Source: https://dfr.vermont.gov/reg-bul-ord/corporate-governance-annual-disclosure
Timestamp: 2020-02-28 09:36:25
Document Index: 183323972

Matched Legal Cases: ['§ 15', '§ 3316', '§ 3681', '§ 3301', '§ 3316', '§ 3316']

Corporate Governance Annual Disclosure | Department of Financial Regulation
Reg. I-2015-01
Printer friendly version of I-2015-01 215.2 KB
REGULATION I-2015-01
This regulation is promulgated pursuant to the authority granted by 8 V.S.A. §§ 15 and 3316.
The purpose of this regulation is to set forth the procedures for filing and the required contents of the Corporate Governance Annual Disclosure (CGAD), deemed necessary by the Commissioner to carry out the provisions of 8 V.S.A. § 3316.
A. “Insurance group” means those insurers and affiliates included within an insurance holding company system as defined in 8 V.S.A. § 3681(4).
B. “Insurer” means an insurance company that offers any of the types of insurance itemized under 8 V.S.A. § 3301(a), except that it shall not include agencies, authorities or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state.
C. “Senior Management” means any corporate officer responsible for reporting information to the board of directors at regular intervals or providing this information to shareholders or regulators and shall include, for example and without limitation, the Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”), Chief Operations Officer (“COO”), Chief Procurement Officer (“CPO”), Chief Legal Officer (“CLO”), Chief Information Officer (“CIO”), Chief Technology Officer (“CTO”), Chief Revenue Officer (“CRO”), Chief Visionary Officer (“CVO”), or any other “C” level executive.
Section 4. Filing Procedures
A. An insurer, or the insurance group of which the insurer is a member, required to file a CGAD by 8 V.S.A. § 3316, shall, no later than June 1 of each calendar year, submit to the Commissioner a CGAD that contains the information described in Section 5 of this regulation.
B. The CGAD must include a signature of the insurer’s or insurance group’s CEO or corporate secretary attesting to the best of that individual’s belief and knowledge that the insurer or insurance group has implemented the corporate governance practices and that a copy of the CGAD has been provided to the insurer’s or insurance group’s Board of Directors (hereafter “Board”) or the appropriate committee thereof.
C. The insurer or insurance group shall have discretion regarding the appropriate format for providing the information required by this regulation and is permitted to customize the CGAD to provide the most relevant information necessary to permit the Commissioner to gain an understanding of the corporate governance structure, policies and practices utilized by the insurer or insurance group.
D. For purposes of completing the CGAD, the insurer or insurance group may choose to provide information on governance activities that occur at the ultimate controlling parent level, an intermediate holding company level and/or the individual legal entity level, depending upon how the insurer or insurance group has structured its system of corporate governance. The insurer or insurance group is encouraged to make the CGAD disclosures at the level at which the insurer’s or insurance group’s risk appetite is determined, or at which the earnings, capital, liquidity, operations, and reputation of the insurer are overseen collectively and at which the supervision of those factors are coordinated and exercised, or the level at which legal liability for failure of general corporate governance duties would be placed. If the insurer or insurance group determines the level of reporting based on these criteria, it shall indicate which of the three criteria was used to determine the level of reporting and explain any subsequent changes in level of reporting.
E. Notwithstanding subsection A of this Section, and as outlined in 8 V.S.A. § 3316(e), if the CGAD is completed at the insurance group level, then it must be filed with the lead state of the group as determined by the procedures outlined in the most recent Financial Analysis Handbook adopted by the NAIC. In these instances, a copy of the CGAD must also be provided to the chief regulatory official of any state in which the insurance group has a domestic insurer, upon request.
F. An insurer or insurance group may comply with this section by referencing other existing documents (e.g., ORSA Summary Report, Holding Company Form B or F Filings, Securities and Exchange Commission (SEC) Proxy Statements, foreign regulatory reporting requirements, etc.) if the documents provide information that is comparable to the information described in Section 5. The insurer or insurance group shall clearly reference the location of the relevant information within the CGAD and attach the referenced document if it is not already filed or available to the regulator.
G. Each year following the initial filing of the CGAD, the insurer or insurance group shall file an amended version of the previously filed CGAD indicating where changes have been made. If no changes were made in the information or activities reported by the insurer or insurance group, the filing should so state.
Section 5. Contents of Corporate Governance Annual Disclosure
B. The CGAD shall describe the insurer’s or insurance group’s corporate governance framework and structure including consideration of the following:
(2) The duties of the Board and each of its significant committees and how they are governed (e.g., bylaws, charters, informal mandates, etc.), as well as how the Board’s leadership is structured, including a discussion of the roles of CEO and Chairman of the Board within the organization.
(1) How the qualifications, expertise and experience of each Board member meet the needs of the insurer or insurance group.
(2) How an appropriate amount of independence is maintained on the Board and its significant committees.
(3) The number of meetings held by the Board and its significant committees over the past year as well as information on director attendance.
(4) How the insurer or insurance group identifies, nominates and elects members to the Board and its committees. The discussion should include, for example:
(a) Whether a nomination committee is in place to identify and select individuals or consideration.
(b) Whether term limits are placed on directors.
(c) How the election and re-election processes function.
(d) Whether a Board diversity policy is in place and if so, how it functions.
(a) Identification of the specific positions for which suitability standards have been developed and a description of the standards employed.
(b) Any changes in an officer’s or key person’s suitability as outlined by the insurer’s or insurance group’s standards and procedures to monitor and evaluate such changes.
(a) Compliance with laws, rules, and regulations; and
(b) Proactive reporting of any illegal or unethical behavior.
(a) The Board’s role in overseeing management compensation programs and practices.
(b) The various elements of compensation awarded in the insurer’s or insurance group’s compensation programs and how the insurer or insurance group determines and calculates the amount of each element of compensation paid.
(c) How compensation programs are related to both company and individual performance over time.
(d) Whether compensation programs include risk adjustments and how those adjustments are incorporated into the programs for employees at different levels.
(e) Any clawback provisions built into the programs to recover awards or payments if the performance measures upon which they are based are restated or otherwise adjusted.
(f) Any other factors relevant in understanding how the insurer or insurance group monitors its compensation policies to determine whether its risk management objectives are met by incentivizing its employees.
(1) How oversight and management responsibilities are delegated between the Board, its committees and Senior Management.
(2) How the Board is kept informed of the insurer’s strategic plans, the associated risks, and steps that Senior Management is taking to monitor and manage those risks.
(a) Risk management processes (An ORSA Summary Report filer may refer to its ORSA Summary Report);
(b) Actuarial function;
(c) Investment decision-making processes;
(d) Reinsurance decision-making processes;
(e) Business strategy/finance decision-making processes;
(f) Compliance function;
(g) Financial reporting/internal auditing; and
(h) Market conduct decision-making processes.
If any provision of this regulation, or the application thereof to any person or circumstance, is held invalid, such determination shall not affect other provisions or applications of this regulation which can be given effect without the invalid provision or application, and to that end the provisions of this regulation are severable.
This regulation shall become effective March 30, 2016.