Compliance at Argo - Argo Group

Compliance at Argo

Group Supervision

Argo Group is the trade name that is used to refer to a global insurance group, with its insurer entities domiciled in certain countries and various states in the United States. It is subject to the group supervision of the Bermuda Monetary Authority (BMA), and as such, Argo Group must comply with the BMA’s rules and regulations as well as with the local rules and regulations in the applicable jurisdictions.

Purpose

The role of the Compliance function (“Compliance”) is to support executive management and the Board of Argo Group International Holdings, Ltd., (the “Board”) in ensuring that Argo Group remains compliant with applicable rules and regulations in the relevant jurisdictions. Compliance performs this function by monitoring regulatory and legislative developments, responding to such developments with a compliance action plan, establishing a compliance training program and advising management as to the status of the compliance functional responsibilities.

The compliance function is intended to be a “second line of defense,” with the “first line of defense” provided by the various functional areas such as claims, underwriting, and finance as well as oversight provided by executive management.

Compliance risk awareness is of critical importance to Argo Group’s business success because it underscores the principle that acting with integrity is a significant aspect of each employee’s performance of her/his job requirements.

Authority

Compliance is supported at all levels in the organization, with leadership emanating from executive management. Argo Group maintains a Board-approved Code of Conduct and Business Ethics Policy (the “Code”) that outlines the overall corporate expectations regarding Argo Group employees’ professional conduct. The Board delegates to the CEO the day-to-day responsibility for the implementation and maintenance of the Code but oversees compliance with the Code.

A system of management monitoring and self-monitoring exists for compliance purposes, with guidance provided by the corporate legal and regulatory compliance functional areas.

Appetite

Argo Group has limited appetite for organizational and/or employee failures to comply with legal, regulatory and/or internal policy requirements or unethical or illegal activities committed by the organization and/or its employees. Unless expressly provided by a specific policy approved by the Board or one of its standing committees, no waiver of the Code may be made without the approval of the Board of Directors, and any such waiver must be disclosed to the extent required by applicable law or regulation.

Argo Group does not tolerate corruption, bribery, violations of the principles of fair competition and other breaches of similar types of law and regulation.

This approach is intended to mitigate the risk of exposing the Group to fines, penalties and criminal sanctions. It also helps to ensure that the Group remains a reputable corporate citizen and a desirable employer.

Measures of Success

An effective compliance function will result in:

  • Argo Group establishing and maintaining a successful working relationship with its regulators;
  • Argo Group having a strong reputation in the market place and not being exposed to public relations issues;
  • The compliance function being considered by Argo management to be a valuable business partner; and
  • Argo Group being compliant with applicable laws and regulations.

Compliance Framework

The diagram below is intended to provide an illustration of the key elements of the compliance framework, which are described below:

Strategy

Compliance is responsible for defining an overall Compliance strategy that informs the Company’s medium-term aspirations in terms of developing its compliance program. This strategy covers a three-year period and articulates how Argo Group addresses stakeholder compliance expectations, including regulators, analysts and credit rating agencies.

The compliance function’s annual plan, at Group level and for each entity, contributes toward achieving this strategy and is approved by the relevant committees and Boards within Argo Group.

Objectives

The compliance function establishes and manages a compliance plan that covers all aspects of the function’s work and progress in the execution of Argo Group’s compliance strategy.

This includes the following elements:

  • Providing regulatory compliance advice and guidance
  • Designing and delivering a corporate training program
  • Establishing and maintaining an enterprise-wide compliance culture
  • Establishing and maintaining successful working relationships with regulators
  • Monitoring regulatory and/or legislative developments and developing corporate compliance responses to such developments
  • Performing and/or supporting compliance monitoring
  • Providing compliance status reports to appropriate entities and/or individuals within Argo Group

Execution

Through a system of pro-active monitoring of applicable legislation and regulation, Compliance ensures that there is an understanding of the impact of such legislation and regulation on Argo’s strategy and operations.

Argo Group has established a suite of Policies and Procedures at the Group level that ensure that there is compliance with the Bermuda Insurance Act and regulations promulgated by the BMA, such as the “Group Rules” and “Insurance Code of Conduct.” Argo Group Policies and Procedures are subject to an annual formal review and approval, and may be subject to interim revisions in response to legislative and/or regulatory requirements.

Argo Group supports the professional and personal development of its staff as being critical to its success now and in the future. Training and communication are provided on key compliance matters on an annual cycle. This type of compliance education is provided through the delivery of on-line training programs, which all employees are required to complete. Such programs may also be supplemented with periodic on-site training programs in response to interim legislative and/or regulatory requirements.

Monitoring

Compliance maintains a compliance monitoring program that is intended to evaluate local and Group-level compliance performance against applicable legislative and/or regulatory requirements and Argo policy requirements. The scope of monitoring includes, among other areas, Anti-Bribery & Corruption, Anti-Money Laundering, Sanctions, Anti-Fraud, Code of Conduct & Business Ethics, Conflict of Interest, Fit and Proper, Legal and Regulatory Compliance Management, Market Business Conduct, Information Security, and Data Privacy.

The outcomes of the monitoring reviews are presented to Argo Group management and confirmation of the effective functioning of the monitoring process is provided to the Argo Group Board Risk & Capital Committee.

Reporting

Compliance provides regular status reports to the Argo Group Boards and their relevant committees on a Group-level and entity-level basis. These reports are intended to provide executive management and Board members with the type and amount of information that is necessary for confirmation that the compliance function is being performed as expected.

Compliance will periodically review the operational performance of the Compliance function and report on their conclusions to the Argo Group Board Risk & Capital Committee.

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