Northern Trust is providing specialist custody and asset administration services to help insurance companies prepare for Solvency II.
Key to these services is a single data source for accounting valuation and asset characteristics, which reduces the need for reconciling multiple data sources, thereby ensuring the availability of consistent asset data and creating efficiencies.
Solvency II is the biggest regulatory challenge facing the insurance industry in Europe today, said Andrew Melville, head of insurance product for Europe, Middle East and Africa at Northern Trust. By delivering a single data source for accounting, valuation and asset characteristics, Northern Trust is uniquely positioned to provide insurers with consistent asset data, reducing the need for reconciling multiple data sources.
The Solvency II directive, scheduled for implementation in 2014, aims to ensure consistent standards across the insurance industry in the European Union by enhancing capital adequacy and risk management requirements. Proposals are expressed in terms of terms of three pillars, which include requirements and components that focus on capital, risk, supervision and disclosure:
Pillar 1 Quantitative requirements
Pillar 2 Supervisory Review
Pillar 3 Disclosure Requirements
Northern Trust can provide a Solvency II risk modeling solution for insurance companies using either a standard risk model or their own internal modeling solution. These risk analytical tools can be used as inputs to determine the required Solvency Capital Requirements and the Minimum Capital Requirements, set out in Pillar 1.
One client that Northern Trust has helped to prepare for Solvency II includes Norwegian non-life insurance company Sparebank Skadesforsikring. Company CFO Christian Parelius, said: Northern Trust has already provided us risk analytic tools to help with our development of the internal models as required under Pillar 1. As our focus now shifts towards Pillars 2 and 3, and work begins on our Qualitative Reporting Template, Northern Trust, through their single data source and leveraging existing asset characteristic data, continues to innovate their reporting and governance solutions to support us in providing the asset data elements that will be used across all three pillars of our Solvency II programme.
(JDC)