Solvency II and Risk Management for the Insurance Industry

The ongoing financial crisis, economic downturn and a soft global market are making it difficult for many insurers to continue in business, let alone remain profitable. In this volatile environment, it is crucial that insurers review their risk management procedures in order to improve investor confidence and prevent regulators from downgrading their portfolios.

Such a review is also necessary for compliance with the forthcoming Solvency II legislation, which was designed to protect policyholders and prevent a financial crisis in the European insurance industry by requiring insurers to implement sound economic risk management practices. As a consequence of the current widespread financial crisis affecting markets all over the world, it is expected that other regulatory bodies worldwide will implement similar standards in an effort to prevent another market meltdown.

What is Solvency II?

Solvency II is the proposed European Union directive for insurance companies regarding capital requirements and related supervision. The legislation is meant to:

• Ensure the financial stability of the insurance industry, taking into consideration insurers’ assets and liabilities.
• Supersede existing – and primarily country-specific – rules by using a more sophisticated approach to determining the market value of assets required to cover the risks to which they are exposed.

How SAS can help

SAS delivers a robust platform for business analytics that can help you achieve success with your risk management project and comply with both existing and future regulatory requirements, including Solvency II, by providing software and services to help you:

• Implement an enterprise data management platform that can combine asset and liability data from operational applications across all different lines of business, then cleanse and transform that data into a consolidated enterprise view.
• Perform complex quantitative risk analysis calculations, such as the Solvency Capital Requirement (SCR) and Minimum Capital Requirement (MCR) calculations necessary for Solvency II.
• Comply with regulatory requirements for transparency with a transparent reporting mechanism that gives you a clear understanding of your organization’s risk position, thus enabling informed, strategic business decision making.

Why SAS^® for risk management?

SAS delivers an insurance-specific intelligence architecture that enables you to:

• Manage all aspects of risk using an integrated business analytics platform.
• Easily integrate the solution into existing IT and management frameworks, and provide an environment that meets both current and future needs.
• Reduce implementation time with a robust risk data platform that includes an insurance data model and data management processes that support your risk analysis and economic capital calculations.
• Improve business decisions by allowing risk managers, senior managers and analysts to access and communicate risk measures across the enterprise.
• Disseminate risk information to decision makers and regulators with easy-to-use business intelligence reporting tools.

Only SAS for Enterprise Risk Management enables you to perform enterprise risk management with an open, flexible and extensible means of measuring and managing your market in a way that best matches your needs by:

• Focusing on identifying and understanding what drives your earnings.
• Establishing a strong risk position to present to regulators, rating agencies, policy holders and Wall Street.
• Lowering the cost of debt, increasing your ability to acquire capital and reducing the threat of regulatory ratings pressure.

Looking for more information on risk management for the insurance industry? Download the white paper Operational Risk: Where Is the Value? See what analysts are saying about risk management from SAS. Sign up for one of our free e-newsletters. Read related success stories. Ready to put THE POWER TO KNOW® to work for you? Contact your local SAS office or call us toll free at 800-727-0025 (US and Canada). Contact SAS for pricing information and to learn more about our products and solutions.		Download the white paper Operational Risk: Where Is the Value?