microstrategy’s ifrs 17 solution...microstrategy’s ifrs 17 solution microstrategy | iii...

MICROSTRATEGY’S IFRS 17 SOLUTION

MicroStrategy’s IFRS 17 Solution

MicroStrategy | ii

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Patent Information

This product is patented. One or more of the following patents may apply to the product sold herein: U.S. Patent Nos. 6,154,766, 6,173,310, 6,260,050, 6,263,051, 6,269,393, 6,279,033, 6,567,796, 6,587,547, 6,606,596, 6,658,093, 6,658,432, 6,662,195, 6,671,715, 6,691,100, 6,694,316, 6,697,808, 6,704,723, 6,741,980, 6,765,997, 6,768,788, 6,772,137, 6,788,768, 6,798,867, 6,801,910, 6,820,073, 6,829,334, 6,836,537, 6,850,603, 6,859,798, 6,873,693, 6,885,734, 6,940,953, 6,964,012, 6,977,992, 6,996,568, 6,996,569, 7,003,512, 7,010,518, 7,016,480, 7,020,251, 7,039,165, 7,082,422, 7,113,993, 7,127,403, 7,174,349, 7,181,417, 7,194,457, 7,197,461, 7,228,303, 7,260,577, 7,266,181, 7,272,212, 7,302,639, 7,324,942, 7,330,847, 7,340,040, 7,356,758, 7,356,840, 7,415,438, 7,428,302, 7,430,562, 7,440,898, 7,486,780, 7,509,671, 7,516,181, 7,559,048, 7,574,376, 7,617,201, 7,725,811, 7,801,967, 7,836,178, 7,861,161, 7,861,253, 7,881,443, 7,925,616, 7,945,584, 7,970,782, 8,005,870, 8,051,168, 8,051,369, 8,094,788, 8,130,918, 8,296,287, 8,321,411, 8,452,755, 8,521,733, 8,522,192, 8,577,902, 8,606,813, 8,607,138, 8,645,313, 8,761,659, 8,775,807, 8,782,083, 8,812,490, 8,832,588, 8,943,044, 8,943,187. 8,958,537, 8,966,597, 8,983,440, 8,984,274, 8,984,288, 8,995,628, 9,027,099, 9,027,105, 9,037, 577, 9,038,152, 9,076,006, 9,086,837, 9,116,954, 9,124,630, 9,154,303, 9,154,486, 9,160,727, 9,166,986, 9,171,073, 9,172,699, 9,173,101, 9,183, 317, 9,195,814, 9,208,213, 9,208,444, 9,262,481, 9,264,415, 9,264,480, 9,269,358, 9,275,127, 9,292,571, 9,300,646, 9,311,683 9,313,206, 9,330,174, 9,338,157, 9,361,392, 9,378,386, 9,386,416, 9,391,782, 9,397,838, 9,397,980, 9,405,804, 9,413,710, 9,413,794, 9,430,629, 9,432,808, 9,438,597, 9,444,805, 9,450,942, 9,450,958, 9,454,594, 9,507,755, 9,513,770, 9,516,018, 9,529,850, 9,563,761, 9,565,175, 9,608,970, 9,640,001, 9,646,165, 9,680,908, and 9,697,350. Other patent applications are pending.


MicroStrategy | iii

Highlights

No need to change underlying systems.

Maximize investments already made.

Build a framework for regulatory compliance.

Start today with rapid implementation.


MicroStrategy | 1


“Only with a truly integrated solution that closely connects the data,

systems, and process environment between Finance and Actuarial will

insurers be able to meet the challenges of the future.”

EY Impacts of IFRS 17 Insurance Contracts Accounting Standard

Insurance organisations have much to agonize over as they prepare to comply with IFRS 17

reporting standards before the approaching deadline. The questions these organisations are

dealing with are much more complicated than simply how CSM (contract service margin) is

measured or RA (risk adjustment) is valued.

The new standard has introduced pressing questions for Chief Financial, Risk, and Compliance

Officers in the insurance industry. These include:

• How do I best integrate my financial and actuarial systems?

• How do I ensure my data is consistent across all systems?

• Should I build or buy a CSM calculation engine?

• Can’t I just enhance the Solvency II actuarial tools and models we already have?

• Is there a way for me to easily pull together risk, policy, premium, and predictive data?

• Can I use this new reporting requirement to transform my underlying data structures?

Additionally, insurers feel pressure to implement the standard rapidly while trying to minimize

the cost of compliance. Companies can expect to incur system, people, and process costs as they

change the way they report insurance contracts.


MicroStrategy | 2

IFRS17 Timeline

https://www.aaa-riskfinance.nl/en/publicaties/alternative-csm-approach-for-ifrs-17/

A few options are available to organisations for transforming operations to become compliant.

Insurers can look to buy a prebuilt IFRS 17 platform that supports the new disclosure requirements.

This can be costly since organisations will have to buy an entirely new platform that still requires

integration with existing GL, finance, and regulatory systems. In addition, staff require intense

training on the new system, and insurers become reliant on the suppliers of the software

applications. This option also does not deliver a framework that can flexibly accommodate potential

future regulatory changes.

A second option is for organisations to build and develop an integration layer, or service bus,

between relevant systems—especially actuarial and finance systems. Such an approach can

be time consuming and opens organisations to the risks of data breaks, system changes, and

security vulnerabilities.

There is a third option that delivers the capabilities organisations need with the security and

flexibility they want—all in a cost-efficient manner: the MicroStrategy IFRS 17 solution.

Year 2016

IFRS17 balloting and field testing

2015

2016

2017

2018

2019

2020

2021

1/1/2017

IFRS9 start comparative period

1/1/2018

IFRS9 effective date

1/1/2020

IFRS9 (insurers) Comparatives Transition Date

IFRS17 Comparatives Transition Date

September 2016

IFRS4: Exemption IFRS9 for Insurers

May 2017

IFRS17 published

1/1/2021

IFRS9 & IFRS17 Effective Date


MicroStrategy | 3

MicroStrategy’s IFRS 17 solution

No need to change the underlying systems or a new data warehouse due to speed APIs

With MicroStrategy’s IFRS 17 solution, insurers do not need to make fundamental changes to their

underlying actuarial, claim, policy, and financial systems. Insurers can continue to use their systems

normally and rely on MicroStrategy’s powerful, award-winning platform to consolidate, map, and

surface data from different systems. This approach means IFRS 17 can be implemented at pace and

at a fraction of the cost of other methods.

Maximize Existing Investments

Under IFRS17, revenues and profitability are predominantly driven by releases of actuarial reserves

(release of Risk Adjustment and release of CSM).

INCOME STATEMENT

Insurance contracts

Contractual Service Margin (CSM)

Fulfillment cash flow

Risk Adjustment (RA)

Best Estimated Liability (BEL)

Income

CMS amortization

Expense

RA amortization

Interest accrual (rate at inception)

Interest accrual (rate at inception)

If an insurer is able to obtain more historical policy information, it is expected that it will achieve a higher

future IFRS result because the release in CSM is usually higher.

In order to optimize IFRS profits, it is advisable to implement a sufficiently robust infrastructure* to

meet the additional requirements:

• Additional functionalty needed

• Additional data (e.g. historical policy data) needed

• Increased number of calculations

*Current infrastructure does not meet the requirements and is not well-positioned to optimize future IFRS results

https://www.aaa-riskfinance.nl/en/publicaties/alternative-csm-approach-for-ifrs-17/

The MicroStrategy IFRS 17 solution sits on top of the insurer’s existing systems and, using IFRS 17

taxonomy, writes the data into the required normalised IFRS format. The following capabilities are

provided with this semantic layer or graph:

• Data lineage

• Account mapping


MicroStrategy | 4

• Single version of the truth

• Data reconciliation

• Data governance

• Content recommendations

• Data calculations including CSM and RA (cost of capital, value at risk, present value of future

cashflows for each portfolio, and more)

With this semantic layer, organisations do not need to invest in new systems and applications

for the sake of compliance. Instead, they can build a metadata layer abstracted from the source

systems, thereby ensuring source integrity and independence. This approach significantly reduces

the time to implement IFRS 17 and its associated costs. Investment in training is minimal and

processes are not radically changed; business can continue operations as normal. By empowering

organisations with federated analytics, MicroStrategy allows insurers to keep their existing

investments in reporting and analytics platforms and simply use the semantic graph for the

underlying data structure.

Aggregate Easily

“The requirements for the level of aggregation of insurance contracts have

been simplified compared to the original proposal….Nonetheless, this will

be one of the most challenging aspects of implementing the standard.”

Deloitte IFRS in Focus

IFRS 17 requires insurance contracts to be grouped in several ways.

Contracts are grouped as portfolios subject to the same risks and managed together. Portfolios are

segmented into those that are onerous at inception, have no significant risk of becoming onerous,

and all other contracts. In addition, contracts need to be further grouped into one year or less cohorts,

meaning CSM is determined on an annual basis and then amortised over the life of the contract.

Because the grouping requirements of IFRS 17 mean data needs to be joined from different tables,

a system needs to support aggregate tables and ensure that ad hoc queries are performance-

optimised. MicroStrategy delivers this capability as it intelligently picks the required table or

transactional level, aggregated as required, and further provides tables from multiple data sources

to be accessed simultaneously. The insurance companies that aggregate quickly and accurately

will not only comply with IFRS 17, but also have a means of visualising the information in visually

appealing ways.


MicroStrategy | 5

Rapidly Report on CSM and RA Trends

IFRS 17 requires that historical data be considered to determine future cash flows and non-finance

risk adjustments. Trends are determined from this historical data. Many applications provide access

to historical data or to data sitting in memory—but not both at the same time. Unlike these

solutions, MicroStrategy simultaneously accesses historical data sitting in financial data sources

and current actuarial data residing in memory. This yields a system that performs at high speeds,

even when volumes are massive. This is important to insurers who have millions of customers and

hundreds of millions of records. Using HyperIntelligence™, a new feature that delivers insights in

zero clicks, organisations can track any client or transaction within a browser application without

having to navigate to a separate analytics tool.

Build a Framework for Regulatory Compliance

It’s one thing to solve IFRS 17 compliance—it’s quite another to create a framework that allows for

easy compliance into the future. As regulations around the world continue to tighten, organisations

can expect to need to comply in more areas. In the insurance industry alone, changes to IFRS 17,

IFRSR 15, and IFRS 9 signal other significant regulatory requirements still to come.

As a solution for IFRS 17, MicroStrategy provides a reusable framework that allows insurers to be

compliant now and reuse objects for other standards and regulations. Data does not need to be

recreated in other systems and the semantic graph components can be reused, thus negating the

need for additional structures, systems, training, and processes.

How It Looks

Implementing IFRS17 Rapidly and Painlessly

VPN Directories PACS EMM

PROTOCOLSDATA

RDBMS OLAP Local Files Cloud DataReal-time

StreamsBig Data

APPS

Cloud AppsEnterprise BI ERP Statistical Charting

SERVICES

Mapping MediaMachineLearning

NaturalLanguage

A PLATFORM FOR ENTERPRISE ANALYTICS AND MOBILITY

Fully Scalable: Deploy and Grow Over Time

Power BI TableauQlik MicroStrategy

FEDERATED ANALYTICS

- Single Version of the Truth- Object Reusability- Data Governance- Security


MicroStrategy | 6

Get Started TodayThe MicroStrategy UK office will work with

your organisation to deploy an IFRS 17

solution in only six weeks. This offering

includes 50 Intelligence Server licenses, 50

Web licenses, 5 Architect licenses, and 240

hours of implementation services.

For more information and to get started,

call +44 208 396 0000.

microstrategy’s ifrs 17 solution...microstrategy’s ifrs 17 solution microstrategy | iii...

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