6.48       1.14    
           
 
 
    1st quarter     672,606,238       1,020       1.74       1.20    
           
 
 
    2nd quarter     230,611,977       298       1.53       1.15    
           
 
2004
    3rd quarter     264,966,780       319       1.39       1.00    
           
 
 
    October     40,935,858       51       1.30       1.19    
           
 
 
    November     121,426,933       168       1.48       1.21    
           
 
 
    December     104,900,657       150       1.53       1.36    
           
 
 
    January     75,708,878       113       1.58       1.38    
           
 
 
    February     72,874,922       115       1.64       1.50    
           
 
 
    March     84,488,496       138       1.70       1.52    
           
 
 
    April     85,991,664       138       1.69       1.49    
           
 
 
    May     96,236,888       155       1.71       1.46    
           
 
 
    June     168,580,282       272       1.69       1.54    
           
 
2005
    July     203,006,449       342       1.76       1.57    
           
 
 
    August     176,179,929       302       1.84       1.59    
           
 
 
    September     141,487,164       237       1.74       1.60    
           
 
 
    October     110,820,086       187       1.77       1.61    
           
 
 
    November     98,436,676       166       1.75       1.62    
           
 
 
    December     108,573,398       198       1.89       1.71    
           
 
2006
    January     194,052,142       380       2.11       1.81    
           
 
 
    February     144,931,333       297       2.19       1.97    
           
 
 
    March                                  
 
 
    (to March 20)     79,720,876       166       2.21       1.99    
           
2.4 DIVIDENDS
                         
Year     Dividend     Distribution     Total Income (1)
            Rate      
                  Individuals and      
                  Parent Company     Others
                         
2001
    0.30     NA     0.45     0.345
2002
    0     NA     NA     NA
2003
    0     NA     NA     NA
2004
    0.03     35.80%     0.03     0.03
                         
2005
    0.05     36.50%     0.05     0.05
                         
(1)   The special tax credit attached to dividends (“Avoir Fiscal”) was abandoned in 2004.
No dividend was distributed in 2002 and 2003, based on decisions made by the General Meeting of Shareholders of May 15, 2003 and May 18, 2004. A dividend of 0.03 per share was distributed in 2004 based on the decision made by the General Meeting of Shareholders of May 31, 2005. The resolution that will be presented to the General Meeting of Shareholders held to approve the accounts for the year ending 2005 includes a dividend of 0.05 per share for 2005.
Dividends are forfeited after 5 years. Dividends not claimed are forfeited to the French State (administration des domaines).

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3. ACTIVITIES OF THE GROUP
1. Global business in 2005 was in line with forecasts at the beginning of the fiscal year.
Gross premiums written in 2005 totaled 2,407 million, in line with forecasts, compared to 2,561 for 2004, representing a decrease of 6% (8% at constant exchange rates). This contraction was mainly due to the decline in savings in the United States.
2. The Group’s global income reflects its technical profitability
Operating income for 2005 reached 242 million, versus 199 million in 2004.
Net income attributable to the Group in 2005 increased to 131 million, versus net income of 75 million in 2004.
Group operating cash flow for 2005 totaled -594 million. Excluding commutations of approximately 600 million, cash flow became positive again.
Liabilities from contracts net of retrocession reached 8,866 million at December 31, 2005, versus 9,020 million at December 31, 2004, representing a decline of 1.7%. This decline was due to the impact of commutations and foreign exchange fluctuations.
The adequacy of the Group’s reserves was confirmed by internal and external reviews by actuaries during the closing of the accounts.
Group shareholders’ equity stood at 1,719 million at December 31, 2005, versus 1,335 million at December 31, 2004. This rise in shareholders’ equity includes the share capital increase of June 30, 2005 for the net amount of 224 million.
Group general expenses reached 200 million in 2005 versus 196 million in 2004.
Total Group staff declined by 5.5% to 994 persons at December 31, 2005.
3. Results by business operation
3.1. The Non-Life Reinsurance business (Property and Casualty, Large Corporate Accounts,Credit and Surety and CRP treaties) generated premium income of 1,383 million for 2005, down 1% compared to 2003 (-4% at constant exchange rates).
Non-Life Reinsurance income (net operating income before general expenses and financial income) declined to 29 million in 2005 versus 85 million in 2004.
This income was affected by the cost of major natural disasters that occurred in 2005 in the United States and Mexico (Katrina, Wilma, Rita) as well as in Europe (the Gudrun storm, floods in Eastern Europe) in the amount of 168 million. Major natural catastrophes are defined by SCOR as events that result in a net retrocession cost for the Group that exceeds 10 million.
The net combined ratio of Non-Life Reinsurance business was 106.5% in 2005, versus 101.8% in 2004. Excluding CRP, the net combined ratio of Non-Life Reinsurance business was 102.8% in 2005. Excluding CRP and major natural catastrophes, this ratio would be 90.8%.
The net operating income for the Non-Life Reinsurance business increased to 159 million in 2005, versus 153 million in 2004. Net operating income benefited from strong technical performance as well as improved performance in the financial markets.
Liabilities relating to policies, net of retrocession from the Non-Life Reinsurance business amounted to 5,652 million at December 31, 2005, compared to 5,785 million at December 31, 2004, down 2% due to the impact of currency exchange and to significant liquidations and commutations in the portion of the SCOR U.S. portfolio in run-off.
3.2. The Life reinsurance business (individual and group policies, long-term care insurance, financing, accidents, disability, unemployment) reflected a decline in revenues in 2005 to 1,024 million, a contraction of 12% versus 2004 due to a drop in savings in the United States.
The operating income from Life reinsurance business reached 83 million in 2005 versus 46 million in 2004, representing an 8.2% margin of net premiums.
Net technical reserves from Life reinsurance business stood at 3,214 million at December 31, 2005 versus 3,235 million at December 31, 2004, representing a decline of 1%.

Page 8 of 184


 

4. Asset Management in 2005
Financial income net of expenses (excluding borrowing costs) stood at 426 million in 2005 versus 315 million in 2004. Financial income from operations, net of expenses, dropped to 288 millions versus 309 millions in 2004. Capital gains from investments net of depreciation stood at 91 million versus 20 million in 2004 with foreign exchange gains reflecting a profit of 8 million versus a loss of -13 millions in 2004.
The change in investments adjusted to reflect income at market value generated a profit of 39 million versus a loss of -1 million in 2004.
Total investments reached 9,743 million at December 31, 2005, a decline of 2.9% as compared to December 31, 2004. The breakdown includes bonds (56%), loans and cash deposits (14%), shares and equity interests (10%), real estate investments (3%) and cash equivalents (17%).

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4. GROUP KEY FIGURES
                 
 
    IFRS  
In millions of EUR   2005     2004  
 
               
 
 
               
Gross premiums written
    2,407       2,561  
 
Gross premiums earned
    2,387       2,728  
 
Current operating result
    242       199  
 
Group net results after tax
    131       75  
 
 
               
Insurance business investments
    8,082       8,211  
 
Cash and cash equivalents
    1,667       1,826  
 
               
Policy-linked net liabilities
    8,858       9,020  
 
Borrowings and debts
    954       1,342  
 
Group shareholders’ equity
    1,719       1,335  
 
               
 
In euros
               
 
               
Number of SCOR equity shares in circulation at December 31
    968,769,070       819,269,070  
 
Earnings per share
    0.15       0.09  
 
Earnings per share (diluted)
    0.14       0.09  
 
Book value per share
    1.79       1.65  
 
Diluted book value per share
    1.78       1.63  
 
Share price at end of year
    1.82       1.39  
 

Page 10 of 184


 

     
SCOR GROUP
  CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
5. CONSOLIDATED FINANCIAL STATEMENTS
5.1 CONSOLIDATED BALANCE SHEET
                                                         
     
  In millions of EUR                              
              IFRS               French GAAP (1)  
  ASSETS           2005   2004           2004   2003  
 
 
                                                     
                             
 
Intangible assets
    Note 1       230       215                   226       296    
 
Goodwill
            200       200                   177       202    
 
Value of business acquired
            17       3                   37       79    
 
Other intangible assets
            13       12                   12       15    
 
 
                                                     
 
Tangible assets
            10       10                   10       13    
 
 
                                                     
 
Insurance business investments
            8,082       8,211                   8,093       7,415    
 
Real-estate investments
    Note 2       317       319                   226       215    
 
Investments available for sale
    Note 3       5,963       5,541                   6,352       5,813    
 
Investments at fair value by income
    Note 3       395       781                   9       56    
 
Loans and accounts receivable
    Note 4       1,372       1,541                   1,506       1,331    
 
Derivative instruments
    Note 5       35       29                                
 
 
                                                     
 
Investments in affiliated companies
    Note 6       23       21                           13    
 
 
                                                     
 
Share of retrocessionnaires in technical reserves and financial liabilities
    Note 11       983       878                   880       1,028    
 
 
                                                     
 
Other assets
            2,693       2,314                   2,429       3,224    
 
Deferred tax assets
    Note 15       229       226                   235       255    
 
Accepted insurance and reinsurance accounts receivable
    Note 7       1,326       1,201                   1,293       1,693    
 
 
                                                     
 
Accounts receivable from reinsurance ceding transactions
    Note 7       229       106                   106       308    
 
Other assets
            356       271                   277       484    
 
Deferred acquisition costs
    Note 8       553       510                   518       484    
 
 
                                                     
 
Cash and cash equivalents
    Note 9       1,667       1,826                   1,799       1,826    
 
 
                                                     
                             
 
TOTAL ASSETS
            13,688       13,475                   13,437       13,815    
                             
(1)   The “French GAAP” data is classified according to IFRS and valued in accordance with French principles. The reclassifications made are explained in the note “Explanation of the Transition to IFRS.”

Page 11 of 184


 

     
SCOR GROUP
  CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
                                                         
     
  In millions of EUR                              
              IFRS               French GAAP(1)  
  LIABILITIES           2005   2004           2004   2003  
                             
 
 
                                                     
 
Group shareholders’ equity
    Note 10       1,719       1,335                   1,324       619    
 
Share capital
            763       645                   645       136    
 
Additional paid-in capital
            147       55                   11       1    
 
Consolidated reserves
            661       510                   599       796    
 
Asset revaluation reserve
            5       43                                
 
Consolidated result
            131       75                   69       (314 )  
 
Share-based payments
            12       7                                
 
 
                                                     
 
Minority interests
                                        183       172    
 
 
                                                     
 
 
                                        1,507       791    
 
Total shareholders’ equity
            1,719       1,335                                
 
 
                                                     
 
Financial debt
    Note 12       954       1,342                   1,083       836    
 
Subordinated debt
            233       222                   225       230    
 
Financial debt securities
            520       934                   769       509    
 
 
                                                     
 
Financial debt to entities in the banking sector
            201       186                   89       97    
 
 
                                                     
 
Contingency reserves
    Note 13       61       58                   35       20    
 
 
                                                     
 
Policy-linked liabilities
    Note 11       9,849       9,898                   9,956       10,971    
 
 
                                                     
 
Technical reserves linked to insurance contracts
            9,686       9,742                   9,956       10,971    
 
Liabilities associated with financial contracts
            163       156                                
 
 
                                                     
 
Other liabilities
            1,105       842                   856       1,197    
 
Deferred tax liabilities
    Note 15       86       70                   25       35    
 
Derivative instruments liabilities
    Note 5       6       3                                
 
 
                                                     
 
Accepted insurance and reinsurance accounts payable
    Note 7       138       181                   181       679    
 
Retrocession accounts payable
    Note 7       645       412                   474       279    
 
Other liabilities
            230       176                   176       204    
 
 
                                                     
                             
 
TOTAL LIABILITIES
            13,688       13,475                   13,437       13,815    
                             
(1)   The “French GAAP” data is classified according to IFRS and valued in accordance with French principles. The reclassifications made are explained in the note “Explanation of the Transition to IFRS.”

Page 12 of 184


 

     
SCOR GROUP
  CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
5.2 CONSOLIDATED STATEMENT OF INCOME
                                                         
     
  In millions of EUR           IFRS               French GAAP (1)  
              2005   2004           2004 (2)   2003  
                             
 
Gross premiums written
    Note 18       2,407       2,561                   2,528       3,691    
 
Change in unearned premiums
            (20 )     167                   156       340    
                                 
 
Gross premiums earned
            2,387       2,728                   2,684       4,031    
                                 
 
Other revenues from operations
            1       7                   8       5    
 
Investment revenues
    Note 19       460       346                   336       626    
                                 
 
Total revenues from ordinary activities
            2,848       3,081                   3,028       4,662    
                                 
 
Expenses relating to contract benefits
    Note 20       (1,843 )     (1,971 )                 (1,864 )     (3,568 )  
 
Gross commission on earned premiums
            (532 )     (612 )                 (671 )     (865 )  
 
Net income (loss) from reinsurance operations
    Note 21       (22 )     (104 )                 (100 )     (145 )  
 
Financial management expenses
            (34 )     (31 )                 (31 )     (27 )  
 
Acquisitions and operational expenses
            (99 )     (98 )                 (98 )     (107 )  
 
Other current operational expenses
            (60 )     (66 )                 (62 )     (73 )  
                                 
 
Total other current revenues and expenses
            (2,590 )     (2,882 )                 (2,825 )     (4,785 )  
                                 
 
INCOME/LOSS FROM CURRENT OPERATIONS
            258       199                   203       (123 )  
                                 
 
Goodwill — value changes
            (3 )     0                   (19 )     (19 )  
 
Other operational expenses
            (13 )     0                                
                                 
 
INCOME(LOSS) FROM OPERATIONS
            242       199                   185       (142 )  
                                 
 
Financing expenses
    Note 22       (57 )     (78 )                 (48 )     (51 )  
 
Share in results of associated companies
                                                1    
 
Income tax
    Note 23       (54 )     (46 )                 (44 )     (96 )  
                                 
 
NET INCOME (LOSS) OF CONSOLIDATED ENTITY
            131       75                   93       (289 )  
                                 
 
Minority interests
            0       0                   (24 )     (26 )  
                                 
 
GROUP NET INCOME (LOSS)
            131       75                   69       (314 )  
                                 
     
                             
 
Earnings per share
    Note 26       0.15       0.09                   0.08       -2.31    
 
Diluted earnings per share
            0.14       0.09                   0.08       -2.31    
                             
(1)   The “French GAAP” data is classified according to IFRS and valued in accordance with French principles (2). The reclassifications made are explained in the note “Explanation of the Transition to IFRS.”
 
(2)   The reclassifications made are given in the Note “Explanation of the transition to IFRS”

Page 13 of 184


 

     
SCOR GROUP
  CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
5.3 CONSOLIDATED STATEMENT OF CASH FLOWS
                                         
     
  In millions of EUR     IFRS     French GAAP (1)  
        2005   2004     2004 (2)   2003  
                 
 
Net income (loss)
      131       75         93       (288 )  
                 
 
Capital gains and losses on investment disposals
      (90 )     (42 )       (42 )     (175 )  
 
Change in amortizations and non-technical reserves
      38       55         59       78    
 
Change in deferred acquisition costs
      (10 )     (20 )       (20 )     (60 )  
 
Increase of technical reserves and financial liabilities
      (789 )     (379 )       (384 )     397    
 
Change in faire value of financial instruments recognized at market value by income (excl. cash and cash equivalents)
      (39 )     4                      
                 
 
Change in deferred taxes and other items not involving cash outlay included in income (loss) from operations
      (37 )     40         24       (111 )  
                 
 
Cash flow from operations excluding working capital changes
      (796 )     (267 )       (270 )     (159 )  
                 
 
Change in loans and accounts receivable
      174       40         39       32    
 
Cash flows from other assets and liabilities
      28       15         15       51    
 
Net taxes paid
                        1       62    
                 
 
Net cash flow from operations
      (594 )     (212 )       (215 )     (14 )  
                 
 
Acquisitions of consolidated companies, net of cash earned
              (3 )       (3 )          
 
Disposal of consolidated acquisitions, net of cash paid
              13         13            
                 
 
Cash flows linked to change in consolidation scope
              10         10            
                 
 
Purchases/disposals of real estate
      1       16         16       197    
 
Purchases/disposals of financial assets
      542       (531 )       (531 )     210    
                 
 
Cash flows linked to acquisitions, issue and disposal of financial assets
      543       (515 )       (515 )     407    
                 
 
Cash flows from investing activities
      543       (505 )       (505 )     407    
                 
 
Issue of capital instruments
      224       737         708       (3 )  
 
Reimbursement of capital instruments
      (183 )     (13 )       (13 )     (39 )  
 
Transactions on treasury stock
      (5 )     (10 )       (10 )     (2 )  
 
Dividends paid
      (24 )                            
                 
 
Cash flows linked to transactions with shareholders
      12       714         685       -44    
                 
 
Cash generated by issuance of financial debt
      9       156         156            
 
Cash flow impacted by reimbursement of financial debt
      (268 )     (24 )               (48 )  
 
Interest paid on financial debt
                                     
                 
 
Cash flows linked to Group financing
      (259 )     132         156       (48 )  
                 
 
Cash flows arising from financing activities
      (247 )     846         841       (92 )  
                 
 
 
                                     
                 
 
Cash and cash equivalents at January 1
      1,825       1,836         1,824       1,788    
                 
 
Net cash flow from operations
      (594 )     (212 )       (215 )     (14 )  
 
Cash flows from investing activities
      543       (505 )       (505 )     407    
 
Cash flows arising from financing activities
      (247 )     846         841       (92 )  
 
Foreign exchange variation impact on cash equivalents
      140       (140 )       (147 )     (265 )  
                 
 
Cash and cash equivalents at end of year
      1,667       1,825         1,798       1,824    
                 
The “French GAAP” data is classified according to IFRS and valued in accordance with French principles.
The reclassifications made are explained in the note “Explanation of the Transition to IFRS.”

Page 14 of 184


 

     
SCOR GROUP
  CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
5.4 CHANGE IN SHAREHOLDERS’ EQUITY
                                                                 
in millions of EUR                   Consolidated                            
            Additional   reserves   Asset                   Share-    
    Share   paid-in   (including   Revaluation   Treasury   Translation   based   Other
    capital   capital   net income)   reserves   stock   adjustment   payments   reserves
 
Shareholders’ equity at January 1, 2004 in French GAAP
    137       1       569               -2       -86                  
 
Impact of adopting IFRS (1)
            14       -162       31               86       1          
 
Shareholders’ equity at January 1 2004 in IFRS
    137       15       407       31       -2               1          
 
Available-for-sale assets ( AFS)
                            21               -6                  
Hedging
                                                               
“Shadow accounting” gross deferred taxes
                            -3               2                  
Effect of changes in foreign exchange rates
                                            -62                  
Actuarial gains and losses not recognized in net income
                                                            10  
Taxes payable or deferred taken directly or transferred to capital
                            -6                               -6  
 
Share-based payments
                                                    6          
 
Other changes
            15                       -11       3               -1  
 
Net income recognized in shareholders’ equity
            15               12       -11       -63       6       3  
 
Consolidated net income (loss) for the fiscal year
                    75                                          
 
Total revenues and losses recognized for the period
            15       75       12       -11       -63       6       3  
 
Capital transactions
    508       25       176                                          
 
Dividends paid
                                                               
 
Shareholders’ equity at December 31, 2004 in IFRS
    645       55       658       43       -13       -63       7       3  
 
Impact of revaluations
                                                               
Available-for-sale assets ( AFS)
                            -89                       4          
Hedging
                                                               
“Shadow accounting” gross deferred taxes
                            45                       -5          
Effect of changes in foreign exchange rates
                                                    97          
Taxes payable or deferred taken directly or transferred to capital
                            6                               -2  
 
Share-based payments
                                                    5          
 
Other changes
                                    -2                       -5  
 
Net income recognized in shareholders’ equity
                            -38       -2       96       5       -7  
 
Consolidated net income (loss) for the fiscal year
                    131                                          
 
Total revenues and losses recognized for the period
                    131       -38       -2       96       5       -7  
 
Capital transactions
    118       106       -1                                          
 
Dividends paid
            -14       -10                                          
 
Shareholders’ equity at December 31, 2005 in IFRS
    763       147       778       5       -15       33       12       -4  
 
(1)   The impact of adopting IFRS standards is explained in the note entitled “Explanation of the Transition to IFRS Standards.”

Page 15 of 184


 

     
SCOR GROUP
  CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
5.5 SEGMENT INFORMATION
The following information presents the operating income for each of the Group’s business segments as well as certain items included under assets and liabilities for the years ended 2004 and 2005.
                                                                       
     
      At December 31, 2005     At December 31, 2004  
                      Intra-                             Intra-      
  In millions of EUR   Life   Non Life   group   Total     LIFE   Non Life   group   Total  
           
 
Gross premiums written
    1,024       1,383               2,407         1,165       1,396               2,561    
 
Change in unearned premiums
    18       (38 )             (20 )       (48 )     215               167    
           
 
 
                                                                   
 
Gross premiums earned
    1,042       1,345               2,387         1,117       1,611               2,728    
           
 
Other revenues from operations
            12       (11 )     1                 18       (11 )     7    
 
Investment revenues
    136       186               322         134       206               340    
 
Capital gains and losses on investment disposals
    27       63               90         12       23               35    
 
Change in fair value of investments accounted for at fair value by income
    8       31               39         (10 )     9               (1 )  
 
Change in investment depreciation
    (1 )     2               1         (1 )     (14 )             (15 )  
 
Currency gains
    5       3               8         3       (16 )             (13 )  
               
 
Investment revenues
    175       285               460         138       208               346    
           
 
Total revenues from ordinary business operations
    1,217       1,642       (11 )     2,848         1,255       1,837       (11 )     3,081    
           
 
 
                                                                   
 
Expenses relating to contract benefits
    (838 )     (1,005 )             (1,843 )       (896 )     (1,075 )             (1,971 )  
 
 
                                                                   
 
Gross commissions earned
    (237 )     (295 )             (532 )       (241 )     (371 )             (612 )  
 
Retroceded written premiums
    (32 )     (102 )             (134 )       (37 )     (83 )             (120 )  
 
Change in retroceded unearned reserves
            (16 )             (16 )               (66 )             (66 )  
 
 
                                                                   
 
Retroceded earned premiums
    (32 )     (118 )             (150 )       (37 )     (149 )             (186 )  
 
Retroceded claims ratio
    20       96               116         9       60               69    
 
Retrocession earned commission
    6       6               12         4       9               13    
               
 
Net income from reinsurance operations
    (6 )     (16 )             (22 )       (24 )     (80 )             (104 )  
               
 
Financial management expenses
    (1 )     (33 )             (34 )       (2 )     (29 )             (31 )  
 
Acquisitions and operational expenses
    (30 )     (69 )             (99 )       (32 )     (66 )             (98 )  
 
Other current operational expenses
    (20 )     (51 )     11       (60 )       (14 )     (63 )     11       (66 )  
 
Other revenues from current operations
                                                                   
           
 
Total other current revenues and expenses
    (1,132 )     (1,469 )     11       (2,590 )       (1,209 )     (1,684 )     11       (2,882 )  
           
 
INCOME/LOSS FROM CURRENT OPERATIONS
    85       173               258         46       153               199    
           
 
Goodwill – value changes
            (3 )             (3 )                                    
 
Other operational expenses
    (2 )     (11 )             (13 )                                    
 
Other revenues from operations
                                                                   
           
 
INCOME(LOSS) FROM OPERATIONS
    83       159               242         46       153               199    
           
The gross premiums generated by geographic zone are as follows:
                                     
  In millions of EUR   LIFE   Non Life  
      2005   2004   2005   2004  
 
Gross premiums written
    1,024       1,165       1,383       1,396    
     
 
Europe
    710       724       1,025       1,010    
 
North America
    314       441       218       234    
 
Asia and rest of world
                    140       152    
     

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SCOR GROUP
  CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
The gross premiums are broken down according to the geographic location of the subsidiary.
A breakdown of the gross premiums by location of ceding company is presented in the appendix under “Geographic Concentration of Insurance Risks.”
Assets and liabilities by activity are broken down as follows:
                                                 
In millions of EUR   2005   2004
    LIFE     Non Life     Total     LIFE     Non Life     Total  
         
Insurance business investments
    3,115       4,967       8,082       3,206       5,005       8,211  
         
Investments in affiliated companies
            23       23               21       21  
         
 
Policy-linked liabilities
    -3,615       -6,234       -9,849       -3,596       -6,302       -9,898  
         
Share of retrocessionnaires in technical reserves and financial liabilities
    401       582       983       361       517       878  
         
 
Total Assets
    4,346       9,342       13,688       4,303       9,172       13,475  
         
The breakdown by geographic zone is according to the location of the subsidiary.
                                                                 
In millions of EUR   2005   2004
                    Asia and                             Asia and        
            North     rest of                     North     rest of        
    Europe     America     world     TOTAL     Europe     America     world     TOTAL  
     
Insurance business investments
    5,071       2,897       114       8,082       5,102       2,976       133       8,211  
         
Investments in affiliated companies
    23                       23       21                       21  
         
 
Total assets
    9,923       3,417       348       13,688       9,808       3,339       328       13,475  
The Cash Flow Statement at 12/31/2005 is presented as follows:
                         
 
In millions of EUR   LIFE     NON LIFE        
 
Cash and cash equivalents at January 1
    219       1,606       1,825  
 
Net cash flow from operations
    -134       -460       (594 )
Cash flows from investing activities
    154       389       543  
Cash flows arising from financing activities
    -10       -237       (247 )
Foreign exchange variation impact on cash and cash equivalents
    71       69       140  
 
Cash and cash equivalents at end of year
    300       1,367       1,667  
 

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SCOR GROUP
  CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
5.6 SIGNIFICANT EVENTS OF THE YEAR
Group net income for 2005 was €131 million. This result comprises technical costs net of retrocessions (with reinstatement premiums) for major natural catastrophes* of €168 million, including Katrina in August, with a net technical cost of approximately €82 million. The after tax impact on the accounts of these major natural catastrophes totalled €166 million. Excluding these major natural catastrophes, technical activity for the year reflects the continuation of the trends observed since the end of 2003.
During the first six months of 2005, the Group significantly reduced its reserves in the United States following several commutations made by two subsidiaries in the United States and in Bermuda, SCOR U.S. and CRP.
In June 2005, SCOR acquired the minority interests of the Irish company IRP Holdings Limited for €183 million. On June 30, 2005, SCOR issued 149,500,000 shares for a net amount of €224 million. This share capital increase enabled the Group to refinance the acquisition of the minority interests of IRP Holdings Limited, as well as reinforce the Group’s financial strength, with a view to upgrading its financial rating.
On August 1, 2005, the Group’s financial rating (Standard & Poor’s) was upgraded to “A- stable outlook.” This rating confirms the solidity of the Group’s financial foundations and its high level of solvency and will enable the Group to implement a complete underwriting policy centred on profitability and risk selection.
In order to adapt the Group’s structure to its level of business, in July 2005 the SCOR Group announced a Group reorganization program called “New SCOR.” To this end, SCOR recognized a restructuring reserve for its French companies in the accounts at December 31, 2005 of €12 million.
*   Major natural catastrophes are defined by SCOR as occurrences where the cost, net of retrocession, for the Group exceeds €10 million.
Premium Income
In 2005, gross written premiums of the SCOR Group stood at €2,407 million, a decline of 6% versus those of 2004.
At constant exchange rates, gross written premiums of the SCOR Group declined by 8% versus those of 2004.
Premiums from life insurance / non-life insurance
Breakdown of premium income by business operation (1)
(Millions of euros, at current exchange rates)
                                                       
 
    2005 PI     2004 PI     Variation
                                          Current rate       Constant rate
                                          of       of
    2005     %     2004     %       exchange       exchange
                   
Non Life reinsurance
    1,383       57 %       1,396       55 %       -1 %       -4 %
Life Reinsurance
    1,024       43 %       1,165       45 %       -12 %       -13 %
                   
TOTAL
    2,407       100 %       2,561       100 %       -6 %       -8 %
                   
Geographic breakdown of premium income (1)
(Millions of euros, at constant exchange rates)
                                   
 
    2005     %     2004     %
       
Europe
    1,336       55 %       1,347       52 %
North America
    594       25 %       762       30 %
Asia-Pacific
    217       9 %       202       8 %
Rest of the World
    260       11 %       250       10 %
       
TOTAL
    2,407       100 %       2,561       100 %
       
(1) Gross premiums written broken down by location of ceding companies
Non-life reinsurance (Property and Casualty, Large Corporate Accounts, Credit and Surety), premium income reached €1,383 million, basically unchanged from 2004.

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SCOR GROUP
  CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
Life Reinsurance (individual and group life, long-term care, financing, disability, unemployment), premium income stood at €1,024 million, a decline of 12% over 2004.
Technical results
The combined ratio “(claims + commissions + overheads) / earned premiums” for non-life reinsurance totalled 106.5% in 2005 versus 101.8% in 2004. This ratio, which includes major natural catastrophes, reflects the technical performance of recent underwriting years (2002 and after).
Net combined ratio * Non-Life insurance
(BAR CHART)
* (claims + commissions + overheads) / premiums earned
The ratio is calculated net of reinsurance and does not include the restructuring reserve, which does not constitute a return on a service rendered.
The net combined ratios are based on estimates of ultimate loss of the technical reserves established by Group actuaries.
Financial results
Investment income net of fees (excluding borrowing costs) in 2005 was €426 million, versus €315 million in 2004, or an increase of 36%. This increase was due primarily to capital gains made in the second half of 2005 and to the positive developments in the financial markets.

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SCOR GROUP
  CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
(BAR CHART)
Taxes
Taxes in 2005 stood at €(54) million versus €(46) million in 2004. This expense included a write-up of €43 million of the deferred assets relating to the French tax-consolidated Group.
Group net income for the period
Group net income for the period stood at €131 million, compared to €75 million in 2004.

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SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
     
5.7   NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Accounting methods and principles
Approval of the consolidated financial statements
The financial statements were presented by the Group Management to the Audit Committee. The Management and the Audit Committee report to the Board of Directors, which approved the financial statements on March 21, 2006. Shareholders can ask for an amendment to the financial statements.
The financial statements are then presented for approval to the General Meeting of May 16, 2006.
Presentation of applied standards and interpretations
The Group’s financial statements were prepared in conformity with international accounting standards (International Financial Reporting Standards’ – IFRS) and the interpretations issued on December 31, 2005, as adopted by the European Union.
As of January 1, 2004 SCOR has also applied IFRS 4, IAS 32 and 39 and the amendment of IAS 19 concerning the accounting of actuarial differences as equity.
Details of the transition of the accounts published under French GAAP to IFRS standards are published under “Explanation of transition to IFRS.”
IFRS standards that can be adopted in anticipation
SCOR’s financial statements at December 31, 2005 do not integrate the impact of standards and interpretations, the application of which may be delayed until the opening of the accounts on January 1, 2006, with the exception of the amendment of IAS 19 regarding the recording of actuarial differences in shareholders’ equity.
Description of accounting options for the first-time adoption of IFRS
IFRS financial information is established in accordance with the provisions of IFRS 1 “First-Time Adoption of IFRS.” For this first financial year, SCOR has adopted the following additional options in accordance with IFRS 1 with regard to the retrospective accounting of assets and liabilities under IFRS.
Business combinations
SCOR has opted not to restate business combinations prior to January 1, 2004, as permitted under IFRS 3. As permitted under IFRS 1, SCOR will not apply IAS 21 “Effects of Changes in Foreign Exchange Rates” retrospectively to goodwill resulting from business combinations that occurred before the transition to IFRS. Consequently, goodwill remains in the functional currency of the acquiring entity.
Actuarial gains and losses on pension plans
SCOR has decided to adopt the option provided for in IFRS 1, whereby unrecognized actuarial gains and losses are recorded against consolidated shareholders’ equity at January 1, 2004.
Unrecognized actuarial gains and losses (SORIES) after January 1, 2004 are reflected in shareholders’ equity.
Translation adjustments
With regard to the conversion into euros of subsidiary accounts having a foreign functional currency, SCOR transferred Translation adjustments at January 1, 2004 into consolidated reserves. The new IFRS value of translation adjustment at January 1, 2004 is therefore returned to zero. In the event of the subsequent disposal of these subsidiaries, the income or loss from the disposal will not include the recovery of exchange rate difference prior to January 1, but will include translation adjustments recorded after January 1, 2004.
Assessment of certain intangible / tangible assets at fair value
SCOR opted not to apply the option offered by IFRS 1 that allows for the assessment at January 1, 2004 of certain intangible and tangible assets at their fair value on that date.
Share-based compensation
SCOR opted to apply the provisions of IFRS 2 solely to equity-based compensation granted after November 7, 2002, for which the rights acquisition date falls after December 31, 2003.
IFRS consolidation principles

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SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
     
Methods of consolidation
All the companies in which SCOR has a controlling interest, which include companies in which it has the power to direct financial and operational policy in order to obtain benefits from their operations, are fully consolidated.
Subsidiaries are consolidated as of the moment the Group takes control of them until the date on which this control is transferred outside the Group. Where control of a subsidiary is lost, the consolidated financial statements for the year include profit and loss for the period during which SCOR held control.
The Group’s investment in an affiliated company is recorded in the accounts using the equity method. An affiliated company is an entity in which the Group exercises significant influence but which is neither a subsidiary of the Group nor a joint venture.
The Group does not have any equity interest in joint ventures.
The Group controls in substance a separate legal structure (“ad hoc entity”) that it consolidates in the absence of any capital links. The following assessment criteria were used to determine the existence of control:
    The entity’s business is conducted exclusively on behalf of the Group, so that the Group may enjoy the benefits;
    The Group holds the decision-making and management power to obtain the maximum benefits relating to the entity’s operational activity; this power was delegated through the implementation of a self-management system;
    The Group may benefit from the majority of the entity’s advantages;
    The Group retains the majority of the risks relating to the entity.
The Group also fully consolidates the mutual funds that it holds as part of its business. These entities could not be consolidated under French accounting standards.
 
 
Harmonization of accounting principles
The financial statements of the subsidiaries are prepared for the same accounting period as that of the parent company. Consolidation adjustments may be made in order to harmonize all the Group’s accounting methods and principles.
All intra-group balances and transactions including internal results resulting from intra-company transactions are fully eliminated.
Translation methods
The Group’s consolidated financial statements are presented in euros (EUR) and all values are rounded off to €millions except where expressly stated otherwise.
Translating the financial statements of a foreign entity
Where the functional currency of Group entities is not the same as the reporting currency used to present the Group’s consolidated financial statements, the balance sheet is translated using the closing date exchange rate and the income statement is converted using the average exchange rate for the period. Exchange rates differences are posted directly as equity under “translation adjustments.”
Translation of transactions denominated in foreign currencies
Transactions denominated in foreign currencies (currencies other than the functional currency) are converted into the functional currency at the rate of exchange in force on the date of the transaction (for practical purposes, an average rate is used).
At each closing date, the entity must convert the foreign-currency items on its balance sheet into the functional currency, using the following procedures:
    monetary items (specifically bond investments, accounts receivable and payable, technical insurance assets and liabilities) are converted at the closing date exchange rate and the resulting gains and losses are recorded in the income statement,
    non-monetary items are converted:
  *   using the exchange rate on the transaction date if they are assessed at historical cost (particularly real estate investments) and,
  *   using the exchange rate at the date of the fair value assessment if they are assessed at fair value (particularly equity investments).
      When a gain or loss on a non-monetary item is recorded directly in shareholders’ equity (shares available for sale, for example), the exchange adjustment resulting from the conversion of this item is also directly recorded in shareholders’ equity. Conversely, when a gain or loss on a non-monetary item is recorded in profit and loss (shares

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SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
     
      at fair value by income; for example), the exchange adjustment resulting from the conversion of this item is also recorded on the income statement.
    The gains and losses resulting from the conversion of hedging on foreign net investments are recorded in shareholders’ equity until the withdrawal of the net investments, at which time they are recorded on the income statement.
Goodwill and business combinations
Goodwill represents the excess of an acquisition cost over the fair value of the Group’s share of the acquired company’s net assets at the date of acquisition. The goodwill on fully consolidated subsidiaries is included under intangible assets. Goodwill on companies accounted for by the equity method is included in the value of securities accounted for by the equity method.
Goodwill is recorded at historical cost, less any possible accumulated loss in value.
In order to establish possible losses in value, goodwill is allocated to each cash-generating unit (CGU). A CGU is defined as an entity with separate identifiable cash flows. Each CGU represents the Group’s investment in each country in which it is active according to the primary segment information, either non-life reinsurance or life reinsurance.
Each CGU to which goodwill is allocated should correspond as closely as possible to the level at which the group is monitoring the rate of return on its investment. A CGU should not be any larger than a primary or secondary level segment as defined for the needs of segment reporting set forth under IAS 14.
In order to assess any loss in value, a goodwill impairment test is conducted:
    each year on the same date for each cash-generating unit, but not necessarily on the closing date;
    more frequently if an unfavourable event occurs between the two annual tests;
    mandatorily before the completion of entity acquisition.
A loss in value is recorded where the net book value of the CGU, to which goodwill has been allocated, is higher than its recoverable value. The recoverable value is the highest amount between: (1) the fair value net of sales costs and (2) the value in use (future discounted cash flow) of this unit.
If the assets of the CGU Group or the unit included in the CGU group to which goodwill has been allocated are tested for impairment on the same date as the CGU that includes the goodwill (or if there is a loss in value index for one of the assets), this test should be conducted before the goodwill impairment test.
Accounting principles
The financial information has been prepared in accordance with the historical cost agreement, with the exception of certain categories of assets and liabilities. The relevant categories are mentioned in the following notes. The consolidated IFRS information is presented in euros and all values are rounded off to the nearest million unless otherwise indicated.
Use of estimates
In order to prepare the financial information in accordance with generally accepted accounting principles, certain assumptions were made. Assumptions are made that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the amounts reported as income and loss for the year.
Management reviews these estimates and assessments constantly, based on its past experience and on various other factors it deems reasonable, thereby reaching its assessments on the carrying value of the assets and liabilities. The actual results could differ substantially from these estimates under different assumptions or conditions that may arise at a later date.
Real estate assets
Classification of buildings:
All buildings currently held by the Group are investment properties. In certain cases, buildings may be partially occupied by entities of the Group.
Accounting method
The buildings are recorded at historical amortized cost. Their value is broken down as follows:
    land, not amortized;
    four technical components:
  *   structure, or carcass, depreciated over a term of 30 to 80 years according to the type of construction;
  *   wind and water tightness, depreciated over a period of 30 years;
  *   technical installations, depreciated over a term of 20 years;
  *   decor fixtures and improvements, depreciated over a term of 10 to 15 years according to type.

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SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
     
The costs, rights and acquisition (or development) fees are integrated in the value of the building.
The relative weight of each technical component and the length of depreciation are set according to a schedule of components showing eight types of construction. This schedule was prepared based on the Group’s own experience and on schedules prepared by professional authorities.
Appraisal
Each building is subject to an in-depth analysis of its market value or “fair value” by an independent appraiser every 5 years at year-end. Its market value is reassessed by the same appraiser at the end of each of the 4 subsequent years depending on the changes that have occurred to its rental status, works completed and developments in the local real estate market.
If the market value of a building appears lower than its net book value, a decrease in value is recorded as a loss equal to the difference between its utility value and the net book value. With regard to investment properties, their utility value is considered a long-term investment based primarily on the sum of estimated future cash flows that are discounted on the basis of current market assumptions. SCOR has not retained any residual value.
Finance lease
Investment properties financed by financial rental agreements are recorded on the balance sheet as assets based on the current value of rents and the option to buy. Once they have been recorded on the balance sheet, they are treated like other investment properties at amortized historic cost.
On the liabilities side, a corresponding debt is recorded under “financial liabilities.” It is amortized in accordance with the effective interest rate method.
Leasing agreements
In December 2003, the SCOR Group sold its headquarters building. A net capital gain of €44 million was realized under local standards.
The Group will remain a tenant of this building until December 2012. The owner of the building has a bank guarantee corresponding to SCOR’s rating. SCOR has pledged an asset amount of the same value with the bank that issued this guarantee.
In application of IAS 17, this capital gain was maintained in the IFRS accounts.
Rental income
Rental income from investment properties is recorded on a straight-line basis over the term of the current rental agreements.
Financial investments
The Group classifies its financial assets in the following categories: available-for-sale financial assets, fair market assets by income, loans and other accounts receivable and derivative instruments. There are currently no assets classified as assets held to maturity.
The sale and purchase of assets is entered in the accounts on the settlement date. Once it has been posted, an asset is assessed according to its asset category, determined according to the methods set forth below.
Financial assets are taken off the balance sheet when their contractual rights to the cash flow of the financial asset expire or are transferred, and when the Group has substantially transferred the risks and advantages inherent to ownership of the financial asset.
At each closing date, the Group assesses whether there is an objective indication of loss in value. The amount of the loss in value is posted in the accounts by asset category, in accordance with the terms and conditions set forth below.
For equity instruments listed on an active market, a drop in price of more than 20% or a consistent decline over a period of more than six months constitutes an objective indication of loss in value. For unlisted equity instruments, fair value is determined according to commonly used valuation techniques. For debt instruments and loans and accounts receivable, an objective indicator of a loss in value relates to a proven credit risk.
Available-for-sale financial assets
Available-for-sale assets include non-derivative assets that are classified as either available for sale or those that are allocated to any other category.
Available-for-sale financial assets are posted at their fair value. Unrealized profits and losses resulting from variations in the fair value of a non-hedged asset are recorded directly in shareholders’ equity, with the exception of profits and losses from foreign

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SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
     
exchange gains and losses on a monetary financial asset held for sale which are recorded on the income statement for the share of exchange profits and losses applied at amortized cost, and in shareholders’ equity for the portion of profits and losses related to fair value. Foreign exchange profits and losses on the fair value of non-monetary financial available-for-sale assetsare recorded under shareholders’ equity.
When there is an objective indication of loss in value, the amount of the accumulated loss posted directly to shareholders’ equity is recorded on the income statement. Losses in value may only be carried forward on debt instruments when the fair value increases during a subsequent financial year due to an event that occurs after the loss in value has been posted.
When the asset is sold, all the accumulated equity gains and losses are included in the capital gains and losses from the sale of investments on the income statement, less the amounts previously posted to income.
Interest on debt instruments is calculated in accordance with the interest method in effect, which integrates the amortization of premiums/discounts and is recorded on the income statement. Dividends on equity instruments are recorded on the income statement when the Group’s right to receive payment for them has been established.
Financial assets at fair value by income
This category includes two classes of assets: financial assets held for transactional purposes and those designated at fair value by income upon initial recognition in the accounts.
Profits and losses from changes in the fair value of financial assets classified under this category are reflected on the income statement in the period in which they occur.
The main financial assets evaluated at fair value by income are securities held in major mutual funds, bonds convertible into shares, derivatives, investments representing Unit-linked policies and certain shares.
Loans and accounts receivable
This category includes non-derivative financial assets where payment is fixed or fixable and which are not listed on an active market, with the exception of accounts receivable from reinsurance transactions.
These assets are recognized at amortized cost using the effective interest rate method where this method has a significant impact compared to the nominal contractual method. Loans and short-term accounts receivable are recorded at cost.
Cash and cash equivalents
The heading “Cash and cash equivalent” includes cash, negative bank balances and short term loans (cash mutual funds). This heading is defined in identical terms in French standards and in IFRS standards.
Treasury stocks
Treasury stocks are deducted from shareholders’ equity, regardless of the purpose for which they are held, and the related income or loss is eliminated from the consolidated income statement.
Financial liabilities
Financial liabilities, with the exception of liabilities resulting from reinsurance transactions, are classified into financial debts, financial liability instruments and other liabilities.
Subordinated financial debts or debt securities
These items combine the various subordinated or unsubordinated bonds issued by the Group.
These debts are posted at amortized cost using the effective interest rate method.
Borrowings that include a derivative instrument have been stripped. The portion that relates to the equity component, determined on the date of issue, is reflected in shareholders’ equity. It is not subsequently reassessed.
Interest on financial debts are posted under charges.
Financial debts owed to entities in the banking sector
This item combines mortgage loans and medium-term notes. These debts are recognized at amortized cost using the effective interest rate method where this method has a significant impact compared to the nominal contractual rate method.
Interest on financial debts are posted under charges.

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SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
     
Derivative and hedging instruments
Derivative instruments are recorded at fair value from inception and are assessed at fair value at each account closure.
The accounting method varies according to whether the derivative instrument is designated as a hedging instrument or not, as described in the note below “Hedging Instruments.”
When the Group has not designated the derivative as a hedging instrument, profits and losses resulting from the variation of the fair value of the instrument are recorded under income in the period in which they occur. The Group uses the following derivative instruments to reduce its exposure to various risks: interest rate swaps, futures and foreign currency forward contracts, caps and floors, stock option puts and calls.
Embedded derivative instruments
An embedded derivative is a component of a hybrid instrument which includes a non-derivative host contract, which causes part of the hybrid instrument’s cash flow to vary in the same way as that of a freestanding derivative.
The embedded derivative is separate from the host contract and is posted as a derivative where its economic features and risks are not closely linked to the economic features of the host contract, where the embedded instrument has the same conditions as a separate derivative instrument, and where the embedded instrument is not assessed at fair value through the income statement.
Where an embedded derivative has been separated from its host contract, it is posted in accordance with the provisions relating to the posting of derivative financial instruments.
Where the embedded derivative represents a significant part of the instrument and cannot be separated from the host contract, the hybrid instrument is treated as an instrument held for trading. Profits and losses resulting from variations in the fair value of the hybrid are posted in profit and loss in the period during which they occur.
Hedging Instruments
A hedging instrument is a designated derivative instrument or, in the case of a single foreign currency hedge, a designated non-derivative asset or liability where the fair value or cash flow offset variations in the fair value or cash flow of the hedged item.
The hedged item may be an asset, a liability, a firm underwriting, a highly profitable scheduled transaction or a net investment in a foreign business that exposes the Group to fair market valuation risk or future cash flow risk, and which is designated as being hedged.
The performance of hedges is monitored periodically in order to ensure, with regard to variations in the fair value or cash flow of the item, the degree of compensation attributable to hedged risk through variations in fair value or cash flow of the hedged instrument.
Hedges for net investments in a foreign business are recorded as follows:
    the portion of profit or loss on the hedging instrument considered as the effective portion of the hedge is recorded directly in shareholders’ equity;
    the ineffective portion of the hedge is recorded on the income statement.
The primary hedging instruments consist of forward foreign currency forward purchases and sales.
Accounting principles and methods specific to reinsurance transactions
Classification and accounting treatment of reinsurance treaties
The reinsurance treaties accepted and retroceded by the Group are subject to different IFRS accounting rules depending on whether they fall under IFRS4 or IAS39.
Reinsurance acceptance and retrocession transactions that involve a significant insurance risk transfer are posted in the accounts in accordance with IFRS4, in other words according to the accounting principles in existence prior to the implementation of IFRS standards and used until December 31, 2004 to prepare SCOR’s consolidated accounts in conformity with CRC 2000-05, with the exception of the equalization reserves described below.
Acceptance and retrocession transactions that do not transfer a significant risk are posted in the accounts in accordance with IAS39, which means that while premiums collected are no longer recognized as premium income, and technical reserves and deferred acquisition expenses that are recorded as assets or liabilities on the balance sheet are reclassified as financial assets or liabilities by assimilation to a deposit as “financial contract liabilities” and “financial contract assets” on the balance sheet. These deposits are assessed on the basis of financial flows alone and no longer on the basis of estimated maximum fluctuations as set forth in the accounting principles applicable to insurance transactions.

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SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
     
Premium income from these transactions is equal to the deductions made by SCOR. It is recorded under “other operating income” on the income statement.
French accounting principles applicable to contracts classified as “insurance” contracts under IFRS 4Accounting for ceding companies’ accounts
SCOR Group reinsurance companies record accounts transmitted by ceding companies upon receipt. At year end, estimates are made for those accounts not yet received from ceding companies. Under this method, the situation recorded in the financial statements reflects as closely as possible the real reinsurance commitments made by the Group. This method impacts the majority of contracts underwritten during the year, and even the prior year.
Recording of reinsurance estimates
Non-Life premiums recorded in the year reflect the estimated premium expected at the time of writing of the policy. It is regularly reviewed during the year to adjust for possible adjustment in premiums paid under the policy. An unearned premium reserve is calculated, either pro rata temporis contract by contract, or using a statistical method when this yields a result close to that obtained via the contract-by-contract method.
The difference between the maximum expected loss based on premiums, net of commissions, and losses reported by ceding companies, is recorded under accounts receivable or liabilities arising from accepted reinsurance transactions. The difference between expected final loss experience based on earned premiums thus calculated and losses reported by ceding companies is recognized in unpaid claims reserves under liabilities.
In Life reinsurance for so-called “insurance” policies, given the type of business written, valuations are obtained by estimating ceding companies’ missing accounts in addition to information actually received and booked. For the sake of consistency with the Non-Life sector, estimated claims are booked under claims reserves.
Claims reserve
Claims reserves must be sufficient to cover all of the Group’s liabilities.
In Non-life reinsurance, SCOR is required to maintain its reserves at a sufficient level to cover the estimated amount of its direct commitments and adjustment expenses for reported and unreported claims, at the end of each fiscal year (net of estimates of recovery and subrogation). These reserves, which pertain to all claims, whether reported or not yet reported, are calculated on the basis of their ultimate cost undiscounted, except for workers’ compensation claims in the United States, which are discounted in the U.S. and in the Bermudas. Claims expense is estimated at the policy’s expiration in the light of statistical experience of similar policies. Claims reserves including estimated claims paid and LAE are calculated in light of expected earnings and supplement the information communicated by assigning companies.
In Life reinsurance, estimates based on statistical experience and information supplied by the underwriters are added to mathematical reserves recorded by the ceding companies.
Acquisition costs of reinsurance transactions
In reinsurance, the costs associated with the acquisition of new contracts, chiefly comprising commissions, are recorded as assets on the balance sheet, to the extent that contracts are profitable. They are written down over the residual life of non-life contracts, at the same rate that estimated future margins are recorded on life insurance contracts.
 
 
Sufficiency test for liabilities
Liabilities relating to contracts are subjected each year to a sufficiency test (IFRS 4).
IFRS accounting principles applied to IFRS4 contracts and different from French GAAP
Equalization reserves
IFRS accounting principles do not provide for the possibility of establishing reserves for risks on future contracts. When such reserves do exist, they are eliminated from SCOR’s consolidated accounts under IFRS standards.
Shadow Accounting:
According to IFRS accounting principles (see note on financial investments), financial assets are valued at fair value. This means that recognized but unrealized capital gains or losses on portfolio securities are recorded in SCOR’s accounts, either in the income statement or as an increase or decrease to shareholders’ equity, depending on the asset classification.
SCOR has elected to apply shadow accounting under the terms of IFRS 4. Consequently, recognized but unrealized capital gains and losses on investments affect the valuation of technical assets and liabilities in the same way as realized gains and

Page 27 of 184


 

SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
     
losses. The corresponding adjustment to insurance liabilities (or deferred acquisition costs or intangible assets) is recorded in shareholders’ equity once the unrealized capital gains or losses are directly recorded in equity. Otherwise, it is recorded in the income statement according to the same scheme in use for realized capital gains and losses. The primary technical items affected by these adjustments are:
    deferred acquisition costs and contract portfolios, where amortization occurs according to the technical and financial profits from contracts (“shadow DAC” and “shadow VOBA”),
    technical reserves, where the discounted rate used depends directly on the performance of the assets (“shadow PM”).
Embedded derivatives
IFRS 4 provides for the separation of embedded derivatives in insurance contracts, particularly when these hybrid contracts are not assessed at fair value by income and when the features of the embedded derivatives are not closely linked with the features and risks of the host contract, and when the embedded derivative corresponds to the definition of a derivative instrument. Embedded derivatives corresponding to the definition of an insurance contract are not separated. SCOR has identified no embedded derivatives in its contracts.
Pension liabilities and similar benefits
Pension liabilities
The SCOR Group is involved in creating pensions for its staff, in accordance with the laws and practices of each country. Group staff in certain countries receives additional pension payments, paid as an annuity or in capital on retirement. The main countries concerned are France, the United States and Germany.
The benefits granted to Group employees are either in the form of defined contributions or defined benefit plans. Defined contribution plans are those where an employer pays fixed contributions into a separate entity, with no legal or constructive obligation to pay further contributions. As a result, only contributions paid or due as part of the financial year appear in the Group accounts. Defined benefit plans are those where a sum is paid to the employee upon retirement, which usually depends on one or several factors such as age, years of service and salary.
Obligations recognized on the balance sheet as defined benefit plans are recorded at the current value of the defined benefit obligation at the date of closure, less the market value of any plan assets, where appropriate, both having been adjusted by actuarial gains and losses and unacknowledged past services. The current value of the obligation is calculated annually by independent actuaries using the projected unit credit method. It is established by discounting the future expected benefits on the basis of Tier 1 bond market rates in the same currency as the benefits to be paid, and for a similar duration to the underlying obligation.
Actuarial gains and losses arising from adjustments linked to experience and the effects of changes in actuarial assumptions are reflected in shareholders’ equity.
Past service costs generated at the adoption or modification of a defined benefit plan are recognized as an expense on a straight-line basis, over the average period until the benefits become vested. When benefit rights are acquired upon the adoption of a plan or its modification, past service cost is immediately recognized as an expense.
Other long-term benefits
In some countries, the SCOR Group rewards employees for length of service by granting them a lump sum after certain periods of service. This occurs primarily in France, where the current value of the obligation is calculated annually by an independent actuary using the projected unit credit method. The obligation is recognized on the balance sheet.
Termination benefits
Employees are entitled to termination benefits when the Group makes one or more employees redundant, or encourages voluntary redundancies. The Group posts these payments into the accounts when it is demonstrably committed by means of a detailed formal plan for termination, which it could not realistically retract. Benefits payable more than twelve months after the closing date are discounted.
Share-based payment and share options
The SCOR Group grants its employees stock option plans. The fair value of the services received in exchange for the granting of options is recognized as an expense. The total amount that is recognized over the vesting period is established by reference to the fair value of options granted, excluding conditions of attribution that are not linked to market conditions. (ROE, for example). These conditions are taken into account when determining the probable number of options to be acquired by the beneficiaries. At each closing date, the company reviews the estimated number of options to be acquired. Any impact is then posted in the income statement against shareholders’ equity for the remaining vesting period.
The Group also allocated shares to all its employees in 2004 and 2005. This allocation is reflected by posting of personnel expenses against an increase in shareholder’s equity over the vesting period.

Page 28 of 184


 

SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
     
The dilutive effect of outstanding options is reflected in the calculation of the diluted earnings per share.
Taxes
Deferred tax assets and liabilities are recognized using the balance sheet liability method of tax allocation for all temporary differences on the closing date between the tax base of assets and liabilities and their carrying value on the balance sheet.
Deferred tax assets are recorded when temporary tax differences occur that are associated with investments in subsidiaries and affiliated companies, unless the date on which this temporary difference reverses is controllable and if it is probable that the temporary difference will be reversed in the foreseeable future.
Deferred tax on the restatement of capitalization reserves is recorded without including the probability of capital losses from asset disposals of securities subject to taxes from these reserves.
Deferred tax liabilities are not recorded in cases of temporary differences associated with investments in subsidiaries and affiliated companies unless it is probable that the temporary difference will be reversed in the foreseeable future and if it is likely that there will be a taxable profit to which the temporary difference can be imputed
The book value of deferred tax assets is reviewed at each closing date and reduced when it is no longer possible that a sufficient taxable benefit will be available to enable all or part of these deferred tax assets to be utilized.
Deferred tax assets and liabilities are assessed at the tax rate applicable in the fiscal year in which the asset will be sold or the liability settled, based on the tax rates (and tax regulations) that have been adopted or substantially adopted at the closing date.
Tax rates relating to items recorded directly as shareholders’ equity are recorded as equity and not in the income statement.
Principles for presentation of financial statements
Allocation of expenses by function
In conformity with the option offered by IAS 1, the Group opted to present its expenses by function on the income statement. This presentation provides information that is more relevant to readers than expenses by nature, but costs are allocated to different functions based on applied costs and are thus subject to decisions of judgment.
This method is identical to the method for presenting overhead expenses that was used for SCOR’s consolidated accounts under French GAAP. Operating expenses are divided into five categories: acquisition costs, claims settlement expenses, administrative expenses, investment portfolio management expenses, and other underwriting expenses. These expenses are allocated to the categories set out above, company by company.
Segment information
The Group’s business is divided into two distinct sectors: Non-Life insurance and Life insurance. Previously, SCOR’s segment information was divided into three areas: Non-Life Reinsurance, Life/Accident & Health and CRP. The legal structure has recognized these two areas since 2003. Each sector offers different products and services, which are marketed via separate channels. Given their specific nature, these sectors constitute the primary level of segment information.
Management has evaluated the performance of these segments and allocates resources to them in accordance with various performance indicators. The sum from inter-segment transactions, related to gross written premiums, is not significant.

Page 29 of 184


 

SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
     
Explanation of the transition to IFRS
Impact on the Group’s shareholders’ equity at 1/1/2004
The Group’s share of net shareholders’ equity at 1/1/2004 totaled €589 million under IFRS versus €619 million under French GAAP.
This change results primarily from:
    the net positive impact on investments, particularly the fair value adjustments to investment securities;
    the negative impact resulting from the application of “shadow accounting”, adjusting underwriting assets and liabilities to reflect the fair value of investment securities;
    the positive impact of canceling equalization reserves;
    the negative impact resulting from accounting for deferred taxes against the capitalization reserve;
    the negative impact of accounting for employee benefits under IAS 19;
    the negative impact resulting from the application of the component-based method used for real-estate assets;
    the positive impact of posting capital-based instrument component included in our OCEANE debt instrument.
               
           
 
Group’s share of shareholders’ equity at 1/1/2004 under French GAAP (millions of euros)
      619 *  
 
 
           
           
 
Net impact of asset revaluation reserve for available-for-sale assets under IAS 32 / 39
      65    
 
Net impact of “shadow accounting”
      (34 )  
 
Other net impacts of financial assets under IAS32 / 39 and SIC 12
      (24 )  
 
Impact of financial liabilities under IAS32 / 39
      4    
 
Net impact of equalization reserves under IFRS 4
      27    
 
Impact of deferred taxes on capitalization reserve
      (40 )  
 
Impact of employee benefits under IAS 19
      (21 )  
 
Net impact of investment property under IAS 40
      (2 )  
 
Other impacts
      (5 )  
 
 
           
           
 
Group share of shareholders’ equity at 1/1/2004 restated under IFRS
      589    
 
 
           
           
* before capital increase on 1/7/2004 for an amount net of expenses of 708 million.
In addition, as permitted under IFRS 1 (first-time adoption), SCOR chose not to restate the accumulated translation adjustments prior to January 1, 2004. Thus, in the event of a future disposal of a business or subsidiary, where the transactions are denominated in a currency different from the consolidation currency, the gains or losses from the disposal will not have an impact on the translation adjustments generated before January 1, 2004.
As a result of adopting this optional treatment, we reclassified €-86 million in the balance sheet on the transition date between translation adjustments and consolidated reserves, with no impact on shareholders’ equity at January 1, 2004. This restatement had no impact on IFRS income for 2004.
Reconciliations provide quantitative information on the significant adjustments arising from the conversion of the SCOR Group consolidated accounts into IFRS standards. These reconciliations were made on the transition date of January 1, 2004 and on December 31, 2004, and had the following impact:

Page 30 of 184


 

SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
     Impact on balance sheet at January 1, 2004
                                                             
 
Assets – in millions of EUR   French   IFRS   Note   Reclassified   Impact of   Note   IFRS   Denominated in IFRS
Denominated in French   GAAP   reclassifications       French   conversion       2003    
GAAP   2003               GAAP                
 
 
                            296                       254    
Intangible assets
Goodwill
    202                       202       -3       (1)       199     Goodwill
Intangible assets
    94                                                      
Contract portfolios
    79                       79       -39               40    
Value of business acquired
Others
    15                       15                       15    
Other intangible assets
 
                                                           
 
            13               13                       13    
Tangible assets
Investments
    7,360                       7,415                       7,701    
Insurance business investments
Land and buildings
    217       -2       (2)       215       93       (2)       308    
Real-estate investments
Investments in subsidiaries (a) or with
    35       -35 ü
ú
ú
ý
ú
ú
þ
 


(3)
                                       
Other investments
    7,108       -7,108                       ü
ú
ú
ý
ú
ú
þ
                 
 
            5,813           5,813       -475    
(3)
      5,338    
Investments available for sale
 
            56               56       699           755    
Investments at fair valueby income
 
            1,331               1,331       -71             1,260    
Loans and accounts receivable
 
                                    40             40    
Derivative instruments
 
                                                           
Equity method investments
    13                       13                       13    
Investments in affiliated companies
Share of assignees and retrocessionnaires in technical reserves
    1,157       -129       (4)       1,028                       1,028    
Share of retrocessionnaires in technical reserves and financial liabilities
 
                            3,224                       3,157     Other assets
 
            255 ü
ú
ý
ú
þ
    (5)       255       25       (5)       280    
Deferred tax assets
Insurance or reinsurance receivables
    772       921     (4)       1,693       18       (4)       1,711    
Receivables resulting from reinsurance accepted
 
            308               308                       308    
Receivables resulting from or reinsurance operations
Receivables from companies in the banking sector
    1,824       -1,824       (6)                                      
 
                                                         
Taxes receivable
Other receivables
    620       -136               484       -108               376    
Other receivables
Other assets
    13                                                      
Tangible assets
    13       -13                                              
Accruals
    1,848                                                      
Deferred acquisition costs
    484                       484       -2               482    
Deferred acquisition costs
Others
    1,364       -1,364       (7)                                     Others
 
            1,826       (6)       1,826       10               1,836    
Cash and cash equivalents
 
TOTAL ASSETS
    13,903       -88               13,815       187               14,002     TOTAL ASSETS
 
 
     
(a)   or with which an equity interest relationship exists

Page 31 of 184


 

SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
                                                             
 
Liabilities – in millions of   French   IFRS   NOTE   Reclassfied   Impact of   Note   IFRS   Denominated in IFRS
EUR   GAAP   reclassifications       French   conversion       2003    
Denominated in French   2003               GAAP                    
GAAP                                
 
Group shareholders’ equity
    619                       619                       589    
Group shareholders’ equity
Share capital
    136                       136       1               137    
Share capital
 
            1               1       14               15    
Additional paid-in capital
Consolidate reserves
    797       -1               796       -77       (11)       719    
Consolidated reserves
Consolidated result
    -314                       -314                       -314    
Consolidated result
 
                                    31               31    
Asset revaluation reserve
 
                                    1       (12)       1    
Payments Based on Shares
Minority interests
    172                       172       -172       (9)            
Minority interests
 
                            791                       589    
Total shareholders’ equity
 
                            836                       1,199    
Financial debt
Subordinated liabilities
    230                       230       -3       (8)       227    
Subordinated debt
 
            509       (8)       509       264       (8)       773    
Financial debt securities
 
            97       (8)       97       102       (8)       199    
Financial debt to entities in the banking sector
Gross technical reserves
    10,923       48       (4)       10,971       -78       (4)       10,893    
Policy-linked liabilities
Contingency reserves
    26       -6               20       31       (10)       51    
Contingency reserves
 
                            1,197                       1,270    
Other liabilities
 
            35       (5)       35       67       (5)       102    
Deferred tax liabilities
 
                                    6       (3)       6    
Derivative instruments liabilities
Insurance or reinsurance accounts payable
    343       336               679                       679    
Accepted insurance and reinsurance accounts payable
 
            279               279                       279    
Retrocession accounts payable
Liabilities represented by securities
    509       -509       (8)                                      
Liabilities to companies in the banking sector
    97       -97       (8)                                      
 
                                                          Taxes payable
Other liabilities
    738       -534               204                       204     Other liabilities
Accruals
    246       -246                                              
 
TOTAL LIABILITIES
    13,903       -88               13,815       187               14,002     TOTAL LIABILITIES
 

Page 32 of 184


 

SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
Impact on balance sheet at December 31, 2004
                                                             
 
Assets – in millions of EUR   French   IFRS reclassify-   Note   Reclassified   Impact of   Note   IFRS   Denominated in IFRS
Denominated in French GAAP   GAAP   cations       French   conversion       2004    
    2004           GAAP                
 
 
                            226                       215     Intangible assets
Goodwill
    177                       177       23       (1)       200     Goodwill
Intangible assets
    49                                                      
Contract portfolios
    37                       37       -34               3    
Life reinsurance portfolio
Others
    12                       12                       12    
Other intangible assets
 
            10               10                       10    
Tangible assets
Investments
    7,985                       8,093                       8,211    
Insurance business investments
Land and buildings
    228       -2       (2)       226       93       (2)       319    
Real-estate investments
Investments in subsidiaries (a) or with
    36       -36 ü
ú
ú
ú
ý
ú
ú
ú
þ
    (3)                                      
Other investments
    7,721       -7,721                                          
 
            6,352           6,352       -811 ü
ú
ú
ý
ú
ú
þ
    (3)       5,541    
Investments available for sale
 
            9           9       772           781    
Investments at fair value by income
 
            1,506           1,506       35           1,541    
Loans and accounts receivable
 
                                    29           29    
Derivative instruments
Equity method investments
                                    21               21    
Investments in affiliated companies
Share of assignees and retrocessionnaires in technical reserves
    908       -28       (4)       880       -2       (4)       878    
Share of retrocessionnaires in technical reserves and financial liabilities
 
                            2,429                       2,314     Other assets
 
            235 ü
ú
ý
ú
þ
    (5)
(4)
      235       -9       (5)       226    
Deferred tax assets
Insurance or reinsurance receivables
    443       850           1,293       -92       (4)       1,201    
Receivables resulting from reinsurance accepted
 
            106           106                       106    
Retrocession accounts receivable in reinsurance
Receivables from companies in the banking sector
    1,798       -1,798       (6)                                      
 
                                                          Taxes receivable
Other receivables
    482       -205               277       -6               271    
Other receivables
Other assets
    10                                                      
Tangible assets
    10       -10                                              
Accruals
    1,598                                                      
Deferred acquisition costs
    518                       518       -8               510    
Deferred acquisition costs
Others
    1,080       -1,080       (7)                                      
 
            1,799       (6)       1,799       27               1,826    
Cash and cash equivalents
 
TOTAL ASSETS
    13,450       -13               13,437       38               13,475     TOTAL ASSETS
 
 
(a)   or with which an equity interest relationship exists

Page 33 of 184


 

SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
                                                             
 
Liabilities – in millions of EUR   French   IFRS   Note   Reclassified   Impact of   Note   IFRS   Denominated in IRFS
Denominated in French GAAP   GAAP   reclassif-       French   conversion       2004    
    2004   cations       GAAP                
 
Group shareholders’ equity
    1,324                       1,324                       1,335    
Group shareholders’ equity
Share capital
    645                       645                       645    
Share capital
 
            11               11       44               55    
Additional paid-in capital
Consolidate reserves
    610       -11               599       -89       (11)       510    
Consolidated reserves
Consolidated result
    69                       69       6               75    
Consolidated result
 
                                    43               43    
Asset revaluation reserve
 
                                    7       (12)       7    
Payments Based on Shares
Minority interests
    183                       183       -183       (9)            
Minority interests
 
                            1,507                       1,335    
Total shareholders’ equity
 
                            1,083                       1,342     Financial debt
Subordinated liabilities
    225                       225       -3       (8)       222     Subordinated debt
 
            769       (8)       769       165       (8)       934    
Financial debt securities
 
            89       (8)       89       97       (8)       186    
Financial debt to entities in the banking sector
Gross technical reserves
    9,938       18       (4)       9,956       -58       (4)       9,898    
Policy-linked liabilities
 
                                                    9,742    
Technical reserves linked to insurance contracts
 
                                                    156    
Liabilities associated with financial contracts
Contingency reserves
    39       -4               35       23       (10)       58     Contingency reserves
 
                            856                       842     Other liabilities
 
            25       (5)       25       45       (5)       70    
Deferred tax liabilities
 
                                    3       (3)       3    
Derivative instruments liabilities
Insurance or reinsurance accounts payable
    227       -46               181                       181    
Accepted insurance and reinsurance accounts payable
 
            474               474       -62               412    
Retrocession accounts payable
Liabilities represented by securities
    769       -769       (8)                                      
Liabilities to companies in the banking sector
    89       -89       (8)                                      
 
                                                          Taxes payable
Other liabilities
    604       -428               176                       176     Other liabilities
Accruals
    53       -53                                              
 
TOTAL LIABILITIES
    13,450       -13               13,437       38               13,475     TOTAL LIABILITIES
 
Corrections have been made to the balance sheet under IFRS standards as at December 31, 2004 by comparison with the versions published in the quarterly financial reports for the 2005 financial period. The impact of these corrections on the net position as at December 31, 2004 is €9 million.

Page 34 of 184


 

SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
Impact on net income at December 31, 2004
                                                             
 
Statement of income – in millions of EUR           IFRS           Reclassified   Impact            
Denominated in French GAAP           reclassifi           French   of       IFRS   Denominated in
            -cations   Note   GAAP   conversion   Note   2004   IFRS
 
Gross premiums written
    2,528                       2,528                       2,561    
Gross premiums written
Net premiums written
    2,417                                                      
Change in unearned premiums
    94                       156                       167    
Change in unearned premiums
Net premiums earned
    2,511       173       (4)       2,684       44       (4)       2,728    
Gross premiums earned
 
            8               8       -1               7    
Other revenues from operations
Net financial revenues
    217       119       (13)       336       10       (3)       346    
Investment revenues
Total revenues from current operations
    2,728                       3,028                       3,081    
Total revenues from ordinary activities
Claims expenses
    -1,802       -62
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ú
ý
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ú
þ
   
(4)
      -1,864       -107
ü
ý
þ
    (4)       -1,971    
Expenses relating to contract benefits
Management expenses
    -820       149           -671       59           -612    
Gross commission on earned premiums
 
            -100           -100       -4               -104    
Net income (loss) from reinsurance operations
 
            -31           -31                       -31    
Financial management expenses
 
            -98               -98                       -98    
Acquisitions and operational expenses
 
            -62               -62       -4               -66    
Other current operational expenses
 
                                                         
Other revenues from current operations
Total current operational expenses
    -2,622                       -2,825                       -2,882    
Total other current revenues and expenses
NET INCOME/LOSS FROM CURRENT OPERATIONS
    107                       203       -4               199    
INCOME/LOSS FROM CURRENT OPERATIONS
Goodwill amortization expense
    -19                       -19       19       (1)            
Change in value of goodwill
Other net revenues
    49       -49                                            
Other operational expenses
 
                                                         
Other revenues from operations
 
                            185                       199     INCOME (LOSS) FROM OPERATIONS
 
            -48       (8)       -48       -30       (8)       -78     Financing expenses
Share of net income – Equity method investments
                                                         
Share in results of associated companies
Income tax
    -44                       -44       -2               -46     Income tax
NET INCOME (LOSS) OF CONSOLIDATED ENTITY
    93                       93                       75    
NET INCOME (LOSS) OF CONSOLIDATED ENTITY
Minority interests
    -24                       -24       24       (9)             Minority interests
GROUP NET INCOME (LOSS)
    69                       69       6               75    
GROUP NET INCOME (LOSS)
 

Page 35 of 184


 

SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS

Note 1 Business Combinations
As authorized under IFRS 3, SCOR elected not to restate business combinations carried out prior to January 1, 2004. As permitted by IFRS 1, SCOR will not apply IAS 21 “Effects of changes in foreign exchange rates” to goodwill from prior acquisitions arising from business combinations before the IFRS transition date. Consequently, this goodwill is maintained in the functional currency of the acquiring company.
Pursuant to IFRS 3, goodwill will no longer be amortized as of January 1, 2004.
Note 2 Property
Restatements arising from implementation of the components-based amortized cost method will have little impact on the consolidated statements.
Under French GAAP, SCOR did not use the preferential method which allows finance lease transactions to be reported on the balance sheet. Under IFRS, this generates an increase in investment properties and a corresponding increase in financial liabilities. This restatement had no impact on IFRS income.
Note 3 Financial Investments
Business combinations under French GAAP are not identical to IFRS standards where investments are classified according to categories: financial assets available for sale, assets at fair value by income, loans and other accounts receivable and derivatives (see Note on Accounting Standards) which are associated with accrued interest and classified as adjustment accounts under French GAAP.
A large portion of financial investments are recorded on the balance sheet at their market value. This revaluation, net of deferred taxes is accounted for according to the classification of securities, either against shareholders’ equity or income. (See Note on Financial Investments.) Pursuant to IAS 39, derivatives are recorded on the balance sheet at their fair value. Losses and gains arising from changes in market value on the closing date of derivatives not designated as hedging instruments are reported under income. Associated with the consolidation of mutual funds and ad hoc entities that are comprised primarily of financial assets and liabilities that fall under IAS 32 and 39, the primary effect of these restatements is an increase in the value of investments and financial liabilities.
Note 4 – Reporting of reinsurance transactions
In conformity with IFRS 4 (See “Principles and methods relating to reinsurance operations”) which requires that all contracts be classified as either “financial” contracts or “insurance” contracts, presentations have been reclassified to reflect these new classifications. In addition, profits from retrocessions must be presented separately under IFRS, representing a major change over previous presentations.
The share of retrocessionnaires in the technical reserves includes the reinsurance loss estimates, and the other reinsurance estimates (premiums, commissions) are classified as accounts receivable resulting from reinsurance transactions net of reserves for depreciation.
IFRS accounting policies do not provide for the possibility of setting aside reserves for future risks under forward contracts. Thus when such reserves exist, they are eliminated from SCOR’s consolidated accounts under IFRS.
SCOR has also opted to use the option offered by IFRS 4 to adopt shadow accounting. This method consists of adjusting underwriting assets and liabilities to take account of capital gains and losses on investments accounted for under IFRS but unrealized. These restatements are not allowed under French GAAP.
Note 5 Deferred Taxes
Under IFRS, deferred taxes are presented on a specific line on the balance sheet.
Under French GAAP, CRC Regulation 2000-05 provides exceptions to the application of the general principles of deferred taxes when the capitalization reserve is cancelled except in cases where there is a strong likelihood that
there will be a loss on the sale of securities included in the capitalization reserve. IFRS standards do not provide for such an exception. Thus, deferred taxes generated from the restatement of capitalization reserves are reported without taking into account the probability of losses on the sale of securities included in this reserve.
Note 6 Accounts Receivable from Companies in the Banking Sector
Accounts receivable from businesses in the banking sector and accrued interest are accounted for as cash and equivalents.
Note 7 Adjustment Accounts
Other adjustment accounts are associated with primary accounts, as indicated below with regard to accrued interest payable on investments and reinsurance estimates.
Note 8 Financial Liabilities
Financial liabilities include all debt securities and loans from banking sector companies.
The debenture loans convertible into shares (OCEANEs) issued by SCOR in 1999 and 2004 are financial instruments that include several components, according to IAS 32, including a liability and equity component (See “Accounting principles and methods relating to financial liabilities”).
The restatements linked to the OCEANE bonds results in a higher financing expense on the IFRS income statement.
Financial liabilities will also be impacted by the consolidation of the Horizon structure on the opening balance sheet for 2004, on finance leases and on leasing commitments. See also Note 2 and 9.
Note 9 Commitments to Repurchase Minority Interests
SCOR extended to the shareholders of its fully consolidated subsidiaries commitments to repurchase their minority interest. Under French GAAP, these commitments to repurchase minority investments are reported as off-balance sheet items. Where appropriate, reserves were made for the anticipated loss on the repurchase value.
Under IFRS, the following accounting treatment has been temporarily adopted in accordance with current IFRS standards:
when posted on the balance sheet for the first time, the commitment to repurchase the minority interest is recognized as a financial liability at the discounted value of the exercise price agreed upon for the repurchase commitment, offset against minority interests;
future changes in the commitment value is recognized as “Financing Expenses”.
The change in the value of the commitment is accounted for as “Financing Expenses” in the 2004 IFRS income statement, offset against minority interests.
Note 10 Pensions and Post-Retirement Obligations
The method for measuring pension commitments and post-retirement obligations, under the rules specified in IAS 19 (employee benefits), resulted in an increase in its contingency and related reserves.

Note 11 Translation Adjustment
Under IFRS 1 (first-time adoption of IFRS) a company may elect not to recognize accumulated translation adjustments prior to January 1, 2004. As a result, in the event of a future disposal of a business or subsidiary, where the transactions are denominated in a currency different from the consolidation currency, the gains or loss from the disposal will not have an impact on the translation adjustments generated before January 1, 2004.
As a result of adopting this optional treatment a translation adjustment reclassification appears on the balance sheet on the transition date.
Note 12 Share-based payments
Application of IFRS 2 results in a change in the accounting method for stock option plans (options for subscriptions or purchases of stocks awarded by SCOR to its employees and the employees of its subsidiaries) and the awarding of free shares to employees. SCOR elected to adopt the early application of this standard in 2004. Only plans announced after November 7, 2002 where rights will be


Page 36 of 184


 

SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS

acquired on January 1, 2004 are included on the balance sheet.
Under IFRS 2, benefits granted to employees through the granting of stock options (value of the option on the grant date) and shares (share value on the grant date) are accounted for as additional compensation. This additional compensation is recognized as personnel expenses, spread out over the term of the acquisition of the benefits granted.
The fair value of these options determined on their respective grant dates represents deferred compensation, with no impact on the shareholders’ equity of the transition balance sheet on January 1, 2004. Accounting for this deferred compensation is spread over the vesting period, but not on a straight-line basis, given the vesting terms, which vary according to the characteristics of the benefit granted.
This is a non-cash expense and is offset against consolidated reserves. Consequently, the application of this standard had no net impact on the shareholders’ equity on January 1 and December 31, 2004.
Note 13 Financial Income net of Expenses
Under French GAAP “Financial Income Net of Expenses” corresponds to financial income from business activities. Financial income from non-technical activities corresponds to “Other Net Income.”
Under IFRS “Financial Income Net of Expenses” includes financial income (technical and non-technical) except:
(I) financing charges classified in a specific IFRS line item
(II) financial management expenses classified in a specific IFRS line item
(III) and other operating income


Primary impact on cash flow
In the SCOR Group balance sheet, the definition of cash flow is identical under French and IFRS standards. (Cash and cash equivalents). At January 1 and December 31, 2004, cash flow under IFRS stood at € 1,836 million and €1,826 million respectively. The impact from the passage to IFRS on the opening cash flow of €12 million at January 1, 2004 and €27 million at December 31, 2004 are primarily due to the consolidation of mutual funds.
Restatements have no major impact on cash flow statement

Page 37 of 184


 

SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
ANALYSIS OF MAIN BALANCE SHEET ITEMS
Note 1 Intangible assets
                                 
In millions of EUR                    
            Value of business        
At January 1, 2004   Goodwill   acquired   Others   Total
 
Gross value
    383       125       17       525  
Amortization
            45       3       48  
Depreciation
    184                       184  
 
Shadow accounting
            39               39  
 
Net book value
    199       41       14       254  
 
 
                               
At December 31, 2004
                               
Net book value on opening
    199       41       14       254  
Exchange rate variation
    1       -3       -1       -3  
Increases
                    0       0  
Change in consolidation scope
                               
Amortization for the period
            37       1       38  
Depreciation from the period
                               
Shadow accounting
            2       -1       1  
 
Net book value at closing
    200       3       12       215  
 
 
                               
At December 31, 2004
                               
Gross value
    381       116       14       511  
Amortization
            79       2       81  
Depreciation
    181                       181  
 
Shadow accounting
            34               34  
 
Net book value
    200       3       12       215  
 
 
                               
At December 31, 2005
                               
Net book value on opening
    200       3       12       215  
Exchange rate variation
            0       1       1  
Increases
                    0       0  
Change in consolidation scope
                               
Amortization for the period
            4               4  
Depreciation from the period
            13               13  
Shadow accounting (1)
            -31               -31  
 
Net book value at closing
    200       17       13       230  
 
 
                               
At December 31, 2005
                               
Gross value
    390       73       15       478  
Amortization
            48       2       50  
Depreciation
    190                       190  
Shadow accounting
            8               8  
 
Net book value
    200       17       13       230  
 
(1)   After disposal of a portfolio of EUR 61 million.
Goodwill represents the excess of the cost of acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired company on the date of acquisition.
In accordance with the accounting principles presented in the section “Goodwill and business alliances,” the main assumptions used in the impairment tests to calculate the useful value are as follows:

Page 38 of 184


 

SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
  -   Determination of the discounted value of income over the period 2006-2008(1),
 
  -   Determination of standardized profits used to calculate terminal value. In the case of SCOR US, the normative income used is based on the 2006-2008 subscription plan and a schedule of losses,
 
  -   2% growth rate for all non-Life insurance companies and 1% for SCOR US,
 
  -   Cash flow approach after income tax except for SCOR US (use of current tax losses through the consumption of DTAs),
 
  -   Cost of capital assets: 10% for all non- Life companies.
Life Insurance Companies: the value of SCOR VIE and SCOR Life Re Insurance Company is calculated on the basis of the revalued net worth of the portfolio (external valuation study of the embedded value).
IRP activities were discontinued on December 31, 2004. The goodwill at December 31, 2003 cannot be verified according to the DCF method and must therefore be depreciated by 100% (€2.6 million) offset against the net worth at opening.
During 2004 and 2005, no loss in value was recorded for the various CGUs, except the goodwill recorded upon the repurchase of minority interest from IRP Holdings Limited and fully depreciated at December 31, 2005.
The main goodwill items concern the following entities:
                         
 
  In millions of EUR       Gross value         Net value    
 
SCOR US
      188         116    
 
SCOR Italia
      99         17    
 
SCOR (SOREMA SA)
      35         29    
 
CRP
      24            
 
The acquisition value of the Life-Reinsurance portfolios appears on the balance sheet as €17 million and corresponds to the valuation of the life insurance portfolio of SCOR Life U.S. Re Insurance Company. This acquisition value is amortized in line with recognition of future contract margins.
Other intangible assets essentially represent the insurance licenses held by SCOR U.S.
 
(1)   The discount rate is a rate before taxes, which reflects current market assessments of the time value of the money and the specific risks of the assets for which the estimates of future cash flows have not been adjusted.

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SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
Note 2 Investment property
The changes in the net book value of investment properties are as follows:
In millions of EUR
                                 
    Real estate           Financing    
At December 31, 2003   investment           contract   Total
 
Gross value
    278               106       384  
Amortization, depreciation
    -71               -5       -76  
 
Net book value
    207               101       308  
 
 
                               
Exchange rate variation
                               
Increase
    24         a)             24  
Decrease
                               
Change in consolidation scope
                               
Amortization for the period
    -9               -4       -13  
Depreciation from the period
    1                       1  
Others
    -1                       -1  
 
Net book value at closing
    222               97       319  
 
 
                               
 
Fair value at December 31, 2004
    275               105       380  
 
 
                               
At December 31, 2004
                               
Gross value
    301               106       407  
Amortization, depreciation
    -79               -9       -88  
 
Net book value
    222               97       319  
 
 
                               
Exchange rate variation
    1                       1  
Increase
    12         b)             12  
Decrease
    -13         c)             -13  
Change in consolidation scope
                               
Amortization for the period
    1               -4       -2  
Depreciation from the period
                               
Others
    1                       1  
 
Net book value at closing
    224               93       317  
 
 
                               
At December 31, 2005
                               
Gross value
    300               106       407  
Amortization, depreciation
    -77               -13       -90  
 
Net book value
    224               93       317  
 
 
Fair value at December 31, 2005
    275               109       384  
 
 
(a)   purchase of a building in Trappes for 24 million
 
(b)   purchase of a building in La Plagne for 12 million
 
(c)   disposal of a building in Velizy with gross value of 13 million and net value of €7 million

Page 40 of 184


 

SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
All the properties held by the SCOR Group are considered investment property. They consist of:
  a)   office or housing buildings which the Group owns and leases. The minimum rents planned are presented in Note 17.
 
  b)   office buildings and warehouses capitalized under finance lease contracts. The minimum rents planned are presented in Note 17.
Note 3 Financial assets
The breakdown of financial assets is as follows, by classification and by type:
                                 
             
in millions of EUR   2005     2004  
    Net book           Net book        
    value     Fair value       value   Fair value      
             
Real-estate investments
    317       384       319       380  
             
Bonds
    5,233       5,233       5,290       5,290  
             
Equities
    730       730       251       251  
             
AFS
    5,963       5,963       5,541       5,541  
             
Equities
    229       229       196       196  
             
Bonds
    166       166       585       585  
             
Fair value by income
    395       395       781       781  
             
Loans and deposits
    94       94       119       119  
             
Receivables for deposited cash
    1,278       1,278       1,422       1,422  
             
Loans and receivables
    1,372       1,372       1,541       1,541  
             
Derivative instruments – fair value by income
    35       35       29       29  
             
Insurance business investments
    8,082       8,148       8,211       8,272  
 
                               
Derivative instruments - hedging (liabilities)
    (6 )     (6 )     (3 )     (3 )
             
 
                               
Cash and cash equivalents
    1,667       1,667       1,826       1,826  
 
             
Unlisted securities stood at €64 million at the end of 2005 and €72 million in 2004.
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SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
The change in net book value of AFS and fair value by income securities is as follows:
         
in millions of EUR        
Gross value
    6,127  
Depreciation
    (34 )
 
Net book value at 01/01/2004
    6,093  
 
 
       
Exchange rate variation
    (353 )
Increases / Decommissioning, Disposals, Acquisitions
    531  
Change in consolidation scope
       
Change in fair value by income and shareholders’ equity
    55  
Depreciation
    (4 )
Others
       
 
Net book value at 12/31/2004
    6,322  
 
 
       
Gross value
    6,359  
Depreciation
    (38 )
 
Net book value at 12/31/2004
    6,322  
 
 
       
Exchange rate variation
    522  
Increases / Decommissioning, Disposals, Acquisitions
    (542 )
Change in consolidation scope
       
Disposals (sales and reimbursements)
       
Change in fair value by income and shareholders’ equity
    40  
Depreciation
    16  
Others
       
 
Net book value at 12/31/2005
    6,358  
 
 
       
Gross value
    6,380  
Depreciation
    (22 )
 
Net book value at 12/31/2005
    6,358  
 
As at December 31, 2003, the net book value under French GAAP for AFS and JVR investments was respectively €5,813 million and €56 million.
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SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
Note 4 Loans and accounts receivable
The breakdown of loans and accounts receivable is as follows:
                 
in millions of EUR   2005     2004  
Loans greater than one year
    67       70  
Deposits
    28       18  
Receivables for cash deposited with ceding companies
    1,278       1,457  
Depreciation
    -1       -4  
 
Loans and accounts receivable
    1,372       1,541  
 
Loans and accounts receivable consist essentially of cash deposits made at the request of ceding companies as cover for our commitments (underwriting reserves).
Note 5 Derivatives
Derivatives consist primarily of options indexed on the S&P 500 for which the fair value amounts to €33.8 million and the forward currency contracts shown in the following table:
                                             
                     
        Forward sales       Forward purchases    
  In million EUR     Nominal       Fair Value       Nominal       Fair Value    
                             
 
TOTAL
      414         412         266         266    
                             
Note 6 Investments in affiliated companies
The Group holds investments in affiliated companies. The following table provides a summary of the financial information for these companies expressed at local standards.
                                             
in millions of EUR  
    COUNTRY   Total assets     Total liabilities     Premium     Net income     Percentage  
                excluding     Income     at 100%     held  
                shareholders’                    
Equity method companies             equity                    
 
ASEFA
  Spain     355       337       110       3       40 %
Mutre
  France     234       219       120               33 %
SCOR Gestion Financière
  France     5                               100 %
SCORLUX
  Luxembourg     7       1                       100 %
Euroscor
  Luxembourg     4       1                       100 %
 
2004 Total (1)
                                           
 
ASEFA
  Spain     522       499       137       7       40 %
Mutre
  France     352       336       112               33 %
SCOR Gestion Financière
  France     5                               100 %
SCORLUX
  Luxembourg     6                               100 %
Euroscor
  Luxembourg     4       1                       100 %
 
 
                                           
Total 2005(2)
                                           
 
(1)   Data based on 2003 accounts except EUROSCOR which is based on 2002 accounts
 
(2)   Data based on 2004 accounts except EUROSCOR which is based on 2003 accounts
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SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
Note 7 Accounts receivable and debts on ceding and retroceding companies
                                                 
in millions of EUR   2005     2004  
    LIFE     Non Life     Total     LIFE     Non Life     Total  
                 
Gross debtor companies
    134       295       429       66       285       351  
Depreciation
    -2       -15       -17       -2       -13       -16  
Reinsurance technical valuations
    418       497       915       445       420       866  
                 
Accepted insurance and reinsurance accounts receivable     550       776       1,326       509       692       1,201  
                 
Retrocession debtor companies
    2       227       229       22       84       106  
                 
Retrocession accounts receivable
    2       227       229       22       84       106  
                 
                                                 
in millions of EUR   2005     2004  
    LIFE     Non Life     Total     LIFE     Non Life     Total  
                 
Creditor companies — acceptance
    -63       -75       -138       -77       -104       -181  
                 
Accepted insurance and reinsurance accounts payable     -63       -75       -138       -77       -104       -181  
                 
Liabilities for cash deposits
    -263       -88       -351       -283       -105       -387  
Retrocession creditor companies
    -5       -211       -216       -16       -31       -46  
Technical retrocession valuations
    -51       -27       -78       -46       67       22  
                 
Retrocession accounts payable
    -320       -325       -645       -344       -68       -412  
                 
Recoverable accounts receivable and due debt regarding ceding and retroceding companies are mostly due at less than one year.
The reinsurance technical valuations include ceding company accounts not yet received and reinsurance estimates (See Note on “Accounting Principles”).
Note 8 Deferred acquisition costs
                                                 
             
In millions of EUR           2005                     2004        
    Life     Non Life     Total     Life     Non Life     Total  
Gross value at 01/01
    577       126       703       508       119       627  
Accumulated amortization and loss in value
    -193               -193       -145               -145  
             
Net value at 01/01
    385       126       511       363       119       482  
             
Capitalization of new contracts for the period
    70       135       205       104       126       230  
             
Change in consolidation scope and contract portfolio exchanges                                                
Amortization for the period     -68       -131       -199       -79       -116       -195  
             
Capitalized interest
    17               17       14               14  
Losses in value recognized during the period                                                
Amortization and losses in value     -10               -10       -9               -9  
Exchange rate variation
    30       5       35       -8       -3       -11  
Other changes
    -6               -6                          
             
Gross value at December 31
    633       135       768       577       126       703  
             
Accumulated amortization and losses in value
    -215               -215       -193               -193  
             
Net value at December 31/12
    418       135       553       385       126       511  
             
Note 9 Cash and cash equivalent
                 
in millions of EUR   2005     2004  
                 
Cash on hand
    857       697  
Short-term loans
    810       1,129  
 
           
 
    1,667       1,826  
 
           
Bank overdrafts stood at €13.5 million in 2005 (€0.70 million in 2004).
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SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
Cash and cash equivalent earn yields based on the posted daily deposit interest rates. Short term loans do not exceed periods of three months. They earn the rates posted for short term deposits. The fair value of cash and cash equivalents stood at €1,667 million and €1,826 million for 2005 and 2004 respectively.
The blocked bank accounts concern primarily SCOR SA for an amount of €155 million as at December 31, 2005.
At December 31, 2005 credit facilities were granted to the Group from various banks. The unused credit facilities at December 31, 2005 stood at €199 million (€44 million in 2004).
Note 10 Information on share capital and consolidated reserves
During the year, share capital and additional paid-in capital increased respectively by €117,760,736 and €105,910,795, through the creation of 149,500,000 shares of €1.56 each, bringing share capital to €763,096,714.
The number of shares in circulation was as follows:
                 
   
    2005     2004  
 
               
 
Beginning of Year
    819,269,070       136,544,845  
 
               
Share capital Increase on January 7, 2004
            682,724,225  
 
               
Share capital Increase on June 30, 2005 at a price of €1.56 per share
    149,500,000          
 
               
End of Year
    968,769,070       819,269,070  
 
               
 
The number of treasury stock held by the company or its affiliates stood at 9,110,915 shares for the year 2005 (9,298,085 for the year 2004).
These shares are not entitled to dividends.
The shares acquired at December 31, 2005 through stock-option plans granted to employees totaled 20,712,100 shares.
At December 31, 2005, the Group had one (OCEANE) convertible bond issue; it also had another convertible bond issue at December 31, 2004 that was fully redeemed in 2005; the respective breakdown of shares is as follows:
                 
   
    2005     2004  
 
               
 
 
               
1999 convertible bond issue of €58 each
            4,025,000  
 
               
2004 convertible bond issue of €2 each
    100,000,000       100,000,000  
 
               
At year end
    100,000,000       104,025,000  
 
The asset revaluation reserves are used to account for the changes in fair value of the available-for-sale financial assets adjusted to reflect the effects of (“shadow accounting”), if any.
The Translation Adjustments line item records the differences between the exchange rates resulting from the conversion of foreign currencies on the financial statements of foreign subsidiaries. This account is also used to record the impact of any hedges made for net investments outside France.
The item entitled “Share-based payments” is used to offset the cost of services received for the granting of shares, stock options or for employee stock purchase plans.
A breakdown of the various reserves is provided in the Table of Changes in Shareholders’ Equity.
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SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
Note 11 Liabilities relating to policies
                                                                 
             
  in millions of EUR     LIFE       Non Life       Total    
        2005       2004       2005       2004       2005       2004    
                                         
 
Mathematical reserve
      2,063         2,045         -2                   2,061         2,045    
 
Unearned premiums reserves
      57         14         637         557         693         571    
 
Claims reserves
      1,387         1,441         5,544         5,684         6,931         7,126    
 
Reserves relating to financial contracts
      108         96         55         61         163         156    
                                         
 
Liabilities relating to contracts (gross reserves)
      3,615         3,596         6,234         6,302         9,849         9,898    
                                         
 
Ceded mathematical reserves
      -311         -286                             -311         -286    
 
Ceded unearned premiums reserves
      -4         -4         -24         -36         -29         -40    
 
Ceded claims reserves
      -85         -60         -558         -481         -643         -541    
 
Reserves relating to financial contracts
                -11                                       -11    
                                         
  Share of retrocessionnaires in technical reserves and financial liabilities       -401         -361         -582         -517         -983         -878    
                                         
 
TOTAL NET TECHNICAL RESERVES
      3,214         3,235         5,652         5,785         8,866         9,020    
                                         
Underwriting reserves are subject to estimate. Payments linked to these reserves are not usually fixed, either by amount or by due date. A projection of the settlement timings, founded on past experience and our own judgment, leads to the following estimated timetable:
- non-life underwriting reserves: settlement of about 30% of reserves in less than one year, 25% within 2 to 3 years, 20% within 4 to 5 years and 25% beyond that.
- Life Underwriting reserves: settlement of about 25% of reserves within one year, 10% within 2 to 3 years, 10% within 4 to 5 years and 55% beyond that.
The projected settlements can differ in a significant manner from future payments. Differences which may be noted in relation to these projections are normal. However estimates for claims reserve as at December 31, 2005 do not take into account the effect of settlements bearing on future business.
The breakdown of claims reserve is as follows:
                                                                 
             
  in millions of EUR     LIFE       Non Life       Total    
        2005       2004       2005       2004       2005       2004    
 
“Property and Casualty” claims reserves
      869         884         5,508         5,666         6,377         6,550    
 
“Property and Casualty” claims estimates
      0         0         35         18         35         18    
 
“Provident” claims reserves
      691         673                             691         673    
 
“Provident” claims estimates
      -173         -115                             -173         -115    
                                         
 
Claims reserves (gross reserves)
      1,387         1,442         5,544         5,684         6,931         7,126    
                                         
 
“Property and Casualty” claims reserves
      -10         -27         -545         -509         -554         -536    
 
“Property and Casualty” claims estimates
      -12         12         -13         28         -25         40    
 
“Provident” claims reserves
      -64         -45                             -64         -45    
 
“Provident” claims estimates
                                                             
                                         
 
Share of retrocessionnaires in claims reserves
      -85         -60         -558         -481         -643         -541    
                                         
 
TOTAL NET CLAIMS RESERVES
      1,302         1,382         4,986         5,203         6,288         6,585    
                                         
Page 46 of 184

 


 

SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
The change in reserves for “Property & Casualty” claims is as follows:
                         
             
  In millions of EUR     2005       2004    
                 
 
Gross claims reserve at January 1
      6,550         7,454    
 
Reinsurers share in reserves for outstanding claims at January 1
      -536         -691    
                 
 
Net claims reserve at January 1
      6,014         6,763    
                 
 
Claims expense for current financial period
      1,585         1,525    
 
Bonuses/losses from previous periods
      -334         -419    
                 
 
Total claims expense
      1,251         1,106    
                 
 
Payment for claims for current period
      -753         -429    
 
Payment for claims for previous periods
      -896         -1,309    
                 
 
Total payments
      -1,649         -1,738    
                 
 
Exchange rate variations
      208         -118    
                 
 
Net reserves for outstanding claims at December 31
      5,824         6,014    
                 
 
Including reinsurers’ share
      -554         -536    
                 
The change in mathematical reserves was as follows:
                         
             
  In millions of EUR     2005       2004    
                 
 
Gross technical reserves at January 1
      2,045         2,035    
                 
 
Net premiums
      472         380    
 
Claims expense
      -699         -267    
 
Technical result and other
      -10         10    
 
Change in shadow accounting
      1         2    
 
Impact of foreign exchange
      255         -115    
                 
 
Gross technical reserves at December 31
      2,063         2,045    
                 
 
                 
 
Share of reinsurers in gross technical reserves at January 1
      286         353    
                 
 
Net premiums
      24         19    
 
Claims expense
      -43         -48    
 
Technical result and other
      1         -13    
 
Impact of foreign exchange
      42         -25    
                 
 
Share of reinsurers in gross technical reserves at December 31
      311         286    
                 
Page 47 of 184

 


 

SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
Note 12 Financing liabilities
                                 
In millions of EUR   2005     2004  
    Net book     Fair Value     Net book     Fair Value  
    value           value        
            (EUR, in millions)          
Subordinated debt
    233       233       222       222  
Subordinated loans
                               
Loans of USD 100 million nominal
    84       84       73       73  
Loans of €100 million nominal
    99       99       99       99  
Non-amortizable loans of €50 million nominal
    50       50       50       50  
Liabilities represented by securities
    520       576       934       1,015  
Bond borrowings
                               
OCEANE borrowings
                    227       265  
OCEANE 2 borrowings
    194       250       186       230  
Senior Loans
    208       208       208       208  
Horizon Loan
    83       83       94       94  
Medium-term notes
    35       35       35       35  
IRP minority interests
                    183       183  
Liabilities to companies in the banking sector
    201       201       186       186  
Financing contract
    93       93       97       97  
Other financial liabilities
    108       108       89       89  
     
TOTAL
    954       1,010       1,342       1,424  
     
OCEANE Bonds
On May 6, 1999, the Board of Directors decided, and the Mixed General Meeting of Shareholders authorized, the issuance of a loan materialized by OCEANE bonds. Issued on June 28, 1999, the total nominal amount was €233.45 million, represented by 4,025,000 OCEANE bonds with a nominal value of €58 each. The bonds carry an interest rate of 1% payable each year on January 1. The loan had a term of 5 years and 187 days.
The gross actuarial yield was 3.12% on the date of payment. Amortization was as follows:
  -   Normal amortization: the bonds were required to be fully amortized by January 1, 2005 at a price of €65.28
  -   Early amortization: either through repurchasing on the market, over the counter, or through a public offering as from January 1, 2003 under certain conditions.
At any time since June 28, 1999, bondholders may request the conversion and/or exchange of these bonds at a rate, since December 31, 2002, of 1.714 shares per bond. The Company may provide new shares to be issued and/or existing shares at its discretion.
This bond had been fully repaid by January 2005.
On June 21, 2004, the Board of Directors decided to issue a loan materialized by SCOR OCEANE bonds, with the authorization of the Combined General Meeting of Shareholders on May 18, 2004, delegating its chairman with the authority required to carry out such transactions. Issued on July 2, 2004, following the decisions of the CEO on June 23 and 24, 2004, the nominal amount of this loan was set at €200 million, represented by 100 million OCEANE bonds with a nominal value of €2. The bonds carry an interest rate of 4.125% payable on January 1 of each year. The loan has a term of 5 years and 183 days.
The gross actuarial yield is 4.125% on the date of payment. Amortization is as follows:
Normal amortization: the bonds will be fully amortized on January 1, 2010 at the price of €2 per bond.
Early amortization: by purchase on or off the stock market or public offer and under other conditions detailed in the offering circular approved by the AMF under No. 04-627 on June 24, 2004.
At any time since July 2, 2004 and until the seventh day preceding the normal or early redemption date, bondholders may request conversion or exchange of the bonds for shares until the amortization date at the rate of one share for one bond. The Company may provide new shares to be issued and/or existing shares at its discretion.
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SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
Subordinated debt and Senior characteristics:
Issue during 1999:
- €50 million in Perpetual Step-Up subordinated notes issued on March 23, 1999. These notes are callable after 15 years, and at 5-yearly intervals thereafter, at SCOR’s discretion. The floating-rate notes will bear interest indexed on the 6-month Euribor plus (i) 0.75% for the first fifteen years of the issue, and (ii) 1.75% thereafter.
- 30-year subordinated bonds for USD 100 million issued on June 7, 1999, callable at SCOR’s discretion each quarter as from the tenth year. These floating-rate bonds will bear interest indexed on the 3-month Libor rate plus (i) 0.80% for the first ten years of the issue, and (ii) 1.80% thereafter.
Issue during 2000:
- the Company issued on July 6, 2000 €100 million in 20-year subordinated bonds, callable at SCOR’s discretion each quarter as from the tenth year following their issuance. These floating-rate bonds bear interest indexed on the 3-month Euribor plus (i) 1.15% for the first ten years, and (ii) 2.15% thereafter.
Issue during 2002:
- SCOR issued €200 million in 5-year unsubordinated notes on June 19, 2002, listed on the Luxembourg Stock Exchange. The notes pay 5.25% fixed-rate interest plus an additional 2.50% payment by decision of the Meeting of note holders on December 20, 2002. This additional payment will be reduced to 1.50% if the rating of these notes is raised to A+ or equivalent by Standard and Poor’s, Fitch or AM Best. It will be reduced to zero if the rating is raised to AA- or equivalent.
Horizon Loan
A debenture loan issued in 2002 whose reimbursement depends on the variations of an index.
Note 13 Contingency reserves
                                 
In millions of EUR   Reserves for     Reserves     Other     Total  
    employee benefits     for taxes     reserves          
    post-retirement                          
At January 1 2004
    44               1       46  
Acquisition of a subsidiary
    18       1       8       27  
Allowances for the fiscal year
                               
Use
    -2                       -2  
Amounts not used taken back
    -3                       -3  
Variation in exchange rate
                               
Adjustment of the discount rate Others
    -10                       -10  
 
At December 31, 2004
    48       1       9       58  
 
Current 2004
    8       1       8       17  
Non current 2004
    40               1       41  
 
 
    48       1       9       58  
 
                               
At January 1, 2005
    48       1       9       58  
Acquisition of a subsidiary
                               
Allowances for the fiscal year
                    13       13  
Use
                               
Amounts not used taken back
                    2       2  
Variation in exchange rate
                               
Adjustment of the discount rate
    -8                       -8  
Others
                               
 
At December 31, 2005
    40       1       20       61  
 
Current 2004
                    13       13  
Non current 2004
    40       1       7       48  
 
 
    40       1       20       61  
The other reserves reflected in 2005 primarily include:
an estimate of the future cost of benefits to employees granted during their professional life (long service medals, etc.) a provision for employment safeguard plans (See highlights).
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SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
Note 14 Provision for employee benefits
                                 
   
    Pension commitments  
            including the             including the  
In millions of EUR   2005     United States:     2004     United States:  
 
 
                               
Projected commitments on opening
    -57       -30       -67       -29  
Standard cost
    -2       -1       -5       -1  
Interest on the commitment
    -3       -2       -4       -2  
Benefit paid
    1       1       1       1  
Actuarial gains (losses)
    -2       0       10       -1  
Settlement
    0       0       4       0  
Plan changes
    0       0       0       0  
Exchange rate variation
    -5       -4       2       2  
 
                               
 
Projected commitments at closing
    -67       -36       -57       -30  
 
 
                               
Market value of appropriated assets, at opening
    22       16       17       15  
Actual yield from assets
    1       1       1       1  
Employer contributions
    4       4       4       2  
Benefits paid
    -1       -1       -1       0  
Exchange rate variation
    2       2       -3       -1  
 
                               
 
Market value of appropriated assets, at closing
    27       21       18       16  
 
 
                               
 
Net commitment
    -40       -15       -39       -14  
 
 
                               
Actuarial (gains)/losses not recognized
    0       9       -10       1  
Cost of prior service not recognized
    0       0       0       0  
 
                               
 
Cost of benefits (to be funded)/paid in advance
    -40       -6       -48       -12  
 
Statement of products and losses recognized for period
                 
In millions of EUR   2005     2004  
 
               
Assets available for sale (AFS)
    -85       15  
Hedging
    40       -1  
“Shadow accounting” gross of deferred tax
    40       -1  
Effect of changes in the conversion rates
    97       -62  
Actuarial spreads not recognized in income
            10  
Due or deferred tax taken directly or transferred to capital
    4       -12  
Sher-based payment
    5       6  
Other changes
    -7       6  
 
Net revenue recognized in stockholders’ equity
    54       -38  
 
Consolidated net result for the period
    131       75  
 
Total products and losses recognized for period
    185       37  
 
Attributable to:
               
 
Stockholders in the parent company
    185       38  
 
Minority interests
    -       -  
 
The suppositions used for calculating the reserves for benefits to employees are described in the paragraph “Rules for the use of estimates.”
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SCOR GROUP   CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
Note 15 Deferred taxes
Deferred tax revenue and expenses at December 31 included the following items:
                                 
in millions of EUR   Balance Sheet   Income Statement
    12/31/2005     12/31/2004     12/31/2005     12/31/2004  
 
Deferred tax liabilities
                               
Deferred acquisition costs
    -76       -84       9       2  
Unrealized revaluations and temporary differences on investments
    -57       -49       -1       1  
Equalization reserves
    -11       -12       1       2  
Goodwill valuation
    -5       -5       0       0  
Financial instruments
    0       -1       0          
Capitalization reserve
    -44       -42       -2       -2  
Temporary differences and others
    -54       -59       -7       -15  
 
                 
Total deferred tax liabilities
    -247       -253                  
                 
 
                               
Deferred tax receivables
                               
Unrealized revaluations and temporary differences on investments
    33       29       -17       0  
Retirement plan
    9       8       1       -1  
Deferred losses
    600       553       -37       2  
Financial instruments
    1       1       0       0  
Claims reserves
    0       2       -2       0  
Shadow accounting
    6       19       0          
Elimination of internal capital gains
    -2       12       -15       4  
Temporary differences and others
    -2       16       23       13  
 
                               
                 
Total deferred tax receivables
    645       641                  
                 
Depreciation
    -256       -233       29       -8  
                 
Receivable (payable) net of deferred tax
    142       155                  
     
Income (loss) related to deferred taxes
                    -18       -2  
                     
A reconciliation of the corporate income tax, obtained by applying the French tax rate of 34.43% for 2005 and 34.93% for 2004 to pre-tax income (losses), minority interest and gains (losses) associated with using the equity method are presented in the table below.
                 
in millions of EUR   2005     2004  
 
Net income before tax
    185       121  
 
               
Theoretical tax expense
    -64       -42  
 
               
Non-taxable net income
    -21       -12  
 
               
Tax losses – non-activated
    -9       -16  
 
               
Net activation of deferrable tax losses from prior years
    4          
 
               
Reversals of deferred tax writedowns
    38       12  
 
               
Changes in tax rates
    -1       -8  
 
               
Different tax rates
    4       13  
 
               
Non taxable revenue and non deductible expenses
    -6       15  
 
               
Change in consolidation scope