TRYGG-HANSA FÖRSÄKRINGSAKTIEBOLAG (publ) EMPLOYEE REMUNERATION 2011

Transcription

1 TRYGG-HANSA FÖRSÄKRINGSAKTIEBOLAG (publ) EMPLOYEE REMUNERATION 2011

2 REPORT ON REMUNERATION AT TRYGG-HANSA FÖRSÄKRINGSAKTIEBOLAG (publ) Rules on remuneration The Swedish Financial Supervisory Authority has issued general guidelines regarding remuneration policies in insurance undertakings, exchanges, clearing organisations and institutions for the issuance of electronic money (FFFS 2011:2). These general guidelines, which took effect on 1 March 2011, supersede the previous general guidelines regarding remuneration policies in insurance undertakings, exchanges, clearing organisations and institutions for the issuance of electronic money (FFFS 2009:). The general guidelines provide guidance on how companies are to govern, design and report on their remuneration programmes. For who could have an influence on the company's risk level ("Risk-takers"), at least 60% of their variable remuneration should be deferred for at least three years. Background Trygg-Hansa Försäkrings AB (publ) ("Trygg-Hansa" or "the Company") is an insurance company that works under the supervision of the Swedish Financial Supervisory Authority. In 2011 Trygg-Hansa and subsidiaries conducted general insurance business primarily in Sweden. Operations are conducted in the Private and Corporate business areas and pertain primarily to sales of general insurance to private persons, companies and public sector entities. Trygg-Hansa is part of RSA Group plc ("the RSA Group"), which is listed on the London Stock Exchange. Remuneration policy The Board of Directors of Trygg-Hansa adopted an updated remuneration policy ("the Remuneration Policy" or "the Policy") on 31 October 2011, which applies for Trygg-Hansa and its subsidiaries. The aim of the Remuneration Policy is to create an overarching set of rules for how remuneration programmes in Trygg-Hansa shall be designed. The policy covers all of Trygg-Hansa. Decision-making process The Remuneration Policy and remuneration programmes that are subject to the Policy are decided on by Trygg- Hansa's board of directors. Trygg-Hansa's board of directors also decides about remuneration for senior executives. A specially appointed committee of Trygg-Hansa's board is responsible for drafting work for important remuneration decisions as well as for decisions on measures for following up application of the Remuneration Policy. Principles for the design of variable remuneration programmes The Remuneration Policy specifies that Trygg-Hansa shall take into account how the Company's variable remuneration affects the Company's earnings over the long term. When Trygg-Hansa sets remuneration criteria, consideration is given to the fact that the Company's earnings may subsequently be affected by current and future risks. When measuring earnings performance, Trygg-Hansa shall take into account the actual costs for maintaining the necessary capital and liquidity for the operations that the performance measurement pertains to. Variable remuneration programmes shall be based on the performance of the individual as well as of the earnings of pertinent profit centre, Trygg-Hansa's total earnings, and in certain cases earnings from other units within the RSA Group. When Trygg-Hansa decides on remuneration for an individual employee, consideration shall be given to qualitative criteria, such as that the employee adheres to internal rules and procedures and respects the Company's rules on interactions with customers and investors. Trygg-Hansa strives to maintain a suitable balance between fixed and variable remuneration. Trygg-Hansa shall also take into account the size and cost of the extra capital that is required to cover the risks that affect earnings for the period, the size of and cost of its liquidity risk, and the possibility that expectations for future revenues will not be realised. Variable remuneration can be set at nil.

3 Report on variable remuneration programmes in 2011 Trygg-Hansa has a number of variable remuneration programmes that reward over the short and long term. Since 2006, Trygg-Hansa have been included in a short-term bonus programme ("the Bonus Programme"), which is revised yearly. As a main principle, all of Trygg-Hansa are included in the Bonus Programme. Employees in control functions are not included in the Bonus Programme. The aim of the Bonus Programme is to support the Company's work with management by objective, to reward good work performance, and to attract and retain talented. The bonus outcome for individual is dependent on the Company's financial performance and performance in relation to individually set performance targets. Financial performance is coupled to the COR 1 and net written premium. The financial performance targets have been chosen to create a coupling to the Company's value creation. In evaluations of individual performance targets, consideration shall be given to qualitative criteria such as adherence to internal rules and the degree to which the employee works in accordance with the Company's values. The weighting in the Bonus Programme between the Company's financial performance and the employee's individual performance targets is dependent on the position the employee has in the organisation. Company management, managers and specialists at certain levels are eligible to participate in the RSA Group Long-Term Incentive Plan (LTIP). The aim of the LTIP is to stimulate ' focus on and interest in the long-term goals of the RSA Group. The programme's design provides opportunities for various types of share grants. Most of these share elements are conditional upon performance criteria. The LTIP entails grants of shares in the RSA Group with a three-year lock-in or measurement period. Grants of Deferred Shares are made yearly and are coupled to the Bonus Programme. The RSA Group's Remuneration Committee may recommend an award of Compulsory Deferred Shares and Voluntarily Deferred Shares. Grants of Compulsory Deferred Shares are normally limited to 33% of the outcome of the Bonus Programme and entail share grants. Compulsory Deferred Shares are coupled to the participant's employment in the RSA Group during a three-year lock-in period. Voluntarily Deferred Shares are purchased by participants from their net bonus paid, with a normal limitation to a maximum of 33% of the net bonus. In addition to Deferred Shares, a grant of Performance Shares may be made with a three-year lock-in period. Deferred Shares entail a grant of matching shares if certain financial performance targets for the RSA Group are met. The financial performance targets consist of a return on equity target and relative total return target (with performance measured against a benchmark group of other European insurance companies over a three-year period). Other in managerial positions or senior specialist roles are eligible to receive grants of Restricted Shares. Restricted Shares are granted on the basis of the individual's performance and potential. Restricted Shares are not tied to Group-based performance targets. The remuneration system's effect on risk The foremost risk in the remuneration system is coupled to the variable remuneration. Trygg-Hansa strives to ensure that the total remuneration is well balanced with respect to fixed and variable components, and that the variable remuneration cannot lead to excessive risk-taking. Variable remuneration is therefore limited to a predetermined amount or grant in relation to the employee's base salary. As a rule, the share of variable remuneration in relation to fixed remuneration increases with the employee's position level in the organisation. The maximum variable remuneration for Risk-takers is normally 160% of their fixed remuneration. The main principle for Risk-takers, however, is that the variable remuneration should normally not exceed 100% of their fixed remuneration. To avoid conflicts of interest, in control functions are excluded from receiving variable salary. For with variable remuneration, a condition for payment and/or awards of variable remuneration is that the employee has not overstepped the risk mandate set by the Board. To limit risks coupled to the remuneration system, a minimum of 60% of variable remuneration shall be deferred for at least three years for Risk-takers. Variable remuneration that has been deferred can be withheld entirely or 1 Combined operating ratio.

4 in part if it is subsequently learned that the employee, profit centre or Trygg-Hansa failed to meet the result criteria. Trygg-Hansa shall also be able to refrain from paying out deferred, variable remuneration if its position were to significantly deteriorate especially if Trygg-Hansa can no longer be assumed to be able to continue with its operations. A complete description of the Company's analysis of the remuneration system's effect on risk is posted on the Company's website. To ensure that Trygg-Hansa complies with the Remuneration Policy, each year Internal Audit shall conduct an independent review to determine if the Company's remuneration is in accordance with the Remuneration Policy. Internal Audit shall report the result of its review to the Board of Directors, not later than in connection with the adoption of the annual report. Identification of Risk-takers Based on the Company's risks, 2 Trygg-Hansa has identified the category of in the Company referred to as Risk-takers. The Risk-taker category consists of management, other Risk-takers and in control functions. For the category "other Risk-takers", the Company has performed a risk test of all to identify who exercise significant influence over the Company's risk level.. Through its risk management process and the adoption of set limits, the Company has limited the risk influence from other sufficiently well for these to be considered to not be able to have a significant influence on the Company's risk level. The category "other Risk-takers" consists of local chief actuaries and managers employed by the Company with special underwriting responsibility. The Chief Actuary of Trygg-Hansa has a central function for pricing and following up risks in the business and is therefore considered to exercise significant influence on the risk level in the Company. Employees with managerial responsibility in other areas are not considered to have such risk influence that they can be considered to exercise significant influence on the Company's risk level. The Company's control functions consist of Internal Control 3 and Internal Audit. Trygg-Hansa has a number of senior executives and other Risk-takers who have their employment with Codan A/S and Codan Forsikring A/S ( Codan ), entities part of RSA Group. These include Trygg-Hansa's CEO (employed dually by Codan A/S and Trygg-Hansa) and other members of the Group Management, as well as the Chief Investment Officer and managers with special responsibility as signatories and/or underwriting responsibility. If any member of the Company Management or other Risk-taker with employment in Codan were to be employed by Trygg-Hansa, he/she would be regarded as a Risk-taker in the Company. The Remuneration Policy, which defines the Company's Risk-takers, is reviewed on a regular basis to reconsider the Risk-taker definition and identify any possible new Risk-takers. Trygg-Hansa had the following Risk-takers in Executive Other Risk-takers Control functions CEO Local chief actuaries Internal Control/ CFO (2) Pricing and UW Director PL Internal Audit (18) Director (Private) UW Director SE Director Operations 2 For a description of the Company's risks, see the Annual Report. 3 Enterprise Risk Control, RR&C and Financial Risk Control.

5 Disclosure of specific remuneration data FFFS 2011:2 reference Unit Senior executives Employees who can influence the Company's risk level Other (all ) Total remuneration 2011 Expensed amount (SEK m ) No Fixed remuneration 2011 Expensed amount (SEK m) No Variable remuneration earned 2011 Expensed amount (SEK m) No FFFS 2011:2 Unit Total 2011 reference 8a Share of variable remuneration earned: cash Percentage distribution 84 % 8b Share of variable remuneration earned: shares/financial instruments Percentage distribution 16 % 8c Share of variable remuneration earned: other Percentage distribution 0 9 Earned remuneration 2011 (SEK m) Earned remuneration 2011, paid 2011 (SEK m) Earned remuneration 2010 or earlier financial years, paid 2011 (SEK m) 80 9 Earned remuneration 2011 or earlier financial years, adjusted not paid (SEK m) 0 10 Accumulated outstanding deferred remuneration for 2011 (1) (SEK m) Severance pay 2011 Expensed amount (SEK m) Total number of covered No Guaranteed variable remuneration 2011 (2) Expensed amount (SEK m) Total number of covered No Severance pay 2011 (2) Accumulated amount (SEK m) Total number of covered No Maximum individual amount awarded (SEK m) Guaranteed variable remuneration 2011 (2) Accumulated amount (SEK m) Total number of covered No Maximum individual amount awarded (SEK m) Severance pay 2011 Amount paid out (SEK m) Guaranteed variable remuneration 2011 Amount paid out (SEK m) 0. (1) Unused rights only (2) Includes guaranteed variable remuneration in the form of sign-on bonus