IORP II
Overcome challenges. Gain a competitive advantage.
Overcome challenges. Gain a competitive advantage.
How AMX can help insurers benefit from Sweden’s IORP II Implementation?
Sweden’s IORP II implementation bill (2019) allows life insurance companies and workplaces pension savings institutions to convert to occupational pension companies governed by IORP II.
AMX aims to guide institutions thorough this transition, helping them transform their business by reducing costs, driving operational efficiency and improving fund governance.
What would would you like to know?
Who we can help About AMX
Our solutions Our team
Who we can help
Institutions looking to find a new perspective on how to manage, future-proof and improve the competitive position of their businesses.
Occupational Pension Companies
i.e. workplace pension savings institutions which became occupational pension companies under the Swedish implementation of the IORP II directive.
Challenges:
- Rising administrative and infrastructure costs
- Human capital burden to fulfil key risk management functions
- Opportunity costs of resources used for implementation
- Stronger capital requirements: calculation method based closely on Solvency II
- Access new asset classes or strategies e.g alternatives
- Implement investor decisions in the most efficient way
Life Insurers
i.e. life insurance companies which are looking to convert all or part of their business to an occupational pension company by 2022.
Challenges:
- Find operational and investment cost savings
- Access new asset classes or strategies e.g alternatives
- Improve risk management and governance procedures
- Meet strict data management and reporting requirements
- Implement investor decisions in the most efficient way
About AMX
Our solutions
Our platform provides an investment infrastructure to both run and launch pooled funds, while leveraging scale and the latest technology to improve efficiency, cuts costs and drives change. We provide a modern utility that gives investors greater control and increased transparency while helping them solve the challenges of the IORP II directive and many of the traditional challenges faced by insurance companies.
Which solution would you like to see?
Cost savings Risk management Capital requirements
Efficiencies Investment strategy
1. Cost savings
AMX aims to provide firms visibility of the true costs of running a their investments, helping them examine their cost base and find new savings across the entire investment process. Often, companies operate inefficient funds with poorly negotiated counterparty agreements, leading to expensive and uncompetitive fund operating costs.
How AMX can help – operational savings
- Service provider fees – AMX uses its scale to negotiate highly competitive service provider and counterparty fees, and actively monitors these costs on an ongoing basis, ensuring all funds are run in the most cost-efficient manner. AMX can help reduce charges for custody, administration, audit, legal and director fees.
- Control of all costs charged to fund – Trading costs are not usually included in the TER, so it is important to be aware of and control them. All expense payments are also controlled, ensuring travel costs, manager legal expenses and non-strategic specific costs (e.g. certain middle office costs) are not charged to the fund.
- Efficient treasury management – Platform-level oversight ensures the best methods of diversification and most efficient use of cash, saving effort for sub-investment managers. By optimising excess cash, treasury management can increase the return on any cash held by around 200bps.
- Fund rationalisation – AMX provides a robust infrastructure for insurers looking to approach fund rationalisation exercises, taking care of the operational and legal complexities and allowing insurers to get ahead of the curve and function efficiently. Outsourcing the operational pain of these exercises, not only saves money but provides institutions the time to focus on growing their core business.
AMX uses scale and standardisation to reduce the costs of investing across all layers of the investment chain.
How AMX can help – investment savings
- Investment management fees – AMX uses its scale and that of its parent company to negotiate highly competitive investment management fees.
- Use of tax transparent vehicles – avoiding unnecessary withholdings tax leakage can result in savings of up to 44bps pa on global equity mandates.
Where a Swedish investor invests in a QIAIF CCF; it may potentially benefit from material tax savings.
- Scenario I: WHT savings in Top 5 MSCI World countries of Swedish insurer investing in an AMX QIAIF CCF versus ‘opaque’ Fund = approx. 22 bps
- Scenario II: WHT savings in Top 5 MSCI World countries of Swedish Pension scheme investing in an AMX QIAIF CCF versus ‘opaque’ Fund = approx. 44 bps
Please get in touch for more information on potential cost savings
Through its scale and tax transparent fund structures AMX can negotiate highly competitive investment management fees and reduce tax drag.
2. Risk Management
AMX ensures risk management is at the forefront of all investment decisions. However, not all institutions have the resources to offer sufficient risk management oversight on their funds. AMX acts as an extension of the risk management function – either as a second layer of governance or by allowing key functions to be outsourced.
How AMX can help
- Independent risk management – A dedicated AMX team conducts investment risk oversight on each AMX fund in line with each investor’s risk guidelines. This is independent of the portfolio manager’s own internal risk processes, and active portfolio manager engagement is conducted across the lifestyle of the fund.
- Outsourced key functions and reporting – Investment risk management, actuarial, internal audit, Asset-liability management, liquidity and concentration risk management, environmental, social and governance (ESG) risks, operational risks
- Regular oversight of fund data – Regular analytical reviews of accounting records designed to ensure reported NAV is correct, additional reviews of cash and asset reconciliations, plus extensive set of key service indicators (KSIs) with service providers and regular monitoring to ensure they are upheld.
- Compensation for trade errors – AMX managers are contractually obliged to rectify trade errors and compensate the fund.
- Monitoring of counterparty exposures – AMX monitors how much exposure each fund has to individual counterparties on a daily basis, on both a sub-fund and aggregate level across AMX to avoid systemic risks.
- Independent governance structure – Fund directors are appointed independently of the investment manager.
The AMX platform is designed to ensure fund governance receives the attention it requires and to ensure that risk management is integrated into all decision-making processes. Investors benefit from greater transparency and an independent governance framework.
3. Capital requirements
AMX ensures pension companies and insurers fully understand the risks embedded on the asset side of their balance sheets. Often, calculating and meeting capital requirement thresholds can be a constant struggle, and AMX can help institutions look for new ways to manage these requirements while not limiting the investment opportunities of underlying investors.
How AMX can help
- Reduction of capital requirement – Investing via tax transparent fund structures can allow institutions to reduce their capital requirements. By using a tax transparent fund such as the Irish-domiciled Common Contractual Fund (CCF), the assets of that fund are not held on a company’s balance sheet, as the underlying investors are deemed to be the owners of the assets for tax purposes, rather than the insurance/pension company itself. This can help to reduce the capital requirement without any change to an investor’s asset allocation.
- Calculation of capital requirements – AMX can help institutions calculate their capital requirements, whether they are reporting under the IORP II directive or Solvency II. AMX utilises the services of Willis Towers Watson Insurance Consulting & Technology to provide all fund data in industry-standard tripartite reporting (TPT). Holdings data for every fund is also provided via quantitative reporting templates (QRTs). Solvency capital requirement calculations (SCR) are then produced and can be adapted by the institution, depending whether industry standard or internal models are preferred.
The standardised structure of AMX funds provides full transparency and full look-through to underlying fund data.
4. Finding Efficiencies
AMX helps pension companies and life insurers find efficiencies, enabling them to save on both time and resources. AMX makes use of technology to transform the way insurers approach the investment process, replacing manual, outdated processes with automation.
How AMX can help
- Standardised framework – All funds and asset managers on AMX operate within a standardised contractual framework that aims to ensure consistency and efficiency across our platform.
- AMXConnect – The ability to manage your investment portfolio via a sophisticated client portal, AMXConnect, with a single log-in. Reporting on all funds and managers is accessible in a timely and uniform manner.
- Tailored reporting (inc ESG) – AMX takes care of reporting, providing consistent performance reporting and manager commentary across all funds. Materials are produced to meet the specific needs and regulatory requirements of its users. As the ESG reporting requirements of clients become more complex, AMX will provide customised ESG reports so that investors receive the granular information they need.
- Voting and engagement – An independent voting and stewardship overlay can be added to each fund. Relationships with Hermes EOS and PIRC offer established voting strategy services and ensure board accountability for ESG issues.
- Dedicated client service team – are on hand to manage account- or investment-related queries, freeing up time and resources.
More time to focus on what really matters.
5. Investment strategy
AMX helps pension companies and life insurers overcome difficulties when trying to implement or make changes to investment strategy. AMX does not replace investment advisers, offer investment advice or look to change your strategic asset allocation – it simply offers an infrastructure to implement an investment strategy in the most effective way.
How AMX can help
- Access new asset classes – AMX houses strategies from all asset classes, and helps institutions access those classes where they have had little prior experience e.g Alternatives
- Access wider pool of investment strategies – AMX can provide insurance reporting for all funds, from all asset managers. This gives insurers access to a range of asset managers whom have not previously been able to service them and meet their strict reporting requirements.
- Switch strategy without member communication – When making core investment changes, insurers can struggle to find a method of communicating these changes to policyholders, often prohibiting them from doing so. AMX can allow certain insurers to make changes to core investment allocations, or switch investment managers, without the need to notify policyholders as there is ultimately no change to the overarching asset manager (AMX).
- Implement investors’ decisions more quickly – A dedicated onboarding team and streamlined process for setting up new funds means time-to-market is faster than the industry standard. Only one set of legal documentation is required, meaning once the initial onboarding process is complete additional investments into other AMX funds are quick and efficient.
The AMX platform provides an infrastructure that allows companies to streamline, structure and consolidate their investments in the most efficient manner.
Our team
