About NTI

Iceland's Natural Catastrophe Insurance (NTI) operates according to Act no. 55/1992 on the Natural Catastrophe Insurance of Iceland and Regulation no. 700/2019 on the Natural Catastrophe Insurance of Iceland. The NTÍ office is located in Hlíðasmári 14, Kópavogur.

NTI operates in the field of non-life insurance in accordance with Act no. 55/1992 and the Act on Insurance Activities no. 100/2016. In accordance with the Act on Auditors no. 79/2008, insurance companies are defined as entities related to the public interest, and the role of audit committees in such units is specified in the Annual Accounts Act, no. 3/2006.

According to the published annual accounts, premiums for the year 2019 at year-end were ISK. 3.259.983.000.
The Boards rules of procedure are available on NTI's website. In making the Statement of Governance, the guidelines of the Chamber of Commerce of Iceland, Nasdaq Iceland hf. and the Confederation of Icelandic Enterprises, published in May 2015.

Natural catastrophe insurance is a statutory insurance policy that compensates for direct damages to insured property caused by volcanic eruptions, earthquakes, landslides, avalanches and floods. The Natural Catastrophe Insurance accompanies the fire insurance police mandatory. If contents are insured against fire, whether through special contents insurance or composite contents insurance, which includes fire-related compansation and is classified as property insurance, then they are also covered for natural catastrophes. The natural catastrophe insurance amount is the same as the fire insurance amount in question, but the insurance terms are different.

It is also mandatory to insure structures e.g. bridges, ports, ski lifts and various publicly owned utilities against natural catastrophes, even if they are not insured against fire. When structures are insured against natural catastrophes with NTI, we refer to direct insurance in the field of non-life insurance. The structures may be insured elsewhere than at NTI.

Disputes as to whether damages are covered by NTI or regarding the amount of insurance compensation can be appealed to a special Appeals Committee. The Appeals Committee consists of Eiríkur Jónsson, Professor, Chair, nominated by the Supreme Court of Iceland, Sólveig Thorvaldsdóttir, Civil Engineer, Appointed by the University of Iceland, Stefán Már Stefánsson, Professor Emeritus, Appointed by the Minister and Guðrún Ólafsdóttir, earthquake engineer, appointed by the Minister. The committee was appointed in November 2018 for a three-year term.

Instructions from the Icelandic Chamber of Commerce, Nasdaq Iceland hf. and the Confederation of Icelandic Enterprise take into account the Act on Public Limited Companies and therefore they do not apply to NTI's operations. Nevertheless, they are taken into account when making the Statement of Governance. The instructions recommend to address any deviations from the instructions and that is done in the following list.

Chapter 1.
• Given that NTI is not a public limited company and that the board is not elected at the Annual General Meeting, this chapter does not apply to NTI's operations.

Chapter 2.
• Clause 2.2.1 is not followed in light of the fact that the Board's appointment is in accordance with Act no. 55/1992 and the Board of Directors does not have the power to decide on the composition of the Board.
• Clauses 2.3.3 - 2.3.5 and certain points in 2.3.6 do not apply to NTI as NTI is not a public limited company.
• The Board does not annually assess the size and composition of the Board in accordance with Section 2.6.2 since it is the responsibility of the Althingi, the Ministry and the SFF to appoint Board members.
• Section 2.7 on Remuneration Policy does not apply to NTI, as NTI is not legally obliged to have such a policy.
• The Board has not adopted a policy on NTI's social responsibility according to section 2.9.
• Section 2.10 on relations with shareholders does not apply as the NTI is wholly owned by the Icelandic state.

Chapter 3.
• No deviations.

Chapter 4.
• Since NTI is not a public limited company, it does not apply to those parts of clause 4.1.1 that relate to disclosure of shares in NTI, stock options or interests related to large shareholders in NTI.

Chapter 5.
• The board of NTI has no subcommittees according to Sections 5.1 and 5.2 outside the audit committee, which is statutory and operates in accordance with the provisions that apply to it.
• NTI has no remuneration committee in accordance with clause 5.4 as NTI is not a public limited company.

Chapter 6.
• Paragraph 7 of clause 6.1.2 does not apply to NTI's operations, as no nominating committee is active due to the fact that NTI is not a public limited company.
• Section 6.1.3 does not apply to NTI as NTI is not part of a group.
• Paragraphs 2, 4, 5, 6, 7, and 8 of clause 6.2.2 do not apply to NTI as NTI is not a limited company.

The NTI sends the Ministry of Finance and Economic Affairs NTI's annual accounts and annual report, directly following the annual meeting. Other communications are in connection with laws and regulations applicable to NTI and the Appeals Committee on Natural Catastrophe Insurance of Iceland. The CEO informs the Ministry of any issues that may be considered important and / or need to be considered regarding NTI's working environment.

NTI has not received any convictions for a criminal offense according to the general penal code, competition law, law on insurance companies or laws on accounting, annual accounts, bankruptcy or government charges or the special laws applicable to parties subject to official supervision of insurance activities.

The NTI is subject to the supervision of the Central Bank of Iceland and has established harmonized risk management covering all NTI's business segments. Until 2017, NTI's risk management was based on the FME's Guidelines no. 3/2014 on risk management and the function of an actuary at insurance companies. Since their repeale in 2017 NTI's risk management has been based on COSO ERM 2017. The current risk management policy is therefore based on the latest COSO guidelines, which is the committee of the Sponsoring Organizations of the Treadway Commission.

NTI's management system and organization is listed in its quality system. Instructions for the Agency's employees are aimed at ensuring that everyone is responsible for the quality of their work, NTI's services and information security. Internal controls are built into NTI's procedures, and internal audits and risk analyzes are carried out regularly. The quality representative presents to the audit committee and board, the conclusions of the quality and safety issues, internal audits and the status of improvement projects following an internal audit and other audits.

NTI emphasizes a clear division of labor and responsibilities. An important element of information presented to the NTI board are monthly reporting on the investment portfolio. In addition, detailed reporting on the portfolio is conducted every four months and an own risk and solvency assessment is conducted in conjunction with the annual portfolio performance report is conducted annually. The CEO usually meets several times a year with financial managers, on how management and supervision of investments are organized and to assess whether it is adequate.

An annual risk management report and other regular audits aim to ensure transparency in operations and facilitate NTI to detect and correct potential errors, monitor deviations and fluctuations in the operations, and provide scope for responding to risk factors or changes in operations.
Outstanding claims and reinsurance of NTI are regularly assessed and made sure that they are in accordance with the needs of the Agency and its obligations.

An external audit contract was signed with Deloitte in the fall of 2018 for a five-year period for 2018-2022, based on a tender conducted by the Central Public Procurement. The Internal Audit Agreement is valid for three years with PWC for the period 2017-2019.

Continuous improvements are being made to the operations of Natural Catastrophe Insurance of Iceland. A code of conduct for those working for NTI were established by the Board and staff in 2013. The Code of Conduct is a guiding light for the Board and employees on the moral responsibilities that all parties have agreed to follow. The rules are based on values ​​that must govern all NTI decisions, which are fairness, reliability, collaboration and initiative. In May 2018, a staff and board workshop was held focusing on strategic planning. The Board has set out a vision for individual operations in policies that are part of NTI's quality system and can be found at the bottom of this page. NTI's organizational structure and organizational chart will be reviewed in 2019. Policies are accompanied by timed objectives and methods that are routinely inspected.

The Rules of Procedure of the Board of Directors were first adopted on 8 February 2011. They are regularly reviewed and their 10th revision was revised on 19 February 2020. The rules stipulate, among other things, the independence of board members, division of duties and responsibility of board members. The rules also cover the role and scope of the Board of Directors and the CEO, the representation of the NTI Board, disclosure to the Board, the organization of meetings and minutes and the Board's decision-making power. In addition to the strategic role, the Board oversees that NTI's operations are in accordance with laws and regulations and oversees NTI's accounting and allocation of funds. The Board monitors the success and efficiency of NTI's internal operations and contributes to the NTI's objectives.

The Board of Directors worked on a comprehensive review of NTI's risk management policy in 2017, which was approved at the beginning of 2018. A new risk management policy defines three major risk factors in the business as; loss management, portfolio management and actuarial risk. The risk management policy is in the spirit of harmonized risk management COSO 2017, where Risk culture, strategy, project implementation risks, risk information and reporting, as well as internal control and risk measurement requirements are discussed. The latest version of the risk management policy was approved at a meeting of the Board of Directors on April 11, 2019.

NTI's information security policy was published in the 7th edition, March 28, 2019 and is based on The Central Bank of Iceland's, Financial Supervisory' s Guidelines no. 1/2019 on the risk of operating information systems of regulated entities.

NTI does not have a special policy on corporate social responsibility, but the Agency's structure and framework, rules are in place to ensure business continuity and social security when natural catastrophes occur. This, among others, are published in the rules on investment activities, investment policy and NTI's natural catastrophe response plan.

The Board has not adopted a policy on diversity in relation to the Board. The Board assumes that those appointed to the Board are in compliance with applicable laws at any given time.

The Board holds joint meetings with internal and external auditors and the Audit Committee on Internal Control and Risk Management. Both the Board and the Audit Committee meet at least once a year without the presence of NTI's CEO. The Board's assessment of its own work was last conducted in September 2018 and the Board considered that it had fulfilled its obligations under the law and rules of procedure and that its work had yielded the desired results. In the Board's performance evaluation, emphasis was placed on assessing the organization and conduct of Board meetings, information to the Board, the role, responsibilities and authority of the Board and the CEO, the activity level of Board members and the evaluation of the work of the Chairman and the CEO.
Each year, the Audit Committee submits a report to the Board of Directors on their work and assesses their own work in accordance with good practices of audit committees.

Laws and regulations on the NTI, the rules of procedure of the NTI Board, the rules of procedure of the Audit Committee and the NTI Code of Conduct are available together with other NTI policy and quality documents at the bottom of the page.

Strong efforts have been made to analyze compliance with the new Privacy Act and the processing of personal information and an action plan prepared following an analysis with the aim that NTI's activities follow the law in all respects. Deloitte performed a gap analysis of compliance with the law, and Deloitte submitted a report on the state of implementation of the Act in the autumn of 2018. NTI's Risk Management system specifically evaluates the risks with respect to the Privacy Act. NTI's Data Protection Officer is Auðbjörg Friðgeirsdóttir, audbjorg.fridgeirsdottir@is.pwc.com.

Great emphasis is placed on asset distribution in NTI's investment policy. There are agreements with Arion Banki, Íslandssjóðir, Íslensk verðbréf and Landsbanki on asset management. Assets are in both domestic and foreign assets and the main emphasis is on low-risk investments where security is emphasised above return on assets. Analytica monitors asset managers and compiles a monthly summary of the portfolio's status and compliance with the investment policy. The board receives a monthly summary of the portfolio's status. A detailed analysis report and a comparison of the performance of asset managers is presented to the Board every four months. In the review process of the investment policy, the annual performance of the asset management portfolio is available for the examination and evaluation of the options on which the policy is based. In 2018, the proportion of foreign assets in the portfolio benchmark was increased from 37.5% to 45%.

Reinsurance contracts are made for the purpose of reducing the agencies risk. The agency has purchased foreign reinsurance in two contracts for the year 2020. Contract no. 1 has two types of activity. On the one hand, for a single event, up to ISK 25 billion, with a deductible of ISK 10 billion. On the other hand, there are accumulation provisions in the agreement, where several events of different types can reach the ISK 10 billion. own risk, to a maximum ISK 25 billion. Contract no. 2 provides protection against very large individual events where reinsurers pay up to ISK 15 billion in excess of the ISK 25 billion loss covered by the previous contract in the case of a single event. Around 25 reinsurers sign NTI's reinsurance contracts for the risk of major events. Since 2014, Aon Benfield has been NTI's broker for reinsurance. Reinsurance contracts are renewed at the end of each year for the coming calendar year.

NTI's Board consists of five members. Three are elected by parliament. The insurance companies that collect premiums (SFF) elect one board member and the Minister of Finance and Economy appoints the chairman. Board members are appointed for a term of four years at a time. The Board of Directors comprises of: Sigurður Kári Kristjánsson, Chairman of the Board, Lína Björg Tryggvadóttir, Vice Chairman, Jóna Björk Guðnadóttir, Ragnar Þorgeirsson and Steinar Harðarson.
Alternate members of the board are Sóley Ragnarsdóttir, Margrét Arnheiður Jónsdóttir, Sigríður Gísladóttir, Silja Dögg Gunnarsdóttir and Tómas Ellert Jónsson.
The Board of Natural Catastrophe Insurance og Iceland believes that the provisions no. 2.3.2 of the Guidelines on Governance regarding the independence of board members is fulfilled. Board members are all independent from the organization and its day-to-day manager.

It is tradition to invite all alternate board members to attend one board meeting a year as observers, this is usually done at a board meeting held on the morning of the annual meeting in May each year. The purpose of calling alternates at an annual meeting is to contribute to the maintenance of knowledge of the activities and to ensure that they are familiar with the procedures of board meetings. The Natural Catastrophe Insurance of Iceland's Board met 14 times in 2019, and alternates were called to meet in two cases due to the absence of a principal board member, and in addition, alternates were invited to attend two meetings during the year as observers.
During the year, finance and asset management took up 25% of the board's working hours, actuarial risk and reinsurance 18%, policy and quality management 16% and risk management and supervision 8%. Other aspects of the Board's work amounted to 35% of the Board's working hours.

The Audit Committee operates according to rules of procedure based on Chapter IX. A. of the Annual Accounts Act no. 3/2006. Article 108 stipulates an obligation of public interest entities to operate an Audit Committee. The NTI Audit Committee is composed of three members elected by the NTI Board. The role of the committee is to oversee work processes for the preparation of financial statements, risk management and the functioning of internal controls. It shall ensure the quality of the annual accounts and other financial information of the Agency and the independence of its auditors. The Audit Committee comprises of: Sigurður Þórðarson, Chairman, as well as Steinunn Guðjónsdóttir and Ragnar Þorgeirsson, who is also a board member. No alternate members are appointed to the Audit Committee and therefore meetings are generally not held unless all members are able to attend the meeting. The Audit Committee normally meets monthly, except for two months during the summer period. The committee met 10 times in 2019. The Audit Committee emphasized that external and internal auditors focused on risk management and risk analysis in 2018-2019. Furthermore, internal audit focused on issues that could increase efficiency in the company's operations. It was also emphasized that the implementation of the provisions of the Privacy Act that entered into force in 2018 would be successful.

Board of Directors

• Sigurður Kári Kristjánsson, born May 9, 1973, resides in Reykjavik. He has served as Chairman of the Board of Natural Catastrophe Insurance of Iceland since 2015 and is appointed by the Minister. He was granted litigation rights  before the District Court in 1999 and before the Supreme Court of Iceland in 2017. Sigurður Kári was a lawyer at the law firm Lex from 1998 to 2003, when he was elected to parliament on behalf of Reykjavík. Since 2011, Sigurður Kári has been a self-employed lawyer and has run the law firm Lögmenn Lækjargötu in association with others. Sigurður Kári has served on numerous boards and committees on behalf of the government.
• Lína Björg Tryggvadóttir, born June 17, 1971, residing in Ísafjörður. Lína Björg was first appointed to the NTI Board by Althingi in 2011 and was Vice Chairman of the Board from 2015-2019. Lína Björg finished a B.S. degree in business administration from the University of Akureyri in 2006 with a focus on business law and management. She is currently pursuing a M.sc. in public administration from the University of Iceland. Lína Björg works as a project manager at the West Fjords Agency and oversees various projects relating to the development of the nine municipalities. She previously served as branch manager of Motus in Ísafjörður (2006-2013) and before that purchasing manager at Penninn's furniture department in Hallarmúli. She is a member of the Planning Committee of Ísafjörður and was previously Vice-Chairman of the Environmental Committee. She also sat on the town council of Ísafjörður for four years. She has also worked on business and development projects, both under the auspices of the Nordic Council of Ministers (Nordregio) and with other municipalities in Iceland.
• Jóna Björk Guðnadóttir, born March 31, 1967, residing in Reykjavik. She was an alternate member of the board from 2015-2019, but was appointed to the NTI board after nomination from the SFF in 2019. Jona Björk completed her law degree from the University of Iceland in 1994 and works as the senior lawyer of the Icelandic Financial Services Association (SFF), since 2008. She worked from 2006-2008 as compliance officer for Sparisjóðabanki Íslands. From 2001-2005, she served as Head of Department at the Ministry of Finance, from 1999 to 2000 she served as Director of the Healthcare Database Operations Committee. After completing a law degree, she served as a representative of the Keflavik District Commissioner. Jóna Björk has been an alternate member of the Board of the Icelandic Depositors and Investors Guarantee Fund since March 2012 and is a member of the European Banking Federation (EBF) Law Committee from April 2008.
• Ragnar Þorgeirsson, born January 23, 1966, resides in Reykjavik. Ragnar was first appointed to the NTI board by parliament in 2015, as well as being a  board representative in the audit committee. Ragnar earned a B.A. degree in public administration from the University of Aalborg in Denmark in 1997 and a master's degree in international business, with a focus on "Private-Public-Partnership", from the same school in 2000. Ragnar was a board member, chairman of the audit committee and later savings bank manager for Sparisjóður Þórshafnar og nágrennis ses. and branch manager in Þórshöfn after the merger of savings banks (2011-2015). Ragnar was CEO of operations, at the accounting and consulting firm PricewaterhouseCoopers ehf. (2005-2011). He has also undertaken longer and shorter business development projects for various companies. Ragnar is a licensed real estate agent and works at Heimili, fasteignasala, as well as operating small boat shipping.
• Steinar Harðarson, born April 8, 1944, resides in Reykjavik. He was on the board from 2011-2015, alternate from 2015-2019 and was again appointed to the board in 2019. Steinar graduated as a car mechanic from the Reykjavík Vocational School in 1964. He is a mechanical engineer from Polhems Technical School, Gothenburg 1977. He served as regional manager at the Administration of Occupational Safety and Health in Iceland from 1999-2014 and was director of the Department of Public Works in Þórshafnarhreppur from 1993 to 1999. He has participated in international projects for the Administration of Occupational Safety and Health and served on working groups on its behalf. Steinar has served on working groups on the drafting of regulations in the Ministry of Social Affair's occupational health department. Steinar has been recognized by the Occupational Safety and Health Administration as a service provider for occupational health and safety and now works as an independent occupational health and safety consultant at Vinnuvernd og forvarnir ehf.

Staff

The NTI board hires a CEO. NTI's CEO is Hulda Ragnheiður Árnadóttir, born in 1971. Hulda Ragnheiður has been NTI's CEO since 2010. The CEO is responsible for the day-to-day operations of the Agency. Hulda Ragnheiður completed her Masters in Banking, Finance and International Business in 2008. She completed her B.Sc. in Business Administration in 2004 and a Diploma in Public Administration and Management in 2001. Hulda also holds a Diploma in Good Governance from the Research Center on Governance at the University of Iceland. She is a member of the Board of Directors of the Association of Women Business Leaders in Iceland (FKA) since May 2018. Hulda previously worked in internal auditing at Kaupþing / Arion Bank, temporarily in the capacity of Mayor of Blönduóssbær and the Director of the Financial and Administrative Division of the City of Húsavík. Before that Hulda had worked both as a farmer and a dressmaker, but she graduated with a vocational degree in dressmaking from the Reykjavik Vocational school in 1991.
As well as the CEO, NTI employs five; Jónína Pálsdóttir, bookkeeper, Johann Arni Helgason, information technology and services manager and Vignir Jónsson, specialist in damage and risk assessment.

Audit committee

• Sigurður Þórðarson, born December 9, 1941, resides in Hafnarfjörður, the former State Auditor. He has been chairman of the NTÍ Audit Committee since 2011. He was appointed State Auditor in 1992 and served in that capacity until 2008. Sigurður became a Certified Auditor in 1982. Joined the Icelandic National Audit Office from 1973 to 1982 when he began working in the Ministry of Finance where he worked until he was appointed Deputy State Auditor in 1987. He has served on numerous boards and committees under the auspices of the State and the town of Hafnarfjörður. Since retiring as a state accountant, he has chaired several audit committees at public, pension and corporate bodies. Sigurður was appointed to the Nordic Investment Bank's (NIB) Audit Committee 2014 for 4 years, of which as Chairman for the last two years. He has also served on the Audit Council of the Council of Europe Resettlement Fund in Paris for 3 years and the Council of Europe in Strasbourg for 6 years. Sigurður was elected as Auditor of EUROSAI in 2002 (European Organization of Supreme Audit Institutions) for four years and also sat as an alternate on the Board of Directors and for a time on the Board of Directors of NIB in Helsinki from 2009 to 2013.
• Steinunn Guðjónsdóttir, born in 1963, resides in Reykjavík and has worked for Sjóvá since 1999. Along with her work at Sjóvá, she also spent her first years working as an actuary for several pension funds. In recent years, she has worked full time at Sjóvá, where she is the director of insurance and statistics analysis. Steinunn previously held the position of director of risk management for Sjóvá and managed the implementation of Solvency II at Sjóvá. Steinunn completed a degree in mathematics from the University of Groningen in the Netherlands in 1988 and worked until 1995 as a mathematics teacher at Menntaskólinn við Sund, in parallel with settlement and ruling projects for pension funds. She completed her degree in actuary from the University of Amsterdam in 1997.
• An overview of Ragnar Þorgeirsson's work experience and background can be found under the discussion of NTI's Board of Directors, but he took a seat on the NTI Audit Committee in 2015.

Deputies on the Board

• Sóley Ragnarsdóttir, born July 22, 1965, resides in Reykjavik. She is a substitute for Sigurður Kári Kristjánsson. Sóley holds a law degree from the University of Iceland. She has worked in the Ministry of Finance and Economic Affairs since 2006 and now works in the financial market office, where she handles, among other things, insurance market issues. Sóley has been involved in all legislation on the insurance market since 2014. Sóley has been an alternate member of the Ruling Committee of Insurance Matters since 2015. Before that, Sóley worked at the Registers Iceland, the District Commissioner in Reykjavik and in a law firm.
• Margrét Arnheiður Jónsdóttir, born September 11, 1978, resides in Hafnarfjörður. She is Jóna Björk Guðnadóttir's alternate. Margrét Arnheiður graduated as Cand. Jur from the Faculty of Law of the University of Iceland in 2007 and completed a degree in securities brokerage in 2013. Margrét has experience in insurance operations and compliance in accordance with the Securities Transactions Act, and she worked as a lawyer in the office of the CEO of VÍS and in compliance with the company from 2011 to 2018. In addition, Margrét worked in legal affairs in public administration from graduation and until she started working for VÍS 2011.
• Tómas Ellert Jónsson, born on November 20, 1970, resides in Selfoss. He is an alternate for Lína Björg Tryggvadóttir. Tómas Ellert graduated as a structural engineer from the Technical School of Iceland (HR) in 2000 and a civil engineer from the University of Washington, Seattle in 2002. Tómas Ellert has been in project management, consulting and design work for many years and now works for SG-hús ehf and Eðalbygging hef in Selfoss. Tómas Ellert is the Deputy Chairman of the Municipal Council and the Chairman of the Property and Utilities Committee of the Municipality of Árborg, as well as working of various committees on behalf of the municipality.
• Silja Dögg Gunnarsdóttir, born December 16, 1973, resides in Reykjanesbær. She is Ragnar Þorgeirsson's alternate. Silja has a MIB in International Business from the University of Bifröst, as well as a BA in History from the University of Iceland. Since 2013, Silja has been a member of Parliament for the Progressive Party for the Southern Constituency. During the years 2008-2013, she worked as an archivist and assistant to the executive board of HS veitur.
• Sigríður Gísladóttir, born August 24, 1981, resides in Ísafjörður. She is a slternate for Steinar Harðarson. Sigríður is a veterinarian (Cand.med.vet) from the Norwegian Veterinærhøgskole. Since 2012, Sigríður has been a specialist veterinarian at the Icelandic Food and Veterinary Authority, where she mainly handles projects in the field of fish diseases. Since 2016 she has been representing Iceland in the Nordic-Baltic Veterinary Response Group, which operates under the auspices of the Nordic Council of Ministers. She is a member of the Port Authority of Ísafjörður and the board of the West Fjords Nature Agency.

This Statement of Governance has been compiled by the Board of Directors and the CEO of NTI to the best of their knowledge. It is intended to provide detailed information on the agencies governance practices to customers, regulators, owners and other stakeholders.