Generali Deutschland prepares for Solvency II with ERM platform

With the finalization of the Solvency II Directive in late 2009, the handwriting was on the wall for Generali Deutschland’s siloed actuarial staff. Rather than continuing to use differing methodologies and various manual processes, Generali “decided to centralize actuarial calculations related to Solvency II, MCEV [Market Consistent Embedded Value] and IFRS [International Financial Reporting Standards], at the holding company level in 2010,” says Laszlo Hrabovszki, group chief life and health actuary for the Cologne, Germany-headquartered insurer.

Laszlo Hrabovszki, Generali Deutschland

Critical to the initiative was an IT platform that would unify and standardize workflows across all units. Although Generali already relied on a legacy release of SunGard’s (Wayne, Pa.) iWorks Prophet for actuarial modeling, the software lacked enterprise functionality.

Starting in January 2011, Generali kicked off an internal initiative to align existing work processes. This followed an “iterative planning and adaptation” process, Hrabovszki says.

In parallel, the insurer identified and evaluated three viable solutions. Of those, SunGard’s new iWorks ERM Platform offered the most comprehensive package. “Its competitors couldn’t solve our problems,” Hrabovszki says.

By April, a contract was signed for three iWorks platform components: the latest version of Prophet for actuarial modeling; Prophet Results Database for consolidation of risk data; and Process Controller for workflow automation. Additionally, Generali engaged SunGard Global Services for technology and business process integration.

Starting in May 2011, Generali’s IT department researched hardware and infrastructure, ultimately adopting 16 IBM (Armonk, N.Y.) System x3850 X5 severs and ILOG software to assist with SunGard integration. For server virtualization, VMWare’s (Palo Alto, Calif.) ESX was chosen.

Server farm deployment began in October 2011, followed by iWorks integration commencing in January 2012. In addition to typical challenges for a project of its size and scope, two significant hurdles emerged. First, Generali struggled with the recently-redesigned Prophet’s lack of backwards-compatibility for actuarial models developed using the legacy Prophet. Also, support for Generali’s existing desktop OS, https://www.microsoft.com/en-us/default.aspx"Microsoft (Redmond, Wash.) Windows XP, was non-existent.

The former proved a modeling issue, which Generali worked with SunGard to resolve. The latter required Generali’s attention. “Like many large European companies, we were in the process of moving from XP to Windows 7,” explains Hrabovszki. Ultimately, Generali’s IT department engineered a solution that is similar to “accelerating our Volkswagen to become a BMW.”

By March 2012 the new version of Prophet went live, with workflow automation via Process Controller rolling out in October. During the final phases Generali used a self-service model for training employees, which included managing data and results. “Previously, each actuary could do calculations one at a time,” explains Hrabovszki. “With the new system they could start hundreds.”

Beyond positioning Generali for Solvency II, the new system frees skilled professional employees from serving as spreadsheet jockeys. “Now our actuaries are working as actuaries,” Hrabovszki say. “Thanks to automation, we’ve taking the first steps toward improved efficiency, including more time to analyze the results of our calculations. This was very important to us.”

Moving forward, Generali intends to expand the system to address other corporate needs, “like Sovency II’s profit and loss attributions,” says Hrabovszki. “And, we’ll be able to extend the system when IFRS requirements become clearer.”

Regardless, Hrabovszki emphasizes that the solution’s intuitive interface provides business users with the flexibility to adapt processes to meet their needs “without IT intervention.” Within the next year Generali might also provide SunGard with “very concrete suggestions for general improvements,” he says.

“Every day we’re learning how to make improvements to the system and processes,” he adds. “It’s been a very good experience.”

SNAPSHOT

Company: Generali Deutschland Group (Cologne, Germany; US$130 billion in total assets).
Lines Of Business: Health, Life and P&C.
Vendor/Technology: SunGard (Wayne, Pa.) iWorks ERM Platform.
Challenge: Unify and streamline actuarial processes to meet Solvency II and other mandates.

Anne Rawland Gabriel is a technology writer and marketing communications consultant based in the Minneapolis/St. Paul metro area. Among other projects, she's a regular contributor to UBM Tech's Bank Systems & Technology, Insurance & Technology and Wall Street & Technology ... View Full Bio