solvency ii 2011 ii 18-1.pdf · 2018. 12. 3. · national bank (malawi) national commercial bank...

Solvency II 2011

As we emerge from the global financial crisis, financial service regulators are seeking to ensure the recovery is sustainablefor consumers, businesses and the wider society. One of the solutions that has been developed is Solvency II, theupdated set of regulatory requirements for insurance firms that operate in the European Union. This Directive aims toensure that there is adequate understanding by insurers of the inherent business risks in the industry and that there thenis the allocation of sufficient capital to cover them.

As experts in risk management for the financial services sector, we have been through this before with Basel 2 for thebanking sector and are still delivering similar projects around the world today. Like Basel, Solvency II has its Pillars, a focuson risk management, data and models, and quantitative mathematical analysis combined with qualitative techniques andbusiness acumen. Clearly to meet these requirements and avoid the failures of the banking sector, insurers must alsoembed robust and sound risk management and risk-based internal audit approaches. As with the Basel requirements,capital management, the IMAP, a risk self-assessment process (Own Risk and Solvency Assessment, ORSA) perhapsbest approached with an ICAAP, and rigorous stress testing are all part of the Solvency II implementation process forinsurers, large and small which must be completed by 2012. The goal is not only to achieve a reduced capital charge,but also a sustainable risk-managed business able to grow and maintain its competitiveness.

Although the Solvency II regulation is formally in a consultation phase, the countdown to 2012 means that Europeanregulators are insisting on a demonstration of project commencement right now. In the UK alone over 460 insurancecompanies have registered for Solvency II of which 90 are conducting their Internal Model Approval Process (IMAPs).How is it going? Anecdotal evidence is that one of the main reasons that insurers are struggling to properly completeand submit their IMAPs to the regulator is that risk management is still embryonic in some parts of the insurance sector.Often it is the IT departments that appear to have taken the lead in running Solvency II projects as a reaction to thedata drivers. While actuaries within insurance companies understand insurance risk, the risk data that arises from businessstreams is often not properly understood and data quality can easily becomes an issue. Data outputs and data analysisof the model are often shown to be inadequate with differences between model results under QIS4 and QIS5 beingboth uncorrelated and explained.

As a mature risk management house we understand the business, risk management and regulatory compliance challengesthat result from such an organisation wide project implementation. Risk Reward’s Board and senior management levelexperts have been advising and training financial institutions successfully, as part of small, focused multidisciplinary teams(risk managers, accountants, quantitative analysts, compliance and regulatory specialists) , across business types, companysizes and internationally for more than 25 years. We roll up our sleeves on day one with immediate value-added service.

Why not challenge us to add value to your business? Please call us for a prompt and friendly reply.

More information:www.riskrewardlimited.com

Dennis Cox, Chief Executive Officer

Contentspage

About Risk Reward 2Global Markets & Clients 3Expertise, Experience & Know-how 4Overview 5Implementation and Compliance 6Adding Value to your business 7In-house Training Courses 8For your consideration 9


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Solvency II Insurance, Reinsurance, Bancassurance

Risk Reward Limited – About UsLeading global supplier of risk management training services

Founded in 2002 by our CEO, Dennis Cox, Risk Reward is a leading global supplier of risk management advisoryand tailored training services to the banking and financial services sectors in developed and emerging markets.Our specialist services are delivered directly to banks and financial institutions, as well as via trusted and respectedintermediaries in Africa, Europe, the Middle East, Asia and the Americas. With a Head Office in the City ofLondon we apply the highest standards of service internationally to all of our assignments.

Technical Advisory ServicesOur business offers a wide range of advisory and training services delivered by a team of over 600 consultants.Each of our consultants are experts in their fields with 20-30 years of relevant industry experience, ensuring thatour services add value from day one eliminating the usual consultant learning curve delays. In every case ourconsultants are able to make suggestions based on their own considerable experience of dealing successfully withsimilar challenges in their own careers. This often results in better, shorter and more cost effective results.

Accredited Training ServicesRisk Reward are official training providers for :

We conduct training to a wide variety of accredited and certified programmes and qualifications focus onworldwide with a emerging markets. We also develop tailored programmes to meet the specific demands ofour clients in international markets.

To date we have helped over 300 top banks and financial institutions, including central banks, to train and improvethe performance of their management and staff. Our expert trainers and courses are considered to be amongthe best in the industry and we have been recognised as finalists for the London Export Awards 2010,exemplifying our place as one of UK's premier international businesses.

● The Chartered Insurance Institute (CII)

● The Institute of Chartered Accountants inEngland & Wales (ICAEW)

● The Chartered Institute of Securities andInvestment (CISI)

● The Professional Risk Managers'International Association (PRMIA)


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Global Markets & Clients

AfricaAfrican Banking CorporationBanque africaine de développement Barclays Bank (South Africa)BDO (Mauritius)Cavmont Capital Bank (Zambia)Central Bank of NigeriaChaseBank (Kenya)Citizens SME Agency (Botswana)Commercial Bank (Zambia)Commercial International Bank (Egypt)Development Bank (Rwanda)Développement Bank PHB (Nigeria)Eco Bank (Ghana)Egyptian Banking Institute (Egypt)Exam Ready (South Africa)Finance Bank (Zambia)First Atlantic Merchant Bank (Ghana)First Bank (Nigeria)First Rand Bank (South Africa)FITC - Financial Institution Training

Centre (Nigeria)Guaranty Trust Bank (Nigeria)HFC Bank (Ghana)Housing Finance (Uganda)Indefund (Malawi)Intercontinental Bank Plc (Nigeria)Intermarket Banking (Nigeria)Investment Banking & TrustInvestrust Bank (Zambia)Investec (South Africa)LEFISA Ventures (Lesotho)National Bank (Malawi)National Commercial Bank (Saudi

Arabia)National Investment Bank (Ghana)Nedbank (South Africa)Nigeria Capital Market InstituteOmnifinance (Cote D'Ivoire)Press Trust (Malawi)Prudent Bank (Nigeria)RawBank (Congo)Rokel Commercial (Sierra Leone)Sierra Leone Commerce BankStandard Corp. & Merchant BankTrust Bank (Ghana)UBA (Nigeria)UBA Capital (London)Union Bank (Cameroon)Zenith Bank (Nigeria)

Russia & CISAlfa Bank (Ukraine)Bank TuranAlem (Kazakhstan)Banking institute of ArmeniaCentral Bank of ArmeniaEurasian Bank (Kazakhstan)HSBC (Armenia)Im Bank (Russia)Prometey Bank (Armenia)Raiffeisen Bank (Russia)Troika Dialog (Russia)

UK & Ireland/EuropeABN-AMRO Bouwfonds (Netherlands)ACCA (UK)AccBank (Ireland)Association of Cyprus Commercial BanksBanco de SabadellBanco Santander TottaBank Julius Baer & Co Bank Mandiri Ltd (Cyprus)Bank of Bermuda (Luxembourg)Bank of ChinaBank of England (UK)Bank of IrelandBank Saderat plcBank Sepah International plcBarclays Bank plcBNP ParibasBrewin Dolphin Bell Lawrie LtdBritish Bankers' AssociationBrunel University (UK)C Hoare & CoChristiania Bank (Norway)City Speakers International (UK)Clariden Bank (Switzerland)Combined Insurance (UK)Commerzbank AGCo-operative Bank (UK)Co-operative Financial ServicesCoutts & CoCredit Agricole Asset ManagementCredit Suisse (Switzerland)D C Gardner (UK)Danske Bank A/SDepfa Bank PlcDeutsche Postbank AGDexia Bank Belgium London BranchDNB ASA (Norway)Euromoney (UK)EuroNBank (Greece)Eximbank (Romania)Fortis Bank (Netherlands)Habib Bank (Switzerland)Harrods Bank LtdHrvatska Postanska (Hungary)HSBC (UK)HVB Bank (Czech Republic)ICAEW (UK)ICICI Bank (India)Im Bank (Russia)ING Group (Netherlands)International Development (Eire)International Moscow Bank (UK)Investec (UK)JP Morgan Chase (UK)Kredietbank (Luxembourg)Laiki Bank (Cyprus)Landsbanki (Iceland)Lloyds Banking GroupMISMKB Bank (Hungary)National Australia Bank LtdNatixisNederlandse Waterschapsbank

(Netherlands)Nomura Bank International PlcNordea (Finland)Nordic Investment Bank (Norway)PWC (Romania)

Rabobank (Netherlands)Raiffeissen Zentralbank (Austria)Royal Bank of Scotland (UK)Russian Commercial Bank (Cyprus)Samba Financial GroupSampo PlcChartered Institute for Securities and

Investment (UK)Santander BankSociété GénéraleStandard Chartered Bank (UK)Swedbank (Sweden)The Bank of Tokyo Mitsubishi UFJ LtdThe Royal Bank of Scotland PlcTotal Solutions (Netherlands, Dubai)Unisys (UK)Yorkshire Building Society

Middle EastAbu Dhabi Audit AuthorityAbu Dhabi Centre for Corporate

GovernanceAbu Dhabi Investment AuthorityAl Rajhi Bank (Saudi Arabia)Al-Ahli Bank (Kuwait)Al-Mashreq Bank (Dubai)Al-Mujaz (Saudi Arabia)Arab Banking CorporationArab National Bank (Saudi Arabia)Bahrain Institute of Banking

and FinanceBank AudiBanque Saradar (Lebanon)Banque Saudi Fransi (Saudi Arabia)Byblos Bank (Lebanon)Commercial Bank of KuwaitCommercial International Bank (Egypt)EFG-Hermes Fund ManagementEngro Polymer & Chemicals LimitedEnhance (Dubai)Finance Al Ain International GroupFinance Gulf Takaful Insurance CoFinancial Control Guaranty

Trust AssuranceFirst Gulf Bank (Dubai)Fleming Gulf (Dubai)Fransabank (Lebanon)Global Investment Bank (Kuwait)Institute of Banking Studies (Jordan)Institute of Banking Studies (Kuwait)Investments Emirates Int’l

Investment CoIslamic Development Bank (Jeddah)Israel Discount Bank LtdNational Bank of Abu DhabiNational Bank of KuwaitNational Commercial Bank (Kuwait)Red MoneyRiyad Bank (Saudi Arabia)Samba Financial GroupSaudi Arabian Monetary AgencyTotal Solutions

AsiaABN-AMRO (Hong Kong, Singapore)Banco Nacional Ultramarino (China)Bank Negara (Malaysia)Bank of Baroda (India)Bank of ChinaBank Negara Indonesia (Persero)Bank TuranAlem (Kazakhstan)Barclays Private Banking (Hong Kong)Canara BankDFCC (Sri Lanka)Dhaka Bank Ltd (Bangladesh)Dutch Bangla Bank (Bangladesh)Ethan Hathaway (Hong Kong)ICBC (Hong Kong China)L B Finance Ltd (Sri Lanka)Mercantile Bank Ltd (Bangladesh)Mitsubishi UFJ Securities

International PlcMonetary Authority (Hong Kong)Monetary Authority (Singapore)National Development Bank

(Sri Lanka)Norinchukin Bank (Japan)Orient Financial Services (Sri Lanka)Oriental Bank of Commerce (India)Overseas Chinese BankingPremier Bank (Bangladesh)PT Bank BNI (Persero)RedMoney (Malaysia)State Bank of Bikaner & Jaipur (India)Swiss Reinsurance (Hong Kong)TBK (Singapore)Whitestone (Singapore)

AmericasBBank of AmericaCentral Bank of BrazilCentral Bank of MexicoCitizen's BankComerica IncEnbridge IncFederal Reserve Bank of DallasFirst Citizen's BankFirst Niagara BankFederal Reserve Bank of New YorkFRB of New YorkFreddie MacING GroupJohnson Financial GroupLance IncLegg Mason & CoMISMorgan StanleyNorthern TrustProtivitiState Street

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Expertise, Experience & Know-how

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John Webb MA, FCCA, CFE

Director of Solvency II

John Webb, FCCA, having mastered the Solvency II European Directive, leads the SolvencyII financial services team. This comprises risk management and risk systems specialists, financialmodellers, internal auditors, compliance and regulatory experts, project managers with BaselII three Pillars implementation experience and individuals with first-hand Solvency II projectexperience in major UK insurance organisations. He is able to determine the business drivers,

that is the reduction of the capital charge to the business and improved risk management, whilst meeting regulatoryrequirements.

Whilst UK Head of Internal Audit at Sun Life of Canada for ten years, John performed an extensive range of audits,including actuarial practice; covering both the responsibilities of the financial and product actuaries. During that timehe was also the Fraud Investigation Officer and Money Laundering Prevention Officer. John later served as its UKRegulatory Compliance Project Manager, leading a multi-disciplinary team.

John currently chairs the Association of Chartered Certified Accountants’ Internal Audit Sub-Committee. He is theImmediate Past Chairman of the Institute of Internal Auditors’ Banking and Financial Services Group Committee(2006-9) and also served as a UK Committee member for the Association of Certified Fraud Examiners.

John completed the three stages of the Chartered Insurance Institute’s Financial Planning Certificate in 1996 andobtained the Securities Representative Certificate of the Securities and Futures Authority in 2000. He is soon tobecome an ACA (Institute of Chartered Accountants in England & Wales) via the Pathways to Membership scheme.

Multidisciplinary ExpertiseHaving developed out of HSBC Operational Risk, part of HSBC Insurance Holdings, Risk Reward Ltd has grown tomore than 600 specialists in risk management, internal audit, regulatory and compliance, modelling and Basel (andits three Pillars) implementation for banks and regulators globally.

Each of our experts has over 25 years industry specific experience; they are not management consultants but aproven team of successful insurers, risk management specialists and modellers, compliance officers and internalauditors with career portfolios inclusive of Sun Life of Canada, Prudential, the former Norwich Union now Aviva, AXASun Life, ING Banking and Insurance Services, Canada Life, Met Life, Zurich Financial Services, Liverpool and London,Halifax/Clerical Medical – HBOS and Friends Provident.

Risk management is the critical core focus and relatively new to the insurance sector. Among our experts is DennisCox, FCA, formerly the Director Risk Management at both HSBC Insurance Brokers Limited and Prudential PortfolioManagers who is currently the Chairman of the Chartered Institute of Securities and Investments (CISI) Risk Forum.He and his risk management team are currently advisors and trainers to central banks and other financial servicesregulators as well as major commercial and Islamic banks worldwide. An on-going training programme includesdelivering risk management training in the City of London to the British Bankers Association, focusing on credit risk,market/liquidity and operational risk management.

Anthony J Smith, Risk Reward Director of FS Regulation and Compliance, was formerly with Halifax/HBOS andClerical Medical. His unit is supported by experts currently involved in a UK Solvency II project for a major insurerand understands the challenges of data quality, model validation and integrating actuarial insurance risk with robustrisk management policies, compliance procedures, monitoring and controls. Anthony is a Fellow of the CharteredInsurance Institute (CII), a Chartered Insurance Practitioner and an Associate of the Personal Finance Society of theCII. (He was also a board director of the Association of Professional Compliance Consultants.)

Risk Reward is currently providing these technical experts, among others, to insurance companies in the UK, Europeand Middle East/North Africa on an ad-hoc project –by-project basis.

In association with the Chartered Insurance Institute (CII), Risk Reward Ltd delivers accredited Solvency II trainingcourses both publically and in-house, in the UK, Europe and internationally .

For more information about Solvency II technical advisory services and training from an established riskassurance leader please contact John Webb at [email protected] or ring +44 20 7638 5558.

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Overview

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Are you ready for Solvency II?

The EU’s Solvency II capital adequacy and risk management regime is now scheduled to apply, from 13thNovember 2012, to insurers and reinsurers who, when measured gross, exceed premium income of €5 millionor technical provisions of €25 million. This directive aims to reduce the likelihood of corporate failure, significantcustomer loss and disruption of the insurance market

Solvency II places strong risk management squarely at the centre of the regulatory expectation through theOwn Risk and Solvency Assessment (ORSA), ensuring the right amount of capital is held commensurate withthe risks each company faces. Whilst actuarial involvement is critical, it is only the start and the management usetest is an imperative for compliance with the regulations. In addition, the management team is ultimatelyresponsible for the reliable and adequate calculation of the technical provisions and needs to form its ownopinion.

Insurance Companies must review and where necessary, enhance risk management and governance in order toshow that systems and internal controls are fit for purpose. Furthermore, they are required to establish andsupport adequate risk management, compliance, internal audit and actuarial functions.

Companies should also consider how the Solvency II changes will affectthe way they run their businessesThe evolving risks and regulatory expectations inherent in the Solvency II Directive and the FSA’s interpretationof it are intertwined around the framework that is built upon the three pillars.

Pillar 1 sets out the quantitative requirements for determining capital adequacy and the role of the internalmodel, from which Pillar 2 sets out the corporate governance, enterprise risk management, internal control andcapital add-on implications. Then Pillar 3 covers the reporting requirements and public disclosure.

One of the biggest Solvency II requirements for insurance companies is for senior executives to demonstratein-depth understanding of the framework, improved management of their capital and better decision-makingbecause of their identification of key organisational risks in the Own Risk and Solvency Assessment.

Companies will need to report more data with more frequency to their regulators; it is expected that they willneed to report each individual asset exposure every quarter. Particular areas for attention relate to riskaggregation and diversification effects, the greater actual frequency of extreme events than normal distributioncurves often predict and the inter-relationship of extreme events. The well-known fat tail phenomenon thatchallenges the Gaussian distribution of the bell curve.

The rules on the new Solvency II balance sheet are very different from current practice and companies shouldknow the changes. QIS5 participation can help in understanding how to construct the new balance sheet.

Careful planning and preparation is paramount in order to successfully monitor the Solvency II project andchallenge the key areas for effective change management. It is an opportunity to give greater confidence topolicyholders and investors alike.

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The European Commission has launched a new set of regulations under Solvency II for Insurance companies.The new regulations will have a significant impact on how Insurance and Reinsurance firms align themselves. Thisnew initiative will closely examine the way insurers are required to address internal governance, risk and capitalmanagement processes. Solvency II will establish a uniform and consistent framework for Insurance firms inEurope - creating greater transparency and a level playing field - and transforming the way insurers conductoperations.

Preparing for Solvency II MeansGaining A CompetitiveAdvantageThe proposed date for implementation of SolvencyII is 2012 and experience with other changes of thismagnitude indicatesthat the lead times canbe significant.

The UK regulator iskeen to ensure thatinsurance companiesor insurance unitswithin banks arepreparing for capitaladequacy now, eventhough the newrules are still in theconsultation phase.

This new mandatewill dramatically change how firms allocate,calculate and manage capital, by setting minimumrequirements at group and company level.

This new holistic regulatory framework utilises arisk-based approach to establish capital and liquidityrequirements.

Risk Reward's InterdisciplinaryApproachAs an award- winning risk management consultancyand training firm Risk Reward is uniquely positionedto support the technical requirements of SolvencyII implementation and compliance for insurancecompanies and especially those in emergingmarkets where the insurance sector is new and/orgrowing rapidly.

Some of the problems with Solvency IIimplementation and compliance have been due tothe over reliance on actuarial models and/orsystems.

Risk Reward experts bring the necessary 360degree multi-disciplinary approach to your SolvencyII project including:

● Risk management (enterprise risk, creditrisk, liquidity risk and operational risk)

● Implementation of Basel pillarsexperience

● Regulatory compliance● Internal audit oversight● Model design and testing● The use test

Our expert consultants have UK and internationalinsurance company and compliance experience inthese areas and many are also qualified trainers tothe Chartered Insurers Institute (CII) Solvency Ipublic training programme. They are able to createend-to-end projects, serve as ad hoc teammembers working in harmony with your firm'sproject teams as technical support, outsourced orin-sourced, short or longer term, as well as conductin-house training at Board level and for seniormanagement and throughout the organisation.

Solvency II, Implementation and ComplianceMeeting the increasing demands of the changing rules and regulations

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Training ServicesRisk Reward has a reputation as one of the leadingproviders of top quality audit training in the world.We have successfully provided financial servicesaudit training to more than 300 institutionsincluding banks, insurance companies, central banks,external audit firms and national regulators.

We have a vast library of courses covering almostevery aspect of financial services details below.Each course is customized to the specific needs ofour clients. We are ready to travel anywhere in theworld to deliver training or, alternatively, we canhost clients at our excellent training facilities in theheart of London.

Risk Reward provides expert trainers to the CII’saccredited public and in-house training courses onSolvency II as well as delivers the CII insuranceexpert trainers to regulators, insurance firms andbanks in emerging markets to support thecompetence of companies and individuals.

At Risk Reward we add value to all of our trainingprojects from the first instance by offering a hostof complimentary services such as:

✓ Conference calls with you to determine yourbusiness goals and preferred training formats

✓ Account Manager to offer you full supportand advice and to ensure that all yourrequirements are met efficiently

✓ Professional, friendly and prompt responseto your enquiries

✓ Customised course outlines and coursematerials to meet with your organisation’s ordepartment’s specific needs

✓ Questionnaires created with your teams todetermine delegates levels and depth ofsubject knowledge pre-training

✓ Evaluation forms prepared for delegatespost-training

✓ Post-training diagnostic, analytical andreporting services and conference calls

✓ Complimentary email Question & Answerservices to the trainer from the delegates for3 months

Adding value to yourbusiness

“It was a pleasure meetingyou and thank you for the

outstanding materialsprovided during this course.

Hopefully we can get more ofour people in front of you in

the future.– Cole Rachel, Financial Auditor,

State Farm

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Introduction to Solvency II (CII accredited training) CII.SLV1

Solvency II for Insurers – Implementation (CII accredited training) CII.SLV2

Practical Solutions to Solvency II Workshop SLV3

Advanced Solvency II Workshop SLV4

Auditing Solvency II SLV5

ICAAP to ORSA SLV6

Practical workshop: Preparing IMAP SLV7

Risk Management for Insurers SLV8

Solvency II, Capital Management and the ICAAP for Insurers SLV9

Asset and Liability Management for Insurers SLV10

Auditing Insurance Companies IA017

Embedding Risk Management into Corporate Culture RM061

Model Risk RM016

Practical Workshop in Regulation & Compliance FC015

Project Management for Insurers (Solvency II) BBIT016

Risk Based Internal Audit IA002

Risk Based Supervision for Regulators SLV12

Risk Management for Insurance Companies RM021

Risk Management for Professionals RM0014

Risk Management Software Systems: Selection & Implementation BBIT016

Stress Testing and Reverse Stress Testing RM015

We deliver training to regulators and insurers across the world via trusted and reputable affiliates including government training centres, training companies and directly on an in-house basis.

For information on Public & In House Courses please contact your local training provider or Risk Reward Limited.

Solvency II and Selected Training CoursesRisk Reward writes and delivers practical Insurance and Management training, both in-house and publiccourses, for insurers, regulators and and banks with insurance functions focusing on the following areas:

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For your consideration

Advisory ServicesRisk Reward provides independent, impartial andhighly professional consultancy services acrossnearly all disciplines in the financial and bankingsectors. We operate in most parts of the world,specialising in emerging markets and operate mainlywithin Europe, the Middle East, Africa, and Asia. Ourservices include introducing risk controls,procedures and processes, credit market andoperational risk, Basel II implementation andcompliance, analysis, valuation for mergers andacquisitions and general advice. We have over 600specialist consultants available to assist your needs.For more information please contact LisetteMermod at [email protected] or ring+44 (0)20 7638 5558

Training ServicesAt Risk Reward we offer a vast range of trainingprogrammes covering almost every aspect of riskmanagement, corporate governance, banking,treasury, investment banking and a variety of othersubjects. The key to our clients’ success is that wefind out from the client exactly what their trainingneeds are beforehand and then engage our experttrainers to design and write course materials toorder. For more information please contactCariska Pieters at [email protected] orring +44 (0)20 7638 5558

Additional brochures available● Risk Management● Internal Audit● Treasury & Capital Markets● Banking● Financial Crime● Islamic Banking and Finance● Training Course Catalogue

If you would like to be sent a copy of any of thebrochures, please contact us at any time with yourrequest or alternatively visit our website fordownloadable versions.

Additional Risk Reward services

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“Very good course. The course wasinstructive and brought together the

operational risk function amidst otherrisks. The course was interesting

because the environment in whichbusiness operates contains other risks

like credit, market and therelationship with operational risk

explored.”

– Makia Efimba, Standard Chartered Bank Doha,Technology & Ops


RISK REWARD LIMITED

60 Moorgate1st FloorLondon ECR2 6ELUnited Kingdom

Office hours: London (GMT)09.00 – 19.00 Monday – Friday

tel: +44 (0)20 7638 5558fax: +44 (0)20 7638 5571email: [email protected]: www.riskrewardlimited.com

solvency ii 2011 ii 18-1.pdf · 2018. 12. 3. · national bank (malawi) national commercial bank...

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