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Board Committees Terms of Reference

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These are the Terms of Reference for four key committees of Bupa Arabia: the Audit Committee, the Executive Committee, the Investment Committee, and the Nomination and Remuneration Committee. If you have any questions about these, please contact us​
 

AUDIT COMMITTEE

Terms of Reference

Constitution

The Board of Directors forms the Audit Committee which is to comprise of no fewer than three members and not more than five members, of whom the majority are non-executive members and not members of the Board of Directors and to be in accordance with Saudi Arabian Monetary Agency, Ministry of Commerce and Capital Market Authority rules.

Role

The principal role of the Committee is to monitor the integrity of the Company's financial statements, to review and, where appropriate, make recommendations to the Board on internal financial controls, internal audit and to review the external audit process and external auditors' performance. The Committee will also have oversight, through the Company's Risk and Compliance Committee, for ensuring that the Company's risk management processes, and also processes for monitoring compliance with laws and regulations, are adequate and effective, particularly with regard to the impact on the Company's financial reporting and its code of business conduct.


In performing its duties, the Committee will maintain effective working relationships with the Board of Directors, management, the Risk and Compliance Committee and the external and internal auditors. To perform their role effectively, each Committee member will need to develop and maintain their skills and knowledge, including an understanding of the Committee's responsibilities and of the Company's business, operations and prime business risks.

Duties and Responsibilities

The Board authorises the Audit Committee, within the scope of its responsibilities, to:

  • Perform activities within the scope of its charter.
  • Engage independent counsel and other advisors as it deems necessary to carry out its duties.
  • Ensure the attendance of Company officers at meetings as appropriate.
  • Have unrestricted access to members of management, employees and relevant information.
  • Review and ratify management's proposals for the performance, appointment and compensation of the external auditors.
  • In conjunction with executive management, approve the annual audit engagement fees and terms, as well as reviewing policies for the provision of non-audit services by the external auditors and, when required the framework for pre-approval of these services.

Internal Control

  • Review the internal controls systems implemented by management for the approval of financial transactions and the recording and processing of financial data.
  • Review the controls and processes implemented by management to ensure that the financial statements derive from the underlying financial systems, comply with relevant standards and requirements and are subject to appropriate management review.
  • Via the Risk and Compliance Committee, evaluate the overall effectiveness of the internal control and risk management frameworks.
  • Consider whether recommendations made by internal and external auditors have been implemented by management.
  • Ensure that controls and procedures are effective with regard to Anti-Money Laundering (AML) and Fraud.

Financial Reporting

  • With the support of the Risk and Compliance committee, review the current areas of greatest financial risk and how these are being managed.
  • Review significant accounting and reporting issues, including recent professional and regulatory pronouncements and understand their impact on financial reports.
  • Have oversight of the actuarial capability, providing an annual written report to the Bupa Arabia Board validating the appropriateness of current actuarial methodologies/models, the sufficiency and quality of data and IT systems, the adequacy of the overall underwriting/pricing policies and the adequacy of re-insurance.
  • Oversee the periodic financial reporting process implemented by management and review the interim financial statements and the annual financial statements prior to presentation to the Board of Directors and to give opinion and recommendations with respect thereto.
  • Review management's process for ensuring that information contained in analyst briefings and press announcements is consistent with published financial information.
  • Meet with management and the external auditors to review the annual financial statements, the key accounting policies and judgments.
  • Ensure that significant adjustments, unadjusted differences, disagreements with management and critical accounting policies and practice are discussed with the external auditors.
  • Review the other sections of the annual report before its release and consider whether the information is understandable and consistent with members' knowledge about the Company.

Compliance with Laws and Regulations

  • Via the Risk and Compliance Committee review the effectiveness of the system for monitoring compliance with laws and regulations insofar as they impact on financial reporting, and the results of management's investigation and follow-up (including disciplinary action) of any fraudulent acts of non-compliance.
  • Obtain updates from management as required and the Company's legal counsel regarding compliance matters that may have a material impact on the financial statements or compliance policies.
  • Obtain assurances from the external auditors that all regulatory compliance matters related to the business of the Company have been considered in the preparation of the financial statements.

Working with External Auditors

  • Obtain assurances from the external auditors as to the professional qualifications of all staff involved in audits.
  • Consider the independence of the external auditor and any potential conflicts of interest.
  • Review on an annual basis the performance of the external auditors and make recommendations to the Board for the appointment, reappointment or termination of the external auditors.
  • Review the external auditors' proposed audit scope and approach for the current year in the light of the Company's present circumstances and changes in regulatory and other requirements.
  • Discuss with the external auditor any audit problems encountered in the normal course of audit work, including any restriction on audit scope or access to information.
  • Ensure that significant findings and recommendations made by the external auditors and management's proposed response are received, discussed and appropriately implemented.
  • Meet separately with the external auditors to discuss any matters that the Committee or auditors believe should be discussed privately. Ensure the auditors have access to the chairman of the Audit Committee when required.
  • Review policies for the provision and authorisation of non-audit services by the external auditor.

Internal Audit

  • Review the activities, resources and organisational structure of the internal audit function and ensure that no unjustified restrictions or limitations are made.
  • Participate in the appointment, promotion or dismissal of the lead internal auditor and if necessary discuss with the external auditor the standard of work of the internal audit function.
  • Review the effectiveness of the internal audit function and ensure that it has appropriate standing within the Company.
  • Meet separately with the lead internal auditor to discuss any matters that the Committee or internal auditors believe should be discussed.
  • Ensure that significant findings and recommendations made by the internal auditors and management's proposed response are received, discussed and appropriately acted on.
  • Review the proposed internal audit plan for the coming year and ensure that it addresses key areas of risk and that there is appropriate co-ordination with the external auditor.

Reporting Responsibilities

  • Regularly update the Board about the Committee activities and make appropriate recommendations. Minutes of each meeting will be taken and distributed to the subsequent Board meeting.
  • Ensure the Board is aware of matters that may significantly impact on the financial condition or affairs of the business.
  • Prepare any reports required by law or listing rules requested by the Board, for example a report on the Audit Committee's activities and duties to be included in the section on corporate governance in the annual report.

Evaluating Performance

  • Assess the achievement of the duties specified in the charter and report the findings to the Board.

Review of the Committee Charter

  • Review the Audit Committee charter annually and discuss any required changes with the Board.
  • Ensure that the charter is approved or reapproved by the Board.

( EXECUTIVE COMMITTEE )

Terms of Reference

Constitution

The Board of Directors forms the Executive Committee, which is to comprise of no fewer than three members and not more than five members. The Committee chooses a member from within them as a chairman of the committee and to chair its meetings. In his/her absence, the committee chooses a temporary chairman from the attending members.

Role

The principal role of the Executive Committee is to, on behalf of the Board of Directors, monitor the performance of the business on an on-going basis, to review financial targets, budgets and forecasts before they are presented to the main Board for sign-off and to ensure that the business is operating within its solvency margin limits.

In performing its duties the committee will maintain effective working relationships with the Board of Directors, Bupa Arabia's management, and the external and internal auditors. To perform their role effectively, each committee member will need to develop and maintain their skills and knowledge, including an understanding of the committee's responsibilities and of the company's business, operations and risks.

Duties and responsibilities

The board authorises the Executive Committee, within the scope of its responsibilities, to:

  • Approve Board meeting agendas.
  • Monitor the performance of the business on a monthly basis
  • Monitor the annual budget, quarterly re-forecasts and management targets.
  • Approve of line-item budget deviations within +/- 10%, or more than SR1 million (as examples).
  • Give final approval to capital expenditure items above SR3 million.
  • Monitor the implementation of the Board's policies and procedures.
  • Monitor the performance of the CEO and senior management team.
  • Review draft budgets before submittal to the full Board.
  • Sign off on the biding of any sales contract with an annual earned premium of SR100m or more or, if the winning of any account will present solvency margin issues.
  • Monitor solvency levels and make recommendations as appropriate.

INVESTMENT COMMITTEE

Terms of Reference

Constitution

The Board of Directors forms the Investment Committee, which is to comprise of no less than three members and not more than five members. The Committee chooses a member from within them as a chairman of the committee and to chair its meetings. At his/her absence, the committee chooses a temporary chairman from the attending members.

Constitution

The principal role of the Investment Committee is to manage the investment cash of Bupa Arabia Company to maximise returns in accordance with SAMA guidelines, Islamic Shariah principles and the Board's stated risk position.

In performing its duties, the Committee will maintain effective working relationships with the Board of Directors, Bupa Arabia Company's management, and the external and internal auditors. To perform their role effectively, each Committee member will need to develop and maintain their skills and knowledge, including an understanding of the Committee's responsibilities and of the Company's business, operations and risks.

Duties and responsibilities

The Board authorises the Investment Committee, within the scope of its responsibilities, to:

  • Manage the investment cash* of Bupa Arabia Company to maximise returns.
  • Manage the relationship between the officially appointed investment manager(s) and Bupa Arabia Company.
  • Ensure these investments are carried out in full accordance with the SAMA insurance regulations.
  • Ensure all investments are in full compliance with Islamic Shariah.
  • Agree an additional layer of liquidity that can be borrowed against.
  • Hire fund managers as appropriate based on expertise / past performance and their credit rating being a minimum of A-.
  • Allocate investments to these fund managers as appropriate.
  • Set out the investment portfolio to deliver returns in the time horizons as determined by the Board.
  • Agree with the Board a maximum risk level for each asset class and for the portfolio in total.
  • Advise the Board on any interest rate risk associated with any future borrowing.
  • Minimise Bupa Arabia Company's foreign exchange exposure through appropriate currency hedging (likely through a fund manager).
  • Set the mandate for and be involved in the recruitment of an internal treasury manager.
  • Set the direction of the internal treasury manager to manage the operational cash investment profile.
  • Receive and review quarterly investment performance and make recommendations as appropriate.

* where investment computed as total cash post portfolio transfer, less regulatory obligations, less cash required to run the business on a day-to-day basis, less a contingency.


Further, the Investment Committee will:

  • Consider and approve on behalf of the Board, Bupa Arabia Company's investment and treasury policy, including specific investments and borrowings and other transactions within the scope of the approved policy.
  • uUndertake the following:
    • The on-going review of the appropriateness of the Bupa Arabia Company investment and treasury policy.
    • The on-going review of the performance of Bupa Arabia Company's investments.
  • Consider:
    • investment activity and current market valuation.
    • review of performance by asset class/investment manager.
    • latest forecasts/asset allocation recommendations.
    • agree asset allocation including buy/sell points.
    • any other relevant investment issues.
  • Make recommendations on investment and treasury policy and wider investment and treasury performance to the Bupa Arabia Company Board as required.
  • To review, at least once a year, its own performance, composition and terms of reference to ensure that it is operating effectively and recommend any changes it considers necessary to the Board for approval.

NOMINATION AND REMUNERATION COMMITTEE

Terms of Reference

Constitution

The Board of Directors forms the Nomination and Remuneration Committee which is to comprise of no fewer than three members and not more than five members. The Committee chooses a member from within them as a chairman of the committee and to chair its meetings. At his/her absence, the committee chooses a temporary chairman from the attending members.

Role

The principal role of the Nomination and Remuneration Committee is to effectively manage Board and Board Committee appointments as required and to review the effectiveness of the Board on an annual basis. Further, the Committee are tasked with reviewing and approving any remuneration-based policy of the company including, and not limited to, senior management pay, company bonus schemes, company pay-rises, sales commission schemes, long term incentive plans and any changes to the HR policy.

In performing its duties the Committee will maintain effective working relationships with the Board of Directors, Bupa Arabia's management, and the external and internal auditors. To perform their role effectively, each committee member will need to develop and maintain their skills and knowledge, including an understanding of the committee's responsibilities and of the company's business, operations and risks.

Duties and responsibilities

The board authorises the Nomination and Remuneration Committee, within the scope of its responsibilities, to:

  • Recommend to the Board of Directors appointments to the Board in accordance with the approved policies and standards. The Committee shall ensure that no person who has been previously convicted of any offence affecting honour or honesty is nominated for such membership.
  • Annual review of the requirement of suitable skills for membership of the Board of Directors and the preparation of the description of the required capabilities and qualifications for such membership, including, inter alia, the time that a Board member should receive for the activities of the Board.
  • Review the structure of the Board of Directors and recommend any amendments to this.
  • Determine the points of strength and weakness in the Board of Directors and recommend remedies that are compatible with the company's interest.
  • Ensure on an annual basis the independence of the independent members and the absence of any conflict of interest in case a Board member also acts as a member of the Board of Directors of another company.
  • Draw clear policies regarding the indemnities and remunerations of the Board member and top executives; in laying down such policies, the standards related to performance shall be followed.
  • Prepare an annual report as to the granted remuneration to Board members and members of subordinate committees to be included in the annual report of the Company.
  • Review on an annual basis the levels of salaries, incentives and remunerations at the end of service as well as recommendation thereof for the Board of Directors.
  • Evaluate the CEO according to laid-down purposes and objectives by the Board of Directors.
  • Set and approve the CEO and his direct reports' compensation and rewards.
  • Approve the overall annual performance bonus scheme for the company as well as its resultant cost every year.
  • Review and agree sales commission schemes.
  • Approve Long Term Incentive Plans for senior executives.
  • Approve long term incentive payments for senior executives.
  • Set and agree company and personal targets in relation to direct pay of bonuses and long term incentives.
  • Approve proposed succession plans for key positions.
  • Approve HR policies and procedures.

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