APC 2005 Annual Report Download - page 23

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22, 2002. Schneider Electric launched proceedings
against the European Commission to obtain damages
for the prejudice caused, estimated at 1.6 billion.
Hearings are scheduled for 2006.
Belgium has initiated proceedings against former
Schneider Electric executives in connection with the
former Empain-Schneider Group's management of its
Belgian subsidiaries. The proceedings began when
SPEP (the Group holding company at the time)
launched public offers for its Belgian subsidiaries Cofi-
bel and Cofimines in 1993. Certain minority sharehold-
ers filed suit. Schneider Electric and subsidiaries Cofi-
bel and Cofimines have been named as a defendant
by the minority shareholders who claim that the Com-
pany is liable for the actions of certain of the accused.
Schneider Electric is paying the legal expenses not
covered by insurance of the former executives
involved.The Brussels correctional court is expected to
hand down a ruling at the end of March 2006.
In connection with the divestment of Spie Batignolles,
Schneider Electric SA booked contingency reserves
to cover the risks associated with certain major con-
tracts and projects. Most of the risks were extin-
guished during 1997. Reserves for the remaining risks
were booked to cover management's estimate of the
risk involved, based on management’s best judgment
of the expected financial impact.
To the best of the Company's knowledge, no other
exceptional event has occurred and no claims or litiga-
tion are pending or in progress that are likely to have
a material adverse impact on the Group's business,
assets and liabilities, financial position or results.
Insurance
Schneider Electric’s strategy for managing insurable
risks is designed to defend the interests of employees
and customers and to protect the environment, the
Company's assets and its shareholders' investment.
This strategy entails:
Identifying and quantifying risk using different
reporting systems.
Preventing risks. Schneider Electric has a realistic
prevention policy to ensure safety at its sites. The
Triple A approach, conducted with insurance compa-
ny experts, aims to enhance processes to control and
monitor risk by identifying vulnerable areas and imple-
menting appropriate solutions to preserve the long-
term sustainability of the Group’s manufacturing
resources and business. This approach builds on pre-
ventive measures already in place such as regular
inspections, danger and vulnerability studies, safety
management for people and equipment and security
plans. As concerns risks of average frequency and
intensity, the Group also has ongoing programs to pre-
vent traffic accidents and work accidents and reduce
transportation risk.
Organizing and deploying crisis management
resources, notably for technical and political risks and
natural disasters.
Ensuring the necessary insurance cover for the
main risks facing Group companies (civil liability, prop-
erty damage and operating losses, environmental
accidents and transportation risk). The Group contin-
ues to carefully screen insurance and reinsurance
companies and evaluate their solvability. To maintain
essential levels of cover while also optimizing insur-
ance costs in light of constraints in the insurance and
reinsurance markets, we have adopted a policy of self-
insuring a certain number of recurring risks, whose
frequency and financial impact can be reliably estimat-
ed (primarily automobile risks). Through our reinsur-
ance subsidiary, we cover moderate property dam-
age, operating loss and civil liability risks. The
amounts involved are not material at the consolidated
level.
In addition, Schneider Electric has taken out specific
cover in response to certain local conditions, regula-
tions or the requirements of certain risks, projects and
businesses. This cover will be renewed in 2006.
Liability insurance
Schneider Electric is covered by a global liability insur-
ance program. Specific liability programs have been
set up in the United States, Canada and Mexico to
take account of the specific requirements and charac-
teristics of the North American market. Insured values
under these programs adequately cover the Group's
exposure to liability claims in connection with its busi-
nesses.
Property and casualty/business
interruption insurance
A global property and casualty/business interruption
insurance program has been set up for Schneider
Electric in all countries except for the United States,
Canada and Mexico where a specific program has
been established to take account of the specific
requirements and characteristics of the North Ameri-
can market. Aggregate settlements under the global
program are capped at 250 million and specific lim-
its apply to certain risks, such as earthquake damage
and machine damage.
In 2005, external auditors prepared a report on the
impact of a major event causing an interruption of
business.
Transport insurance
A global transport insurance program has been set up
for Schneider Electric in all countries except for the
United States, Canada and Mexico where a specific
program has been established to take account of the
specific requirements and characteristics of the North
American market. The program covers all goods ship-
ments, including between Group facilities, by all
means of transport, with a maximum insured value of
15.2 million per convoy.
Business Presentation