1 Introduction to Grant Thornton s General Insurance Actuarial Services
2 Contents What our clients say about us 2 Our key principles 4 How we can help 5 Reserving 7 Solvency II 8 Independent expertise 10 Senior members of our team 12 Six things you may not have known about Grant Thornton 14 Why Grant Thornton 15 Contacts 16
3 Actuarial services Grant Thornton believes that advisory services will be the engine for growth. We are committed to an investment programme aimed at strengthening our insurance sector expertise, and deepening collaboration, with our clients. It is our ambition to establish Grant Thornton as a unique and valued provider of the full suite of advisory and assurance services to the general insurance industry by It is central to our ambition that our general insurance actuarial team further develops and deepens relationships with the insurance market. We believe that we can achieve this by continuing to deliver bespoke solutions that are not only technically robust, but also pragmatic to implement. Simon Sheaf FIA FSAI General Insurance Actuarial Practice Leader 2013 Grant Thornton UK LLP. All rights reserved. 01
4 What our clients say about us It has been a pleasure to work with Simon [Sheaf] and the team at Grant Thornton and we would recommend them unreservedly to others in the London Market. Senior Actuary at a Lloyd s Managing Agency I could not recommend Grant Thornton highly enough. CEO of a European insurer They provide a good professional service delivering on time and on budget. Chief Actuary of a Lloyd s Managing Agency Simon [Sheaf] is absolutely top notch and would always be in front of mind for this sort of work. Senior Actuary at a large multinational insurer Grant Thornton UK LLP. All rights reserved.
5 They have delivered what they said they would deliver, on time and as seamlessly as possibly, with minimum intrusion into our day to day operations. Finance Director of a Gibraltan insurer Compared to other firms, I feel that Grant Thornton have been more easily accessible, open and honest in their interactions with us and the team have been approachable and personable. Senior Actuary at a Lloyd s Managing Agency It was a very easy relationship with Grant Thornton. I was genuinely pleased with how it went. Senior Actuary at a Bermudan insurer I appreciate the team taking the time to communicate technical information in a language which is more accessible to me. CEO of a European insurer 2013 Grant Thornton UK LLP. All rights reserved. 03
6 Our key principles There are several principles which underpin everything we do: we believe in no surprises. Transparency and proactivity are important to us; we will keep you informed throughout the course of our engagements we treat every challenge as unique: change is constant, components are consistent, configuration is key collaboration underpins our approach; total business engagement is critical to successful delivery we will not compromise on quality, yet we appreciate the need for flexible and cost-effective solutions people really are our best asset. Our consultants are adaptable, agile and energetic and combine technical expertise with practical experience we pride ourselves on telling it like it is. We will provide you with robust opinions, backed up by strong evidence Grant Thornton UK LLP. All rights reserved.
7 How we can help Whether you are after a full range of services or an ad hoc piece of work, we have the experience to ensure that your needs are met. The areas that we are able to offer assistance with include, but are not limited to: reserving, including Statements of Actuarial Opinion Solvency II section 166 Skilled Persons reviews capital modelling fulfilling the role of independent expert on Part VII transfers pricing support price optimisation business planning risk and capital management reinsurance programmes IFRS4 management information systems fulfilling the role of Scheme Actuary for schemes of arrangement strategic advice transaction support secondments Grant Thornton UK LLP. All rights reserved. 05
8 Case study Quinn Insurance For two years, we provided the internal actuarial function for Quinn Insurance Limited (Under Administration). Quinn wrote Private Motor, Commercial Motor, Commercial Property, Liability, Household, Motorcycle and Healthcare businesses, and was licensed to conduct business in the Republic of Ireland, United Kingdom and Mainland Europe. It was placed into Administration by its regulator during As part of the administration, we established the actuarial function and delivered the full suite of internal actuarial services. Simon Sheaf was the Chief Actuary and Chief Underwriting Officer. Jinit Shah was responsible for the day to day management of the on-site actuarial team which was entirely staffed with Grant Thornton personnel. Our responsibilities included: pricing of the private motor account using generalised linear modelling techniques development of book rates for the commercial account pricing of individual large commercial risks design and implementation of a quarterly reserving process, including governance arrangements around this process quarterly reserving on an accident year basis quarterly reserving on an underwriting year basis calculation of capital requirements under the Solvency II regime design and implementation of a risk management framework design and build of an internal model for use within the ORSA embedding the model within the business Solvency II training for senior management and executives design and provision of management information in relation to underwriting and claims support with the regular business planning processes reporting to UK and Ireland regulators on performance in relation to underwriting and reserving assisting with reinsurance purchase assisting with the sale process Grant Thornton UK LLP. All rights reserved.
9 Reserving Our actuarial team has extensive experience of undertaking reserving exercises for insurers. Our reserving experience ranges from small niche insurers to large market leaders and includes substantial experience of reserving for each of the following: Lloyd s syndicates London market companies personal lines insurers commercial lines insurers reinsurers. Our reserving experience covers the full range of liabilities and classes of business from the very short-tail to the extremely long-tail. It includes reserving for both latent claims and catastrophic events. Our actuarial team has experience of reserving for insurers in a wide range of territories including the UK, Ireland, Gibraltar, Continental Europe, Scandinavia, the USA, Bermuda, Japan and South Africa. Statements of Actuarial Opinion We provide Statements of Actuarial Opinion to Lloyd s syndicates and Irish insurers, as well as providing certification of reserves to meet the requirements of other European regulators. Simon Sheaf is the holder of a Lloyd s Syndicates Practicing Certificate and an Irish Signing Actuary Practicing Certificate. He has been providing Statements of Actuarial Opinion to Lloyd s syndicates since they were first introduced. The quality of our work is demonstrated by the fact that, in Lloyd s annual review of SAO reports, we have been rated the top consultancy for SAO reports in each of the last four years Grant Thornton UK LLP. All rights reserved. 07
10 Solvency II Our actuarial and risk team has extensive experience in all three pillars of Solvency II. Our practical experience includes the following: designing and building capital models under the Solvency II regime validating internal models completing QIS4 and QIS5 questionnaires and analysis of results calculating the SCR and MCR for companies using the latest version of the standard formula and analysis of results building a standard formula tool for companies to use to calculate their SCR and MCR under Solvency II calculating and advising on the derivation of technical provisions on a Solvency II basis board and senior management mentoring and education conducting gap analyses developing implementation plans, including work streams, resourcing and dependencies developing ORSA processes, reports and models advising on the development of Solvency II balance sheets developing governance arrangements under the new regime articulating risk appetite statements developing and embedding risk management frameworks including target operating models and ERM frameworks developing Solvency II compliant reporting and disclosure procedures. We have undertaken Solvency II assignments for a wide variety of clients including Lloyd s managing agents, London market companies, personal lines insurers, commercial lines insurers, and reinsurers. We have also undertaken Solvency II assignments in a variety of territories, including the UK, Ireland, Gibraltar, Continental Europe and Bermuda Grant Thornton UK LLP. All rights reserved.
11 Case study Delivering a major project Our client was a very large UK-incorporated insurer. It has a number of subsidiaries, in the UK, throughout Europe and in North America and writes a wide variety of classes of business. The insurer had a major project to transfer the insurance capital team from one territory (the moving territory) to another (the receiving territory). However, it was resource constrained and asked us to provide a team to help to deliver the project. The assignment involved reviewing a model built and used by the subsidiary general insurance company to calculate its required capital under the UK ICA regime. The output of the model was the capital requirement of the subsidiary and served as an input into the group ICA model and capital requirement. Our team was also responsible for the frequent calculations of the Solvency Capital Requirement and Minimum Capital Requirement under the Solvency II regime. In addition, our team was involved in the quarterly reserving process, both for the statutory reserves and for the Solvency II technical provisions. Included in this work was technical review of the models used for reserving. As part of the insurance capital team, responsibilities included the drafting of risk appetite statements, against which insurance, credit and market risk would then be monitored. Our team, along with the senior management of the insurer then developed the management information which would be submitted to board committees to effectively manage risk within the business. The transfer of the insurance capital team from one territory to another also required several ad-hoc projects to be undertaken while continuing to perform business as usual activities. These ad-hoc projects included: integrating the ICA model into the model already in-situ in the receiving territory design and appropriate monitoring of risk appetites that encompassed both the moving territory and the receiving territory integrating the annual business planning process of the moving territory with that of the receiving territory planning the logistics of the physical move including: the availability of data the availability of systems the facilitation of knowledge transfer between teams Grant Thornton UK LLP. All rights reserved. 09
12 Independent expertise We have a long established reputation for providing independent professional expertise, for both regulatory and transaction assignments. This background, combined with the strong skills and experience of our team, means that we are extremely well positioned to work on assignments of this nature. Section 166 We have extensive experience of undertaking section 166 Skilled Person reviews covering all aspects of an insurer s governance arrangements. This includes areas where our actuarial expertise is particularly relevant including claims reserving, claims governance, actuarial reserving and business planning. In fact, Grant Thornton has completed more section 166 Skilled Person reviews that any other professional services firm. In addition, we have also assisted other regulators with their investigations into significant issues arising at insurance companies, including reserving issues. Part VII transfers Grant Thornton has provided the Independent Expert for a wide range of Part VII transfers. These include: transfers between unrelated entities intra-group transfers transfers between insurance companies and Lloyd s syndicates transfers between insurers in the UK, Ireland and other European territories transfers of both direct and reinsurance business transfers of liabilities arising from exposure to asbestos, pollution and other latent claims Schemes of Arrangement We have provided the Scheme Actuary for a variety of Schemes of Arrangement. These have included schemes with substantial exposure to latent claims, including those arising from asbestos and environmental pollution. Independent expert We have also acted as the independent expert for a variety of assignments, including those involving litigation Grant Thornton UK LLP. All rights reserved.
13 Case studies Trusted advisor We are a trusted advisor to a European based insurer writing a variety of commercial risks across a number of European territories. We have worked with this insurer for more than six years. We assist the Board of Directors in setting the reserves by undertaking quarterly reserving exercises. We also provide the certification of reserves required by the regulator. In addition, we are helping the insurer to prepare for Solvency II. Assignments have included: completion of QIS4, completion of QIS5, gap analyses, implementation planning, designing risk management frameworks, and Board training. We have also assisted this client with a strategically important transaction, as well as seconding one of our team to support the data analysis and reporting function. s.166 review We have recently acted as the Skilled Person for a s.166 review of a large UK motor insurer. Our work involved assessing the effectiveness and appropriateness of the firm s claims and actuarial reserving processes. When undertaking this assignment, in addition to meeting the FSA s requirements, we also delivered pragmatic recommendations that enabled the insurer to strengthen its governance arrangements and enhance its business without undermining the strengths of its business model Grant Thornton UK LLP. All rights reserved. 11
14 Senior members of our team Simon Sheaf FIA FSAI General Insurance Actuarial Practice Leader Simon leads Grant Thornton s provision of actuarial services to the general insurance sector. He has more than 20 years experience working as an actuary in the general insurance sector. He is a Fellow of the Institute and Faculty of Actuaries and a Fellow of the Society of Actuaries in Ireland His extensive experience in the general insurance sector includes claims reserving, strategic reviews of insurance operations, business planning, reviews of rating adequacy, pricing of portfolios and individual risks, assisting insurers with preparations for the forthcoming Solvency II regulatory regime, designing, building and validating capital models, due diligence, designing management information systems, s.166 Skilled Person reviews, Part VII transfers of insurance liabilities, acting as Scheme Actuary for Schemes of Arrangement, providing advice on risk management frameworks, and review and optimisation of reinsurance arrangements After Quinn Insurance Limited was placed into Administration, Simon established its internal actuarial function and spent two years acting as Chief Actuary and Chief Underwriting Officer He is the holder of a Lloyd s Syndicates Practicing Certificate and an Irish Signing Actuary Practicing Certificate, and provides Statements of Actuarial Opinion Prior to joining Grant Thornton, Simon was the Chief Actuary for a general insurer writing commercial and personal lines Simon is a regular speaker at industry and professional events. He frequently writes for or is quoted in insurance publications Simon sits on both the Council and the Management Board of the Institute and Faculty of Actuaries. He is also a member of the Institute and Faculty of Actuaries General Insurance Board, General Insurance Education and Continuing Professional Development Committee, and Education Board Simon Yeung FIA Senior Manager Simon is a Fellow of the Institute and Faculty of Actuaries with more than ten years experience working in the general insurance industry He joined Grant Thornton in 2012 and specialises in advising clients in the general insurance sector Since joining Grant Thornton, Simon s key assignments have included: managing a s.166 Skilled Person review of the claims and actuarial reserving processes of a large UK motor insurer managing a project assisting a regulator in its investigation of a number of actuaries in relation to actuarial reserving practices. pricing a large motor insurance portfolio using generalised linear modelling Prior to joining Grant Thornton, Simon was the head of motor pricing at Saga for three years. He was responsible for commercial pricing of the motor account. This included reviewing the risk prices and reviewing the reserves for the motor account Before that, Simon was a reserving manager at RBS Insurance for three years. In this role, he was responsible for quarterly reserving of the motor account and quarterly forecasting Simon s career before RBS Insurance included the design and implementation of management information systems, reserving process and pricing models for personal lines insurance companies, and valuations of profit share for motor, home and PMI lines of business Simon is a member of the Institute and Faculty of Actuaries Advanced Pricing Techniques Working Party. He is also a member of the Institute and Faculty of Actuaries Financial Reporting Group Grant Thornton UK LLP. All rights reserved.
15 Jinit Shah FIA Manager Mark Schaffer Assistant Manager Jinit is a Fellow of the Institute and Faculty of Actuaries and specialises in consulting to the general insurance sector He assisted in setting up and managed the newly formed actuarial team at Quinn Insurance Limited (Under Administration). He was responsible for pricing of all accounts, reserving, Solvency II preparations and business planning. In addition he also assisted with provision of management information, provision of information to regulators, and the sale of the company Jinit also has significant experience in assisting companies with their preparations for Solvency II, including capital calculations, calculations of technical provisions, governance and risk management issues and reporting He spent six months on secondment at a Lloyd s syndicate reserving, pricing and business planning for UK Property and Liability lines, US and Worldwide Property lines and Specialist Financial lines His other experience includes design and construction of capital models, buy side due diligence of insurance companies, assistance with independent expert assignments, and reviews of payment protection insurance Jinit is a member of the Institute and Faculty s General Insurance Actuarial Function Working Party Mark has more than 15 years experience in the general insurance industry He has significant experience in motor insurance pricing, having spent six years at a large UK motor insurer prior to joining Grant Thornton Mark s other experience includes: extensive experience of reserving methods, both deterministic and stochastic substantial experience of assisting with the provision of Statements of Actuarial Opinion for Lloyd s syndicates experience of insurance report and accounts, including the preparation of FSA returns for a general insurer assisting with s.166 Skilled Person review of the claims and actuarial reserving processes of a large UK motor insurer Mark is a member of the Institute and Faculty of Actuaries Advanced Pricing Techniques Working Party 2013 Grant Thornton UK LLP. All rights reserved. 13
16 Six things you may not have known about Grant Thornton 1 2 Grant Thornton has over 4,500 employees in the UK, providing Audit, Tax and Advisory services to several thousand clients This includes over 180 consultants, with significant Financial Services experience 3 This capacity allows Grant Thornton to provide consulting services to over 200 clients in the Financial Services sector 4 Grant Thornton s global advisory function grew by 18% in The Firm as a whole grew by 10%. Both these figures outstrip those of our competitors 5 6 Grant Thornton has over 2,500 partners and over 35,000 staff in over 110 countries worldwide Grant Thornton UK LLP has been providing actuarial services to the general insurance market for more than ten years Grant Thornton UK LLP. All rights reserved.
17 Why Grant Thornton We have the capacity to deliver. With over 35,000 employees globally and over 4,500 in the UK We are flexible and adaptable. Our core competencies are aligned to established industry challenges Our people are market-leading, industry experts. Our scale and reputation ensures we have access to the best talent Our track record is proven. We count over 200 financial institutions as our clients, which is testament to our delivery capability This is what we do: As one of the UK s largest financial services advisory firms, we have conducted a wide range of engagements across the financial services and consulting spectrum. We have relevant experience We have deep and relevant experience across the financial services sector, particularly within insurance. We already work for many of the world s largest insurers, providing a wide range of consulting and advisory services. We understand this market and the challenges facing insurers today, and will bring this experience to deliver the outcomes and assurance you require. We know how to apply the rules Financial institutions are facing increasing scrutiny, both internally and from the Regulators. We help our clients interpret the regulations published by local Regulators. In the UK, we even assisted the FSA to draft regulations (the better ones!). We therefore know the relevant rules and requirements better than most and, by understanding what sits behind them, are able to take a proportionate and pragmatic view of how to apply them. We have strong brand values We pride ourselves on our independence and telling it like it is. We will provide you with robust advice and opinions, backed up by strong evidence. Where appropriate, we will make practical and workable recommendations to help you strengthen and develop your business. We always seek to work together with our clients to overcome business challenges, delivering value-add solutions that provide longterm benefits. We are credible We are credible and respected within the Financial Services industry, both by our clients and by the Regulators. We have highly experienced, industry-leading experts across the sector and an excellent track record. As a result, most clients return for advice and support, knowing they will receive insightful, unbiased and valued solutions Grant Thornton UK LLP. All rights reserved. 15
18 Contacts Simon Sheaf General Insurance Actuarial Practice Leader T +44 (0) M +44 (0) E Simon Yeung Senior Manager T +44 (0) M +44 (0) E Jinit Shah Manager T +44 (0) M +44 (0) E Grant Thornton UK LLP. All rights reserved.
20 2013 Grant Thornton UK LLP, All rights reserved Grant Thornton means Grant Thornton UK LLP, a limited liability partnership. Grant Thornton is a member firm of Grant Thornton International Ltd (Grant Thornton International). References to Grant Thornton are to the brand under which the Grant Thornton member firms operate and refer to one or more member firms, as the context requires. Grant Thornton International and the member firms are not a worldwide partnership. Services are delivered independently by member firms, which are not responsible for the services or activities of one another. Grant Thornton International does not provide services to clients. This publication has been prepared only as a guide. No responsibility can be accepted by us for loss occasioned to any person acting or refraining from acting as a result of any material in this publication. grant-thornton.co.uk