Sustainability-related Disclosure

Legal Background

This information is based on the Sustainable Finance Disclosure Regulation ("SFDR").[1]
Product name/legal identifier: NOVIS "Wealth Insuring" (GTC-90160802, GTC-90171003, GTC-90180204)
Name of investment option: NOVIS Sustainability Insurance Fund (“Fund”)
Product and investment option manufacturer: NOVIS Insurance Company, NOVIS Versicherungsgesellschaft, NOVIS Compagnia di Assicurazioni, NOVIS Poisťovňa a.s. (“NOVIS”)

(a) Summary

This financial product is an insurance-based investment product. It invests in one or more NOVIS` internal insurance funds under Slovakian law, according to the selection of the policyholder. One of those funds is the NOVIS Sustainability Insurance Fund ("Fund"), which promotes environmental and social characteristics. When this document refers to "this financial product", it means NOVIS "Wealth Insuring" (GTC-90160801, GTC-90160802, GTC-90171003, GTC-90180204) with selected investment option NOVIS Sustainability Insurance Fund.

Fund's objective is to invest only in such financial instruments, that comply with strict corporate governance, environmental and social criteria. Minimum required criteria are based on UN criteria for ESG investments. Another aim of the Fund is to invest into companies which fulfills criteria for impact investments, while Fund uses the publicly available definitions of impact investments when deciding about the selection of securities.  

Only financial instruments used by Fund are those, which are issued by organizations who are signatories of Principles for Responsible Investments. This strategy is implemented in the investment process on a continuous basis as part of the regular quarterly review of composition of Fund.

NOVIS works closely with management of investee companies or, in case of indirect investment via investment fund, monitors the documentation provided by asset manager related to good governance practices of the investee companies.

Minimum proportion of the investments of the Fund used to attain the sustainable investment objective in accordance with the binding element of the investment strategy is 80 % of Fund's asset, while usually it’s close to 90 % Fund's asset.

(b) No sustainable investment objective

This financial product promotes environmental or social characteristics but does not have as its objective a sustainable investment. 

(c) Environmental or social characteristics of the financial product

Fund invests directly or indirectly into stocks or bonds of companies which comply with strict corporate governance, environmental and social criteria. However, the Fund is generally oriented and does not promote specific environmental or social characteristics. Another aim is to invest into companies which fulfill criteria for impact investments, but such underlying assets are currently not used.

(d) Investment strategy

Fund only invests into financial instruments issued by organizations which are signatories of Principles for Responsible Investments (see: www.unpri.org).

Every issuer of financial instrument must be a signatory of Principles for Responsible Investments. If the Fund invest indirectly, then in addition the underlying fund must promote environmental or social characteristics or sustainable investments - although sustainable investments are currently not used.

This strategy is implemented in the investment process on a continuous basis as part of the quarterly regular review of composition of Fund. Should the regular review show discrepancy between the investment strategy of the Fund and the parameters of financial instruments used in the Fund, NOVIS will apply appropriate remedial measures to make sure the investment strategy is complied with. As an example NOVIS may change the share or financial instruments used in the Fund or replace some or all of them or remove some of them.

To assess good governance practices of the investee companies NOVIS works closely with management of investee companies or, in case of indirect investment via investment fund, monitors the documentation provided by asset manager related to good governance practices of the investee companies.

More information and further details on the investment strategy can be found on https://www.novis.eu/en/novis-sustainability-related-information.

(e) Proportion of investment

Fund invests predominantly indirectly into investment funds compliant with UCITS regulation. Fund's statute defines that share of such indirect investment has to be at least 80 % of Funds assets. Remaining part of Fund's assets can be invested directly into financial instruments such as shares or bonds or into bank deposits. 

Although the basic precondition used in selection of underlying funds is the focus on ESG criteria, the underlying funds may also use investments that do not contribute to the specific environmental or social characteristics promoted by the underlying fund. Examples of these investments are are hedging instruments, derivatives used for risk mitigation purposes or bank deposits held as as ancillary liquidity. The proportion of these investments usually does not exceed 10 % of Fund`s assets. Some proportion of the Fund is usually (up to 20% of Fund`s assets) allocated in bank deposits, in order to maintain an adequate level of liquidity. The selection of banks is made without consideration to ESG criteria.

(f) Monitoring of environmental or social characteristics

The environmental or social characteristics are monitored on regular basis throughout the lifecycle of the financial product as part of:

i.) Annual product review – the Fund is offered as an investment option within insurance-based investment product (IBIP) which is subject to NOVIS' Product Oversight and Governance policy. This policy includes a requirement for yearly review of every IBIP and its investment options including its alignment with related regulations and consistency of product features with objectives, interests and characteristics of clients.

ii.) Quarterly insurance funds review – NOVIS performs on a quarterly basis a periodic review of composition of its Insurance Fund's assets applying look-through approach, i. e. monitoring the composition of insurance funds down to the level of individual financial instrument (e.g. shares or bonds) used directly or indirectly within Fund's assets. In case of indirect investments, the review is based predominantly on information included in reports provided by asset managers.

iii.) Annual sustainability policy review – as part of implementation of SFDR, NOVIS established new procedure focused primarily on alignment of its Sustainable policies and disclosures with applicable regulations and on fulfilling of the Sustainable policies on product and Fund level.

NOVIS currently performs above-mentioned control mechanisms internally and will consider implementing external control elements, such as audit of sustainability policies which would be performed by independent external party.

(g) Methodologies

The objective of the Fund is to promote environmental or social characteristics, yet we in NOVIS are open-minded and we do not want to focus on particular aspect or objective. The main reason for this approach is the fact that we offer the Fund as one of the investment options in our long-term and whole-life IBIP products. We do not believe that it is appropriate to stick to a too prescriptive methodology in a long-term horizon, as it might be not flexible enough through the whole life-cycle of our products. Thus, our approach is more high-level oriented and less specific. We believe that this policy will allow us to adapt to changes and challenges that we are not able to anticipate in the present days. 

(h) Data sources and processing

Data sources used to attain the environmental or social characteristics promoted by the Fund are mainly:

i) in case of indirect investments via investment funds, publicly available documents provided by asset manager of the investment fund, such as Prospectus of investment fund, Key Investor Information Document and Annual (Semi-Annual) Report of the investment fund and information provided to NOVIS directly by asset manager,

ii) in case of direct investments, publicly available documents provided by the issuer of the financial instrument, such as Annual Report, Sustainability Policy and information provided to NOVIS directly by issuers of financial instruments (such as internal reports, external audit reports etc.),

iii) publicly available information provided by independent third parties such as NGOs (e.g. registry of signatories of Principles of Responsible Investments) or professional investment portals (e.g. Morning Star, Bloomberg).

If possible and appropriate, NOVIS verifies the provided information with at least two different sources. Data is collected and processed and stored in line with documentation principles applied by NOVIS.

(i) Limitations to methodologies and data

As the Fund does not promote only specific environmental or social characteristics and as the methodology for assessing the investments is based only on high-level qualitative criteria, the proportion of investments with environmental or social characteristics may be relatively high. On the other hand, this flexible approach hinders exact measurement of attained positive effects.

Usually, data is provided in structure that depends on data source, therefore processing of the provided data is limited to the extent how the provided data can be aligned to each another and it is only possible to conduct some controls or analysis on partial data as the provided data differs not only by its structure but also its scope.

Some information may not be up to date, which relates specifically to data published in annual reports, or may not be provided at all, based on the data governance principles applied by issuers of financial instruments.

In order to mitigate such limitations, NOVIS only cooperates with renowned issuers so that provided data is of high quantity and quality and is provided in timely manner.

(j) Due diligence

Nature and extent of the due diligence carried out on the underlying assets of the Fund depends on the quantity, quality, and accurateness of provided information by respective issuer of underlying financial instrument. NOVIS intensively communicates with issuers of underlying financial instruments, especially in case that publicly available information is not sufficient to assess the alignment of issuer with environmental or social characteristics promoted by the Fund.

Due diligence carried out in this aspect is subject of the internal control environment and subject to internal audit. External controls are currently not applied but NOVIS will consider implementation of independent third-party audit on its due diligence process.

(k) Engagement policies