ABACUS/Solvency II. Regulatory reporting solution for Solvency II Pillar 3. Service Overview ABACUS/Solvency II

Transcription

1 ABACUS/Solvency II Regulatory reporting solution for Solvency II Pillar 3 Service Overview ABACUS/Solvency II

2 Solvency II requirements raise both business and IT issues. With the ABACUS/Solvency II reporting solution, BearingPoint offers a comprehensive off-the-shelf software package designed to meet the specific needs of supervisory reporting. BearingPoint has leveraged its longstanding experience in regulatory reporting (more than 200 ABACUS/ Solution Suite clients in the FS industry) to create a solution tailored to the requirements of Solvency II. Reports can be generated in a simple, efficient and cost-effective manner for submission to the supervisory authorities. Through ongoing regulatory monitoring and functionality updates, ABACUS/ Solvency II is able to keep its reporting modules up to date with European (and local) reporting requirements. ABACUS/ Solvency II has already been chosen by many different types of insurers (e.g. large multinationals, small insurers with different product lines as well as niche players) and is being implemented across numerous reporting entities within and outside the European Union. New Solvency II reporting requirements The European insurance industry is undergoing an adaptation to the rules of Solvency II which apply to insurers with operations located in the European Union. Before the new regulations take effect, a number of clarifications are expected on the part of EIOPA (European Insurance and Occupational Pensions Authority). Preliminary Solvency II reporting requirements (Pillar 3) were issued by the EIOPA in 2010, and these have served as the basis for a comprehensive review and comment phase by the European insurance industry. Since then, EIOPA has released a number of updates related to reporting content (e.g. in July 2012 and September 2013). The current status of the regulations foresees the submission of quantitative and qualitative information in the following forms: Regular Supervisory Report (RSR) submitted to the regulatory authorities. Solvency Financial Condition Report (SFCR) made publicly-available to disclose information on a firm s general financial situation and solvency. Overall Solvency II reporting requirements Two main final products have to be delivered: Regular Supervisory Report (RSR) Solvency and Financial Condition Report (SFCR) Supervisory reporting Regular Supervisory Report (RSR) All information necessary for the purposes of supervision - Qualitative Report - Quantitative Reporting Templates (QRTs) Public disclosure Regular reporting at predefined periods Ad-hoc reporting Solvency and Financial Condition Report (SFCR) Publicly disclosed information - Qualitative Report - Quantitative Reporting Templates (QRTs) Quantitative Reporting Templates (QRTs) QRTs are an integrated part of both the RSR and the SFCR and cover all required quantitative information. There are several categories: Solo templates (quarterly and annual) Balance sheet Capital requirements Own funds Country cover Variation analysis Assets QRT Technical provisions Reinsurance Financial stability Group templates (quarterly and annual) Similar to solo templates Overview of entities across group Intra-group transactions Risk concentration (Partially) for public disclosure Figure 1: Solvency II reporting requirements and Quantitative Reporting Templates 2 ABACUS/Solvency II Service Overview

3 Both reports include qualitative (narrative) information as well as a quantitative data reporting in the structure of Quantitative Reporting Templates (QRTs). Disclosures will have to be provided on a quarterly basis, although quarterly reporting will not be as detailed as the annual reports. A major challenge for the insurance sector Insurance firms find data creation and collection for the QRTs particularly demanding, since the QRTs draw on data from different functions and usually various data sources (finance, risk, investments, actuarial, etc.). As a result, dimensions that typically need to be addressed and managed closely by Solvency II implementation projects are: Availability general availability of each category of data Granularity level of detail of data needed for reporting Compliance application of principles and methods of estimation/calculation (e.g. best estimate) Timing availability of data at the right time, aligned with the required reporting schedule Flexibility ability to adapt to ongoing changes in supervisory requirements BearingPoint s work with several leading insurers has highlighted a need to address the business issues from two IT-related perspectives: (a) Adaptation of feeder systems and processes: To prepare for Solvency II reporting, processes and systems in the different functions that generate the respective data need to be adapted or enhanced. New solutions, e.g. data warehouses and ETL (extract, transform, load), can be used to provide the necessary data. (b) Implementation of a Solvency II reporting solution: Data will need to be collected, checked for consistency and quality, signed off by the responsible individual and reported to supervisors. This process calls for a specific software solution to function effectively and to address complex, evolving supervisory reporting requirements. With ABACUS/Solvency II BearingPoint provides a proven Solvency II Pillar 3 compliant, standards based software package. 3

4 ABACUS/ Solvency II enables data collection, validation, preparation and submission of quantitative and qualitative reports. Whereas the adaptation of feeder systems and their related processes are unique to each insurance firm and vary depending on each company s business and IT projects, the data collection and reporting to supervisors are highly standardized throughout Solvency II relevant countries. In close collaboration with its clients, BearingPoint has developed a solution enabling Solvency II data collection, validation, preparation and submission of quantitative and qualitative reports. The ABACUS/Solvency II reporting solution can integrate flexibly with your existing systems architecture Many insurance firms have developed sophisticated IT system landscapes to support their risk management, finance, investment or actuarial data processing. While some have longestablished projects to address the Pillar 1 and 2 requirements of Solvency II, the integration of data stemming from different functions and information systems is proving to be a real operational and technical challenge. BearingPoint s ABACUS/Solvency II addresses this challenge by supporting firms in integrating multi-format data from various sources. The solution is flexible enough to support various data-load and -entry options in order to integrate with insurers complex and diverse landscapes. ABACUS/Solvency II helps ensure data integrity in regulatory reporting Solvency II reporting will add a significant additional burden to the workload a regulated insurance company already faces in terms of the quantity, complexity and frequency of statutory reporting. Safeguarding data integrity through an ongoing control and validation process (identification and correction of data errors or inconsistencies) while ensuring the traceability of information and constant adjustments will have a major impact on the costs and required resources. The effects of non-compliance with reporting mandates extend beyond regulatory consequences. Errors in reporting processes can have a short-term Regulator Shareholders Analysts Management Regulatory Reporting Internal Reporting QRT sheets RSR SFCR Reports Dashboards ABACUS/Solvency II Finance Risk Investments Actuarial Others Data sources Figure 2: Simplified technical architecture (illustrating add-on feature for internal reporting) 4 ABACUS/Solvency II Service Overview

5 impact on company market capitalization with the potential to cause longer-term reputational damage. ABACUS/Solvency II offers a range of standard functions to improve data quality (1) The data model has been developed to accommodate the specific needs of Solvency II reporting. A flexible interface permits the upload of data on solo entity or group level. The interfaces are designed to handle large data volumes effectively. To ensure audit-proof tracking ABACUS/ Solvency II logs all process steps including sign-off and manual changes to reported data. (2) ABACUS/Solvency II mirrors the insurer s hierarchical reporting structure (multi-entity, solo/group level, etc.). Associated authorizations and rights (e.g. for access, data validation) can be specified per QRT, per entity and per process step. ABACUS/Solvency II is available in multiple languages (e.g. English, French, German, Spanish, Italian) to facilitate deployment across international groups. (3) The status monitor or cockpit of ABACUS/Solvency II makes it possible to monitor report development across all group hierarchy levels and to control data quality at every step of the process. Authorized users can thus trigger different processes (e.g. collection, controls, allocation) directly from this screen and track the progress of any reports under their responsibility. (4) Data required for reporting can easily be uploaded into ABACUS/Solvency II either manually (data entry) or automatically (interface, ETL). All actions affecting data are systematically logged to allow tracking of the change history. (5) The technical design of ABACUS/ Solvency II enables authorized users to create separate reporting scenarios where simulations or tests can be performed on one or several reporting areas. The solution is also capable of comparing reports created in different what-if scenarios or issued at different reporting dates. ABACUS/ Solvency II ensures full traceability and auditability. Quantitative Reporting Data loading Data consistency checks Allocations and rounding Validations QRT approvals Report generation Source systems QRT sheets Qualitative Reporting Supervisory Authority Choice of sections Drafting of report Links with QRT data Review and analysis Report approvals Report generation RSR/SFCR Figure 3: Standard ABACUS/Solvency II reporting workflow 5

6 Consistency checks and validation rules enhance data quality. (6) The allocation engine is standardized and maintained up to date in line with the latest status of supervisory guidelines. (7) To support appropriate quality and relevance of the reported data, ABACUS/ Solvency II performs consistency checks and provides a comprehensive validation rules engine (for consistency within and between QRTs). Validations are conducted using a standardized set of validation rules, however client-specific rules can also be added to reflect potential internal constraints or local regulations. (8) ABACUS/Solvency II also permits the sign-off of QRT sheets at the solo entity as well as group level. ABACUS/Solvency II requires that the QRT sheets be signed off by authorized users before submission to the regulator in the format specified by EIOPA (XBRL). (9) As part of its standard solution, ABACUS/Solvency II provides a feature to export reports to PDF or MS Excel format. As a supplemental option the production of the RSR and SFCR reports can be supported and managed within a dedicated module that makes the ABACUS/Solvency II data available for flexible use in MS Word templates. (10) ABACUS/Solvency II as an application has been designed on a threetier architecture. It uses a flexible clientserver architecture as well as a relational database for data storage. Figure 4: Illustrative example of ABACUS/Solvency II Cockpit with traffic light system 6 ABACUS/Solvency II Service Overview

7 Figure 5: Illustrative example of a QRT report incl. tracking of manual modifications A comprehensive and unique service offering: A reporting structure to support compliance with regulatory requirements Auditability at every step of the reporting process (quantitative and qualitative) Comfortable front-end that encourages rapid user adoption European regulatory monitoring to adapt the solution to new requirements IT architecture which is open for integration with different source systems Detailed, user-oriented documentation Recognized know-how in implementation and integration across large and small insurers ABACUS/ Solvency II has an open IT architecture to facilitate integration with different source systems. 7

8 About BearingPoint BearingPoint consultants understand that the world of business changes constantly and that the resulting complexities demand intelligent and adaptive solutions. Our clients, whether in commercial or financial industries or in government, experience real results when they work with us. We combine industry, operational and technology skills with relevant proprietary and other assets in order to tailor solutions for each client s individual challenges. This adaptive approach is at the heart of our culture and has led to long-standing relationships with many of the world s leading companies and organizations. Our 3350 people, together with our global consulting network serve clients in more than 70 countries and engage with them for measurable results and long-lasting success. For more information, please visit: Contact Austria Andreas Unger Senior Manager andreas.unger@bearingpoint.com Belgium/Luxembourg Jean-Christophe Gaury Partner jean-christophe.gaury@bearingpoint.com Denmark Filip Rydman Senior Manager filip.rydman@bearingpoint.com Finland Mika Niemela Partner mika.niemela@bearingpoint.com France Jean-Christophe Gaury Partner jean-christophe.gaury@bearingpoint.com Germany Rolf Meyer Partner rolf.meyer@bearingpoint.com Ireland Martin McKenna Partner martin.mckenna@bearingpoint.com Norway Vegar Paulsen Partner vegar.paulsen@bearingpoint.com Sweden Filip Rydman Senior Manager filip.rydman@bearingpoint.com Switzerland Daniel Berger Director daniel.berger@bearingpoint.com The Netherlands Marc Bartels Partner marc.bartels@bearingpoint.com United Kingdom Andreas Rindler Partner andreas.rindler@bearingpoint.com Firm-wide Maciej Piechocki Partner Head of ABACUS/Solvency II maciej.piechocki@bearingpoint.com 2015 BearingPoint Holding B.V. All rights reserved. Printed in the EU. The content of this document is subject to copy right ( Urheberrecht ). Changes, cuts, enlargements and amendments, any publication, translation or commercial use for the purpose of trainings by third parties requires the prior written consent of BearingPoint Holding B.V. Any copying for personal use is allowed and only under the condition that this copy right annotation ( Urheberrechtsvermerk ) will be mentioned on the copied documents as well. Photo credits: Fotolia