Advise and assist the Board of Directors (the "Board") of Assurant, Inc. (the "Company") in fulfilling its responsibility to the stockholders, potential stockholders and investment community with respect to its oversight of:
the integrity of the Company's quarterly and annual financial statements;
the Company's compliance with legal and regulatory requirements;
the independent auditor's qualifications and independence; and
the performance and effectiveness of the Company's internal controls over financial and management information and independent auditors;
Ensure that the report required by the Securities and Exchange Commission (the "SEC") rules to be included in the Company's annual proxy statement is prepared and included; and
Review and advise the Board on such other matters as may be delegated to it by the Board.
To perform his or her role effectively, each Committee member will obtain an understanding of the responsibilities of Committee membership as well as the Company's business, operations, and risks.
The Board authorizes the Committee, within the scope of its responsibilities, to:
Seek any information it requires from:
Any employee (and all employees are directed to co-operate with any request made by the Committee); and
Obtain outside legal or other professional advice;
Ensure the attendance of the Company's officers at its meetings as appropriate; and
Appropriate or allocate such funding from the Company as the Committee shall deem necessary for compensation of the independent auditors, for retention by the Committee of legal or professional advisors, or for the fulfillment of the Committee's other responsibilities as set forth herein.
The Committee shall be comprised of at least three directors as determined by the Board, each of whom is determined by the Board to be "independent" under the rules of the New York Stock Exchange, Inc., the Sarbanes-Oxley Act of 2002, and any rules or regulations promulgated by the SEC pursuant thereto. No member of the Committee may serve on the audit committees of more than three public companies, including the Company, unless the Board (i) determines that such simultaneous service would not impair the ability of such member to effectively serve on the Committee and (ii) discloses such determination in the annual proxy statements;
All members should have a working familiarity with basic finance and accounting practices (or acquire such familiarity within a reasonable period after his or her appointment) and at least one member must be an "audit committee financial expert" as such term is defined by Rule 401(h) of Regulation S-K. Committee members may enhance their familiarity with finance and accounting by participating in educational programs conducted by the Company or by an outside consultant;
No member of the Committee shall receive any consulting, advisory, or other compensatory fees from the Company or any of its subsidiaries other than (i) director's fees for service as a director of the Company, including reasonable compensation for serving on the Committee and regular benefits that other directors receive, or (ii) fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with the listed issuer (provided that such compensation is not related in any way to continued service, including any obligation to provide consulting services);
Members of the Committee shall be appointed by the Board upon the recommendation of the Nominating and Corporate Governance Committee and shall serve until such member's successor is duly qualified and elected or until such member's earlier resignation or removal. The members of the Committee may be removed, with or without cause, by a majority vote of the Board;
The Chair of the Committee shall be elected by the Board. The Chair will chair all regular sessions of the Committee and set the agendas for Committee meetings; and
The secretary of the Committee will be the Board's Secretary.
Meetings shall be held not less than four times a year and may be held telephonically. Special meetings may be convened as required. The Chair or any member of the Committee may call meetings of the Committee. Internal auditors or the independent auditors may convene a meeting if they consider that it is necessary;
A quorum for any meeting will be a majority;
The Committee should meet with the independent auditors and management quarterly to review the Company's financial statements in a manner consistent with Section IV.B.2 of this Charter;
The Committee shall periodically meet separately with each of management, the directors of the internal audit group and the independent auditors to discuss any matters that the Committee or each of the groups believe would be appropriate to discuss privately;
The internal and independent auditors should be invited to make presentations to the Committee as appropriate;
All non-management directors who are not members of the Committee may attend meetings of the Committee but may not vote. Additionally, the Committee may invite to its meetings any director, member of management of the Company and such other persons as it deems appropriate in order to carry out its responsibilities. The Committee may also exclude from its meeting any persons it deems appropriate in order to carry out its responsibilities; and
Minutes will be made of all meetings and activities of the Committee.
IV. Roles and Responsibilities
The Committee, in discharging its role, is empowered to study or investigate any matter of interest or concern that the Committee deems appropriate. In this regard, the Committee shall have the authority to retain outside legal, accounting or other advisors for this purpose, including the authority to approve the fees payable to such advisors and any other terms of retention;
The Committee shall be given full access to the Company's internal audit group, Board, corporate executives and independent accountants as necessary to carry out these responsibilities. While acting within the scope of its stated purpose, the Committee shall have all the authority of the Board; and
Notwithstanding the foregoing, the Committee shall not be responsible for certifying the Company's financial statements or guaranteeing the auditor's report. The fundamental responsibility for the Company's financial statements and disclosures rests with management.
The Committee shall:
Discuss with management the Company's guidelines and policies with respect to risk assessment and risk management focusing on the Company's major risk exposures relating to financial statements and the steps management has taken to monitor and control such exposures;
Evaluate whether management is setting the appropriate "control culture" by communicating the importance of internal control and risk management and ensuring that all employees have an understanding of their roles and responsibilities;
Evaluate the results of the assessments regarding the quality of internal control by management (Control & Risk Self Assessment) and internal auditors. Gain an understanding of whether internal control recommendations made have been implemented by management;
Discuss with independent auditors any significant matters regarding internal control over financial reporting that have come to their attention during the conduct of their audit.
The Committee is primarily responsible for oversight of risks related to the Company's financial statements, privacy, data security, information technology, and non-compliance with legal and regulatory requirements and with the Company's Code of Ethics. Oversight of certain financial risks such as those related to investment strategy, and certain other enterprise risks, are within the purview of the Finance and Investment Committee or the Board as a whole.
In consultation with the independent auditors, management and the internal auditors, review the integrity of the Company's financial reporting processes, both internal and external. In connection therewith, the Committee should obtain and discuss with management and the independent auditor reports from management and the independent auditor regarding: (i) all critical accounting policies and practices to be used by the Company; (ii) analyses prepared by management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including all significant alternative treatments of financial information within generally accepted accounting principles that have been discussed with the Company's management, the ramifications of the use of the alternative disclosures and treatments, and the treatment preferred by the independent auditor; (iii) major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company's selection or application of accounting principles; (iv) major issues as to the adequacy of the Company's internal controls and any specific audit steps adopted in light of material control deficiencies; and (v) any other material written communications between the independent auditor and the Company's management;
Review significant accounting and reporting issues, including recent professional and regulatory pronouncements, as well as off-balance sheet structures, and understand their impact on the financial statements of the Company;
Review with the independent auditor (i) any audit problems or other difficulties encountered by the auditor in the course of the audit process, including any restrictions on the scope of the independent auditor's activities or on access to requested information, and any significant disagreements with management and (ii) management's responses to such matters. Without excluding other possibilities, the Committee may wish to review with the independent auditor (x) any accounting adjustments that were noted or proposed by the auditor but were "passed" (as immaterial or otherwise) and (y) significant consultation, on matters that otherwise are required to be disclosed to the Committee, made with the independent auditor's national office, and (iii) any "management" or "internal control" letter issued, or proposed to be issued, by the independent auditor to the Company; and
Review and discuss with the independent auditor the responsibilities, budget and staffing of the Company's internal audit function;
Annual and quarterly financial statements
Review with management and the independent auditors prior to public dissemination the Company's annual audited financial statements and quarterly financial statements, including the Company's disclosures under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and a discussion with the independent auditors of the matters required to be discussed by Statement of Auditing Standards No. 90;
Review and discuss with management and the independent auditors the Company's earnings press releases (paying particular attention to the use of any "pro forma" or "adjusted" non-GAAP information), as well as financial information and earnings guidance provided to analysts and rating agencies. The Committee's discussion in this regard may be general in nature (i.e., discussion of the types of information to be disclosed and the type of presentation to be made) and need not take place in advance of each earnings release or each instance in which the Company may provide earnings guidance;
Pay particular attention to complex and/or unusual transactions such as restructuring charges and derivative disclosures;
Focus on judgmental areas, for example those involving the setting and the release of provision, the valuation of assets and liabilities; warranty, product or environmental liability; litigation reserves; and other commitments and contingencies;
Challenge management for explanations of any identified audit differences not recorded; and
Perform any functions required to be performed by it or otherwise appropriate under applicable law, rules or regulations, the Company's By-Laws and the resolutions or other directives of the Board, including review of any certification required to be reviewed in accordance with applicable law or regulations of the SEC.
Review this Charter and the organizational structure and activities of internal audit and ensure no unjustified restrictions or limitations are made;
Review the qualifications of internal audit personnel and concur in the appointment, replacement, reassignment or dismissal of the general auditor;
Review the effectiveness of the internal audit function;
Approve the annual audit plan, scope and audit budget;
Meet separately with the internal auditors to discuss any matters that the Committee or auditors believe should be discussed privately;
Meet separately with the internal auditors to discuss any matters that the Committee or auditors believe should be discussed privately;
Ensure that significant findings and recommendations made by the internal auditors are received and discussed on a timely basis; and
Ensure that management responds to recommendations by the internal auditors.
Retain and terminate independent auditors and approve all audit engagement fees and terms;
Inform each registered public accounting firm performing work for the Company that such firm shall report directly to the Committee;
Directly oversee the work of any registered public accounting firm employed by the Company, including the resolution of any disagreement between management and the auditor regarding financial reporting, for the purpose of preparing or issuing an audit report or related work;
Approve in advance any significant audit or non-audit engagement or relationship between the Company and the independent auditors, other than "prohibited non-auditing services";
"Prohibited non-auditing services" are services that applicable law or regulation prohibits.
Notwithstanding the foregoing, pre-approval is not necessary for minor audit services if: (i) the aggregate amount of all such non-audit services provided to the Company constitutes not more than five percent (5%) of the total amount of revenues paid by the Company to its auditor during the fiscal year in which the non-audit services are provided; (ii) such services were not recognized by the Company at the time of the engagement to be non-audit services; and (iii) such services are promptly brought to the attention of the Committee and approved prior to the completion of the audit by the Committee or by one or more members of the Committee who are members of the Board to whom authority to grant such approvals has been delegated by the Committee. The Committee may delegate to one or more of its members the authority to approve in advance all significant audit or non-audit services to be provided by the independent auditors so long as it is presented to the full Committee at a later time.
Review, at least annually, the qualifications, performance and independence of the independent auditors. In conducting such review, the Committee should:
At least annually, obtain, discuss, and review a report by the independent auditor describing: the firm's internal quality-control procedures, any material issues raised by the most recent internal quality-control review, or peer review of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues, and (to assess the auditor's independence) all relationships between the independent auditor and the Company;
Ensure the rotation of the lead audit partner at least every five years, and consider whether there should be regular rotation of the audit firm itself; and
Confirm with any independent auditor retained to provide audit services for any fiscal year that the lead (or coordinating) audit partner (having primary responsibility for the audit), or the audit partner responsible for reviewing the audit, has not performed non-audit services for the Company in each of the five previous fiscal years of the Company.
Meet separately with the independent auditors to discuss any matters that the committee or auditors believe should be discussed privately;
Ensure that significant findings and recommendations made by the independent auditors are received and discussed on a timely basis; and
Ensure that management responds to recommendations by the independent auditors.
Compliance with Laws and Regulations
Review periodically, with the Company's counsel, any legal matter that could have a significant impact on the Company's financial statements;
Review the relevant findings of examinations by regulatory agencies;
Obtain regular updates from management and Company's compliance officer(s) regarding compliance matters;
Set clear hiring policies for employees or former employees of the independent auditors consistent with law; and /p>
Establish procedures for: (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters; and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.
Review and assess the effectiveness of the fraud deterrence program.
Annually review and approve the fraud deterrence plan of activities.
Compliance with the Company's Code of Ethics
Ensure that the Code of Ethics is in writing and that arrangements are made for all employees to be aware of it;
Evaluate whether management is setting the appropriate "tone at the top" by communicating the importance of the Code of Ethics and the guidelines for acceptable behavior;
Review the process for monitoring compliance with the Code of Ethics;
Obtain regular updates from management regarding compliance;
Obtain regular and no less than annual reports from management regarding the effectiveness of the compliance program as well as the adequacy of resources and personnel for the compliance program; and
Participate periodically in a compliance and ethics educational awareness session either at the Company or through some other venue.
Ensure that an audit committee report as required by the SEC is included in the Company's annual proxy statement;
Report regularly to the full Board:
With respect to any issues that arise with respect to the quality or integrity of the Company's financial statements, the Company's compliance with legal or regulatory requirements, the performance and independence of the Company's independent auditors, the performance of the internal audit function or any matters that may significantly impact the financial condition or affairs of the business;
Following all meetings of the Committee; and
With respect to such other matters as are relevant to the Committee's fulfillment of its responsibilities.
The Committee shall provide such recommendations as the Committee may deem appropriate. The report to the Board may take the form of an oral report by the Chair or any other member of the Committee designated by the Committee to make such report.
Company Financial Forecast
Review and discuss annually with management the Company's three-year financial forecast and underlying assumptions.
Perform other activities related to this Charter as requested by the Board;
If necessary, institute special investigations and, if appropriate, hire special counsel or experts to assist;
Review and reassess, at least annually, the adequacy of this Charter and recommend to the Board any improvements to this Charter that the Committee considers necessary or advisable and receive approval of such changes from the Board;
Review and evaluate, at least annually, the performance of the Committee and its members, including by reviewing the compliance of the Committee with this Charter; and
The Committee shall conduct its evaluations and reviews in such manner as it deems appropriate.