Northern Trust (Nasdaq: NTRS) announced today that it is providing specialist custody and asset administration services to help insurance clients, such as Sparebank1 Skadesforsikring, help prepare for Solvency II.
Solvency II is the biggest regulatory challenge facing the insurance industry in Europe today, said Andrew Melville, head of insurance product for Europe, Middle East and Africa at Northern Trust. By delivering a single data source for accounting, valuation and asset characteristics, Northern Trust is uniquely positioned to provide insurers with consistent asset data, reducing the need for reconciling multiple data sources.
The Solvency II directive, scheduled for implementation in 2014, aims to ensure consistent standards across the insurance industry in the European Union by enhancing capital adequacy and risk management requirements. Proposals are expressed in terms of terms of three pillars which include requirements and components that focus on capital, risk, supervision and disclosure:
Pillar 1 Quantitative requirements
Pillar 2 Supervisory Review
Pillar 3 Disclosure Requirements
One of the key features of Northern Trusts custody platform is that it provides insurers with a single data source for accounting, valuation and asset characteristics. This is important for Solvency II, as it reduces the need for reconciling multiple data sources, thereby ensuring the availability of consistent asset data and creating efficiencies.
Northern Trust can provide a Solvency II risk modelling solution for insurance companies using either a standard risk model or their own internal modelling solution. These risk analytical tools can be used as inputs to determine the required Solvency Capital Requirements and the Minimum Capital Requirements, set out in Pillar 1.
Northern Trust has already provided us risk analytic tools to help with our development of the internal models as required under Pillar 1, said Christian Parelius from Sparebank Skadesforsikring, a non-life insurance company based in Norway. As our focus now shifts towards Pillars 2 and 3, and work begins on our Qualitative Reporting Template, Northern Trust, through their single data source and leveraging existing asset characteristic data, continues to innovate their reporting and governance solutions to support us in providing the asset data elements that will be used across all three pillars of our Solvency II programme.
Northern Trust provides asset servicing and asset management solutions for insurance clients across the globe, including custody, reporting, investment operations outsourcing and investment sub-advisory services. It is today hosting a forum for its UK based insurance clients at its Canary Wharf offices, to discuss the impact of Solvency II on the industry.
About Northern Trust
Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of investment management, asset and fund administration, banking solutions and fiduciary services for corporations, institutions and affluent individuals worldwide. Northern Trust, a financial holding company based in Chicago, has offices in 18 U.S. states and 16 international locations in North America, Europe, the Middle East and the Asia-Pacific region. As of March 31, 2012, Northern Trust had assets under custody of US$4.6 trillion, and assets under investment management of US$716.5 billion. For more than 120 years, Northern Trust has earned distinction as an industry leader in combining exceptional service and expertise with innovative products and technology. For more information, visit www.northerntrust.com or follow us on Twitter @NorthernTrust.
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