Customer SAP Insurance Analyzer Strategic Solution for Finance and Risk. Armin Fischer, Product Owner Insurance Analyzer April 13, 2016

Transcription

1 Customer SAP Insurance Analyzer Strategic Solution for Finance and Risk Armin Fischer, Product Owner Insurance Analyzer April 13, 2016

2 Legal Disclaimer The information in this document is confidential and proprietary to SAP and may not be disclosed without the permission of SAP. This document is not subject to your license agreement or any other service or subscription agreement with SAP. SAP has no obligation to pursue any course of business outlined in this document or any related presentation, or to develop or release any functionality mentioned therein. This document, or any related presentation and SAP's strategy and possible future developments, products and or platforms directions and functionality are all subject to change and may be changed by SAP at any time for any reason without notice. The information on this document is not a commitment, promise or legal obligation to deliver any material, code or functionality. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement. This document is for informational purposes and may not be incorporated into a contract. SAP assumes no responsibility for errors or omissions in this document, except if such damages were caused by SAP intentionally or grossly negligent. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates, and they should not be relied upon in making purchasing decisions SAP SE or an SAP affiliate company. All rights reserved. Customer 2

3 Agenda Introduction Insurance Analyzer Insurance Analyzer Source Data Layer (SDL) Concept & Functionalities Primary Objects Insurance Analyzer Process & Methods Layer Concept & Functionalities Insurance Analyzer Result Data Layer (RDL) Concept & Functionalities SAP Accounting for Insurance Contracts Overview & Example SAP Solvency Management for Insurance Overview & Example Mass Performance Test: Insurance Analyzer 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 3

4 Introduction Insurance Analyzer

5 SAP Insurance Analyzer is the core of an integrated finance & risk approach Visualize and Report Source and Result Data SAP GL SAP Business Warehouse SAP Business Objects Non-SAP Consolidate and Store Result Data Calculate Result Data Consolidate and Store Source Data Extract, Transform, Load Source Data Non-SAP Calculation Engines SAP Calculation Engines SAP Insurance Analyzer Process Insurance Transactions SAP Core Insurance Non SAP Systems 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 5

6 which is the foundation for business solutions Solutions SAP Accounting for Insurance Contracts SAP Solvency Management for Insurance SAP GL Non-SAP Calculation Engines SAP Calculation Engines SAP Business Warehouse AL SAP Business Objects Non-SAP SAP Insurance Analyzer RDL PML SDL SAP Accounting for Insurance Contracts SAP Solvency Managemt. for Insurance SAP Core Insurance Non SAP Systems 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 6

7 Advantages of the solution approach Advantages Integration of Finance- and Risk Subledger Approach for Assets and Liablities Integration of SAP GL & other reporting systems Multiledger Capabilities Versioning and Drill-Down Full Audittrail 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 7

8 Finance and Risk Data Platform for Financial Services Foundation for SAP Insurance Analyzer Data Modeling and Governance Data Access Interface Data Storage, Reference Data Model Data Integration and Quality Management Single-Source of truth for Finance and Risk data in Banking and Insurance Fulfillment of internal and external compliance rules for data management Open data foundation for SAP and non-sap applications and BI tools Data Provisioning Interface Finance and Risk Data Platform 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 8

9 Architecture Cornerstones Finance & Risk Data Model Finance & Risk Data Platform The Data Access Interface provides business services to read data from the Propagation Layer. Data Modelling and Governance Data Access Interface Data Storage, Reference Data Model Source Data Layer Results Data Layer Data Integration and Quality Management The Propagation Layer is the single-source of truth in which all data of the F&R data platform is materialized. Acquisition Layer Data Provisioning Interface Source Data 1 Source Data 2... Source Data 3 The Provisioning Interface provides business services to write data into the Propagation Layer Source System Source Appl. 1 Source Appl. 2 Source Appl SAP SE or an SAP affiliate company. All rights reserved. Customer 9

10 Source Data Layer

11 Concept and functionality of the Source Data Layer Single source of truth Collect data on single transaction level required for analytical purposes and make it available to the Analytics Modules Flexibility to apply changes and enhancements Tools for transferring data from source systems Interfaces to Analyzers and third party products Tools for Source Data modeling Physical data storage 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 12

12 Concept and functionality of the Source Data Layer Versioning and historization Procedure for aggregation of source data Archiving function Procedure and process monitoring Generation of audit trails to trace and verify data Correction server for detailed documentation of changes to data Management of metadata Access security and authorization concept 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 13

13 The SDL Primary Objects The SDL data model is defined by a fixed number of Primary Objects for mapping business processes and business concepts Primary objects are provided to store data for units of data that are logically related. They allow customer-individual data modeling based on predefined structures. Primary objects are used to prepare data for read access by other IFRA components SAP SE or an SAP affiliate company. All rights reserved. Customer 14

14 The 14 SDL Primary Objects used by Insurance Analyzer Position Master Data Aggregation Object Physical Assets Financial Instrument Account Hedging Relationship Financial Transaction Business Transaction/ Op. Event Market Data Country Business Partner Organizational units Positions Generic Market Data static (master data) dynamic (flow data) 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 15

15 Templates are used for modelling insurance contracts Templates are used to define the field structures in customizing. They contain a structure of predefined Service Modules. The Segmentation Service is used to assign Business Content or own Characteristics. Template Category Service Module Template Basic Data Partner Data Attributes Cash Flow Financial Conditions Template Version Service Module Segmentation Service Characteristics structures 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 16

16 Source Data Layer: Template Hierarchies Versions A template version consists of the actual settings for a template. In particular, in template versions, you make settings for individual fields. A template can have one or more template version. When adding or deleting fields from a template, a new template version has to be defined SAP SE or an SAP affiliate company. All rights reserved. Customer 17

17 Templates for policies and reinsurance treaties Templates for policies and reinsurance treaties Processing is performed per coverage or section Contains attributes relevant for portfolio assignment Contains relevant key figures (premium sum, SI) Policy 1:n Policy Contract 1:n Policy Coverage 0:n Coverage Option 1:n Participation Treaty 1:n Period Generation 1:n Section Section Item 1:n 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 18

18 Templates for Business Transactions Templates for business transactions Business Transaction Type 1:n Contains link to the policy Contains relevant key figures (payable/receivable amounts, ) Item Type 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 19

19 Data Load Layer (DLL) & Outbound Interfaces

20 SAP Data Load Layer: Architecture Overview SAP Insurance Analyzer Source Data Layer (SDL) Result Data Layer (RDL) SAP Data Load Layer (DLL) Loading Remark: The DLL can be implemented in the embedded SAP BW of Insurance Analyze or in a separate SAP BW SAP BW Data Store Object Data Store Object Data Store Object Transformation Results Transformation Extraction Results Data Store Object Data Store Object Data Store Object Data Store Object Data Store Object Data Store Object Extraction Source Systems Operational System A Operational System B.. Operational System xyz 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 21

21 Process and Method Layer

22 Concept and functionality of the Process and Method Layer The PML is the place where the actual IFRS and Solvency II functionality is carried out The PML brings all the Multi-Ledger Multi-GAAP Multi-Currency functionalities that are needed for different Finance and Risk purposes The PML can trigger valuations with built-in pricing engines or external calculation engines The SDL is the single source of truth for the PML 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 23

23 Result Data Layer

24 The concept of the Result Data Layer is to store result data determined by Insurance Analyzers submitted by external systems (e.g. Moses) mostly on single transaction level and in a harmonized and integrated way to enable reconciliation and auditing and to make these data available for further processing and for reporting purposes to be therefore the single source of truth and to support different kind of service functions all this under the premise to both include insurance best practices but also flexibility to apply changes and enhancements 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 25

25 SAP Accounting for Insurance Contracts

26 (Insurance) Contracts Contracts issued by entity Contracts held by entity Insurance Contract (issued by entity) Investment Contract with discretionary participation feature Reinsurance Contract (issued by entity) Reinsurance Contract (held by entity) (issued by entity) Relevant for IFRS SAP SE or an SAP affiliate company. All rights reserved. Customer 27

27 Policy Lifecycle Process new Policy Recognition Initial Measurement Presentation and Disclosure Subsequent Measurement Presentation and Disclosure Derecognition 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 28

28 Input for initial measurement Contractual Service Margin Expected contract profit Calculation in Insurance Analyzer Fulfilment Cash flows Risk Adjustment Assessment of the uncertainty about the amount of future cash flows Discounting Adjustment that converts future cash flows into current amounts Future Cash Flows Expected cash flows from premiums, claims and benefits Actuarial System Market Data Provider Actuarial System 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 29

29 Process steps used for Initial Measurement of Insurance Contracts 1 Set SDL Timestamp 2 Execution of Source Data Aggregation 3 Process Accounting Events 4 Post External Business Transactions 5 Update Secondary Business Transactions 6 Start Key Date Valuation 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 30

30 Accounting Results are stored in the Result Data Layer SDL All results are stored in the Result Data Layer in a table called SF: Posting Documents Results are different for each process: Post External Business Transactions (PEBT) posts the external business transactions to SF Update Secondary Business Transactions (USBT) performs IFRS 4 Phase II valuations and stores the results in RDL result view SF Booking of operational business transactions from source systems IFRS 4 Phase II valuation and bookings 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 31

31 The Use of the GL Connector The function of the GL Connector is to aggregate near time, at least on a daily base, the postings performed in AFI and to send them to the General Ledger The postings are aggregated under consideration of characteristics. Examples are partner legal entity and business segment As the main concept is to maintain a thin GL and keep the details in the AFI subledger the contract or the portfolio number is not forwarded to GL! A drill through is provided from the General Ledger so the audit trail is available to the single AFI postings 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 32

32 GL Connector Process Prepare GL Document (daily) The general ledger documents are prepared daily, which ensures the extraction of relevant data from the Results Data Layer to the general ledger documents. Simultaneously, the G/L documents are checked in terms of consistency. The functionality of integration belongs to the general ledger connectivity. It is required to prepare the G/L documents and necessary before they can be sent. Send GL Document (daily) By using the Send Document function, the GL documents are send per accounting system and legal entity via the SAP NetWeaver Exchange Infrastructure (XI) to the general ledger. Documents monitoring The status of the sent documents can be checked by using several tools available in the system: Display General ledger documents (/BA1/B8_GLC_UI) XI message monitoring (SXI_MONITOR) Display Post-processing Order (/SAPPO/PPO3) 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 33

33 Process steps used for Subsequent Measurement 1 Set SDL Timestamp 2 Execution of Source Data Aggregation 3 Process Accounting Events 4 Post External Business Transactions 5 Update Secondary Business Transactions 6 Start Key Date Valuation 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 34

34 Key Date Valuation Runs The term key-date valuation defines a bracket over three aspects than can be separated from a business perspective. At a given key date the following information needs might to be satisfied : Adjustment (update) of operational accruals and deferrals in order to provide an up-to-date interest and commission result Adjustment of product-specific valuation components (e.g. Amortized cost adjustment, Fair Value adjustment, Hedge Adjustment, Risk Provisioning, Unwinding Effect etc.) in order to provide point-in-time presentation of the balance sheet Determination of effects due to foreign-currencies in order to provide an up-to-date reporting on foreign currency positions and result from these 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 35

35 SAP Solvency Management for Insurance

36 Business Background Structure of SCR Model Approach 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 37

37 Business Background Calculation principles of Basic Solvency Capital Required (BSCR) Basic SCR Capital (BSCR) consists of following 6 risk categories: Market Risk Health Risk Default Risk Life Risk NON-Life Risk Risk for Intangible Assets Details: Aggregation of above risk categories will be done by applying correlation technique based on given correlation matrix Calculation should be done on a gross basis and net basis including loss absorbing capacity of technical provisions In modular approach BSCR calculation will be done by aggregating risk categories using correlation technique (gross/net) only material loss absorbing capacity should be considered 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 38

38 Solvency II Requirements and solution coverage Solvency II Pillar I: Quantitative Requirements Calculation of required Solvency Capital (SCR, MCR) Solvency 2 Balance Sheet SAP Solvency Management for Insurance Pillar II: Qualitative Requirements Own Risk and Solvency Assessment (ORSA) Governance System Pillar III: Reporting and Disclosure Requirements Report to Supervisor (RSR) Solvency and Financial Condition Report (SFCR) Quantitative Reporting Templates (QRTs) 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 39

39 Risk Processing: Main Risk Process Initial Valuation of interest bearing financial instruments, financial transaction, treaties and policies based on derived yield curve incl. Look-Through Approach for funds (unshocked scenario) (gross/net) Valuation based on upwards shock scenario of above instruments using derived market data scenario reflecting model-given relative upwards interest changes (gross/net) Valuation based on downwards shock scenario of above instruments using derived market data scenario reflecting model-given relative downwards interest changes (gross/net) Aggregation of results of model-given Upwards/Downwards shocks and determination of SCR capital for Interest Rate Risk module Recalculation of all hierarchy nodes of Solvency II standard approach 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 40

40 Mass Performance Testing

41 Mass Performance Test Scenarios & Scope Accounting for Insurance Contracts (IFRS4) Building Block Approach (BBA) Solvency Managment for Insurance (Solvency II EIOPA Standard Approach) Counterparty Default Risk Sub-Module Volumes Smoke Test: Tuning Test: Medium Size Test: High Volume Test: Policies Policies Policies Policies 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 42

42 Mass Performance Test Project Organization Name Role Company Klaus Scholten Program Manager IBM Louise Cooke Development Head Nexontis Justine Angeles Project Lead Mass Performance Test Nexontis Klaus Mitulla Performance Expert & technical Support Insurance Analyzer Nexontis Paul DeLessio Technical Engineer Expert IBM Paul Lekkas Head of Performance Team IBM Seewah Chan Technical Engineer Expert IBM Johannes Schützner DB2 Expert IBM Armin Fischer Product Owner Insurance Analyzer SAP Volker Schulz Program Manager Insurance Analyzer SAP 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 43

43 Mass Performance Test Project Timelines Phase 1: Prework: Project/System Setup Data Preparation Smoke Test Phase 2: Smoke Test Cycle (5K) System Optimization Adaption Custom.& BC Phase 3: TuningTest Cycle (50K) Validation System Config. Optimization Process Orchestration & Application Phase 4: Medium Test Cycle (250K) Validation Scaling Phase 5: High Volume Test Cycle based 1 million objects Phase 6: Postwork Creation Whitepaper Roundup Meeting Checkpoint Today 2016 SAP SE or an SAP affiliate company. All rights reserved. Customer 44

44 Mass Performance Test Hardware Landscape for Insurance Analyzer Database Server z N63 z/os 2.1 DB2 11 Application Server IBM Power AIX 7.1 SAP NW 7.11 SAP IA SP5 FINBASIS 700 / FSAPPL 400 DASD Storage IBM DS Gigabit Ethernet Network 10Gb OSA adapters for z13 10Gb Ethernet to Power 780 Insurance Analyzer is implemented using Shared Object Memory(SOM) & Database Table (DBT) approach and SOM is limited to a single SAP node and application server, whereas DBT approach allows multiple SAP instances and application servers SAP SE or an SAP affiliate company. All rights reserved. Customer 45

45 Mass Performance Test First Conclusions Insurance Analyzer Test run in Accounting scenario executes total about 4 Million Bookings. Monthly Bookings are normally below 1 Million. In general Insurance Analyzer s workload is mainly application server centric, with over 80% of time spent on the Application Server Side. No significant performance issue regarding Data Consumption (SDL/RDL selection) and Data Load SAP SE or an SAP affiliate company. All rights reserved. Customer 46