Barclays targets insurers with CPPI module

Barclays is targeting insurance companies with Bravura Solutions' new Sonata CPPI. The fully integrated, global module enables financial services organisations to offer bespoke and flexible portfolio protection products including individualised time invariant portfolio protection (iTipp) and integrated risk management hedging as users can offset the risk of offering protection with Barclays as a third party risk management provider.

Changing demographics, regulatory reform and increased choice are driving product innovation in the investment space for life insurance companies, pension providers and wealth and asset managers, according to Fabien Labouret (pictured), global head of investment strategies at Barclays Investment Bank.

"Barclays is working with life insurance companies to provide an infrastructure that allows them to offer individualised portfolio protection products to the end policy holders as opposed to everybody being subscribed to the same product; we call these 'micro solutions'," said Labouret. "The infrastructure allows insurers to track the value of each individual policy, culminating in an aggregated hedge value which simplifies the risk mitigation process. These individualised solutions are particularly important for regular premium type-products where clients keep contributing to the products until they mature, while they have different investment profiles and maturity targets (e.g. retirement age)."

Although originally designed for insurance companies the infrastructure would also fit particularly well with fund platforms willing to offer principal protected investments to their investors and is an area the bank is exploring with key clients, according Labouret. "The infrastructure has already been deployed through a number of markets, but a recurring request was the importance of a front-to-end solution that 'plugged' into clients' existing technology systems," said Labouret. "In response we have partnered with Bravura to deploy their Sonata platform and offer a turn-key infrastructure solution that aligns with many clients existing systems. The result is a faster implementation from a universal and centralised system that offers both greater transparency and a more efficient lead time."

According to Labouret, by using Sonata CPPI, Barclays' institutional clients will have access to Barclays' risk management products "removing the need to invest in significant new technology development to provide such individualised solutions". Sonata CPPI enables advisers to retain management of end customer portfolios, with the option of applying and altering protection levels to suit individual needs, while end customers are also able to manage specific investment assets within their portfolio, via a tailored portal.

"These product initiatives are implemented through long-standing client partnerships. It requires Barclays and its partner clients to invest a substantial amount of time and resources incorporating and adjusting to different dealing technology systems," said Labouret. "Because of this, the structure is particularly pertinent for long term open-ended investment solutions where scalability can be achieved through size and a long commercialisation period."

Sonata CPPI is very appealing to insurance companies that want to provide a differentiated offering in a challenging and volatile market environment, said Labouret. "They can streamline the way they deliver individualised retirement solutions to market while addressing the issue of low interest rates through the use of CPPI and TIPP hedging solutions," he said. "This allows them to provide long-term capital protection, and is flexible enough to accommodate regular premium products. There are only a handful of banks involved in the retirement segment and the solutions offered differ from one investment bank to another. We expect significant activity in this space and we are confident we have a unique and flexible solution to serve our clients."

Sonata is Bravura's unified wealth management platform and offers customer-centric administration of pension, investment and life insurance products via Java and Oracle technology. Sonata includes workflow, analytics, mobility and straight-through processing (STP) capabilities.

"This latest addition to our next-generation Sonata platform represents an exciting new market for us, enabling providers to offer investors a sensible risk/reward balance with a transparent investment process," said Tony Klim, CEO at Bravura, in a statement.

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