KPMG professionals worked closely with the client to structure a global program to implement Economic Capital Reporting (ECR) as a core element of strategic risk management.
A large global insurer needed better financial information as it sought to run its business more effectively and refine its longer-term strategy. As a result, it wanted to implement ECR in order to gain commercial insights that could not be achieved with IFRS. The insurer was not using embedded value and wanted to be ready for Solvency II and to be in a position to produce and fully understand the relevant numbers.
KPMG professionals worked closely with the client to structure a global program to implement ECR as a core element of strategic risk management. This addressed a range of issues such as measures of risk, assessment periods, aggregation tools and implementation methodologies. In addition, the application of ECR results in such areas as pricing, management incentives, capital allocation, performance measurement and capital management. This was the client’s first major global initiative of this nature, so knowledge transfer from KPMG to the client formed a major part of the work, covering not only technical issues but also the systems, process, project management and communications aspects of effective global change management.
Working side by side within a team environment, KPMG helped the client develop the main features of the — from engaging with business units around the world and mapping current processes — to improving the quality, value and speed of the reporting process. This involved a truly global effort, in which KPMG professionals coached client representatives on engaging with their own business units in the Netherlands, eastern Europe, the US and the UK.
As a result of this collaborative effort, the insurer was able to introduce ECR successfully to its chosen timescales across its global operations. Subsequently, KPMG professionals also supported the client in developing and driving a global program and technical framework when it launched its preparations for implementing Solvency II.
- The insurer was able to enhance its global change management capabilities.
- The global risk framework was strengthened.
- The strategic value of financial reporting to the business was considerably improved, providing better quality and more detailed information for decision-making and strategy formulation.
- The global work on ECR meant that the client's country business units were well-positioned to address the financial reporting aspects of Solvency II.