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Pillar III

The effort and resources involved in achieving this milestone were significant and unprecedented for the insurance industry. But, notwithstanding the deadline being met by the vast majority, firms still need to ask themselves some questions - what is the quality of the information submitted? are the processes and controls around Solvency II reporting efficient and robust? are the QRTs, SFCR and RSR submitted free of error and omissions?

Regulator’s feedback – what went well and what can be improved?

Shortly after these first sets of annual qualitative and quantitative reports were submitted to the Central Bank of Ireland (“CBI”), initial indicators are that the CBI has found numerous errors in the submissions it has so far reviewed. The CBI also:

� recommended that firms undertake appropriate post-implementation reviews of Solvency II reporting, to see what went well and what could have been done better;

� advised that the On-Site Inspection team within the Insurance Supervision Directorate would be focusing on the area of reporting over the coming months; and

� advised that the quality of the data in the supervisory reports is a priority for them.

KPMG’s experience from assisting firms in meeting the recent deadlines and in the areas of external and internal audit indicates that the processes and internal controls, as well as the governance arrangements around supervisory reporting require strengthening. KPMG can help you meet this challenge whilst also providing your board with confidence on the quality and integrity of supervisory and publicly disclosed data.

What next?

Now is a good time to step back and assess whether your firm has the appropriate systems and internal controls to ensure that the information that it submits to the CBI is relevant, reliable, comprehensible and complete in all material respects, as required by the Solvency II Regulations.

How can KPMG help?

KPMG can work with your firm to help review and document the processes and/or strengthen the internal controls around the production and submission to the CBI of supervisory returns, including the SFCR and RSR, to ensure the integrity of the information.

In particular, KPMG can assist as follows:

20 May 2017 marked the first deadline for the submission of Pillar III annual reports - the annual Solvency II quantitative reporting templates (QRTs), Solvency and Financial Condition Report (SFCR) and Regular Supervisory Report (RSR) - to the Central Bank of Ireland by over 200 insurance and reinsurance firms with their head office in Ireland.

� Review the processes, controls and governance arrangements around supervisory and public disclosure reporting;

� Review the appropriateness of the data quality assurance checks, reconciliations and other validation processes carried out prior to the submission of information to the CBI;

� Review both the Reporting Policy and the Public Disclosure Policy to ensure they meet regulatory requirements and are in line with best practice;

� Document, in detail, the reporting processes and controls, as well as any reporting assumptions and reporting adjustments;

� Sample test the data reported in both annual and quarterly QRTs to identify production errors and to assess the quality of the data reported;

� Review the completeness of the reporting submissions, including quarterly and annual QRTs, SFCR and RSR;

� Review the consistency of the data as reported in the annual and quarterly QRTs, SFCR and RSR;

� Review the various documented reporting procedures with a view to identifying gaps and inconsistencies between them;

� Assess the extent of manual data input into Solvency II reporting and the possibility of error;

� Identify weaknesses in the reporting procedures, controls and review processes, both human and IT related, and recommend additional risk management controls;

� Assess the input of and interaction between the Key Functions in producing supervisory reporting; and/or

� Peer review/challenge SRC assumptions and calculations.

KPMG can help Management ensure:

Quality of procedural documentation

� The Public Disclosure Policy and the Supervisory Reporting Policy have been implemented and comply with Solvency II requirements.

� Documented reporting procedures and controls are complete, comprehensive and unambiguous.

� Manual adjustments and reporting assumptions and interpretations are adequately documented.

� Sources of data are adequately identified.

� Data quality and validation checks are adequately documented.

Human and IT resources

� Adequate controls are in place to minimise errors where there’s a high level of manual adjustments required to produce regulatory returns.

� Adequate resources are available, both in terms of numbers and required knowledge and skills.

Data quality

� Consistency between the data reported in the different QRTs (where no taxonomy validations exist).

� Consistency between the data reported in the different QRTs and the data reported in the SFCR, RSR and Financial Statements.

� The integrity of supervisory reporting data.

� The instructions to completing the templates were interpreted accurately.

� The firm complies fully with the regulatory reporting requirements.

Governance

� Clear and documented allocation of roles and responsibilities between the different teams involved in the different elements of supervisory reporting.

� Accountability at a senior management level for regulatory reporting.

� Adequate review of the regulatory reporting process by internal audit.

How can KPMG help? (continued)

Our experience

Our team has extensive experience and knowledge in the following areas:

� Solvency II requirements and guidelines, including the implementing technical standards on submission of information to supervisory authorities;

� Production and review of Solvency II quantitative reporting templates (QRTs), RSRs and SFCRs;

� Calculation of Solvency II TPs and SCR;

� Audit of SFCR templates;

� Peer review of TPs;

� Acting as Head of Actuarial Function;

� Internal controls, governance and risk management frameworks reviews.

Brian Morrissey is a qualified actuary with over 23 years’ experience. He heads up KPMG’s insurance practice in Ireland delivering services to our domestic and international insurance and reinsurance clients across audit, tax and advisory activities. He principally works with life insurance and life reinsurance companies in the areas of financial reporting, regulatory capital reporting, M&A, economic capital and process improvement. Brian acts as Head of Actuarial Function to a number of regulated entities in Ireland, Isle of Man and Bermuda.

John O’Donnell leads our Insurance Regulatory practice. He has over 20 years’ experience in the insurance sector covering prudential, conduct of business, financial control and compliance matters. John’s role includes advising firms on regulatory matters including applications for authorisations, and on best practice in the areas of Corporate Governance, Risk Management, Compliance and Regulatory reporting.

Prior to joining KPMG, Leticia Cashin worked in the Prudential Policy Division of the Central Bank of Ireland where she was Subject Matter Expert on Solvency II regulatory reporting, own funds, valuation of assets and liabilities other than technical provisions, and group supervision. She was also a member of EIOPA’s Reporting sub-group which developed implementing technical standards on reporting to supervisors as well as the Guidelines on reporting and public disclosure.

Prior to joining KPMG, Arcangelo Giannattasio worked as Financial Controller for both life and non-life insurance companies and has specific experience in the implementation and execution of regulatory changes having most recently led a Solvency II reporting implementation project which covered the design of the reporting processes and controls relating to quantitative reporting templates, SFCR and RSR.

© 2017 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland. Produced by: KPMG’s Creative Services. Publication Date: July 2017. (2858)

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Contact us

Brian MorrisseyPartnerActuary

t: +353 1 410 1220e: [email protected]

Leticia CashinManagerRegulatory


John O’DonnellDirectorRegulatory


Arcangelo GiannattasioManagerRegulatory


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