Corporate governance is the most essential element for insurance business as the business is based on trust, integrity and accountability to insured and citizens. In order to achieve sustainable and robust business amidst rapid changes, a company is required to implement checks and balances, comply with laws and establish systematic enterprise risk management.
In this regard, Muang Thai Life Assurance Public Company Limited (“Company”) has developed this Corporate Governance Framework as principles or guidelines for Board of Directors to supervise the Company in conducting the business with transparency, trustworthy, and responsibility to stakeholders. By concerning long-term benefits, the Company is fully aware that the Board of Directors is the key to providing business direction, core policies, and business strategies. The Board of Directors is responsible for ensuring that the Company has internal control process and mechanism, effective audit procedure, clear performance monitoring guideline as well as a distinct separation between the functions of governance and those of management. In addition, subcommittees are appointed to support the Board of Directors by considering essential issues of the Company in various aspects and ensuring that the Company conducts the business with stability, transparency, and responsibility to insured and stakeholders, and eventually achieves business sustainability.
1) To provide the Board of Directors with clear corporate governance process or guideline to ensure business transparency, responsibility to insured and stakeholders and long-term benefits for the Company’s stability and sustainability
2) To ensure that the Company is trustworthy, transparent, able to operate the business firmly and continuously, as well as adaptable to rapid changes in current and future business environment
3) For the Board of Directors to be aware of its roles and responsibilities in supervising the Company and ensuring that the Company has an effective internal control system, comply with laws, and implement enterprise risk management system
“Board of Directors” means the Board of Directors as prescribed by the laws of life insurance.
“Director” means a person who serves as a director in the Board of Directors.
“Executive Director” means directors who are executives or directors responsible for operations like executives. It shall include an authorized director unless it is evident that such signing is made according to the Board of Directors’ resolution and it is co-sign with other directors.
“Executive” means the manager or the first four top-ranking executives after the manager level as well as all other 4th ranking equivalent, and accounting or finance executives of department executive level and up.
The Board of Directors is responsible for determining key strategies and policies, ensuring the availability of effective governance, monitoring the Executive’s performance in alignment with the strategies and policies efficiently and effectively. The Board of Directors must ensure that the Executives report key issues of the Company and establish a reporting process to provide the Board of Directors with adequate and updated information and allow the Board of Directors to fully exercise its authority, duty and responsibility. Therefore, the Company is able to conduct the business with fairness, transparency, responsibility to stakeholders under the Corporate Governance Code and achieve long-term value.
The Board of Directors appoints the Executive Committee to act as if it is a management committee. The Executive Committee shall be in charge of discussing strategies and collaborating with the Management to ensure an alignment with business plan and budget. The Executive Committee shall ensure that the Company complies with policy for other businesses, outsourcing service policy and market conduct which includes product development, sales process that prevents misunderstanding or taking advantage of customer’s misunderstanding, claim management and fair complaint management. In terms of investment, the Board of Directors appoints the Investment Committee to ensure the Company’s compliance with investment policy and real estate business policy.
The Board of Directors has also appointed the following subcommittees to support its duties.
1) Audit Committee
2) Risk Management Committee
3) Nomination, Remuneration, and Corporate Governance Committee
1.1 Structure and Composition of Board of Directors
The structure and composition of Board of Directors is developed to be suitable with business size and complexity and allows the Board of Directors to perform its duties effectively in accordance with Public Limited Companies Act B.E. 2535 and OIC’s Notification Re: Corporate Governance of Life Insurance Companies B.E. 2562.
• The Company’s Articles of Association, Article 31: “The Company shall have the Board of Directors, consisting of no more than sixteen (16) Directors, to conduct its operation. No less than one-half (1/2) of the total number of Directors shall reside in the Kingdom of Thailand and no less than three-quarters (3/4) of the total number of Directors shall be Thai nationals.”
• Charter of Board of Directors: Prescribes the structure of the Board of Directors below.
- Executive Directors shall not be more than one-third (1/3) of the total number of Directors.
- Independent Directors shall not be less than one-quarter (1/4) of total number of Directors.
- Chairman of the Board of Directors must be an Independent Director or Non-Executive Director.
1.2 Qualifications of Directors
According to the Charter of Board of Directors, the Directors must have no prohibited characteristics under laws of life insurance, laws of public limited companies, laws of securities and exchange, notifications of Office of Insurance Commission and other laws related to Director’s duties.
1.3 Qualifications of Independent Directors
According to the Charter of Board of Directors, Independent Director must have no prohibited characteristics under laws of life insurance, laws of public limited companies, laws of securities and exchange, notifications of Office of Insurance Commission and other laws related to Independent Director duties.
1.4 Roles and Responsibilities of Directors
The Board of Directors must perform the following roles and responsibilities.
1) The Board of Directors shall determine direction and strategic target of the Company as well as consider and approve policy and annual budget of the Company. Business strategies should be in line with the risk management framework and the risk management policy as well as the Company’s risk appetite.
2) The Board of Directors shall consider and approve Investment Management Guideline and other businesses, monitor, and control investment and other businesses of the Company to be suitable with situation and obligation.
3) The Board of Directors shall consider, review and approve the risk management framework, the risk management policy and the risk appetite as well as reporting overall risk management and assessment including the Company’s financial stability, process and risk management control of the Company in order to be in line with the regulations of the regulators.
4) The Board of Directors shall operate the Company to have efficient internal control and audit system.
5) The Board of Directors shall govern and oversee the Company’s risk management to be in line with the risk appetite as well as formulating reports of risk status and compliance with the risk management policy, monitoring the Company’s capital to be stable, solvent and sufficient for both current and future business operations and providing support to Risk Management Committee and related department in order to allow them to perform duties effectively and completely with adequate resources.
6) The Board of Directors shall, honestly and by protecting the Company’s interest, perform their duties in accordance with the laws, objectives and Articles of Association of the Company and resolutions of the shareholders’ meetings.
7) The Board of Directors shall appoint subcommittees, which have authority and responsibility as determined by the Board of Directors.
8) The Board of Directors shall elect a person who has the qualifications and who possesses no prohibited characteristics under related laws as Director in case there is vacancy in Director’s seat due to other reasons rather than being retired by rotation.
9) The Board of Directors shall appoint or authorize any other person to operate the Company under control of the Board of Directors when it is deemed appropriate by the Board of Directors.
The Board of Directors has appointed the following subcommittees to support its duties.
2.1 Audit Committee
Audit Committee is in charge of supervising and monitoring the Company to comply with the policies below.
• Internal control policy justifies the Company’s performance and ensures that the Company can achieve its goals and long-term benefits. It ensures that the Company has reliable financial and performance reports which are aligned with laws, rules and regulations in order to prevent any potential damage to the Company’s reputation. It also promotes checks and balances as well as compliance with laws.
• Anti-corruption policy which includes effective whistleblowing policy and procedure in order to detect and report potentially illegal activities which do not comply with policy, rule, internal process, and code of conduct
• Anti-money laundering and counter-terrorism financing policy
• Conflict of interest policy which prevents any activities that might seek personal or related party’s interest, create conflict of interest, and not take into account the Company’s key risk.
• Fraud risk management policy to mitigate, prevent, detect, report, manage and recover damages from fraud effectively.
Audit Committee must ensure that the Company has accurate and reliable financial reporting processes, and discloses key information correctly, sufficiently and timely to the public and regulators as specified by related laws and standards. Audit Committee shall also supervise the Company’s audit as follows:
1) Consider, appoint and terminate an independent person to perform a duty as independent auditor of the Company, including determining the appropriate remuneration and proposing to the Board of Directors and the shareholders’ meeting for consideration and approval.
2) Manage the auditor to formulate and present a management letter and comments of the Company’s top Executives to the Board of Directors.
3) Hold meetings between Audit Committee and auditors of the Company at least once a year without participation of the Executives.
Upon selection of auditors, the auditors must at least have knowledge and understanding about insurance industry, insurance reserves valuation and insurance operation. The auditors must be listed in the auditor list approved by the Securities and Exchange Commission and Stock Exchange of Thailand.
Audit Committee supervises and ensures that the Company complies with laws, rules and regulations related to its business operations. It also ensures that the Executives report key and sufficient information to the Board of Directors so that the Board of Directors can fully perform its authorities, roles and responsibilities.
2.2 Risk Management Committee
The Risk Management Committee must perform the following roles and responsibilities.
• To determine the risk management policy which cover the significant risks of the Company to be proposed to the Board of Directors, and regularly review the risk management policy and other risks-related policies.
• To ensure that the Company has clear risk management regarding authority, duty, responsibility, and risk report procedures which comply with rules, regulations, and criterion that regulate business of the Company.
• To ensure that the Company has appropriate, sufficient and effective risk management process that comply with the Company’s risk management policy, rules, regulations, and criterion that regulate business of the Company, and be in line with the good corporate governance. The risk management process should include identification, assessment, response, monitoring, review, and report of the risks. This should also include stress testing, Business Continuity Plan, risk model testing, and complete, timely, and reliable database for decision making. The details must be reported to the Board of the Directors.
• To provide advice to the Board of Directors on the risk management or any matters relating to the Company’s risk regarding appropriate directions, including any advice on matters that may lead the Company to violate related regulations, rules or criterion.
• To oversee and provide advice to the Board of Directors on the adequacy and sufficiency of infrastructure, tools, resources, systems, and documents for efficient risk management in a timely manner.
• To review and provide advice to the Board of Directors on setting risk appetite, risk limit, assumptions relating to risk management models, and current and future capital adequacy.
2.3 Nomination, Remuneration, and Corporate Governance Committee
Nomination, Remuneration, and Corporate Governance Committee’s roles and responsibilities could be divided into following three dimensions:
In the case of a vacancy on the Board of Directors or the expiration of the Director’s term of office, Nomination, Remuneration, and Corporate Governance Committee shall be in charge of considering, nominating and selecting person who possesses proper qualifications based on related laws and regulations by considering his/her useful qualifications and suitable experience for the Company.
Nomination, Remuneration, and Corporate Governance Committee shall be in charge of determining and considering the remuneration for the Board of Directors and Subcommittees, including attendance fee, annual bonus, and other fringe benefits both in financial and non-financial values. It shall ensure that the Board of Directors and Subcommittees receive appropriate remuneration in comparison to their dedication, value, and fiduciary duties as prescribed by laws. The Directors shall be liable to both civil and criminal offences for non-compliance.
3) Corporate Governance
Nomination, Remuneration, and Corporate Governance Committee shall provide suggestions to the Company to ensure that corporate governance and sustainable development practices are put into practice continuously and appropriately and aligned with the Company’s size. The Committee should ensure that the Company discloses corporate governance information to the public, demonstrating its transparency and responsibility to stakeholders under corporate governance principles and for the purpose of the Company's long-term benefits.
Nomination, Remuneration, and Corporate Governance Committee is in charge of supervising and monitoring the Company to comply with the policies below.
• Corporate Governance Framework is a guideline for the Board of Directors to be aware of and understand its roles and responsibilities. As a corporate leader, the Board of Directors shall ensure that the Company applies good management system which contributes to good and reliable long-term performance as well as business sustainability.
• Corporate governance policy includes 5 sections i.e. 1. Rights of shareholders, 2. Equitable treatment of shareholders, 3. Role of stakeholders, 4. Disclosure and transparency and 5. Responsibilities of the Board of Directors
• Code of conduct is a guideline and a standard of good governance management which shall be applied by the Directors and all employees of the Company.
• Nomination and remuneration policy for the Directors as well as remuneration policy for Executives and personnel in controlling units and major risk-taking staff are established in accordance with objectives and risks of each unit and taken into account the Company’s long-term stability. Besides, they should not lead to high-risk transaction that might potentially impact the Company’s stability and the insured’s interest.
Nomination, Remuneration, and Corporate Governance Committee is in charge of preparing self-assessment form for evaluating the performance of the Board of Directors as a whole and subcommittees. Then, it shall be proposed to the Board of Directors for consideration and approval to evaluate the performance every year. After the Nomination, Remuneration, and Corporate Governance Committee processes the assessment data, the Committee shall present the data to the Board of Directors to use it as a guideline for improving the Company’s performance and effectively support the duties of the Board of Directors. This also assures that the Board of Directors continues to perform its roles and responsibilities efficiently.
In addition, Nomination, Remuneration, and Corporate Governance Committee shall report the performance assessment of Executives to the Board of Directors on annual basis.
The Executives have duties and responsibilities to perform according to the strategies and policies determined by the Board of Directors in order to achieve the Company's objectives and goals. The Executives must at least perform the following duties.
1) The Executives shall effectively implement the strategies and policies determined by the Board of Directors by taking into account the Company’s long-term value and sustainable business.
2) The Executives shall promote, support and ensure an availability of effective risk management process and internal control system. The Executive shall ensure that the Company complies with laws and provide fair treatment to the insured.
3) The Executives shall report key information about the Company’s performance, the Company’s risk level, and performance of the Executives to the Board of Directors correctly, considerably and timely so that the Board of Directors can supervise and monitor the performance effectively.
4) The Executive shall determine an appropriate hierarchical structure or reporting lines as well as specify roles and responsibilities of each unit in the hierarchical structure clearly for effective risk management, audit and governance.
5) The Executives shall promote risk management culture in the Company in order to monitor and maintain the Company’s risks within the risk appetite set by the Board of Directors. The Executives shall also communicate about risk management policy to all employees to raise their understanding and awareness.
6) The Executive shall set annual performance evaluation of Executives by comparing with target set by the Board of Directors, and report the performance to the Board of Directors.
7) The Executives must not perform duties as full-time employees in other organizations unless being approved by the Board of Directors.