Corporate Governance at Suomi Mutual
Suomi Mutual's business
operations are based on compliance with valid laws and other norms, as well as
with official regulations issued by the authorities on the basis of these laws.
Suomi Mutual conforms, in a manner applicable to a mutual company, to the
recommendations issued for listed companies' corporate governance and steering
systems.
General Meeting
The Policyholders' Representative Assembly comprising 75 members appointed from among themselves by postal elections acts as Suomi Mutual's General Meeting. It deals with the matters generally dealt with at a general meeting. The President and CEO, the Chair of the Board of Directors and the majority of other Board members are usually present in General Meetings. The Policyholders' Representative Assembly convened once in 2005. The current composition of the Policyholders' Representative Assembly is presented under this section.
The Policyholders' Representative Assembly has appointed a nomination committee from among its members made up of three people. The aim of this committee is to prepare proposals regarding the number of Board members, the Chair of the Board, the Deputy Chair and other members, and their salaries.The current composition of the Nomination Committee is presented under this section .
Supervisory Board
The company's Supervisory Board will continue until the end of the 2007 Annual General Meeting when it will be disbanded. The Supervisory Board convened three times in 2006. The current composition of the Supervisory Board is presented under this section.
Board of Directors
According to the Articles of Association, Suomi Mutual's Board of Directors comprises four to seven members. There are currently five members. The Board of Directors has been elected by the Supervisory Board. As of the 2007 Annual General Meeting, the Chair of the Board, the Deputy Chair and the other members of the Board will be elected by the meeting. The term of office of a Board member is one year.
Board members shall have such general knowledge of insurance business and of financial or economic issues as is required for the successful handling of duties entrusted to the Board of Directors. The members are not required to be owners of the company, there is no upper age restriction and there are no restrictions regarding re-election.
The Board of Directors attends to the administration of the company and to the appropriate organization of corporate activities.
The Board of Directors has drawn up a written working order. In order to fulfil its duties, the Board of Directors undertakes to
- take decisions on Suomi Mutual's strategy and supervise its implementation
- take decisions on the use of non-restricted capital and of the excess capital generated by the company's insurance business for various additional benefits to be declared for policyholders
- make proposals to the General Meeting for the use of the company's profit or the handling of loss
- approve the company's investment plan and define, among other things, investment powers and reporting as part of the investment plan
- approve operational plans, objectives and budgets and supervise their implementation
- approve the company's risk management plan
- take decisions on substantial business transactions, disposals of assets, and contracts
- appoint and release the President and CEO and his/her deputy and decide on their salaries and benefits and other conditions of their employment
- decide on the reward and incentive systems for the management and staff
- decide on the selection of reinsurers and on the principles for the diversification of reinsurance cover
- appoint the Electoral Board for the elections of the Policyholders' Representative Assembly.
The Board of Directors convened 10 times in 2006. The participation rate was 98%.
To ensure operational efficiency, the Board of Directors annually assesses its operations and working methods.
The Board
of Directors has not appointed any separate committees.
The current composition of the Board of Directors is presented under this section.
President and Management Group
The President manages the company's business operations and day-to-day administration in accordance with the guidelines and regulations provided by the Board of Directors. In addition, the President supervises that the company operates in conformity with the law, official regulations, good insurance practice and contractual obligations. The President is not a member of the Board of Directors. However, the President attends Board meetings.
The conditions of the President's employment relationship are defined in the President's employment contract approved by the Board of Directors.
The company's Management Group assists the President. The President and the Management Group are presented under this section.
Reward system
The company has a performance-based pay system which applies to the company's entire staff. The Board of Directors is not included in the scope of the reward system. The Board has approved the reward system and annually decides on the criteria for result targets.
The main criterion for determining the amount of performance-based pay is the change in the company's net assets during the financial year added by the amount of additional benefits declared for the policyholders. The maximum performance-based pay for the President and the members of the Management Group is equivalent to six months' salary.
Suomi Mutual discloses, in the notes to the financial statements, the amounts of salaries and fees paid by business function. The company considers this information adequate for a mutual company.Internal control, risk management and internal audit
The company's risk management principles are separately presented in the notes to the financial statements.
Most of the company's day-to-day operations have typically been outsourced. Outsourcing is managed through long-term outsourcing contracts which include provisions for division of responsibilities between the company and the service provider in problem situations. The internal audit function of an outsourced service provider is responsible for supervising that the service provider acts in conformity with the contract. Suomi Mutual and its auditors have the right to obtain from the outsourced service provider the information required by the company's audit and internal control functions.
Auditing
The Board of Directors annually makes a proposal to the General Meeting for the appointment of an auditor for the company. In the General Meeting held in 2006, PricewaterhouseCoopers Oy, Authorised Public Accountants, with Mr Juha Wahlroos, Authorized Public Accountant, as the partner-in-charge, and Ms Leena Rajala, Authorised Public Accountant, were elected as the company's auditors.
In 2006, the Authorized Public Accountants and other companies within the same group were paid EUR 135 464 for auditing, and EUR 549 for various advisory and consultative services. The fees paid are inclusive of value added tax.
Supervision by authorities
The operations of Suomi Mutual are supervised by the Finnish Insurance Supervisory Authority, which focuses on ensuring that the operations of insurance and pension institutions are stable and that a general trust in insurance operations is maintained.
For more
information, visit
www.vakuutusvalvonta.fi