Alfa Corporate Guidelines
Revised 11/2006
TABLE OF CONTENTS
INTRODUCTION
Purpose
Individual Responsibility
1 - ALFA EMPLOYEES
Respect
Compliance with Policies
2 - CUSTOMERS
Sales and Marketing
Customer Information
3 - SHAREHOLDERS
Protecting Alfa Assets
Proprietary Information
Inside Information and Securities Trading
Accuracy of Company Records
Business Communications
4 - BUSINESS PARTNERS
Doing Business with Others
Spending Practices
5 - GOVERNMENTS
Compliance with the Law
Alfa’s Political Activities
Political Office
Felony Convictions
Alabama Code for Domestic Insurers
6 - COMMUNITIES
Community Service
Personal Community Activities
Environment
External Communication
7 - CONFLICTS OF INTEREST
General Guidance
Outside Employment
Board Memberships
Close Personal Relationships
Personal Business Transactions
Investments
Gifts
Entertainment
Travel
8 - FOLLOW-THROUGH
9 - COMPLIANCE WITH SARBANES-OXLEY
Disclosure and Compliance with Laws and Regulations
Violations and Reports
Pre-Approval of Conflicts
Waivers
Review of Decisions
INTRODUCTION
Purpose
Alfa’s Principles of Business Conduct represent who we are and what we stand for. “We” means Alfa and its employees. We strive to earn and maintain the trust of our customers and the public, while doing the right thing by our shareholders, our policyholders, our governments, our communities and each other. These Principles are our ground rules.
Individual Responsibility
Each of us has an individual responsibility for ethical behavior. Alfa’s success depends on our individual moral character, commitment to the organization, and self-control. We cannot achieve individual success without organizational success. While we are expected to read and understand these Principles, ensuring that they govern our actions is primarily a matter of individual spirit and intent. If we are in positions that directly influence policy and practice, we have an added responsibility to promote open and honest two-way communications.
OUR RESPONSIBILITY TO ALFA EMPLOYEES
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We respect the dignity of each and
every Alfa employee.
Respect
Each of us wants and deserves a workplace where we feel respected,
satisfied, and appreciated. Abusive, harassing or offensive
conduct - whether verbal, physical or visual - is unacceptable.
We are encouraged to speak out when a coworker’s conduct
makes us uncomfortable, and to report harassment to our managers
or Human Resources when it occurs.
Compliance with Policies
We are all responsible for conducting our work activities to the best of our ability. Each of us will be familiar with Alfa’s Employee Handbook and other Company policies and will strive to comply with them in practice and in spirit. If the Handbook and other Company policies are not clear to us, we will seek guidance and interpretation from our managers as necessary.
OUR RESPONSIBILITY TO CUSTOMERS -
Alfa exists because of its customers.
Sales and Marketing
We will build long-term relationships with our customers by demonstrating honesty and integrity. All of our marketing and advertising will accurately represent our products and services. Deliberately misleading messages, omissions of important facts, or false claims about our products or our competitors’ products are not acceptable.
Customer Information
We must protect customer information just as carefully as our own and as the law requires. Customers should be given access to personally signed documents in accordance with Alfa’s policy.
OUR RESPONSIBILITY TO SHAREHOLDERS -
We will treat the investment of our shareholders as if it were our own.
Protecting Alfa Assets
We have a responsibility to protect the Alfa assets entrusted to us from loss, damage, misuse or theft. Alfa assets, such as funds or computers, may only be used for business purposes and other purposes approved by management. Alfa assets may never be used for illegal purposes.
Proprietary Information
We will safeguard all proprietary information by marking information accordingly, keeping it secure, and limiting access to those who have a need to know in order to do their jobs. Proprietary information includes any information that is not generally known to the public and is helpful to Alfa, or would be helpful to competitors. It also includes information that customers and suppliers have entrusted to us. The obligation to preserve proprietary information continues even after employment ends.
Inside Information and Securities Trading
We understand that inside information concerning the Alfa Companies and any of our operations is highly confidential and must not be disclosed to anyone outside the Companies. We are prohibited from trading in Alfa stock at any time when we are aware of inside material information that could affect the value of the stock.
We will not trade in either Alfa or other companies’ securities or any other kind of property based on knowledge that comes solely from our jobs, if that information has not been reported publicly, or if we have been advised to refrain from trading. It is against the law to trade or to “tip” others who might make an investment decision based on inside information.
Accuracy of Company Records
We require honest and accurate reporting of information in order to make responsible business decisions. All financial books, records and accounts must accurately reflect transactions and events, and conform both to required accounting principles and to Alfa’s system of internal controls. No false, misleading or incomplete entries may be made.
Business Communications
All business records and communications should be clear, truthful and accurate. Avoid comments containing exaggeration, colorful language, etc. in communications of all kinds, including e-mail and “informal” notes or memos. Business records and communications often become public through litigation, government investigations and the media. Records should be maintained according to Alfa’s record retention practices.
OUR RESPONSIBILITY TO BUSINESS PARTNERS -
Building quality relationships with other companies gives Alfa a competitive advantage.
Doing Business with Others
We will strive to ally with companies that share our commitment to ethics and values. We will not do business with others if they violate the law or if a business relationship with them would likely harm Alfa’s reputation. We will not use other companies to perform any act prohibited by law or by these Principles of Business Conduct. Some limited examples of laws include employment, anti-corruption statutes, and insurance codes.
Spending Practices
Decisions to spend or commit Company assets must be based solely on Alfa’s best interests. Suppliers, reinsurers, etc. earn Alfa’s business based on product or service suitability, price, delivery and quality. Purchase agreements and contracts should clearly identify the services or products to be provided, their costs and any other relevant terms. Costs must be commensurate with the services or products provided. Continuous service, equipment, software or other assets provided to Alfa employees in connection with purchases (“soft dollar” transactions) should be documented.
OUR RESPONSIBILITY TO GOVERNMENTS
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As a responsible citizen, it
is our obligation to obey the law.
Compliance with the Law
We are required to comply with all applicable laws and regulations wherever we do business. Perceived pressures from supervisors or demands due to business conditions are not excuses for violating the law. When we have any questions or concerns about the legality of an action, we are responsible for checking with our managers or Alfa’s Legal Department.
We are expected to cooperate with reasonable requests for information from government agencies and regulators, and to consult with the Legal Department before responding to any non-routine requests. All information provided must be truthful and accurate. We will not alter or destroy documents or records in response to an investigation or other lawful request.
Alfa’s Political Activities
No employee may, except with approval from Alfa’s Legal Department, make any political contribution on behalf of Alfa or use Alfa’s name, funds, property, equipment or services for the support of political parties, initiatives, committees or candidates. This includes any contribution of value. Additionally, lobbying activities or government contacts on behalf of Alfa, other than regulatory activities through departments of insurance, should be coordinated with the Legal Department.
This guideline for Alfa’s political activities is not intended to discourage or limit us from making personal contributions of funds or time in support of the candidates and political parties of our choice. Alfa will not reimburse us in any way, however, directly or indirectly, for our personal contributions or other support.
Political Office
If any of us desire to run for an elective political office or to accept an appointment to any government office, whether paid or unpaid, we will obtain the President’s written, advance approval through our manager. The President will obtain written, advance approval from the Board of Directors before running for or accepting an appointment to any political or government office.
Felony Convictions
The 1994 Violent Crime Control and Law Enforcement Act prevents any person who has been convicted of a felony from working for an insurance company without approval from departments of insurance. Because of the obligations imposed on Alfa under the Act, we will report any felony convictions, either personal or about another employee, immediately to Human Resources. This does not include misdemeanors or minor traffic violations.
Alabama Code for Domestic Insurers
The Code of Alabama, 1975, requires us to safeguard Alfa’s funds:
• We should not cause Alfa to guarantee any financial obligation of its officers or directors.
• If we are responsible for investing or handling Alfa’s funds, we must deposit or invest them in Alfa’s name or account.
• We shall not borrow Alfa’s funds nor have a financial interest in any loan, investment, sale, purchase, exchange, etc. of Alfa’s property or made with Alfa property.
• We shall not receive or use any fee, commission, or other consideration that belongs to Alfa or is the result of Alfa’s business.
The Code does not prohibit us from making personal loans as a consumer through Alfa’s financial services division, purchasing publically traded securities, or enjoying the usual rights due to policyholders.
OUR RESPONSIBILITY TO COMMUNITIES -
Alfa is a responsible citizen in all the communities where we do business.
Community Service
We actively support the communities in which we operate in addition to providing life-enhancing services and products at a fair price. Alfa and its employees provide generous financial and voluntary support to many worthwhile community programs.
Personal Community Activities
We are free to support community, charity and political organizations and causes of our choice. Each of us must ensure that our outside activities do not interfere with our job performance. No employee may pressure another employee to express a view that is contrary to a personal belief, or to contribute to or support political, religious or charitable causes.
Environment
We will respect the environment by complying with all applicable environmental laws. We will notify our managers if hazardous materials come into contact with the environment or we believe them to be improperly handled or discarded.
External Communications
To ensure professional and consistent handling, we will forward requests from the media to the Office of the President. We will forward requests from financial analysts and shareholders to Investor Relations. Let the experts handle such situations.
CONFLICTS OF INTEREST -
We will make business decisions based on the best interests of Alfa.
General Guidance
Playing favorites or having conflicts of interest – in practice or in appearance – runs counter to fair treatment and good business judgment. Our goal is to avoid any relationship, influence, or activity that might impair, or even appear to impair, our ability to make objective and fair decisions when performing our jobs. We are required to disclose to our manager any situation that may be, or appear to be, a conflict of interest. When in doubt, it is best to disclose. Several of the most common potential conflicts of interest include:
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Outside Employment
We may not work for or receive payments for services from any regulator, supplier, contractor, or competitor of Alfa without written approval from our manager. Any outside activity must be strictly separated from Alfa employment and should not harm job performance at Alfa. We must make sure that the skills we learn and use at Alfa are not used in such a way that could hurt the business of Alfa.
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Close Personal Relationships
A “person having a close personal relationship” with us refers to our spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, or brothers and sisters-in-law, aunts or uncles, nieces or nephews, by blood or marriage; any person living in the same home with us or any of our personal business associates.
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Business Transactions
When we directly or indirectly cause Alfa to do business with a “person having a close personal relationship” with us, it is always considered a conflict of interest. We will disclose all such relationships to our manager, in advance of the business transaction if possible. Required disclosure of a transaction does not mean that Alfa will prohibit it. Each case will be decided on an individual basis.
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Employment
We understand that Alfa strives to recruit, reward and retain exceptional employees, regardless of their relationship with others. To maintain objectivity and morale, people having close personal relationships with us should not have either direct reporting relationships to us or job responsibilities that conflict with ours. This restriction applies only to permanent employment positions, not temporary positions such as summer help or internships. Close personal relationships with respect to employment positions existing and disclosed as of July 18, 2001 are grandfathered.
Conflicting job responsibilities will be analyzed on an individual basis. As examples, spouses employed at Alfa as an underwriter and an agent could have conflicting job responsibilities as could siblings employed at Alfa as an auditor and an accountant.
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Personal Business Transactions
We shall not process an application of insurance, underwrite a risk or handle a claim for property in which we have a direct or indirect interest, except for agents, who may process applications of insurance on personal residences, automobiles (including property inspection), life insurance and loans. Agents should not process applications of insurance for commercial property in which they have a direct or indirect interest.
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Investments
We may not allow our investments to influence, or appear to influence, our independent judgment on behalf of Alfa. For example, we could create the appearance of a conflict of interest if we have an investment in a supplier, customer, distributor or competitor and our decisions may have a business impact on this outside party. If there is any doubt about how an investment might be perceived, it should be disclosed to our manager.
We are also prohibited from directly or indirectly buying, or otherwise acquiring rights to any property or materials, when we know that Alfa may be interested in pursuing such an opportunity and the information is not public.
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Giving Gifts
Some business situations call for giving gifts. Gifts purchased with Alfa funds must be legal, reasonable, and approved by our managers. We will not provide any gift, however, if it is prohibited by law or by the recipient’s organization. If in doubt, check first. We never give bribes or kickbacks.
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Rebating
We will not pay any premiums for customers or provide any gift, discount, favor, etc. that could be construed as rebating, a practice that is prohibited by departments of insurance.
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Entertainment
We consider “entertainment” to include a representative of both parties at the event. For example, if a business partner does not attend an event she gives for two Alfa managers, the event is a gift and vice versa.
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Accepting Entertainment
We may accept entertainment that is reasonable in the context of the business and that advances Alfa’s interests. For example, accompanying a business associate to a local cultural or sporting event, or to a business meal, would be acceptable in most cases. Entertainment that is lavish or frequent may appear to influence one’s independent judgment on behalf of Alfa. If an invitation seems inappropriate, we must turn down the offer or pay the true value of the entertainment ourselves. We will discuss accepting entertainment that may appear inappropriate with our manager, in advance if possible.
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Providing Entertainment
We may provide entertainment that is reasonable in the context of the business. If we have a concern about whether providing entertainment is appropriate, we will discuss it with our manager in advance. Entertainment of government officials must in all respects be of such a nature that neither the officials’ nor Alfa’s integrity or reputation could be questioned.
FOLLOW-THROUGH
To ensure that our written commitment to ethical business conduct pays off in practice, we must feel that we can report ethical concerns without fear of retaliation. Retaliation against any employee who honestly reports a concern about illegal or unethical conduct will not be tolerated. Along the same lines, it is unacceptable to knowingly file a false report.
When faced with a possible ethics violation, we are first encouraged
to discuss it with our manager or department head. We should
not hesitate to talk to them about a question of business
conduct, no matter how small or insignificant it may seem.
The department head will then contact Human Resources. However,
there may be some situations where we are uncomfortable about
approaching our managers. For those situations, we may talk
directly with a corporate attorney, auditors from Audit Services
or a manager from Human Resources.
Another option available for employees to report concerns
regarding the Company’s accounting procedures and information
or suspicions about criminal or illegal activities is to call
Alfa EthicsLine. This is an outsourced line operated by Global
Compliance Services, a vendor that is independent from Alfa
and its management. Employees can call EthicsLine toll-free
at any time (365 days a year, 24/7) to report concerns confidentially
and anonymously. All reports will be investigated thoroughly.
Possible ethics violations will be investigated in a competent, fair, and confidential manner. Any employee found to be in violation of the Principles of Business Conduct shall be subject to disciplinary action, including termination of employment. It is Alfa’s policy to seek and assist in the prosecution of persons who are believed to have committed criminal acts against Alfa.
The President serves as the final authority with regard to Alfa’s Principles of Business Conduct. Audit Services will appraise Alfa’s overall ethics program and report on the program to the Audit Committee or the Board of Directors as appropriate.
Confirmation will be obtained from each employee that he or she has complied with the Principles, and is not aware of any violations of the Principles other than those the employee lists in his or her response. Confirmation will be obtained from all newly hired employees when they are hired and from all existing employees when the Principles undergo significant revisions or when other circumstances dictate that a reconfirmation would be helpful in reinforcing Alfa's "tone at the top" message.
SARBANES-OXLEY COMPLIANCE
9.1 The Sarbanes-Oxley Act of 2002 and rules of the Securities and Exchange Commission require Alfa Corporation (the “Corporation”) to disclose whether it has a code of ethics applicable to certain officers. Nasdaq rules also require the Corporation to maintain a code of ethics applicable to executive officers and directors. The Alfa Principles of Business Conduct (the “Principles”) is a code of ethics for these purposes and applies to all employees, including senior management of the Corporation. This Section 9 applies specifically to the Corporation’s President and CEO, CFO, and principal accounting officer or controller (i.e., the “covered officers”) the executive officers and to the members of the Corporation’s board of directors. The covered officers and executive officers other than the covered officers are otherwise subject to the Principles, but to the extent there is a conflict between this Section and Sections 1-8 of the Principles, this Section 9 shall control.
For purposes of this Section 9, “executive officer” shall mean any person with the title Senior Vice President or above and any other person who has significant decision making authority or control over one of the Corporation’s major business units or subsidiaries. No person shall be deemed an executive officer who does not meet the definition of executive officer as contained in the rules of the Securities and Exchange Commission or Nasdaq.
Disclosure and Compliance with Laws and Regulations
9.2 The covered officers shall assist the Corporation in making full, fair, accurate, timely and understandable disclosure in reports and documents which the Corporation files with or submits to the United States Securities and Exchange Commission and in other public communications made by the Corporation. The covered officers shall establish appropriate procedures for this purpose. The directors agree that all applicable law and regulations should be followed by the Corporation, its board of directors, and employees. The directors will support and assist, when appropriate, the covered officers and the Corporation in complying with applicable law and regulations and making fair, accurate, timely and understandable disclosure in public filings under the securities laws.
Violations and Reports
9.3 Section 8 of the Principles states that the final authority with regard to the Principles is the President of Alfa. However, if the conduct of any covered officer, executive officer or director of the Corporation under the Principles is called into question, or represents a material transaction or relationship that has given rise to or could reasonably be expected to give rise to a conflict of interest, such final authority shall be the board of directors of the Corporation. Any employee, including any covered officer, executive officer, or any director, who believes a violation or other unethical conduct has occurred that involves any covered officer, executive officer or director may report the violation or unethical conduct directly to the audit committee of the board of directors of the Corporation, to the full board of directors or to the Corporation’s general counsel who will in turn report to the board or the audit committee, as appropriate.
9.4 If any employee wishes to file a complaint or express concerns
regarding the Corporation’s accounting, internal accounting
controls or auditing matters or any questionable accounting
or audit matters, such complaints or concerns may be made
in the same fashion as set forth in the last sentence of paragraph
9.3. All such reports of violations of the Principles or complaints
or concerns regarding accounting or audit matters as provided
in the previous sentence may be made anonymously in whatever
form the employee chooses.
Another option available for employees to report concerns
regarding the Company’s accounting procedures and information
or suspicions about criminal or illegal activities is to call
Alfa EthicsLine. This is an outsourced line operated by Global
Compliance Services, a vendor that is independent from Alfa
and its management. Employees can call EthicsLine toll-free
at any time (365 days a year, 24/7) to report concerns confidentially
and anonymously.
Pre-Approval of Conflicts
9.5 Any covered officer, executive officer or director who proposes to enter into any material transaction or relationship that could reasonably be expected to give rise to a conflict of interest shall report such transaction or relationship to the audit committee or to the board of directors and receive approval from the board of directors for such transaction or relationship before entering into it.
Waivers
9.6 Any waivers of the Principles applicable to the covered officers, executive officers or directors shall be approved by the board of directors of the Corporation and disclosed promptly.
Review of Decisions
9.7 Any alleged violation of the Principles by any covered officer, executive officer or director shall be reviewed by the board of directors of the Corporation or the audit committee, if the matter relates to an item covered by paragraph 9.4. A decision may be reached by the board or audit committee regarding the nature and extent, if any, of the violation and the response to such violation after investigation of the facts deemed relevant by the board, or committee, giving due regard to protection for the person reporting the alleged violation.
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