Solvency II is the biggest regulatory change for insurers and reinsurers, bringing the industry under one regime. It will impact all areas of business operations. Early adopters are helping set industry standards. While there is no single solution, companies must have high quality data and robust risk management to meet Solvency II requirements. The regulator emphasizes that firms must improve data management to obtain model approval.

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. Slide 5
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
Data Quality
Data Governance
Data Warehouse
Data
Dictionary/Directory
Spreadsheet
Control
Documentation, e.g.
of the Internal Model
Systems & Data
Data Lineage
Facilitating Business
Process Change
External Reporting
Policy
Different organisations have different priorities for data within the Solvency II context
ORSA/SFCR/RTS
Source – Xchanging Survey, February 2011

6. The Regulator’s View
Highlighted below is the regulator’s view on data
“ Firms must improve their data
management and quality –
we will assess firms’ plans and
ensure that their project planning
is robust”…
FSA IMAP update on pre-application
process – April 2010
Slide 6

7. FSA Guidance
Highlighted below are extracts from the FSA’s guidance as to why firms must meet the minimum
requirements
Systems & Data
“ Solvency II Programme
5.24 The Directive sets out high-level requirements for the statistical quality standards underlying the model. This
requirement aims to ensure that the methodology underlying the model is sound. The standards apply to:
• the methodology used to select, fit and, where appropriate, combine statistical distributions (probability
distribution forecasts);
• data quality;
• model dependencies and diversification effects;
• risk mitigation techniques;
• the treatment of financial guarantees and options; and
• future management actions.
5.25 Firms seeking internal model approval will need to have accurate, complete and appropriate data, as well as be
able to justify assumptions and judgment.
5.26 High quality data is essential for modelling. Firms should pay particular attention to this requirement as
experience under the FSA’s existing regime has indicated that the current quality of data in many UK firms may
fall short of both existing and Solvency II requirements. We recommend that firms review the following for
internal and external sources of data:
• Data collection processes to make sure all data items required are collected;
• Data resolution to ensure data is stored and accessible at a level appropriate for the design of the internal
model;
• The quality of data to ensure data items are correct and validated as far as possible;
•
Slide 7 Access to data, to ensure it can be easily and accurately retrieved by relevant users. “
Source : FSA Insurance Risk Management : The Path to Solvency II, September 2009

8. Systems & Data
The Systems & Data Workstream must deliver a scalable IT infrastructure with the data being
Complete, Accurate and Appropriate
Solvency II Programme
Slide 8

9. Key Deliverables
The Key Deliverables for Systems & Data workstream are highlighted below
• Data Policy/Governance
Solvency II Programme
– A robust data policy/governance document which defines the date policy and, key data owners and the
link between the various data deliverables.
• Data Dictionary
– A repository which defines all of the key data elements required for Solvency II, and an explanation of
the data elements and a verbal definition of each specific data element.
• Data Directory
– A definitive repository of each model input into the standard model.
• Data Controls & Flow Diagrams
– A DFD must be created for each input to the standard model, i.e. row of the Data Directory, and cross
reference the Data Dictionary.
• Data Controls Register
– A complete register of all controls applied to the data as it transfers through the organisation. Controls
should also be categorised to show their relevance and strength.
Slide 9

10. Data Flows & Controls Diagrams
The Data Flows & Controls Diagrams (DFDs) pictorially represent how the data is manipulated and
physically moves within the organisation
• The DFDs are created for each row on the Data Directory – i.e. for each Internal Model Input;
• Best practice shows that it should cross-reference the Data Dictionary;
• Overall data quality, control and governance can be seen by incorporating the data controls.
Slide 10

11. The Gain-line Consortium
Member Companies

12. 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 12

13. 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 13

14. 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 14

15. 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 15

16. End of Presentation