Financial Institutions Professional
Indemnity Proposal Form
THIS IS A CLAIMS MADE POLICY.
Please note that the limit of liability to pay judgements or settlements shall be reduced by amounts incurred for defence costs.
Amounts incurred for defence costs shall be applied against the deductible amount. Also note that the Insurer has the right, but
not the duty, to defend the Insured; however, the Insurer may advance defence costs prior to the final disposition of the claim.
Instructions:
1.
Answer all the questions, leaving no blank spaces.
2.
If you have insufficient space to complete any of your answers, continue on your headed paper.
3.
The form must be dated and signed by two Directors of the Proposer.
It is the intention of the Insurer that any contract of insurance with the Proposer shall be based upon the answers and information
provided in the proposal form and any other additional information provided by the Proposer. If a quotation is offered, it will be
the intention of the Insurer to offer coverage only in respect of those entities named in answer to question 1.
Attached, copies of the following:
Proposer’s latest audited annual financial statements.
2.
Copy of brochure or sample contract offered to clients.
3.
List of Proposer’s subsidiaries and related entities, including agencies and branches.
4.
Information indicating overall portfolio performance for past five years.
5.
Listoftheinvestmentcompanies /unittrustcompaniesforwhichtheProposeractsasinvestmentadvisor.
March 2014
1.
The Hollard Insurance Co. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider | www.hollard.co.za
Financial Institutions Professional
Indemnity Proposal Form
1. State the name and address of the Proposer and the date of the establishment. Also list all subsidiaries for which cover is
requested, indicating each subsidiary’s address and date of establishment:
(a) Proposer:
(b) Address:
(c) Date Established:
(d) VAT Reg. No:
(e) Subsidiaries:
NAME
ADDRESS
DATE ESTABLISHED
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
2. Does the Proposer have a parent (ownership of more than 50% of the Proposer)?
YES
NO
If ‘Yes’, please supply full details and attach the parent company’s latest audited annual financial statements.
3
(Please provide the organisational chart of the Proposer and any subsidiaries listed above showing the operating structure
of each company)
a.
Has the Proposer been involved in any mergers, acquisitions, consolidations and/or divestitures during the last five years?
YES
NO
If ‘Yes’, please supply full details.
March 2014
The Hollard Insurance Co. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider | www.hollard.co.za
Financial Institutions Professional
Indemnity Proposal Form
b.
Are any plans for merger, acquisition, consolidation and/or divestiture being considered?
YES
4.
NO
Financial Information (state the following as of the dates indicated).
Currently or at date of
last interim report
At last year-end
At previous year-end
Authorised capital:
Paid up capital:
Total assets:
Total loans and discounts:
Total funds under Discretionary:
Total profit before tax:
BIS ratio: Tier One
Tier Two
In the last financial year the approximate percentage of the Proposer’s total revenues were derived from the
following activities:
(a) Loans, leases and extensions of credit:
Commercial
- Domestic
%
- Foreign
Interbank
- Domestic
- Foreign
Personal
(b) Trade financing, a forfeit
(c) Barter, countertrade or swap operations
(d) Foreign exchange deals
(e) Commodity market dealings
(f) Acting as securities broker/dealer
(g) Acting as custodian of depository or managing agent for securities/money
(h) Acting as an investment advisor, financial advisor, economic advisor or investment manager
pursuant to a written contact in regard to the following:
• Mergers and acquisitions
The Hollard Insurance Co. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider | www.hollard.co.za
March 2014
5.
Financial Institutions Professional
Indemnity Proposal Form
%
•
Share placing and new issues
•
Venture capital
•
Other (describe)
(i) Administration of trusts, estates or guardianships within the Proposer’s Trust Department
(j) Acting as trustee under bond indenture
(k) Individual asset or fund management
(l) Overseas advisory (if applicable, attach separate sheet stating which countries are covered)
(n) Acting as a receiver, trustee in bankruptcy or assignee for the benefit of creditors
(o) Administration of a programme of securities lending (using client’s securities)
(p) Acting as a dividend disbursing agent, exchange agent, redemption or subscription agent,
warrant or scrip agent, fiscal or paying agent, tax withholding agent, escrow agent, registrar,
transfer agent or clearing agent, or wire transfer agent
(q) Acting as a tax planner and/or tax preparer to trusts, estates and individuals
(r) Acting as a real estate broker or agent or real estate appraiser and/or managing real or
personal property for others, acting as an insurance agent or broker, or otherwise rendering
advice or recommendations regarding insurance
(s) Sale of travellers cheques, certified cheques or money orders, or administration or sale of
credit cards or credit card services
a.
Description of other services provided by Proposer or its subsidiaries (attach separate sheet if necessary).
NOTE: Only those services listed herein shall be afforded coverage if the policy is issued, unless the Insurer agrees in
writing to extend cover for additional services).
b.
Has the Proposer or any subsidiary provided any new services to its clients during the last three years?
YES
NO
If ‘Yes’, give details.
March 2014
6
The Hollard Insurance Co. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider | www.hollard.co.za
Financial Institutions Professional
Indemnity Proposal Form
c.
Does the Proposer intend to offer any new services to its clients during the next twelve months?
YES
d.
NO
If ‘Yes’, give details.
Are all services provided to clients pursuant to a standard form of contract, agreement or letter of appointment?
YES
NO
If ‘No’, give details of those services which are rendered in the absence of a written contract or letter of appointment.
f.
Describe the procedures adopted when client instructions are received by telephone:
• Within the commodity department:
•
Concerning the purchase/sale of stock:
•
Within the foreign exchange department:
•
In any other instance:
List each take-over or merger situation in which the Proposer acted on behalf of clients in the last twelve months,
indicating by asterisk, on behalf of whom the Proposer was acting, and the values involved.
Offeror
Offeree
Outcome
Offer value
Fee Income
March 2014
e.
The Hollard Insurance Co. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider | www.hollard.co.za
Financial Institutions Professional
Indemnity Proposal Form
g.
List all flotations in which the Proposer acted on behalf of clients in the last twelve months, and indicate share
capital involved.
Share placed
Company
h.
underwriter
Fee income
underwriters
Share placed
Value
Value lead/ follow % left with
underwriter
Fee income
underwriters
Describe the standard due diligence procedures followed when performing the functions stated in (f), (g) and (h) above,
and indicate whether clients are required to review any prospectus before it is released and agree to its contents.
If the Proposer undertakes trust activities or individual asset/fund management:
(a) Are these transactions subject to the same procedures and review as the Proposer’s own account transactions?
YES
NO
If ‘No’, please describe.
(b) State the total asset value of trust, individual asset and fund management accounts:
i.
Current year:
R
ii.
Asset value of the largest account:
Previous year:
R
R
The Hollard Insurance Co. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider | www.hollard.co.za
March 2014
7.
Value lead/ follow % left with
List all rights issues in which the Proposer acted on behalf of clients in the last twelve months.
Company
i.
Value
Financial Institutions Professional
Indemnity Proposal Form
iii.
Total number of account managed:
iv.
Number of accounts lost during the last 12 months and the corresponding asset value:
Number of accounts lost:
Asset value:
R
v.
Reasons for lost accounts:
vi.
Minimum size of accounts currently accepted as new accounts:
R
vii. How often are financial reports rendered to clients?
viii. Does the Proposer have an approved list of securities that can be recommended to clients?
YES
ix.
NO
Indicate the percentage of account investments in each of the following geographic regions:
%
%
South Africa:
Africa:
United Kingdom:
Far East:
United States:
Canada:
Continental Europe:
Australia:
South America:
Southeast Asia:
Other:
a.
Does the Proposer use or subscribe to any Electronic Funds Transfer Systems which allow direct access by clients to
the Proposer’s database?
YES
NO
If ‘Yes’, list each system, indicating whether transfer is made on a pre-format or a free-format system.
b.
Does the Proposer permit the initiation of Funds Transfer by telephonic instruction from clients?
YES
NO
The Hollard Insurance Co. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider | www.hollard.co.za
March 2014
8
Financial Institutions Professional
Indemnity Proposal Form
c.
If ‘Yes’, do all clients to whom this facility is available complete written agreements outlining legal responsibilities,
transfer limits and call back parameters for verifications?
YES
NO
d.
What are the call back parameters for verification?
e.
Are all instructions directed only toward the Wire Transfer Room?
YES
NO
f.
Are all conversations, including these instructions, recorded?
YES
NO
g.
Is a written document produced in respect of each instruction, which is date/time stamped, logged and maintained
for at least 90 days?
YES
a. State number of employees in the following categories?
DOMESTIC
I.
FOREIGN
AT HEAD OFFICE
II. AT COMPUTER CENTRE
III. AT AGENCIES AND BRANCHES
IV. AT SUBSIDIARIES
TOTAL:
b.
What has been the percentage turnover in the following employment categories during the last twelve months?
INWARD
OUTWARD
Directors (including those of Subsidiaries)
%
%
Employees
%
%
c.
State the total of salaries, including commissions, paid to Directors and Employees during the last financial year:
d.
Are any Directors or Employees compensated by bonus, profit commission, or similar performance related reward
that is based upon their own performance or that of a particular department/division/subsidiary (as distinguished
from the Proposer as a whole)?
YES
NO
If “Yes”, state in which departments/divisions/subsidiaries:
The Hollard Insurance Co. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider | www.hollard.co.za
March 2014
9
NO
Financial Institutions Professional
Indemnity Proposal Form
10 a.
State the name and address of External Accountants.
b.
State the frequency of auditing services performed by the External Accountant for the Proposer.
c.
Does the External Accountant regularly review the system of internal controls and furnish written reports?
YES
d.
NO
Has the External Accountant made any recommendations in the last two audits?
YES
NO
If “Yes”, state the recommendations and confirm that they have been adopted or give reasons for non-compliance.
e.
Has the External Accountant changed in the last five years?
If “Yes”, give details and explain why the changes were made.
YES
NO
Attach a copy of the most recent engagement letter from the Proposer’s Principal External Account.
b.
Do the Lawyers supply written opinions as to the legality of any change in investment or management policy in
connection with Trusteeship activities?
YES
NO
The Hollard Insurance Co. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider | www.hollard.co.za
March 2014
11 a. State the name and address of Lawyers routinely acting for the Proposer.
Financial Institutions Professional
Indemnity Proposal Form
c.
Does the Proposer have an in-house Legal Department?
If “Yes”, how many legally qualified individuals does it comprise?
d.
What are the in-house Legal Department’s responsibilities?
e.
Does the Proposer have a Compliance Officer?
If “Yes”, state his duties and to whom he reports and attach his curriculum vitae.
YES
NO
YES
NO
If “No”, who is responsible for compliance issues?
f.
Who has the responsibility for reviewing client contracts, agreements or letters of appointment?
g.
Are all publications issued by the Proposer reviewed by the in-house Legal Department and/or outside Lawyers?
YES
Does the in-house Legal Department offer its services to customers or other third parties?
YES
NO
If “Yes”, provide complete details.
12 a. Does the Proposer have a written code of ethics encompassing all Directors and Employees which includes a statement
on the principles of acceptable conduct, and with guidelines for acceptable outside activities, conflicts of interest,
gifts from customers, and prohibition on other employment?
YES
NO
The Hollard Insurance Co. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider | www.hollard.co.za
March 2014
h.
NO
Financial Institutions Professional
Indemnity Proposal Form
b.
Are Directors and Employees required to agree in writing that they have read the ethics code and are abiding by said code?
YES
c.
NO
Does the Proposer require all Directors and Employees to declare their outside business interests and specify
relationships which could lead to possible conflicts of interest?
YES
NO
13 a. To which regulatory authorities are the Proposer, and those Subsidiaries listed in the answer to question 1, accountable?
b.
Are regular examinations of the Proposer and/or its Subsidiaries conducted by such authorities?
YES
NO
If “Yes”, please list the dates and authorities which performed the last two examinations.
c.
During the last five years has the Proposer received any admonishment or critical directive from any regulatory authority?
YES
NO
If “Yes”, provide complete details.
14. Does any proposed Insured have any knowledge or information, after full enquiry, of any circumstances whatsoever, which
might give rise to claims being made against them?
YES
NO
If “Yes”, provide complete details.
15. Has any demand or claim of a type being the subject of this insurance been made against any Proposed Insured to which
this Proposal Form applies during the past five years?
NO
If “Yes”, provide complete details.
March 2014
YES
The Hollard Insurance Co. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider | www.hollard.co.za
Financial Institutions Professional
Indemnity Proposal Form
16) Indicate all litigation experience of the Proposer and its Subsidiaries for the last five (5) years which relate to or involve services
which cold be covered herein. For each such litigation, please indicate the amount of settlements and judgements paid.
17. State details of similar insurance carried during the previous five (5) years, if any:
a) Professional Indemnity
i)
Insurers
ii)
Sum Insured
iii) Deductible
b)
iv)
Policy Period
v)
Premium
Directors and Officers
i)
Insurers
ii)
Sum Insured
iii) Deductible
Policy Period
v)
Premium
Bankers Blanket Bond/Fidelity/In and Out Policy
i)
Insurers
ii)
Sum Insured
iii) Deductible
iv)
Policy Period
v)
Premium
March 2014
c)
iv)
The Hollard Insurance Co. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider | www.hollard.co.za
Financial Institutions Professional
Indemnity Proposal Form
d)
Has any application or Proposal for Professional Indemnity Insurance made by the Proposer or its predecessor(s) in
business ever been declined?
YES
e)
NO
If “Yes”, state the reasons.
Has any Professional Indemnity Policy in the name of the proposer or its predecessor(s) in business ever been cancelled?
YES
NO
If “Yes”, state the reasons.
18. State the limit of Indemnity requested.
I HEREBY DECLARE THAT the above statements and particulars are true and complete to the best of our knowledge and that
we have not suppressed or misstated any material facts and we agree that this proposal shall be the basis of any contract*
subsequently effected between the Proposer and the Underwriters.
DATE:
D
D
M
M
Y
Y
Y
Y
SIGNATURE:
(Director)
DATE:
D
D
M
M
Y
Y
Y
Y
SIGNATURE:
(Director)
1.
Signing this Proposal Form does not bind either the Proposer or the Insurer to complete this insurance.
2.
If a Policy is concluded it will be issued on a “CLAIMS BASIS” basis i.e. to indemnify the Proposer for claims first made
against it in the manner described in the Policy during the Policy Period.
March 2014
*
The Hollard Insurance Co. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider | www.hollard.co.za
Supplemental Questionnaires
P.I. QUESTIONNAIRE - LOAN SYNDICATION
1.
Where you act as Agent or Manager, what policies are in place to ensure disclosure to participants of all relevant information
that you may possess with respect to the borrower?
2.
How many deals have you acted as a lead manager for?
3.
Over the last three years, in loans where you have acted as Agent or Manager, what percentage of borrowers are
investment grade?
4.
Where you act as a follow underwriter on a syndicated loan, how do you ensure that the loan is being handled in accordance
with our minimum criteria and security?
Important: Read carefully: This supplemental application will be attached to and become part of the application completed by:
P.I. QUESTIONNAIRE - ASSET MANAGEMENT
What internal structures exit to review customers’ accounts and compliance with account guidelines? How often is this done?
2.
What policies are in place to ensure disclosure of potential conflicts of interest?
March 2014
1.
The Hollard Insurance Co. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider | www.hollard.co.za
Supplemental Questionnaires
3.
Are there any policies regarding investment of managed funds in obligations of XXXXX or its affiliates, or with regards to
obligations underwritten by XXXXXXX or its affiliates or of derivative products provided by XXXX or its affiliates?
4.
What procedures do you have to ensure best execution of customer accounts?
5.
What disclaimers are contained in a standard funds management contract?
6.
Do XXXXXX invest in non-investment grade securities as a matter of course, or only on specific requests or confirmation
from their clients?
7.
How do you limit sub adviser liability in your contract terms?
8.
What is the split by number of accounts between private and institutional investors?
March 2014
Important: Read carefully: This supplemental application will be attached to and become part of the application completed by:
The Hollard Insurance Co. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider | www.hollard.co.za
Supplemental Questionnaires
P.I. QUESTIONNAIRE - DERIVATIVES
What policies exist for management of derivatives? What type of instruments do you classify as derivatives?
2.
What percentage of your counterparties are investment grades?
3.
Are standard contracts in place for derivative products? What are the procedures when deviating from the standard contact?
4.
How do you calculate the derivatives notional value? How frequently is the notional value calculated?
5.
What is the liquidity period of the derivatives?
6.
Please provide a three-year breakdown of derivative activity by type, notional principal amount, gross unrealised gains
(losses) and time to maturity.
7.
What percentage of derivative activity has been in major OECD currencies and localities as opposed to exotics?
March 2014
1.
The Hollard Insurance Co. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider | www.hollard.co.za
Supplemental Questionnaires
8.
Do you have master netting agreements in place with major counterparties?
9.
Do you have any suitability procedures in place to ensure that the products meet the clients’ purposes?
10. What due diligence work is undertaken to ensure credit worthiness of your counterparties?
11. What procedures are in force to ensure that employees operate in accordance with pre-agreed guidelines?
12. How do you notify clients of the potential risks of dealing in derivatives?
Important: Read carefully: This supplemental application will be attached to and become part of the application completed by:
P.I. QUESTIONNAIRE - EQUITY UNDERWRITING/MERGERS & ACQUISITIONS
Are any securities underwritten by XXXXX or their affiliates sold to client accounts by XXXXX or their affiliates? If so, what
procedures are in place with respect to such sales?
March 2014
1.
The Hollard Insurance Co. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider | www.hollard.co.za
Supplemental Questionnaires
What procedures do you have in place for controlling inside information and insider trading?
3.
What limitations exist with respect to personal trading by XXXXX personnel?
4.
What procedures are in place to ensure the accuracy of the current financial status and future projections contained in any
publication that XXXXX issue to the market?
5.
What is the minimum investment grade that you would underwrite?
6.
What is the percentage split between IPO’s and secondary offerings?
7.
What predetermined guidelines are in force for handing IPO?
8.
What specific considerations are given where the client is acquiring a company outside of its normal business?
March 2014
2.
The Hollard Insurance Co. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider | www.hollard.co.za
Supplemental Questionnaires
9.
What additional outside consultants are utilised when undertaking due diligence work?
10. What is the volume of accounts for which you give M & A advice? What disclaimers regarding such advice are contained in
the client contracts?
Important: Read carefully: This supplemental application will be attached to and become part of the application completed by:
Financial Derivatives Risk Management Questionnaire
I.
II.
Business Philosophy
• What is your institution’s philosophy with respect to derivatives and proprietary trading activities.
•
Would you consider your institution a market maker in one or more derivative products and/or foreign exchange
related instruments?
•
What portions of your revenues and/or profits are derived from proprietary trading? From customer driven
transaction? How do you see this derivatives trading revenue profile changing in the future?
Risk Management Organisation
Describe the structure and operation of your institution’s risk management organisation. Please include organisational
charts and backgrounds of senior managers at each of your institution’s trading centres with an emphasis on origination
and hedging functions.
•
Describe your institution’s central and back office operations. Please focus on the staff’s level of expertise, experience
and management supervision.
•
Discuss your institution’s information systems which support those functions.
•
What type of MTM systems do you use?
-
What is the general methodology for each of the systems?
-
How often are they validated?
-
How do you address long duration and/or illiquid transactions?
The Hollard Insurance Co. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider | www.hollard.co.za
March 2014
III. Mid. - Back Office Management & System
Supplemental Questionnaires
IV.
V.
Hedging Strategy and Market Risk Management
•
What is your institution’s overall hedging philosophy?
•
How is it implemented according to different products and transactions?
•
How do your institution’s systems support this function? What are the types of systems used?
•
Describe your institution’s approach to capital reserve/loss allocation.
Products
•
Describe the various types of derivative products that are transacted by your institute.
•
How are new products developed?
-
Are dedicated teams assigned to product development?
-
What are the respective team members’ backgrounds and experience level?
VI. Credit Risk Management
•
Describe your institution’s credit risk management structure as it applies to derivatives trading.
•
Please provide details of credit exposure by counter-party investment grade (according to major rating agencies only,
e.g. S&P, Moody’s) with respect to transactions volume, revenues and net income.
•
What are your institution’s netting policies and practices? How does our institution address disparate jurisdictional
treatments with respect to insolvency/bankruptcy laws?
•
What is your institution’s counter-party default experience?
•
How are your loss reserves structured and managed?
•
Please provide loss reserve profiles segmented by region, by sector, and by investment grade.
•
What are the $ amounts of transactions classified as substandard and doubtful?
VII Internal Audit
Please provide us with internal audit reports which include reviews of our derivatives trading operations?
VIII Regulatory Oversight
What regulatory oversight exists at each of our institution’s trading centres?
•
What are your institution’s guidelines with respect to evaluating the appropriateness of a product/transaction for a new,
or current, customer?
The Hollard Insurance Co. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider | www.hollard.co.za
March 2014
IX Sales and Advisory Practices
Supplemental Questionnaires
Briefly describe your institution’s policies and guidelines with regards to disclosure to customers. Specifically address
disclosures as to risk/reward scenarios.
•
In extended duration and path dependent transactions; do you provide the customer with updated valuations? How often?
How are those valuations validated? Who performs the valuation validations?
•
Have there been, in the previous three years, any written notifications of disagreement by any customer during the life
of a transaction or immediately after the close of a transaction? (excluding issues and items covered by confirmation
procedures).
March 2014
•
The Hollard Insurance Co. Ltd (Reg No 1952/003004/06) is an authorised Financial Services Provider | www.hollard.co.za