Investment Management Minimum Standards and Self Assessment Workshop

Transcription

1 < Picture to go here > Management Minimum Standards and Self Assessment Workshop Friday 6 th February 2015 Lloyd s 1

2 Welcome Lloyd s 2

3 Agenda Introduction New minimum standards Management 2015 Self Assessment return Coffee and questions Lloyd s 3

4 Lloyd s Minimum Standards Robust market oversight regime is a key benefit of Lloyd s Market oversight is supported by standards that all market participants are expected to achieve Original Lloyd s standards developed around 2005 Standards refreshed to incorporate the new SII Tests & Standards Oversight structures already in place and can be used to demonstrate robust oversight to the PRA - essential to achieve and sustain approval of Lloyd s Internal Model Lloyd s 4

5 Minimum Standards Refresh: Background Refreshed standards published in July 2014 and effective Jan 2015 Alignment of standards to SII was the key driver but further objectives included: A clear and complete framework within which all Managing Agents are expected to operate Consistency in interpretation, presentation and publication Extensive market consultation: A specific LMA committee was established, with representation from 10 managing agents Full market consultation of all standards and guidance Lloyd s 5

6 Minimum Standards Refresh: Structure of Standards A user friendly and consistent format and structure has also been adopted across all standards Clear definitions for each element have been adopted as follows: Element Standard Group Definition Groups of standards, generally aligned to Lloyd s market oversight teams. Standard A brief statement of capability or level of conduct required. Requirement A sub-set of requirements that specifies key areas that must be addressed in meeting the standard. Lloyd s will seek positive assurance that each requirement has been met. Guidance Explanation of how Lloyd s will assess whether standards have been met as well as potential ways of achieving this. These definitions enable consistency in presentation and make it clear which elements are mandatory and which are recommendations Lloyd s 6

7 Minimum Standards: New Management Minimum Standards Management Strategy, Governance and Use Test Outsourcing Valuation and Reporting Lloyd s 7

8 1.1 INVESTMENT RISK DOCUMENTATION risk documentation Strategy, Governance and Use Test Management Minimum Standards Outsourcing Valuation and Reporting Managing Agents shall establish and maintain comprehensive investment risk documentation The investment risk documentation shall: include an investment risk policy; describe the investment objectives; define comprehensive limits for investment risk; set out the responsibilities for the management of the investment of syndicate assets; describe the processes and procedures which will operate to ensure compliance with the policy; allocate responsibility for maintenance and implementation of investment strategy; incorporate the requirements of the prudent person principle; describe the processes and controls to ensure compliance with all relevant UK and overseas statutory, regulatory and trustee requirements. Lloyd s 8

9 1.2 INVESTMENT STRATEGY strategy Strategy, Governance and Use Test Management Minimum Standards Outsourcing Valuation and Reporting Managing Agents shall operate an investment strategy which is consistent with the investment risk policy The investment strategy shall: be consistent with the Syndicate Business Forecast (SBF); be approved and reviewed regularly by the Board, or an appropriate sub-committee. Lloyd s 9

10 1.3 GOVERNANCE Governance Managing Agents shall maintain an effective governance and control framework for the management of syndicate assets Strategy, Governance and Use Test Management Minimum Standards Outsourcing Valuation and Reporting Managing Agents shall ensure that: syndicate investments are properly recorded, monitored and controlled; investment activity shall be monitored against defined parameters; processes will be maintained to address any exceptions; the authority and reporting lines of the investment staff are clearly delineated and documented; there is a process providing monitoring and challenge of investment activity. Lloyd s 10

11 1.4 USE TEST Use Test Managing Agents shall comply with Solvency II use test requirements Strategy, Governance and Use Test Management Minimum Standards Outsourcing Valuation and Reporting Managing Agents shall: demonstrate that their internal model is consistent with their investment governance, risk management and decision making processes. Lloyd s 11

12 2.1 OUTSOURCING Outsourcing Where investment functions are delegated to third parties, managing agents shall maintain appropriate oversight and control Strategy, Governance and Use Test Management Minimum Standards Outsourcing Valuation and Reporting Managing Agents shall: ensure that outsourced investment arrangements are fully documented (i.e. an investment management agreement as a minimum) and regularly reviewed; retain overall responsibility for the management of syndicate assets. Lloyd s 12

13 3.1 VALUATION AND REPORTING Valuation and Reporting Strategy, Governance and Use Test Management Minimum Standards Outsourcing Valuation and Reporting Managing Agents shall comply with the requirements of the Solvency II Framework Directive regarding valuation and reporting of assets Managing Agents shall: ensure that all asset valuations and calculations of own funds comply with the Solvency II directive; provide Lloyd s with asset disposition returns which are timely, accurate and complete. Lloyd s 13

14 Future investment related collections The self-assessment return timetable considers the deadlines of other investment related reporting requirements. Minimum Standards SCR SCR Q Q Q Q Q Q Q Q AAD Interim Reporting QAD QAD QAD AAD QAD Minimum Standards via SecureStore SCR: Syndicate Capital Requirement via Core Market Returns AAD: Annual Asset Data via Core Market Returns QAD: Quarterly Asset Data via Core Market Returns. Lloyd s 14

15 2015 Self Assessment Return Lloyd s 15

16 Purpose of Self- Assessments The objectives are to: Establish whether agents are by their own assessment meeting the standards, and to identify standards which they believe are not being met Ensure agents can provide a high level description of how they meet the standards and requirements Agree action plans to address any identified gaps or failings Reinforce that agents are required to carry out regular assessments of their compliance with the standards and the role of the Senior Nominated Person (SNP) Provide a baseline against which Lloyd s can test when carrying out further assurance activities It is not a review activity. Lloyd s will examine the responses but this will not include a test of the responses/evidence provided Lloyd s 16

17 Associated Benefits Support agents gap analysis of the standards Ensure agents and Lloyd s track actions and record level of compliance Support Lloyd s planning of review & oversight activity To allow Lloyd s to identify areas where clarity or training may be needed Lloyd s 17

18 Information to be provided for each Requirement Describe how the Requirement is met Controls Evidence Self-assessment score GREEN (Currently Meets Minimum Standard) RED (Currently Not Meeting Minimum Standard) Action(s) planned Action(s) deadline(s) Lloyd s 18

19 Example Governance Requirement Describe how the requirement is met List the controls List the evidence Rating Specify Actions Planned & Deadline activity shall be monitored against defined parameters Operations Supervisor reviews compliance reports generated from central record systems for internally managed funds. Daily report identifies exceptions and monthly report lists all parameters for each portfolio listed together with status. Parameters are maintained within central record systems by Operations Supervisor. Any parameter breaches are reported to the Head of Treasury, Finance Director, Financial Controller and Chairman of the Lloyd s Committee within 2 business days. Exception report produced bi-weekly to alert Head of Treasury, Finance Director and Financial Controller of compliance status. Compliance status report submitted quarterly to Committee, signed by Operations Supervisor and Financial Controller. Committee Minutes [Q4 2014] Signed by the Chairman of the Committee [31 Dec 14] Sample biweekly report [x date] sample breach notification . [31 Dec 14] Sample system compliance reports GREEN (currently meets) Lloyd s 19

20 What Managing Agents need to do Complete the template Check for gaps and inconsistencies Obtain sign-off by Senior Nominated Person and Finance Director Submit via SecureStore Provide updates regarding action(s) Lloyd s 20

21 What Lloyd s will do Examine the Self Assessment Return Raise queries where the information needs clarification Discuss action(s) where they do not appear sufficient Track action(s) Assess what review work may be needed to test the Self Assessment information Identify where the returns indicate a general lack of understanding or compliance and what action may be needed and reissue guidance Lloyd s 21

22 Key Dates Dates 16 February alerting start self assessment six week process 1pm 31 March 2015 Submission 17 April 2015 Receipt confirmed and initial queries raised 30 June 2015 Completion confirmed May be delayed by up to 4 weeks for returns with numerous queries/actions. Q Ongoing Market feedback Action tracking Queries about using SecureStore should be ed to securestore@lloyds.com Queries about the Self Assessment Return should be ed to IM-standardsreview@lloyds.com Lloyd s 22

23 Q&A Nicola Hartley Rodger Houghton Helen Hayward Mike Steer Lloyd s 23

24 Wrap Up Lloyd s views standards as a critical element of the market oversight regime Standards refreshed to include SII and improve clarity and consistency Questions on the interpretation or content of standards or requirements and on self-assessment submission should be referred to IM-standardsreview@lloyds.com to Managing Agents to alert start of your 6 week self assessment process 16 February Self-assessments to be submitted by 1pm on 31 March Lloyd s 24