20-F
Table of Contents

As filed with the Securities and Exchange Commission on June 29, 2006


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
             
o
  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
       
    OR        
x
  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2005
       
    OR        
o
  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from           to
Commission file number: 001-14518
       
SCOR
(Exact name of registrant as specified in its charter)
     
N/A   The Republic of France
     
(Translation of registrant’s name into English)   (Jurisdiction of incorporation or organization)
 
1, Avenue du Général de Gaulle, 92800 Puteaux, France
(Address of principal executive offices)
 
Securities registered or to be registered pursuant to Section 12(b) of the Act:
     
Title of each class   Name of each exchange on which registered
     
American Depositary Shares (as evidenced
by American Depositary Receipts), each
representing one Ordinary Share
  New York Stock Exchange, Inc.
 
Ordinary Shares, no par value *   New York Stock Exchange, Inc.
Listed, not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.
 
Securities registered or to be registered pursuant to Section 12(g) of the Act:
NONE
 
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
NONE
 
Indicate the number of outstanding shares of each of the issuer’s class of capital or common stock as of the close of the period covered by the annual report:
  968,769,070 Ordinary Shares, including 25,340,999 American Depositary Shares (as evidenced by American Depositary Receipts), each representing one Ordinary Share.  
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
x  Yes      o   No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
o  Yes      x   No
  Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligation under those Sections.  
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
x  Yes      o   No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one)
x  Large accelerated filer      o  Accelerated filer      o   Non-accelerated filer
Indicate by check mark which financial statement item the registrant has elected to follow.
o  ITEM 17      x   ITEM 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o  Yes      x   No



Table of Contents

CAUTIONARY STATEMENT WITH RESPECT TO FORWARD-LOOKING STATEMENTS
The information contained in this Annual Report, as well as oral statements that may be made by SCOR or by its officers, directors or employees acting on behalf of SCOR related to such information contain statements that constitute “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, specifically Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, are forward-looking statements including, without limitation, statements relating to:
  the implementation of the “SCOR Moving Forward” plan described under “Item 4. – Information on the Company”;
 
  the implementation of strategic initiatives, including the update of information systems;
 
  changes in premium revenues;
 
  changes in the balance of lines and classes of business;
 
  the development of revenues overall and within specific business areas;
 
  the development of expenses;
 
  the direction of insurance and reinsurance rates and the demand for reinsurance products and services;
 
  the market risks associated with interest and exchange rates and equity markets; and
 
  other statements relating to SCOR’s future business development and economic performance.
The words “anticipate”, “believe”, “expect”, “estimate”, “intend”, “plan”, “may”, “will”, “should” and similar expressions identify certain of these forward-looking statements although the absence of such words does not necessarily mean that a statement is not forward-looking. Readers are cautioned not to place undue reliance on forward-looking statements because actual events and results may differ materially from the results implied or expected by such forward-looking statements.
Many factors may influence SCOR’s actual results and cause them to differ materially from the implied or expected results as described in such forward-looking statements, including, without limitation:
  cyclical trends in the insurance and reinsurance sectors;
 
  the outcome of U.S. legal proceedings after the conclusion of all appeals and the allocation of liability, amount of damages and amount of indemnification ultimately allocated to SCOR and its affiliates related to the World Trade Center litigation at the conclusion of such proceedings;
 
  the frequency and severity of insured loss events, including natural and man made catastrophes, terrorist attacks and environmental and asbestos claims, as well as mortality and morbidity levels and trends and persistency levels;
 
  the underwriting results of primary insurers and the accuracy and overall quality of information provided to SCOR by primary insurance companies with which SCOR transacts business, particularly regarding their reserve levels;
 
  the availability of and terms under which SCOR is able to enter into retrocessional arrangements;
 
  the ability of reinsurers and members of pools in which SCOR participates to meet their obligations;
 
  increasing levels of competition in France, Europe, North America and other international reinsurance markets;
 
  interest rate levels;
 
  the performance of global debt and equity markets;
 
  ratings downgrades;

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  SCOR’s financial strength;
 
  SCOR’s ability to meet its liquidity requirements;
 
  currency exchange rates, including the euro – U.S. dollar exchange rate;
 
  economic trends in general;
 
  changes in laws, regulations and case law;
 
  political, regulatory and industry initiatives;
 
  the run-off of certain of its U.S. business lines, including CRP and SCOR U.S.;
 
  the value of SCOR’s intangible assets;
 
  the ability of SCOR to improve its internal control over financial reporting and resolve material weaknesses in its internal control over financial reporting;
 
  the impact of operational risks, including human or systems failures;
 
  the risks identified in “Item 3.D – Risk Factors” of this Annual Report on Form 20-F filed with the U.S. Securities Exchange Commission (the “SEC”) and SCOR’s other filings with, or documents furnished to, the SEC; and
 
  other matters not yet known to SCOR or not currently considered material by SCOR.
All forward-looking statements attributable to SCOR, or persons acting on its behalf, are qualified in their entirety by these cautionary statements. SCOR disclaims any intention or obligation to update and revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless it is required by law. See “Item 3.D. – Risk Factors” for certain risks that may affect the Group’s results.
In this Annual Report on Form 20-F, the term the “Company” refers to SCOR and the terms “SCOR”, the “Group”, the “SCOR Group”, “we”, “us” and “our” refer to the Company together with its consolidated subsidiaries.
As used herein, references to “EUR” or “” are to euro and references to “dollars”, “USD” or “$” are to U.S. dollars. For your convenience, this Annual Report contains translations of certain euro amounts into dollar amounts at the rate of USD 1.18 per EUR 1.00, the noon buying rate in New York for cable transfers in euro as certified for customs purposes by the Federal Reserve Bank of New York (the “Noon Buying Rate”) on December 31, 2005, the date of SCOR’s most recent balance sheet included in this Annual Report. You should not assume, however, that euros could have been exchanged into dollars at any particular rate or at all. See “Item 3.A. – Selected Financial Data” for certain historical information regarding the Noon Buying Rate.

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Table of Contents
             
        Page
         
 PART I     5  
   Identity of Directors, Senior Management and Advisers     5  
   Offer Statistics and Expected Timetable     5  
   Key Information     5  
   Information on the Company     19  
   Unresolved Staff Comments     49  
   Operating and Financial Review and Prospects     49  
   Directors, Senior Management and Employees     74  
   Major Shareholders and Related Party Transactions     108  
   Financial Information     116  
   The Offer and Listing     121  
   Additional Information     127  
   Quantitative and Qualitative Disclosures About Market Risk     144  
   Description of Securities Other than Equity Securities     146  
 PART II     147  
   Defaults, Dividend Arrearages and Delinquencies     147  
   Material Modifications to the Rights of Security Holders and Use of Proceeds     147  
   Controls and Procedures     147  
   A.   Audit Committee Financial Expert     157  
   B.   Code of Ethics     158  
   C.   Principal Accountant Fees and Services     158  
   D.   Exemptions From The Listings Standards for Audit Committees     159  
   E.   Purchases Of Equity Securities by the Issuer and Affiliated Purchasers     159  
 PART III     164  
   Financial Statements     164  
   Financial Statements     164  
   Exhibits     164  
 EX-1.1
 EX-4.5
 EX-4.6
 EX-4.7
 EX-8
 EX-12.1
 EX-12.2
 EX-13.1
 EX-13.2
 EX-15

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PART I
Item 1. Identity of Directors, Senior Management and Advisers
Not applicable.
Item 2. Offer Statistics and Expected Timetable
Not applicable.
Item 3. Key Information
A. SELECTED FINANCIAL DATA
Currency Translations And Exchange Rates:
The following table sets forth, for the periods indicated, information with respect to the high, low, average and end of period Noon Buying Rates, expressed in U.S. dollars per euro.
                                   
            Average   End of
Year Ended December 31,   High   Low   Rate(1)   Period(2)
                 
2001
    0.95       0.83       0.89       0.89  
2002
    1.05       0.86       0.95       1.04  
2003
    1.26       1.04       1.14       1.26  
2004
    1.36       1.18       1.25       1.35  
2005
    1.35       1.17       1.24       1.18  
2006 (through June 23)
    1.30       1.19       1.23       1.25  
 
January 2006
    1.23       1.20       1.21       1.22  
 
February 2006
    1.21       1.19       1.19       1.19  
 
March 2006
    1.22       1.19       1.20       1.21  
 
April 2006
    1.26       1.21       1.23       1.26  
 
May 2006
    1.29       1.26       1.28       1.28  
 
June 2006 (through June 23, 2006)
    1.30       1.25       1.27       1.25  
 
(1) The average of the Noon Buying Rates on the last business day of each month during the relevant period.
 
(2) The end of period Noon Buying Rate is the Noon Buying Rate on the last business day of the relevant period.
The Noon Buying Rate on June 23, 2006 was USD 1.25 per EUR 1.00.
SCOR prepares and publishes its financial statements in euros. Because a significant part of the Group’s revenues and expenses, as well as its assets and liabilities, are denominated in dollars and other currencies, fluctuations in the exchange rates used to translate these currencies into euros may have a significant impact on SCOR’s reported results of operations and net equity from year to year. Fluctuations in the exchange rate between the euro and the dollar will also affect the dollar amounts received by holders of American Depositary Shares, or ADSs, on conversion by the Depositary of dividends paid in euro on the Ordinary Shares underlying the ADSs and may affect the dollar trading prices of the ADSs on the New York Stock Exchange. See “Item 3.D. Risk Factors – We are exposed to the risk on foreign exchange rates” and “Item 3.D. Risk Factors – The trading price of SCOR’s ADSs and dividends paid on SCOR’s ADSs may be materially adversely affected by fluctuations in the exchange rate for converting euros into U.S. dollars.” See also “Item 5.A. Operating Results – Exchange Rate Fluctuations” for information regarding the effects of currency fluctuations on the Group’s results and “Item 11. Quantitative and Qualitative Disclosures About Market Risk.”

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Selected U.S. GAAP Consolidated Financial Data
The following selected consolidated financial data are derived from the consolidated financial statements of SCOR.
The consolidated financial data of SCOR presented below have been prepared in accordance with U.S. Generally Accepted Accounting Principles, or U.S. GAAP. SCOR also publishes consolidated financial statements, not included herein, prepared in accordance with International Financial Reporting Standards as adopted by the European Union, or IFRS-EU, which differ in certain respects from U.S. GAAP.
The euro amounts presented in the table below as at and for the year ended December 31, 2005 have been translated into dollars solely for your convenience at the Noon Buying Rate of USD 1.18 per EUR 1.00 on December 31, 2005, the date of SCOR’s most recent balance sheet included in this Annual Report. These translations should not be construed as representations that the euro amounts could actually have been converted into dollars at these rates or at all.
The selected consolidated financial data should be read in conjunction with “Item 3.D. Risk Factors”, “Item 5. Operating and Financial Review and Prospects” and SCOR’s consolidated financial statements and related notes and other financial information included elsewhere in this Annual Report.

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SELECTED U.S. GAAP CONSOLIDATED FINANCIAL DATA
                                                 
    As of and for the years ended December 31,
     
    2001   2002   2003   2004   2005   2005
                         
                        (Translated)
                        (unaudited)
    (EUR)   (EUR)   (EUR)   (EUR)   (EUR)   (USD)
    (millions, except share and per share amounts)
Income statement
                                               
Operating revenues
    4,000       4,520       3,650       2,509       2,387       2,823  
Total revenues
    4,010       4,562       3,767       2,551       2,486       2,940  
Income (loss) before cumulative effect of change in accounting
    (434 )     (493 )     (512 )     243       165       195  
Cumulative effect of change in accounting principles, net of income taxes(1),(2)
    42                   4              
Net income (loss)
    (392 )     (493 )     (512 )     247       165       195  
Net income (loss) per Ordinary Share, basic
    (11.54 )     (13.03 )     (3.76 )     0.31       0.18       0.21  
Net income (loss) per Ordinary Share, diluted
    (11.54 )     (13.03 )     (3.76 )     0.30       0.17       0.20  
Balance sheet data (as at end of year)
                                               
Total assets
    16,917       16,002       13,605       13,400       13,829       16,354  
Shareholders’ equity
    1,267       1,078       356       1,211       1,702       2,013  
Convertible debentures, long-term debt and capital leases
    510       902       1,039       961       955       1,129  
Dividend declared per Ordinary Share
    0.30                         0.03       0.04  
Number of Ordinary Shares, in thousands
    41,244       136,545       136,545       819,269       968,769        
 
(1) A change in accounting principles due to the discount of reserves occurred in 2001. The effect of the change in 2001 was to increase the Property Casualty net income by EUR 62 million before tax and EUR 41 million after tax. If the accounting change was never made, the impact in 2002, 2003, 2004 and 2005 would have been to increase Property Casualty net income by EUR 17 million before tax and EUR 11 million after tax, EUR 3 million before tax and EUR 2 million after tax, EUR 12 million before tax and EUR 8 million after tax, and EUR 9 million before tax and EUR 6 million after tax, respectively.
 
(2) In 2004, the Group adopted Statement of Position, “Accounting and Reporting by Insurance Enterprise for Certain Non-Traditional Long-Duration Contracts and for Separate Accounts”. See Note 3.9 to the consolidated financial statements included in “Item 18. Financial Statements”.
B. CAPITALIZATION AND INDEBTEDNESS
Not applicable.
C. REASONS FOR THE OFFER AND USE OF PROCEEDS
Not applicable.
D. RISK FACTORS
You should carefully consider the risks described below in conjunction with the other information and the consolidated financial statements of SCOR and the related notes thereto included elsewhere in this Annual Report before making an investment decision with respect to the Ordinary Shares or ADSs.
The insurance and reinsurance sectors are cyclical, which may impact our results.
The insurance and reinsurance sectors, particularly in the Non Life area are cyclical. Historically, reinsurers have experienced significant fluctuations in operating results due to volatile and sometimes unpredictable developments, many of which are beyond the direct control of the reinsurer, including, notably, competition, frequency or severity of catastrophic events, levels of capacity and general economic conditions. Demand for reinsurance is influenced significantly by underwriting results of primary insurers and prevailing general

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economic conditions. The supply of reinsurance is related to prevailing prices, the levels of insured losses, levels of sector surplus and utilization of underwriting capacity that, in turn, may fluctuate in response to changes in rates of return on investments being earned in the insurance and reinsurance industries. As the performance of financial markets and reinsurers improves and reinsurance capacity increases, however, ceding companies are more inclined to ask for price reductions in the most profitable lines of business and underwriting quality tends to decline. At the same time, claims may be higher when economic conditions are unfavorable, particularly for products that provide reinsurance coverage for a risk that is related to the financial condition of the company that is being insured. As a result, the reinsurance business has been cyclical historically, characterized by periods of intense price competition due to significant underwriting capacity and periods when shortages of underwriting capacity permit favorable premium levels.
We may therefore experience the effects of such cyclicality and there can be no assurances that changes in premium rates, the frequency and severity of catastrophes or other loss events or other factors affecting the insurance or reinsurance industries will not have a material effect on our revenues, net income, results of operations and financial condition in future periods.
We are exposed to losses from catastrophic events.
Like all reinsurers, our operating results and financial condition have in the past been, and can be expected in the future to be, adversely affected by natural and man-made catastrophes, which may give rise to claims under the Property-Casualty and Life reinsurance coverage we provide. Catastrophes can be caused by a variety of events, including hurricanes, windstorms, earthquakes, hail, severe winter weather conditions, fires and explosions.
In 2004 and 2005, SCOR, like most other reinsurers, although to a lesser degree because of its underwriting policy, was affected by the unusually high frequency of natural catastrophes, particularly the major hurricanes in the United States, Mexico and the Caribbean in 2004 and 2005 and numerous typhoons in Japan in 2004. The Group’s most significant exposure to natural catastrophes mainly relates to earthquake risks, particularly in Japan, Taiwan, Canada, Portugal, Israel, Chile, Italy and Turkey, and storms and other weather-related phenomena in Europe, Asia and, to a lesser extent, in the United States.
The frequency and severity of such events, particularly natural catastrophes, are by their nature unpredictable. The inherent unpredictability of these events makes forecasts and risk evaluations uncertain for any given year. As a result, our claims experience may vary significantly from one year to another, which can have a large impact on our profitability and financial situation. In addition, depending on the frequency and nature of the losses, the speed with which claims are made and the terms of the policies affected, we may be required to make large claims payments. We may be forced to fund these obligations by liquidating investments in unfavorable market conditions, or raising funds at unfavorable costs. These factors could have a significant impact on our financial condition.
We have managed our exposure to catastrophic losses through selective underwriting practices, particularly by limiting our exposure to certain events which are now frequent in the Gulf of Mexico, by monitoring risk accumulations on a geographic basis, and by retroceding a portion of those risks to other reinsurers (retrocessionaires) selectively chosen based on their solid financial solvency margin. There can be no assurance, however, that these underwriting practices, including the management of risks on a geographical basis, or retrocessions, will be sufficient to protect us against material catastrophic losses, or that retrocession will continue to be available in the future at commercially reasonable rates. Although we attempt to limit our exposure to acceptable levels, it is possible that multiple catastrophic events could have a material adverse effect on our assets, results of operations and financial position. To obtain a better understanding of our possible exposure, we strengthened the modeling of our exposure to natural catastrophes by adopting the Eqecat model in 2005.
We may be subject to losses due to our exposure to risks related to terrorist acts.
In the context of our business, we may be exposed to claims arising from the consequences of terrorist acts. These risks, the potential significance of which can be illustrated by the September 11, 2001 attack in the United States, can affect both individuals and property. The September 11, 2001 attack on the World Trade Center (WTC) initially resulted in the Group establishing reserves as a reinsurer on the basis that such attack was one single

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occurrence and not two occurrences under the terms of the applicable insurance coverage issued to the lessors of the WTC and others. On December 6, 2004, a jury determined that the attack on the WTC made SCOR’s ceding company liable for two distinct occurrences on the basis of the policy wording it had issued. However, the jury verdict did not determine the amount of indemnification due from the insurers. A separate court-supervised appraisal procedure is underway in order to determine the amount of indemnification due by the insurers resulting from the destruction of the WTC towers. Pending the final determination of the appraisal process, which is expected in late 2006 or early 2007, the Group felt that it would be prudent to increase its reserves based on the replacement value estimated by the experts appointed by insurers including our ceding company. The gross amount of reserves was accordingly increased from USD 355 million as of December 31, 2003 to USD 422 million as of December 31, 2004, and net of retrocession from USD 167.5 million to USD 193.5 million. Those amounts did not change significantly in 2005. The jury verdict that the attack on the WTC constituted two occurrences and not one single occurrence under the terms of our ceding company’s insurance policy has been appealed in the U.S. Court of Appeals for the Second Circuit and a decision is expected in 2006. See “Item 8.A. Consolidated Statements and Other Financial Information – Legal Proceedings” for a discussion of the pending World Trade Center litigation.
After the events of September 11, 2001, we adopted underwriting rules designed to exclude or limit our exposure to risks related to terrorism in our reinsurance contracts, in particular in those countries and for the risks that are the most exposed to terrorism. Contracts entered into prior to the implementation of these measures, however, remain unchanged until their expiry date or renewal. In addition, it has not always been possible to implement these measures, particularly in our principal markets. For example, certain European countries do not permit excluding terrorist risks from insurance policies. Due to these regulatory constraints, we have actively supported the creation of insurance and reinsurance pools that involve insurance and reinsurance companies as well as public authorities in order to spread the risks of terrorist activity among the members of these pools. We participate in pools created in certain countries such as France (GAREAT), Germany (Extremus) and the Netherlands (NHT), which allows us to have limited and known commitments. Although the U.S. Congress passed the Terrorism Risk Insurance Act (“TRIA”) in November 2002 and extended it in 2005, which established a federal assistance program, initially through the end of 2005 to help the commercial property and casualty insurance industry cover claims related to future terrorism-related losses and required that coverage for terrorist acts be offered by insurers, the U.S. insurance market is still subject to significant exposures in respect of terrorism-related losses. SCOR has significantly reduced its exposure to the U.S. market by declining to underwrite reinsurance agreements with large national insurers. In addition to the commitments described above, the Group does reinsure, from time to time, terrorist risks, usually limiting by event and by period as well as geographically the coverage that ceding companies receive for damage caused by terrorist acts.
As a result, additional terrorist acts, whether in the U.S. or elsewhere, could cause us significant claims payments and, as a result, could have a significant effect on our operating income, results of operations, financial condition and future profitability.
We could be subject to losses as a result of our exposure to environmental and asbestos-related risks.
Like other reinsurance companies, we are exposed to environmental and asbestos-related risks, particularly in the United States. Insurers are required under their contracts with us to notify us of any claims or potential claims that they are aware of. However, we often receive notices from insurers of potential claims related to environmental and asbestos risks that are not precise enough, as the primary insurer may not have fully evaluated the risk at the time it notifies us of the claim. Due to the imprecise nature of these claims, the uncertainty surrounding the extent of coverage under insurance policies and whether or not particular claims are subject to an aggregate limit, the number of occurrences involved in particular claims and new theories of insured and insurer liability, we can, like other reinsurers, only give a very approximate estimate of our potential exposure to environmental and asbestos claims that may or may not have been reported. In 2005, we increased the level of reserves for asbestos-related risks by EUR 13 million and reduced our reserves for environmental risks by EUR 15 million following commutations of old contracts issued in Europe. We believe our reserves at December 31, 2005, are sufficient to cover our estimated liabilities relating to environmental and asbestos claims and correspond to approximately eleven years of payments.

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Nonetheless, due to the changing legal and regulatory environment, including changes in tort law, the evaluation of the final cost of our exposure to asbestos-related and environmental claims may be increasing in uncertain proportions. Diverse factors could increase our exposure to the consequences of asbestos-related risks, such as an increase in the number of claims filed or in the number of persons likely to be covered by these claims. Evaluation of these risks is all the more difficult as claims related to asbestos and environmental pollution are often subject to payments over long periods of time. In these circumstances, it is difficult to estimate the reserves that should be recorded for these risks. We therefore rely on market assessments of survival ratios for reserves although data currently available relate to old underwriting years in the U.S. market to which we are not significantly exposed.
As a result of these imprecisions and uncertainties, we cannot exclude the possibility that we could be exposed to significant additional environmental and asbestos claims, which could have an adverse effect on our operating income, results of operations, financial condition and future profitability.
If our reserves prove to be inadequate, our net income, results of operations and financial condition may be adversely affected.
We are required to maintain reserves to cover our estimated ultimate liability for Property-Casualty losses and loss adjustment expenses with respect to reported and unreported claims incurred as of the end of each accounting period, net of estimated related salvage and subrogation claims. Our reserves are established both on the basis of information that we receive from insurance companies, particularly their own reserving levels, as well as on the basis of our knowledge of the risks, the studies we conduct and the trends we observe on a regular basis. For our Life business, we are required to maintain reserves for future policy benefits that take into account expected investment yields and mortality, morbidity, lapse rate and other assumptions. In our Non Life business, our reserves and policy pricing are based on a number of assumptions and on information provided by third parties, which, if proven to be incorrect, could have an adverse effect on our results of operations. Even though we are entitled to audit the companies with which we do business, and despite our frequent contacts with these companies, our reserving policy remains dependent on the risk evaluations of these companies.
The inherent uncertainties in estimating reserves are compounded for reinsurers by the significant periods of time that often elapse between the occurrence of an insured loss, the reporting of the loss to the primary insurer and ultimately to the reinsurer, the primary insurer’s payment of that loss and subsequent indemnification by the reinsurer, as well as by differing reserving practices among ceding companies and changes in jurisprudence, particularly in the United States.
Furthermore, we have significant exposures to a number of business lines in respect of which accurate reserving is known to be particularly difficult because of the “long-tail” nature of these businesses, including workers compensation, liability insurance, and environmental and asbestos-related claims. Our reserves for these lines of business represent a significant portion of our technical reserves, although the proportion has been decreasing as we have increased in our subscriptions the proportion of our Property business relative to our Casualty and liability business. In relation to such claims, it has in the past been necessary to revise our estimated potential loss exposure and, therefore, the related loss reserves. Changes in law, evolving judicial interpretations and theories as well as developments in class action litigation, particularly in the United States, add to the uncertainties inherent to claims of this nature.
We annually review the methods for establishing reserves and the amount of our reserves and perform, if necessary, audits of our portfolios. To the extent that our reserves prove to be insufficient, after taking into account available retrocessional coverage, we increase our reserves and incur a charge to earnings, which can have a material adverse effect on our consolidated net income and financial condition. We strengthened our reserves on several occasions in 2002 and 2003 following internal and external actuarial reviews. The most recent reserves strengthening occurred at September 30, 2003, when the Group increased its loss reserves by EUR 297 million, EUR 290 million of which was related to adverse trends in loss experience in the United States with respect to business underwritten by SCOR U.S. and CRP over the period 1997-2001. These additional reserves mainly concern lines of business which have now been put in run-off, such as buffer layers and program

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business, or which have been significantly reduced such as workers compensation. If we are required to increase our reserves in the future, it could materially affect our results and our financial position.
In addition, because we, like other reinsurers, do not separately evaluate each of the individual risks assumed under reinsurance treaties, we are largely dependent on the original underwriting decisions made by ceding companies. We are subject to the risk that our ceding companies may not have adequately evaluated the risks to be reinsured and that the premiums ceded to us may not adequately compensate us for the risk we assume. To reduce this risk, we conduct risk audits and regularly visit our ceding companies, and carry out portfolio audits of our business.
Our results may be affected by the inability of our reinsurers (retrocessionaires) or members of pools in which we participate to meet their obligations and the availability of retrocessional reinsurance on commercially acceptable terms.
We transfer a part of our exposure to certain risks to other reinsurers through retrocession arrangements. Under these arrangements, other reinsurers assume a portion of our losses and expenses associated with losses in exchange for a portion of policy premiums. When we obtain retrocession, we are still liable for those transferred risks if the reinsurer cannot meet its obligations. Therefore, the inability of our reinsurers to meet their financial obligations could materially affect our operating results and financial condition. We also assume risk by writing business on a funds withheld basis. Thus, the inability of our reinsurers (retrocessionaires) to meet their financial commitments could negatively affect our operating result and our financial position. We conduct periodic reviews of the financial condition of our reinsurers. Our reinsurers may become financially unsound by the time they are called upon to pay amounts due, which may not occur for many years. For accounts receivable for which a probable loss is expected we book an allowance in our accounts. Furthermore, since our reinsurers do business in the same sectors as we do, events that have an adverse effect on the sector could have the same effect on all of the participants in the reinsurance sector.
To reduce these risks, we maintain a prudent policy for the selection of our retrocessionnaires. Moreover, a portion of the accounts receivable due from our retrocessionaires is guaranteed by letters of credit or deposits of our retrocessionnaires.
We participate in various pools of insurers and reinsurers in order to spread certain risks, in particular terrorism risks, among the members of the pool. In case of total default of one of the members of a pool, we could be required to assume part of the liabilities and obligations of the member in default, which could affect our financial condition.
We operate in a highly competitive industry.
The reinsurance business is highly competitive. Our position in the reinsurance market is based on many factors, such as perceived financial strength of the reinsurer by ratings agencies, underwriting expertise, reputation and experience in the lines written, the jurisdictions in which the reinsurer is licensed or otherwise authorized to do business, premiums charged, as well as other terms and conditions of the reinsurance offered, services offered and speed of claims payment. We compete for business in the French, European, United States, Asian and other international reinsurance markets with numerous international and domestic reinsurance companies, some of which have a larger market share, greater financial resources and higher ratings from financial ratings agencies than we do.
When the supply of reinsurance is greater than the demand from ceding companies, our competitors, some of whom hold higher ratings than us, may be better positioned to enter into new contracts and to gain market share at our expense. From 2003 to mid-2005, our rating had a significant impact on our competitive position. When S&P upgraded our rating on August 1, 2005, it improved our competitive position in our principal markets. However, the fact that we have not obtained an A rating from the AM Best rating agency is currently adversely affecting our operations and our competitive position in the United States, primarily in Life Reinsurance, although we cannot quantify the impact. See “Item 3.D. Risk factors – Ratings are important to our business”.

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We are exposed to the impact of changes in interest rates and developments in the debt and equity markets.
Investment returns are an important part of our overall profitability and changes in interest rates and fluctuations in the debt and equity markets could have a material adverse impact on our profitability, cash flows, results of operations and financial condition. Interest rate fluctuations could have consequences on our return from fixed-maturity securities, as well as the market values of, and corresponding levels of capital gains or losses on the fixed-maturity securities in our investment portfolio. Interest rates and the debt and equity markets are highly sensitive to many factors, including governmental monetary policies, domestic and international economic and political conditions and other factors beyond our control.
During periods of declining interest rates, our annuity and other life insurance products, including the fixed annuities of SCOR Life U.S. Re, may be relatively more attractive to consumers, resulting in increased premium payments on products with flexible premium features, and a higher percentage of insurance policies remaining in force from year to year. During such a period, our investment earnings may be lower because the interest earnings on our fixed-maturity investments likely will have declined in parallel with market interest rates.
In addition, our fixed-maturity investments are more likely to be prepaid or redeemed as borrowers seek to borrow at lower interest rates. Consequently, we may be required to reinvest the proceeds in securities bearing lower interest rates. Accordingly, during periods of declining interest rates, our profitability may suffer as a result of the decrease in the spread between interest rates credited to policyholders and returns on our investment portfolio.
Conversely, an increase in interest rates, as well as developments in the capital markets, could also lead to unanticipated changes in the pattern of surrender and withdrawal of our fixed annuity and other Life reinsurance products, including the fixed annuities of SCOR Life U.S. Re. These would result in cash outflows that might require the sale of assets at a time when the investment portfolio is negatively affected by increases in interest rates, resulting in losses.
We are also exposed to credit risks in the debt securities markets since the financial difficulties of certain issuers and the deterioration of their credit quality could make payment of their obligations uncertain and lead to lower market prices for their fixed-maturity securities, which would affect the value of our investment portfolio.
Interest rate risk is managed within the Group primarily at two levels. At the level of each entity, we take into account the asset-liabilities matching policy and the rules of congruence, and local regulatory, accounting and tax constraints. At the central level, we conduct operations to consolidate all portfolios in order to identify the overall risk and return level.
Accordingly, the Group has analytic tools that guide both its strategic allocation and local distribution of assets.
The sensitivity to changes in interest rates is analyzed on a monthly basis. The Group analyzes the impact of a major change in interest rates on all the portfolios and at the global level. In such a case, the Group identifies the unrealized capital loss that would result from a rise in interest rates and then decides whether a hedging policy should be implemented. We measure the instantaneous unrealized loss due to a uniform increase of 100 basis points in rates or in the case of a distortion of the structures by interest rate terms. The primary risk measurement used is sensitivity or duration. An analysis of the impact on the portfolio may lead to decisions for reallocation or hedging.
Interest rate risk is monitored continuously by the Group. Because of our primarily medium-term investment activity that is tied to the duration of liabilities, portfolio rotation is moderate. Thus, average duration at the Group level is relatively stable, which allows for rapid risk assessment.
For maturities and interest rates on financial assets and liabilities, and for an analysis of interest rate sensitivity, see Note 4 to the consolidated financial statements included in “Item 18. Financial Statements” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk”.

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We face risks related to our equity-based investments.
We are exposed to equity price risk. Stocks of publicly traded companies represented approximately 9% of our investments as of December 31, 2005. The stock markets posted overall gains in 2005, generating capital gains on our equity investments. Conversely, a general and sustained decline in the equity markets would result in a depreciation of our equity portfolio. Such depreciation could affect our operating results and financial condition.
Stock investments represent both traditional and strategic assets for the Group. The goal is to develop and manage a quality and diversified portfolio of stocks that will appreciate over the medium term (generally greater than 2 years). We also seek stocks that offer high dividend pay-outs. Thus, the valuation methods we use are mainly based on fundamental criteria.
Our exposure to the stock market results both from direct stock purchases and from purchases of shares in mutual funds.
Because stocks are more volatile than bonds, this asset class is continually tracked. All stock positions (directly held or held in mutual funds) are aggregated and valued on a daily basis. This approach allows us to monitor changes in the portfolio and to identify the investments with higher than average volatility as soon as possible through use of alert signals. It also facilitates portfolio arbitrage or reallocation decisions.
The stock risk is controlled and measured. It is controlled at the level of the Group’s exposure, which is decided by management and regularly reviewed by the Investment Committee (generally once a month). It is also controlled by defining maximum exposures by stock or by mutual fund, which is reviewed on a regular basis (the exposure in large – cap stocks will generally be greater than exposure in mid-cap stocks). The control ratios on mutual funds are also reviewed regularly.
To measure the risk, a “stock” beta of 1 is generally used. This assumption consists of considering that the whole portfolio varies homogeneously and with the same magnitude as the stock market, which is true on average. Therefore, the Group has a daily measurement of the change in the unrealized value of the stock portfolio for an instantaneous change of plus or minus 10% in the stock market.
Ratings are important to our business.
Our ratings are reviewed periodically. Over the course of 2003, our ratings from all the major rating agencies were revised downwards on several occasions and put on watch, particularly after we announced we would be increasing our reserves and announced the amount of our loss for the third quarter of 2003. Although S&P raised our rating from BBB+ to A- on August 1, 2005, we have not yet received an A rating from AM Best, which affects our competitiveness, primarily in the United States.
Our Life reinsurance business and large facultative and direct underwriting businesses are particularly sensitive to the way our clients and ceding companies perceive our financial strength as well as to our ratings. Our rating in 2004 made it difficult to renew certain contracts and certain treaties with existing clients and to obtain new clients, particularly in the Life and large Facultatives business and in our direct underwriting segments. In addition, these ratings also led to a reduction by certain ceding companies of their shares in treaties or contracts in 2004. Finally, some of our reinsurance treaties contain termination clauses triggered by ratings.
The timing of any changes to our credit ratings is also very important to our business since contracts or treaties in our Life and large Facultives businesses are renewed at various times throughout the year. In the United States, our contracts and treaties are generally renewed on January 1 and July 1. If our rating from AM Best does not improve before these renewal dates, it could have an adverse effect on our revenues in 2006 and 2007.
In addition, a part of our business is conducted with U.S. ceding companies for whom state insurance regulations and market practice require that we obtain letters of credit from banks in order to maintain reinsurance contracts. If we are unable to honor our financial commitments under our outstanding credit facilities or if we suffer any ratings downgrade, our financial situation and results could be significantly affected.

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A significant portion of our treaties contain provisions relating to financial strength, which could have an adverse effect on our financial condition.
Some of our reinsurance treaties, in particular in the Scandinavian countries, the United Kingdom and the United States, contain triggers relating to financial strength which entitle our cedents to terminate the relevant treaty upon the occurrence of specified events of default, including a ratings downgrade, our net assets falling below specified thresholds or our carrying out a reduction in share capital. Any such events could allow some of our cedents to terminate their contractual undertakings, which would have a material adverse, but unquantifiable effect on our financial condition.
In addition, our main credit facilities contain financial undertakings and provisions with respect to our financial position, the breach of which could constitute an event of default and cause a suspension in the use of these credit facilities and prevent us from obtaining new credit facilities, which could, in certain circumstances, have an adverse effect on our financial condition.
We face a number of significant liquidity requirements in the short to medium-term.
The main sources of revenue from our reinsurance operations are premiums, revenues from investing activities, and realized capital gains. The bulk of these funds are used to pay out claims and related expenses, together with other operating costs. Our operations generate cash flows due to the fact that most premiums are received prior to the date at which claims must be paid out. Historically, these positive operating cash flows, together with the portion of the investment portfolio held directly in cash or highly liquid securities, have always allowed us to meet the cash demands entailed by our operating activities.
  In 2002, we issued EUR 200 million of unsubordinated notes repayable on June 21, 2007.
 
  In June 2004, we issued EUR 200 million of OCEANE bonds at par value, which are bonds convertible or exchangeable for new or existing shares. The OCEANE bonds will be fully redeemed in 2010. We used the proceeds from the OCEANE bond issuance, together with available cash, to repay our 1999 OCEANE bonds that matured on January 1, 2005 for an aggregate amount of approximately EUR 235 million.
Despite the level of cash generated by SCOR’s ordinary activities, we may be required to seek full or partial external debt or equity financing in order to meet some or all of the foregoing payments. The amount of any required external financing will depend in the first place on the Group’s available cash. Our decision to withdraw from some business lines has significantly reduced our premium income, which may further affect our cash flow. In addition, a significant portion of our assets in life reinsurance are collateralized for the purpose of guaranteeing either letters of credit obtained from banks for the purpose of writing reinsurance contracts with ceding companies, or payment of loss claims made by ceding companies. These liabilities amount to EUR 2,080 million and restrict our capacity to increase cash by means of asset disposals. The credit agreements were renewed in 2005. Furthermore, cash available in Group subsidiaries may not be transferable to the Company, subject to local regulations and because of these subsidiaries’ own cash requirements.
Moreover, access to additional outside financing depends on a range of other factors, many of which are beyond our control, including general economic conditions, market conditions, investor perceptions of our industry sector of activity and our financial condition. In addition, our ability to raise new financings depends on clauses in our outstanding finance contracts and on our credit ratings. We cannot guarantee that we will be in a position to obtain additional financing, or to do so on commercially acceptable terms. If we were unable to do so, the pursuit of our business development strategy and our financial condition would be materially adversely affected.
We are exposed to the risk on foreign exchange rates.
We publish our consolidated financial statements in euros, but a significant part of our income and expenses, as well as our assets and liabilities, are denominated in currencies other than the euro. Consequently, fluctuations in the exchange rates used to translate these currencies into euros may have a significant impact on SCOR’s reported results of operations and net equity from year to year.

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Fluctuations in exchange rates can have consequences on our results of operations and net equity because of the conversion of income, expenses, assets and liabilities in foreign currencies.
For the year ended December 31, 2005, the Group’s foreign exchange loss was EUR 81 million, compared with a gain of EUR 37 million for the year ended December 31, 2004.
In addition, the shareholders’ equity of some entities of our Group is stated in a currency other than the euro, specifically U.S. dollars. As a result, changes in the exchange rates used to translate foreign currencies into euros, and in particular the movements of the U.S. dollar against the euro in recent years have had and may in the future have a negative impact on our consolidated net equity. However, during 2005, the appreciation of the dollar generated a positive translation adjustment of EUR 110 million in the Group’s equity. These changes in the value of the equity of our subsidiaries are not currently hedged by the Group.
For the consolidated net position of assets and liabilities by currency, and for an analysis of sensitivity to exchange rates, see “Item 11. Quantitative and Qualitative Disclosures About Market Risk”.
Our Non Life subsidiaries in the United States have been facing financial difficulties.
The operations of our Non Life subsidiaries in the U.S. include on-going business and businesses in run-off. Such businesses in run-off have deteriorated, principally because of increases in claims for the underwriting years 1997 to 2001, the impact of the terrorist attack of September 11, 2001 and the claims experience of the workers’ compensation and credit surety business lines. Based on U.S. risk-based capital requirements, we recapitalized our U.S. subsidiaries in 2003, 2004 and 2005 through share capital increases, for a total amount of approximately USD 402 million or through granting loans.
As a result of these share capital increases, active management of businesses in run-off, a reduction in the volume of premiums underwritten in 2005 and careful cost management, the level of assets and solvency margin of our U.S. subsidiaries were substantially larger than U.S. regulatory requirements as of December 31, 2005.
Our U.S. reinsurance and insurance subsidiaries are required to file financial reports in the states in which they are licensed or authorized, prepared in accordance with the accounting principles and methods prescribed by the New York State Insurance Department, or NYID, and other state regulators where their headquarters are located.
We face risks due to changes in government regulations and legal proceedings and developments.
As of this date, we are subject to detailed, comprehensive regulation and supervision by insurance and reinsurance authorities in all the countries in which we do business. Changes in existing laws and regulations may affect the way in which we conduct our business and the products we may offer or the amount of reserves to be posted, including on claims already declared. Regulatory agencies controlling insurance and reinsurance activities have broad administrative power over many aspects of the reinsurance industry and we cannot predict the timing or form of any future regulatory initiatives. Furthermore, government regulators are concerned primarily with the protection of policyholders rather than shareholders or creditors. The diverse regulations governing our industry would be reduced after the transposition of Directive 2005/68/EC of November 16, 2005 (the “Directive”) which confers control of a European Community reinsurance company exclusively to the regulatory authority in the country in which the company is headquartered. Moreover, under this Directive, a regulation governing technical reserves, solvency margins and guarantee funds would apply to European reinsurers as of December 10, 2007 or, if national lawmakers use the option granted by the Directive to provide an additional 12-month period to allow reinsurers already established to comply with new prudential requirements, as of December 10, 2008. The Directive defines the minimum conditions common to all member States of the European Community, and gives national legislators the option to set more stringent requirements. The national provisions adopted for the transposition of this Directive, as well as other legislative or regulatory changes, could increase the harmonization of regulations governing reinsurers with the regulations governing insurers. These new regulations and statutes may over time restrict our ability to write new contracts or treaties. Moreover, we are involved in legal and arbitration proceedings in certain jurisdictions, particularly in Europe and the United States. See “Item 8.A. Consolidated Statements and Other Financial Information – Legal Proceedings”. Negative changes in laws or

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regulations or an adverse outcome of these proceedings could have a material adverse affect on our business, cash position, financial condition and results of operations.
The reinsurance industry is also affected by political, judicial, social and other legal developments, which have at times in the past resulted in new or expanded theories of liability. For example, we could be subject to new regulations that impose additional coverage obligations on us beyond our underwriting intent, or to increases in the number or size of claims to which we are subject. We cannot predict the future impact of changing political, judicial, legal or social developments on our operations and any changes could have a material adverse effect on our financial condition, results of operations or cash position.
Political, legal, regulatory and industry initiatives relating to the insurance industry, including investigations into contingent commission arrangements and certain finite risk or non-traditional insurance products could adversely affect our business and industry.
Recently, the insurance industry has experienced substantial volatility as a result of current litigation, investigations and regulatory activity by various insurance, governmental and enforcement authorities concerning certain practices within the insurance industry. These practices include the payment of contingent commissions by insurance companies to insurance brokers and agents and the extent to which such compensation has been disclosed, the accounting treatment for finite reinsurance or other non-traditional or loss mitigation insurance and reinsurance products. At this time, it is not possible to predict the potential effects, if any, that these investigations may have upon the insurance and reinsurance markets and industry business practices or what, if any, changes may be made to laws and regulations regarding the industry and financial reporting. Any of the foregoing could adversely affect the reinsurance sector.
In addition, public authorities in both the U.S. and worldwide are carefully examining the potential risks posed by the reinsurance industry as a whole, and their consequences on commercial and financial systems in general. While these inquiries have not identified meaningful new risks that the reinsurance industry poses to the financial system or to policyholders, and while the exact nature, timing or scope of possible public initiatives cannot be predicted, it is likely there could be increased regulation of the reinsurance business in the future.
Our business and future profitability and financial condition could be adversely affected by the run-off of certain of our lines of business in the United States and in Bermuda.
In January 2003, we put CRP’s operations in run-off and according to the “Back on Track” plan we launched in 2002, we have determined to withdraw from certain other lines of business at our SCOR U.S. operations. We have organized these operations as “run off” and have put management in place to implement the management and commutation of these businesses. The costs and liabilities associated with these run-off businesses and other contingent liabilities could cause the Group to take additional charges that could be material to the Group’s results of operations.
A significant part of our strategy regarding the run-off of certain of our operations in the United States includes the commutation of the risks held by our Bermudian subsidiary, CRP, and some of the risks subscribed in the U.S. by SCOR U.S. The outstanding reserve levels have been substantially reduced and from December 31, 2002 to December 31, 2005, dropped by approximately 55% over the period. However, there cannot be any assurance that the remaining commutations will be achieved within a foreseeable time, as this depends largely on the cooperation of the ceding companies.
Our shareholders’ equity is sensitive to the value of our intangible assets.
A significant portion of our assets is comprised of intangible assets, the value of which is to a large extent dependent on our future operating performance. The valuation of intangible assets also requires us to make subjective and complex judgments about matters that are inherently uncertain. If there is a change in the assumptions supporting our intangible assets, we may be required to write them down in whole or in part, thereby further reducing our capital base.

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The amount of goodwill we carry in our consolidated accounts may also be impacted by business and market conditions. As of December 31, 2005, we carried EUR 228 million of goodwill as a result of acquisitions, primarily of South Barrington in 1996 and Sorema S.A. and Sorema N.A. in 2001.
In order to evaluate any potential impairment of goodwill, an impairment test of goodwill is performed every year according to FAS 142 on the same date and more frequently if an unfavorable event occurs between two annual tests. Impairment is recognized when the net book value is greater than the fair value. The result of the test performed justifies the goodwill recognized in our accounts.
As of December 31, 2005, we had a total amount of EUR 158 million in net deferred tax assets, net of valuation allowance. The recognition of deferred tax assets is based on the applicable tax legislation and accounting methods and also depends on the expected performance of each unit, which determines the recoverability of these deferred tax assets in the future. At each annual financial statement closing, we are required to assess the need for a valuation allowance on our deferred tax assets. Because of the losses suffered, we were required in 2003 to provide a 100% valuation allowance on all deferred tax assets of SCOR U.S. In 2005, SCOR U.S. recorded a loss, however, a 100% valuation allowance was applied for the deferred tax assets arising as a result of the current year net operating loss. The recoverability test also led us to fully depreciate the deffered tax assets of our Bermudian subsidiary, CRP. As regards the French companies of the Group, the recoverability test led us to a booking of a valuation allowance of EUR 132 million at year end 2004, and, reflecting the expected improvement in future performance, the booking of a valuation allowance of EUR 21 million at year end 2005. No valuation allowance has been recorded on the deferred taxes of the other companies of the Group. Nevertheless, the occurrence of other events could lead to the loss of other deferred tax assets, such as changes in tax legislation or accounting methods, operational earnings lower than currently projected or losses continuing over a longer period than originally planned. All of these developments or each of them separately could have a significant negative impact on our financial position and our results of operation.
Acquisition costs, including commissions and underwriting costs, are recognized as assets up to a maximum of the profitability of the contracts. They are amortized on the basis of the residual term of the contracts in Non-Life, and on the basis of the recognition of future margins for Life contracts. As a result, the assumptions considered concerning the recoverable nature of the deferred acquisition costs are affected by factors such as operating results and market conditions. If the assumptions for recoverability of deferred acquisition costs are incorrect, it would then be necessary to accelerate amortization, which could have a substantial negative effect on our financial position.
We have identified material weaknesses in our internal controls, and these material weaknesses or the identification of any material weaknesses or significant deficiencies in our internal controls in the future could affect our ability to ensure timely and reliable financial reports and could have a significant and adverse effect on our business and reputation.
In connection with the filing of our 2004 20-F, we restated our U.S. GAAP financial statements as a result of a number of errors that we identified. In addition, in connection with their audit of our 2004 fiscal year financial statements, our auditors, Ernst & Young, notified us that they had identified two material weaknesses in our controls over U.S. GAAP financial reporting. Our failure to significantly improve our U.S. GAAP financial statement closing process led our auditors to determine, in connection with their audit of our 2005 fiscal year financial statements, that the material weakness with respect to their audit of the 2004 fiscal year continues to exist, and accordingly notified us that they had identified matters involving internal control and its operation that they consider to be a material weakness under standards established by the United States Public Company Accounting Oversight Board. See “Item 15. Controls and Procedures”. While we intend to take certain actions to address the identified material weaknesses, these measures may not be sufficient to address the issues identified or to ensure that our internal controls are effective. If any material weaknesses in our internal control are identified in the future, unless we are able to correct such deficiencies in a timely manner, our ability to record, process, summarize and report financial information within the time periods specified in the rules and forms of the SEC will be adversely affected which could, in turn, materially and adversely impact our business, financial condition and the market value of our securities.

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In addition, the management certification and auditor attestation requirements of Section 404 of the US Sarbanes-Oxley Act of 2002 will initially apply to SCOR for its Annual Report on Form 20-F for the year ended December 31, 2006. If we are not able to implement the requirements of Section 404 in a timely manner or with adequate compliance, our independent auditors may not be able to certify as to the effectiveness of our internal control over financial reporting and we may be subject to sanctions or investigation by regulatory authorities, such as the SEC. As a result, there could be a negative reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. In addition, we may be required to incur costs in improving our internal control system and the hiring of additional personnel. Any such action could negatively affect our results.
Operational risks, including human or systems failures, are inherent in our business.
Operational risk is inherent in our business. Operational risk and losses can result from business interruption, misconduct or fraud, errors by employees, failure to document transactions properly or to obtain proper internal authorization, failure to comply with regulatory requirements, information technology failures, poor vendor performance or external events.
We believe our modeling, underwriting and information technology and application systems are fundamental to our business. Moreover, our proprietary technology and applications have been an important part of our underwriting process and our ability to compete successfully. We have also licensed certain systems and data from third parties. We cannot be certain that we will have access to these, or comparable, service providers, or that our technology or applications will continue to operate as intended. Our information technology is subject to the risk of breakdowns and outages, disruptions due to viruses, attacks by hackers and theft of data. A major defect or failure in our information technology and application systems could result in management distraction, harm to our reputation, increased expense or financial loss. The potential impact of these risks is considered from a qualitative and not a quantitative standpoint. We believe appropriate controls and mitigation actions are in place to prevent significant risk of defect in our information technology and application systems, or are in the process of being formalized and implemented. If this turned out not to be the case, the adverse effect on our business could be significant.
It may not be possible for shareholders to effect service of legal process, enforce judgments of courts outside of France or bring actions based on securities laws of jurisdictions other than France against SCOR or members of its Board of Directors and executive officers.
SCOR and a majority of the members of its Board of Directors and executive officers are residents of France and other countries other than the United States. In addition, the assets of SCOR and the members of its Board of Directors and executive officers are located in whole or in substantial part outside of the United States. As a result, it may not be possible for you to effect service of legal process within the United States upon most of our directors and executive officers, including with respect to matters arising under U.S. federal securities laws or applicable state securities laws. Moreover, judgments of U.S. courts, including those predicated on the civil liability provisions of the U.S. federal securities laws, may not be enforceable in French courts. As a result, our shareholders who obtain a judgment against us in the United States may not be able to require us to pay the amount of the judgment.
The trading price of SCOR’s ADSs and dividends paid on SCOR’s ADSs may be materially adversely affected by fluctuations in the exchange rate for converting euros into U.S. dollars.
Fluctuations in the exchange rate for converting euros into U.S. dollars may affect the value of SCOR’s ADSs. Specifically, as the relative value of the euro against the U.S. dollar declines, each of the following values will also decline:
  the U.S. dollar equivalent of the euro trading prices of SCOR Ordinary Shares on Euronext, which may consequently cause the trading price of SCOR’s ADSs in the United States to also decline;
 
  the U.S. dollar equivalent of the proceeds that a holder of SCOR’s ADSs would receive upon the sale in France of any SCOR Ordinary Share withdrawn from the Depositary; and

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  the U.S. dollar equivalent of cash dividends paid in euros on the SCOR Ordinary Shares represented by SCOR’s ADSs.
The holders of SCOR’s ADSs may not be able to exercise their voting rights due to delays in notification to and by the Depositary.
The Depositary for SCOR’s ADSs may not receive voting materials for SCOR Ordinary Shares represented by SCOR’s ADSs in time to ensure that holders of SCOR’s ADSs can instruct the Depositary to vote their shares. In addition, the Depositary’s liability to holders of SCOR’s ADSs for failing to carry out voting instructions or for the manner of carrying out voting instructions is limited by the deposit agreement governing the SCOR ADSs. As a result, holders of SCOR’s ADSs may not be able to exercise their right to vote and may not have any recourse against the Depositary or SCOR if their shares are not voted as they have requested.
SCOR’s ADS and Ordinary Shares price could be volatile and could drop unexpectedly and you may not be able to sell your ADSs or Ordinary Shares at or above the price you paid.
The price at which SCOR’s ADSs and Ordinary Shares will trade may be influenced by a large number of factors, some of which will be specific to us and our operations and some of which will be related to the insurance industry and equity markets generally. As a result of these factors, you may not be able to resell your ADSs or Ordinary Shares at or above the prices which you paid for them. In particular, the following factors, in addition to other risk factors described in this section, may have a significant impact on the market price of SCOR’s ADSs or Ordinary Shares:
  a downgrade or rumored downgrade of SCOR’s credit or financial strength ratings, including placement on credit watch;
 
  potential litigation involving SCOR or the insurance industry generally;
 
  changes in financial estimates and recommendations by securities research analysts;
 
  fluctuations in foreign exchange rates and interest rates;
 
  the performance of other companies in the insurance sector;
 
  regulatory and legal developments in the principal markets in which SCOR operates;
 
  international political and economic conditions, including the effects of terrorism attacks, military operations and other developments stemming from such events and the uncertainty related to these developments;
 
  investor perception of SCOR, including actual or anticipated variations in its revenues or operating results;
 
  announcements by SCOR of acquisitions, disposals or financings or speculation about such acquisitions, disposals or financings;
 
  changes in SCOR’s dividend policy, which could result from changes in its cash flow and capital position;
 
  sales of blocks of SCOR’s shares by shareholders; and
 
  general economic and market conditions.
Item 4. Information on the Company
A. HISTORY AND DEVELOPMENT OF THE COMPANY
General
The Company is a French société anonyme with its corporate headquarters at 1, avenue du Général de Gaulle, 92800 Puteaux, France. SCOR’s telephone number is: +33.(0)1.46.98.70.00 and its internet address is

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http://www.scor.com. Information contained on SCOR’s website is not part of this Annual Report. The Company is registered with the Nanterre registry of commerce and companies under number B562033357.
SCOR provides treaty and facultative reinsurance on a worldwide basis to Property-Casualty and Life insurers. In 2005, the Group had net written premiums of EUR 2,121 million, which management believes make it one of the 15 largest European reinsurers, based on management’s estimate of the 2005 net premiums written by major international reinsurers and excluding intra-group business. SCOR operates in 19 countries through its subsidiaries, branches and representative offices and provides services in more than 100 countries.
Strategy
At the end of 2002, SCOR had reassessed its strategy and launched the “Back on Track” strategic plan. Since the end of 2002, when it implemented its “Back on Track” plan, SCOR has shifted its underwriting towards:
  “short-tail” business, which allows a clearer view of prospective business and which does not carry the same level of risk for future results and the inherent difficulties in calculating necessary reserves that are associated with “long tail” business as a result of the long term nature of the litigation and inflation of claims; and
 
  non-proportional business, where SCOR underwriters and actuaries are able to establish prices that are less susceptible to the adverse effects of the ceding companies’ underwriting and pricing.
The “Back on Track” plan had met its four major objectives by the end of 2004, including:
  strengthening the Group’s reserves;
 
  replenishing the Group’s capital base through two capital increases;
 
  right-sizing the Group by reducing premium underwriting and implementing the Group’s new underwriting policy focused on “short tail”, non-proportional treaties and large business underwriting in Non Life, either primary or through large facultatives, when capacity and pricing are adequate; and
 
  restructuring the Group, particularly by putting in place a new board of directors, new management and new procedures.
In the second half of 2004, the Board of Directors adopted a new strategic plan for 2005 through 2007, entitled “SCOR Moving Forward”. The “SCOR Moving Forward” plan is a business model designed to achieve SCOR’s objectives through a profitability-focused underwriting plan and an optimal allocation of the capital base throughout the different stages of the business cycle. The plan seeks to maintain SCOR’s client base in Europe, Asia, North America, and emerging countries, and regain shares in treaties where premium rates, terms and conditions meet the Group’s return on equity requisites.
As part of the “SCOR Moving Forward” plan, SCOR has reassessed its capital allocation plan along the Group’s lines of business and by market. Under this plan, the Group is attempting to anticipate and manage its activity based on the various phases of the premium rate cycle in reinsurance. On the basis of this modeling of the underwriting policy in 2005/2007, the Group’s objective is to reach a trend in profitability that corresponds to 6 basis points above the risk free rate.
Consistent with the “Back on Track” plan, SCOR’s gross written premiums declined approximately 32% in the year ended December 31, 2004 primarily due to the decrease of premiums in the Non-Life line of business in the United States and Large Corporate Accounts line of business, as a consequence of the implementation of the “Back on Track” plan, which imposed more rigorous underwriting standards, as well as SCOR’s lower financial strength ratings in 2004. In addition, SCOR furthered the geographic rebalancing of its Non-Life business by reducing the percentage of Non-Life premium income in the U.S. Revenues for the year ended December 31, 2005 were EUR 2,258 million, nearly unchanged from revenues of EUR 2,245 million for the year ended December 31, 2004 due to the maintenance of underwriting rules in a weak market and renewal of the Non-Life treaties in January and April 2005 being affected by a financial rating of BBB+ (S&P) and B++ (AM Best), which were relatively unfavorable compared with our principal competitors.

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History of SCOR
SCOR was founded in 1970 at the initiative of the French government with the objective of creating a reinsurance company of international stature. SCOR expanded rapidly on the world’s markets, building up a substantial international portfolio. SCOR’s current statuts, or bylaws, provide for a term that expires on June 30, 2024, unless the shareholders elect to shorten or extend the Company’s term by extraordinary resolution.
At the beginning of the 1980s, the French State progressively wound down its interest in the Company’s capital, held through the Caisse Centrale de Réassurance, and was replaced by insurance companies operating in the French market.
In 1989, SCOR and UAP Reassurances combined their Property-Casualty and Life reinsurance businesses as part of a restructuring of SCOR’s capital, and listed the Company on the Paris stock market. Compagnie UAP, which held 41% of the capital, disposed of its shareholding in October 1996 via an international public offering timed to coincide with the listing of SCOR’s shares on the New York Stock Exchange.
In July 1996, SCOR acquired the reinsurance portfolio of the American insurer Allstate Insurance Company, doubling the share of its U.S. business as a proportion of total Group revenues.
While maintaining an active local presence on the major markets and building up new units in fast-growing emerging countries, SCOR has continued in the following years to streamline its structure and rationalize its organization.
In 1999, SCOR purchased Western General Insurance’s 35% stake in CRP, thus raising its interest in this subsidiary to 100%.
In 2000, SCOR acquired PartnerRe Life in the United States, thus providing it with a platform to expand its Life, Accident and Health reinsurance business in the U.S.
In 2001, SCOR acquired Sorema S.A. and Sorema N.A. in order to increase its market share and take advantage of the cyclical upturn in Property & Casualty reinsurance. That same year, SCOR and a group of private investors formed a reinsurance company in Dublin, named Irish Reinsurance Partners, with a paid up capital of EUR 300 million to strengthen the Group’s overall capital base and increase its subscription capacity to take advantage of the upturn in the reinsurance cycle.
In 2002, SCOR entered into a cooperation agreement in the Life business with the Legacy Marketing Group of California for the distribution and management of annuity products. It also opened a Life office in Brussels in order to take full advantage of the growth potential in the Life reinsurance market in Belgium and Luxembourg.
Recent Developments
Since the closure of the 2005 Accounts, SCOR has renewed insurance contracts and treaties on approximately 80% of its Treaty portfolio in Non-Life and Credit & Surety Reinsurance, and on 30% of its Large Corporate Accounts business.
The renewal of treaties and facultatives up for renewal on January 1 took place in a market that is still very competitive, but stable or slightly rising. SCOR has successfully pursued its strategy of regaining co-reinsurance shares on treaties with traditional cedants, and regaining business with clients who had broken off commercial relations with SCOR over the past two years, for reasons linked to Standard & Poor’s rating of the Group. The upgrade of this rating has enabled SCOR to renew relations with 120 cedant insurance companies and to regain many lead underwriting positions.
Moreover, SCOR has benefited from EUR 61 million in premiums underwritten when it acquired the underwriting of the European company ALEA, the underwriting rights of which the Company bought at the end of 2005. This acquisition enables SCOR to anticipate a sustainable premium income, as well as access to new clients, particularly in Central and Northern Europe.
With regard to major claims, SCOR is aware of only one serious loss since the beginning of 2006: fire in a propylene plant in Texas (U.S.), for an estimated cost of USD 20 million.

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The Group is nevertheless very closely following the development of claims registered with regard to the major climatic events that took place in the second half of 2005. SCOR is in particular following the demands for compensation on a case by case basis. At this stage, and incorporating adjustments relating to exchange rates, the amounts declared have increased only slightly (around EUR 5 million), which could suggest that the gross cost of these claims is stabilizing.
The Group is actively pursuing its commutations policy, notably in the United States and as part of the run-off of its Bermudan subsidiary, CRP. No significant new commutations were carried out during the first two months of 2006.
The Group has conducted an in-depth review of its retrocession cover plan, notably in order to face the very significant increase in retrocession prices and the development of cedants’ capacity requirements in natural catastrophe cover. The Group has in particular improved its coverage of storms in Europe, along with facultatives in the United States, taking into account catastrophe simulation models and the way in which these have developed since the serious events of 2005. This improvement of the retrocession cover plan should lead to a substantial increase in retrocession costs.
Finally, SCOR has acquired the EQECAT cost simulation model for natural catastrophes. This market model replaces the SERN model which SCOR has developed independently until now.
SCOR is implementing a number of major Group organization and structural projects.
  In connection with Project New SCOR announced in June 2005, SCOR has transferred its Non-Life reinsurance activities in Europe, comprising Treaty underwriting and management business, Large Corporate Accounts, Credit & Surety and Construction reinsurance, to a wholly-owned subsidiary of SCOR registered in France called SCOR Global P&C (formerly Société Putéolienne de Participations). Such transfer was approved by the shareholders’ meeting held on May 16, 2006 and is effective as of January 1, 2006.
 
  This reorganization represents an important step in the strategy of SCOR and has been carried out with a view to simplifying the legal structure of the Group by streamlining the Group into two subsidiaries dedicated to Life and Non-Life business, respectively. SCOR SA will remain the holding company and owner of the US, Canadian and Asian Non-Life subsidiaries (although these entities will report to SCOR Global P&C for their operational activity). SCOR SA will benefit from the retrocession of its Life and Non-Life reinsurance subsidiaries, and will be responsible for the allocation of capital and resources within the Group, based on the underwriting needs and the determined capacities of each entity.
 
  The Group is continuing its efforts to improve the control of its business.
  The Chief Risk Officer has developed and updated the underwriting rules and allocated the capacity defined as part of the recently instituted “Catastrophe Committee”, in accordance with the annual underwriting policy.
 
  The Group is continuing to conform its internal procedures to the provisions of the new Rating Agency requirements for Enterprise Risk Management, as well as the new obligations following the application in France and Europe of the Directive 2005/68/EC of the European Parliament and of the Council of 16 November 2005 on reinsurance (OJ L 323, 12.9.2005, p. 1) on Reinsurance Monitoring.
 
  In order to meet the restrictions resulting from this Directive, as well as from the European Union Commission’s “Solvency II” project, SCOR has acquired one of the best solvency modeling tools on the market (Dynamic Financial Analysis).
 
  The annual underwriting plan is now monitored in the quarterly reporting structures, which should enable the Group to improve the underwriting control management charts over the next few months.
 
  The Group is implementing the “Matrix” pricing project, which constitutes a major element in the unification and monitoring of the underwriting, risk selection and pricing policy.

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  The Group has decided to invest in the upgrade of the accounting tool used to consolidate its accounts, and has begun a project to this effect.
 
  Finally, in view of the development of structures in Europe, SCOR is developing an electronic document management system for all of its Non-Life business.
In the context of the second phase of Project New SCOR, SCOR is currently working on the possible creation of three Societas Europaea at the level of SCOR, SCOR Vie (both by way of conversion) and SCOR Global P&C (by way of merger pursuant to which SCOR Global P&C would absorb SCOR Deutschland and SCOR Italia). After the effectiveness of the merger, SCOR Global P&C SE will carry out its business in Germany and in Italy via branch offices which are in the process of being created.
All of these operations are in line with the “Moving Forward” plan, which sets out the restructuring of the Group until 2007, with a view to achieving a controlled increase in premium income, substantially improving technical results and profitability (i.e. creating value for the shareholder) and restructuring the capital base, with the aim of enabling SCOR to achieve an “A” level of solvency.
Lastly, Christian Mounis, Deputy Chief Executive Officer of SCOR Vie, was appointed to the SCOR Executive Committee in March 2006. Christian Mounis, 52, a graduate of France’s ESSEC business school, joined SCOR in 1977 as a treaty underwriter. He opened the SCOR Tokyo office in 1983, before running SCOR’s Regional Operations in Asia from 1989 to 1995. Christian Mounis has been Deputy Chief Executive Officer of the Group’s Life business since 1998.

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B. BUSINESS OVERVIEW
INDUSTRY OVERVIEW
Principles
Reinsurance is an arrangement in which a company, the reinsurer, agrees to indemnify an insurance company, the ceding company, against all or a portion of the primary insurance risks underwritten by the ceding company under one or more insurance contracts. Reinsurance business is similar to the insurance business. The main differences stem from a greater complexity due to a wider diversity of activities and from a more international practice. Reinsurance can provide a ceding company with several benefits, including a reduction in net liability on individual risks and catastrophe protection from large or multiple losses. Reinsurance also provides a ceding company with additional underwriting capacity by permitting it to accept larger risks and write more business than would be possible without a concomitant increase in capital. Reinsurance, however, does not discharge the ceding company from its liability to policyholders. Reinsurers themselves may feel the need to transfer some of the risks concerned to other reinsurers, in a procedure known as retrocession.
Functions
Reinsurance provides three essential functions:
  First, reinsurance helps to stabilize direct insurers’ earnings when unusual and major events occur, by assuming the high layers of these risks or relieving them of accumulated individual exposures.
 
  Reinsurance allows insurers to increase the maximum amount they can insure for a given loss or category of losses, by enabling them to underwrite a greater number of risks, or larger risks, without burdening their need to cover their solvency margin, and hence their capital base.
 
  Reinsurance makes substantial quantities of liquidity available to insurers in the event of major loss events.
In addition, reinsurers also:
  help ceding companies define their reinsurance needs and devise the most effective reinsurance program, to better plan for their capital adequacy and solvency margins;
 
  supply a wide array of support services, particularly in terms of technical training, organization, accounting and information technology;
 
  provide expertise in certain highly specialized areas such as the analysis of complex risks and risk pricing;
 
  enable ceding companies to build up their business even if they are undercapitalized, particularly in order to launch new products requiring heavy investment.
Types of Reinsurance
Treaty and Facultative Reinsurance
The two basic types of reinsurance arrangements are treaty and facultative reinsurance. In treaty reinsurance, the ceding company is contractually bound to cede and the reinsurer is bound to assume a specified portion of a type or category of risks insured by the ceding company. Treaty reinsurers, including SCOR, do not separately evaluate each of the individual risks assumed under their treaties and, consequently, after a review of the ceding company’s underwriting practices, are dependent on the original risk underwriting decisions made by the ceding company’s primary policy writers. Such dependence subjects reinsurers in general, including SCOR, to the possibility that the ceding companies have not adequately evaluated the risks to be reinsured and, therefore, that the premiums ceded in connection therewith may not adequately compensate the reinsurer for the risk assumed. The reinsurer’s evaluation of the ceding company’s risk management and underwriting practices, as well as claims settlement practices and procedures, therefore, will usually impact the pricing of the treaty.

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In facultative reinsurance, the ceding company cedes and the reinsurer assumes all or part of the risk assumed by a particular specified insurance policy. Facultative reinsurance is negotiated separately for each insurance contract that is reinsured. Facultative reinsurance is normally purchased by ceding companies for individual risks not covered by their reinsurance treaties, for amounts in excess of the monetary limits of their reinsurance treaties and for unusual risks. Underwriting expenses and, in particular, personnel costs, are higher relative to premiums written on facultative business because each risk is individually underwritten and administered. The ability to separately evaluate each risk reinsured, however, increases the probability that the underwriter can price the contract more accurately to reflect the risks involved.
Proportional and Non-Proportional Reinsurance
Both treaty and facultative reinsurance can be written on a proportional, or pro rata, basis or a non-proportional, or excess of loss or stop loss, basis. With respect to proportional, or pro rata, reinsurance, the reinsurer, in return for a predetermined portion or share of the insurance premium charged by the ceding company, indemnifies the ceding company against a predetermined portion of the losses and loss adjustment expenses, or LAE, of the ceding company under the covered insurance contract or contracts. In the case of reinsurance written on a non-proportional, or excess of loss or stop loss, basis, the reinsurer indemnifies the ceding company against all or a specified portion of losses and LAE, on a claim by claim basis or with respect to a line of business, in excess of a specified amount, known as the ceding company’s retention or reinsurer’s attachment point, and up to a negotiated reinsurance contract limit.
Although the frequency of losses under a pro rata reinsurance contract is usually greater than on an excess of loss contract, generally the loss experience is more predictable and the terms and conditions of a pro rata contract can be structured to limit aggregate losses from the contract. A pro rata reinsurance contract therefore does not necessarily require that a reinsurance company assume greater risk exposure than on an excess of loss contract. In addition, the predictability of the loss experience may better enable underwriters and actuaries to price such business accurately in light of the risk assumed, therefore reducing the volatility of results.
Excess of loss reinsurance is often written in layers. One or a group of reinsurers accepts the risk just above the ceding company’s retention up to a specified amount, at which point another reinsurer or a group of reinsurers accepts the excess liability up to a higher specified amount or such liability reverts to the ceding company. The reinsurer taking on the risk just above the ceding company’s retention layer is said to write working layer or low layer excess of loss reinsurance. A loss that reaches just beyond the ceding company’s retention will create a loss for the lower layer reinsurer, but not for the reinsurers on the higher layers. Loss activity in lower layer reinsurance tends to be more predictable than that in higher layers due to a greater historical frequency, and therefore, like pro rata reinsurance, better enables underwriters and actuaries to more accurately price the underlying risks.
Premiums payable by the ceding company to a reinsurer for excess of loss reinsurance are not directly proportional to the premiums that the ceding company receives because the reinsurer does not assume a direct proportionate risk. In contrast, premiums that the ceding company pays to the reinsurer for pro rata reinsurance are proportional to the premiums that the ceding company receives, consistent with the proportional sharing of risk. In addition, in pro rata reinsurance the reinsurer generally pays the ceding company a ceding commission. The ceding commission is usually based on the ceding company’s cost of acquiring the business being reinsured, including commissions, premium taxes, assessments and miscellaneous administrative expense, and also may include a profit factor for producing the business.
Retrocession
Reinsurers typically purchase reinsurance to cover their own risk exposure or to increase their capacity. Reinsurance of a reinsurer’s business is called a retrocession. Reinsurance companies cede risks under retrocessional agreements to other reinsurers, known as retrocessionaires, for reasons similar to those that cause primary insurers to purchase reinsurance: to reduce net liability on individual risks, protect against catastrophic losses and obtain additional underwriting capacity.

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Broker vs. Direct Reinsurance
Reinsurance can be written through professional reinsurance brokers or directly from ceding companies. From a ceding company’s perspective, both the broker market and the direct market have advantages and disadvantages. A ceding company’s selection of one market over the other will be influenced by its perception of such advantages and disadvantages relative to the reinsurance coverage being placed. For example, broker coverages usually involve a number of participating reinsurers that have been assembled by a broker, each assuming a specified portion of the risk being reinsured. A ceding company may find it easier to arrange such coverage in a difficult underwriting environment where risk capacity is constrained and reinsurers are seeking to limit their risk exposure. In contrast, direct coverage is usually structured by ceding companies directly with one or a limited number of reinsurers. The relative amount of brokered and direct business written by the Group’s subsidiaries varies according to local market practices.
Cyclicality
The insurance and reinsurance sectors, particularly in the Non-Life area, are cyclical and are characterized by periods of intense price competition due to excessive underwriting capacity and periods when shortages of underwriting capacity permit favorable premium levels. The movement in reinsurance premiums is closely linked to the yearly renewal of treaties and contracts in specialty lines. If the claims experience and the financial results of reinsurers is favorable in a given year, ceding companies will be inclined to ask for price reductions in the most profitable lines of business. At the same time, new entrants to the reinsurance market may seek to take advantage of the profitable situation of the business, thus increasing the capacity and exerting pressure on premium rates. This situation of downward trends may be offset by natural catastrophes or large claims affecting certain lines of business or certain countries. After three years of strong premium rate increases, and a year of price stabilization in 2005, the reinsurance industry saw the first signs of a downturn in the market in most of the business lines, with the exception of general liability. The high number and substantial cost of the natural disasters that occurred in the second half of 2005 will probably slow, or even reverse, this downward trend in most markets.

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PRODUCTS AND MARKETS
General
Our operations are organized into the following two business segments: the Property-Casualty segment and the Life/ Accident & Health segment. Property-Casualty is further organized into two sub-segments: Property & Casualty and Large Corporate Accounts’ contracts underwritten on a facultative basis. For additional information on the contribution to SCOR Global P&C made by certain reinsurance casualty segments of SCOR in France and outside France, see “Item 4.A. History and Development of the Company – Recent Developments” and “Item 4.C. Organizational Structure”. Within each segment, we write various classes of business, as indicated below. Responsibilities and reporting within the Group are established based on this structure, and our consolidated financial statements reflect the activities of each segment.
The Credit, Surety and Political Risks sector covers proportional or non-proportional reinsurance treaties with companies specialized in credit and surety insurance. SCOR has integrated its Credit, Surety and Political Risks business into its Property-Casualty segment since it was a relatively small treaty business and, accordingly, its Credit, Surety and Political Risks business is no longer treated as a separate business segment in its financial statements.
The Property-Casualty and Life/Accident & Health segments differ from the Non-Life and Life segments included in the financial statements because, on a statutory basis, the Accident & Health reinsurance business is classified as Property-Casualty.
The following table sets forth our gross premiums written by segment and class of business:
                                                     
    Year ended December 31,
     
    2003   2004   2005
             
    EUR   %   EUR   %   EUR   %
                         
    (EUR, in millions, except percentages)
By segment of business
                                               
Property-Casualty
    2,323       70       1,365       61       1,383       61  
Life/Accident & Health
    983       30       880       39       875       39  
                                     
 
Total
    3,306       100       2,245       100       2,258       100  
                                     
By class of business
                                               
Property-Casualty
                                               
Property-Casualty Treaty
                                               
 
Property
    972       58       608       57       549       55  
 
Casualty
    609       36       326       31       272       27  
 
Marine, Aviation and Transportation
    63       4       19       2       31       3  
 
Construction
    46       2       111       10       144       15  
                                     
   
Total Property-Casualty Treaty
    1,690       100       1,064       100       996       100  
                                     
Facultatives and Large Corporate
                                               
Accounts (SBS)
                                               
 
Property
    329       58       161       62       185       55  
 
Casualty
    85       15       30       11       35       11  
 
Marine, Aviation and Transportation
    36       6       41       16       60       18  
 
Construction
    119       21       29       11       55       16  
                                     
   
Total Facultatives and Large Corporate Accounts
    569       100       261       100       335       100  
Credit, Surety & Political Risks
    65               38               52          
Alternative Reinsurance
    (1 )             2               0          
                                     
 
Total Property-Casualty
    2,323               1,365               1,383          
                                     

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    Year ended December 31,
     
    2003   2004   2005
             
    EUR   %   EUR   %   EUR   %
                         
    (EUR, in millions, except percentages)
Life/Accident & Health
                                               
Annuity-based
    198       18       33       4       81       9  
Individual & group life
    384       46       511       58       462       53  
Accident
    132       12       97       11       82       9  
Disability
    50       4       39       5       94       11  
Health
    105       9       74       8       42       5  
Unemployment
    28       3       28       3       13       1  
Long-term care
    86       8       98       11       101       12  
                                     
 
Total Life/Accident & Health
    983       100       880       100       875       100  
                                     
Property-Casualty
The Property-Casualty segment is divided into two operational sub-segments:
  Property & Casualty Treaty; and
 
  Facultatives and Large Corporate Accounts.
Property & Casualty Treaties
The Property & Casualty sub-segment includes damages to property and personal injuries; marine, aviation and transportation; and construction.
Property. These proportional and non-proportional treaties of the Group cover damages to the underlying assets or operating losses caused by fire or other events in the housing, automobile, industrial and commercial premises, product lines and the damages caused by third parties under third-party liability coverage.
Casualty. The Group’s casualty treaties, both proportional and non-proportional, cover personal injuries as the result of accidents or those caused by third parties. Accordingly, they include treaties covering auto liability and general third-party liability. Auto liability reinsurance covers bodily injuries and other risks arising from both private driver and passenger and commercial fleet auto coverage.
Marine, Aviation and Transportation. The Group’s marine, aviation and transportation treaty business relates primarily to shipping and onshore transport risks, as well as a limited number of aeronautics and aviation policies.
Construction. The Group’s construction treaty business, primarily written on a proportional basis, includes inherent defect insurance coverage, also known as ten-year insurance. As required by French and Spanish law, ten-year insurance covers major structural defects and collapse for ten years after completion of construction of a building.
Credit, Surety & Political Risks are managed by teams based in Europe. In credit insurance, the insurer covers the risks of losses due to non-payment of trade accounts receivable, while surety insurance is a contract under which a guarantor undertakes with regard to a beneficiary to perform the commitment of, to ensure payment by or to pay the debt of the secured debtor. Political risk insurance covers the risk of losses due to measures taken by a government or similar entity that endangers the existence of a sales contract or commitment made by a public or private citizen of the country in which the covered operations are performed.
Facultatives and Large Corporate Accounts
The second sub-segment of the Property-Casualty segment is Facultatives and Large Corporate Accounts, which is also known as SCOR Business Solutions, or SBS. In addition to Facultative Services to ceding companies, SBS is structured around four industrial business sectors: Energy & Utilities, New Technologies (including space risks), Finances & Services and Industry, Construction & Major Projects; it also includes the Ten-Year Liability

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business. SBS consists primarily of facultative business, which is underwritten by specialized teams and was reorganized in 2000 to cover the activities of corporate buyers seeking global risk financing solutions that combine traditional risk coverage and other alternative financing solutions. The risks shared with the ceding companies are large-scale industrially or technically complex risks, such as semiconductor plants, chemical facilities, oil and gas exploration and production sites, energy production facilities, and boiler and machinery installations.
The Large Corporate Accounts policies are primarily underwritten in property, as well as, to a lesser degree, in third-party liability, transportation and offshore, space and construction.
Underwriting facultatives in the space and offshore sectors requires the application of sophisticated underwriting criteria and risk analysis. Offshore business relates to offshore oil and gas exploration and operations, while space business relates to satellite assembly, launch and coverage for commercial space programs.
Construction facultative coverage is typically provided against risk of loss due to physical property damage caused during the construction period as well as, in certain cases, business interruption or other financial losses incurred as a result of completion delays for large and complex construction and industrial projects. The Group has acted or is acting as lead or principal reinsurer on several world scale infrastructure projects. For these leading projects, SCOR takes an active role in all phases of the development, and works with ceding companies, brokers, insureds, risk managers and project sponsors in optimizing the combination of risk management techniques and insurance solutions.
Industrial clients are particularly sensitive to the ratings of the reinsurers that cover their risks.
Life/Accident & Health
Life/Accident & Health segment includes life insurance products, as well as casualty such as accidents, disability, health, unemployment and the risk of long-term care.
Life. The Group’s Life business, written primarily in the form of proportional and non-proportional treaties, includes individual or group Life reinsurance, reinsurance for annuity-based products, and longevity reinsurance, to primary life insurers and pension funds.
Accident, disability, health, unemployment and long-term care. This business is primarily covered by proportional treaties.
Competitive position of our Life and non life businesses.
The SCOR Group is the 12th largest reinsurer in the world according to the Association of French Reinsurers (ARF), based on gross premium income in 2004.
The business of SCOR VIE gives the SCOR Group the rank of seventh in Life Reinsurance in the world in gross premiums in 2004, based on the most recent classification published by Standard & Poor’s.
The top six reinsurers in the world in Life and the principal competitors of SCOR VIE are the following: Swiss Re, Munich Re, RGA, Hannover Re, Employers Re/GE Insurance Solutions and General Re/Berkshire Hathaway Re.
In the Standard & Poor’s 2004 rankings based on gross premiums, SCOR VIE is ahead of Revios, XL Re and Transamerica Re.
In the French market, according to the Argus de l’Assurance’s rankings published in October 2005 for 2004 based on gross premiums, SCOR VIE is the leading reinsurer in volume of gross premiums, ahead of the following (in descending order): Mut Ré, Hannover Re, Munich Re, General Re, Prevoyance Re, CCR, Partner Re, Swiss Re, GE Frankona Re, XL Re Life and Revios.
As reported in the same Argus de l’Assurance article, SCOR VIE is also the leading operator in the French market in reinsuring long-term care risk, which gives the SCOR Group a major competitive advantage in the

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world markets for the development of this complex product. In fact, France, along with the United States and Japan, is one of the world’s three major markets for private long-term care insurance.
For the Non-Life business, the figures from the 2004 rankings published by the ARF (Association des Réassureurs Français) place SCOR 12th in the rankings of the top twenty Non-Life reinsurers for 2004.
Data published at the end of the renewals of January 1, 2006 by SCOR’s main competitors included in this classification, and which operate similarly to SCOR with “non-Bermudan” business models, i.e. Munich Re, Swiss Re and Hannover Re, positioned SCOR as follows:
  the European component in its portfolio is the most intense;
 
  the North American component is the lowest;
 
  the proportion of P&C premiums is the highest and, in contrast, the proportion of Third-Party Liability premiums is the lowest;
 
  the proportion of Special Risk premium is relatively high, which reflects SCOR’s leadership in the Ten-Year Liability business;
 
  the proportion of Credit-Surety premiums is in line with the competition.
Distribution by geographic area
As part of its strategic refocus in 2002, the Group continues to re-balance its Non-Life business portfolio by geographic region, particularly with a deliberate reduction of underwriting in the United States. The strategic reorientation pursued since September 2002 has allowed the Group to underwrite better quality policies and treaties. As a result of its efforts, SCOR has reduced the percentage of its Non-Life premium income in the United States from 42% in 2002 to approximately 10% in 2005.
In 2005, SCOR generated approximately 59% of its gross premiums written in Europe, with significant market positions in France, Germany, Spain and Italy, 20% of its gross premiums written in North America, including Bermuda and the Caribbean region and 21% of its gross premiums written in Asia and in the rest of the world.
The following table shows the breakdown by gross volume of Life and Non-Life premiums written by geographic area (1) based on the country in which the ceding company operates:
                                                   
    Year ended December 31,
     
    2003   2004   2005
             
    EUR   %   EUR   %   EUR   %
                         
    (EUR figures in millions)
Total Europe
    1,925       58%       1,355       60%       1,341       59%  
 
France
    720       22%       480       21%       521       23%  
 
Europe (Outside of France)
    1,205       36%       875       39%       820       36%  
North America
    822       25%       430       19%       440       20%  
Asia-Pacific and Other International
    559       17%       460       21%       477       21%  
                                     
Total
    3,306       100%       2,245       100%       2,258       100%  
                                     
 
(1) Premiums are allocated by geographic area based on information received by the Group from its cedents concerning the primary location of the cedents’ underlying insured risks.

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RATINGS
Ratings are important to all reinsurance companies, including SCOR, as ceding companies will seek reinsurance from institutions with a higher quality financial standing. Our Life reinsurance business and facultative and large corporate accounts and direct underwriting areas are particularly sensitive to the way our clients and ceding companies perceive our financial strength as well as to our credit ratings. See “Item 3.D. Risk Factors – Ratings are important to our business”.
Our current solicited Group ratings by Standard & Poor’s, A.M. Best Co. (“A.M. Best”) and Moody’s are as follows:
             
    Insurer Financial Strength   Senior Debt   Subordinated Debt
     
Standard & Poor’s
August 1, 2005
  A-
(stable outlook)
  A-   BBB
A.M. Best
November 8, 2005
  B++
(positive outlook)
  bbb
(positive outlook)
  bbb-
(positive outlook)
Moody’s
October 7, 2005
  Baa1
(positive outlook)
  Baa1
(positive outlook)
  Baa3
(positive outlook)
On August 1, 2005, the ratings agency S&P raised SCOR’s financial solvency rating from BBB+ to A-. The rating for senior debt was also raised from BBB+ to A- and subordinated debt from BBB- to BBB. The outlook for the rating is stable.
On November 8, 2005, A.M. Best confirmed the financial solvency of SCOR (Paris) and its principal subsidiaries to “B++” (Very Good). The outlook for the rating is positive.
On October 7, 2005, Moody’s Investors Service announced that it had upgraded SCOR’s Insurance Financial Strength Rating from Baa2 to Baa1, its Senior Debt from Baa3 to Baa1, and its Subordinated Debt from Ba2 to Baa3. The outlook for these ratings is positive.

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UNDERWRITING, RISK MANAGEMENT AND RETROCESSION
Underwriting
Consistent with its strategy of selective market and business segment development, the Group seeks to maintain a portfolio of business risks that is strategically diversified both geographically and by line and class of business. Consistent with the “SCOR Moving Forward” plan, SCOR has sought to reduce its exposure to the U.S. market by declining to underwrite large national insurers. SCOR furthered the geographic rebalancing of its business in 2005 by reducing the percentage of Property-Casualty premium income in the U.S. from 15% in 2003 to 10% in 2005. In addition, the Company has centrally established underwriting guidelines for its subsidiary companies to ensure the diversification and management of risk with respect to its business by line and class of business.
The Group’s underwriting is conducted through Property-Casualty Treaty and Facultative and Large Corporate Accounts underwriting teams in its Property-Casualty segment and through its Life/ Accident & Health underwriting team, with the support of technical departments such as actuarial, claims, legal, retrocession and accounting.
Underwriting, actuarial, accounting and other support staff are located in the Group’s Paris headquarters as well as in local subsidiaries and branches. While underwriting is carried out at decentralized subsidiary or division level, the Group’s overall exposure to particular risks and in particular geographic zones is centrally monitored from Paris. The underwriting policy and rules are validated every year by the Chief Risk Officer (CRO).
Property-Casualty Treaty underwriters manage client relationships and offer reinsurance support after a careful review and assessment of the cedents’ underwriting policy, portfolio profile, exposures and management procedures. They are responsible for writing treaty business as well as small facultative risks in their respective territories within the limits of their delegated underwriting authority and the scope of underwriting guidelines approved by the Group general management.
The underwriting teams are supported by a technical underwriting unit based in the Group head office. The technical underwriting unit provides worldwide treaty and small facultative underwriting guidelines, the delegation of capacity, underwriting support to specific classes or individual risks when required, ceding company portfolio analyses and risk surveys.
The underwriting teams are also supported by a Group actuarial unit responsible for pricing and reserving methods and tools to be applied by the actuarial units based in the treaty operating units. The Group audit department conducts frequent underwriting audits in the operating units.
Most facultative underwriters belong to the Business Solutions departments centralized in the Global P&C division, which operates worldwide from five sites (Paris, London, Toronto, New York and Singapore) and with underwriting entities located in certain of the Group’s subsidiaries and branches. This division is dedicated to large corporate business and is geared to provide its clients with solutions for coverage of conventional risks. Small Property and Casualty facultative underwriting is handled by the Property-Casualty Treaty underwriting team.
The underwriting of Life/Accident & Health business within the Group is under the worldwide responsibility of SCOR VIE. The clients are life or accident and health insurance companies worldwide. They are served by specialized treaty underwriters familiar with the specific features of each of the markets in which they operate, including mortality tables, morbidity risks, disability and pension coverage, product development, financing and specific market coverage and policy conditions. Life treaty underwriting consists of the consideration of many factors, including the type of risks to be covered, ceding company retention levels, product and pricing assumptions and the ceding company’s underwriting standards and financial strength.
Life treaty underwriters worldwide are supported by the Life Treaty Underwriting Department, or LUD, which coordinates treaty underwriting activities at the Group level and conducts audits in the operating units, and by the Technical and Development Department, or TDD, responsible for pricing, reserving, product development, life underwriting (medical and non medical) and retrocession. These two departments set the underwriting guidelines, which are approved by the Business Underwriting Committee, comprising SCOR VIE General Management, and

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the heads of underwriting units LUD and TDD. This Committee periodically reviews and updates the four levels of underwriting authority delegated to each treaty underwriter.
Catastrophe Risk and Exposure Controls
Like other reinsurance companies, SCOR is exposed to multiple insured losses arising out of a single occurrence, whether a natural event such as a hurricane, a flood or an earthquake, or a man-made catastrophe such as an explosion or fire at a major industrial facility or an act of terrorism. Any such catastrophic event could generate insured losses in one or many of SCOR’s lines of business.
In 2005, like most other reinsurers, SCOR was affected by the abnormally high frequency of natural disasters throughout the world, particularly a storm in Europe, five hurricanes in the United States and Mexico, and a number of large claims for natural occurrences that were smaller in scope. Hurricanes Katrina, Rita and Wilma generated a total claims expense estimated before taxes and retrocession of EUR 177.6 million at the end of 2005. The storms Erwin/ Gudrun generated a total claims expense estimated before taxes and retrocession of EUR 21.5 million, while hurricanes Stan and Emily, the floods in Europe and the Mumbai flood in India generated a total claims expense estimated before taxes and retrocession of EUR 40 million.
In 2004, SCOR, like most other reinsurers, was adversely affected by the unusually high frequency of natural catastrophes around the world, including four hurricanes in the United States and the Caribbean and a number of typhoons in Asia. Hurricanes Ivan, Charley, Frances and Jeanne generated a total claims expense estimated before taxes and retrocession at EUR 45 million at the end of 2005, compared with EUR 34 million reported at the end of 2004. Typhoon Songda in Japan generated a claims expense estimated before taxes and retrocession of EUR 49 million at December 31, 2005, compared with an estimate of EUR 30 million at December 31, 2004. Typhoons Rananim, Chaba and the tsunami in December 2004 had an impact of approximately EUR 6 million on SCOR’s total claims expense at December 31, 2005, compared with an estimate of EUR 12 million reported at December 31, 2004.
In 2003, SCOR experienced no major natural catastrophic losses, the largest one being the storms in the Midwest of the U.S. for a net cost of approximately EUR 20 million as of December 31, 2004, which remained unchanged at the end of 2005.
For all its property business, SCOR prudently evaluates the accumulations generated by potential natural events and other risks. This evaluation includes the risks underwritten by corporate headquarters and by its subsidiaries in France and elsewhere. Pursuant to the rules and procedures established by General Management in Paris, each subsidiary monitors the structure of its portfolio for each region or country and the Group Risk Management department based in Paris consolidates this data for the Group.
Depending on the region of the world and the risk in question, SCOR uses a variety of techniques to evaluate and manage its total exposure at the occurrence of natural disasters that result in property damage in every region of the world. SCOR quantifies this exposure in terms of a maximum commitment. SCOR defines this maximum commitment, taking into account policy limits, as its potential maximum loss caused by a single catastrophe affecting a large contiguous geographic area, such as a storm, hurricane or earthquake, and occurring within a given return period. SCOR estimates that the Group’s current maximum risks for catastrophes, before retrocession, come from earthquakes in Japan, Italy, Israel, Turkey, Taiwan, Chile, and Portugal and other weather-related risks concentrated primarily in Europe, Asia and North and Central America.
The following table summarizes the main projected natural catastrophe exposures of the Group by geographic area:
     
Range of Potential Catastrophe Exposure(1)   Subject countries as of December 2005
     
(EUR, in millions)    
100 to 200
  Canada, United States, Mexico, Israel, Italy, Turkey
200 to 300
  Chile, Portugal, Taiwan
300 and over
  Japan, Europe
 
(1) Calculated on a potential maximum loss basis for a given return period before retrocession.

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The results are based on proprietary software.
For more than 15 years, SCOR has been using its own internally-developed and regularly updated software program for evaluating earthquake potential maximum losses for 20 countries. SCOR currently utilizes SERN for the simulation of events and of their consequential damages. SERN (“Système d’Evaluation des Risques Naturels” or Natural Risks Evaluation System) is an enhancement of existing models initiated in 1997 by SCOR and partners from prominent research institutes and recognized private IT companies. This software program is linked directly to our worldwide database and available to all of SCOR’s subsidiaries and operating units. As of December 31, 2005, SERN can provide results for earthquake exposure in Australia, Algeria, Canada, Chile, Colombia, Greece, Indonesia, Israel, Jordan, Italy, Japan, Mexico, New Zealand, Peru, the Philippines, Portugal, Taiwan, Turkey, the United States and Venezuela. For countries such as Japan and the United States, SCOR’s analyses are compared with other calculations performed using programs developed by specialized independent consultants.
In a similar manner as with SERN, the potential accumulations for hurricanes in the United States and in a growing number of countries are analyzed using external simulation tools; the principal tool used is World Cat Entreprise (WCE) developed by Eqecat. The potential accumulation due to typhoons in Japan is analyzed by combining (a) the arithmetic sum of the commitments for non-proportional treaties and (b) a scenario based on Mireille, a major typhoon in Japan in 1991, for proportional treaties. The accumulations due to storms in Europe, the principal European earthquakes and the earthquake in Japan for the treaty portfolio are now evaluated using software and outside simulation tools, primarily WCE. If necessary, SCOR periodically completes these analyses with outside studies covering either specific exposures or complete portfolios.
The following table sets forth certain data regarding the Group’s catastrophe loss experience in each of the three years ended December 31, 2003, 2004 and 2005:
                         
    Year ended December 31,
     
    2003   2004   2005
             
    (EUR, in millions)
Number of catastrophes(1)
    4       2       5  
Incurred losses and LAE from catastrophes, gross
    78 (2)     40 (3)     215 (4)
Incurred losses and LAE from catastrophes, net of Retrocession
    72 (2)     40 (3)     168 (4)
Group loss ratio(5)
    99 %     69 %     74 %
Group loss ratio excluding catastrophes
    96 %     67 %     60 %
 
(1) A catastrophe is defined by SCOR as an event involving multiple insured risks causing pre-tax losses, net of retrocession, of EUR 10 million or more.
 
(2) Floods in Italy and Southwestern France, storms in the Midwestern United States and Typhoon Maemi in South Korea.
 
(3) Typhoon Sondga plus Hurricane Ivan.
 
(4) Hurricanes Katrina, Wilma, Rita, storm Gudrun and floods in Eastern Europe.
 
(5) Loss incurred prior to discount on workers compensation reserves on North American operations expressed as a percentage of premiums earned.
Claims
SCOR’s Group Claims Division, created in April 2003, is tasked with implementing the general claims handling policy for the Group, implementing worldwide control and reporting procedures and managing commutation of claim portfolios.
The claims handling function is performed by the subsidiaries Claims Departments, which initially process and monitor reported claims. The Group Claims Division supports and controls their general activity and takes over the direct management of large, litigious, serial and latent claims. Additionally, periodic audits are conducted on specific claims and lines of business and claims processing and procedures are examined at the ceding companies’ offices with the aim of evaluating their claims adjusting process, valuation of reserves and overall performance. Technical and legal assistance is provided to underwriters before and after accepting certain risks.

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When needed, recommendations are given to underwriters, local claims adjusters and management of the subsidiaries and branches.
The main objectives of the Group Large Claims Committee, chaired by the Chief Operating Officer (Directeur Général Délégué), are to review the consolidated impact of large and strategic claims and to monitor the management of such claims across lines of business and countries. It reviews on a monthly basis all reported new large claims and follows the development of all such claims.
Retrocessional Reinsurance
The Group retrocedes a portion of the risks it underwrites in order to control its exposures and losses, and pays premiums based upon the risks and exposures of its facultative and treaty acceptance, subject to such retrocession reinsurance. The Group generally limits retrocession to catastrophe and property large risks. Retrocession reinsurance is subject to collectibility in all cases where the original business accepted by the Group suffers from a loss. The Group remains primarily liable to the direct insurer on all risks reinsured although the retrocessionnaire is liable to the Group to the extent of the reinsurance limits purchased. The Group then monitors the financial condition of retrocessionaires on an ongoing basis. In recent years, the Group has not experienced any material difficulties in collecting recoverable amounts from its retrocessional reinsurers. The Group reviews its retrocession arrangements periodically, to ensure that they fit closely to the development of its business.
Retrocession procedures are centralized in the retrocession department of the Property-Casualty sector. The Group utilizes a variety of retrocession agreements with non-affiliated retrocessionaires to control its exposures to large property losses. In particular, the Group has implemented an overall program set in place on an annual basis that provides partial coverage for up to three major catastrophic events within one occurrence year. A major event is likely to be a natural catastrophe such as an earthquake, a windstorm, a hurricane or a typhoon in a region where the Group has major aggregate exposures stemming from the business written.
IRP Holdings Limited was established in December 2001 to reinsure (as a retrocessionnaire) certain of SCOR’s Property-Casualty business on a quota share basis from 2002 forward. The purpose of the vehicle was to expand capacity in order to underwrite business at a time when premium levels were considered to be attractive. The retrocession rate in 2004 was 25% under the quota share treaties among Irish Reinsurance Partners Limited, SCOR and certain SCOR Group subsidiaries.
These quota share treaties were terminated, effective December 31, 2004. All the liabilities, rights and obligations of Irish Reinsurance Partners Limited under the quota share treaties were transferred to SCOR in October 2005.
These substitutions were made under novation contracts dated October 17, 2005 and October 26, 2005.
SCOR acquired the minority interests of IRP Holdings Limited for EUR 183.1 million, corresponding to the share of the Highfields Funds in the equity of IRP Holdings Limited at December 31, 2004 established under U.S. accounting rules. See “Item 9.A. Offer and Listing Details – IRP”.

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RESERVES
Significant periods of time may elapse between the occurrence of an insured loss, the reporting of the loss to the ceding company and the reinsurer and the ceding company’s payment of that loss and subsequent payments to the ceding company by the reinsurer. To recognize liabilities for unpaid losses, and future policy benefits, insurers and reinsurers establish reserves, which are balance sheet liabilities representing estimates of future amounts needed to be paid for known or unknown claims, as well as the related expenses.
The Group maintains reserves to cover its estimated ultimate liability for losses and LAE with respect to reported and not yet reported claims. Because reserves are estimates of ultimate losses and LAE, management monitors reserve adequacy over time evaluating new information as it becomes known and adjusting reserves, as necessary. Management considers many factors when setting reserves, including the following:
  information from ceding companies;
 
  historical trends, such as reserving patterns, loss payments, pending levels of unpaid claims and product mix;
 
  internal methodologies that analyze the Group’s experience with similar cases;
 
  current legal interpretations of coverage and liability; and
 
  economic conditions.
Based on these considerations, management believes that adequate provision has been made for the Group’s Life and Non-Life loss and LAE reserves. Liabilities on contracts net of retrocession were EUR 5,873 million for Non-Life and EUR 2,344 million for Life at December 31, 2005.
General
Non Life business
As part of the reserving process, insurers and reinsurers review historical data and anticipate the impact of various factors such as legislative enactments and judicial decisions that may tend to affect potential losses from casualty claims, changes in social and political attitudes that may increase exposure to losses, mortality and morbidity trends and trends in general economic conditions. This process assumes that past experience, adjusted for the effects of current developments, is an appropriate basis for anticipating future events. The reserving process implicitly recognizes the impact of inflation and other factors affecting losses by taking into account changes in historical claim patterns and perceived trends. There is no precise method, however, for subsequently evaluating the impact of any specific item on the adequacy of reserves, because the eventual deficiency or redundancy of reserves is affected by many factors.
The Group periodically reviews and updates its methods of determining the incurred but not reported (“IBNR”) reserves. Estimation of loss reserves is a difficult process, however, especially in view of changes in the legal and tort environment that may affect the development of loss reserves. While the reserving process is difficult and subjective for ceding companies, the inherent uncertainties of estimating such reserves are even greater for reinsurers, due primarily to the longer time between the date of an occurrence and the reporting of any attendant claims to the reinsurer, the diversity of development patterns among different types of reinsurance treaties or facultative contracts, the necessary reliance on the ceding companies for information regarding reported claims and differing reserving practices among ceding companies. In addition, trends that have affected development of liabilities in the past may not necessarily occur or affect liability development to the same degree in the future. Thus, actual losses, LAE and future policy benefits may deviate, perhaps significantly, from estimates of reserves reflected in the Group’s consolidated financial statements.
When a claim is reported to the ceding company, its claims personnel establish a case reserve for the estimated amount of the ultimate settlement, if any, with respect to such claim. The estimate reflects the judgment of the ceding company’s claims personnel, based on its reserving practices. The ceding company reports the claim to the Group entity from which it obtained the reinsurance, together with the ceding company’s suggested estimate of the claim’s cost. The Group records the ceding company’s suggested reserve and may establish additional

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reserves based on review by the Group’s claims department and internal actuaries. Such additional reserves are based upon the consideration of many factors, including coverage, liability, severity and the Group’s assessment of the ceding company’s ability to evaluate and handle the claim.
In accordance with industry practice, the Group maintains IBNR reserves. IBNR reserves are actuarially determined and reflect the ultimate loss amount which may have to be paid by the Group on claims for events and circumstances which have occurred but which have not yet been reported either to the ceding company or to the Group, and the expected change in the value of those claims, which have already been reported to the Group.
In its actuarial determination of its reserves, the Group uses generally accepted actuarial reserving techniques that take into account quantitative loss experience data, together with, where appropriate, qualitative factors. The reserves are also adjusted to reflect changes in the volume of business written, reinsurance contract terms and conditions, the mix of business and claims processing that can be expected to affect the Group’s liability for losses over time. The Group does not discount Non-Life reserves, except for most of CRP’s reserves and certain reserves associated with workers’ compensation that are discounted pursuant to applicable U.S. and Bermudian regulation.
Life business
In the Life area, reserves for future policy benefits and claims are established based upon the Group’s best estimates of mortality, morbidity, persistency and investment income, with provision for adverse deviation. The liabilities for future policy benefits established by the Group with respect to individual risks or classes of business may be greater or less than those established by ceding companies due to the use of different mortality and other assumptions. Reserves for policy claims and benefits include both mortality and morbidity claims in the process of settlement and claims that have been incurred but not yet reported. Actual experience in a particular period may be worse than assumed experience and, consequently, may adversely affect the Group’s operating results for such period.
Changes in Historical Reserves
The table below shows changes in historical loss reserves, on a U.S. GAAP basis, for the Group’s Non-Life operations for 1995 and subsequent years, net of retrocessional reinsurance. The Group’s reinsurance contracts are generally written on an underwriting year basis and the Group maintains its records on this same basis. As compared to loss development tables presented on an accident year basis by U.S. registrants, presentation on an underwriting year basis accelerates the timing of the presentation of loss reserve development by moving development of losses that actually occur in an accident year subsequent to the end of the applicable underwriting year back into such underwriting year. As discussed in the third paragraph below, the Company’s underwriting year loss development data is, as a result, not fully comparable with accident year data presented by U.S. registrants.
The top line of the table shows the initial estimated gross reserves for unpaid losses and LAE recorded at each year-end date, as well as the amount of such initial reserve. The upper (paid) portion of the table presents the cumulative amounts paid through each subsequent year on those claims for which reserves were carried as of each specific year-end. The lower (liability re-estimated) portion shows the re-estimated amount of the previously recorded reserves, net of retrocession, based on experience as of the end of each succeeding year. The estimate changes as more information becomes known about the actual claims for which the initial reserves were created. The cumulative redundancy/ deficiency line represents the cumulative change in estimates since the initial reserve was established. It is equal to the latest liability re-estimated amount less the initial reserve.
An underwriting year reinsurance contract reinsures losses incurred on underlying insurance policies that begin at any time during the reinsurance contract term. This means that, if both the underlying insurance contracts and the reinsurance contract have twelve-month terms, the reinsurance contract will cover underlying losses occurring over a twenty-four month period. For example, if an underwriting year reinsurance contract term was from January 1 to December 31, 2005, it would cover underlying policies with terms beginning on both January 1, 2005 and December 31, 2005. Losses incurred on underlying policies beginning on January 1, 2005 could occur

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as early as January 1, 2005 while losses incurred on underlying policies beginning on December 31, 2005 could occur as late as December 30, 2006.
For purposes of the loss reserve development table, the Group has assigned all losses incurred under reinsurance contracts written in a particular year to that year, even though some of those losses may not have been incurred until twelve months after the end of the year. Since losses have been so assigned, the “reserve re-estimated ‘x’ years later” set forth in the table includes all those losses incurred during the “x” years following the reference year, but related to an underwriting year prior to and including the reference year. As a result, the amounts on the line labeled “cumulative redundancy/ (deficiency) before premium development” in the loss development tables are not a precise indication of the adequacy of the initial reserves that appear on the first and third lines of the tables.
This has been partially corrected by inclusion in the line labeled “premium development” of all the premiums attributable to the underwriting year and which are earned in subsequent years. Such earned premiums are comprised primarily of amounts included in the unearned premium reserves at the end of a given reference year and which are progressively earned during the years following such reference year, but also include experience rated premiums received under certain reinsurance contracts written in such underwriting year. The Group does not specifically segregate experience rated premiums in its accounting systems, but management does not believe such amounts are material. This presentation permits a comparison of the reserves for claims and claims expenses as initially established with the re-estimated reserves for claims and claims expenses, which have been adjusted for the effect of claims and claims expenses incurred subsequent to the reference year-end. While the resulting adjusted cumulative redundancy/ deficiency is not a precise measurement and is not fully comparable to the amounts that would be determined using accident year data, management believes it to be a reasonable indication of the adequacy of the Group’s loss and LAE reserves as recorded in its consolidated financial statements as of the referenced year ends.

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The following tables present ten-year loss development on a U.S. GAAP basis and a three-year reconciliation of beginning and ending reserve balances on a U.S. GAAP basis. The U.S. GAAP loss development data is presented on an underwriting year basis, while the reserve reconciliation data represents the Company’s allocation of incurred and paid losses and LAE between current and prior years on a calendar year basis. See also Note 18 to the consolidated financial statements included in “Item 18. Financial Statements”.
Ten-Year Loss Development Table Presented Net of
Reinsurance with Supplemental Gross Data (U.S. GAAP)(1)
                                                                                           
    1995   1996   1997   1998   1999   2000   2001   2002   2003   2004   2005
                                             
Initial gross reserves for unpaid loss (4) and LAE
    2,600       3,361       3,723       3,942       4,774       5,575       8,365       7,966       7,004       6,119       6,030  
Initial retroceded reserves
    234       316       306       337       421       507       1,448       1,033       673       536       566  
                                                                   
Initial net reserves
    2,366       3,045       3,417       3,605       4,353       5,068       6,917       6,933       6,331       5,583       5,464  
Paid (Cumulative) as of:(2)
                                                                                       
 
One year later
    420       654       874       1,040       1,399       1,807       2,514       2,627       1,426       896          
 
Two years later
    901       1,136       1,440       1,570       2,294       3,163       3,614       3,736       2,119                  
 
Three years later
    1,188       1,405       1,778       1,946       3,046       4,390       3,575       4,557                          
 
Four years later
    1,368       1,599       2,015       2,356       3,606       5,027       6,309                                  
 
Five years later
    1,505       1,731       2,306       2,626       4,028       5,536                                          
 
Six years later
    1,590       1,953       2,488       2,874       3,474                                                  
 
Seven years later
    1,779       2,073       2,646       2,069                                                          
 
Eight years later
    1,871       2,176       2,790                                                                  
 
Nine years later
    1,948       2,274                                                                          
 
Ten years later
    2,023                                                                                  
 
Eleven years later
                                                                                       
Reserve re-estimated as of:(3)
                                                                                       
 
One year later
    2,630       3,458       3,690       4,057       4,996       5,938       8,030       8,344       6,466       5,916          
 
Two years later
    2,733       3,411       3,772       4,082       5,278       6,358       8,699       7,984       6,756                  
 
Three years later
    2,702       3,401       3,810       4,117       5,446       7,385       8,794       8,404                          
 
Four years later
    2,692       3,404       3,807       4,209       5,952       7,412       9,104                                  
 
Five years later
    2,675       3,379       3,887       4,479       5,962       7,530                                          
 
Six years later
    2,653       3,429       4,002       4,454       6,032                                                  
 
Seven years later
    2,711       3,522       3,990       4,522                                                          
 
Eight years later
    2,792       3,507       4,070                                                                  
 
Nine years later
    2,780       3,448                                                                          
 
Ten years later
    2,571                                                                                  
 
Eleven years later
                                                                                       
Cumulative redundancy/ (deficiency) before premium development
    (205)       (403)       (652)       (917)       (1,679)       (2,462)       (2,187)       (1,471)       (426)       (333)          
% before premium development
    (9) %     (13) %     (19) %     (25) %     (39) %     (49) %     (32) %     (21) %     (7) %     (6) %        
Premium development
    231       363       344       395       476       957       1,238       701       358       337          
Cumulative redundancy/(deficiency) after premiums development
    26       (40)       (308)       (522)       (1,203)       (1,505)       (949)       (770)       (68)       4          
Percentage
    1 %     (1) %     (9) %     (14) %     (28) %     (30) %     (14) %     (11) %     (1) %              
Gross re-estimated liability at December 31, 2005
    3,057       3,945       4,761       5,239       7,213       8,774       11,240       10,162       7,513       6,604          
Re-estimated receivable at December 31, 2005
    486       497       691       717       1,181       1,244       2,136       1,758       757       688          
                                                                   
Net re-estimated liability at December 31, 2005
    2,571       3,448       4,070       4,522       6,032       7,530       9,104       8,404       6,756       5,916          
Gross cumulative redundancy/(deficiency) before premium development
    (457)       (585)       (1,038)       (1,297)       (2,439)       (3,199)       (2,875)       (2,196)       (510)       (485)          
Gross premium adjustments
    283       412       368       365       467       805       1,168       770       522       401          
Gross Cumulative redundancy/(deficiency) after premiums development
    (174)       (173)       (670)       (932)       (1,972)       (2,394)       (1,707)       (1,426)       12       (84)          
Percentage
    -6.71 %     -5.15 %     -18.00 %     -23.66 %     -41.30 %     -42.95 %     -20.41       -18.00 %     0.17 %     -1.37 %        

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(1) Initial gross, initial retroceded and initial net reserves are shown on a U.S. GAAP basis. Paid (cumulative) amounts and reserves re- estimated amounts are shown on an underwriting year basis, consistent with the reporting practices of the Company and its cedents, particularly in the European market.
 
(2) Cash commutation payments (i) received in 1993 of EUR 60 million and in 1994 of EUR 129 million and (ii) paid in 1994 of EUR 48 million have been excluded from the paid (cumulative) amounts presented. The EUR 260 million North American portfolio acquired in 1996 has been excluded from the paid (cumulative) amount presented for the years concerned.
 
(3) Re-estimated gross claims reserves for a given underwriting year are reduced by the amount of any premiums earned subsequent, but related, to that underwriting year, including experience-rated premiums received and accrued from the ceding insurers as assumed losses were incurred.
 
(4) Gross underwriting reserves for 2003, 2004 and 2005 differ by EUR 302 million, EUR 351 million and EUR 409 million, respectively, from the amounts presented on the financial statements due to the exclusion in this table of the reserves for increasing risks.
Reconciliation of Reserves for Losses and LAE (U.S. GAAP)
                             
    Year ended December 31,
     
    2003   2004   2005
             
    (EUR, in millions)
Reserves for losses and LAE at beginning of year, net
    6,933       6,633       5,934  
Effect of changes in foreign currency exchange rates
    (656 )     (203 )     359  
Effect of claims portfolio transfer and other reclassifications
    333       58       3  
                   
Incurred related to:
                       
 
Current year
    1,661       1,002       1,134  
 
Prior years
    1,078       174       34  
                   
   
Total incurred losses and LAE(1)
    2,739       1,176       1,168  
                   
Paid related to:
                       
 
Current year
    316       116       695  
 
Prior years
    2,400       1,614       896  
                   
   
Total paid losses and LAE(1)
    2,716       1,730       1,591  
                   
Reserves for losses and loss expenses at end of year – net
    6,633       5,934       5,873  
Reinsurance recoverable on unpaid losses
    673       536       566  
                   
Reserves for losses and loss expenses at end of year – gross
    7,306       6,470       6,439  
                   
 
(1) Initial gross, initial retroceded and initial net reserves are shown on a U.S. GAAP basis. Paid (cumulative) amounts and reserve re-estimated amounts are shown on a calendar year basis.
Commutations
In 2005, the Group has pursued an active commutation policy for its portfolio, the main objective being the reduction of volatility of claims reserves and to allow the freeing up of share capital. This policy will be continued in 2006, by focusing efforts on the run-off activities and business exposed to Asbestos and Pollution risks.
Commutations on Non Life business occurred in the portfolios of SCOR U.S., CRP and European business.
Total commutations realized by SCOR U.S. during 2005 permitted a reduction in gross reserves of EUR 264 million. These commutations have contributed to the global decrease in reserves at SCOR U.S. of 10% to EUR 1,461 million.
Regarding CRP, the commutations realized for a total amount of EUR 50 million, as well as the normal payment of claims, have permitted a reduction in the amount of reserves to EUR 210 million.
In 2005, commutations in Europe totaled EUR 25 million, reducing exposure to asbestos and environmental risks.
Commutations of Life business came to a total of EUR 265 million in 2005.

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The commutations in 2005 did not have a material effect on the Group results of operations for the year ended December 31, 2005, except one commutation relating primarily to SCOR U.S. that increased the Group’s results of operations, before tax, by USD 13 million.
In 2004, the reduction in reserves on the balance sheet due to significant commutations amounted to approximately EUR 26 million at CRP, and approximately EUR 60 million at SCOR U.S. The commutations in 2004 did not have a material effect on the Group results of operations for the year ended December 31, 2004. In 2003, CRP’s reserves were reduced on the balance sheet by approximately EUR 577 million, due to two significant commutations. These commutations in 2003 reduced the Group’s results of operations for the year ended December 31, 2003 by approximately EUR 26 million, before taxes.
Asbestos and environmental
The Group’s reserves for losses and LAE include an estimate of its ultimate liability for asbestos and environmental claims for which an ultimate value cannot be estimated using traditional reserving techniques and for which there are significant uncertainties in estimating the amount of the Group’s potential losses. SCOR and its subsidiaries have received and continue to receive notices of potential reinsurance claims from ceding insurance companies which have in turn received claims asserting environmental and asbestos losses under primary insurance policies, in part reinsured by Group companies. Such claims notices are frequently merely precautionary in nature and generally are unspecific, and the primary insurers often do not attempt to quantify the amount, timing or nature of the exposure. Due to the imprecise nature of these claims, the uncertainty surrounding the extent of coverage under insurance policies and whether or not particular claims are subject to an aggregate limit, the number of occurrences involved in particular claims and new theories of insured and insurer liability, we can, like other reinsurers, only give a very approximate estimate of our potential exposures to environmental and asbestos claims that may or may not have been reported. Nonetheless, due to the changing legal and regulatory environment, including changes in tort law, the final cost of our exposure to asbestos-related and environmental claims may be increasing in undefined proportions. Diverse factors could increase our exposure to the consequences of asbestos-related risks, such as an increase in the number of claims filed or in the number of persons likely to be covered by these claims. These uncertainties inherent to environmental and asbestos claims are unlikely to be resolved in the near future, despite several aborted regulatory attempts in the U.S. for containing the overall costs related to asbestos. Evaluation of these risks is all the more difficult given that claims related to asbestos and environmental pollution are often subject to payments over long periods of time. In these circumstances, it is difficult for us to precisely estimate the reserves that should be recorded for these risks and to guarantee that the amount reserved will be sufficient.
Case reserves have been established when sufficient information has been developed to indicate the involvement of a specific reinsurance contract. In addition, incurred but not reported reserves have been established to provide for additional exposure on both known and unasserted claims. These reserves are reviewed and updated continually. In establishing liabilities for asbestos and environmental claims, management considers facts currently known and the current legal and tort environment. The Group may be required to increase the reserves in future periods if evidence becomes available to support that the latent claims will develop above the recorded amounts. As a result of all these uncertainties, it cannot be excluded that the final settlement of these claims may have a material effect on the Group’s results of operations and financial condition.
See “Item 3.D. Risk Factors – We could be subject to losses as a result of our exposure to environmental and asbestos-related risks”.

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The following table shows information related to the Group’s asbestos and environmental gross claims reserves and LAE paid:
                                                 
    Year ended December 31,
     
    Asbestos(1)   Environmental(1)
         
    2003   2004   2005   2003   2004   2005
                         
    (EUR, in millions)
Gross Non Life claims reserves, including IBNR reserves
    109       98       111       59       54       39  
% of total loss and LAE reserves
    1.5 %     1.6 %     1.7 %     0.8 %     0.9 %     0.6 %
Non Life claims and LAE paid
    15       15       12       13       5       7  
% of the Group’s total net Non Life claims and LAE paid
    0.6 %     0.9 %     0.7 %     0.5 %     0.3 %     0.4 %
 
(1) Asbestos and environmental (A&E) reserve data includes SCOR’s estimated A&E exposures in respect of its participation in the Anglo French Reinsurance Pool, for which A&E exposures for the years shown were as follows:
  The 2003 reserves were EUR 19 million and EUR 18 million for asbestos and environmental, respectively. The 2003 paid claims and LAE were EUR 0.6 million and EUR 0.9 million for asbestos and environmental, respectively.
 
  The 2004 reserves were EUR 18 million and EUR 16 million for asbestos and environmental, respectively. The 2004 paid claims and LAE were EUR 0.3 million and EUR 0.3 million for asbestos and environmental, respectively.
 
  The 2005 reserves were EUR 15 million and EUR 8 million for asbestos and environmental, respectively. The 2005 paid claims were EUR 1.7 million and EUR 1 million for asbestos and environmental, respectively.
The exposure to environmental risks has dropped significantly in the last three years because of agreements on major claims and the commutations executed by the Group on several policies related to pollution claims covering earlier years.
As a result, in 2005, SCOR’s exposure to asbestos and environmental risks fell by EUR 11 million from the previous year because of the commutations carried out.
More generally, SCOR has developed a policy of buying back its longstanding liabilities on asbestos and environmental exposures whenever the possibility exists to do so on a commercially reasonable basis, whenever SCOR determines, based on its assessment of the potential exposure of the Group based on actuarial techniques and market practices, that the terms of the final negotiated settlement are attractive in light of the possible development of future liabilities. Preference is given to selected treaties with regard to specific circumstances such as the maturity of claims, the level of claims information available, the status of cedents and market settlements. It is the intention of management that this commutation policy be further pursued and developed in 2006 and in subsequent years. It is anticipated that the policy will affect settlement patterns to a limited degree in future years. These changes in settlement patterns may improve predictability and reduce potential volatility in the reserves.
SCOR’s exposure to asbestos and environmental liabilities stems from its participation in both proportional and non-proportional treaties and in facultative contracts which have generally been in run-off for many years.
Proportional treaties typically provide claims information on a global treaty basis, and as a result specific claims data is rarely available. With respect to non-proportional treaties and facultative contracts, normal market practice is to provide a specific proof of loss for each individual claim, making it possible to record total claims notified for such contracts. With respect to environmental exposures, most of SCOR’s identified claims stem from its U.S. subsidiary operations, with less significant amounts recorded by its European subsidiaries. The claims costs

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are invoiced by the ceding companies at the same time as the claims themselves. No significant cost for litigation was incurred under these commitments.
                 
    Year ended December 31, 2005
     
    Asbestos   Environmental
         
Number of claims notifications with respect to non-proportional treaties and facultative contracts
    7,961       7,219  
Average cost per claim(1)
    EUR 14,689       EUR 4,338  
 
(1) Not including claims that were settled at no cost, and claims of a precautionary nature not quantified in amount.

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INVESTMENTS
General
In the year ended December 31, 2004 the Group’s total investments, including cash, rose from EUR 8,119 million to EUR 8,435 million.
The portion invested in trading equities increased from EUR 740 million to EUR 778 million at the end of 2004. At the same time, the portion invested in bonds rose about EUR 142 million. The duration of the bond portfolio generally declined over the year from 4.2% to 3.9%. With respect to the quality of credit, the bond portfolio continued to be heavily invested in AAA bonds (about 70%), i.e. in securities issued or secured by governments or in blue chip securities.
The portion invested in real estate remained stable at about 4% of the assets on the basis of amortized cost.
The currency allocation remained stable over the year, with about 50% invested in USD, and 36% invested in euros.
In the year ended December 31, 2005 the Group’s total investments, including cash, decreased from EUR 8,435 million to EUR 8,324 million.
As in the previous year, the portion invested in stocks was increased to 11.4% of the assets, compared with 5.7% at the beginning of the year. Most of the stock investments were in European large market capitalization.
At the same time, the portion invested in bonds dropped to about 64.8% of total assets (EUR 398 million including trading and available for sale investments. The duration of the bond portfolio also declined slightly over the year from 3.9% to 3.8%. In terms of credit quality, most of the bond portfolio continued to be invested in AAA bonds (for approximately 71%), primarily securities issued or secured by governments or in securities of very high-quality issuers.
The portion invested in real estate remained stable at approximately 4% of assets on the basis of amortized cost.
The portion invested in U.S dollar denominated assets rose slightly to 52% and the portion invested in euro denominated assets dropped slightly to 33%.
In the first quarter of 2006, the policy to increase the portion invested in stocks continued.
The following table summarizes net investment income of the SCOR Group’s portfolio for 2003, 2004 and 2005. See also Note 4 to the consolidated financial statements included in “Item 18. Financial Statements”.
Consolidated Net Investment Income
                                                                             
    Year ended December 31,
     
    2003   2004   2005
             
        Realized       Realized       Realized
        Pre-tax   Gains       Pre-tax   Gains       Pre-tax   Gains
    Income   Yield(1)   (Losses)   Income   Yield(1)   (Losses)   Income   Yield(1)   (Losses)
                                     
    (EUR in millions)
Fixed maturity securities
    265       4.8%       93       244       4.4%       27       221       4.2%       48  
Equity securities
    3       1.1%       14       6       1.4%       17       7       1.4%       45  
Trading equity securities
    47                       3                   49                  
Short term and other(2)
    100       4.7%       10       112       4.4%       (2 )     95       3.2%       6  
Less investment expense
                                                                       
 
Swap interest
    (8 )                     (7 )                     (5 )                
 
Administration expense
    (29 )                     (33 )                     (33 )                
 
Other
    (52 )                     (43 )                     (33 )                
                                                       
   
Total
    326               117       282               42       301               99  
                                                       

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(1) Pre-tax yield is calculated as investment income (including dividends in the case of equities) divided by the average of the beginning and end of year investment balances. Investment balances were at fair value, except for equities for which cost was used. Investment balances were converted into euro from local currencies at year-end exchange rates.
 
(2) Includes swap income of EUR 3 million in 2003, EUR 8 million in 2004 and EUR 2 million in 2005. Other swap-related net income is included in realized and unrealized capital gains (and losses).
Portfolios
The following table details the distribution by category of investment of the Group’s insurance investment portfolio by net carrying value:
Consolidated Investment Position
                                                   
    2003                
                     
        2004        
                 
    Net carrying value as of December 31,
     
        2005
         
    )
    (EUR in millions
Fixed maturities available for sale, at fair value
    5,130       64 %     5,272       63 %     5,237       63 %
Equity securities, available for sale
    109       1 %     265       3 %     769       9 %
Trading Investments
    740       9 %     778       9 %     335       4 %
Short term investments
                                   
Other long-term investments
    316       4 %     322       4 %     317       4 %
Cash and cash equivalents
    1,824       22 %     1,798       21 %     1,666       20 %
                                     
 
Total
    8,119       100 %     8,435       100 %     8,324       100 %
                                     
See Note 4 to the consolidated financial statements included in “Item 18. Financial Statements” for a breakdown of amortized costs and estimated fair values of fixed maturity investments by major type of security, including fixed maturities held to maturity and available for sale as of December 31, 2003, 2004 and 2005.
The following table presents the Group’s fixed maturities by counterparty credit quality, including fixed-maturities classified as trading, as of December 31, 2005:
                   
    As of December 31, 2005
     
    Net carrying   % of total net
Rating   value   book value
         
    (EUR, in millions)
AAA
    3,824       71 %
AA
    573       11 %
A
    621       11 %
BBB
    310       6 %
Below BBB
    22       0 %
Unrated
    45       1 %
             
 
Total
    5,395       100 %
             
See Note 4 to the consolidated financial statements for a breakdown of fixed maturities included in the Group’s portfolio by remaining maturity as of December 31, 2005.

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INFORMATION TECHNOLOGY
SCOR has a uniform global Information System used in all locations worldwide, with the exception of CRP.
Its core reinsurance back-office system is a custom application, called Omega. Omega is designed to allow for Group-wide relationship, follow up with clients and insureds, worldwide online facultative clearance, claims monitoring analysis of the technical profitability of contracts, and quarterly closing based on ultimate result estimates.
In addition to the reinsurance administration system, SCOR has implemented the PeopleSoft software package solutions for human resources and finance. SCOR is promoting a paperless environment. Internally, imaging solutions have been implemented worldwide for document sharing within the Group. With its clients, SCOR is able to process automatically electronic reinsurance accounts, formatted in the ACORD standard, without any re-keying. New electronic exchanges have been put in place in 2005 with large international brokers.
The SCOR technical environment is based on an international secured network. Corporate technical standards have been implemented in all locations, either on personal computers or servers. The Group has implemented an ambitious security plan, with a strong focus on strengthening physical and logic access controls, protection against unauthorized access, and restarts in the event of a disaster.
The Group is in the process of defining a strategic plan called the “IS2008 strategy”, which sets out the evolutions of the information system based on the SCOR business strategy. The IS2008 strategy is the first component of the Group’s information system governance, which is now largely set up, and provides scorecards and a standard way to evaluate value created by systems.
Most of SCOR’s efforts in 2005 have been dedicated to front-office applications for an improved risk selection, anticipation and reactivity on markets and products. The management system has thus been expanded to strengthen information on business lines and market development. From the underwriting plan, an accounting forecast is built, and comparative analyses are performed through standard adequate reports. A new P&C underwriting and rating system, which includes price modeling, profitability criteria, and claims simulation capacity, was implemented in 2005, demonstrating the emphasis SCOR places on enhancing risk control.
The portal has been designated as the central repository for sharing all information, whether internal or collected from outside sources.
INSURANCE AND RISK COVERAGE (EXCLUDING REINSURANCE ACTIVITY)
SCOR, both at the level of the parent company and the subsidiaries, operates a financial business. Therefore, it is not dependent, as industrial companies may be, on a manufacturing tool, and generates few physical risks for its immediate environment.
Some of SCOR’s major assets include its IT network and its communication tools, which are regularly updated to reflect technological progress.
In these fields, emergency solutions have been organized off-site such as system duplication and data backup, to allow business continuity in the event of a major incident. Catastrophic scenarios that could affect SCOR’s entire working tool are being studied and will lead to the revision of the business continuity plan.
The properties and other assets of SCOR and its subsidiaries are covered locally for replacement value through property and fire damage and comprehensive IT risk policies. The levels of self-insurance depend on the risks insured and are generally less than EUR 15,000 in deductibles per claim.
Liability risks are covered at Group level in amounts considered to be sufficient.
Third-party liability risks related to the operation of the company due to employees and properties are insured for EUR 15 million. Professional liability risks are insured for EUR 20 million above a self-insurance charge of EUR 2 million. The Group is covered against the civil liability of its officers and directors. In addition, it has EUR 10 million in fraud coverage. All of these insurance policies are with first-tier insurers.

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The management of the Group’s property and liability insurance is subject to a validation procedure during which a steering committee composed of specialist employees is asked to issue an opinion every six months. Assessment of the strategies pursued is performed by the Chief Risk Officer (CRO).
REGULATION OF THE REINSURANCE INDUSTRY
The Company is a French société anonyme governed by French legislation on corporations, subject to specific provisions applicable to it as a company engaged in reinsurance. Since Law No 94-679 of August 8, 1994, reinsurance companies in France are subject to State control under the conditions defined in Book III of the French Insurance Code.
The terms and scope of this control were considerably reinforced by Law No. 2001-420 of May 15, 2001. For example, the law introduced the following provisions:
  the institution of a prior authorization procedure for French companies whose exclusive business is reinsurance, prior to being permitted to engage in this business. However, as the application texts were not adopted, this procedure has not yet come into effect;
 
  the possibility for the French Insurance regulator (A.C.A.M.) to send warnings when a company violates applicable legislative or regulatory provisions;
 
  the introduction of new sanctions to be imposed by the A.C.A.M. on reinsurance companies for violations of applicable legislative or regulatory provisions; and
 
  the possibility of withdrawing approvals in the event of prolonged inactivity, failure to maintain a balance between the company’s financial situation and its business or, if the general interest requires, substantial modification in the company’s stock ownership or governing bodies.
There is no European regulatory framework, at present, harmonizing the supervision of reinsurance across Europe. On November 16, 2005, directive number 2005/68/EC was adopted by the European Parliament and the European Council which established, for reinsurance companies located within the European Community, a unique approval regime granted by the supervisory authority of the State in which the company has its corporate headquarters, recognized in all Member States, as well as financial supervision exercised by such authority. Furthermore, this directive establishes the regulations related to the solvency of reinsurance companies located within the European Community, thereby aiming to harmonize the inspections to which such companies are subject. The provisions of the directive should be transposed into national law by the Member States no later than December 10, 2007. Within this same time frame, established reinsurers must comply with the provisions of the directive related to the operation of their activities. However, at the time of the transposition of the directive into national law, the legislators of the various Member States may grant such companies an additional period of 12 months (i.e. until December 10, 2008) in order to comply with certain provisions of the directive, in particular those related to technical reserves, solvency ratios and loss reserve fund requirements.
In the United States, the Group’s reinsurance and insurance subsidiaries are regulated primarily by the insurance regulators in the State in which they are domiciled, but they are also subject to regulation in each State in which they are licensed or authorized. SCOR Reinsurance Company, the Group’s principal Non Life subsidiary in the United States, is domiciled in New York State and SCOR Life U.S. Re Insurance Company, the principal Life subsidiary in the United States, is domiciled in Texas. The Group’s other subsidiaries in the United States are domiciled in Arizona, Delaware, Texas and Vermont, and one subsidiary is also commercially domiciled in California.
Solvency margin
In the reinsurance industry, the solvency margin is defined as the ratio between shareholders’ equity to net premiums, and serves to indicate the amount of capital base required to write reinsurance contracts.
The book solvency margin is defined as the ratio to book shareholders’ equity, while the economic solvency margin also comprises certain components of long-term borrowing that qualify for inclusion in equity.

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Even though there is, at present, no regulatory solvency margin defined in the reinsurance sector in the European Union (except in the United Kingdom), European reinsurers consider economic solvency margins of between 40% and 50% of net written premium appropriate. This ratio is between 80% and 100% for American reinsurers. In light of the loss accounted for in 2003, the Group’s solvency margin has been reduced. But, following the completion of the capital increases in 2002, 2004 and 2005 and the reduction of the gross premium written in 2005, the solvency margin very clearly improved in 2004 and 2005.
C.  ORGANIZATIONAL STRUCTURE
OPERATIONS
General
As of December 31, 2005, the Group’s Non-Life reinsurance operations are conducted primarily through the Property-Casualty Treaty reinsurance, Facultatives and Large Corporate Accounts operating divisions of SCOR, which are all part of the Global P&C sector, as well as through ten European, North American and Asian subsidiaries, each of which operates primarily in its regional market. The life, accident, disability, health, unemployment and long-term care operations of the Group are conducted mainly through SCOR VIE, a wholly-owned SCOR subsidiary, since December 1, 2003. SCOR VIE operates mainly through its branches in Italy, Germany and Canada as well as through SCOR Life Re U.S. The subsidiary Commercial Risk Partners (CRP) Bermuda is an ART specialized subsidiary which has been placed in run-off since January 2003. The following sets forth the Group’s reinsurance subsidiaries as of December 31, 2005, their respective country of incorporation, and the main markets served by each entity:
(ORGANIZATION CHART)
The current existing Group structure had been developed to facilitate access to domestic markets through local subsidiaries and branch offices, to provide for clearly identified profit centers in each major primary reinsurance market, and to develop local management and underwriting expertise in order to better attract, service and maintain relationships with local cedents and better understand the unique nature of local risks.
In connection with the Project New SCOR announced in June 2005, SCOR has transferred its Non-Life reinsurance activities in Europe, comprising Treaty underwriting and management, Large Corporate Accounts, Credit & Surety and Construction reinsurance, to a wholly-owned subsidiary of SCOR registered in France called SCOR Global P&C (formerly Société Putéolienne de Participations). Such transfer was approved by the shareholders’ meeting held on May 16, 2006 and is effective as of January 1, 2006.

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This reorganization represents an important step in the strategy of SCOR and has been carried out with a view to simplifying the legal structure of the Group by streamlining the Group into two subsidiaries dedicated to Life and Non-Life business, respectively. SCOR SA will remain the holding company and owner of the US, Canadian and Asian Non-Life subsidiaries (although these entities will report to SCOR Global P&C for their operational activity). SCOR SA will benefit from the retrocession of its Life and Non-Life reinsurance subsidiaries, and will be responsible for the allocation of capital and resources within the Group, based on the underwriting needs and the determined capacities of each entity.
The Group’s headquarters in Paris determines underwriting policy and monitors risk accumulation, controls claims and provides actuarial, accounting, legal, administrative, systems, internal audit, investment and human resources support to subsidiaries. The Group’s worldwide offices are connected through a backbone network and application, data and exchange systems, allowing local access to centralized risk analysis, underwriting or pricing databases, while at the same time allowing information on local market conditions to be shared among the Group’s offices worldwide. In addition, through regular exchanges of personnel between Group headquarters in Paris and its non-French subsidiaries and branch offices, the Group encourages professional development and training across its various geographic markets and business lines.
SCOR wholly owns its operating subsidiaries (excluding the shares held by members of the Board as required pursuant to French law and our by-laws). SCOR also makes loans to its subsidiaries. Lastly, whenever necessary, SCOR acts as retrocessionnaire vis-à-vis its subsidiaries.
D.  PROPERTY, PLANTS AND EQUIPMENT
On December 29, 2003, SCOR sold the Group’s headquarters, consisting of more than 30,000 square meters of offices located at 1, avenue du Général de Gaulle, 92074 Paris La Défense, to the German investment fund KanAm for EUR 149,500,000. On the same date, SCOR and KanAm entered into a nine-year lease agreement for this same building for an annual rent equal to EUR 11 million per year. Under this lease and in addition to customary guarantees, KanAm asked for financial guarantees based both on SCOR’s financial rating and the term of the lease. For more information on these guarantees, see Note 16 to the consolidated financial statements included in “Item 18. Financial Statements”.
Under U.S. GAAP, SCOR is still considered for financial reporting purposes as the owner of the building. The Group also rents space separate from its home office for the purpose of safeguarding its data handling capability in case of emergency. The Group also owns offices in Hanover (Germany), Milan (Italy), and Singapore, which it leases to third parties as part of its investment management business and in which its local subsidiaries have their corporate headquarters. The Group leases office space for its other business locations. SCOR believes that the Group’s office space is adequate for its present needs. SCOR also holds property investments as part of its asset management related to its reinsurance operations.
Item 4A.  Unresolved Staff Comments
Not applicable.
Item 5.  Operating and Financial Review and Prospects
A.  OPERATING RESULTS
You should read the following discussion together with the consolidated financial statements of SCOR and the notes thereto included elsewhere in this annual report. The consolidated financial statements of SCOR included herein and the financial information discussed below have been prepared in accordance with U.S. GAAP. SCOR also publishes consolidated financial statements, not included herein, prepared in accordance with IFRS, which differ in certain respects from U.S. GAAP.
Overview
In 2005 and 2004, like most other reinsurers, SCOR was affected by the abnormally high frequency of natural disasters throughout the world, and particularly, in 2005, due to a storm in Europe, five hurricanes in the United

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States and Mexico, and a number of large claims for natural occurrences that were smaller in scope. Hurricanes Katrina, Rita and Wilma generated a total claims expense estimated before taxes and retrocessions, of EUR 177.6 million at the end of 2005. The storms Erwin/Gudrun generated a total claims expense estimated before taxes and retrocession of EUR 21.5 million, while hurricanes Stan and Emily, the floods in Europe and the Mumbai flood in India generated a total claims expense estimated before taxes and retrocession of EUR 40 million.
At the same time, companies’ assets and surplus were adversely impacted by the stock market crisis in 2001 and 2002, as the world’s major stock markets lost between 40% and 60% of their value and interest rates continued to fall. Historically, financial and underwriting cycles have been asynchronous, with investment income offsetting technical losses, and vice versa. In recent years, however, insurance and reinsurance companies’ liabilities have increased significantly, but their assets have decreased simultaneously.
As a result of these developments, major insurance companies have revised their underwriting policies and developed measures to improve risk analysis and selection, and adjust rates. They have also refocused their investment portfolio in light of falling equity markets and interest rates.
The unprecedented loss that hit the industry over prior years led to pricing adjustments that were needed and expected by reinsurers. Although Property-Casualty rates did not reach the level of 2002, they remained hard in 2003, 2004, and, to a lesser extent, 2005. This was true for the business overall, and more particularly for some Casualty lines which, due to persistent poor developments over recent years, were first in need of pricing reevaluations. The Life/ Accident and Health markets continued to develop, offering reinsurance opportunities to respond to new needs of new operational structures.
As the performance of financial markets and reinsurers improves and reinsurance capacity increases, however, ceding companies are more inclined to ask for price reductions in the most profitable lines of business and underwriting quality tends to decline. After three years of strong premium rate increases, the reinsurance industry has been experiencing a plateau in most lines of business in 2005, except general liability, and a moderate decrease in the reinsurance market in 2005. See “Item 3.D. Risk Factors – The insurance and reinsurance sectors are cyclical, which may impact our results”.
Exchange Rate Fluctuations
The following table sets forth the value of one euro in our subsidiaries’ main functional currencies, used in the preparation of the Group’s consolidated financial statements for balance sheet items (year-end exchange rates) and income statement items (average yearly rates) as published by Natexis bank at each month end.
                                                 
    Value of one euro in each currency
     
    Year-end exchange rates   Average annual exchange rates for
    as of December 31,   the year ended December 31,
         
    2003   2004   2005   2003   2004   2005
                         
U.S. Dollar
    1.263       1.3604       1.182       1.141       1.244       1.240  
Canadian Dollar
    1.623       1.648       1.380       1.587       1.619       1.502  
British Pound
    0.705       0.709       0.688       0.693       0.679       0.682  
Singapore Dollar
    2.145       2.228       1.968       1.986       2.010       2.061  
SCOR books its operations in approximately 100 local currencies. All these currencies are then converted into euro. The fluctuation of the main transaction currencies of the Group in comparison to the euro has an important impact on income statement items and balance sheet items. In particular, when a currency is not matched (i.e. there is a surplus in assets or liabilities in one currency), the variation of exchange rate from one period to another has a direct impact on the foreign exchange result. See “Item 3.D. Risk Factors – We are exposed to the risk on foreign exchange rates”.

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Business Segments
Our operations are organized into the following two business segments: the Property-Casualty segment and the Life/Accident & Health segment. Property-Casualty segment is further organized into two sub-segments: Property & Casualty Treaty and Large Corporate Accounts’ treaties underwritten on a facultative basis. Within each segment, we write various classes of business, as indicated below. Responsibilities and reporting within the Group are established based on this structure, and our consolidated financial statements reflect the activities of each segment.
Credit, Surety and Political Risks relates to reinsurance treaties, either proportional or non-proportional, with companies specialized in credit insurance.
In 2004, SCOR merged its Credit, Surety and Political Risks business into a sub segment of its Non-Life segment in its financial statements since it was a relatively small treaty business and, accordingly, its Credit, Surety and Political Risks business is no longer treated as a separate business segment in its financial statements. The presentation contained herein has been revised for prior years to reflect such reclassification.
SCOR’s Alternative Reinsurance Treaty business has been limited to underwriting within its Bermudan subsidiary, Commercial Risk Partners, which has been in run-off since January 2003. Therefore, in 2004, SCOR merged its ART business into a sub segment of its Property-Casualty segment in its financial statements since SCOR is no longer active in this business. The presentation contained herein has been revised for prior years to reflect such reclassification.
Consolidated Results of Operations
We recorded a net profit of EUR 165 million for the year ended December 31, 2005 compared to a net profit of EUR 247 million in 2004 and a net loss of EUR 512 million in 2003. The following discussion addresses the principal components of our revenues, expenses and results of operations in each of those years.
Premiums
Gross premiums written
The following table sets forth the Group’s gross premiums written for the years ended December 31, 2003, 2004 and 2005:
                               
    Year ended December 31,
     
    2003   2004   2005
             
    (EUR, in millions)
Gross premiums written
                       
 
Property-Casualty
                       
   
Treaty Property-Casualty
    1,690       1,064       996  
   
Credit, Surety & Political Risks
    65       38       52  
   
Large Corporate accounts
    569       261       335  
                   
   
Alternative Reinsurance
    (1 )     2       0  
                   
     
Total Property-Casualty
    2,323       1,365       1,383  
 
Life/Accident & Health
    983       880       875  
                   
   
Total
    3,306       2,245       2,258  
                   
Gross premiums written increased by 1% in 2005 from EUR 2,245 million in 2004 to EUR 2,258 million in 2005. In 2004, gross premiums decreased by 32% from EUR 3,306 million in 2003 to EUR 2,245 million in 2004. The one-third reduction in the volume of gross written premiums in each of 2004 and 2003 resulted primarily from the combination of the following constraining factors: the implementation of the “Back on Track” plan, the lowering of the Group’s financial strength ratings and, in 2003, the negative impact of the fluctuations in exchange rates.

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In 2005, the Property-Casualty segment represented 61% of our overall gross premiums written, compared to 61% in 2004 and 70% in 2003. Within the Property-Casualty segment, Property-Casualty Treaty accounted for 72% of overall gross premiums written in 2005, compared to 78% in 2004 and 73% in 2003, while Large Corporate Accounts represented 24% of overall gross premiums written in 2005, compared to 19% in 2004 and 24% in 2003. Credit, Surety and Political Risks’ share represented 4%, 3% and 3% of Property-Casualty overall gross premiums written in 2005, 2004 and 2003, respectively, while Alternative Reinsurance still represented 0% of Property-Casualty overall gross premiums written in 2003, 2004 and 2005 following the Group’s decision to cease business underwritten by CRP.
Life/Accident & Health represented 39% of overall gross premiums written in 2005, compared to 39% in 2004 and 30% in 2003.
Conclusion of the “Back on Track” plan and implementation of the “SCOR Moving Forward” plan. SCOR’s “Back on Track” plan was implemented in 2002 and was effective for both 2004 and 2003 renewals. Pursuant to the “Back on Track” plan, SCOR has shifted its underwriting towards:
  “short-tail” business, which allows a clearer view of prospective business and which does not carry the same level of risk for future results and the inherent difficulties in calculating necessary reserves that are associated with “long-tail” business as a result of the long term nature of the litigation and inflation of claims; and
 
  non-proportional business, where SCOR underwriters and actuaries are better able to establish prices that are less susceptible to the adverse effects of the ceding companies’ underwriting and pricing.
This restructuring plan refocused underwriting activities on profitable businesses such as Life/Accident & Health, Large Corporate Accounts and Property & Casualty Treaty. The plan also refocused on profitable regions. The “Back on Track” plan included the exit of a number of unprofitable lines of business in the U.S. as well as the discontinuation of alternative risk transfer and credit derivatives underwriting.
In 2004, the plan had met its four major objectives, including:
  strengthening the Group’s reserves;
 
  replenishing the Group’s capital base through two capital increases;
 
  right-sizing the Group by reducing premium underwriting and implementing the Group’s new underwriting policy, focusing on “short tail”, non-proportional treaties and large business underwriting in Property-Casualty, either primary or through large facultatives, when capacity and pricing are adequate; and
 
  restructuring the Group, particularly by putting in place a new board of directors, new management and new procedures.
In the second half of 2004, the Board of Directors adopted a new strategic plan for 2005 through 2007, entitled “SCOR Moving Forward”. The “SCOR Moving Forward” plan is a business model designed to achieve SCOR’s objectives through a profitability-focused underwriting plan and an optimal allocation of the capital base throughout the different stages of the business cycle. The plan seeks to maintain SCOR’s client base in Europe, Asia, North America, and emerging countries, and regain shares in treaties where premium rates, terms and conditions meet the Group’s return on equity requisites. On the basis of this modeling of underwriting policy for 2005 through 2007, the Group’s objective is to maintain profitability and ensure solvency.
Impact of changes in the Group’ financial strength rating. The downgrading of SCOR’s financial strength ratings in 2003 affected SCOR’s business development during 2004 and 2003. In 2003, Standard & Poors’ downgraded SCOR’s financial strength rating from A- to BBB+. On November 6, 2003, A.M. Best Co. changed the under review status of SCOR’s financial strength rating of B++ (Very Good) to negative from developing and on December 1, 2004 A.M. Best Co. affirmed the financial strength rating of B++ (Very Good) of SCOR (Paris) and its core subsidiaries. On November 19, 2003, Fitch Ratings downgraded SCOR Group’s major reinsurance entities’ Insurer Financial Strength (IFS) rating to BB+ from BBB.

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In November 2004, Standard & Poor’s Rating Services revised its outlook on SCOR and guaranteed subsidiaries rating to positive from stable. At the same time, SCOR’s BBB+ ratings for insurer financial strength and senior debt were affirmed. In December 2004, A.M. Best affirmed the financial strength rating of B++ (Very Good) of SCOR (Paris) and its core subsidiaries and assigned an issuer credit rating of bbb+ to these companies. In December 2004, Moody’s Investors Service announced that it had upgraded SCOR’s Insurance Financial Strength Rating to Baa2 from Baa3, Senior Debt Rating to Baa3 from Ba2 and Subordinated Debt Rating to Ba2 from Ba3.
On August 1, 2005, the ratings agency S&P raised SCOR’s financial solvency rating from BBB+ to A-. The rating for the Group’s senior debt was also raised from BBB+ to A- and subordinated debt from BBB- to BBB. The outlook for the rating is stable.
On November 8, 2005, A.M. Best confirmed the financial solvency of SCOR (Paris) and its principal subsidiaries to “B++” (Very Good). The outlook for the rating is positive.
On October 7, 2005, Moody’s Investors Service announced that it had upgraded SCOR’s Insurance Financial Strength Rating from Baa2 to Baa1, its Senior Debt from Baa3 to Baa1, and Subordinated Debt from Ba2 to Baa3. The outlook for these ratings is positive.
Fluctuations in exchange rates. In 2004, the fluctuation of exchanges rates was limited, with the Group’s gross written premiums decreasing by 31% in 2004 compared to 2003 on a constant exchange rate basis as compared to 32% at current exchanges rates. In 2005 the Group’s gross written premiums increased 1% at both current and constant exchange rates.
Net premiums written
The following table sets forth the Group’s net premiums written for the years ended December 31, 2003, 2004 and 2005:
                               
    Year ended December 31,
     
    2003   2004   2005
             
    (EUR, in millions)
Net premiums written
                       
 
Property-Casualty
                       
   
Treaty Property-Casualty
    1,580       1,014       942  
   
Credit, Surety & Political Risks
    63       38       51  
   
Large Corporate accounts
    461       227       287  
                   
   
Alternative Reinsurance
    (1 )     3       0  
                   
     
Total Property-Casualty
    2,103       1,282       1,280  
 
Life/Accident & Health
    885       844       841  
                   
   
Total
    2,988       2,126       2,121  
                   
Net premiums written constitute gross premiums written during the financial year, net of retrocession, including unearned premiums. Net premiums written remain steady from EUR 2,126 million in 2004 to EUR 2,121 million in 2005, reflecting primarily the slight increase in gross premiums written of 1%. During 2004, net premiums written decreased by 29% from EUR 2,988 million in 2003 to EUR 2,126 million in 2004, reflecting the decrease in gross premiums written.
The premiums retroceded increased by 16% in 2005 and 63% in 2004 from EUR 318 million in 2003 to EUR 118 million in 2004 and EUR 137 million in 2005 due to the increase of the worldwide reinsurance rates and reflected the slight decrease of the overall retention level from 95% in 2004 to 94% in 2005 compared to 90% in 2003. Our retention level for premiums is computed as net premiums divided by gross premiums.

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Revenues
Our consolidated total revenues decreased by 3% to EUR 2,486 million in 2005 compared to EUR 2,551 million in 2004 due primarily to a 6% decrease in net premiums earned and, to a lesser extent, a 7% increase in net investment income and a 136% increase in net realized gain on investments.
In 2004, our consolidated total revenues decreased by 32% from EUR 3,767 million in 2003 to EUR 2,551 million in 2004 due primarily to a 34% decrease in net premiums earned and, to a lesser extent, a 13% decrease in net investment income and a 64% decrease in net realized gain on investments.
Net premiums earned
The following table sets forth the Group’s net premiums earned for the years ended December 31, 2003, 2004 and 2005:
                               
    Year ended December 31,
     
    2003   2004   2005
             
    (EUR, in millions)
Net premiums earned
                       
 
Property-Casualty
                       
   
Treaty Property-Casualty
    1,670       1,120       937  
   
Credit, Surety & Political Risks
    122       51       51  
   
Large Corporate accounts
    504       253       240  
   
Alternative Reinsurance
    159       3       0  
                   
     
Total Property-Casualty
    2,455       1,427       1.227  
                   
 
Life/Accident & Health
    869       800       859  
                   
   
Total
    3,324       2,227       2,086  
                   
Net premiums earned decreased by 6% in 2005 from EUR 2,227 million in 2004 to EUR 2,086 million in 2005 and represented 84% of our consolidated total revenues in 2005 compared to 90% in 2004. The overall decrease in net premiums earned resulted primarily from decreases of 16% in Treaty Property-Casualty, 5% in Large Corporate Accounts, no change in Credit, Surety & Political Risks, no premiums earned in Alternative Reinsurance and an increase of 7% in Life/ Accident & Health. The decreases in net premiums earned were due to a 1% increase in gross written premiums in 2005 and a 32% decrease in gross written premiums in 2004.
Net premiums earned decreased by 33% in 2004 from EUR 3,324 million in 2003 to EUR 2,227 million in 2004 and represented 90% of our consolidated total revenues in 2004 compared to 89% in 2003. The overall decrease in net premiums earned resulted primarily from decreases of 33% in Treaty Property-Casualty, 50% in Large Corporate Accounts, 58% in Credit, Surety & Political Risks, 98% in Alternative Reinsurance and 8% in Life/ Accident & Health. The decreases in net premiums earned were due to a 32% decrease in gross written premiums in 2004 and a 33% decrease in gross written premiums in 2003.
Net Income from investments
Net income from investment is comprised of investment income, investment expenses and realized capital gains and losses.
Investment income increased from EUR 365 million in 2004 to EUR 372 million in 2005 primarily due to a decrease in revenue from fixed-maturity securities from EUR 244 million in 2004 to EUR 221 million in 2005, an increase in revenue from equity securities from EUR 6 million in 2004 to EUR 7 million in 2005 and from trading equity securities from EUR 3 million in 2004 to EUR 49 million in 2005 and a decrease in short term investments from EUR 112 million in 2004 to EUR 95 million in 2005. Approximately 79% of invested assets were invested in fixed-maturity securities in 2005, compared to approximately 79% in 2004. Invested assets increased by 1% from EUR 6,637 million in 2004 to EUR 6,658 million in 2005.

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Investment income decreased from EUR 415 million in 2003 to EUR 365 million in 2004 primarily due to a decrease in revenue from fixed-maturity securities from EUR 265 million in 2003 to EUR 244 million in 2004 and from trading equity securities from EUR 47 million in 2003 to EUR 3 million in 2004. Approximately 79% of invested assets were invested in fixed-maturity securities in 2004, compared to approximately 82% in 2003. Invested assets increased by 5% from EUR 6,295 million in 2003 to EUR 6,637 million in 2004.
Investment expenses, mainly comprised of financial expenses, decreased from EUR 83 million in 2004 to EUR 71 million in 2005, mainly as a result of a decrease in other financial expenses.
Investment expenses decreased from EUR 89 million in 2003 to EUR 83 million in 2004.
Realized capital gains on investments increased from EUR 42 million in 2004 to EUR 99 million in 2005 primarily due to the sale of fixed and equity securities. In 2005, realized capital gains on investments amounted to EUR 99 million and consisted of EUR 48 million from the sale of fixed-maturity securities, EUR 45 million from the sale of equity securities and EUR 6 million on short term investments.
Realized capital gains on investments decreased from EUR 117 million in 2003 to EUR 42 million in 2004 primarily due to the sale of fixed-maturity securities at lower prices due to higher interest rates in 2004. In 2004, realized capital gains on investment amounted to EUR 42 million and consisted of EUR 27 million from the sale of fixed-maturity securities, EUR 17 million from the sale of equity securities and a loss of EUR 2 million on short term investments.
Expenses
In 2005, the Group’s consolidated total expenses increased by 2% to EUR 2,393 million, compared to EUR 2,356 million in 2004, or four points more than the reduction in total revenues. In 2004, the Group’s consolidated total expenses decreased by 41% to EUR 2,356 million, compared to EUR 3,976 million in 2003, or 9% more than the reduction in total revenues.
Total incurred claims decreased by 3% in 2005, while the volume of premiums earned decreased by 6% primarily due the commutations made on both Non-Life and Life business. Total incurred claims decreased by 49% in 2004, notwithstanding the reserve increases noted below, while the volume of earned premiums decreased by 33%.
Non-Life claims decreased by 1% in 2005 to EUR 1,168 million, resulting in a loss ratio of 75% in 2005 (69% in 2004), compared to a decline in Non-Life earned premium volumes of 8%. This 1% decrease resulted from commutations made on the U.S. and European business for EUR 339 million and from the increase in natural catastrophes, including hurricane Katrina in the US, which amounted to EUR 168 million.
Non-Life claims decreased by 57% in 2004 to EUR 1,176 million, resulting in a loss ratio of 69% in 2004 (98% in 2003), compared to a decline in Non-Life earned premium volumes of 39%. This decrease resulted from a combination of a better loss ratio in 2004 and the impact of EUR 272 million re-reserving in 2003 on U.S. Treaties. Losses were impacted in 2004 by hurricanes in the U.S. and Caribbean, typhoons in Asia and additional World Trade Center reserves, all of which amounted to EUR 96 million, net of retrocession, in 2004.
Life claims decreased by 8% to EUR 414 million in 2005 compared to EUR 451 million in 2004 primarily due to the commutations made on Life business for EUR 265 million. Life claims increased by 7% to EUR 451 million in 2004 compared to EUR 421 million in 2003 primarily due to a 2% increase in Life premiums earned in 2004.
Policy acquisition costs and commissions decreased by 8% to EUR 521 million in 2005, compared to EUR 568 million in 2004. This decrease is 2 percentage points more than the reduction in earned premiums. Underwriting and administration expenses increased by 4% in 2005 to EUR 141 million compared to EUR 135 million in 2004.
Policy acquisition costs and commissions decreased by 23% to EUR 568 million in 2004, compared to EUR 742 million in 2003. This decrease is 10 percentage points less than the reduction in earned premiums primarily due to the relative increase in the percentage of Proportional business in Treaty which had higher

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average commission rates in 2004 than in 2003. Underwriting and administration expenses decreased by 15% in 2004 to EUR 135 million compared to EUR 160 million in 2003 mainly due to a reduction of salary expenses.
Foreign exchange loss amounted to EUR 81 million in 2005 compared to a gain of EUR 37 million in 2004.
Foreign exchange gain of EUR 37 million in 2004 compared to a gain of EUR 147 million in 2003 was primarily due to better matching by the Company of the currencies of assets and liabilities denominated in foreign currency. As a result, the depreciation of the U.S. dollar against the euro did not have as large of a positive effect on the Company in 2004 compared to prior years.
Following the purchase of the minority interests of IRP, goodwill of EUR 3 million has been totally impaired in 2005. No impairment of goodwill occurred in 2004 and 2003.
Interest expenses were EUR 48 million in 2005 compared to EUR 49 million in 2004 and EUR 33 million in 2003. On January 1, 2005, SCOR reimbursed its OCEANE bonds issued in June 1999 with the proceeds from the 2004 OCEANE bond issuance, together with available cash.
Other operating expenses were EUR 17 million in 2005 compared to EUR 14 million in 2004 and EUR 19 million in 2003. Other operating expenses were comprised mainly of provisions for risks and charges, depreciation on bad debt and amortization of fixed assets.
In 2005, the ratio of underwriting and administration expenses to gross premiums written was 6%, compared to 6% in 2004 and 4.8% in 2003.
Income taxes
The total rate of income tax on French corporations applied on taxable income in 2005 was 34.93% compared to 35.43% applied in 2004 and 2003. The total rate of income tax on French corporations to be applied on taxable income decreased to 34.93% in 2005 and is scheduled to be decreased to 34.43% in 2006. In 2003, French tax law changed to authorize unlimited carry forward of tax losses compared to 5 years previously.
In 2005, the Group recorded a net income tax benefit of EUR 72 million compared to an income tax benefit equal to EUR 73 million in 2004 and an income tax expense of EUR 287 million in 2003.
The 2005 net income tax benefit consisted of tax benefit computed at the statutory rate equal to EUR 71 million, net of the change in valuation allowance on deferred tax assets resulting from tax loss carry forwards. The 2005 net income tax was partially offset by certain tax-exempt expenses equal to EUR 4 million and in the reduction in French corporate tax rates for 2005, which amounted to EUR 5 million.
The 2004 net income tax benefit consisted of tax benefit computed at the statutory rate equal to EUR 49 million, net of the change in valuation allowance on deferred tax assets resulting from tax loss carry forwards. The 2004 net income tax benefit was partially offset by certain tax-exempt benefits equal to EUR 14 million, the reduction in French corporate tax rates for 2004, which amounted to EUR 12 million, and by an increase in the tax on capitalization reserve and other items amounting to EUR 2 million.
In 2004 and 2005, respectively, the Company recorded a EUR 133 million and EUR 111 million reduction to the valuation allowance on French net operating losses, mainly due to improvements in the profitability and actions taken by management to sustain profitability in the future.
At December 31, 2003, the most significant factor affecting net income tax expense was a tax loss resulting from an additional valuation allowance on deferred tax assets in accordance with SFAS 109 due to a net loss of SCOR U.S. and SCOR on a consolidated basis for three consecutive years. The net impact of this additional valuation allowance on income tax is EUR 353 million. The 2003 net income tax expense consisted of a tax loss computed at the statutory rate equal to EUR 282 million, including the write off of deferred tax assets resulting from tax loss carry forwards. This net income tax loss was also due to certain tax-exempt expenses (EUR 9 million), the reduction in French Corporate tax rates for 2003 (EUR (4) million), and on a tax on a capitalization reserve and other items for EUR 10 million.

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Minority interests
There were no minority interests in 2005 compared to EUR 24 million in 2004 and EUR 26 million in 2003. The decrease in 2005 was due to the purchase of the remaining minority interests of IRP Holdings Limited business. The decrease in 2004 is due to the decrease of IRP business.
Income from investments accounted for under the equity method
Income from investments accounted for under the equity method were nil in 2005, compared to EUR (1) million in 2004 and 1 million in 2003.
On June 1, 2004 we sold our 50% stake in Unistrat, which was the only remaining company accounted for under the equity method and thus is no longer included in our accounts. The result of this transaction was recorded in the first half of 2004.
Changes in accounting standards
In July 2003, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued Statement of Position (“SOP”) 03-1, “Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts.” SOP 03-1 provides a conceptual framework that facilitates the determination of the proper accounting for various life and annuity products. SOP 03-1 requires (1) the classification and valuation of certain nontraditional long-duration contract liabilities, (2) the reporting and measurement of separate account assets and liabilities as general account assets and liabilities when specified criteria are not met, and (3) the capitalization of sales inducements that meet specified criteria and amortizing such amounts over the life of the contracts using the same methodology as used for amortizing deferred acquisition costs, but immediately expensing sales inducements accrued or credited if such criteria are not met.
SOP 03-1 was effective for financial statements for fiscal years beginning after December 15, 2003 and was adopted by the Group on January 1, 2004. The adoption resulted in a one-time cumulative accounting gain of approximately EUR 5 million before taxes, or EUR 4 million after taxes, reported as a “Cumulative effect of change in accounting principle, net of taxes” in the results of operations for the year ended December 31, 2004. This gain reflects the impact of reducing reserves for future policy benefits for certain annuity contracts in the U.S., offset by additional reserves for certain annuitization benefits and net of the related impact on amortization of PVFP.
Underwriting Results
Property-Casualty
The Property-Casualty segment is divided into four operational sub-segments: Property-Casualty Treaty, including the proportional and non-proportional treaty classes of property, casualty, marine, aviation and transportation, and construction reinsurance; Facultatives and Large Corporate Accounts, or SCOR Business Solutions, including the Group’s large facultatives business; Credit, Surety and Political Risks; and Alternative Reinsurance (ART).

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The following table sets forth premium, loss and expense data, and related ratios, for our Property-Casualty segment for the periods indicated:
                         
    Year ended December 31,
     
    2003   2004   2005
             
    (EUR, in millions)
Gross premiums written
    2,323       1,365       1,383  
Net premiums written
    2,103       1,282       1,280  
Net premiums earned
    2,455       1,427       1,227  
Net loss and LAE
    2,507       999       916  
Net commissions and expenses(1)
    613       461       393  
Underwriting (loss)
    (673 )     (17 )     (82 )
Loss ratio
    102 %     70 %     75 %
Expense ratio(1)
    25 %     32 %     32 %
Combined ratio
    127 %     102 %     107 %
 
(1) Expenses include direct charges of each business segment and indirect charges allocated by business segment pro rata according to direct expenses.
Gross Property-Casualty premiums written increased by 1% in 2005 compared to 2004 and decreased by 41% in 2004 compared to 2003. This slight increase in 2005 reflected a reverse trend and the first steps of the “moving forward” action plan. In 2004 and 2003, favorable premium rates and renewal terms and conditions remained on the whole in line with expectations and SCOR continued to focus on profitable activities, particularly on short to medium tail business.
In 2005, Property-Casualty Treaty gross premiums decreased by 6%, Large Corporate Accounts gross premiums increased by 28% and Credit, Surety and Political Risks gross premiums increased 37%. The Property Casualty business, Large Corporate Accounts and Credit and Surety businesses represented 72%, 24% and 4% of the Property-Casualty segment, respectively, in 2005 compared to 78%, 19% and 3%, respectively, in 2004. Net premium earned showed a 14% decrease in 2005 compared to 2004, reflecting the impact of the diminution of unearned premium brought forward after two consecutive years of reduced activity. Gross written premiums showed a slight 1% increase compared to 2004 while net written premium remained stable.
In 2004, Property-Casualty Treaty gross premiums decreased 37%, Large Corporate Accounts gross premiums decreased 54% and Credit, Surety and Political Risks gross premiums decreased 42%. The Property Casualty business, Large Corporate Accounts and Credit and Surety businesses represented 78%, 19% and 3% of the Property-Casualty segment, respectively, in 2004 compared to 73%, 24% and 3%, respectively, in 2003. Net premium earned showed a 42% decrease in 2004 compared to 2003, reflecting premiums earned in 2004 from 2003, while gross and net written premiums decreased by 41% and 39%, respectively.
The retention level of the Property-Casualty segment decreased by 1 percentage point to 93% in 2005 and increased by 3 percentage points to 94% in 2004. The 2005 combined ratio of the Property-Casualty segment was 107% compared to 102% in 2004. This decline, that represented an increase of 5 points of the loss ratio in 2005 compared to 2004, was primarily due to the occurrence of large catastrophe losses throughout the year. The combined ratio of the Property-Casualty segment was 102% in 2004 compared to 127% in 2003.
Our credit and surety business consists primarily of our surety business outside of the United States, including insuring commitments of financial institutions against the risk of default of their borrowers. The Group stopped the underwriting of its credit derivatives business in November 2001.
After two consecutive years of reduction in the volume of premium income, the Group increased its Credit, Surety & Political Risk gross written premiums by 37% in 2005 compared to a reduction of 42% in 2004 and 47% in 2003. This increase is partially attributable to the new opportunities offered in 2005 as well as the completion of the reductions made on past portfolios and on the Group’s surety business in the United States. In 2005, Credit, Surety & Political Risk earned premiums remained at the same level as in 2004, compared to a decrease of 58% in 2004 and a decrease of 20% in 2003, due to the starting over of the activity. On December 1,

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2003, SCOR removed its credit derivative exposures by entering into an agreement with Goldman Sachs to hedge the Group entirely against all credit events that occur on or subsequent to that date, representing a maximum loss amount of USD 2.5 billion. The overall cost for SCOR, including a related commutation transaction that took place at the beginning of the fourth quarter of 2003, amounted to EUR 45 million.
Commercial Risk Partners, the ART Bermuda-based subsidiary of SCOR, ceased writing business in January 2003. During the first quarter of 2003, SCOR began Commercial Risk Partners’ sales negotiations and started commutation negotiations with its largest ceding companies. By year-end, the sale of CRP was no longer pursued, but SCOR had succeeded in commuting approximately 60% of its alternative risk transfer portfolio. Due to the termination of activity, Commercial Risk Partners had no gross premiums written in 2003, 2004 or 2005. Commercial Risk Partners’ net premiums earned from the run-off operations was EUR 0 million in 2005 compared to EUR 0 million in 2004 and EUR 159 million in 2003, reflecting its run-off status.
The occurrence in 2005 of successive hurricanes Katrina, Wilma and Rita, caused the highest catastrophe loss ever registered in the insurance industry within a year. These major events, coupled with storm Gudrun, floods in Eastern Europe and various other natural catastrophes generated a global net pre-tax catastrophe loss of EUR 168 million for the 2005 Property-Casualty Group operations. The SCOR Group, however, still benefiting from its ongoing selective underwriting policy believes it was less exposed than the majority of its competitors to these adverse losses emanating from natural events in 2005. As a consequence, the overall Group Property-Casualty net loss ratio deterioration was limited to 5% and the net loss ratio was 75% in 2005 compared to 70% in 2004.
SCOR actively pursued its efforts to commute certain lines of business and during the course of 2005 reduced its gross Property-Casualty liabilities by EUR 314 million in connection with its run-off portfolios in North America and by EUR 25 million in connection with its asbestos and environmental liabilities in Europe.
In 2004, the loss ratio decreased to 70% despite the fact that the claims related to natural catastrophes represented a net cost of EUR 76 million for the Property-Casualty segment compared to EUR 72 million in 2003. Following a second phase verdict returned on December 6, 2004 by a New-York jury regarding the WTC tower losses, SCOR decided to book an additional, net of retrocession, reserve of EUR 20 million in the fourth quarter of 2004. In 2004, SCOR, like most other reinsurers, was affected by the unusually high frequency of events, including four hurricanes in the United States and Caribbean and a number of typhoons in Asia. The decrease of the reserves in 2004 reflects the evolution of the exchange rate, particularly the weakening of the U.S. Dollar, which accounted for approximately EUR 350 million, a large commutation in July 2004, which accounted for approximately EUR 70 million, and the run-off of ART, which accounted for approximately EUR 102 million.
In 2003, the increase in our loss reserves, based on a comprehensive review of our claims reserves at best estimate in September 2003, amounted to EUR 233 million and contributed 11 percentage points to our Property-Casualty loss ratio of 102% in 2003. The amount of claims related to natural catastrophes represented a net charge of EUR 72 million in 2003, including EUR 31 million for storms in the Midwest of America, EUR 18 million for typhoon Maemi in South Korea, EUR 12 million for floods in Italy and EUR 11 million for floods in Southwest France, compared to a net charge of EUR 94 million in 2002 for floods in Central Europe.
Property-Casualty commissions and expenses ratio remained stable at 32% between 2004 and 2005.

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Life/Accident & Health
The following table sets forth premium, loss and expense data, and related ratios, for the Group’s Life/Accident & Health segment for the years indicated:
                         
    Year ended December 31,
     
    2003   2004   2005
             
    (EUR, in millions)
Gross premiums written
    983       880       875  
Net premiums written
    885       844       841  
Net premiums earned
    869       800       859  
Net loss and LAE
    653       628       666  
Net commissions and expenses(1)
    319       266       269  
Underwriting (loss)
    (104 )     (94 )     (76 )
Loss ratio
    75 %     79 %     78 %
Expense ratio(1)
    37 %     33 %     31 %
Combined ratio
    112 %     112 %     109 %
 
(1) Expenses include direct charges of each business segment and indirect charges allocated by business segment pro rata according to direct expenses.
The Life/Accident & Health gross written premiums decreased by 1% in 2005 compared to 2004 mainly from the reduction of the volume of premiums underwritten in the United States. On the one hand, SCOR Vie compensated the natural erosion of business by new business acquired and comforted its leadership in France regarding long term care reinsurance. On the other hand, SCOR Life Re reduced its overall premium income by reducing its Annuity accounts but maintained a satisfactory level of premium income on its other lines of business.
In 2004, the gross written premiums decreased by 11% compared to 2003. This reduction, which impacted the Accident & Heath segment resulted primarily from the Accident & Health segment in which Accident and Medical Care decreased.
In 2005, net premiums written showed a slight increase below 1% point of variation compared to 2004. As a result, the retention level for 2005 remained steady at 96% as in 2004.
In 2004, net premiums written decreased by 5% compared to 2003. As a result, the retention level for 2004 increased to 96% from 90% in 2003. This 6% percentage point increase in the overall retention level of this segment was principally due to an increase of the retention on the Life/Death class of business.
Net premiums earned in 2005 increased by 7% compared to 2004 as a result of the reduction of unearned premiums closed at year end caused by the combined reduction of a certain contract covering the reinsurance of the person in Europe and the general reduction of the Accident & Health lines of business in the United States.
The 8% decrease in net premiums earned in 2004 compared to 2003 was more pronounced than the decrease in net written premiums in the same period due to the acquisition of the premiums on Long Term Care contracts, which have a larger acquisition period.
During the period from the 2000 to 2003 balance sheet years, newly obtained experience data for the industry in general and SCOR revealed medical cost inflation in the United States significantly exceeding original projections. Indeed, the actual medical consumer price index exceeded SCOR’s original projection of 7% per annum and turned out to be 14%. This effect was progressive and was recognized accordingly across these balance sheet years.
This increase happened after a few years of relatively low increases in medical costs due to the introduction of the Health Management Organizations (HMO). In the late 1990s, the effectiveness of HMOs diminished and medical expenses increased dramatically. This development was not expected by the non life insurance industry. This caused SCOR and other members of the industry to reevaluate the impact of medical costs on all of the reserves for U.S. Casualty lines of business, particularly those relating to U.S. workers compensation for underwriting

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years 1997, 1998, 1999 and 2000. The increase in reserves on the balance sheet at SCOR U.S. over the period totaled approximately EUR 929 million comprising an increase of EUR 206 million, 201 million, 197 million and 325 million in 2000, 2001, 2002 and 2003, respectively. These increases in reserves were reflected in Property-Casualty claims in the consolidated statement of operations for the corresponding year. No change in actuarial methods was made. SCOR also revised the reserves corresponding to CRP’s business in 2000 to 2003. The net technical result of these operations corresponded respectively to a loss of EUR 14 million in 2000, a loss of EUR 60 million in 2001, a loss of EUR 240 million in 2002 and a loss of EUR 170 million in 2003. These increases in reserves were reflected in Property-Casualty claims in the consolidated statement of operations for the corresponding year. No change in actuarial methods was made.
In 2005, commissions and expenses remained at a level very close to that reached in 2004. As a consequence the expense ratio decreased by two percentage points to 31% due to the increase of the net earned premiums.
In 2004, commissions and expenses decreased by 17% from 2003 due to new regulation SOP 03 01 which accelerated the amortization of the value of business acquired on the SCOR Life Re portfolio, when net premiums earned decreased 8%.
In 2005, the loss and LAE ratios remained at the same level as in 2004. Globally, the Life/Accident & Health operations showed satisfactory developments in 2005 both for current and prior accident years and the net Life/Accident & Health loss ratio stood at 78% for the second consecutive year. Also, the 2005 accounting year benefited from the release of almost the totality of the provision made at the end of 2004 for the December tsunami, having been over estimated by cedents compared with final indemnifications. During the year, SCOR effected commutations regarding its Life/Accident & Health activity for a total amount of EUR 265 million.
B.  LIQUIDITY AND CAPITAL RESOURCES
Liquidity and Capital Resources
The following table sets forth the Group’s summarized cash flows statements:
                         
    Year ended December 31,
     
    2003   2004   2005
             
    (EUR, in millions)
Net cash flows provided by (used in) operating activities
    (98 )     (229 )     (742 )
                   
Net cash flows provided by (used in) investing activities
    258       (450 )     584  
                   
Net cash flows provided by (used in) financing activities
    50       846       (242 )
                   
Effect of exchange rate changes on cash
    21       (135 )     171  
Cash and cash equivalents at beginning of year
    1,788       1,824       1,798  
Effect of changes in exchange rates on cash beginning
    (195 )     (58 )     97  
                   
Cash and cash equivalents at end of year
    1,824       1,798       1,666  
                   
In the insurance and reinsurance industries, liquidity generally relates to the ability of a company or a group to generate adequate amounts of cash from its normal operations, including from its investment portfolio, in order to meet its financial commitments, which are principally obligations under its insurance or reinsurance contracts. Future catastrophe claims, the timing and amount of which are inherently unpredictable, may create increased liquidity requirements for the Group.
The principal sources of funds for the Group’s reinsurance operations are premiums, net investment income and realized capital gains, while the major uses of these funds are to pay claims and related expenses, and other operating costs. The Group generates cash flow from operations as a result of most premiums being received in advance of the time when claim payments are required. These positive operating cash flows, along with that portion of the investment portfolio that is held in cash and highly liquid securities, have historically met the liquidity requirements of the Group’s operations. Despite the level of cash generated by SCOR’s ordinary activities, we may be required to seek full or partial external debt or equity financing in order to meet some or all

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of SCOR’s obligations. See “Item 3.D. Risk Factors – We face a number of significant liquidity requirements in the short to medium-term.”
The Group’s liquidity requirements are met on both a short and long-term basis by funds provided by reinsurance premiums collected, investment income and collected retrocessional reinsurance receivable balances, and from the sale and maturity of investments. The Group also has access to the financial markets, commercial paper, medium-term note and other credit facilities described below as additional sources of liquidity.
In the reinsurance business, operating cash flow is primarily provided by premiums written and cash is primarily used by the subsequent payment of claims. In an increasing or stable business environment, premiums received are ordinarily higher than the claims paid on prior years and the current year and generate a positive operating cash-flow. In a decreasing business environment, premiums received decrease while at the same time claims paid relating to prior years ordinarily increase, generating, as a consequence, a negative operating cash-flow.
Our operating cash outflows include claim settlements. Since cash inflow from premiums is received in advance of cash outflow required to settle claims, we accumulate funds that we invest. SCOR’s asset/liability management strategy entails minimizing asset risk, since SCOR’s core business activity, reinsurance, can expose SCOR to significant uncertainty regarding the expected timing of its liabilities. In addition, changes in SCOR’s underwriting strategy and the run-off of certain business segments have impacted the composition of SCOR’s liabilities. Consequently, SCOR has historically maintained a conservative investment policy. In general, SCOR invests in liquid, high-grade securities, with a majority (64%, 63% and 63% for each of 2003, 2004 and 2005, respectively) of its investments in fixed maturities, and a significant portion of its investments in cash and cash equivalents (22%, 21% and 20% for each of 2003, 2004 and 2005, respectively) in order to maintain sufficient liquidity to meet its expected liabilities together with a reasonably possible deviation from these expected liabilities. As a result, liquidation of fixed maturity securities should not be necessary in the ordinary course of business. As a general practice, the Group does not invest in derivative securities for the purpose of managing the relative duration of its assets and liabilities. Similarly, assets are generally invested in currencies corresponding to those in which the related liabilities are denominated in order to minimize exposure to currency fluctuations. The Group does use currency spot and forward contracts, as well as swap and other derivative contracts, to a limited extent, to manage its foreign currency exposure.
The Group’s balance of cash and cash equivalents was EUR 1,666 at December 31, 2005 compared to EUR 1,798 million at December 31, 2004 and EUR 1,824 million at December 31, 2003.
Net cash used by operations was EUR 742 million in 2005 compared to EUR 229 million in 2004 and EUR 98 million in 2003. The significant decrease in cash flow used in operating activities in 2005 was primarily due to the commutations made on SCOR U.S. and CRP business for approximately EUR 339 million and on Life/Accident & Health Business for approximately EUR 265 million.
In 2005, the Property-Casualty technical provisions for claims and unearned premiums decreased by EUR 401 million due to several commutations during the first half of 2005 made on business underwritten by SCOR U.S. and our Bermudian subsidiary CRP and on the European market which accounted for approximately EUR 339 million. The Life/Accident & Health technical provisions decreased by EUR 223 million due to commutations made on Life/Accident & Health business which accounted for approximately EUR 265 million.
In 2004, the Property-Casualty technical provisions decrease for claims (EUR (662) million) and unearned premiums (EUR (167) million) was a result of the decrease in our activities in accordance with the “Back on Track” plan which was completed at the end of the 2004 financial year. The decrease of reserves in 2004 is primarily due to the impact of exchange rate fluctuations, principally the weakening of the U.S. Dollar, which accounted for approximately EUR 350 million, a large commutation in July 2004, which accounted for approximately EUR 70 million and the run-off of our Bermudan subsidiary CRP, which accounted for approximately EUR 102 million.
In 2003, the Property-Casualty technical provisions decrease for claims (EUR (230) million) and unearned premiums (EUR (375) million) was a result of the decrease in our activities in accordance with the “Back on Track” plan which we started during the fourth quarter of 2002. In 2003, net cash used in operating activities was

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primarily due to an increase in our reserves related to certain reinsurance contracts in the United States prior to 2002 by EUR 272 million and the commutation of business underwritten by our Bermudan subsidiary CRP.
Changes in assets and liabilities resulted in net cash used of EUR 66 million in 2005 compared to net cash used of EUR 72 million in 2004. This net cash used in 2005 was mainly due to an increase of the balance receivable mostly linked to the upturn of the reinsurance cycle.
Changes in assets and liabilities resulted in net cash used of EUR 72 million in 2004 compared to net cash provided of EUR 125 million in 2003. This cash used in 2004 was mainly due to an increase of the cash deposits of EUR 266 million partly compensated by a decrease of the balance receivable of EUR (205) million due to the 29% reduction in premiums.
Net cash provided by investing activities was EUR 584 million in 2005 compared to net cash used of EUR 450 million in 2004 and cash provided by investing activities of EUR 258 million in 2003. For 2005, our investing activities consisted primarily of a net sale of fixed maturity securities amounting to EUR 921 million, the sale of one building amounting to EUR 18 million and a purchase of equity securities amounting of EUR 351 million.
Net cash used by investing activities was EUR 450 million in 2004 compared to cash provided by investing activities of EUR 258 million in 2003 and net cash used in investing activities of EUR 614 million in 2002. For 2004, our investing activities consisted primarily of a net purchase of fixed maturity securities amounting to EUR 257 million and equity securities amounting to EUR 189 million.
For 2003, our investing activities consisted of a net sale of fixed maturity securities amounting to EUR 33 million and short-term investments amounting to EUR 169 million.
Net cash used by the Group’s financing activities was EUR 242 million in 2005 compared to cash provided of EUR 846 million in 2004 and EUR 50 million in 2003. Net cash used by financing activities in 2005 was primarily due to the redemption of OCEANE bonds 1999-2005 reimbursed on January 1, 2005 for EUR 225 million, the payment of IRP Holding minority interests of EUR 183 million and the payment of a dividend distributed on 2004 results of EUR 24 million, less the issuance of 149,500,000 shares at a subscription price of EUR 1.56 on June 22, 2005, resulting in a capital increase of EUR 224 million.
Net cash provided by the Group’s financing activities was EUR 846 million in 2004 compared to EUR 50 million in 2003 and EUR 395 million in 2002. Net cash provided by financing activities in 2004 was primarily due to the issuance of 682,724,225 shares at a subscription price of EUR 1.10 on January 7, 2004, resulting in a capital increase of EUR 708 million, and a new OCEANE bond issuance on July 2, 2004 for EUR 200 million.
Net cash provided by financing activities in 2003 was due primarily to proceeds of long-term borrowings of EUR 209 million, and was partially offset by repayments of borrowings for EUR 114 million and our acquisition of minority interests in IRP for EUR 40 million.
At December 31, 2005, the Group had approximately EUR 99 million available in unused short and long-term credit lines, compared to approximately EUR 44 million at December 31, 2004 and EUR 50 million at December 31, 2003. For additional information, see below under “Item 5.E. Off-Balance Sheet Arrangements”. As of December 31, 2005, SCOR believes that its working capital is sufficient for its present requirements.
At December 31, 2005, the Group had letters of credit outstanding with a face amount of EUR 1,090 million.
The principal agreements relating to the Group’s letters of credit facilities as of December 31, 2005 are as follows:
EUR 75 million renewable credit facility with BNP Paribas
For a description of this credit facility, see “Item 7.B. Related Party Transactions”.
This credit facility was never utilized and was terminated in May 2006.

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EUR 25 million renewable credit facility with Deutsche Bank Luxembourg
On May 30, 2005, the Company entered into a renewable credit facility agreement with Deutsche Bank Luxembourg, the purpose of which is to provide the Company with short-term cash facilities to finance its general cash needs. The Credit Facility Agreement is for a term of twelve months from the date of signature. The credit may be used in the form of revolving drawdowns up to a maximum of EUR 25 million.
To guarantee its obligations under the Credit Facility Agreement, the Company is required to pledge either French Treasury Bonds (OAT) in an amount at least equal to 105% of the drawn amount, or shares for an amount at least equal to 125% of the drawn amount, or bonds in an amount at least equal to 110% of the drawn amount.
This credit facility was never utilized and was terminated in June 2006.
SCOR stand-by letters of credit facility with BNP Paribas
For a description of this stand-by letters of credit facility, see “Item 7.B. Related Party Transactions”.
The outstanding amount under the facility as at December 31, 2005 is USD 18.1 million.
SCOR VIE stand-by letters of credit facility
On November 14, 2003, in the context of the contribution of the Life business of SCOR to SCOR Vie, SCOR Vie entered into a stand-by letter of credit facility agreement with the banking syndicate referred to above. The purpose of this facility agreement is also to secure SCOR VIE’s obligations with respect to ceding companies. The initial amount of the facility was USD 110 million and was subsequently reduced by amendment to USD 85 million. As in the case of the SCOR credit facility, this credit facility requires the payment of similar banking fees and provides for similar covenants and events of default. The outstanding amount of the letters of credit is also secured by collateral given to the banking syndicate in the form of French Government OAT Bonds for an aggregate amount equal to 105% of such amount. This agreement was terminated on December 31, 2005.
SCOR VIE and SCOR Financial Services Limited USD 250 million stand-by letters of credit facility with CALYON
For a description of this stand-by letters of credit facility, see “Item 7.B. Related Party Transactions”.
The outstanding amount under the facility as at December 31, 2005 is USD 41.6 million.
SCOR and SCOR VIE USD 100 million stand-by letters of credit facility entered into with CALYON and Caisse Régionale de Crédit Agricole Mutuel de Paris et d’Ile de France on December 14, 2005.
The outstanding amount as at December 31, 2005 is USD 100 million.
SCOR and SCOR VIE USD 50 million stand-by letters of credit facility entered into with Natexis on December 19, 2005.
The outstanding amount as at December 31, 2005 is USD 50 million.
SCOR and SCOR VIE USD 200 million stand-by letter of credit facility entered into with Deutsche Bank on October 11, 2004.
On October 11, 2004, the Company and SCOR VIE each entered into a separate stand-by letters of credit facility with Deutsche Bank AG in amounts up to an aggregate of USD 200 million. The letters of credit facilities were issued to secure their respective reinsurance activities and related contracts and expire on December 31, 2005 unless earlier terminated as a result of an event of default. Interest on amounts drawn under the letters of credit accrues at the prime rate. An annual commitment fee of 0.05% of the undrawn portion of the facility is due to the bank. The facility agreements include the same type of events of default as those provided in the above stand-by letters of credit facilities. The collateral securing the amounts drawn and outstanding is comprised of U.S. Treasury bills with a percentage of overcollateralization depending on the term of such notes. Pursuant to

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amendment No. 1 dated as of November 16, 2005, the commitment has been increased from USD 200 million to USD 250 million and the final maturity date has been extended from December 31, 2005 to December 31, 2008. The outstanding amount as at December 31, 2005 is USD 6.9 million.
Letter of credit facility between Commercial Risk Reinsurance Company Ltd. and Citigroup Global Markets Ltd. dated December 22, 1999, as amended on of November 16, 2005.
The outstanding amount as of December 31, 2005 is USD 186.8 million.
EUR 200,000,000 notes due 2007 issued on June 19, 2002.
                         
Principal Amount   Term   Interest Rate   Interest Payment   Redeemable
                 
EUR 200 million
    2007     From June, 2002 to June, 2007: Fixed Rate 5.25% and complementary 2.5%     Annual     The notes will be redeemed at their principal amount on June 21, 2007.
On March 23, 1999, June 25, 1999 and July 6, 2000, the Company issued subordinated debt programs of EUR 50 million, USD 100 million and EUR 100 million, respectively. All consist of step-up notes under the following conditions:
                         
Principal Amount   Term                
                     
        Interest Rate        
                 
            Interest   Redeemable
            Payment    
                 
EUR 50 million
  Perpetual   From March, 1999 to March, 2014: EURIBOR for six-month deposits + 0.75%   March 2014 and thereafter: EURIBOR for six-month deposits + 1.75%     Semi-annual     In whole and not in part, at the option of the Company on or about March 24, 2009, or on any interest payment date falling on or about each fifth anniversary thereafter.
USD 100 million
  2029   From June, 1999 to June, 2009: LIBOR for three months deposits in USD + 0.80%   From June, 2009 to June, 2029: LIBOR for three months deposits in USD + 1.80%     Quarterly     In whole or in part, at the option of the Company on or about June 25, 2009, or on any interest payment date falling thereafter.
EUR 100 million
  2020   From July, 2000 to July, 2010: EURIBOR for three month deposits + 1.15%   From July, 2010 to July, 2020: EURIBOR for three months deposits in USD + 2.15%     Quarterly     In whole but not in part, at the option of the Company on or about July 6, 2010, or on any interest payment date falling thereafter.
C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
See “Item 4.B. Business Overview – Information Technology”.
D. TREND INFORMATION
See “Item 4.B. Business Overview” and “Item 5.A. Operating Results”.
E. OFF-BALANCE SHEET ARRANGEMENTS
We enter into off-balance-sheet arrangements in the ordinary course of business both on our own behalf and on behalf of our customers. Off-balance-sheet arrangements we enter into for our own behalf generally consist of OTC and other derivative instruments, and are described in Note 16 to the Consolidated Financial Statements.
Off-balance-sheet arrangements entered into on behalf of clients include letter of credit (LOC) transactions where the Company or its subsidiaries provide LOC coverage for all or part of reinsurance obligations to ceding companies, or where similar coverage is provided to the Company or its subsidiaries by retrocessionaires. These transactions are entered into in the ordinary course of business to comply with ceding companies’ credit or regulatory requirements. The Company and its subsidiaries also pledge securities as collateral in order to

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guarantee the payment of cedents’ reserves. The following table sets forth the off-balance-sheet commitments at December 31, 2003, 2004 and 2005:
                           
    Year ended December 31,
     
    2003   2004   2005
             
    (EUR, in millions)
Commitments received
                       
 
Unused credit lines
    50       44       99  
 
Endorsements and sureties
    68       47       12  
 
Letters of Credit
    1,285       867       1,090  
 
Other commitments
          13        
                   
Total
    1,403       971       1,201  
                   
Commitments given
                       
 
Endorsements and sureties
    90       47       25  
 
Leases
    17       10       7  
 
Letters of Credit
    594       656       645  
 
Collateralized securities
    3,226       1,885       2,080  
 
Other commitments
    139       99       162  
                   
Total
    4,066       2,697       2,919  
                   
Additionally, the Group had received EUR 27 million and EUR 29 million in security pledges from reinsurers and retrocessionaires at December 31, 2005 and 2004, respectively.
As of December 31, 2005, SCOR was not aware of factors relating to the foregoing off-balance-sheet arrangements that are reasonably likely to adversely affect liquidity trends or the availability of or requirements for capital resources. As of December 31, 2005, there were no material additional financial commitments required from Group companies in respect of such arrangements.
Guarantees
In connection with a leasing arrangement accounted for as a capital lease by the Company related to a building, the Company guaranteed the lessor against realized losses that may be incurred on the ultimate sale of the building. Under the terms of the lease, if the Company, as lessee, does not elect to exercise the bargain purchase option contained within the lease agreement, and the building is sold at a realized loss, the Group is obligated to fund this guarantee. In doing so, the Group would be required to pay the lessor to the extent that the residual value exceeds the sale price of the building. The maximum potential amount of future payments the Group could be required to fund under the guarantee is contractually limited to EUR 18 million. The guarantee expires in 2012. As of December 31, 2005, the Group has not been required to make any payments under this guarantee.
In connection with the sale of the Group’s interest in an insurance entity, the Group guaranteed the purchasers against adverse developments related to insurance and reinsurance contracts written by the entity. There is no expiration date for this guarantee. The Group believes that there is no maximum potential loss from this guarantee. As of December 31, 2004, there has been no material adverse development in the reserves concerned. Accordingly, the Group has not been required to make any payments under this guarantee as of December 31, 2005.

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F. CONTRACTUAL OBLIGATIONS
The following table sets forth the schedule of repayments of SCOR’s debt as of December 31, 2005.
           
Year   Payment
     
    (EUR, in millions)
2006
    36  
2007
    230  
2008
    5  
2009
    15  
2010
    206  
Thereafter
    414  
       
 
Total long-term debt
    906 (1)
       
 
(1) Excluding EUR 144 million related to the sale of the SCOR building.
                                           
    Payment due by period
     
        Less than       More than
Contractual obligations   Total   1 year   1-3 years   3-5 years   5 years
                     
Long term debt (principal)
    813       31       225       210       347  
Long term debt and capital lease (interest) (1)
    223       21       52       35       115  
Losses and loss adjustment expenses(2)
    6,439       1,888       1,628       1,244       1,679  
Future policy benefits(2)
    2,719       557       140       155       1,867  
Capital lease
    93       5       10       11       67  
Operating lease
                             
Purchase
                             
Other long term liabilities
                             
                               
 
Total(3)
    10,287       2,502       2,055       1,655       4,075  
                               
 
(1) Some of SCOR’s long term debt bears interest at floating rates and is denominated in U.S. dollars. The calculation of interest payments on long term debt is based on interest rates and exchange rates as of December 31, 2005.
 
(2) Given that loss reserves and future policy benefits are estimates, the payment of these estimates are generally not fixed as to amount or timing. The projected amounts included in the table are estimates based on past experience and our judgment. The projected settlement of loss reserves and future policy benefits will differ, perhaps significantly, from future payments. Deviations from these estimates are normal and are to be expected. These estimates can not be extrapolated to future underwriting years payment patterns as underwriting policy has changed and the commutation policy pursued by SCOR in the past might significantly change in the future. Additionally, estimated losses as of the financial statement date do not take into account the impact of estimated losses from future business. For further information regarding the uncertainty associated with loss reserves and future policy benefits see “Item 4.A. History and Development of the Company – Reserves” and “Item 5.G. Critical Accounting Policies”.
 
(3) Excluding EUR 144 million related to the sale of the SCOR building.
For more information, see Note 9 to the financial statements included in “Item 18. Financial Statements”. See also “Item 3.D. Risk Factors – SCOR faces a number of significant liquidity requirements in the short to medium-term”.
G. CRITICAL ACCOUNTING POLICIES
SCOR’s consolidated financial statements included in this annual report have been prepared in accordance with U.S. GAAP. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. The following presents those accounting policies that management believes are the most critical to its operations and those policies that require significant judgment on the part of management. These critical accounting policies are those which involve the most complex or subjective decisions or assessments, and relate to the recognition of premium income, the establishment of technical insurance reserves, the recording of deferred acquisition costs, goodwill, deferred taxes and the determination of the fair value of financial assets. In each case, the determination of these items is fundamental to our financial condition and

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results of operations, and requires management to make complex judgments based on information and financial data that may change in future periods. As a result, determinations regarding these matters necessarily involve the use of assumptions and subjective judgments as to future events and are subject to change, as the use of different assumptions or data could produce materially different results.
Technical Reserves
Our insurance provisions, or technical reserves, represent estimates of future payouts that we will make in respect of our Property-Casualty and Life/Accident & Health claims, including expenses relating to such claims. Such estimates are made on a case-by-case basis, based on the facts known to us at the time provisions are established, and are periodically adjusted to recognize the estimated ultimate cost of a claim. As a reinsurance company, our reserve estimates are largely based on information received from our ceding companies, which are in turn dependent on information received from their underlying insured, with the result that a significant amount of time can lapse between the assumption of risk on our part, and the ultimate payment of a claim on a covered loss event. In addition, we establish “IBNR” reserves in our Property-Casualty business to recognize the estimated cost of losses that have occurred but about which we do not yet have notice. The establishment of our technical reserves is an inherently uncertain process, involving assumptions as to factors such as court decisions, changes in laws, social, economic and demographic trends, inflation and other factors affecting claim costs. Reserves are calculated on the basis of their ultimate cost undiscounted, except for workmen’s compensation which is discounted. In our Life/Accident & Health business, the technical reserves for life benefits that we establish are based on information received from our ceding companies, together with actuarial estimates concerning mortality and morbidity trends. See also Note 3.16 to the consolidated financial statements included in “Item 18. Financial Statements”.
Reserve Segmentation:
SCOR’s overall Property-Casualty business portfolio is divided into more than one hundred different reserving segments. Every contract is assigned to a reserving segment which is defined homogenously using, among other parameters, the applicable line of business and geographical areas of underwriting.
Once a year, in light of year end actuarial studies and in order to improve the assessment of reserves estimates, modifications of criteria used to segment the portfolio can be proposed to the Group Actuarial department which then decides whether or not to implement any modifications to the portfolio segmentation criteria. During the course of the year, any new contract is allocated to the existing pre-defined segmentation.
Actuarial methods:
Reserves are actuarially determined by reserving segment, using methods consistent with industry practices and taking into account various assumptions and factors such as internal analyses, loss and exposure information provided by the ceding companies, historic loss development and trend experience, which is viewed as indicative of future loss development and trends, as well as court decisions, changes in legislation, social, economic and demographic trends, inflation and other factors affecting claim costs. SCOR’s actuaries do not determine a range of loss reserve estimates. Instead, SCOR’s actuaries determine point estimates for each reserving segment which are then aggregated to determine the total loss reserve estimate. SCOR’s management examines and challenges the actuarial determinations although the actuaries are responsible for the reserve estimates. No adjustments were made by management to the actuarially determined loss reserve estimates as of December 31, 2005.
The methods commonly used by us include, but are not limited to, the “Chain Ladder” technique, the Bornhuetter-Ferguson method (which takes into account exogenous information in the a priori loss ratio used), and the loss ratio method. The method used depends heavily on the characteristics of the reserving segments. The classical loss development factor methods are usually used for underwriting years where the information available is considered to be sufficiently reliable. For recent underwriting years, exogenous information such as underwriting information and pricing elements are taken into account and the Bornhuetter-Ferguson and loss ratio methods are used. Catastrophe claims are evaluated by using commercial catastrophe modeling systems.

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Assumptions:
In order to properly apply those actuarial techniques, a thorough knowledge of the portfolio is needed to analyze and interpret any trends. For example, changes in legislation or changes in the underwriting policies of cedents or SCOR could result in a balance sheet or underwriting effect.
From a mathematical standpoint, the assumptions to be verified for the “Chain Ladder” method are the independence of the underwriting years and similar loss development factors of a given development year. If one of these assumptions is not able to be verified, then the model can be altered. With respect to the Bornhuetter-Ferguson and loss ratio methods, the a priori expected loss ratio used reflects the projected loss ratio from the prior year adjusted for loss trends and the impact of rate changes.
Long tail:
For long tail reserving segments such as medical malpractice, motor liability and workers compensation (other than asbestos and environmental claims described below), classic reserving methods are not always directly applicable due to the long-term characteristics of these types of claims. For example, for bodily injury losses, the assessment of the ultimate cost needs to take into account the stabilization of the victim’s state of health and may also take into account a court decision, which option leads to a long duration between the occurrence of a loss and its settlement. Assumptions must also be made regarding the timing of the cash flows, contributing further to the inherent uncertainty in estimating reserves for these lines of business. Therefore, in order to complete the analysis for such reserves, additional studies are performed, taking into account various factors, such as loss and exposure information provided by the ceding companies, historic loss development and trends, medical costs, jury verdicts, regulatory environment, inflation and other factors affecting claims costs. In some cases, a more detailed analysis on a contract-by-contract basis is performed.
Asbestos and Environmental Claims:
Due to the Group’s limited activities in these types of risks, SCOR’s exposure to these losses is limited. Due to the characteristics of asbestos and environmental claims, which include:
      •   a loss which does not manifest itself until some considerable time after exposure (latency period); and
      •   large volumes of unanticipated claims or claims with a significantly misjudged scope when underwritten, other reserving techniques than the ones previously mentioned are used.
SCOR has four different methods which it can use to assess the appropriate level of reserves for asbestos and environmental claims. Depending on the historical data available for each book, SCOR applies one or more of these methods.
The first method used is the survival ratio technique, defined as the ratio of loss reserves (including IBNR) over the average of calendar paid losses over the last three years. This ratio is commonly used in the industry and by SCOR. It represents the number of future calendar years, taking into account assumptions regarding average annual claims payment that the held reserves could fund.
The survival ratio technique is very sensitive to a company’s litigation settlement philosophy and commutation activity. The three other actuarial methods used to compute reserve estimates are an “S-curves” approach, a frequency-severity method using the Manville pattern and the market share approach. It is important to note that none of these methods can be considered to be perfect. In some cases, the results of these four methods can vary significantly.
Range and Process:
SCOR believes that due to the variability and unpredictability of the many factors that impact reserve estimates such as inconsistent and unforeseeable court decisions, judicial interpretations that have broadened coverage, increases in medical costs and related liabilities, and the increasing frequency of catastrophe losses, one cannot reasonably expect the reserves to fall within any particular narrow range. This is particularly the case for the long-

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tail lines of business. For latent claims, which represent the most uncertain exposures, industry experience indicates that the upper end of the range cannot be quantified.
SCOR does not compute a range based on the volatility of losses. Therefore no actuarial range is available at the Group level. However, the SCOR Group Actuarial Department verifies on a yearly basis and for each entity of the Group, that locally recorded reserves fall within a reasonable range as commonly accepted by industry practice. At December 31, 2005 the lower end of the interval is 7% lower than the best estimate, and the upper end of the interval is 10% higher than the best estimate.
Furthermore, on specific reserving segments, SCOR actuaries conduct stress test scenarios using assumed evolution of some parameters and/or deviation of Ultimate Loss Ratios. For example, a deviation of 5% of workers compensation and non proportional casualty’s Ultimate Loss Ratios (underwriting years 1995 to 2005), would increase by around USD 75 million the amount of IBNRs for those two segments.
Each quarter, actuaries within SCOR’s local business units conduct analyses of reserves. These analyses undergo a review by local management, the SCOR Group actuarial department and the head of SCOR’s “global property and casualty” division. As part of this review, the methodologies and the underlying assumptions are challenged. Studies of independent actuaries, where conducted, are also taken into consideration. Based on these reviews the appropriate level of reserves is determined.
SCOR sets its claim reserves for assumed reinsurance operations based upon information received from the ceding companies, utilizing different methodologies used for its Property-Casualty and life/Accident & Health businesses.
Property-Casualty
SCOR’s policy is to ensure that all claims are promptly and adequately reserved. An adequate reserve is a reserve that is sufficient to cover SCOR’s entire estimated ultimate share of a loss and the expenses generated by such a loss. In accordance with this policy, the claims handling procedures at SCOR are designed (i) to ensure that reserves are adequately recorded, and (ii) that the appropriate control mechanisms are in place to allow proper monitoring of the process.
Claims are handled promptly. Upon receipt of a claim, all related documents are directed to and handled by the technical staff who verifies that the claim submission conforms to the terms and conditions of the contract, as already recorded in SCOR’s IT system (called Omega). Any issues regarding coverage are then discussed and resolved with the underwriter and, when necessary, with SCOR’s legal department and outside counsel. In addition, in each business unit dedicated staff is in charge of overseeing the claims activity. All claims in litigation are reported to, and monitored by, the Group Claims Division based in Paris.
If additional claim information is needed, the claims examiner will contact the ceding company or broker. The booking of reserves is performed promptly even if additional information from the ceding company is being requested. If the examiner’s evaluation of the claim reveals that the actual loss value is greater than the claim notice, the examiner will book an Additional Case Reserve (ACR). In cases where SCOR has knowledge of a loss (whether from the cedant, market information or media reports) but with no amount yet reported by the cedant, substitution reserves (SR) are booked by SCOR to reflect a level of reserve consistent with the exposure analysis. Substitution reserves are replaced by information reported by the cedant as soon as it is available. Both ACR and SR are dynamically adjusted as new information is obtained. SCOR’s policy is to actively seek claims’ information in order to ensure that the reserve figure booked is as adequate as possible.
Before each quarterly closing, SCOR’s technical accounting department also analyzes the backlog of claims and ensures that any material claims detected in the backlog are booked.
Claims with reserves in excess of a defined threshold are subject to committee review and a detailed written description of the claim is circulated to the management, underwriters and actuaries. Claims’ transactions are monitored regularly to verify that claim reserve and payments are accurate and that any deviation is immediately

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detected and corrected. A report of all claims posted on an accounting data basis is produced periodically in order to detect and analyze the most significant claims and check their reliability.
On a regular basis, SCOR conducts claims’ audits at the insurance companies’ premises. Such audits (i) permit an in-depth analysis of the quality of the claims’ work by the insurance companies and, as a consequence, they allow for an appraisal of the reliability of reported case reserves and (ii) permit the early detection of loss trends, legislation, jurisprudence or social inflation that could have an impact on reserves.
Lastly, the Group Claims Division performs internal audits of claims operations in order to verify that the group claims’ guidelines and group settlement and reserve policy are complied with.
Life/Accident & Health
With respect to the Life/Accident & Health business, reserves for future policy benefits are generally based on the ceding companies’ information which is usually set forth in the reinsurance treaty between the cedent and SCOR. Occasionally, specific audits can be performed on the ceding company’s books and records.
SCOR’s reserves for future policy benefits are based on cedents’ reserves, adjusted for U.S. GAAP when appropriate, or are directly calculated when individual data is available.
Reserves for future policy benefits include pending claims, benefits to be paid under the contract and Additional Technical Reserves.
These Additional Technical Reserves are calculated to take into account:
  a reserve component that SCOR has identified as an item missing in the information received from the cedent; or
 
  a Loss Recognition Reserve, when SCOR’s actuarial analysis of the reinsured risks reveals that overall losses are expected until termination of the contracts.
For the interest sensitive line of business, the benefit reserve is the account value which is considered to be a deposit.
The process described above is highly automated and controlled. SCOR’s underwriting system automatically calculates estimates for premiums, commissions and losses based on the underwriting conditions of each treaty which assists in mitigating the potential impact of backlogs, missing and/or late accounts.
Premiums
Management must make judgments about the ultimate premiums written by the Group. Due to lags in the reporting of premium data by our ceding company clients, our reported premiums written are based on reports received from ceding companies, supplemented by our own estimates of premiums written for which ceding company reports have not been received. Property-Casualty and Life/Accident & Health premiums recorded in the year correspond to the estimated premiums anticipated at the time of writing the contract. This is regularly reviewed in the course of the year to adjust for possible modifications in premiums paid under the contract. An unearned premium reserve is calculated, either on a time apportioned contract-by-contract basis, or using a statistical method when this yields as a result close to that obtained via the contract-by-contract method. See also Note 3.9 to the consolidated financial statements included in “Item 18. Financial Statements”.
Methodology
SCOR determines its estimates of assumed premiums with different methodologies for its Property-Casualty and Life/Accident & Health businesses and for proportional and non-proportional contracts.

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Property-Casualty
The estimated ultimate premium for a given contract and a given underwriting year (also called Estimated Gross Premium Income, or EGPI) is the starting point for SCOR’s premium recognition process. The determination of this EGPI depends upon the nature of the particular products comprising the Property-Casualty business.
For proportional Property-Casualty reinsurance contracts, the ultimate premium is specified by the cedent in its proposal. In the case of a proposal to renew an existing contract, the SCOR underwriter assigned to review the particular proposal verifies the validity of the information provided in the proposal against existing statistics and actual accounts recorded during the previous underwriting year in relation to the cedent’s existing contract or contracts with SCOR. The ultimate premium is revised on a regular basis according to data received and recorded during the life of the contract, including information furnished by the cedent and experience. Specific internal reports are also available for these verifications and controls, including pattern models. The recorded estimated premium is the difference between the latest revised ultimate premium (prorated for the contract risk period) and the actual partial premium received and recorded from the cedent company to date.
For the non-proportional business, the ultimate premium is equal to the subject premium provided by the cedent multiplied by the quoted premium rate. Non-proportional treaties usually include a minimum premium equal to approximately 80% of the EGPI. Prior to any acceptance, the SCOR actuarial department provides a quotation to allow the underwriter to evaluate the rate proposed by the cedent. Similarly to the proportional business, the estimated subject premium for non-proportional business is revised regularly according to information received during the life of the contract and specific internal reports are available for these verifications and controls, including pattern models. The recording of estimates follows the premium installment schedules set forth in the signed contract.
Lastly, for the facultative business, the ultimate premium is provided by the cedent in its proposal, which is approved by SCOR underwriters. This estimated premium is immediately recorded and will be revised according to the installment schedule sent by the cedent, or if there is any change in the coverage provided for the business. Again, specific internal reports are available for these verifications and controls, including pattern models.
Life/Accident & Health
For Life treaties, estimated premium income is determined for each cedents’ accounting years and premium is recognized when due from cedents and policyholders. As long as all premium information has not been received from cedents, the estimates can be reviewed.
Life premium estimates are calculated on a treaty-by-treaty basis by SCOR’s administration department, and the premium estimates are then validated by SCOR’s underwriters for a sampling of treaties. A treaty is “sampled” if the estimated premium volume is greater than EUR 150,000, or if the expected technical result is greater than plus or minus EUR 100,000, or if related technical reserves are greater than EUR 450,000. These “sampled” treaties generally represent more than 90% of the Life contracts portfolio.
“Non-sampled” treaties are estimated on a bulk basis by geographical segments and by the nature of the business (proportional or non-proportional). Premium estimates are generally based upon the cedents’ premium information which are then validated by SCOR’s underwriters.
Estimates are reviewed each time new information is received from the ceding companies or from industry sources.
The estimates recorded by SCOR are the difference between the total estimated premium income and the actual premium actually sent in reinsurance accounts by ceding companies to date.
Different calculation methods are used depending on the type of business. For renewed or cancelled proportional treaties, estimates are calculated based upon statistical trends which are then completed using specific underwriting information. For new proportional treaties, the estimated gross premium income is either provided by SCOR’s underwriters and/or calculated by actuaries based on the quotation files. Lastly, for non-proportional treaties, estimated gross premium income results from the estimated subject premium (provided by SCOR’s underwriters based upon the cedents’ information) on which SCOR applies the quoted premium rate.

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Accounting
The assumed premium estimates for SCOR’s Non-Life and Life businesses are booked as assets on SCOR’s consolidated balance sheet net of the estimates of the corresponding commissions payable by SCOR. As of December 31, 2005, the assumed premium estimates for SCOR’s Non-Life and Life businesses amounted to EUR 1,245 million.
In cases where SCOR has over-estimated the assumed premium, this over-estimation would generally be largely offset by a corresponding over-estimation of commissions and losses payable by SCOR. If the Property-Casualty estimated premium as of end of balance sheet year 2005 for the 2005 and 2004 underwriting years were over estimated by 5%, Property-Casualty underwriting premium revenues would be overstated by EUR 26.6 million, and after adjustments for related expenses, the net effect would be to overstate underwriting income before income taxes by EUR 0.2 million, and by EUR 0.13 million after income taxes.
SCOR’s management considers that the booking of provisions for depreciation of assumed premium estimates is not necessary for the following reason. In cases where SCOR identifies a counter-party risk on one of its cedents, the risk appreciation by SCOR will be performed on the net financial position (including reserves, deposits, current account and estimates) of the cedent vis-à-vis SCOR and thus it is rare that SCOR be in a net debit position because loss reserves largely exceed premium estimates and premiums receivable. As long as premium is not due, claims are neither due. In case of a recoverability issue, the uncollectible premium would be offset by unpaid claims.
Amortization of Deferred Policy Acquisition Costs
We amortize our deferred policy acquisition costs (DAC) for our Life business based on a percentage of our expected gross profits (EGPs) over the life of the policies. Our estimated EGPs are computed based on assumptions related to the underlying policies written, including the lives of the underlying policies, and, if applicable, growth rate of the assets supporting the liabilities. We amortize deferred policy acquisition costs by estimating the present value of the EGP’s over the lives of the insurance policies and then calculate a percentage of the policy acquisition cost deferred as compared to the present value of the EGPs. That percentage is used to amortize the deferred policy acquisition cost such that the amount amortized over the life of the policies results in a constant percentage of amortization when related to the actual and future gross profits.
Because the EGPs are only estimates of the profits we expect to recognize from these policies, the EGPs are adjusted at each balance sheet date to take into consideration the actual gross profits to date and any changes in the remaining expected future gross profits. When EGPs are adjusted, we also adjust the amortization of the DAC amount, if applicable, to maintain a constant amortization percentage over the entire life of the policies, or to take into account the absence of future profits. For 2004, we have not materially changed the weighted average expected life of the policies. The present value of the future profits acquired in the context of the purchase of SCOR Life Re U.S. is determined in a similar manner. See Note 3.10 to the consolidated financial statements included in “Item 18. Financial Statements”.
In our Property-Casualty business, deferred acquisition costs represent the portion of commissions pertaining to contracts in force at year-end over the period for which premiums are not yet earned, and are written down over the residual duration of the contacts in question.
Fair Values
Fair value determinations for financial assets are based generally on listed market prices or broker or dealer price quotations. If prices are not readily determinable, fair value is based on either internal valuation models or management’s estimate of amounts that could be realized under normal market conditions, assuming an orderly liquidation over a reasonable period of time. Certain financial instruments, including OTC derivative instruments, are valued using pricing models that consider, among other factors, contractual and market prices, correlations, time value, credit, yield curve volatility factors and/or prepayment rates of the underlying positions. The use of different pricing models and assumptions could produce materially different estimates of fair value.

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Goodwill
The excess of purchase price over the fair value of the net assets acquired of a company restated to fair value at the date of purchase, is recorded as goodwill. Under FASB 142 (“Goodwill and other intangible assets”), goodwill is not amortized but is subject to an assessment for impairment on an annual basis, or more frequently if circumstances indicate that a possible impairment has occurred. If the goodwill is higher than its fair value, an impairment is recorded in the statement of income.
Deferred Tax
The deferred tax assets and liabilities on the consolidated balance sheets reflect tax effects of differences between the carrying amount of assets and liabilities for financial reporting and income tax purposes. See Note 10 (Income Tax) to the consolidated financial statements included in “Item 18. Financial Statements” for significant components of the Group’s deferred tax assets and liabilities.
SFAS 109 requires the establishment of a valuation allowance for deferred income tax benefits if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
In assessing the realizability of deferred tax assets, including French net operating losses, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.
Item 6. Directors, Senior Management and Employees
A. DIRECTORS AND SENIOR MANAGEMENT
In accordance with French law governing a société anonyme, the principal responsibility of our Board of Directors is to determine the guiding principles of the Company’s business plan and strategy and to monitor their application. The Chairman and Chief Executive Officer (Président-Directeur Général) has full executive authority to manage the affairs of the Company, subject to the prior authorization of the Board of Directors or of the Company’s shareholders for certain decisions as required by law.
Board of Directors
Under French law, our Board of Directors prepares and presents the year-end accounts of the Company to the shareholders and convenes shareholders’ meetings. In addition, the Board of Directors reviews and monitors SCOR’s economic, financial and technical strategies. French law provides that our Board of Directors be composed of no fewer than nine and no more than eighteen members. The actual number of directors must be within such limits and may be provided for in the statuts (bylaws) or determined by the shareholders at the annual general meeting of shareholders. The Board of Directors cannot increase the number of members of the board.
On December 31, 2005, the Company’s Board of Directors consisted of fifteen voting members, including one elected representative of the personnel of SCOR in France, known as the employee director. Under the Company’s statuts, each director must own at least one share in the Company throughout his entire term of office. Under French law, a director, other than an employee director, may be an individual or a corporation, but the Chairman must be an individual. Currently, each of the Company’s directors is an individual. The employee director is currently elected for a three-year term by the Company’s and its French subsidiaries’ employees and each voting director is elected for a six-year term. Directors may not hold office after the age of 72 under the Company’s statuts. A director reaching the age of 72 while in office has to retire at the expiry of the term of his or her office, as determined at the annual general meeting of shareholders. Non-employee directors are elected by the shareholders and serve until the expiration of their respective term, or until their resignation, death or removal, with or without cause, by the shareholders. Vacancies on the Board of Directors may, under certain conditions, be filled by the Board of Directors, pending the next shareholders’ meeting.

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Directors are required to comply with applicable law and SCOR’s statuts. Under French law, directors are liable for violations of French legal or regulatory requirements applicable to sociétés anonymes, violation of a company’s statuts or mismanagement. Directors may be held liable for such actions both individually and jointly with the other directors.
The following table sets forth the directors of the Company, currently and as at December 31, 2005, unless otherwise indicated, as appointed by the combined shareholders’ meeting of May 15, 2003, their date of birth and positions with SCOR and their principal business activities performed outside SCOR, the dates of their initial appointment as directors and the expiration dates of their term of office.
                         
        Other current principal position at SCOR   Initially   Expiration
Name   Date of Birth   and principal business activities outside SCOR   appointed   of term
                 
Denis Kessler(1)
Chairman and CEO
  March 25, 1952   Chairman and Chief Executive Officer: SCOR VIE.
Chairman: SCOR Italia Riassicurazioni S.p.A (Italy), SCOR Life U.S. Re Insurance Company (U.S.), SCOR Reinsurance Company (U.S.), SCOR U.S. Corporation (U.S.).
Director: BNP Paribas SA, BOLLORE Investissement SA, COGEDIM S.A.S., DASSAULT Aviation, SCOR Canada Reinsurance Company, AMVESCAP Plc (UK), Dexia S.A. (Belgium).
Member of the Supervisory Board: SCOR Deutschland (Allemagne).
Non-voting director: FDC S.A., GIMAR Finance & Cie S.C.A.
Permanent representative of FERGASCOR in S.A. Communication et Participation.
    11/4/02       2007  
 
Carlo Acutis(2)   October 17, 1938   Vice-Chairman: Vittoria Assicurazioni S.p.A., Banca Passadore S.p.A., Presidential Council of the European Committee of National Insurance Companies, Fondazione Piemontese per la ricerca sul cancro.
Chairman: BPC INVESTIMENTI SGR S.p.A.;
    5/15/03       2009  
        Director: SCOR VIE (6), Yura International Holding B.V., Yura S.A., Camfin S.p.A., Pirelli & C. S.p.A., Ergo Italia S.p.A., Ergo Assicurazioni S.p.A., Ergo Previdenza S.p.A., Vittoria Capital N.V.;                
        Member of the Supervisory Board: COGEDIM S.A.S., Yam Invest N.V.                
        Member of council: European Committee of Insurance Companies, Geneva Association.
Member of the executive committee: ANIA Associazione Italiana fra le Imprese di Assicurazione.
               

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        Other current principal position at SCOR   Initially   Expiration
Name   Date of Birth   and principal business activities outside SCOR   appointed   of term
                 
Michèle Aronvald(7)   August 15, 1958   Employee Director.     8/30/01       2006  
 
Antonio Borges(2)(3)   November 18, 1949   Vice-Chairman: Goldman Sachs International (London).
Supervisory board: CNP Assurances.
Director: SCOR VIE (6), Jérónimo Martins, SONEAcom, Caixa Seguros, Heidrick & Struggles.
    5/15/03       2007  
 
Allan Chapin, Esq.(1)(4)   August 28, 1941   Partner: Compass Advisers LLP (New York, U.S.A.).
Director: Pinault Printemps Redoute, SCOR VIE (6), In Bev (Belgium), SCOR Reinsurance Company (US), General Security National Insurance Company (US), French-American Foundation; Chairman of American Friends of the Pompidou Foundation.
    5/12/97       2011  
 
Daniel Havis(2)   December 31, 1955   Chairman and Chief Executive Officer: MATMUT (Mutuelle Assurance des Travailleurs Mutualistes).
Chairman: GEMA, SMAC (Mutuelle Accidents Corporels), IMADIES.
Vice-Chairman: CEGES.
    11/18/96       2011  
        Director: Mutualité Française de la Seine Maritime (MFSM), La Fédération Nationale de la Mutualité Française (FNMF).                
        Member of the bureau: Fédération Nationale de la Mutualité Interprofessionnelle (FNMI).                
        Chairman of the Supervisory Board: OFI Asset Management (formerly OFIVALMO Gestion).                
        Vice-Chairman of the Supervisory Board: IMA, OFIVALMO.                
        Chairman of the Board of Directors: Matmut Protection Juridique formerly PMA (Protection Mutualiste en Assurance), MUTRE S.A.; MDA.                

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        Other current principal position at SCOR   Initially   Expiration
Name   Date of Birth   and principal business activities outside SCOR   appointed   of term
                 
        Director: Matmut Vie, OFIMALLIANCE, SCOR VIE (6).
Vice-chairman of the Board of Directors: Groupe des Mutuelles Associées.
Permanent representative of OFI Asset Management in OFIVALMO Net Epargne, OFI Mandats; of MATMUT in the supervisory board of OFI Palmarès; of SMAC in the board of directors of OFIMA Trésor, OFIMA Convertibles and OFI SMIDCAP.
               
        Chairman of the Comité National des Réalisations Sanitaires et Sociales, Member of commissions in the Conseil Supérieur de la Mutualité (Commission Agréments and Commission Affaires Générales). Member of the Haut Conseil pour l’Avenir de l’Assurance Maladie. Representative Imadiès in Conseil des Mutuelles Santé.                
 
Yvon Lamontagne*(2)   June 14, 1940   Director: AXA Insurance Canada (Toronto, Canada), SCOR VIE (6); SCOR Canada Reinsurance Company (Toronto, Canada), Hydro-Québec (Montreal, Canada), Anglo-Canada General Insurance Company (Toronto, Canada), AXA Pacific Insurance Company (Vancouver, Canada).
Member of the consultative board: Bureau of Superintendent of Financial Institutions (Ottawa, Canada).
Fiduciary: Fiducie Henri-Paul Rousseau (Montréal, Canada) (Chairman of the treasury).
    5/15/03       2007  
 
Daniel Lebègue(1)(2)(3)   May 4, 1943   Chairman: IFA (French Society of Directors – Institut Français des Administrateurs).
Director: SCOR VIE (6), Crédit Agricole S.A., Alcatel, Technip, SCOR Reinsurance Company (U.S.), General Security National Insurance Company (U.S.).
    5/15/03       2009  
        Member of the Supervisory Board: Areva.                
        Chairman of the Board of Directors: Institut d’Études Politiques de Lyon;                

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        Other current principal position at SCOR   Initially   Expiration
Name   Date of Birth   and principal business activities outside SCOR   appointed   of term
                 
        Chairman: Institute of Sustainable Development and International Relations (Institut du Développement Durable et des Relations Internationales, IDDRI), Transparence-International France, Ecoda (European Confederation of Associations of Directors – Confédération Européenne des Associations d’Administrateurs).
Co-Chairman: Eurofi (association).
               
 
Helman le Pas de Sécheval(1)(2)(3)(5)   January 21, 1966   Group Chief Financial Officer: GROUPAMA S.A..
Chairman of the Board of Directors: Groupama Immobilier, Groupama Asset Management, Finama Private Equity, Compagnie Financière Parisienne.
    11/3/04       2009  
        Vice-Chairman of the Supervisory Board: Banque Finama.                
        Director: SCOR VIE (6), GAN Italia Vita (Italy), GAN Italia S.p.A (Italy).                
        Non-Voting member of the Supervisory Board: GIMAR Finance & Compagnie.
Permanent representative of GROUPAMA S.A. on the supervisory board of Lagardère S.C.A. and at the Board of Directors of Silic; of GAN Assurances Vie on the Supervisory Board of Locindus.
               
 
André Lévy-Lang(1)(3)(4)   November 26, 1937   Associate Professor (Emeritus) at the Paris University of Dauphine.
Director: AGF, SCOR VIE (6), Dexia (Brussels), Schlumberger (U.S.).
Member of Supervisory Board: Paris-Orléans.
    5/15/03       2009  
 
Herbert Schimetschek(2)   January 5, 1938   Chairman: Oesterreichische Nationalbank.
Director: SCOR VIE (6).
Chairman of the Management Board: Austria Versicherungsverein auf Gegenseitigkeit Privatstiftung (Holding), UNIQA Immobilien- Projekterrichtungs GmbH.
    5/15/03       2007  
        Chairman of the Supervisory Board: Austria Österreichische Hotelbetriebs Aktiengesellschaft.                

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        Other current principal position at SCOR   Initially   Expiration
Name   Date of Birth   and principal business activities outside SCOR   appointed   of term
                 
        Vice-Chairman of the Supervisory Board: Bank Gutmann S.A.
Vice-Chairman: Automobile Club of Austria, Franco-Austrian Chamber of Commerce. Member of the Board of Directors: Diplomatic Academy of Vienna.
               
 
Jean-Claude Seys(1)   November 13, 1938   Chairman and Chief Executive Officer: COVEA (SGAM).
Chairman of the Board of Directors: MMA IARD, MMA Vie (SAM), MAAF Santé (Mutuelle 45), Force et Santé (Union Mutualiste), COSEM (Association), Aide Médicale (Association), Fondation MAAF Assurances, OCEAM Ré (SRM).
    5/15/03       2009  
        Director: MAAF Assurances (SAM), MAAF Assurances (SA), Défense Automobile et Sportive (DAS) (SAM), AGMAA S.A. – Azur GMF Mutuelles Assurances Associés, SCOR VIE (6), OFIMALLIANCE S.A., Fidelia S.A. (subsidiary of Azur GMF), COVEA Ré (Luxembourg), EURAPCO.                
        Chairman of the Supervisory Board: Savour Club S.A. (MAAF S.A. subsidiary), OFIVALMO S.A.;                
        Member of the Supervisory Board: OFI Asset Management (subsidiary of OFIVALMO S.A.).                
        Vice-Chairman of the Board of Directors: ACMA (Association for the Cooperation Among Mutual Insurance Companies for Agriculture and Craft Industry – Association pour la Coopération entre Mutuelles Assurances pour l’Agriculture et l’Artisanat:), SC Holding S.A.S. (Santéclair).
Permanent representative: of COVEA (SGAM) in Covéa Technologie (S.A.S.) and of OCEAM Ré (SRM) in COVEA Group S.A.S.
               

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        Other current principal position at SCOR   Initially   Expiration
Name   Date of Birth   and principal business activities outside SCOR   appointed   of term
                 
 
Jean Simonnet(2)   August 5, 1936   Chairman: MACIF (Mutual Insurance Company) **, SOCRAM (Credit Company)**, SMIP (Mutual Insurance Company).
Director: FORINTER S.A.**, SICAV OFIMA EURO Moyen Terme, Union Mutualiste des Deux Sèvres (Mutual Insurance Company), SCOR VIE (6), IMA IBERICA.
    3/2/99       2011  
        Non-Voting Director: MACIFILIA**, OFIMA MIDCAP SICAV, OFIMA TRESOR SICAV.                
        Managing director (gérant): Gironde et Gascogne S.A.R.L., Château de Belcier S.C.E.A., Château Ramage La Batisse S.C.I.                
        Permanent representative of MACIF: on the supervisory board of I.M.A. S.A.**, MUTAVIE S.A.**, OFIVALMO S.A.** and on the board of directors of Compagnie Immobilière MACIF S.A.**, Foncière de Lutèce S.A.**, MACIF Mutualité**, EURESA.                
        Member of the councils or committees: GPIM S.A.S., MACIF Participations S.A.S.**, Compagnie Foncière de la MACIF S.A.S.**, SIEM S.A., MACIFIMO S.A.S.
 
** Companies consolidated in the MACIF Group
               
 
Claude Tendil(1)(2)   July 25, 1945   Chairman and Chief Executive Officer: Generali France, Generali France Assurances Vie.
Chairman of the Board of Directors: Assurance France Generali, Generali Assurances-IARD, GPA IARD, GPA VIE, La Fédération Continentale, Europ Assistance Holding.
    5/15/03       2007  
        Director: Unibail, SCOR VIE (6).                
        Chairman of the Board of Directors: Europ Assistance Italy.
Permanent representative of Europ Assistance Holding on the board of directors of Europ Assistance Spain.
               

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        Other current principal position at SCOR   Initially   Expiration
Name   Date of Birth   and principal business activities outside SCOR   appointed   of term
                 
Daniel Valot(1)   August 24, 1944   Chairman and Chief Executive Officer: Technip.
Director: Compagnie Générale de Géophysique, Institut Français du Pétrole, SCOR VIE (6), Technip Far East (Malaysia).
Permanent representative of Technip in Technip France. Chairman: Technip Italy (Italy).
    5/15/03       2007  
 
(1) Member of the Strategic Committee.
 
(2) Member of the Risks Committee.
 
(3) Member of the Accounts and Audit Committee.
 
(4) Member of the Compensation and Nominations Committee.
 
(5) Mr. Helman le Pas de Secheval is a non-voting member of the Accounts and Audit Committee. He was appointed as a board member in replacement of Mr. Jean Baligand on November 3, 2004, and his appointment was ratified by the general shareholders’ meeting of May 31, 2005.
 
(6) During the meeting of SCOR VIE Board of Directors held on May 16, 2006, these Directors resigned from their position as Directors of SCOR VIE and have been replaced by Patrick Thourot, Jean-Luc Besson, Marcel Kahn and Christian Mounis.
 
(7) The bylaws were amended at the May 16, 2006 shareholders’ meeting. The amended bylaws no longer contain a provision requiring one Board member to be an employee director.
 
* Mr. Yvon Lamontagne passed away on March 20, 2006.
In addition, Georges Chodron de Courcel, 55, Chief Operating Officer of BNP Paribas, was elected as a non-voting director for a two-year term commencing by the ordinary general shareholders’ meeting of May 31, 2005. He is also a member of the Compensation and Nominations Committee and the Risks Committee. Mr. Chodron de Courcel holds various non-executive positions within the BNP Paribas Group subsidiaries and is a director of Bouygues S.A., Alstom, Nexans S.A., Société Foncière Financière et de Participations (FFP) and Erbé S.A. (Belgium), chairman of BNP Paribas Suisse S.A. and BNP Paribas UK Holdings Limited (United Kingdom), a member of the supervisory board of Lagardère S.C.A. and chairman of BNP Paribas Emergis S.A.S., Compagnie d’Investissement de Paris S.A.S., Financière BNP Paribas S.A.S. He is also a non-voting director in SCOR VIE and SAFRAN.
The Board of Directors sets the amount and type of guarantees or sureties that the Chairman and Chief Executive Officer may grant on behalf of the Company pursuant to applicable law.
The age limit for directors is 72. The average age of SCOR’s directors is currently 59.
In 2005, the Board of Directors met eight times, on March 23, April 12, May 9, May 31 (morning), May 31 (afternoon), June 14, August 31 and November 2.
The following sets forth the business experience of the voting and non-voting members of SCOR’s Board of Directors:
Denis Kessler
Denis Kessler is a graduate of HEC business school (Ecole des Hautes Etudes Commerciales) and holds a PhD in economics, an advanced degree in economics and an advanced degree in social sciences. He was Chairman of the Fédération Française des Sociétés d’Assurance (FFSA) and Senior Executive Vice President and member of the Executive Committee of the AXA Group. Denis Kessler worked also for the MEDEF (French Business Confederation). He joined SCOR as Chairman and Chief Executive Officer on November 4, 2002.

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Carlo Acutis
Carlo Acutis, an Italian national, is Vice-Chairman of Vittoria Assicurazioni S.p.A. He also serves as chairman or member of the boards of directors for a number of companies. An expert in the international insurance market, he was formerly chairman of the Comité Européen des Assurances (CEA) (European Insurance Committee), and a Director of the Geneva Association.
Michèle Aronvald
Michèle Aronvald has been employed with SCOR for twenty-six years in the Finance Department. Mrs. Aronvald has served as an employee-elected director on SCOR’s Board of Directors since 2001.
Antonio Borges
Antonio Borges is currently Vice Chairman of Goldman Sachs International in London. Among other positions, he is a member of the Supervisory Board of CNP Assurances and a member of the Fiscal Committee of Banco Santander de Negocios Portugal. Mr. Borges previously served as Dean of the INSEAD business school.
Allan Chapin, Esq.
After being a partner at Sullivan & Cromwell and Lazard Frères, New York, for a number of years, Allan Chapin has been a partner at Compass Advisers LLP, New York, since June 2002. He also serves on the boards of directors for Pinault Printemps Redoute Group, InBev (Belgium), and a number of subsidiaries of SCOR U.S. Corporation.
Daniel Havis
The principal position of Daniel Havis is as Chairman and Chief Executive Officer of the Mutuelle Assurance de Travailleurs Mutualistes (MATMUT).
Yvon Lamontagne
Non-executive Chairman of SCOR Canada, Yvon Lamontagne served as Chairman of Boreal Assurances (now AXA). Mr. Lamontagne is director in several other Canadian companies. Yvon Lamontagne passed away on March 20, 2006.
Daniel Lebègue
Daniel Lebègue has directed the French Trésor and has been Chief Executive Officer of BNP and of Caisse des Dépôts et Consignations, Chairman of the Supervisory Board of CDC IXIS and Chairman of Eulia. He currently serves on the boards of directors for various companies
Helman le Pas de Sécheval
From 1998 to 2001, Helman Le Pas de Sécheval directed the financial information and operations department at the COB (Commission des opérations de bourse, now Autorité des Marchés Financiers, or AMF), before being appointed Group Chief Financial Officer of Groupama in November 2001.
André Lévy-Lang
André Lévy-Lang was Chairman of the Management Board of Paribas from 1990 to 1999 and is now director of various companies and an associate professor emeritus at the University of Paris-Dauphine.
Herbert Schimetschek
From 1997 to 2000, Herbert Schimetschek was Chairman of the Comité Européen des Assurances, then until June 2000, Vice Chairman of the Austrian Insurance Companies Association and from 1999 to 2001, Chairman of the Management Board and Chief Executive Officer of UNIQA Versicherung S.A.

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Jean-Claude Seys
Jean-Claude Seys has worked mainly in the insurance field. He was appointed Chairman and Chief Executive Officer of MAAF in 1992 and Chairman and Chief Executive Officer of MAAF-MMA in 1998. Mr. Seys is currently the Chairman and Chief Executive Officer of SGAM COVEA (since June 2003) and Chairman of MMA.
In connection with the Crédit Lyonnais/ Executive Life matter, Jean-Claude Seys entered into a settlement with the California prosecutor’s office pursuant to which he is subject to five years of probation. During such time, he cannot travel to the United States without a special authorization.
Jean Simonnet
Jean Simonnet is currently the Chairman of MACIF (Mutuelle Assurance des Commerçants et Industriels de France) and also serves as Chairman of SMIP (Mutuelle Complémentaire Santé) and of SOCRAM (a credit institution).
Claude Tendil
Claude Tendil began his career at UAP in 1972 and joined the AXA Group from 1989 to 2002, where he became Vice-Chairman of the Management Board in 2001. Claude Tendil is Chairman and Chief Executive Officer of Generali France, the holding company of the Generali Group in France and of Generali Assurances Vie. He is also Chairman of the Board of Directors of Assurance France Generali, Generali Assurances IARD, Gpa IARD, Gpa Vie, La Fédération Continentale, Europ Assistance Holding and Europ Assistance Italie. Claude Tendil is a permanent representative of Europ Assistance Holding, director of Europ Assistance Espagne. Claude Tendil is also a director of Unibail.
Daniel Valot
Daniel Valot was Chief Executive Officer of Total Exploration Production, then worked for Technip, where he was appointed Chairman and Chief Executive Officer in September 1999.
Georges Chodron de Courcel
Georges Chodron de Courcel is Chief Operating Officer of BNP Paribas in Paris and is a director of several subsidiaries of the BNP Paribas Group.
Executive Officers
Under French law and the Company’s statuts and pursuant to a decision of the Board of Directors, the Chairman and Chief Executive Officer has full executive authority to manage the affairs of the Company, subject to the prior authorization of the Board of Directors or of the Company’s shareholders for certain decisions as required by law. The Chairman and Chief Executive Officer has authority to act on behalf of SCOR and to represent SCOR in dealings with third parties, subject only to those powers expressly reserved by law to the Board of Directors or the shareholders. The Chairman and Chief Executive Officer determines, and is responsible for the implementation of the goals, strategies and budgets of SCOR, which are reviewed and monitored by the Board of Directors. The Board of Directors has the power to appoint and remove, at any time and with or without cause, the Chairman and Chief Executive Officer, as well as to appoint separate persons to hold the positions of Chairman of the Board (Président du Conseil d’Administration) and Chief Executive Officer (Directeur Général). Upon a proposal made by the Chairman and Chief Executive Officer (Président-Directeur Général), the Board of Directors may also appoint a Chief Operating Officer (Directeur Général Délégué) to assist the Chairman and Chief Executive Officer in managing the Company’s affairs.

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The following table sets forth the Company’s executive officers who comprise the Executive Committee at December 31, 2005 and as of the date hereof, their ages as of December 31, 2005, their positions with SCOR and the first dates as of which they served as executive officers of SCOR.
                     
            Executive
Name   Age   Current Position   Officer Since
             
Denis Kessler
    53     Chairman and Chief Executive Officer     2002  
Patrick Thourot(1)
    57     Chief Operating Officer (Directeur Général Délégué)     2003  
Yvan Besnard
    51     Deputy Chief Operating Officer (Adjoint du Directeur Général Délégué) of SCOR Global P&C     2004  
Jean-Luc Besson
    59     Chief Risk Officer     2003  
Romain Durand(2)
    48     Chief Executive Officer and Director of SCOR VIE     1997  
Marcel Kahn
    49     Chief Financial Officer     2004  
Henry Klecan Jr.
    54     President and CEO of SCOR U.S. and SCOR Canada     2003  
Victor Peignet
    48     Chief Operating Officer of SCOR Global P&C     2004  
 
(1) Mr. Thourot was appointed by the Board of Directors on January 22, 2003 as Chief Operating Officer for the length of the term of the Chairman and Chief Executive Officer.
 
(2) Romain Durand resigned as Chief Executive Officer and director of SCOR VIE on December 28, 2005. The Board of Directors of SCOR VIE confirmed his resignation on January 11, 2006. Upon a proposal of the Compensation and Nominations Committee, the Board of Directors of SCOR VIE unanimously appointed its Chairman, Denis Kessler, as Chief Executive Officer of SCOR VIE.
Emmanuelle Rousseau has served as Secretary to the Executive Committee and the Board of Directors since September 10, 2004.
The following sets forth the business experience of SCOR’s executive officers:
Denis Kessler
See above under “Item 6.A. Directors and Senior Management – Board of Directors”.
Patrick Thourot
Patrick Thourot is a graduate of the Ecole Nationale d’Administration, and worked first with the French Ministry of Finance, before becoming Chief Executive Officer of PFA (Athéna Group), then had several duties in the AXA Group, where he was a member of the Executive Committee. He then served as Chief Executive Officer of Zürich France before being appointed Chief Operating Officer of the Company in January 2003. Patrick Thourot serves as Chairman of Eurofinimo, Finimofrance and Fergascor as well as a number of SCOR entities.
Yvan Besnard
Yvan Besnard graduated from the ESSEC Business School. He joined SCOR Group in 1991, where he held international and financial duties. In 2000, he was appointed Head of Development for the SCOR Group. He has been Chief Internal Auditor for the Group since 2003. In July 2004, Yvan Besnard was named Director for Non Life Treaties for Europe, and thereafter Deputy Chief Operating Officer of SCOR Global P&C. He also serves as a director for a number of SCOR entities and serves as SCOR’s permanent representative on the boards of Assuratome, Tricast SA and Assurpol.
Jean-Luc Besson
Jean-Luc Besson, an actuary holding a PhD in mathematics, first served as a University Professor in Mathematics at the French University, and joined the FFSA where he served as President of the Research, Statistics and Information Systems. Mr. Besson was appointed as Chief Reserving Actuary of SCOR Group in January, 2003 and was appointed as Chief Risk Officer of the SCOR Group on July 1, 2004.

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Romain Durand
Romain Durand is a graduate of HEC business school (Ecole des Hautes Etudes Commerciales) and IEP Paris (Institut d’Etudes Politiques de Paris). Romain Durand joined SCOR in January 1997, after spending several years in the international insurance industry. He was named director of the SCOR VIE Division in April 1998 and was Chief Executive Officer and a director of SCOR VIE until December 28, 2005.
Marcel Kahn
Marcel Kahn, actuary, chartered accountant and graduate from the ESSEC business school, spent several years as an external auditor and chartered accountant before joining the AXA group in 1988 as Group Management Control Director. From 1991 to 2001, he was successively Chief Financial Officer of AXA France, International Director for Europe, Director for Strategy and Development and Chief Operating Officer (Directeur General Adjoint) of AXIVA (Life insurance). In 2001, he was appointed Chief Financial Officer of PartnerRe Global and Chief Executive Officer for PartnerRe France. In 2004, Marcel Kahn was appointed Chief Financial Officer of the SCOR Group and a member of the Group Executive Committee. He currently serves as Chairman of several SCOR subsidiaries.
Henry Klecan Jr.
Henry Klecan Jr., holds a B.A. in philosophy from Sir George Williams University and a law degree from University of Montreal. He is a Canadian citizen, a founder and manager of the London Guarantee Insurance Company and then, of Citadel Assurance Company. Henry Klecan Jr. has been President and Chief Executive Officer of SCOR Canada Reinsurance Company since July 2000 and was appointed President and Chief Executive Officer of SCOR U.S. on November 18, 2003.
Victor Peignet
Victor Peignet, marine and offshore engineer, joined SCOR’s Facultative Department in 1984. He was appointed Executive Vice President of SCOR Business Solutions, since its formation in 2000 and Chief Operating Officer of SCOR Global P&C. He is a director of SCOR UK Co., SCOR Channel Ltd, Arisis Ltd., General Security Indemnity Company of Arizona, General Security National Insurance Company, and SCOR Reinsurance Company.
                 
Name   Age   Current position   Other offices
             
Denis Kessler
    53     Chairman and Chief Executive Officer   See above under “Item 6.A. Directors and Senior Management – Board of Directors”.

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Name   Age   Current position   Other offices
             
Patrick Thourot(1)
    57     Chief Operating Officer   Chairman and Chief Executive Officer: EUROFINIMO; FINIMOFRANCE; FERGASCOR; SCOR AUBER.
Director: MUTRE S.A.
Permanent Representative of FERGASCOR on the Board of Directors of the Société Putéolienne de Participations Chairman: SCOR UK Group Limited; SCOR UK Company Limited; IRP Holdings Limited (Ireland); Irish Reinsurance Partners Ltd (Ireland); SCOR Reinsurance Asia-Pacific (Singapore); SCOR Deutschland (Germany); Commercial Risk Re-Insurance Company (U.S.); Commercial Risk Partners Ltd (Bermuda); Commercial Risk Reinsurance Company Ltd (Bermuda);
Director: SCOR Reinsurance Company U.S.; SCOR U.S. Corporation; General Security National Insurance Company (U.S.); ASEFA (Spain).
Yvan Besnard
    51     Deputy Chief Operating Officer of SCOR Global P&C   Member of the Supervisory Board: FCPE Actions SCOR; FCPE Valeurs Mobilières Obligations. Director: Groupement de Services d’Assurance et Réassurance; Euroscor/ Actiscor (Luxembourg); SCOR UK Group Ltd; SCOR UK Company Ltd; SCOR Europe Mid Cap (Luxembourg); SCOR Italia; SCOR Picking (Luxembourg). Permanent Representative of SCOR in: Assuratome (G.I.E.); Assurpol (G.I.E.); Tricast S.A. Member of the Supervisory Board and Deputy Chairman of SCOR Deutschland.
Jean-Luc Besson
    59     Chief Risk Officer   Director of the Institut des Actuaires.
Romain Durand(2)
    48     CEO of SCOR VIE   Chairman: SOLAREH S.A.* Permanent Representative of SCOR VIE on the Supervisory Board of MUTRE*. Director: SGF*; Investors Insurance Corporation (U.S.)*; Investors Marketing Group (U.S.)*; SCOR Financial Services Limited (Ireland)*; SCOR Life U.S. Reinsurance Company (U.S.)*; SCOR Italia Riassicurazioni S.p.A. (Italy)*. Member of the Supervisory Board REMARK B.V. (Netherlands)*.
 
* Romain Durand resigned from his positions within these companies on December 31, 2005.

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Name   Age   Current position   Other offices
             
Marcel Kahn
    49     Group Chief Financial Officer   Member of the Supervisory Board: FCPE Actions SCOR; FCPE Valeurs Mobilières Obligations.
Chairman: Euroscor/ Actiscor (Luxembourg); SCOR Europe Mid Cap (Luxembourg); SCOR Picking (Luxembourg).
Permanent Representative of SCOR in SGF, SCOR Auber and in the Supervisory Board of Locindus SA.
Henry Klecan, Jr.
    54     President and CEO of SCOR U.S. and SCOR Canada   Chief Executive Officer of SCOR Reinsurance Company (U.S.); SCOR U.S. Corporation; General Security Indemnity Company of Arizona (U.S.); General Security National Insurance Company (U.S.); SCOR Canada Reinsurance Company; Cal Re Management, Inc (U.S.); SOREMA N.A. Holding Corporation.
Victor Peignet
    48     Chief Operating Officer of SCOR Global P&C   Chairman of SCORLUX (Luxembourg; company in the process of liquidation). Director of SCOR UK Co. Ltd. (London); SCOR Channel Ltd. (Guernsey); Arisis Ltd. (Guernsey); General Security Indemnity Company of Arizona (U.S.); General Security National Insurance Company (U.S.); SCOR Reinsurance Company (U.S.).
 
(1) Mr. Thourot was appointed by the Board of Directors on January 22, 2003 as Chief Operating Officer for the length of the term of the Chairman and Chief Executive Officer.
 
(2) Romain Durand resigned as Chief Executive Officer and director of SCOR VIE on December 28, 2005. The Board of Directors of SCOR VIE confirmed his resignation on January 11, 2006. Upon a proposal of the Compensation and Nominations Committee, the Board of Directors of SCOR VIE unanimously appointed its Chairman, Denis Kessler, as Chief Executive Officer of SCOR VIE.
B. COMPENSATION
Directors’ attendance fees
The General Meeting of Shareholders on May 31, 2005 set the aggregate annual amount payable to the Board of Directors for attendance fees at EUR 800,000. At its May 15, 2003 meeting, the Board of Directors decided to allocate these fees among the directors, split equally between an equivalent fixed portion and a variable portion depending on the attendance of each director at meetings of the Board of Directors (the fixed portion amounting to EUR 20,000 and the variable portion amounting to EUR 1,700 for each meeting attended). The non-voting directors receive a share of the attendance fees according to the same procedure. No attendance fees are paid to the Chief Operating Officer. In addition, an amount of EUR 1,700 is paid for each attendance at a meeting of a board committee.
These fees are paid at the end of each quarter.
The amount of compensation paid, and benefits in kind granted to, all of SCOR’s voting and non-voting directors during and for the year ended December 31, 2005 is set forth below.

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Attendance fees were paid for 2005 and 2004 as listed below (In euro):
                 
    2005   2004
         
Mr. Denis Kessler(1)
    0       0  
Mr. Carlo Acutis(2)
    18,825       20,100  
Ms. Michèle Aronvald(3)
    31,900       28,500  
Mr. Antonio Borges(4)
    30,300       27,750  
Mr. Allan Chapin(5)
    31,575       26,475  
Mr. Georges Chodron de Courcel
    35,300       31,900  
Mr. Daniel Havis
    31,900       28,500  
Mr. Yvon Lamontagne(6)
    23,925       21,375  
Mr. Helman le Pas de Sécheval
    37,000       35,300  
Mr. Daniel Lebègue
    43,800       43,800  
Mr. André Lévy Lang
    45,500       47,200  
Mr. Herbert Schimetschek(7)
    18,825       17,550  
Mr. Jean-Claude Seys
    30,200       31,900  
Mr. Jean Simonnet
    30,200       26,800  
Mr. Claude Tendil
    31,900       30,200  
Mr. Daniel Valot
    33,600       28,500  
 
(1) In accordance with the decision taken by the Board of Directors on March 21, 2006, in the future the Chairman and Chief Executive Officer will receive directors’ attendance fees to the same extent as the other members of the Board of Directors of the Company and according to the same breakdown.
 
(2) The amount allocated to Mr. Carlo Acutis was initially EUR 25,100 which takes into account an initial tax of 25%, (i.e. EUR 6,275), pursuant to Articles 117 bis, 119 bis 2, and 187 of the French Tax Code.
 
(3) Employee director.
 
(4) The amount allocated to Mr. Antonio Borgès was initially EUR 40,400 which takes into account an initial tax of 25%, (i.e. EUR 10,100), pursuant to Articles 117 bis, 119 bis 2, and 187 of the French Tax Code.
 
(5) The amount allocated to Mr. Allan Chapin was initially EUR 42,100 which takes into account an initial tax of 25%, (i.e. EUR 10,525), pursuant to Articles 117 bis, 119 bis 2, and 187 of the French Tax Code.
 
(6) The amount allocated to Mr. Yvon Lamontagne was initially EUR 31,900 which takes into account an initial tax of 25% (i.e. EUR 7,975), pursuant to Articles 117 bis, 119 bis 2, and 187 of the French Tax Code.
 
(7) The amount allocated to Mr. Herbert Schimetschek was initially EUR 25,100 which takes into account an initial tax of 25%, (i.e. EUR 6,275), pursuant to Articles 117 bis, 119 bis 2, and 187 of the French Tax Code.
In addition, some directors of SCOR attend or attended meetings of the boards of directors of some of the Group’s subsidiaries and consequently received related attendance fees for 2005 and 2004 as follows:
SCOR U.S.:
Mr. Chapin: 27,000 USD in 2005 and 27,000 USD in 2004.
Mr. Lebègue: 14,700 USD in 2005 and 14,700 USD in 2004.
SCOR Canada:
Mr. Lamontagne: 40,000 CAD in 2005 and 40,000 in 2004.
The Company paid an aggregate of EUR 4,753.54 to the French government for pension benefits on behalf of its employee director, Michele Aronvald. No other amounts were paid whether for pension, retirement, or any other purpose to the Company’s directors in 2005.
2005 Compensation for Members of the Executive Committee
The aggregate amount of compensation of all members of SCOR’s Executive Committee (8 persons) during and for the year ended December 31, 2005 amounted to EUR 4,019,557.

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There is no employment contract between Mr. Kessler and SCOR. The terms and conditions of his appointment are described in the minutes of the meeting of the Board of Directors held on December 19, 2002, and the meeting of the Board of Directors of August 31, 2005. The Compensation and Nominations Committee proposed to the Board that the compensation of the Chairman and Chief Executive Officer be made up as follows:
  a fixed sum of EUR 500,000,
 
  a variable portion for a maximum amount of EUR 900,000, including a portion of 3 per thousand of the consolidated net result for SCOR, provided such result exceeds EUR 30,000,000, up to EUR 360,000, and an amount up to EUR 540,000 determined by the Board of Directors linked to the achievement of objectives decided for each year by the Board of Directors.
There is no employment contract between Mr. Thourot and SCOR. The terms and conditions of his appointment are described in the minutes of the meetings of the Board of Directors held on January 22, 2003. The Compensation Committee proposed to the Board that the compensation of the Chief Operating Officer be comprised as follows:
  a fixed amount of EUR 410,000,
 
  a variable portion for a maximum amount of EUR 410,000, including a portion of 1.50 per thousand of the consolidated net result for SCOR, up to EUR 287,000, and an amount up to EUR 123,000 determined by the Board of Directors linked to the achievement of objectives decided for each year by the Chairman and Chief Executive Officer.
The following table presents gross compensation owing for fiscal year 2005 and fiscal year 2004 to the Chairman and Chief Executive Officer and to the Chief Operating Officer:
                                                 
        Variable                
    Fixed   compensation   Total   Fixed   Variable   Total
    compensation   paid and/or to be   compensation   compensation   compensation   compensation
    paid for 2005   paid for 2005   paid for 2005   paid for 2004   paid for 2004   paid for 2004
                         
    In euros   In euros   In euros   In euros   In euros   In euros
Mr. Denis Kessler
    500,000       846,000       1,346,000       500,000       328,791       828,791  
Mr. Patrick Thourot
    410,000       289,450       699,450       410,000       164,477       574,477  
The following table presents the gross compensation paid in 2005 and 2004 to the Chairman and Chief Executive Officer and to the Chief Operating Officer:
                                                 
                    Variable    
    Fixed   Variable   Total   Fixed   compensation   Total
    compensation   compensation   compensation   compensation   variable   compensation
    paid in 2005   paid in 2005   paid in 2005   paid in 2004   paid in 2004   paid in 2004
                         
    In euros   In euros   In euros   In euros   In euros   In euros
Mr. Denis Kessler
    500,000       495,364       995,364       500,000       150,000       650,000  
Mr. Patrick Thourot
    410,000       164,477       574,477       410,000       123,000       533,000  
The Compensation and Nominations Committee determines the variable compensation attributed to the other members of the Executive Committee on the proposal of the Chairman. The variable portion of the compensation presented in the table below depends, on the one hand, on the achievement of individual objectives and, on the other hand, on the achievement of the Group’s earnings objectives, which are based on return on equity or ROE.

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The following table presents gross compensation owing for fiscal year 2005 and for fiscal year 2004 to the members of the Executive Committee (other than the Chairman and Chief Executive Officer and the Chief Operating Officer):
                                                                 
        Variable                        
    Fixed   compensation   Profit   Total   Fixed   Variable   Profit   Total
    compensation   paid and/or to be   sharing   compensation   compensation   compensation   sharing   compensation
    paid for 2005   paid for 2005   for 2005   paid for 2005   paid for 2004   paid for 2004   paid for 2004   paid for 2004
                                 
    In euros   In euros   In euros   In euros   In euros   In euros   In euros   In euros
Marcel Kahn
    280,000       138,390       25,130       443,520       195,152       142,240       11,342       348,734  
Romain Durand(1)
    280,000             251       280,251       255,000       142,240             397,240  
Jean-Luc Besson
    280,000       171,990       25,130       477,120       209,000       167,740       15,753       392,493  
Victor Peignet
    280,000       160,790       25,130       465,920       203,000       159,676       15,753       378,429  
Henry Klecan Jr(2)
    253,700       111,112             364,812       226,743       126,850             353,593  
Yvan Besnard
    197,000       97,798       25,130       319,928       157,000       90,226       12,397       259,623  
The following table presents gross compensation paid in 2005 and in 2004 to the members of the Executive Committee (other than the Chairman and Chief Executive Officer and the Chief Operating Officer):
                                                                 
    Fixed   Variable   Profit   Total   Fixed   Variable   Profit   Total
    compensation   compensation   sharing   compensation   compensation   compensation   sharing   compensation
    paid in 2005   paid in 2005   paid in 2005   paid in 2005   paid in 2004   paid in 2004   paid in 2004   paid in 2004
                                 
    In euros   In euros   In euros   In euros   In euros   In euros   In euros   In euros
Marcel Kahn
    280,000       142,240       11,342       433,582       195,152                   195,152  
Romain Durand(1)
    280,000       148,774             428,774       255,000       79,635             334,635  
Jean-Luc Besson
    280,000       133,840       15,753       429,593       209,000       50,460             259,460  
Victor Peignet
    280,000       181,842       15,753       477,595       203,000       109,078             312,078  
Henry Klecan, Jr.(2)
    253,700       126,850             380,550       226,743       25,481             252,224  
Yvan Besnard
    197,000       90,226       12,397       299,623       157,000       11,700             168,700  
 
(1) Romain Durand resigned from his functions as Chief Executive Officer and director of SCOR VIE on December 28, 2005. The Board of Directors of SCOR VIE accepted his resignation on January 11, 2006. Effective December 28, 2005, Romain Durand lost all his rights under the Company’s stock option plans and stock compensation plans.
 
(2) Exchange rate at December 31, 2005 of 1 USD = 0.8456 EUR and 1 CAD = 0.7448 EUR.
Like all Group senior executives, members of the Group Executive Committee are entitled to a guaranteed capped pension plan conditioned on a 10-year length of service in the Group, the payment of which is based on their average compensation over the last five years at SCOR. They also benefit from the use of a vehicle for professional transportation; all insurance, maintenance and fuel costs in addition to driver service expenses in relation to the Chairman and Chief Executive Officer’s vehicle are charged to the Company. The aggregate amounts set aside or accrued by the Group to provide pension, retirement or similar benefits for senior executives in 2005 was EUR 3,992,964.
In addition, the Chairman and Chief Executive Officer and the Chief Operating Officer receive the following benefits in kind:
  (a) a health insurance policy under the terms of a contract dated September 16, 1998;
 
  (b) an “all causes” death or permanent disability insurance underwritten for the senior management of the Company on June 30, 1993.
  The Company is currently re-negotiating this contract, and it should be noted that the Chairman and Chief Executive Officer and the Chief Operating Officer will benefit from any contract replacing the existing contract; and
(c) an insurance for death or permanent disability caused by an accident, underwritten on January 1, 2006. The Company is currently re-negotiating this contract and it should be noted that the Chairman and Chief Executive Officer and the Chief Operating Officer will benefit from any contract replacing the existing contract.

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The members of the Executive Committee do not receive directors’ fees in respect of their directorships of companies in which SCOR holds more than 20% of the capital. They are, however, reimbursed for justified business expenses.
Compensation to the Chairman and Chief Executive Officer and the Chief Operating Officer for the 2006 Financial Year
Compensation to the Chairman and Chief Executive Officer
On March 21, 2006, as proposed by the Compensation and Nominations Committee, the Board of Directors decided that the Chairman and Chief Executive Officer:
  will continue to receive a fixed annual gross amount of EUR 500,000, payable in twelve monthly payments; and
 
  will receive, as of the 2006 financial year, a variable annual gross amount capped at EUR 1,000,000, consisting of:
  an annual variable gross amount capped at EUR 500,000, which will be determined in accordance with the achievement of personal objectives, defined at the beginning of each financial year by the Board of Directors following a proposal by the Compensation and Nominations Committee; and
  an annual variable gross amount capped at EUR 500,000, which will be determined in accordance with the achievement of financial objectives, defined at the beginning of each financial year by the Board of Directors following a proposal of the Compensation and Nominations Committee.
The variable amount for the “N” financial year will be paid during the “N” financial year + 1, when the Company financial statements for the “N” financial year are approved by the shareholders’ meeting.
For the 2006 financial year, the variable amount paid to the Chairman and Chief Executive Officer will be determined according to the following criteria:
  personal criteria: completion of strategic transactions, return to an A- rating (A.M.Best) and maintenance of the A- rating (S&P), restructuring of the SCOR Group around the three companies currently being created, general management of the firm; and
 
  financial criteria: level of Return on Equity (ROE) achieved by SCOR, provided that the amount of the variable compensation will be progressive and proportional to the amount of ROE between 0% and 10%, an ROE exceeding or equal to 10% awards the maximum variable amount.
In the event of departure during the “N” financial year:
  the entire variable amount of his compensation for the “N-1” financial year will be payable during the “N” financial year when the Company financial statements for the financial year “N-1” are approved by the shareholders’ meeting;
 
  furthermore, in the event of dismissal, the variable amount of his compensation for the “N” financial year will be (i) determined based on the variable amount for the “N-1” financial year and in proportion to his departure date during the “N” financial year in course, and (ii) paid when the Company financial statements for the “N-1” financial year are approved by the shareholders’ meeting.
In the event of dismissal, the Chairman and Chief Executive Officer will receive an indemnity corresponding to the amount of all fixed and variable elements of his gross annual compensation paid by the Company during the two years prior to his dismissal.
In the event of a change in the structure of the Company’s share capital which significantly affects his responsibilities and which causes difficulties in the pursuit of his activity and the regular exercise of his powers, and in the event of his resignation, the Chairman and Chief Executive Officer will receive an indemnity corresponding to the amount of all fixed and variable elements of his gross annual compensation paid by the Company during the three years prior to his resignation. This indemnity will be paid at the request of the

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Chairman and Chief Executive Officer, which must be presented within six months from the occurrence of the significant change in the structure of the Company’s share capital.
Finally, pursuant to the decision of the Board of Directors’ meeting of March 21, 2006, the Chairman and Chief Executive Officer will benefit from a specific life insurance aimed at covering the risks inherent to the functions of Chairman and Chief Executive Officer of the Company for an amount equivalent to three years of fixed and variable compensation. Such insurance policy will be subscribed by the Company to the benefit of the members of the Executive Committee.
Compensation to the Chief Operating Officer
On March 21, 2006, as proposed by the Compensation and Nominations Committee, the Board of Directors decided that the Chief Operating Officer:
  will continue to receive a fixed annual gross amount of EUR 410,000, payable in twelve monthly payments; and
 
  will receive, as of the 2006 financial year, a variable annual gross amount capped at EUR 410,000, consisting of:
  an annual variable gross amount capped at EUR 205,000, which will be determined in accordance with the achievement of personal objectives, defined at the beginning of each financial year by the Board of Directors following a proposal by the Compensation and Nominations Committee; and
 
  an annual variable gross amount capped at EUR 205,000, which will be determined in accordance with the achievement of financial objectives, defined at the beginning of each financial year by the Board of Directors following a proposal of the Compensation and Nominations Committee.
The variable amount for the “N” financial year will be paid during the “N” financial year + 1, when the Company financial statements for the “N” financial year are approved by the shareholders’ meeting.
For the 2006 financial year, the variable amount paid to the Chief Operating Officer will be determined according to the following criteria:
  personal criteria: completion of strategic transactions, return to an A- rating (A.M. Best) and maintenance of the A- rating (S&P), restructuring of the SCOR Group around the three companies currently being created, contribution to the general management of the firm; and
 
  financial criteria: level of Return on Equity (ROE) achieved by SCOR, provided that the amount of the variable compensation will be progressive and proportional to the figure achieved by this ROE between 0% and 10%, an ROE exceeding or equal to 10% awards the maximum variable amount.
In the event of departure during the “N” financial year:
  the entire variable amount of his compensation for the “N-1” financial year will be payable during the “N” financial year when the Company financial statements for the financial year “N-1” are approved by the shareholders’ meeting;
 
  furthermore, in the event of dismissal, the variable amount of his compensation for the “N” financial year will be (i) determined based on the variable amount for the “N-1” financial year and in proportion to his departure date during the “N” financial year in course, and (ii) paid when the Company financial statements for the “N-1” financial year are approved by the shareholders’ meeting.
In the event of dismissal, the Chief Operating Officer will receive an indemnity corresponding to the amount of all fixed and variable elements of his gross annual compensation paid by the Company during the two years prior to his dismissal.
In the event of a change in the structure of the Company’s share capital which significantly affects his responsibilities and which causes difficulties in the pursuit of his activity and the regular exercise of his powers, and in the event of his resignation, the Chief Operating Officer will receive an indemnity corresponding to the

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amount of all fixed and variable elements of his gross annual compensation paid by the Company during the three years prior to his resignation. This indemnity will be paid at the request of the Chief Operating Officer, which must be presented within six months from the occurrence of the significant change in the structure of the Company’s share capital.
C. BOARD PRACTICES
As recommended in an evaluation of board practices carried out in January 2003, the Board of Directors now abides by the following principles:
  A majority of independent directors, pursuant to criteria adopted by the Board of Directors based on those set forth in the 2003 AFEP-MEDEF Report in France. The board considers eleven of its fifteen members to be independent, namely Messrs. Acutis, Borges, Chapin, Havis, Lamontagne, Lebègue, Lévy-Lang, Schimetschek, Simonnet, Tendil and Valot.;
 
  A greater diversity of expertise. In addition to experts drawn from the insurance and reinsurance sectors, the Board of Directors has more members representing the world of finance and industry;
 
  A more international perspective, with directors from Italy, Portugal, Austria, Canada and the United States, and directors with extensive international experience;
 
  An improved flow of information with the Board of Directors of the Company’s subsidiaries;
 
  A reorganization of the Board of Directors’ committees; and
 
  An in-depth evaluation, every three years, of the functioning of the Board of Directors and an update in each intervening year.
Pursuant to the above recommendations, Mr. Lévy-Lang led an evaluation relative to the functioning of the Board of Directors for the 2004 fiscal year. The summary of the evaluation questionnaire completed by the Board of Directors as well as the comments of Mr. Lévy-Lang were remitted to the Board of Directors at its meeting of March 23, 2005.
At the meeting of the Board of Directors held on March 31, 2004, new internal regulations regarding the organization and functioning of the Board were formalized. The main provisions of these internal regulations are set out below:
Mission of the Board of Directors
Pursuant to these internal regulations, the Board of Directors determines the policies of the Company’s businesses, oversees their implementation and supervises management’s administration. The Board meets at least four times a year. In accordance with legal provisions, it approves the financial statements, proposes dividends, and makes investment and financial policy decisions. The Board also determines the amount and the nature of the sureties, securities and guarantees that can be granted by the Chief Executive Officer on behalf of the Company.
Meetings of the Board of Directors
At least five days before any meeting of the Board of Directors, the Chairman and Chief Executive Officer is required to submit a work folder to the Directors including all information that will allow them to participate in the discussions listed on the agenda in a discerning and efficient manner. Furthermore, outside of Board meetings, the Chairman and Chief Executive Officer is required to submit to the Directors any information and documents necessary to complete their duties, and the Directors may submit requests for information to the Chairman and Chief Executive Officer. In addition, Directors may ask the Chairman and Chief Executive Officer to invite the principal top executives of the Company to attend Board meetings.
Meetings held by videoconference or telecommunication
At the Board of Directors meeting held on November 2, 2005, the set of internal regulations (règlement intérieur) were amended to allow the Board to hold its meetings via means of telecommunication in accordance with the

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provisions of the Act of July 26, 2005. Subject to the implementation of the Decree referred to in this July 26, 2005 Act, the Board of Directors will be able to hold meetings either via videoconferencing or telecommunication, under the conditions established by applicable regulations.
Independence of Directors
The independence of Directors is now analyzed on the basis of the following principal criteria. Independent Directors must not:
  receive a salary or hold an executive position within SCOR and must not have done so during the previous five years;
 
  have received from SCOR compensation greater than EUR 100,000 during the five previous years, except for directors’ fees,
 
  be an officer in a company in which SCOR directly or indirectly is a director or in which an employee has been designated as such or in which an officer of SCOR (currently or within the last five years) is a director;
 
  be a significant client, supplier, investment banker, commercial banker of the Company or of the Group or for which the Company or the Group represents a significant share of the business. A significant share is a contribution to the business equal to the lesser of the following two amounts: more than 2% of the Company’s consolidated premium income, or an amount greater than EUR 100 million,
 
  have a close family relationship with an officer of the Company;
 
  have been an auditor of the company during the previous five years;
 
  have been a Director of SCOR for more than twelve years,
 
  represent a shareholder of the Company owning more than 5% of the share capital or voting rights.
Rights and obligations of Directors
Directors may receive training at their request on the specific nature of the Company, its business lines and its business sector. They agree to regularly attend meetings of the Board, Committees of which they may be members, and general shareholders’ meetings. Lastly, they are obligated to express their opposition when they believe that a decision of the Board of Directors is likely to be harmful to the Company.
Loyalty and conflict of interest
The internal regulations prohibit Directors from accepting benefits from the Company or from the Group that are likely to place their independence in question, and require them to dismiss any pressure from other Directors, specific groups of shareholders, creditors, suppliers or other third parties. Directors agree to submit to the Board of Directors any agreement falling under the purview of Article L. 226-38 of the French Commercial Code. In the event of a conflict of interest, the Director will fully inform the Board in advance. He is then required to abstain from participating in any Board discussions.
Accumulation of directorships
The internal regulations requires that candidates for Director inform the Board of the directorships that they hold, as the Board has the duty to ensure compliance with the rules on accumulation of directorships. Once appointed, Directors must inform the Board of any appointment as a company officer within a period of five days following their appointment. Lastly, Directors must inform the Board within a period of one year following the end of the fiscal year of the list of directorships they held during that fiscal year.

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Limitations and restrictions on trading SCOR securities
The internal regulations set out the principal recommendations of the market authorities with regard to Directors trading the securities of their company.
First and foremost, the internal regulations set out the legal and regulatory provisions requiring confidentiality with regard to privileged information of which Directors could have knowledge while performing their functions.
Then, the internal regulations require Directors to register as owners of SCOR equities that they themselves or their minor children are holding at the time they enter office or those acquired subsequently. In addition, the internal regulations lay down certain restrictions on trading SCOR securities:
  first, it is forbidden to trade in SCOR securities while in possession of information which, when made public, is likely to have an impact on the share price. This restriction remains in effect two days after this information has been made public by a press release;
 
  in addition, it is forbidden to directly or indirectly conduct any transaction with regard to the Company’s securities during certain sensitive periods as notified to the Directors by the Company or during any period preceding an important event affecting the Company and likely to influence its market price.
Lastly, Directors are required to inform SCOR of all transactions conducted with regard to the Company’s securities, directly or by an intermediary, on their behalf or on behalf of a third party, by their spouse, or by a third party holding a power of attorney.
Board Committees
At its meeting on May 15, 2003, the Board of Directors of SCOR set up four advisory committees to prepare the Board’s proceedings and make recommendations to it on specific subjects.
  The Strategic Committee is comprised of Denis Kessler, Chairman; Allan Chapin(1); Daniel Lebègue(1); Helman le Pas de Sécheval(2); André Lévy-Lang(1); Jean-Claude Seys; Claude Tendil(1) and Daniel Valot(1). Pursuant to the internal regulations, this Committee is comprised of six to ten members appointed by the Board of Directors and chosen among the Directors and Non-voting Directors. The duration of their term corresponds to the their term as Director or Non-voting Director.
 
(1)  Independent director.
 
(2)  Appointed as member of the Strategic Committee on November 3, 2004 in replacement of Jean Baligand who resigned on August 18, 2004.
  Its mission is to scrutinize the Group’s development strategies and to make recommendations on major Group acquisition and disposal plans in excess of EUR 100 million.
 
  The Chairman of the Committee may call any individual to attend who is likely to shed relevant light on the clear understanding of a given point, this person’s presence and the information shall be limited to an agenda item concerning him. The Chairman of the Committee must exclude the non-independent members of the Committee from its deliberations on matters likely to pose an ethical problem or conflict of interest.
 
  The Strategic Committee convened twice in 2005.
  The Accounts and Audit Committee is comprised of Daniel Lebègue(1), Chairman; André Lévy-Lang(1); Antonio Borges(1) and Helman le Pas de Sécheval(2). Pursuant to the bylaws, this Committee is comprised of three to five members appointed by the Board of Directors and chosen among the Directors and non-voting Directors. The duration of their term corresponds to their term as Director or non-voting Director.
 
(1)  Independent Director.
(2)  Mr. le Pas de Sécheval is a non-voting member of the Accounts and Audit Committee.

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  Its mission is to scrutinize the fairness of the Group’s financial statements and compliance with internal procedures, and the controls and inspections carried out by the statutory auditors and by the internal audit division.
 
  The Accounts and Audit Committee met six times in 2005 and discussed the following matters:
  the disengagement from IRP,
 
  update and principal issues relative to IFRS standards;
 
  Sarbanes-Oxley developments and compliance requirements;
 
  2005 budget of the external auditors and pre-approval of the missions of the external auditors;
 
  verification of the French GAAP Company and consolidated financial statements at December 31, 2004;
 
  approval of the U.S. GAAP accounts at December 31, 2004 and at September 30, 2004;
 
  the Group’s 2005 budget;
 
  agreement for the SCOR – SCOR VIE pooling of resources;
 
  financial consequences of the exit of minority shareholders from IRP;
 
  the organization of the management of SCOR’s assets;
 
  IFRS financial statements at March 31, 2005;
 
  consolidated results of the first quarter of 2005;
 
  2005 Audit Plan;
 
  Auditors’ Report;
 
  consolidated results at September 30, 2005;
 
  the Group’s exposure to and protection from natural catastrophes in 2005 and forecast for 2006; and
 
  Certification of the CRP accounts in 2004.
  The Accounts and Audit Committee has established standing rules that emphasize two essential missions:
  accounting missions, notably comprising scrutiny of periodic financial documents, review of the appropriateness of choices and proper application of accounting methods, review of the accounting treatment of all significant transactions, review of off-balance sheet liabilities, management of the selection, remuneration, independence and scope of the engagement of the statutory auditors, control of all accounting and financial disclosure documents and related press releases prior to their release to the public; and
 
  ethical and internal control missions. The Accounts and Audit Committee has a duty to ensure that internal procedures for the gathering and verification of data guarantee the quality and reliability of SCOR’s financial statements. Further, it is the duty of the Accounts and Audit Committee to review related-party transactions, to analyze and reply to employees’ questions with respect to internal controls, preparation of the financial statements, and the treatment of accounting entries.
  The Chairman of the Committee may call any individual to attend an Accounts and Audit Committee meeting who is likely to assist in achieving a clear understanding of a given point. This person’s presence and the information shall be limited to an agenda item concerning him. The Chairman of the Committee must exclude the non-independent members of the Committee from its discussions to examine points likely to pose an ethical problem or conflict of interest.
 
  The Sarbanes-Oxley Act of 2002 requires, among other things, that the audit committees of listed companies in the United States, such as SCOR, be entirely composed of independent board members (as

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  such notion is defined in the Sarbanes-Oxley Act of 2002), subject to certain exemptions, and that they be exclusively responsible for supervising the selection of external auditors. The internal rules of SCOR’s Accounts and Audit Committee provide that all members of the Accounts and Audit Committee will be chosen among the independent Directors, subject to exceptions provided by applicable regulations. See “Item 16D – Exemptions from the Listing Standards For Audit Committees”.
 
  The rules of the Accounts and Audit Committee were approved by the Accounts and Audit Committee on March 18, 2005.
  The Compensation and Nominations Committee is comprised of Allan Chapin(1), Chairman; André Lévy-Lang(1) and Georges Chodron de Courcel(2). Pursuant to internal rules, it is composed of three to five members appointed by the Board of Directors and non-voting Directors. The majority of the members must be chosen among the independent Directors. The duration of their term corresponds to their term as Director or non-voting Director.
  Its missions are to make recommendations on the compensation of Group Directors, officers and of senior executives, on pension plans and stock options, and to make proposals regarding the membership and organization of the Board of Directors and its committees.
 
  The Compensation and Nominations Committee met four times in 2005 and has made recommendations on the implementation of a stock award plan, a stock option plan and on the bonus to be allocated to the senior executives of SCOR.
  The Risks Committee is comprised of Carlo Acutis(1); Antonio Borges(1); Daniel Havis(1); Daniel Lebègue(1); Herbert Schimetschek(1); Jean Simonnet(1); Claude Tendil(1); Georges Chodron de Courcel(2); and Helman le Pas de Sécheval.
  Its mission is to identify the major risks to which the Group is exposed on both the assets and liabilities sides, and to ensure that means are in place to monitor and manage these risks. It scrutinizes the main technical and financial risks to which the Group is exposed. The Risks Committee did not meet in 2004 because all of the matters it would have acted upon were acted upon by the full board or the Audit and Accounts Committee. As a result, on March 23, 2005, the Board decided to dissolve the Risks Committee going forward, and to transfer its tasks to other relevant Group Committees. On May 16, 2006 the Board of Directors decided to re-instate the Risks Committee following its dissolution on March 23, 2005 with the same mission as it previously had.
Statement of Significant Differences Between Corporate Governance Practices Followed by SCOR and the NYSE’s Corporate Governance Standards Pursuant to Article 303A-11 of the New York Stock Exchange Listed Company Manual
Overview
The following discussion provides a general summary of the significant differences between the corporate governance standards followed by SCOR and those required by the listing standards of the New York Stock Exchange (“NYSE”) for U.S companies.
Principal sources
The principal sources of corporate governance standards in France are the French Commercial Code (Code de commerce) and the French Financial and Monetary Code (Code monétaire et financier), both as amended, in particular by the French Financial Security Act (Loi de sécurité financière) of August 2003 and the French Economic Improvement and Confidence Act (Loi pour la confiance et la modernisation de l’économie) of July 2005, the European Prospectus Directive (European Parliament and Council Directive 2003/71/EC of 4 November
 
(1)  Independent director.
(2)  Non-voting director.

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2003 on the prospectus to be published when securities are offered to the public or admitted to trading) and its implementing regulation (Commission Regulation (EC) No 809/2004 of 29 April 2004) as well as a number of general recommendations and guidelines on corporate governance issued in France, most notably the AFEP-MEDEF Report, a report issued in October 2003 to promote better corporate governance of listed companies in France. The AFEP-MEDEF Report includes, among other, recommendations relating to the role and operation of the board of directors (creation, composition and evaluation of the board of directors and the audit, compensation and nominating committees) and the independence criteria for board members. The French Financial Security Act also prohibits statutory auditors from providing certain non-audit services and defines certain criteria for independence of auditors. In France, the independence of statutory auditors is also monitored by an independent body, the High Council for Statutory Auditors (Haut Conseil du Commissariat aux Comptes).
The NYSE listing standards are available on the NYSE’s website at http://www.nyse.com.
Composition of the Board of Directors; Independence.
The NYSE listing standards provide that the board of directors of a U.S listed company must consist of a majority of independent directors and that certain committees must consist solely of independent directors. A director qualifies as independent only if the board affirmatively determines that the director has no material relationship with the company, either directly or indirectly. In addition, the listing standards enumerate a number of relationships that preclude independence.
French law does not contain any independence requirement for the members of the board of directors of a French company and the functions of board chairman and chief executive officer are frequently performed by the same person. The AFEP-MEDEF Report recommends, however, that at least half of the members of the board of the directors be independent in companies that have a dispersed ownership structure and no controlling shareholder. The report states that a director is independent when “he or she has no relationship of any kind whatsoever with the corporation, its group or the management of either that is such as to color his or her judgment.” The report also enumerates specific criteria for determining independence, which are on the whole consistent with the goals of the NYSE’s rules although the specific tests under the two standards may vary on some points.
At its meeting on March 31, 2004, the Board of Directors of SCOR adopted internal Board rules governing its operation and composition, including specific criteria for determining the independence of its Boards members. These criteria have regard to both the independence standards of the AFEP-MEDEF Report and the NYSE listing standards.
Based on the independence criteria of its internal Board rules, SCOR considers that 11 of its 15 directors are independent.
Board Committees
Overview. The NYSE listing standards require that a U.S. listed company must have an audit committee, a nominating/ corporate governance committee and a compensation committee. Each of these committees consists solely of independent directors and must have a written charter that addresses certain matters specified in the listing standards.
French law requires neither the establishment of board committee nor the adoption of written charters. The AFEP-MEDEF Report recommends, however, that the board of directors set up an audit committee, a nominating committee and a compensation committee, indicating that the nominating and compensation committees may form one committee. The report also recommends that at least two-thirds of the audit committee members and a majority of the members of each the nominating and the compensation committee be independent directors.
SCOR established an Accounts and Audit Committee and a combined nominating and compensation committee called the Compensation and Nominations Committee and considers all of the voting members of the Accounts and Audit Committee and two-thirds of the Compensation and Nominations Committee to be independent. The Board determined the scope of the activities of both committees.

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Audit committee. The NYSE listing standards contain detailed requirements for the audit committees of U.S. listed companies. Starting on July 31, 2005, some, but not all, of these requirements applied to non-U.S. listed companies, such as SCOR. As of the date hereof, SCOR considers that is in compliance with all of the NYSE rules applicable to non-U.S. companies, subject to certain exemptions as permitted by such rules.
The AFEP-MEDEF Report recommends that French public companies establish an audit committee that is responsible for, among other things, examining the company’s risk exposures and material off-balance sheet commitments and the scope of consolidation, reviewing the financial statements, managing the process of selecting the statutory auditors, expressing an opinion on the amount of their fees and monitoring compliance with the rules designed to ensure auditor independence, regularly interviewing statutory auditors without executive management present, and may call outside experts if necessary.
Although the audit committee recommendations of the AFEP-MEDEF Report are less detailed than those contained in the NYSE listing standards, the NYSE listing standards and the AFEP-MEDEF Report share the goal of establishing a system for overseeing the company’s accounting that is independent from management and of ensuring the auditor’s independence. As a result, they address similar topics, and there is some overlap.
SCOR has established certain roles and tasks for its Accounts and Audit Committee, which emphasize the two following essential missions and exceed those recommended by the AFEP-MEDEF Report:
  Accounting: review of periodic financial reports, review of the appropriateness of choices and proper application of accounting methods, review of the accounting treatment of all significant transactions, review of the consolidation scope, review of off-balance sheet liabilities, management of the selection and remuneration of the statutory auditors, control of all accounting and financial disclosure documents prior to their release to the public; and
 
  Ethical and internal controls: ensure that internal procedures for the gathering and verification of data ensure the quality and reliability of SCOR’s financial statements, review related-party transactions, analyze and reply to employees’ questions with respect to internal control, preparation of the financial statements, and the treatment of accounting entries.
One structural difference between the legal status of the audit committee of the U.S. listed company and that of the French listed company concerns the degree of the committee’s involvement in managing the relationship between the company and the auditors. French law requires French companies that publish consolidated financial statements, such as SCOR, to have two co-auditors. While the NYSE listing standards require the audit committee of a U.S listed company to have direct responsibility for the appointment, compensation, retention, and oversight of the work of the auditor, French law provides that the election of the co-auditors is the sole responsibility of the shareholders’ meeting. In making its decision, the shareholders’ meeting may rely on proposals submitted to it by the board of directors, whose decision is taken upon consultation with the audit committee. The shareholders’ meeting elects the auditors for an audit period of six fiscal years. The auditors may only be dismissed by a court and only on grounds of professional negligence or incapacity to perform their mission.
Corporate governance guidelines
The NYSE listing standards require U.S. listed companies to adopt, and post on their websites, a set of corporate governance guidelines. The guidelines must address, among other things: director qualifications standards, director responsibilities, director access to management and independent advisers, director compensation, director orientation and continuing education, management succession, and an annual performance evaluation. In addition, the chief executive officer of a U.S. listed company must certify to the NYSE annually that he or she is not aware of any violations of the company of the NYSE’s corporate governance listing standards. The certification must be disclosed in the company’s annual report to shareholders.
French law requires neither the adoption of such guidelines nor the publication of such certification. The AFEP-MEDEF Report recommends, however, that the board of directors of a French public company perform annual self-evaluations by an outside consultant every three years, and that shareholders be informed each year in the annual report of the evaluations. In 2002, pursuant to the recommendations of the AFEP-MEDEF Report and the Sarbanes-Oxley Act of July 2002, SCOR’s Board of Directors mandated Allan Chapin, one of its independent members, to

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carry out a review of the functioning of the Board of Directors and issue recommendations. One of these recommendations, submitted to the Board of Directors in January 2003, was to carry out an in-depth review of the functioning of the Board every three years, with an annual review in the interim years. In addition, the French Financial Security Act (Loi de sécurité financière) of August 1, 2003, now requires the Chairman of SCOR’s Board of Directors to deliver a special report to the annual general meeting of shareholders regarding, inter alia, the Board’s practices. The text of this report has been included in “Item 15. Internal Controls and Procedures”.
Code of Business Conduct and Ethics
The NYSE listing standards require each U.S. listed company to adopt, and post on its website, a code of business conduct and ethics for its directors, officers and employees. There is no similar requirement or recommendation under French law. However, under the SEC’s rules and regulations, all companies required to submit periodic reports to the SEC, including SCOR, must disclose in their annual reports whether they have adopted a code of ethics for their principal executives and senior financial officers. In addition, they must file a copy of the code with the SEC, post the text of the code on their website or undertake to provide a copy upon request to any person without charge. SCOR adopted a Code of Ethics in 1996. This Code of Ethics is applicable to all members of personnel. A copy is available on SCOR’s corporate website. In addition, SCOR undertakes to provide to any person without charge, upon request, a copy of such code of ethics by writing to:
Investor Relations and Financial Communications Department
Immeuble SCOR
1, Avenue du Général de Gaulle
92074 Paris La Défense Cedex
Attention: Stéphane Le May, Investor Relations Office
D. EMPLOYEES
As of December 31, 2005, the Group employed 994 people, including 565 at its headquarters in Paris, 208 in North America, 62 in the Asia-Pacific region, 141 in other European countries, and 18 in other regions. In addition to the provisions of the French labor code, SCOR’s employees in France are covered by various collective bargaining agreements relating to working conditions that are negotiated periodically with the employees’ representatives. SCOR considers its employee relations to be good.
The number of employees overall decreased by 5.5% from 1,052 as of December 31, 2004 to 994 as of December 31, 2005. The primary decrease took place in North America and in the staff and financial sectors in Paris.
As part of the restructuring of the Group and its personnel, a redundancy program was initiated in France in September 2005, the effects of which should be primarily apparent at the beginning of 2006.

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The following table sets forth the distribution of employees at the dates indicated(1):
                         
    As of December 31,
     
    2003   2004   2005
             
Number of employees
    1,187       1,052       994  
Breakdown by geographic location
                       
France
    639       587       565  
Asia-Pacific region
    70       63       62  
Other European countries
    167       150       141  
North America
    293       233       208  
Other regions
    18       19       18  
                   
      1,187       1,052       994  
Breakdown by main category of activity
                       
Global Property and Casualty
    553       455       416  
Life reinsurance
    238       224       215  
Staff and financial sectors
    396       373       363  
                   
      1,187       1,052       994  
 
(1) The calculation of the total workforce is based on the registered workforce as of December 31, 2005 with expatriates being counted in their country of expatriation. The figures published last year, 1,038 in 2004 and 1,162 in 2003, were based on the workforce present on December 31 of each financial year, with expatriates being counted in their country of origin.
E. SHARE OWNERSHIP
Shares Held by Directors and Executive Officers
The following table indicates the number of Ordinary Shares held by each director and executive officer of the Company as of December 31, 2005, representing approximately 0.07% of SCOR’s outstanding capital stock on such date:
         
Directors
       
Mr. Carlo Acutis
    60,000  
Ms. Michèle Aronvald
    948  
Mr. Antonio Borges
    1  
Mr. Allan Chapin
    1,000  
Mr. Daniel Havis
    7,602  
Mr. Denis Kessler
    319,920  
Mr. Yvon Lamontagne
    4,460  
Mr. Helman le Pas de Sécheval
    500  
Mr. Daniel Lebègue
    100  
Mr. André Lévy Lang
    150,000  
Mr. Herbert Schimetschek
    6  
Mr. Jean-Claude Seys
    21,050  
Mr. Jean Simonnet
    2,736  
Mr. Claude Tendil
    1,506  
Mr. Daniel Valot
    100  
       
Non-Voting Directors
       
Mr. Georges Chodron de Courcel
    17,836  
       
Chief Operating Officer
       
Mr. Patrick Thourot
    91,530  
       
Total
    679,295  
       

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Stock Option Plans
The total number of share options outstanding as of December 31, 2005 was 20,712,100.
As of December 31, 2005, unexercised share subscription options, if exercised, would lead to the creation of 16,812,193 shares, representing approximately 2.2% of the capital of the Company.
The following table sets forth certain information relating to the various option plans as of December 31, 2005:
                                                         
                            Number
                            granted to
                    Total   Number   top ten
    Date of Board   Date options           Number   granted to   beneficiaries
    of Directors’   become       Number of   of shares   the Group’s   employed
OPTION PLAN   Resolution   exercisable   Expiration date   beneficiaries   granted   executives   by SCOR
                             
  1992       September 28     Expired     Expired       76       318,800       42,000       54,000  
  1994       May 9     Expired     Expired       104       429,000       59,000       64,000  
  1995       May 15     Expired     Expired       99