The document outlines the Solvency II initiative, a regulatory framework for insurers and reinsurers aimed at enhancing risk management across all business areas. It emphasizes a collaborative approach through the Gain-Line consortium, highlighting stakeholder requirements, governance structures, and an integrated risk management framework. Key objectives include fostering a consistent modeling approach, adhering to regulatory standards, and tailoring solutions for various companies based on their specific needs.

1. Solvency II
A Practical Way of Delivery

2. Gain-Line & Solvency II
Solvency II is the biggest ever exercise in bringing together insurers and re-insurers under one
regulatory regime
• Solvency II is a set of principles and guidelines leading to best practice in risk management;
Solvency II Programme
• It is an Enterprise wide initiative that will impact all areas of the business;
• Early adopters are helping Lloyd’s and the FSA set the bar for what is required in the market;
• We can’t give you ‘The Answer’, but only a framework to help provide ‘An Answer’ based on decisions your
business need to make;
• Numerous approaches are being adopted across the market and it is not a case of ‘one size fits all’;
• Resources will be scarce and the deadline is unlikely to move;
• The range and diversity of insurance operations means that a Solvency II solution will vary from company to
company;
• The eventual solution in each case will require a detailed initial assessment and a range of inputs from a number
of different disciplines.
• The Gain-Line Consortium
• Gain-Line is a consortium of companies formed specifically to provide clients with focused Solvency II expertise
and resources;
• The details of the consortium members are contained within the Appendix.
Slide 2

3. Stakeholder Requirements
There are many stakeholders with differing priorities that need to be integral to the Solvency II
Programme
Solvency II Programme
Key Objectives:-
CA CIO Chief Actuary – centralised and consistent modelling approach for all
actuarial users for realistic ‘what-if’ and scenario planning;
CEO
Chief Risk Officer – enterprise wide consistent risk management standards
and transparent risk modelling approach;
Chief Information Officer – robust IT governance with scalable modelling
CRO CFO tools and techniques, with consistent approach to data controls and
architecture;
Chief Financial Officer – faster reporting timetable with consistent approach to financial and management
information;
Chief Executive Officer – enhanced business performance through risk based decision making and efficient
allocation of capital.
Slide 3

4. Solvency II Components
Programmes will be challenged to align a variety of different functions as Solvency II will impact all
elements of the Business
Governance & Oversight
Governance,
Compliance & Comms Documentation, Comms & Training
External Reporting
Standard Formula
Solvency II Programme
(including Programme Office)
Balance Sheet & Portfolio Management
Portfolio
Management Calculation Kernel
Technical Provisions
Assets & Asset Liability Management
Internal Model/Risk Management
Risk Management
ORSA & the 6 Tests
Data Quality & Governance
Systems &
Solvency II Data Repository
Data
Slide 4 IT Systems & Processes

5. Programme Workstreams
Highlighted below is an indicative Solvency II Programme Plan and the key workstreams that
should be included
Programme Management/Change Management
SII Risk Based
Business Governance & Methodology & SII Systems Statutory
Implementation Decision
Requirements Communications Approaches Architecture Reporting
Plan Making
Balance Sheet & Risk Management
Internal Connectivity & Management
SII Strategy Portfolio Processes & Targeting
Model Integration Reporting
Management Controls
Business
Risk Reporting Data Systems Performance
Analytics/
Management Requirements Management Testing Management
Dashboard
Systems Audit, Security Training &
ORSA
& Data & Control Communications
Documentation Documentation
Risk
Gap SII Project Regulatory SII Technology Management Review Capital
Analysis Plan Approval Infrastructure Systems & Process Allocations
Slide 5 Processes

6. ERM under Solvency II
Key Solvency II Principles
• Clear responsibility at senior level for risk management ensuring its use in managing the business, including
Solvency II Programme
influence on key decisions;
• Full integration of risk and capital management – must be embedded sufficiently to pass the Use Test;
• The ORSA is an integral part of managing the business against the chosen strategy and strategic decision
making;
• Risk appetite is clearly articulated and widely understood as the parameters to manage the business –
changes are proactive and based upon the risk and capital framework;
• The risk and capital framework is clearly documented and evidenced in advance of its use.
Slide 6

7. The Risk Management Framework
ERM Framework Elements “Systemic” / Interdependent Risk Scenario Analysis
Contingency Planning
- Operational
Governance Governance E.g.: - Market changing events
• Accountability Risks & Controls Financial markets risk
- 1st line: Line Management
Review & Assurance Currency fluctuations Emerging Risk Management
- 2nd line: Review & Challenge
- 3rd line: Independent assurance /
Quantification Market changing events Linkage to Strategy
challenge
• Structure
• Decision making (inc. Delegation)
Risks & Controls
• Identification & Assessment Regulatory Risk
• Systems & controls i.e.: Governance
• Policy and approach Risks & Controls & Capital Risk
• Core processes & systems Group
Review & Assurance
• Risk appetite set Governance
Risks & Controls
Liquidity Risk
Review & Assurance Quantification
• MI / KPI’s
Review & Assurance
Governance Regularly Disclosure
Quantification Operational Risk updated,
• Scenario analysis & stress testing Risks & Controls
• Review & challenge
• Independent assurance
Review & Assurance
Governance clearly &
Risks & Controls
Quantification
Market Risk
Quantification Assurance
Review &
documented Reporting
• Base Level (solvency / regulatory) Governance
• Economic Risks & Controls
Quantification
• Stress testing / tolerance levels Credit Risk
Review & Assurance
• Continually refined risk appetite Governance
Risks & Controls
Quantification
Insurance
Review & Assurance
Risk
Governance
Risks & Controls
Quantification
Review & Assurance
Quantification
Pillar 1 Pillar 2 Pillar 3
MCR, SCR Capital Model etc ORSA & Supervisory Review Disclosure & Market Discipline
Slide 7

8. Solvency II Governance
Highlighted below is an indicative governance approach which could dovetail into existing
governance structures
Frequency – Monthly
Chair – CEO
Board/EMC/PMC Purpose – Oversight, Risk Management & Embedding
Solvency II
Frequency – Monthly Chair – Programme Sponsor
Purpose – Progress, Budgets, Risks, Issues Programme Steering Attendees – CFO, CRO, CA, Risk Manager,
Programme Director, Business Reps, Programme
Committee Manager
Project Steering Advisory Forums/
Committees Subject Matter Experts
One For Each Workstream Frequency – As required with
Frequency – Monthly Chair – Project Managers
Chair – Programme Director Purpose – Operational impact and analysis
Purpose – Planning & Delivery Attendees – As required
Attendees – Project Sponsors, Programme Managers, Project
Slide 8 Managers, Business Representatives

9. The Gain-line Consortium
Member Companies

10. Magellan Consultancy Services
Magellan are an independent management consultancy focussing on programme management and
project delivery
Magellan’s Proposition is based on deep Project & Programme Management skills within this
sector:-
• Specific Insurance experience (client references are available);
• Extensive Project & Programme Management experience within this environment with the
Management Team coming from Big-4 consultancies and senior operational roles within industry;
• A wide range of programme services, including strategy definition, project and programme
management, project delivery and QA;
• An innovative approach to delivering programme services;
• A collaborative approach to project delivery which has delivered in excess of £30m of savings in the
programmes we have worked on with our clients.
Phase 0 Phase 1 Phase 2 Phase 3 Phase 4
'Discovery' 'Initiation' 'Analysis' 'Implementation' 'Realisation'
Initial Feasibility Planning and Definition Detailed Planning and 'Go-Live' and Roll-out Benefits Realisation
Design and Review
High Level Planning Initial Implementation Planning Detailed mplementation Planning Detailed Training Plans Benefits Realisation Plan
Initial Cost Benefit Analysis Stage 1 Business Case Stage 2 Business Case Roll-out Strategy Post Implementation Review
Recommendation Report Operational Review 'To-Be' Operational Design Benefits Tracking
Initial Process Analysis Process Review Define Controls and Checks Implement 'To-Be' Processess
BAU Handover
High Level Process Documentation Project Initiation Document
Future Training Plans
Risks, Assumptions, Issues, Dependencies
Operational Risk Assessments
High Level Operational Risk Assessment Detailed Operational Risk Assessment
Initial Technical Review Technical Requirements Detailed Systems Design Testing and Roll-Out Technology Strategy
Techni cal Requirements Document Techni cal Design Document Testing Strategy Define Technical Strategy
Define Technical Specifications Systems Pilot Review Systems Performance
Define Workflow Requirements
Define Systems Interfaces Implement Final Solution
Review Organisation Structures Organisational Review 'To-Be' Organisational Design People Strategy
Analyse FTE numbers Define Roles and Resposibilities Recruit/Re-organise Key Staff People Strategy
Review Staff Locations Communications Plan and Execution Ongoing Review of Structure
High Level Staff/Union Consultations Detailed Staff/Union Consultations
Supplier Selection / Evaluation Define Contractuals Service Level Agreements Supplier Review Strategy
Initial Supplier Review Detailed Supplier Analysis Supplier Due Diligence Agree Service Levels Supplier Review Forum
Reference Site Visits Create Contractual Framework Define MI Requirements Agree Escalation Routes
Agree Terms and Conditions Business Continuity Planning
Slide 10

11. JMR
JMR are an independent software services and solutions company that has been providing quality
technical resource for 20 years
JMR’s Proposition is based on the provision of experienced technical resource who have skills
within this sector:-
• Specific Insurance experience (client references are available);
• Extensive analysis, design and modelling skills within this environment having delivered individual
assignments and fixed price projects for data migration;
• A strong network of associates that that can join a team to deliver specific assignments;
• Willing to work on flexible commercial models;
• A collaborative approach to project delivery with a ‘can do’ attitude;
• A strong focus on clients requirements and delivery.
Slide 11

12. Hillway Consulting
Hillway Consulting is an independent organisation focusing on operational and management issues
in the London insurance market
Hillway Consulting has:-
• Over 30 years experience in the London Insurance market;
• Operational and management experience in both active and run-off environments with particular
knowledge of underwriting, claims and reinsurance operations;
• Experience at Board Level in regulated environments and in working with regulators;
• Excellent network and contacts within the UK and overseas;
• First hand experience of capital markets, risk and capital modelling;
• Experience in corporate formations, restructuring and M&A in both the direct and reinsurance
markets.
Slide 12

13. CirclePeople
Circle People are a boutique executive search firm operating across the FS Risk Management
community
Summary
• Key sectors; Insurance, Retail Banking, Investment Banking and Big 4 Consulting and Strategy;
• Market discipline; Credit, Market and Operational Risk, Solvency II, Liquidity & Capital Management,
Basel II, Economic Capital, Quantitative and Risk Strategy;
• We typically place Senior Managers, Directors, Programme Directors & Managers, Head’s of and
Project Managers;
• We operate a search methodology whether working contingently or retained supported by a
dedicated research function providing detailed market mapping and ensuring we stay in regular contact
with our candidate community/key people.
Slide 13

14. End of Presentation