solvency ii for asset management3 attaining solvency ii compliance is anything but a straightforward...
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Solvency II for Asset Management
www.pwc.lu/solvency-2
Our integrated bridge to compliance
March 2015
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Solvency II is a new risk-based framework aimed at harmonising the European insurance business and will replace the current national regulatory framework from 1 January 2016 onwards. Unlike the current solvency regime for (re)insurance undertakings, quantitative and qualitative requirements are now closely linked to the asset side of the insurer’s balance sheet.Asset managers are indirectly impacted by the new Solvency II Directive. Solvency II increases the data and governance demands on insurers and will require them to review and possibly rethink their investment strategies.
Your challenges
1Solvency II in a nutshell
Revisiting investment strategies/asset allocation
Regulatory capital requirements in respect of market risk are based on shocks - their magnitude driving the resulting capital charges - on the assets of insurers. The new capital charges will increase insurers’ focus on the mix between risk and reward within the investment portfolio and lead to investor driven product development.
Timely reporting
Meeting reporting requirements to insurers in a short time frame and a given format will be a key challenge for asset managers, as asset data will be a significant component of Solvency II’s quarterly and annual reports.
Quality and availability of data
A strong data management framework, which is essential for Solvency Capital Requirements calculation, has to be implemented to allow insurers to assess the market risk by applying a “look-through” approach to the valuation of funds. Asset managers/fund administrators will need to provide a wide range of information not currently enclosed in their reporting to insurers. These data will need to be accurate and insurers will expect proper organisation, effective governance and controls in place at asset managers’ level.
Product structuring
Investor requirements
ReportingData
management
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Attaining Solvency II compliance is anything but a straightforward endeavour. Both insurance & asset management industries have to take the appropriate measures to prepare themselves for the challenges involved in implementing the Directive.
Review permanent control procedure over
the organisation
Review asset allocation strategy
Develop SII-compliant reporting
Implement a strong data management framework
Analyse SII efficiency of
investment vehicles
Solvency II compliance
2015
Our approach has been designed to assess all parts of the organisation impacted by Solvency II. Our goal is to identify key areas of improvements, taking into consideration your internal constraints and requirements in order to ensure compliance with Solvency II.
Solvency II: the way forward2Some of the most important steps towards compliance...
...among many more!
2016
Ongoing reporting
3Our approach
1.Assess clients’ needs
2.Define a strategy
3.I Identify the opportunities
4.Evaluate the business case
5.Implement solutions
6.Control the
organisation
ReportingOur experts can advise you - and produce reporting on:• asset classification;• fund reporting based on industry
standards (e.g. BVI);• SCR calculation.
How we can help
AdvisoryOur cross-disciplinary team dedicated to Solvency II, well aware of the stakes and impacts of Solvency II is able to tailor its methodology to support you in:• analysis of regulatory impacts and terminology;• identification of improvement opportunities;• Solvency II-efficient product structuring.
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This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers, Société coopérative, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
© 2015 PricewaterhouseCoopers, Société coopérative. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers, Société coopérative Luxembourg, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.
Why PwC Luxembourg?PwC Luxembourg (www.pwc.lu) is the largest professional services firm in Luxembourg with 2,450 people employed from 55 different countries. It provides audit, tax and advisory services including management consulting, transaction, financing and regulatory advice to a wide variety of clients from local and middle market entrepreneurs to large multinational companies operating from Luxembourg and the Greater Region. It helps its clients create the value they are looking for by giving comfort to the capital markets and providing advice through an industry focused approach.
Our people working alongside you
Marc VonckenPartner, Solvency II Leader
+352 49 48 48 2461 [email protected]
Steven Libby Partner, Asset Management Leader
+352 49 48 48 2116 [email protected]
Matt MoranPartner, Insurance Leader
+352 49 48 48 2071 [email protected]
Carsten Brengel Partner, Asset Management
+352 49 48 48 2187 [email protected]
Oliver SchachingerPartner, Tax
+352 49 48 48 2027 [email protected]
ITA team specialised in IT operations can help you with:• a review of current data processes;• the identification of the scope of relevant data and potential
improvements to meet Solvency II requirements;• recommendations for improving controls in data governance,
data quality, collection and reporting to investors.
Governance, Risk and ControlsOur specialists can help you further the development and enhancement of your risk and governance framework, such as:• risk policy setting;• Risk Management Function and operating model design;• embedding risk management into key business processes;• internal controls framework enhancement;• third-party assurance (i.e. control reports).