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These principles apply to The Standard Steamship Owners’ Mutual War Risks Association Limited. Definitions are the same as are contained in the Association’s Memorandum and Articles of Association, and the Rules.
Board’s conduct of affairs
There should be an effective Board to lead and control the company
The principal functions of the Board are to:
• Govern and direct the Club’s affairs
• Set overall policy and decide upon general strategic direction
• Set investment strategy
• Oversee risk management and compliance issues
• Direct the Managers and consider their reports on all significant aspects of the Club’s affairs
A formal management agreement between the Club and the Managers sets out their respective obligations and responsibilities.
The Board normally meets once a year.
Directors are provided with a manual to advise them on Club matters generally and to inform and assist them in the discharge of their duties.
Board composition and guidance
There should be a strong and independent element on the Board
The Directors are non-executive, insofar as they are not involved in day-to-day executive management and exercise independent judgement in respect of the Club’s affairs.
The Directors are, by virtue of the Memorandum and Articles of Association, comprised
of owners or managers of, or a director of or employed in an executive capacity by a corporation which is the owner, or manager of, a ship entered in the |Association.
The Board has the benefit of independent expert insurance sector guidance from its Managers, Charles Taylor and Co Limited and personnel within the Managers’ group, and their parent, Charles Taylor Consulting plc.
Chairman and Chief Executive Officer
There should be clear division of responsibilities
The Chairman of the Club is non-executive.
The Club does not have direct employees and day-to-day executive management is contracted to the managers who carry out executive responsibilities in accordance with the obligations and responsibilities set out in the management agreement, and who corporately fulfil the role of Chief Executive.
Board membership
There should be a formal and transparent process for the appointment of new Directors to the Board.
The company does not have a formal nomination committee. This role is undertaken by the Chairman who consults with the Managers and the Board. In a mutual where the Board is normally made up of Directors drawn from the Club’s shipowning membership, the Board considers that a formal nomination committee is not required.
One third of the Directors must retire from office by rotation at each annual general meeting. Directors must retire from the Board if they no longer qualify for Board membership, for example if they cease to be an owner of a ship entered in the Club or to be a director or executive employee of a member of the Club.
Board performance
Formal assessment of the effectiveness of the Board
The Club is a mutual insurance organisation with Board members elected from the totality of the membership. There is no formal assessment of its effectiveness but the Board reports to and is accountable to the members.
Access to information
Board members should have complete, adequate and timely information
At each Board meeting the Directors are provided with reports on the key financial indicators for the Club and on underwriting, claims, investment and general policy issues.
The Directors are provided with board meeting papers in sufficient time before the relevant board meeting to enable them to have adequate time to understand relevant issues and to focus upon particular decisions that need to be made.
The Managers are generally present at every Board meeting to provide additional briefings and explanations as required.
The Managers and Directors may also have informal contacts between board meetings to discuss issues arising and general matters.
Remuneration matters
There should be procedures for remuneration, adequacy and transparency
The Club does not have a formal remuneration committee. The Directors receive fees agreed by the whole Club membership from time to time in general meeting, appropriate to their non-executive status.
The executive and administrative functions are undertaken by the Managers who receive a management fee for their services which is agreed by the Board annually.
Accountability and audit
The Board should present a balanced and understandable assessment of the Company’s performance, position and prospects
The Board issues an annual report which sets out a summary of the important issues discussed by it throughout the year, the industry environment and the strategy followed by the Board, together with financial statements which give a full explanation of the Club’s financial position.
The Club’s accounts are audited by independent registered auditors and published to the members. They are also available on the Club’s website.
Internal controls
There should be a sound system of internal controls and independent internal audit function
The Managers have comprehensive internal control procedures covering financial, operating and compliance areas. They report on risk and internal control issues to the Board at each meeting.
All material risk incidents are reported to the Board.
Regular audits of company processes are carried out by the Managers’ internal audit department, which is independent of the personnel involved with the management of the Club. The Board has direct access to the audit department’s Director of Internal Controls.
Communications with members
There should be effective and fair communication and participation
Important decisions and matters of general interest to members from each Board meeting are reported to the members by circular letter or by bulletin.
The Managers publish regular bulletins dealing with all important Club and industry issues, including safety and loss prevention, claims and legal matters. These are sent to the members and are also published on the Club’s website.
Club circular letters dealing with policy issues and the extent of, or proposed changes to the cover provided, are sent to every member.
The Managers maintain regular contact with members through visits, handling of claims, underwriting discussions and general advisory assistance.
Executive committee
The Board may wish to establish an executive committee
The Board does not believe that it is necessary to establish an executive committee in the context of the structure of the Club where day-to-day management responsibilities are undertaken by the Managers in accordance with the terms of the management agreement.
The size of the Board enables it to review the Club’s financial position and financial statements at relevant meetings. It does not consider it necessary to appoint a formal audit committee.
Risk management
There should be an adequate and comprehensive process for risk management
The Managers have a comprehensive risk management system to enable the Board to identify and assess the nature and potential impact of risks faced by the business, and which provides an effective method of monitoring and controlling such risks and reporting on them to the Board.
The Managers continuously assess business risks and the effectiveness of control processes in place, which are also monitored by its internal audit department.
A report on risk management processes is made when appropriate.
Related party transactions
Related party transactions should be undertaken at arm’s length
In a mutual organisation the members are also the insuring underwriters. Negotiations relating to any matter concerning members or directors in their capacity as members are conducted at arm’s length.
Directors do not participate in board discussions on specific matters concerning them as members.
There are insignificant other related party transactions.
Business values
The business should adopt appropriate standards for the conduct of its affairs
The Club’s Managers have a code of business values in place to ensure that their work on behalf of the Club is carried out with integrity and fairness.
The Managers have in place procedures to prevent the Club being involved unwittingly in money laundering. They also have in place whistle-blowing procedures to ensure that members of their staff can raise matters of concern confidentially so that they may be appropriately investigated.
Business continuity
There should be measures in place to allow the business to continue to conduct its affairs in the event of interruption to its normal operations
The Managers have full business continuity contingency plans, which they regularly test, to ensure that the Club can continue to operate in the event of a serious incident, such as, for example, an outbreak of avian flu or a terrorist event. Business records and documentation are stored electronically, are regularly backed-up and are accessible from a number of different locations.
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