Sirius International Insurance Corp.
Remuneration Principles 2011
Remuneration Principles 2011
Contents
1
INTRODUCTION .............................................................................................................. 1
1.1
Regulation ..................................................................................................................... 1
1.2
Scope ............................................................................................................................ 1
2
2.1
REMUNERATION IN SIRIUS ........................................................................................... 2
General. ......................................................................................................................... 2
2.1.1
Balance between fixed and variable components .......................................................... 2
2.1.2
Combination of individual and collective performance ................................................... 2
2.1.3
Risk Based Approach............................................................................................................. 2
2.1.4
Long term view ....................................................................................................................... 3
2.2
Decision-making process. .............................................................................................. 3
2.3
Remunerations components
3
2.3.1
Basic Salary. ............................................................................................................................. 3
2.3.2
Variable remuneration ........................................................................................................... 4
2.3.3
Occupational Pension. ........................................................................................................... 5
2.3.4
Other allowances. ................................................................................................................... 5
3
PERSONNEL WITH A MATERIAL IMPACT ON THE RISK PROFILE.............................. 5
4
RISK ANALYSIS ............................................................................................................... 5
Remuneration Principles 2011
1 INTRODUCTION
This report aims to define and describe remunerations which apply to Sirius
International Insurance Corp (Sirius). Sirius has a remuneration policy adopted
by the Board of Sirius.
1.1 Regulation
The Swedish FSA has issued a general guideline on remuneration policies and
practices for insurance companies (FFFS 2011:2). According to these, the
remuneration policy and practice should:
promote sound and effective risk management and shall not encourage
risk taking that exceed the business´ risk tolerance limit,
promote the company’s long-term interest,
be based on risk-based profitability measures that take cost of capital and
liquidity into consideration,
have a sound balance between fixed and variable remuneration
components,
use a combination of individual, business unit and company performance
for calculation of variable compensation, and
for employees with a material impact on the risk profile at least 60 percent
of the variable remuneration shall be deferred over 3 years.
Regulation in the form of general guidelines allows alternative solutions
provided that these lead to the same result and can be motivated.
1.2 Scope
The remuneration policy applies to the business as a whole, including all
remunerations and all employees. The policy sets the basic principles for
remunerations that are common for all different jurisdictions within Sirius.
However, to get the full picture of how employees are compensated, local
salary policies, local legislation, local regulatory requirements and union
agreements as to vacation, healthcare, working environment, compensation
etc. have to be recognized.
1
Remuneration Principles 2011
2 REMUNERATION IN SIRIUS
2.1
General
The overriding principle for compensation to Sirius employees is that salaries
and other remuneration are in line with the market level in the insurance
industry. The remuneration policy and remunerations practices shall be in line
with Sirius business and risk management strategy promote sound and
effective risk management and not encourage excessive risk-taking or
counteract Sirius´ long term interests.
2.1.1
Balance between fixed and variable components
When remuneration schemes include both fixed and variable components,
these shall be appropriately balanced so that the fixed component represents
a sufficiently high proportion of the total remuneration to avoid that the
employees are overly dependent on the variable components and allow Sirius
to operate a fully flexible bonus policy.
2.1.2 Combination of individual and collective performance
A variable remuneration component shall be based on a combination of the
assessment of the individual and the collective performance, such as business
area and the overall results of the undertaking or group. In the assessment of
individual performance nonfinancial performance shall be considered.
.
2.1.3 Risk Based Approach
The measurement of performance, as a basis for bonus or bonus pools, shall
include an adjustment for current and future risks related to the underlying
performance and shall take into account the cost of the capital employed and
the liquidity required.
2
Remuneration Principles 2011
2.1.4
Long term view
The payment of variable remuneration to risk-takers shall contain a flexible,
deferred component that considers the nature and time horizon of the
undertaking’s business in order to align the remuneration practices with the
long term interest of shareholders.
2.2
Decision-making process
Sirius´ board decides on the remuneration policy.
2.3
Remunerations components
The remuneration policy stipulates that an employee´s remuneration can
consist of a fixed and a variable component, consisting of one or more of the
following components:
Basic salary, i.e., a fixed salary that is paid out monthly
Bonus (variable remuneration), which pertains to remuneration based
on results. Such remuneration is paid out based on results and
performance in relation to expectation
Occupational pension
Other benefits such as car benefit, lunch subsidy and wellness grant.
Severance payment
2.3.1 Basic Salary
Sirius has adopted a Salary policy. The policy stipulates that the company
should strive for a salary structure that is accepted as being fair and objective.
The objective of the company is to give all employees competitive fixed
salaries adjusted to the market conditions.
CEO confirms the overall yearly level for the salary review.
3
Remuneration Principles 2011
2.3.2 Variable remuneration
Variable remuneration within Sirius consists of three types of variable
remunerations:
All employee bonus
Annual bonus
Long term incentive plan (LTIP)
a) non share-based
b) share-based
All Employee Bonus includes all permanent employees in Stockholm except
for those who are included in other bonus programs. The objectives with the
All employee bonus are to i) clarify the relationship between performance and
reward ii) reward employees when the Companies result and individual
performance are good iii) clarifying the Companies and individual employees
ability to meet strategic objectives. The predefined targets for the year are
decided by the Board at the beginning of every year.
The Sirius Group Annual Bonus Plan (Annual bonus) is intended to
provide performance incentives for officers and other key employees who are
not participating in All employee bonus. Participation in the Annual Bonus plan
is discretionary based on annual recommendations by CEO and are finally
approved by the Compensation Committee of White Mountains Insurance
Group. The predefined target for the year is decided by the Board of White
Mountains at the beginning of every year.
Long Term Incentive Plan (LTIP) is an additional bonus program to the
Annual Bonus Plan. LTIP is designed and approved by the Board of WTM.
LTIP is intended for a limited number of senior executives as key member of
Sirius management and defined risk-takers. In general, awards vest, subject to
attainment of pre-specified performance goal after three years. Performance
units are designed to reward company-wide performance.
4
Remuneration Principles 2011
Long Term Incentive Plan (LTIP) share-based. LTIP share-based is
designed and approved by the Board of White Mountains. The participant is
entitled to receive a pre-defined number of shares if pre-defined terms and
conditions are fulfilled.
2.3.3 Occupational Pension
Sirius applies the basic principal for pension plans that are common for all
different jurisdictions within Sirius.
2.3.4 Other allowances
A limited number of employees are entitled to company car benefit. CEO
approves the company car benefit.
2.3.5 Severance payment
Employees could under certain circumstances receive severance payment.
3 PERSONNEL WITH A MATERIAL IMPACT ON THE RISK
PROFILE
Personnel with a material impact on the risk profile are defined as holders of key
functions, parts of senior management and personnel undertaking activities that
involve significant risk-taking. Personnel belonging to this group has to be
defined on a regular basis by the management and the Board as special rules
apply for this category as regards deferral of variable remuneration according to
the Swedish FSA (FFFS 2011:2).
4 RISK ANALYSIS
Sirius is assessed annually by the Risk management and control system to
ensure that the remuneration principles within Sirius are followed.
5