Outsourcing Investment Accounting for a Life Insurance Company

A Canadian life insurance company struggled with data quality, data management and the business processes related to its investment and fund accounting operation. This increased the risk of accounting and reporting errors in its general fund business, universal life index-linked products and separate accounts, where 400+ NAV’s were generated in-house every business day. The company elected to pursue an outsourcing strategy, moving all investment and fund accounting processes off-site and engaged us to provide leadership and subject matter expertise through this process.
During the project, we provided a team of resources skilled in business analysis, system development and project leadership. We worked in partnership with the client and the client’s two outsourcing partners. Our responsibilities were varied and diverse throughout the project, and included:

  • Shoring up existing business processes to survive the transition including implementation of new business processes and reporting for security impairments, security master file data scrubbing and development of multi-basis, multi-currency roll forward reporting for general fund assets.
  • Helping the client determine the appropriate outsourcing strategy, which ultimately involved engaging two outsourcing partners to meet the unique needs of the business.
  • Assisting with the due diligence effort, to ensure that the outsourcing partners had a clear understanding of the scope and complexity of the existing operation.
  • Assisting with project planning and administration related to the outsourcing effort, leading to development of a reasonable and achievable implementation schedule that was substantially adhered to through the course of the project.
  • Leading the effort to articulate the client’s business requirements in the context of the outsourcing arrangement. Clear definition and broad user acceptance of the requirements were crucial to what ultimately was a successful and timely conversion.
  • Developing an interim solution for investment performance measurement of universal life products, where matching of asset and liability returns is a key component for minimizing company capital requirements for the product.
  • Developing a new cash management and forecasting system to be retained by the client. Development was performed using the traditional software development lifecycle, in collaboration with client’s development team.
  • Decommissioning and transitioning 75+ Microsoft Access and Excel processes to critical to client reporting and operations infrastructure, including pricing, delivery of NAV’s to external entities, universal life liability valuation, etc. The processes had to be decommissioned to support an incremental conversion schedule, where portfolios transitioned to outsourcing partners over the course of eight weeks.
  • Assisting with requirements, specifications, testing and deployment of new interfaces to client’s investment advisor, via Charles River Investment Management System. This included development of a conversion architecture to support the incremental transition of portfolios to outsourcing partners.
  • Completing inbound general ledger mapping from two investment accounting systems, including full reconciliation, parallel processing, and resolution of mapping differences caused by core system functionality differences.

Why us?
It started with our investment accounting experience, particularly as it related to challenges faced by diverse life insurance companies. We were called upon initially to help with existing processes, but quickly became an invaluable resource for the whole outsourcing effort. By quickly increasing our understanding of this client’s unique business challenges, we were able to guide them through the remainder of the project.
The true measure of our success can be expressed through satisfaction not only from the client but from both outsourcing partners. Our understanding of industry best practices, outsourcing and service providers allowed us to provide a reasonable perspective and enabled us to quickly resolve disagreements between the parties involved.