Disclosure of information about policies on the integration of sustainability risks in investment decision‐making process and investment advice (Article 3)
The Environmental, Social and Governance Policy (the “ESG Policy”) of Lombard International Assurance S.A. (the “Company”) defines the Company's sustainability principles and targets. Lombard International Assurance S.A. is committed to contribute towards implementing the UN 2030 Agenda for Sustainable Development and in particular, comply with the EU implementation measures on Sustainable Development. For this purpose, the Company has rolled-out and implemented a number of initiatives which e.g. protect our environment, reduce inequalities or support health of employees over the last years. A strong governance structure is protecting the interests of the Company's clients, employees and stakeholders and helps the Company to implement its sustainability strategy.
As Lombard International Assurance S.A. is not managing assets the Company's ESG Policy does not define how sustainability risks are integrated in the investment decision‐making process. Where Lombard International Assurance S.A. is acting as Insurance Distributor it does not consider sustainability risks in its advice and for this reason the Company's ESG policy does not define how sustainability risks are integrated in insurance or investment advice.
Disclosure on due-diligence policies with respect to principal adverse impacts of investment decisions on sustainability factors OR where adverse impacts are not considered, explanation why this is not the case (Article 4)
Lombard International Assurance S.A. provides a range of unit-linked insurance products. The investment parameters for those solutions and the principles of their underlying asset allocation are determined by the Insurer in accordance with its own investment policy, Luxembourg law and, often, insurance law and taxation in policyholders’ countries of residence.
However, investment decisions are ultimately taken either by independent investment managers appointed by Lombard International Assurance S.A. or (in certain) countries by, or with the confirmation of, policyholders themselves, who may in turn receive investment advice. As such, it is the independent investment manager, investment adviser or, if this is the case, policyholder who is best placed to integrate sustainability risk into investment decision making and assess the principal adverse impacts of investment decisions on sustainability factors and risks on investment returns.
For the same reasons, neither Lombard International Assurance S.A. as a financial market participant nor the unit-linked insurance products issued by Lombard International Assurance S.A. consider the adverse impacts of investment decisions on sustainability factors. Likewise, Lombard International Assurance S.A., when acting as Insurance Distributor, does not consider the adverse impacts of investment decisions on sustainability factors in the insurance advice carried out.
Remuneration policy statement (Article 5)
Lombard International Assurance (the “Company”) established a Remuneration Policy in accordance with the applicable regulatory requirements. Reviewed on an annual basis or when deemed necessary it applies to all staff members. Its purpose is to define the principles and guidelines to establish and maintains equal, controlled and compliant remuneration practices that are designed to prevent (1) non-sustainable business decisions, (2) decisions in conflict with the Company and its clients’ interests, (3) risk-taking outside of risk appetite, (4) fines from the regulator(s), (5) financial loss and/or (6) demotivation of staff members. The Board of Directors, in order to exercise its responsibilities regarding remuneration, delegates the oversight of the execution of this policy to the Remuneration Committee (RemCo).
The Company’s aim is to provide fair remuneration that contributes to attracting and retaining people while incentivising and rewarding them via variable remuneration for the successful delivery of the Company’s strategy and business priorities. The mechanisms of this remuneration should, in compliance with applicable regulatory requirements and best market practice (i) discourage risk taking beyond defined risk appetite (ii) prevent non-sustainable decision making and (iii) avoid situations of conflict of interest.
A sustainable remuneration framework
The Company’s remuneration framework is designed to:
- Ensure that remuneration is appropriate and linked to the role of the individual.
- Rewards the overall delivery of the business strategy, achievement of financial results and long term growth and sustainability.
- Aims at paying fair base pay, based on market practice, and at recognising and rewarding collective and individual performance via variable remuneration.
- Encourages sound corporate governance and a strict compliance with internal rules and procedures.
- Does not reward excessive risk-taking outside of confirmed risk appetite.
- Considers the principle of proportionality in defining the remuneration principles in such a way as to take into account the internal organisation and the nature, the scale and the complexity of the risks inherent to the business.
Specific provision for Material Risk Takers
The Company identifies, on an annual basis, all employees whose work is deemed to have a major influence on the overall risk profile of the Company. A suitable compensation structure is designed and subject to deferral rules.
Claw back mechanism
The RemCo may decide, at any time within 3 years of the date of a Bonus allocation that the Employee who has been allocated that Bonus shall be subject to claw back of the related Bonus allocation, if such claw back is justified in relation to one or several of the following circumstances:
- any act of fraud or other intentional infringement of penal law caused by the Employee or of which the Employee had knowledge of but failed to prevent and/or flag to the board of the Company as appropriate;
- any circumstances caused through wilful misconduct and/or gross negligence by the Employee, or of which the Employee had knowledge of but failed to prevent and/or flag to the board of the Company as appropriate, that has (or would have if made public) a significant impact on the reputation of the Company; or
- a material misstatement of the Company’s financial results, caused by or of which the Employee had knowledge, and which had been considered in the Bonus determination.
Lombard International Assurance (the “Company”) established an Inducement Policy (the “Policy”) in accordance with the applicable regulatory requirements. Inducements mean any fee, commission, or any non-monetary benefit provided by or to an intermediary or insurance undertaking in connection with the distribution of an insurance-based investment product or an ancillary service, to or by any third party except the customer or a person on behalf of the customer. Inducements do not include fees paid by the customer or internal payments to employees of insurance distributors.
The Policy defines that inducements and inducement schemes paid or received must not lead to a detrimental impact on the quality of the service provided to customers and prevent the insurance intermediary or insurance undertaking from complying with their obligation to act honestly, fairly and professionally and in accordance with the best interests of its customers.
The Policy defines clear criteria in order to assess whether an inducement can have a detrimental impact on the services provided to the client. On a regular basis all identified inducements are reviewed and assessed. Any inducement which is likely to have a detrimental impact on the services provided to the client are escalated to the company’s Compliance Department in order to implement mitigating actions.
Lombard International Assurance S.A. does not make investment decisions in respect of the assets underlying its life insurance policies, nor does it consider sustainability risks in its insurance advice as assets will exclusively be selected by independent investment managers appointed by Lombard International Assurance S.A. or (in certain) countries by, or with the confirmation of, policyholders themselves, who may in turn receive investment advice. As a consequence, this Inducement Policy does not take into account the integration of sustainability risks in the investment or insurance advice.