Insurance: preparing for Solvency II Pillar 3
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Transcript of 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
Preparing for Solvency II Pillar III Page 5
Join today’s Twitter discussion: #EYInsurance
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Today’s presenters
Preparing for Solvency II Pillar III Page 6
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
► 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
Preparing for Solvency II Pillar III Page 7
Join today’s Twitter discussion: #EYInsurance
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Pillar 3 requirements: What are the deadlines for reporting?
Preparing for Solvency II Pillar III Page 8
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
Preparing for Solvency II Pillar III Page 9
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?
Preparing for Solvency II Pillar III Page 10
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
► 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
Preparing for Solvency II Pillar III Page 11
Join today’s Twitter discussion: #EYInsurance
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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
Preparing for Solvency II Pillar III Page 12
Join today’s Twitter discussion: #EYInsurance
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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
Preparing for Solvency II Pillar III Page 13
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EY Solvency II European Survey
Preparing for Solvency II Pillar III Page 14
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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
Preparing for Solvency II Pillar III Page 15
Join today’s Twitter discussion: #EYInsurance
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Market status and preparedness
Based on EY assessment of some leading insurance companies in UK and Continental Europe
Preparing for Solvency II Pillar III Page 16
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
Preparing for Solvency II Pillar III Page 17
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
► 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
Preparing for Solvency II Pillar III Page 18
Join today’s Twitter discussion: #EYInsurance
About color themes
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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
Preparing for Solvency II Pillar III Page 19
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
Preparing for Solvency II Pillar III Page 20
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
Preparing for Solvency II Pillar III Page 22
+44 20 7951 5687
+44 20 7951 0556
+44 20 7783 0790
+49 89 14331 24913
Follow us on Twitter: @EY_Webcasts
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Resources
► www.ey.com/insurance
► www.ey.com/solvencyII
► www.gfsi.ey.com
Preparing for Solvency II Pillar III Page 23
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Insurance: preparing for Solvency II Pillar III
Thanks for participating
Preparing for Solvency II Pillar III Page 24