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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.
EY is a global leader in assurance, tax, transaction and
advisory services. The insights and quality
services we deliver help build trust and confidence in the
capital markets and in economies the world
over. We develop outstanding leaders who team to deliver on our
promises to all of our stakeholders.
In so doing, we play a critical role in building a better
working world for our people, for our clients and
for our communities.
EY refers to the global organization, and may refer to one or
more of the member firms, of Ernst & Young
Global Limited, each of which is a separate legal entity. Ernst
& Young Global Limited, a UK company
limited by guarantee, does not provide services to clients. For
more information about our organization,
please visit ey.com.
Disclaimer
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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
-
Todays moderator
David Foster Ernst & Young LLP (UK)
Partner
Global Insurance Finance Change
Co-Leader
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Todays agenda
Introduction
Solvency II reporting timelines and Pillar 3
requirements
An industry practitioners perspective
Key implementation challenges; European Survey
Market status and preparedness
Developing your Pillar 3 solution
Preparing for Solvency II Pillar III Page 5
Join todays Twitter discussion: #EYInsurance
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Todays presenters
Preparing for Solvency II Pillar III Page 6
Dsir 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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Todays agenda
Introduction
Solvency II reporting timelines and Pillar 3
requirements
An industry practitioners perspective
Key implementation challenges; European Survey
Market status and preparedness
Developing your Pillar 3 solution
Preparing for Solvency II Pillar III Page 7
Join todays 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
(Q315 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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Todays agenda
Introduction
Solvency II reporting timelines and Pillar 3
requirements
An industry practitioners perspective
Key implementation challenges; European Survey
Market status and preparedness
Developing your Pillar 3 solution
Preparing for Solvency II Pillar III Page 11
Join todays Twitter discussion: #EYInsurance
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Todays agenda
Introduction
Solvency II reporting timelines and Pillar 3
requirements
An industry practitioners perspective
Key implementation challenges; European
Survey
Market status and preparedness
Developing your Pillar 3 solution
Preparing for Solvency II Pillar III Page 12
Join todays 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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Todays agenda
Introduction
Solvency II reporting timelines and Pillar 3
requirements
An industry practitioners perspective
Key implementation challenges; European Survey
Market status and preparedness
Developing your Pillar 3 solution
Preparing for Solvency II Pillar III Page 15
Join todays 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 (contd)
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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Todays agenda
Introduction
Solvency II reporting timelines and Pillar 3
requirements
An industry practitioners perspective
Key implementation challenges; European Survey
Market status and preparedness
Developing your Pillar 3 solution
Preparing for Solvency II Pillar III Page 18
Join todays Twitter discussion: #EYInsurance
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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/
Reqts
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/
Reqts
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
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One-minute recap
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Contact us
David Foster
Ernst & Young LLP (UK)
Kim Harmer
Ernst & Young
Dsir Lan
Ernst & Young
Christian Schmid
Ernst & Young
Preparing for Solvency II Pillar III Page 22
+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
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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
