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Market Reform and Rüschlikon Initiative

Market Reform and Rüschlikon Initiative. Market Reform Forum. Andrew Muir, SWIFT Peter Arbenz, Swiss Re 2 October 2008. Agenda. Goals of Market Reform vs. Rüschlikon Initiative An Introduction to the Rüschlikon Initiative: What? Why? When? Who? And How? An introduction to SWIFT

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Market Reform and Rüschlikon Initiative

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  1. Market Reform and Rüschlikon Initiative Market Reform Forum Andrew Muir, SWIFT Peter Arbenz, Swiss Re 2 October 2008

  2. Agenda • Goals of Market Reform vs. Rüschlikon Initiative • An Introduction to the Rüschlikon Initiative: • What? Why? When? Who? • And How? • An introduction to SWIFT • What is different this time? • Synergies RI and MR • Contacts

  3. London Market Reform - Goals • Identify inefficiencies in London’s processes and develop solutions to deliver a more competitive service • Ensure that London is the market of choice for insurance risks • Assure consistency of direction and cooperation between market players • Meet increased customer expectations re level of information and the speed and quality of services

  4. insurers insurers brokers brokers re re - - insurers insurers hub services services The Rüschlikon Initiative - Goals • Replace paper by e-data and for reasons of cost, speed and quality • Avoid proprietary standards and connections and foster anindustry solution for the benefit of our clients • Enable the evolution of the (re)insurance business model • Enhance the reputation and attractiveness of the insurance industry for investors and other stakeholders To be avoided To be targeted

  5. The Rüschlikon Initiative – What, and Why? • a vision • to establish a central platform for automation of (re)insurance transaction processing • in order to • Increase speed, quality and transparency of transactions • starting with • a pilot focussed on eBOT(accounting & settlement) • a limited rollout • reusing existing componentry where appropriate • in a scalable and extensible way

  6. 2 1 Central Hub: Vision Central Service Cedent / Broker Initial Contract Ref. Premium Account Claims Movement Financial Statement of Accounts Acknowledgement per Message Payment Single Point of Access 1 2 3 4 3 5 Services 4 5 6 Validation Mapping 6 Reinsurer Storing Routing 1 2 3 4 Value added Reports 5 Shared process rules 6

  7. The Rüschlikon Initiative – When? • pioneers will join the pilot from April 2009 til March 2010 • early adopters will join during or after the pilot • the first phase will focus on messaging (data exchange), and will grow to include: • Validation • Matching and pairing • Netting … and possibly more

  8. The Rüschlikon Initiative – Who? pioneers include: • SwissRe • MunichRe • SCOR • AON • Willis • Benfield • ACORD • SWIFT some early adopters are already involved …would you like to join in?

  9. The Rüschlikon Initiative – How? milestones: - Project Definition Document signed 17.9.08 - Commercial Proposal due 31.12.08 - Pilot starts April 2009 - First package of additional functionality Autumn 2009 - Fully open solution available March 2010

  10. community standards platform SWIFT in three parts:

  11. The SWIFT community banks founded SWIFT - broker/dealers - central depositories & clearing institutions - exchanges 1973 regulators corporates 2007 securities market data providers 1987 2006 travellers cheque issuers 2004 1988 fund administrators 2002 money brokers 1989 2001 - registrars & transfer agents - custody providers - trust or fiduciary services companies MA-CUGs 1990 2000 securities MIs 1992 1999 - treasury counterparties - treasury ETC service providers investment managers 1995 1998 1996 • - payments MIs • proxy voting agencies • non-shareholding financial institutions trading institutions treasury securities ETC service providers

  12. SWIFT figures (December 2007) 3.5 billion messages per year 8,332 customers 208 countries average daily traffic 14 million messages peak day of 16.1 million messages 28 September 07

  13. SWIFT’s business model Price (EURcent/msg) Traffic (Millions of messages) 50 3000 Traffic 45 2500 40 35 2000 30 1500 25 20 1000 15 Price 500 10 5 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

  14. community standards platform SWIFT in three parts:

  15. Standards – working with the community Convergence UNIFI (ISO 20022) SWIFT Standards Development and market practices across all markets Implementationof standards enabling STP

  16. SWIFT Standards development Business process modelling SWIFTNet Marketpractice Applications Integration Standards Partners SWIFT

  17. SWIFT and other Standards bodies Treasury Payments EPC EACT CHIPS IGTA TCH RosettaNet/PMP IFSA TWIST NACHA OAGi FpML IFSA ISTH W3C X12.F OMG Fedwire ISDA TC68/SC7 CEFACT/ TBG5 TC68/SC4&7 IFX ISO/TC68 UNIFI - ISO 20022 UN/CEFACT FPL Bolero TC68/SC7 CEFACT/TBG5 TC68/SC4 SIFMA OASIS SMPG EACT IIBLP e-bMoU FISD/MDDL IFSA MiFID ACBI GS1 G30 WCO ISSA TWIST ACORD X9.D ISITC ICC Insurance Giovannini UNCITRAL Securities Trade Services

  18. community standards platform SWIFT in three parts:

  19. Standards Rules SWIFTSolutions Quality of service Security Resilience Reliability Platform – the SWIFT product stack SWIFTSolutions Payments  Treasury  Trade  Securities Directories and Information Services Messaging Services Interfaces Secure IP Network (SIPN)

  20. Provided by FIs or vendors Application but also To enable FI integration Partners SWIFT Solution components Structured standards– SWIFT or others Standards SWIFTNet in a SWIFT managed CUG mandatory SWIFTNet Industry agreed market practice and R&L, with SLAs Rules

  21. The Deliverable insurers insurers brokers brokers re re - - insurers insurers services

  22. Many prior initiatives have failed –What is different this time? • The maturity of standards and technical solutions is higher than during the times of RINET, the suffering from inadequate processes too • Focus on non-competitive administration and information processes • Exclusion of all quoting, placing and trading components which are by nature competitive and potentially in conflict with anti-trust law • Avoidance of big startup investments – use existing data standards, message forms, interfaces and platform • Choice of an experienced non-for-profit partner from the banking side: SWIFT • Inclusion of leading brokers in pilot team (Aon, Benfield, Willis) • Structuring as open market initiative without access or exit restrictions  no hidden agenda

  23. Where can the Rüschlikon Initiative help to reform the London Market? Short term: • Global implementation of ACORD RLC standards • Availability of joint message transmission platform • Secure transmission of data and files • Many peer-to-peer connections replaced by one SWIFT connection • Acceleration of accounting processes and cash flow Longer term: • Straight through processing of (re)insurance data • Additional efficiency in the areas of settlement, pairing and payment • Reduction of credit risk • Process statistics and benchmarks • Evolution of the business models (e.g. risk trading)

  24. Contacts: andrew.muir@swift.com +44 207 762 2030 peter_arbenz@swissre.com +41 43 285 3358 rlaker@acord.org +44 207 617 6405

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