Solution Brief
Tackling LDTI compliance for insurers
Meet complex financial reporting requirements with one comprehensive platform.
- Run the complete LDTI process on a single, integrated platform.
- Ensure data consistency and ease collaboration between actuaries and finance.
- Verify and benchmark the accuracy, traceability and timeliness of LDTI implementation.
- Start with a flexible architecture and add elements as priorities evolve.
The issue
Long Duration Targeted Improvements (LDTI) to accounting introduced changes to financial reporting for certain long-duration insurance contracts in several areas:
- Assumption updates to the liability for future policy benefits and discount rate requirements.
- Measurement of market risk benefits (MRB).
- Amortization of deferred acquisition costs (DAC).
- Disclosures, with new requirements such as liability roll-forwards and information about significant inputs, judgments, assumptions and methods used in their measurement.
The principles of these targeted improvements introduce substantial changes compared to the current US Generally Accepted Accounting Principles (GAAP). These changes increase the complexity of data requirements, data storage and calculations, as well as the scope and processes required to satisfy disclosure requirements. They also require insurers to transform or modernize their capabilities to support a complete process that effectively fulfills LDTI requirements.
To prepare, insurers must align their actuarial, accounting, general ledger and reporting systems. Such an alignment requires insurers to transform their technology foundation.
The challenge
Adapting to a new era
The new targeted improvements affect profitability monitoring, introduce new calculation requirements (e.g., for LFPB, DAC and MRB) and require more granular data capture at an enterprise level.
Achieving greater collaboration
LDTI requires closer collaboration between actuaries, accounting staff and IT to support enhanced data needs and disclosure requirements. Additional processes are needed to integrate actuarial and finance workflows.
Lacking a holistic approach
The changes introduced by LDTI increase the scope and complexity of data requirements, storage and calculations while altering the processes for producing disclosures.
Investor expectations
Investors have voiced concerns that current financial statements for long-duration contracts do not provide decision-useful information in a timely or transparent manner, presenting an opportunity for firms that tackle LDTI compliance quickly and smoothly.
Our approach
Many insurers are seeking ways to streamline their efforts to meet the multifaceted requirements of LDTI.
We approach the problem by providing software and services to help you:
Meet broad, complex LDTI requirements
SAS takes a comprehensive approach to accounting for insurance contracts – from data sources to reporting. We offer predefined data models, data management, calculations based on LDTI requirements, generation of postings, process management and subledgers supporting multi-GAAP and governance.
Implement risk and finance calculations plus reporting on a single platform
The platform ensures consistency in common data, enables data comparison and eases results reconciliation. As a result, there’s closer collaboration among actuaries, accounting staff and IT when it comes to reporting LDTI measurements and disclosures.
Take a gradual approach to implementation
Start with a less mature process and model set and evolve to an advanced process and model set that applies to the whole portfolio of liabilities in scope.
Accelerate required calculations
Run processes and calculations faster by orders of magnitude, thanks to parallel execution and in-memory architecture.
SAS difference
With SAS, you can address LDTI requirements using a single, integrated and comprehensive platform. You benefit from:
Data accessibility
- SAS can read from and write to multiple actuarial and accounting software types.
Traceable, auditable processes
- Repeatable, custom processes that are fully transparent and auditable.
Scenario testing for the current reporting period
- Define and run processes based on several configurations or sets of expectations – for different sets of assumptions – before concluding production.
Prebuilt rules, models and templates with embedded business logic
- Ease implementation using dedicated configuration data, prebuilt data management rules and calculation/posting logic to satisfy LDTI requirements.
Data quality and process quality management
- Define data quality rules and data packages, then monitor the delivery, completeness and quality of this data.
Insurance-specific subledger for increased transparency and control
- Our subledger supports multi-GAAP and allocation mechanisms as it consolidates and centralizes all the details, feeding complex regulatory and reporting environments.
Flexible definitions of the chart of accounts and measures disclosed
- Define various sets of rules, allocating calculation results to the different elements in the chart of accounts according to the intermediary and final disclosures.
Advanced reporting
- Predefined financial reports with drill-down capabilities allow you to access details and source data for the final values that support financial disclosures.
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Leverage an integrated business process workflow
Use the predefined solution workflow to accelerate your business process implementation. Ensure governance and auditability through step-by-step orchestration and configurable security for each individual workflow task. -
Follow and analyze calculation flow steps
Trace the data flow and transformation steps along the calculation process. Follow the progression status or analyze individual calculation nodes through inputs and outputs. -
Access financial reports through the integrated dashboard
Review disclosures and detailed financial reports through an integrated dashboard from the solution UI. Filter results and drill down to the preferred level of detail to analyze business performance and financial health.