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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 GROUP NOMINATION COMMITTEE REPORT “During the year the Committee continued to focus on ensuring that the right balance of skills, experience, knowledge and independence is represented on the Board both currently and in the future. In doing so, the Committee identified potential new appointees and made recommendations to the Board regarding the appointment of a new Executive Director, a new Non-Executive Director and a new Chairman, all of whom bring complementary skills to maintain the quality of the Board” Edward Lea Senior Independent Director GROUP NOMINATION COMMITTEE Membership and attendance at 2012 meetings John Napier (Chairman) 1 6/6 Edward Lea 6/6 John Maxwell 6/6 Johanna Waterous 6/6 Notes: 1. John Napier retired as a Director and member of the Committee with effect from 31 December 2012. PRINCIPAL DUTIES OF THE GROUP NOMINATION COMMITTEE To keep under review the capabilities required by the Board and the leadership needs of the Group To review succession planning for the Board To manage the process of identifying potential Board appointees, seeking advice from external advisers as appropriate for recommending candidates for assessment by the Board as a whole To make recommendations to the Board in relation to the re-appointment of any Non-Executive Director at the conclusion of his/her specified term of office. 2012 KEY ACTIVITIES Managing the process of identifying Board appointees Recommending the appointment of a new Chairman Recommending the appointment of a new Executive Director Recommending the appointment of a new Non-Executive Director. Membership All members of the Committee are independent Non-Executive Directors, with the exception of both the former Chairman and the current Chairman who were independent on appointment. The Chairman chairs the Committee unless it is dealing with matters regarding his succession. The Chairman, Martin Scicluna, was appointed to the Committee with effect from 8 February 2013 and with effect from 1 March 2013, John Maxwell ceases to be a member of the Committee with Alastair Barbour and Hugh Mitchell joining the Committee on the same date. 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. When appointing new Directors, regard is given to the size of the Board, the balance of Executive and Non-Executive Directors and the benefits of diversity, including gender. The Committee considers the skills, experience, independence and knowledge already represented when making recommendations to the Board on new appointments. During the year, MWM Consulting Limited, an external search agency specialising in the recruitment of Directors, was engaged to assist the Company. A description of the role and the capabilities required for each appointment were provided to the agency. Reports on potential appointees were provided to the Committee members who, after careful consideration, made a recommendation to the Board. MWM Consulting Limited is independent and has no other relationship with the Company. During 2012, the Committee considered and recommended to the Board the appointment of Richard Houghton as an Executive Director and Group CFO, Hugh Mitchell as a Non-Executive Director and Chairman of the Group Remuneration Committee and Martin Scicluna as a Non-Executive Director and Chairman of the Company. All candidates were considered to complement the existing skills, experience and knowledge on the Board, with sufficient time to dedicate to the role. Group Remuneration Committee Full details of the activities and duties of the Group Remuneration Committee can be found in the Directors’ Remuneration Report on pages 55 to 71. Group Audit Committee Full details of the activities and duties of the Group Audit Committee can be found in the Group Audit Committee Report on pages 52 to 54. RELATIONS WITH SHAREHOLDERS Dialogue with institutional shareholders The Board attaches considerable importance to its relationships and communication with shareholders. Senior management meet principal institutional shareholders on a regular basis and Non-Executive Directors are available to meet with institutional shareholders as required. Executive Directors attended 68 meetings with investors during 2012. The Board is made aware of significant issues raised by shareholders. The Board receives regular reports from the Investor Relations team on the views of institutional shareholders. Presentations and meetings are conducted in compliance with the Company’s Inside Information Policy and the Disclosure and Transparency Rules to ensure that inside information is not disclosed prior to it being made available to shareholders generally. 46 | RSA | Annual Report and Accounts 2012

CORPORATE GOVERNANCE Substantial Share Interests No. of ordinary shares % of voting rights At 31 December 2012 At 19 February 2013 Nature of holding No. of ordinary shares % of voting rights Nature of holding Blackrock, Inc 188,217,284 5.46 Indirect 188,217,284 5.46 Indirect Legal & General Group plc 136,295,990 3.99 Direct and Indirect 136,295,990 3.99 Direct and Indirect Newton Investment Management Ltd 168,455,475 4.88 Indirect as discretionary investment manager 168,455,475 4.88 Indirect as discretionary investment manager Schroders plc 170,851,201 4.95 Direct and Indirect 170,851,201 4.95 Direct and Indirect Standard Life Investments Ltd 152,266,879 4.42 Direct and Indirect 152,266,879 4.42 Direct and Indirect Substantial share interests The table above shows the holdings of major shareholders notified to the Company in accordance with the Disclosure and Transparency Rules as at 31 December 2012 and the date of this Report. redemption or purchase of shares), or in such other circumstances as the Board shall determine. In any of these situations the preference shareholders may only vote on the relevant resolution and not on all the business of the general meeting. Annual General Meeting (AGM) The AGM will be held at 200 Aldersgate, St Paul’s, London EC1A 4HD on Wednesday, 15 May 2013 at 11.00am. A letter from the Chairman and the notice convening the AGM (Notice) is made available to all ordinary shareholders at least 20 working days before the meeting and can be found at www.rsagroup.com. Presentations are given on the Company’s performance and activities during the year and the financial results of the Company prior to the formal business of the meeting. All Directors are requested to attend the AGM. The Chairman and each Board Committee chairman make themselves available to take questions from ordinary shareholders at the AGM. Separate resolutions are proposed on each substantive issue. In accordance with the provisions of the Articles of Association (Articles), any proxy form sent by the Company to shareholders in relation to any general meeting must be delivered to the Company, whether in written form or in electronic form, not less than 48 hours before the time for holding the meeting excluding non business days (or, in the case of a poll taken otherwise than at or on the same day as the meeting, not less than 24 hours before the time appointed for the taking of the poll). At any general meeting, every ordinary shareholder present shall have one vote on a show of hands and on a poll, every ordinary shareholder present in person or by proxy shall have one vote for each share of which he is the holder. Each resolution will be put to a poll at the AGM in 2013. The results of the vote on each resolution will be announced to the London Stock Exchange and will be available on the Company’s website, www.rsagroup.com. Preference shareholders are only entitled to receive notice of, attend, speak and vote at general meetings if the dividend payable on the preference shares is in arrears at the date of the Notice, a resolution is proposed that affects the rights of the preference shareholders, a resolution is proposed to wind up the Company, a resolution is proposed to reduce the capital of the Company (other than a OTHER STATUTORY INFORMATION Principal activity The Company is the holding company of the RSA group of companies (the Group) whose principal activity is the transaction of personal and commercial general insurance business. The Group operates in 32 countries and provides general insurance products and services in around 140 countries. Business review and results Throughout this Annual Report, the Business Review on pages 8 to 33 and the Directors’ and Corporate Governance Report on pages 40 to 54, the Board seeks to present a balanced and clear assessment of the Group’s activities, position and prospects. Each of those sections is incorporated by reference into the Directors’ and Corporate Governance Report, which is comprised of those reports, the information set out below and the other information which is incorporated by reference. The Group’s results for the financial year are shown in the consolidated income statement on page 76. Employment policy The Group’s approach and employment policies reflect its belief that motivated, engaged and skilled employees are critical to its success. The Group is committed to the promotion of equal opportunities for all employees and creating a working environment that fosters diversity and inclusion. The Group seeks to ensure that recruitment, talent selection and development, reward, performance management and internal promotion are all carried out solely on the grounds of ability and are entirely free from any form of discrimination. To do this, all reasonable adjustments are made, where it is appropriate to do so, to our policies, practices, processes and terms and conditions of employment. The Group is also committed, wherever possible, to employing people who are disabled or become disabled during their career with the Group. Diversity and inclusion are encouraged and supported and in 2012 a Global Forum was established, sponsored by Group and Regional CEOs, to ensure further focus and progress Annual Report and Accounts 2012 | RSA | 47

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