Market Reform and Rüschlikon Initiative Market Reform Forum Andrew Muir, SWIFTPeter 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 Londons 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 The Rüschlikon Initiative - Goals Replace paper by e-data and for reasons of cost, speed and quality Avoid proprietary standards and connections and foster an industry 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 avoidedTo be targeted services insurers brokers re-insurers hub services insurers brokers re-insurers

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 Central Hub: Vision Initial Contract Ref. Premium Account Claims Movement Financial Statement of Accounts Acknowledgement per Message Payment 1 Central Service Cedent / Broker Shared process rules Single Point of Access Reinsurer Services Mapping Validation Routing Value added Reports Storing 6 6 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 Commercial Proposal due Pilot starts April First package of additional functionality Autumn Fully open solution available March 2010

10 SWIFT in three parts: communitystandardsplatform

11 The SWIFT community fund administrators MA-CUGs banks founded SWIFT money brokers trading institutions - registrars & transfer agents - custody providers - trust or fiduciary services companies investment managers - broker/dealers - central depositories & clearing institutions - exchanges - payments MIs - proxy voting agencies - non-shareholding financial institutions - treasury counterparties - treasury ETC service providers travellers cheque issuers securities MIs securities market data providers 1996 treasury securities ETC service providers 2006 corporates regulators 2007

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 SWIFT figures (December 2007)

13 SWIFTs business model Traffic Price (EURcent/msg) Traffic (Millions of messages)

14 SWIFT in three parts: communitystandardsplatform

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

16 SWIFT Standards development Business process modelling SWIFTNet Market practice ApplicationsIntegration Standards SWIFT Partners

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

18 SWIFT in three parts: communitystandardsplatform

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

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

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

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: