Views
3 years ago

ANNUAL REPORT AND ACCOUNTS 2012 - Royal and Sun Alliance

ANNUAL REPORT AND ACCOUNTS 2012 - Royal and Sun Alliance

DIRECTORS’

DIRECTORS’ AND CORPORATE GOVERNANCE REPORT CONTINUED BOARD COMMITTEES The reports of the Group Audit Committee and the Group Remuneration Committee are set out on pages 52 to 54 and 55 to 71 respectively. BOARD RISK COMMITTEE REPORT “The Committee is authorised to advise on risk management issues and recommend the Group framework of risk limits and risk appetite to the Board. During 2012 the Committee has reviewed the Group’s material risks in the context of the overall risk strategy and appetite of the Group. The scope of the Committee’s remit includes existing and emerging risks facing the Group in relation to market, credit, liquidity, insurance and operational risk. The Committee is assisted in discharging its responsibilities by the risk function and regional risk committees” Noel Harwerth Chair, Board Risk Committee BOARD RISK COMMITTEE Membership and attendance at 2012 meetings Noel Harwerth (Chair) 4/4 George Culmer 1 0/1 Richard Houghton 2 3/3 Simon Lee 2/4 Malcolm Le May 3/4 Notes: 1. George Culmer resigned from the Committee with effect from 14 May 2012. 2. Richard Houghton was appointed to the Committee with effect from 12 June 2012. PRINCIPAL DUTIES OF THE BOARD RISK COMMITTEE (BRC) To recommend the Group framework of risk limits and risk appetite to the Board To review the quantum of capital required for the Individual Capital Assessment (ICA) and Economic Capital Assessment (ECA) To ensure that material risks have been identified and mitigated appropriately To approve new and amended Group policies To approve the remit of the Group Risk team To review the Remuneration Policy for any implications for risk and risk management To review and monitor emerging risks. 2012 KEY ACTIVITIES Reviewing and challenging the Group’s risk appetite and material risk profile Reviewing results of stress and scenario tests Considering emerging risks Reviewing and approving changes to Group policies Reviewing the quantum of the ICA and ECA capital models Reviewing risks facing the Group by type and region at each meeting Monitoring progress on preparation for compliance with the Solvency II regulatory framework Undertaking an effectiveness review of the Committee’s performance in 2012 Reviewing the Remuneration Policy and any implications for risk and risk management Reviewing and challenging the proposed reinsurance arrangements for 2013. Membership In 2012 the Committee comprised two Non-Executive Directors, the Group Chief Executive and Group CFO. In addition, the Group Chief Risk Officer, Group Risk Director, Group General Counsel and Group Company Secretary, Group Director of Corporate Finance, Group Underwriting & Claims Director and Regional Risk Directors are all regular attendees. The Committee Chairman may invite Directors, other executives of the Group or any external professional advisers to attend from time to time. The Chairman, Martin Scicluna, was appointed to the Committee with effect from 8 February 2013. With effect from 1 March 2013 Edward Lea and Alastair Barbour will become members of this Committee, with Edward Lea succeeding Noel Harwerth as Chairman of the Committee. Terms of Reference The terms of reference set out the authority of the Committee to carry out its duties. The Committee reviewed its terms of reference during the year and these are available on the Company’s website, www.rsagroup.com. The terms of reference are reviewed to ensure they reflect the requirements of the Group and meet current best practice and industry guidance. The BRC has a standing agenda to ensure that all items within its terms of reference are covered by the Committee. BRC agendas may include greater focus on specific risk disciplines or individual insurance portfolios as considered appropriate through pre-meeting discussions between the BRC Chairman and the Group Risk Director. Meetings The BRC oversees and challenges the results of stress and scenario tests carried out by the Group Risk team and the business. These tests are carried out each year with the involvement of senior executives to assess the Group’s resilience in relation to extreme but plausible events that could have a material impact on the Group. The aim is to enable management and the BRC to better understand the dynamics of the Group’s risk profile, identify potential mitigation strategies for such events and act as a validation tool for both the Group’s capital modelling process and its risk appetite. These tests involve exploring a range of scenarios which could adversely impact the Group’s assets, liabilities and/or operational performance. The BRC has continued to evaluate the impact of scenarios such as a Euro sovereign debt default and the collapse of the Euro from a Group perspective. In 2012 the programme was extended across our 14 44 | RSA | Annual Report and Accounts 2012

CORPORATE GOVERNANCE European Economic Area legal entities covering scenarios around the seven risk types: Catastrophe, Non-catastrophe, Reserve, Reinsurance, Credit, Market, Strategic and a single Reverse Stress Test. The results demonstrated the Group’s resilience on both an absolute and relative basis to the scenarios considered. The results also allowed for the identification of potential additional management actions that could be taken to protect customers, shareholders and operations. In addition to monitoring risks that are already recognised as material to the Group, the BRC monitors emerging risks that could threaten the Group’s position of competitive advantage or successful delivery of strategy to ensure that plans are put in place where possible to mitigate such risks. During the year, the BRC has received regular updates from the Solvency II Steering Committee on the Group’s preparation for the implementation of Solvency II and its impact on the business. Solvency II is a fundamental overhaul of the regulatory capital adequacy regime for insurers and reinsurers within the EU. The deadline for compliance with Solvency II has been postponed and the FSA is working towards an implementation date of January 2016. Solvency II requires regulated insurers and reinsurers to have an effective system of governance in place which provides for sound and prudent management of the business. This includes ensuring that Board members possess sufficient relevant professional qualifications, knowledge and experience to ensure that, collectively, they provide sound and prudent corporate stewardship. There is an ongoing programme to document the governance policy and processes within each regulated Group company within the EU to ensure that a consistent and high standard of governance is maintained throughout the Group, which includes training Directors on Solvency II and the Company’s Internal Capital Model. The minutes of the regional risk committees are provided to the BRC and the regional risk Directors regularly present to the BRC. Evaluation The evaluation of the Board Risk Committee, which was conducted by way of a structured questionnaire, included a review of the annual planning cycle, the number and length of meetings and the quality of information provided. It also considered the responsiveness of management to the Committee’s requests and the Committee’s challenge of management. Priorities identified by the evaluation for focus in 2013 included training for new Committee members, continued focus on both key areas of risk by type and region and the ongoing challenge of management’s risk assessments. GROUP INVESTMENT COMMITTEE REPORT “Global economic and market conditions remained challenging during 2012. Against this background the Committee has continued to ensure that the Group maintains its prudent approach to the management of investment assets whilst successfully taking advantage of selective opportunities to enhance portfolio income” Malcolm Le May Chairman, Group Investment Committee GROUP INVESTMENT COMMITTEE Membership and attendance at 2012 meetings 1, 2 Malcolm Le May (Chairman) 2/2 Alastair Barbour 2/2 Richard Houghton 3 2/2 Simon Lee 2/2 Notes: 1. George Culmer resigned from the Committee with effect from 14 May 2012, before the first meeting of the year. 2. Noel Harwerth, Edward Lea, John Maxwell, John Napier, Jos Streppel and Johanna Waterous resigned from the Committee prior to the first meeting of the year following a review of the Committee’s constitution. 3. Richard Houghton was appointed to the Committee with effect from 12 June 2012. PRINCIPAL DUTIES OF THE GROUP INVESTMENT COMMITTEE To assist the Board in setting the Group’s investment strategy To monitor the execution of that strategy and the Group’s investment performance. 2012 KEY ACTIVITIES Reviewing activity in the Group’s investment portfolio Approving and monitoring investment strategy implementation and portfolio results. Membership During the year, the membership of the Committee was reviewed and revised to become the Group Chief Executive, Group CFO and two Non-Executive Directors. The Group Investments Director attends all meetings of the Committee to provide an update on the economic and market background and outlook affecting the Group, the investment activities taken since the Committee last met and any portfolio actions which require the Committee’s approval. The Chairman, Martin Scicluna, was appointed to the Committee with effect from 8 February 2013 and with effect from 1 March 2013 Jos Streppel will become a member of the Committee. Terms of Reference The Committee is authorised by the Board to manage all aspects of investment policy and strategy for the Group and provide oversight of the operation of the Group’s investment portfolios within established strategy and risk frameworks. The terms of reference set out the authority of the Committee to carry out its duties. The Committee reviewed its terms of reference during the year and these are available on the Company’s website at www.rsagroup.com. Meetings Strategic themes relating to cash, bonds, equities and alternative yield assets were discussed during 2012, together with options for the Group to enhance its income in an environment of historically low interest rates and bond yields, whilst retaining the high quality and low risk nature of the portfolios. Details of the Group’s investment activities are contained in the Financial Review on pages 14 to 17. Annual Report and Accounts 2012 | RSA | 45

ANNUAL REPORT AND ACCOUNTS 2012 - RSA, Annual Report ...
Annual Review 2010 - Royal and Sun Alliance
St. JameS'S Place Plc annual RePoRt and accountS 2012
Discover the financial annual reports of 2012 - Sun Resorts
Annual Report and Accounts 2012 - Petards Group plc
Royal College of Physicians Annual report and accounts 2012
2011 Annual Report and Accounts - The Group
Annual report and accounts - Cattles Limited
2012 Statutory Annual Report - Pharmaxis
Annual Report and Accounts 2009 - Taliesin
Pace plc Annual Report and Accounts 2012 - Financial Statements
Ophir Energy plc Annual Report and Accounts 2011
PDF version of this press release - Royal and Sun Alliance
IMI plc annual report 2012
Annual Report and Accounts 2012 - Global Energy Development
Annual Report and Accounts 2009 - Unibet
AnnuAl RepoRt And Accounts - Mobile Tornado
Annual Report Accounts 2012 - Tribal
Annual Report & Accounts 2011 - Taliesin
Report & Accounts for 2012 - Ten Alps
Annual report 2012 - Von Roll
2012 annual report - TLA Worldwide
ANNUAL REPORT 2012 - Euronav.com
M Winkworth PLC Annual Report and Accounts 2011 - Supadu
RSA CR Report 2011 Artwork Final:297x210 - Royal and Sun Alliance