SAS^® Enables Finnish Insurer

Tapiola Group Improves Financial Reporting and Fine Tunes Performance

Tapiola Group, Finland's third largest insurance company, offers services that cover life, pension and corporate insurance, together with asset and fund management. The group's underlying principle is to "produce surplus value to the owners" – which means to their policyholders. Using a combination of SAS Financial Management Solutions and SAS Strategic Performance Management, Tapiola can now achieve its goal of creating value more effectively while working towards meeting stringent new standards for accounting.

"We face various issues in our business," explains Markku Paakkanen, Financial Manager at Tapiola Group. "These include globalization, managing our company's continued growth and dealing with structural changes in the financial services sector." Another example is preparing for the stringent reporting structures as detailed in the European Union regulations for International Accounting Standards (IAS).

New accounting standards
The IAS regulations require all listed companies in Europe to adopt IAS for their 2005 accounts. The biggest change in European financial reporting for three decades, IAS will make Europe the world's first region with a common set of accounting standards. The objective is to reduce capital costs for companies and provide improved information for decision making. But for many companies, implementing IAS poses a raft of challenges.

"One problem is that an IAS standard for insurers doesn't exist yet, although it will probably be in place by 2004," says Paakkanen. "The real challenge is that IAS rules differ significantly from the Finnish system; therefore enormous changes are required in terms of the content of reports. We'll also have to produce reports more rapidly and include more extensive information. SAS Financial Management Solutions are helping us to adapt to IAS demands.

"We have a long-standing relationship with SAS and have used SAS solutions for many years, and we enjoy good personal relationships with the people at SAS Finland. We decided on SAS Financial Management Solutions after concluding that SAS covered our needs most extensively."

Faster and more accurate reporting
Paakkanen continues, "Our general ledger system didn't have a proper reporting system, but we needed to perform both group-level and company-level reporting. Now, we can do it all centrally." The reports include information on premiums, claims, costs, and so on. "Previously, we had manual phases in our processes. We've reduced these in areas such as closing our books, and in producing monthly, quarterly and annual reports. IAS mandates that reporting become more extensive and transparent, and it would quite simply have been impossible to produce reports within reasonable time limits without SAS Financial Management Solutions."

He believes that the structure of the SAS solution and its flexibility are key. "Reports can be assembled quickly and efficiently based on certain variables. We've reduced the time required to close our books by over 30 percent, and we can produce quarterly reports fast. Although we're not listed on the stock exchange and aren't required to produce quarterly reports, we want to be competitive with the larger insurers in the marketplace who do publish them.

"We provide around 200 single reports, and most users receive summaries. With our 'standard' users, I'd say the marketing reports are the most important. We can produce these in less than 24 hours and post them on the intranet. Before SAS, this wasn't possible. We can additionally now deliver monthly reports directly to everyone's desktops. We've reduced reporting time by several days, cut out the paperwork and can provide reports graphically." Several reports feature more detailed information, and can run to 30 pages. "Our finance people use SAS to drill-in to single items and explore them further, and the figures are now linked so you can easily find the sources of an aggregated figure. People like this multidimensional capability. Further, SAS' flexibility means that figures are easier to change if necessary," says Paakkanen.

"We've been using SAS for over 10 years, so obviously we're happy with the company," adds Kalervo Rinne, IT Manager at Tapiola Group. "SAS Financial Management Solutions fits well into our system landscape. In fact, it's fair to say that SAS is our system landscape. The main benefit of using SAS is that we can trust our reports now. We create them fast, and provide easy access - our salespeople are heavy users. We also use SAS for consolidation, drawing on information from many different systems to provide figures for the whole group. As for the balanced scorecard, it's widely used and will be deployed company-wide in the future."

Linking strategy with activity
"In 2001, we acquired SAS Strategic Performance Management," says Paakkanen. "We'd been using manual, spreadsheet-based balanced scorecards in some parts of the group for five years. But we wanted to make our approach more 'alive' and dynamic. With SAS, we can do this; for example, through automatic links to various data sources like our budgeting systems. We want a situation where anybody coming into work in the morning can look at their screen and see how the business is performing on a daily basis. We have gone from using 125 scorecards to approximately 250 now. Every organizational level that has a budget has a balanced scorecard, and every individual has a target card, which is part of each level's scorecard. We can further decide on staff bonuses based on this target card, which guarantees that all personnel are interested in the balanced scorecard system.

"If you imagine Tapiola as a super-tanker that cannot change direction very rapidly, with SAS Strategic Performance Management we have a steering wheel that, if somebody turns it, something really happens – strategy and activity are linked." The main areas covered by Tapiola's 250 scorecards are Client, Internal Processes, Economic and Market Position, and Personnel. Each perspective has two sets of measures with corresponding goals. "We update how performance relates to the key indicators on a weekly, monthly, quarterly and annual basis," says Paakkanen. "The more updates we make, the more 'alive' the scorecard is. "It was a natural extension to choose SAS Strategic Performance Management when starting to work on balanced scorecards. We did a very detailed competitor comparison, but we chose the SAS solution because it was easier to use and it had the scope we need for further development, it can handle larger amounts of data and, perhaps most importantly, because our data is already being handled in SAS systems. We therefore decided that we also wanted a SAS-based balanced scorecard, as we could then build the links we needed more easily than if we brought in some other vendor's software. Lastly, the SAS Strategic Performance Management solution is simply more advanced than the others and, of course, our users already had been using SAS for a long time."

Bottom line benefits
"We have one solution for all the reports we need at different levels, and the speed and accuracy of reporting have increased," states Paakkanen. "In addition, our board has seen the difference using SAS has made on our business. We've speeded up the process of closing the books and producing annual reports, we've been able to move to quarterly reporting, and now have extensive monthly reports for everybody online, so we get better information faster.

"The speed of reporting at management level has also influenced decision making. For example, quarterly competitor analyses mean we can compare ourselves to other insurers in the market. We can see trends in our activity earlier and take action: how premiums or costs are developing, the profitability of different branches, and so on. This is a big advantage. We can also provide information to the market even though we're not a public company, which helps to support our company image and brand. SAS supports our tradition of being open and transparent."

Concludes Rinne, "We are very happy with the SAS solutions. SAS is the best when it comes to data processing. We will for sure use SAS more in the future."

About Tapiola
The Tapiola Group is made up of companies engaged in general life insurance, corporate insurance and, uniquely, pension insurance. It was established in 1982 when the supervisory boards of its predecessor companies decided on a merger. Finland's largest mutual insurance group, it has achieved good results for more than ten years in a row, with continued growth in both market share and investment income.

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