Combined Life Insurance Company of Australia Limited (Combined Life) engages the services of Chubb Insurance Australia Limited (Chubb) in carrying out its operations. For the purposes of CPS 511, Combined Life adopts and relies on Chubb’s remuneration framework disclosures as follows:
Chubb’s Remuneration Framework and Practices Disclosure
Chubb Holdings Australia Pty Limited, via its operating subsidiary, Chubb Insurance Australia Limited (Chubb), have established a comprehensive remuneration framework and practices that align with its business strategy and comply with Prudential Standard CPS 511 Remuneration. This framework is an integral part of Chubb’s risk management framework and is overseen by the Board to ensure remuneration arrangements are appropriately designed and managed, and consistently applied, across Chubb.
Governance and Oversight
To assist the Board in fulfilling its obligations, the Nomination and Remuneration Committee (NRC) has been established as the main governing body for key people and remuneration issues at Chubb in accordance with Chubb’s Remuneration Policy. The NRC meets quarterly (i.e. four times in a financial year) and is responsible for reviewing the Remuneration Policy at least annually, with final approval by the Board.
Remuneration Framework, Policy and Structure
Chubb’s Remuneration Policy is designed to ensure competitiveness in attracting and retaining talent, consistent with its culture, business plan, strategic objectives and risk management framework. It promotes effective management of financial and non-financial risks, sustainable performance, long-term soundness, and supports the prevention and mitigation of conduct risk.
The Remuneration Policy outlines several remuneration objectives, such as attracting high-quality talent and ensuring fair compensation for all employees. To achieve these objectives, Chubb considers various factors in designing and assessing performance-based remuneration.
The remuneration structure for Chubb employees includes a fixed component (salary, statutory superannuation and packaged benefits) and two variable performance-based components for eligible employees: an Annual Incentive Plan (AIP) and a Long-Term Incentive Plan (LTIP). The AIP provides a cash reward for achieving financial and non-financial objectives, while the LTIP offers equity awards for significant contributions, with a prohibition on hedging. Bonus and equity pool distributions consider both financial results and non-financial measures, aligning remuneration outcomes with Chubb’s business plan, strategic objectives and risk management framework.
Key Executives and Specified Roles
The Remuneration Policy details the variable remuneration terms for key executives in specified roles, such as the Country President, Chief Financial Officer, Chief Risk Officer, Chief Actuary, and Heads of Property & Casualty, Distribution and Operations. These executives receive both fixed and variable remuneration, as outlined above, balancing long-term and short-term rewards based on performance, and encouraging decision-making aligned with Chubb’s business plan, strategic objectives and long-term interests and financial soundness.
Separate arrangements are in place for non-executive directors.
Board Responsibilities and Risk Management
The Board is ultimately responsible for approving variable remuneration outcomes for senior managers and executives, and on a cohort basis for highly paid material risk-takers, other material risk-takers, and Risk and Financial Control Personnel. The Remuneration Policy empowers the Board to apply ‘clawback’ and ‘malus’ provisions for employees responsible for material breaches, risk management failures, or misconduct, thereby aiding in the prevention and mitigation of conduct risk.
The NRC reviews remuneration arrangements and has various discretions regarding remuneration, including setting amounts, limits, terms and conditions, based on comprehensive information provided by relevant stakeholders. The NRC, guided by its obligation to ensure financial soundness of Chubb and appropriate risk management, may consider adjustments to performance-based remuneration, including the ability to adjust remuneration downwards, potentially to zero, if necessary.
This disclosure ensures compliance with CPS 511 and aligns with Chubb’s Remuneration Policy, supporting Chubb’s commitment to sound governance and risk management practices.