Corporate Governance Disclosure

The Board of Directors (“Board”) and the Management of MS First Capital Insurance Limited (“Management”) place great importance on high standards of corporate governance and are committed to upholding the values of integrity, honesty, and proper conduct in the business operations and dealings of the Company, at all times.

The Company has adopted corporate governance practices which are in conformity with the Insurance (Corporate Governance) Regulations 2013 (“CG Regulations”) and the Monetary Authority of Singapore (“MAS”) Guidelines on Corporate Governance issued on 09 November 2021 (“MAS CG Guidelines”). Where differences exist between the requirements of the above, the Company follows the CG Regulations.

Principle 1

The company is headed by an effective Board which is collectively responsible and works with Management for the long-term success of the company.

The Board is appointed by the shareholders of the Company. The prime stewardship responsibility of the Board is to ensure the viability and sustainability of the Company and to ensure that it is managed in the best interests of the Company while considering the interests of shareholders and other stakeholders.

The Board provides strategic direction to the operations of the Company and oversight of the Management to ensure that day-to-day operations are carried out effectively and in accordance with the Company’s Code of Conduct. The roles, responsibilities, accountability, and authority of the Board are documented in the Board Charter.

The Board, through its Nominating Committee, ensures that the expertise and knowledge of Directors and Key Management Personnel are appropriate, given the risk profile and nature of the Company’s business. Directors with conflicts of interest recuse themselves from discussions and decisions involving issues of conflict.

Roles and Responsibilities

The principal roles and functions of the Board, as set out in the Board Charter, include:

1. Reviewing and approving the overall business strategy as developed and recommended by Management.
2. Ensuring that decisions and investments are consistent with the long-term strategic goals of the Company and the relevant policies.
3. Ensuring that the interests of shareholders, policyholders and other stakeholders are taken into account in managing the Company’s business.
4. Reviewing the organisational structure of the Company and ensuring that the necessary human resources are in place.
5. Ensuring that the Company is operated in accordance with the relevant laws and regulations, as well as the policies, processes and guidelines approved by the Board.
6. Reviewing any material acquisition or disposal of assets by the Company.
7. Reviewing and approving the risk appetite statement of the Company, reflecting its strategic intent and consisting of a balanced set of return objectives and risk tolerances.
8. Overseeing, through the Audit Committee, the quality and integrity of accounting and financial reporting systems, disclosure controls and procedures, and the system of internal controls.
9. Overseeing, through the Risk Management Committee, the establishment and operation of an independent risk management function, the adequacy of risk management policies and systems, and capital management strategy.
10. Ensuring that the Company puts in place succession planning for key senior executive positions, and overseeing, through the Nominating Committee, the selection and appointment of directors and key management personnel.
11. Establishing corporate values and risk cultures, emphasising integrity, honesty and proper conduct at all times.
12. Providing a balanced and objective assessment of the performance, position and prospects of the Company, including reports to regulators.
13. Overseeing, through the Remuneration Committee, the design and operation of an appropriate remuneration framework.
14. Reviewing Management’s performance and ensuring that Management formulates policies and processes to promote fair practices and high standards of business conduct.
15. Maintaining records of all meetings of the Board and Board Committees.
16. Formulating strategies taking into consideration sustainability issues such as environmental and social factors, and reviewing and approving all material ESG issues and the sustainability strategy.
17. Reviewing the recommendations and reports prepared by the Certifying Actuary of the Company.

The Board also ensures that corporate governance framework and systems are in place across the Company and that they remain relevant and effective.

Principle 2

The Board has an appropriate balance of independence and diversity of thought and background in its composition to enable it to make decisions in the best interests of the company.

Composition

The Board comprises 9 Directors including:

• 4 Independent Directors
• 2 Executive Directors
• 3 Non-Executive, Nominee Directors

Status of independence of the Directors as at 05 July 2024:

* Determined by the Nominating Committee under Clause 14(1) of Insurance (Corporate Governance) Regulations 2013

Meetings and Resolutions in Writing

The number of meetings of the Board and Board Committees and resolutions passed in writing in 2023:

Access to Information

Board members are provided with relevant and timely information by Management on matters to be considered or approved. For matters requiring approval, information usually includes background explanatory information, relevant facts and/or analysis, risk analysis and mitigating strategies, budget (if applicable), and Management’s recommendation.

Information furnished to the Board on an ongoing basis includes:

• Financial results and performance including business forecasts, plans, and strategy
• Report on investments
• Reports by Board Committees covering: Internal Audit, Risk Management, Compliance, Remuneration matters, Nominating matters, Changes to Company Policies, Changes to Risk Appetite
• Reinsurance Strategy
• Governance matters for the Board’s information
• Any other matter requiring the Board’s consideration or approval

Agenda papers for each meeting are circulated to all members at least 7 days before the meeting date. Directors have separate and independent access to the Company Secretary, who attends all Board meetings and prepares minutes of Board proceedings.

Board Training Scheduled in 2024

Principle 3

There is a clear division of responsibilities between the leadership of the Board and Management, and no one individual has unfettered powers of decision-making.

The Chairman and the Chief Executive Officer (“CEO”) of the Company are separate, unrelated individuals. Their roles are distinct, with a clear division of responsibilities documented in the Board Charter to ensure an appropriate balance of power, increased accountability, and greater independence in decision-making.

The CEO manages the Company and implements its strategies, plans and policies. Together with the senior management team, the CEO is responsible for day-to-day operations and administration, embedding effective risk management, regulatory compliance, and good corporate governance.

The Board has not appointed a Lead Independent Director, as the Chairman and the CEO are already separate persons and the Chairman is not involved in the day-to-day running of the Company’s operations. Where the Chairman is conflicted, an interim Chairman will be elected by the rest of the Board members to chair deliberations on such matters.

Principle 4

The Board has a formal and transparent process for the appointment and reappointment of directors, taking into account the need for progressive renewal of the Board.

The Board has established a Nominating Committee (“NC”) in accordance with the CG Regulations. The NC comprises five members, three of whom — including the NC Chairman — are independent directors free from management and business relationships. The NC is reappointed every year from the date of the Annual General Meeting, with prior approval from MAS. For 2024, the reappointment took effect from 05 July 2024.

The NC is responsible for determining and applying criteria for identifying and reviewing nominations for appointments to the following positions:

1. Each director
2. Each member of each board committee
3. Chief Executive Officer (CEO)
4. Deputy CEO
5. Any actuary appointed with the approval of the Authority
6. Chief Financial Officer (CFO)
7. Chief Risk Officer (CRO)

The NC is also responsible for reviewing reasons for resignations of key appointment holders and determines the independence of persons proposed to be appointed as directors.

Principle 5

The Board undertakes a formal annual assessment of its effectiveness as a whole, and that of each of its board committees and individual directors.

The Board and Board Committees undertake a formal annual self-assessment via a structured questionnaire, administered by the Chairman and NC. Reports are presented to the Board for consideration and action.

The self-assessment of the Board covers:

• Board Composition and skills
• Standards of conduct
• Board Functions — Strategy & Performance
• Board Functions — Procedures
• Board Functions/Dynamics — CEO & Management
• Policyholder’s Protection and Complaints Management

The Board is undertaking the assessment of the performance of individual directors in 2024.

Principle 6

The Board has a formal and transparent procedure for developing policies on director and executive remuneration, and for fixing the remuneration packages of individual directors and key management personnel. No director is involved in deciding his or her own remuneration.

The Board has established a Remuneration Committee (“RC”) in accordance with the CG Regulations. The RC comprises five members, three of whom — including the RC Chairman — are independent directors free from management and business relationships.

The responsibilities of the RC include:

• Reviewing and making recommendations to the Board on a framework of remuneration for the Board and key management personnel.
• Recommending a remuneration framework for executive officers that is aligned to job functions, sensitive to the time horizon of risks, and considers personal and overall Company performance.
• Determining an appropriate balance between fixed and variable components.
• Considering all aspects of remuneration, including termination terms, to ensure they are fair.
• Supporting the Board in oversight of the implementation of the MAS Guidelines on Individual Accountability and Conduct.

The Company has a Remuneration Policy designed to ensure that:

• Remuneration offered is fair and competitive.
• Remuneration is aligned with the long-term goals of the Company and its shareholders.
• The process for fixing remuneration is clear and unambiguous.
• An individual’s reward is clearly linked to his/her performance and annual business performance.
• A culture of meritocracy is established.
• The Company can attract and retain the best talent.
• Excessive or inappropriate risk-taking by employees is avoided.

The Remuneration Policy applies to all members of staff including permanent, contract and temporary employees. It does not apply to expatriates on deputation from Mitsui Sumitomo Insurance Co. Ltd. (MSI), whose remuneration is governed by MSI Japan’s policy.

Principle 7

The level and structure of remuneration of the Board and key management personnel are appropriate and proportionate to the sustained performance and value creation of the company, taking into account the strategic objectives of the company.

Only Independent Directors are entitled to receive a Director’s Fee, as approved each year by Members at the Annual General Meeting. Non-independent Directors do not receive a Director’s Fee. No Director is involved in the deliberations or voting on setting of his own Director’s Fee.

Principle 8

The company is transparent on its remuneration policies, level and mix of remuneration, the procedure for setting remuneration, and the relationships between remuneration, performance and value creation.

Disclosure of Remuneration

Director’s Fee in bands of S$250,000 for each Independent Director on a named basis:

The Company has decided not to disclose the remuneration of the top five key management personnel and the CEO, considering the highly competitive environment within the non-life insurance industry, the shortage of insurance specialists, and the tangible threat of poaching. The aggregate compensation for key management personnel for FY 2023 has been disclosed in the Annual Report.

During the financial year ended 31 December 2023, no employee of the Company with remuneration exceeding S$100,000 was a substantial shareholder of the Company.

Fixation of Remuneration

An individual’s level and basic salary is based on qualifications, area of expertise and experience. An appropriate proportion of executive directors’ and key management personnel’s remuneration is structured to link rewards to corporate and individual performance. The services of an external remuneration consultant were not requisitioned by the Board in 2023.

Principle 9

The Board is responsible for the governance of risk and ensures that Management maintains a sound system of risk management and internal controls, to safeguard the interests of the company and its shareholders.

The Board has constituted a Risk Management Committee (“RMC”) in accordance with the CG Regulations. The RMC comprises five members, all of whom are non-executive directors, with three — including the RMC Chairman — being independent directors.

Members of the RMC are appropriately qualified to discharge their responsibilities. The RMC has undertaken a self-assessment to provide assurance to the Board on its effectiveness and performance. In view of the breadth of risk management expertise available within the Board and RMC, the Company has not found it necessary to appoint a non-director risk management expert as a member of the RMC.

Principle 10

The Board has an Audit Committee (“AC”) which discharges its duties objectively.

The Board has constituted an AC in accordance with the CG Regulations. The AC comprises five members, all of whom are non-executive directors. Three members — including the AC Chairman — are independent directors. At least two members have relevant accounting or related financial management expertise or experience. The AC does not comprise former partners or directors of the Company’s existing auditing firm.

The key functions performed by the AC include:

1. Review of the scope and reports of the internal auditor.
2. Review of the functions and reports of the external auditor.
3. Review of the draft audited financial statements with Management, including discussion on accounting policies applied and significant judgements affecting the financial statements.
4. Review of findings of internal and external auditors on the adequacy and effectiveness of internal controls and risk management systems, including financial, operational, compliance and IT controls.
5. Review of assurance from the CEO and CFO on the financial records and financial statements.
6. Assessment of the adequacy and effectiveness of internal audit functions.
7. Assessment of the independence of external and internal auditors.
8. Making recommendations to the Board on the re-appointment of the external auditor and approving remuneration and terms of engagement of the external auditor.

Principles 11 & 12 [non-mandatory]

The company treats all shareholders fairly and equitably. The company gives shareholders a balanced and understandable assessment of its performance, position, and prospects.

Notice of Annual General Meeting is given to all shareholders, giving them the opportunity to attend the meeting. Relevant financial information is shared in advance with all shareholders.

Through its nominee directors, the major shareholder participates in the deliberations and approval of all matters relating to the Company placed before the Board and Board Committees. For the present, the Company has not established an investor relations policy.

Principle 13

The Board adopts an inclusive approach by considering and balancing the needs and interests of material stakeholders, as part of its overall responsibility to ensure that the best interests of the company are served.

The Company maintains a corporate website (www.msfirstcapital.com.sg) which provides stakeholders ready access to:

• Company profile
• Mission statement
• Board of Directors
• Management Team
• AM Best Rating
• Financials (Annual Reports)
• Disclosures: Human Rights Policy, Public Disclosure, and Corporate Governance Disclosure

Minutes of all meetings of the Board, Board Committees and Investment Committees are submitted to the MAS on a quarterly basis.