Playing our part in the digital world As more business is transacted online, we are investing to improve our customers’ online experience and encouraging customers to embrace digital distribution.
Enabling growth and providing capital We invest in all the countries we operate in, providing capital to governments and companies to enable economic growth.
Lower volatility of earnings and lower capital requirements The diversity of our business enables us to hold capital DEãBHDMSKX �.TQ�FDNFQ@OGHB@K� ENNSOQHMS�CHUDQRHãDR�NTQ�DWONRTQD� to catastrophe events leading to lower volatility of earnings.
2014 was an important year for RSA. The Company made good progress in the face of some tough realities. We can look to the coming years with LTBG�RNTMCDQ�RSQ@SDFHB�@MC�äM@MBH@K�ENTMC@SHNMR � We have created far reaching and detailed plans for operational improvement. Actions are VDKK�TMCDQV@X�@MC�ADFHMMHMF�SN�ADMDäS�ANSG� the underlying potential and performance of our businesses.
JUNE UK AND SCANDINAVIAN CEOS Stephen Lewis and Patrick Bergander announced as UK and Scandinavia CEOs respectively
Outlook Growth rates in Scandinavia, Canada, UK and Ireland would typically be at low single-digit levels. In Latin America mid-high single-digit growth is expected.
Based on current forward bond yields and foreign exchange rates, it is estimated that investment income VHKK�AD�HM�SGD�NQCDQ�NE�`���L�ENQ������� E@KKHMF�SN�@QNTMC�`���L�HM������@MC� ���� �'NVDUDQ��VHSG�XHDKCR�@S�GHRSNQHB� lows, these income numbers are sensitive to market changes. This NTSKNNJ�QDâDBSR�SGD�BNLAHMDC�HLO@BS� of sharply lower bond yields and depreciation of our major overseas NODQ@SHMF�BTQQDMBHDR�BNLO@QDC�SN������� together with the ongoing impact of maturing high yield bond positions.
Commercial premiums were up �í�VHSG�FQNVSG�NE��í�HM�#DML@QJ� QDâDBSHMF�RSQNMF�QDSDMSHNM�@BQNRR� the portfolio, good new business levels in Workers Compensation and good growth in Renewable Energy. Our strategic partnership in Norwegian Hospital Care insurance continues strongly, and as a result Norway "NLLDQBH@K�OQDLHTLR�VDQD�TO���í� in the year. In Sweden, premiums VDQD�CNVM��í�@R�VD�BNMSHMTDC�SN�S@JD� actions to rationalise our Commercial portfolio and increase rate.
OUR OPERATIONS IN CANADA In Canada we are the third-largest insurer, establishing our market position through a combination of strategic acquisitions and organic growth. We are a national insurer, operating across all provinces with a broad multiproduct, multidistribution offering. The market is stable and consolidating with the top ���HMRTQDQR�@BBNTMSHMF�ENQ�@QNTMC���í� market share.
SSE supports individuals to set-up businesses with a social purpose. By taking part in SSE’s programmes, social entrepreneurs are able to transform their talent into sustainable solutions to poverty and disadvantage. Over the three-year partnership we are providing bursaries to fund social entrepreneurs through the SSE Fellowship Course. We are also providing senior RSA mentors to support the students. Graduates of SGD�%DKKNVRGHO�"NTQRD�@QD���í�LNQD� KHJDKX�SN�RTQUHUD�ENQ�ãUD�XD@QR�SG@M� traditional UK business.
The Irish executive management team has been completely restructured and VD�G@UD�L@CD�FNNC�OQNFQDRR�HM�ãKKHMF� critical management vacancies with a new CEO, CFO, COO and Chief 4MCDQVQHSHMF�.EãBDQ�MNV�HM�OK@BD �
This period of change and uncertainty G@R�ADDM�CHEãBTKS�ENQ�NTQ�ODNOKD��ATS�VD� have maintained our commitment to be open, honest and to communicate early about any changes that impact them.
We have strengthened our culture by introducing an award-winning Culture Risk Index and Assessment across the world, which helps leaders and HR teams to identify and manage cultural health and identify potential issues around culture that could lead to a failure of ethics, controls or governance before they occur.
Of the 42 participants who completed the 2014 STA programme, 26% have already moved into new roles within the organisation.
On target: Support customers through the development of products and services that help them respond to changing environmental risks and opportunities
In addition to responding to high levels of weather-related claims this year, we have taken proactive measures to help customers increase their resilience to extreme weather events, including weather warnings and advice using digital communications.
Robust governance, control and reporting • Comprehensive policies, procedures and controls
2. CULTURAL HEALTH INDEX The Group Risk and HR teams worked together to create an index of positive and negative indicators to help senior leaders spot the early warning signs of cultural risk.
Insurance Risk: — Varied risk mix of insurance business; with volume and mix effectively managed
Serve Customers Well Operate with Capital Strength Focus on driving shareholder value
Capital Surplus: — Economic, Regulatory and S&P Coverage Ratios above determined levels and buffers
RSAs Reputation, including with Customers, Business Partners, Regulators, Investors or in the Media
LEADERSHIP The Company is led by a strong, experienced leadership team with wide-ranging expertise and capability. (M�%DAQT@QX�������2SDOGDM�'DRSDQ�INHMDC� SGD�!N@QC�@R�&QNTO�"GHDE�$WDBTSHUD� bringing a wealth of experience and FKNA@K�ãM@MBH@K�RDQUHBDR�DWODQSHRD � 'D�G@R�ADDM�HMRSQTLDMS@K�HM�CQHUHMF� our action plan forward.
A Group Audit Committee B� !N@QC�1HRJ�"NLLHSSDD I Group Investment Committee N Group Nomination and Governance Committee R Group Remuneration Committee
Financial • Monthly review of performance for each business • �1DUHDV�NE�OQNãS@AHKHSX�@F@HMRS�OK@M • Financial reporting and controls • Reserving • Capital strengthening: rights issue, share consolidation, bond issue • Review of the capital position against internal and external capital measures
The Board reviews the membership of its Committees on an annual basis to ensure they remain appropriate. Further details on changes to Board Committee membership are contained in the relevant Committee report. Only members of the Board Committees are entitled to attend Committee meetings; however, the Committee or its chairman may invite any directors, senior management or any external professional advisers to attend all or part of any meetings as and when required. The key functions of Risk, Actuarial, Compliance and Internal Audit, all directly report to a Board Committee providing expert advice on their remits to the relevant Committee and senior management.
Site visits to build awareness of the Group. Stephen Hester has undertaken a programme of visits SN�@KK�QDFHNM@K�NEãBDR�SGQNTFGNTS����� �(M�@CCHSHNM�� Non-Executive Directors have attended regional Board and Audit Committee meetings and spent time with regional senior management.
The ability to work together to identify priorities and integrate into the Group’s evolving executive culture should be a particular focus by the Board in the future.
REGULATORS The Board is responsible to the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) for complying with the Group’s UK insurance regulatory obligations. The Board attaches great importance to its regulatory responsibilities and is committed to dealing with the regulators in an open, cooperative and transparent manner. The Board paid close attention to the expectations of the PRA and FCA following their establishment on 1 April 2013 and also monitored developing EU and international regulation, in particular Solvency II. During the year the PRA and FCA conducted private meetings with several members of the Board and senior management. Regular management information is provided to assist the PRA and FCA with the supervision of the Group. In addition, the Group includes a number of regulated subsidiary entities which seek to foster positive regulatory relationships in support of the businesses. Accordingly, maintaining effective relationships with the Group’s regulators across the world is integral to the success of the Group’s strategy and its long-term value.
Schroders plc2 170,851,201 4.95% Direct & Indirect through subsidiaries 170,851,201 4.95% Direct & Indirect through subsidiaries
CONFLICTS OF INTEREST AND RELATED PARTY TRANSACTIONS In accordance with section 175 of the Companies Act 2006, D@BG�CHQDBSNQ�G@R�@�CTSX�SN�@UNHC�BNMâHBSR�NE�HMSDQDRS �4MCDQ� Articles 91 and 92 of the Company’s Articles of Association, BNMâHBSR�NE�HMSDQDRS�L@X�AD�@TSGNQHRDC�AX�SGD�!N@QC�NQ�@� Board Committee. Directors are required to notify the Group General Counsel and Company Secretary when a potential BNMâHBS�NE�HMSDQDRS�@QHRDR �$@BG�CHQDBSNQ�R�QDONQSDC�BNMâHBSR�NE� interest are reviewed on an annual basis. Any director who G@R�CDBK@QDC�@�BNMâHBS�NE�HMSDQDRS�RG@KK�MNS�BNTMS�SNV@QCR�SGD� PTNQTL�NQ�UNSD�NM�@MX�QDRNKTSHNM�SN�@TSGNQHRD�SGD�BNMâHBS�NE� interest and, at the Board’s discretion, may be excluded from @MX�LDDSHMF�@S�VGHBG�SGD�BNMâHBS�NE�HMSDQDRS�HR�TMCDQ� BNMRHCDQ@SHNM �6GDQD�@�BNMâHBS�NE�HMSDQDRS�HR�@TSGNQHRDC�� QDRSQHBSHNMR�L@X�AD�HLONRDC�NM�SGD�BNMâHBSDC�CHQDBSNQ��RTBG� as excluding the director from the discussion or receiving any HMENQL@SHNM�HM�BNMMDBSHNM�VHSG�SGD�BNMâHBS�NE�HMSDQDRS �
The diagram below illustrates the relationship of each Committee to the Board and those subsidiary committees that report information and support the purpose of each Board Committee.
GROUP INVESTMENT COMMITTEE As Chairman of the Group Investment Committee, I am pleased to present an update for the year to Shareholders.
COMMITTEE COMPOSITION I became Chair of the Committee in May 2014. I would like to thank Edward Lea for his contribution as Chairman of the Committee between March 2013 and May 2014.
September meeting, after which Stephen Hester and Richard Houghton ceased to be members, although both still attend meetings at the invitation of the Committee.
Notes: 1. Edward Lea ceased to be a member of the Group Audit Committee with effect from 8 May 2014.
The reporting framework delivers information to enable the systems of internal control to be monitored and their effectiveness to be reviewed as required by the 2012 Code. The Board considers that an ongoing process for identifying, DU@KT@SHMF�@MC�L@M@FHMF�SGD�RHFMHãB@MS�QHRJR�E@BDC�AX� the Group has been in place during 2014, and up to the date of approval of the Annual Report and Accounts. This process accords with the latest Turnbull Guidance.
At the start of the year, a Business Review component was built into the Group’s incentive plans, to align them to the turnaround strategy.
• None of the performance-based long-term incentive plan (LTIP) awards from the 2012–14 cycle will vest.
– A Business Review Scorecard, which will be strengthened taking into account the progress made in 2014, and will additionally include TNAV:NWP, and the revised controllable expense targets detailed on page 23 over the three-year performance period.
• $WSDMRHNM�SN�"K@VA@BJ�/NKHBX� to allow recovery of cash bonuses paid for 2015 performance year onwards.
KSGNTFG�SGD�"NLO@MX�@R�@�VGNKD�EDKK�RGNQS�NE�HSR�TMCDQKXHMF�OQNãS@AHKHSX�S@QFDSR�ENQ�SGD�XD@Q��@R�QDâDBSDC�HM�SGD�ãM@MBH@K� element of the bonus, progress was made in a number of areas. Those elements of performance most controllable by L@M@FDLDMS�DWBDDCDC�SGDHQ�OK@MMDC�NTSBNLDR���M@LDKX�BTQQDMS�XD@Q�TMCDQVQHSHMF�OQNãS�DWBKTCHMF�(QDK@MC��@�QDBNQC��� BNRSR��ADSSDQ�SG@M�OK@M��@MC�HMUDRSLDMS�HMBNLD�NM�OK@M �3GHR�V@R�BNMRHCDQDC�@�RHFMHãB@MS�@BGHDUDLDMS �3GD�RGNQSE@KKR�K@X� OQHL@QHKX�HM�(QHRG�KNRRDR�@MC�4*�OQHNQ�XD@Q�QDRDQUD�RSQDMFSGDMHMF�
&QNTO�"GHDE�%HM@MBH@K�.EëBDQ� The Financial, Business Review and Personal Scorecard elements were considered in a corresponding manner for Richard Houghton. In light of Richard Houghton’s departure from the Group, announced on 26 February 2015, and the associated SDQLR�@FQDDC�HM�@BBNQC@MBD�VHSG�SGD�&QNTO�R�ONKHBX�ENQ�$WDBTSHUD�CDO@QSTQDR��SGD�"NLLHSSDD�CDSDQLHMDC�SG@S�SGD�@V@QC� ENQ�,Q�'NTFGSNM�RGNTKC�AD�`�����������í�NE�L@WHLTL�ADHMF���í�NE�@MMT@K�A@RD�R@K@QX���VHSG�G@KE�NE�SGHR�@V@QC�ADHMF� CDEDQQDC�HM�RG@QDR�ENQ�SGQDD�XD@QR�RTAIDBS�SN�L@KTR�@CITRSLDMS
The circumstances in which malus and clawback may apply are outlined in the table below: ,@KTR�@CITRSLDMS Clawback
The table below shows the total remuneration for the HMBTLADMSR�@OONHMSDC�@R�SGD�LNRS�RDMHNQ�$WDBTSHUD�#HQDBSNQ� in the Group over the past six years. The percentages show the proportion of bonuses and LTIPs that were received. Bonuses include both cash and deferred shares components.
3GD�ãFTQDR�ENQ�SGD�LNRS�RDMHNQ�$WDBTSHUD�#HQDBSNQ�HMBKTCD� SGD�CHEEDQDMS�INAGNKCDQR�CTQHMF�SGD�ODQHNC �2SDOGDM�'DRSDQ� V@R�@OONHMSDC�&QNTO�"GHDE�$WDBTSHUD�HM�%DAQT@QX������ and received no salary increase in the year. No bonus was @V@QCDC�SN�SGD�&QNTO�"GHDE�$WDBTSHUD�HM�QDRODBS�NE�������RN� a percentage change between 2013 and 2014 is not calculable.
Group Chief Executive Fixed remuneration Variable remuneration (short-term) Variable remuneration (long-term)
BASE SALARY, BENEFITS AND PENSION 3GD�"NLLHSSDD�QDUHDVDC�SGD�&QNTO�"GHDE�$WDBTSHUD�R�R@K@QX�@MC�G@R�CDSDQLHMDC�SG@S�MN�HMBQD@RD�VHKK�@OOKX�EQNL��� OQHK������� @R�RGNVM�HM�SGD�S@AKD�ADKNV �(M�QDRODBS�NE�ADMDãSR�@MC�ODMRHNM��SGD�/NKHBX�VHKK�BNMSHMTD�SN�AD�HLOKDLDMSDC�SGD�R@LD�V@X�@R�HS� was at the end of 2014.
Business Review: - Strategic Focus, - Capital and Balance Sheet Strength, - Performance Improvement
• $@BG�BNLONMDMS�NE�SGD�SNS@K�QDLTMDQ@SHNM�O@BJ@FD� is simple and transparent, so as to be effective and understood by executives, shareholders and regulators
• Non-contributory pension plan membership or a full/partial cash allowance, where the Director is unable SN�INHM�SGD�"NLO@MX�R�ODMRHNM�OK@MR �3GD�12 �CDãMDC�ADMDãS�ODMRHNM�OK@M�HR�BKNRDC�SN�@KK�MDV�DMSQ@MSR
• Reviewed annually with consideration of factors including: market positioning, internal pay relativities, levels NE�O@X�ENQ�NSGDQ�12 �DLOKNXDDR��HMâ@SHNM��@EENQC@AHKHSX��INA�RB@KD�@MC�BNMSDMS��HMCHUHCT@K�R�DWODQHDMBD�@MC� DWODQSHRD �.MKX�@MMT@K�A@RD�R@K@QX�HR�ODMRHNM@AKD � M�DWHRSHMF�$WDBTSHUD�#HQDBSNQ�R�R@K@QX�L@X�AD�HMBQD@RDC� outside of the normal review cycle for material role changes.
• When assessing fee levels, account is taken of the required time commitment and the degree of expertise MDBDRR@QX�SN�ETKãK�SGD�O@QSHBTK@Q�QNKD��RTBG�@R�BG@HQHMF�@�BNLLHSSDD�
RSA’S REMUNERATION POLICY FOR NON-EXECUTIVE DIRECTORS Purpose and Strategic Link Policy for 2014 onwards Opportunity and performance conditions
Non-Executive Directors -NM�$WDBTSHUD�#HQDBSNQR�@QD�MNS�DLOKNXDC�AX�12 �ATS�SGDX� are engaged on a contract for services basis. They are issued with an appointment letter for an initial three-year term, which can be extended with the Board’s agreement. 3GD�SDQL�NE�NEãBD�B@M�DMC�OQHNQ�SN�HSR�DWOHQX�VHSG�DHSGDQ� the individual or the Company serving one month’s notice, or three months in respect of the Chairman. No notice will be served by the Company in the event of gross misconduct.
3GQNTFGNTS�SGHR�QHRJ�@RRDRRLDMS��VD�BNMRHCDQDC�GNV�SGD�E@BSNQR�HCDMSHãDC�HLO@BSDC�SGD�&QNTO�R�@AHKHSX�SN�BNMSHMTD�@R�@�FNHMF� BNMBDQM�HMBKTCHMF�HSR�@AHKHSX�SN�LDDS�ETSTQD�QDFTK@SNQX�B@OHS@K�QDPTHQDLDMSR�@MC�HM�O@QSHBTK@Q�SGNRD�QDPTHQDC�AX�SGD�2NKUDMBX�((� B@OHS@K�QDFHLD��@OOKHB@AKD�EQNL���)@MT@QX�������BNMRHCDQHMF�SGD�FQNTO�R�OQNRODBSR�ENQ�RDBTQHMF�QDFTK@SNQX�@OOQNU@K�ENQ�SGD� TRD�NE�@M�HMSDQM@K�LNCDK��@KK�NQ�HM�O@QS��ENQ�B@KBTK@SHMF�SGD�ETSTQD�B@OHS@K�QDPTHQDLDMS��@MC�BNMSHMFDMBX�OK@MR�ENQ�@BGHDUHMF� a materially higher capital requirement if it were required to enter the new regime on a standard formula basis.
3NS@K�BNLOQDGDMRHUD�HMBNLD �+NRR��OQNãS� for the year – – – – – – – ����� ����� � ����� Other BNLOQDGDMRHUD� HMBNLD��MNSD���� – – – – ����� – ����� � ����� ��� �����
3Q@MR@BSHNMR�VHSG�NVMDQR�NE�SGD�"NLO@MX "NMSQHATSHNM�@MC�CHRSQHATSHNM #HUHCDMCR��MNSD��� – – – – – – – ��� ��� ��� (15) Shares issued for B@RG��MNSD���� 382 371 – – – – – – 753 – 753 Share based O@XLDMSR��MNSD���� 2 – – – – – – 8 �� – ��� .SGDQ�QDRDQUD� SQ@MREDQ��MNSD���� (381) – – – – 381 – – – – –
1DHMRTQ@MBD�BDCDC Premiums payable in respect of reinsurance ceded are recognised in the period in which the reinsurance contract is entered HMSN�@MC�HMBKTCD�DRSHL@SDR�VGDQD�SGD�@LNTMSR�@QD�MNS�CDSDQLHMDC�@S�SGD�DMC�NE�SGD�QDONQSHMF�ODQHNC �/QDLHTLR�@QD�DWODMRDC� NUDQ�SGD�ODQHNC�NE�SGD�QDHMRTQ@MBD�BNMSQ@BS��B@KBTK@SDC�OQHMBHO@KKX�NM�@�C@HKX�OQN�Q@S@�A@RHR
3GD�OQNUHRHNMR�ENQ�KNRRDR�@MC�KNRR�@CITRSLDMS�DWODMRDR�@QD�RTAIDBS�SN�BKNRD�RBQTSHMX�ANSG�VHSGHM�SGD�&QNTO�R�ATRHMDRR�TMHSR� @MC�@S�&QNTO�"NQONQ@SD�"DMSQD �(M�@CCHSHNM��ENQ�L@INQ�BK@RRDR�VGDQD�SGD�QHRJR�@MC�TMBDQS@HMSHDR�HMGDQDMS�HM�SGD�OQNUHRHNMR�@QD� FQD@SDRS��QDFTK@Q�@MC�@C�GNB�CDS@HKDC�QDUHDVR�@QD�TMCDQS@JDM�AX�@CUHRDQR�VGN�@QD�@AKD�SN�CQ@V�TONM�SGDHQ�RODBH@KHRS�DWODQSHRD� @MC�@�AQN@CDQ�JMNVKDCFD�NE�BTQQDMS�HMCTRSQX�SQDMCR�HM�BK@HLR�CDUDKNOLDMS � R�@M�DW@LOKD��SGD�&QNTO�R�DWONRTQD�SN�@RADRSNR� QDK@SDC�KNRRDR�HR�DW@LHMDC�NM�SGHR�A@RHR �3GD�QDRTKSR�NE�SGDRD�QDUHDVR�@QD�BNMRHCDQDC�VGDM�DRS@AKHRGHMF�SGD�KDUDKR�NE�OQNUHRHNMR� ENQ�KNRRDR�@MC�KNRR�@CITRSLDMS�DWODMRDR�@MC�TMDWOHQDC�ODQHNCR�NE�QHRJ �3GD�KDUDK�NE�OQNUHRHNM�B@QQHDC�AX�SGD�&QNTO�S@QFDSR�SGD� HMBKTRHNM�NE�@�L@QFHM�NE��í��ENQ�SGD�BNQD�ATRHMDRRDR �3GD�@OOQNOQH@SDMDRR�NE�SGD��í�S@QFDS�HR�RTAIDBS�SN�QDFTK@Q�QDUHDV �,@QFHM� HR�CDãMDC�@R�SGD�CHEEDQDMBD�ADSVDDM�SGD�B@QQHDC�OQNUHRHNM�@MC�SGD�@BST@QH@K�HMCHB@SHNM
Insurance and reinsurance debtors 281 38 ��� ��� ��� ����� ����� (143) �����
Perpetual guaranteed subordinated capital securities – – – ��� – – – ��� ���
SHAREGIFT Shareholders with a small number of shares, the value of which makes it uneconomic to sell them, may wish to consider donating them to charity through ShareGift, a registered charity administered by The Orr Mackintosh Foundation, registered charity number 1052686. The relevant share transfer form can be obtained from Equiniti. Further details can be obtained from www.sharegift.org or by calling +44(0) 20 7930 3737.
THURSDAY 6 AUGUST 2015* Announcement of the half year results for the six months ended 30 June 2015 and the ordinary interim dividend for 2015.