Governance of Mutual Insurance Companies: the current state of legislation Gouvernance des Sociétés d Assurance Mutuelles : Etat du Droit

Transcription

1 Governance of Mutual Insurance Companies: the current state of legislation Gouvernance des Sociétés d Assurance Mutuelles : Etat du Droit

2 GOVERNANCE OF MUTUAL INSURANCE COMPANIES: THE CURRENT STATE OF LEGISLATION Report by the Governance & Company Law Taskforce, led by Jeanne-Marie CAMBOLY, of the European Legislation Working Group, chaired by Edoardo GREPPI

3 Copyright AISAM () Editor: Lieve LOWET Square de Meeûs 22B/16 BE-1050 Brussels Printed in October 2006 by Massoz, BE Liège Dépôt légal : October N

4 Governance of Mutual Insurance Companies: the current state of legislation 3 TABLE OF CONTENTS I. Introduction...p.4 II. Legal system and applicable legislation...p.5 MIXED LEGISLATION LAWS AND REGULATIONS REFORMS UNDERWAY III. Elements of applicable law...p.6 1) The main points... p.6 MANAGEMENT STRUCTURES: MONISTIC AND/OR DUALISTIC DIRECT OR INDIRECT DEMOCRACY ABSENCE OR PRESENCE OF SHARE CAPITAL 2) Main governing bodies of the SAMs 1... p.7 BOARD OF DIRECTORS/SUPERVISORY BOARD - Periodicity of meetings - Age of the Board members - Female Board members - Chairman-Managing Director - Tasks, power and responsibilities of Board members - Board members training and experience - Financial information submitted to the General Meeting - Board committees - External directors - Conflicts of interest - Incompatibility of offices - Compensation and remuneration of Board members MANAGING DIRECTOR - Tasks and powers - Liability - Employee status - Remuneration GENERAL MEETING - Agenda items submitted by member-policyholders - Questions from member-policyholders to the Board of Directors - The annual report to the Board of Directors - Voting rights and related rules - Representational powers - OGM/EGM quorum Annex: detailed answers to the questionnaire...p.13 1 SAM Société d Assurance Mutuelle = Mutual Insurance company

5 Governance of Mutual Insurance Companies: the current state of legislation 4 I. Introduction Jeanne-Marie CAMBOLY 2, Leader of AISAM s GOV Taskforce, Groupama, France In line with the instructions of its governing bodies, AISAM s Governance & Company Law Taskforce decided to take stock of current laws relating to the governance of mutual insurance companies in the majority of the European Union member states. To that end, a questionnaire was drawn up in 2005 and sent to one of the AISAM member companies or trade associations in each of the countries involved. Each company or association that was consulted was asked to fill in the questionnaire based on the current regulations applicable in its country. Eleven companies or associations provided information on current legislation in the following countries: Belgium, Denmark, Finland, France, Germany, Hungary, Italy, the Netherlands, Spain, Sweden and the United Kingdom 3. The detailed answers can be found in the summary table annexed to this document. Luxembourg, Poland, Austria and Portugal were asked to participate in the survey but have not been able to respond to the questionnaire. The aim of this overview, written in 2006, is to present the conclusions from the survey and to underline the similarities and differences between the different countries surveyed in the area of governance. I should like to thank the AISAM members who replied to this questionnaire Paul JACOBS, Secretary General, Mensura, Belgium; Hans REYMANN-CARLSEN, Head Officer, Danish Association of Mutual Insurance Companies, Denmark; Anu PYLKKÄNEN, Assistant Director, International Legal Affairs, Tapiola, Finland; Manuela KRÜTT, Lawyer, Gothaer, and Ralf- Rainer BÖRK, Signal Iduna, Germany; Robert LILLI, Deputy CEO, Köbe, Hungary; Antonio CERETTI, Corporate Affairs, Reale Mutua, and Ettore LOMBARDO, Director General, ITAS, Italy; Chris VAN TOOR, General Manager, FOV, the Netherlands; Antonio LOPEZ TARACENA, Secretary General, Mutua Madrileña Automovilista, and Miguel GOMEZ BERMÚDEZ, Legal Consultant, Mapfre, Spain; Olle TÖRNELL, General Counsel, Länsförsäkringar, Sweden; Malcolm WOOD, Company Secretary and General Counsel, Standard Life, United Kingdom. 2 Jeanne-Marie Camboly is currently Head of External Relations for Groupama and in charge, in particular, of Parliamentary and professional relations for the group. In this context, she runs the secretariat of the Fédération Française des Sociétés d Assurances Mutuelles (FFSAM, the French Federation of Mutual Insurance Companies). From 1983 until 2000, Jeanne-Marie was legal consultant for Groupama s Legal and Fiscal Department, specialising in personal non-life and health insurance. Before joining Groupama, she was in charge of a general legal department at the Fédération Nationale des Coopératives de Consommateurs (National Federation of Consumer Cooperatives). Prior to this, she taught law at Paris and Sceaux faculties. Jeanne-Marie holds a Post-Graduate diploma in insurance law as well as in real estate law. She also graduated top of her class from the Paris Law Faculty. She is the author of several legal reference books in insurance and particularly in agricultural social cover 3 It should be noted that Standard Life, which completed the questionnaire for the United Kingdom, was set up by an individual Act of Parliament: answers may therefore vary for other UK mutual insurers.

6 Governance of Mutual Insurance Companies: the current state of legislation 5 II. Legal system and applicable legislation MIXED LEGISLATION In all countries, the governance of SAMs is determined by a combination of legislation: Law applicable to joint-stock companies as well as legislation that is specific to all insurance companies and legislation specific to SAMs (six countries) or Law applicable to joint-stock companies as well as legislation that is specific to all insurance companies (four countries) or Law applicable to all insurance companies and specific legislation applicable to mutual insurance companies: Hungary. With the exception of Hungary, the law applicable to unlisted joint-stock companies influences the way mutual insurance companies are governed. Except for United Kingdom, where legislation applicable to listed joint-stock companies has no impact on mutual insurance companies, the information submitted by members shows that even where legislation pertaining to listed joint-stock companies does not directly apply to mutual insurance companies, there is an indirect impact. The regulatory authority may pass regulations based on these laws, as in the case of Italy, and mutual insurance companies in some countries include in their statutes the rules for listed joint-stock companies, as is the case in Belgium, Finland and Spain. All of these points fully justify AISAM s Governance & Company Law Taskforce s attentive monitoring of legislation relating to joint-stock companies, whether listed or unlisted. LEGISLATION AND REGULATIONS In all instances, governance regulations are, by nature, legislative and regulatory. These rules are completely or partially of public good and are therefore compulsory. REFORMS UNDERWAY In nearly half of the countries surveyed (Finland, Germany, Italy, Sweden and the United Kingdom) reforms are currently underway that are likely to have an impact on SAMs. Moreover, France and Spain note that changes by the public authorities are in the pipeline. No reforms are envisaged in the other surveyed countries.

7 Governance of Mutual Insurance Companies: the current state of legislation 6 III. Elements of applicable law 1) The main points MANAGEMENT STRUCTURES: MONISTIC AND/OR DUALISTIC In the majority of countries, the monistic structure is the most usual system. - Management by a Board of Directors and Managing Director (monistic) In five countries Belgium, Denmark, Spain, Sweden and the United Kingdom, management is, by obligation, the responsibility of: The Board members and the Managing Director, appointed by the Board of Directors or the General Meeting. Spain, however, has no regulations dealing with how the Managing Director is appointed. Co-optation is possible in France, Italy and Spain. It is used to replace a board member during his term of office; the nomination is then ratified by the member-policyholders at the following General Meeting. - A Management Committee and a Supervisory Board (dualistic) Germany only uses the dual structure of the Management Committee and the Supervisory Board. - Monistic versus Dualistic Management In France and Italy, SAMs are managed, for the most part, by a Board of Directors and a Managing Director. However, it is possible to opt for a management structure comprising a Supervisory Board and a Management Committee. In the latter case, the members of the Supervisory Board are elected from among the member-policyholders who are up-to-date with their premium payments by the General Meeting. Members of the Management Committee are appointed by the Supervisory board. - Monistic versus another System Finland and Hungary use a different type of management structure, comprising a Board of Directors, a Managing Director and a Supervisory Board. However, the monistic system is more usual in Finland. - Mixed systems In the Netherlands, small mutual insurance companies use a monistic management structure, requiring only a Board of Directors (a Bestuur), appointed by the General Meeting. A Managing Director is optional but in practice one is often appointed. Large mutual insurance companies must be managed by a Board of Directors (a Bestuur) and a Supervisory Board (a Raad van Commisarissen). Companies are considered large when the balance sheet total is 13 million euros or more for 3 consecutive years and when its employees number more than 100.

8 Governance of Mutual Insurance Companies: the current state of legislation 7 DIRECT OR INDIRECT DEMOCRACY Most countries offer a choice between direct and indirect democracy: Direct democracy: in this case, the General Meeting brings together all the memberpolicyholders, Indirect democracy: Delegates represent the member-policyholders at the General Meeting. In Belgium, Finland, Spain and the United Kingdom, only direct democracy is allowed: the General Meeting may not be composed of delegates. ABSENCE OR PRESENCE OF SHARE CAPITAL The main principle is that no share capital is held by the member-policyholders. In the Netherlands, however, there are two types of mutual insurance companies: the mutuals and the joint-stock mutuals (onderlinge op aandelen). For reasons of solvency, this latter form is sometimes used when there is a need for capital. Moreover, it would appear that this general rule has certain exceptions in the United Kingdom. 2) Regulations applicable to the main governing bodies of the SAMs 4 BOARD OF DIRECTORS/SUPERVISORY BOARD - Periodicity of meetings The periodicity of meetings of the Board of Directors is not governed by any regulations, with the exception of: Belgium, where a minimum of three per year is set; the Netherlands, where the supervisory authorities require more than one meeting per year; Germany, where the Supervisory Board must meet at least twice a year. - Age of the Board members The various regulations set no age limit, with the exception of the United Kingdom, where the age limit is 70 years. - Female Board members There are no regulations requiring female Board Members. - Chairman-Managing Director The combined office of Chairman and Managing Director is not allowed in Belgium, Denmark and Sweden but is allowed in France, Hungary, Italy, Spain and the United Kingdom. In France, Italy and the United Kingdom, however, while the holding of more than one office is legal, it is not considered a good governance practice. 4 When the questionnaire was prepared, it was thought that all SAMs were managed by a Board of Directors and a Managing Director. However, German SAMs must be managed by a Management Committee and a Supervisory Board. Germany s answers therefore refer to the Supervisory Board rather than the Board of Directors.

9 Governance of Mutual Insurance Companies: the current state of legislation 8 Germany and the Netherlands did not respond to this question owing to the fact that they have a unique management system in that their legislation makes no mention of the Managing Director. This is an important point because it raises the essential issue of the combining of political and executive offices in the SAMs. - Tasks, powers and responsibilities of Board members The tasks and powers of the Board are established by the regulations in the various countries. In general, the Board has wide-ranging powers to achieve the company's corporate objectives, subject to the powers accorded by the General Meeting. In this capacity, it sets out the main strategic guidelines, ensures that they are applied and exercises control over the operational management of the company that has been entrusted to the Managing Director (or to the general management committee). Danish regulations appear to be very precise in their description of the tasks and powers of the Board. With the exception of Hungary, the regulations provide for the possible civil and criminal liability of the Board members, usually individually, although this does not exclude the possibility of them being held liable as a group. - Board members training and experience Compulsory initial education and training is stipulated only in Spain, where Board members must have a degree in law or economics or must have 5 years experience as a Board member in a financial institution. Hungary requires a 3-4 years post secondary school diploma. Training for Board members at the beginning of their term of office is optional in most countries, with the exception of France, where it is compulsory. Professional experience required may be divided into three categories: Professional experience is not covered at all by legislation in Belgium, the Netherlands, Sweden and the United Kingdom. There is thus no requirement. Legislation in Denmark, Finland, Germany and France does not make reference to any particular type of professional experience, but does state in a general manner that the competence and worthiness of the Board members must be appropriate to the tasks they will be called upon to carry out. Regulations in Hungary and Italy are more specific. Both require the Board members to have previously held a similar position for between 3 and 5 years. There is one element which is common to all of these different systems, namely the idea that there is open access to the position of Board member since, even where they do exist, the regulations do not limit access to this position to persons who meet a precise pre-defined profile. - Financial information submitted to the General Meeting While in the majority of countries the Board of Directors must provide financial information to the General Meeting, the Board of Directors is not required to provide information on a systematic basis to the General Meeting in all countries. Indeed, in Italy, Spain and the United Kingdom, the Board of Directors is exempted from this requirement.

10 Governance of Mutual Insurance Companies: the current state of legislation 9 - Board committees Only in five countries is there any legal provision for the establishment of the committees of the Board of Directors: in Belgium, France, Germany, Sweden and the United Kingdom. Their establishment is optional. In Belgium, the constitution of the audit committee and the remuneration committee are greatly encouraged. These are also the most commonly found committees in France and in the United Kingdom, together with the nominations committee. In Spain, only listed companies are required to have an audit committee. However, some unlisted companies as well as some mutuals have decided to set up audit, remuneration and governance committees on a voluntary basis. - External Directors With three exceptions (France, Netherlands, Sweden), legislation in the countries that replied to the questionnaire does not mention external directors. - Conflicts of interest With two notable exceptions, all of the countries have very strict regulations regarding conflicts of interest. These strict regulations are one of the elements that guarantee the independence of the Board members. In Italy and Spain, there is only an obligation to declare a conflict of interest. A Board member who finds he has a conflict of interest must inform the Board of Directors and, in the case of Italy, also the auditors. - Incompatibility of offices The incompatibility of being both a Board member and an employee of the same company is only stated clearly under Finnish and French legislation. In Sweden, the number of employee- Board members is limited by regulations. In all other countries,, an employee of a SAM may be a Board member. Where the position of Managing Director exists, he/she may be a Board member except in Denmark. - Compensation and remuneration of Board members All of the countries, with the exception of France which only provides for a simple compensation, grant some form of remuneration to their Board members. In most cases the level of remuneration is freely defined. MANAGING DIRECTOR - Tasks and powers In countries in which they are set by regulations, i.e. Belgium, Denmark, Finland and France, the tasks of the Managing Director all refer to the fact that he/she is responsible for the operational management of the company, according to the strategic guidelines established by the Board. - Liability In the majority of countries, a Managing Director may be held liable in civil and/or criminal matters.

11 Governance of Mutual Insurance Companies: the current state of legislation 10 Hungary notes that regulations do not provide for the liability of the Managing Director, which seems surprising. It is possible that, even though the legislation specific to SAMs does not provide for this, general civil and criminal liability law can be used to hold the Managing Director accountable. In the Netherlands, criminal liability can be invoked only if the Managing Director is an employee. - Employee status The status of the Managing Director is dealt with in different ways: Either he/she is always an employee of the SAM, which is the case in Denmark, Hungary, Italy and Spain Or he/she is never an employee of the SAM as in Finland Or finally he/she may or may not be an employee of the SAM as is the case in Belgium, France, the Netherlands, Sweden and the United Kingdom. - Remuneration Remuneration of the Managing Director is freely set. The General Meeting must be informed of the amount in the following countries: Denmark, Finland, France, Sweden and the United Kingdom. On the other hand, there is no requirement to provide the General Meeting with this information in Belgium, Hungary, Italy, the Netherlands or Spain. However, Spain points out that it is considered a good governance practice to disclose the global remuneration of the Board members, the Managing Director and the senior management. GENERAL MEETING - Agenda items submitted by member-policyholders With the exception of Italy and the United Kingdom, all other countries allow their memberpolicyholders to add items to the agenda of a General Meeting, often on the condition that a certain time-frame is respected and, in certain cases, on the condition that a sufficient number of member-policyholders' signatures have been collected. - Questions from member-policyholders to the Board The member-policyholders may also submit questions in writing to the Board, with the exception of Italy. The requirement to respond is not necessarily part of this right. - The annual report of the Board The various regulations define the content, or at least the minimum contents, of the annual report of the Board of Directors. - Voting rights and related rules The principle of one man, one vote is applied in Belgium, France, Hungary and Sweden. In Germany and the Netherlands, regulations do not contain any voting rules. Remote voting is only provided for by the Danish, French and UK regulations.

12 Governance of Mutual Insurance Companies: the current state of legislation 11 - Representational powers On the whole, the regulations do not limit the maximum number of proxies that may be entrusted to a member-policyholder. However, a maximum number is set in Belgium, Finland and France. - OGM/EGM Quorum With regard to the quorum, i.e. the number of member-policyholders who must be either present or represented before an Ordinary General Meeting or an Extraordinary General Meeting may go ahead, it is difficult to perceive a general trend given the diversity of the information collected. Six countries Belgium, Germany, Hungary, the Netherlands5, Sweden and the United Kingdom, have no rules setting a quorum either for the Ordinary General Meeting or the Extraordinary General Meeting. Belgium s rules state that in the absence of legal requirements, the statutes may introduce, with adaptations, the relevant provisions of company law, which provides no special quorum for the Ordinary General Meetings but does so for the Extraordinary General Meetings, consisting of 50% of the share capital at the first invitation and, if a quorum is not reached, the meeting is postponed for two weeks, with decisions being made by simple majority. Four countries require a quorum for the Ordinary General Meetings Denmark, France, Italy and Spain but the rules require clarification for the Danish companies. As regards the quorum for Extraordinary General Meetings, the rules are foreseen in the regulations in Denmark, Finland, Italy and Spain. Finland and the Netherlands require a quorum for Extraordinary General Meetings for the purpose of amending the bylaws, calling for two-thirds of the members to be present, unless the statutes require a different quorum. 5 See below on the modification of bylaws

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14 ANNEX European Legislation Working Group Governance & Company Law Taskforce Replies to AISAM's Questionnaire - Governance of Mutual insurance companies (SAM) - the current state of legislation The first part contains a summary table with the replies on the state of national legislation given by: For Germany, by Signal Iduna & Gothaer For Belgium, by Mensura For Denmark, by the Danish mutual insurance association For Spain, by Mutua Madrilenã & Mapfre For Finland, by Tapiola For France, by Groupama For the UK, by Standard Life For Hungary, by Köbe, For Italy, by Itas & Reale Mutua, for the Netherlands, by the Dutch mutual insurance association (FOV) For Sweden, by Länsförsäkringar The second part contains supplementary information provided by the respondees.

15 I. - I. Governance of SAMs State of Legislation System and nature of applicable legislation Germany Belgium Denmark Spain Finland France UK Hungary Italy Netherlands Sweden a. a) Legal system The governance of SAMs is determined by: common law relating to joint-stock companies Unlisted joint-stock companies Listed joint-stock companies legislation specific to All insurance companies (whether mutuals or not) Mutual insurance companies alone mixed regulations Laws governing joint-stock companies + regulations specific to all insurance companies Laws governing joint-stock companies + regulations specific to mutual insurance companies Laws governing joint-stock companies + regulations specific to all insurance companies + regulations specific to mutual insurance companies C 55 E55 J 55 b. Nature of applicable legislation The regulations on the governance of SAMs result from: Laws Statutory instruments Decrees Orders Circulars or instructions issued by Ministry or supervisory authority Laws and statutory instruments These regulations are : Compulsory (of public order) Optional (additional) Partly compulsory, partly optional c. Possible reforms affecting the SAM A reform is in progress A reform is being considered A reform is neither in progress nor being considered G74

16 2. Content of applicable legislation The questions below are intended to gather information about possible governance structures, the composition of the General Meeting and whether equity is held by member-policyholders whatever the legal structure adopted by a mutual insurance company, and the nature of the laws governing it. Germany Belgium Denmark Spain Finland France UK Hungary Italy Netherlands Sweden a. Preliminary questions Governance structure by a Board of Directors and a Managing Director Conditions governing the appointment (in the case of cooptation, indicate if approval of the General Meeting is necessary, for how long and under which conditions they can be co-opted): of Board members (administrators): C87 D87 E87 G87 H87 J87 of the Managing Director C88 D88 E88 G88 H88 J88 by a Management Committee and a Supervisory Board Conditions governing the appointment (in the case of cooptation, indicate if approval of the General Meeting is necessary, for how long and under which conditions they can be co-opted): Of the Members of the Management Committee: G91 I91 of Members of the Supervisory Board: B92 G92 I92 by another governance structure Conditions governing the appointment of management executives: F94 K94 Composition of the General Meeting The General Meeting is composed of : all member-policyholders H98 delegates representing the member-policyholders The regulations (laws and decrees) Offer a choice between direct and indirect democracy Do not offer a choice between direct and indirect democracy It is always direct It is always indirect Share capital No share capital is held by member-policyholders Some share capital is held by member-policyholders K110 b. Regulations applicable to the main bodies of the SAM Part b below is based on the hypothesis that mutual insurance companies are managed by a Board of Directors and a Managing Director (whether an employee or not) Board of Directors Periodicity of meetings The regulations impose a periodicity B117 Which is? B118 C118 The regulations do not impose any periodicity

17 Germany Belgium Denmark Spain Finland France UK Hungary Italy Netherlands Sweden Age of Board members: The regulations impose an age limit Which is? H125 The regulations do not impose an age limit B126 C126 G126 K126 Female Board members The regulations impose the presence of female Board members There is a quota If so, how many? There is no quota The regulations do not impose the presence of female Board members The Chairman & Managing Director The regulations allow a single person to fulfil the duties of Chairman and of Managing Director H136 I136 The regulations require that the duties of Chairman and of Managing Director be dissociated Tasks and powers of the Board of Directors The main tasks and powers of the Board, according to the regulations, are as follows B140 C140 D140 E140 F140 G140 H140 J140 K140 Liability of Board members B142 The regulations provide for the possible liability of Board members This liability is: Individual Collective Civil Criminal Civil and Criminal The regulations do not provide for the possible liability of Board members Training for Board members Training for Board members is legally compulsory Training for Board members is legally optional Competence and professional experience of non-external Directors What type of original education is required (diplomas)? B158 C158 E158 F158 G158 H158 I158 K158 What professional experience is required? B159 C159 D159 F159 G159 H159 I159 J159 K159

18 Germany Belgium Denmark Spain Finland France UK Hungary Italy Netherlands Sweden Transparency and communication The Board of Directors must inform the General Meeting B163 About what? Governance Risk management Other areas, please specify: B167 C167 D167 G167 H167 I167 J167 K167 L167 The Board of Directors is not obliged to inform the General Meeting Committees of the Board of Directors The regulations provide for Committees which are Optional B172 Compulsory Purpose and denomination of the Committees: Committees set up as a priority, i.e., Audit Committee, Nominations Committee, Remuneration Committee: G176 H176 For each Committee, if different, please describe: C177 G177 H177 its composition (non-executive Directors, external Directors, etc.): Method of appointment: C180 G180 H180 Scope of the power of Committees: Powers delegated by the Board of Directors H182 No delegation of power (may only issue ordinary recommendations) - Degree of flexibility granted (possibility of creating a single Committee to fulfil more duties, etc.) The regulations do not provide for Committees Please describe, on a separate sheet, how far current national legislation in your country complies with the European Commission's draft recommendation on the role of non-executive or Supervisory Directors and the committees of the Board of Directors or Supervisory Board, and more particularly Annex 1 on committees of the (Supervisory) Board: size; composition; authority; available resources; attendance at committee meetings; transparency; etc. E188 J188 External Directors External Directors, sometimes referred to as "independent Directors", are people chosen for their skills who have no connection to the mutual insurance company, except perhaps in their capacity as member-policyholders. The regulations provide for external Directors G193 Such Board members are necessarily member-policyholders Such Board members are not necessarily member-policyholders These Board members cannot be member-policyholders The number of such Board members is freely decided by the SAM The number of such Board members is limited by the regulations L198 The regulations do not provide for external Board members C200 G200

19 Germany Belgium Denmark Spain Finland France UK Hungary Italy Netherlands Sweden Independence of Board members & conflicts of interest The regulations provide for a special procedure (i.e., authorisation by the Board of E205 J205 Directors and approval by the General Meeting) for agreements concluded between the Mutual insurance company and a Board member containing ordinary conditions for agreements concluded between the Mutual insurance company and a Board member containing extraordinary conditions or for other conflicts of interest G208 There is no special procedure for agreements concluded between a Mutual insurance company and a Board member or for other conflicts of interest Independence of Board members and employee status, in terms of regulations The Board members may not be employees of the SAM The Board members may be employees of the SAM B216 G216 J216 The number of employee/ Board members is freely decided by the SAM The number of employee/ Board members is limited by the regulations The Managing Director may be a Board member C219 The Managing Director may not be a Board member Compensation of Board members According to the regulations: Board members are not compensated/reimbursed and fulfil their duties free of charge Board members may only be compensated/reimbursed: they may not earn anything Board members may be remunerated: they may profit from their duties G226 Board members may be compensated/reimbursed and remunerated Conditions governing the compensation/reimbursement or remuneration Compensation/reimbursement or remuneration is defined freely Compensation/reimbursement or remuneration is subject to the following legal conditions: B230 D230 E230 G230 H230 Managing Director Tasks & powers of the Managing Director H233 The main tasks and powers of the Managing Director, according to the regulations, are as follows C234 D234 E234 F234 G234 I234 K234 Liability of the Managing Director The regulations provide for the possible liability of the Managing Director This liability is: Civil Criminal Civil and criminal The regulations do not provide for the possible liability of the Managing Director

20 Germany Belgium Denmark Spain Finland France UK Hungary Italy Netherlands Sweden Status of the Managing Director The Managing Director is an employee of the SAM The Managing Director is not an employee of the SAM The Managing Director may be an employee of the SAM or not Remuneration of the Managing Director Determination of the remuneration The setting of the remuneration of the Managing Director is governed as follows: C254 D254 G254 The Managing Director's amount of remuneration is freely set in his/her employment contract G255 Informing the General Meeting about the remuneration The regulations require that the General Meeting be informed about the Managing Director's remuneration The regulations do not require that the General Meeting be informed about the Managing C259 Director's remuneration General Meeting Adding questions to the agenda of a General Meeting The regulations provide for the possibility for member-policyholders to add questions to the agenda of the General Meeting Under the following conditions: B264 D264 E264 F264 G264 I264 K264 L264 Without any special conditions The regulations do not provide for the possibility for member-policyholders to add questions to the agenda of the General Meeting The regulations oblige the General Meeting to answer The regulations do not oblige the General Meeting to answer E268 Questions to the Board of Directors The regulations allow member-policyholders to submit questions in writing to the Board of Directors D271 G271 The regulations do not allow member-policyholders to submit questions in writing to the Board of Directors Annual report of the Board of Directors The regulations define the content of the report J275 The regulations do not contain any indications concerning the content of the report Voting rights The regulations define the voting rights as: "one man, one vote" G279 The regulations define other conditions which are as follows D280 F280 H280 J280 The regulations do not define any conditions

21 Germany Belgium Denmark Spain Finland France UK Hungary Italy Netherlands Sweden Electronic voting (by , remotely) The regulations provide for the possibility of remote voting The regulations define the following conditions on remote voting: G287 The regulations do not contain any indications on remote voting Power of representation The regulations limit the maximum number of powers which can be entrusted to a F291 G291 member-policyholder L291 The regulations do not contain any indications on this point C292 Required quorum for an Ordinary General Meeting The regulations define the required quorum The quorum is as follows: D296 E296 G296 J296 The regulations do not contain any indications about the required quorum H297 Required quorum for an Extraordinary General Meeting The regulations define the required quorum The quorum is as follows: D301 G301 J301 The regulations do not contain any indications about the required quorum C302 H302

22 Cell: C55 Comment: Belgium : Company law does not concern SAMs. However the principles can be applied via the bylaws for example Cell: Comment: E55 Spain: Mutuals are governed: 1) By the law and regulation on insurance companies (only 10 articles for SAM). 2) by the will of members as laid down in the bylaws. 3) by the law on joint-stock companies, as far as it can be used. For governance, there are only dispositions for listed companies. Cell: J55 Comment: Italy : If the SAM are not directly affected by the legislation on listed joint-stock companies, the Supervisory Authority often applies standards from this legislation to all insurance companies, inlcuding SAMs. Example: professionalism of board members and Auditors Cell: G74 Comment: France Modifications foreseen by the supervisory authority Cell: C87 Comment: Belgium: Are appointed by the GM upon proposal of the Board of Directors Cell: D87 Comment: Denmark : The Board of Directors shall be elected by the General Meeting. Cell: E87 Comment: Spain: By the GM and between GMs by the Board of Directors under the condition that they are ratified by the GM afterwards Cell: G87 Board members are chosen from member-policyholders who are up-to-date witht their premiums (R ), elected by the GM, upon proposal of the Board of Directors. Cooptation is possible, if a seat becomes vacant following death or resignation. This cooptation must be ratified at a following GM. Cell: H87 Comment: UK: 1) Co-option by Board of directors, with mandatory resignation at next General Meeting, or 2) Election at General Meeting Cell: J87 Comment: Italy: By the GM. Cooptation is possible for the replacement of a Board member during the mandate but the nomination must be ratified by the next GM Cell: C88 Comment: Belgium :

23 The MD is the Chairman of the management committee and is appointed by the Board of Directors Cell: D88 Comment: Denmark : The Board of Directors shall appoint a management board consisting of one to three members. Cell: E88 Comment: Spain : No legislative disposition. The MD is a company emploee subject to the employment code Cell: G88 The Managing Director is nominated by the Board of Directors (R ) Cell: H88 Comment: UK: Same as other Directors Cell: J88 Comment: Italy : By the Board of directors Cell: G91 The members of the Management Committee are nominated by the Supervisory Board (R ,I) Cell: I91 Comment: Hungary: Members are elected by General Meeting. Conditions to fulfil are prescribed in insurance act.supervisory authority approval is needed. Conditions : 5 years management practice, 3-4 years post secondary school diploma, goodwill. Cell: B92 Comment: Germany: nominated by the General Meeting Cell: G92 The members of the Supervisory Board chosen from member-policyholders who are up to date with their premiums (R ), are elected by the GM. Cell: I92 Comment: Hungary: For the chairman : the same conditions as for Management Committee members. For other members : management practice and degree not needed. Managing directors : appointed by General Meeting, conditions are the same as for Management Committe members Cell: F94 Comment: Finland: The General Meeting elects the Supervisory Committee, the Supervisory Committee elects the Board of Directors, and the Board of Directors elects the Managing Director.

24 Cell: K94 Comment: Netherlands: Board is compulsory Management is not Cell: H98 Comment: UK: All member-policyholders (only those holding with profits policies) Cell: K110 Comment: Netherlands: There are two types of mutual insurance companies: the mutuals and the joint-stock mutuals (onderlinge op aandelen). For reasons of solvency, this latter form is sometimes used when there is a need for capital Cell: B117 Comment: Germany: Mutual Insurance Companies in Germany are exclusively managed by a management committee & supervisory board. Cell: B118 Comment: Germany: The supervisory Board must meet not less than twice a year according to regulations on unlisted companies which is generally considered to apply to mutuals Cell: C118 Comment: Belgium: 3 times per year minimum, according to the bylaws Cell: H125 Comment: UK: 70 Cell: B126 Comment: Germany: but the Kodex on governance for listed companies is generally applied as good governance Cell: C126 Comment: Belgium: But 70 according to the bylaws Cell: G126 The regulations do not impose an age limit unless there is no indication in the bylaws: the number of Board members over 70 may not represent more than 1/3 (R ) Cell: K126 Comment: Netherlands: This is regarded as being discriminatory Cell: H136 Comment: UK: But this would be contrary to good Corporate Governance standards.

25 Cell: I136 Comment: Hungary: There are no rules Cell: B140 Comment: Germany: The Supervisory Board is responsible for overall supervision but not for operational decisions which remain the responsibility of the Management Committee. Cell: C140 Comment: Belgium: Wide powers to carry out all acts necessary or useful in attaining the corporate aim and everything which is not reserved for the GM by law, regulations or bylaws. Internal regulation. General company policy. Effective monitoring of the management of the management committee. Delegation of power. Report to the GM. Determine the powers of the management committee and their compensation. Cell: D140 Comment: Denmark: The board of directors shall : 1) ensure proper organisation of the business of the company 2) consider whether the financial position of the company is sound in the context of the company's operations 3) ensure that the book-keeping and asset management is controlled in a satisfactory manner 4) prepare written guidelines on the most significant areas of activity of the company, specifying the distribution of responsabilities between the board of directors and the board of management. Cell: E140 Comment: Spain: All management powers are held by the Board which may delegate but only within the limits of the law Cell: F140 Comment: Finland: The board is responsable for the proper administration and operation of the company. Cell: G140 1) Fixes the direction of the SAM's activitiy 2) Follows up on the implementation of the above 3) Nomination and monitoring of the MD (R et R ) Cell: H140 Comment: UK: Exercise control of the Government, direction and supervision of the Company's business and affairs. Cell: J140 Comment: Italy: Management of the company All powers, except those reserved for the GM (e.g., approval of the balance sheet) Cell: K140 Comment: Netherlands:

26 To give direction to the SAM Cell: B142 Comment: Germany: This applies to the Supervisory Board and the Management Committee. Cell: B158 Comment: Germany: No general legal requirement. Cell: C158 Comment: Belgium: None (except via the Lippens code of good governance) Cell: E158 Comment: Spain : Law or economics degree (5 years), or experience as Board member of at least 5 years in financial companies Cell: F158 Comment: Finland: No requirements. Cell: G158 No particular titles or experience required by the regulations: the competences and experience necessary are foreseen in general terms (L et L.322-2). However the conditions as regards respectability (honour) are very precisely described. Cell: H158 Comment: UK: None Cell: I158 Comment: Hungary: High school diploma (3-4 years post secondary school) Cell: K158 Comment: Netherlands: Not described Cell: B159 Comment: Germany: The Management Board Members have to be of good repute and professionally suitable. These conditions are deemed to be fulfilled if a member has worked in a similar position for 3 years. Cell: C159 Comment: Belgium: None (except via the Lippens code of good governance) Cell: D159

27 Comment: Denmark: Danish Financial Business Act, section 64 :" A member of the board of directors and the board of management of a financial undertaking shall have adequate experience in carrying out the duties and responsabilities of such a position". Cell: F159 Comment: Finland: Must have a good reputation and have such general knowledge of insurance that is necessary for the size and volume of the company (fit and proper declarations) Cell: G159 The Committee of Insurance Companies - composed of the Director of the Treasury and the President of the Supervisory Authority - give or refuse the administartive licence with particular regard for the "respectability, competence of the persons responsible for running the company", whether a joint-stock company or a SAM (L ). Moreover, those called upon to "manage or administrate an insurance company must have the competence and experience necessary for their position" (L.322-2) Cell: H159 Comment: UK: None Cell: I159 Comment: Hungary: 5 years management experience Cell: J159 Comment: Italy: 3 years as a Board member (or as a director, or as an auditor) in a bank, financial company or insurer or: law or economics university professor or: entrepreneur or director of a company of "adequate size", or: liberal profession connected to a financial or insurance activity (e.g., lawyer or tax specialist). Cell: K159 Comment: Netherlands: Not described Cell: B163 Comment: Germany: The Management Committee must inform the GM Cell: B167 Comment: Germany: the year's business activities Cell: C167 Comment: Belgium: All strategic activities, state of the market, portfolio... Cell: D167 Comment: Denmark : Insurance companies shall prepare an annual report, which as a minimum shall comprise a management endorsement, a balance sheet, an income statement, notes, including a statement of accounting policies and a statement

28 detailing the movements in own funds, as well as a management review. Cell: G167 About the work of the Board, the internal control procedures, possible limitations to the powers of the MD (R of the insurance code), the remuneration and compensation paid to each representative (R of the insurance code), the agreements SAM/Board members or employed management (R of the insurance code). Cell: H167 Comment: UK: The Board of Directors must answer questions from members on any relevant topic but has no positive duty to inform the meeting. Cell: I167 Comment: Hungary: balance sheet, P&L account Cell: J167 Comment: Italy: About the general management Cell: K167 Comment: Netherlands: Financial results Cell: L167 Comment: Sweden: The Board is obliged to provide financial information to the General Meeting in the form of an audited Annual report. Furthermore the Board and the Managing director is obliged to provide the General Meeting with such information the General Meeting is asking for that might have an impact on the judging of the Annual report and the company s financial position, if such information can be provided without essential detriment for the company. Cell: B172 Comment: Germany: Optional for the Supervisory Board; none for the Management Committee Cell: G176 The regulations do not indicate which committees should be set up as a priority but in practice audit, remuneration and nomination committees are those most commonly created. Cell: H176 Comment: UK: Audit, nominations, remuneration, are required by best practice in Corporate Governance. Cell: C177 Comment: Belgium: Audit committtee: exeutive, non-executive, external Board members Remuneration committtee: non-executive Board members. Cell: G177

29 Composition not foreseen by the regulations Cell: H177 Comment: UK: Investment Committee (Only non-executive) Cell: C180 Comment: Belgium: Upon proposal of the Board of Directors Cell: G180 The composition of committees is fixed by the Board of Directors (R ) Cell: H180 Comment: UK: By Board of Directors Cell: H182 Comment: UK: No limits on potential powers of committees Cell: E188 Comment: Spain: Only listed companies are obliged to have an audit committee. However, many non-listed companies have set up audit, remuneration, gouernance committees Among mutuals, only a few (the largest) have voluntarily set up these committees and prepare a report on governance for the GM. See the bylaws and codes of Mutua Madrilenã Cell: J188 Comment: Italy: There are no regulations about this Cell: G193 In specialized mutuals (R ) Cell: L198 Comment: Sweden: Mutual companies and stock companies that are not allowed to distribute profit, the majority of the Board members must be persons that are not employed by the company or employed or Board members in another company in the same legal group. Cell: C200 Comment: Belgium: Starting from the principle that the company code does not apply to mutuals, for fear of a legal vacuum, we apply it by analogy. 1) article of the company code provides for the existence of «independent» Board members. They are able to give written advice to the Board of Directors when the company takes decisions which (in short) modify the relations between subsidiaries within a group. Article 524 fixes the criteria for independent Board members; no family ties, no business ties, not have been a board member, a member of the management committee,.. in the previous two years. 2) Besides the company code, Belgium has the Lippens code (2004) for listed companies and the Buysse code (2005) for family, non listed and small companies. (Lippens and Buysse, after their coordinators). These codes are not compulsory, least of all legally. Their application is strongly recommended and it is likely that a judge, in the absence of a legal text, would apply it in the case of conflict. They are recognised jurisprudence and doctrine.

30 The Lippens code fixes at 50% the minimum number of Board members who are non-executive and from these, ideally 3 independent Board members, with more or less the same criteria as under the company code. The Buysse code has only one principle, that the Board members be as independent as possible (article ). The Buysse code also mentions external Board members who are generally independent Board members. Cell: G200 In non-specialized mutuals. However, a certain number of SAMs do use external directors, i.e. persons with competence in financial and accounting fields. Cell: E205 Comment: Spain: In cases of conflicts of interest, the Board member concerned informs the Board and does not take part in the vote.cases of conflicts of interest are mentioned in the annual report on governance, only for listed companies. Cell: J205 Comment: Italy: A procedure exists, not for prior authorisation by the Board with ratification by the GM, but for a declaration by the Board member concerned: he/she must inform the other Board members and auditors of the existence of a personal interest and specify the nature, terms, origin and extent (article of the civil code applicable to joint-stock companies and SAM) Cell: G208 Insurance contracts subscribed by Board members and their close family (R ,IV). Cell: B216 Comment: Germany: Management Committee members are not employees according to German law but are paid by the company. A certain number of Supervisory Board members must be employees in companies with more than 500 employees Cell: G216 Derogation to the principle of the incompatibility of the positions of Board member/employee Cell: J216 Comment: Italy: There are no salaried Board members Cell: C219 Comment: Belgium: The MD may be a Board member = President of the management commmittee Cell: G226 For the chairman of the Board of Directors and under certain conditions. Cell: B230 Comment: Germany: Compensation of the members of the management Committee is determined by the supervisory board at an appropriate amount based on a performance and considering any payments by group companies Cell: D230 Comment: Denmark: Danish Public Companies Act, Section 64 / 3members of the board of directors and of the management board may be paid a fixed remuneration as well as emoluments. The remuneration shall not exceed the amount which is considered to be normal in view of the nature of