Insurance: preparing for Solvency II Pillar 3

Insurance: preparing for
Solvency II Pillar 3
10 April 2014

Preparing for Solvency II Pillar IIIPage 2
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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

Today’s moderator
David Foster
Ernst & Young LLP (UK)
Partner
Global Insurance Finance Change
Co-Leader

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

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

Today’s agenda
► Introduction
requirements

Pillar 3 requirements: What are the deadlines
for reporting?
End State (2019)
Accelerated
reporting 6 weeks14 weeks
6 weeks5 weeks
6 weeks8 weeks
6 weeks
2016
Full
Implementation
22 weeks
6 weeks8 weeks
2015
Preparatory Phase
6 weeks20 weeks
Feb Mar Apr May Jun JulJanYear 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

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.

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

Today’s agenda
► Introduction
requirements

Today’s agenda
► Introduction
requirements
► Key implementation challenges; European
Survey

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

EY Solvency II European Survey

Today’s agenda
► Introduction
requirements

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

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

Today’s agenda
► Introduction
requirements

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)
Readinessassessment
Update
gap
assess-
ment

Solution insights: Accelerating the reporting
processes
Some levers for change
► Data quality
► Technology enablers
► Process improvements

Contact us
David Foster
Ernst & Young LLP (UK)
Kim Harmer
Ernst & Young
Désiré Lan
Ernst & Young
Christian Schmid
Ernst & Young
+44 20 7951 5687
dfoster@uk.ey.com
+44 20 7951 0556
kharmer@uk.ey.com
+44 20 7783 0790
dlan@uk.ey.com
+49 89 14331 24913
christian.schmid@de.ey.com
Follow us on Twitter: @EY_Webcasts

Resources
► www.ey.com/insurance
► www.ey.com/solvencyII
► www.gfsi.ey.com

Insurance: preparing for Solvency II Pillar III
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Insurance: preparing for Solvency II Pillar 3

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