KPMG in the UK worked closely with a leading UK insurance firm's team to develop a Life Finance Transformation Program that addressed all aspects of business processes, model rationalization and development, organizational design, reporting, data and systems.
A leading UK insurer turned to KPMG in the UK to help meet the need for better quality data and analysis, faster reporting and Solvency II compliance. It was evident from an initial analysis that the goals could not be met simply by adapting and extending the existing systems, which were highly complex and inflexible because they had been developed piecemeal over an extended period. A more fundamental and radical solution was required. To achieve this, the firm needed to:
- develop new financial reporting capabilities that could deliver Solvency II requirements
- integrate two finance teams as a result of a recent merger.
By transforming the finance function’s approach to data, systems, processes and culture, not only could the goals of Solvency II compliance and faster, more accurate reporting and analysis be achieved, but also the whole finance function could be made more efficient and costs cut. In addition, the amount of operating capital held against the risk of financial reporting misstatement could be significantly reduced.
To do this, KPMG worked closely with the insurer’s team to develop a Life Finance Transformation Program that addressed aspects of business processes, model rationalization and development, organizational design, reporting, data and systems. Working alongside the client, KPMG continuously shared its knowledge and experience – in particular, ensuring the client understood the culture and behavior changes the new ways of working would require. By participating in the development and implementation of the specific solutions, the client’s staff learned first hand the reasons for the compromises that are inevitably needed to build practical, real life solutions. In this way, they developed a deep understanding of the new data, systems, processes and culture.
The creation of teams that included both members of the client firm, as well as KPMG professionals, resulted in an efficient and successful delivery vehicle that provided:
- a clearly understood and thoroughly tested Solvency II reporting process with full traceability of data from source to user to meet Solvency II requirements
- a data warehouse that gives a clear view of the quality and completeness of the data in the underlying systems
- reengineering of key financial reporting and analysis close processes enabling future operating to be completed with reduced headcount
- a new build of some actuarial models and rationalization of others
- a new architecture for finance data and systems, incorporating the new COA and ledger structure.
- The insurer has a simplified and flexible IT landscape that not only enables compliance but is also more ‘future proof’.
- The board has confidence in the quality and robustness of the financial numbers, enabling faster and better decision making.
- There has been a significant improvement in the speed of reporting.
- The results are now available at the business unit and product level.
- The finance function is in a position to fully comply with Solvency II.
- The operating capital held against the risk of financial reporting misstatement has been reduced with opportunities for further reductions as the new financial reporting processes are embedded.
- Overall, as a result of the Life Finance Transformation Program and other initiatives, the finance function has become more efficient, with cost reductions of 44 percent.