Patent Document

BACKGROUND OF THE INVENTION  
         [0001]    The present invention relates to a system, method and process for monitoring and processing trades of securities, and more particularly, to a system and process for monitoring and processing trades of securities within a business entity which sells insurance related products.  
           [0002]    When insurance is sold, both an asset and a liability are created. The asset exists in the form of income from the insurance policy owner. The liability exist in the coverage due under the policy when insurance claims are filed.  
           [0003]    Because of the nature of insurance, the asset created when a policy is sold is immediately realized and the liability remains contingent on future events. Accordingly, to plan for and offset the future costs of its liabilities, insurance companies must use a combination of two key methods to keep their accounts in order. A first method is for insurance companies to re-sell their insurance liabilities to other large insurance firms. This practice is called reinsurance. A second method used in combination with reinsurance is the purchase of low risk securities to provide future income. Primarily, insurance companies invest in securities such as bonds. Using reinsurance and securities, insurance companies are able to offset and plan for their future liabilities.  
           [0004]    For each insurance company, the balance between their liabilities and their assets are strictly monitored and are required by law to be kept in balance. Keeping this balance in accordance with state law is generally referred to as “compliance.” 
           [0005]    For insurance companies, managing the balance between assets and liabilities is a complex burden which is handled by large and costly staffs. Complicating matters is the fact that insurance companies are heavily regulated by each state in which they do business and each state sets different rules for compliance. Further complicating matters is the fact that the balance between liabilities and assets is continually changing as insurance policies are sold and as the securities markets rise and fall.  
           [0006]    Presently, most insurance companies rely on a variety of systems to provide them with data and reports on the state of their balance sheets. However, these systems as a whole are unable to discern and communicate the status of an insurance investment portfolio in a timely and efficient manner.  
           [0007]    Other drawbacks may also exist.  
         SUMMARY OF THE INVENTION  
         [0008]    According to one aspect of the present invention, a method is provided for purchasing securities and selling insurance policies within a business entity having an internal trading system for inputting trades and an internal management system for managing trade information. According to a preferred embodiment of this aspect of the invention, the method includes: selling an insurance policy; inputting data concerning the sold insurance policy into the internal trading system; selecting a security to purchase; inputting trade data regarding the desired purchase into the internal trading system; allocating the selected security to an insurance policy sold; executing the purchase of the selected security; retrieving data regarding purchases from an external trading information system; updating and correcting errors in the trade data using the retrieved data; and storing the trade data and the insurance policy data in an internal management system.  
           [0009]    According to another aspect of the present invention, a trade management system for tracking inputted trades and insurance sales information is provided. According to a preferred embodiment of this aspect of the invention, the trade management system includes: an insurance policy sales system, wherein the insurance policy sales system produces insurance policy sales data; a trade input device, wherein the trade input device accepts trade input data; a trade execution system, wherein the trade execution system executes trades using the trade input data; and an internal trading system for accepting insurance policy sales data and trade input data, wherein the internal trading system allocates inputted trades with outstanding insurance policies using the insurance policy sales data and trade input data in accordance with a predetermined compliance requirement.  
           [0010]    According to another aspect of the present invention, a medium containing code is provided for causing a process to purchase securities and sell insurance policies within a business entity having an internal trading system for inputting trades and an internal management system for managing trade information. According to one embodiment of this aspect, the code includes: code for inputting data concerning the sold insurance policy into the internal trading system; code for selecting a security to purchase; code for inputting trade data regarding the desired purchase into the internal trading system; code for allocating the selected security to an insurance policy sold; code for executing the purchase of the selected security; code for retrieving data regarding purchases from an external trading information system; code for updating and correcting errors in the trade data using the retrieved data; and code for storing the trade data and the insurance policy data to an internal management system.  
           [0011]    According to another aspect of the present invention, another system for purchasing securities and selling insurance policies within a business entity having an internal trading system for inputting trades and an internal management system for managing trade information is provided. According to one embodiment of this aspect, the system includes: a means for selecting a security to purchase; a means for inputting trade data regarding the desired purchase into the internal trading system; a means for allocating the selected security to an insurance policy sold; a means for executing the purchase of the selected security; a means for retrieving data regarding purchases from an external trading information system; a means for updating and correcting errors in the trade data using the retrieved data; and a means for storing the trade data and the insurance policy data in an internal management system.  
           [0012]    Other advantages and exemplary embodiments are also included in the present application 
       
    
    
     BRIEF DESCRIPTION OF THE FIGURES  
       [0013]    [0013]FIG. 1 is a flowchart illustrating a method according to an embodiment of the present invention.  
         [0014]    [0014]FIG. 2 is a flowchart illustrating a method according to an embodiment of the invention.  
         [0015]    [0015]FIG. 3 is a flowchart illustrating a method according to an embodiment of the invention.  
         [0016]    [0016]FIG. 4 is a flowchart illustrating a method according to an embodiment of the invention.  
         [0017]    [0017]FIG. 5 is schematic diagram illustrating a system according to an embodiment of the invention.  
     
    
     DETAILED DESCRIPTION OF THE INVENTION  
       [0018]    Reference will now be made in detail to the present preferred embodiments of the invention, examples of which are illustrated in the accompanying drawings in which like reference characters refer to corresponding elements.  
         [0019]    The present invention is related to a system and method for monitoring and processing trades of securities within a business entity which sells insurance related products. Reference will be made to internal and external elements for receiving and producing trade data. More specifically, reference will be made to a series of steps to be performed within an organization, comprising several different entities, and at least one external agency, for receiving, producing and analyzing data. The present invention should not be construed as limited to the organization structure shown which is provided purely for example. Further, for each step and series of steps, it should be understood that no order for the steps is required in the present invention.  
         [0020]    [0020]FIG. 1 is a flowchart illustrating a first series of steps to monitor and process trades of securities according to one embodiment of the present invention. FIG. 5 is a schematic diagram illustrating the elements of FIG. 1. At step  10 , an insurance policy is sold within an insurance sales system  56  and insurance policy data is entered or made available to the internal trade system  54 . The type of insurance sold may include any type of insurance which can be bought and sold. For example, the types of insurance may include annuities, life insurance, term life, longer term care insurance, whole life, universal life, variable life, automobile insurance, automobile warranties as well as others. Further, the means for selling the insurance policy may include any type of mechanism which allows insurance policies to be bought and sold. This may include, for example, a sale conducted in person, a sale via an insurance agent, a sale made via telephone, or an on-line purchase of insurance.  
         [0021]    Naturally, because of the nature of insurance sales and the variety of types of sales made, the time between the sale of an insurance policy and the uploading of the policy data onto an internal trade system  54  may be separated by some time. In particular, the collection, processing and entry of insurance policy data may understandably be delayed depending on the internal procedures of the companies involved. During this process, individual or multiple policies may be grouped together so that insurance policy data from multiple policies or insurance entities is combined prior to being forwarded to the internal trading system  54 . Once this data is forwarded, the internal trading system  54  is able to processes and store the insurance policy data and determined the compliance requirements which apply.  
         [0022]    At step  12 , a trader selects and identifies the appropriate securities to purchase. This selection is usually based on market conditions, the makeup of the outstanding policies of the insurance company as well as the present balance of the insurance company&#39;s investment portfolio. Additionally, multiple traders may be performing trades in a variety of locations. Further, the traders may work directly for the insurance company or they may be commissioned to perform trades on behalf of the insurance company. The type of securities purchased may include any type of securities which may be bought or sold. For example, the securities purchased may include, for example, stocks, bonds, derivatives, mortgage bonds, asset based securities and other types of securities as well.  
         [0023]    Regardless of the specific trading arrangement and the type of securities identified for purchase, once a trade is proposed by the trader, the proposed trade data is entered into the internal trade system  54 . As shown in FIG. 5, the trade data may be entered via a trade input device  58 . Alternatively, this data may simply be made available to the internal trade system via the Internet or other network arrangement.  
         [0024]    At step  14 , the internal trade system  54  compares the insurance policy data submitted with the proposed trade data. The internal trade system then allocates or matches the value between the insurance policies issued and the security proposed for purchase. This allocation is preferably performed so as to satisfy the compliance and investment requirements for each jurisdiction relevant for compliance. According to a preferred embodiment, the approved value of securities to be purchased will be such that the future income from the securities will be equal to or greater than a selected percentage of the outstanding liabilities of the insurance policies sold.  
         [0025]    Once a determined value of securities is approved for purchase, the processor  72  may generate a confirmation code and, at step  16 , the confirmation code confirming the trade may be provided to the trader. With this confirmation received, the trade, at step  18 , may then be released for settlement. As shown in FIG. 5, the trade may be released to a corporate treasury department  66  for settlement  68 .  
         [0026]    With reference to FIG. 2, the post-settlement processes of the present invention will now be discussed. In step  20 , following the execution of a trade, supplemental data is preferably received from an external trade data source  62  which may be a system such as Bloomberg&#39;s or a similar reporting system. In step  22 , the received data may be loaded into the internal trading system  54  after being received by receiver  64 . In an alternative embodiment, the received data may be loaded onto any system containing trade data to be updated and corrected.  
         [0027]    In step  24 , the supplemental data may be used by the processor  72  to fix and update incomplete trade information stored in memory  70  within the internal trading system  54 . In accordance with a first preferred embodiment, the process of fixing and updating trade information may be performed in accordance with the method described with reference to FIG. 4 below. Alternatively, this process may be performed using an automated process to identify and supply missing data where necessary. In step  26 , the updated files may be uploaded or made available to at least one other internal management system  60 . In step  28 , the updated files may be stored in memory  70 .  
         [0028]    With reference to FIG. 3, at step  30  the updated and stored files may be made available for further processing within at least one other internal management system. At step  32 , the updated files may be used to create and run reports using the updated trade data. At step  34 , the reports may be used to further identify and fix errors and omissions within the updated trade data. At step  36 , the update reports may be made available to further monitor and document compliance.  
         [0029]    With reference to FIG. 4 a preferred method for updating and correcting errors within trade data as called for in step  34  is provided. In step  38 , the updated files within the internal management system  60  are checked for errors such as missing or incomplete fields. This process may occur manually or via a software process. In step  40 , the missing fields and other found errors are fixed. In step  42 , updated reports may be run. In step  44 , the updated reports may be rechecked for completeness and accuracy. Assuming the updated reports are satisfactory, in step  46  the data files may be extracted for upload. In step  48 , the extracted files may be loaded into a test system to ensure accuracy and completeness. In step  50 , the loading errors may be fixed and the files may be reloaded onto the system. In step  52 , the files may be stored and made available to the internal management system  60  for producing reports used to monitor compliance. The methods and processes of FIGS.  1 - 4  will now be described in greater detail below, with reference to FIG. 5.  
         [0030]    As discussed above, the system and method of present invention are designed for use by a business entity which sells insurance policies for which securities must be purchased to offset the amount of future liabilities. As shown in FIG. 5, within insurance system  56 , insurance policy data is produced and forwarded to a centralized internal trading system  54 . As discussed above, this insurance policy data may be produced from a variety of sources (e.g. individual policies, groups of policies, entire insurance policy portfolios.) As further discussed above, this insurance policy data my relate to any type of insurance which may be bought or sold (e.g. annuities, life insurance, term life, longer term care insurance, whole life, universal life, variable life, automobile insurance, and automobile warranties). As with insurance policy data, trade data is also provided to the internal trading system  54 . Trade data may be provided using at least one trade input device  58 .  
         [0031]    With the inputted trade data and insurance policy data, the internal trading system  54  processes and allocates proposed trades entered into the trade input system so that they correspond to a specific amount of liability incurred by outstanding insurance policies. Where the internal trading system  54  is able to match the amount of the proposed trade with an outstanding liability, the internal trading system  54  approves the trades for execution. Once approved, the internal trading system then forwards the trade and notice of approval to the corporate treasury  66  for settlement  68 . Following execution of the trade, the internal trading system  54  records details of the trade in memory  70 .  
         [0032]    Initially, the trade data which is recorded in the internal trading system  54  is incomplete. According to a preferred embodiment of the present invention, the trade data may be later updated with additional trade data may occur from at least one external trade data source  62  via receiver element  64 . In accordance with a preferred embodiment of the present invention, the updating of the trade data using data from an external data source such as Bloomberg&#39;s or similar trade information service. Alternatively, any entity producing trade data may be used. Further in accordance with a preferred embodiment of the present invention, such trade data may be provided via a dedicated network connection. Alternatively, such trade data may be provided via an Internet, LAN, W-LAN or other similar connection.  
         [0033]    With the additional trade data, the internal trading system  54  may update and fix errors in its originally collected trading data. Thereafter, the updated trade data may be provided to at least one internal management system  60  for further processing and analysis. According to a preferred embodiment of the present invention, the updated trade data may be further provided to an accounting system produced by SS&amp;C (i.e. the CAMRA™ system) or similar system for analysis.  
         [0034]    According to a preferred embodiment, the internal trading system may include an application server and web server for processing trade input data, insurance policy data and other data and for communicating with internal and external processors. The servers used may include a Sun E450 server. Further, a web server layer may be used, such as iPlanet. An operating system module may also be used for running portions of the internal trading system  54  and for enabling other functions and features to be performed as necessary. According to an embodiment of the invention, the operating system module may use a UNIX based operating system, such as Solaris. Alternatively, the operation system module may use another type of operating system such as a Windows or Apple based operating system.  
         [0035]    Further in accordance with the present invention, the internal trading system  54  and particularly memory  70 , may include a database. According to a preferred embodiment, the database may use a server running Microsoft SQL server software. Alternatively, any other database software such as Oracle or other Microsoft database software may be used.  
         [0036]    According to another embodiment of the invention, a computer-usable and writeable medium having a plurality of computer readable program code stored therein may be provided for practicing the process of the present invention. The process and system of the present invention may be implemented within a variety of operating systems, such as a Windows operating system, various versions of a Unix-based operating system (e.g., a Hewlett Packard, a Red Hat, or a Linux version of a Unix-based operating system), or various versions of an AS/400-based operating system. For example, the computer-usable and writeable medium may be comprised of a CD ROM, a floppy disk, a hard disk, or any other computer-usable medium. One or more of the components of a system may comprise computer readable program code in the form of functional instructions stored in the computer-usable medium such that when the computer-usable medium is installed on the system, those components cause the system to perform the functions described. The computer readable program code for the present invention may also be bundled with other computer readable program software.  
         [0037]    According to one embodiment, the internal trade system  54 , processor  72 , memory  70 , receiver  64 , and internal management system  60  may each comprise computer-readable code that, when installed on a computer, performs the functions described above. Also, only some of the components may be provided in computer-readable code.  
         [0038]    Additionally, various entities and combinations of entities may employ a computer to implement the components performing the above-described functions. According to an embodiment of the invention, the computer may be a standard computer comprising an input device, an output device, a processor device, and a data storage device. According to other embodiments of the invention, various components may be computers in different departments within the same corporation or entity. Other computer configurations may also be used. According to another embodiment of the invention, various components may be separate entities such as corporations or limited liability companies. Other embodiments, in compliance with applicable laws and regulations, may also be used.  
         [0039]    According to one specific embodiment of the present invention, the system may comprise components of a software system. The system may operate on a network and may be connected to other systems sharing a common database. Other hardware arrangements may also be provided.  
         [0040]    Other embodiments, uses and advantages of the present invention will be apparent to those skilled in the art from consideration of the specification and practice of the invention disclosed herein. The specification and examples should be considered exemplary only. The intended scope of the invention is only limited by the claims appended hereto.

Technology Category: 3