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RULE §7.89Corporate Governance Annual Disclosure

    (B) the various elements of compensation awarded in the insurer's or insurance group's compensation programs and how the insurer or insurance group determines and calculates the amount of each element of compensation paid;

    (C) how compensation programs are related to both company and individual performance over time;

    (D) whether compensation programs include risk adjustments and how those adjustments are incorporated into the programs for employees at different levels;

    (E) any "clawback provisions" built into the programs to recover awards or payments if the performance measures upon which they are based are restated or otherwise adjusted; and

    (F) any other factors relevant in understanding how the insurer or insurance group monitors its compensation policies to determine whether its risk management objectives are met by incentivizing its employees.

  (4) The insurer's or insurance group's plans for chief executive officer and senior management succession.

(h) Oversight. The insurer or insurance group must describe the processes by which the board, its committees, and senior management ensure an appropriate amount of oversight to the critical risk areas impacting the insurer's business activities, including a discussion of:

  (1) how oversight and management responsibilities are delegated between the board, its committees, and senior management;

  (2) how the board is kept informed of the insurer's strategic plans, the associated risks, and steps that senior management is taking to monitor and manage those risks; and

  (3) how reporting responsibilities are organized for each critical risk area. The description should allow the board to understand the frequency at which information on each critical risk area is reported to and reviewed by senior management and the board. This description may include the following critical risk areas of the insurer:

    (A) risk management processes. An ORSA summary report filer may refer to its ORSA summary report under Insurance Code Chapter 30;

    (B) actuarial function;

    (C) investment decision-making processes;

    (D) reinsurance decision-making processes;

    (E) business strategy/finance decision-making processes;

    (F) compliance function;

    (G) financial reporting/internal auditing; and

    (H) market conduct decision-making processes.

(i) Severability. If any portion of this section, or its application to any person or circumstance, is held invalid, the determination does not affect other portions of this section or its applications that can be given effect without the invalid portion or application. To this end, the provisions of this rule are severable.

Source Note: The provisions of this §7.89 adopted to be effective November 25, 2020, 45 TexReg 8344

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