The Board of Randall & Quilter Investment Holdings Ltd. (the “Company”) is responsible for the Group’s corporate governance policies and recognises the importance of high standards of integrity. The Company has adopted the Quoted Companies Alliance Code for Small & Mid-sized Quoted Companies 2018 (the “QCA Code”). This statement sets out how we are complying with the 10 principles of the QCA Code as set out in our 2018 Annual Report.
The Company’s mission is to deliver on our core strategy of providing Program Management services to Managing General Agencies and their reinsurers and create finality solutions to owners of discontinued insurance businesses. By focussing on these high growth markets, we provide our investors with complementary revenue streams, regular and stable fee income from program business and the capital extraction from managing legacy portfolios. Our mission is underpinned by our strategic objectives.
The Group and its core businesses take risks in order to attain rewards in an informed and controlled manner. This translates into having regard to both potential upside and downside risk, in the context of the overall Group strategy, that aims to optimise return on equity and shareholder value within the Group’s defined risk appetite.
The overall risk strategy is underpinned by a number of core risk objectives which set the boundaries in order to meet the expectations of capital providers and other stakeholders.
The core objectives of the Group’s risk strategy are as follows:
The Group’s strategic objectives are:
The key challenges that the Company faces in the execution of these objectives include the identification of suitable pipeline opportunities in both core areas, the quality of potential partners, appropriate due diligence and timely capital raising.
These and other risk related matters are continually monitored by the Group’s Risk Management function which reports regularly to the Group Board via the Group Risk Committee.
Feeback from investors is obtained through direct interaction between the Chairman/Chief Executive Officer and the Chief Financial Officer at semi-annual meetings at least. The voting record at the Company’s general meetings is monitored and we are pleased that all resolutions proposed in 2018 have been passed by shareholders.
The £107m Placing and Open Offer completed in March 2019 enjoyed wide shareholder support and was oversubscribed.
There is regular dialogue through the medium of the Company’s corporate brokers, Numis Securities and Shore Capital, and the Company seeks to take the pulse of shareholder expectations and reactions through its retained advisers.
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The Company believes that by communicating its strategic and financial objectives on a regular basis shareholder expectations can be adequately managed. This is particularly important because the Company’s shareholders do not have uniform objectives; on the one hand, some shareholders seek long term growth in the share price, whilst others put greater emphasis on synergies and growing dividends/distributions.
We are pleased with the level of engagement from our shareholders and the strong relationships that have developed.
Our approach to Corporate Social Responsibility is described in more detail in our Annual Report.
The Board is aware of the impact that its business activities have on the communities in which the Group’s businesses operate. The Group’s responsibilities to stakeholders including staff, suppliers, customers and wider society are also recognised through the Group’s policies on modern slavery, data protection, whistleblowing and diversity for example. As an insurance business, our key resources are essentially people and capital; the business model recognises the need for access to a skilled employee base, access to skilled intermediaries and a strong capital position.
Other key resources and relationships on which the business relies include regulatory authorities in various jurisdictions and US States, our joint venture partners, our primary bank the Royal Bank of Scotland, A.M. Best and our auditors and external legal advisers to name a few, with whom the Group is in frequent communication.
Due to the nature of the Group’s businesses, the Board considers that its impact on the environment is minimal and of low risk. However, it seeks to minimise environmental impact through good practice, such as reducing paper wastage, use of electronic communications and reducing business travel by making maximum use of telephone and video conference arrangements.
Further details on how the Company obtains feedback from shareholders is provided in the disclosures under Principle 2 and Principle 10.
The Group has a mature Risk Management framework and Risk Management function, headed by the Chief Risk Officer. The Group Risk Committee, a full committee of the Board, is chaired by an independent non-executive director. It meets quarterly and provides a report to the Board. The Chief Risk Officer also attends the Company’s board meetings. The Risk Management function maintains detailed risk registers where appropriate at the Group and legal entity level, and there is also a risk appetite framework in place against which adherence is monitored. The Risk Management function also engages regularly with all the functional areas to ensure that risks and controls are properly assessed and managed.
The Chairman of the Group Risk Committee has provided a report on the Committee’s activities during 2018 in our Annual Report.
The Board comprises four Non-Executive Directors and three Executive Directors. The Chairman of the Board, Ken Randall, leads it in the determination of its strategy and in achieving its objectives. Ken also acts as the Chief Executive, overseeing the Group on a day-to-day basis and is not considered to be independent.
Mark Langridge was appointed as a director at the beginning of the 2018 financial year. Mark has been with R&Q for more than 10 years and is the Group’s Head of Legacy. The Board has also recently appointed Jo Fox, its first female board member, who brings considerable experience in syndicates and underwriting business. This will complement the overall balance of the Board and be invaluable as we continue to build on our platform for growth.
Directors who have been appointed to the Board have been chosen because of the skills and experience they offer. With regard to the Non-Executive Directors, this includes extensive experience in the fields of law, accountancy and insurance. The skills and experience of each of the Directors give them the ability to constructively challenge strategy and to scrutinise performance. The Company has adopted a Board Diversity Policy which seeks to improve the diversity amongst its members, including gender balance, in its future appointments.
The Board considers each of the Non-Executive Directors to be fully independent. The Board gives regard to the overall effectiveness of the contribution made by each Non-Executive Director and does not consider a director’s period of service in isolation to determine their independence.
The Senior Independent Director is Michael Smith, who took up this appointment in March 2019. His role is to provide a sounding board for the Chairman, to act as an intermediary for the other directors where necessary and to provide an additional contact point for shareholder communication. Should Michael be re-appointed at our AGM in June, he will have served as a Non-Executive Director of the Company for 6 years and for an overall period of 11 years, taking into account time as a Non-Executive Director of the predecessor company prior to the Group’s redomicile to Bermuda in 2013. The Board considers that Michael maintains his independence and brings an important contribution on legal and succession matters.
All of the Executive Directors work full time for the Company. Directors are expected to attend all meetings of the Board and the committees on which they sit, and to devote sufficient time to the Company’s affairs to enable them to fulfil their duties. In the event that Directors are unable to attend a meeting, their comments on papers to be considered at the meeting will be discussed in advance with the Chairman so that their contribution can be included in the wider Board discussion.
We encourage all Directors to keep their skills and knowledge up to date and will provide individual Directors with any training they need. In 2018, the Directors and members of the senior management team attended a full day’s bespoke training provided by the Institute of Directors on the role of the director and the board, corporate governance, the Company’s legal and regulatory environment, board structure and functioning. Sessions are held between the Board and senior management during which in-depth presentations covering areas of the Group’s business are made.
For 2019 briefings have so far been arranged on the new IFRS17 requirements, on cyber risk and on divisional business plans for Accredited, in Malta and the US, and Healthcare, our specialist provider of inter-disciplinary programs for US Workers’ Compensation patients. The Company Secretary provides updates during the year on any significant developments in legal, governance and compliance areas.
Jo Fox, R&Q’s new Non-Executive Director, is following a formal induction programme tailored to her existing knowledge and experience.
We have an open and transparent approach to management information, with the Chief Executive Officer providing business updates and insights in his regular report to the Board. This ensures that the Directors have a thorough understanding of the Company’s operational activities, the regulatory environment that affects the Group, Group and subsidiary company performance and investor relations.
In 2018, the Board undertook an internal board evaluation using an online facility developed by Internal Audit Limited. Input was obtained from every Board member and members of the senior management team that engage frequently with the Board. The Board identified specific actions which are being implemented.
The action plan from the 2018 board evaluation is outlined on the table below:
|Categories||Board Action Plan for 2019|
|IT||Keep the significant contribution of IT towards the delivery of the strategic model and the security of systems, data and information in the forefront of our thinking|
|Succession||Focus on leadership planning|
|Focus on People||Facilitate employee engagement|
The frequency of further evaluations will be determined by the Board.
Agreed personal objectives and targets, including financial and non-financial metrics, are set out each year for the Executive Directors and performance is measured against those metrics.
We are committed to ensuring high standards of corporate and social responsibility. Our employees are key to the continued success of our business and we actively promote their development and ongoing improvement. We promote diversity in our workforce and wholly support equal opportunities in employment. Our recruitment, training and promotion processes are all done on a non-discriminatory basis.
Our ethical values of fitness and propriety, consistent with our business model, are reflected in our System of Governance and detailed in Group-wide policies, including matters such as Dignity at Work, Health and Well-being, Modern Slavery, Anti-bribery and Whistleblowing. The System of Governance document explains that the Group continues to simplify its business model to promote a completely open culture where we share ideals and are open in passing information up and down through the Group. The Group accepts that the business model only works with a strong “centre” which sets the rules, delegates to the subsidiaries (with boards which include appropriate numbers of group managers and technical specialists) but then operates group-centric governance processes to ensure that systems and philosophy are being consistently adopted throughout the Group.
The Company’s progress with regards to promoting ethical values and a healthy culture is monitored by a team of cross-functional representatives which provides a quarterly report for the Board to review.
The Board is responsible for the Group’s strategy and for its overall management. Our governance structure is designed to help the Board lead the Company within a framework of prudent and effective controls that enable risk to be assessed and managed.
In 2018, the Board held 6 full meetings and scheduled 7 additional meetings to discuss specific matters such as the 2019 budget, fund raising and M&A opportunities.
The operation of the Board is documented in a formal schedule of matters reserved for its approval which was adopted in March 2019 and will be reviewed annually.
At each meeting, the Board considers Directors’ conflicts of interest. The Company’s bye-laws provide for the Board to authorise any actual or potential conflicts of interest. The Board is aware of the other interests and commitments of its Directors and changes to these commitments and interests are reported by the Directors. A review of Directors’ conflicts is conducted annually.
The Board has a schedule of regular business, financial and operational matters and each committee has compiled a schedule of work to ensure that all areas for which the Board has responsibility are addressed and reviewed during the course of the year.
The Chairman, aided by the Company Secretary, is responsible for ensuring that the Directors receive accurate and timely information. The Company Secretary compiles the Board and committee papers which are circulated to the Directors prior to the meetings. The Company Secretary also ensures that any feedback or suggestions for improvement on board papers is fed back to management. The Company Secretary provides minutes of each meeting and every Director is aware of the right to have concerns minuted and to seek independent advice at the Group’s expense where appropriate.
The Board considers that the Group’s governance framework is appropriate and in line with its plans for growth. The System of Governance report, which is approved by the Board, is submitted to the Bermuda Monetary Authority on an annual basis.
The Board delegates certain matters to the Audit, Remuneration & Nominations, Risk, Reinsurance Asset, Capital & Investment and Disclosure Committees as well as to ad hoc committees of the Board authorised to deal with specific matters from time to time according to business need. All Board and committee members are provided with sufficient resources to undertake their duties, including access to internal and external specialist advice at the Company’s expense.
The terms of reference of each committee are available on this website.
No independent external advice was sought by the Board or its committees during the period.
The Audit Committee is chaired by Alastair Campbell and its other members are Michael Smith and Phil Barnes.
The Audit Committee has primary responsibility for ensuring that the financial performance of the Group is properly measured and reported on. It receives and reviews reports from the Group’s management and Auditor relating to the annual accounts and the accounting and internal control systems in use throughout the Group. It also advises the Board on the appointment of the Auditor, reviews their fees and discusses the nature, scope and results of the audit with the Auditor.
The Audit Committee meets at least 4 times a year and has unrestricted access to the Group’s Auditor. The Chief Executive Officer and Chief Financial Officer attend the committee meetings by invitation.
Remuneration & Nominations Committee
The Remuneration & Nominations Committee (“RemCo”) is chaired by Michael Smith. Its other members are Alastair Campbell and Phil Barnes.
The RemCo reviews the performance of the Executive Directors and makes recommendations relating to their remuneration and terms of employment. The RemCo also has responsibility for senior management succession planning.
The Chief Executive and Chief Financial Officer are invited to attend for some parts of the committee meetings where their input is required although they do not take part in any discussion on their own benefits and remuneration.
The Risk Committee is chaired by Phil Barnes and its other members are Alan Quilter and the Chief Risk Officer, Susan Young. The Chief Executive, Chief Governance Officer, Chief Actuary and the Head of Internal Audit also attend.
The Risk Committee has responsibility for overseeing the management of risk across the Group, and maintaining the effectiveness of the Group’s risk management framework, systems of internal control, risk policies and procedures and adherence to risk appetite.
The Committee meets at least quarterly and provides a report on its activity to the Board.
Reinsurance Asset Committee
The Reinsurance Asset Committer (“RAC”) is chaired by Michael Smith and consists of the Chief Financial Officer, Head of Legacy and the Head of Claims and Reinsurance.
The RAC monitors and reports on the Group’s owned insurance company reinsurance assets and recommends actions to protect such assets. The RAC also reviews bad and doubtful debt provisions proposed by the Group’s owned insurance companies, the levels of concentration of risk placed with reinsurance companies/groups and reinsurance litigation/arbitration and commutation activity.
In 2018, the RAC extended its review to incorporate Program Management business as well as the Legacy business already under review.
The RAC meets at least quarterly and provides a report on its activities to the Board. It met 5 times in 2018.
Capital & Investment Committee
The Group Capital & Investment Committee (“GCIC”) consists of the Executive Directors and the Chief Actuary. It is chaired by the Chief Financial Officer.
The GCIC’s primary purpose is to oversee the Group’s capital management, to monitor Group Solvency requirements and the Group’s investment strategy and implementation. The GCIC also ensures that the necessary financial, legal, regulatory, commercial and personnel due diligence has been undertaken on acquisitions, portfolio transfers and similar investments or structures.
The GCIC has a standing agenda for its quarterly meetings and also meets frequently to consider M&A transactions and investment opportunities. During 2018 the Committee reviewed 39 proposed transactions, including a significant number of Program Management proposals, received regular presentations on the performance of its portfolio of investments from Investment Managers and oversaw the repositioning of the portfolios to maximise returns in 2019.
The Disclosure Committee comprises the Chief Executive Officer, the Chief Financial Officer and the Company Secretary.
The Committee’s purpose is to review the operation, adequacy and effectiveness of the Group’s disclosure procedures and to assist the Board in fulfilling its responsibilities under the Market Abuse Regulation, AIM Rules and Disclosure Guidelines and Transparency Rules.
The Disclosure Committee met formally on 3 occasions in 2018; in addition, disclosure matters and share dealing applications were reviewed regularly throughout the year.
The Board recognises the importance of effective communication with its shareholders. The Group maintains communication with institutional investors through individual face-to-face meetings with Executive Directors, particularly following the publication of the Group’s interim and full year results.
Private shareholders have the opportunity to attend the Annual General Meeting at which questions can be answered. A range of corporate information (including copies of presentations and announcements, and an overview of activities of the Group) is available on this website. The Group lists contact details on this website should shareholders wish to communicate with the Board or with its brokers, Numis Securities and Shore Capital.