AREP – SOLVENCY II REPORTING

arep Solvency II is a complete solution covering the entire process chain for data management and reporting on securities investments in compliance with the Solvency II regulation:

1. Data integration & look through
2. Classification & validation
3. Calculation of SCR (Solvency Capital Requirement) values
4. Reporting (Tripartite Template and QRTs)

THE SOLVENCY II REGULATION & ITS CONSEQUENCES FOR ASSET MANAGEMENT

The Solvency II Directive stipulates European insurances’ requirements with regard to capitalization, risk management and regulatory reports. It came into effect on January 1, 2016, and will affect about 40% of assets under management in Europe1), meaning that:

  • Asset managers will need to provide detailed data of portfolio holdings to insurers. Even if asset managers do not have their own insurance clients, they will often be indirectly affected by fund of funds and unit-linked insurance schemes.
  • Insurance companies will be responsible for controlling the quality of the data of their directly and indirectly invested assets. Accurate classifications for SCR calculation and reporting must be ensured.
  • Administrators and master investment management companies will be offering these services to asset managers or insurance companies. They will need a multitenant European system enabling them to integrate external look-through data and to correctly enrich internal data.
  • Insurers with volumes above EUR 5 million are bound to Solvency II. Smaller insurance companies, pension funds, occupational and municipal pension funds are further bound by the investment ordinance.

SPECIAL FEATURES OF ACARDA’S SOLUTION

  • Our modular and ready-to-use system is being operated in our Tier IV certified data centre in Luxembourg. The implementation of your own IT infrastructure is no longer necessary, because our system is equipped with a browser-enabled user interface and central Oracle data base.
  • arep Solvency II enables you to easily integrate and check internal as well as external look-through data, classifications, data enrichment, SCR calculation and reporting in different formats (Tripartite Template, QRTs).
  • Short implementation times and comprehensive maintenance services ensure that all legal and client specific requirements are observed.

DATA EXCHANGE & REPORT GENERATION REQUIREMENTS

With arep-Solvency II you can rely on a solution that fully complies with EIOPA requirements.

  • Pillar 1 requires the monthly calculation of the SCR of insurers’ assets, thus necessitating a look-through of these assets, as well as about 130 key data for the SCR calculation.
  • Pillar 2 stipulates quality assurance and responsibility for all data.
  • Pillar 3 calls for transparency for supervisors and the public, as standardised in the QRTs.

OUR SERVICES

Covering requirements from all three pillars with just one efficient solution & service.

Having served the European fund industry for over 15 years, we have the experience you can rely on. Our web-based arep Solvency II solution was developed on the basis of our well-proven VAG (Insurance Supervision Act) reporting and harmonised with the European asset management associations’ standards.

Our Solvency II experts provide you with business, organisational and technical support services for the implementation of the solution as managed service for data gathering, quality assurance, classification, calculation and reporting.

Pillar 1: Data management & look-through

  • Automated integration of data from different fund accounting systems, platforms, data banks or third-party systems for own funds, target funds (look-through), and direct investments from insurance.
  • Compliance with current EIOPA legal guidelines.
  • Data enrichment with CIC, NACE, LEI and issuers as a basis for SCR calculation.

Pillar 2: Risk management & governance

  • Complete traceability by means of exportable CSV-tables as well as data quality assurance due to plausibility checks and audit trail.
  • Automated process monitoring with coloured flag.
  • Operation of the application in Tier IV-certified computer centres at ebrc in Luxembourg

Pillar 3: Reporting to supervisory authority

  • Compilation of the required data for the Tripartite Data Exchange Template for asset managers or QRTs for insurance companies and subsequent report generation.
  • Definable, secure and browser-enabled data access to portfolio managers, investment firms, administrators and insurance companies.

WORKFLOW-ORIENTED PROCESS

End-to-end data exchange & reporting:

1. Integration of fund & look through target fund data

  • Import of portfolio data from various systems with interfaces to administrators, e.g., BBH, BNP Paribas, BNY Mellon, EFA, RBC, State Street.
  • Automated integration of target funds through our look through platform with a non-disclosure agreement and approval process.

2. Data transformation into a standard format

  • Rule-based transformation of data from different sources into a standard format.
  • Resolution of target funds (consolidation with look through).

3. CIC-mapping & risk classification

  • Rule-based CIC classification of ISIN instruments or non-ISIN structured products.
  • Risk classification for SCR calculations.

4. Data enhancement & validation

  • Data enhancement to fill gaps: e.g. NACE, ultimate parent issuer.
  • Automated data validation: e.g. maturity date for bonds.

5. Optional SCR Market calculation

  • Calculation of SCR values according to standard approach.

6. Verification, quality check & approval

  • Automated process monitoring with coloured flags highlighting errors on the software dashboard and escalation system via e-mail alerts.
  • Collective approval by the asset manager prior to transmission.

7. Report generation

  • Tripartite Template in version 3.0.
  • Optional completion of the QRTs (e.g. S.06.02./03) for assets and optionally for liabilities.

THE APPLICATION AS SOFTWARE AS A SERVICE (SAAS) AND/OR MANAGED SERVICE

Software as a Service

Should you wish, the application can be provided to you as Software as a Service (SaaS) through a highly secured, Tier IV certified computer centre.

The implementation of your own IT infrastructure, with corresponding initial investments, is no longer necessary. In addition, by refraining from using your own systems you avoid increasing the complexity of your IT infrastructure.

This will allow you to concentrate more on your key competences, using your IT skills and resources in a needs-oriented way.

At acarda, we take care of operations as well as providing support services. Secure and easy access to the application is possible via your web-browser.

Business Service / Managed Service

We also offer different reportings as a business service. Under this option our experts will perform all tasks required for your reportings on your behalf.

Service Level Agreement

The specific type and volume of the software as a service or business service will be selected according to your requirements.

You will only pay for the services used according to contractually agreed service level agreements (SLA).

QUOTES

1) EFAMA, Asset Management Europe, Facts and Figures, April 2015, p. 22.