FORM 20-F
Table of Contents

As filed with the Securities and Exchange Commission on April 29, 2005


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, 2004
       
    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:
  819,269,070 Ordinary Shares, including 29,615,519 American Depositary Shares (as evidenced by American Depositary Receipts), each representing one Ordinary Share.  
 
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 requirement for the past 90 days.
x  YES      o  NO
Indicate by check mark which financial statement item the registrant has elected to follow:
o  ITEM 17      x  ITEM 18



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EXPLANATORY NOTE
The U.S. GAAP consolidated statements of operations, changes in shareholders’ equity, comprehensive income and cash flows for the years ended December 31, 2003 and 2002 and the consolidated balance sheet as of December 31, 2003, including the applicable notes thereto, contained in Item 18 – Financial Statements of this Annual Report on Form 20-F have been restated from those financial statements previously presented. In addition, the financial information as of December 31, 2002 and as of and for the years ended December 31, 2001 and 2000 contained in Item 3.A – Selected Financial Data has also been restated. SCOR has not amended, and does not intend to amend, its previously filed Annual Reports on Form 20-F for the years affected by the restatements that ended prior to December 31, 2004. For this reason, those prior Annual Reports and the consolidated financial statements, auditors’ reports and related financial information for the affected years contained in such reports should no longer be relied upon. For a description of the restatements, see “Item 5 Management’s Discussion and Analysis of Financial Condition and Results of Operation – Restatement” and Note 2. “Restatement” contained in the notes to the audited U.S. GAAP consolidated financial statements included herein.
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 “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 class 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;

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  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 state of the reinsurance brokerage market and 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;
 
  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;
 
  the outcome of regulatory review by U.S. insurance regulators;
 
  changes in laws, regulations and case law;
 
  political, regulatory and industry initiatives;
 
  SCOR’s ability to maintain its relationships with, and be recommended by, brokers;
 
  SCOR’s ability to implement its “Moving Forward” strategic plan and 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 SCOR’s conversion to International Financial Reporting Standards;
 
  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 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.

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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 1.35 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, 2004, 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     6  
   Identity of Directors, Senior Management and Advisers     6  
   Offer Statistics and Expected Timetable     6  
   Key Information     6  
   Information on the Company     22  
   Operating and Financial Review and Prospects     50  
   Directors, Senior Management and Employees     75  
   Major Shareholders and Related Party Transactions     93  
   Financial Information     97  
   The Offer and Listing     100  
   Additional Information     106  
   Quantitative and Qualitative Disclosures About Market Risk     122  
   Description of Securities Other than Equity Securities     124  
 PART II     125  
   Defaults, Dividend Arrearages and Delinquencies     125  
   Material Modifications to the Rights of Security Holders and Use of Proceeds     125  
   Controls and Procedures     125  
   A.   Audit Committee Financial Expert     126  
   B.   Code of Ethics     127  
   C.   Principal Accountant Fees and Services     127  
   D.   Exemptions From The Listings Standards for Audit Committees     128  
   E.   Purchases Of Equity Securities by the Issuer and Affiliated Purchasers     128  
 PART III     130  
   Financial Statements     130  
   Financial Statements     130  
   Exhibits     130  
 EX-4.2
 EX-4.3
 EX-4.4
 EX-4.5
 EX-4.6
 EX-4.7
 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)
                 
2000
    1.03       0.83       0.92       0.94  
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  
 
October 2004
    1.28       1.23                  
 
November 2004
    1.33       1.27                  
 
December 2004
    1.36       1.32                  
2005 (through April 22)
    1.35       1.28                  
 
January 2005
    1.35       1.30                  
 
February 2005
    1.33       1.28                  
 
March 2005
    1.35       1.29                  
 
April (through April 22)
    1.31       1.28                  
 
(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 April 22, 2005 was USD 1.31 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 of changes in 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. – Operating and Financial Review and Prospects” for information regarding the effects of currency fluctuations on the Group’s results.

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Selected U.S. GAAP Consolidated Financial Data
The following selected financial data as of December 31, 2004 and 2003 and for each of the years ended December 31, 2004, 2003 and 2002 are derived from the consolidated financial statements of SCOR, as restated, included in this Annual Report, which have been audited by Ernst & Young, our independent auditors. The following selected financial data as of December 31, 2002, 2001 and 2000 and for each of the years ended December 31, 2001 and 2000 are derived from the unaudited consolidated financial statements of SCOR, as restated, not included in this Annual Report.
The consolidated financial statements 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 French Generally Accepted Accounting Principles, or French GAAP, which differ in certain respects from U.S. GAAP. See “Item 3.D. Risk Factors – Our French GAAP results may differ significantly from our U.S. GAAP results.”
The unaudited euro amounts presented in the table below as at and for the year ended December 31, 2004 have been translated into dollars solely for your convenience at the Noon Buying Rate of USD 1.35 per EUR 1.00 on December 31, 2004, 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.
Restatement
In the course of implementing International Financial Reporting Standards, or IFRS, which the Group will be required to follow in France as of January 1, 2005 for purposes of satisfying French regulatory requirements, the Group identified a number of errors in its financial statements for 2003 and 2002 that had been prepared in accordance with U.S. GAAP, including the 2002 opening balance sheet. As a result, the Group determined that it was necessary to restate its previously issued U.S. GAAP consolidated financial statements.
The restatement principally relates to:
  consolidation: capital leases and mutual funds;
 
  accounting for taxation: deferred taxes on the “reserve de capitalisation” and valuation allowance;
 
  accounting for foreign currency: foreign currency transaction and financial statement, translation of goodwill and impact of currency fluctuations on available for sale debt securities held in currencies other than the functional currency;
 
  accounting for post-retirement benefits; and
 
  accounting for other issues: impairment of securities, derivative contracts, several minor unadjusted difference items for the periods concerned and costs incurred in connection with the creation of the SCOR Vie subsidiary.
Certain reclassifications have been made to balances previously reported to conform to the current presentation.
The Company has not amended, and does not intend to amend, its previously filed Annual Reports on Form 20-F for the years affected by the restatements that ended prior to December 31, 2004. For this reason, those prior Annual Reports and the consolidated financial statements, auditors’ reports and related financial information for the affected years contained in such reports should no longer be relied upon.
The selected financial information presented below has been restated for all periods presented, to reflect the correction of such errors.
For a description of the restatements, see “Item 5 Management’s Discussion and Analysis of Financial Condition and Results of Operation – Restatement” and Note 2. “Restatement” contained in the notes to the audited U.S. GAAP consolidated financial statements included elsewhere herein.

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SELECTED U.S. GAAP CONSOLIDATED FINANCIAL DATA
                                                 
    As at and for the year ended December 31,
     
    2000   2001   2002   2003   2004   2004
                         
    (Restated)   (Restated)               (Translated)
    (unaudited)   (unaudited)   (Restated)   (Restated)       (unaudited)
    (EUR)   (EUR)   (EUR)   (EUR)   (EUR)   (USD)
    (millions, except share and per share amounts)
Income statement
                                               
Operating revenues
    2,964       4,000       4,520       3,650       2,509       3,387  
Total revenues
    3,377       4,010       4,562       3,767       2,551       3,444  
Income (loss) before cumulative effect of change in accounting
    78       (434 )     (493 )     (512 )     243       328  
Cumulative effect of change in accounting principles, net of income taxes(1),(2)
          42                   4       5  
Net income (loss)
    78       (392 )     (493 )     (512 )     247       333  
Net income (loss) per Ordinary Share, basic
    2.48       (11.54 )     (13.03 )     (3.76 )     0.31       0.42  
Net income (loss) per Ordinary Share, diluted
    2.31       (11.54 )     (13.03 )     (3.76 )     0.30       0.41  
Balance sheet data (as at end of year)
                                               
Total assets
    12,776       16,917       16,002       13,605       13,439       18,143  
Shareholders’ equity
    1,371       1,267       1,078       356       1,211       1,635  
Convertible debentures, long-term debt and capital leases
    499       510       902       1,039       961       1,297  
Dividend declared per Ordinary Share
    1.70       0.30                          
Number of Ordinary Shares, in thousands
    34,794       41,244       136,545       136,545       819,269          
 
(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 and 2004 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 and EUR 12 million before tax and EUR 8 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 3.23 to the consolidated financial statements included in Item 18 – Financial Statements.
Dividends
The payment and amount of dividends on outstanding Ordinary Shares are subject to the recommendation of the Company’s Board of Directors and the approval by the Company’s shareholders at an annual general meeting. The Board of Directors also recommends, and the Company’s shareholders determine at the annual general meeting, the portion, if any, of any annual dividend that each shareholder will have the option to receive in Ordinary Shares. Historically, from 1996 through 2001, dividends were paid entirely in cash. Future dividends will depend on the Company’s earnings, financial condition, capital requirements, exchange rate and interest rate fluctuations and other factors. The Company has not paid any dividends since 2001. A dividend of EUR 0.03 per Ordinary Share has been proposed to be approved by the shareholders at the next annual meeting to be held in 2005.
Under French law and the Company’s statuts, or charter and by-laws, the Company’s net income in each fiscal year (after deduction for depreciation and reserves), as increased or reduced, as the case may be, by any profit or loss of the Company carried forward from prior years, less any contributions to legal reserves, is available for distribution to the shareholders of the Company as dividends, subject to other applicable requirements of French law and the Company’s statuts.

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Historically, any cash dividends paid by the Company have generally been paid solely in euros. Dividends paid to holders of ADSs are converted from euros to U.S. dollars, subject to a charge by the Depositary for any expenses incurred by the Depositary in such conversion. Fluctuations in the exchange rate between euros and dollars and expenses of the Depositary will affect the dollar amounts actually received by holders of ADSs upon conversion by the Depositary of such cash dividends. See “Item 3.D. – Risk Factors – We are exposed to the risk of changes in 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 “Item 10.E. – Taxation” for a description of the principal French and U.S. federal income tax consequences regarding the taxation of dividends for holders of ADSs and Ordinary Shares.
Dividends for each year are paid in the year following the approval of such dividend at the annual meeting of shareholders, which is generally held in April or May. The aggregate annual dividends paid for each of the five years ended December 31, 2004 were as follows:
                                         
    Number of       Dividend per        
    Ordinary   Dividend per   Ordinary       Dividend per
    Shares   Ordinary   Share including   Dividend per   ADS including
    outstanding   Share   Avoir Fiscal(1)   ADS(2)   Avoir Fiscal(1)(2)
                     
    (Thousands)   (EUR)   (EUR)   (USD)   (USD)
2000
    34,794       1.70       2.55       1.52       2.28  
2001
    41,244       0.30       0.45       0.27       0.40  
2002
    136,545       0.00       0.00       0.00       0.00  
2003
    136,545       0.00       0.00       0.00       0.00  
2004
    819,269       (*)       (*)       (*)       (*)  
 
(1) Avoir Fiscal for individuals and corporations which own at least 5% of the Company’s share capital at a rate of 50%. The dividend per Ordinary Share including Avoir Fiscal for other corporations was EUR 2.13 and EUR 0.35 in 2000 and 2001, respectively, and the dividend per ADS including Avoir Fiscal for other corporations was USD 1.90 and USD 0.31 in 2000 and 2001, respectively. The Avoir Fiscal was repealed and therefore will not be applicable with respect to dividends distributed in the future. See “Item 10.E. – Taxation.”
 
(2) Solely for your convenience, the dividend per Ordinary Share and avoir fiscal have been translated from the euro amounts actually paid into the corresponding U.S. dollar amounts at the Noon Buying Rates. The Noon Buying Rate may differ from the rate that may be used by the Depositary to convert euros to U.S. dollars for purposes of making payments to holders of ADSs.
 
(*) The Company’s board of directors has approved a EUR 0.03 dividend per Ordinary Share that will be proposed to the shareholders meeting to be held in May 2005.
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 economic conditions. The supply of reinsurance is related to prevailing prices, the levels of insured losses, levels

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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 excessive underwriting capacity and periods when shortages of underwriting capacity permit favorable premium levels.
For example, certain reinsurance sectors in which the Group does business have, particularly since the terrorist attack of September 11, 2001, been characterized by a reduction in subscription capacity on the part of reinsurance companies, in turn leading to increases in pricing and tightened reinsurance conditions. Over the past four years, these capacity shortages have continued due to increasing cost of claims and to multiple catastrophic events from 2001 to 2004, including floods in Northern Europe and France, an earthquake in Japan, typhoons in Asia and hurricanes and tornadoes in the U.S. and the Caribbean, and reduced investment income from financial markets, which has allowed us to maintain premium rates. The reinsurance market nonetheless remains cyclical and there have been some signs of a downturn, including retention increases by insurers and increases in the trend towards non proportional treaties, thus reducing the prospects of premium income, while potentially increasing volatility.
We may 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 adverse effect on our revenues, net income, results of operations and financial condition in future periods.
We are exposed to losses from catastrophic events.
Like other 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, explosions, severe winter weather and fires. In 2004, SCOR, like most other reinsurers, was affected by the unusually high frequency of events, including four hurricanes in the United States and the Caribbean and a number of typhoons in Asia. Although catastrophes may cause losses in several of the Group’s business lines, most of the Group’s catastrophe-related claims in the past have related to homeowners or commercial property coverage. SCOR’s most significant exposure to catastrophe events relates to earthquake risks primarily in Japan, Italy, Israel, Taiwan, Chile, Turkey and Portugal and wind and other weather-related risks concentrated primarily in North America, Europe and Asia.
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. 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 upon short notice. We may be forced to fund these obligations by liquidating investments unexpectedly and in unfavorable market conditions, or raising funds at unfavorable costs. These factors could have a significant impact on our financial condition, profitability and results of operations and the comparability over time of our results.
We have sought to manage our exposure to catastrophic losses through selective underwriting practices, including the monitoring of risk accumulations on a geographic basis, and through the purchase of retrocessional catastrophe reinsurance. There can be no assurance, however, that these underwriting practices, including the management of risks on a geographical basis, or the purchase of retrocessional reinsurance, will be sufficient to protect us against material catastrophic losses, or that retrocessional reinsurance will continue to be available in the future at commercially reasonable rates. Although we attempt to limit our exposure to acceptable levels, it is

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possible that a single or multiple catastrophic events could have a material adverse effect on our consolidated financial condition, results of operations and cash flows.
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 resulted in the Group establishing reserves on the basis that the attack on the two towers of the World Trade Center was one single occurrence and not two occurrences under the term of the applicable coverage. On December 6, 2004, a jury determined that the attacks on the World Trade Center were two distinct occurrences and therefore that our ceding company, which provided insurance on the World Trade Center, was liable for two events on the basis of its policy wording. As a result, we have increased our reserves based on the actual replacement value established by the ceding company’s claims adjusters. The gross amount of reserves has accordingly been 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. The jury verdict that the attack on the World Trade Center constituted two occurrences and not one occurrence under the terms of the ceding company’s insurance policy is expected to be appealed and we have issued two letters of credit in the amount of USD 145.3 million as security required by the ceding company to guarantee our willingness and capacity to pay the ceding company if the jury verdict is not reversed by the U.S. Court of Appeals for the Second Circuit, or if an appraisal process to be conducted under court supervision in 2005 were to lead to an increased amount of liabilities to be paid in the future. 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 measures 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. 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 France (GAREAT), in Germany (Extremus), in the United Kingdom and in Austria. Although the U.S. Congress passed the Terrorism Risk Insurance Act (“TRIA”) in November 2002, which established a federal assistance program 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 and the TRIA may not be renewed at the end of 2005. SCOR has reduced its exposure to the U.S. market by declining to underwrite large national insurers. See “Item 3.D. – Risk Factors – Our results may be impacted by the inability of our reinsurers (retrocessionaires) or other members of pools in which we participate to meet their obligations and the availability of retrocessional reinsurance on commercially acceptable terms.” In addition to the commitments described above, the Group does reinsure, from time to time, terrorist risks, usually limiting by event and by period 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 to make 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 imprecise, 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

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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 2004, we decreased the level of our reserves by EUR 16 million. We believe that our reserves as at December 31, 2004 are sufficient to cover our estimated liabilities relating to environmental and asbestos claims and we estimate correspond to approximately nine years of payments and seven years if the commutations previously made are taken into account.
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. These uncertainties inherent to environmental and asbestos claims are unlikely to be resolved in the near future. 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 to estimate the reserves that should be recorded for these risks and to give any assurance that the amount reserved will be sufficient. 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 considerably 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 a material 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 on the basis of information that we receive from insurance companies, particularly their own reserving levels. 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 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 in claims of this nature.
We periodically review the methods for establishing reserves and their amounts. 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

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condition. We strengthened our reserves on several occasions in 2002 and 2003 following internal and external actuarial reviews. The most recent such 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 or sharply reduced, such as buffer layers, program business and workers compensation.
Although we believe our Non Life technical reserves were adequate as of the end of 2004, we cannot guarantee that our level of reserves will be sufficient to cover future losses. In particular, our market experience has shown that these measures have not always proven to be sufficient. To the extent we are required to further increase our reserves in the future, our net income, results of operations and financial condition could be materially adversely affected. 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.
Our results may be impacted 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 credit risk by writing business on a funds withheld basis. Under such arrangements the cedant retains the premium they would otherwise pay to the reinsurer to cover future loss payments. Although 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. 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. In addition, retrocession may prove inadequate to protect against losses or may become unavailable in the future or unavailable at commercially acceptable rates.
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 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 net income, results of operations and 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 and ratings assigned by independent 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. In addition, our current ratings have significantly hindered our competitive position, and may in the future continue to do so. In 2004, our lower ratings were responsible for losses of business. Although a change in the outlook and an upgrade from one rating agency before the end of the 2004-2005 renewal period has

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improved our competitive position, if we do not improve our credit ratings to an A level our business, our financial condition and our results of operations could be seriously affected. See “– Ratings are important to our business.”
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 reinsurance 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 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.
We are exposed to equity price risk. While equity investments accounted for only approximately 8.3% of our investments as at December 31, 2004 by market value, we may need to record impairments to our equity portfolio as a result of negative developments in the stock markets. Such depreciation could affect our operating results and financial condition.
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 one rating agency improved the outlook of our rating in 2004 before the end of the 2004/ 2005 renewal period, our principal competitors currently hold higher ratings than us, which has significantly hindered our competitive position, and there can be no assurance that such ratings will be improved or maintained in the future.
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 ratings levels in 2003 and 2004 have made it difficult for us to renew policies and treaties with existing clients and to sign new clients, notably in our Life reinsurance, large facultative and direct underwriting segments. Moreover, such ratings have induced some ceding companies to reduce our shares on some treaties and contracts in 2004. In addition, given that some of our reinsurance treaties contain termination clauses triggered by ratings, there is a risk that our reserves would be reduced as a result of such termination by our clients, which in turn would be likely to significantly reduce our future financial margins and to require us to depreciate some or all of our deferred acquisition costs. See also “– Our shareholders’ equity is sensitive to the value of our intangible assets”

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and “Item 4. Information on the Company – Ratings.” We cannot assure you that we will be able to improve our underwriting results, decrease management expenses or improve our ratings in 2005, or that any such improvements will be sufficient to compensate for such decreases in premium volumes.
The timing of any changes to our credit ratings is also very important to our business since our Life, large facultative and “business solutions” contracts and treaties with ceding companies are renewed at various times throughout the year. Our contracts and treaties are generally renewed in Japan and Korea each April, in the U.S. each January and July and in Europe, Canada and the rest of the world each January. If our credit ratings do not improve prior to the renewal periods described above, our premium income for 2005 and 2006 could be negatively impacted as we could continue to lose contracts, treaties and premiums to our competitors with higher credit ratings.
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 further ratings downgrade, our financial situation and results could be significantly affected. Despite our improved condition in 2004 our current credit ratings levels have made it more costly for us to obtain such letters of credit and have sometimes made it more difficult for us to renew or obtain letters of credit and, as a result, to conclude or renew reinsurance contracts. Any further downgrading in our credit ratings levels, however, would significantly restrict our ability to obtain such letters of credit and would affect our operations. In these circumstances, we could be required to reduce our business with U.S. ceding companies and our business, operating results and financial condition could be adversely affected.
A significant portion of our treaties contain provisions relating to financial strength, which could have an adverse effect on our financial condition.
A significant portion of our reinsurance treaties, in particular in our Life reinsurance business, 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 effect on our financial condition. In addition, our main credit facilities, in particular those which were renewed in the third and fourth quarters of 2003, contain financial undertakings and provisions with respect to minimum ratings and net consolidated assets, 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, either of which would have a material adverse effect on our business, operating results and 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 allowed us to meet the cash demands entailed by our operating activities.
  In June 2004, we issued EUR 200 million of OCEANEs, consisting of 100 million bonds having a nominal value of EUR 2 each, which are bonds convertible or exchangeable for new or existing shares. The OCEANEs bonds will be fully redeemed in 2010. We used the proceeds from the OCEANEs bond issuance, together with available cash, to repay our 1999 OCEANEs bonds that matured on January 1, 2005 for an aggregate amount of approximately EUR 263 million, including repayment premium and reimbursement value of previously repurchased bonds.
 
  In 2002, we issued EUR 200 million of unsubordinated notes repayable on June 21, 2007.

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  Pursuant to agreements dated December 28, 2001 entered into in connection with the formation of IRP Holdings Limited, or IRP Holdings, IRP Holdings’ minority shareholders have an agreed set of exit rights exercisable during certain defined periods. The agreements permit the minority shareholders to exit IRP Holdings during the first half of 2005 and in any event require an exit no later than May 31, 2006. SCOR may acquire the shares held by the minority shareholders either with existing or newly-issued SCOR shares, with cash, or with a combination of shares and cash. SCOR may, depending on conditions at the time of the exit, decide to acquire all or part of these shares in 2005. For more information on IRP Holdings, see “Item 9.A. The Offer and Listing – IRP”, and for a description of the pending litigations initiated by minority shareholders of IRP Holdings, see “Item 8.A. Consolidated Statements and Other Financial Information – Legal Proceedings”.
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 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 amounted to approximately EUR 1.9 billion at December 31, 2004 and accordingly restrict our capacity to increase cash by means of asset disposals. 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 also 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 of changes in 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. 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.
In addition, the shareholders’ equity of a large majority of our Group entities 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 weakening 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. These fluctuations are currently not covered by any hedging transactions by the Group. The strengthening of the euro against other currencies resulted in a gain of EUR 37 million in the year ended December 31, 2004. During the year ended December 31, 2004, the strengthening of the euro against other currencies resulted in a negative exchange rate adjustment in the Group’s equity of EUR 101 million.
Our Non Life subsidiaries in the United States are facing financial difficulties and certain of our American subsidiaries are subject to a regulatory review by U.S. insurance regulators.
The operations of our Non Life subsidiaries in the U.S. have deteriorated principally as a result of losses stemming from the underwriting years 1997 to 2001, the impact of the terrorist attack of September 11, 2001 and the claims experience of the health insurance and credit markets. Based on U.S. risk-based capital requirements, we recapitalized our U.S. subsidiaries in 2003, 2004 and early 2005 through capital investments or by the

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issuance of surplus notes, for a total amount of approximately USD 402 million. As a result of these capital increases and the reduction of premiums booked in 2004, the level of assets and risk-based capital of our U.S. subsidiaries were in compliance with U.S. regulatory requirements as of December 31, 2004.
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. On February 25, 2004, SCOR Reinsurance Company, or SCOR Re, notified the NYID that it had incorrectly accounted for a loss portfolio transfer reinsurance treaty signed in 2000 with three reinsurers unaffiliated with the Group in its 2000, 2001 and 2002 financial statements. We believe that the application by SCOR Re of the correct accounting principles and methods during this period would have had no material impact on our consolidated financial condition. The NYID is currently reviewing this matter and has not advised SCOR Re as to its conclusion.
We face risks from changes in government regulations and legal proceedings and developments.
We are subject to detailed, comprehensive regulation and supervision 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 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. For example, there are regulations about to be made applicable to French reinsurers that dictate investment portfolio contents and solvency ratios. There are also regulatory initiatives to reconcile the regulations applicable to insurance companies to reinsurance companies. We believe these regulations will become more robust over time. These new regulations and statutes may over time restrict our ability to write reinsurance business. Moreover, we are involved in legal and arbitration proceedings in certain European, and other jurisdictions, including in the United States. In particular, we are subject to proceedings initiated by the minority shareholder of IRP Holdings in Dublin, Ireland and Boston, Massachusetts. See “Item 8.A. Consolidated Statements and Other Financial Information – Legal Proceedings”. Negative changes in laws or regulations or an adverse outcome of these proceedings could have a material adverse affect on our business, liquidity, 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 developments 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. These political, judicial, social and other legal developments may not become apparent until some time after their occurrence. We cannot predict the future impact of changing political, judicial, social and other legal developments on our operations and any changes could have a material adverse effect on our financial condition, results of operations or cash flows.
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 and the accounting treatment for finite reinsurance or other non-traditional or loss mitigation insurance and reinsurance products. At this time, we are unable 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 our business.
In addition, governmental authorities in both the U.S. and worldwide are increasingly examining the potential risks posed by the reinsurance industry as a whole, and to commercial and financial systems in general. While we

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do not believe these inquiries have identified meaningful new risks posed by the reinsurance industry to the financial system or to policyholders, and we cannot predict the exact nature, timing or scope of possible governmental initiatives, we believe it is likely there will be increased regulation in our industry in the future.
A significant part of our business is conducted with a limited number of brokers.
As is the case with many reinsurance companies, an important part of our Non Life business is transacted through reinsurance brokers. The Non Life reinsurance brokerage market is dominated by a limited number of brokers with whom we do business. As a result, our ability to obtain underwriting premiums is heavily dependant on being recommended by these brokers to their clients. After having been suspended by several large brokers from their list of recommended reinsurers in late 2003 due to our credit ratings downgrades, we have been readmitted to the list of recommended reinsurers by such reinsurance and insurance brokers for the 2004 underwriting year. If, however, our brokers were to suspend us from the list of reinsurers that they propose to their clients in the future or we are otherwise unable to maintain relationships with the limited number of brokers with whom we do business, the volume of our written premiums could decline, which could significantly impact our operating results as well as our financial condition.
If we do not successfully implement our “Moving Forward” strategic plan, we will not achieve our objectives and our business and future profitability and financial condition would be adversely affected.
Our Board of Directors adopted a new strategic plan entitled “Moving Forward” and we have begun to implement this plan with the Property and Casualty treaties renewals for 2005. This plan marks the end of our recovery action and serves as a business plan for the management of the business throughout the business cycle, taking into account three hypothetical capital base levels according to the business requirements during the different times in the business cycle. The implementation and success of our strategic plan are based on a number of assumptions and factors that are not under our control, including current and projected general economic conditions, our competitive position, our ratings levels and our financial condition. If these factors prevent us from implementing our strategic plan or if our assumptions prove incorrect or the plan is not effectively implemented, we will not achieve our objectives and our business and future profitability and financial condition would adversely be affected.
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, including those of CRP and SCOR U.S.
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 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, 2004, dropped by approximately 80% over the period. However, there cannot be any assurance that the remaining commutation will be achieved on attractive terms.
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, 2004, we carried EUR 209 million of goodwill as a result of acquisitions, primarily of South Barrington in 1996 and Sorema S.A. and Sorema N.A. in 2001.
According to the FAS 142, the Group performs the required annual assessment of goodwill in its annual closing in the fourth quarter; however, this assessment normally requires an additional test to be performed during the year upon the occurrence of certain events or circumstances. Should any adverse significant change occur in the future, the Group would need to perform an impairment assessment of its goodwill before the regular fourth quarter assessment. If the goodwill is determined to be impaired, the amount of the goodwill’s write off will impact the Group’s results.
Other assets we carry are subject to review. For example, as of December 31, 2004 we had a total of EUR 313 million in deferred tax assets, net of valuation allowance, and EUR 236 million in deferred tax liabilities compared to a total of EUR 188 million in deferred tax assets, net of valuation allowance, and EUR 228 million in deferred tax liabilities at December 31, 2003. The calculation of deferred tax assets and liabilities is based on applicable tax legislation and accounting standards and the future recoverability of these deferred tax assets depends on the performance of each entity. At each annual financial statement closing, we are required to assess the need for a valuation allowance of our deferred tax assets. As a result, at December 31, 2003, we had to write down all of the deferred tax assets related to SCOR and SCOR U.S., resulting in a charge of EUR 353 million. Due to improvements in our profitability in 2004 and actions we have taken to sustain profitability in the future, we have reassesed the realizability of deferred tax assets with respect to French net operating losses based upon projections for future taxable income, including tax planning strategies.
The costs of acquiring new business in Life, including commissions and underwriting expenses, are deferred and amortized as deferred acquisition costs, or DAC. In general, DAC is amortized in proportion to the profits expected to be generated over the life of the underlying business. The assumptions we make with respect to the recoverability of DAC are therefore affected by such factors as operating performance, market conditions and persistency of underlying life policies. If the assumptions on which recoverability of DAC is based prove to be incorrect, it could become necessary to accelerate its amortization, which could have a material adverse impact on our financial condition and results of operations.
We have restated our U.S. GAAP financial statements and identified material weaknesses in our internal controls, and the identification of any material weaknesses or significant deficiencies in the future could affect our ability to ensure timely and reliable financial reports.
In connection with the implementation of International Financial Reporting Standards, or IFRS, as required by the EU, SCOR identified a number of errors in its U.S. GAAP financial statements. As a result, the Group has determined that it was necessary to restate its previously issued U.S. GAAP consolidated financial statements. 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 reportable conditions under standards established by the American Institute of Certified Public Accountants involving control and its operation, that they consider to be material weaknesses, and that other potential material weaknesses were being investigated. The first material weakness identified related to an error in the accounting for leases that were originated during the fiscal year ended December 31, 2002 and that were not properly accounted for as capital leases under U.S. GAAP. The second material weakness identified related to the accounting for derivatives at December 31, 2003. In Ernst & Young’s view, both errors were attributable to inadequate controls over the U.S. GAAP financial statements closing process. For additional information regarding the restatement and these material weaknesses, see “Item 15. Controls and Procedures” and note 2 to our U.S. GAAP consolidated financial statements included elsewhere herein.
While we are planning to take actions to address these material weaknesses, including contracting with or hiring additional persons knowledgeable in U.S. GAAP, these measures may not be sufficient to address the issues identified by us or to ensure that our internal controls are effective. If we are unable to contract with or hire and retain additional accounting personnel knowledgeable in U.S. GAAP or otherwise correct deficiencies in internal controls in a timely manner, our ability to record, process, summarize and report financial information within the

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time periods specified in the rules and forms of the SEC will be adversely affected. This failure could materially and adversely impact our business, financial condition and the market value of our securities.
Our internal control over financial reporting may not be effective and our independent auditors may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation.
We are evaluating our internal control over financial reporting in order to allow management to report on, and our independent auditors to attest to, our internal control over financial reporting, as required by Section 404 of the US Sarbanes-Oxley Act of 2002 and the rules and regulations of the SEC thereunder, which we refer to as Section 404. We are currently performing the system and process evaluation and testing required, and any necessary remediation, in an effort to comply with the management certification and auditor attestation requirements of Section 404. The management certification and auditor attestation requirements of Section 404 will initially apply to SCOR for its Annual Report on Form 20-F for the year ended December 31, 2006. In the course of our ongoing Section 404 evaluation, we have identified areas of internal control over financial reporting that may need improvement, and plan to design enhanced processes and controls to address these and any other issues that might be identified through this review. In addition, as described in the previous risk factor, SCOR has identified a number of errors in its U.S. GAAP financial statements and determined that it was necessary to restate its previously issued U.S. GAAP consolidated financial statements and our auditors, Ernst & Young, notified us that they had identified two reportable conditions under standards established by the American Institute of Certified Public Accountings involving control and its operation, that they consider to be material weaknesses, and that other potential material weaknesses were being investigated.
We cannot be certain as to the timing of completion of our evaluation, testing and any remediation actions or the impact of the same on our operations. 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.
Our French GAAP results may differ significantly from our U.S. GAAP results.
The consolidated financial statements of SCOR included herein have been prepared in accordance with U.S. GAAP. In addition, SCOR, like other French companies, publishes its primary consolidated financial statements, not included herein, prepared in accordance with French GAAP. There are significant differences between French GAAP and U.S. GAAP which lead to different results under the two systems of accounting. Currently, the most significant differences between SCOR’s French GAAP results and U.S. GAAP results arise due to the (i) manner in which currencies are converted (i.e. French GAAP uses the exchange rate at the close of the applicable day and U.S. GAAP uses an average of the exchange rate for such day), (ii) the treatment of goodwill (i.e., French GAAP requires amortization of goodwill and U.S. GAAP uses a depreciation test) and (iii) difference in valuation of deferred tax assets. As described below, starting January 1, 2005, SCOR will prepare its primary financial statements under International Financial Reporting Standards, or IFRS, and no longer under French GAAP. There are also differences between IFRS and U.S. GAAP and we cannot predict with any certainty the extent to which SCOR’s IFRS and U.S. GAAP results will differ in future years.
The transition of our primary financial statements from French GAAP to IFRS may affect our operating results.
The Council of the European Union, or EU, adopted a regulation requiring listed companies in its member states, such as SCOR, to prepare consolidated financial statements in accordance with IFRS, which was previously known as International Accounting Standards. This new regulation took effect on January 1, 2005. Accordingly, the basis on which we prepare our primary financial statements and report our operating results will be changed

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for the year ended December 31, 2005. The impact of adopting IFRS is difficult to predict; however, it could have an impact on our level of reported assets, liabilities, shareholders’ equity, earnings, expenses and income.
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 critical 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. We believe appropriate controls and mitigation actions are in place to prevent significant risk of defect in our information technology and application systems, but if such controls and actions are not effective, 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
 
  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

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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. BUSINESS OVERVIEW
General
SCOR is a French société anonyme with its registered office 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 http://www.scor.com. Information contained on SCOR’s website is not part of this Annual Report. SCOR’s Articles of Association are registered with the Nanterre under registry number B562033357.
SCOR provides treaty and facultative reinsurance on a worldwide basis to Property-Casualty and Life insurers. In 2004, the Group had net written premiums of EUR 2,126 million, which management believes make it one of the 15 largest European reinsurers, based on management’s estimate of the 2004 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.

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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 better 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 in 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.
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 implementation of the “Back on Track” plan, which imposed more rigorous underwriting standards, as well as SCOR’s lower financial strength ratings. 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. from approximately 37% in the year ended December 31, 2002 to approximately 16% in the year ended December 31, 2003 and approximately 9% in the year ended December 31, 2004, while increasing the percentage of Non Life premium income in Europe from approximately 42% in the year ended December 31, 2002 to approximately 53% in the year ended December 31, 2003 and approximately 60% in the year ended December 31, 2004.
In the second half of 2004, the Board of Directors adopted a new strategic plan for 2005 through 2007, entitled “Moving Forward”. The “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. As part of the “Moving Forward” plan, SCOR has also reassessed its capital allocation plan along the Group’s lines of business and by market. 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.
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 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

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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
IRP
Pursuant to agreements dated December 28, 2001 entered into in connection with the formation of IRP Holdings Limited, or IRP Holdings, IRP Holdings’ minority shareholders have an agreed set of exit rights exercisable during certain defined periods. The agreements permit the minority shareholders to exit IRP Holdings during the first half of 2005 and in any event require an exit no later than May 31, 2006. SCOR may acquire the shares held by the minority shareholders either with existing or newly-issued SCOR shares, with cash, or with a combination of shares and cash. SCOR may, depending on conditions at the time of the exit, decide to acquire all or part of these shares in 2005. For more information on IRP Holdings, see “Item 9.A. The Offer and Listing – IRP”, and for a description of the pending litigations initiated by the minority shareholders of IRP Holdings, see “Item 8.A. Consolidated Statements and Other Financial Information – Legal Proceedings”.
Renewals
The January 1, 2005 renewal period involved approximately 80% of SCOR’s 2004 Property & Casualty treaty portfolio, approximately 20% of SCOR’s 2004 Large Corporate Accounts portfolio and approximately 95% of SCOR’s 2004 Credit & Surety portfolio. Gross premiums written on Property & Casualty treaties during the January 1, 2005 renewal period were approximately EUR 802 million. SCOR increased its quota share on existing treaties and regained several lead underwriting positions in European Property & Casualty treaties, gaining or regaining 40 clients, as opposed to losing 27 clients in the prior renewal year, 14 of which SCOR decided to relinquish, 7 of which left following a decision made by the cedants due to SCOR’s ratings and 6 of which left following mergers between cedants. In the United States, SCOR has maintained its commercial presence while pursuing a selective underwriting policy despite its current ratings. SCOR has continued to reposition itself with small and medium-sized regional cedants. In Mexico and the Caribbean, SCOR has benefited from a rate increase in high-layer natural catastrophe lines in the zones recently affected by hurricanes. In Canada, SCOR has initiated relationships with several clients and has increased its share on several existing treaties. In Asia, SCOR regained quota share on its treaties in Malaysia, Indonesia, China and Singapore and gained new clients in Malaysia, Taiwan and Hong Kong.

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Renewals in the Large Corporate Accounts business are carried out throughout the year. However, of the 20% of SCOR’s Large Corporate Accounts portfolio up for renewal during the January 1, 2005 renewal period, 77% of business was renewed. The trends in this sector to lower premiums and adverse exchange rate fluctuations have weighed on the value of premiums where the accounting currency is often U.S. dollars. SCOR has initiated relationships with four new clients and has increased its quota share on several existing treaties in the Credit & Surety sector.
World Trade Center Litigation
The September 11, 2001 attack on the World Trade Center resulted in the Group establishing reserves on the basis that the attack on the two towers of the World Trade Center was one single occurrence and not two occurrences under the terms of the applicable insurance coverage. On December 6, 2004, a jury determined that the attacks on the World Trade Center were two distinct occurrences and therefore that our ceding company, which provided insurance on the World Trade Center, was liable for two events on the basis of its policy wording. As a result, we have increased our reserves based on the actual replacement value established by the ceding company’s claims adjusters. The gross amount of reserves has accordingly been 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. The jury verdict that the attack on the World Trade Center constituted two occurrences and not one occurrence under the terms of the ceding company’s insurance policy is expected to be appealed and we have issued two letters of credit in the amount of USD 145.3 million as security required by the ceding company to guarantee our willingness and capacity to pay the ceding company if the jury verdict is not reversed by the U.S. Court of Appeals for the Second Circuit, or if an appraisal process to be conducted under court supervision in 2005 were to lead to an increased amount of liabilities to be paid in the future. See “Item 8.A. Consolidated Statements and Other Financial Information – Legal Proceedings” for a discussion of the pending World Trade Center litigation.
Claims
The storm damage of January 8 to 9, 2005 in Northern Europe is currently being assessed and could reach a relatively large sum exceeding the initial estimates made after it had occurred.
Furthermore, decisions made by the operator of Roissy airport to perform more significant reconstruction work on terminal 2 E than that declared by the client and his insurers when the claim was launched will result in a reassessment of the gross cost, the impact of which for SCOR should be significantly reduced by the involvement of retrocessionaires. The impact on the Group’s accounts should be marginal.
Commutations
There were two commutations for USD 26.9 million of reserves in the Bermudan subsidiary of SCOR (CRP) since January 1, 2005, for which the discounted reserves have now been reduced to EUR 216 millions, down by 32% compared to the level as of December 31, 2003. Moreover, several negotiations started in 2004 have recently been achieved.
On February 7, 2005, SCOR and its U.S. and Bermudan subsidiaries, SCOR U.S. and Commercial Risk Companies (CRP) signed a large commutation agreement for the SCOR Group which will reduce the overall reserves of SCOR U.S. (and CRP but to a lesser extent) by approximately USD 300 million and will be accounted for in the first quarter of 2005.
These transactions reduce the Group’s risk exposure and the volatility of reserves, especially for segments exposed to claims inflation.
“Run off” management in the United States
SCOR U.S. has set up a “run off” department, which is managed separately from the Company’s normal underwriting business. This department administers all claims, accounting and actuarial activities relating to market segments in which SCOR U.S. is no longer writing new business.

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Retrocession
The SCOR Group continues to pursue a conservative retrocession policy based on acquiring capacity tailored to requirements and uses. SCOR has selected market models to assess its exposure and reinsurance policy in terms of catastrophic risks. The result is a program better adapted to the requirements of the Group and its customers, and a sharp reduction in retrocession expenses. SCOR continues to retain the same level of risks for catastrophic risks and individual events as in the past.
OCEANEs Issuance and Repayment
In July 2004, we issued EUR 200 million of OCEANEs, consisting of 100 million bonds having a nominal value of EUR 2 each, which are bonds convertible or exchangeable for new or existing shares. The OCEANEs bonds will be fully redeemed in 2010. We used the proceeds from the OCEANEs bond issuance, together with available cash, to repay our OCEANEs bonds originally issued in June 1999.
On January 3, 2005, SCOR repaid its OCEANEs bonds originally issued in June 1999 in the original principal amount of approximately EUR 233 million, at a price of EUR 65.28 per bond, for an aggregate amount of EUR 263 million, including repayment premium and reimbursement value of previously repurchased bonds. In 2004, we had previously repurchased 577,258 OCEANEs bonds, the reimbursement value of which corresponds to EUR 37.7 million.

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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 and surplus. 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.
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.
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 normally is 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

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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.
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

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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 practice.
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, the reinsurance industry has been experiencing a plateau in most lines of business in 2004, except general liability, and a moderate decrease in the reinsurance market is expected in 2005, notwithstanding the effects of a number of large and costly natural catastrophes in the second half of 2004 which may reduce the downward trend of the cycle in some countries.

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PRODUCTS AND MARKETS
General
Our operations are organized into the following two business segments: Non Life and Life/ Accident & Health. Non Life is further organized into four sub-segments: Property-Casualty Treaty; Facultatives and Large Corporate Accounts written on a facultative basis by SCOR Business Solutions, or SBS; Credit, Surety & Political Risks; and Alternative Reinsurance. The Non Life and Life segments discussed below differ from the Non Life and Life/Accident & Health segments contained in our financial statements included elsewhere herein because on a statutory basis the Accident and Health reinsurance business are classified in the Non Life category. 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, such as COFACE, Euler-Hermès and NCM. In 2004, SCOR merged its Credit, Surety and Political Risks business into 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 and discussion contained herein have been revised to reflect such reclassification for prior years.
SCOR’s Alternative Reinsurance Treaty business, or ART, 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 its Non Life business segment in its financial statements since SCOR is no longer active in this business. The presentation and discussion contained herein have been revised to reflect such reclassification for prior years.
The following table sets forth our gross premiums written by segment and class of business:
                                                     
    Year ended December 31,
     
    2002   2003   2004
             
    (Restated)   (Restated)    
             
    EUR   %   EUR   %   EUR   %
                         
    (EUR, in millions, except percentages)
By segment of business
                                               
Non Life
    3,696       75       2,323       70       1,365       61%  
Life/ Accident & Health
    1,218       25       983       30       880       39%  
                                     
 
Total
    4,914       100       3,306       100       2,245       100%  
                                     
By class of business
                                               
Non Life
                                               
Property-Casualty Treaty
                                               
 
Property
    1,139       52       972       58       608       57  
 
Casualty
    920       42       609       36       326       31  
 
Marine, Aviation and Transportation
    77       4       63       4       19       2  
 
Construction
    40       2       46       2       111       10  
                                     
   
Total Property-Casualty Treaty
    2,176       100       1,690       100       1,064       100  
                                     

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    Year ended December 31,
     
    2002   2003   2004
             
    (Restated)   (Restated)    
             
    EUR   %   EUR   %   EUR   %
                         
    (EUR, in millions, except percentages)
Facultatives and Large Corporate
                                               
Accounts (SBS)
                                               
 
Property
    437       47       329       58       161       62  
 
Casualty
    278       30       85       15       30       11  
 
Marine, Aviation and Transportation
    79       8       36       6       41       16  
 
Construction
    136       15       119       21       29       11  
                                     
   
Total Facultatives and Large Corporate Accounts
    930       100       569       100       261       100  
                                     
Credit, Surety & Political Risks
    123               65               38          
Alternative Reinsurance
    467               (1 )             2          
                                     
 
Total Non Life
    3,696               2,323               1,365          
                                     
Life/ Accident & Health
                                               
Annuity-based
    182       15       198       18       33       4  
Individual & group life
    493       40       384       46       511       58  
Accident
    100       8       132       12       97       11  
Disability
    56       5       50       4       39       5  
Health
    200       16       105       9       74       8  
Unemployment
    14       1       28       3       28       3  
Long-term care
    173       14       86       8       98       11  
                                     
 
Total Life/ Accident & Health
    1,218       100       983       100       880       100  
                                     
Non Life
The Non Life segment is divided into four operational sub–segments:
  Property-Casualty Treaty;
 
  Facultatives and Large Corporate Accounts.
 
  Credit, Surety & Political Risks; and
 
  Alternative Reinsurance.
Property-Casualty Treaty
The Property-Casualty Treaty sub-segment includes: the proportional and non-proportional treaty classes of property; casualty; marine, aviation and transportation; and construction reinsurance.
Property. The Group’s proportional and non-proportional property treaty business provides reinsurance coverage for underlying insured property damage or business interruption losses resulting from fire or other perils in the homeowners, personal auto, industrial and general commercial property lines. In addition, SCOR’s specialized excess of loss coverage also provides catastrophe loss protection to cedents.
Casualty. The Group’s proportional and non-proportional casualty treaty reinsurance business includes auto liability and general third party liability coverage, as well as the liability components of both homeowners and general commercial coverage. Auto liability reinsurance covers bodily injury and third party property and other liability risks arising from both private passenger and commercial fleet auto coverage.
Marine, Aviation and Transportation. The Group’s marine, aviation and transportation treaty business relates primarily to ocean and inland marine risk, as well as a limited amount of commercial aviation coverage.
Construction. The Group’s construction treaty business, primarily written on a proportional basis, includes inherent defect insurance coverage, also known as decennial insurance. As required by French and Spanish law,

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decennial insurance covers major structural defects and collapse for ten years after completion of construction of a building.
Facultatives and Large Corporate Accounts
The second sub-segment of the Non Life segment is Facultatives and Large Corporate Accounts, which we refer to as SCOR Business Solutions, or SBS. SBS consists of six industrial sectors: energy & utilities, new technologies, including a unit dedicated to space risks, finance & services, industry, contracting & major projects and large facultatives in three geographic areas: Europe, Asia Pacific and North America. SBS consists mostly of facultative business, which is written by specialized underwriting teams. It was reorganized in 2000 to cover the activities of corporate buyers seeking global risk financing solutions that combine traditional risk coverage and alternative financing. It shares risks on a proportional or non-proportional basis with cedents for large, complex industrial or technical risks, such as automotive assembly lines, semiconductor manufacturing plants, oil and gas or chemical facilities, oil and gas exploration and production sites, energy facilities, and boiler and machinery installations.
The Group’s large facultative business is primarily written in property, as well as, to a lesser degree, in the liability, transportation, space and construction classes of business. SBS also writes casualty facultative business, which encompasses commercial fleet auto coverage, workers compensation, fraud and commercial third party liabilities.
Space and transportation facultative coverage is written particularly in the areas of space and offshore risks, and requires the application of sophisticated, highly technical risk analysis and underwriting criteria. 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 cedents, 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 who are covering their risks. See “Item 3.D. – Risk Factors – Ratings are important to our business.”
Credit, Surety & Political Risks
SCOR’s Credit, Surety and Political Risks business is conducted by teams based primarily in Europe and to a lesser extent in the United States. In credit insurance contracts, the insurer covers risks of loss due to non-payment of debts, while in surety insurance contracts, the insurer acts as guarantor to pay, or make pay, a debt. Political risks insurance covers risks of loss as a result of measures taken by governments or governmental entities jeopardizing a sales contract or an obligation.
Alternative Reinsurance
SCOR’s ART business has been limited to underwriting within its Bermudan subsidiary, Commercial Risk Partners, and has been in run-off since January 2003.
Life/Accident & Health
Life/Accident & Health reinsurance includes life reinsurance products, as well as personal casualty reinsurance, namely accident, disability, health, unemployment and long-term care.

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Life. The Group’s Life business, written primarily on a proportional and non-proportional treaty basis, provides life reinsurance coverage with respect to individual and group life, reinsurance of annuity-based products, and longevity reinsurance, to primary life insurers and pension funds.
Accident, disability, health, unemployment and long-term care. The segments of this business are written primarily on a proportional treaty basis.
Distribution by geographic area
In 2004, SCOR generated approximately 60% of its gross premiums written in Europe, with significant market positions in France, Germany, Spain and Italy, 19% of its gross premiums written in North America, including Bermuda and the Caribbean region and 21% of its gross premiums written in Asia and the rest of the world.
As part of its strategic reassessment in 2002, the Group has pursued and is continuing to pursue the reorientation of its Non Life business portfolio by geographic zone, particularly by a deliberate reduction of underwriting in the United States. The strategic reorientation pursued since September 2002 has allowed the Group to write better quality business. As a result of its efforts, SCOR reduced the percentage of Non Life premium income in the U.S. from approximately 37% in the year ended December 31, 2002 to approximately 16% in the year ended December 31, 2003 and approximately 9% in the year ended December 31, 2004, while increasing the percentage of Non Life premium income in Europe from approximately 42% in the year ended December 31, 2002 to approximately 53% in the year ended December 31, 2003 and approximately 60% in the year ended December 31, 2004. In connection with its Asian operations, SCOR has submitted a file for converting its representation bureau in Beijing into a subsidiary and on April 16, 2004 obtained a license for its Seoul bureau to be converted into a branch.
The following table shows the distribution of the Group’s gross Life and Non Life premiums written by geographic area:
Gross Premiums Written by Geographic Area(1)
                                                   
    Year ended December 31,
     
    2002   2003   2004
             
    (Restated)   (Restated)    
             
    EUR   %   EUR   %   EUR   %
                         
    (EUR figures in millions)
Total Europe
    2,217       45%       1,925       58%       1,355       60%  
 
France
    840       17%       720       22%       480       21%  
 
Europe (Outside of France)
    1,377       28%       1,205       36%       875       39%  
North America
    1,934       39%       822       25%       430       19%  
Asia-Pacific and Other International
    763       16%       559       17%       460       21%  
                                     
Total
    4,914       100%       3,306       100%       2,245       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 large facultative 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 & Poors
November 9, 2004
  BBB+
(positive outlook)
  BBB+
(positive outlook)
  BBB-
(positive outlook)
AM Best
December 1st, 2004
  B++
(positive outlook)
  bbb
(positive outlook)
  bbb-
(positive outlook)
Moody’s
December 7, 2004
  Baa2
(positive outlook)
  Baa3
(positive outlook)
  Ba2
(positive outlook)
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. The rating on SCOR’s commercial paper program has been affirmed. The outlook for all these ratings has been changed to positive from stable.
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. These ratings all have a positive outlook.

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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 “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 2004 by reducing the percentage of Non Life premium income in the U.S. from approximately 37% in the year ended December 31, 2002 to approximately 16% in the year ended December 31, 2003 and approximately 9% in the year ended December 31, 2004, while increasing the percentage of Non Life premium income in Europe from approximately 42% in the year ended December 31, 2002 to approximately 53% in the year ended December 31, 2003 and approximately 60% in the year ended December 31, 2004. 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 Non Life segment and through its Life 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.
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 Group’s SCOR Business Solutions integrated division, which operates on a worldwide basis, from four underwriting centers in Paris, London, 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 conventional risks. Small Property and Casualty facultative underwriting is handled by the Property-Casualty Treaty underwriting team.
Life underwriting within the Group is under the worldwide responsibility of SCOR VIE. Our Life clients are life or accident and health insurance companies worldwide. They are served by specialized Life 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 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 underwriters worldwide are supported by the Life Underwriting Department, or LUD, which coordinates underwriting activities at the Group level and conducts underwriting audits in the operating units, and by the Technical and Development Department, or TDD, responsible for pricing tools, reserving rules, product

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development and retrocession. These two departments set the underwriting guidelines, which are approved by the Underwriting Innovation Committee, comprising SCOR Vie General Management, and the heads of underwriting units LUD and TDD. This Committee periodically reviews and updates the four levels of underwriting authority delegated to each 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, windstorm, flood, hail or severe winter weather storm 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 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 produced an estimated aggregate pre-tax catastrophic loss for the Group, gross of retrocession, of EUR 34 million by the year end. Similarly, Typhoon Songda produced an estimated pre-tax catastrophic loss for the Group, gross of retrocession, of EUR 30 million, while Typhoons Rananim and Chaba, as well as the tsunami in December 2004 had an estimated aggregate pretax catastrophic loss for the Group, gross of retrocession, of approximately EUR 12 million. The aggregate catastrophic loss for these events for the year ended December 31, 2004 is estimated by the Group, before tax and retrocession, at EUR 76 million.
In 2003, SCOR experienced no major natural catastrophic losses, the largest one being the storms in the Midwest of the U.S. for a cost of approximately EUR 20 million as of December 31, 2004, net of retrocession, down from the EUR 30 million reported in 2003.
During the summer of 2002, the catastrophic floods in Central Europe affecting the Czech Republic, Germany and Austria produced a pre-tax catastrophe loss for the Group, net of retrocession, of EUR 95 million for 2002. These events did not produce additional loss for the Group in 2004. Typhoon Rusa in Korea in August 2002, the flooding in the southeast of France in September 2002 and the windstorm Jeannet in Northern Europe in October 2002 did not have any new material impact on SCOR in the year ended December 31, 2004.
SCOR carefully evaluates its potential natural event and other risk accumulation for its entire property business at the head office level, including exposures underwritten by its subsidiaries worldwide. Pursuant to overall guidelines and procedures established from the Paris headquarters, each subsidiary monitors its own accumulation for the relevant country or region, and the Accumulation Department based in Paris centrally consolidates the results for the Group.
SCOR employs various techniques, depending upon the region and peril, to assess and manage its accumulated exposure to property natural catastrophe losses in any one region of the world and quantifies that exposure in terms of its potential maximum loss. SCOR defines this as its anticipated maximum loss, taking into account contract limits, caused by a single catastrophe affecting a broad contiguous geographic area, such as that caused by a windstorm, a hurricane or an earthquake, occurring within a given return period. SCOR estimates that its current Group-wide potential maximum loss from natural catastrophe events, before retrocessional reinsurance, is related primarily to earthquake risks in Japan, Italy, Taiwan, Chile, Israel, Turkey and Portugal and wind and other weather-related risks concentrated primarily in North America, Europe and Asia.
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 2004
     
(EUR, in millions)    
100 to 200
  Canada, Colombia, Greece, Peru, United States, Mexico
200 to 300
  Chile, Israel, Italy, Portugal, Taiwan, Turkey
300 and over
  Japan, Europe
 
(1) Calculated on a potential maximum loss basis for a given return period before retrocession.

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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, 2004, SERN was operational for earthquake exposure in Australia, Algeria, Canada, Chile, Colombia, Greece, Indonesia, Israel, Jordan, Italy, Japan, Mexico, New Zealand, Peru, 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.
The potential accumulation for hurricanes in the United States is analyzed in a similar fashion, using third-party software and simulation tools. The potential accumulation for typhoons in Japan is analyzed using maximum liability for non-proportional treaties and scenarios based on Mireille, a major typhoon in Japan in 1991, for pro rata treaties. European windstorm accumulation in the treaty portfolio is also assessed by SERN, which has been adapted to analyze windstorm events and is now operational in eight European countries, reproducing past events. SCOR continues to refine its loss estimation methodologies internally with the assistance of outside consultants.
The following table sets forth certain data regarding the Group’s catastrophe loss experience in each of the three years ended December 31, 2004:
                         
    Year ended December 31,
     
    2002   2003   2004
             
    (EUR, in millions)
Number of catastrophes(1)
    1       4       2  
Incurred losses and LAE from catastrophes, gross
    95 (2)     78 (3)     40 (4)
Incurred losses and LAE from catastrophes, net of retrocession
    94 (2)     72 (3)     40 (4)
Group loss ratio(5)
    97 %     99 %     69 %
Group loss ratio excluding catastrophes
    94 %     96 %     67 %
 
(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) Catastrophic floods in Central Europe.
 
(3) Floods in Italy and Southwestern France, storms in the Midwestern United States and Typhoon Maemi in South Korea.
 
(4) Typhoon Sondga plus Hurricane Ivan.
 
(5) Loss incurred prior to discount on workers compensation reserves on North American operations expressed as a percentage of premiums earned.
As previously reported, incurred losses and LAE from catastrophes were EUR 670 million on a gross basis and EUR 215 million net of retrocession for the year ended December 31, 2001. Such amounts reflected the impact of the September 11 attack on the World Trade Center.
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 subsidiary 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. When needed, recommendations are given to underwriters, local claims adjusters and management.

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The main objectives of the Group Large Claims Committee, chaired by the Group Chief Operating Officer, 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 and strategic 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 retrocessionaire 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 non life 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 was established in December 2001 to reinsure (as a retrocessionaire) certain of SCOR’s Non Life reinsurance 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%. The relevant quota share agreements were terminated with effect from January 1, 2005, and IRP Holdings’ minority shareholders must exit IRP not later than May 31, 2006. SCOR’s initial ownership interest in IRP Holdings was 41.70%, and increased to 53.35% as of June 30, 2003. IRP Holdings has been fully consolidated with SCOR since fiscal year 2001. For more information on IRP Holdings, see “Item 9.A. The Offer and Listing – IRP” and “Item 8.A. Consolidated Statements and Other Financial Information – Legal Proceedings.”
On December 28, 2001, the Group purchased a USD 150 million multi-year reinsurance cover, to provide coverage against the occurrence of an earthquake in California or in Japan, or a severe windstorm in Northern Europe, subject to a limit of USD 100 million per occurrence. The contract, provided by Atlas Reinsurance II p.l.c., a public limited company incorporated under the laws of Ireland, protected SCOR’s property and construction business for a period of three years from January 1, 2002 to December 31, 2004. Atlas Reinsurance II p.l.c. issued two classes of notes for a total of USD 150 million with principal reduction contingent on the parametric model designed by Risk Management Solutions (RMS) based on SCOR’s exposure. This coverage expired on December 31, 2004, and the notes were redeemed pursuant to the agreement on the scheduled redemption date on January 7, 2005. Atlas II is in the course of being liquidated.

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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, LAE and future policy benefits, insurers and reinsurers establish reserves, which are balance sheet liabilities representing estimates of future amounts needed to be paid in respect of not yet reported (IBNYR) and not enough reserved (IBNER) claims that are incurred but not yet reported, which are referred to as IBNR, and 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 as of December 31, 2004. In the Life business the reserves totaled EUR 2,635 million (net of retrocession) as of December 31, 2004 and the Non Life loss and LAE reserves totaled EUR 5,583 million as of December 31, 2004. Actual loss and LAE paid may deviate, perhaps significantly, from such reserves. To the extent reserves prove to be insufficient to cover actual losses and LAE after taking into account available retrocessional coverage, the Group would have to augment such reserves and incur a charge to earnings which could have a material adverse effect on the Group’s consolidated financial condition and results of operations. See “Item 3.D. – Risk Factors – If our reserves prove to be inadequate, our net income, results of operations and financial condition may be adversely affected.”
The Group Chief Risk Officer conducted an appraisal of the technical reserves as at December 31, 2004, based on reports by internal and external actuaries.
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 IBNR reserves. Estimation of loss reserves is a difficult process, however, especially in view of changes in the legal and tort environment that may impact 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

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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 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 IBNR reserves, the Group uses generally accepted actuarial reserving techniques that take into account quantitative loss experience data, together with, where appropriate, qualitative factors. IBNR 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.
Catastrophe Equalization Reserves
In addition to loss, LAE, future policy benefits and IBNR reserves, under French GAAP and pursuant to applicable French insurance regulations, and in the case of certain non-French subsidiaries pursuant to applicable local regulations, SCOR is required to establish certain equalization reserves for future catastrophes and other losses. These reserves are generally established by setting aside in each year a specified portion of underwriting gains, if any, for such year, subject to specified aggregate limits based on premium volumes in lines of business affected by catastrophes or other events. These reserves are not recorded as liabilities in the financial statements prepared in accordance with U.S. GAAP. The U.S. GAAP financial statements do, however, include an allocation of retained earnings to a “catastrophe reserve” recorded as an account in shareholders’ equity. Retained earnings allocated to the catastrophe reserve represent amounts expensed as catastrophe coverage premium expense under French GAAP but not under U.S. GAAP. Because such amounts have been expensed for French accounting purposes, these amounts are not distributable as dividends and consequently have been shown as an allocation of retained earnings in the U.S. GAAP financial statements.

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Changes in Historical Reserves
The table below shows changes in historical loss reserves, on a U.S. GAAP basis, for the Group’s Property-Casualty 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, 2004, it would cover underlying policies with terms beginning on both January 1, 2004 and December 31, 2004. Losses incurred on underlying policies beginning on January 1, 2004 could occur as early as January 1, 2004 while losses incurred on underlying policies beginning on December 31, 2004 could occur as late as December 30, 2005.
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.
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

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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.
Ten-Year Loss Development Table Presented Net of
Reinsurance with Supplemental Gross Data (U.S. GAAP)(1)
                                                                                           
    1994   1995   1996   1997   1998   1999   2000   2001   2002   2003   2004
                                             
Initial gross reserves for unpaid loss and LAE
    2,760       2,600       3,361       3,723       3,942       4,774       5,575       8,365       7,966       7,004       6,119  
Initial retroceded reserves
    351       234       316       306       337       421       507       1,448       1,033       673       536  
                                                                   
Initial net reserves
    2,409       2,366       3,045       3,417       3,605       4,353       5,068       6,917       6,933       6,331       5,583  
Paid (Cumulative) as of:(2)
                                                                                       
 
One year later
    354       420       654       874       1,040       1,399       1,807       2,514       2,627       1,426          
 
Two years later
    717       901       1,136       1,440       1,570       2,294       3,163       3,614       3,736                  
 
Three years later
    1,054       1,188       1,405       1,778       1,946       3,046       4,390       3,575                          
 
Four years later
    1,292       1,368       1,599       2,015       2,356       3,606       5,027                                  
 
Five years later
    1,431       1,505       1,731       2,306       2,626       4,028                                          
 
Six years later
    1,542       1,590       1,953       2,488       2,874                                                  
 
Seven years later
    1,613       1,779       2,073       2,646                                                          
 
Eight years later
    1,777       1,871       2,176                                                                  
 
Nine years later
    1,853       1,948                                                                          
 
Ten years later
    1,923                                                                                  
 
Eleven years later
                                                                                       
Reserve re-estimated as of:(3)
                                                                                       
 
One year later
    2,595       2,630       3,458       3,690       4,057       4,996       5,938       8,030       8,344       6,466          
 
Two years later
    2,665       2,733       3,411       3,772       4,082       5,278       6,358       8,699       7,984                  
 
Three years later
    2,767       2,702       3,401       3,810       4,117       5,446       7,385       8,794                          
 
Four years later
    2,758       2,692       3,404       3,807       4,209       5,952       7,412                                  
 
Five years later
    2,748       2,675       3,379       3,887       4,479       5,962                                          
 
Six years later
    2,722       2,653       3,429       4,002       4,454                                                  
 
Seven years later
    2,711       2,711       3,522       3,990                                                          
 
Eight years later
    2,777       2,792       3,507                                                                  
 
Nine years later
    2,834       2,780                                                                          
 
Ten years later
    2,823                                                                                  
 
Eleven years later
                                                                                       
Cumulative redundancy/(deficiency) before premium development
    (414)       (414)       (462)       (573)       (849)       (1,609)       (2,344)       (1,877)       (1,052)       (136)          
% before premium development
    (17) %     (18) %     (15) %     (17) %     (24) %     (37) %     (46) %     (27) %     (15) %     (2) %        
Premium development
    245       229       361       343       390       487       942       1,215       676       339          
Cumulative redundancy/(deficiency) after premiums development
    (169)       (185)       (101)       (230)       (459)       (1,122)       (1,402)       (662)       (376)       203          
Percentage
    (7) %     (8) %     (3) %     (7) %     (13) %     (26) %     (28) %     (10) %     (5) %     3 %        
Gross re-estimated liability at December 31, 2004
    3,328       3,134       4,020       4,700       5,181       7,113       8,639       12,841       9,702       7,532          
Re-estimated receivable at December 31, 2004
    505       354       513       710       727       1,151       1,227       4,047       1,718       1,066          
                                                                   
Net re-estimated liability at December 31, 2004
    2,823       2,780       3,507       3,990       4,454       5,962       7,412       8,794       7,984       6,466          
Gross cumulative redundancy/(deficiency) before premium development
    (568)       (534)       (659)       (977)       (1,239)       (2,339)       (3,064)       (4,476)       (1,736)       (529)          
Gross premium adjustments
    288       281       332       366       360       459       784       1,154       735       495          
Gross Cumulative redundancy/(deficiency) after premiums development
    (280)       (253)       (327)       (611)       (879)       (1,880)       (2,280)       (3,322)       (1,001)       (34)          
Percentage
    - 10.15 %     - 9.74 %     - 9.74 %     - 16.41 %     - 22.31 %     - 39.38 %     - 40.90 %     - 39.71 %     -13 %     - 0.49 %        
 
(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.

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(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.
Reconciliation of Reserves for Losses and LAE (U.S. GAAP)
                             
    Year ended December 31,
     
    2002   2003   2004
             
    (Restated)   (Restated)    
    (EUR, in millions)
Reserves for losses and LAE at beginning of year, net
    6,917       6,933       6,331  
Effect of changes in foreign currency exchange rates
    (745 )     (656 )     (203 )
Effect of claims portfolio transfer and other reclassifications
    107       31       9  
                   
Incurred related to:
                       
 
Current year
    2,802       1,661       1,002  
 
Prior years
    660       1,078       174  
                   
   
Total incurred losses and LAE(1)
    3,462       2,739       1,176  
                   
Paid related to:
                       
 
Current year
    450       316       116  
 
Prior years
    2,358       2,400       1,614  
                   
   
Total paid losses and LAE(1)
    2,808       2,716       1,730  
                   
Reserves for losses and loss expenses at end of year – net
    6,933       6,331       5,583  
Reinsurance recoverable on unpaid losses
    1,033       673       536  
                   
Reserves for losses and loss expenses at end of year – gross
    7,966       7,004       6,119  
                   
 
(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.
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

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time. In these circumstances, it is difficult for us to 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”.
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)
         
    2002   2003   2004   2002   2003   2004
                         
    (EUR, in millions)
Gross Non Life claims reserves, including IBNR reserves
    157       109       98       88       59       54  
% of total loss and LAE reserves
    2 %     1.5 %     1.6 %     1.1 %     0.8 %     0.9 %
Non Life claims and LAE paid
    7       15       15       71       13       5  
% of the Group’s total net property-casualty claims and LAE paid
    0.3 %     0.6 %     0.9 %     2.5 %     0.5 %     0.3 %
 
(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 2002 reserves were EUR 30 million and EUR 28 million for asbestos and environmental, respectively. The 2002 paid claims and LAE were EUR 0.8 million and EUR 0.7 million for asbestos and environmental, respectively.
 
  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.
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. SCOR’s exposure to asbestos was reduced in 2004 by EUR 9.3 million compared to 2003, due to commutations. Environmental exposure also decreased by EUR 2.5 million over the same period for the same reason. It is the intention of management that this commutation policy be further pursued and developed in 2005 and in subsequent years. It is anticipated that the policy will affect settlement patterns to a limited degree in future years. Although the changes in settlement patterns may improve predictability and reduce potential volatility in the reserves, they may also have an adverse effect on the Group’s cash flows linked to these 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

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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. When applicable, LAE are part of the claims submitted by cedents and as such are included in the figures above for both asbestos and environmental exposures.
                 
    Year ended December 31, 2004
     
    Asbestos   Environmental
         
Number of claims notifications with respect to non-proportional treaties and facultative contracts
    7,725       7,116  
Average cost per claim(1)
    EUR 13,298       EUR 4,556  
 
(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
SCOR’s overall investment strategy is to achieve satisfactory returns on managed assets with minimal exposure to risk. This investment strategy also reflects the structure of SCOR’s liability profile, and the duration of the assets of each subsidiary is generally established based upon the expected duration of liabilities. At December 31, 2004, the weighted average duration of the Group’s fixed maturity portfolio was approximately 6.2 years. See “Changes in Historical Reserves” for a discussion of the expected duration of the Group’s reinsurance liabilities, and the tabular summary of the Group’s fixed maturities by remaining contract maturity, set forth in Note 4 to the consolidated financial statements, for information concerning the duration of the Group’s assets. 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.
SCOR’s investment policy is largely centralized. Investment guidelines are established annually and regularly reviewed and updated by the Investment Committee, subject to supervision by the Company’s Board of Directors. Regular meetings of the Investment Committee are held to review portfolio performance and monitor market and portfolio developments.
The Group’s portfolio consists primarily of government and government-guaranteed bonds with medium term maturities. The remainder of the portfolio is divided among equity securities, real estate and liquid and short-term assets. The Company manages its investment portfolio to maximize income and generally does not manage such portfolio for the purpose of generating capital gains, but seeks to realize capital gains or losses when and as they become available as a result of its normal investing activities.
The following table summarizes net investment income of the SCOR Group’s portfolio for 2002, 2003 and 2004. See also Note 4 to the consolidated financial statements.
Consolidated Net Investment Income
                                                                             
    Year ended December 31,
     
    2002   2003   2004
             
    (Restated)   (Restated)    
        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
    318       5.6%       72       265       4.8%       93       244       4.4%       27  
Equity securities
    6       4.0%       (123 )     3       1.1%       14       6       1.4%       17  
Trading equity securities
    39                     47                       3              
Short term and other(2)
    105       2.6%       93       100       4.7%       10       112       4.4%       (2 )
Less investment expense
                                                                       
 
Swap interest
    (17 )                     (8 )                     (7 )                
 
Administration expense
    (16 )                     (29 )                     (33 )                
 
Other
    (68 )                     (52 )                     (43 )                
                                                       
   
Total
    367                       326                       282                  
                                                       
 
(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. To the applicable, investment balances were converted into euro from local currencies at year-end exchange rates.
 
(2) Includes swap income of EUR 10 million in 2002, EUR 3 million in 2003 and EUR 8 million in 2004. Other swap-related net income is included in realized and unrealized capital gains (and losses).

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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
                                                   
    Net carrying   value as of De   cember 31,
             
    2002   2003    
             
            2004
             
    (Restated)   (Restate   d        
    (EUR in millions)
Fixed maturities available for sale, at fair value
    5,805       63 %     5,130       64 %     5,272       63 %
Equity securities, available for sale
    440       5 %     109       1 %     265       3 %
Trading Investments
    433       5 %     740       9 %     778       9 %
Short term investments
    198       2 %                        
Other long-term investments
    434       5 %     316       4 %     322       4 %
Cash and cash equivalents
    1,788       20 %     1,824       22 %     1,798       21 %
                                     
 
Total
    9,098       100 %     8,119       100 %     8,435       100 %
                                     
See Note 4 to the consolidated 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, 2002, 2003 and 2004.
The following table presents the Group’s fixed maturities by counterparty credit quality, including fixed-maturities classified as trading, as of December 31, 2004:
                   
    As of December 31, 2004
     
        % of total net
Rating   Net carrying value   book value
         
    (EUR, in millions)
Guaranteed by the French or European government or its agencies, or the European Union(1)
    273       5 %
AAA
    4,040       70 %
AA
    396       7 %
A
    608       10 %
BBB
    347       6 %
Below BBB
    4       0 %
Unrated
    125       2 %
             
 
Total
    5,793       100 %
             
 
(1) Debt securities issued or guaranteed by the French government, by another European government or by the European Union, none of which are rated.
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, 2004.

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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, 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 business partners, SCOR is able to receive and process automatically electronic reinsurance accounts, formatted in the ACORD standard, without any re-keying. New exchanges have been launched in 2004 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 internet and disaster recovery in 2004.
The Group has defined a strategic plan called the “IS2005 strategy”, which sets out the evolutions of the information system based on the SCOR business strategy. The IS2005 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 2004 have been dedicated to front-office applications for an improved risk selection, anticipation and reactivity on markets and products. A management system has also been developed to provide decision makers with 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. Finally, a strong emphasis is put on the reinforcement of risk control where important projects are underway, integrating SCOR standard pricing models, profitability rules, and catastrophe simulation facilities information.
The portal has been designated as the central repository for sharing all information, internal or collected from outside sources.
REGULATION OF THE REINSURANCE INDUSTRY
French corporations exclusively engaged in the reinsurance business are subject to reporting requirements and are controlled by the French Insurance Control Commission (Commission de Contrôle des Assurances, des Mutuelles et des Institutions de Prévoyance or C.C.A.M.I.P.) in application of the French Law dated August 8, 1994 (Law no. 94-679). This regime has been modified significantly by the May 15, 2001 “New Economic Regulation” Act (Law no. 2001-420), which institutes a system of prior authorization. This regime applies equally to companies already engaged in the reinsurance business at the time of entry into force. However, pending publication of the enabling decrees, this new regime has not come into effect.
Under the new regime, reinsurance companies will be required to file an application with the C.C.A.M.I.P., which will have authority to issue and revoke operating licenses. Within the framework of its supervisory mission, which has been enhanced by the “New Economic Regulation” Act, the C.C.A.M.I.P. will in particular have the power to conduct onsite inspections, to place reinsurers whose solvency is impaired or is liable to be impaired under special surveillance, and to impose sanctions on reinsurers found to be in breach of the regulations applicable to them. The “New Economic Regulation” Act has broadened the range of sanctions, which now include revocation of a company’s license to engage in reinsurance operations.
There is no European regulatory framework, at present, harmonizing the supervision of reinsurance across Europe. The European Commission has been working closely with the member states of the European Union since 2001 on a draft directive aimed at instituting solvency ratios and mutual recognition of reinsurance companies in the EU member states. It is expected that this directive will be adopted in 2005.
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

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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 100% of 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.
Even though there is 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 increase in January 2004 and the reduction of the gross premiums written in 2004, the Group’s solvency margin improved in 2004.
B. ORGANIZATIONAL STRUCTURE
OPERATIONS
General
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, respectively known as Division SCOR Non-Vie and Division SCOR Business Solutions, 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, which was made a subsidiary on December 1, 2003. SCOR Vie operates mainly through its branches in Italy, Germany and Canada as well as through SCOR Life Re U.S. 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 primary reinsurance subsidiaries as of December 31, 2004, their respective country of incorporation, and between parentheses, the main markets served by each entity:
(ORGANIZATIONAL STRUCTURE CHART)
 
(1) SCOR has currently submitted a file for converting its representation bureau in Beijing into a subsidiary, and obtained on April 16, 2004, a licence for its Seoul Bureau to be converted into a branch. The Honk Kong office is linked to the Singapore office.

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The current Group structure has 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.
The Group’s headquarters in Paris provides underwriting policy and risk accumulation direction and control claims, actuarial, accounting, legal, administrative, systems, internal audit, investment, human resources and other support to the Group’s 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.
C. PROPERTY, PLANTS AND EQUIPMENT
In 2003, SCOR sold the Group’s headquarters, consisting of 30,000 square meters of offices located in the business district of Paris La Défense. The Group remains a tenant of these offices. 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 properties in Hanover (Germany), Milan (Italy) and Singapore, where its local subsidiaries have their home offices, and rents space for other subsidiaries. SCOR U.S.’s headquarters, located at the World Trade Center in New York, were destroyed in the attack of September 11, 2001 and have since been relocated to other facilities in Lower Manhattan. SCOR believes that the Group’s facilities are adequate for its present needs in all material respects. SCOR also holds other investment properties in connection with its reinsurance operations.
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 French GAAP, which differ in certain respects from U.S. GAAP.
Restatement
In the course of implementing International Financial Reporting Standards, or IFRS, which the Group will be required to follow in France as of January 1, 2005 for purposes of satisfying French regulatory requirements, the Group identified a number of errors in its financial statements for 2003 and 2002 that had been prepared in accordance with U.S. GAAP, including the 2002 opening balance sheet. As a result, the Group determined that it was necessary to restate its previously issued U.S. GAAP consolidated financial statements.
The restatement principally relates to:
  consolidation: capital leases and mutual fund;
 
  accounting for taxation: deferred taxes on the “reserve de capitalisation” and valuation allowance;
 
  accounting for foreign currency: foreign currency transaction and financial statement, translation of goodwill and impact of currency fluctuations on available for sale debt securities held in currencies other than the functional currency;
 
  accounting for post-retirement benefits; and

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  accounting for other issues: impairment of securities, derivative contracts, several minor unadjusted difference items for the periods concerned and costs incurred in connection with the creation of the SCOR Vie subsidiary.
The impacts of the restatements on net loss and shareholders’ equity are detailed in the following table (“summary table”). All items are present net of tax.
                                 
    In millions of Euros
     
        Shareholders’       Shareholders’
    Net loss   equity   Net loss   equity
    2002   2002   2003   2003
                 
Previously Reported
    (561 )     1,145       (577 )     428  
Consolidation
    45             12        
Capital lease
                (1 )      
Consolidation of mutual funds
    45             13        
Taxation
    (7 )     (29 )     28       (1 )
Deferred taxes on “Réserve de capitalisation”
    (7 )     (29 )     (11 )     (40 )
Valuation allowance
                39       39  
Foreign Currency
    56       (9 )     14       (57 )
Foreign exchange
                (24 )     (37 )
Goodwill
          (9 )           (20 )
Available for sale securities
                14        
Foreign currency transactions
    56             24        
Employee Benefits
    (2 )     (9 )     (4 )     (13 )
Other Adjustments
    (24 )     (20 )     15       (1 )
Other Than Temporary Impairments of Investments
    (3 )           1        
Horizon
    (7 )           (8 )     1  
Creation of SCOR Vie subsidiary
                (3 )      
Miscellaneous adjustments
    (14 )     (20 )     25       (2 )
                         
Total Impact Due to Restatements
    68       (67 )     65       (72 )
                         
Restated
    (493 )     1,078       (512 )     356  
                         
                                   
    2002       2003    
                 
Basic earnings per share:
                               
 
As previously reported
    (4.11 )             (4.23 )        
 
Total impact due to restatements*
    (8.92 )             0.47          
                         
 
Basic earnings per share, as restated
    (13.03 )             (3.76 )        
                         
Diluted earnings per share:
                               
 
As previously reported
    (4.11 )             (4.23 )        
 
Total impact due to restatements
    (8.92 )             0.47          
                         
 
Diluted earnings per share, as restated
    (13.03 )             (3.76 )        
                         
 
* Including impact of changes to the calculation of the weighted average number of shares.
Consolidation
Accounting for capital leases
In connection with its review of certain leases related to office buildings, the Group determined that two leases should have been accounted for as capital leases rather than operating leases. Accordingly, the Group restated its prior year U.S. GAAP consolidated financial statements to record these assets in its U.S. GAAP consolidated balance sheet, with an approximately equal increase in its debt in respect of capital leases. The effects on the U.S. GAAP consolidated statements of operations was relatively minor as the additional depreciation expense for

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the capital lease properties was substantially offset by the reduction in rental expense. There was no net significant effect on the U.S. GAAP consolidated statements of cash flows.
This restatement has the following effects on the U.S. GAAP consolidated balance sheets:
Increasing other long term investments under capital leases by:
         
January 1, 2002
     
December 31, 2002
    EUR 90 million  
December 31, 2003
    EUR 101 million  
Increasing other long term debt in respect of capital leases by:
         
January 1, 2002
     
December 31, 2002
    EUR 90 million  
December 31, 2003
    EUR 101 million  
The effects on the U.S. GAAP consolidated net loss and shareholders’ equity are given in the summary table above.
Consolidation of mutual funds
The Group has determined that six wholly-owned mutual funds known as Organismes de Placement Collectif en Valeurs Mobilières or “OPCVMs” that the Group previously reported as available for sale investments under FAS 115 (“Accounting for Certain Investments in Debt and Equity Securities”), should have been consolidated in the past, because the Group has economic control of these funds.
To correct these errors, the Company consolidated the six mutual funds and classified the related investment portfolio as trading (i.e. carried at fair value with changes in fair value reported through earnings) in the restated financials statements. The impact on opening equity is a reclassification between other comprehensive income and retained earnings (see summary table above).
Accounting for deferred taxes
Deferred taxes on the “réserve de capitalisation”
French insurance companies are required by law to establish a “réserve de capitalisation”, which is equal to the cumulative amount of realized gains and losses on investment securities. Each time a gain is realized, which is taxable, an equivalent amount is deducted and credited to this reserve so that the net amount taxed is zero. Similarly, realized losses are offset by a reduction in this reserve so that there is no net loss for tax purposes. Accordingly, this deferral of taxable income creates a temporary difference and gives rise to a deferred tax liability. Insurance companies would generally expect over time that their net investment gains realized would be positive, and thus the “réserve de capitalisation” would never reverse until liquidation of the company. This reserve is not established for U.S. GAAP, so there is a future taxable book-tax difference for this amount. Under Statement of Financial Accounting Standard (“FAS”) No. 109 “Accounting for Income Taxes”, because this difference does not meet the definition of a permanent difference and does not fall into exemptions allowed by FAS 109, a deferred tax liability related to this reserve should have been recorded in the consolidated financial statements.
The effects on the U.S. GAAP consolidated net loss and shareholders’ equity are given in the summary table above.
Valuation allowance
In 2003, the Company recognized a full valuation allowance against its deferred tax assets due to a cumulative loss position. The Company has determined that the calculation of that tax valuation allowance did not include a tax planning strategy that is available to the Company to recapture some of the deferred tax assets. That strategy involves the sale of certain real estate assets owned by the Company. Accordingly the valuation allowance has

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been restated to reflect the tax strategy that is available to the Company. The effects on the U.S. GAAP consolidated net loss and shareholders’ equity are given in the summary table above.
Reduced rate items
There exist certain tax asset temporary differences that due to the nature of the items were determined by the Company to be unlikely to be recovered. Previously, the Company did not recognize either the deferred tax asset or the corresponding valuation allowance. As a result the Group restated its prior year U.S. GAAP consolidated financial statements to record these deferred tax assets and valuation allowances.
The effect of recording these deferred tax assets and related valuation allowances in the U.S. GAAP consolidated balance sheets in prior periods is be as follows:
Increasing deferred tax assets by
         
January 1, 2002
     
December 31, 2002
    EUR 40 million  
December 31, 2003
    EUR 130 million  
Increasing valuation allowance by
         
January 1, 2002
     
December 31, 2002
    EUR 40 million  
December 31, 2003
    EUR 130 million  
Net effects on the statements of operations:
Increase/(decrease) in income tax expense and increased/(reduced) net loss of
         
Year ended December 31, 2002
     
Year ended December 31, 2003
     
This previous error does not effect either the net loss or shareholders’ equity and, accordingly, has not been included in the summary table above.
Accounting for translation of foreign currency transactions and foreign currency financial statements
Foreign exchange
The Company discovered an error in its 2003 financial statements related to the accounting for a forward sale of USD 400 million initiated in September 2003. As at December 31, 2003, the mark-to-market adjustment for this derivative carried at fair value in the balance sheet had been accounted for twice: once as a gain through income with a related tax effect, and again through the 2003 foreign currency translation adjustment without a related tax effect in a separate component of U.S. GAAP shareholders’ equity, for an amount of EUR 37 million gross of tax. The Company has determined that there was a hedging relationship and therefore the amount recorded in income should be reversed. At the same time, the tax effect on the equity was booked.
The effects on the U.S. GAAP consolidated net loss and shareholders’ equity are given in the summary table above.
Goodwill
The Company has determined that it should have accounted for goodwill related to a certain block of its US Non Life operations as US dollar-denominated and converted it into EUR at each closing, instead of considering it as a Euro-denominated asset.
The effects on U.S. GAAP consolidated net loss and shareholders’ equity are given in the summary table above.

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Impact of currency fluctuations on available for sale debt securities held in currencies other than the functional currency
The Group determined that Emerging Issues Task Force (EITF) Issue No. 96-15 “Accounting for the Effects of Changes in Foreign Currency Exchange Rates on Foreign-Currency-Denominated Available-for-Sale Debt Securities” was not properly applied in its previously issued consolidated U.S. GAAP financial statements. EITF 96-15 requires the entire change in the fair value of foreign-currency denominated available-for-sale debt securities to be reported in accumulated other comprehensive income. The Group previously included the portion of the change in fair value related to currency fluctuations in its statement of operations. Accordingly, the Group has restated its prior U.S. GAAP consolidated financial statements.
The effects of the restatement on the prior years’ U.S. GAAP consolidated financial statements are as follows:
Increase (decrease) in accumulated other comprehensive income:
         
January 1, 2002
     
December 31, 2002
     
December 31, 2003
    EUR (14) million  
Increase (decrease) in retained earnings:
         
January 1, 2002
     
December 31, 2002
     
December 31, 2003
    EUR 14 million  
Increase (decrease) in other comprehensive income: unrealized depreciation on investments net
         
Year ended December 31, 2002
     
Year ended December 31, 2003
    EUR (14) million  
Increase (decrease) in foreign exchange gain, net:
         
Year ended December 31, 2002
     
Year ended December 31, 2003
    EUR 14 million  
Accounting for transactions in foreign currencies
The Group determined that certain of its subsidiaries did not properly apply FAS 52 “Foreign Currency Translation” for the conversion their foreign currency transactions into the subsidiaries’ functional currency. FAS 52 requires that, at each balance sheet date, recorded balances that are denominated in a currency other than the functional currency of the entity be translated to the functional currency using the exchange rate at the time of the transaction. FAS 52 also requires that any adjustments resulting from this procedure be made to income currently. In prior years, the amounts relating to the revaluation of foreign currency balances of certain subsidiaries were recorded as a component of other comprehensive income rather than being included in the statement of operations. Accordingly, the Group has restated its prior U.S. GAAP consolidated financial statements.
The effects of the restatement on the prior years’ U.S. GAAP consolidated financial statements are as follows:
Increase (decrease) in accumulated other comprehensive income:
         
January 1, 2002
    EUR 5 million  
December 31, 2002
    EUR (51) million  
December 31, 2003
    EUR (75) million  

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Increase (decrease) in retained earnings:
         
January 1, 2002
    EUR (5) million  
December 31, 2002
    EUR 51 million  
December 31, 2003
    EUR 75 million  
Increase (decrease) in other comprehensive income:
         
Year ended December 31, 2002
    EUR (56) million  
Year ended December 31, 2003
    EUR (24) million  
Increase in foreign exchange gain, net:
         
Year ended December 31, 2002
    EUR 56 million  
Year ended December 31, 2003
    EUR 24 million  
The total effects on U.S. GAAP consolidated net loss and stockholders’ equity are given in the summary table above.
Accounting for employee post retirement benefits
In connection with its review of pension and retirement plans the Group determined that certain defined benefit plans primarily related to its non-U.S. entities had not been consistently accounted for in accordance with FAS 87, “Employers’ Accounting for Pensions”, FAS 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits”, FAS 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions”, or APB 12, “Omnibus Opinion – 1967”, as applicable. Several small plans had either not been included for purposes of U.S. GAAP accounting and disclosure or not properly valued in accordance with U.S. rules.
Accordingly, the Group restated its prior year U.S. GAAP consolidated financial statements to record additional liabilities related to employee benefits on the balance sheet as well as the related charge in each period concerned.
The effects on the U.S. GAAP consolidated net loss and shareholders’ equity are given in the summary table above.
Other adjustments
Other than temporary impairments of investments
U.S. GAAP requires that securities accounted for in accordance with FAS 115, “Accounting for Certain Investments in Debt and Equity Securities”, be evaluated for impairment whenever the fair value of a security is less than its amortized cost basis. Whenever a decline in the fair value of a security below its amortized cost basis is deemed other than temporary (which is not the same as permanent impairment), the security is deemed to be impaired and it is written down to its fair value with the amount of the write-down included in earnings.
In prior years, the Group determined its impairment on debt and equity securities for U.S. GAAP consistent with the determination made for French GAAP. Under French GAAP, impairments are generally recognized when the book value of an investment is in excess of its estimated recovery value, which could include factors such as strategic value and longer-term value, and thus may be a less restrictive and longer-term concept than that used under U.S. GAAP.
The Group restated its prior U.S. GAAP consolidated financial statements for such securities to record additional impairment losses on equity securities available for sale.
The effects on the U.S. GAAP consolidated net loss and shareholders’ equity are given in the summary table above.

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Horizon special purpose vehicle
Horizon is an entity that was set up in 2002 as a mean to pass some of the Group’s exposure to its past credit reinsurance activities to the capital markets. Horizon issued credit-linked notes and entered into two swaps with a bank, with the Group entering into mirroring swaps with the same bank that passed along certain credit risks ultimately to the credit-linked noteholders.
Since inception, the Group has consolidated Horizon. When evaluating Horizon as part of their adoption of FIN 46(R), “Consolidation of Variable Entities, an interpretation of ARB No. 51”, the Group determined that two types of accounting errors were made in the past when consolidating Horizon into SCOR’s consolidated financial statements.
  The derivative contracts between the Group and the bank were not carried at fair value in the consolidated financial statements with fluctuations in fair value recognized in earnings.
 
  Remeasurement of foreign currency-denominated credit linked notes and investments in bonds (both denominated in Euros) had not been done into Horizon’s U.S. dollar functional currency, with foreign currency transaction gains and losses reported in earnings.
The effects on the U.S. GAAP consolidated net loss and total shareholders’ equity are given in the summary table above.
Costs incurred in connection with the creation of the SCOR Vie subsidiary
The life company SCOR Vie was incorporated in 2003. Costs associated with its incorporation and initial expenses totaling EUR 3 million were recorded directly as a reduction of equity rather than being expensed as required under U.S. GAAP. This does not have any effect on ending total U.S. GAAP consolidated shareholders’ equity at December 31, 2004 or 2003, nor does it have any effect on U.S. GAAP consolidated cash flows. However, restatement of the year 2003 for this item increases the net loss by EUR 3 million. The net effect on income tax expense is 0 as a valuation allowance was immediately recorded on the related deferred tax asset.
The effects on the U.S. GAAP consolidated net income and shareholders’ equity are given in the summary table above.
Miscellaneous adjustments
Upon determining that a restatement of prior period U.S. GAAP consolidated financial statements was necessary, the Group also decided to record certain unadjusted differences previously considered immaterial by the Group.
The effects on the U.S. GAAP consolidated net loss and shareholders equity are given in the summary table above.
Reclassifications
Certain reclassifications have been made to balances previously reported to conform to the current presentation.
The Company has not amended, and does not intend to amend, its previously filed Annual Reports on Form 20-F for the years affected by the restatements that ended prior to December 31, 2004. For this reason, those prior Annual Reports and the consolidated financial statements, auditors’ reports and related financial information for the affected years contained in such reports should no longer be relied upon.
Overview
In recent years, SCOR, along with many other insurance and reinsurance companies suffered a series of unprecedented setbacks both with respect to their assets and their liabilities. Leaving aside the direct economic cost of at least USD 40 billion to the world’s insurers and reinsurers, the September 11, 2001 terrorist attacks deeply affected the industry in terms of capacity and the cost of insurance coverage. Other disasters, such as the floods in central Europe in the summer of 2002 and typhoons in Asia and hurricanes and tornadoes in the US and the Caribbean in 2004, have also had a serious impact on the industry. In addition, insurers under-estimated risks

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taken on in the late-1990s, which is demonstrated by the low prices at which risks were underwritten at the time. As a consequence, in 2002, many insurers were required to set aside additional reserves to cover prior-year writings.
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 Non Life rates did not reach the level of 2002, they remained hard in 2003 and 2004. 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 and 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 2004, except general liability, and a moderate decrease in the reinsurance market is expected in 2005, notwithstanding the effect of a number of large catastrophes in the second half of 2004 which may reduce the downward trend in some countries. 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,
         
    2002   2003   2004   2002   2003   2004
                         
U.S. Dollar
    1.042       1.263       1.3604       0.950       1.141       1.244  
Canadian Dollar
    1.638       1.623       1.648       1.487       1.587       1.619  
British Pound
    0.650       0.705       0.709       0.629       0.693       0.679  
Singapore Dollar
    1.809       2.145       2.228       1.693       1.986       2.010  
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 of changes in foreign exchange rates.”
Business Segments
Our operations are organized into the following two business segments: Non Life and Life/ Accident & Health. Non Life is further organized into four sub-segments: Property-Casualty Treaty; Large Corporate Accounts written on a facultative basis by SCOR Business Solutions; Credit, Surety & Political Risks; and Alternative

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Reinsurance. The Non Life and Life segments discussed below differ from the Non Life and Life/ Accident & Health segments contained in our financial statements included elsewhere herein because on a statutory basis the Accident and Health reinsurance business are classified in the Non Life category. Within each segment, we write various classes of business. Responsibilities and reporting within the Group are established based on this structure and our reported financial segments 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, such as COFACE, Euler-Hermès and NCM. 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 Non Life 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 247 million for the year ended December 31, 2004 compared to a net loss of EUR 512 million in 2003 and a net loss of EUR 493 million in 2002. 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, 2002, 2003 and 2004:
                               
    Year ended December 31,
     
    2002   2003   2004
             
    (Restated)   (Restated)    
    (EUR, in millions)
Gross premiums written
                       
 
Non-life
                       
   
Treaty Property-Casualty
    2,176       1,690       1,064  
   
Credit, Surety & Political Risks
    123       65       38  
   
Large Corporate accounts
    930       569       261  
                   
   
Alternative Reinsurance
    467       (1 )     2  
                   
     
Total Non-life
    3,696       2,323       1,365  
 
Life/Accident & Health
    1,218       983       880  
                   
   
Total
    4,914       3,306       2,245  
                   
Gross premiums written decreased by 32% in 2004 from EUR 3,306 million in 2003 to EUR 2,245 million in 2004. In 2003, gross premiums decreased by 33% from EUR 4,914 million in 2002 to EUR 3,306 million in 2003. 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 two 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.
In 2004, the Non–Life segment represented 61% of our overall gross premiums written, compared to 70% in 2003 and 75% in 2002. Within the Non Life segment, Property-Casualty Treaty accounted for 78% of overall

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gross premiums written in 2004, compared to 73% in 2003 and 59% in 2002, while Large Corporate accounts represented 19% of overall gross premiums written in 2004, compared to 24% in 2003 and 25% in 2002. Credit, Surety and Political Risks’ share represented 3% of Non Life overall gross premiums written in 2004, 2003 and 2002, while Alternative Reinsurance decreased from 13% of Non Life overall gross premiums written in 2002 to 0% in 2003 and 2004 following the Group’s decision to cease business underwritten by CRP.
Life and Accident & Health represented 39% of overall gross premiums written in 2004, compared to 30% in 2003 and 25% in 2002.
Conclusion of the “Back on Track” plan and implementation of the “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 reinsurance, Large Corporate Accounts and Property & Casualty reinsurance. 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 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 “Moving Forward”. The “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. As part of the “Moving Forward” plan, SCOR has also reassessed its capital allocation plan along the Group’s lines of business and by market. The plan seeks to maintain SCOR’s client base in Europe, Asia, North America and emerging countries and regaining shares in treaties where premium rates, terms and conditions meet the Group’s return on equity requisites.
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.
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. The rating

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on SCOR’s commercial paper program has been affirmed. The outlook for all these ratings has been changed to positive from stable. 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. These ratings all have a positive outlook.
Fluctuations in exchange rates. In 2003, the fluctuations in exchanges rates used to translate foreign currencies into Euro, and particularly the depreciation of the US dollar against the EUR by 17% have had an adverse impact of 7% on the development of premium income year over year. On a constant exchange rate basis, the Group’s gross written premiums decreased by 23% in 2003 compared to 2002. 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.
Net premiums written
The following table sets forth the Group’s net premiums written for the years ended December 31, 2002, 2003 and 2004:
                               
    Year ended December 31,
     
    2002   2003   2004
             
    (Restated)   (Restated)    
    (EUR, in millions)
Net premiums written
                       
 
Non life
                       
   
Treaty Property-Casualty
    1,982       1,580       1,014  
   
Credit, Surety & Political Risks
    108       63       38  
   
Large Corporate accounts
    757       461       227  
                   
   
Alternative Reinsurance
    466       (1 )     3  
                   
     
Total Non life
    3,313       2,103       1,282  
 
Life/Accident & Health
    1,045       885       844  
                   
   
Total
    4,358       2,988       2,126  
                   
Net premiums written constitute gross premiums written during the financial year, net of retrocession, including unearned premiums. Net premiums written decreased by 29% in 2004 from EUR 2,988 million in 2003 to EUR 2,126 million in 2004, reflecting primarily the decrease in gross premiums written, partially offset by an increase in our retention level. During 2003, net premiums written decreased by 31% from EUR 4,358 million in 2002 to EUR 2,988 million in 2003, reflecting the decrease in gross premiums written.
The premiums retroceded decreased 63% in 2004 and 43% in 2003 from EUR 557 million in 2002 to EUR 318 million in 2003 and EUR 118 million in 2004 due to lower costs for retrocession agreements and the lower need for retrocession contracts as a result of the decrease in gross written premiums. Our overall retention level was 95% in 2004, compared to 90% in 2003 and 89% in 2002. Our retention level for premiums is computed as net premiums divided by gross premiums.
Revenues
Our consolidated total revenues decreased by 32% to EUR 2,551 million in 2004 compared to EUR 3,767 million in 2003 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.
In 2003, our consolidated total revenues decreased by 17% from EUR 4,562 million in 2002 to EUR 3,767 million in 2003 due primarily to a 20% decrease in net premiums earned and to a 11% decrease in net investment income, which was partially offset by a significant increase in net realized gain on investments of EUR 117 million in 2003 compared to EUR 42 million in 2002.

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Net premiums earned
The following table sets forth the Group’s net premiums earned for the years ended December 31, 2002, 2003 and 2004:
                               
    Year ended December 31,
     
    2002   2003   2004
             
    (Restated)   (Restated)    
    (EUR, in millions)
Net premiums earned
                       
 
Non life
                       
   
Treaty Property-Casualty
    2,016       1,670       1,120  
   
Credit, Surety & Political Risks
    153       122       51  
   
Large Corporate accounts
    559       504       253  
   
Alternative Reinsurance
    524       159       3  
                   
     
Total Non life
    3,252       2,455       1,427  
                   
 
Life/Accident & Health
    901       869       800  
                   
   
Total
    4,153       3,324       2,227  
                   
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 premiums earned decreased by 20% in 2003 from EUR 4,153 million in 2002 to EUR 3,324 million in 2003 and represented 88% of our consolidated total revenues in 2003 compared to 93% in 2002. The overall decrease in net premiums earned resulted primarily from decreases of 17% in Treaty Property-Casualty, 10% in Large Corporate Accounts, 20% in Credit, Surety & Political Risks, 70% in Alternative Reinsurance and 4% in Life-Accident & Health. The decreases in net premiums earned were primarily due to 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 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 income decreased by 11% in 2003 from EUR 468 million in 2002 to EUR 415 million in 2003 due to a decrease in revenue from fixed-maturity securities from EUR 318 million in 2002 to EUR 265 million in 2003, which was partially offset by an increase in revenue from trading in equity securities from EUR 39 million in 2002 to EUR 47 million in 2003.
Investment expenses, mainly comprised of financial expenses, decreased from EUR 89 million in 2003 to EUR 83 million in 2004.
Investment expenses decreased from EUR 101 million in 2002 to EUR 89 million in 2003 mainly due to the decrease in financial charges on commercial paper.
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,

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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.
Realized capital gains on investments increased from EUR 42 million in 2002 to EUR 117 million in 2003 primarily due to increases in the sale of equity securities and increases in trading equity securities, which were EUR (123) million and EUR 14 million in 2002 and 2003, respectively, as a result of higher equity markets in 2003. In 2003, realized capital gains on investment amounted to EUR 117 million and consisted of EUR 93 million from the sale of fixed-maturity securities, EUR 14 million from the sale of equity securities and EUR 10 million from the sale of real estate.
The realized capital gain on the sale of SCOR head office that took place in December 2003 for EUR 69 million is not included in the realized capital gain recorded in the fiscal years 2003 and 2004. Under FASB 13, 66 and 98, because SCOR has a continuing involvement in the property, the sale-leaseback transaction has not been treated as a sale. Therefore the sale is not currently recognized and the asset remains on SCOR’s books. In addition, the sale proceeds are considered as financing and part of SCOR’s debt as of December 31, 2003 and 2004. Under the financing method, lease payments (EUR 10,3 million per year over 9 years) will reduce the debt over the lease and property will be amortized. Sale will be recognized at the end of the lease at the latest.
Expenses
In 2004, the Group’s consolidated total expenses decreased by 41% to EUR 2,356 million, compared to EUR 3,967 million in 2003, or 9% more than the reduction in total revenues. In 2003, the Group’s consolidated total expenses decreased by 21% to EUR 3,967 million, compared to EUR 4,995 million in 2002, or 4% more than the reduction in total revenues.
Total incurred claims decreased by 49% in 2004, while the volume of premiums earned decreased by 33% primarily due to increases in reserves in 2003. Total incurred claims decreased by 19% in 2003, notwithstanding the reserve increases noted below, while the volume of premiums decreased by 20%.
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 US Treaties. Losses were impacted in 2004 by hurricanes in the US and Caribbean, typhoons in Asia and additional World Trade Center reserves, all of which amounted to EUR 96 million, net of retrocession, in 2004.
Non Life claims decreased by 21% in 2003, resulting in a loss ratio of 98% in 2003 compared to 97% in 2002, as premium volumes also declined. Losses were also impacted in 2003 by the US portfolio reserve strengthening in an amount equal to EUR 272 million and storms in the Midwest of America, typhoon Maemi in South Korea and floods in Italy and in the Southwestern France for a total of EUR 72 million, net of retrocession.
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. Life claims decreased by 8% to EUR 421 million in 2003 compared to EUR 459 million in 2002. This decrease was 3 percentage points lower than the reduction in Life earned premiums in 2003.
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 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.
Policy acquisition costs and commissions decreased by 18% to EUR 742 million in 2003, compared to EUR 909 million in 2002. This decrease is in line with the decrease of 20% in earned premiums. Underwriting and administration expenses decreased by 22% in 2003 to EUR 160 million compared to EUR 204 million in 2002.
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

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currency. As a result, the depreciation of the dollar against the EUR did not have as a large of a positive effect on the Company in 2004 compared to prior years. Foreign exchange gain increased by 34% to EUR 147 million in 2003 compared to a gain of EUR 110 million in 2002 primarily due to the strengthening of the EUR against the US Dollar of 16.8% between 2002 and 2003, based on average annual exchange rates as reported by Natexis bank at each end of month.
No impairment of goodwill occurred in 2004 and 2003. In 2002, an impairment of EUR 17 million was made with respect to CRP, which had been fully depreciated by year end 2002.
Interest expenses were EUR 49 million in 2004 compared to EUR 33 million in 2003 and EUR 34 million in 2002. In 2004, the increase in interest expenses from EUR 34 million in 2003 to EUR 49 million in 2004 was primarily due to the issuance of OCEANEs bonds in July 2004 which contributed EUR 3 million, and to the total lease payments of the SCOR head office, which amounted EUR 10.3 million in 2004. On January 1, 2005, SCOR reimbursed its OCEANEs bonds issued in June 1999 with the proceeds from the 2004 OCEANEs bond issuance, together with available cash.
In 2003, interest expenses was EUR 33 million, a 4% decrease over the EUR 34 million recorded in 2002, mainly due to a decrease in the Eurolibor and U.S. Libor rates and a significant reduction of our short-term debt securities due to the issuance of EUR 200 million 5-year senior notes in May 2002.
Other operating expenses were EUR 14 million in 2004 compared to other operating expenses of EUR 19 million in 2003 and EUR 20 million in 2002. Other operating expenses were comprised mainly of provisions for risks and charges, depreciation on bad debt and amortization of fixed assets.
In 2004, the ratio of underwriting and administration expenses to gross premiums written was 6 % compared to 4.8% in 2003 and 4.1% in 2002. This increase is due to the reduction of the gross premiums income of 32% when underwriting and administration expenses decreased of 16% in 2004.
Income taxes
The total rate of income tax on French corporations applied on taxable income in 2004, 2003 and 2002 was 35.43%. The total rate of income tax on French corporations to be applied on taxable income is scheduled to decrease to 34.93% in 2005 and 34.43% in 2006. In 2003, French tax law changed and thus authorizing unlimited carry forward of tax losses compared to 5 years previously.
In 2004, the Group recorded a net income tax gain of EUR 73 million compared to an income tax loss equal to EUR 287 million in 2003 and EUR 51 million in 2002.
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 expenses 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 capitalisation reserve and other items amounting to EUR 2 million.
In 2004, the Company recorded a EUR 133 million reduction to the valuation allowance on French net operating losses, mainly due to improvements in the profitability in 2004 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 capitalisation reserve and other items for EUR 10 million.

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Minority interests
Minority interests were EUR 24 million in 2004 compared to 26 million in 2003 and EUR 13 million in 2002. The increase in 2003 was due to increased earnings at IRP and the increase in SCOR’s stake in IRP to 53.35% as of December 31, 2003. 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 totaled EUR (1) million in 2004, 1 million in 2003 and EUR 4 million in 2002.
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. On March 29, 2002, we sold our 35.26% stake in Coface, which is no longer included in our accounts, and the capital gain realized in this transaction was recorded in the first half of 2002. Coface’s contribution to our net income was EUR 1 million in 2002.
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 accounting change, 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
Non Life
The Non Life 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 Non Life segment for the periods indicated:
                         
    Year ended December 31,
     
    2002   2003   2004
             
    (Restated)   (Restated)    
    (EUR, in millions)
Gross premiums written
    3,696       2,323       1,365  
Net premiums written
    3,313       2,103       1,282  
Net premiums earned
    3,252       2,455       1,427  
Net loss and LAE
    3,258       2,507       999  
Net commissions and expenses(1)
    830       613       461  
Underwriting (loss)
    (834 )     (673 )     (17 )
Loss ratio
    100 %     102 %     70 %
Expense ratio(1)
    26 %     25 %     32 %
Combined ratio
    126 %     127 %     102 %
 
(1) Expenses include direct charges of each business segment and indirect charges allocated by business segment pro rata according to direct expenses.
Gross Non-life premiums written decreased by 41% in 2004 compared to 2003 and by 37% in 2003 compared to 2002. This decrease reflected the implementation of the Back on Track plan announced in November 2002 and completed in 2004, that aimed to apply a strict and selective underwriting policy to return to profitability and resulted in the Group’s underwriters taking significant actions in 2003 to cancel unprofitable or non-core businesses and, when necessary, adjusting pricing or improving terms and conditions. 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 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 Non-Life 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.
In 2003, the percentage of Property Treaty premiums increased by 7 points to 44%, while Casualty Treaty business and Large Corporate Accounts decreased by 3 points and 5 points, respectively, to represent 31 % and 25 % of the Non Life segment, respectively. Net premium earned showed a 16% decrease in 2003 compared to 2002, reflecting premiums earned in 2003 from 2002, while gross and net written premiums decreased by 27% and 25%, respectively.
The retention level of the Non Life segment increased by 3 percentage points to 94% in 2004 and by 3 percentage points to 91% in 2003. The 2004 combined ratio of the Non Life segment was 102% compared 127% in 2003. This improvement, that represented a decrease of 32 points of the loss ratio in 2004 compared to 2003, was primarily due to significant re-reserving in 2003 and 2002. The combined ratio of the Non Life segment was 127% in 2003 compared to 126% in 2002.
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.
In 2004, 2003 and 2002, the Group significantly reduced its Credit, Surety & Political Risk gross premium income. Credit, Surety & Political Risk gross written premiums were reduced by 42% in 2004, 47% in 2003 and by 30% in 2002. These reductions mainly reflected share reductions in existing portfolios as well as the continuing impact of the reduction of the Group’s surety business in the United States. Credit, Surety & Political Risk earned premiums decreased 58% in 2004 compared to 2003 and 20% in 2003 compared to 2002 due to the continuing spread out of the credit derivatives premiums. On December 1, 2003, SCOR removed its credit

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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 and 2004. Commercial Risk Partners’ net premiums earned from the run-off operations was EUR 0 million in 2004 compared to EUR 159 million in 2003 and EUR 524 million in 2002, reflecting its run-off status.
The loss ratio decreased to 70% despite the fact that the claims related to natural catastrophes represented a net cost of EUR 76 million in 2004 for the Non Life 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 US 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 Non Life 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 31 million, 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.
Non Life commissions and expenses ratio increased from 25% in 2003 to 32% in 2004 primarily due to the increase in the percentage of proportional treaties, which have higher commission rates, to SCOR’s total business mix as a result of a 54% decrease in Large Corporate account premiums in 2004.
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,
     
    2002   2003   2004
             
    (Restated)   (Restated)    
    (EUR, in millions)
Gross premiums written
    1,218       983       880  
Net premiums written
    1,045       885       844  
Net premiums earned
    901       869       800  
Net loss and LAE
    663       653       627  
Net commissions and expenses(1)
    312       319       266  
Underwriting (loss)
    (74 )     (104 )     (93 )
Loss ratio
    73 %     75 %     78 %
Expense ratio(1)
    35 %     37 %     33 %
Combined ratio
    108 %     112 %     111 %
 
(1) Expenses include direct charges of each business segment and indirect charges allocated by business segment pro rata according to direct expenses.

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The Life and Accident & Health gross written premiums decreased by 11% in 2004 compared to 2003 mainly from the Accident & Health segment in which Accident and Medical Care decreased.
In 2003, the gross written premiums decreased by 19% compared to 2002. This reduction, which impacted the Accident & Heath segment resulted primarily from a significant withdrawal from the French medical welfare business initiated by the Group in the last quarter of 2002.
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.
In 2003, net premiums written decreased by 16% compared to 2002. As a result, the retention level for 2003 increased to 90% from 86% in 2002. This 4 percentage points increase in the overall retention level of the Life and Accident & Health segment was principally due to the withdrawal from the French medical welfare business on which we had a low retention level in 2002.
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. The 4% decrease in net earned premium in 2003 compared to 2002 was less pronounced than the decrease in net written premiums in the same period, due to the writing of a contract in the last quarter of 2002 that generated strong retained earned premiums in 2003.
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 2003, commissions and expenses were relatively stable, increasing 2% from 2002 to 2003.
In 2004, loss and LAE decreased by 4% compared to 2003, 4 points less than premiums earned due to run-off of prior years. In 2003, loss and LAE decreased by 2% compared to 2002 in line with the decrease of premiums earned.
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,
     
    2002   2003   2004
             
    (Restated)   (Restated)    
    (EUR, in millions)
Net cash flows provided by (used in) operating activities
    264       (98 )     (229 )
                   
Net cash flows provided by (used in) investing activities
    (614 )     258       (450 )
                   
Net cash flows provided by financing activities
    395       50       846  
                   
Effect of exchange rate changes on cash
    (49 )     21       (135 )
Cash and cash equivalents at beginning of year
    1,927       1,788       1,824  
Effect of changes in exchange rates on cash beginning
    (135 )     (195 )     (58 )
                   
Cash and cash equivalents at end of year
    1,788       1,824       1,798  
                   
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.

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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 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 increases, generating, as a consequence, a negative operating cash-flow.
The Group’s balance of cash and cash equivalents was EUR 1,798 million at December 31, 2004 compared to EUR 1,824 million at December 31, 2003 and EUR 1,788 million at December 31, 2002.
Net cash used by operations was EUR 229 million in 2004 compared to EUR 98 million in 2003 and net cash provided of EUR 264 million in 2002. The significant increase in cash flow used in operating activities in 2004 was primarily due to the combination of the reduction of premiums written and the payment of claims on run-off portfolio.
In 2004, the non-life 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 US 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 non-life 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 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.
In 2002, the operating cash-flow provided is due to the developments in our activities. As a consequence, the technical provisions increased for claims (EUR 501 million) and unearned premiums (EUR 192 million). In particular, the higher increase in losses and LAE reserves than in unearned premium reserves was due to the high loss ratios in Alternative Reinsurance and in Credit, Surety and Political Risks. We readjusted our reserves related to certain reinsurance contracts in the United States prior to 2001. Likewise, we readjusted our reserves, due particularly to an increase in claims related to certain credit derivatives reinsurance contracts largely caused by the worsening of the condition of certain debtors, to certain events related to the Program Business of SCOR U.S. and to the high claims rate of certain contracts covering workers compensation in the United States underwritten by our Bermudan subsidiary CRP.
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.

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Changes in assets and liabilities created net cash provided of EUR 140 million in 2003 compared to net cash used of EUR 116 million in 2002. This cash provided in 2003 was mainly due the decrease of the balance recoverable of EUR (232) million due to the 31% reduction in premiums.
In 2002, changes in assets and liabilities created net cash used of EUR 116 million. This was due to a strong increase (EUR 275 million) in deposits with ceding companies (mainly due to Life deposits and a stronger need of guarantees from the cedent due to the downgrade of our ratings) and in receivable on sundry debtors and creditors (EUR 102 million), compensated by a decrease in accrued reinsurance balance payable (EUR 409 million) due to a decrease of our estimates taking into consideration the ceding accounts receipt.
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.
For 2002, our investing activities consisted of a net purchase of fixed maturity securities amounting to EUR 1,227 million and a net sale of equity securities amounting to EUR 253 million and short-term investments amounting to EUR 174 million and a net sale of reinsurance companies (COFACE) amounting to EUR 275 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 the issuance of a new OCEANEs bond issuance on July 2, 2004 for EUR 200 million.
Net cash provided by financing activities in 2003 was due primarily to a proceed 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.
Net cash provided by financing activities in 2002 was due primarily to the issuance of new shares in the Company’s December 2002 capital increase, which contributed EUR 363 million. As part of its short and medium term debt management strategy, SCOR finalized the placement of a 5-year, 5.25% senior notes issue in June 2002 for a total amount of EUR 200 million. This offering lengthened the average duration of SCOR’s outstanding debt. Following the lower of SCOR’s ratings in 2003, the interest was increased to 7.75%.
The issue was used entirely to consolidate part of SCOR’s existing commercial paper program and did not alter the Group’s overall debt ratio.
On April 17, 2002, SCOR issued USD 112 million index-linked securitization of liabilities designed to lower its risk profile in Credit Reinsurance. This securitization was fully backed by Aaa rated assets. The coverage was linked to Moody’s A and Baa ratings indices, which comprise weighted credit risk populations rated between A1 and Baa3. The indices were picked for their match with the credit exposures SCOR is seeking to protect in terms of quality, geographic diversity and range of sectors.
At December 31, 2004, the Group had approximately EUR 44 million available in unused short and long-term credit lines, compared to approximately EUR 50 million at December 31, 2003 and approximately EUR 100 million at December 31, 2002. For additional information, see below under “– Off Balance Sheet Transaction”. As of December 31, 2004, SCOR believes that its working capital is sufficient for its present requirements.

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During the year ended December 31, 2004, the Group had a credit line of EUR 50 million EUR 44 million of which was outstanding on December 31, 2004 and had letters of credit outstanding with a face amount of EUR 867 million on December 31, 2004, as follows:
EUR 50 million short term credit line
On November 5, 2003, the Board of Directors of the Company authorized the extension and amendment of a contract signed on December 11, 2002 concerning the opening of a EUR 100 million short-term credit line between SCOR and a syndicate of banks. Pursuant to a December 8, 2003 amendment, the global commitment under the short-term credit line was reduced to EUR 50 million and one bank left the syndicate. The credit line was terminated by SCOR on February 24, 2004. Interest on amounts outstanding under the credit line accrued at a rate equal to EURIBOR plus a margin of 1% to 1.5%, depending on SCOR’s credit rating. The facility agreement provided for payment of an annual commitment fee of 0.75%, a fronting fee of 0.20% and a contract extension fee of 0.20% of the EUR 50 million credit line provided.
SCOR stand-by letters of credit facility
On December 26, 2002, SCOR entered into a facility agreement with a banking syndicate relating to the issuance of letters of credit in favor of third party beneficiaries designated by SCOR. The purpose of this facility agreement is to secure SCOR’s obligations with respect to ceding companies. The initial maximum commitment of the participating banks amounted to USD 900 million. The facility agreement was amended on November 13, 2003 for an amended aggregate amount of up to USD 842 million. This maximum amount was subsequently reduced by a series of partial cancellations by SCOR, the most recent occurring in November 2004, to USD 115 million. In addition to other customary covenants, the facility agreement requires SCOR to notify the participating banks in the event of any sale by SCOR of substantial assets exceeding EUR 50 million, or any sale by SCOR’s significant subsidiaries of assets exceeding EUR 75 million, and of the occurrence of any damages or litigation involving an amount higher than EUR 50 million. The facility contains a negative pledge with a basket of EUR 250 million for security interests and EUR 125 million for guarantees. Any disposal of SCOR’s controlling interest in SCOR Vie requires the consent of a majority of the participating banks. Events of default include (i) the failure by SCOR to pay amounts due under the facility; (ii) a breach of representation or the failure by SCOR to comply with its other obligations under the agreement; (iii) a default or acceleration of payment obligations under the SCOR Vie stand-by letters of credit facility described below; (iv) an event of default in relation to any financial debt of more than EUR 50 million of the Company or any company of the Group or the Company or any company of the Group fails to pay when due any other debt exceeding EUR 50 million; (v) the occurrence of any insolvency event or proceeding, or any other similar event or proceeding, with respect to the Company or any company of the Group; (vi) the occurrence of a material adverse event (as defined in the facility agreement) or an event which the majority of the syndicate (67%) deems to be a material adverse event; (vii) a decrease of SCOR’s consolidated net worth below EUR 1 billion; (viii) the auditors of the Company or a company of the Group refusing to certify statutory financial statements, or certifying only with significant reservations; and (ix) attachments on assets with value in excess of EUR 30 million. The outstanding amount of the letters of credit is collateralized by French Government OAT Bonds in an amount equal to 105% of such outstanding amount. The facility agreement provides for a number of fees, including a utilization fee of 0.15% per year, a contract extension fee of 0.045% and a fronting fee of 0.10%, each based on the outstanding amount of the letters of credit, and a non-utilization fee of 0.06% per year, based on the non-used portion of the facility. The facility agreement expires on December 31, 2005. It shall automatically be renewed for an additional period of twelve months unless SCOR or the banking syndicate delivers a termination notice to the other party no later than 3 months prior to the maturity date.
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

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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.
Stand-by letter of credit facility
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.
C. OFF-BALANCE SHEET TRANSACTIONS
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 13 to the Consolidated Financial Statements.
Off-balance-sheet arrangements we enter into for our clients consist of letter of credit (LOC) transactions where we provide LOC coverage for all or part of our reinsurance obligations to ceding companies, or where similar coverage is provided to us by our retrocessionaires. These transactions are entered into in the ordinary course to comply with ceding companies’ credit or regulatory requirements. We also pledge some securities as collateral in order to guarantee the payment of cedants’ reserves. The following table sets forth our off-balance-sheet engagements at December 31, 2002, 2003 and 2004:
                           
    Year ended December 31,
     
    2002   2003   2004
             
    (EUR, in millions)
Commitments received
                       
 
Unused credit lines
    100       50       44  
 
Endorsements and sureties
    1       68       47  
 
Letters of Credit
    1,262       1,285       867  
 
Other commitments
    1             13  
                   
Total
    1,364       1,403       971  
                   
Commitments given
                       
 
Endorsements and sureties
    1       90       47  
 
Leases
    28       17       10  
 
Letters of Credit
    1,085       594       656  
 
Collateralized securities
    2,583       3,226       1,885  
 
Other commitments
    23       139       99  
                   
Total
    3,720       4,066       2,698  
                   
As of December 31, 2004, 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, 2004, there were no material additional financial commitments required from Group companies in respect of such arrangements.

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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, 2004, 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, 2004.
Pursuant to agreements dated December 28, 2001 entered into in connection with the formation of IRP Holdings, the minority shareholders of IRP Holdings have an agreed set of exit rights exercisable during the first half of 2005 and in any event require an exit no later than May 31, 2006. SCOR may acquire the shares held by the minority shareholders either with existing or newly-issued SCOR shares, with cash, or with a combination of shares and cash. SCOR may, depending on conditions at the time of the exit, decide to acquire all or part of these shares in 2005.
D. CONTRACTUAL OBLIGATIONS
The following table sets forth the schedule of repayments of SCOR’s debt as of December 31, 2004.
           
Year   Payment
     
    (EUR, in millions)
2005
    266  
2006
    78  
2007
    232  
2008
    16  
2009
    205  
Thereafter
    295  
       
 
Total long-term debt
    1,092 (1)
       
 
(1) Excluding EUR 147 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
    995       262       300       211       222  
Capital lease
    97       4       10       10       73  
Operating lease
                             
Purchase
                             
Other long term liabilities
                             
                               
 
Total(1)
    1,092       266       310       221       295  
                               
 
(1) Excluding EUR 147 million related to the sale of the SCOR building.
For more information, see Note 9 to the financial statements. See “Item 3.D. Key Information – Risk Factors – SCOR faces a number of significant liquidity requirements in the short to medium-term.”

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E. RESEARCH AND DEVELOPMENT, PATENTS, LICENSES
See “Item 4.B. Business overview — Information Technology.”
F. TREND INFORMATION
See “Item 4.B. Business overview” and “Item 5.A. Operating results.”
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 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 reinsurance 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 reinsurance 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.
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 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.
Amortization of Deferred Policy Acquisition Costs.
We amortize our deferred policy acquisition costs (DAC) for 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

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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 US is determined in a similar manner. See Note 3.10 to the consolidated 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.
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. During 2002, Commercial Risk Partners’ goodwill, which is included in the Alternative Risk Transfer sub-segment, was determined to be fully impaired.
Deferred Tax.
The deferred tax assets and liabilities on the consolidated balance sheets reflect timing 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 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.

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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 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 three and no more than eighteen members. The actual number of directors must be within such limits and may be provided for in the statuts 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, 2004, 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, which exist in the Board of Directors, may, under certain conditions, be filled by the Board of Directors, pending the next shareholders’ meeting.
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.

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The following table sets forth the directors of the Company, currently and as at December 31, 2004, unless otherwise indicated, as appointed by the combined shareholders’ meeting of May 15, 2003, their ages as of December 31, 2004 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 in office.
                             
        Current principal position at SCOR   Initially   Expiration
Name   Age   and principal business activities outside SCOR   appointed   of term
                 
Denis Kessler(1)
    52     Chairman and Chief Executive Officer; Member of the Board of Directors of BNP Paribas SA; BOLLORE Investissement SA; and DASSAULT Aviation     11/4/02       2007  
Carlo Acutis(2)
    66     Director; Vice-Chairman, La Vittoria Assicurazioni SpA (Italy)     5/15/03       2009  
Michèle Aronvald
    46     Employee – elected Director     8/30/01       2006  
Antonio Borges(2)(3)
    55     Director; Vice-Chairman, Goldman Sachs International, Investment Banker     5/15/03       2007  
Allan Chapin, Esq.(1)(4)
    63     Director; Partner, Compass Advisers LLP (New York, U.S.A.)     5/12/97       2005  
Daniel Havis(2)
    49     Director; Chairman and Chief Executive Officer, MATMUT (Mutuelle Assurance de Travailleurs Mutualistes) (France)     11/18/96       2005  
Yvon Lamontagne(2)
    64     Director; Director of Hydro Québec (Montréal)     5/15/03       2007  
Daniel Lebègue(1)(2)(3)
    61     Director; Président of the French Institute of Directors (Institut Français des Administrateurs – IFA)     5/15/03       2009  
Helman Le Pas de Sécheval(1)(2)(3)(5)     38     Director; Group Chief Financial Officer, GROUPAMA S.A.     11/3/04       2009  
André Lévy-Lang(1)(3)(4)
    67     Director; Associate Professor at the Paris University of Dauphine; former Chairman of the Management Board, Paribas     5/15/03       2009  
Herbert Schimetschek(2)
    66     Director; Chairman of the Management Board and Chief Executive Officer, Austria Versicherungsverein auf Gegenseitigkeit (holding) (Austria)     5/15/03       2007  
Jean-Claude Seys(1)
    66     Director; Chairman and Chief Executive Officer, MAAF Assurance S.A.; Chairman and Chief Executive Officer, MMA     5/15/03       2009  
Jean Simonnet(2)
    68     Director; Chairman, MACIF and subsidiaries of MACIF (France)     3/2/99       2005  
Claude Tendil(1)(2)
    59     Director; Chairman and Chief Executive Officer, Generali (France) and Chairman, Europ Assistance Group     5/15/03       2007  
Daniel Valot(1)
    60     Director; Chairman and Chief Executive Officer, Technip     5/15/03       2007  
 
(1) Member of the Strategic Committee.
 
(2) Member of the Risks Committee.
 
(3) Member of the Accounting and Audit Committee.
 
(4) Member of the Compensation and Nominations Committee.
 
(5) Appointed as a member of the Board of Directors in replacement of Jean Baligand and as a member of the Strategic Committee on November 3, 2004. He is also a member of the Risks Committee and a non-voting member of the Accounting and Audit Committee.

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Jean Baligand resigned from the Board of Directors and Strategic Committee on August 18, 2004.
In addition, the following two non-voting directors were elected for a two-year term commencing on May 15, 2003:
  Georges Chodron de Courcel, 54, Chief Operating Officer, BNP-Paribas, who was also appointed as member of the Compensation and Nominations Committee and the Risks Committee.
 
  Helman Le Pas de Sécheval, 38, Group Chief Financial Officer, Groupama was a non-voting director until November 3, 2004. However, due to his appointment as a member of the Board of Directors in replacement of Jean Baligand, Helman Le Pas de Sécheval resigned as a non-voting director on November 3, 2004 and has not been replaced.
As recommended in an evaluation carried out in January 2003, the Board of Directors now comprises:
  A majority of non-executive directors. 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. This evaluation was based on the criteria laid down in the 2002 Bouton Report in France;
 
  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.
The age limit for directors is 72. The average age of SCOR’s directors is currently 58.
In 2004, the Board of Directors met six times, on February 25, March 31, May 18, June 21, August 25, and November 3.
The following sets forth the business experience of the voting and non-voting members of SCOR’s Board of Directors:
Denis Kessler
After seven years in the insurance field as Chairman of the Fédération Française des Sociétés d’Assurance (FFSA), and subsequently Senior Executive Vice President and member of the Executive Committee of AXA, Denis Kessler worked for the MEDEF (French Business Confederation), where he was First Executive Vice-Chairman from 1999 to 2002 while continuing to serve as Chairman of the FFSA. He then joined SCOR as Chairman and Chief Executive Officer of the Group on November 4, 2002 and serves on the boards of numerous SCOR subsidiaries. Denis Kessler is also a director of BNP Paribas SA, Bolloré Investissement SA, Dassault Aviation, AMVESCAP Plc (UK), Dexia SA (Bruxelles), COGEDIM S.A.S., General Security National Insurance Company, Investors Insurance Corporation and Investors Marketing Group. Mr. Kessler is a graduate of HEC business school (Ecole des Hautes Etudes Commerciales) and holds a PhD in economics and an advanced degree in social sciences.
Carlo Acutis
The principal position of Carlo Acutis is as Vice Chairman of Vittoria Assicurazioni S.p.A. He also serves on the boards of directors for a number of companies, including Yura International Holdings, B.V., Banca Passadore S.p.A., Ergo Italia S.p.A., Inbco B.V and Vittoria Capital N.V.
Michèle Aronvald
Michèle Aronvald has been employed with SCOR for twenty-five years in the Finance Department. Mrs. Aronvald has served as an employee-elected director on SCOR’s Board of Directors since 2001.

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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. He also serves on the boards of directors for Jérónimo Martins, SONEAcom, Caixa Seguros and Heidrick & Struggles. 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 Partners International LLP, New York, since June 2002. He also serves on the boards of directors for Pinault Printemps Redoute Group, InBev (Belgium), SCOR Reinsurance Company and certain of its subsidiaries, the General Security National Insurance Company and the French-American Foundation.
Daniel Havis
The principal position of Daniel Havis is as Chairman and Chief Executive Officer of the Mutuelle Assurance de Travailleurs Mutualistes (MATMUT). Among other appointments, Mr. Havis is also Chairman of SMAC (Mutuelle Accidents Corporels) and PMA. He holds non-executive positions in certain OFIVALMO (Omnium Financier de Valeurs Mobilières) entities, in finance companies, including OFIVALMO Gestion and OFIVM and insurance companies, including IMA (Inter Mutuelle Assistance).
Yvon Lamontagne
Yvon Lamontagne served as Chairman and Chief of Management of Boreal Assurances (now AXA). Mr. Lamontagne lives in Québec and holds various non-executive positions in local companies, notably in Canadian branches of insurance/ reinsurance companies, including SCOR and AXA. He also serves as Director of Hydro-Québec.
Daniel Lebègue
From 1988 to 2002, Daniel Lebègue was Chief Operating Officer of la 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, including Alcatel, Technip, SCOR Vie and Crédit Agricole S.A. He has also been named Chairman of, among others, the French Institute of Directors (IFA), the Political Science Institute of Lyon, the Confederation of European Associations of Directors and Eurofi.
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. He holds various non-executive positions for GAN Insurance in France and abroad as well as for other financial companies, including as Chairman of Compagnie Financière Parisienne and Banque Finama.
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, notably Assurances Générales de France (AGF), Schlumberger (U.S.) and Dexia (Bruxelles). He is currently an associate professor emeritus at the Paris University of Dauphine.
Herbert Schimetschek
From 1997 to 2000, Herbert Schimetschek was Chairman of the Conseil Européen des Assureurs, then until June 2000, Vice Chairman of the Austrian Insurance Companies Association and from 1999 to 2001, Chairman of the Management Board and Chief Operating Officer of UNIQA Versicherung S.A. He currently has numerous non-

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executive positions in insurance and bank companies in Austria, including the Austrian Central Bank, Bank Gutmann S.A. and Ludwig Boltzmann Gesellschaft.
Jean-Claude Seys
Jean-Claude Seys has worked mainly in the banking and insurance field. He was appointed Chairman and Chief Executive Officer of MAAF Assurance S.A. in 1992, Chief Executive Officer of MaaF-MMA in 1998 and Chief Executive Officer of COVEA in June 2003. Mr. Seys currently holds numerous non-executive positions in France and abroad, including OFIVALMO, DAS, Azur-GMF and Eurapco.
In connection with the Crédit Lyonnais/ Executive Life matter, Jean-Claude Seys was sentenced in January 2004 in U.S. federal court to five years of probation, during which time he is barred from entering the United States. Insurance regulatory authorities in the United States have been informed of the foregoing.
Jean Simonnet
Over the last five years, Jean Simonnet has been Chairman of a number of companies, including MACIF (Société d’Assurance Mutuelle), SOCRAM (Société de Crédit) and SMIP (Mutuelle Complémentaire Santé), OFIMA MIDCAP (SICAV d’OFIVALMO). He is currently a director of or represents MACIF on the Board of various insurance and real estate companies, including IMA, OFIVALMO, MACIF (Mutuelle Assistance des Commerçants et Industriels de France), Foncière de Lutèce, FORINTER and Mutavie S.A.
Claude Tendil
Claude Tendil started his career at UAP in 1972, worked for the Drouot group from 1980 and for AXA from 1989 to 2002, where he became Vice Chairman of the Management Board in 2001. He has been Chairman and CEO of Generali group in France since April 2002 and Chairman of the Europ Assistance group since April 2003. He also serves as chairman or director of La Fédération Continentale Europ Assistance Holding and Unibail.
Daniel Valot
From 1995 to 1999, Daniel Valot was Chief Operating Officer of Total Exploration Production, then worked for Technip, where he was appointed Chairman and Chief Executive Officer in July 2003. His other director positions are mainly in the industrial field in France and abroad, including Compagnie Générale de Géophysique, the French Oil Institute (Institut Français du Pétrole) and SCOR Vie.
Georges Chodron de Courcel
Georges Chodron de Courcel is Chief Operating Officer of BNP Paribas in Paris and holds non-executive positions for the BNP Paribas Group in some of their foreign subsidiaries. He is a director of Bouygues, Alstom, Nexans, BNP Paribas (Suisse) and the Société Foncière Financière et de Participations (FFP) since April 14, 2005. He has been appointed Chairman of Erbé S.A. and is a member of the supervisory board of Lagardère and Sagem. He is president of BNP Paribas Emergis SAS, Compagnie d’Investissement de Paris SAS and Financière BNP Paribas SAS. He is a non-voting director of SCOR Vie.
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

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Chairman and Chief Executive Officer. Upon a proposal made by the Chairman and Chief Executive Officer, the Board of Directors may also appoint a Chief Operating Officer to assist the Chairman and Chief Executive Officer in managing the Company’s affairs.
The following table sets forth the Company’s executive officers who comprise the Executive Committee at December 31, 2004 and as of the date hereof, their ages as of December 31, 2004, 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
    52     Chairman and Chief Executive Officer     2002  
Patrick Thourot
    56     Chief Operating Officer     2003  
Marcel Kahn
    48     Chief Financial Officer     2004  
Jean-Luc Besson
    58     Chief Risk Officer     2003  
Yvan Besnard
    50     Director for Non Life Treaties, Europe     2004  
Romain Durand
    47     Chief Executive Officer and Director of SCOR VIE     1997  
Victor Peignet
    47     Managing Director, Business Solutions     2004  
Henry Klecan Jr. 
    53     Division President & CEO of SCOR U.S. and SCOR Canada     2003  
Arnaud Chneiweiss served as Secretary to the Executive Committee and the Board of Directors until September 10, 2004 and Emmanuelle Rousseau has served in such position since that date.
The following sets forth the business experience of SCOR’s executive officers:
Denis Kessler
See above under “– Board of Directors”.
Patrick Thourot
Patrick Thourot is a graduate of the Ecole Nationale d’Administration and worked for ten years with the French Ministry of Finance, before spending most of his career in insurance companies or professional organizations since 1983, including COFACE, FFSA, PFA IARD and AXA, where he was Executive Vice President of the Group, Group Technical Director and 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. He also serves as director of Asefa (Spain) and as vice president of the supervisory board of Mutre.
Marcel Kahn
Marcel Kahn, actuary, chartered accountant and MBA from the ESSEC business school, spent several years as an external auditor and chartered accountant before joining the Axa group in 1988 as Group Controller. From 1991 to 2001, he was successively Chief Financial Officer (CFO) of Axa France, International Director for Europe, the Axa Group’s Director for Strategy and Development, Deputy Managing Director of Axiva (Life insurance), and Director of Procurement for Axa France. In 2001, he was appointed Chief Financial Officer of PartnerRe Global and Managing Director 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.
Jean-Luc Besson
Jean-Luc Besson, an actuary holding a PhD in mathematics, joined the FFSA in 1985 and was since July 2001 Senior Vice President, Research, Statistics and Information Systems at the FFSA. He is the head of the French Institute of Actuaries and is a member of the International Actuarial Association. Mr. Besson was appointed as

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Chief Reserving Actuary of SCOR Group in January, 2003 and was appointed as Chief Risk Officer of the SCOR Group on July 1, 2004.
Yvan Besnard
Yvan Besnard graduated from the ESSEC Business School, CHEA (Centre des Hautes Etudes de l’Assurance) and holds the DECS (Diplôme d’Etudes Comptables Supérieures, an advanced accounting degree). He joined the AGF Group in 1978 as Financial Controller of AGF Re, then became Manager of the Technical and Marketing Department of the Health Insurance Division. He joined SCOR Group in 1991 as Head of Management Analysis. In 1993, he became Financial Controller of SCOR Réassurance. In 1995 he joined SCOR UK, where he was appointed Managing Director in 1997. In July 2000, he was appointed Head of Development for the SCOR Group. He has been since 2003 Chief Internal Auditor for the Group. Yvan Besnard was named, in July 2004, Director for Non Life Treaties for Europe. 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.
Romain Durand
Romain Durand is a graduate of HEC business school (Ecole des Hautes Etudes Commerciales) and Sciences Po (Political Sciences faculty in Paris). Romain Durand joined SCOR in January 1997, after spending several years in the international insurance industry, and became a member of the Group Executive Committee. He was named Chief Operating Officer of the SCOR Life Division in April 1998 and is currently Chief Executive Officer and Director of SCOR Vie. He currently serves as Chairman of Solareh SA and as a director of SGF, Investors Insurance Corporation and several SCOR entities.
Victor Peignet
Victor Peignet, marine and offshore engineer, joined SCOR’s Facultative Department in 1984 from the offshore contracting industry. He has 15 years of underwriting and managing experience in Energy and Marine insurance with SCOR. He has been the head of the Corporate Business Division of the Group, SCOR Business Solutions, since its formation in 2000 and as Executive Vice President and Managing Director since April 2004. He is a director of SCOR UK Co., SCOR Channel Ltd and Arisis Ltd.
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 member of the Quebec Law Society and has been active in the insurance industry for over 20 years in various senior executive positions. Until 1989, Henry Klecan Jr. held executive positions in Canada’s leading specialty lines insurance companies and insurance brokerage operations. From 1989 to 1998 he was Senior Vice President and co-founder of London Guarantee Insurance Company. From 1999 to 2000 he was Senior Vice President of Citadel Assurance Company. Henry Klecan Jr. has been President and Chief Executive Officer of SCOR Canada since July 2000 and was appointed President and Chief Executive Officer of SCOR U.S. on November 18, 2003.
B. COMPENSATION
Directors’ attendance fees
The Ordinary General Meeting of Shareholders on May 18, 2002 increased the aggregate annual amount payable to members of the Board of Directors for attendance fees to EUR 600,000 with effect from fiscal 2002. 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 of meetings (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. In addition, an amount of EUR 1,700 is paid for each attendance at a meeting of a board committee. However, no attendance fee is paid to the Chairman and Chief Executive Officer or to the Chief Operating Officer. These fees are paid at the end of each quarter. The amount of compensation paid, and benefits in kind

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granted to, all of SCOR’s voting and non-voting directors during and for the year ended December 31, 2004 is set forth below.
The Company paid an aggregate of EUR 8,285 to the French government for pension benefits on behalf of its employee director, Michele Aronvald. No other amounts were paid for pension, retirement or similar benefits for the Company’s directors in 2004.
Attendance fees for 2004 were paid as listed below (In euro):
         
Mr. Carlo Acutis(1)
    20,100  
Mrs. Michèle Aronvald(2)
    28,500  
Mr. Jean Baligand(3)
    15,800  
Mr. Antonio Borges(4)
    27,750  
Mr. Allan Chapin(5)
    26,475  
Mr. Georges Chodron de Courcel
    31,900  
Mr. Daniel Havis
    28,500  
Mr. Yvon Lamontagne(6)
    21,375  
Mr. Daniel Lebègue
    43,800  
Mr. Helman le Pas de Sécheval(7)
    35,300  
Mr. André Lévy Lang
    47,200  
Mr. Herbert Schimetschek(8)
    17,550  
Mr. Jean-Claude Seys
    31,900  
Mr. Jean Simonnet
    26,800  
Mr. Claude Tendil
    30,200  
Mr. Daniel Valot
    28,500  
 
(1) The amount allocated to Carlo Acutis was initially EUR 26,800 which takes into account an initial tax of 25% (i.e., EUR 6,700) pursuant to articles 117 bis, 119 bis 2 and 187 of the French Tax Code.
 
(2) Employee-elected Director
 
(3) Jean Baligand resigned on August 18, 2004.
 
(4) The amount allocated to Antonio Borges was initially EUR 37,000 which takes into account an initial tax of 25% (i.e., EUR 9,250) pursuant to articles 117 bis, 119 bis 2 and 187 of the French Tax Code.
 
(5) The amount allocated to Allan Chapin was initially EUR 35,300 which takes into account an initial tax of 25% (i.e., EUR 8,825) pursuant to articles 117 bis, 119 bis 2 and 187 of the French Tax Code.
 
(6) The amount allocated to Yvon Lamontagne was initially EUR 28,500 which takes into account an initial tax of 25% (i.e., EUR 7,125) pursuant to articles 117 bis, 119 bis 2 and 187 of the French Tax Code.
 
(7) Helman Le Pas de Sécheval was elected to replace Jean Baligand on November 3, 2004.
 
(8) The amount allocated to Herbert Schimetschek was initially EUR 23,400 which takes into account an initial tax of 25% (i.e., EUR 5,580) 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 2004 as follows:
SCOR U.S.:
Mr. Chapin: 27,000 USD
Mr. Lebègue: 14,700 USD
SCOR Canada:
Mr. Lamontagne: 40,000 CAD

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2004 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, 2004 amounted to EUR 2,830,367 including fixed compensation for 2004 and variable compensation relating to 2003 paid during the first-half of 2004.
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. The Compensation and Nominations Committee decided 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 500,000; including a portion of 2.75 per thousand of the consolidated net result for SCOR, up to EUR 350,000, and an amount up to EUR 150,000 determined by the Board of Directors being linked to the achievement of objectives decided for each year.
In addition, SCOR paid part of the cost of Denis Kessler’s rent for his apartment through September 30, 2004 totalling EUR 39,617 for 2004. Mr. Kessler is entitled to two years severance in the event of his termination and three years severance in the event of a material change in the shareholder structure of the Group.
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 Directors held on January 22, 2003, 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 being linked to the achievement of objectives decided for each year by the Chairman and Chief Executive Officer.
In addition, in the event Mr. Kessler resigns as CEO for any reason, Mr. Thourot is required to resign as Chief Operating Officer upon the appointment of a new Chief Executive Officer. Mr. Thourot is entitled to two years compensation in the event the Company terminates his mandate, subject to certain conditions and to three years compensation if Mr. Thourot resigns from his position, subject to certain conditions.
The following table sets forth 2004 and 2003 compensation information for Messrs. Kessler, Thourot and Osouf.
                                 
    Fixed compensation   Variable compensation   Total compensation   Total compensation
    for 2004 in EUR   for 2004 in EUR   for 2004 in EUR   paid in 2003 in EUR
                 
Mr. Denis Kessler
    500,000       150,000       650,000       650,000  
Mr. Patrick Thourot
    410,000       123,000       533,000       383,000 (1)
Mr. Serge Osouf(2)
                      200,917  
 
(1) M. Thourot joined the Group on January 27, 2003
 
(2) Serge Osouf’s term of office ended on January 22, 2003 before his retirement on November 1, 2003.

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The Compensation and Nominations Committee determines the variable compensation attributed to the other members of the Executive Committee on proposal of the Chairman. The variable portion of the compensation presented in the following table depends, on one hand, on the achievement of individual objectives and, on the other hand, on the achievement of the Group’s results objectives which are based on return on equity.
                         
    Fixed compensation   Variable compensation   Total compensation
    for 2004 in EUR   for 2004 in EUR   for 2004 in EUR
             
Mr. Marcel Kahn(1)
    195,152             195,152  
Mr. Jean-Luc Besson
    209,000       50,460       259,460  
Mr. Romain Durand
    255,000       79,635       334,635  
Mr. Victor Peignet(2)
    203,000       109,078       312,078  
Mr. Henry Klecan Jr.(3)(4)
    226,743       25,481       252,224  
Mr. Yvan Besnard(5)
    157,000       11,700       168,700  
Mr. François Terren(6)
    80,110             80,110  
Mr. Renaud de Pressigny(7)
    45,000             45,000  
 
(1) Marcel Kahn joined SCOR on April 14, 2004 as Chief Financial Officer
 
(2) Victor Peignet was appointed on April 1, 2004 as Managing Director, Business Solution Division
 
(3) Henry Klecan Jr. has been appointed on January 1, 2004 as Chairman & Chief Executive Officer of SCOR U.S., he is also Chairman & Chief Executive Officer of SCOR Canada.
 
(4) Change rate at 31.12.04 1 EUR = 1.3604 USD/1.6483 CAD
 
(5) Yvan Besnard has been appointed on July 2, 2004 as Director for Non Life Treaties, Europe
 
(6) François Terren left the Company on April 14, 2004
 
(7) Renaud de Pressigny left the Company on May 1, 2004
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. The aggregate amounts set aside or accrued by the Group to provide pension, retirement or similar benefits for senior executives in 2004 was EUR 267,881.
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.
C. BOARD PRACTICES
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).
         Its mission is to scrutinize the Group’s development strategies and to make recommendations on major Group acquisition and disposal plans.
         In the course of its three meetings in 2004, the Strategic Committee has in particular reviewed the three year strategic plan of the Group called the “Moving Forward” plan adopted in August 2004.
 
(1)  Independent director.
(2)  Appointed as member of Strategic Committee on November 3, 2004 in replacement of Jean Baligand who resigned on August 18, 2004.

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  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(3)
  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 eight times in 2004 and discussed the following matters:
  Analysis of the audited accounts for 2003 and non-audited quarterly accounts for the first three quarters of 2004;
 
  Refinancing of the OCEANEs bond issuance described in “Item 9.A. – The Offer and Listing Details”;
 
  Preparation of the transition to the IFRS rules;
 
  Relations with rating agencies;
 
  Remuneration of the statutory auditors and analysis of their missions;
 
  Setting up and monitoring of procedures to fight against fraud and money laundering;
 
  Internal control procedures and introduction within the group of management letters;
 
  Analysis of SCOR procedures in relation to the Sarbanes-Oxley Act;
 
  Procedures for provisional accounts;
         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 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).
         Its missions are to make recommendations on the compensation of Group directors and officers and of senior executives, pension plans and stock options, and to make proposals regarding the membership and organization of the Board of Directors and its committees.
 
(1)  Independent director
(2)  Non-voting director
(3)  Non-voting member of the Accounts and Audit Committee.

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         The Compensation and Nominations Committee met three times in 2004 and has made recommendations on the implementation of a stock award plan, a stock options 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); Yvon Lamontagne(1); Daniel Lebègue(1); Herbert Schimetschek(1); Jean Simonnet(1); Claude Tendil(1); Georges Chodron de Courcel(2); and Helman le Pas de Sécheval(1).
         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 determined to disband the Risks Committee going forward.
D. EMPLOYEES
As of December 31, 2004, the Group employed 1,038 people, including 605 at its headquarters in Paris, 227 in North America, 50 in the Asia-Pacific region, 136 in other European countries, and 20 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 10.7% from 1,162 as of December 31, 2003 to 1,038 as of December 31, 2004. The primary decrease took place in North America and in the Property-Casualty Reinsurance and the Business Solutions areas.
The following table sets forth the distribution of employee at the dates indicated:
                         
    As of December 31,
     
    2002   2003   2004
             
Number of employees
    1,256       1,162       1,038  
Breakdown by geographic location
                       
France
    653       639       605  
Asia-Pacific region
    70       58       50  
Other European countries
    168       159       136  
North America
    346       287       227  
Other regions
    19       19       20  
                   
      1,256       1,162       1,038  
Breakdown by main category of activity
                       
Property-Casualty reinsurance
    620       514       391  
Life reinsurance
    213       227       192  
Credit, Surety & Political Risks
    14       13       7  
Commercial Risk Partners
    38       11       7  
Management, Investment and other
    371       397       441  
                   
      1,256       1,162       1,038  

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E. SHARE OWNERSHIP
Shares Held by Directors and Executive Officers
The following table indicates the number of Ordinary Shares held by each director of the Company as of December 31, 2004, representing approximately 0.05% of SCOR’s outstanding capital stock on such date:
         
Directors
       
Mr. Carlo Acutis
    60,000  
Mrs. Michèle Aronvald
    948  
Mr. Antonio Borges
    1  
Mr. Allan Chapin
    1,000  
Mr. Daniel Havis
    7,602  
Mr. Denis Kessler
    132,420  
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
    14,600  
Mr. Jean Simonnet
    2,736  
Mr. Claude Tendil
    1,506  
Mr. Daniel Valot
    100  
       
Total
    375,979  
       
Non-Voting Directors
       
Mr. Georges Chodron de Courcel
    17,837  
       
Total
    17,837  
       

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Stock Option Plans
The total number of share options outstanding as of December 31, 2004 was 17,055,698.
As of December 31, 2004, unexercised share subscription options, if exercised, would lead to the creation of 12,682,726 shares, representing approximately 1.97% of the capital of the Company.
The following table sets forth certain information relating to the various option plans as of December 31, 2004:
                                                         
                            Number
                            granted to
                    Total   Number   ten first
    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     May 15, 1996 (30%) May 15, 1997 (30%) May 15, 1998 (40%)     May 14, 2005       99       430,000       82,000       68,000  
  1996       September 5     Sept. 5, 1997 (30%) Sept. 5, 1998 (30%) Sept. 5, 1999 (40%)     Sept. 4, 2006       122       480,000       83,000       70,000  
  1997       September 4     September 4, 2002     Sept. 3, 2007       113       481,500       112,000       72,000  
  1998       September 3     September 4, 2003     Sept. 3, 2008       134       498,000       130,000       71,500  
  1999       September 2     September 3, 2004     Sept. 2, 2009       145       498,500       130,000       71,000  
  2000       May 4     May 5, 2004     May 3, 2010       1,116       111,600       600       1,000  
  2000       August 31     September 1, 2005     Aug. 30, 2010       137       406,500       110,000       63,000  
  2001       September 4     September 4, 2005     Sept. 3, 2011       162       560,000       150,000       77,000  
  2001       October 3     October 4, 2005     Oct. 2, 2011       1,330       262,000       1,200       2,000  
                                           
  TOTAL                                   4,475,900       899,800       613,500  
                                           
Readjusted total after the capital increase, at December 31, 2002             7,615,337       1,530,928       1,043,814  
  2003       February 28     February 28, 2007     Feb. 27, 2013       65       986,000       450,000       170,000  
  2003 (1)     June 3     June 3, 2007     June 2, 2013       1,161                    
  2003             Without any condition             1,556,877       288,750       122,100  
  2003             With condition of 12% ROE 2004             778,439       144,375       61,050  
Readjusted total after the capital increase, at December 31, 2003             15,924,979       3,515,129       2,034,134  
                                           
  2004       August 25     August 26, 2008     Aug. 25, 2014       171       5,990,000       1,335,000       920,000  
                                           
TOTAL at December 31, 2004             21,914,979       4,250,129       2,954,134  
                                           
 
(1) Some of the options granted in June 2003 depended on the Group’s profitability being more than 10% and 12% greater than the Group’s average shareholders’ equity for 2003 and 2004 respectively. These conditions were unrealized so the options were cancelled. For 2003, it was confirmed by the validation of the accounts at the May 15, 2004 Shareholders Meeting.
Following the capital increase on December 31, 2002, the Company has adjusted the price of the shares issuable upon the exercise of options granted and the number of shares issuable upon the exercise of options, pursuant to article L. 225-81 of the French Commercial Code.
The exercise price of shares issuable upon the exercise of options, as set prior to this capital increase, has been reduced by an amount equal to the product of this price multiplied by the ratio between (a) the value of the preferential subscription right and (b) the value of the share prior to removal of this right, i.e.:
         
    Previous offer price × value of preferential subscription right (average listed opening
price during the subscription period)
   
         
    Value of share after removal of preferential subscription right (average listed opening
price during the subscription period)
+ value of preferential subscription right
   

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Because the initial value of the option is supposed to remain constant, the new number of shares eligible for subscription is equal to the initial value of the option divided by the new offer price, i.e.:
         
    Initial number of options × previous offer price    
         
    New offer price as defined below    
These calculations have been performed individually and by plan, and rounded up to the nearest share. The same calculations have been applied after the capital increase of January 7, 2004.
The table below summarizes the status of the various option plans:
                                             
Status at December 31, 2004
 
    Exercise Price   Options outstanding   Number of   Options    
    after readjusting for   after the capital   options cancelled   outstanding at   Options
    capital increases   increase of   at the end of   the end of   granted in
Option Plan   (in EUR)   January 7, 2004   2004   2004   2004
                     
  1995       6.59       222,498       29,716       192,782       0  
  1996       11.7       743,406       39,621       703,785       0  
  1997       15.03       902,587       37,144       865,443       0  
  1998       22.72       979,358       42,098       937,260       0  
  1999       18.58       950,886       47,051       903,835       0  
  2000       19.39       208,164       20,916       187,248       0  
  2000       18.17       828,330       66,861       761,469       0  
  2001       19.39       1,230,713       92,865       1,137,848       0  
  2001       13.73       505,946       60,634       445,312       0  
  2003       2.86       1,392,042       116,489       1,275,553       0  
  2003       3.94       4,265,223       610,060       3,655,163       0  
  2004       1.14       0       0       5,990,000 (1)     5,990,000  
                                 
  Total               12,229,153       1,163,455       17,055,698       5,990,000  
                                 
 
(1) granted in December 2004
The option plans for the years 1994 to 1997 are share subscription plans giving rise to an increase in capital. Starting with the 1998 plan, all plans provide for the purchase of existing shares.
There are no stock option plans providing for the purchase of or subscription to shares in Group subsidiaries.
Following the authorization decided by the Shareholders’ meeting on April 18 2002, the Board of Directors approved, on February 28, 2003, a plan for senior officers providing for a total of 986,000 options (1,435,725 options after the capital increase of January 7, 2004), granted without discount, at a price of EUR 4.16 per option (EUR 2.86 after capital increase). Options can be exercised all at once or separately but with a minimum of 100 shares each time, from February 28, 2007 to February 27, 2013. After February 27, 2013, any unexercised options are cancelled, null and void.
SCOR’s Board of Directors decided on June 3, 2003, in accordance with the delegation received from the extraordinary shareholders’ meeting of May 15, 2003, to set up two new stock subscription plans for (i) all the employees of the SCOR Group and (ii) two officers, namely Mr. Denis Kessler (Chairman and CEO of SCOR) and Mr. Patrick Thourot (Vice-President of SCOR) and certain senior executives of the Group. In both plans, the stock subscription price amounts to EUR 5.74 per share (EUR 3.94 after capital increase of January 7, 2004). The 3,113,754 options (4,534,061 after the capital increase of January 7, 2004) may be exercised on one or several occasions between June 3, 2007 and June 2, 2013.
Options are granted to officers and senior executives and may be exercised according to the following procedure: (i) 50% without condition; (ii) 25% at such time as the Group consolidated net income for the 2003 fiscal year is greater than 10% of the average Group consolidated net equity (such average being deemed to be net equity at the opening of the fiscal year plus net equity at the end of the fiscal year divided by two); and (iii) 25% at such time

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as the Group consolidated net income for the 2004 fiscal year is greater than 12% of the average Group consolidated net equity (such average being deemed to be net equity at the opening of the fiscal year plus net equity at the end of the fiscal year divided by two).
Taking into account the loss recorded for 2003, 25% of subscription options granted to the directors and officers in 2003 were cancelled.
SCOR’s Board of Directors approved on August 25, 2004, a new subscription plan for certain senior and middle managers, proposing a total of 5,990,000 options. The stock subscription price amounts to EUR 1.14 per share. The options may be exercised on one or several occasions (with a minimum of 1000 shares per exercise) from August 26, 2008 through August 25, 2014. After August 25, 2014, any unexercised options are cancelled, null and void.
The table below shows the outstanding options for members of the Executive Committee, as at December 31, 2004:
                                                 
                    Potential Volume    
    Options   Options to       Price   of transaction    
    exercised   be exercised   Option Plan   (in EUR)   (in EUR)   Exercise Date
                         
Denis Kessler
    0       364,019       02/28/2003       2.86       1,041,094       02/28/2007 - 02/28/2013  
      0       240,254       06/03/2003       3.94       946,601       06/03/2007 - 06/03/2013  
      0       375,000       08/25/2004       1.14       427,500       08/26/2008 - 08/25/2014  
                                     
TOTAL
            979,273                                  
                                     
Patrick Thourot
    0       72,804       02/28/2003       2.86       208,219       02/28/2007 - 02/28/2013  
      0       90,096       06/03/2003       3.94       354,978       06/03/2007 - 06/03/2013  
      0       180,000       08/25/2004       1.14       205,200       08/26/2008 - 08/25/2014  
                                     
TOTAL
            342,900                                  
                                     
Romain Durand
    0       19,809       09/04/1997       15.03       297,729       09/04/2002 - 09/03/2007  
      0       29,713       09/03/1998       22.72       675,079       09/04/2003 - 09/03/2008  
      0       32,188       09/02/1999       18.58       598,053       09/03/2004 - 09/02/2009  
      0       249       05/04/2000       19.39       4,828       05/05/2004 - 05/03/2010  
      0       37,140       08/31/2000     &n