Corporate Governance
Corporate Governance Statement
The Board Members, management and employees of Zurich SA (“the Company”) fully support and are committed to compliance with the JSE Limited (JSE) Listings Requirements and the King II Report on Corporate Governance, in terms of which its shareholders and stakeholders are assured that the Company is being managed ethically and in compliance with legislation and best practices.
Board of Directors
i) Composition
There is a clear procedure for appointments to the Board. 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. At December 31, 2007 the Board comprised seven Non-Executive and three Executive Directors who, with their experience, knowledge and skill, add to the successful operation of the Company. Four of the Non-Executive Directors are independent.
ii) Chairman and Chief Executive Officer
The roles of the Chairman and Chief Executive Officer are separate. Managing the Executive Committee is the responsibility of the Chief Executive Officer, NV Beyers.
iii) Shareholder Representation
Zurich Financial Services (73.6% Controlling Shareholder)
Board: CJ Cron and JPM Deiss. A Paas resigned on February 7, 2007
Audit Committee: CJ Cron, as an attendee
Investment Committee: M Christen was appointed on August 1, 2007 although he is not a Board Member.
R Bollag resigned on August 1, 2007 although he was not a Board Member
Remuneration Committee: R Schaetlze was appointed on October 24, 2007 although he is not a Board
Member. D Arkell resigned on February 21, 2007 although he was not a Board Member
Royal Bafokeng Finance (Pty) Limited (10% BEE Partner)
Board: DS Phiri
Transformation Committee: DS Phiri
iv) 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 ensure compliance with applicable legislation by the Company.
The role and responsibility of the Board is recorded in the Board Charter.
v) Meetings
The Board of Directors meets quarterly. In good time for meetings, all Board Members 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 2007 | February 21 |
May 09 |
August 01 |
October 24 |
| NV Beyers | Present |
Present |
Present |
Present |
| DM Burton | Present |
Present |
Present |
Absent |
| CJ Cron * | – |
– |
Present |
Present |
| JPM Deiss * | – |
– |
– |
Present |
| JPG de Rauville | Present |
Present |
Present |
Present |
| PT Martin # | Present |
– |
– |
– |
| MN Mbekeni * | – |
– |
Present |
Absent |
| DD Mokgatle * | – |
– |
– |
Present |
| SG Morris | Present |
Present |
Present |
Present |
| A Paas # | Present |
Absent |
– |
– |
| DS Phiri | Present |
Present |
Present |
Present |
| CN Zungu | Present |
Present |
Present |
Present |
| # Resignations: | ||||
| PT Martin resigned on February 21, 2007 | ||||
| A Paas resigned on August 1, 2007 | ||||
| * New appointments: | ||||
| CJ Cron was appointed on August 1, 2007 | ||||
| JPM Deiss was appointed on October 23, 2007 | ||||
| MN Mbekeni was appointed on August 1, 2007 | ||||
| DD Mokgatle was appointed on October 1, 2007 |
Executive Management Committee
The Executive Management Committee assists the Chief Executive Officer, to whom the daily running of the business has been delegated by the Board, to efficiently and effectively manage the Zurich Insurance Company South Africa Group of Companies (the Group) and to implement strategic plans as approved by the Board.
The Committee consists of the three Executive Directors as well as six General Managers who represent the main business and operational units in the Company.
The main objective of the Committee is to assist the Chief Executive Officer to guide and control the overall direction of the business of the Group and to act as a medium of communication and co-ordination 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
SG Morris (Chairman, Independent Non-Executive Director)
CJ Cron (Non-Executive Director) – appointed on August 1, 2007
JPM Deiss (Non-Executive Director) – appointed on October 23, 2007
JPG de Rauville (Independent Non-Executive Director)
PT Martin (Independent Non-Executive Director) – resigned on February 21, 2007
Two of the Executive Directors as well as management representation 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 reports and statements in compliance with all applicable legal requirements and accounting standards.
The responsibilities include 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 Zurich SA and subsidiary companies are a true and fair presentation of the financial position at year-end. Reports on the results of the operations, changes in equity and cash flows for the year-end are all prepared in accordance with International Financial Reporting Standards (IFRS).
The functions of the Committee include 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, and monitor procedures designed to ensure that the Company’s fraud control plans are being
implemented; and
– Review compliance with taxation responsibilities, 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 internal controls. All members are financially literate and no relationships exist that could interfere with the members’ independence from management.
| Attendance Register 2007 | February 19 |
May 07 |
August 01 |
October 23 |
| CJ Cron * | – | – | Present | Present |
| JPM Deiss * | – | – | – | Present |
| JPG de Rauville | Present | Present | Present | Present |
| PT Martin # | Present | – | – | – |
| SG Morris | Present | Present | Present | Present |
| # Resignations: PT Martin resigned on February 21, 2007 * New appointments: CJ Cron was appointed on August 1, 2007 JPM Deiss was appointed on October 23, 2007 |
Remuneration Committee
i) Composition
SG Morris (Chairman, Independent Non-Executive Director)
PT Martin (Independent Non-Executive Director) – resigned on February 21, 2007
D Arkell – resigned on February 21, 2007 – although he was not a Board Member (Zurich Financial Services Representative)
R Schaetlze – appointed on October 24, 2007 – although he is not a Board Member (Zurich Financial Services Representative)
ii) Functions
The Remuneration Committee is there to establish a transparent procedure to determine the policy and approach the Company should follow over remuneration and the determination of the remuneration packages for the Directors and Senior Executives, taking cognizance of market-related packages, skill and experience while avoiding potential conflicts of interest.
The financial statements include the details of Executive and Non-Executive Directors’ remuneration and other benefits in accordance with the requirements of the Companies Act 1973 and JSE Listings Requirements. Click here for details of the Directors’ emoluments.
iii) Meetings
The Committee meets when necessary; such meetings normally coincide with Board Meetings.
Investment Committee
i) Composition
PT Martin (Chairman, Independent Non-Executive Director) – resigned on February 7, 2007
JPG de Rauville (Chairman, Independent Non-Executive Director)
NV Beyers (Executive Director)
R Bollag – resigned on August 1, 2007 – although he was not a Board Member (Zurich Financial Services Representative)
M Christen – appointed on August 1, 2007 – although he is not a Board Member (Zurich Financial Services Representative)
ii) Functions
The Investment Committee ensures that appropriate and timely decisions are taken on 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.
Transformation Committee
i) Composition
DS Phiri (Chairman, Non-Executive Director)
G Kettaneh (Royal Bafokeng Finance Representative)
MT Neille (Zurich SA Executive Committee Member)
DA Roussouw (Zurich SA Executive Committee Member) – appointed on October 1, 2007
CN Zungu (Zurich SA Executive Director)
ii) Functions
The purpose of the Committee is to:
– Define the Company’s social responsibility strategy in accordance with the Financial Sector Charter and Codes of Good Practice on
Broad Based Black Economic Empowerment;
– Define the Company’s transformation strategy to align the Company with the Financial Sector Charter and Codes of Good Practice on
Broad Based Black Economic Empowerment;
– Help set or review the annual action plans and other steps for advancing these strategies, which includes defining proposals and
project plans;
– Monitor and measure progress in executing the strategy and each year’s action plan;
– Accounting for Company spending on projects as approved by the Board;
– Serve as a regular platform for discussing, co-ordinating and advancing the work in areas of each of the various functions represented
on the Committee; and
– Serve as a sounding or consultative board for specific corporate responsibility issues.
ii) Meetings
The Committee meets quarterly, with a direct reporting function to the Board.
Nominations Committee
i) Composition
SG Morris (Chairman, Independent Non-Executive Director)
DS Phiri (Non-Executive Director)
NV Beyers (Executive Director)
ii) Functions
The Company has established a Nominations Committee that makes recommendations to the Board on all new Board appointments. This committee reviews the balance and effectiveness of the Board. In addition, it identifies the necessary skills and individuals who might best be able to provide them. The Nominations Committee is a mechanism for ensuring that the Board remains effective and focused.
iii) Meetings
The Nominations Committee consists of not less that three Directors appointed by the Board, the majority of whom are Non-Executive Directors. Meetings are held as appropriate, though the committee meets at least once a year.
Business Risk Management Committee
The Committee comprises members of Executive Management, Group Audit, Risk Management and Legal & Compliance. The Committee meets quarterly and reports to the Board.
The Business Risk Committee has the duty of identifying corporate accountability and 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, determines if any emerging or prospective impacts exist and deals with them appropriately.
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 International Financial Reporting Standards. 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.
The following non-auditing services were provided by other external audit firms:
– IFRS Training and Advice;
– Review of current accounting policies in light of IFRS;
– Income Tax and VAT Consulting;
– Internal Control Review; and
– Implementation of SAP.
Group Audit
The function of the Group Audit Department is to provide independent, objective assurance and consulting services designed to add value and improve Zurich’s operations. It helps Zurich to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. Group Audit is independent of management and is staffed by qualified and experienced individuals, with the head of the department reporting directly to the Chief Executive Officer and the Audit Committee. Group Audit submits reports to and attends the Audit Committee meetings.
The Group Audit Department determines whether the organisation’s network of risk management, control and governance processes, as designed and represented by management, is adequate and functions effectively.
Group 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 on 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, the notice of which is contained in this Annual Report. This 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 JSE Listings Requirements.
