Zurich Insurance Group Annual Report 2019 36
Group overview Governance Risk review Financial review
Governance Zurich Insurance Group Annual Report 2019 37
Group overview Governance Risk review Financial review
40 Corporate governance report 92 Remuneration report Zurich Insurance Group Annual Report 2019 38
Group overview Governance Risk review Financial review
Message from our Chairman on corporate governance
Insurance is perfectly placed to support society on environmental, social and governance (ESG) challenges, and Zurich has accelerated its contribution in the area of investments and insurance products and offerings. Furthermore, we are committed to work sustainability through our Message from our Chairman on corporate governance aims to build employability – Creating making sure we provide our employees and others in the community with skills needed sustainable value to keep pace with change – while playing our part in creating a sustainable future for all for all our stakeholders our stakeholders.
With a clear strategy and a strong commitment to sustainability, we embed ESG issues across our business.” Michel M. Liès Chairman of the Board of Directors Zurich Insurance Group Annual Report 2019 39
Group overview Governance Risk review Financial review
Message from our Chairman on corporate governance
Dear Shareholder together. And with regard to our third pillar Amanda Blanc, former CEO EMEA and Good corporate decision-making is key of our sustainability strategy, building trust Bank Distribution, decided to step down to our organization. We continued to in a digital era, we recently released our from her role as of July 2, 2019, and Alison strengthen our governance structure in 2019. global Data Commitment – a binding pledge Martin took over the role as CEO EMEA to use our customers’ data responsibly and Bank Distribution effective July 9, 2019, Sustainability is becoming and securely. while continuing as Group Chief Risk Officer (Group CRO) until September 30, 2019. And, in a fast-changing world marked increasingly important On October 1, 2019, Peter Giger took up the by challenges such as climate change, cyber Over the past twelve months, creating role of Group CRO and became a member risks and new skillsets, sustainability is sustainable value for all stakeholders on of the Executive Committee (ExCo). environmental, social and governance more than an objective. It is a principle that (ESG) issues has become an even greater underpins everything we do so that future These appointments continue to enhance imperative for businesses. For example, generations can thrive. diverse thinking within our Board and the effects of climate change are increasingly Executive team, as a result of different becoming felt in the here and now, while Good governance supports our tenures, a more balanced gender mix, young people are making their voices heard sustainable business different professional backgrounds, geographic origins or other factors. like never before. To add sustainable value, a business must Such diversity represents the global also sustain itself. The Board’s traditional Insurance is perfectly placed to support nature of our business and our customer governance and oversight functions society on ESG challenges, and Zurich has and employee base. It enables us to see are therefore crucial, with frameworks accelerated its contribution. Key moments the full picture, promotes innovation, regularly reviewed to ensure robustness. in 2019 included becoming the first insurer boosts productivity and ultimately delivers As management continues to pursue to sign up to the UN’s Business Ambition better results. for 1.5°C Pledge and joining the UN- transformation of the business, the Board is focusing on the long term perspective convened Asset Owner Initiative for Net Zurich stakeholders Zero Portfolios’. These commit us to tackling and planning. And, as we move into a new Acting sustainably matters to all our climate change and facilitating transition strategic cycle in 2020, the Board will stakeholders, and Zurich’s strategy will to a low carbon environment through our encourage a learning culture within the enable us to deliver a positive impact operations, our relationships with customers business and further tangible impacts for all of them. Thank you for your continued and in the way we invest our assets. from our sustainability strategy. trust, support and engagement. On social issues, we are helping workers Changes to our Board and protect incomes and fund longer retirements, Executive Committee as well as building employability and At the Annual General Meeting (AGM) digital skills among our employees and on April 3, 2019, Michael Halbherr, Jasmin communities. We are committed to Staiblin and Barry Stowe were elected to Michel M. Liès Work Sustainability and promote a work Chairman of the Board of Directors join the Board of Directors as new members. culture in which everyone – employer David Nish did not stand for re-election. and employee, each playing their part – can The Board proposes to shareholders that pursue their ambitions, with the aim to they re-elect all current members of that we are all better prepared for the future, the Board at the AGM on April 1, 2020.
We have progressed in line with our evolving sustainability philosophy
2010 2011 2014 2015 2016 2017 2018 2019 Zurich Zurich Bronze class #2 in DJSI #3 in DJSI #3 in DJSI #5 in DJSI #2 in DJSI drops out re-enters in DJSI Silver class Silver class Silver class Bronze class Bronze class of the DJSI the DJSI
Corporate philanthropy ESG risk management Sustainable value creation
2008/9 2011 2012 2014/15 2017 2019 Longer term Approval Goals and plans Proof-point examples: Approval of a new ExCo & Board commitment to of Zurich’s for seven focus USD 2bn green bond commitment sustainability ambition alignment for the Z Zurich 1 st Corporate areas developed for Zurich 2019–2020 priorities 10% PE impact investing allocation Foundation Responsibility and agreed Signatory of the New policy on strategy Signatory of Flood resilience measurement UN Principles for thermal coal, oil the PRI framework developed & tested Sustainable Insurance sands & oil shales Carbon neutrality Signed the Business Group-wide Health & Safety standards Ambition for 1.5°C Diversity & Inclusion incorporated into pledge our People Strategy Sustainability risk framework in underwriting Zurich Insurance Group Annual Report 2019 40
Group overview Governance Risk review Financial review
Corporate governance report
Contents
Introduction 41 Overview on Group governance 42 Group structure 44 Board of Directors 46 Executive Committee 64 Corporate governance report Governance, controls and assurance at Zurich Insurance Group 74 External auditors 75 Group Audit 77 Group Compliance 78 Stakeholders 79 Shareholders 79 Employees 82 Customers 84 Communities – our role in society 85 Capital structure 86 Changes of control and defense measures 88 Risk management and internal control framework 88 Going concern 88 Zurich Insurance Group Annual Report 2019 41
Group overview Governance Risk review Financial review
Corporate governance report (continued)
Introduction
The Zurich Insurance Group, consisting of Zurich Insurance Group Ltd and its subsidiaries (the Group or Zurich), is committed to effective corporate governance for the benefit of its shareholders, customers, employees and other stakeholders based on the principles of fairness, transparency and accountability. Structures, rules and processes are designed to enable proper conduct of business by defining the powers and responsibilities of its corporate bodies and employees.
This report describes the Group’s approach to the key elements of corporate governance within the Group. It includes the information required under the following rules, with which Zurich complies: 33Directive on Information Relating to Corporate Governance of the SIX Exchange Regulation (as of March 20, 2018). 33Swiss Code of Best Practice for Corporate Governance (Swiss Code of Best Practice), issued in 2002 by economiesuisse, as amended in October 2007 and in August 2014.
The shares of Zurich Insurance Group Ltd are listed on the SIX Swiss Exchange. Certain Group companies have listed debt issued under its Euro Medium Term Note Programme and other financial instruments.
Zurich is subject to insurance group supervision by the Swiss Financial Market Supervisory Authority FINMA (FINMA). The Joint Committee of the European Supervisory Authorities has also designated the Group as an insurance group and not as an insurance conglomerate because of the small size of its non-insurance activities. The Swiss Insurance Supervision Act (ISA) requires Swiss insurance companies and groups to establish and maintain strong governance and risk management systems as well as effective internal control systems that are appropriate to their business activities. It prescribes the calculation of a risk-based solvency margin on a Group-wide basis and at legal entity level pursuant to the Swiss Solvency Test (SST). All material intra-group transactions must be reported to FINMA. In addition to the group supervision exercised by FINMA and its insurance supervision of the legal entities Zurich Insurance Company Ltd, Zurich Life Insurance Company Ltd, Zurich Reinsurance Company Ltd and Orion Legal Expenses Insurance Ltd., the insurance subsidiaries and remaining financial services entities of the Group are supervised by the respective local supervisory authorities.
The principles of corporate governance and the standards described above are incorporated and reflected in a number of corporate documents, in particular the Articles of Association, the Organizational Rules and the Charter of the Committees of the Board of Directors of Zurich Insurance Group Ltd (www.zurich.com/en/about-us/corporate-governance/ corporate-documents). The Governance, Nominations and Sustainability Committee of the Board of Directors of Zurich Insurance Group Ltd regularly reviews the Group’s corporate governance against best practice standards and ensures compliance with corporate governance requirements.