Combined Code/Board of Directors
Overview, basis of reporting and the Combined Code
The Company is incorporated in Bermuda and as a result is not bound by the Combined Code on Corporate Governance. The Company does however aim to apply best practice in corporate governance and complies not only with all Bermuda statutory requirements but also strives to comply voluntarily with the Combined Code. During 2006, the Company did in fact comply with the Code other than with respect to the minor variances described below. The Company’s auditors have reviewed the Company’s compliance with the Combined Code to the extent required by the UK Financial Services Authority for review by auditors of UK-listed companies.
Board of Directors
Catlin Group Limited Board of Directors Biographical Information
The Board of Directors comprises a Non-Executive Chairman, two Executive Directors, eight Independent Non-Executive Directors (‘Independent Directors’), and one Non-Executive Director originally appointed by specific shareholders (‘Non-Executive Director’).
Michael Eisenson, Non-Executive Director, was originally appointed (in 2002) to the Board by a shareholder, Charlesbank. He was re-elected to the Board by shareholders generally at the 2005 Annual General Meeting.
Independence of Directors
The Board considers Alan Bossin, Michael Crall, Jean Claude Damerval, Kenneth Goldstein, Michael Harper, Richard Haverland, Michael Hepher and Alton Irby to be independent within the meaning of the Combined Code. None of them has any executive or other role or relationship with the Company or management that would affect his objectivity, and all have proven to be independent in character and judgment. Mr Bossin is counsel at the Bermudian law firm Appleby Hunter Bailhache, which acts as an advisor to the Company on Bermuda law, but the Board believes that the relationship between the Company and Appleby (including the level of fees) is not of sufficient significance to any of the Company, Appleby or Mr Bossin to compromise his independence.
The Company does not comply with the Combined Code in that certain Directors’ appointment letters do not specify a minimum time commitment. The affected individuals have been Directors for at least two years, and the Board is satisfied that they devote sufficient time and attention to their responsibilities.
Board performance evaluation
During 2006 the Board undertook a formal self-appraisal, completed the implementation of improvements adopted from previous performance evaluations and reviewed on an ongoing basis the quality, content and frequency of information being provided to it by the Company. These processes focused on the roles and responsibilities of the Board and its committees, Board procedures and the information provided to the Board. The principal steps taken as a result included clarifying the respective authorities of the Board and Audit Committee, strengthening company secretarial support, and numerous improvements in reporting to the Board including the introduction of new reports designed to monitor key performance indicators and progress against the business plan.
During 2006, the Audit Committee retained a specialist corporate governance firm to review its terms of reference, the information provided to it and its general effectiveness. As a result, various changes to its terms of reference and working practices have been adopted and implemented.
Other performance reviews undertaken during 2006 include:
- A Board review of the effectiveness of all Board committees alongside self-appraisals by each committee (or, in the case of the Audit Committee, an external review);
- Performance appraisals of individual directors; and
- Meetings between the Senior Independent Director and the Independent and Non-Executive Directors, in the absence of the Chairman, to assess the Chairman’s effectiveness.
The reviews were conducted through a combination of meetings and appraisal forms, and recommendations arising therefrom were implemented during 2006. A similar process is being followed early in 2007.
Responsibilities and procedures
The Board is responsible for the leadership, strategic direction, prudential control and long-term performance of the Company. It has adopted a schedule of matters reserved to the Board for decision. These include the adoption of strategic or business plans, major transactions, investment strategy, major treasury or financial decisions, significant borrowing, capital structure, issuance of equity or debt securities, approval of public financial statements, and the appointment of selected members of senior management.
The Board is responsible for ensuring the maintenance of proper accounting records which disclose with reasonable accuracy the financial position of the Company. It is required to ensure that the financial statements present a fair view for each financial period.
The Board has delegated to the Chief Executive Officer and to the Group Executive Committee (comprising the Executive Directors and other senior executives) authority to execute Board strategy and to manage the Company on a day to day basis, including approval of financial commitments below the levels requiring Board approval.
The Board has delegated authority to the Nomination, Compensation and Audit Committees in accordance with governance best practice.
The level of delegation is defined in terms of reference and described in the reports that follow. The Board has also delegated certain authority over the Company’s investments to an Investment Committee of the Board.
Management regularly provides to the Board information necessary to enable the Board to perform its duties; that information is provided principally in standard monthly reports covering key performance indicators and in comprehensive meeting papers. Further information is obtained by the Board from the Executive Directors and from other senior executives as the Board, particularly the Independent and Non-Executive Directors, considers appropriate. The Board and its committees also have unrestricted access to the Company’s professional advisors and are authorised to take independent professional advice at the Company’s expense.
The Board is regularly updated on regulatory and compliance developments including Board governance matters. Additional briefing materials are available to any Director upon request. The Board is able to discuss the business with employees at all levels.
The Board has adopted a formal division of responsibilities between the Chairman, who is responsible for running the Board and related matters such as Board induction and evaluation, and the Chief Executive, who is responsible for the day to day management of the business.
Upon their appointments, new Directors receive a detailed induction programme which may include written materials and presentations from executives responsible for key areas of the business.
Relations with shareholders
The Company is committed to ongoing dialogue with its shareholders. Presentations to analysts and institutional investors are made by senior management, including the Executive Directors, following the half-year and full-year results announcements and at other times during the year. Other senior executives are also available to meet analysts and investors.
With the assistance of its corporate brokers and investor relations advisors, the Company seeks feedback from investors following major presentations. This feedback is communicated to the Board. The Chairman, Non-Executive Directors and Independent Directors are also available to meet major shareholders.
Shareholders are encouraged to attend the Annual General Meeting.