Corporate governance 2018-06-20T16:56:42+00:00

Corporate governance

The Board of Directors (the “Board”) of ERGO Insurance Pte. Ltd. (the “Company”) is committed to maintaining a high standard of corporate governance to safeguard the interests of the Shareholder of the Company (the “Shareholder”) and to promote stakeholders’ confidence and support in complying with the Code of Corporate Governance 2012 (the “Code”).

The Board is pleased to confirm that for the financial year ended 31 December 2017 (“FY2017”), the Company has adhered to the principles and guidelines as set out in the Code and the Guidelines on Corporate Governance introduced on 3 April 2013 by the Monetary Authority of Singapore (“Guidelines”), except where otherwise stated.

The Board’s Conduct of Affairs
(in accordance with Principle 1 of the Code)

The Company is led and controlled by an effective Board that is collectively responsible for the long term success of the Company and reports to the Shareholder. The main functions of the Board are as follows:

(a) To approve the broad policies, strategies and financial objectives of the Company;

(b) To monitor and approve management’s performance, annual budget, significant financial and operating expenditures, acquisition and disposal of significant investments and significant related-party transactions;

(c) To approve the nominations to the Board and the removal and appointment of senior management staff;

(d) To put in place an appropriate and adequate system of internal controls, risk management processes and financial authority limits;

(e) To assume responsibility for corporate governance of the Company;

(f) To identify the key stakeholder groups and recognise that their perceptions affect the Company’s reputation; and

(g) To consider any sustainability issues as part of its strategic formulation.

Matters which require specific approval from the Board include approval of budgets and financial reports, interested persons transactions, material acquisitions and disposal of assets and investments, corporate or financial restructuring, issue of shares, payment of dividends and other distributions to the Shareholder. The Board will consider if it is necessary to establish an executive committee to assist in its discharge of duties from time to time.

To strive for full attendance and to assist the directors of the Company (“Directors”) in planning their attendances at the Board meetings of the Company, meetings for the following year are scheduled before the start of the year in consultation with the Directors. The Board meets at least four times a year, with additional meetings convened when circumstances require. Non-Executive Directors are encouraged to meet without the presence of the Company’s management.

During FY2017, the Board met four times. There was a change in the composition of the Board and the Directors effective from 18 September 2017 in view of the resignation of the Non-Executive Chairman and the appointment of a new Non-Executive Director and effective from 1 September 2017 in view of the appointment of a new Non-Executive Chairman. Details of the number of Board meetings held during FY2017 as well as the attendance of each Board member are disclosed below:

Name of Directors No. of Meetings Attendance
Jürgen Peter Schmitz
(Non-Executive Director –
Resigned 18 September 2017)
3 2
Cheong Yue Loon
(Non-Executive Chairman –
Appointed as Chairman 1 September 2017)
4 4
Lionel Tay Yew Jin
(Non-Executive Director)
4 4
Frank Ellgring
(Non-Executive Director –
Appointed 18 September 2017)
1 0

The Company does not have a formal training programme for new Directors. However, newly appointed Directors can request for a briefing on the Company’s business, governance practices and industry-specific issues to enable them to discharge their responsibilities. The new Directors can also request for further training on areas such as accounting, legal or industry specific knowledge as required.

Directors are also updated from time to time on any development of the Company as well as on changes to relevant legislations, accounting standards and issues which have a direct impact on financial statements and corporate governance.

The senior management of the Company reports to the Board on strategies and businesses of the Company, including any updates to its policies from time to time. Reporting relationships of senior management are properly documented and there is a clear delegation of authority from the Board to the Company’s senior management.

The Board will review the training needs of the Directors on a regular basis to ensure that they are equipped with the appropriate skills and knowledge to effectively perform their roles on the Board.

Board Composition and Guidance
(in accordance with Principle 2 of the Code)

The names of the Directors in office as at the date of this report are:

  1. Mr. Cheong Yue Loon,Chairman
  2. Mr. Frank Ellgring
  3. Mr. Lionel Tay Yew Jin

Mr. Cheong Yue Loon is the Non-Executive Chairman of the Board. Mr. Frank Ellgring is a Non-Executive Director. Mr. Cheong Yue Loon and Mr. Frank Ellgring are not considered Independent Directors by virtue of their status as employees of the Company’s holding company.

Mr. Lionel Tay Yew Jin is a Non-Executive Independent Director.

There is a strong and independent element on the Board and as recommended by the Code, one-third of the Directors are independent. No individual or small group of individuals dominates the Board’s decision-making process.

The Board, taking into account the scope and nature of the operations of the Company, is satisfied that the current size of the Board, the standing of the members of the Board in the business community and their combined experience, knowledge and expertise in areas such as legal, business and insurance provide for effective decision-making and direction to the Company.

The Board has reviewed the necessity of establishing an executive committee during the year and is of the view that the existing composition of the Board is adequate in supporting the discharge of its duties.

Chairman and Chief Executive
(in accordance with Principle 3 of the Code)

The functions of the Chairman and the Chief Executive in the Company are assumed by two different individuals.

The Chairman is responsible for leading the Board and ensures that all Directors receive complete, adequate and timely information (both financial and non-financial) to enable them to participate effectively in Board discussions and decisions. The Chairman also assists in ensuring compliance with the corporate governance policies of the Company.

The Chief Executive of the Company, is responsible for the daily management of the Company’s business as well as the implementation of the Board’s policies and decisions. There is a clear division of responsibilities between the Chairman and the Chief Executive, which ensures a balance of power and authority.

Mr. Cheong Yue Loon is presently the Non-Executive Chairman of the Company since 1 September 2017. Mr. Karl-Heinz Jung has been the Chief Executive of the Company since 1 August 2017. Mr. Karl-Heinz Jung is not related to Mr. Cheong Yue Loon.

Board Membership and Board Performance
(in accordance with Principles 4 & 5 of the Code)

The Company does not have a Nominating Committee. The Board is responsible for and performs the following functions:

(a) Identify candidates and review all nominations on appointment and re-appointment of Directors;

(b) Review the Board structure, size and composition regularly;

(c) Determine the independence of Directors annually;

(d) Assess the effectiveness of the Board and the contribution of each individual Director; and

(e) Review the training programme for the Board.

The Board reviews annually the effectiveness of the Board as a whole and its required mix of skills and experiences and other qualities, including core competencies, which Directors should bring to the Board. The assessment process includes criteria such as the success of the strategic and long-term objectives set by the Board and the effectiveness of the Board in monitoring management’s performance against the goals that have been set by the Board.

Article 124 of the Company’s Articles of Association requires Directors appointed to fill a casual vacancy or as an addition to the Board to retire at the next Annual General Meeting of the Company (“AGM”) and shall be eligible for re-election. Mr. Cheong Yue Loon, Mr. Frank Ellgring and Mr. Lionel Tay Yew Jin, will be retiring and shall be eligible for re-election at the forthcoming Company’s AGM to be held on 30 April 2018.

The Company has internal guidelines stipulating that each Director could serve on a maximum of five boards of publicly listed companies to address competing time commitments that are faced when Directors serve on multiple boards. As at the date of this report, none of the Directors holds directorships in publicly listed companies. The Board has reviewed and is satisfied that all the Directors are able to perform their duties effectively. Each Director abstains from deliberating on his own performance and re-election as a Director.

In its search and nomination process for new Directors, the Board has, at its disposal, search companies, personal contacts and recommendations, to cast its net as wide as possible for the right candidates. The Board also takes into consideration the skill base of each Director.

During the year, the Board has reviewed and determined that Mr. Lionel Tay Yew Jin is an Independent Director of the Company.

The Board will consider succession planning for Directors and for the Chief Executive, from time to time.

Access to Information
(in accordance to Principle 6 of the Code)

The Board is provided with quarterly accounts containing complete, adequate and timely information. Board reports are circulated prior to Board meetings and the reports provide, amongst others, financial and corporate information, significant operational, financial and corporate issues, information on all potentially material risks facing the business of the Company, performance of the Company and management proposals which require the approval of the Board.

All Directors have access to the Company’s senior management team for any information required, either through emails or phone calls, to effectively fulfill their responsibilities.

The Joint Company Secretary or her representative attends the Board meetings and is responsible for advising the Board on compliance with the relevant statutes and regulations, as well as implementation of these requirements. The Joint Company Secretary also advises the Board on corporate governance matters. All proceedings of meetings of the Board and Board Committees are recorded with a view of taking into account the key deliberations and decisions taken. Minutes of all Board meetings are circulated to members for review and confirmation. These minutes enable Directors to keep abreast of matters discussed. The appointment and the removal of the Joint Company Secretary(ies) is a matter of consideration for the Board as a whole. Directors have separate and independent access to any of the Joint Company Secretaries.

The Directors can seek independent professional advice in the furtherance of their duties from time to time. The adviser so selected shall be approved by either the Chairman or the Chief Executive and the fees incurred are borne by the Company.

Procedures for developing remuneration policies and level and mix of remuneration
(in accordance to Principles 7 & 8 of the Code)

The Board functions as the Company’s Remuneration Committee. The Board is responsible for and performs the following functions:

(a) To review the framework of remuneration for Directors and senior management personnel of the Company (including the Chief Executive) to ensure that the package is sufficient to attract and retain people of required quality to run the Company successfully;

(b) To determine the specific remuneration packages for each Director and senior management personnel of the Company (including the Chief Executive) based on performance, service seniority, experience and scope of responsibility and which are periodically benchmarked to market/industry;

(c)To review Directors’ remuneration packages annually.

For the Non-Executive Independent Director, the quantum of fees reflects the level of responsibilities undertaken by him. In determining the quantum of such fees, factors such as frequency of meetings, time spent and responsibilities are taken into account.

Non-Executive Non-Independent Directors and Executive Directors do not receive Directors’ fees. As at the date of this report, there is no Executive Director in the Company.

No Director shall take part in decisions pertaining to his own remuneration.

The Board has reviewed the Company’s remuneration policies and practices against the Principles for Sound Compensation Practices and Implementation Standards issued by the Financial Stability Board and has adopted the practices and standards, where applicable.

Disclosure on remuneration
(in accordance with Principle 9 of the Code)

For competitive reasons, the Company is not disclosing the Non-Executive Independent Director’s and the Chief Executive’s remuneration.

The Company has a competitive performance-based remuneration policy which remunerates its top executives (who are not directors or the Chief Executive) competitively. To maintain confidentiality of staff remuneration and to prevent poaching of key executives, the Company shall not disclose in this report the remuneration of the top key management personnel of the Company.

Directors’ fees (as a lump sum payment) are subject to the approval of the Shareholder at the AGM. The remuneration framework for key management personnel of the Company (including the Chief Executive) has been approved by the Board.

Accountability and Audit
(in accordance with Principles 10, 11, 12 & 13 of the Code)

The Company does not have an Audit Committee. The Board is responsible for and performs the following functions:

(a) To review the audit plans of the internal and external auditors, the results of their audits and their effectiveness in evaluating the Company’s system of internal controls;

(b) To review the Company’s financial and operating results and its accounting policies to ensure the integrity of the financial statements of the Company;

(c) To review the financial statements, accounting policies and any significant financial reporting issues and judgments of the Company so as to ensure the integrity of the financial statements before their submission to the Board and the auditors’ report on those financial statements;

(d) To review the co-operation given by the management to the external auditors;

(e) To review the appointment of the external auditors;

(f) To examine the cost effectiveness, independence and objectivity of the external auditors;

(g) To evaluate the nature and extent of non-audit services provided by the external auditors;

The Board has full access to and co-operation of the Management. The internal and external auditors have unrestricted access to the Board. The Board also conducts a review of the independence and objectivity of external auditors annually. The Board is satisfied that the non-audit fees paid to the external auditors in FY2017 which constitutes less than 20% of the total fees paid, does not affect their independence and that the external auditors are able to meet the audit requirements and statutory obligation of the Company.

Risk Management, Internal Controls and Internal Audit

The Board acknowledges its overall responsibility for maintaining a sound system of internal controls to safeguard the Shareholder’s investments, the Company’s assets, and the need to review the adequacy and integrity of those systems regularly. In establishing and reviewing the risk management framework and system of internal controls, the Directors recognise that the risk management framework and system of internal controls can only provide reasonable but not absolute assurance against the risk of material misstatement or loss. The Board will, at least annually, review the adequacy and effectiveness of the Company’s risk management and internal control systems, including financial, operational, compliance and information technology controls.

In accordance with the scope laid out in the audit plan, the external auditors carry out a review of the effectiveness of the Company’s material financial controls in the course of their annual statutory audit. Material non-compliance and financial control weaknesses noted during their audit, if any, are reported to the Board together with the auditors’ recommendations.

The Board has reviewed the risk management framework and is satisfied that the Company has a system to identify, measure, monitor, control and report the risks arising from the Company’s business and investment activities for its size and complexity. The Company’s risk management framework has the following attributes:

  1. A process for identifying, measuring, monitoring, controlling and reporting risks on an enterprise-wide basis;
  2. Categorisation of risks into strategic, business, financial, operational (including information technology), to ensure material risks and the controls to mitigate the frequency and impact of these risks are reviewed regularly;
  3. Risk tolerance level which are reviewed for adequacy on a regular basis; and
  4. A strong awareness of the necessity of risk management and proper accountability, through the use of key performance indicators, for managing risks within the Company.

The Company has a Chief Risk Officer with a direct reporting line to the Chief Executive and direct access to the Board.

Risk Management Policies and Processes

The Board oversees the Company’s risk management policies and processes. Assessment of risks (including strategic risks, business risks, financial risks and operational risks) is an on-going process performed by the Management jointly with the Chief Risk Officer and the Internal Auditor.

Management is guided by the risk tolerance approved by the Board in managing the risks of the Company. Regular risk reviews and assessments are conducted to constantly update the system of internal controls to effectively mitigate the risks to an acceptable level. In addition, all business units perform a risk analysis whenever embarking on new projects and contracts. This involves identifying, quantifying and evaluating the risk types. They are then expected to take the necessary steps to mitigate and manage the risks.

Internal Controls and Internal Audit

The Company has outsourced its Internal Audit services to the Group’s Asia Audit Hub and the Head of the Asia Audit Hub reports directly to the Chairman of the Board and the Head and members of the Asia Audit Hub review the system of internal controls to ensure its relevance and effectiveness in the current business environment. The Board reviews and approves the terms of outsourcing to the Asia Audit Hub. The Board reviews the adequacy and effectiveness of the Asia Audit Hub through a review of their activities in the Company and ensures that the Asia Audit Hub has adequate resources and appropriate standing within the Company to perform its functions properly.

As part of the Asia Audit Hub function, the Head of the Asia Audit Hub will also identify and highlight risks while conducting internal checks and reports her findings and recommendations to the Board for review and approval. The Internal Auditors from the Asia Audit Hub has unfettered access to all the Company’s documents, records, properties and personnel, including access to the Board.

In accordance with the scope laid out in the audit plan, the external auditors carry out a review of the effectiveness of the Company’s material financial controls in the course of their annual statutory audit. Material non-compliance and financial control weaknesses noted during their audit, if any, are reported to the Board together with the auditors’ recommendations.

The Board has reviewed the effectiveness of the actions taken by the Management to manage the Company’s risk and on the recommendations made by both the internal and external auditors. Based on the findings by internal and external auditors, the Board is of the opinion that the internal controls of the Company including financial, operational, compliance and information technology controls and the risk management framework are adequate and effective.

Shareholder Rights, Communication with Shareholders and Conduct of Shareholders’ Meetings
(in accordance with Principles 14, 15 and 16 of the Code)

The Board acknowledges the importance of regular communication with the Shareholder through which the Shareholder can have an overview of the Company’s performance and operation. This is made via the Company’s annual report and Group reporting processes.

The Company maintains minutes of general meetings. These minutes can be made available to the Shareholder upon request.

Related Party Transactions
(in accordance with Principle 17 of the Guidelines)

The Board reviews and monitors all related party transactions to ensure that it is conducted on arm’s length. The Board is satisfied with the related party transactions that have been undertaken at arm’s length basis.

Date: 19 April 2018

Telephone

E-Mail

Address

Social Media

Social

Telephone

+65 6829 9199

Call
E-Mail

ergoinsurance@ergo.com.sg

E-Mail
ERGO Insurance Pte. Ltd.

5 Temasek Boulevard,
#04-01 Suntec Tower Five,
Singapore 038985

Get directions