Letter of Appointment for Non-Executive Directors

February 2009

Dear

I set out below the terms and conditions of your appointment as a non-executive director of Reliance Mutual Insurance Society Limited. Your appointment will commence on <date> or when the FSA approves your appointment, whichever is the later. You are a member of the audit and risk, nomination and remuneration committees, and you may be required to act as a director of Reliance Pension Scheme Trustees Limited (RPST).

The board usually has six regular meetings in a year as well as two strategy review meetings. Other meetings are convened as required, but in the past there have not been more than two additional meetings in a year. The audit and risk committee meets at least three times annually, normally on the same day as board meetings. RPST meets up to four times annually.

As an indication of your responsibilities, you should be aware that the board determines:

• Strategic principles and objectives, approves an annual budget and monitors performance
• Risk appetite
• Organisational structure
• Pension and remuneration policies

The board declares annual and final bonuses and approves the annual report and group accounts and the annual regulatory return to the FSA. It also approves the Principles and Practices of Financial Management. It reserves to itself decisions on acquisitions and ensures there is an appropriate apportionment of responsibilities among the Chief Executive and Senior Managers to effectively manage the business. The board has overall responsibility for the company system of internal control.

Directors may take independent professional advice at the company’s expense if they judge it necessary to discharge their responsibilities.

The company maintains directors’ and officers’ liability insurance and the current indemnity limit is £<amount>.

All directors appointed by the board must stand for re-appointment at the Annual General Meeting following their appointment. One third of the members of the board must stand for re-appointment at each Annual General Meeting. Directors who are 65 years of age or over must stand for re-appointment at each Annual General Meeting. Standard service would be expected to be two terms of three years, with the possibility of a third term if that appears suitable.

Directors are required under our Memorandum and Articles to be members holding policies with the Society. I enclose with this letter details and application forms in respect of two types of policy which have usually been found suitable by new directors in this regard.

You are required to disclose any other directorships to the company secretary. The Annotated Combined Code on Corporate Governance for mutual insurers requires non-executive directors to undertake that they will have sufficient time to meet what is expected of them. If you have any doubt about this, you should consult the Chairman. The Chairman will consider this matter annually when the review of the board is undertaken at the annual strategy meeting.

In the event that you become aware of a potential conflict of interest, you should disclose this to the Chairman.

Your appointment will be terminated forthwith if the FSA withdraws your registration, you are made bankrupt or commit a criminal offence. If you wish to leave the board you are requested to give three months notice in writing. If you work for a competitor within six months following the termination of your appointment, you agree that you will disclose this to the Chairman.

Fees for non-executive directors of Reliance Mutual are £<amount> per annum and are subject to tax and national insurance where appropriate. You may claim reasonable expenses in the performance of your duties and these are also subject to tax.

Please sign a copy of this letter confirming your agreement to the above terms.

Yours sincerely

R C EASTWOOD

Company Secretary              

I confirm my agreement to the above terms. 

Signed …………………………………….    Date ….………………………………..