Combined Code/Board of Directors

Overview, basis of reporting and the Combined Code

The Company is incorporated in Bermuda and as a result is not bound by the Combined Code on Corporate Governance. The Company does however aim to apply best practice in corporate governance and complies with all Bermuda statutory requirements and the Combined Code. The Company’s auditors have reviewed the Company’s compliance with the Combined Code to the extent required by the UK Financial Services Authority for review by auditors of UK-listed companies.

Board of Directors

The Board of Directors comprises a Non-Executive Chairman, two Executive Directors and eight Non-Executive Directors. There were several changes to Board composition during 2009. Michael Eisenson, a director affiliated with a shareholder, Charlesbank, resigned on 30 June. Christopher Stooke an Executive Director, resigned as a director on 31 August. Benjamin Meuli, who succeeded Mr Stooke as group Chief Financial Officer, joined the Board as an Executive Director on 30 June. Two new Non-Executive Directors, Robert Gowdy and Guy Beringer, joined the Board on 30 June and 8 December, respectively. Michael Hepher, Non-Executive Director, retired from the Board on 31 January 2010. There were no other changes to Board membership during 2009 and 2010 up to the date of this Report.

During 2009 there were no material changes to the Chairman’s other commitments.

Independence of Directors

The Board considers all of the Non-Executive Directors, Guy Beringer, Alan Bossin, Michael Crall, Jean Claude Damerval, Kenneth Goldstein, Robert Gowdy, Michael Harper and Nicholas Lyons, to be independent within the meaning of the Combined Code. None of them has any executive or other role or relationship with the Company or management that would affect his objectivity, and all have proven to be independent in character and judgment. Mr Bossin is counsel at the Bermudian law firm Appleby, which acts as an advisor to the Company on Bermuda law, but the Board believes that the relationship between the Company and Appleby (including the level of fees) is not of sufficient significance to any of the Company, Appleby or Mr Bossin to compromise his independence. With seven independent directors for the first half of the year and eight for the second, the Board composition complied with the Combined Code during 2009.

The Company complies with the Combined Code other than in respect of the following:

Board performance evaluation

The Board is committed to ongoing improvement in its procedures and performance, and during 2009 implemented a variety of measures to achieve this. The Board commissioned a formal independent third-party effectiveness review, continued implementing recommendations adopted from previous performance evaluations and reviewed on an ongoing basis the quality, content and frequency of information being provided to it by the Company. The external effectiveness review focused on Board input into Group strategy, risk management, dynamics between Non-Executive Directors and Group executives and information provided to the Board, especially between meetings. Steps taken following the review included improving the quality and timeliness of information to support Board decisions on strategy, regular presentations to the Board by the enterprise risk management team and improved reporting between meetings. In addition, throughout the year the Board heard regular presentations from various areas of the business, attended formal professional development seminars held regular meetings of all Non-Executive Directors in the absence of the Executive Directors.

Other performance reviews undertaken during 2009 include:

The internal reviews were conducted through a combination of meetings and appraisal forms, and recommendations arising from these reviews were implemented during 2009.

For 2010, effectiveness reviews will be undertaken internally.

Responsibilities and procedures

The Board is responsible for the leadership, strategic direction, prudential control and long-term performance of the Company. It has adopted a schedule of matters reserved to the Board for decision, to which there were no changes during 2009. These include the adoption of strategic or business plans, major transactions, investment strategy, major treasury or financial decisions, significant borrowing, changes to capital structure, issuance of equity or debt securities, approval of public financial statements and the appointment of selected members of senior management.

The Board is responsible for ensuring the maintenance of proper accounting records which disclose with reasonable accuracy the financial position of the Company. It is required to ensure that the financial statements present a fair view for each financial period.

During 2009 the Board considered succession planning for senior executives and at the Board level.

The Board has delegated to the Chief Executive Officer and to the Group Executive Committee (comprising the Executive Directors and other senior executives) authority to execute Board strategy and to manage the Company on a day-to-day basis, including approval of financial commitments below the levels requiring Board approval.

The Board has delegated authority to the Nomination, Compensation and Audit Committees in accordance with governance best practice. The level of delegation is defined in terms of reference and described in the reports that follow. The Board has also delegated certain authority over management of the Company’s investments to an Investment Committee of the Board.

Management regularly provides to the Board information necessary to enable the Board to perform its duties; that information is provided principally in standard monthly reports covering key performance indicators and Group Executive Committee deliberations, comprehensive meeting papers, discussions with executives and in the Board and Committee meetings. Further information is provided on an ad hoc basis as issues of interest arise. Directors are free to request from the Executive Directors and from other executives such information as they consider appropriate. The Board and its committees have unrestricted access to the Company’s professional advisors and are authorised to take independent professional advice at the Company’s expense.

The Board is regularly updated on regulatory and compliance developments including Board governance matters. Additional briefing materials are available to any Director upon request. The Board is able to discuss the business with employees at all levels.

The Board has adopted a formal division of responsibilities between the Chairman, who is responsible for running the Board and related matters such as Board induction and evaluation, and the Chief Executive, who is responsible for the day-to-day management of the business.

Upon their appointments, new Directors receive a comprehensive induction programme covering amongst other things the Group’s history and business, the competitive environment, business plans and strategy, finance, investor relations, governance and Directors’ responsibilities, and corporate social responsibility.

Relations with shareholders

The Company is committed to ongoing dialogue with its shareholders. Presentations to analysts and investors are made by senior management, including the Executive Directors, following the half-year and full-year results announcements and at other times during the year including an Investor Day held in November 2009. The Executive Directors and other senior executives undertake an extensive programme of one-on-one investor meetings throughout the year.

With the assistance of its corporate brokers and investor relations advisors, the Company seeks feedback from investors following major presentations. This feedback is communicated to the Board. The Chairman and Non-Executive Directors are also available to meet major shareholders upon request.

Shareholders are encouraged to attend the Annual General Meeting.

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