Transformation for the insurance industry

The five mission critical challenges driving insurance firms to transform

The insurance industry is at an inflection point. The responsibility of managing liabilities and capital requirements, combined with a challenging external environment, is driving the need for insurers to transform.

Your operating landscape has changed significantly in the past few years and the pandemic has added a new layer of urgency. The low yield environment, a tsunami of regulations and changes to accounting frameworks, evolving client preferences, the emergence of new technologies, exploding data volumes, increased competition and continued M&A activity have led to increasing pressure on margins and the overarching need to focus on your core insurance business. This environment has created a situation where the current operating model is often too complex, or even inefficient. Simply maintaining the status quo is no longer an option.

SimCorp is a trusted global partner for insurance firms and their affiliated asset managers who want to transform their operating model and technology infrastructure. We support the investment operations of over 50 insurance companies world-wide. Whether you're a global firm operating across multiple regions and jurisdictions, or a regional specialist, our blend of software, services and expertise will empower you to tackle these five critical challenges.

THE FIVE MISSION-CRITICAL AREAS TO ADDRESS

 
1 Investment performance in a low-yield environment 200x200px
2 Risks and regulations 200x200px
3 Growth and operational efficiency
Digitalization, services and automation 200x200px
5 Data, ESG and transparency 200x200px
 

1: Drive investment performance in a low-yield environment 

A continued low-yield environment, exacerbated by the COVID-19 crisis and the massive amounts of monetary support provided by central banks worldwide, has put pressure on investment teams within insurance firms.

Returns from traditional fixed-income investments are no longer matching the long-term obligations needed to safeguard the interests of your clients across life, annuities, and retirement planning business lines. This has driven a move towards more portfolio diversification, both in terms of illiquid asset classes like alternative investments, but also in terms of geographical allocation. Furthermore, the pressure on solvency ratios has led to a shift away from guaranteed rate products towards unit linked products.

These developments coupled with volatile market conditions have increased the need for a full view on all exposures across assets, as well as the ability to react quickly to protect the portfolio or to seize new investment opportunities. They have also created more scrutiny on the management of assets and liabilities and on the quality of data which, in turn, puts pressure on the operating models, people, processes, and the technology which underpins business.


Why partner with SimCorp

SimCorp’s integrated multi-asset front-to-back platform, based on an award-winning Investment Book of Record, provides you with a holistic, accurate and real-time view on your complete portfolio across all assets - whether public or private, liquid or illiquid, internally or externally managed assets - and all portfolios including general accounts, mandates and unit-linked products.

The integration of accounting information into portfolio management and the IBOR allows you to monitor accounting and P&L figures in real-time and for multiple accounting frameworks.  

Alternative investments are an important asset class for insurance companies as they generally match well with long-term liabilities and are a source for yield pick-up. Our dedicated Alternative Investments Manager is fully integrated into the single platform and consolidates and automates alternative investments across the entire lifecycle. 

This frees up valuable time spent on reconciling data and positions from multiple disparate systems or separately handling the various operational complexities of each asset class and allows Portfolio Managers to focus on markets and the management of the portfolios.

 

One Investment Truth drives investment portfolio excellence

Chartis recently interviewed and surveyed senior decision makers at world-leading investment management firms focusing on the importance of having a comprehensive view of their portfolios – or “One Investment Truth”- to react to fast-moving markets and make informed investment decisions.

Download the report
IBOR Chartis white paper 560x420px

2: Take control of risks and regulations

The low-yield environment has pushed many insurance companies to take on more investment risk, whether it is more equity, credit or liquidity risk, in order to support the portfolio yield. With this comes an increased focus on risk management and the need to have a holistic view on risk exposures.

Additionally, to manage the volatility of capital requirements, liquidity and P&L, it is no longer enough to have a view on the current risks and capital requirements of the portfolio; you also need to be able to forecast the long-term impact of different market and reinvestment scenarios for your different accounting frameworks.

Furthermore, a tsunami of regulatory initiatives has put pressure on insurance firms and more is to come. In the past years, we’ve seen the introduction of Solvency II, IFRS 9 and 17, EMIR, SFTR, the phasing out of LIBOR, the introduction of SFDR and new ESG regulations. Each new piece of legislation requires time, resources, significant cost and often spans numerous areas of your business, which all use their own technology, processes, and data sources.


Why partner with SimCorp

Good risk management starts by having a complete view of all your exposures across all assets and entities. SimCorp’s multi-asset platform provides valuable insights into the sensitivities of your total portfolio through a full suite of both standard and complex risk analytics, flexible aggregation capabilities and powerful stress-testing capabilities. 

Our Investment Forecasting solution allows you to take decisions proactively to control the volatility of your balance sheet and P&L and to preserve and optimize your capital and liquidity over a long-term horizon and under different market and reinvestment scenarios.

One integrated system also greatly facilitates the consistent and efficient implementation of group-wide regulatory compliance and governance. With offices in over 20 countries, we understand each geographical region and its specific regulatory constraints. Our clients have a range of regulatory services at their disposal, including access to our Regulatory Center of Excellence, a team of regulation experts who continuously monitor the regulatory landscape and offer standardized solutions based on market best practices. We will also offer a standard solution for the SFDR reporting later this year.

Furthermore, our best of breed accounting solution with duplicate ledger and multiple books is unparalleled in its global coverage of both international and local accounting and tax frameworks. It covers all asset classes natively and is compliant with the latest regulatory changes, including IFRS9, CECL, hedge accounting and more.

 

Ensuring safety and security of investment activities

With the implementation of SimCorp Dimension, NÜRNBERGER has a sophisticated platform upon which to base the processes that support investment strategy decisions – and thus for optimizing the risk-return profile. By investing in such advanced technology, NÜRNBERGER has taken a clear step towards active risk management.

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Nurnberger client story 560x420px

3: Support growth and enhance operational resilience

In a highly complex and competitive environment where pressure on margins is high, there is a growing importance to create value through technology. Insurance firms are looking to lower the cost of doing business by operating more efficiently and cost-effectively across the investment value chain.

To access new markets and customer bases, achieve synergies or gain specialist expertise not available in-house, many insurance firms are looking to grow their business or to expand through M&A activity and partnerships with alternative, private equity, or multi-asset boutiques. This creates new challenges, as different regions have their own regulatory and accounting frameworks, their own technology, teams and processes. Additionally, it can create complexities when pulling together a consolidated view of data, which is required in a fast-moving market.

Why partner with SimCorp

SimCorp helps you to simplify your operating model by moving away from a fragmented IT setup towards an integrated multi-asset F2B platform using proven and robust technology.

Our Standard Platforms solution gives you access to market best practices, reduces implementation time and risks, and allows for faster and easier upgrades and maintenance while still allowing for a flexible configuration layer on top.

This will increase operational efficiency and scalability, reduce risks and create a robust foundation to support business growth whether it is growing your AUM, launching new investment or product strategies or expanding into different geographies.


Investments are now uniformly managed across the entire group

UNIQA, one of the largest insurance groups in Central and Eastern Europe first implemented SimCorp Dimension in 2004, initially for their Austrian business. Later, it was rolled out across the rest of the countries UNIQA is currently operating in. With further expansion planned in the region there was a growing need to manage bonds, funds, shares and derivatives in one system, creating the single source of truth for the entire group.

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Uniqa client story 560x420px

4: Futureproof your organization through digitalization, services and automation 

Many insurers are looking to improve customer engagement and ensure that business processes run smoothly in an environment where flexible working conditions have become the norm.

To achieve this, the fundamental basics need to be addressed. Automating manual, repetitive tasks, standardizing investment processes, consolidating data sources, and removing legacy technologies are crucial steps to take.

Insurers also need to think about redefining and optimizing their operating model. Deciding which parts of the investment value chain to keep in-house and which parts to entrust to service providers is part of the quest to leverage valuable in-house expertise and focus on core business value creation.

As you shift into unit-linked funds you'll compete more with traditional asset managers – who are facing fee pressure and increased demands from clients. The ability to provide better client experiences through digital channels will be key in the battle to differentiate.


Why partner with SimCorp

SimCorp helps insurance companies to digitalize the complete investment value chain and streamline and automate operational processes, thereby ensuring robust investment processes and agile decision-making, while facilitating a workforce which is working from different locations.

Our modular approach with powerful interconnectivity and interoperability, with third parties and custodians, allows you to optimize your operating model in function of your business needs and to choose the best tool or service for a specific task.

Become a futureproof organization and support scalable growth through the adoption of our managed services and cloud-based solutions. Adapt easily and swiftly to new business or legal requirements whilst improving user experience, the quality and accuracy of system environments and alleviating your cost of infrastructure.


Front office drives STP from portfolio optimization to accounting

MEAG has from its creation demanded an operating model built on best-practice operational processes, applying the latest technology, and offering the flexibility required to adapt to the growth and development of the business over time. “My vision for MEAG’s future use of SimCorp Dimension is 100% seamless STP from portfolio optimization to accounting,” explains Claudio-Peter Prutz, Head of Digital Business Services, MEAG.

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MEAG client story 560x420px

5: Unleash the power of data, ESG and transparency 

Mirroring the rest of the buy-side community, insurers are required to handle increasingly large volumes of data. Traditionally, this has been handled in spreadsheets and multiple disparate systems that do not allow information to flow easily across the whole organization.

Yet, data volumes will only increase. Market trends such as ESG, require the integration of additional data sets in the investment and risk management process and create more challenges for the aggregation and analysis of data.

Having access to good quality data is however not enough, it is equally important to be able to report quickly and with full confidence and transparency to both internal and external stakeholders.


Why partner with SimCorp

SimCorp supports the end-to-end workflow of data – from financial data management software, hosted and managed data services through to data analytics modules and a powerful reporting platform.

Customizable dashboards and strong data visualization tools combine information from different areas across the investment value chain into one real-time view to provide the insights needed to react quickly to changing market conditions.

Soon you can apply these workflows to your ESG data. SimCorp is building solutions that will integrate ESG metrics into the complete investment process and maintain compliance with new ESG regulations like SFDR.

 

New data warehouse enables best-practice data management and report creation

CNP Assurances, the leading personal insurer in France and the fourth largest life insurer in Europe was facing increasing data management and reporting demands as the company expanded its business in Europe and Brazil. They selected SimCorp’s Data Warehouse and after a successful implementation, the firm’s employees now have more time to work on value-added tasks and exception handling instead of spending time on manual work and duplicate processes.

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CNP client story 560x420px

A strategic and trusted transformation partner to the insurance industry