FINANCIAL SOLVENCY REGULATION: Corporate Governance Annual Disclosure Filing
(1)A CCO shall file a corporate governance annual disclosure report with the Authority, as described in this section, no later than June 1 of each calendar year. A CCO that is not subject to the requirement under this section to submit a CGAD Report shall nevertheless submit a CGAD Report at the Authority’s request.
(2)A CGAD Report shall contain the following information:
(c)The CGAD Report shall describe the CCO Board’s policies and practices for directing senior management, including a description of the following factors:
(A)Any processes or practices (i.e. suitability standards) to determine whether officers and key persons in control functions have the appropriate background, experience and integrity to fulfill their prospective roles, including identification of the specific positions for which suitability standards have been developed and a description of the standards employed.
(B)Any changes in an officer’s or key person’s suitability as outlined by the CCO’s standards and procedures to monitor and evaluate such changes.
(C)The CCO’s code of business conduct and ethics, the discussion of which considers, for example:
(i)Compliance with laws, rules and regulations.
(ii)Proactive reporting of any illegal or unethical behavior.
(iii)The CCO’s processes for performance evaluation, compensation and corrective action to ensure effective senior management throughout the organization, including a description of the general objectives of significant compensation programs and what the programs are designed to reward. The description shall include sufficient detail to allow the Authority to understand how the organization ensures that compensation programs do not encourage and/or reward excessive risk taking. Elements to be discussed may include, for example:
(iv)The CCO’s plans for senior management succession.
(d)The CGAD Report shall describe the processes by which the CCO Board, its committees and senior management ensure an appropriate amount of oversight to the critical risk areas impacting the CCO’s business activities, including a discussion of:
(A)How oversight and management responsibilities are delegated between the CCO Board, its committees and senior management.
(B)How CCO Board is kept informed of the CCO’s strategic plans, the associated risks and steps that senior management is taking to monitor and manage those risks.
(C)How reporting responsibilities are organized for each critical risk area. The description should allow the Authority to understand the frequency at which information on each critical risk area is reported to and reviewed by senior management and the CCO Board. This description may include, for example, the following critical risk areas of the insurer:
(i)Risk management processes.
(iii)Investment decision-making processes.
(iv)Reinsurance decision-making processes.
(v)Business strategy/finance decision-making processes.
(vii)Financial reporting/internal auditing.
(viii)Market conduct decision-making processes.
(a)At the level of the CCO, an intermediate holding company or any controlling affiliate, depending on how the CCO and its controlling affiliates have structured corporate governance.
(5)A CCO shall identify the level at which its CGAD Report is presented and explain the basis on which that level was determined to be appropriate. A CCO also shall explain any subsequent changes in the level of reporting.
(6)The CCO shall have discretion regarding the appropriate format for providing the information required by this section and is permitted to customize the CGAD Report to provide the most relevant information necessary to permit the Authority to gain an understanding of the corporate governance structure, policies and practices utilized by the CCO.
(7)Each year following the initial filing of the CGAD Report, the CCO shall file an amended version of the previously filed CGAD Report indicating where changes have been made. If no changes were made in the information or activities reported by the CCO, the filing should so state.
(8)Upon written application of a CCO, the Authority may grant an exemption from compliance with the CGAD Report filing requirement under this section if the Authority finds upon review of the application that compliance would constitute a financial or organizational hardship upon the CCO. An exemption may be granted at any time and from time to time for a specified period or periods. Not later than the 10th day after denial of a CCO’s written request for an exemption under this section, the CCO may request in writing a hearing on its application for an exemption.
Rule 410-141-5045 — FINANCIAL SOLVENCY REGULATION: Corporate Governance Annual Disclosure Filing,