Mandate of the Board of Directors
Intact Financial Corporation and its P&C insurance companies

I. Purpose

The main responsibility of the Board of Directors is to oversee the management of business and affairs of the Company, including its pension funds. In this regard, the Board establishes policies, reporting mechanisms and procedures in view of safeguarding the assets of the Company and ensuring its long-term viability, profitability and development. The Board appoints the following committees to assist it in its stewardship role: the Audit Committee, the Risk Management Committee (the “Risk Committee”), the Compliance Review and Corporate Governance Committee (the “CRCG Committee”), and the Human Resources and Compensation Committee (the “HRC Committee”). The Board may also appoint other Committees, such as the Pension Committee or the Enterprise Risk Management Committee or the Disclosure Committee and others, as it deems appropriate.

II. Composition and Qualifications

The composition of the Board is determined based on applicable legal requirements. The mandate of the Board requires complementary knowledge, skills and expertise on the part of the Directors, to enable them to positively contribute to the achievement of the Company’s corporate objectives, including a reasonable representation of financial industry and risk management skills. The Board of Directors Policies and Procedures, as approved from time to time by the Board, serves as a guide to determine the composition of the Board.

In addition, the composition of the Board and qualifications of its members will comply with such additional requirements as may be imposed by applicable legislation and Best Practices.

III. Process and Operations

1. Meetings

The Board of Directors meets at least four times per year. The calendar of meetings is determined two years in advance.

2. Private Meeting of the Members of the Board and Private Meetings With Members of Management

Preceding or following each regular meeting, the members of the Board meet privately without the presence of Management. The members of the Board may meet in private at their discretion following each non-regular meeting.

The members of the Board may meet members of Management in private after each regular or non-regular meeting. The Board may also meet with any other employees of the Company or otherwise request access to Company records.

As well, any of the Oversight Functions may call a meeting of the Board at any time.

3. Quorum

A quorum at any meeting shall be a simple majority of the members of the Board of Directors.

IV. Mandate

The Board of Directors supervises the management of the business and affairs of the Company. In exercising this role, the Board fulfills the following responsibilities:

  1. Strategic Planning
  2. Supervision over Senior Management, Oversight Functions and Compensation and Succession Planning
  3. Financial Reporting & Disclosures
  4. Pension Plans and Funds
  5. Board of Directors Structure and Composition
  6. Risk Management
  7. Internal Controls
  8. Business Ethics, Compliance and Corporate Governance

1. Strategic Planning

Each year, the Board reviews, discusses and approves the strategic plan and the corporate objectives of the Company; it also monitors the Company’s performance against the strategic plan using appropriate metrics and milestones and conduct periodic reviews of strategy. In this regard, it reviews and discusses attainment of results at each of its quarterly meetings, to ensure close monitoring of key objectives and prompt realignment, if judged appropriate. In relation thereto, the Board reviews with Management the opportunities and risks of the Company’s three-year plan, and approves it, including the budget for the following year.

At least annually, the Board requires management to provide an update or a revised strategic plan.

As part of strategic planning, the Board also reviews and approves material transactions and reorganizations, such as acquisitions, dispositions, mergers, corporate reorganizations, alliances and financing.

2. Supervision over Senior Management, Oversight Functions and Compensation and Succession Planning

The Board is responsible for ensuring that the Company is supported by an appropriate organizational structure including a CEO, Oversight Functions as defined by law, and other Executives who have complementary skills and expertise, to ensure the sound management of the business and affairs of the Company and its long-term profitability.

To fulfill its role, the Board delegates certain functions to its Committees as follows:

  • The oversight of the organizational structure of the Company, its succession planning and talent development is delegated to the HRC Committee that makes its recommendation to the CEO and to the Board in these regards;
  • The HRC Committee will make recommendations to the Board for its approval on the appointment, assessment, compensation and termination (if applicable) of the CEO
  • The HRC Committee will also make recommendations to the CEO on the compensation of the other Executives, including the Oversight Functions;
  • The annual assessment of the effectiveness and the review of the objectives of an Oversight Function is delegated to each Committee that has a relationship with such Oversight Function, such assessment may include conducting a benchmarking analysis of such functions and processes with the assistance of internal or external advisors;
  • Each Committee that has a relationship with an Oversight Function will periodically review and approve the respective mandate of such Oversight Function;
  • Each Committee that has a relationship with an Oversight Function will make recommendations to the CEO and to the Board on the appointment, assessment and termination (if applicable) of the head of such Oversight Function;
  • The HRC Committee will review and approve the description of functions of the CEO, the Presidents, the Chief Operating Officers and the Chief Human Resources Officer.
  • The HRC Committee reviews, discusses and approves, after discussion with the CEO, the compensation and benefits plans for Employees, Management and Executives, including the Oversight Functions, in view of attracting and retaining talent and linking total compensation to financial performance and the attainment of strategic objectives of the Company.

3. Financial Reporting & Disclosures

The Board of Directors is responsible for ensuring that the Company adopts appropriate policies and procedures for the accuracy of its Financial Statements and returns and the timely reporting and disclosure of financial information to regulators and shareholders, respectively. The Board may delegate this function to the Audit Committee, which will review the Company’s annual and quarterly Financial Statements and management’s discussion and analysis and meet with the Internal and External Auditors and actuaries to discuss such statements and documentation. The Audit Committee will approve or make recommendations to the Board for its approval of such statements and returns. The Audit Committee may also review and approve press releases containing previously undisclosed financial information.

4. Pension Plans and Funds

The Board of Directors may appoint one or more committees for the monitoring of the various aspects of its Pension Plans (benefits, Financial Statements and actuarial valuation) or the management of their funds (review of policies and approval of strategies and investment reports). The Board may also appoint a committee for the review of the governance framework in relation to the management of the pension plans and pension funds.

5. Board of Directors Structure and Composition

The Board of Directors is responsible for ensuring that its own structure and composition are in compliance with applicable corporate governance legislation and Best Practices and that such structure and composition are appropriate for the Company and take into account the suitability and the integrity of all the members of the Board.

With a view to ensuring effective Board structure and composition, on an annual basis, the Board undertakes a self-assessment to evaluate the effectiveness of the Board and Committee practices and occasionally with the assistance of an independent external advisor. The Board may delegate to the CRCG Committee the identification of new Board members and the implementation and review of the nomination process for new Board members.

6. Risk Management

The Board is responsible for ensuring that the Company’s business strategies and allocations of capital are related to the Company’s Risk Appetite Framework and tolerance. To this end, the Board must ensure that the Company has effective risk management programs and practices that are within the risk tolerance of the Company. The Board may delegate this function to the Risk Management Committee, which will review the Company’s risk management programs and practices and evaluate the Company’s compliance with key risk policies and limits.

The Board is responsible for annually evaluating and approving the Enterprise Risk Management Strategy including the Risk Appetite Framework and the Internal Capital Ratio. The Board is also responsible for approving the Company’s Investment Policy.

7. Internal Controls

The Board is also responsible for ensuring that the Company has an appropriate internal control framework in place that supports the achievement of the Company’s strategies and objectives, including the protection of the accounting and financial reporting process. The Board may delegate this function to the Audit Committee, which will review the Company’s internal control procedures, and establish procedures to receive submissions or complaints regarding accounting or auditing matters.

8. Business Ethics, Compliance and Corporate Governance

The Board of Directors is responsible for ensuring that the Company has the appropriate structures and programs in place to operate within the highest ethics, compliance and corporate governance practices. The Board may delegate this function to the CRCG Committee, which will review the Company’s compliance programs including the Ombudsman’s Office, the Privacy Office, market conduct and corporate governance initiatives. The Committee will review the Company’s procedures to monitor its Related Party Transactions and will approve permitted Related Party Transactions. The Committee will also ensure that there are appropriate procedures in place for the identification and resolution of conflicts of interest.

To support the Company’s corporate governance objectives, the Board and its Committees ensure that the Directors, the CEO, the Oversight Functions and other Executives demonstrate suitability and integrity in line with high ethical values of the Company and mandates the CRCG Committee to approve governance and compliance programs proposed by Management that aim at implementing and maintaining a governance and compliance mindset across the Company, including with its employees and other stakeholders.

V. Access to Independent Consultants

The Board of Directors enjoys a broad oversight function over many technical and specialised aspects of the business and affairs of the Company. As such, individual members of the Board are authorised to engage consultants including lawyers, auditors and actuaries at the expense of the Company, in appropriate circumstances.

It is the responsibility of the Board of Directors to ensure that consultants are retained only when necessary and that such consultants are retained prudently and without duplication.

The Board of Directors may delegate this function to the CRCG Committee, which will ensure that appropriate policies and procedures are in place to provide for the prudent engagement of consultants.

Upon the recommendation of the Audit Committee, the Board also recommends the appointment of the External Auditor to the Shareholders.

VI. Delegation

The Board of Directors may designate a sub-committee or individual(s) to review any matter the Board of Directors can delegate by law.

VII. Board Mandate Review

On an annual basis, the Board of Directors reviews this mandate and approves such changes as are necessary.

Approved by the Board of Directors of Intact Financial Corporation and its P&C Subsidiaries on July 30, 2013 and revised on July 28, 2015.