reference document 2003 - Euler Hermes Kreditversicherungs-AG

Chairman’s
Report
pursuant to Article L. 225-37 of the Commercial Code
To the shareholders,
In addition to the management report, I
wish to report to you on the conditions
under which the work of the Supervisory
Board and the Group Management Board is
prepared and organised, and on the internal
control procedures introduced by Euler
Hermes SA.
As this is the first presentation to the
General Meeting of shareholders, it is specified
that the form and content of this
report may be changed in future years, so
as to take into account the provisions of
the future General Regulations of the
Autorité des Marchés Financiers (AMF) and
professional and market standards.
New regulatory obligations
The French Financial Security Act (loi de
sécurité financière, or LSF) was promulgated
on 1 August 2003. It requires the
Chairman of the Board of Directors or the
Supervisory Board of a French public
imited company (société anonyme) to disclose,
in a report attached to the management
report:
• the conditions under which the Board’s
work is prepared and organised,
• the limits on the powers of the Chief
Executive Officer (Directeur Général),
• the internal control procedures.
In a report attached to their general report,
the Independent Auditors must submit
their remarks on the part of the Chairman
of the Supervisory Board’s report on internal
control procedures relating to the
preparation and processing of accounting
and financial information. These provisions
apply as from the 2003 financial year. Euler
Hermes is a French public limited company
with a Group Management Board and a
Supervisory Board and must therefore
comply with the provisions of the Financial
Security Act.
The Sarbanes-Oxley Act adopted in the
United States on 25 July 2002, and which
will apply from the end of 2005 to companies
listed on the New York Stock
Exchange, introduced measures to
increase financial and accounting transparency
and to emphasize directors’
responsibility. These measures relate in
particular to:
• certification by the CEO (Chief Executive
Officer) and the CFO (Chief Financial
Officer) that procedures and controls
relating to published information have
been defined, established and maintained,
and in addition that the effectiveness
of these procedures and controls
has been evaluated (Section 302 of the
Sarbanes-Oxley Act).
• assessment by the directors of the internal
controls set forth in a report stating
the responsibility of management for
establishing and maintaining an adequate
internal control structure and procedures
for financial reporting, an
assessment of the effectiveness of this
system, and certification by external
auditors (Section 404 of the Sarbanes-
Oxley Act).
The Allianz Group to which Euler Hermes
belongs is subject to the obligations set
out in the Sarbanes-Oxley Act and took
steps to be able to comply with it as from
the financial statements drawn up as at
31 December 2004. The work performed by
Euler Hermes in the context of Allianz’s
requests in this regard will be coordinated
with the work required in relation to the
French Financial Security Act.
There are three parts to this report:
• The conditions under which the Supervisory
Board’s work is prepared and
organised
– The role of the Supervisory Board and
how it is organised
– The role of the Group Management
Board and how it is organised
• Internal control procedures and the control
environment
• Internal control procedures with regard
to accounting and financial information
Conditions under which the supervisory
board’s work is prepared and
organised
In general, the Group is run by a
Management Board, which is itself supervised
by a Supervisory Board. In addition,
the Group has set up an Audit Committee
and a Remuneration and Appointments
Committee. These structures are completed
by a Management Committee, which
reports to the Group Management Board.
This forms the Group’s operational management
structure.
The role of the Supervisory Board and
how it is organised
In accordance with the law and under the
terms of Article 11 of the Articles of
Association, the Supervisory Board continuously
monitors the Company’s management
by the Group Management Board and
gives this Board the prior authorisations
required under the law or the Articles of
Association.
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