Apollo Group – Section 172 statement

The directors adopt the responsibilities to promote the success of each managed syndicate as if Section 172 of the Companies Act 2006 were applicable and have acted in accordance with these responsibilities during the year. The AGHL Board has identified the following key stakeholders: capital providers to the Managed Syndicates, Apollo employees, the shareholders of AGHL, Lloyds’s and regulators, policyholders and brokers.

Throughout the year the AGHL Board considered the wider impact of strategic and operational decisions on its stakeholders. Examples include the development and execution of the business plans for the Managed Syndicates; the assessment and raising of capital; communications with capital providers; and changes to board composition. The AGHL Board considers that the interests of all stakeholders were aligned for these decisions.

The support and engagement of capital providers of the managed syndicate is imperative to the future success of our business. We have regular meetings with capital providers and members’ agents throughout the year to discuss the performance and future prospects for the syndicates which they support. Feedback received during these meetings enables the Board to factor the views of these key stakeholders into the development of business plans for future years.

Developing and maintaining relationships with brokers and policyholders is central to the success of the Managed Syndicates. Underwriters travel widely with our broking partners to visit clients and attend industry events to promote the syndicate and the Lloyd’s brand and ensure we continue to provide an excellent service to our policyholders. In developing insurance propositions and marketing them with our broking partners and in settling claims, we always seek to ensure fair customer outcomes and provide products that deliver value.

We maintain open and transparent relationships with our regulators and Lloyd’s, which are managed through our compliance team. Regular meetings are held with representatives of Lloyd’s and the PRA and significant regulatory engagements are reported via the appropriate governance arrangements.

Apollo’s Purpose statement is “Enabling a resilient and sustainable world”. Through 2022 we continued our work to develop and document our ESG principles and standards and assess our current business model against these standards. This work culminated in several actions to strengthen our ESG framework and governance, including the adoption of a Board agenda item to focus on culture, implementing ESG considerations throughout the governance committees, and committing time to support community volunteering and charitable activities. Additional actions included formalisation of a defined referral process for underwriting risks to adhere to our ESG appetite and manage potential reputational risk, ongoing monitoring of ESG metrics and climate intensity scores within the asset portfolios, and further strengthening activities and staff engagement around diversity, equality, and inclusion initiatives. Further work on ESG activities will continue through 2023 as we seek to evolve this area of AGHL’s strategy.

We have put in place procedures and actions to assist in managing the financial risks and opportunities associated with the effects of climate change and to ensure that adequate oversight and control of this area is exercised throughout all aspects of underwriting, reserving, investment management and operations. The business meets the requirements for PRA Supervisory Statement 3/19. Whilst the Chief Risk Officer retains overall accountability for coordinating the approach and effectiveness within ASML, the responsibility is allocated to relevant managers of each business area. Further developments to ensure management of the risks and opportunities will continue through 2023.

Employee matters

The Group recognises its people are a key asset. Attraction, retention, and development is fundamental to the success of the business. The Group commits to positive employee engagement through effective communication, recognition, development opportunities and a continued focus on diversity, inclusion and mental wellbeing.

Apollo acts as a single team where employees have mutual respect and enjoy working in a collaborative, hybrid environment. A “speak up” culture and relevant channels allow employees to raise concerns ensuring a safe and supportive environment that complies with relevant legislation, as well as shared values. Terms and conditions offered to employees, as part of their overall remuneration package remain competitive with the rest of the London Market insurance industry and employees are provided with opportunities to develop their skills and capabilities. In the context of the challenges provided by enhanced inflation experienced in 2022 and the cost of living, particular economic support has been provided where it was most needed.

‍Business operations

Apollo -centric with a London-based operation and distribution model. The Group fully embraces and supports Lloyd’s vision of being a broker market, as well as local markets through third party cover holders.

The Group aims to maintain a lean operating model utilising technology and outsourcing arrangements where flexibility is required, or greater efficiency can be achieved. As a mid-sized business, the Group is able to expand and contract as market conditions dictate. Through the use of specific outsourcing, the Group maintains an appropriate support function commensurate with its underwriting capacity. We continue to invest in actuarial, risk management, operations, and data management resources in order to ensure that the discipline we aim for in underwriting is matched by the intensity of scrutiny given to pricing, reserving and second line of defence activities.

Lloyd’s Blueprint initiatives offer a number of processing efficiency gains for the market and we continue to actively monitor progress to position ourselves as necessary to maximise the benefit to the Group, its syndicates and its capital providers.

Apollo continues to successfully maintain a hybrid working environment with all employees able to work effectively, both remotely and from the office with suitable access to business systems.

Aligned with the recent Financial Conduct Authority and Prudential Regulation Authority Operational Resilience and Third-Party Oversight policies, Apollo has successfully undertaken a thorough self-assessment of our operational resilience. We continue to focus on ensuring we maintain robust and resilient plans to prevent, adapt, respond and recover from operational disruptions with the primary objective to protect our customers and integrity of our business.

‍Environmental, social and governance

During 2022, Apollo has published its first Board approved Environmental, Social and Governance (ESG) strategy. The ESG strategy covers a variety of internal and external targets and aligns with the Group Vision statements as well as to Apollo’s purpose; “Enabling a resilient and sustainable world”. The ESG Group coordinate the majority of ESG-related activities within Apollo and is comprised of representatives from across Apollo, both in terms of seniority and business activities. The ESG Group reports directly to the Executive Committee and has the purpose of identifying areas of improvement as well as to ensure progress against the ESG Strategy.

The AGHL Board drives the tone for good governance and the overall ESG strategy. Apollo has aligned its strategy with five of the UN Sustainable Development Goals in the short to medium term. The AGHL Board and Executive Committee are actively engaged in embedding ESG considerations throughout the governance committees within Apollo and have supported related considerations within Apollo suppliers and outsource service partners.

From an environmental perspective Apollo is committed to a long-term sustainable approach to protecting the environment, as well as socially responsible underwriting and sustainable investing. This now includes specific ESG related underwriting and investment risk appetites which were implemented during 2022 and a public commitment to be net carbon zero by year end 2023 for emissions that are within Apollo’s control (for Scope 1 & 2 emissions). Apollo will seek to support clients and partners to transition to a low carbon sustainable economy.

At Apollo our people are at the heart of everything we do, and we are committed to creating a diverse and inclusive workplace, one where difference is celebrated and everyone is welcome, included and can thrive. Apollo operates a zero-tolerance policy to bullying and harassment and all forms of discrimination. This includes, but is not limited to, all of the protected characteristics of the Equality Act of 2010 as well as neurodiversity, parental and caring responsibilities, socio-economic status and working patterns.

Apollo provides staff with Inclusion & Diversity (“I&D”) training including racial awareness training, as well as inclusive hiring manager training and inclusive leadership training for business managers and leaders. Apollo sponsors and supports six Lloyd’s  market inclusion networks, and has nominated “Inclusion Champions” who each represent Apollo and provide links back to the business. All employees are given access to mental health and wellbeing tools via an independent partner organisation. Apollo conducted a diversity survey in Autumn 2022 which had a 91% completion rate and we are implementing feedback from the survey. Apollo had above market average results compared to benchmarks for the Lloyd’s Culture Survey in 2021.

Apollo has begun internal quarterly reporting on various ESG metrics across multiple business areas. These include carbon emission data across scopes 1, 2 and 3 (scope 1 & 2 emissions are those directly produced by Apollo and scope 3 are indirect emissions) as well as recycling, gender and racial diversity information, employee satisfaction and governance metrics. This information will be utilised over time to ensure Apollo makes progress against its broader ESG Strategy.

From a gender perspective, the ratio of female to male Board directors is 25% at year-end 2022 (20% at year-end 2021). For the Executive Committee and direct reports (excluding executive assistants) the ratio is 27% at Q4 2022 (2021: 26%). Within the overall business the ratio of male:female employees is 65%:35%. Apollo has also started to report to Lloyd’s and the Board on ethnicity. Further details in relation to current and planned I&D activities conducted within AGHL can be found on the Apollo website (https://apollounderwriting.com).

Apollo will continue to develop its ESG Strategy through 2023. This includes the development of TCFD-style (Taskforce for Climate related Financial Disclosure) reporting as well as enhancing how ESG data is linked into underwriting. Apollo has engaged an independent specialist company (Ecofye) to help develop these aspects and ensure emissions reporting is accurate.