Mandate of the Governance and Sustainability Committee
Intact Financial Corporation And its Canadian P&C Insurance Companies (jointly called the “Company”)
The Governance and Sustainability Committee (the “Committee”) is a committee of the Board ofDirectors (the “Board”) of the Company. It ensures a high standard of governance, compliance and ethics in the Company and its subsidiaries (the “Group”), including its pension funds and that the Group meets its legal requirements and engages in best practices as determined by the Board.
In this regard, the Committee oversees: (i) the governance framework of the Group and of its pension plans, (ii) the Company’s board and committee composition, (iii) the assessment of the Company’s board and committee effectiveness, (iv) the compliance framework, (v) the compliance programs of the Group which includes related party transactions (“RPT”), market conduct programs and policies, as well as the implementation of corporate compliance initiatives, and (vi) the Company’s environmental, social and governance (ESG) framework, performance thereunder, and related reporting.
The Board will appoint no fewer than three of its members to the Committee, on the recommendation of the Committee.
2. Composition and Qualifications
The Committee consists of directors who are “independent” as that term is defined from time to time in the relevant legislation, and who are non-executives of the Group. In addition, the composition of the Committee, and qualifications of its members, will comply with such additional requirements as may be imposed by applicable legislation and best practices as determined by the Board. Committee membership will reflect a balance of experience and expertise required to fulfill the Committee’s mandate.
The Board will appoint the Chair of the Committee annually, to be selected from the members of the Committee. If, in any year, the Board does not make such an appointment, the incumbent Chair will continue in office until a successor is appointed. In the event the Chair is not able or willing to act as Chair of the Committee for any reason, the Board may appoint another Chair on an interim or permanent basis. The Chair is bound to act in accordance with this mandate.
Each member of the Committee will be appointed annually by the Board and will hold office at the will of the Board or until their successor is appointed.
5. Removal and Vacancies
Any member of the Committee may be removed and replaced at any time by the Board and will also automatically cease to be a member of the Committee as soon as such member ceases to be a director. The Board may fill vacancies by appointing members of the Board to the Committee. If and whenever a vacancy exists, the remaining members may exercise all the powers of the Committee as long as a quorum remains in office.
III. Process and Operations
The Committee meets at least four times per year and otherwise as needed.
The following individuals may call a meeting of the Committee at any time:
• Chair of the Committee
• The chair of the governance, conduct and remuneration committee of the Company’s subsidiaries in the United Kingdom
• Group Chief Legal Officer (“Group CLO”)
• Group Chief Compliance Officer (“Group CCO”)
2. Private Meetings of the Committee and Private Meetings With Members of Management
Following each meeting, the Committee meets privately without the presence of management.
Following each regular meeting, the Committee meets in private with the Group CLO and the Group CCO and any other members of management required in respect of this mandate. The Committee may meet members of management in private after each non-regular meeting. The Committee may also meet with any other employee of the Group, as it deems appropriate.
A quorum at any meeting shall be a simple majority of the members of the Committee.
4. Report to the Board
Following each meeting, the Committee reports to the Board on matters reviewed by the Committee.
5. Regulatory Reports
The Committee reports to regulators as required by relevant legislation, which includes reporting annually to the Office of the Superintendent of Financial Institutions (Canada) (“OSFI”) and, where applicable, to the Autorité des marchés financiers (Quebec) (the “AMF”).
IV. Duties and Responsibilities of the Committee
1. Governance Framework of the Company
The Committee reviewsthe governance framework of the Group, which includes the framework for subsidiary governance, and ensures that it meets regulatory requirements and best practices as determined by the Board.
With respect to subsidiaries with independent Board members, the Committee will review and approve their proposed appointment and any compensation related to that appointment.
2. Nominating Functions and Board Assessment
The Committee is the nominating committee for Board member appointment. As such, the Committee is responsible for the implementation and review of the nomination process as well as the implementation and review of orientation and education programs for Board members.
The Committee reviews the Company’s procedures on appointment of Board and Committee members from time to time and recommends it to the Board for approval.
The Committee recommends candidates for appointment or election as members of the Board, as members of committees of the Board, as Chair of the Board or as Chair of the Board’s committees.
The Committee reviews the processes, policies and procedures for selection and background screenings of potential Board candidates and Senior Executives as provided for by applicable regulatory guidelines.
The Committee also assesses the Board, its members and its Committees on an ongoing basis. On an annual basis, the members of the Board complete a self-assessment of the effectiveness of the Board.
The Committee reviews the report and analysis on such self-assessment and reports to the Board accordingly.
3. Directors’ Compensation
The Committee reviews practices and the approach in relation to directors’ compensation and makes its recommendation to the Board in this regard.
The Committee assists the Group in defining directors’ compensation that attracts and retains key members in view of enhancing the Company’s ability to determine its plans and strategies for the attainment of its corporate objectives.
4. Compliance and Market Conduct Programs
The Committee reviews the Group’s various compliance programs which include corporate and operational compliance, public company compliance, investment compliance, legislative compliance, the ombudsman’s office, the privacy office, market conduct standards, as well as the Group’s relationships with clients, brokerages and regulatory authorities.
At each regular meeting, the Group CCO reports to the Committee on the compliance activities of the Group.
The Committee also reviews compliance programs, policies and initiatives proposed by management and either approves them or recommends them for approval to the Board.
The Committee may approve minor changes to policies previously approved by the Board.
The Committee also monitors compliance with the Group code of conduct entitled “Living Our Values”.
The Committee monitors ongoing developments regarding compliance and identifies potential situations of conflicts of interest. As a result, it reviews various reports and disclosures on a quarterly or an annual basis, for example:
- reports from the Group CCO on compliance programs, action plans, including market conduct;
- reports from the Group CCO on corporate governance best practices and benchmarking;
- reports on the Directors and Officers Conflicts of Interest Questionnaires; and
- disclosures on corporate governance to be included in the annual meeting documentation of Intact Financial Corporation.
The Committee also reviews any compliance aspects that it identifies or at the request of the Board or other committees of the Board or the Company, including policies in relation to directors and the CEO or senior management.
5. Compliance Function
The Committee reviews and recommends to the Board for approval the appointment, assessment or termination (if applicable), of the Group CCO.
The Committee periodically reviews and approves the mandate of the compliance function and annually obtains the assurances that this function has the necessary budget, independence and resources to meet its mandate and reports to the Board any issue in relation thereto before the Board approves the budget and plans of the Group.
The Committee annually reviews the objectives and assesses the effectiveness of the Group CCO function.
6. Related Party Transactions (“RPT”)
The Committee requires management to establish procedures to ensure that when any of Intact Financial Corporation’s Canadian P&C Insurance Companies engages in RPT, the terms and conditions of such transactions are at fair market value or at least as favourable as prevailing market terms and conditions or at fair value if such fair market conditions are not available.
The Committee reviews the Company’s procedures to ascertain their effectiveness in complying with insurance legislation and their effectiveness in identifying RPT that may have a material effect on the stability and solvency of Intact Financial Corporation or any of its Canadian P&C Insurance Companies.
The Committee approves permitted RPT, except those that the Committee must recommend to the Board for approval by law and reports such transactions that it approves to the Board. The Committee also reviews, approves and/or recommends to the Board for approval related party transactions which involve the Group’s non-regulated entities, as applicable.
7. Oversight of ESG Matters
The Committee oversees the development and implementation of ESG priorities, framework, performance assessment and disclosure. In this regard, the Committee will review:
- the Group’s sustainability strategy, objectives, targets and performance, and the Group’s plans to deliver a high level of performance with respect to sustainability practices and reporting;
- reports and disclosure on the Company’s ESG practices and performance including how it conducts business in an ethical, socially responsible and environmentally conscious manner;
- reports to stay abreast of emerging trends, standards and best practices on ESG matters;
- annual reports on the Company’s community investment and giving strategy and activities.
8. Pension Plan Governance Framework
The Committee approves the framework of the compliance programs of the Group’s pension plans and any material amendments thereof. Such framework includes, but is not limited to, the pension committee’s mandate and related allocation of responsibilities.
V. Access to Independent Consultants
The Committee may retain and terminate independent consultants, at the Company’s expense, as it deems necessary or advisable to carry out its duties. In case of differences of opinion between the members of the Committee or with management in relation to the hiring of such consultants, the Board may decide on the issue.
The Committee may designate a sub-committee or individual(s) to review any matter the Committee can delegate by law.
On an annual basis, the Committee evaluates and reviews the assessment reports on the adequacy of the Committee, its Chair and each of its members.
VIII. Committee Mandate
On an annual basis, and as may otherwise be required, the Committee reviews this mandate and recommends any changes to the Board.
Approved by the Board of Directors of Intact Financial Corporation and its Canadian P&C Subsidiaries on August 1, 2023.