CORPORATE GOVERNANCE

The Group is a leading non-life global specialty insurance company focusing on the Program Management and Legacy Insurance businesses. We are leaders in our target markets, both of which are experiencing strong secular growth. Our businesses have become key components of the global insurance market and have high barriers to entry which protects our competitive position.

Our Program Management business is a balance sheet light recurring revenue business that charges annual fees for allowing insurance distribution to access its licences to connect with global reinsurers. The Program Management business plays an important role supporting the growth of independent insurance distribution.

The Legacy Insurance business is a balance sheet business that earns high returns on capital deployed by acquiring or reinsuring already expired insurance risk, and managing off the exposure. The Legacy Insurance business provides an important form of capital management for existing insurance carriers. The Group leverages its core strengths in origination, underwriting and claims management to compete in the marketplace.

The Group’s strategy is to deliver long-term value for our shareholders by transitioning from a capital-based business model to a fee-based one and its key pillars are Increasing Fee Income, Automating Processes, Harnessing Data, Engaging Employees and Acting Responsibly. Details of how we propose to deliver upon our strategy, the key challenges we face in its execution and our new business model can be found in our Strategic Report.

The Board recognizes its responsibility to deliver long-term value to shareholders through the execution of the Company’s strategy and is accountable to shareholders for the Company’s performance over the long-term. Our strategic performance is measured by our Key Performance Indicators, which are detailed on page 12 of our 2021 Annual Report.

The Board is committed to providing shareholders with clear and transparent information on the Group’s strategy and financial performance. Any published announcements, financial reports and key documents are publicly available and are regularly updated on the Group’s website. Our Directors meet with selected key shareholders and research analysts following the announcement of results and obtain appropriate feedback.

The Group Chief Executive Officer and the Chief Financial Officer have a regular dialogue with the Company’s joint brokers, Barclays and Numis Securities, also the Group’s NOMAD, on the Group’s activities, strategies and performance. Other actions to engage with shareholders during the year include investor roadshows and virtual meetings on financial social media networks. These meetings and discussions give the Board an opportunity to gauge shareholder feedback and expectations.

Enquiries from individual shareholders are welcomed. The Board makes itself available to all shareholders at the Company’s Annual General Meeting each year. The results of the Meeting are published via a regulatory news service and on this website.

R&Q recognizes that delivering long-term value to its shareholders relies on maintaining good relations with its wider stakeholders, both internal and external. Each Board decision has a different impact and relevance to each key stakeholder of the business, so having a good understanding of their priorities is important. We do this by building trust and long-term relations with our employees, debt investors, bankers, regulators and insurance partners.

The Board engages directly with some stakeholders, principally our shareholders and employees. Engagement with stakeholders also takes place at different levels within the business and material issues are reported back to the Board or Board Committees, either informally by executive management or by regular written reports. The Board currently receives regular stakeholder reports on investor relations from the Chair, our People Strategy from the Chief Human Resources Officer and the Group’s regulatory supervision from the Group Head of Governance.

Certain decisions require the Board to balance the different and sometimes competing interest of its key stakeholders in order to promote the long-term success of the Company. Examples include adopting a new Group Remuneration Policy, our efficiency and transformation programme Project Gateway and our Dividend Policy.

R&Q is committed to operating responsibly and our stakeholders have told us that they expect this of us. Having listened, the Board adopted Acting Responsibly as one of the Company’s strategic pillars and has initiated a new Group-wide ESG strategy which seeks to integrate ESG into everything we do. Our ESG journey is described in the Working responsibly section on pages 25 to 27 of our 2021 Annual Report.

The Board is responsible for determining the nature and extent of both the upside and downside risks that it is willing to take within the Group’s defined risk appetite in order to deliver the Group’s strategy. The Group’s core risk objectives seek to:

• protect the Group’s capital base by supporting the implementation of a Solvency II (or equivalent) compliant framework where appropriate
• enhance value creation
• support decision making and improve and maintain transparency and accountability for risk throughout the Group by way of comprehensive risk reporting and control
• protect R&Q’s reputation and brand

The Board, assisted by the Group Risk and Compliance Committee, monitors and reviews the Group’s risk management and internal controls framework. It is further assisted by the Audit Committee which reviews the Group’s systems of internal financial controls on an annual basis. The Risk Management section on page 20 of our 2021 Annual Report, together with the Group Risk and Compliance Committee Report on pages 45 to 47 outline the Board’s approach to identifying and assessing risks and embedding risk management across the Group.

The principal risks and uncertainties affecting the Group and mitigating actions are set out on pages 22 to 24. These and other risk related matters are continually monitored by the Group’s risk function which reports regularly to the Board via the Group Risk and Compliance Committee.

On 1 April 2021, William Spiegel succeeded Ken Randall as Executive Chair of the Company. The Board appreciates the contribution that Ken Randall made to the stewardship of R&Q, as director and co-founder, during his time with the Company. With the appointment of a new Executive Chair, our Board is now ready to lead R&Q through the next phase of its growth.

The Board’s intention is to appoint two new Independent Non-Executive Directors to succeed Philip Barnes and Alastair Campbell who reached the ninth anniversaries of their appointments in 2022 and 2023 respectively. Board succession planning was put on hold during merger talks and will be revisited in good order, as appropriate. The Board has expressed a desire to retain Philip Barnes’ experience of the Group and he has agreed to remain involved with the Group following his retirement.

Composition of the Board
The Board is led by William Spiegel, the Executive Chair, whose role is to ensure that the Board is effective in its task of setting and implementing the Group’s direction and strategy. He promotes a culture of openness and debate facilitating constructive Board relations and the effective contribution of all Directors. As a full-time Executive Director, he is not considered to be independent.

The Non-Executive Directors comprise Philip Barnes, Eamonn Flanagan and Jo Fox, who are all judged to be fully independent. They provide an external perspective, independent oversight and constructive challenge to the Executive Directors and leadership by using their broad range of experience and expertise. All the Non-Executive Directors are able to commit the time necessary to fulfil their respective roles, including making themselves available at short notice when required.

The Executive Directors on the Board are Alan Quilter, Chief Executive Officer, and Tom Solomon, Chief Financial Officer. They work full-time for the Company and are responsible for the day-to-day running of the Group’s businesses and the development and implementation of strategy and decisions made by the Board, and operational management of the Group.

Board balance and independence
The Board considers that the current balance of Executive and Non-Executive Directors is appropriate and predominantly independent, ensuring that no one individual or group of individuals dominate the Board’s decision-making, and have the right mix of skills and experience to ensure effective decision-making.

To further safeguard its independent judgement and to prevent the undue influence of third parties on the Board’s decision making, the Board operates a conflicts of interests policy, which restricts a Director from voting on any matter in which they might have a personal interest unless the Board decides otherwise in accordance with its bye-laws.

Directors who have been appointed to the Board have been chosen because of the skills and experience they offer. The current Directors bring a broad range of commercial and professional capabilities to the Board including financial, insurance, actuarial and governance skills. Their biographies are detailed on pages 30 and 31 of our 2021 Annual Report.

The Board considers its composition regularly as part of the succession planning process and in response to the changing needs of the Group’s business. In 2021, the Board conducted an externally facilitated skills and experience assessment as part of its recruitment process for new Non- Executive Directors. The Board concluded that while it had the right mix of skills and experience to deliver the Group’s strategic ambitions, it could benefit from greater international experience. This was factored into the appointment process, which considered a wide diverse candidate pool in line with the Board’s Diversity Policy.

To maintain their skills and knowledge, the Board is updated on legal, regulatory and governance issues by the Company Secretary, internal and external lawyers, the Company’s NOMAD and the Group’s external auditors, and receives independent advice from other external professionals as required. In addition, there are regular deep dives from across the business at Board and Committee level to ensure the Directors’ understanding of the Group’s business remains current.

The Board engaged BP&E Global Ltd to undertake an external Board Effectiveness Review of Randall & Quilter Investment Holdings Ltd (RQIH), the ultimate holding company of the Group. This included a review of Board and Committee papers, individual questionnaires, interviews and observing a Board meeting. The draft findings were discussed with Eamonn Flanagan, as sponsor, and then presented to the Board in November 2021.

While nothing critical was identified, helpful points for further improvement were recommended. These included focusing on Board succession plans, reviewing the structure of Board Committees, improving Board oversight and delegation to management and developing R&Q’s purpose, values and mission. The recommendations that the Board has to date acted upon are described throughout our 2021 Annual Report.

The Board evaluation findings reinforced the sense of substantial change and improvement of the Board’s effectiveness and governance of R&Q under the leadership of our new Executive Chair.

In late 2022, R&Q launched it's new global Purpose and Values. We’ve made tremendous progress in the past year against our Five Year Strategy as we continue our transformation into a capital efficient, fee-orientated and data drive company.

A key driver on this journey was to have a clear sense of why we exist as an organisation and a clear sense of what set of behaviours help support our culture.

To help us define these two aspects we intentionally set out to hear from all voices across the company at every level.  Our Purpose and Values reflects the contributions of over 130 employees in 19 workshops globally. The leadership team also participated in a workshop — which generated healthy discussion about why we do what we do and the kind of culture we wish to cultivate.

The Board was involved in overseeing and approving where the organization landed in this bottoms-up approach.  Our Purpose reflects the positive impact that we believe we can have on customers and society and our values describe our desired culture and give us all a compass for how we wish to work with each other and those we serve—all over the world.

Our Governance Framework

The Board has a clear corporate governance framework, the structure of which is described on page 35 of our 2021 Annual Report.

Responsibilities of the Board

The Board maintains a formal schedule of matters which are reserved solely for its approval and is permitted under its bye-laws to delegate other responsibilities as appropriate to its Board Committees and executive management.

Matters Reserved for the Board include decisions relating to:

• Group strategy
• Capital structure
• Financial reporting and controls
• Significant contracts
• External and internal communications
• Board and executive leadership and succession planning
• Group corporate governance, policies and procedures
• Risk management and systems of internal controls across the Group.

The complete Schedule of Matters Reserved for the Board is available here.

Board Committees

The Board is supported by the work of its four principal committees, namely the Audit Committee, the Remuneration & Nominations Committee, the Group Risk and Compliance Committee, and the Investment Committee. Reports from the Chairs of these Committees outlining their respective roles and work can be found on pages 38 to 49 of our 2021 Annual Report. Other supporting Committees include the Disclosure Committee and the Regulatory Committee.

The Disclosure Committee comprises the Executive Chairman, the Chief Executive Officer and the Group General Counsel. It meets annually to review the operation, adequacy and effectiveness of the Group’s disclosure procedures and as necessary for the purpose of assisting the Board in fulfilling its responsibilities under the Market Abuse Regulation, AIM Rules and the Disclosure and Transparency Rules.

The Regulatory Committee is a standing committee comprising the Executive Directors of the Company and the Group Head of Governance. The Committee considers and approves matters relating to the submission of regulatory and statutory returns made in the name of Company or the R&Q Group as a whole. The Committee meets as required during the year.

Our Changing Governance Framework

During 2021, the Board refreshed its governance framework by restructuring two of its Committees to make the framework more flexible and efficient in meeting the Group’s business needs and delivering its strategic ambitions.

Firstly, the Group Capital and Investment Committee was succeeded by a dedicated Investment Committee on 1 May 2021 with specific responsibility for delivering the Group’s investment strategy. Its other responsibilities were assumed by the Board. A non-decision making Transaction Advisory Group was formed at the same time to provide advice across Group functions on program management and legacy transactions.

Secondly, the Group’s Reinsurance Asset Committee was disbanded in December 2021 and its responsibilities were assumed by the Group Risk & Compliance Committee and Group Audit Committee as appropriate.

How the Board Operates

The Board comprises the Executive Chair, two Executive Directors and four Independent Non-Executive Directors.

The Board met at five scheduled meetings to consider its main business and on 15 further occasions to consider other specific matters. Details of meetings attendance can be found on page 37 of our 2021 Annual Report.

The Board has a yearly forward planner of meeting dates and agendas, which allow sufficient time for both routine and non-routine matters to be considered throughout the year. The Chair of the Board sets the agendas for upcoming meetings with the Company Secretary. Board and Committee papers and reports are required to be clear and concise, with any feedback on their content provided to authors by the Company Secretary. They are circulated via a secure Board portal, sufficiently in advance of meetings to ensure that Directors have sufficient time to review them. The authors of Board papers and reports are sometimes invited to join Board discussions, to enable Directors to gain a deeper understanding of the information provided and to hear from those directly responsible. Minutes and matters arising from meetings are produced by the Company Secretary after the meetings.

Main activities during 2021

• Review of Group’s strategic projects
• Re-structuring of Board Committees
• Developing the Group’s ESG initiative
• Reviewing the Quarterly Budget Reforecasts
• Approval of 2020 financial results, 2021 interim financial results and dividend payments
• Reviewing the Group Solvency Report
• Reviewing the Group’s BMA Supervisory College Response
• Approving a listing on OTCQX in the USA
• Approving the launch of Gibson Re
• Initiating an external Board evaluation and effectiveness review
• Amendment of the Company’s Bye-laws
• Approval of Group Tax Strategy and Tax Operational Guidelines.

Areas of focus for 2022

• Further implementation of Project Gateway, the Group’s transformation and efficiency programme
• Embedding ESG across the Group and business
• Rolling out the Group People Strategy
• Renewing the Company’s purpose, values and culture
• Approval of 2021 financial results, 202 interim financial results and any dividend payments
• Implementation of an appropriate accounting framework
• Succession planning and remuneration
• Monitoring climate and cyber risk on the business.

The Board is committed to maintaining effective communication and having constructive dialogue with all its stakeholders.

The Board’s direct engagement with the Company’s stakeholders is principally with its shareholders and employees. Where Directors do not have direct contact with stakeholders, they rely on the executive leadership team and dedicated functions such as compliance and procurement to engage with stakeholders on behalf of the Company and this can take place at both a Group and operational level. Each stakeholder group has a tailored engagement approach and this can range from informal telephone calls, email correspondence, regular meetings, reports and surveys. The aim of all our stakeholder engagement is to build trust and to understand the views, interests and priorities of all stakeholders, which in turn allows us to take stakeholders’ interests into account in key decisions.

Further details of how the Company engages with its key stakeholders can be found on pages 25 and 27 of our 2021 Annual Report. Details of how the Board understands and meets the needs of its shareholders are outlined in Paragraph two of this Statement.