Corporate Governance at Suomi Mutual

Suomi Mutual’s business operations are based on compliance with valid laws and other norms, as well as with official regulations issued by the authorities on the basis of these laws. Suomi Mutual observes the Finnish Corporate Governance Code for listed companies in a manner appropriate to a mutual company.

General Meeting

The 75-member Policyholders’ Representative Assembly elected by policyholders from among themselves by postal vote acts as Suomi Mutual’s General Meeting. It deals with the matters usually discussed at the general meeting. It deals with the matters generally dealt with at a general meeting. The President and CEO, the Chair of the Board of Directors and the majority of other Board members are usually present in General Meetings. The Policyholders’ Representative Assembly convened once in 2009. The Chairman and other members of the Policyholders’ Representative Assembly are paid a remuneration of EUR 1,200 and EUR 800 respectively for each meeting attended.

List of the Assembly members can be found on page Policyholders’ Representative Assembly.

Every year, the Policyholders’ Representative Assembly appoints a nomination committee made up of three people from among its members. The aim of this committee is to prepare proposals regarding the number of Board members, the Chair of the Board, the Deputy Chair and other members, and the auditors and their fees.

The Chairman and other members of the nomination committee are paid a remuneration of EUR 600 and EUR 500 respectively for each meeting attended.

List of the Nomination Committee members can be found on page Composition of the Nomination Committee.

Board of Directors

Under the Articles of Association, Suomi Mutual’s Board of Directors has between four and seven members. There are currently five members. The Chair, Deputy Chair and the other members of the Board will be elected by the annual general meeting. The term of office of a Board member is one year.

Those elected as Board members must have a good reputation and possess the professional qualifications and experience required for the task. Board members must also possess such general insurance expertise that is required by the company in view of the nature and scope of its operations. The members are not required to be owners of the company, there is no upper age restriction and there are no restrictions regarding re-election.

The Board of Directors attends to the administration of the company and to the appropriate organization of corporate activities.

The Board of Directors has drawn up a written working order. In order to fulfil its duties, the Board of Directors undertakes to

  • take decisions on Suomi Mutual’s strategy and supervise its implementation
  • take decisions on the use of non-restricted capital and of the excess capital generated by the company’s insurance business for various additional benefits to be declared for policyholders
  • make proposals to the General Meeting for the use of the company’s profit or the handling of loss
  • approve the company’s investment plan and define, among other things, investment powers and reporting as part of the investment plan
  • approve operational plans, objectives and budgets and supervise their implementation
  • approve the company’s risk management plan
  • take decisions on substantial business transactions, disposals of assets, and contracts
  • appoint and release the President and CEO and his/ her deputy and decide on their salaries and benefits and other conditions of their employment
  • take decisions on the reward and incentive systems for the management and staff and approve the pay and reward system applied in the company
  • decide on the selection of reinsurers and on the principles for the diversification of reinsurance cover
  • appoint the Electoral Board for the elections of the Policyholders’ Representative Assembly during the election year.

The Board of Directors convened 11 times in 2009. The participation rate was 100 per cent.

To ensure operational efficiency, the Board of Directors annually assesses its operations and working methods. All Board members are paid a remuneration of EUR 500 for each meeting attended. The Chair, the Deputy Chair and other members also receive a monthly remuneration of EUR 3,300, EUR 2,200 and EUR 1,700 respectively.

The Board of Directors has not appointed any separate committees.

President and Management Group

The President manages the company’s business operations and day-to-day administration in accordance with the guidelines and regulations provided by the Board of Directors. In addition, the President supervises that the company operates in conformity with the law, official regulations, good insurance practice and contractual obligations. The President is not a member of the Board of Directors. However, the President attends Board meetings.

The conditions of the President’s employment relationship are defined in the President’s employment contract approved by the Board of Directors. Salaries and fees (including fringe benefits) paid to the President in 2009 totalled EUR 441,952 (In 2008, EUR 541,357).

The company’s Management Group assists the President. The President and the members of the Management Group are presented on page Composition of Management Group.

Reward System

The company has a performance-based pay system which applies to the company’s entire staff. The Board of Directors is not included in the scope of the reward system. The Board has approved the reward system and annually decides on the criteria for result targets.

The main criterion for determining the amount of performance-based pay is the change in the company’s net assets during the financial year added by the amount of additional benefits declared for the policyholders. The maximum performance-based pay for the President and the members of the Management Group is equivalent to six months’ salary. The reward system for the investment staff also applies to the Chief Investment Officer, who is a member of the Management Group.

Internal control, risk management and internal audit

The company’s risk management principles are separately presented in the notes to the financial statements.

Most of the company’s day-to-day operations have typically been outsourced. Outsourcing is based on long-term outsourcing contracts, which also contain provisions on the division of responsibilities between the company and the service provider in problem situations. The internal audit function of an outsourced service provider is responsible for supervising that the service provider acts in conformity with the contract. Suomi Mutual and its auditors have the right to obtain from the outsourced service provider the information required by the company’s audit and internal control functions.

Auditing

The Nomination Committee annually makes a proposal to the General Meeting for the appointment of an auditor for the company. The 2009 General Meeting elected PricewaterhouseCoopers Oy, Authorised Public Accountants, and Ms Leena Rajala, Authorised Public Accountant, as company’s auditors. Mr Juha Wahlroos, Authorised Public Accountant, acts as the partner-in-charge.

In 2009, the Authorised Public Accountants and other companies within the same group were paid EUR 120,000 for auditing and EUR 22,000 for various advisory and consultative services. The fees paid are inclusive of value added tax.

Articles of Association

The Articles of Association of Suomi Mutual are more extensive than required by law; this is necessary for the provision of information in a mutual company. The Articles of Association also outline the election system that must be followed in the election of representatives.

Supervision by Authorities

The operations of Suomi Mutual are supervised by the Financial Supervisory Authority, whose main task is to monitor and inspect banks, insurance and pension institutions and other institutions in the insurance sector. For more information, go to www.finanssivalvonta.fi

Communications

The company’s web pages are at www.suomi-yhtio.fi. The company’s Finnish-language web pages contain information on subject matters in accordance with the Finnish Corporate Governance Code for listed companies, to the extent that its recommendations are relevant for a mutual company. Information on shares and shareholders is not relevant owing to the company’s mutual structure.