francois kruger solvency assessment and management (sam) … · pwc - assisting you with your sam...

Solvency Assessment and Management(SAM) Implementation

How can PwC assist you?

©2011 PricewaterhouseCoopers (“PwC”), the South African firm. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers in South Africa, which is a member firm of PricewaterhouseCoopers International Limited (PwCIL), each member firm of which is a separate legal entity and does not act as an agent of PwCIL. (11-08619)

Our local PwC TeamVictor MugutoVictor leads PwC ‘s Southern African Insurance practice. He has 28 years of experience working with insurance and financial services clients throughout Southern Africa and as such has a broad knowledge of the industry.

David KirkDavid is a partner in PwC’s Actuarial & Insurance Management Solutions practice. He is the chairman of the SAM Technical Provisions Task Group and is advising and assisting many clients with the adoption of Solvency II and SAM.

Tracy O’ConnorTracy is a senior manager in PwC’s Actuarial & Insurance Management Solutions practice. She is actively involved with the implementation of SAM especially with regards to the approval of internal models and providing SAM training.

Francois KrugerFrancois is a technical partner in our Insurance practice. He is the chairman of the SAM Reporting Task Group and is the engagement partner on life and short-term insurance audits.

Wikus LuusWikus is an associate director of PwC’s Financial Risk Services practice. He is lead Solvency II advisor to a European owned non-life insurer and is currently assisting a life insurer with its SAM implementation. His key involvement is programme integration, risk management and ORSA.

Renasha GovenderRenasha is a senior manager in PwC’s Actuarial & Insurance Management Solutions practice. She has significant SAM and Solvency II consulting experience within the life insurance industry, both locally and in the UK.

Hendrik Jansen van RensburgHenrik is a partner in PwC’s Financial Services System Process & Assurance practice. He has expert knowledge and expertise across all areas of data governance and system processes.

Junaid KhanJunaid is an assistant manager in PwC’s Actuarial & Insurance Management Solutions practice. He brings valuable financial modelling experience to the team and is involved in many audits for both short-term and life insurance companies as well as other financial services clients.

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PwC - Assisting you with your SAM implementation

Internal model pre-application criteria released

Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Publication of SAM roadmap

Draft primarylegislation published

SAMroadmapfeedback

SAM working groups prepare proposal of SAM requirements

FSB develops internal models application process guidance

SAM QIS1 SAM QIS2 SAM QIS3 if required

SAM goes live

Interim measures introduced

Internal models pre-application process

FSB internal model approval

SAM guidance - first draft published SAM guidance - second draft published SAM guidance - final draft published

Standard formulaparallel run

Quarterly unauditedreturns submission

2010 2011

SAM Economic Impact Assessment framework published

2012 2013 2014Timeline

FSB SAM

Roadmap





SAMroadmapfeedback



Companies work towards satisfying internal models pre-applicationcriteria


SAM goes live


Internal models application and review process






2010 2011


2012 2013 2014

PwC can help you with all aspects of your specific SAM requirements including

planning, costing, development, advising, training and providing an independent

review .

GAP ANALYSIS: An analysis of the

PROGRAMME AND CHANGE MANAGEMENT:The implementation of SAM requireseffective programme design and management. A key risk area is change management.

TECHNICAL PROVISIONS AND CAPITAL REQUIREMENTS:Allowing for the principle of proportionality, what is the appropriate methodology to use to determine your technical provisions and SCR?Should you use the standard formula as provided or do your risksrequire a more appropriate set of assumptions?

GOVERNANCE AND OPERATING MODEL: Long term organisational success is dependent on a robust system of governance including the operating model. These systems need to be developed and implemented.

IT INFRASTRUCTURE AND DATA GOVERNANCE: Riskmanagement is heavily reliant on robust infrastructure and sounddata governance. The implementation of best practice systemssuitable to your organisational structure and the nature of yourbusiness is vital.

ORSA: Your organisation needs to develop their "OwnRisk and Solvency Assessment" architecture and the SYSTEMS

DATA

Timeline

FSB SAM

Roadmap

TECHNICAL

PROVISIONS

CAPITAL

MODELS





SAMroadmapfeedback





SAM goes live








2010 2011


2012 2013 2014



review .

GAP ANALYSIS: An analysis of the differences between your current business practices and those required under SAM.

KNOWLEDGE AND SKILLS DEVELOPMENT: The Board of Directors and other officers will have many new responsibilities, as will the functions (risk management, finance, actuarial and internal audit) to whom responsibility will be delegated. They and other staff may need training to equip them to fulfil their respective roles.



INTERNAL MODELS: Are you developing an internal model? Before this model can be used to calculate your statutory capital

requirement, it will need to be approved by the FSB through their Internal Model Approval Process. This assessment will include, amongst others, the use test, statistical quality standards and internal model governance.

QIS AND INTERIM MEASURES: Are you going to take part in the QIS assessments? These will be useful to gain an understanding of the probable impact of the Pillar I requirements on your organisation and assist you in getting ready for the SAM "go live" date. The interim measures for the system of governance disclosures, short-term insurance capital requirements and group regulations are expected to be effective at the start of 2012. Interim measures for risk-based Pillar III statutory reporting are expected to be adopted during 2011.

OPERATIONAL RISK: Many high profile, global failures have been as a result f i ffi i d i ff i i l i k Th id ifi i



ORSA: Your organisation needs to develop their "OwnRisk and Solvency Assessment" architecture and the underlying key processes. These processes will include the identification, measurement, management and reportingof both the internal and external risks to achieving your businessobjectives and the measurement of the appropriate level of capital resources required.

EXTERNAL COMMUNICATION: Does your organisation already have a communication strategy in place? The effective management of risk (including reputational risk) is dependent on effective external communication, whether this be to regulators, policyholders, shareholders, analysts or the public in general.

REPORTING AND DISCLOSURE: The qualitative and quantitative disclosure requirements of SAM are expected to be extensive and diverse. Many systems and processes will be involved in providing the necessary information to complete all internal and external reports as well as

ti th l t di l i t It i i t t t li ith

SYSTEMS

DATA

Timeline

FSB SAM

Roadmap

The journey to

implement SAM will be challenging

for many insurers

TECHNICAL

PROVISIONS

CAPITAL

MODELS





SAMroadmapfeedback





SAM goes live








2010 2011


2012 2013 2014

Contact David Kirk to discuss how we can assist you: tel: +27 (0) 11 797 4544e-mail: [email protected]

PwC is committed to the SAM project and to creating value for our clients and our community. We have an experienced Solvency II team, both locally and globally, and utilise this experience and our extensive knowledge of the insurance industry to advise and assist with the implementation of SAM. PwC are active participants in the SAM Task and Working Groups and actively engage with the industry through public forums and client specific presentations. We also publish regular topical papers through our Thought Leadership initiative.



review .

GAP ANALYSIS: An analysis of the differences between your current business practices and those required under SAM.

KNOWLEDGE AND SKILLS DEVELOPMENT: The Board of Directors and other officers will have many new responsibilities, as will the functions (risk management, finance, actuarial and internal audit) to whom responsibility will be delegated. They and other staff may need training to equip them to fulfil their respective roles.



INTERNAL MODELS: Are you developing an internal model? Before this model can be used to calculate your statutory capital

requirement, it will need to be approved by the FSB through their Internal Model Approval Process. This assessment will include, amongst others, the use test, statistical quality standards and internal model governance.

QIS AND INTERIM MEASURES: Are you going to take part in the QIS assessments? These will be useful to gain an understanding of the probable impact of the Pillar I requirements on your organisation and assist you in getting ready for the SAM "go live" date. The interim measures for the system of governance disclosures, short-term insurance capital requirements and group regulations are expected to be effective at the start of 2012. Interim measures for risk-based Pillar III statutory reporting are expected to be adopted during 2011.

OPERATIONAL RISK: Many high profile, global failures have been as a result of insufficient and ineffective operational risk management. The identification, measurement and management of these risks will require expert knowledge and skills.

REGULATORY AND CORPORATE GOVERNANCE INTEGRATION:IFRS4 Phase II, King III and many other regulatory changes are happening at the same time. Efficient and effective integration is required, both during implementation and thereafter.

REPORTING/

DISCLOSURE

SKILLSQIS



ORSA: Your organisation needs to develop their "OwnRisk and Solvency Assessment" architecture and the underlying key processes. These processes will include the identification, measurement, management and reportingof both the internal and external risks to achieving your businessobjectives and the measurement of the appropriate level of capital resources required.

EXTERNAL COMMUNICATION: Does your organisation already have a communication strategy in place? The effective management of risk (including reputational risk) is dependent on effective external communication, whether this be to regulators, policyholders, shareholders, analysts or the public in general.

REPORTING AND DISCLOSURE: The qualitative and quantitative disclosure requirements of SAM are expected to be extensive and diverse. Many systems and processes will be involved in providing the necessary information to complete all internal and external reports as well as meeting these regulatory disclosure requirements. It is important to ensure compliance with these requirements and that all information disclosed is reliable and accurate.

CAPITAL STRUCTURE OPTIMISATION: The diversification and economy of scale benefits may well result in industry consolidations. Do you need advice on how best to optimise your organisation's capital structure?

SYSTEMS

DATA

Timeline

FSB SAM

Roadmap

The journey to

implement SAM will be challenging

for many insurers

TECHNICAL

PROVISIONS

CAPITAL

MODELS

francois kruger solvency assessment and management (sam) … · pwc - assisting you with your sam...

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