Insurance: preparing for Solvency II Pillar 3

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Insurance: preparing for Solvency II Pillar 3

10 April 2014

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Preparing for Solvency II Pillar III Page 2

► This material has been prepared for general informational

purposes only and is not intended to be relied upon as

accounting, tax, or other professional advice. Please

refer to your advisors for specific advice.

► The views expressed by the presenters are not necessarily

those of EY.

► This presentation is © 2014 EYGM Limited. All Rights Reserved.

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Disclaimer

Glossary of terms

QRTs Quantitative Reporting Templates

SII Solvency II

SFCR Solvency and Financial Condition Report

RSR Regular Supervisory Report

MCR Minimum Capital Requirement

SCR Solvency Capital Requirement

OFR Operating and Financial Review

SPVs Special Purpose Vehicles

TBD To be determined

EIOPA European Insurance and Occupational Pensions Authority

MCBS Market Consistent Balance Sheet

Today’s moderator

David Foster Ernst & Young LLP (UK)

Partner

Global Insurance Finance Change

Co-Leader

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Today’s agenda

► Introduction

► Solvency II reporting timelines and Pillar 3

requirements

► An industry practitioner’s perspective

► Key implementation challenges; European Survey

► Market status and preparedness

►Developing your Pillar 3 solution


Join today’s Twitter discussion: #EYInsurance

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Today’s presenters


Désiré Lan Ernst & Young

Director

Dr Monty Cachej Zurich Group

Head of Solvency II PMO

& Solution Management

Christian Schmid Ernst & Young

Senior Manager

Kim Harmer Ernst & Young

Director

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Today’s agenda

► Introduction


requirements







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Pillar 3 requirements: What are the deadlines for reporting?


End State (2019)

Accelerated

reporting 6 weeks 14 weeks

6 weeks 5 weeks

6 weeks 8 weeks

6 weeks

2016

Full

Implementation

22 weeks

6 weeks 8 weeks 2015

Preparatory Phase

6 weeks 20 weeks

Feb Mar Apr May Jun Jul Jan Year of reporting

Quarterly

(Q3’15 only)

Annual (y/e 2014)

Quarterly

Annual

Quarterly

Annual

Annual Solo

SFCR/RSR/QRTs

Quarterly Solo

QRTs

Quarterly Group

QRTs

Annual Group

SFCR/RSR/QRTs

Key

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Pillar 3 requirements and governance


Impacted business

functions

► Finance and Actuarial

functions

► Company Secretarial

► Compliance

► Internal audit

► Asset management

► Investor relations

► Finance and Actuarial

functions

► Asset management

► Investor relations

► Compliance

► Internal audit

► Company secretarial

Potential Sources

► Directors’ report

► Company Registrar

► Internal MI reporting

► Financial statements

► Risk and Capital reporting

► Compliance reporting

► Financial statements

► Internal MI reporting

► Internal/Standard model

capital reporting

► Internal/Standard model

technical reporting

► Risk reporting

► Compliance reporting

► Business and performance

► System of governance

► Risk profile

► Valuation for solvency

purposes

► Capital management

Content

A – Premiums, claims , exp

B – Own funds, MCR, SCR

C –Balance Sheet and variance

analysis of own funds

D – Assets

E, F – Technical provisions

J – Reinsurance

G, IGT – Group items

K – Activity by country

Other – e.g., Duration of

liabilities,

Area

RSR/

SFCR

QRTs1

1 The materials issued with the preparatory guidelines introduce a new naming system for the templates that is less

transparent than stated here so we have retained the ‘old’ names.

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Preparatory phase – What is required to be submitted and when?


QRT forms

SII preparatory phase SII full implementation

31/12/2014 Q3 2015 Q1 2016 31/12/2016

Solo

annual

Groups

annual

Solo

quarterly

Groups

quarterly

Solo

quarterly

Groups

quarterly

Solo

annual

Groups

annual

Content of the submission 1 1 1 1

Narrative information subset subset

Basic information 1 1 1 1 1 1 1 1

Premiums, claims and expenses

paid 1 1 1 1

Own Funds, MCR, SCR 13 11 3 1 3 2 13 11

Participations 1

SII Balance Sheet 2 1 1 1 1 1 3 3

Variance analysis of own funds 3

Assets 2 2 2 2 6 5 5 5

Non-life related forms 1 1 1 7

Life insurance related forms 1 1 1 6 1

Reinsurance including SPVs 3 1 6 3

Activity by country 1

Financial Stability information 2 2 2 2

Specific group templates 4 9

Total no of forms 21 20 10 6 19 13 49 36

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Today’s agenda

► Introduction


requirements







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Today’s agenda

► Introduction


requirements


► Key implementation challenges; European

Survey


► Developing your Pillar 3 solution



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Key implementation challenges

► Accelerated close process

► Data consistency

► Asset reporting

► IT Systems for reporting

► Extent and granularity of requirements

► Uncertainty

► Internal and external stakeholder management


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EY Solvency II European Survey


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Today’s agenda

► Introduction


requirements







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Market status and preparedness

Based on EY assessment of some leading insurance companies in UK and Continental Europe


Peer comparison Co 1 Co 2 Co 3 Co 4 Co 5 Co 6 Co 7 Co 8

1. Current status of Pillar 3

project and solution:

► Developed reporting

processes?

► Designed Solution (IT

& reporting

architecture)?

► Built or ‘off the shelf’

reporting package

installed?

► Any dry runs

performed already?

Yes No Partial

Key

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Market status and preparedness (cont’d)

Based on EY assessment of some leading insurance companies in UK and Continental Europe


Peer comparison Co 1 Co 2 Co 3 Co 4 Co 5 Co 6 Co 7 Co 8

2. Is a tactical solution or

strategic solution

(automated solution,

data warehouse) being

considered for the

interim measures?

Strategic Strategic Strategic Tactical Tactical Strategic Strategic TBD

3. Are there plans to

deliver a full dry run

before 2015 interim

measures?

TBD TBD

4. Is the reporting solution

being built to deliver the

interim measures, 2016

or the Target State

timelines? (timelines get

shorter over time)

Target

State

Target

State 2016 2016 TBD

Target

State 2016 TBD

5. What are the indicative/

estimated budgets to

complete

€2-3m €3-4m TBD TBD TBD TBD €1m TBD

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Today’s agenda

► Introduction


requirements







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2 2014 2015 2016

Work-streams Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Programme

Management

Data

Process –

Tactical Solution

Process –

Strategic

Solution

Technology

People & Org Assess

impact on

people and

governance

Developing your Pillar 3 solution: Typical implementation roadmap


Solution design and implementation

Data

catalogue/governance

2014 QRTs

(interim)

Process

design & dry

runs Quarterly

QRTs (interim) Process design & dry runs

Process

Gap/

Req’ts

To be

process

(Target)

Embed Annual QRTs and

RSR

Embed

Quarterly

QRTs in

BAU

Dry runs UAT

Testing

Align to be

process with

IT solution

Process

Gap/

Req’ts

To be

processes

(Target)

Go Live System

Test Integration

Design

(inc. build

or buy)

Functional

Requirements

Roles, responsibilities, training

(strategic)

Roles,

responsibilities,

training (tactical)

Re

ad

ine

ss

as

se

ss

men

t

Update

gap

assess-

ment

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Solution insights: Accelerating the reporting processes


Some levers for change

► Data quality

► Technology enablers

► Process improvements

One-minute recap

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Contact us

David Foster

Ernst & Young LLP (UK)

Kim Harmer

Ernst & Young

Désiré Lan

Ernst & Young

Christian Schmid

Ernst & Young


+44 20 7951 5687

[email protected]

+44 20 7951 0556

[email protected]

+44 20 7783 0790

[email protected]

+49 89 14331 24913

[email protected]

Follow us on Twitter: @EY_Webcasts

mailto:[email protected]





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Resources

► www.ey.com/insurance

► www.ey.com/solvencyII

► www.gfsi.ey.com


http://www.ey.com/insurance

http://www.ey.com/solvencyII

http://www.gfsi.ey.com/

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Insurance: preparing for Solvency II Pillar III

Thanks for participating
