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nor rain, nor poisonous mail kept the Academy’s Health Practice Council from its appointed Capitol Hill rounds on Feb. 3 and 4. Well, maybe the poisonous mail. With all Senate office buildings shuttered due to the discovery of ricin in the offices of Majority Leader Bill Frist (R-Tenn.), members of the Health Practice Council had to cancel planned visits to Senate staffers. But braving sidewalks, roads, and runways coated with ice and wintry mix, the group met as planned with other congressional EITHER SNOW,

staff and policy-makers. The main topic of conversation? “Medicare was really the primary topic of each group that I met with,” said David Shea, who attended meetings with representatives of the Congressional Budget Office (CBO), the Congressional Research Service, and the Department of Labor. Medicare, and specifically questions about actuarial equivalence, were the dominant topics in meetings she attended, said Jan Carstens, the Academy’s vice president for health See MEDICARE CHANGES, Page 4

Meeting prior to the Hill visits are, seated from left, Jeff Nohl, Mike Abroe, Jim Murphy, Joanna Ossinger, Jan Carstens, John Schubert, Karl Madrecki, and Grady Catterall. Standing, from left, are Darrell Knapp, Dave Axene, Cori Uccello, Al Bingham, David Shea, Holly Kwiatkowski, Geoff Sandler, and Craig Hanna.

Inside DC Health Plans Academy monograph explores potential cost savings . . . . . . . . . . PAGE 2 Meet Mike LaMonica A talk with the new ASB chair . . . . . . . . PAGE 5 Rule Revisions The ABCD is proposing some procedural changes . . . . PAGE 8 C-3 Phase 2 Planning has begun for a new seminar on variable annuities, regulatory RBC, and reserves . . . . . . . . . . PAGE 8

EAs Not Barred From N.C. Practice


HE NORTH CAROLINA BAR ASSOCIATION recently decided not to pur-

sue action against several employee benefit plan service firms that it had earlier claimed were illegally practicing law in the state when they advised clients on ERISA-qualified plans. Last fall, the bar association issued cease-and-desist letters to the firms, contending that their advice to clients on ERISA-qualified plans constituted the unauthorized practice of law. Both the Academy and ASPA submitted letters in support of the firms, arguing that ERISA pre-empts state law definitions of the practice of law and that enrolled actuaries (EAs) and other individuals licensed by the federal government to practice under ERISA should be permitted to do so without interference from the local bar association. The Acad-

emy’s letter emphasized EA professionalism and the strict standards governing EAs in their practice. Following a hearing on the matter, the bar association issued letters to the employee benefit firms, indicating that it would take no further action to prevent them from providing professional services to clients. Agreeing with the Academy’s position, the bar acknowledged that while ERISA practice might otherwise be considered the practice of law, ERISA specifically authorized EAs and others licensed by the federal government to practice, thereby effectively pre-empting North Carolina’s unauthorized practice laws. In briefly explaining its decision not to act against the firms, however, the bar stressed that only an EA could lawfully See ENROLLED ACTUARIES, Page 3

Actuarial UPDATE

Medicare Changes Dominate Health Hill Visits


Calendar MARCH

2 Academy Health Rate Filing Task Force meeting, Atlanta 3 Academy Committee on Qualifications meeting, Washington 8–9 Applied actuarial research conference (CAS, SOA), Orlando, Fla. 10 Academy Life Practice Council meeting, New York 10 Academy Committee on Professional Responsibility meeting, Washington 10–12 CAS ratemaking seminar, Philadelphia 13–16 NAIC spring meeting, New York 17 Academy Risk Management and Financial Reporting Council meeting with AICPA’s Insurance Liaison Task Force, New York 17 Academy Risk Management and Financial Reporting Council meeting, New York 21–24 Enrolled Actuaries Meeting (Academy, CCA), Washington 23 Academy Life Products Committee meeting, Atlanta 24–25 Defined Benefits Symposium (Academy, CCA), Washington 25–26 ASB meeting, Washington 31–April 2 SOA pension conference, Las Vegas


16 CIA pension seminar, Montreal 22 Academy Executive Committee meeting, Washington 27–29 IAA international health colloquium, Dresden, Germany


4–5 Academy C-3 Phase 2, RBC, and reserves

seminar, Washington 5 Illustrations seminar (Academy, SOA), Chicago 5 Academy Board of Directors meeting, Washington 6–7 Academy spring meeting, Washington 16–17 Academy Pension Practice Council meeting, Boston 16–19 CAS spring meeting, Colorado Springs, Colo. 18 Academy Casualty Practice Council meeting, Colorado Springs, Colo. 19–21 SOA spring meeting (health, pension), Anaheim, Calif.


3–5 IAA council and committee meetings,

Stockholm, Sweden 6–10 ASTIN 2004, Bergen, Norway 12–15 NAIC summer meeting, San Francisco 14–16 SOA spring meeting (financial reporting, product development), San Antonio 16 CIA professionalism workshop, Calgary, Alberta, Canada 17–18 CIA annual meeting, Victoria, B.C., Canada


8–10 Council of Presidents meeting, Harrison

Hot Springs, B.C., Canada 18–21 ASPA summer conference, San Francisco


2–3 Academy leadership meeting, Washington 8–9 Pension Practice Council meeting, Santa Fe

WEB INTERFACE Links to documents underlined in blue can be found at


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Academy NEWS Briefs DC Health Plans: Can They Keep Costs Down?


about consumerdriven health plans as the next best way for employers and employees to lower medical costs. But key questions about these plans remain, including how effective they will actually be in lowering costs and stemming double-digit premium increases. While data is beginning to emerge about these types of health plans, the results are limited and inconclusive. In order to provide further helpful data, the Academy’s Defined Contribution Health Plan Work Group used an actuarial model to study the impact of such plans on health costs, as well as the theoretical impact of a shift to consumerdriven health plans on various health care system participants. Results of the study are published in a new Academy monograph, The Impact of ConsumerDriven Health Plans on Health Care Costs: A Closer Look at Plans with Health Reimbursement Accounts. Not surprisingly, the study found that how a consumer-driven health plan is designed and implemented would have a big influence over HERE’S A LOT OF BUZZ

whether it is successful. The monograph contains tables that illustrate, based on an actuarial model, the effect on both the employer’s and employee’s share of benefit costs when benefits are modified under a typical consumer-driven health plan and a typical PPO plan. The monograph also looks at potential effects on the various parties participating in a consumerdriven health plan, including employees and their dependents, employers and plan sponsors, health plans, carriers, physicians, hospitals, and other medical providers. Jim Murphy is chairperson of the work group and a member of the subgroup that wrote the monograph, along with Brent Greenwood, Sunit Patel, and Brett Roush. Other work group members who participated in the project are Karen Bender, Patrick Collins, William Falk, Penny Hahn, D. Michael Jones, William McNamara, Jean Moore, Donna Novak, David Ogden, Jeffrey Petertil, Daniel Plante, Harry Sutton, Jr., David Tuomala, George Wagoner, and Mark Wernicke.


Rade Musulin,

vice president for public affairs and reinsurance with the Florida Farm Bureau Insurance Co. and chairperson of the Academy’s Communications Review Committee, is a new member of the Casualty Practice Council. ® Brian Clancy, assistant vice president and actuary for workers’ comp pricing for The Hartford Insurance Group in Hartford, Conn., has joined the Workers’ Compensation Subcommittee. PENSION NEWS

Ron Gebhardtsbauer, the

Academy’s senior pension fellow (above, right), was a featured speaker at a Jan. 26 Capitol Hill luncheon briefing on pension funding sponsored by RetireM a rc h 2 0 0 4

ment Savings Network, an industry benefits group, and the Senate/House Steering Committee on Retirement Security, an ad hoc committee of members of Congress interested in pension issues. Gebhardtsbauer gave an overview of federal pension funding rules for defined benefit (DB) pension plans and discussed funding challenges

that DB plans currently face. Also speaking at the luncheon were Theodore Economou, representing the ERISA Industry Committee, and William Sweetnam, benefits tax counsel at the U.S. Treasury Department. ® The Social Insurance Committee has updated three earlier issue briefs. Assumptions Used to Project Social Security’s Financial Condition describes

Enrolled Actuaries

Joe Sutliff

continued from Page 1

Was something lost in translation? The preamble to the Code of Professional Conduct says that an actuary is responsible for getting translations of any foreign laws or rules of conduct that might be necessary in the course of business. To minimize problems, get a qualified independent translator to do the job for you, or consider having something translated and then getting someone else to translate it back for you.

the major demographic and economic assumptions used in projections of Social Security’s financial condition and how variations in assumptions affect the results. Means Testing for Social Security discusses the impact of eliminating or reducing Social Security benefits for wealthier beneficiaries and how such a move would affect public support for the program. Social Adequacy and Individual Equity in Social Security examines provisions in Social Security that balance social adequacy and individual equity and considers how individual account arrangements would affect that balance. ® The Joint Academy/SOA Task Force on Financial Economics and the Actuarial Model is looking for suggestions of research topics as it begins planning for a spring 2005 symposium on financial economics. Interested? Contact Emily Kessler, the SOA staff fellow who is supporting the task force’s research, at, or 847-7063530. There is no deadline for ideas, and suggesting an idea does not commit you to writing a research paper. ® The Academy’s Pension Practice Council is creating w w w. a c t u a r y. o r g

a new task force to examine retirement-age-issues, such as phased retirement, rehiring of retirees, retirement age, and life expectancy. Chairperson of the new task force will be Bruce Schobel. If you are an actuary specializing in pensions, long-term care, or health issues and you would like to be involved, contact Heather Jerbi, the Academy’s pension policy analyst (202-223-8196, ® Jerrold Dubner, a director with PricewaterhouseCoopers in Atlanta, has joined the Pension Accounting Committee. ON THE MOVE

Martin Pippins, chairman of the

joint board for the enrollment of actuaries, has been named manager, employee plans technical guidance and quality assurance, at the IRS. He was formerly actuarial manager at the IRS. ® Pierre Samson has been named chief actuary of AGC Holdings Ltd. and chief underwriting officer of AGC International, one of the ACE Group of insurance and reinsurance companies in Hamilton, Bermuda. He was formerly president and chief executive officer of ACE Global Financial Solutions.

provide professional services to ERISA-qualified employee benefit plans and that it would not be sufficient for a firm providing such services to have an EA or other licensed individual on its staff. Rather, the EA would need to be actively involved in performing or overseeing the professional services authorized under ERISA. In the absence of such active participation or supervision by a licensed professional, the bar suggested, a firm would risk engaging in the unauthorized practice of law if it provided professional services to employee benefit plans in the state. The case, which was closely monitored by other bar associations around the country, broadly affirmed the right of EAs to provide services to their clients and employers. However, pension actuaries who are not licensed as EAs could face unauthorizedpractice-of-law claims in North Carolina unless they worked closely with an EA, other licensed ERISA professionals, or an attorney. The bar also puts EAs on notice that they must actively participate in work performed for their clients and employers and not simply rely on other non-licensed individuals to perform those services without proper supervision. — LAUREN BLOOM

Foundation Promotes Consumer Education The Actuarial Foundation, in partnership with the Women’s Institute for a Secure Retirement (WISER), recently published Seven Life-defining Financial Decisions, a financial education primer for consumers. The 60-page booklet discusses how decisions made throughout a lifetime—choosing a career, getting married, having children, buying a home, starting to save and invest—can have an enormous impact on financial security in retirement and old age. Hard-copy versions of the booklet are available for $6 from WISER. To order, call 202-3935452 or go to The booklet and supplementary materials can also be viewed or downloaded from the Actuarial Foundation’s website, wiser051503.htm.

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Long-Term Medicare Funding Off Balance


following the passage of the Medicare prescription drug plan, the Academy suggests that you read the fine print. As was pointed out in the 2003 Medicare Trustees report, Medicare’s hospital insurance (HI) trust fund is out of long-term actuarial balance. Specifically, that means that only 10 years from now, expenditures in Medicare’s HI program will exceed its non-interest income. By 2026, when, according to projections, trust fund assets will be depleted, tax revenues would cover only about three-quarters of the program costs. This is one of several sobering details included in the Academy’s new issue brief Medicare’s Financial Condition: Beyond Actuarial Balance. A comprehensive examination of Medicare’s financial condition, the issue brief highlights long-term financing problems that were urgent even before the addition of a prescription drug benefit to the program. Some other findings: ➤ Without payroll tax increases or benefit decreases, Medicare’s demand on the federal budget — measured as the HI income shortfall OW THAT THE DUST HAS SETTLED

and the general revenue contribution to the federal supplementary medical insurance — is increasing rapidly. ➤ Medicare expenditures as a share of gross domestic product (GDP) and of total federal outlays are also increasing rapidly, especially when considered in conjunction with Medicaid and Social Security expenditures. ➤ The addition of a Medicare prescription drug benefit is only going to exacerbate these problems. The issue brief states that even with a provision in the new Medicare prescription drug plan that alerts Congress when the program’s reliance on general revenue funding is becoming unduly large, Medicare will probably place an increasing strain on the federal budget in coming years as currently promised benefits make up larger and larger shares of both GDP and total federal outlays. Tony Hammond, chairperson of the Medicare Steering Committee’s subgroup on the Medicare Trustees Report, and Cori Uccello, the Academy’s senior health fellow, led the effort in writing the issue brief. Other members of the subgroup are Guy King, Gordon Trapnell, and Lynette Trygstad.

Medicare Changes, continued from Page 1 issues. Having done a Capitol Hill briefing on actuarial equivalence last year, Carstens said the council is planning this year to hold more intensive individual meetings on the topic with selected parties, such as the Centers for Medicare and Medicaid Services and the House Committee on Ways and Means Health Subcommittee. Although Medicare dominated, questions about the uninsured also surfaced, said Al Bingham, chairperson of the Academy’s Committee on Federal Health Issues. But because this is an election year, there will probably not be a lot of movement in that area. “They said that this year will set the stage for how solutions for the uninsured are debated next year,” Bingham said. “There will be a lot of talk but probably no specific legislation passed.” Other topics raised during the council Hill visits were association health plans, Medicare supplemental insurance, and health savings accounts. While it was unfortunate that council members couldn’t visit with Senate staff, Bingham said, the meetings with various agencies this year were particularly valuable since those are the bodies that are implementing legislation that has already been passed.


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“The agencies seem to be bringing more and more people to our meetings,” Bingham said, “and they usually have as many or more questions for us as we have for them.” “What’s been nice about the visits, and was particularly true of this round, is that we didn’t spend a lot of time introducing ourselves,” agreed Shea, who has been making Hill visits with the Academy for the past eight years. “We are starting to recognize each other, and there was a familiarity that facilitated the discussion.” One outgrowth of this familiarity with the Academy was a request from the CBO that they be allowed to tap into and participate in ongoing discussions by the Academy’s Mental Health Parity Work Group. “They want input early on, instead of when finished work products are presented,” Carstens said. Carstens said she was a little surprised by but also grateful for the number of Health Practice Council members who did not let bad weather or terrorism deter them from coming to Washington for the Hill visits. “The fact that they took time out of very busy schedules to do this means they are very interested in making sure the Academy’s voice is heard,” Carstens said. And both Carstens and Bingham ex-

pressed appreciation for the continuing work of Cori Uccello, the Academy’s senior health fellow, and Holly Kwiatkowski, senior health policy analyst, for the high Academy profile they have maintained on these issues throughout the year and for their Herculean efforts to keep the Hill visits on an even keel despite evolving circumstances. “We found out only the night before that the Senate office buildings were closed,” Bingham said, “and Holly was working frantically up to the last minute to rearrange our schedules and teams to make sure that people were well deployed.” In addition to Bingham, Carstens, Shea, and Uccello, others participating in the visits were Michael Abroe, chairperson of the Committee on State Health Issues and of the Medicare Supplement Work Group; David Axene; Grady Catterall, chairperson of the Medicaid Work Group; Darrell Knapp, chairperson of the Health Practice Financial Reporting Committee; Karl Madrecki, chairperson of the Uninsured Work Group; James Murphy, chairperson of the Defined Contributions Health Plan Work Group; Jeff Nohl; Geoff Sandler; John Schubert, vice chairperson of the Health Practice Council; and Tom Wildsmith, chairperson of the Medicare Steering Committee.

A Ta l k W i t h t h e N e w A S B C h a i r


Make Your Opinions Count


IKE LAMONICA, the new chairperson of the

Actuarial Standards Board (ASB), wants to get out the word: The ASB is very interested in hearing from members of the profession about the changing ways in which they do business. Member feedback is crucial to the board as it works to ensure that standards governing the profession keep pace with evolving practices. LaMonica, a casualty actuary for Allstate Insurance in Northbrook, Ill., with three years, tenure on the ASB and previous service as chairperson of the ASB’s Casualty Committee, took over as ASB chairperson in January, succeeding Bill Koenig. “We’ve reached a point where we’ve addressed the majority of needs of the profession by putting into standards most generally accepted practices,” LaMonica said in a recent interview. The board is now turning its focus toward updating existing actuarial standards of practice (ASOPs) as needed and scrutinizing areas of practice for which new standards could be helpful—areas such as reserve estimation, for instance. “We charge each of the operating committees with originating reviews of the existing ASOPs,” LaMonica said, adding that many of the standards exposed for comment in the past year have been revisions of existing standards. For instance, a proposed revision of ASOP No. 23, Data Quality, which clarifies the respective roles of actuaries and principals in addressing data-related issues, may be particularly helpful to P/C actuaries in light of the NAIC’s interest in strengthening requirements for evaluating and testing the quality of data used for reserve opinions. In fact, LaMonica will be leading a general session on this issue at the Academy’s 2004 Spring Meeting (see Page 6 for details). The comment deadline for the proposed revision is March 31. Also open for comment until March 31 is a proposed revision of ASOP No. 38, Using Models Outside the Actuary’s Area of Expertise (All Practice Areas), and a revision of ASOP No. 21, Responding to or Assisting Auditors or Examiners in Connection with Financial Statements (All Practice Areas), is open for comment until April 30. In an effort to encourage greater comment, LaMonica said, the ASB continues to improve electronic access to its documents. “If you go back a couple of years ago, we had hard copies of everything sent to everyone,” La Monica said. Actuaries now have several modern options for maintaining their library of standards. The ASB offers all the standards on CD-ROM, and actuaries can visit the ASB’s website (www.actuarialstandardsboard,com) to find standards, news, and the latest exposure drafts. The next step, LaMonica said, would be to have all documents available on CD-ROM or on the website, with hard copies sent out only upon request. w w w. a c t u a r y. o r g

The ASB is also encouraging greater participation from the Academy’s practice councils, LaMonica said, in order to generate more comments. The ASB now has liaisons to each of the councils and is generally “more actively engaged” with their work, LaMonica said. LaMonica has spent his entire actuarial career at Allstate. A 1974 graduate of the University of Illinois with a double major in actuarial science and finance, LaMonica was guided toward the actuarial profession by one of his professors. “I was seeking a business application for my math aptitude,” LaMonica said. However, LaMonica, who is an avid fisherman, admits that despite having spent the past 29 years as an actuary, he might have missed his true calling: “Given my skill at filleting fish, I really should have been a surgeon.”

Mike LaMonica ➤ Has lived his whole life in Illinois: Born in Chicago, he grew up in Morton Grove and now lives in Inverness. ➤ Is married and is the father of four daughters — two of them currently college undergraduates and a third who is a fourth-year medical student. ➤ Is a big fan of the Chicago Blackhawks and considers hockey the ultimate sport.

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Spring Meeting 2004 AN ACADEMY FORUM

Where Actuarial Practice, Professionalism, and Public Policy Intersect May 6-7, 2004



learn about forces affecting your profession and what the Academy is doing to help. Listen to keynote speaker Kayla Gillan, a founding member of the Public Company Accounting Board created by the Sarbanes-Oxley Act, as she discusses the board’s mandate to reform the way in which public companies are audited. Attend a session on ethical issues facing actuaries featuring Gary Eisenbarth, president of the Insurance Marketplace Standards Association. Get the latest from Charles Bryan, chairperson of the Academy’s new Task Force on Minimizing Actuarial Liability, as he describes litigation risks facing actuaries today. Actuaries attending the spring meeting will be eligible for continuing education credit in all areas of practice. For life, health, and casualty actuaries, more than 11 hours of organized continuing education activity credit can be earned. Enrolled actuaries can earn two hours of core and five hours of non-core credit. To register, see the flyer enclosed with this issue of the Update or go to index.htm. Questions? Contact Denise Winston, the Academy’s meeting planner (; 202-223-8196).


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Breakfast General Session

Overview of Meeting SPEAKER

Barbara J. Lautzenheiser, president of the American Academy of Actuaries; principal, Lautzenheiser & Associates

“What Is Good for the Goose Is Good for the Gander”

Susan Geiger, partner, Preston, Gates, Ellis & Rouvelas, Meeds LLP Dave McRoberts, partner, Smart & Associates LLP Patricia A. Teufel, member of the Academy’s Risk Management and Financial Reporting Council; consulting actuary and principal, KPMG LLP


Actuaries, when communicating their professional findings and conclusions, are bound by Actuarial Standard of Practice No. 41, Actuarial Communications. But what if politicians had to meet the requirements of ASOP No. 41? This session will look at the highlights of ASOP No. 41 and analyze its requirements using statements made by politicians from both sides of the aisle.

Data problems can make it more difficult for actuaries to complete professional assignments and are often a factor in lawsuits against the profession. The ASB has proposed a revision to its standard on data quality to clarify the respective roles of actuaries and principals in addressing data-related issues. This session will provide an up-to-the-minute report on the ASB’s work on the proposed revised standard, and will discuss other ways that data-quality issues are affecting actuaries’ professional practices.



Charles L. McClenahan, managing director,

Michael A. LaMonica, chairperson of the ASB; product vice president, Allstate Insurance Co. Paul Meyers, attorney, Watson Wyatt Worldwide Robert J. Rietz, Academy vice president for professionalism issues; director, Deloitte & Touche LLP

Mercer Risk Finance & Insurance Consulting Robert J. Rietz, Academy vice president for professionalism issues; director, Deloitte & Touche LLP


Sarbanes-Oxley Act Congress passed the Sarbanes-Oxley Act in the wake of high-profile accounting scandals that have shaken the very foundations of American business. The legislation imposes oversight by federal regulators and seeks to ensure independence between auditors and their clients, effectively changing the way businesses operate. This discussion will focus on how actuaries can apply the new rules into a risk-assessment framework that integrates overall corporate governance and business philosophies with the new requirements. SPEAKERS

Robert A. Anker, immediate past president of the Academy; president, QuayQuest


Actuarial Litigation Litigation against actuaries is increasing, in both quantity and kind. The North American Council of Presidents chartered a task force to study the problem and recommend ways that the actuarial profession can mitigate the risk of unfair liability. This session will describe the increased litigation risks facing actuaries today and present recommendations on steps the profession can take to manage the risks facing its members. SPEAKERS

Charles A. Bryan, chairperson of the Academy Task Force on Minimizing Actuarial Liability; president, CAB Consulting Services

Friday, May 7

Spring Meeting 2004


Actuaries and Ethics

Kayla Gillan, member of the newly formed Public Company Accounting Oversight Board The Academy is fortunate to have Kayla Gillan of the Public Accounting Board as its keynote speaker for this year’s Washington luncheon. An attorney with more than 16 years of experience in the pension field, Gillan is one of four founding members of the board, which was created by the Sarbanes-Oxley Act to reform the way in which public companies are audited. Prior to her appointment to the board, Gillan most recently served as general counsel to the $130 billion California Public Employees' Retirement System (CalPERS) and for 10 years in other positions, including deputy general counsel. She was a principal architect of CalPERS' corporate governance program, managed all aspects of the funds' legal services, and oversaw a staff of internal auditors.

Presentation of the 2004 Robert J. Myers Award for Public Service

8:00 AM– 9:00 AM


NOON– 11:00 AM– 9:00 AM– 2:00 PM 11:50 AM 10:55 AM


The American Academy of Actuaries is a provider of continuing education (CE) for actuaries under the Qualification Standards for Prescribed Statements of Actuarial Opinion. For actuaries practicing in the life, health, and casualty areas, more than 11 hours of organized continuing education activity credit may be earned. Two hours of core and five hours of non-core credit can be earned by enrolled actuaries. We cannot guarantee credit for enrolled actuaries, either as core or non-core, since the final determination rests with the Joint Board for the Enrollment of Actuaries. The Academy is in the process of determining if any of the sessions qualify for professional development credit. Go to www.actuary. org for updates on the CE credits available.

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GENERAL SESSION II : DATA QUALITY Michael LaMonica, Paul Meyers, Robert Rietz



C1. The NAIC and H1. Medicare Actuarial Audit/ Reform/ Financial Reporting Prescription Drugs

L1. C-3 Phase 2

P1. Does What We Do as Professionals Impact on the Future of DB Plans?

C2. SarbanesOxley Section 302 and Section 404

L2. Variable Annuity Reserves/Actuarial Guideline 34

P2. New Perspectives on Retirement Risk

C3. A Discussion of H3. Health Care Company Affordability Failures and Actuarial Practice

L3. Generally Accepted Accounting Principles (GAAP) Issues

P3. The Future of DB Plans: The Crystal Ball Is Becoming the Eight Ball


H2. Coverage for the Uninsured


10:30 AM– 11:25 AM

9:30 AM– 10:25 AM

8:00 AM– 9:25 AM


11:30AM– 12:25 PM

Note on Continuing Education Credits

GENERAL SESSION I : SARBANES–OXLEY ACT Robert Anker, Susan Geiger, Dave McRoberts, Patricia Teufel

P Track: : PENSION

BREAKFAST GENERAL SESSION: ACTUARIES AND ETHICS SPEAKER: Gary Eisenbarth, president, Insurance Marketplace Standards Association; CEO, MTL Insurance C4. The Pricing of Volatile Lines

H4. Retiree Health Care

L4. Life Practice Notes

P4. Social Security Reform

C5. What Does Your Opinion Mean?

H5. Solvency Protection and Regulation

L5. Nonforfeiture

P5. Accounting and Pensions: Is the Glass Transparent or a Mirror?

C6. Modeling Issues

H6. Approaching New Issues Arising from SarbanesOxley

L6. International Accounting Issues

P6. Retirement Plan Governance


12:30 PM– 2:30 PM

Lauren Bloom, the Academy’s general counsel Charles A. Bryan, chairperson of the Academy Task Force on Minimizing Actuarial Liability; president, CAB Consulting Services Jack M. Turnquist, former Academy president

Charles McClenahan and Robert Rietz

L Track: LIFE

Presentation of the 2004 Robert J. Myers Award for Public Service KEYNOTE SPEAKER: Kayla Gillan, member of the newly formed Public Company Accounting Oversight Board


2:30 PM– 4 PM




Discussion Forum on Actuarial Litigation Join your colleagues for a free and open exchange on actuarial malpractice litigation led by three of the profession’s most knowledgeable experts on the subject.

“What Is Good for the Goose Is Good for the Gander”

2:00 PM– 2:55 PM

Washington Luncheon


3:00 PM– 3:55 PM

Gary Eisenbarth, president, Insurance Marketplace Standards Association; CEO, MTL Insurance


4:00 PM– 4:55 PM



5:30 PM– 7:30 PM

One of the most important challenges facing the insurance industry today is setting the ethical standards and marketing practices used by companies when selling insurance products. What role do actuaries play in an ethical corporate culture? Can they do more to protect companies and the industry from compliance problems?


Lauren Bloom, Charles Bryan, Jack Turnquist

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ABCD Procedural Rules Revised The Actuarial Update ASSOCIATE EDITORS

William Carroll Andrew Erman Ronald Gebhardtsbauer Rade Musulin Peter Perkins Adam Reese EDITOR



Becky Horst

American Academy of Actuaries PRESIDENT

Barbara Lautzenheiser PRESIDENT-ELECT




of the Update is an exposure draft of proposed revisions in the ABCD Rules of Procedure. “None of these changes is revolutionary,” said Frank Irish, chairperson of the ABCD. “Many of them simply create a more efficient approach to the process.” For instance, the revision would eliminate the category of informal inquiries to the ABCD. The impetus for this change, said Irish, was the recognition that all requests from actuaries to the ABCD that don’t suggest or allege a violation by another actuary are essentially requests for guidance. Under the revision, requests for guidance need not be submitted in a particular format. However, there is latitude for both binding responses by the entire ABCD and non-binding responses by an individual ABCD member. The revision also contains clarification on the confidential nature of requests for guidance. A more important change, Irish said, is a new provision designed to protect the identity of someone who wishes to make an anonymous complaint. The revision would allow the ABCD to handle these cases as information received, much as inquiries undertaken in the absence of a formal complaint are handled. “I don’t think we’ll get that many anonymous complaints,” NCLOSED WITH THIS ISSUE

Jan Carstens Donna Claire Burt Jay Ken Kent Jan Lommele Robert Rietz Richard Lawson DIRECTOR OF COMMUNICATIONS



Hone your knowledge at the Academy’s Variable Annuities–Regulatory Risk-based Capital and Reserves (C-3 Phase 2) Seminar, May 4-5, in Washington*.


The American Academy of Actuaries 1100 Seventeenth Street NW Seventh Floor Washington, DC 20036 Phone 202-223-8196 Fax 202-872-1948

The seminar will offer: ➤ A history of the project ➤ Overview of the modeling approach ➤ Overview of alternate factor methodology ➤ Discussion of applicable actuarial standards of practice ➤ A look at the future, including possible practice notes and beginning work on C-3 Phase 2.

Need more information? Contact Steve English, the Academy’s life policy analyst, at, or 202-223-8196.

©2004 The American Academy of Actuaries. All rights reserved.


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Irish said, explaining that the revisions would extend protection of anonymity to the accuser without in any way reducing the rights of the actuary who is accused of unprofessional conduct. Among minor changes are the removal of the word "public" in the introduction (in recognition of the fact that discipline may sometimes be private); the provision of guidance to actuarial students, as well as actuaries; and language that makes it clear that the recommended format for complaints isn’t mandatory, as well as the elimination of the suggestion that the person who makes a complaint must name the relevant section of the standards or of the code. The rules of procedure were last revised in 1998. The ABCD is accepting comments on the revision electronically. To file comments, send a message to using the phrase “ABCD rules of procedure” in the subject line. You may include your comments either in the body of your message or as an attachment. The board will also accept comments sent by conventional mail. Send your comments to: ABCD Rules of Procedure Actuarial Board for Counseling and Discipline 1100 17th Street NW, Seventh Floor Washington, DC 20036-4601 The deadline for all comments is June 1.

Are you up to speed on C-3 Phase 2?


Statements of fact and opinion in this publication, including editorials and letters to the editor, are made on the responsibility of the authors alone and do not necessarily imply or represent the position of the American Academy of Actuaries, the editors, or the members of the Academy.


*Depending on upcoming action by the NAIC, the seminar may be moved to September.

M a rc h 2 0 0 4


EAs Not Barred From N.C. Practice T HE N EWSMONTHLY OF THE A MERICAN A CADEMY OF A CTUARIES Rule Revisions The ABCD is proposing some proced...


EAs Not Barred From N.C. Practice T HE N EWSMONTHLY OF THE A MERICAN A CADEMY OF A CTUARIES Rule Revisions The ABCD is proposing some proced...