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How a New Insurance Company Hit the Ground Running Using Kyriba

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In January of 2016, MetLife announced plans to spin off a substantial portion of its US retail business (Brighthouse Financial – “BHF”). MetLife engaged EY to support efforts with due diligence and day 1 operational readiness support, that culminated with the completion of the separation on August 4th, 2018. However, the journey to becoming a self-operating company would take another 10 months, that started months before the official separation. BHF went through a thorough assessment of infrastructure inventory at MetLife to determine critical systems required to be self-sustainable and exit aggressive TSA timelines, whilst becoming a low cost provider to the market. As part of that effort, BHF identified Treasury technology as a critical path solution. Following a detailed assessment of business requirements and accelerated market scan/selection process, Brighthouse Financial chose Kyriba as their preferred Treasury Management System vendor. The main challenge BHF faced was to standardize a custom legacy solution that MetLife had been using for 20+ years that included 40+ interface connections from various mainframe systems through a highly customized solution providing cash visibility and a centralized payment control process. Brighthouse successfully implemented Kyriba in June of 2018, and are now full live with visibility of cash activity across 500+ accounts. The purpose of this session will be to walk through BHF’s journey from design through deployment, and provide an overview of the mythology they used to provide control across a program that saw 150+ solutions “Go Live” in parallel to Kyriba.

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How a New Insurance Company Hit the Ground Running Using Kyriba

  1. 1. Forward-Looking Statements This presentation and other oral or written statements that we make from time to time may contain information that includes or is based upon forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve substantial risks and uncertainties. We have tried, wherever possible, to identify such statements using words such as “anticipate,” “estimate,” “expect,” “project,” “may,” “will,” “could,” “intend,” “goal,” “target,” "guidance," “forecast,” “preliminary,” “objective,” “continue,” “aim,” “plan,” “believe” and other words and terms of similar meaning, or that are tied to future periods, in connection with a discussion of future operating or financial performance. In particular, these include, without limitation, statements relating to future actions, prospective services or products, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, trends in operating and financial results, as well as statements regarding the expected benefits of the separation (the "Separation") from MetLife, Inc. Any or all forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining the actual future results of Brighthouse Financial, Inc. and its subsidiaries. These statements are based on current expectations and the current economic environment and involve a number of risks and uncertainties that are difficult to predict. These statements are not guarantees of future performance. Actual results could differ materially from those expressed or implied in the forward-looking statements due to a variety of known and unknown risks, uncertainties, and other factors. Risks, uncertainties and other factors that might cause such differences include the risks, uncertainties and other factors identified in Brighthouse Financial, Inc.’s most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) subsequent Quarterly Reports on Form 10-Q, including in the sections thereof captioned “Note Regarding Forward-Looking Statements” and “Item 1A. Risk Factors,” and in other filings Brighthouse Financial, Inc. makes with the SEC. Brighthouse Financial, Inc. does not undertake any obligation to publicly correct or update any forward-looking statement if Brighthouse Financial, Inc. later becomes aware that such statement is not likely to be achieved. Please consult any further disclosures Brighthouse Financial, Inc. makes on related subjects in reports to the SEC.
  2. 2. The Brighthouse Financial Treasury Story How a newly spun-off insurance company hit the ground running using Kyriba 3
  3. 3. Brighthouse Financial: A Focused US Retail Franchise • One of the largest providers of annuity and life insurance products in the United States. • Formerly a part of MetLife, Inc., Brighthouse Financial became an independent public company in August 2017. $206.3B Total assets $7.4B Combined TAC $134.5B AUM $414.1B1 Life insurance in-force 2.5M Policies and contracts in-force A+ / A3 / A / A FSR Ratings (S&P / Moody’s / Fitch / AM Best) $14.4B Stockholders’ equity Data as of December 31, 2018 1Net of reinsurance
  4. 4. Brighthouse Financial Strategy  Simpler products focused on generating statutory capital  Focused on target market segments  Independent and diverse distribution network  Seek to be a financially disciplined and, over time, cost-competitive product manufacturer
  5. 5. • BHF concludes market scan and system selection project 6 Brighthouse Financial Timeline • BHF begins technology scan June 2016 August 2016 December 2016 May 2017 June 2018 Kyriba “Go Live” • September 2016: 1st Assistant Treasurer hired • January 2017: BHF selects Kyriba as preferred TMS vendor and hires 3 directors • Kyriba project kick-off • June 2017: Solution architecture and approval from ARB • January 2016: MetLife, Inc. announces plans to pursue separation of its U.S. Retail business • August 2017: Brighthouse Financial completes separation from MetLife, Inc.
  6. 6. 7 Brighthouse Financial Treasury Operations Assistant Treasurer Director- Liquidity & Risk Management Director- Banking & Payment Flows Director-Cash Management Director- Risk Management Jr. Liquidity & Risk Analyst Liquidity & Risk Analyst Sr. Analyst Analyst Analyst Analyst Analyst Sr. Analyst Analyst Analyst Analyst
  7. 7. 8 Brighthouse Financial Guiding Principles Client-centric solution design  Laser-focused understanding of client needs  Simple product designs that deliver those needs and nothing else  Rapid innovation and deployment Advisor loyalty and advocacy  Advisor segmentation / preferred partner tiers  Ease of doing business  Responsiveness and feedback system  Support to grow their businesses Operating cost leadership  Relentless elimination of waste  Promotion of digital and outsourcing  Lowest distribution cost per $ of VNB Risk and capital management  Individual and portfolio level risk insights to enable price leadership with the most attractive customers  Innovative funding model to drive down our cost of capital
  8. 8. 9 Brighthouse Financial Approach to Technology Enablement A successful Business Architecture design will: • Articulate comprehensive view of business structure • Enable strategic investment decision making • Enable business and technology alignment • Enhance business optimization • Support alignment and communication of various aspects of the organization including data objects, risk and controls, metrics etc.
  9. 9. 10 Brighthouse Financial Treasury Capabilities Considered areas in scope for Kyriba implementation
  10. 10. 11 Brighthouse Financial Market Scan Maturity Assessment Treasury Treasury is targeting a leading solution design in the areas of cash, payments, and capital management. Treasury accounting being limited in scope is targeted as Strong. The solutions identified as ‘leading’ are all still classified as best-in-cost. Primary Capability Areas Lagging Develop- ing Basic Strong Leading 1 Cash Management 2 Payment Processing and Sanction Screening 3 Capital Management 4 Treasury Accounting Envisioned Brighthouse Capability Maturity Cash Management LEADING Payment Processing and Sanction Screening LEADING  Collection of all cash balances is fully automated, and data collection is standard and available to use immediately without any further manipulation.  Treasury has near real-time visibility into at least 95% of the company’s daily cash balances.  Cash positioning process is effective at least 95% of the time with minimal variances.  Cash is concentrated automatically through a Treasury Management System, where automated sweeps are not available or cost effective  Short, medium and long term forecasts are coordinated and fully automated between treasury and other functional areas.  Treasury centralizes execution of funding and investments through a single platform and deals are tracked within a central repository for reporting and settlement.  95% of all treasury payments are executed from a treasury management system.  Standard payment practices are established across all functional areas.  All settlement of intercompany funding is standardized and automated to the extent possible.  95% of all non-treasury payments are automated into the cash position for forecasting purposes  Transaction lifecycle is automated to capture confirmations for all payments  Sanction screening is automated through a single source for 100% of all payments sent across all functions. Capital Management LEADING Treasury Accounting STRONG  Detailed funding plan is aligned with the Company's capital agenda (target capital structure, share buy-backs, target leverage ratios, dividend policy) is communicated to the financial community, including investors, credit ratings agencies, and analysts.  Material changes to the funding plan and financing strategy are reviewed with, and approved by the Board of Directors  Treasury is responsible for proactive management of the relationship with rating agencies.  LTD covenants are consistent and focus on optimizing the Company's value.  LTD covenant compliance process includes proactive corrective actions across the organization, should the Company's performance result in a breach of any (or all) LTD covenants.  The LTD portfolio structure reflects the Company's risk appetite (including balance sheet leverage level and refinancing risk) and funding requirements, with optimal maturity profile and source of funds.  Treasury tracks 100% of the LTD instruments and associated interest payments in a treasury management system.  Treasury system produces journal entries that are posted directly into the GL system(s) based on appropriate approvals and validation process  Month end treasury entries are manually generated using treasury management system and manually imported into ERP.  All cash journal entries are manually reconciled to bank statements using a treasury management system prior to passing entries to ERP.  Control and workflow for passing balanced entries is controlled through a treasury management system which requires manual review. Summarized Maturity Levels View
  11. 11. 12 Brighthouse Financial Solution Architecture
  12. 12. 13 Brighthouse Financial Enterprise Roadmap
  13. 13. 14 Implementation Highlights  Reporting: Prior Day/Current Day Reporting for 7 Banks  Users: 160+ Users both Internal and External  16 Payment approval tiers ranging from $1,500 to $500M+  Bank Accounts: 750 Bank accounts  Workflows: 20+ payment workflows  Transaction Types (Budget Codes) : 200+
  14. 14. 15 Brighthouse Financial Operational Volumes Imported - Blind Routed Files, 953,060 , 49% Imported - Aladdin 330 File, 582,725 , 30% Kyriba Generated , 394,056 , 21% Manually Created, 3,698 , 0% Monthly Forecasted Transaction Totals Payment Volumes  950,000 outbound blind-routed ACH payments  1,000 payments to OFAC/month  2,500 wires released/month  $5B of internal/external wires processed each month
  15. 15. 16 Questions?
  16. 16. THANK YOU • Karen Jeffries – Director, Cash Management 17 • Ehren Moeller – Senior Manager

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