Richard J. Swift, Chair; Ann C. Berzin,
George W. Buckley, Peter C. Godsoe, H. William
The Audit Committee is appointed by the Board of Directors to assist the
Board in fulfilling its responsibilities to the shareholders and the investment
community with respect to its oversight of the:
- Integrity of the Company's
financial statements, including its accounting policies and financial
reporting and disclosure practices.
- Adequacy of the system of
internal controls within the Company to support the financial and business
- Company's processes to assure
its compliance with all applicable laws, regulations and corporate policy.
- Qualification and
independence of the Company's independent auditors.
- Performance of the Company's
internal audit function and independent auditors.
The Committee shall be comprised of three or more directors, each of whom
shall be independent and, as determined by the Board consistent with New York
Stock Exchange guidelines, free from any relationship that would interfere with
the exercise of his or her independent judgment as a member of the Committee.
Each member of the Committee shall be financially literate, defined as being
able to read and understand fundamental financial statements, including the
Company's balance sheet, income statement and cash flow statement or will
become able to do so within a reasonable period of time after his or her
appointment. In addition, at least one member of the Committee shall be a
financial expert, as determined by the Board in accordance with applicable
regulations and New York Stock Exchange requirements.
No member of the Committee shall receive compensation 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 and (ii) a pension or similar
compensation for past performance, provided that such compensation is not
conditioned on continued or future service to the Company.
The Committee shall meet at least five times annually, or more frequently as
circumstances dictate. At each of the five regularly scheduled meetings, and at
other meetings as necessary, the Committee shall meet with the senior internal
auditing executive and the Company's independent auditors in separate executive
sessions to discuss any audit problems or difficulties or any other matters
that the Committee or any of the aforementioned believes should be discussed
The Committee shall have the authority to delegate to the Chair of the
Committee or a subcommittee any of its responsibilities in this charter,
including, in particular, those set forth in paragraphs 4 and 11 below.
The Committee shall have the authority to retain special legal, accounting
or other consultants to advise the Committee. The Company will provide for such
funding as the Committee deems appropriate for the payment of compensation to
the Company's independent auditors and any special legal accounting or other
consultants retained by the Committee. The Committee may request any officer or
employee of the Company or the Company's outside counsel or independent auditor
to attend a meeting of the Committee or to meet with any members of, or
consultants to, the Committee.
The Committee shall:
- Review and reassess the
adequacy of this Charter annually or more often as conditions dictate, and
recommend proposed changes to the Board.
- Meet to review and discuss
with management and the independent auditors the Company's annual audited
financial statements and quarterly financial statements prior to their
public dissemination, as well as the Company's specific disclosures under
"Management's Discussion and Analysis of Financial Condition and
Results of Operations," the Company's critical accounting policies
and practices, and alternative treatments within generally accepted
accounting principles relating to material items. Such review shall
include a discussion of significant issues regarding the accounting and
auditing principles and practices (and the resolution of any disagreements
between management and the independent auditors), as well as the adequacy
of the internal controls and a review of any certifications being issued
in respect of such statements by senior executives of the Company.
- Discuss with the independent
auditors the matters required to be discussed by Statement on Auditing
Standards No. 61 relating to the conduct of the audit or review of the
quarterly financial statements as included in the Company's Forms 10-Q.
- 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 Chair will review and discuss in advance
each quarterly earnings release or provision of earnings guidance. The
other Committee members may participate at their option in these
- Consider and approve, if
appropriate, major changes to the Company's auditing and accounting
principles and practices as recommended by the independent auditors,
management or the internal auditing department.
- Review significant accounting
and reporting issues, including recent professional and regulatory
- Recommend to the Board of
Directors the nomination for shareholder approval in accordance with Bermuda
law of the independent auditors.
- Review, at least annually,
the qualifications and performance of the independent auditors. In
conducting its review and evaluation, the Committee shall obtain and
review a report from the independent auditing firm describing (a) the
firm's internal quality control procedures; (b) any material issues raised
by the most recent internal quality control or peer review of the firm, or
by any inquiry or investigation within the preceding five years by
governmental or professional authorities, respecting one or more
independent audits carried out by the firm; and (c) any steps taken to
deal with any issues raised by such review, inquiry or investigation.
Based on such review, and taking into account the opinions of the
management and the Company's senior internal audit executive, the
Committee should consider whether there should be a rotation of the lead
audit partner or the audit firm itself.
- Review and discuss with the
independent auditors, in order to satisfy itself as to their independence,
all relationships that would reasonably be thought to bear on the
objectivity and independence of the independent auditors. Ensure the
receipt of the independent auditors' annual independent statement.
- Review with the independent
auditors and financial management of the Company in advance and approve
all auditing services to be performed by the independent auditors,
including the scope, staffing and, subject to prior delegation from the
shareholders, the fees of the independent auditors to be incurred in
connection with the proposed audit for the current year and, at the
conclusion such audit, review such audit including any comments or
recommendations of the independent auditors.
- Approve in advance, subject
to and in accordance with applicable laws and regulations, non-audit
services and related fees to be performed by the independent auditors.
- Discuss with management and
the independent auditors the Company's policies with respect to risk
assessment and risk management.
- Obtain and review periodic
reports, at least annually, from management assessing the effectiveness of
the Company's internal controls and procedures for financial reporting,
including reports on (a) all significant deficiencies or material
weaknesses in the design or operation of internal controls; and (b) any
fraud, whether or not material, that involves management or other
employees having a significant role in internal controls.
- Obtain from management
annually, as required by law, a report on internal controls, which shall
(a) state the responsibility of management for establishing and
maintaining an adequate internal control structure and procedures for
financial reporting; and (b) contain management's assessment, as of the
end of the most recent fiscal year, of the effectiveness of the internal
control structure and financial reporting procedures.
- Obtain from the independent
auditors an attestation to (and a report on) the assessment made by
management in 14 above.
- Review the Company's
disclosure controls and procedures and management's assessment of them.
- Set clear hiring policies for
employees or former employees of the independent auditing firm.
- Review management's
monitoring of compliance with laws, regulations and the Company's Code of
- Establish procedures for (a)
the receipt, retention and treatment of complaints received by the Company
regarding accounting, internal accounting controls, or auditing matters;
and (b) the confidential, anonymous submission by employees of the Company
of concerns regarding questionable accounting or auditing matters.
- Review with the General
Counsel any legal matters, including litigation and regulatory matters,
which could have a significant impact on the Company's financial
- Review periodically (at least
annually) with the senior tax executive all tax matters affecting the
Company's financial performance.
- Review periodically (at least
annually) the internal audit organization and the objectives and scope of
the internal audit function and examinations.
- Review the appointment and
replacement of the senior internal auditing executive.
- Cause to be issued the report
of the Committee required by the rules of the Securities and Exchange
Commission to be included in the Company's annual general meeting proxy
- Report to the Board all
significant issues discussed and make recommendations to be acted upon by
- Conduct an annual evaluation
of the performance of the Committee.
- Perform any other activities
consistent with this Charter, the Company's Bye-laws and governing law, as
the Committee or the Board deems necessary or appropriate.