Board and Board Committee evaluation.

In 2012, an externally facilitated evaluation of the Board’s performance, the performance of its individual directors and that of its Committees was carried out by KPMG LLP (KPMG) who were chosen following a selection process that considered a range of potential external evaluators. The Board agreed detailed terms of reference for the review and considered the merits of each evaluator against those terms. The Board concluded that KPMG demonstrated the most appropriate skill set.

In particular, the Board believed KPMG’s significant expertise in the areas of Solvency II and RDR would be useful to the evaluation process given that these matters have required significant consideration and input from the Board. KPMG do not currently have any material relationships with the Company, they are not the Company’s auditors, but are on a panel of numerous service providers who may be considered to assist the Company with various projects, from time to time.

The aim of the Board Effectiveness Review was to assess the effectiveness of the Board’s processes, composition and structure in order to identify and implement any actions required to improve effectiveness. In order to best meet this objective, the review focused on five related areas:

  • Board Leadership
  • Board Structure & Composition
  • Oversight of Strategy, Risk and Control
  • Decision Making
  • Development and Culture.

The Board Effectiveness Review process comprised:

  • A desktop assessment of Board papers, Board and management information and other relevant documentation.
  • Meetings with Executive Committee members and other key individuals within the organisation.
  • Case study reviews in order to gain practical insight into the functioning of the governance process.
  • Formal structured interviews with all Board directors focusing on all aspects of the Board’s composition; Board oversight of strategy, risk and controls; decision-making and the roles and performance of the Chairman, the senior independent director, executive directors and other non-executive directors.

The evaluation concluded that the Board was overall effective and recommendations, incorporating feedback from the directors’ interviews, were provided to ensure the Board remained fully effective as Corporate Governance continues to evolve. The Board has considered the recommendations and an update on progress made against some of the key recommendations is set out below.

RECOMMENDATION FROM 2012 BOARD EVALUATION

ACTION TAKEN

Board Considerations

BOARD AGENDAS
Consider and refine the Board agendas to enhance focus on strategic opportunities and growth.

The Board agenda was reviewed and a revised agenda was trialled by the Board. The revised agenda prioritised strategic proposals to allow more time for discussion, debate and challenge. The revised format received positive feedback and has been in place since July 2012.

BOARD PAPERS
Consider improvements to the form and focus of Board papers.

To ensure that all papers submitted to the Board are consistent and focused, a guide to the drafting of Board papers and presenting at the Board has been developed and we have significantly reduced the volume of paper used in Board packs through the introduction of electronic Board papers.

MANAGEMENT INFORMATION
Improving the provision of information to allow more effective scrutiny and challenge.

The Board management information packs have been reviewed and refreshed to highlight progress against key performance indicators, strategic initiatives and risk appetite along with a consolidated business performance dashboard.

Director Considerations

TRAINING
Consider improvements to the format and content of the Board Training Programme.

The Board Training Programme has been tailored to the needs of each director. The programme has been enhanced to include site visits to the various business locations including Kingswood, Hove, France and the Netherlands. The programme also includes regular one-to-one and group training sessions on relevant topics, with recent examples of Balance Sheet and Reserving and With Profit Bonds.

BOARD PARTICIPATION
Consider how to further increase the contribution of all executive directors and how to promote greater open discussion of issues, including bringing ideas to the Board at an earlier stage.

Each executive director provides an update at each Board meeting on their respective business areas, including bringing early stage proposals to the Board; for example, new initiatives as part of the Group’s digital strategy. Following implementation of this recommendation, each individual director’s contribution to discussion, debate and challenge has significantly increased.