Case Study - IFDS Group Case Study.pdf · third party administration model, initially from Styne House (Phoenix’s office). The aim of the BAFO was to provide Phoenix (through the

MAy 2012

Case Study – PhOENIx IrELAND– SCOTTISh MUTUAL INTErNATIONAL

Copyright Statement This document is confidential and is the property of IFDS Percana Group Limited. IFDS Percana Group Limited retains all title to copyright in this document.

“Following a detailed selection process IFDS Percana were chosen because of their wide range of capabilities to deliver a comprehensive cost effective IT driven solution through their Percana system. We were also impressed by the expertise and commitment of the IFDS Percana team linked to the strength of their shareholders. We are impressed by IFDS Percana’s track record of delivery and look forward to working with them on this contract.” Ciaran McGettrick, Phoenix (‘Phoenix’ - previously Pearl Group Limited) Ireland’s Managing Director

Phoenix Ireland is part of a broader group of companies and is a top 10 UK life assurer; other companies include Phoenix Life, London Life and NPI. As at 30th June 2009 (known then as the Pearl Group) it had 7.65m policies in force and AUM of around £66bn, a significant player in the Life and Pension sector. (Now known collectively as Phoenix Group).

Contents

Background 2

Project Introduction 2

Starting the Project 4

“Executive Summary” of the Phoenix Tender 5

Building a Team 6

Key Strengths and Weaknesses 8

TUPE & TOM 10

Setting out the Work Streams 11

Transformation 12

Governance: Risk and Compliance 16

Group Assistance 18

Managing the Project Teams 18

Post Transformation – New World 19

Summary 24

CASE STUDY PHOENIX IRELAND & SCOTTISH MUTUAL INTERNATIONAL

1

In Ireland, Phoenix Group owns and manages two Life and Pensions businesses – Scottish Mutual International and Phoenix Ireland (previously Scottish Provident Ireland) these are managed through a wholly owned subsidiary, PGMS (Ireland) Ltd (PGMSI), collectively referred to in this document as Phoenix. The companies were acquired when Phoenix bought Resolution plc in 2008. The policy books include life insurance, pensions and protection business and are closed to new business. Even though they are in run off a number of top-ups and alterations take place to existing business.

Phoenix sought a TPA provider who could:

1. Maintain and improve the existing service environment for the policy books by deploying a modern policy administration system

2. Maintain (or exceed) existing service to policyholders and agents.

3. Ensure regulatory requirements and group governance continue to be met

4. Provide cost efficiencies for Phoenix

5. Maximise the future opportunities for the existing staff

See page 24 for a summary of outcomes delivered by IFDS Percana

As part of the response to the RFP process Phoenix were looking for a partner that would be creative, pro-active and supportive. IFDS Percana presented some clear cut opportunities for process improvement through the extensive use of Percana and AWD (Automated Workflow Distributor) systems. We provided existing Phoenix staff with a career path and very quickly proved our in-depth Life and Pension knowledge. We demonstrated our vast migration experience that was necessary to provide the selection committee with the assurances to engage IFDS Percana.

This project presented a variety of challenges including:

• LegacyEnvironmentwithmultiplesystems

• Disengagedstaff

• Booksspanningfivedecades

• Policiesinthreecurrencies

• 72productsandthreepreviousmigrations

This summary provides a synopsis of a process, project and partnership that had its origins via the tried and trusted methods of big company, big system tender processes – RFI, RFP, demonstrations, due diligence and old fashioned relationship building.

In August 2008 IFDS Percana introduced themselves to Phoenix, the typical ‘getting to know you’ meetings ensued – wewerebeingvetted,sizedandqualified,inthefirstinstanceforsuitabilitytoreceivetheRFI.Wehadinfactbeennotifiedof it via two system integrators who were keen on this client and saw IFDS Percana as the vehicle to help them to win this business. They were right and our new group IFDS, State Street and DST Systems had the same intentions. We were ready to win this business and we had all the raw materials necessary coupled now with the corporate strength of our shareholders, whohadanexistingandsignificantrelationshipintheUK with Phoenix.

The process of securing Phoenix as a client began early Autumn 2008, the tender process was protracted, as this project entailed a transfer of 110 PGMSI staff under TUPE (term for the Transfer of Undertakings (Protection of Employment)), four complex migrations off legacy systems, in-depth analysis of a broad range of both domestic and international products and policies spanningfivedecades,whilstcontinuingtomaintainaserviceto the agents and policyholders. A challenge for even the most experienced of Life and Pension specialists. IFDS Percana had successfully completed 12 migrations thus far and already been involved in and preparing for upcoming migration projects. On the grounds of in depth L&P capability, a successful track record and the ability to demonstrate very transparently that the systems and utilities were readily available to complete the projects as agreed – IFDS Percana won the 11 year contract. The tender process was complete on the 31st of December 2009, the day before the partnership officially began and what you’ll read from here on is about the project, the targets, the milestones, the concerns, the key factors and the solutions.

Background Project Introduction


2

The tender process and negotiations gave the two companies an opportunity to build relationships and become familiar with each others cultures, a fundamental factor for the success of the project and partnership post the January 2010 service start date.

Phoenix facilitated a lengthy period of due diligence which gaveIFDSPercanatheopportunitytofinalisethetermsofthedeal and also to establish a deep understanding of the nature of the products which the company administered and the way inwhichtheservicewasdeliveredtotheirclients.Businessandproduct analysis started early; this (in agreement with Phoenix) proved to be invaluable in the success of the project.

While the scope of services stayed true to the objectives of the RFP, the delivery far exceeded the scope of what had initially been considered.

The tender process was protracted, as this project entailed a transfer of 110 PGMSI staff under TUPE, four complex migrations off legacy systems, in-depth analysis of a broad range of both domesticandinternationalproductsandpoliciesspanningfivedecades, whilst continuing to maintain a service to the agents and policyholders. A challenge for even the most experienced of Life and Pension specialists. ”

11 year contractOn the grounds of in depth L&P capability, a successful track record and the ability to demonstrate very transparently that the systems and utilities were readily available to complete the projects as agreed – IFDS Percana won the 11 year contract.

50IFDS UK and Ireland have over 50 BPO clients delivering a full end to end solution, which is completely dominant in the competitive Transfer Agency market and now evolving in the Life and Pension industry in the UK.

12The number of successful life and pension policy migrations complete prior to the Phoenix project by IFDS Percana.

“


3

The Phoenix transformation project was primarily focussed on the migration of Phoenix Ireland’s and SMI’s typically unique products configuredontothePercanaplatform.Thatworkraninparalleltoavarietyofworkstreamswhilstcontendingwithtimeconstraintsand staff concerns (as new IFDS Percana employees) about their future. The staff concerns were addressed through a detailed and opencommunicationprocess.Akeydeliverywastomaintaintheservicetopolicyholdersandintermediariesinrelationtothe72products. We were also very much aware that the regulator would have an interest in monitoring all areas regarding this outsource.

AbusymixwhenaddedtothesensitivitiesofafullTUPEof110staff.TheFinancialRegulator,thePensionsBoard,theFinancialServicesOmbudsmanBureau(FSOB)andtheFinancialServicesAuthority(FSA)intheUKallhadaregulatoryinterestinthepartnership.Theexisting staff union (Unite) were a further stakeholder. All the cogs were in motion to deliver – as agreed!

Despite having an array of highly valued and progressive domestic and international clients, it is fair to say that IFDS Percana had not previously engaged in a project this broad. The knowledge gained through our wide array of clients proved to be invaluable for providing a measured and phased approach for all aspects of this project, an approach which was signed off with the complete backing of the client.

the scope of the project – as expressed in product types

phoenix Life Limited (ir Branch) Scottish mutual international

Non Profit: Life 12%Non Profit: Pension 1%Unit Linked: Life 9%Unit Linked: Pension 6%With Profit: Life 25%With Profit: Pension 47%

Non Profit: Life 2%Unit Linked: Life 71%Unit Linked: Pension 16%With Profit: Life 11%

Starting the Project


4

InlinewithPhoenixprocedure,IFDSPercanaproducedaBestandFinalOffer(‘BAFO’)fortheprovisionofoutsourcingservicesand that document was the culmination of a detailed tender and due diligence process involving an RFI/RFP and a number of workshops between the parties.

ThisBAFOoutlinedtheIFDSPercanaapproachtotheprovisionof a full third party administration service with starting date January 1st 2010. Percana would take full responsibility for all operations within the scope of the RFP. The Phoenix staff would TUPE across to IFDS Percana on that date. The business would migrate off the four Phoenix systems onto IFDS Percana’s policy administration platform ‘Percana’ and implement IFDS Percana’s third party administration model, initially from Styne House (Phoenix’s office).

TheaimoftheBAFOwastoprovidePhoenix(throughthemanagement services company, PGMSI) with visibility of the approach IFDS Percana would take in delivering the systems andservicesanddemonstrateconfidenceinIFDSPercana’scapability to support Phoenix in the short, medium and long term.

The commercial ambition of an outsource is to gain efficiencies, introduce automation to reduce manual processes and bring staff numbers to the optimum level required to run the business. At a minimum the current service levels to policyholders, brokers and IFA’s would be maintained whilst ensuring continued regulatory compliance, operational risk managementandprovidingsignificantcostssavings.

IFDS Percana’s niche is the provision of world class services to Life & Pension companies through the smart use of smart technology. IFDS Percana’s success is evident from the delivery of previous projects and the attention to detail given to all clients. IFDS Percana would utilise a combination of both existing and acquired staff experience to administer the Phoenix books of business. One of the lessons learnt (we realised early into the project) was involving the existing staff – as opposed to simply using them as a resource to inform the project, this turned out to be a wise decision. With significantimpactonthesuccessofthisprojectandseveralmonths into the project it was the TUPE’d staff who assisted with ensuring many of the projects work streams were brought to a successful conclusion.

IFDS Percana would also leverage group resources from IFDS, DST and State Street to deliver the required TPA services with significantcostsavingsandancillarybenefits.Theproposeddelivery model for Phoenix would be a seamless integrated service utilising the back office L&P capability of IFDS Percana.

IFDS Percana would work with Phoenix on a solution to efficiently and cost effectively manage their books of business. The basis for the solution will be:

1. FromJanuary1st2010we“TooktheKeys”fortheentireoperation and existing service level agreements (SLAs) whilst carrying out the transformation. Phoenix staff would TUPE to IFDS Percana at this point.

2. Migrate the Phoenix and SMI policy books onto Percana, IFDS Percana’s policy administration platform in phases and then decommission legacy systems.

3. Complete the voluntary redundancy programme

4. Run the Percana systems for a period in Styne House before transferring to IFDS Percana (Park West) offices on an agreed transfer date in 2011 (this exact date was based on the ensuing business analysis phase).

5. Staff being made redundant would be in a four phased schedule agreed by IFDS Percana and Phoenix. The last of the redundancies to be made when the Target Operating Model (TOM) was achieved and the business running efficiently on Percana.

“ The commercial ambition of an outsource is to gain efficiencies, introduce automation to reduce manual processes and bring staff numbers to the optimum level required to run the business. ”

“Executive Summary” of the Phoenix Tender


5

IFDS Percana knew that project discipline and timeliness were key to successful projects, so having been selected as preferred vendor IFDS Percana started immediately. A comprehensive project team was deployed to Phoenix’s Styne House office.

Twoworkstreamsemergedimmediately:firstlycomingtogripswith the products and the functional aspects of service delivery and secondly starting to build a plan which would allow deployment of Percana in an achievable period.

It became clear through the analysis that the levels of efficiencies we needed to attain would not be achieved until therelianceonthepaperbasedfileswasremoved.Inthisclosed book of business, claim processing is a most prominent feature but in the legacy environment, no claim could be processedwithoutretrievaloftheclientfilesfromstorage(approximate monthly transaction volumes are detailed below). Subsequent to the implementation of AWD the task of back scanning 5.3 million archived documents commenced. This generated considerable efficiency for the administration, as well asreducingthecostsrelatedtoretrievaloffilesandprovidedgreatersecurityarounddataandfilemanagement.

transaction volumes (all phoenix companies/operation areas)

BrEAKDOwN OF TrANSACTIONS MONTh AvErAGE

Volumes – work items received (post/email)

8,502

Volumes - calls received 2,671

Total volumes received 11,173

Many of these policy cases are old, in some cases up to half a centuryold.Documentswerefoundonlivecasefilesshowingpremium in pounds, shillings and pence. It was standard practice for operations teams to convert policy information to Euro before starting work on a claim.

If we didn’t know before now, it was clear we were going to need the right toolkit, many hands and a team game plan.

Day 1 brought 110 staff into IFDS Percana, redundancies now inevitable; reduction in numbers, automation, improved processes, efficiencies and milestones now the buzz words that were centre to the project. We needed to quickly identify who was most suited and who was willing to embrace the project andprovidetheappropriateassistanceandexpertisetofulfilthe projects goals and work alongside the IFDS Percana team.

Naturallythisteambuildingexercisebroughtforwardthefirstbig success for the project. The multiple systems that had been in place for years and that needed to change so dramatically were the same systems which frustrated the staff past and present. There was a huge appetite among the staff for change and a deep understanding of the weaknesses in the systems they ran and no shortage of suggestions on where the “quick wins” could be found.

The team was assembled to include transferred staff from those who had a good understanding of the existing legacy environment and products.

phoenix Legacy environment

Phoenix administered its policies using a number of different systems.

SMI polices were processed on a legacy system for unit linkedinvestmentpolicies,whileitsbookofPPBbusinesswasadministered on Genesis. Neither platform could adequately produce valuation extracts and an in-house database collated data for reporting to the actuarial and reassurance functions.

Much of the ancillary work – loading prices, unit movement reports, trading and settlement, cash reconciliation and payment generation – were handled in satellite, manually intensive systems using a combination of IT support, spreadsheets and in-house macro driven applets.

BecauseSMIistheyoungerbookofbusiness,itssystemswere more integrated than those used for the Phoenix Ireland policies. The core administration system for Phoenix Ireland was another legacy system which was used in two installations: oneforunitlinkedbusinessandonefornonprofitandwithprofitbusiness.However,thelistoffunctionalitywhichwasnot present on the system was extensive: premium collection, claims calculation, policyholder payments, IFA administration andpayment,with-profitvaluations,policyholderdocumentation,pensionbenefitstatementsand trustee reports.

Many peripheral systems were in place to provide functionality that the core administration systems did not have, these were also decommissioned.

Building a Team


6

Alongside this, much of the data required to process a claim was not available electronically and needed to be retrieved fromthepaperfiles.Thissloweddowntheturnaroundtime for much of the ordinary business activities.

Coupled with the limitations inherent in the basic systems, the workflow system employed by Phoenix was not robust enough for the amount of manually driven processes.

The fragmented nature of the IT systems was reflected in a disjointed series of contracts with IT service providers which created dependencies for IFDS Percana with some external vendors. Managing these inherited relationships was another critical factor in the ongoing success of the project.

The transformation project was designed to address all of these limitations and add value to the policy servicing functions.

active participation

The energy and enthusiasm of the existing staff for the project had been underestimated. In the early stages of planning the project the degree to which the existing staff could or would want to contribute to the progress of the various work streams was not factored in fully – this is a lesson learnt.

The process that IFDS Percana put in place (to support the TUPE effort) involved many different approaches to communication with active staff participation for integration, of considerable note was the one-to-one dialogue with the staff members. Thistranslatedintotangibleteambenefitsandgreatlyassistedin the focus of the day to day work effort.

Communication Stream

A number of communication channels and events were planned. The IFDS Percana approach to TUPE is highlighted by the client as another reason for this successful transition;

1. Engagement with HR from an early stage, to talk about key staff, roles and skills needed. These were commenced in September 2009, prior to the official start date.

2. A dedicated HR resource was in situ for the duration of the transition, continuous employee engagement in an open andtransparentwayrespectingemployeeconfidentiality.

3. The culture of the company and people was openly embraced and understood.

4. InSeptember2009a“townhall”briefingwasheldregardingwho IFDS Percana were and what can we offer, highlighting how existing staff knowledge was key to success of this project.

5. Phoenix were encouraged to set up an ‘outsource inbox’ for staff queries.

6. A Questions and Answers document was issued to all staff.

7. Aweeklater:HRhadonetooneswithstaffandwentthrough TUPE details.

8. IFDS Percana HR set up on site drop in sessions each week, for all staff.

9. Consultation process with Unite union meetings regularly addressing staff concerns

10. IFDS and State Street issued a welcome letter with branded stationery (note pads etc) provided to assist with recognition followed by a welcome night for the entire staff.

11. Post TUPE the one-to-one sessions continued and the open door policy remained.

“ Twoworkstreamsemergedimmediately:firstlycomingtogrips with the products and the functional aspects of service delivery and secondly starting to build a plan which would allow deployment of Percana in an achievable period. ”


7

The history of the Phoenix’s Irish business had an unsettling effect on the staff, many of whom had moved on after de-mutualisation (Scottish Provident Ireland) or after Abbey had bought and sold it. Understandably one of the weaknesses we encountered was lack of complete knowledge within Phoenix about the legacy products.

age Distribution of phoenix employees (including all of the retained company)

The nature of the Phoenix legacy business meant that much of the product and functional knowledge – the corporate memory if you like – transferred with the staff. If the staff did not know the answer to an issue, the chances were that no one involved did and an in-depth review of the process was often necessary. This was the experience time and time again in areas such as product terms and conditions, rate tables, functional processes, reinsurance practices, and the list continues.

At the outset this ‘gap’ appeared to be an insurmountable problem – for instance, if we encountered a problem on a product rule which no one could clarify then the data migration effort, the development effort and the business process migration all could potentially have ground to a halt.

The close relationship we fostered with the Phoenix staff basedintheUK,primarilythroughthegovernanceprocessmeant that we built solutions to these kinds of problems through a combined team process that increased in its efficiency as the transformation process went on. Phoenix began to understand and trust the processes IFDS Percana were using and at the same time we understood that we could get the decisions we needed to keep pushing along the transformation project.

Accepting the risk of the business processes was another key areaofpartnershipwithPhoenix:forthefirsttimeIFDSPercanawere responsible for day to day business risks arising from processes and systems which we had not built and, in many cases, were not robust enough for purpose. This in essence is why Phoenix sought an outsource partner.

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56-60 yrs51-55 yrs46-50 yrs41-45 yrs36-40 yrs31-35 yrs26-30 yrs20-25 yrs

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Non Pro�t: Life 12%Non Pro�t: Pension 1%Unit Linked: Life 9%Unit Linked: Pension 6%With Pro�t: Life 25%With Pro�t: Pension 47%

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Key Strengths and weaknesses


8

“

“

The close relationship we fostered with the Phoenix staffbasedintheUK,primarilythrough the governance process meant that we built solutions to these kinds of problems through a combined team process that increased in its efficiency as the transformation process went on. ”

”

For instance, we enhanced the processes around the daily production of unit prices as we believed they fell short of the standards IFDS Percana adhere to. We worked with the Phoenix staffinDublinandtheUKtodevelopnewprocesses.Aninterimsolution to assist in the transformation was to migrate the unit pricing to a Phoenix sister company to mitigate the ongoing business risk. This happened, on time, on budget and with no impact on the policyholder valuations.

Isolating the business risks and implementing a solution to resolve them (even in advance of the go live) became a feature oftheBusinessAsUsual(BAU)effort.

The reality of knuckling down, lessening the inherent control weaknesses that IFDS Percana was now exposed to was underway. Worthy of note is that IFDS Percana also gained enormously from the features of the existing operations which in turn added value to the existing TPA offering. IFDS Percana gained new skills in areas such as risk and compliance, client and IFA facing staff, experienced call centre operatives, pensions administration and a variety of new product types.

Cultural shift

The enlarged IFDS Percana, with over 220 staff would further enhance the existing positive and flourishing IFDS Percana culture.Bi-lateralacceptanceandpositionalshiftwasnecessarybefore settling into a mutual comfort zone. It is strikingly obvious that there are differences between an outsourcer and a life company, in:

• Practices

• Attitude

• Culture

• Traditions

Neither an outsourcer nor a life company on their own best serves the policyholders. In integrating with Phoenix we believe we have blended the best of both worlds.

IFDS Percana gained new skills in areas such as risk and compliance, client and IFA facing staff, experienced call centre operatives, pensions administration and a variety of new product types.

220The enlarged IFDS Percana, with over 220 staff would further enhance the existing positive and flourishing IFDS Percana culture.


9

A cornerstone of the TUPE activity is that the nature of the staffs’ employment is not changed without their consent. The team structures and management reporting lines could not, of course, be retained post transformation: they simply were not consistent with the IFDS Percana service delivery environment.

To overcome this, we developed a TOM (Target Operating Model) and then set about determining the steps which needed to take place to move from the adopted environment to that outlined in the TOM. As a further consideration, staff numbers had to be reduced, so the plan had to accommodate this too.

Staff deployment: Department

Keyfactorstakenintoaccountwere:

• Staff competency matrices: There was less concern about the business aspects of service delivery (IFDS Percana would change all the existing practices) but the key product knowledge and functional operations had to be preserved.

• Control risk assessments:Becauseofthemanualnatureof legacy operations, some areas were overburdened with controls, this was reflected in the number of staff managing those controls.

• Culture: The environment in a Life Company office is very different from an outsource office. Every effort to encourage the people and the culture through to the post transformation environment was made. The positive effect on the once culturally diverse entity began to spread and an air of enthusiasm became apparent in what once was an uncertain environment.

• Communication: Without effective communication thereisnosuccess.Keepingthestaffinformedabouttheproject activities was an ongoing objective of the process. Communication was a key success factor and proved to be the most important aspect of this transformation.

Operations Mgt 2Life: Servicing 15Life: Claims 12Pension: Servicing 10Pension: Claims 15SMI: Servicing & Claims 14Technical 3Change Mgt 2Finance 10IT 11Legal & Compliance 7Call Centre 7HR 2 TOM

The team structures and management reporting lines could not, of course, be retained post transformation: they simply were not consistent with the IFDS Percana service delivery environment. To overcome this, we developed a TOM (Target Operating Model).

TUPEA cornerstone of the TUPE activity is that the nature of the staffs’ employment is not changed without their consent.

TUPE & TOM


10

Work needed to progress on many different fronts and the work areas had many interdependencies with each other. The project was carved into work streams and the project management team had to report on the progress of each against the project plan on a weekly basis.

phoenix transformation projet Workstreams

Support Teams: IT, Finance, TechnicalBusiness As usuAl

DATA MiGRATiOn

PeRCAnA BuilD

CRM – PROJeCT DeliVeRY

PROJeCT DeliVeRY

Data from Existing Systems

Data from paper policy files

Product Specifications

Functional Specifications

Life & Pensions Operations Teams

Migrated Data

AWD Design

Percana

CRM, Oversight & Governance

Setting out the work Streams

5.3 millionAs part of the implementation of AwD, 5.3 million archived documents were backscanned. This generated considerable efficiency for the administration, as well as reducing the costs related to retrieval of files and provided greater security around data and file management.


11

Knowledge transfer – benefits of the iFDS percana service solution

The IFDS Percana service solution is based around a suite of modern integrated, proven IT applications. This allows IFDS Percana to operate with lower headcount, but can attract a higher technology cost component.

TheIFDSPercanatechnologydrivensolutionbenefitsknowledgetransferbecauseknowledgeisacquiredaspartofthetransitionandtransformationproject.KnowledgeisgatheredfromexistingITsystems,manualprocessesandpeople,documentedandlockedintoIFDS Percana technology in a formal and structured way. This knowledge is highly accessible and is largely independent of individuals’ knowledge–keymandependenciesandrelianceontransferredstaffaresignificantlyreduced.

Knowledge residence traditional administration Knowledge residence iFDS percana administration

Transformation

People 50%Manual Process 25%IT System 25%

People 18%Manual Process 7%Percana System 40%AWD Workflow 20%Training Manuals /Product Specs 15%

“ TheIFDSPercanatechnologydrivensolutionsignificantlybenefitsknowledgetransferasasignificantelementofknowledgeisacquired as part of the transition and transformation project. ”


12

To a large extent knowledge transfer becomes a one-time exercise driven by IFDS Percana and separate from resource transfer. TUPE transfer of staff, mainly within the control of the incumbent supplier becomes far less critical to achieving a viable transition to service to IFDS Percana.

The diagram below illustrates the push to minimise key dependencies through the knowledge transfer programme.

Ultimately knowledge will be embedded in the underlying systems and freely accessible documentation.

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IFDS PERCANA KNOWLEDGE RESIDENCEASSUMED KNOWLEDGE RESIDENCE

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IT – workflow Documentation: User Manuals, Product Specifications

Top Ratingwithin 12 months of service start-date we had achieved “preferred service provider” status with a top rating from within Phoenix Group.


13

tUpe

Thisdiagramrepresentsmanyofthe11pointsdetailedintheCommunicationStreamfeaturedonpage7ofthisdocument.

policy migration outline tasks

DATA MIGrATION TASKS IFDS INvOLvEMENT

PhOENIx GrOUP INvOLvEMENT

ThIrD PArTy INvOLvEMENT

Data Migration Management High Low Low

BASupport High Low Low

DevSupport(DMBuild,TestandUAT) High Low Low

Data Migration QA High Low Low

Data Analysis & Requirements High Low Low

Data Validation & Loading High Low Low

Data Audit & Reconciliation High Low Low

Trial Migration High Low Medium

Trial Migration 1 High Low Medium

Trial Migration 2 High Low Medium

Trial Migration 3 High Low Low

Trial Migration Go-Live High Low Low

Key: HR Stream Ac�vi�esStaff Comms /

Consulta�onTraining Resourcing Key / Required Dates

Other Project

Ac�vi�es

TUPE FTE MONTH 0 / BEFORE MONTH 1 MONTH 2 MONTH 3 MONTH 4 MONTH 5 MONTH 6 MONTH 7 MONTH 8 MONTH 9 MONTH 10 MONTH 11 MONTH 12 MONTH +1

Conversion date

PROJECT PHOENIX Job matching agreed

Payroll workstream

agreed for

transferring staff

Pseudo Live

Agree post TUPE reten�on payment

IrelandIFDS Percana Introduc�on

- Staff Townhall

T&C consulta�on - Reps

/ Staff

Job match process

consulta�on - Reps

Collec�ve redundancy consulta�on - Reps

Reward roadshow

(benefits)

Staff TUPE /

redeployed

Individual le�ers - TUPE IFDS Percana meet

Managers / influencers

Q&A s / communica�on

methods in placeIFDS Percana Tours

Individual le�ers -

TUPE transfer

Target opera�ng structure

discussions

Opera�ng structure /

resourcing plan

TOM and incumbents

ra�fied post 1:1s

SME Floorwalking

support

TNA discussion - ops &

oversight (NB: TOM

required)

TNA AgreedChange Management

session - key roles

Client loca�on -

oversight training

ALTERNATIVE REQUIREMENTS No�ce Period

Con�nued consulta�onwith the Unions

Agree redundancy

payments basis Staff redundant

Individual le�ers - TUPE Individual le�ers - Risk

of redundancy

Side by side familiarisa�on /

knowledge share


redundancy

20-99 30 days prior 20+ within 90 days no�fy 30 days prior

SCENARIO - Collec�ve

redundancy situa�on e.g.

Loca�on / minimal staff

iden�fied in scope or

transferring

ASSUMPTION - TUPE at

conversion with all in scope

staff transferring

Elec�on of consulta�on Reps (Phoenix)

Resourcing programme where skills gaps

have been iden�fied from 1:1s

Job match 1:1s with all in scope staff

Jointly agree HR approach with client Phoenix T&C review & agree measures

Contract/Heads of Terms

Key skill / role external resourcing to backfill

internal redeployments

Opera�onal readiness pre Pseudo

Client / IFDS Percana - cultural, product and systems training for TUPE

staff (include side-by-side familiarisa�on)

New starter IFDS Percana induc�on

Redundancy Statutory Consulta�on *

Transformation (continued)

TOM and incumbents

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ment

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Client loca�on -

oversight training

Staff redundantAgree redundancy

payments basis

20-99 30 days prior 20+ within 90 da

Key skill / role external resourcing

internal redeployment

Redundancy Statutory Consulta�on

Staff

Individual le�ers - Risk

of redundancy

Side by sidefamiliarisa�on /

knowledge share


redundancy

20+ within 90 days no�fy 30 days prior

cing to backfill

deploymentsNew starter IFDS Percana induc�on

dundancy Statutory Consulta�on *

No�ce Period

Key: HR Stream Ac�vi�esStaff Comms /

Consulta�onTraining Resourcing Key / Required Dates

Other Project

Ac�vi�es

TUPE FTE MONTH 0 / BEFORE MONTH 1 MONTH 2 MONTH 3 MONTH 4 MONTH 5 MONTH 6 MONTH 7 MONTH 8 MONTH 9 MONTH 10 MONTH 11 MONTH 12 MONTH +1

Conversion date

PROJECT PHOENIX Job matching agreed

Payroll workstream

agreed for

transferring staff

Pseudo Live

Agree post TUPE reten�on payment

IrelandIFDS Percana Introduc�on

- Staff Townhall

T&C consulta�on - Reps

/ Staff

Job match process

consulta�on - Reps

Collec�ve redundancy consulta�on - Reps

Reward roadshow

(benefits)

Staff TUPE /

redeployed

Individual le�ers - TUPE IFDS Percana meet

Managers / influencers

Q&A s / communica�on

methods in placeIFDS Percana Tours


TUPE transfer

Target opera�ng structure

discussions

Opera�ng structure /

resourcing plan

TOM and incumbents

ra�fied post 1:1s

SME Floorwalking

support


oversight (NB: TOM

required)


session - key roles

Client loca�on -

oversight training

ALTERNATIVE REQUIREMENTS No�ce Period

Con�nued consulta�onwith the Unions

Agree redundancy

payments basis Staff redundant

Individual le�ers - TUPE Individual le�ers - Risk

of redundancy

Side by side familiarisa�on /

knowledge share


redundancy

20-99 30 days prior 20+ within 90 days no�fy 30 days prior

SCENARIO - Collec�ve

redundancy situa�on e.g.

Loca�on / minimal staff

iden�fied in scope or

transferring

ASSUMPTION - TUPE at

conversion with all in scope

staff transferring

Elec�on of consulta�on Reps (Phoenix)



Job match 1:1s with all in scope staff

Jointly agree HR approach with client Phoenix T&C review & agree measures

Contract/Heads of Terms

Key skill / role external resourcing to backfill

internal redeployments




New starter IFDS Percana induc�on

Redundancy Statutory Consulta�on *


14

products & Bpo Service Setup – operations

PErCANA FUNCTIONAL DELIvEry TASKS

IFDS INvOLvEMENT

PhOENIx GrOUP INvOLvEMENT

ThIrD PArTy INvOLvEMENT

project

Project Management High Medium Low

BA High Low Low

Dev Team Lead High Low Low

QA Team Lead High Medium Low

Environment Setup High Low Low

Builds/Installs/Releases High Low Low

Branching/MergingCode High Low Low

Dev Test / UAT Support High Low Low

QA Test / UAT Support High Low Low

BAUAncillaryDevelopment High Low Low

AWDProcessflowdefinition High Low High

BusinessReadiness High Medium High

Further Considerations

AWD High Low High

AWD integration High Low High

Documents High Low High

TemplateSet-upandConfiguration High Low Low

Annual and Semi-Annual Policy Statements High Low Low

Reports High Low Low

Percana report customisation High Low Low

Data security enhancements High Low Low

Interfaces High Medium High

3rd Party Interface Customisations (e.g. Actuarial, Unit Pricing, GL, Premium Collection, Commission system)

High High High

Invest|Pro™ High Low High


15

Governance: risk and Compliance

Prior to winning Phoenix as a client, IFDS Percana had no centralised Risk and Compliance Department. This was a gap that needed to be addressed and this is a prime example of howweleveragedourgroupresourceswhichsatisfiedthePhoenix selection committee.

IFDS(UKandIreland)nowhasacomplianceteamofinexcessof 30 personnel with 5 based in Dublin solely focussed on Life and Pensions who actively work with the regulatory authorities. IFDSPercanaisregulatedbytheCBIandisauthorisedunderInsurance Mediation Directive and Markets in Financial Instruments Directive (MiFID). IFDS Percana also deals with the PensionsBoard,FSOBandthePensionsOmbudsmanonbehalfof Phoenix.

IFDS are regulated by the Financial Services Authority and work actively with the FSA, other regulators and trade bodies. We work proactively with all our clients to meet all regulatory requirements, e.g. RDR, Data Protection and Financial Crime.

PhoenixGroupnowbenefitfromavastlyexperiencedandenhanced Risk and Compliance Department.

• Regulatory Developments

– Regulatory and impact analysis shared with clients

– Workshops to review and initiate development (e.g. Retail Distribution Review, ‘Test Achats’)

– Active participation in industry groups (e.g. IIF, LIA, IMA, TISA)

• Risk Management

– Leading Financial Crime Prevention (“FCP”) systems developed

– Quarterly FCP Forum (topics including updated JMLSG Guidance, fraud patterns, etc.)

– BusinessContinuityPlanning(BCP)

– Risk Management Committee & Risk coordinators and RiskOnline

– Risk Management, Self Assessment and Plan (RMSAP)

• Liaison

– Quarterly Compliance meeting off ered at alternating offi ces

– Enables discussion of business strategies, regulatory developments, etc.

– Advisory – dedicated individuals for managing compliance / audit / risk visits

• Monitoring – compliance and controls

– A dynamic, risk-based monitoring programme

– Results shared through the Quarterly Monitoring Report (“QMR”)

– Quarterly Monitoring Meeting with clients to review results and regulatory update / discuss topical issues

– Audits and International Audit Committee

– Due Diligence reviews – Data room, Directors Annual Internal Controls Report (AAF01)

IFDS has created and owns some of the strongest oversight tools in the Industry, in order to maintain our position as recognised thought-leaders.

These include but are not exclusive to:

• SystemAccess-FAST,AWD,Extranet

• Incidentreporting

• RiskOnline

• KPI’s

• Breachandcomplaintanalysis

• QuarterlyComplianceMonitoringReports

• AAF01

• Visitsquestionnaire

• MLROreport

• Forums-Compliancemonitoring/FCPforum/UserGroup

• FSAvisits

• Internalaudit

• RMSAP

requirements, e.g. RDR, Data Protection and Financial Crime.

LIAISONLOBBYING

RISK MANAGEMENT

MONITORING

REGULATORYDEVELOPMENTS


16

Risk Online is the IFDS tool that provides the ability to eff ectively deliver the Risk Management Framework highlighted across.

It provides:

• Rationalisedandcentralisedrepositoryforissueandincident data

– Consolidated reporting to Corporate level

– Keyrisksandincidents

– Drill-down capability

– Increased business visibility

• Proactivecontrolmanagement

outsource governance Framework

This framework was adopted by IFDS Percana and Phoenix and remains the framework in use today (however the Transformation Committee is no longer necessary).

Duties & Scope

• Risk, Compliance & AuditFramework

• Review MI in relation toIncidents, Risk, Audit,Compliance & Fin. Crime

• Approve plans in relation toAudit, Risk and Compliance

• Monitor Regulatory change &interaction with regulator

• Report on RegulatoryObligations

• Review MI in relation to SLAfor Customer, TCF & Support

• Monitor & review service levelimprovement plans

• Review complaints activityand RCA

• Review CustomerCommunications

• Customer Incidents (inc. Regbreaches) overview

• Agree Customer,including TCF, initiatives

• Review resourcing &capacity planning

• Oversee Risk & ControlFailures & progress withaudit points for Customer

• Review website activity &availability

• Monitor progress onkey project activity &SLAs

• Oversee• Review Risk and

Control Failures *progress with auditactions for Change

• Prioritise change,agree costs, resourcesand monitor progress

• Review & approve anycontractual changes

• Monitor progress againstkey transformation activity,workstreams andmilestones

• Identify & address keyrisks/issues

• Oversee re-planningapproval / prioritisation

• Review payment schedule& spend

• This Committee will mergewith Change onceTransformation is complete

Half Year – Phoenix Group & IFDS Board Members

Strategic/Relationship Review Forum

Relationship Overview, Broader Obligations, Strategic Alignment

IFDS Board and/or Group representatives will sit on the steering committee

Monthly Outsourcer Management Group & Commercial Committee

• Escalation from forums as below • Holistic Oversight • Commercial issues• Pre-Dispute Escalations

MI feeds into Phoenix ExCoand Board, TCF Conduct

of Business, and Phoenix RiskCommittee as required

Customer/TCF Change Transformation Assurance


17

The involvement of IFDS was important from the inception of the tender process. The critical mass they gave to the IFDS Percana offering meant that the transformation proposition was more credible and robust to the client.

Some of the topics in the due diligence process were new to IFDS Percana. We had to investigate the features of the business as presented; both to validate the Phoenix claims about the businessandtoassistusinfiguringoutthefinerdetailsoftheproposed solution. IFDS Percana accepted the assistance and experience of IFDS who had successfully completed many similarly sized and larger due diligence exercises and TUPE projects. We adopted one of their proven models and we used it to conduct this work. So it transpired that the project itselfwasassistedintheearlystagesbytheIFDSUKHumanResources team but little further assistance was requested or needed as the experience within the existing IFDS Percana team proved to be sufficient to abide by their proven models.

Becauseofthebreadthandvarietyoftheprojectworkstreamsit was a key concern of IFDS Percana management that we put in place sufficient, capable project management resources. Identifying a key project manager was not difficult as IFDS Percana had built up many years of critical project management expertise; however putting in place team leads for each of the project work streams was more of a challenge.

Each project work stream needed two core knowledge bases: a good working knowledge of Percana (both its system and its business environment), and a good working knowledge of the products managed by Phoenix. Regardless there was a steep learning curve, cross training began and the individual leaders and staff rose to the challenge.

Group Assistance Managing the Project Teams

“ Becauseofthebreadthandvarietyoftheprojectworkstreamsitwasa key concern of IFDS Percana management that we put in place sufficient, capable project management resources. ”


18

percana running in unison with aWD – efficiently

The migrated books of business had a future for the term of the 11 year contract on a proven solution in Percana, utilising other toolkits within the group, AWD has been implemented to great effect and an efficient streamlined future with policies administered with the minimal of effort on a select few systems – depicted below.

Post Transformation – New world


19

Control & governance – phoenix transformed

LEGACy NEw wOrLD

Disparate systems which did not talk to each other with a large amount of manual manipulation

Centralisedrepositoryforallclient,policyandfinancialinformationandconsolidatedfinancialreporting

Run by Capita for ICL and RL360 for LifeFit but no local visibility or management input

Centralised sanctions and PEP screening through Lexis Nexis to identify any matches against the watchlists

Previously updated across a suite of claims and valuation spreadsheets - generally took 3 weeks full time technical resource per update

CentralisedupdatingofMVRandTBrates,includinganaudittrailand history

Reporting was from a number of different sources and systems, including a large amount of manual reporting and workarounds

Improvedfinancialreportingforexamplethedailyfinancialreports(DRLs) produced including unit movements, ghost prices, bonus smoothing, scheduled events, etc

Poor management information which relied on a small number of 'key individuals' , extracts from diverse and not connected systems, satellite applications, manual workarounds and other third party providers (Capita, Fujitsu, RL360, etc)

Improved Management Information with the flexibility to design and create new reports and enquiries to a central and integrated administration platform

Poor controls and oversight across a number of applications requiring a number of 'super users' and with very little audit trail.

Robust Information Security platform with strong controls and audit trails

Teams based around different products and platforms and reliant on a small number of expert or specialist users

Single modern platform which allows the teams to be trained across a range of products and process leading to a more integrated and flexible framework

Varied error reporting depending on the system but with little oversight and few built in product rules

Data integrity controls, error and exception reporting, product rules and validation are all built into the administration system

Post Transformation – New world (continued)


20

Finance & actuarial – phoenix transformed

LEGACy NEw wOrLD

Minimal reporting and mainly manual Trade and unit movement forecasting which facilitates investment management

Manual payment reconciliations Automated payment reconciliations

Stand alone general ledger reliant on manual process and extracts from different systems and satellite applications

Fully integrated general ledger

Manual extracts and reporting Invest|Pro® fund administration system linked into Percana and uploads to produce valuations of the external holdings

Risk charging was poorly managed and resulted in accrual of negative units where the policy value had fallen to zero

Risk charging has automated flags when policy values are insufficienttosupportprotectionbenefits

Manual process which was done periodically and which may have resulted in inaccurate payments

Development of automated reinsurance reporting and calculation

Tax was manually applied and reported off-system Integrated tax calculation and tax reporting

Manual logs kept within the admin teams to keep a record of MVRs and TBs and reported periodically.

AutomatedTerminalBonusandMVRprocessingwithpostingsapplied to the relevant accounts

Manual bank recs done monthly in arrears with unreconciled items building into a back-log situation.

Integrated daily bank reconciliations which clears all items or flags any exception items in real time


21

policy administration – phoenix transformed

LEGACy NEw wOrLD

Entirely manual leading to reconciliation issues and errors – 1 FTE worked on this full time

Allocation of dividends and rebates for portfolio bonds is automated

Largely manual historically for SMI and entirely manual for Phoenix Ireland

Automated valuations - unit linked (SMI and Phoenix Ireland) and withprofits(SMIonlycurrently-PhoenixIrelandnotautomatedattime of print)

Only limited direct credit availability with the vast majority of payments for Phoenix Ireland being made by cheque and TT for SMI

Facility to pay by direct credit to customer bank accounts

Entirely manual with little control over format or content where requirements were outstanding

Automated 'Not in Good Order' (NIGO) letters generated from Percana where requirements are outstanding ensuring consistency and standard approach

Manually produced via an Oracle application which ran separately from the administration platform giving rise to data discrepancies and errors

Automateddisclosurestatements/memberbenefitstatements

Manual processes which had to be planned into a diary of activities and frequently at risk of being missed or forgotten

Automation of planned / scheduled events including QDD for SMI, regular income payments, addition of loyalty bonus, arrears and making policies paid-up

Commission generated from a satellite application (GDE), commission statements often required a degree of manual intervention and payment was by cheque

Agency commission integrated into the administration system, automated commission statements and payment by direct credit

Limited automated facility to run reports at an agent level on LifeFIt but manual on ICL and Genesis

Facility to produce an automated broker portfolio report

For Phoenix Ireland it was possible - and did happen - where claims were paid but there was no unit disinvestment and the appropriate 'stop' was never put on the system resulting in duplicate payments where a policy was surrendered more than once

Automated unit disinvestments when a claim is processed so that the system can only pay a claim once the funds are available

System dependant with users often having to alternate between different systems, satellite applications and manual spreadsheets

Enhanced ease of access to policy information and automation in answering queries for the service desks

Post Transformation – New world (continued)


22

opportunities for phoenix to further enhance the service...

voice biometrics

Extend use of tools for ‘fantasy’ portfolio

modelling

Further new funds

webchat

Product comparison

‘App’


23

Summary

Phoenix sought a TPA provider who could:

1. Maintain and improve the existing service environment for the policy books by deploying a more up to date policy administration system

oUtCome

Within 12 months of service start-date IFDS Percana had achieved “preferred service provider” status with a top rating from within Phoenix Group.

2. Maintain (or exceed) existing service to policyholders and agents. oUtCome

IFDS Percana maintain high service standards across all clients and immediately sought to bring the Phoenix service in line with these standards. No policyholder or agent complaints for poor service have been received since IFDS Percana commenced this service.

3. Ensure regulatory requirements and group governance continue to be met oUtCome

The backlog of complaints inherited rapidly depleted with the number of communications via email, phone, letter or walk-ins all being significantly reduced. The governance framework adopted by IFDS Percana and Phoenix remains the framework in use today.

4. Provide cost efficiencies for Phoenix oUtCome

Within 18 months Phoenix had realised a return on investment and within 24 months the cost per policy was dramatically reduced. Phoenix now have far greater clarity on all costs.

5. Maximise the future opportunities for the existing staff oUtCome

The transferred staff are an integral part of IFDS Percana future and current projects. Now as IFDS Percana staff they are presented with new opportunities within a variety of projects.

24

CASE STUDY PHOENIX GROUP & SCOTTISH MUTUAL

reference

In June 2010 the feedback from the senior Phoenix executives intheUKtotheIFDSPercanaexecutivemanagementwasverypositive, “we are on course and have hit all of our commercial milestones” and intimated that there would be other opportunities for IFDS Percana from within their wider group. For the opportunity, the project and the esteemed reference we are grateful and we look forward to working with Phoenix and anyL&Pentitytoachievethesamemutualbenefits.

name:

Ciaran McGettrick, Managing Director, PGMSI Dublin

address:

Styne House, Hatch Street, Dublin 2.

phone number:

+353 1 804 4004

IFDS Percana Group Limited 16 Joyce Way ParkWestBusinessPark Dublin 12

Telephone +353 1 6296920

Facsimile +353 1 6296964

Email [email protected]