i) Composition

There is a clear procedure for appointments to the Board and such appointments are formal and transparent and a matter for the Board as a whole. There is a clear division of responsibility to ensure a balance of power, such that no one individual has unfettered powers of decision-making. The Board comprises five Non-Executive and two Executive Directors who, with their experience, knowledge and skill, add to the successful operation of the Company. Three of the Non-Executive Directors are independent.

ii) Chairman and Chief Executive Officer

The roles of the Chairman and Chief Executive Officer are separate. GM Riddell chairs the Board and the Executive Management is the responsibility of the Managing Director, NV Beyers.

GM Riddell and MC South represent SA Eagle’s ultimate holding company. The Board believes that this arrangement is positive and in the interest of the Company.

iii) Functions

As the Board is ultimately accountable and responsible for the performance and affairs of the Company, it is the Board’s responsibility to adopt strategic plans, monitor operational performance and management, ensure an effective risk management strategy is in place and that there is compliance by the Company with applicable legislation.

The role and responsibility of the Board is recorded in the Board Charter.

iv) Meetings

The Board of Directors meets quarterly. All Directors attend at least three meetings per year.

Prior to the meetings, all Board members timeously receive a comprehensive Board pack with all the relevant documents for Board members to study in order to make informed decisions at the meetings.

Attendance register 2004

Executive Management Committee

At SA Eagle, the Executive Management Committee assists the Managing Director, to whom the daily running has been delegated by the Board, to efficiently and effectively manage the Group and to enforce the strategic plans as approved by the Board.

The Committee consists of the two Executive Directors as well as four General Managers who represent the main business and operational units in the Company.

The main objective of the Committee is to assist the Managing Director to guide and control the overall direction of the business of the Group and to act as a medium of communication and coordination between the various business units. As the Committee members attend the Board Meetings, direct reporting and feedback is given to the Board of Directors.

Executive Committee meetings are held weekly.

Board Committees

Audit Committee
i) Composition

JL Pamensky (Chairman, Non-Executive Director)
JPG de Rauville (Non-Executive Director)
PT Martin (Non-Executive Director)
KR Allen (Zurich Financial Services Representative)

The two Executive Directors and representatives of management attend the Audit Committee meetings.

ii) Function

The objective of the Audit Committee is to assist the Board in discharging its duties relating to the safeguarding of assets, operation of adequate systems, control processes and the preparation of accurate financial reporting and statements in compliance with all applicable legal requirements and accounting standards.

The responsibilities include inter alia the review of the full year’s financial statements prior to submission to the Board. The Audit Committee ensures that the Annual Financial Statements of SA Eagle and its subsidiaries are a true and fair presentation of the financial position at year-end. Reporting on the results of the operations, changes in equity and cash flows for the year are all prepared in accordance with the South African Statements of Generally Accepted Accounting Practice in South Africa.

The functions include inter alia the following:

• Monitor corporate risk assessment processes
• Review internal control systems
• Oversee the performance of the internal audit function
• Review internal and external audit reports to ensure that, where major deficiencies or breakdown in controls and procedures have been identified, appropriate and prompt remedial action is instituted
• Review the nomination, appointment, independence, performance and remuneration of the external auditor
• Review theft and fraud issues, and monitor procedures designed to ensure that the Company’s fraud control plans are being implemented
• Review compliance with legal, regulatory and industry code responsibilities

iii) Meetings

The Audit Committee meets quarterly with the internal and external auditors and management to review the effectiveness of the operations. All the members are financially literate and no relationships exist that could interfere with the members independence from management.

Attendance register 2004

Remuneration Committee
i) Composition

GM Riddell (Chairman, Non-Executive Director)
PT Martin (Non-Executive Director)

ii) Functions

The formally appointed Remuneration Committee is there to establish a transparent procedure to determine the policy and approach the Company should follow with regard to remuneration and the determination of the remuneration packages for the Directors and Senior Executives, taking cognisance of market related packages, skill and experience.

The financial statements include the details of Executive and Non-Executive Directors’ earnings and other benefits in accordance with the requirements of the Companies Act 1973 and the JSE Listings Requirements. For details of Directors’ emoluments, refer to note 17 in this report.

iii) Meetings

The Committee meets when necessary.

Investment Committee
i) Composition

PT Martin (Chairman, Non-Executive Director)
NV Beyers (Executive Director)
JM Carter (Executive Director)
R Bollag (Zurich Financial Services Representative)

ii) Functions

The objective of the Investment Committee is to ensure that appropriate and timely decisions are taken with regard to the investment of Company funds. The Committee sets the guidelines and principles for the Company to follow and takes advice where appropriate from outside investment professionals.

iii) Meetings

The Committee meets quarterly with a direct reporting function to the Board.

Business Risk Management Committee
The Committee comprises members of Executive Management and meets quarterly.

The Business Risk Committee has the duty of identifying corporate accountability, associated risks in terms of management and reporting. The Committee enforces risk control policies and strategies and has an accompanying evaluation function.

The Committee monitors external developments relating to its functions, identifies whether any emerging or prospective impacts exist and deals with them appropriately.

Black Economic Empowerment (BEE) Committee
The Committee comprises members of Executive Management and meets quarterly.

The Committee has the duty to enforce compliance with the Financial Sector Charter and has the responsibility to ensure that the Company completes the Charter Scorecard when required.

Accounting and auditing

External audit
The external auditors, PricewaterhouseCoopers Inc., are responsible for reporting on whether the financial statements are fairly presented in conformity with South African Statements of Generally Accepted Accounting Practice. The external auditors offer reasonable, but not absolute assurance on the accuracy of financial disclosures. The preparation of the financial statements is the responsibility of management.

Consultation occurs between external and internal auditors to effect an efficient audit process. The Audit Committee sets the principles for recommending the use of the external auditors for non-audit services.

External auditors provided the following non-auditing services:

1. International Financial Reporting Standards Training
2. Review of current accounting policies in light of International Financial Reporting Standards
3. Income Tax Consulting

Internal audit
The function of the Internal Audit Department is to provide independent, objective assurance and consulting services designed to add value and improve SA Eagle’s operations. It helps SA Eagle to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

Internal Audit is independent from management and is staffed by qualified and experienced individuals, with the head of the department reporting directly to the Managing Director and the Audit Committee. Internal Audit submits reports to and attends the Audit Committee meetings.

The scope of work of the Internal Audit Department is to determine whether the organisation’s network of risk management, control and governance processes, as designed and represented by management, is adequate and functions effectively.

Internal Audit liaises closely with the external auditors in the planning, execution and communication of the results of their work.

Directors’ responsibility

The Directors acknowledge their responsibility for the preparation of the Annual Financial Statements, adherence to applicable accounting policies and standards and the presentation of related information that fairly presents the state of affairs and the results of the Company, as well as for the effectiveness of risk management and the internal control environment.

Going concern

Based on the Annual Financial Statements as set out in this report, the Directors have every reason to believe that the Company has adequate resources in place to continue operations for the foreseeable future.

Code of business conduct

The Company has a formal Code of Business Conduct, which incorporates a Code of Ethics. The Code applies throughout the Group and ensures that best business practices are applied on a constant basis. The Code is distributed to all employees of the Company and its subsidiaries and prescribes the ethical standards required of employees in their interaction with one another and all stakeholders.

The Company also subscribes to the Industry Code of Conduct and Ethics, which was published by the South African Insurance Association during 2002.

Communication

Communication to the public and to shareholders embodies the principles of balanced reporting, clarity and openness. Positive and negative aspects of both financial and non-financial information are provided.

The Board encourages shareholders to attend its forthcoming Annual General Meeting, notice of which is contained in this Annual Report. This meeting provides opportunities for shareholders to ask questions of the Board.

Disclosure

The Annual Report deals adequately with disclosures pertaining to financial statements, auditors’ responsibility, accounting records, internal control, risk management, accounting policies, adherence to accounting standards, going concern issues and adherence to codes of governance as well as Section 3.84 of the JSE Listings Requirements.