Swiss Re manages most group treasury activities out of Zurich, but also has treasury and cash management functions in the UK and the US.

Problem…

In 2004, as a result of a decentralised approach and several acquisitions in the recent past, the company was using seven different software systems to manage treasury and cash management throughout the group.

The fragmented systems infrastructure meant that aggregated information on the group’s cash flow had to be collected manually. As Jürg Hess, Head of Corporate Finance and Treasury at Swiss Re explains, this made it very difficult to determine the group’s cash position accurately and in a timely fashion. “Nobody was able to establish our cash exposure to certain institutions. Also, nobody was able to say what our actual aggregated cash in and outflow was on a daily, monthly or even on a quarterly basis.”

The technical infrastructure was further complicated by different legacy insurance systems at the three hubs in Switzerland, the UK and the US. As Hess explains, “We had to find a single cash management solution that would fulfil the different requirements in these hubs and that could also be integrated with the different legacy systems in each location.”

…Solved

Together with the IT department, Swiss Re’s treasury determined which capabilities the new system should have. “When you want to win people over, you need to give them a system that can do the things that they want,” says Hess. “The emphasis was to look for a system that could fulfil almost all the requirements that anyone could have.”

Considering three main selection criteria – system functionalities, best practice in IT architecture and the solidity of the software provider itself – Swiss Re could identify only one system that would be able to meet its needs efficiently: SunGard’s AvantGard Quantum. The first phase of the implementation of AvantGard Quantum was finalised in the summer of 2006 and it has already brought numerous benefits according to Hess. The substitution of several disparate systems for a single system meant that maintenance and licensing costs were reduced. At the same time, any future changes to the new system will now only affect the redesign of one interface, instead of many.

In terms of cash management, AvantGard Quantum provides Swiss Re’s treasury with a consolidated overview of the group’s cash and cash equivalent balances in the CHF 5 billion range from approximately 1,400 operational and investment bank accounts. “We know now where the cash is,” says Hess. “We have a much better understanding now where it is coming from and where it is going to.” The new infrastructure has also enabled Swiss Re to streamline its treasury structure. “We believe that the new system has served as a catalyst to form a single team out of three teams in the individual hubs, which previously did not really interact with each other.”

Finally, the new system has brought with it a number of efficiency gains and savings for Swiss Re. “We learnt during the past months where our weaknesses were with regards to bank management or where we did not get the best returns. We are also able to net many intracompany transactions, which represents significant savings.”

Currently, Swiss Re is adding functionalities to SunGard’s AvantGard Quantum on a frequent basis. “First, we wanted transparency of the group cash flow through a real-time view and straight through processing approach to treasury and cash management,” says Hess. “In a second stage, we want now to become the in-house bank for the Swiss Re Group. We will ensure that the system supports the best practice processes and guarantees that policies and procedures are implemented and complied with. We also want to use the system as a maintenance facility for all trade and intragroup transactions. In addition, we aim to get more data into the system so we can improve the consistency of our cash forecasting.”