© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success 1 02/09/1002/09/10

© Copyright IBM Corporation 02/09/1002/09/10 2 Boris Khalkhal IBM Certified Senior IT Architect Insurance Industry IBM Business Solution Centre Solvency 2 Solution Prototype

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success 3 02/09/1002/09/10 Agenda ● Showcase presentation, the goals, the method ● Demonstrations and feedback

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success 4 02/09/1002/09/10 Solvency II Solution Elements Element Components Description Decision Supporting / Reporting Dashboards Analysis Budgeting Scenario Planning Display of information to support business processes (e.g. create reports, views) Integration of Solvency II information generated through all related business processes Generate Solvency II specific reports (e.g. report on capital ratios to supervisor) Calculation Engines Financial risk modeling framework Specification and calculation engine Model & analyze financial risks with IBM partners such as Watson Wyatt or EMB Perform specific data transformation operations (e.g., formulas, rules & calculations) Generate information needed for risk and/or performance management Data MartsDimensional Data Models Storage of History Subsets of data (operational and result data) from Enterprise Data Warehouse Data schema and storage mechanisms tailored to specific business analytical purposes (e.g., de-normalized structures) Enterprise Data Warehouse KPI and Data Requirements Logical & Physical Data Models EDW (Atomic plus Analytical Layer) Historical data Central data store for all analytic purposes (e.g. risk and performance measurement) Storage of detailed raw data from multiple sources (primary data area) Capturing of results from calculation engines (result data area) Repository of historical data for validation/calibration of internal models and reporting Extract, Transform, and Load (ETL) Source System Analysis Data Mapping, Governance & Quality Data Integration Models Extraction processes of data from data source (e.g. operational systems) Technical data transformation (e.g. formatting) Exception handling and data cleansing procedures Loading processes of data into target system (e.g. data warehouse) Data SourcesOperational Systems Validated and authenticated sources for business and customer data External sources to provide supporting data for analytical purposes (e.g. market data, customer/country rating information) Supporting risk management tools (e.g. rating engine, loss database)

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success 5 02/09/1002/09/10 Solvency II IBM Solution Architecture Profile – Extract – Transform - Load Sales Claim Policy Contracts Investments IBM Infosphere IBM’s Cognos 8 Reporting IBM’s IAA insurance business terms and IIW data warehouse and data mart model IBM Infosphere Data Warehouse Extract, Transform, and Load (ETL) Enterprise Data Warehouse Calculation EnginesData Marts Decision Support/ Reporting Data Sources / Operational Systems 3 rd party or insurer’s calculation Engine “Metadata” Archive

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success 6 02/09/1002/09/10 Agenda ➔ Showcase presentation, the goals, the method ● Demonstrations and feedback

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success 7 02/09/1002/09/10 Introduction to the Solvency 2 solution prototype ● IBM developed a demonstration of its solution capabilities for Solvency II in an end-to-end showcase in its Business Solution Center in La Gaude, France. ● This showcase is based on real data (policy, claims, financial) data from a German car insurer and a British Life insurance company. ● QIS3 and an internal model (EMB Igloo) were used in the P&C scenario ● QIS4 and life insurance typical calculations (best estimates with Watson Wyatt VIPitech) were used in the life scenario

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success 8 02/09/1002/09/10 Goals of Solvency II demo Share lessons learned from Solvency II solution development in La Gaude from the perspective of: Project management (what cost most effort, what are typical lead times, what are the risks) Requirements gathering (reporting, data requirements) Tooling (IIW, Cognos, Information Server) Architecture Discuss reusability of developments in LaGaude for customer to accelerate Solvency II developments

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success 9 02/09/1002/09/10 Stabilize your information requirements of the risk engines and start defining your internal & external reporting requirements Internal models as- is Integrated Data Model Insurance Reference Model Solvency II Business Requirement Templates Scoping Operational Data Systems Additional Financial reporting Requirements (e.g. IFRS II) Warehouse Logical Data Model SII Facts (standard model) What is available? What else do we need? What do we need ? Metadata Publish ETL design and Data Delivery Lists specifications deploy Database Data Inputs/Outputs Internal models Solvency II Additions on standard Data Lineage

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success10 02/09/1002/09/10 Prototypes risk scope Prototype 2 Scope Prototype 1 Scope Full customer Scope

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success11 02/09/1002/09/10 Solution Prototype Architecture Risk Enterprise Warehouse Data and Metadata Management Calculation Engine A&L and Operational Data Reporting and Performance management

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success12 02/09/1002/09/10 IBM InfoSphere Information Server 8.1 Solution Prototype software components and accelerators IBM InfoSphere Warehouse 8.1 IBM Insurance Information Warehouse IBM InfoSphere Metadata Server InfoSphere Business Glossary InfoSphere Metadata Workbench EMB Igloo 1.3 Watson Wyatt VIPitech 1.4 A&L and Operational Data IBM Cognos BI CEIOPS CP 58 specifications IBM IIW Solvency II Template EMB and WW data requirements

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success13 02/09/1002/09/10 Agenda ✔ Showcase presentation, the goals, the method ➔ Demonstrations and feedback

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success14 02/09/1002/09/10

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© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success33 02/09/1002/09/10 Technical perspective ● Step 1: Standard Formula Reporting Requirements ● Step 2: Standard Formula Operational Data Requirements ● Step 3: Internal Model Data Modeling ● Step 4: Develop ETL Jobs and BI Reports for Standard Formula ● Step 5: Develop ETL Jobs and BI Reports for Internal Model

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success34 02/09/1002/09/10 best practice data governance tooling Import Industry Data Models Search and Profile Source Data Information Analyzer Business Glossary DataStage and QualityStage Transform and Cleanse Map Sources to Target Model FastTrack Services Oriented Architecture Information Services Director Populate Share Deploy Share Link Define Create Single, Metadata Repository & Metadata Workbench Active Cross-Platform Administration, Management and Reporting Exchange Data Structures Link Common Enterprise Vocabulary Rational Data Architect

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success35 02/09/1002/09/10 Step 1: Standard Formula Reporting Requirements Solvency II docs and Specifications (QIS3) Warehouse Logical Data Model SII Facts Customise SII Facts Physical Data Model and Database Generate/Deploy Metadata Publish IIW Reference Design Model IIW - Solvency II Business Solution Template

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success36 02/09/1002/09/10 Step 2: Standard Formula Operational Data Requirements Extended Warehouse Logical Data Model IIW Reference Design Model IIW - Solvency II Business Solution Template Data lineage/mapping Operational Data Systems Additional BI Requirements Warehouse Logical Data Model SII Facts What is available? What else do we need? What do we need ? Metadata Publish ETL1, ETL4 Specifications Develop deploy Extended Physical Data Model and Database

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success37 02/09/1002/09/10 Step 3: Internal Model Data Modeling ETL Specifications Additional BI Requirements What will we show? Internal Model Inputs/Outputs Extended Warehouse Logical Data Model Internal Model Datamart Logical Data Model deploy Internal Model Datamart Data Model and Database deploy Extended Physical Data Model and Database Metadata Publish

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success38 02/09/1002/09/10 Use Compare and Merge to Selectively Add IIW content Start with IIW content in development project and delete unwanted entities from enterprise model to get a starting point. Create a second IIW project as reference. Use Compare/Merge between projects to selectively add standard content to development project. Base IIW Model Development Model Compare/Merge additions to target model

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success39 02/09/1002/09/10 Build Diagrams with Drag and Drop Drag and drop entities onto diagrams

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success40 02/09/1002/09/10 Add Model Extensions Added/Changed entities, attributes, relationships etc. can be added via the project folders or directly on diagrams. These are mapped to the existing data domain, glossaries, etc to ensure consistency with exising IIW content.

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success41 02/09/1002/09/10 Generate Physical Model Physical data model is created/updated directly from logical model using defined naming conventions and data types. Database administrator can complete this model for target environment by defining: the physical storage layout, buffer pools, etc. users and privileges user defined functions, types and stored procedures constraints and triggers views, indexes, mqts etc.

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success42 02/09/1002/09/10 Generate and Run Deployment Scripts Database deployment scripts generated from physical model Scripts executed against target servers to create physical database

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success43 02/09/1002/09/10 Step 4: Develop ETL Jobs and BI Reports for Standard Formula ETL Specifications Metadata Operational Data Systems ETL1 Atomic Warehouse Data Develop Analytic Warehouse Data ETL4 Cognos Framework Packages Cognos Reports Metadata Publish

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success44 02/09/1002/09/10 Step 5: Develop ETL Jobs and BI Reports for Internal Model Cognos Reports Metadata Publish ETL2 Internal Model Datamart ETL3 Warehouse Cognos Framework Packages

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© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success46 02/09/1002/09/10

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© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success58 02/09/1002/09/10 Lessons learned ● Requirements are a moving target ● Subject area is non-intuitive for IT specialists  upskill time is slow, IIW glossary and docs helped ● ETL was almost 70 % of the efforts, even with well know data source and target. Learning subject area was an inhibitor to productivity. ● Results validation was complex – likely easier in a real situation. ● FastTrack is effective workproduct for ETL specs ● Effective metadata collection requires care and planning

© Copyright IBM CorporationSolvency II prototype – Solution Design focused on your success59 02/09/1002/09/10 QUESTIONS?