Solvency II special report

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The Full Look-Through

"Look-through" is a buzzword in discussions of Solvency II, as seen in the Virtual Roundtable and Q&A in this special report on the European regulation. Northern Trust's Andrew Melville, the subject of the Q&A (page 18), defines look through as the requirement for insurers to show details of individual security holdings in pooled funds. HSBC's Chris Johnson, in the Roundtable (page 8), points to look-through as a key requirement for Solvency II compliance.

A significant amount of work now looms if firms are to achieve the necessary look-through capability, which must be completed in less than three years. SIX Financial Information's Darren Marsh says in the Roundtable that the industry still needs to identify and centralize key data elements for Solvency II, as well as deal with new data elements, such as new identifiers. State Street's John Ellis says the industry has to hasten its ability to supply data suitable for look-through to within five days of the end of a month. Thomson Reuters' Tim Lind adds that firms must focus on data quality in their data management strategies. Data managers must be sure to have adequate data for calculating capital requirements to comply with Solvency II, Lind says.

This work should have its benefits, though. Data quality concerns will be addressed by tackling inconsistencies between investment records and reported data. Data will need to be aggregated and consolidated to achieve the consistency necessary for compliance. Portfolio data will also become more transparent.

In five years from now, when Solvency II has made its impact, the end result should be increased data quality and more precise accounting for assets throughout the buy-side value chain.

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