Presentation by Curt Burmeister, Head of Buy Side Products, IBM Risk Analytics which highlights strategies and challenges for European insurers at different stages of their solvency II journey with a focus on pillar 1, 2 & 3

1. Strategies and challenges for
insurers at different stages in the
Solvency II journey
© 2014 IBM Corporation
Curt Burmeister
Head of Buy Side Products
IBM Risk Analytics

2. Source – E&Y European Solvency II Survey 2014
2 © 2014 IBM Corporation

3. Source – E&Y European Solvency II Survey 2014
3 © 2014 IBM Corporation

4. © 2014 IBM Corporation
What are people working on?
 Regulatory Approval Process
 Pillar 1
– Updating calculations and methodology
 Pillar 2
– Model Governance
– Data Governance for Standard Model
 Pillar 3
– Regulatory Reporting
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5. © 2014 IBM Corporation
What are people working on?
The Regulatory Approval Process
– The back and forth with regulator is on-going process
– Different regulators have different requirements (some examples)
Insurers must participate in a field test in 2014 to test Omnibus II measures
will be tested
Firms are required to submit an ORSA report during 2014
Companies must report QRTs on a solo basis in XBRL format in 2014
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6. © 2014 IBM Corporation
What are people working on?
Omnibus II clarified many issues but some “regulatory uncertainty” remains
 Extrapolation of discount curves and UFR
 Matching adjustment
 Volatility adjustment
 Treatment of credit spreads for government bonds
 Spread and concentration risk for Standard Formula sub-modules
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7. © 2014 IBM Corporation
What are people working on?
Model governance
 Documentation of existing models
 Policies for model standards, changes, updates, and validation
 Control processes to manage (and audit) updates to models
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8. © 2014 IBM Corporation
What are people working on?
Data governance for Standard Model
 Controls for uploading and approving data
 Policies for changing and updating data
 Ability to run ‘what-if’ SCR with different data inputs
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9. © 2014 IBM Corporation
What are people working on?
Regulatory Reporting will be a major focus into 2015
 Quantitative Reporting Templates (QRTs)
 Regular Supervisory Reporting (RSR)
 Solvency and Financial Condition Report (SFCR)
 Manual Reporting Process
 Automated Reporting Process
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10. © 2014 IBM Corporation
What are people thinking about?
 Management reporting
 IT, Cloud, & Mobile
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11. © 2014 IBM Corporation
What are people thinking about?
Management reporting - how to embed Risk Management into the business
steering
 Risk mitigation and hedging
 Asset allocation and portfolio management
 Product development and management
 Types of management reports to facilitate decision-making
 What-if and stress testing of Management reports
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12. © 2014 IBM Corporation
What are people thinking about?
IT, Cloud, & Mobile
 Reducing IT costs is a big topic
 Many firms are beginning to look at the Cloud as a cost effective way to run
analytics
 Mobile as a platform for delivering reports
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13. © 2014 IBM Corporation
What are people thinking about?
Cloud Computing
 Aligns hardware costs with usage
 Provides flexibility to dynamically provision hardware
 Area of innovation for software vendors and service providers
 Large adoption of Cloud by other industries
 Availability of insurance solutions on the Cloud
 Data storage and transfer
 Data Security
 Regulatory Constraints
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14. © 2014 IBM Corporation
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