You are on page 1of 18

Conference and AGM 2011

Southport Theatre and Convention Centre, Saturday 11 June - Monday 13 June 2011

Conference and AGM 2011


Opening of the conference
High Chief Ranger Michael Grealy opened the conference. What a privilege it has been, he said. Im proof that anyone with dedication can reach the ofce of High Chief Ranger. To do the job you need a love of Foresters Friendly Society, as I do, and be prepared to put your normal life on hold. Its been an honour to meet so many of you around the country, and to choose the Royal National Lifeboat Institution (RNLI) as the national charity during my time as High Chief Ranger. Michael thanked the members for all their donations, which he said had been raised in many different ways. He added: The last nine months have been hard on my wife Shirley, butI couldnt have done it without her. Immediate Past High Chief Ranger Jim Launchbury gave the vote of thanks, saying that Michael had risen to the occasion. Jim said it had been a surprise to Michael that hed been voted into the ofce, and hed been the youngest High Chief Ranger in many years. He added: Mike is Secretary of Court Children of the Forest in Grimsby, and works in a sports centre four days a week - hes dedicated his weekends to attending engagements as High Chief Ranger. Hes worked hard to maintain the spirit of the High Chief Ranger, looking after the ofce and the membership. The RNLIs train one, save many scheme has really touched a lot of us. John Hughes seconded the vote of thanks: In 2003, I came to the microphone and put forward a proposition to separate the roles of High Chief Ranger and Chairman of the Board. This has enabled the High Chief Ranger to be chosen by ballot from among High Court delegates, and I think its been the right choice - weve seen a high calibre of nominees, and Michael is no exception. Every member now has the right to rise to the highest ofce, and this is good for the Society.

Greetings from the Oddfellows


Charles Vaughan, Grand Master of the Independent Order of the Oddfellows, then spoke, at what was his rst ofcial engagement as Grand Master. The Oddfellows celebrated their 200th anniversary last year, he said, with events held throughout the world to celebrate; though they can trace their origins back to the Israelites in Babylon in 500 BC. The Oddfellows were people who didnt t into particular trade guilds, he explained. But, while its good to look back, he said, we need to look to the future. The Oddfellows voted in May to move to incorporate on 1st January 2013. Like most member Societies today, the Oddfellows are suffering from a lack of new members, but its good to see the Foresters imaginative calendar of social events. Charles added that although he doesnt have a nominated charity, the Oddfellows particularly support research into prostate cancer and immunodeciency in premature babies.

Conference and AGM 2011


In remembrance
Several delegates spoke in remembrance of fellow members who had passed away. Dave Harman of Court Lansdown had died on 3rd June 2011. He was an active Forester and district trustee of Brighton district, as well as twice being District Chief Ranger. In 1996 hed taken the branch over and got it going again. Richard Bourne said that Dave had been ill for a number of years following a car accident, but that he was someone who took on a lot of work and did it well, and that he was a wonderful person to know, always cheerful. Ive lost a friend, he said, and the Society has lost a loyal servant. Paul Westerman of Court Sir Robert Peel in Yorkshire spoke about James Robert Hill, who passed away in February 2011, approaching his 103rd year. Jim attended many High Courts. He epitomised what being a Forester is all about. He was a Trustee of Leeds District Investment Association, loved being a Forester, and gave so much of his time to helping people.

Chairmans address
Carl Genese, in his rst conference as Chairman, gave a particular welcome to the 36 rst-time delegates who he and the High Chief Ranger had met before the conference. He was taking over from Glyn Carpenter, who was stepping down after nine years service on the Board - a considerable contribution, he said. Carl also paid tribute to Andrew Pooley, who was stepping down. Andrew had previously served as Deputy Chairman and Senior Independent Director on the Board. It was a great pleasure to see so many branches represented, he said - 86 per cent sent a delegate. Ill be doing all I can to ensure that delegates have the opportunity to speak, knowing that they come with questions from their members. All questions from Conference will be answered this year, even if it is after the Conference has closed.

Candidates for High Sub-Chief Ranger


As in the previous year, candidates for the role of High Sub-Chief Ranger were given the chance to introduce themselves to the delegation. Elizabeth Abbott, known as Liz, nominated by Court Benevolence, said that shed been a Forester for 50 years, after her father took out a policy for her shortly after she was born. She remembered wanting to go to High Court from an early age, and became Court Chief Ranger for Court Heart of Oak. She said shed taken the skills shed picked up through the Foresters into her working life, including as governor of a school and almshouse. If nominated, she said shed have a chance to pay the Foresters back for what shed learnt. Andrew Pooley, nominated by Court Unity, described his nine years serving on the Board. He added, however, that he was and remained a Court Secretary, close to members. The Courts are the root and matter of Forestry. Though they are often called Branches these days, they are still roots to me. Andrew said he was standing because he saw the job as important and worth doing. It goes to the heart of the Society - it needs contact with ordinary members. He added that he was ambitious for Foresters. The combination of the fraternal and insurance side made it unique, he said, and he was pleased with the accreditation process, as it was helping to reactivate the branches.

Conference and AGM 2011


High Court, Governance and the Role of Delegates
Chairman Carl Genese said that 2010 had been another busy year for the Board, with key issues around regulation, investment and membership. The FSA had announced a tightening-up of the Approved Persons Regime and the Combined Code for Mutuals and the Society had to ensure that it complied with them. The Approved Persons Regime had made appointment to the Board more difcult, given the professional experience now required. Carl said that, in response to the changes, the Board were looking at ways of continuing to ensure that members are heard at Board level. As a strong membership organisation, Foresters needs to keep its voice, he said. The year saw further work to prepare for the Europe-wide Solvency II regulation, due to come into force in 2013. It had also seen good progress in reducing costs, with a reduction of 8 per cent in management costs. There had been a major transition in investment funds too, with all of them achieving improved returns compared to 2009. Plus, there had been further progress in the branch review programme, with a number gaining accreditation. Carl said the 2012 Conference would be held in the Birmingham Hilton Metropole, from Friday 8th June to Sunday 10th June - a totally inclusive conference was possible there, he said, with delegates staying at the venue. The rate was expected not to exceed 550, including bed, breakfast and dinner, and free shuttles to Birmingham International station and airport. Graham Berville then spoke about the role specically of delegates (not including their other roles as members etc). Practices of governance now came from the failure of Equitable Life - a review commissioned by Lord Penrose had found signicant failings in Equitables governance system. The Chief Executive had been dominant, with the Board receiving inadequate information, meaning that they didnt understand their liabilities to policyholders. Not the least important was a lack of engagement with ordinary members, Graham said. Lord Penrose recommended a further review of corporate governance in other mutuals, and a review by Lord Myners had followed from this. Graham, then with the Police Mutual, said he led the mutual sectors dialogue with Lord Myners, who had concerns around the delegate system of representation, as few mutuals still have them. There were concerns about their ability to represent members views, and the concentration of power when a small group acts for many. The outcome was the Annotated Combined Code for Mutuals, a voluntary system, though failure to comply could result in a regulated solution. Graham gave examples of what delegates should be concerned about, such as assessing the performance of the Board; whether the business is achieving its plans and setting appropriate strategies for the future; whether it held enough capital to meet liabilities; whether the risk, audit and compliance functions were working well; and whether the external auditors report raises any issues. Delegates should look at policy returns, and the way in which discretionary benets are distributed.

Conference and AGM 2011


Questions, answers and comments
Colin Walker, Past High Chief Ranger, pointed out that Parliament itself represented a considerable concentration of power, with 650 MPs representing a population of more than 60 million. Paul Syrett asked how many delegates had seen the Foresters business plan, and since few had, how could they monitor the Boards performance? Daphne OConnell said that she knew of Court Secretaries who could not take part or vote at High Court - according to Graham, this was because they counted as employees of the Society, whereas delegates needed to be independent. Pauline Young questioned the ability of delegates to canvass the opinions of members before High Court, given that the programme was only circulated two weeks before.

Funds clarication
Chief Executive Kevin Dann then spoke about the clarication of the Societys Funds structure, in response to the FSA. Foresters, like all with prots mutuals, had received a Dear CEO letter from the FSA. Its general position had been that with prots policyholders were ultimately entitled to all, or almost all, of the assets in a mutuals long-term funds. This had serious implications, said Kevin: if Foresters only had a single with prots fund and it was ultimately wound-up, the last with prots policyholder would get all of what was left. Kevin said the Boards response has involved looking at the history of our Society, our incorporation process, the origin of our funds, and the contractual rights of our policyholders, as well as taking legal advice. Our conclusion was that it wasnt our priority to challenge the FSAs position, but to consider the implications for Foresters. Weve got a complex fund structure, and its difcult to apply with prots denitions to them. Pooled assets are difcult to identify as with prots or not. So weve gone through our funds to clarify whether they are insurance or noninsurance funds, non-prot or with prot. Theyre all dened in our Principals and Practices of Financial Management, available on our website. Weve also proposed to clarify the situation with pooled assets, making sure that each individual fund has a distinct, discrete pool of assets within it. We sent our proposals to the FSA in July 2010, pointing out that this was part of our modernisation process, aiming to bring clarity and dene the extent of our with prots funds, but without changing our policyholder or member rights, and keeping branch funds ring-fenced. Implementation is timetabled for summer 2011, and the FSA accepted our proposals on 14 April. Its ended up being a fantastic result for the Society, said Kevin. We get clarity around our funds and who they belong to, the rights of our policyholders and members are protected, and were able to plan to go forward.

Questions, answers and comments


Rosemary Clark asked whether there would be any effect on the performance of the funds with assets not being pooled. Kevin said he didnt think there would be, but that in future it would be possible to look at a fund and know exactly what assets it invested in.

Conference and AGM 2011


Benevolence Committee report
Cheryl Eagleson and Jim Launchbury reported on the work of the Benevolence Committee. At High Court in 2009, changes to the Benevolent Funds had been reported. Subsequently approved by the Board, revised regulations had recently been circulated. The Foresters Support Fund (previously the High Court Relief Fund) had made 65 grants in 2010, worth 25,000, although this fund was likely to be depleted in 2011. Claims had increased by 12 per cent in 2010. The Convalescent Benet Fund (no longer the Convalescent Home Fund) still made it possible for members to use the convalescent home of their choice, but since others charged higher rates than the Foresters own home in Bridlington, the relevant literature no longer offers free convalescent home stays. Donations from the Foresters Child Support Fund had increased by 33 per cent in 2010, despite these being difcult times. The nal fund administered by head ofce is the 150th Anniversary Educational Award. Donations and awards fell slightly in 2010, though this remains a crucial fund for young people, especially given the rise in university tuition fees. Cheryl asked Court Secretaries to ensure that they applied for the appropriate funds. Jim then spoke about the idea, rst raised last year, of the Society having its own permanent war memorial. A site has become available, at the National Arboretum Memorial Garden in Staffordshire, who have said that the Society can place a memorial there for members of the Foresters who gave their lives in the service of their country. The appeal fund now stands at 14,425. Donations received ranged from 5 to 1,000, but all were important. We have spoken to monumental masons recommended by the Arboretum who say that they can provide a suitable memorial for that amount, Jim said. Having travelled to northern France to see the grave of his wife Janets grandfather, who was killed in World War I, Jim said he appreciated how important remembrance is.

Questions, answers and comments


Ken Thomas, Jenny Ray, Daphne OConnell, John Springham and Pat Jeffcott passed on the thanks of their members for grants over the year. Richard Darlington said that the application for the new constitution of the Friendly Societies Convalescent Home to the Charity Commission still hadnt been dealt with.

Conference and AGM 2011


New business
Marketing Director Neil Armitage pointed out that the economy was still fragile, but that while consumer trust in nancial brands was low, that wasnt the case with mutual brands. And, comparing the trends in payouts of with prots policies between mutuals and demutualised insurers, it showed that the mutuals were getting something right. With sound management, a prudent attitude to risk, and no shareholders to pay, you could see why consumers still have faith. The results for group business were a gross prot of 1.9 million, with premiums worth 7.5 million and claims of 5.6 million. There were good business wins during the year, including from the Police Federation of Northern Ireland. County Councils had also been reducing their sick pay benets, and Foresters had been developing new schemes to provide them. Individual business had seen members with policies in the Order Insurance Fund increasing by 7 per cent, in a difcult year. Policy numbers were now above 20,000 for the rst time. Year-on-year new business (annualised) income was up by 22 per cent. However, Foresters needs to recruit new members just to stand still, Neil said. Weve seen signicant growth in the Order Insurance Fund, which is 40 per cent up since 2007, Neil added. Research also shows phenomenal customer satisfaction, with 99 per cent (up from 89 per cent last year) of members saying that they would recommend Foresters to their friends and family. Neil said the Ethical Child Trust Fund was the Societys most popular product, though it only sold it for the rst half of the year, before Child Trust Funds were discontinued. This is followed, in order, by the 50+ Life Cover plan, then Membership, and then the Tax Exempt Savings Plan, which is unique to friendly societies. Weve put a lot of effort into getting regional media exposure, which is often what reaches average members. We also got a lot of online exposure for keeping our Child Trust Fund open until it ended in July, said Neil. The 50+ market is a rare growing one, but competitors are targeting it, and its difcult to compete on advertising spend. Were making our product fairer, so for example you stop paying premiums after the age of 90. Were also changing our incentives for this product, offering a free Will from professionally qualied Will writers - something relevant to the end of life, and worth 199. For the future, legislation remains a challenge, said Neil. The Retail Distribution Review will mean that we cant pay commission to Independent Financial Advisers any more, while the European Court of Justices gender discrimination judgment means that we cant use gender as a risk factor in providing insurance - its going to be more expensive now for women, from December 2012. Neil added that the Society was very much involved in developing the new Junior ISA, the successor to the Child Trust Fund, sitting on the panel that advised the Treasury on it. Its a new thing for us to be inuencing policy and product design like this, he said. As sponsors of Archery GB, we had a great press launch at the Tower of London, and Danielle Brown became the rst Paralympian to win a gold medal at the Commonwealth Games in competition with able-bodied athletes - archery is one of the few sports where that could happen, Neil said. And nally we now have our own Facebook and Twitter pages, with the main nancial journalists following us. David Sherratt, Chief Executive of Archery GB, said that, like the Foresters, they had been around for a long time - this year was Archery GBs 150th anniversary. The partnership with Foresters was very important, he said: Were thrilled to be associated with a long-standing member organisation thats also looking to be relevant in the 21st century. David said the Foresters logo was on Archery GBs website, as well as at its training facilities at Lilleshall. Archery had been in the Olympics since 1900, and British archers were training hard for 2012 - we hope well be able to share success with you next year.

Conference and AGM 2011


Questions, answers and comments
Joan Lowe asked about the response rate in maintaining maturing policies. Neil said that maturing policies are often held by 18-year-olds, who had policies as children, or 70-to 80-year-olds. With both groups it was difcult to persuade them to re-invest their money, he said, but Foresters was gradually bringing in new members all the time, helping to spread the age range. Frank Beech asked whether ads for the Foresters could focus more on member benets, and whether the website address could be shorter and snappier. Neil said in reply that FSA rules made it difcult to talk about member benets other than generically in adverts, since non-regulated activities couldnt be mentioned in regulated adverts. The Board was looking at options for the web address, he said. Neil Kiernan wondered whether the biggest shake-up in the Welfare State in 60 years could lead to new business for the Foresters, as friendly societies had been the Welfare State of old. Neil pointed to the Society offering sickness plans to make up for reduced staff benets in the public sector as an indication of how this might work. Paul Syrett asked what the Societys annual gures looked like without the Child Trust Fund, given that this had now nished, and where Foresters came in terms of performance relative to other similar bodies. Neil said that Foresters was certainly not in trouble without the Child Trust Fund, since other products see much higher amounts invested in them. Foresters does measure itself against its peers as one of its Key Performance Indicators, including through a review published by Money Management magazine, he said. Of with prots funds still open to new business, the Society generally came in the top ve.

Branch results 2010


Kevin Dann presented the Consolidated Court Income and Expenditure Accounts for 2010, showing a total income of 4.46 million, up from 3.7 million. However, this includes a surplus from the Shefeld Investment Association, which was wound up, he said - when that was stripped out, income was down by around 1 per cent. Social income increased by 20 per cent. The total assets of the branches totalled nearly 63 million, slightly up from 2009. Income by branch ranged from 960 to 170,000, with half of the total received by just 50 branches. 65 per cent of income came from the Court Investment Fund. The real picture of income as against member numbers varies widely, Kevin said. Branch expenses total 2.8 million, and the range is from 695 to 65,000. Of these expenses, 35 per cent went on management expenses, 16 per cent on social events, 14 per cent on other discretionary benets, and 11 per cent on dental and optical benets. Again, per member it varies widely, from 2 to 102, with benets per member from 72p to 202 (based on total members, not those claiming). Kevin said that overall surplus income for 2010 was 860,000 (excluding the Shefeld Investment amount), or 3,772 per branch, up 24 per cent from 2009. Budgets for the coming year are for income ranging from 518 to 185,000, and expenditure from 711 to 98,000. Though were projecting a lower return from the Court Investment Fund, were still expecting a surplus of more than 550,000, he said.

Conference and AGM 2011


Questions, answers and comments
Jenny Ray asked for clarication that branches were allowed to make donations to charity from members funds, if they alert members. Kevin reiterated that such decisions were for branch committees of management, based on consulting local members. Chris Emery asked whether the numbers of members of each branch could be circulated, and Kevin said that he was open to that idea. Humphrey Clarke asked for the data in Kevins presentation to be made available in a spreadsheet-friendly le. John Lettall asked why the number of members was not included in the accounts, and Kevin said that he would do so in future.

Membership and Branch activity


Neil Armitage said that the unique structure of friendly societies made his job easier in marketing - it differentiates the Foresters offer. In 2010 there were 19 new Court Secretaries, he said, and the number of failing branches was down to one, with the number of accredited branches going up from 83 to 103. Over the year, 855,000 was given back to members in benets - what other nancial organisation could say this? The decline in membership has also halted, Neil said, with the branches bringing in around 700 new members in 2010. Peter Chase, of Court No 2271, was given a bottle of champagne as the top recruiter of new members over the year. Branch activities lead to a lot of press coverage, and supporting the RNLI has given the Foresters good exposure, Neil added. Also in 2010 Beryl Hendes retired - shed been our longest-serving member of staff, and to say thank you we sent her off on a cruise to New Zealand. Michelle Collins is now running the Help Desk.

Questions, answers and comments


Jenny Ray asked whether communications could be sent more regularly, and why The Forester was now only produced twice yearly. Neil conrmed that this was simply a question of cost. Alex Battershill asked whether Miscellany in particular could be produced more often online - most Foresters members now had Internet access, he said. George Brown asked whether it was the Boards intention to abolish area committees, as their budgets were being cut. Neil said that the areas very much have a future, and that area co-ordinators had an important role to play, giving Court Secretaries help and advice, and providing a link between central activities and those on the ground at branch level. Well be developing our area and branch strategy at the end of this month, Neil said. But we have to be very clear now where expenditure comes from. Area budgets come from the Court Reserve Fund, so you collectively, as branches, are paying for area activities. We could increase area budgets, but it would come off what gets paid to you - it would mean robbing Peter to pay Paul. A number of delegates questioned the meaning of Rule 11/2 in the Propositions and Rule Changes. This was regarding the setting of maximum numbers of executive and nonexecutive members that the Board can be comprised of, and so the number of vacancies that there currently were for re-election to the Board. John Gilbert gave his opinion that the implication of this rule, as well as Rule 11.6 L, was that the Board had the exibility to determine a lower number of its own members, and whether those were to be executive or non-executive members. Christine Carpenter asked whether High Court could change the rule to clarify the numbers of members allowed on the Board - Carl Genese said that it was the Boards intention to re-write the rule book to present at next years High Court for debate, with delegates being able to approve or amend them, as always.

Conference and AGM 2011


Investment Committee Report
Graham Berville then spoke about the work of the Investment Committee over 2010. There has been a big change in the way our investments are structured, he said, closely linked to the way our funds are being restructured, as a result of Project Chrysalis. Weve revised the investment strategy approved by the Board in 2010. The Committees responsibilities as summarised in the report and accounts are to review and approve external fund managers, monitor their performance, and monitor funds and asset classes across funds. In addition it develops and recommends investment strategies for the Board to approve, and ensures compliance with regulations. In 2010, it spent a lot of time looking at asset liability matching, Graham said. This means investing in such a way as to take account of the amount of time before funds have to be paid back to policyholders, and the nature of that liability. The new investment strategy has involved the transfer of the Foresters xed interest and equity portfolios to Legal & General, and moving treasury management to Royal London. The trigger points, at which Foresters sells equities if the market falls (effectively to prevent the Society becoming insolvent if theres a crash), have been adjusted. Preparatory work has been carried out for disposing of property assets. The Order Insurance Fund produced a return of 10.6 per cent in 2010. Were separating out each of the nine funds, looking at their specic liabilities and their assets (including how diversied they are), their cash ow requirements, and policyholder expectations, explained Graham. Since different assets have different characteristics (some are more liquid than others, some involve more risk than others etc), we can draw up proles of what assets are right for different funds, and so where we are currently over or under exposed. Were working on approaches to rebalancing each fund to take back to the Board. Our priorities for 2011 are to nish redistributing assets between funds, continue work on rening the xed interest portfolios (with more variation in duration), and take account of Solvency II. Well also keep reviewing the trigger points, lockingin capital in effect as the market rises.

Questions, answers and comments


Bernard Smith asked whether the move to sell residential properties was therefore about more than just health and safety issues. Kevin Dann replied by saying that a Foresters member had died in one of the properties owned and managed by a local branch, and so the Board took the decision that it wouldnt let the branches continue to hold and manage property. A criminal investigation is ongoing. The Board is not criticising the way that most branches have run their properties, but we cant collectively continue to take this risk. Our members could all end up having to contribute to a ne. Paul Syrett asked how the Board knew that moving to a passive investment approach was in keeping with the expectations of members, as it had said? Graham Berville said investments that had previously been actively managed by equity managers had experienced control problems - it was difcult for Foresters to see whether it was under or over exposed at an individual share or sector level. It wasnt clear whether the risks involved were worth the potential for better performance, especially given that 60 to 70 per cent of active equity managers under perform the index over the medium term. And, in any case, asset allocation - choosing which assets to invest in - was a much bigger decision than whether to have active or passive fund management. Given that our products are relatively simple and low-premium, and tend not to be held by sophisticated investors but by people looking for certainty, the Board decided to move to passive funds, said Graham. Our understanding of members expectations comes from the policies theyve bought, and what weve promised them. We cant write to all of our policyholders every year, asking them how theyd like us to invest.

Conference and AGM 2011


With Prots Committee report
Paul Engers was appointed by the Board as the independent member of the With Prots Committee in February 2011. He said that With Prots investments had long seemed the obvious choice for people who wanted to invest for long periods, and had been seen as low risk. However, after the endowment miss-selling scandal and the fall of Equitable Life, theyd come under scrutiny. There were concerns about how insurance companies worked out how much policies were worth, and where they were investing. The outcome was the Principles and Practices of Financial Management, which sets out how a company should run its With Prots business, and Paul said the key role of the With Prots Committee is to review how Foresters complies with the PPFM. Paul explained that the With Prots Committee did not have management responsibility for running the With Prots Fund - the Board does. The Committees role is to monitor what the Board is doing and advise as necessary, to meet policyholders expectations. It looks, for example, at bonus rates, and whether the amount of smoothing from year to year is reasonable. It also looks at the investment strategy that the Society adopts, and how the balance of risk and reward matches what members might expect from the literature that Foresters provides. And it looks at surrender values - whether the amount you get back is fair and reasonable if you dont continue paying into your policy as you should. Until recently the whole of the Board sat as the With Prots Committee, but to make it more independent, a separate committee has been set up, said Paul. Weve pushed for the inclusion of ordinary Foresters members, and in practice two of the Committee members are also policyholders.

Candidates for re-election to the Board


The four candidates up for re-election to the Board made short presentations to delegates. Paul Osborn spoke about his work as Foresters current Finance Director, and how as a chartered accountant hed been working with friendly societies since 1996, before joining Foresters in 2006. He spoke about his responsibilities for the nance section of the Society, the actuarial department and policy administration. Neil Armitage spoke about his work as a marketing director on four different Boards over 14 years. He said hed always been measured before on performance, not popularity, and that hed taken difcult decisions, but had always done so in the Societys interests. Neil said he hoped hes shown hed done a good job, with policies and funds growing 40 per cent since he joined three years ago, and Foresters raising its prole among policymakers. John Levett spoke about being enrolled as a Forester by his father 55 years ago. Hed absolutely loved being a High Chief Ranger, but he was concerned about the members - there must be member representation on the Board, which was challenging to achieve at the moment, he said. He was asking for the status quo to remain, with four vacancies on the Board, not three. Kathryn Vagneur said she took her job as a Non-Executive Director seriously, including holding the other directors to account. She said that the reason why some other Board members were not supporting her application for re-election was that she had been asking questions about something that one of the other directors did - an issue around risk and auditor independence. Not something wrong, but unusual. I was doing the job for Foresters members, and would like to continue. In response to delegates wishes, Chairman Carl Genese ruled that all four candidates would be allowed to be re-appointed to the Board, provided they met the stipulation in the Foresters rules by receiving more than 50 per cent of votes obtainable.

Conference and AGM 2011


Update on FSA matters
Kevin Dann then spoke about regulatory matters affecting the Society, and the pressure of compliance with FSA rules. The Board was now responsible for compliance with the Friendly Societies Act 1992, the Societys own rules, the FSA Principles and FSA Rulebooks, and the Annotated Combined Code for Mutuals. Also affecting the Society were Project Chrysalis, the With Prots Review, Solvency II, and Signicant Inuence Functions and Effective Corporate Governance. The With Prots Review report focused on key concerns of governance and policyholder communications, and has led to pressure to strengthen rules, again showing a lack of consideration for the things that make the mutual sector different Kevin said. Policy statement 10/15 on Effective Corporate Governance, published in September 2010, had been a response to the Walker Review following the banking crisis. Signicant Inuence Functions has involved assigning much clearer responsibilities to the roles of key individuals, especially the role of non-executive directors, and recognising the specic skills that are needed in certain roles. You can nd out more by going to www.fsa.gov.uk/register, and searching for Ancient Order... to nd a list of the people carrying out controlled functions at the Foresters, where weve come from, and what were allowed to do, advised Kevin. There are increased expectations particularly around the role of Non-Executive Directors, including the time it requires, he added. The FSA is also hardening its guidance and turning it into rules, and taking a more intrusive role in approving and supervising those who perform Signicant Inuence Functions. The effect is to raise the bar in terms of getting on the Board, especially for Non-Executive Directors. Prospective candidates now have to expect to be interviewed by the FSA, and to be ready to do that from the moment they join the Board.

Questions, answers and comments


Christine Carpenter asked that, since it says in the Report and Accounts that the Society will encourage members to go forward to the Board, what the Board were doing to full this. Carl Genese said that now that Project Chrysalis was out of the way, he promised to raise this with the FSA. Dozie Azubike raised the question of whether the Board had given High Court delegates the sufcient three months notice of vacancies on the Board regarding the required skills matrix, which had not been circulated.

Charity presentations
Michael Grealy announced that the total raised for the RNLI was 64,386. Receiving the cheque, RNLIs Senior Corporate Partnerships Manager Patrick Crow said that every one of the 139,000 lives saved by the RNLI was saved with the help of the charitys supporters, and that Foresters was among the most loyal of them, having been raising money for lifeboats since the 1860s. The Societys donation would fund the training of 52 volunteer crew members. It was a superb total, Patrick said, and Foresters had gone about raising it in a truly friendly way. Richard Darlington then explained his choice of charity to support during his time as High Chief Ranger. He said he couldnt imagine what it would be like not being able to see Englands green and pleasant land. He and his wife Doreen had been supporting the Guide Dogs for the Blind Association (Guide Dogs for short) for over 20 years. With no Government support, the charity aims to increase the number of guide dog owners in the UK to 6,000 by 2020, from 4,500 now. Delegates then heard from Andrew Cork, who felt that other charities hadnt been prepared to consider him for help after hed been left with multiple disabilities, including blindness. Guide Dogs, though, had given him a chance: Its opened my eyes to a whole new future,

Conference and AGM 2011


Andrew said. His guide dog, Verney, had made a huge difference to his life. Foresters will be sponsoring a buddy dog in the rst instance, which goes into schools for blind children, giving them condence and the practical experience in caring for a dog. Additional money will be used to sponsor the training of guide dog puppies. All kinds of sponsored events are already being organised, said Richard. Elizabeth Wilde announced that a race night held at the Royal Clifton Hotel during the conference had raised 1,235, part of which was to help kick-start the High Chief Rangers Appeal, with donations also being made to sponsor research into Parkinsons disease, and brain and spinal injuries.

Membership
Carl Genese then spoke about the continued pressure on the Societys governance arrangements, and how it needs to adapt its governance framework to meet that pressure, while retaining member involvement, as a mutual. Two key considerations over the year for the Board would be to review its size and look at ways of engaging members. The Board had begun to address the size issue in 2009, led by then Chairman Glyn Carpenter, looking at the needs of a business of the size and shape of Foresters, and given the FSAs approach to and expectations of Non-Executive Directors. While keeping the majority of Non-Executive Directors, the Boards proposal is to reduce the number of Board members to between seven and nine, said Carl. With Glyn and Andrew Pooley reaching the end of their service as directors, by not seeking to replace them wed be moving towards this target, from the current 12 directors. This reduction is likely to continue, taking into account the prevailing skills on the Board. A skills matrix is now in place to help with this. Then we have to nd ways to encourage members to participate at Board level, despite the increasingly high bar set by the FSA, said Carl. So the Board is also proposing to create a new Membership Committee, to work with and advise it on membership matters. The Membership Committee will be chaired by the High Chief Ranger and have up to eight members, with up to four representatives from delegates and interested members. It will help to maintain levels of member engagement, beyond High Court, and help member views be represented to the Board, especially on membership funds, benevolence and other benets. It will also help to develop prospective Non-Executive Directors, said Carl, strengthening the Societys governance framework, while meeting its responsibility to treat members fairly. Were looking to set it up as soon as possible, inviting applications from interested members, with a deadline of 22nd July. The nominations committee will interview candidates and aim to appoint by 1st September 2011. Members will serve initially until 2012; then, at the 2012 High Court, member elections will take place for a further term of two to three years. Carl encouraged delegates to write to him if they wished to know more, after discussing the matter with their branches.

Questions, answers and comments


Angela Stimson asked whether the Board could issue an organogram or structure chart to show lines of accountability to members. Sylvia Jones pointed out that other mutuals have long had structures in place to train members in governance. She also asked whether there was an age limit on the committee, given the vast experience that some older members had. Carl said in reply that the Board was always happy to learn from outside organisations on issues that they faced in common, and that, while the committee did not have an age limit, the Foresters rules did include an age limit for Board members.

Conference and AGM 2011


Opening of formal AGM
High Chief Ranger Michael Grealy formally opened the proceedings. The total number of delegates present at the start of High Court was 294. The minutes of High Court 2010 in Torquay were conrmed. Panel members for the Arbitration tribunal were conrmed, as well as members who will be the subject of portraits in Miscellany.

Report and Accounts 2010


Paul Osborn presented the Report and Accounts for 2010. The Annual Report and Accounts included the Auditors report for 2010. Both were received by delegates. Key points Against the background of another difcult year for the wider economy, Foresters saw an increase of 5 per cent in gross premium income (Individual +3 per cent to 4.8 million; Group +6 per cent to 7.5m; and Guernsey +5 per cent to 1.7m). Annualised new business showed a 21 per cent increase on 2009. Total premium income, at just short of 14m, was at its highest since incorporation. 2010 continued the trend that weve seen since 2005, of Group premium income outstripping Individual, Paul said. These gures show not just that Foresters is selling, but that the Society is selling protably, ensuring that current policyholders are not subsidising new ones. The number of Society members, at 71,703, was down by 1 per cent on 2009, though the number of policies in the Order Insurance Fund was up 7 per cent, at 20,117. Investment performance (total return) showed an increase of 8 per cent, with Equities up 15 per cent, Property up 7 per cent, and Fixed Interest up 9 per cent. Almost all the annual bonuses awarded on ISAs, Bonds, 50+ Life Cover etc (based on Asset Share values, and modied for smoothing), have remained the same as in 2009. Total management expenses were down 8 per cent on 2009, with particular reduction in the noninsurance side of the business (down 20 per cent), and in the branches (down 9 per cent). In terms of Insurance Expense Overruns, the expense reserve was 10m (down from 10.6m in 2009), the asset share charge was 29 per policy on average, and actual costs were 34 per policy (down from 39 in 2009) on average. Discretionary benets, including approved distributions, were down 19 per cent, discretionary benets without approved distributions were down 2 per cent, and the branch surplus (as a percentage of branch income) was up 25 per cent. In summary, Paul said that 2010 had been a good year for the Foresters, with similar results to 2009. Premium income was up by 0.7m and Equity values had increased by 4m, while Property values fell by 0.5m. There had been a small rise in technical provisions (by 0.3m), and claims were up by 1.6m in group business and maturities. Membership numbers had only declined by 66 (excluding the results of a data clean-up). The Societys nancial strength had increased by 4m.

Questions, answers and comments


Geoff Armitage asked when Board-approved distributions would be allowed again, and whether branches could still make grants to members below the value of 50 without Board approval. Kevin Dann replied, saying that the distributions shown in the accounts were those in the pipeline before they were suspended. They would be started again, but when was a question for the Board, as it considered the whole question of branch funding. Branches were empowered to make discretionary benets - they should refer them to the Board if there was any doubt. Roger Henson asked whether properties would be sold individually, or as a portfolio. Paul Osborn said that the sale of managed properties was a result of the investment strategy approved by the Board. It was not a re sale properties would not be sold below value. They would be sold individually, over 18 to 24 months. A decision would be taken on each property, so as not to disadvantage members.

Conference and AGM 2011


Dozie Azubike said that he was troubled by the expense overruns on the Order Insurance Fund, which seemed quite high to him. He said he was worried about whether new business was being written protably. He also suggested that employing an in-house actuary might be cheaper than employing Towers Watson. In response, Paul Osborn said the business plan across the Society stipulated that new business had to be sold protably by 2014 - there needed to be an element of investment in the early years of setting up a new business system. He pointed out that Towers Watsons work was for one product only, and that reports on valuation assumptions, calculations of bonus rates etc, were all produced in-house. Paul said it was on his radar to bring the remaining work in-house, rather than relying on external suppliers. George Brown pointed out that the Propositions 10-14 that were being considered by delegates only spoke about remuneration for Non-Executive Directors being increased up to certain limits, whereas the rules said that delegates would determine the nal amount of any increase. He said that was impossible unless the exact amount was to be made known. Pauline Young and Jenny Ray both questioned the accommodation allowance being paid to Neil Armitage, and the reasons for his travel costs. In reply, John Levett pointed out that all payments to Directors had been considered by the Remuneration Committee, and approved by the Board, and that all payments were strictly within Inland Revenue rules. Any individual has the right to negotiate their contract - there is a proper process for setting remuneration, and it is reported in the accounts, he said. Peter Saunders asked why, since Executive Directors recently had a pay freeze, one of them had a 10 per cent increase last year? And why had Director bonuses increased by 40 per cent? John Levett said that some of the gures within the accounts represented more than one year, and that bonuses for Executive Directors were considered by the Remuneration Committee on the basis of performance over the year, and approved by the Board. Special consideration had been given in 2010 to the work of dealing with Project Chrysalis.

Rule changes & Propositions


The following Propositions and Rule changes were approved: That BDO Stoy Hayward LLP be appointed as Auditors for the 2011 year end and that their remuneration be approved by the Board. That in Rule 8.12, the word two be removed and replaced with the word three and that the word three be removed and replaced with the word four. The Rule would then read:

Subject to Rule 8.13 below, each branch shall be entitled to send three Delegates to general meetings of the Society, branches with over 500 members shall be entitled to send four Delegates, and a further one delegate for every additional 500 members up to a maximum of fteen delegates in total. That the incoming Board be authorised to make a call upon each branch for payment of a levy of 5p per 100 of the total funds shown on the last annual return received at Head Ofce for the Convalescent Home Fund. Such levy to be remitted to Head Ofce or deducted from the Courts Investment Fund Account by no later than 1st April 2012. That in 2011 the Board be authorised to pay 2,750 to the Yorkshire Foresters Convalescent Home. That in 2011 the Board be authorised to pay 2,750 to the Foresters Homes, Bexley Heath. That in 2011 the Board be authorised to pay 2,750 to the Portsmouth and District Friendly Societies Home, Portsmouth. That the remuneration of the High Chief Ranger, if not also a Non-Executive Director, be set at 5,500 per annum. That the remuneration of the High Chief Ranger, if also a Non-Executive Director, be set at 3,500 per annum.

Conference and AGM 2011


That the remuneration of the High Sub-Chief Ranger, if not also a Non-Executive Director, be set at 3,000 per annum. Following a proposition put from the oor by Ken Strudwick and seconded by George Brown, the following propositions were put back to High Court 2012: That the remuneration of a Non-Executive Director be up to 20,000 per annum. That the additional remuneration of the Deputy Chairman be up to 20 per cent of his/ her own remuneration as a Non-Executive Director. That the additional remuneration of the Chairman be up to 40 per cent of his/ her own remuneration as a Non-Executive Director. That the additional remuneration of the Senior Independent Director be up to 20 per cent of his/ her own remuneration as a Non-Executive Director. That the additional remuneration of a Board Sub-Committee Chairman be up to 20 per cent of his/ her own remuneration as a Non-Executive Director. That no Non-Executive Director may receive more than one additional remuneration as per the propositions above, even if more than one prescribed role is undertaken.

As a result of this, an emergency proposition was agreed, that arrangements under miscellaneous propositions 14, 18, 19 and 20 from High Court 2010 should continue until High Court 2012.

Election and installation of ofcers


Re-election of the Board Four directors retired from the Board by rotation and were seeking re-election. The Societys Rules require candidates to obtain more than 50% of the votes obtainable. Following a challenge to the original version, the ballot papers for the vote were reissued during High Court and, as some delegates had already departed from the event, the number of ballot papers reissued, and hence the number of votes obtainable, was 287. A total of 284 votes were cast in the ballot and the votes cast were: Kathryn Vagneur 266 Paul Osborn 244 John Levett 242 Neil Armitage 146 As the Board had previously determined that there were four vacancies, and given that each obtained more than 50% of the votes obtainable, all four candidates were re-elected. Glyn Carpenter and Andrew Pooley both announced that they had decided not to stand down from the Board. Election of the High Sub-Chief Ranger Nominations were invited for the ofce of High Sub-Chief Ranger and, in accordance with Society rules, the names of Liz Abbott and Andrew Pooley were put forward. Of 287 ballot papers, Andrew Pooley received 129 votes, and Liz Abbott 158. Liz Abbott was duly elected High Sub-Chief Ranger for 2011-2012. She thanked Court Benevolence for putting her forward, the Nominations Committee for allowing her nomination, and delegates for voting for her. She gave particular thanks to her late father. Installation of High Chief Ranger Catherine Darlington and Peter Saunders then ofcially nominated Richard Darlington as High Chief Ranger for 2011 to 2012. Catherine said that shed known Richard for 40 years as a father and a Forester, and that

Conference and AGM 2011


she knew hed give his all in the year to come. Peter said that Richard embodied the Foresters motto of Unity, Benevolence and Concord, and that he knew he would show the same enthusiasm in his role as High Chief Ranger as he did in his branch. To close the conference, Richard was presented with the High Chief Rangers chain by Michael Grealy and ofcially installed as High Chief Ranger, to serve until June 2012.

Foresters Friendly Society is the trading name of the Ancient Order of Foresters Friendly Society Limited. Authorised and regulated by the Financial Services Authority. Incorporated Friendly Society No. 511F. FSA Registration No. 110029. Foresters Friendly Society is an incorporated branch society registered in the United Kingdom.