Governance

Governance principles, minimum standards, guidance and advice.

Note: The following principles and standards are extracts from the Combined Code on Corporate Governance[1]. Managing agents which already comply with the full Code will therefore comply with these principles and standards and need not consider them further.

  • Principle - An effective board

    Every managing agent should be headed by an effective board, which is collectively responsible for the success of the managing agent.

    Standards

    • The board’s role is to provide entrepreneurial leadership of the managing agent within a framework of prudent and effective controls which enables risk to be assessed and managed. The board should set the managing agent’s strategic aims1, ensure that the necessary financial and human resources are in place for the managing agent to meet its objectives and review management performance.
    • All directors must take decisions objectively in the interests of the managing agent.
    • As part of their role as members of a unitary board, non-executive directors should constructively challenge and help develop proposals on strategy. Non-executive directors should scrutinise the performance of management in meeting agreed goals and objectives and monitor the reporting of performance. They should satisfy themselves on the integrity of financial information and that financial controls and systems of risk management are robust and defensible.

    Toolkit

    [1] Where relevant, the board may have regard to the strategic aims of the managing agent’s holding company and group

     

  • Principle - Clear division of responsibilities
    There should be a clear division of responsibilities at the head of the managing agent between the running of the board and the executive responsibility for the running of the managing agent’s business. No one individual should have unfettered powers of decision.
    Toolkit

    See also, the FSA’s Handbook - Senior Management Arrangements (SYSC 2)http://fsahandbook.info/FSA/html/handbook/SYSC/2/1
  • Principle - Balance of executive and non-executive directors

    The board should include a balance of executive and non-executive directors (and in particular independent non-executive directors) such that no individual or small group of individuals can dominate the board’s decision taking.


    Standards

    • The board should not be so large as to be unwieldy. The board should be of sufficient size that the balance of skills and experience is appropriate for the requirements of the business and that changes to the board’s composition can be managed without undue disruption.
    • To ensure that power and information are not concentrated in one or two individuals, there should be a strong presence on the board of both executive and non-executive directors.
  • Principle - Board appointments
    There should be a formal, rigorous and transparent procedure for the appointment of new directors to the board.
     
    Standard
    • Appointments to the board should be made on merit and against objective criteria. Care should be taken to ensure that appointees have enough time available to devote to the job. This is particularly important in the case of chairmanships.
  • Principle - Information supplied to the board

    The board should be supplied in a timely manner with information in a form and of a quality appropriate to enable it to discharge its duties.

  • Principle - Board to evaluate its own performance

    The board should undertake a formal and rigorous annual evaluation of its own performance.

 

Appointments to senior positions

Change of control for underwriting agents

Contacts

Olly Reeves
Head of Risk Management

t: +44 (0)20 7327 6229
olly.reeves@lloyds.com