SOLVENCY II ARE YOU READY AND COMPLIANT?

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1 SOLVENCY II ARE YOU READY AND COMPLIANT? With 1 January 2016 fast approaching, companies have only a relatively short period of time to get ready for full Solvency II implementation. In advance of this, EIOPA s Preparatory Guidelines bring forward many aspects of Solvency II for (re)insurance companies, and EIOPA is consulting on a range of Implementing Technical Standards and Guidelines to finalise the remaining details. The Milliman Solvency II Compliance Assessment Tool can help companies stay on top of the latest developments and prioritise areas within their Solvency II implementation projects to ensure they are ready for implementation and ongoing compliance with the new requirements. This Tool is an enhancement of Milliman s Solvency II Readiness Assessment Tool which was first developed in Preparatory Guidelines Where to focus valuable resources? Pillar 1 Pillar 2 Pillar 3 Solvency II calculations Assets, liabilities, technical provisions, SCR, MCR Internal models Pre-application to continue Governance Most aspects introduced e.g. risk management system ORSA All companies to conduct a forward looking assessment in 2014; To include: process, report, qualitative and quantitative requirements Interim reporting Annual and quarterly reporting templates (QRTs) Not publicly disclosed XBRL used for reporting to EIOPA Systems automation Reporting & QRTs Risk Management and ORSA FOCUS Internal Models Independent Review Impact on strategy To help companies with this process Milliman has developed a Solvency II Compliance Assessment Tool that is relevant for life / non-life / (re)insurance companies and groups that: Provides companies with a clear assessment of the organisation s readiness for, and compliance with, Solvency II across key areas; Is an easy-to-use reference tool with automatic links to the latest Solvency II regulations; and Identifies work remaining in key areas and assists with project planning.

2 Features of the Solvency II Compliance Assessment Tool: The tool contains a detailed list of the requirements to be met to ensure compliance with the Solvency II regulations. The list of requirements is based on the consolidated Solvency II and Omnibus II Directive, October 2014 Delegated Acts, Implementing Technical Standards (ITS), EIOPA Level 3 Guidelines and Preparatory Guidelines including Quantitative Reporting Templates. It is an easy-to-use tool with automatic hyperlinks to the relevant sections of the Solvency II regulations that provides an invaluable reference tool. The relevant requirements are filtered based on actual business profile. The tool can be completed via full self-assessment or through a collaborative workshop approach. The output includes a summary assessment of readiness and compliance in key areas for both Solvency II and the Preparatory Guidelines and provides input into Solvency II project planning. The assessment includes other factors such as readiness of systems and processes, and strategic considerations such as capital structure and business mix. The assessment can be supplemented with recommendations on next steps and benchmarking against industry best practice. Requirements based on Level 1 - Directive Benefits Assess Readiness & Compliance for Solvency II Level 2 - Delegated Acts and ITS Level 3 - Guidelines Solvency II Compliance Assessment Tool Prioiritise key areas and input to planning Invaluable reference tool for regulatory requirements Preparatory Guidelines Enable Independent Review and Benchmarking

3 Input interface The easy-to-use interface allows users to assign a level of readiness as well as compliance to each Solvency II requirement at the click of a button. The requirements are clearly set out with links to the relevant sources to allow users to easily access the more detailed requirements if desired. The assigned scores can be supplemented by additional comments and questions to allow other users and reviewers better understand the company s level of compliance for each requirement. In addition the tool offers project planning functionality to allow users to allocate resources and timelines to any areas of outstanding work. Questions based on a thorough analysis of Solvency II regulations Shows weighted score and progress bar to indicate percentage of questions completed Self-assessment score on a scale of 1-5. Each score represents a different level of readiness Supporting comments can be included to explain why a particular score was given Hyperlinks to relevant articles / guidelines Project Planning Information (optional): Allows users to record work to be done by person

4 Summary dashboard The summary dashboard provides a clear visual summary. At a glance, users can gauge their level of readiness and compliance for the various Solvency II requirements. Progress bars highlight any questions that have not been completed while embedded links allow users and reviewers to easily navigate to each requirements page to review the requirements and answers provided in more detail.

5 Group tool and dashboard The group dashboard provides an aggregated summary of subsidiaries levels of readiness and compliance which allows senior management of groups to analyse the level of readiness and compliance across the group. Groups can allocate a weighting to each subsidiary to arrive at the average level of readiness and compliance across all subsidiaries. They can also gauge the group s level of readiness and compliance for meeting group requirements with the separate group tool. Summary Solvency II Group Compliance Assessment for XYZ Solvency II Readiness Assessment for Group XYZ GROUP LEVEL Group Specific Requirements Weighted Average Solo Requirements Pillar 1 P1 - Assets and Liabilities P1 - Technical Provisions P1 - Data Quality P1 - Assumptions P1 - Own Funds P1 - Capital Requirements P1 - Internal Models Pillar 2 P2 - Governance P2 - Risk Management System (RMS) P2 - Own Risk and Solvency Assessment (ORSA) Pillar 3 P3 - Solvency and Financial Condition Report (SFCR) P3- Regular Supervisory Report (RSR) P3 - QRT - Annual solo P3 - QRT- Quarterly solo Other O - Strategic considerations Summary SUBSIDIARY LEVEL Company 1 Company 2 Company 3 Weighting 33.33% 33.33% 33.33% Pillar 1 P1 - Assets and Liabilities P1 - Technical Provisions P1 - Data Quality P1 - Assumptions P1 - Own Funds P1 - Capital Requirements P1 - Internal Models Pillar 2 P2 - Governance P2 - Risk Management System (RMS) P2 - Own Risk and Solvency Assessment (ORSA) Pillar 3 P3 - Solvency and Financial Condition Report (SFCR) P3- Regular Supervisory Report (RSR) P3 - QRT - Annual solo P3 - QRT- Quarterly solo Other O - Strategic considerations

6 Project planning dashboard The project planning dashboard provides users with a high-level project plan setting out the amount of work needed to address remaining issues in each area of Solvency II. This work can be allocated to different individuals and across the interim period in advance of the full implementation of Solvency II.

7 WHY MILLIMAN? Our consultants have been involved in advising our clients on Solvency II issues since its conception. We have undertaken a wide range of work for clients across all three Pillars of Solvency II including: Extensive experience of modelling of technical provisions and SCR calculations and Independent Review of technical provisions and SCR; ABOUT MILLIMAN Milliman is among the world s largest providers of actuarial and related products and services. The firm has consulting practices in life insurance and financial services, property & casualty insurance, healthcare and employee benefits. Founded in 1947, Milliman is an independent firm with offices in major cities around the globe. Acting as Actuarial Function for the Preparatory Phase; Assisting with the design, calibration, validation and documentation of Internal Models; Design and implementation of Risk Management Systems, Own Risk and Solvency Assessment, and Solvency II policies; Providing Solvency II training courses for senior management and directors; Advising on Pillar 3 reporting requirements; Milliman also has a range of software available to support companies in their implementation of Solvency II including: MILLIMAN IN EUROPE Milliman maintains a strong and growing presence in Europe with more than 250 professional consultants serving clients from offices in Amsterdam, Brussels, Bucharest, Dublin, Dusseldorf, London, Madrid, Milan, Munich, Paris, Stockholm, Warsaw, and Zurich. milliman.com o o o Vega: An automated Pillar 3 reporting and standard formula aggregation system (link) Solvency II Compliance Assessment Tool (link) Navi: A liability proxy modelling tool (link) As a result, we have a wide range of experience that can be brought to bear to benefit your business. Above all, we remain focussed on efficiency and practical delivery. CONTACT If you would like to arrange a free demonstration of the Solvency II Compliance Assessment Tool please contact Andrew Kay, or your usual Milliman consultant. Andrew Kay [email protected]