A Property Casualty Insurance Company was confronted with the challenge of spreading investment risk appropriately across the five companies for which it managed assets. We were called in to assist in identifying and implementing a solution. We devised a solution that involved establishing two pools of assets balanced between Held For Trading and Available for Sale. It was important to understand not only how each companies interest in the pools were maintained but also how income, and unrealized gains were allocated. Lastly we needed to make sure that we provided lookthrough reporting to each companies holdings and supported posting to ledger and regulatory reporting. In order to achieve this we:
- Developed a target operating model that met all stakeholder needs
- Searched for and acquired a partner accounting engine to calculate interest in pool and allocation of interest and unrealized gains
- Developed an operational data store to manage ledger postings between the partner accounting module, the investment accounting system and the corporate ledger
- Developed a comprehensive multi-basis trial balance engine for reporting and management of investment accounting
- Undertook an in-place re-conversion of the investment accounting system to transition to the new operating model
- Developed and delivered procedures and training to support new daily processes around investment pool rebalancing and associated cashflow management
Why us? We had already established trust with the client, helping them implement daily cash management processes that allowed them to feed trade date cash balances to their performance measurement solution. Along the way we had solved problems with Futures processing that had caused cash and FX problems over the years. In doing this we had demonstrated a knowledge of their investment accounting system and an ability to work in partnership with their systems provider to solve problems.