Implementation of Solvency II with zeb.control
Grazer Wechselseitige Versicherung (GRAWE Group) is an Austrian insurance company with a long-standing tradition. The group has around 4,500 employees in 14 Central and Eastern European countries. As the sixth-largest insurance company in Austria, it unites countries and people as well as banks and insurances to form a close network. GRAWE Group set up a project to make sure that Solvency II requirements were implemented for nine insurance companies (solo) subject to reporting obligation according to EU law. The group process also included nine other insurance subsidiaries from non-EU countries, a banking group and a real estate holding company.
1. Systematic: the implementation
To meet the complex business, process and data-related requirements, GRAWE Group had been looking for a multi-tenant Solvency II software. The future solution should also meet the following requirements, among others: mapping of composite insurance companies, compliance with audit requirements, integrated process management, end-to-end process documentation in the system, multi-user capability, role and rights management as well as multi-lingual and multi-currency capability. Realizing the long-term objective, the integrated Solvency II solution for all three pillars was also considered during the selection process. Following a successful trial period, zeb was asked to introduce zeb.control - Solvency II.
2. Effective: the results
zeb.control - Solvency II pillars 1 and 3
In early 2014, zeb started to implement zeb.control - Solvency II with the aim of identifying reporting-relevant data as early as possible and matching interfaces with feeder systems. The comprehensive calculation options included in the Solvency II calculation engine of zeb.control were included in GRAWE’s target architecture and replaced various manual processing steps. In addition, GRAWE and zeb developed customer- specific algorithms and included them in the software. The project team also specified the departments’ responsibilities regarding data supply, QRT releases and overall reporting along the process model implemented in zeb.control. Based on the project results for GRAWE AG Austria – being the largest and most complex entity within the group – the second project step involved training foreign subsidiaries in using the software and regarding general information on Solvency II requirements. Various foreign subsidiaries will be using the English version of zeb.control. Further localizations can be generated by exchanging dictionary tables.
zeb.control - Solvency II pillar 2
For GRAWE Group, the projection and management of risks across a multi-year planning period is particularly important in order to meet the pillar 2 requirements. Besides the pillar 1 view (SCR standard formula), here, major risks are quantified by means of company-specific procedure (pillar 2: own solvency needs, OSN). If the board of directors submits requests – at short notice – on the risk-related impact of business policy decisions, they can now be quantified promptly. With the zeb.control - Solvency II pillar 2 software, GRAWE is in the position to tackle these ORSA challenges on solo and group level (see Fig. 1).
ORSA challenges at solo and group level
3. Future-proof: outlook and conclusion
The Solvency II reports of the preparatory phase were successfully submitted for the required EU companies and GRAWE Group within the statutory reporting dates. The timely provision of software updates for modified regulatory frameworks (pillar 1 calculation, pillar 3 taxonomy, especially EIOPA filing rules and validation rules) represented an essential success factor. Based on the GRAWE-specific risk profile and the internal quantification methods, zeb.control - Solvency II pillar 2 provides a comparative analysis of SCR risk values and sensitivity analyses for identifying the risks’ relevance. The software projection features enable GRAWE to perform a consistent projection of the solvency balance sheet, own funds and risks as well as stress tests and scenario analyses. In the group module, GRAWE consolidates projected solo results and results of the last annual group report in an efficient consolidation approach and presents them in the annual ORSA report for GRAWE Group.