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CAL/ FEDSURE INTEGRATION

CAL/ FEDSURE INTEGRATION. 23 NOVEMBER 2001. Presentation Outline. Philosophy Martijn Appelo Products and Valuation Martijn Appelo Integration Progress Hennie Nortje System Conversion Hennie Reyneke Accounting and Investments Andrew Birrell. Looking Back.

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CAL/ FEDSURE INTEGRATION

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  1. CAL/ FEDSURE INTEGRATION 23 NOVEMBER 2001

  2. Presentation Outline • Philosophy Martijn Appelo • Products and Valuation Martijn Appelo • Integration Progress Hennie Nortje • System Conversion Hennie Reyneke • Accounting and Investments Andrew Birrell

  3. Looking Back An agreement was reached with Fedsure on 24 August The agreement is effective from 31 May 2001 Terms • CAL has reinsured individual life policies underwritten by Fedsure ILD • CAL assumes responsibility for the administration of the policies covered in the reinsurance agreement • Investec 29% shareholder in CAL

  4. What we found • New Business Cost : R2 400 - R4 400 • Renewal Cost : R 460 - R 250 • Systems : Policy Administration - Fedsure ILD / Norwich • Business Processes - Fedsure ILD / Norwich • Large number of isolated projects

  5. Physical Locations Cape Town Johannesburg Other Systems Programmers Programmers Accounts Management Department Call Centre Department Branches Various Head Office Staff

  6. Initial Decisions • Investment administration to IAM • Close new business • Cost is priority • CAL : Process • : Systems • : Location

  7. Life Assurance Company Activities • New business • Monthly administration • Periodic administration - statutory returns • Investment functions • Internal administration - staff - location

  8. Life Assurance Company Example: Monthly administration: - Collect premiums - Allocate premiums - Accounting - Investments - Policy alterations - Policy benefits - Policy charges - Reassurance - Record keeping

  9. Life Assurance Company • Functionality required • Shortfalls • Completeness of computerised systems: • - Fedsure • - Norwich • - Capital Alliance Life

  10. Functionality Shortfall and Importance Values : Very High Commission : Medium Multiple investment funds : Low Investment switches : Lower Escalation methodology : Medium Reassurance : Low Loans : High

  11. Business Decisions Priorities: 1. Conversion - Cost 2. Service Levels - Cost 3. Investment returns - Outsourced 4. Policy retention - Result

  12. Business Decisions • Systems: • Conversion first • Solve existing system issues after conversion • Perspective: • Systems • Products • Data clean-up

  13. Completeness of Computerised System • Fedsure, Norwich, CAL: • Policy administration • Accounting • Investment accounting • Matching exercise (policy/ investment) • Actuarial interface • Analysis of surplus

  14. Fedsure Policies in Force

  15. Fedsure Ancillary Benefits

  16. Norwich Policies in Force

  17. Norwich Ancillary Benefits

  18. Product Perspective

  19. Product Process • Product specifications - outsource SAAC • Team: 4 actuaries • 4 senior students • 2 junior students • 3 CAL staff

  20. Product Process • Reconciliations • - VIP • - Prophet • - Administration system • Data checks - unknown commitments • Administration - CAL • Completion date - February 2002 • System conversion is independent

  21. Integration Progress

  22. Presentation Outline Model for success Integration objectives Risks Integration team Achievements to date Feedback on Service Level Agreements System conversion

  23. Model for Success Mergers frequently fail to meet their objectives Essential steps to ensuring successful integration: Sound due diligence Ensure staff feel secure throughout Build trust in management All staff to share a compelling vision Integrate and streamline systems and processes

  24. CAL’s Integration Objectives Integrate staff Integrate systems Business retention Communicate Optimise intellectual knowledge Reduce costs Relocate staff Seamless transition for policyholders Achieve complete integration in 15 months

  25. Risks Inherited backlogs Not achieving Service Level Agreements Market perceptions People integration Manage expectations Meet timetable deadlines Pace of integration

  26. The Integration Team Elize O’Neil Colin Brazer Enver Dickson Laurel Towler Ernest Pereira Hennie Reyneke Championed by Martijn Appelo Lead by Hennie Nortje Brenda Mills

  27. To date the integration process has exceeded expectations Achievements thus far.……... Integration Process

  28. Physical Integration CAL business units relocated Refurbishment of CAL building Additional staff parking secured Office environment established PABX / switchboard equipment upgraded Fedsure staff relocated to CAL building

  29. IT Infrastructure IT capacity planned Fedsure system access implemented from CAL network User workstations installed New servers implemented for email, network, imaging, fax and line of business systems New storage area network implemented

  30. Skills & Knowledge Transfer Authorisation processes revised Induction courses facilitated Call centre multiskilling commenced Buddy system adopted

  31. People Integration Announcement of new EXCO structure Announcement of management structure Management integration seminar held Employment offers finalised Organisation structures finalised Divisional teambuilding sessions held Fedsure staff loaded on CAL payroll Restructuring and redundancies finalised Culture survey and forums conducted

  32. Process Integration Business process review completed Volume estimate established Standard times for activities identified Business process requirements

  33. Systems Conversion System conversion teams finalised Responsibilities per team defined High level systems analysis completed Annuity system conversion completed System conversion detailed plan completed Time table agreed

  34. Staff Communication TAXI campaign - created the opportunity for staff to actively participate in the integration…. ….further enhancing a feeling of security and comfort amongst staff TAXI ENGINE EOOM

  35. Staff Communication Whatzup - a weekly newsletter Taxi Talk - the official integration news piece Whatzup Taxi Talk

  36. Other Communication Editorials Visits and workshops to intermediaries Blast faxes Policyholder communication

  37. Brief Summary - Achievements to date Surveys & forums conducted High level plan for system conversion Intermediaries workshops Physical integration System processes identified Announcement of new structure Culture surveys & forums conducted IT infrastructure Taxi communication vehicle in progress Implementation of new servers Refurbishment Office moves complete Integration team in place Induction program introduced Employment offers Systems conversion plan Reinsurance agreement signed Relocation of CAL business units Conversion of annuity system Staff restructuring & redundancies November August September October

  38. Feedback on Fedsure Service Level Agreements

  39. Feedback on CAL Service Level Agreements

  40. Backlogs inherited Scanning arrears Restructuring of silos Relocation of staff Data statistics Staff morale Double deduction of September premiums Market value adjuster Volatile markets Difficulties Encountered

  41. Work in Queues

  42. System Conversion

  43. Presentation Outline Vision Objectives Fedsure ILD systems CAL systems Fedsure source  CAL target General conversion approach Risks Project plan Project feedback

  44. Vision Reduce annual IT costs per Fedsure ILD policy by 75%

  45. Objectives Convert all Fedsure ILD systems to CAL systems before December 2002 - Speed very important Business must still meet existing service levels Reduce Fedsure IT maintenance costs by 75% Systems must be good not perfect - manual vs automated Find short cuts to success Convert data as-is - do not fix data during conversion

  46. Fedsure ILD Systems Saturn Fedsure policy administration Lazarus Norwich policy administration FANS Fedsure annuities administration VIP Valuations Aims Commission administration Masterpiece General Ledger FADS Document and letter printing Internet Marketing and client/broker enquiries Eastman Kodak Workflow and images Data warehouse Copy of all Saturn/Lazarus/Fans data Clues Client enquiries (Call centre)

  47. Fedsure ILD Systems Annual Costs to run Fedsure ILD systems • Saturn R7.6M • Lazarus R16.9M • Fans/Accounting R3.0M • Aims R2.7M • Workflow R3.6M • Datawarehouse/Internet R3.7M • Other R7.7M • Depreciation R16.7M • VIP minimal TOTAL R61.9M

  48. CAL ILD Systems • Sun - CAL policy administration • Hyphen - Annuities - Payment and Collection • Oculus - Images • Internet - Enquiries • Accountability - General ledger • Prophet - Valuation

  49. Fedsure Source  CAL Target • Saturn  Sun / Hyphen • Lazarus  Sun / Hyphen • Fans  Sun / Hyphen • Aims  Sun • Eastman Kodak  Sun / Oculus • Fads  Fads • Datawarehouse  Sun • Clues  Sun • VIP  Prophet • Masterpiece  Accountability • Internet  Internet

  50. General Conversion Approach • 13 Conversion projects • Conversion approach • High level analysis • Project plan • Detailed analysis • Programming • Testing • Training • Conversion • Verification and audit • Streamline system processes – will commence after conversion

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