AIG Japan Holdings Kabushiki Kaisha (“AIGJH”) hereby establishes the basic policy regarding internal control, in accordance with the Corporations Law (No. 86 of 2005, as amended) based on which AIGJH will implement and maintain internal control frameworks to ensure sound and appropriate management of the businesses of AIGJH and the subsidiaries (“AIGJH Subsidiaries”, together with “AIGJH” collectively, the “AIGJH Group”).
1. Frameworks to Ensure the Appropriateness of Business
- AIGJH, as a regulated insurance holding company as well as a regional management company in Japan of American International Group, Inc. (“AIG, Inc.”) establishes the policies regarding the management principle of the AIGJH group and the policies regarding group management and conducts group business management for the AIGJH Group.
AIGJH enters into the Management Services Agreement (keiei kanri keiyaku) with each AIGJH Subsidiary directly managed by AIGJH taking into account of AIGJH Subsidiaries’ scale and business category. Under the Management Services Agreement executed with the AIGJH Subsidiaries, AIGJH will carry out the subsidiary business management in an appropriate fashion, such as to furnish the approvals and receive reports for material affairs concerning the AIGJH Subsidiaries, and to conduct daily monitoring.
Besides, in order to ensure the appropriateness of business, AIGJH establishes the “Subsidiaries Management Rule” with all AIGJH Subsidiaries under which it will implement necessary frameworks to ensure monitoring regarding risk management status and financial soundness status and provide appropriate supports and advice.
- In order to ensure accurate and reliable financial reporting, AIGJH establishes the “Accounting Policy” based on which AIGJH Group will implement frameworks and functions as necessary.
- In order to ensure transparency and soundness of the AIGJH Group business management, AIGJH implements frameworks to ensure appropriate disclosure of information required by laws and regulations.
- In order to ensure fairness and soundness in related-party transactions with entities, which are members of the group companies of AIG, Inc., including AIGJH Group, AIGJH establishes the “Intergroup Transactions Management Policy” based on which AIGJH will implement frameworks as necessary.
2. Frameworks to Ensure Compliance by the Directors, and the Staff in their Carrying Out Businesses
- In accordance with the “Compliance Basic Policy” and the subordinated rules and the “AIG Code of Conduct”, the directors, corporate officers and the staff of the AIGJH Group, as a leader of compliance, will make efforts to promote compliance with high ethics. AIGJH establishes the “Compliance Manual” as guidance for the directors, corporate officers and the staff of the AIGJH Group to act in compliance and furthermore, AIGJH will disseminate corporate culture and corporate identity emphasizing compliance through training programs concerning relevant laws, regulations and internal rules to which they must adhere.
- In order to promote and sustain compliance in the AIGJH Group, AIGJH establishes compliance function by appointment of the head of compliance division and formation of the division taking responsible for compliance.
- In order for AIGJH Subsidiaries doing insurance business (“AIGJH Insurance Subsidiaries”) to implement and maintain the “Compliance Programs”, which is a specific activity plan to be formulated each fiscal year, and other concrete action plans annually, AIGJH establishes a system to provide necessary support for the program developments and review the progress of them periodically. In order to encourage the AIGJH Insurance Subsidiaries and AIGJH Subsidiaries that deal with insurance solicitation to ensure protection of their customers and appropriate insurance distribution in compliance with all relevant laws and regulations, AIGJH, as a regulated insurance holding company establishes necessary frameworks. AJH establishes necessary systems as an Insurance Holding Company to ensure appropriate customer protection, taking into account of AIGJH Subsidiaries’ scale and business category.
- In order to encourage the AIGJH Insurance Subsidiaries to ensure protection of the interests of customers and prevention and reoccurrence of misconducts, violation of laws and internal rules and threads thereof, AIGJH, as a regulated insurance holding company establishes necessary frameworks.
- In order to encourage the AIGJH Insurance Subsidiaries to ensure appropriate handling of customers’ voices and swift and appropriate insurance contract management and claim payment administration, AIGJH establish necessary frameworks.
- In order to ensure swift and appropriate response to violation of laws and internal rules and threads thereof, AIGJH and the AIGJH Subsidiaries will implement whistleblowing framework under which contact can be made to the “AIG Japan Help Line” set by AIGJH and the lines set by each of AIGJH Subsidiaries in addition to ordinary reporting route.
- In order to manage conflicts of interest concerns and protect the interests of customers against conflicting transactions in the AIGJH Group, AIGJH establishes the “Basic Policies for Management of Conflict of Interest” under which AIGJH will implement frameworks as necessary.
- The AIGJH Group will refuse any unlawful demands from anti-social groups and will not establish any relationship with anti-social groups. AIGJH will implement control frameworks as necessary in accordance with the “Basic Polices for Anti-Social Forces”.
- In order to ensure internal audit effectiveness, AIGJH establishes the “Internal Audit Basic Policy” and the Internal Audit Division independent from other functions. The Internal Audit Division conducts internal audit over business of AIGJH entirely and will interact with each AIGJH Subsidiaries’ Internal Audit Division to implement frameworks necessary to conduct efficient and effective internal audit. Based on the Internal Audit Policy and the Internal Audit Plans, the Internal Audit Division will conduct the internal audit in an appropriate fashion and furnish audited division or audited AIGJH Subsidiaries with direction on improvement as necessary and report to AIGJH’s Board of Directors on the audit results and the status of improvement periodically.
- In order to ensure that the members of the Board of Directors (torishimariyaku) and the corporate officers entitled shikkou yakuin (directors and corporate officers are collectively referred to as the “Directors,etc.”) of and the staff of the AIGJH Subsidiaries conduct their business in compliance with all applicable laws, regulations and their Articles of Incorporation, AIGJH will assess and control the implementation of compliance frameworks and functions in the AIGJH Subsidiaries.
3. Policies and Other Frameworks regarding Risk Management
- In order to ensure the AIGJH Group enterprise risk management, AIGJH establishes the “AIGJH Risk Management Policy” and the “AIG Japan Holdings RISK APPETITE STATEMENT” based on which AIGJH will implement appropriate risk control frameworks and functions as necessary.
Besides, in order to ensure the AIGJH Group financial soundness continuously, AIGJH will establish the own risk and solvency assessment framework.
- ①In order to ensure effective identification and measurement of various risks to which AIGJH Group is exposed and carry out appropriate enterprise risk management, AIGJH establishes risk management function by appointment of the head of risk management division and formation of the division taking responsible for risk management and other organizational structures.
- ②AIGJH will establish the “Risk and Capital Committee”, which shall address risk management matters and capital management matters in the AIGJH Group and assess the internal and external risk environment. AIGJH conducts appropriate risk management based on the activities of the “Risk and Capital Committee.”
- In order to ensure adequate capital level against various risks facing the AIGJH Group, AIGJH establishes the “AIGJH Capital Management Policy” based on which AIGJH will set forth the adequate capital standards for each AIGJH Subsidiary, AIGJH implement AIGJH Group’s own risk and solvency assessment and conduct appropriate capital management of the AIGJH Group.
- In order to ensure AIGJH Group’s business continuity timely and appropriately, AIGJH will implement the business continuity frameworks through establishment of the “Business Continuity Management Policy” and subordinated plans, such as the business continuity plan, the emergency management plan and the disaster recovery plan, and the training programs. Business continuity management shall be well disseminated through training provided.
- In order to ensure that appropriate risk management frameworks and functions are in place in the AIGJH Subsidiaries, AIGJH will assess and control the implementation of such frameworks and functions in the AIGJH Subsidiaries.
4. Frameworks to Ensure Efficient Business Conduct
- AIGJH will establish business strategies and goals for the AIGJH Group and allocate appropriate operating resources and review the implementation of the strategies and goals.
- In order to ensure efficient and appropriate business conduct, AIGJH will establish the internal rules, such as the “Board of Directors Rule” and the “Organization Regulation” and the “Assigned Roles and Responsibilities Regulation”, and implement frameworks as necessary.
- In accordance with resolution of the Board of Directors, AIGJH will establish the “Management Committee (keiei iinkaii)” and other committees with authorities to discuss and resolve managerial important matters or matters regarding business conducted.
- In order to ensure implementation of accurate and strong IT environment in the AIGJH group, AIGJH will establish appropriate frameworks as necessary.
- AIGJH will promote to create a corporate culture where talents from diverse background can work respectfully which will enable AIGJH Group to contribute to our clients as a Corporate Group by going above and beyond the common practice and innovation.
- In order to ensure efficient business conduct by the Directors, etc. of the AIGJH Sbsidiaries, AIGJH will assess and control the implementation of frameworks and functions in the AIGJH Subsidiaries.
5. Frameworks to Ensure Storage and Management of Information concerning the Business Conduct
In accordance with the “Record and Information Storage Management Rules”, AIGJH will store and manage all records concerning the business conduct by the directors, such as the minutes of the Board of Directors, committees and other important meetings, in an appropriate fashion.
6. Matters concerning Independence of the Staff Assisting the Audit & Supervisory Board Members and Matters concerning Securement of Effectiveness of their Instruction to the Staff
- AIGJH will position appropriate staff with capability and relevant competencies to support the Audit & Supervisory Board Members in carrying out their responsibilities (the “Auditor Support Staff”) upon request from an Audit & Supervisory Board Member.
- In order to ensure independence of the Auditor Support Staff from the directors of AIGJH, appointment, termination, performance assessment, remuneration, disciplining and dismissal of the Auditor Support Staff shall require prior consent of the full-time Audit & Supervisory Board Member(s).
- AIGJH shall take due care not to restrict or otherwise interfere with the activities of the Auditor Support Staff inappropriately.
- AIGJH shall not assign the Auditor Support Staff to operational functions in AIGJH without prior consent of the Audit & Supervisory Board Members and within the duties of the Auditor Support Staff, they shall adhere to the directions and instructions from the Audit & Supervisory Board Members and shall not have any report line of the Directors and staff.
7. Frameworks to Ensure Appropriate Reporting to the Audit & Supervisory Board Members
- The directors shall make reports to the Audit & Supervisory Board Members about all affairs required to be reported by the laws and regulations, the status of operation, finance, compliance, risk management and internal audit, all matters materially affecting the business or corporate organization, which require approval, and the status of whistleblowing (the “Matters for Reporting”). The staff shall be able to communicate directly with the Audit & Supervisory Board Members on the Matters for Reporting.
- AIGJH will implement frameworks to ensure that any reports on the Matters for Reporting shall be duly delivered to the Audit & Supervisory Board Members by the Directors, etc. and the staff of the AIGJH Subsidiaries or any persons who receive the reports from them.
- The directors and the staff shall promptly respond to request for reporting from the Audit & Supervisory Board Members.
- AIGJH will ensure that any persons making reporting to the Audit & Supervisory Board Members under preceding sections shall not be retaliated due to such reporting.
- The Audit & Supervisory Board Members shall attend the meetings of the Board of Directors. They may attend and opine at the meetings of committees and any other important meetings of AIGJH.
- The Audit & Supervisory Board Members of AIGJH shall have unrestricted access to the minutes of the Board of Directors, the committees and other important meetings, and any other records concerning determination by the directors and the staff.
8. Matters concerning Appropriate Handling of Expenses Arising from Activities of the Audit & Supervisory Board Members
AIGJH shall bear any expenses required for duties of an Audit & Supervisory Board Member unless proves to be unnecessary for them to fulfill their mission.
9. Other Frameworks to Ensure Effective Audit by the Audit & Supervisory Board Members
- The Board of Directors shall establish the audit environment necessary for the Audit & Supervisory Board Members to carry out their responsibilities.
- The directors and the Internal Audit Division shall cooperate to audit activities of the Audit & Supervisory Board Members upon such request from them.
- The representative directors and other executive directors shall exchange views with the Audit & Supervisory Board Members on issues, such as material audit matters, periodically, and they also shall ensure opportunities for the Audit & Supervisory Board Members to communicate directly with the external accounting auditors.
- AIGJH will ensure opportunities for the Audit & Supervisory Board Members to communicate directly with the Directors, etc., the Audit & Supervisory Board Members, the external accounting auditors and the Internal Audit Division of the AIGJH subsidiaries.