Agm Conference Report 2011

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Conferenceand AGM 2011

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


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Opening of the conferenceHigh Chief Ranger Michael Grealyopened the conference. What a privilege ithas been, he said. Im proof that anyone with dedication can reach the office ofHigh Chief Ranger. To do the job you need a love of Foresters Friendly Society, as Ido, and be prepared to put your normal life on hold. Its been an honour to meet somany 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 thankedthe members for all their donations, which he said had been raised in many differentways. He added: The last nine months have been hard on my wife Shirley, but Icouldnt 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 toMichael that hed been voted into the office, and hed been the youngest High

Chief Ranger in many years. He added: Mike is Secretary of Court Children ofthe Forest in Grimsby, and works in a sports centre four days a week - hesdedicated his weekends to attending engagements as High Chief Ranger. Hesworked hard to maintain the spirit of the High Chief Ranger, looking after the officeand the membership. The RNLIs train one, save many scheme has really toucheda lot of us.

John Hughesseconded the vote of thanks: In 2003, I came to the microphone andput forward a proposition to separate the roles of High Chief Ranger and Chairmanof the Board. This has enabled the High Chief Ranger to be chosen by ballot fromamong High Court delegates, and I think its been the right choice - weve seen ahigh calibre of nominees, and Michael is no exception. Every member now has theright to rise to the highest office, and this is good for the Society.

Greetings from the OddfellowsCharles Vaughan, Grand Master of the Independent Order of the Oddfellows, thenspoke, at what was his first official engagement as Grand Master. The Oddfellowscelebrated their 200thanniversary last year, he said, with events held throughoutthe world to celebrate; though they can trace their origins back to the Israelites inBabylon in 500 BC. The Oddfellows were people who didnt fit into particular tradeguilds, he explained.

But, while its good to look back, he said, we need to look to the future. TheOddfellows voted in May to move to incorporate on 1st January 2013. Like mostmember 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 Oddfellowsparticularly support research into prostate cancer and immunodeficiency inpremature babies.

Conference and AGM 2011


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In remembranceSeveral delegates spoke in remembrance of fellow members who had passed away.Dave Harmanof Court Lansdown had died on 3rd June 2011. He was an activeForester and district trustee of Brighton district, as well as twice being District ChiefRanger. In 1996 hed taken the branch over and got it going again. Richard Bournesaid that Davehad been ill for a number of years following a car accident, but that hewas someone who took on a lot of work and did it well, and that he was a wonderfulperson to know, always cheerful. Ive lost a friend, he said, and the Society haslost a loyal servant.

Paul Westermanof Court Sir Robert Peel in Yorkshire spoke about JamesRobert Hill, who passed away in February 2011, approaching his 103rdyear. Jimattended 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, andgave so much of his time to helping people.

Chairmans addressCarl Genese, in his first conference as Chairman, gave a particular welcome tothe 36 first-time delegates who he and the High Chief Ranger had met before theconference. He was taking over from Glyn Carpenter, who was stepping down afternine years service on the Board - a considerable contribution, he said.

Carl also paid tribute toAndrew Pooley, who was stepping down. Andrew hadpreviously served as Deputy Chairman and Senior Independent Director on theBoard. 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 theopportunity 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 theConference has closed.

Candidates for High Sub-Chief RangerAs in the previous year, candidates for the role of High Sub-Chief Ranger were giventhe chance to introduce themselves to the delegation.

Elizabeth Abbott, known as Liz, nominated by Court Benevolence, said that shedbeen 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, andbecame Court Chief Ranger for Court Heart of Oak. She said shed taken the skillsshed picked up through the Foresters into her working life, including as governorof a school and almshouse. If nominated, she said shed have a chance to pay theForesters back for what shed learnt.

Andrew Pooley, nominated by Court Unity, described his nine years serving onthe Board. He added, however, that he was and remained a Court Secretary, closeto members. The Courts are the root and matter of Forestry. Though they areoften called Branches these days, they are still roots to me. Andrew said he wasstanding because he saw the job as important and worth doing. It goes to the heartof the Society - it needs contact with ordinary members.

He added that he was ambitious for Foresters. The combination of the fraternal andinsurance side made it unique, he said, and he was pleased with the accreditation

process, as it was helping to reactivate the branches.



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High Court, Governanceand the Role of DelegatesChairman Carl Genesesaid that 2010 had been another busy year for the Board,with key issues around regulation, investment and membership. The FSA hadannounced a tightening-up of the Approved Persons Regime and the CombinedCode for Mutuals and the Society had to ensure that it complied with them. TheApproved Persons Regime had made appointment to the Board more difficult,given the professional experience now required. Carl said that, in response to thechanges, the Board were looking at ways of continuing to ensure that members areheard at Board level. As a strong membership organisation, Foresters needs tokeep 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 majortransition in investment funds too, with all of them achieving improved returnscompared to 2009. Plus, there had been further progress in the branch reviewprogramme, 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 waspossible there, he said, with delegates staying at the venue. The rate was expectednot to exceed 550, including bed, breakfast and dinner, and free shuttles toBirmingham International station and airport.

Graham Bervillethen spoke about the role specifically of delegates (not includingtheir other roles as members etc). Practices of governance now came from the failure

of Equitable Life - a review commissioned by Lord Penrosehad found significantfailings in Equitables governance system. The Chief Executive had been dominant,with the Board receiving inadequate information, meaning that they didnt understandtheir liabilities to policyholders. Not the least important was a lack of engagementwith ordinary members, Graham said.

Lord Penrose recommended a further review of corporate governance in othermutuals, and a review by Lord Mynershad followed from this. Graham, then withthe Police Mutual, said he led the mutual sectors dialogue with Lord Myners, whohad concerns around the delegate system of representation, as few mutuals stillhave 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 wasthe Annotated Combined Code for Mutuals, a voluntary system, though failure tocomply could result in a regulated solution.

Graham gave examples of what delegates should be concerned about, such asassessing the performance of the Board; whether the business is achieving its plansand setting appropriate strategies for the future; whether it held enough capital tomeet liabilities; whether the risk, audit and compliance functions were working well;and whether the external auditors report raises any issues. Delegates should look atpolicy returns, and the way in which discretionary benefits are distributed.



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Questions, answers and commentsColin Walker, Past High Chief Ranger, pointed out that Parliament itself representeda considerable concentration of power, with 650 MPs representing a population ofmore than 60 million.

Paul Syrettasked how many delegates had seen the Foresters business plan, andsince few had, how could they monitor the Boards performance?

Daphne OConnellsaid that she knew of Court Secretaries who could not takepart or vote at High Court - according to Graham, this was because they counted asemployees of the Society, whereas delegates needed to be independent.

Pauline Youngquestioned the ability of delegates to canvass the opinions ofmembers before High Court, given that the programme was only circulated two

weeks before.

Funds clarificationChief Executive Kevin Dannthen spoke about the clarification of the SocietysFunds structure, in response to the FSA. Foresters, like all with profits mutuals, hadreceived a Dear CEO letter from the FSA. Its general position had been that withprofits policyholders were ultimately entitled to all, or almost all, of the assets in amutuals long-term funds. This had serious implications, said Kevin: if Foresters onlyhad a single with profits fund and it was ultimately wound-up, the last with profitspolicyholder 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 ourpolicyholders, as well as taking legal advice. Our conclusion was that it wasnt ourpriority to challenge the FSAs position, but to consider the implications for Foresters.Weve got a complex fund structure, and its difficult to apply with profits definitionsto them. Pooled assets are difficult to identify as with profits or not.

So weve gone through our funds to clarify whether they are insurance or non-insurance funds, non-profit or with profit. Theyre all defined in our Principals andPractices of Financial Management, available on our website. Weve also proposedto clarify the situation with pooled assets, making sure that each individual fundhas a distinct, discrete pool of assets within it. We sent our proposals to theFSA in July 2010, pointing out that this was part of our modernisation process,aiming to bring clarity and define the extent of our with profits funds, but withoutchanging 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 andmembers are protected, and were able to plan to go forward.

Questions, answers and commentsRosemary Clarkasked whether there would be any effect on the performance ofthe 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 assetsit invested in.



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Benevolence Committee reportCheryl Eaglesonand JimLaunchburyreported on the work of the BenevolenceCommittee.

At High Court in 2009, changes to the Benevolent Funds had been reported.Subsequently approved by the Board, revised regulations had recently beencirculated. The Foresters Support Fund (previously the High Court Relief Fund) hadmade 65 grants in 2010, worth 25,000, although this fund was likely to be depletedin 2011. Claims had increased by 12 per cent in 2010.

The Convalescent Benefit Fund (no longer the Convalescent Home Fund) still madeit possible for members to use the convalescent home of their choice, but sinceothers charged higher rates than the Foresters own home in Bridlington, the relevantliterature no longer offers free convalescent home stays.

Donations from the Foresters Child Support Fund had increased by 33 per cent in2010, despite these being difficult times.

The final fund administered by head office is the 150th

Anniversary EducationalAward. Donations and awards fell slightly in 2010, though this remains a crucial fundfor young people, especially given the rise in university tuition fees. Cheryl askedCourt Secretaries to ensure that they applied for the appropriate funds.

Jim thenspoke about the idea, first raised last year, of the Society having its ownpermanent war memorial. A site has become available, at the National ArboretumMemorial Garden in Staffordshire, who have said that the Society can place amemorial there for members of the Foresters who gave their lives in the service oftheir country. The appeal fund now stands at 14,425. Donations received rangedfrom 5 to 1,000, but all were important. We have spoken to monumental masonsrecommended by the Arboretum who say that they can provide a suitable memorialfor that amount, Jim said. Having travelled to northern France to see the grave of hiswife Janets grandfather, who was killed in World War I, Jim said he appreciated howimportant remembrance is.

Questions, answers and commentsKen Thomas, Jenny Ray, Daphne OConnell, John Springhamand PatJeffcottpassed on the thanks of their members for grants over the year.

Richard Darlingtonsaid that the application for the new constitution of the FriendlySocieties Convalescent Home to the Charity Commission still hadnt been dealt with.



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New businessMarketing Director Neil Armitagepointed out that the economy was still fragile,but that while consumer trust in financial brands was low, that wasnt the casewith mutual brands. And, comparing the trends in payouts of with profits policiesbetween mutuals and demutualised insurers, it showed that the mutuals weregetting something right. With sound management, a prudent attitude to risk, and noshareholders to pay, you could see why consumers still have faith.

The results for group business were a gross profit of 1.9 million, with premiumsworth 7.5 million and claims of 5.6 million. There were good business wins duringthe year, including from the Police Federation of Northern Ireland. County Councilshad also been reducing their sick pay benefits, and Foresters had been developingnew schemes to provide them.

Individual business had seen members with policies in the Order Insurance Fundincreasing by 7 per cent, in a difficult year. Policy numbers were now above 20,000

for the first time. Year-on-year new business (annualised) income was up by 22 percent. However, Foresters needs to recruit new members just to stand still, Neil said.Weve seen significant growth in the Order Insurance Fund, which is 40 per cent upsince 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 wouldrecommend 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 first half of the year, before Child Trust Funds werediscontinued. 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 whatreaches average members. We also got a lot of online exposure for keeping our ChildTrust Fund open until it ended in July, said Neil.

The 50+ market is a rare growing one, but competitors are targeting it, and its

difficult to compete on advertising spend. Were making our product fairer, so forexample you stop paying premiums after the age of 90. Were also changing ourincentives for this product, offering a free Will from professionally qualified Will writers- something relevant to the end of life, and worth 199.

For the future, legislation remains a challenge, said Neil. The Retail DistributionReview will mean that we cant pay commission to Independent Financial Advisersany more, while the European Court of Justices gender discrimination judgmentmeans that we cant use gender as a risk factor in providing insurance - its going tobe more expensive now for women, from December 2012.

Neil added that the Society was very much involved in developing the new JuniorISA, the successor to the Child Trust Fund, sitting on the panel that advised theTreasury on it. Its a new thing for us to be influencing policy and product design likethis, he said.

As sponsors of Archery GB, we had a great press launch at the Tower of London,and Danielle Brownbecame the first Paralympian to win a gold medal at theCommonwealth Games in competition with able-bodied athletes - archery is one ofthe few sports where that could happen, Neil said. And finally we now have ourown Facebook and Twitter pages, with the main financial journalists following us.

David Sherratt, Chief Executive of Archery GB, said that, like the Foresters, theyhad been around for a long time - this year was Archery GBs 150 thanniversary.The partnership with Foresters was very important, he said: Were thrilled to beassociated with a long-standing member organisation thats also looking to berelevant in the 21stcentury.

David said the Foresters logo was on Archery GBs website, as well as at itstraining facilities at Lilleshall. Archery had been in the Olympics since 1900, andBritish archers were training hard for 2012 - we hope well be able to share success

with you next year.



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Questions, answers and commentsJoan Loweasked about the response rate in maintaining maturing policies. Neil saidthat 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 difficult to persuade them to re-investtheir money, he said, but Foresters was gradually bringing in new members all thetime, helping to spread the age range.

Frank Beechasked whether ads for the Foresters could focus more on memberbenefits, and whether the website address could be shorter and snappier. Neilsaid in reply that FSA rules made it difficult to talk about member benefits otherthan generically in adverts, since non-regulated activities couldnt be mentioned inregulated adverts. The Board was looking at options for the web address, he said.

Neil Kiernanwondered 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 theWelfare State of old. Neil pointed to the Society offering sickness plans to make upfor reduced staff benefits in the public sector as an indication of how this might work.

Paul Syrettasked what the Societys annual figures looked like without the ChildTrust Fund, given that this had now finished, and where Foresters came in terms ofperformance relative to other similar bodies. Neil said that Foresters was certainlynot in trouble without the Child Trust Fund, since other products see much higheramounts invested in them. Foresters does measure itself against its peers as oneof its Key Performance Indicators, including through a review published by MoneyManagementmagazine, he said. Of with profits funds still open to new business, theSociety generally came in the top five.

Branch results 2010Kevin Dannpresented the Consolidated Court Income and Expenditure Accountsfor 2010, showing a total income of 4.46 million, up from 3.7 million. However,this includes a surplus from the Sheffield Investment Association, which was woundup, 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 receivedby 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. Ofthese expenses, 35 per cent went on management expenses, 16 per cent on social

events, 14 per cent on other discretionary benefits, and 11 per cent on dental andoptical benefits. Again, per member it varies widely, from 2 to 102, with benefitsper member from 72p to 202 (based on total members, not those claiming).

Kevin said that overall surplus income for 2010 was 860,000 (excluding theSheffield 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, andexpenditure from 711 to 98,000. Though were projecting a lower return fromthe Court Investment Fund, were still expecting a surplus of more than 550,000,he said.



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Questions, answers and commentsJenny Rayasked for clarification that branches were allowed to make donations tocharity from members funds, if they alert members. Kevin reiterated that such decisionswere for branch committees of management, based on consulting local members.

Chris Emeryasked whether the numbers of members of each branch could becirculated, and Kevin said that he was open to that idea.

Humphrey Clarkeasked for the data in Kevins presentation to be made available in aspreadsheet-friendly file.

John Lettallasked why the number of members was not included in the accounts, andKevin said that he would do so in future.

Membership and Branch activityNeil Armitagesaid that the unique structure of friendly societies made his job easierin marketing - it differentiates the Foresters offer. In 2010 there were 19 new CourtSecretaries, he said, and the number of failing branches was down to one, with thenumber of accredited branches going up from 83 to 103. Over the year, 855,000 wasgiven back to members in benefits - what other financial organisation could say this?

The decline in membership has also halted, Neil said, with the branches bringing inaround 700 new members in 2010. Peter Chase, of Court No 2271, was given a bottleof 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 giventhe Foresters good exposure, Neil added. Also in 2010 Beryl Hendesretired - shed

been our longest-serving member of staff, and to say thank you we sent her off on acruise to New Zealand. Michelle Collinsis now running the Help Desk.

Questions, answers and commentsJenny Rayasked whether communications could be sent more regularly, and whyThe Forester was now only produced twice yearly. Neil confirmed that this was simplya question of cost.Alex Battershillasked whether Miscellanyin particular could beproduced more often online - most Foresters members now had Internet access, he said.

George Brownasked 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 thatarea 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, Neilsaid. But we have to be very clear now where expenditure comes from. Area budgetscome from the Court Reserve Fund, so you collectively, as branches, are paying for areaactivities. We could increase area budgets, but it would come off what gets paid to you - itwould mean robbing Peter to pay Paul.

A number of delegates questioned the meaning of Rule 11/2 in the Propositions and RuleChanges. This was regarding the setting of maximum numbers of executive and non-executive members that the Board can be comprised of, and so the number of vacanciesthat there currently were for re-election to the Board.

John Gilbertgave his opinion that the implication of this rule, as well as Rule 11.6 L,was that the Board had the flexibility to determine a lower number of its own members,

and whether those were to be executive or non-executive members. ChristineCarpenterasked whether High Court could change the rule to clarify the numbers ofmembers allowed on the Board - Carl Genesesaid that it was the Boards intention tore-write the rule book to present at next years High Court for debate, with delegates beingable to approve or amend them, as always.



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Investment Committee ReportGraham Bervillethen spoke about the work of the Investment Committee over2010. 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 ofProject Chrysalis. Weve revised the investment strategy approved by the Boardin 2010. The Committees responsibilities as summarised in the report and accountsare to review and approve external fund managers, monitor their performance,and monitor funds and asset classes across funds. In addition it develops andrecommends investment strategies for the Board to approve, and ensurescompliance 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 beforefunds have to be paid back to policyholders, and the nature of that l iability. Thenew investment strategy has involved the transfer of the Foresters fixed interest

and equity portfolios to Legal & General, and moving treasury management toRoyal 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 beenadjusted. 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 specific liabilities andtheir assets (including how diversified they are), their cash flow requirements, andpolicyholder expectations, explained Graham. Since different assets have differentcharacteristics (some are more liquid than others, some involve more risk than othersetc), we can draw up profiles of what assets are right for different funds, and sowhere we are currently over or under exposed.

Were working on approaches to rebalancing each fund to take back to theBoard. Our priorities for 2011 are to finish redistributing assets between funds,continue work on refining the fixed interest portfolios (with more variation in duration),

and take account of Solvency II. Well also keep reviewing the trigger points, locking-in capital in effect as the market rises.

Questions, answers and commentsBernard Smithasked whether the move to sell residential properties was thereforeabout more than just health and safety issues. Kevin Dannreplied by saying thata Foresters member had died in one of the properties owned and managed by alocal branch, and so the Board took the decision that it wouldnt let the branchescontinue to hold and manage property. A criminal investigation is ongoing. TheBoard is not criticising the way that most branches have run their properties, but wecant collectively continue to take this risk. Our members could all end up having tocontribute to a fine.

Paul Syrettasked how the Board knew that moving to a passive investmentapproach was in keeping with the expectations of members, as it had said?

Graham Bervillesaid investments that had previously been actively managedby equity managers had experienced control problems - it was difficult for Forestersto see whether it was under or over exposed at an individual share or sectorlevel. It wasnt clear whether the risks involved were worth the potential for betterperformance, especially given that 60 to 70 per cent of active equity managersunder 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 tohave 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 Boarddecided to move to passive funds, said Graham. Our understanding of membersexpectations comes from the policies theyve bought, and what weve promisedthem. We cant write to all of our policyholders every year, asking them how theydlike us to invest.



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With Profits Committee reportPaul Engerswas appointed by the Board as the independent member of the WithProfits Committee in February 2011. He said that With Profits investments had longseemed the obvious choice for people who wanted to invest for long periods, andhad been seen as low risk. However, after the endowment miss-selling scandal andthe fall of Equitable Life, theyd come under scrutiny. There were concerns abouthow insurance companies worked out how much policies were worth, and wherethey were investing. The outcome was the Principles and Practices of FinancialManagement, which sets out how a company should run its With Profits business,and Paul said the key role of the With Profits Committee is to review how Foresterscomplies with the PPFM.

Paul explained that the With Profits Committee did not have managementresponsibility for running the With Profits Fund - the Board does. The Committeesrole 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 theamount of smoothing from year to year is reasonable. It also looks at the investmentstrategy that the Society adopts, and how the balance of risk and reward matcheswhat members might expect from the literature that Foresters provides. And it looksat surrender values - whether the amount you get back is fair and reasonable if youdont continue paying into your policy as you should.

Until recently the whole of the Board sat as the With Profits Committee, but tomake it more independent, a separate committee has been set up, said Paul. Wevepushed for the inclusion of ordinary Foresters members, and in practice two of theCommittee members are also policyholders.

Candidates for re-election to the BoardThe four candidates up for re-election to the Board made short presentations todelegates.

Paul Osbornspoke about his work as Foresters current Finance Director, and howas a chartered accountant hed been working with friendly societies since 1996,before joining Foresters in 2006. He spoke about his responsibilities for the financesection of the Society, the actuarial department and policy administration.

Neil Armitagespoke about his work as a marketing director on four differentBoards over 14 years. He said hed always been measured before on performance,not popularity, and that hed taken difficult decisions, but had always done soin 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 profile among policymakers.

John Levettspoke about being enrolled as a Forester by his father 55 years ago.Hed absolutely loved being a High Chief Ranger, but he was concerned aboutthe members - there must be member representation on the Board, which waschallenging to achieve at the moment, he said. He was asking for the status quo toremain, with four vacancies on the Board, not three.

Kathryn Vagneursaid she took her job as a Non-Executive Director seriously,including holding the other directors to account. She said that the reason why someother Board members were not supporting her application for re-election was thatshe 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 Geneseruled that all fourcandidates would be allowed to be re-appointed to the Board, provided theymet the stipulation in the Foresters rules by receiving more than 50 per cent ofvotes obtainable.



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Update on FSA mattersKevin Dannthen spoke about regulatory matters affecting the Society, andthe pressure of compliance with FSA rules. The Board was now responsible forcompliance with the Friendly Societies Act 1992, the Societys own rules, the FSAPrinciples and FSA Rulebooks, and the Annotated Combined Code for Mutuals. Alsoaffecting the Society were Project Chrysalis, the With Profits Review, Solvency II, andSignificant Influence Functions and Effective Corporate Governance.

The With Profits Review report focused on key concerns of governance andpolicyholder communications, and has led to pressure to strengthen rules, againshowing a lack of consideration for the things that make the mutual sector differentKevin said. Policy statement 10/15 on Effective Corporate Governance, publishedin September 2010, had been a response to the Walker Review following thebanking crisis. Significant Influence Functions has involved assigning much clearer

responsibilities to the roles of key individuals, especially the role of non-executivedirectors, and recognising the specific skills that are needed in certain roles.You can find out more by going to www.fsa.gov.uk/register, and searching for

Ancient Order... to find a list of the people carrying out controlled functions at theForesters, where weve come from, and what were allowed to do, advised Kevin.

There are increased expectations particularly around the role of Non-ExecutiveDirectors, including the time it requires, he added. The FSA is also hardening itsguidance and turning it into rules, and taking a more intrusive role in approving andsupervising those who perform Significant Influence Functions. The effect is to raisethe 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 beready to do that from the moment they join the Board.

Questions, answers and commentsChristine Carpenterasked that, since it says in the Report and Accounts that theSociety will encourage members to go forward to the Board, what the Board weredoing to fulfil this. Carl Genesesaid that now that Project Chrysalis was out of theway, he promised to raise this with the FSA.

Dozie Azubikeraised the question of whether the Board had given High Courtdelegates the sufficient three months notice of vacancies on the Board regarding therequired skills matrix, which had not been circulated.

Charity presentationsMichael Grealyannounced that the total raised for the RNLI was 64,386.Receiving the cheque, RNLIs Senior Corporate Partnerships Manager Patrick Crowsaid that every one of the 139,000 lives saved by the RNLI was saved with the helpof the charitys supporters, and that Foresters was among the most loyal of them,having been raising money for lifeboats since the 1860s. The Societys donationwould fund the training of 52 volunteer crew members. It was a superb total, Patricksaid, and Foresters had gone about raising it in a truly friendly way.

Richard Darlingtonthen explained his choice of charity to support during his timeas High Chief Ranger. He said he couldnt imagine what it would be like not beingable 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 over20 years. With no Government support, the charity aims to increase the number ofguide dog owners in the UK to 6,000 by 2020, from 4,500 now. Delegates then heardfromAndrew Cork, who felt that other charities hadnt been prepared to considerhim for help after hed been left with multiple disabilities, including blindness. GuideDogs, though, had given him a chance: Its opened my eyes to a whole new future,



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Andrew said. His guide dog, Verney, had made a huge difference to his life.Foresters will be sponsoring a buddy dog in the first instance, which goes into

schools for blind children, giving them confidence and the practical experience incaring for a dog. Additional money will be used to sponsor the training of guide dogpuppies. All kinds of sponsored events are already being organised, said Richard.

Elizabeth Wildeannounced that a race night held at the Royal Clifton Hotelduring the conference had raised 1,235, part of which was to help kick-start theHigh Chief Rangers Appeal, with donations also being made to sponsor researchinto Parkinsons disease, and brain and spinal injuries.

MembershipCarl Genesethen spoke about the continued pressure on the Societys governancearrangements, and how it needs to adapt its governance framework to meet that

pressure, while retaining member involvement, as a mutual. Two key considerationsover the year for the Board would be to review its size and look at ways of engagingmembers.

The Board had begun to address the size issue in 2009, led by then ChairmanGlyn Carpenter, looking at the needs of a business of the size and shape ofForesters, and given the FSAs approach to and expectations of Non-ExecutiveDirectors. While keeping the majority of Non-Executive Directors, the Boardsproposal is to reduce the number of Board members to between seven and nine,said Carl. With Glyn andAndrew Pooleyreaching the end of their service asdirectors, by not seeking to replace them wed be moving towards this target, fromthe current 12 directors. This reduction is likely to continue, taking into account theprevailing skills on the Board. A skills matrix is now in place to help with this.

Then we have to find 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 onmembership matters.

The Membership Committee will be chaired by the High Chief Ranger andhave up to eight members, with up to four representatives from delegates andinterested members. It will help to maintain levels of member engagement, beyondHigh Court, and help member views be represented to the Board, especially onmembership funds, benevolence and other benefits.

It will also help to develop prospective Non-Executive Directors, said Carl,strengthening the Societys governance framework, while meeting its responsibilityto treat members fairly. Were looking to set it up as soon as possible, invitingapplications from interested members, with a deadline of 22ndJuly. The nominationscommittee will interview candidates and aim to appoint by 1stSeptember 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 encourageddelegates to write to him if they wished to know more, after discussing the matterwith their branches.

Questions, answers and commentsAngela Stimsonasked whether the Board could issue an organogram or structurechart to show lines of accountability to members.

Sylvia Jonespointed out that other mutuals have long had structures in place totrain members in governance. She also asked whether there was an age limit on thecommittee, given the vast experience that some older members had. Carl said inreply 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.



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Dozie Azubikesaid that he was troubled by the expense overruns on the Order Insurance Fund, which seemedquite high to him. He said he was worried about whether new business was being written profitably. He alsosuggested that employing an in-house actuary might be cheaper than employing Towers Watson. In response,

Paul Osbornsaid the business plan across the Society stipulated that new business had to be sold profitablyby 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 remainingwork in-house, rather than relying on external suppliers.

George Brownpointed out that the Propositions 10-14 that were being considered by delegates only spokeabout remuneration for Non-Executive Directors being increased up to certain limits, whereas the rules said thatdelegates would determine the final amount of any increase. He said that was impossible unless the exact amountwas to be made known.

Pauline Youngand Jenny Rayboth questioned the accommodation allowance being paid to Neil Armitage,and the reasons for his travel costs. In reply, John Levettpointed out that all payments to Directors had been

considered by the Remuneration Committee, and approved by the Board, and that all payments were strictlywithin Inland Revenue rules. Any individual has the right to negotiate their contract - there is a proper process forsetting remuneration, and it is reported in the accounts, he said.

Peter Saundersasked why, since Executive Directors recently had a pay freeze, one of them had a10 per cent increase last year? And why had Director bonuses increased by 40 per cent? John Levettsaid that some of the figures within the accounts represented more than one year, and that bonuses for ExecutiveDirectors were considered by the Remuneration Committee on the basis of performance overthe year, and approved by the Board. Special consideration had been given in 2010 to the work of dealingwith Project Chrysalis.

Rule changes & PropositionsThe following Propositions and Rule changes were approved:

That BDO Stoy Hayward LLP be appointed as Auditors for the 2011 year end and that their remunerationbe approved by the Board.

That in Rule 8.12, the word two be removed and replaced with the word three and that the word threebe 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 theSociety, branches with over 500 members shall be entitled to send four Delegates, and a further one delegate forevery additional 500 members up to a maximum of fifteen 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 Office for the ConvalescentHome Fund. Such levy to be remitted to Head Office or deducted from the Courts Investment FundAccount by no later than 1stApril 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 SocietiesHome, Portsmouth.

That the remuneration of the High Chief Ranger, if not also a Non-Executive Director, be set at 5,500 perannum.

That the remuneration of the High Chief Ranger, if also a Non-Executive Director, be set at 3,500 perannum.



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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 ChiefRanger as he did in his branch.

To close the conference, Richardwas presented with the High Chief Rangers chain by Michael Grealyandofficially installed as High Chief Ranger, to serve until June 2012.



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

Documents

Agm Conference Report 2011