AMENDED AND RESTATED CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS OF QUORUM INSURANCE HOLDINGS CORP.
Adopted by the Board of Directors on December 11, 2025
This Amended and Restated Charter (this "Charter") replaces in its entirety the Charter of the Audit Committee of the Board of Directors originally adopted on February 12, 2016, as amended on March 20, 2019 and June 14, 2021. This Charter is effective as of December 11, 2025.
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ARTICLE I — PURPOSE
The Audit Committee (the "Committee") is a standing committee of the Board of Directors (the "Board") of Quorum Insurance Holdings Corp., a Delaware corporation (the "Company" or "QIH," NYSE: QIHC). The Committee is established pursuant to Section 141(c) of the Delaware General Corporation Law and in accordance with the listing standards of the New York Stock Exchange ("NYSE"), the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"), and the Company's Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, and Corporate Governance Guidelines, each as in effect from time to time.
The primary purposes of the Committee are as follows:
(a) To assist the Board in fulfilling its oversight responsibilities with respect to the integrity of the Company's financial statements, including the annual audited financial statements and the quarterly unaudited financial statements included in the Company's periodic reports filed with the SEC;
(b) To assist the Board in its oversight of the Company's compliance with applicable legal and regulatory requirements, including those imposed by federal and state insurance regulators, the SEC, and the NYSE;
(c) To assist the Board in its oversight of the qualifications, independence, and performance of the Company's independent registered public accounting firm (currently Garrett & Whitfield LLP);
(d) To assist the Board in its oversight of the performance of the Company's internal audit function, which is led by the Chief Audit Executive (currently Renata M. Vásquez);
(e) To assist the Board in its oversight of the Company's enterprise risk management ("ERM") framework, as more fully described in Section 4.5 of this Charter. This provision represents a new area of responsibility not present in prior versions of the Committee's charter, and reflects the Board's determination that the Committee should play a defined role in the oversight of financial risk dimensions within the broader ERM framework;
(f) To oversee the administration of the Company's Compensation Recovery Policy (the "Clawback Policy") adopted pursuant to SEC Rule 10D-1 and NYSE Rule 303A.14, as more fully described in Section 4.6 of this Charter. This provision represents a new area of responsibility assigned to the Committee following the adoption of the Clawback Policy in compliance with final SEC rules;
(g) To prepare the Audit Committee report required by the rules and regulations of the SEC to be included in the Company's annual proxy statement on Schedule 14A; and
(h) To perform such other functions as the Board may assign to the Committee from time to time.
Notwithstanding the foregoing, the Committee's function is one of oversight. The management of the Company is responsible for the preparation, presentation, and integrity of the Company's financial statements and for maintaining appropriate accounting and financial reporting principles, policies, internal controls, and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The Company's independent registered public accounting firm is responsible for planning and carrying out a proper audit of the Company's annual financial statements in accordance with the standards of the Public Company Accounting Oversight Board ("PCAOB") and for reviewing the Company's quarterly financial statements. In fulfilling their responsibilities hereunder, members of the Committee are not acting as professional accountants or auditors, and their functions are not intended to duplicate or certify the activities of management and the independent registered public accounting firm. Nothing in this Charter shall be construed to reduce the responsibilities or liabilities of the Company's management or the independent registered public accounting firm.
ARTICLE II — COMPOSITION
Section 2.1 — Number of Members
The Committee shall consist of not fewer than three (3) members of the Board. The actual number of Committee members shall be determined from time to time by the Board, taking into account the recommendation of the Nominating & Corporate Governance Committee and the requirements of applicable law, SEC rules, and NYSE listing standards.
All members of the Committee shall be appointed annually by the Board upon the recommendation of the Nominating & Corporate Governance Committee. Such appointments shall ordinarily be made at the first meeting of the Board held following the annual meeting of shareholders of the Company. Committee members shall serve until their successors are duly appointed and qualified, or until the earlier of their death, resignation, removal from the Committee, or cessation of service as a director of the Company.
The Board shall designate one member of the Committee as the Chair of the Committee (the "Chair"). The Chair shall preside at all meetings of the Committee, shall establish the agenda for each meeting in consultation with the General Counsel & Corporate Secretary, and shall perform such other duties and responsibilities as are set forth in this Charter or as may be assigned by the Board from time to time. In the absence of the Chair at any meeting, the Committee members present at such meeting shall designate an acting chair from among themselves. As of the date of adoption of this Charter, the Chair of the Committee is Dr. Lilian Fong-Archer.
Section 2.2 — Independence Requirements
Each member of the Committee shall satisfy all applicable independence requirements, including:
(a) The independence requirements set forth in Section 303A.02 of the NYSE Listed Company Manual, as the same may be amended from time to time, which establish general standards for independence of members of the Board;
(b) The enhanced independence requirements for audit committee members set forth in Section 303A.06 of the NYSE Listed Company Manual, as the same may be amended from time to time, including the amendments adopted in 2024 relating to cooling-off periods and the scope of prohibited compensatory relationships;
(c) The independence requirements set forth in Rule 10A-3 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which impose additional independence standards on audit committee members of listed companies; and
(d) Any other applicable independence requirements imposed by law, rule, or regulation.
Without limiting the generality of the foregoing, no member of the Committee may receive, directly or indirectly, any consulting, advisory, or other compensatory fee from the Company or any subsidiary thereof, other than fees received in such member's capacity as a member of the Board or any committee of the Board (including this Committee). In addition, no member of the Committee may be an "affiliated person" of the Company or any subsidiary thereof, as that term is defined in Rule 10A-3 under the Exchange Act, other than in such member's capacity as a member of the Board.
The Board shall affirmatively determine the independence of each member of the Committee at the time of appointment and at least annually thereafter. Such determinations shall be disclosed in the Company's annual proxy statement as required by SEC rules and NYSE listing standards.
Section 2.3 — Financial Literacy and Audit Committee Financial Expert
Each member of the Committee must be "financially literate," as determined by the Board in the exercise of its business judgment. A member who does not satisfy the financial literacy requirement at the time of appointment must become financially literate within a reasonable period of time after appointment, not to exceed six (6) months. Financial literacy shall be interpreted broadly to include the ability to read and understand fundamental financial statements, including a company's balance sheet, income statement, and cash flow statement, as well as familiarity with insurance accounting concepts relevant to the Company's business.
At least one member of the Committee shall be an "audit committee financial expert" as that term is defined in Item 407(d)(5) of Regulation S-K promulgated by the SEC, and shall satisfy the corresponding financial expertise requirements set forth in Section 303A.07 of the NYSE Listed Company Manual. The Board has determined that Dr. Lilian Fong-Archer, who previously served as Chief Financial Officer of Pinehurst Financial Group, Inc. and who holds a Doctor of Business Administration degree with a concentration in accounting and financial management, qualifies as an audit committee financial expert within the meaning of the applicable SEC rules. The Company shall disclose in its annual proxy statement whether at least one member of the Committee is an audit committee financial expert and, if so, the identity of such member.
The designation of a member as an audit committee financial expert shall not impose on such member any duties, obligations, or liability that are greater than the duties, obligations, or liability imposed on such member as a member of the Committee and the Board in the absence of such designation. Furthermore, the designation of one or more members as audit committee financial experts shall not affect or diminish the duties, obligations, or liability of any other member of the Committee.
Section 2.4 — Overboarding
Members of the Committee are subject to the director overboarding policy set forth in the Company's Corporate Governance Guidelines (as amended and restated effective December 11, 2025). As set forth in the Corporate Governance Guidelines, independent directors of the Company may not serve on more than four (4) total public-company boards of directors, including the Board of the Company. Any Committee member who exceeds or proposes to exceed this limit must promptly inform the Chair of the Board and the Chair of the Nominating & Corporate Governance Committee, and the Board shall evaluate whether such member's continued service on the Committee is appropriate in light of the demands on such member's time and attention. The Board retains the discretion to grant temporary exceptions to this policy on a case-by-case basis, subject to public disclosure if required by applicable rules.
Additionally, if a Committee member simultaneously serves on the audit committees of more than two (2) other public companies, the Board must determine, and disclose in the Company's annual proxy statement, that such simultaneous service does not impair the ability of such member to effectively serve on the Committee.
Section 2.5 — Removal and Vacancies
Members of the Committee serve at the pleasure of the Board and may be removed or replaced at any time by the Board, with or without cause. Any vacancy on the Committee, whether arising from removal, resignation, death, or any other cause, shall be filled by the Board upon the recommendation of the Nominating & Corporate Governance Committee. In the event that the number of Committee members falls below three (3), the Board shall use its reasonable best efforts to appoint a replacement member as promptly as practicable, and in any event within sixty (60) days, in order to maintain compliance with NYSE listing standards and SEC requirements.
ARTICLE III — MEETINGS AND PROCEDURES
Section 3.1 — Frequency
The Committee shall meet at least four (4) times per year on a quarterly basis, with meetings generally scheduled to coincide with the quarterly financial reporting cycle. Additional meetings may be called by the Chair of the Committee, by any two (2) members of the Committee, or at the request of the Board, the independent registered public accounting firm, the Chief Audit Executive, or the Chief Financial Officer, whenever circumstances require. The Committee met seven (7) times during the fiscal year ended December 31, 2024.
Meetings may be held in person, by telephone conference, by video conference, or by any other means of communication by which all persons participating in the meeting can hear each other, in accordance with the Company's Bylaws and the Delaware General Corporation Law.
Section 3.2 — Quorum
A majority of the members of the Committee then in office shall constitute a quorum for the transaction of business at any meeting of the Committee. For purposes of determining a quorum, a member participating by telephone conference, video conference, or other means of remote communication shall be deemed present in person.
Section 3.3 — Actions
The Committee shall act by a majority vote of the members present at a meeting at which a quorum is present. Each member shall have one vote. The Chair shall not have a casting or tie-breaking vote. The Committee may also act by unanimous written consent in lieu of a meeting, in accordance with the Company's Bylaws and Section 141(f) of the Delaware General Corporation Law. Any action taken by unanimous written consent shall have the same force and effect as if taken at a duly convened meeting of the Committee.
Section 3.4 — Attendance
The Committee may invite any director, officer, or employee of the Company, or any representative of the Company's outside advisors (including legal counsel, accountants, actuaries, and consultants), to attend all or any portion of a Committee meeting and to provide such information as the Committee deems appropriate. The attendance of non-members at Committee meetings shall be at the discretion of the Committee, and the Committee may exclude non-members from any portion of a meeting.
The Committee shall meet separately and periodically in executive session with each of the following, in each case without the presence of other members of management (unless specifically invited):
(a) The Company's senior management, including the Chief Executive Officer (Margaret A. Calloway), the Chief Financial Officer (Patricia Sung-Hee Lam), and the General Counsel & Corporate Secretary (Dennis R. Okonkwo);
(b) The Chief Audit Executive (Renata M. Vásquez);
(c) The Chief Compliance Officer (Ivan D. Pruett); and
(d) Representatives of the independent registered public accounting firm (currently Garrett & Whitfield LLP, with the lead engagement partner currently being Roland S. Brewer).
The Committee shall also meet periodically in executive session with only Committee members present, without any members of management or representatives of the independent auditor. Such executive sessions shall be held at least once per quarter.
Section 3.5 — Agenda and Minutes
The Chair of the Committee shall establish the agenda for each meeting of the Committee in consultation with the General Counsel & Corporate Secretary (Dennis R. Okonkwo). The agenda, together with appropriate briefing materials, shall be distributed to Committee members sufficiently in advance of each meeting to allow for meaningful review, and in any event no later than five (5) business days prior to the meeting, except in the case of special meetings called on shorter notice.
Minutes of each meeting of the Committee shall be prepared by the General Counsel & Corporate Secretary or such other person as the Chair may designate, and shall be maintained as part of the corporate records of the Company. Draft minutes shall be circulated to Committee members for review and shall be approved by the Committee at the next succeeding meeting. Following approval, minutes shall be distributed to all members of the Board, subject to the Committee's discretion to redact or withhold portions of the minutes relating to matters of particular sensitivity (including discussions with the independent auditor in executive session).
Section 3.6 — Authority to Delegate
The Committee may, in its discretion, delegate authority to one or more subcommittees consisting of one or more members of the Committee, or to individual members of the Committee, to the extent permitted by the NYSE Listed Company Manual, Section 141(c) of the Delaware General Corporation Law, and applicable law. Any such delegation shall be set forth in a written resolution of the Committee. Provided, however, that no such delegation shall relieve the Committee of its ultimate responsibilities under this Charter. Any action taken by a subcommittee or a designated individual member pursuant to such delegation shall be reported to the full Committee at its next regularly scheduled meeting.
ARTICLE IV — AUTHORITY AND RESPONSIBILITIES
The Committee shall have the following authority and responsibilities, in addition to any other authority and responsibilities that may be delegated to it by the Board from time to time:
Section 4.1 — Independent Auditor
4.1.1 — Appointment, Compensation, and Oversight. The Committee shall be directly responsible for the appointment, compensation, retention, and oversight of the work of the independent registered public accounting firm engaged for the purpose of preparing or issuing an audit report on the Company's annual financial statements or performing other audit, review, or attest services for the Company. The independent registered public accounting firm (currently Garrett & Whitfield LLP) shall report directly to the Committee, and the Committee shall have the sole authority and responsibility to select, evaluate, and, where appropriate, terminate and replace the independent auditor.
The Committee shall have sole authority to approve the terms of the engagement of the independent auditor, including the engagement letter, audit fees, and the scope and terms of the audit engagement. The Committee shall negotiate the audit fee on behalf of the Company and shall approve any proposed changes to the scope, terms, or fees of the audit engagement.
The Committee shall also have sole authority to approve any non-audit services to be provided by the independent auditor, in accordance with Section 4.1.3 of this Charter.
The Committee shall resolve any disagreements between management and the independent auditor regarding financial reporting matters. In carrying out its oversight responsibilities, the Committee shall discuss with the independent auditor any matters required to be discussed by the applicable requirements of the PCAOB, including PCAOB Auditing Standard No. 1301 (Communications with Audit Committees) and any successor standards.
4.1.2 — Independence Evaluation. The Committee shall, at least annually, evaluate the qualifications, performance, and independence of the independent registered public accounting firm. In conducting such evaluation, the Committee shall:
(a) Obtain and review a written report from the independent auditor describing: (i) the firm's internal quality-control procedures; (ii) any material issues raised by the most recent internal quality-control review, peer review, or PCAOB inspection of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm; and (iii) all relationships between the independent auditor and the Company and its subsidiaries, including a description of each non-audit service provided and the fees related thereto, to assess the auditor's independence;
(b) Monitor the rotation of the lead audit partner (currently Roland S. Brewer) and the concurring partner in accordance with the partner rotation requirements of Section 203 of the Sarbanes-Oxley Act of 2002 and the rules of the PCAOB, and evaluate the qualifications and performance of the lead engagement partner;
(c) Consider, at least annually, whether the Committee should recommend to the Board the rotation of the audit firm itself, taking into account the length of the firm's tenure, the quality and efficiency of the services provided, and any other factors the Committee deems relevant. Garrett & Whitfield LLP has served as the Company's independent registered public accounting firm since the Company's initial public offering in 2015;
(d) Review the independent auditor's annual confirmation of independence, including confirmation that the firm and its personnel are in compliance with all applicable independence rules of the SEC and the PCAOB; and
(e) Consider the opinions of management, the Chief Audit Executive, and the Chief Financial Officer in assessing the independent auditor's qualifications, performance, and independence.
The Committee shall present its conclusions with respect to the independent auditor to the Board and, based on such evaluation, shall recommend to the Board whether to engage or re-engage the independent auditor for the ensuing fiscal year. The Committee's recommendation shall be presented to the shareholders for ratification at the annual meeting of shareholders.
4.1.3 — Pre-Approval of Services. The Committee shall pre-approve all audit services and permissible non-audit services to be performed by the independent registered public accounting firm, in accordance with Section 10A of the Exchange Act, the rules and regulations of the SEC, and the requirements of the PCAOB. The Committee shall establish policies and procedures for the pre-approval of such services, which may include the following framework:
(a) Annual pre-approval of categories of routine, recurring audit and audit-related services and associated fee ranges;
(b) Specific pre-approval of individual non-audit engagements that are not covered by the annual pre-approval;
(c) Delegation of pre-approval authority to the Chair of the Committee (or, in the Chair's absence, another designated member of the Committee) for interim approvals between regularly scheduled Committee meetings, provided that: (i) the fee for any single engagement approved by the Chair on an interim basis does not exceed $250,000; and (ii) the Chair shall report any such interim approvals to the full Committee at its next regularly scheduled meeting for ratification; and
(d) A prohibition on the engagement of the independent auditor for any services that are prohibited by the Sarbanes-Oxley Act, SEC rules, PCAOB rules, or the policies of the Committee.
The Committee shall review with the independent auditor the scope and nature of all non-audit services provided during each fiscal year to confirm that such services are consistent with the auditor's independence.
Section 4.2 — Financial Statements and Disclosure
4.2.1 — Annual and Quarterly Financial Statements. The Committee shall review and discuss with management and the independent registered public accounting firm the following:
(a) The Company's audited annual financial statements, including all related notes and disclosures, the disclosures contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations" ("MD&A"), and the independent auditor's report thereon, prior to the filing of the Company's Annual Report on Form 10-K with the SEC;
(b) The independent auditor's report on the Company's financial statements, including any qualifications, modifications, or emphasis of matter paragraphs;
(c) The Company's unaudited quarterly financial statements, including all related notes and disclosures and the MD&A section, prior to the filing of the Company's Quarterly Reports on Form 10-Q with the SEC;
(d) Any special items, significant adjustments, reclassifications, or other unusual matters reflected in the Company's financial statements, including but not limited to those related to insurance reserves and loss development, incurred-but-not-reported ("IBNR") reserves, premium deficiency reserves, and reinsurance recoverables;
(e) Significant financial reporting issues and judgments made in connection with the preparation of the Company's financial statements, including the effects of alternative GAAP methods, and the treatment and disclosure of transactions in which there is a lack of authoritative guidance or in which there is a divergence between the position of the Company and that of the independent auditor;
(f) The effect of off-balance sheet transactions, arrangements, and obligations (including contingent obligations) on the Company's financial statements; and
(g) Management's representations and certifications regarding the financial statements, internal controls, and disclosure controls required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002.
Based on such review and discussion, the Committee shall recommend to the Board whether the audited annual financial statements should be included in the Company's Annual Report on Form 10-K for filing with the SEC.
4.2.2 — Earnings Releases and Financial Information. The Committee shall discuss with management the Company's earnings press releases, including the type and presentation of information to be included therein, as well as the use of any "pro forma" or "non-GAAP" financial information. The Committee shall also discuss with management financial information and earnings guidance provided to analysts, rating agencies, and the public, including any significant changes in the Company's approach to or methodology for providing such guidance.
4.2.3 — Critical Accounting Policies. The Committee shall review and discuss with the independent registered public accounting firm and management:
(a) Critical accounting policies and practices used in the preparation of the Company's financial statements, including the selection of accounting policies and the reasonableness of significant estimates and judgments;
(b) Alternative treatments of financial information within generally accepted accounting principles ("GAAP") that have been discussed with management, including the ramifications of the use of such alternative treatments and the treatment preferred by the independent auditor;
(c) The effects on the Company's financial statements of any regulatory and accounting initiatives, including new or proposed accounting standards issued by the Financial Accounting Standards Board ("FASB"), the SEC, or the PCAOB; and
(d) Off-balance sheet arrangements, transactions, and structures, and the related disclosures in the Company's periodic reports filed with the SEC.
4.2.4 — Management Letter and Internal Control Matters. The Committee shall review and discuss the independent auditor's management letter, any other written communications from the independent auditor to management or the Committee regarding the auditor's observations during the course of the audit, and management's responses thereto. This shall include, without limitation, the review of the type of observations identified in the management letter issued by Garrett & Whitfield LLP dated March 14, 2025, which identified certain matters relating to delegation-of-authority gaps in the Company's approval processes and inconsistent authority thresholds across the Company's operating subsidiaries, among other items.
The Committee shall also review and discuss with management and the independent auditor:
(a) Management's assessment of the effectiveness of the Company's internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002 and the rules thereunder;
(b) The independent auditor's report on the effectiveness of the Company's internal control over financial reporting;
(c) Any significant deficiencies or material weaknesses in the design or operation of internal control over financial reporting that are reasonably likely to adversely affect the Company's ability to record, process, summarize, and report financial data;
(d) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting; and
(e) The adequacy and effectiveness of the Company's disclosure controls and procedures as defined in Rules 13a-15 and 15d-15 under the Exchange Act.
Section 4.3 — Internal Audit
4.3.1 — Oversight of Internal Audit Function. The Committee shall oversee the Company's internal audit function, which serves as an independent and objective assurance and consulting activity designed to add value and improve the Company's operations. The Chief Audit Executive (currently Renata M. Vásquez) shall report functionally to the Committee and administratively to the Chief Executive Officer. This dual reporting structure is intended to ensure the organizational independence of the internal audit function while facilitating day-to-day operations and access to management.
The Committee shall:
(a) Review and approve the annual internal audit plan, including the scope, methodology, risk-based prioritization, resource allocation, and budget of the internal audit function, and review and approve any significant changes to the annual plan during the course of the year;
(b) Review the results of completed internal audit engagements, including findings, recommendations, management's responses, and the status of corrective actions, on a periodic basis (and no less frequently than quarterly);
(c) Review the organizational structure, qualifications, independence, staffing levels, and resources of the internal audit function, and ensure that the function is adequately resourced to carry out its responsibilities effectively, including through the use of co-sourced or outsourced resources as appropriate;
(d) Evaluate the performance of the Chief Audit Executive at least annually, including an assessment of the Chief Audit Executive's effectiveness, independence, and adherence to the Institute of Internal Auditors' International Professional Practices Framework;
(e) Approve the appointment, replacement, reassignment, or dismissal of the Chief Audit Executive;
(f) Review the internal audit function's charter and ensure its alignment with this Charter and the Committee's expectations; and
(g) Ensure that the internal audit function has unrestricted access to all Company records, properties, and personnel necessary to carry out its responsibilities, and that there are no unjustified restrictions or limitations placed on the scope of internal audit activities.
Section 4.4 — Compliance Oversight
4.4.1 — Legal and Regulatory Compliance. The Committee shall:
(a) Review with management and the General Counsel (Dennis R. Okonkwo) the Company's compliance with applicable legal and regulatory requirements, including, without limitation, insurance regulatory requirements in Connecticut, Texas, and Ohio that are applicable to the Company's regulated insurance subsidiaries — Quorum Property & Casualty Insurance Company (NAIC No. 38472, domiciled in Connecticut), Lone Star Specialty Insurance Company (NAIC No. 41359, domiciled in Texas), and Great Lakes Surety & Indemnity Co. (NAIC No. 29814, domiciled in Ohio) — as well as any other jurisdictions in which the Company or its subsidiaries are licensed or authorized to conduct business;
(b) Receive and review periodic reports from the Chief Compliance Officer (Ivan D. Pruett) regarding the Company's compliance program, including the results of compliance monitoring and testing activities, regulatory examinations, and any material compliance failures or remediation efforts;
(c) Establish procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, including procedures for the confidential, anonymous submission of concerns by employees of the Company regarding questionable accounting or auditing matters (commonly referred to as "whistleblower" procedures), in accordance with Section 301 of the Sarbanes-Oxley Act of 2002 and Rule 10A-3 under the Exchange Act;
(d) Review with the General Counsel any correspondence with, or examination reports from, regulators or governmental agencies, and any published reports that raise material issues regarding the Company's compliance with applicable laws and regulations; and
(e) Discuss with the General Counsel the Company's compliance with the Foreign Corrupt Practices Act, sanctions laws, anti-money laundering requirements, and any other compliance matters that the Committee or the General Counsel deems significant.
4.4.2 — Code of Ethics. The Committee shall oversee the Company's Code of Business Conduct and Ethics (the "Code of Ethics"), including:
(a) Reviewing the Code of Ethics at least annually and recommending any proposed amendments to the Board for approval;
(b) Reviewing proposed waivers of the Code of Ethics for directors or executive officers and making recommendations to the Board regarding the approval or denial of such waivers, in accordance with Item 5.05 of Form 8-K and applicable SEC and NYSE requirements;
(c) Monitoring compliance with the Code of Ethics and reviewing periodic reports from the Chief Compliance Officer regarding compliance training, certifications, and any material violations; and
(d) Reviewing the Company's procedures for receiving and investigating reports of alleged violations of the Code of Ethics.
Section 4.5 — Enterprise Risk Management Oversight
This Section 4.5 is a new provision adopted as part of this Amended and Restated Charter and was not included in prior versions of the Committee's charter.
The Committee shall oversee the Company's enterprise risk management ("ERM") framework as it relates to financial risk dimensions, in coordination with the Risk Committee of the Board (chaired by Raymond T. Huerta). Specifically, the Committee shall:
(a) Review and discuss with management the Company's major financial risk exposures, including but not limited to risks relating to insurance reserving and loss development, reinsurance credit risk and collectability, investment portfolio credit risk, liquidity risk, interest rate risk, and financial reporting risks, and the steps management has taken to monitor and control such exposures;
(b) Receive periodic reports from the Chief Audit Executive on internal audit's assessment of the effectiveness of the ERM framework, including the integration of ERM considerations into the annual internal audit plan and the results of internal audit engagements that address risk management processes;
(c) Review the adequacy of the Company's insurance program and directors' and officers' ("D&O") liability coverage, in coordination with management and the Company's insurance broker, at least annually;
(d) Ensure that the ERM framework is appropriately integrated with the financial reporting process and internal controls over financial reporting, such that material risks identified through the ERM process are reflected in the Company's financial statement disclosures and in the design and operation of internal controls; and
(e) Receive reports from the Risk Committee on enterprise-wide risk matters that have financial reporting implications.
Delineation of Responsibilities. The Board has allocated risk oversight responsibilities among its standing committees as follows, and the Committee shall exercise its responsibilities in accordance with this delineation:
(i) Risk Committee. The Risk Committee (chaired by Raymond T. Huerta) retains primary oversight of enterprise-wide risk identification, risk appetite-setting, and risk tolerance frameworks; insurance-specific risk categories, including reserving risk, reinsurance strategy, catastrophe exposure, and underwriting risk; and operational risks, including third-party risk management and business continuity.
(ii) Audit Committee. The Committee retains primary oversight of financial reporting risks, internal controls over financial reporting, and the financial dimensions of the ERM framework, as described in this Section 4.5, as well as compliance risks to the extent they relate to financial reporting and disclosure.
(iii) Technology & Cybersecurity Oversight Committee. The Technology & Cybersecurity Oversight Committee (chaired by Priya Narasimhan) retains oversight of technology and cybersecurity risks, with reporting to both the Audit Committee and the Risk Committee as appropriate.
The Committee shall work cooperatively with the Risk Committee and the Technology & Cybersecurity Oversight Committee to ensure that all material risks are subject to appropriate Board-level oversight and that there are no significant gaps or unnecessary duplication in the Board's overall risk oversight framework.
Section 4.6 — Clawback Policy Administration
This Section 4.6 is a new provision adopted as part of this Amended and Restated Charter and was not included in prior versions of the Committee's charter.
Pursuant to SEC Rule 10D-1 under the Exchange Act and NYSE Rule 303A.14, the Company has adopted a Compensation Recovery Policy (the "Clawback Policy") that provides for the mandatory recovery of erroneously awarded incentive-based compensation from current and former executive officers of the Company in the event of an accounting restatement. The Committee shall have the following authority and responsibilities with respect to the administration of the Clawback Policy:
(a) Triggering Event Determination. The Committee shall determine whether a triggering event has occurred under the Clawback Policy — specifically, whether the Company is required to prepare an "accounting restatement" as defined in SEC Rule 10D-1, including both "Big R" restatements that correct errors in previously issued financial statements that are material to those previously issued financial statements, and "little r" restatements that correct errors that are not material to previously issued financial statements but would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period;
(b) Calculation of Recovery Amount. Upon determining that a triggering event has occurred, the Committee shall determine the amount of "erroneously awarded incentive-based compensation" (as defined in SEC Rule 10D-1 and the Clawback Policy) that is subject to recovery from each current and former executive officer who received such compensation during the applicable three-year look-back period;
(c) Pursuit of Recovery. The Committee shall pursue the recovery of erroneously awarded incentive-based compensation in accordance with the Clawback Policy and applicable law, taking into account the circumstances of each case and the available methods of recovery. The Committee shall determine the method and timing of recovery and shall exercise reasonable discretion in implementing recovery, subject to the limited exceptions permitted under SEC Rule 10D-1;
(d) Reporting and Coordination. The Committee shall report to the Compensation & Human Capital Committee (chaired by Claudia M. Severin) on clawback matters as appropriate, including any determination that a triggering event has occurred, the amounts subject to recovery, and the status of recovery efforts. The Committee shall coordinate with the Compensation & Human Capital Committee on any discretionary recovery determinations and on matters relating to the impact of clawback administration on the Company's overall compensation program; and
(e) Annual Policy Review. The Committee shall review the Clawback Policy at least annually and shall recommend any amendments to the Board as appropriate to ensure the policy's continued compliance with SEC and NYSE requirements and alignment with best practices.
Section 4.7 — Related Party Transactions
The Committee shall review and approve or ratify all related party transactions involving the Company or any of its subsidiaries, in accordance with the Company's Related Party Transaction Policy, the applicable rules and regulations of the SEC (including Item 404 of Regulation S-K), and NYSE listing standards. For purposes of this provision, a "related party transaction" shall have the meaning set forth in the Company's Related Party Transaction Policy, which is consistent with the definitions in SEC rules.
In reviewing a related party transaction, the Committee shall consider all relevant facts and circumstances, including without limitation: the related party's relationship to the Company and interest in the transaction; the material terms of the transaction, including the dollar value and nature of the related party's direct or indirect interest; whether the transaction would impair the independence of a director; and whether the transaction is on terms comparable to those that could be obtained in an arm's-length transaction with an unrelated party. The Committee shall approve or ratify a related party transaction only if it determines that the transaction is in, or not inconsistent with, the best interests of the Company and its shareholders.
Section 4.8 — Litigation and Contingencies
The Committee shall review with the General Counsel (Dennis R. Okonkwo) and, as appropriate, outside counsel retained by the Company:
(a) Any significant legal, regulatory, or compliance matters that could have a material effect on the Company's financial statements, financial condition, or results of operations, including pending or threatened litigation, arbitration proceedings, regulatory investigations, and enforcement actions; and
(b) The adequacy of the Company's reserves for litigation and contingencies, including management's assessment of probable and reasonably possible losses in accordance with ASC 450 (Contingencies) and the independent auditor's evaluation thereof.
The Committee shall also review the Company's policies and procedures for the reporting and escalation of significant legal and regulatory matters. Litigation settlement authority above specified thresholds, as established in the Company's Delegation of Authority Matrix, requires Committee or full Board approval. As currently proposed, the threshold structure is as follows: settlements at or below $5.0 million may be approved by management in accordance with the authority levels specified in the Delegation of Authority Matrix; settlements in excess of $5.0 million require the approval of the Committee or the full Board.
Section 4.9 — Delegation of Authority Matrix — Financial Thresholds
The Committee shall periodically review the financial thresholds contained in the Company's Delegation of Authority Matrix as they relate to matters within the Committee's oversight responsibility. This review shall include, but not be limited to, the following thresholds as currently proposed:
(a) Litigation Settlements. General Counsel authority for settlements at or below $1.0 million; joint CEO and General Counsel authority for settlements greater than $1.0 million but not exceeding $5.0 million; Board or Audit Committee approval required for settlements exceeding $5.0 million;
(b) Write-offs and Impairments. Approval thresholds for the write-off of assets or recognition of impairment charges;
(c) Capital Expenditures and Commitments. Approval thresholds for capital expenditures and contractual commitments to the extent they have a material impact on the Company's financial statements or internal controls; and
(d) Other Financial Thresholds. Such other financial thresholds as the Committee determines to be relevant to its oversight responsibilities.
The Committee shall recommend adjustments to the Delegation of Authority Matrix to the Board as it deems appropriate, taking into account changes in the size, complexity, and risk profile of the Company's operations.
ARTICLE V — COORDINATION WITH OTHER BOARD COMMITTEES
This Article V is a new provision adopted as part of this Amended and Restated Charter and was not included in prior versions of the Committee's charter. The Board has determined that formal coordination protocols among the Board's standing committees are necessary to ensure comprehensive and efficient risk and governance oversight.
Section 5.1 — Risk Committee Coordination Protocol
The Committee and the Risk Committee of the Board shall coordinate their respective activities to avoid unnecessary duplication of effort and to ensure comprehensive risk oversight across the organization. The Chairs of the Committee and the Risk Committee shall confer at least quarterly, and more frequently as circumstances warrant, on matters of overlapping jurisdiction, including but not limited to the financial dimensions of enterprise risk, insurance reserving risk and its impact on the Company's financial statements, reinsurance credit risk and collectability, investment portfolio risks, and other matters that may arise at the intersection of the two committees' respective mandates.
Joint sessions of the Committee and the Risk Committee may be held from time to time as the respective Chairs and the Chair of the Board determine to be appropriate. Such joint sessions shall be governed by the procedures of the committee whose Chair presides at the session, unless the committees agree otherwise.
The Committee and the Risk Committee shall share relevant meeting materials, reports, and analyses to the extent necessary to facilitate coordination, subject to appropriate confidentiality protections. Each committee shall report to the full Board on any matters addressed through inter-committee coordination.
Section 5.2 — Compensation & Human Capital Committee Coordination
The Committee shall coordinate with the Compensation & Human Capital Committee (chaired by Claudia M. Severin) on matters relating to the Clawback Policy, including the determination of triggering events, the calculation of amounts subject to recovery, and the implementation of recovery actions, as described in Section 4.6 of this Charter. The Committee shall also coordinate with the Compensation & Human Capital Committee on any matters relating to incentive-based compensation that may be subject to recovery, including the design of incentive compensation plans and the establishment of performance metrics that could give rise to clawback obligations.
The Chairs of the Committee and the Compensation & Human Capital Committee shall confer as needed on matters of overlapping jurisdiction and shall report to the full Board on any significant issues arising from such coordination.
Section 5.3 — Technology & Cybersecurity Oversight Committee Coordination
The Committee shall receive reports from the Technology & Cybersecurity Oversight Committee (chaired by Priya Narasimhan) on cybersecurity incidents, data privacy matters, and technology risks that may have a material impact on the Company's financial statements, internal controls over financial reporting, or regulatory compliance obligations. The Committee retains oversight of the financial reporting implications of cybersecurity incidents, including the Company's disclosure obligations under SEC rules (including the cybersecurity disclosure requirements adopted in 2023 under Item 1.05 of Form 8-K and Item 106 of Regulation S-K).
The Committee shall also coordinate with the Technology & Cybersecurity Oversight Committee on matters relating to the integrity and security of the Company's financial reporting systems, including the information technology general controls ("ITGCs") that support the Company's financial reporting infrastructure, and the results of any internal or external assessments of the effectiveness of such controls.
ARTICLE VI — RESOURCES AND AUTHORITY
Section 6.1 — Advisors
The Committee shall have the sole authority to retain and terminate outside legal counsel, independent accountants, and other advisors as the Committee determines necessary or appropriate to carry out its duties and responsibilities under this Charter. The Committee may retain such advisors without seeking the approval of the Board or management. The Committee may, in its discretion, engage the services of any qualified advisor, including but not limited to law firms (such as Calderwood & Harkness LLP or other firms), forensic accounting firms, compensation consultants, valuation experts, actuaries, and other specialists.
The Company shall provide appropriate funding, as determined by the Committee in its sole discretion, for:
(a) The payment of compensation to the independent registered public accounting firm for the purpose of rendering or issuing an audit report on the Company's financial statements or performing other audit, review, or attest services;
(b) The payment of compensation to any outside legal counsel, accountants, or other advisors retained by the Committee; and
(c) The payment of ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.
Section 6.2 — Access to Information
The Committee shall have full, free, and unrestricted access to the Company's books, records, facilities, and personnel, including the employees of the Company and all of its subsidiaries and affiliates, including but not limited to Quorum Property & Casualty Insurance Company, Lone Star Specialty Insurance Company, Great Lakes Surety & Indemnity Co., Quorum MGA Services, LLC, and Vantage Digital Insurance Solutions, Inc. The Company's management and employees shall cooperate fully with the Committee and shall provide such information and assistance as the Committee may request in a timely manner. No officer, director, or employee of the Company shall obstruct, impede, or interfere with the Committee's access to information or its ability to carry out its responsibilities.
Section 6.3 — Funding
The Company shall provide for appropriate funding, as determined by the Committee in its sole discretion, for:
(a) Compensation of the independent registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review, or attest services for the Company;
(b) Compensation of any advisors engaged by the Committee pursuant to Section 6.1 of this Charter; and
(c) Ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.
The foregoing funding obligation is in accordance with Section 303A.07 of the NYSE Listed Company Manual, which requires listed companies to provide appropriate funding for the audit committee. The Board acknowledges and affirms the Committee's authority to determine the level of funding necessary for the Committee to fulfill its responsibilities under this Charter, and the Company shall not condition or limit such funding in a manner that impairs the Committee's ability to carry out its duties.
ARTICLE VII — ANNUAL SELF-EVALUATION
This Article VII is a new provision adopted as part of this Amended and Restated Charter.
The Committee shall conduct an annual self-evaluation of its performance and effectiveness, including a review of the Committee's compliance with this Charter, the adequacy of the Committee's composition and expertise, and the effectiveness of the Committee's processes and procedures. The self-evaluation shall consider, among other things:
(a) Whether the Committee has fulfilled all of the responsibilities set forth in this Charter;
(b) The quality and timeliness of information provided to the Committee by management, the independent auditor, the Chief Audit Executive, and the Chief Compliance Officer;
(c) The effectiveness of the Committee's communications with the Board, other Board committees, management, and the independent auditor;
(d) The adequacy of the Committee's meeting schedule, agenda-setting process, and executive session practices;
(e) The appropriateness of the Committee's composition, including the mix of skills, experience, and expertise represented on the Committee; and
(f) Any recommended changes to this Charter, to the Committee's practices and procedures, or to the Committee's composition.
The Committee shall report the results of its annual self-evaluation to the Board, including any recommendations for changes to this Charter or to the Committee's practices and procedures. The self-evaluation process shall be coordinated with the Board's overall annual self-evaluation process as set forth in the Company's Corporate Governance Guidelines (as amended and restated), and the results of the Committee's self-evaluation shall be incorporated into the Board's overall assessment of its governance effectiveness.
ARTICLE VIII — REPORTING TO THE BOARD
The Chair of the Committee shall report to the full Board on the Committee's activities, findings, conclusions, and recommendations at each regular meeting of the Board, or at such other times as the Chair deems appropriate or as the Board may request. Such reports shall include a summary of the matters discussed at each Committee meeting, any actions taken by the Committee, and any recommendations requiring Board action.
The Committee shall maintain minutes of its meetings and shall make such minutes available to all members of the Board in a timely manner. To the extent that the Committee's minutes contain information that is subject to attorney-client privilege, work product protection, or other applicable privilege, the Committee may take such steps as it deems appropriate to preserve such privileges, including distributing redacted versions of the minutes to non-Committee Board members.