1. Drafting the Corporate Governance Annual Disclosure – Best Practices
September 8, 2017
PAMIC Corporate Governance Workshop

2. Agenda Company Overview
Preparing for the Corporate Governance Annual Disclosure
 Drafting the Report
Indiana Department of Insurance Feedback

3. Company Overview

4. Company Overview Property & Casualty Insurance Company
Crop Insurance Company
FCIC
Private Products
Domiciled in state of Indiana
Licensed to write business in 38 states

5. Company Overview
CGBE Enterprises, Inc. (“CGBE”) purchased CGB Insurance Company from Diamond State Insurance Company pursuant to a Stock Purchase Agreement dated July 9, 2013
CGBE is owned by ZEN-NOH Grain Corporation (40%), ZEN-NOH Unico America Corporation (10%), ITOCHU Corporation (32%), and ITOCHU International Inc. (18%).

6. CGBE Holding Company System

7. Direct Written Premiums

8. 2016 Premium Profile
# States Writing Business 32 Total Premium $677,674,000 MPCI 93% Private Products 7% MPCI Independent Agents 92% MPCI Captive Agents 8% Largest Crops - MPCI Corn 41% Soybeans 26% Cotton 10% Wheat 9%

9. Preparing for the Corporate Governance Annual Disclosure

10. Indiana Adopts CGAD
In July 2015, the Indiana Department of Insurance adopted the NAIC’s Model Act and Model Regulation.
The first report was due June 1, 2016 and each calendar year thereafter.
Must be prepared in a manner consistent with the NAIC’s Corporate Governance Annual Disclosure Model Regulation.

11. Review of Current State
Key items required to be described within the corporate governance disclosure include:
The insurer's corporate governance framework and structure including duties and structure of the Board of Directors and its committees;
The policies and practices of its Board of Directors and significant committees including appointment practices, the frequency of meetings held and review procedures;

12. Review of Current State
The policies and practices directing Senior Management including a description of defined suitability standards, the insurer's code of conduct and ethics, performance evaluation and compensation practices, and succession planning; and
The processes by which the Board of Directors, its committees and senior management ensure an appropriate level of oversight to the critical risk areas impacting the insurer's business activities including risk management processes, the actuarial function, and investment, reinsurance and business strategy decision-making processes.

13. Review of Current State
Engaged Marcum LLP to perform a review of our corporate governance framework and related documentation of those charged with governance for the period December 31, 2013 through December 31, 2015.
Procedures included reading board of director minutes, articles of incorporation, bylaws and discussions with a board member of the Company.

14. Review of Current State
Recommendations related mainly to:
Formalization of board meeting agendas and meetings.
Documentation enhancement in board minutes.
Addition of independent board members.
Formalization of board committees.
Critical risk items addressed with the filing of the ORSA report in December 2016.

15. Drafting the Report

16. Drafting the Report
Under the requirements of the Model Act, U.S. insurers will be required to provide a detailed narrative describing governance practices to their lead state or domestic regulator by June 1st of each year. The narrative will be protected by strict confidentiality measures, which were included within the models to encourage insurers to be open and transparent in describing their governance practices to regulators. Insurers will be allowed some discretion in determining the level within the organization to report their corporate governance practices at, depending upon their structure and organization. The new disclosure requirements are expected to commence in 2016.

17. Drafting the Report
Prepared a 3 page narrative report that summarized each of the individual governance areas:
Section I: Board Suitability
Section II: Board Independence
Section III: Board Meetings
Section IV: Board Nominations
Section V: Board Performance and Evaluations
Section VI: Suitability Standards for Senior Management
Section VII: Insurer’s Code of Conduct and Ethics
Section VIII: Oversight of Senior Management and Performance
Section IX: Senior Management Succession Planning
Section X: Oversight of Risk Management Responsibilities

18. Indiana Department of Insurance Feedback

19. IDOI Feedback
Re-file the June 1, 2017 completing the IDOI standard form.
Report expanded from 3 pages to many more pages - see handout.

20. Scott Hall CGB Insurance Company Scott.Hall@cgb.com 217.479.6007
Good Luck
Scott Hall CGB Insurance Company