JUNE 2013 theactuary.com
Interview: Steve Webb
The magazine of the actuarial profession
The pensions minister talks exclusively to The Actuary
Risk Underestimating the value of intangible assets
Reinsurance
The Actuary
Can capital relief unlock hidden beneďŹ ts for long-tail business?
Arts Bi(centennial) birthdays and the wonder of theatre
June 2013
HUNGRY FOR POWER Switched-on actuaries in the sustainability markets p01_june_cover •gc.indd 1
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What’s underneath? We look below the surface to spot trends early and show you what is really happening. Whether your need relates to risk management, capital, or strategy, our cutting-edge analysis techniques can help you see deeper than the competition.
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JUNE 2013
Contents GREG MEESON
18
24 “The UK electricity market is going through significant change. By 2020, the target is to meet 30% of our power generation from renewables. In 2011, the proportion of our power from such sources was just 10%”
29 UP FRONT
FEATURES
AT THE BACK
10 Profession news
18 Interview: Steve Webb
34 Arts
14 Industry news 16 People/society news 21 SIAS events
Nick Mann meets the government minister charged with managing massive changes in workplace and state pension provision
22 Risk management: Priceless
OPINION 5
Editorial Deepak Jobanputra believes drafting a roadmap of sustainability can offer opportunities for actuaries
6
Letters Scottish slip-up, Solvency II and pension scheme liabilities
7
President’s comment In his final editorial, Philip Scott acknowledges the high-profile work of the Pensions PEC, and looks back on an eventful year
8
Underestimating the value of intangible assets can be costly, warns Jackie Maguire
27 Reinsurance: Uncovered Can we learn from Solvency II to unlock the hidden value of reinsurance for long-tail business? Victoria Jenkins and Jessica Leong report
29 Risk management: Bridging the gap Alex Ntelekos calls for closer ties between actuaries and catastrophe modelling
30 Environment: The green guardians Louise Pryor and Tracey Zalk talk to four actuaries trying to make sustainable sense of the future
Alan Frost explores the wealth of world-class music and theatre in 2013
36 Puzzles New crossword prize, and Mensa puzzles
38 Actuary of the future Richard Cronin of Friends Life
39 Student Jessica Elkin on networking with SIAS
40 Appointments and moves
ONLINE The art of VaR optimisation Mark Sinclair-McGarvie discusses how to simplify complex VaR optimisation problems
Dust in a drawer? Jean-Pierre Charmaille and Rachel Elwell on maintaining your pension scheme risk register
Soapbox
May issue apology
Claire Jones calls for an overhaul of how we measure economic success
Consumer Confusion by Ronnie Bowes contained a chart with incorrect data. The Spotlight article on granular reserving contained a misspelling of the name of the author, Jens Perch Nielsen. Both errors have been rectified and can be viewed online
33 Book review Finance and the Good Society by Robert J Shiller
MORE CONTENT ONLINE Additional content can be found at www.theactuary.com
WRITER OF THE MONTH Jackie Maguire wins a £50 book token for her article on intangible assets, courtesy of the Staple Inn Actuarial Society
June 2013 • THE ACTUARY www.theactuary.com
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Editorial DEEPAK JOBANPUTRA Redactive Media Group 17-18 Britton Street, London EC1M 5TP +44 (0)20 7880 6200 Editor, Redactive finance division Mike Thatcher Publishing director Joanna Marsh Chief sub-editor Caroline Taylor News editor Nick Mann +44 (0)20 7324 2794 nick.mann@theactuary.com Recruitment and display manager Katy Eggleton +44 (0)20 7324 2762 katy.eggleton@redactive.co.uk Recruitment sales Gill Rock +44 (0)20 7880 6234 gill.rock@redactive.co.uk Digital sales Leila Serlin +44 (0)20 7324 2787 leila.serlin@redactive.co.uk
Managing editor Sharon Maguire +44 (0)20 7880 6246 sharon.maguire@redactive.co.uk
Opinion
Editor Deepak Jobanputra editor@theactuary.com Editorial team Sarah Bennett health, international Jeremy Lee pensions, investment, ERM, banking
Deepak Jobanputra believes drafting a roadmap of sustainability will offer many actuarial opportunities
Richard Purcell Richard Schneider, life, Solvency II, mortality/longevity, modelling and software
Electric Avenue
Helen Lau, GI, reinsurance, environment, careers (UK) Aoife Martin, GI, reinsurance, ERM, Solvency II
Art editor Gene Cornelius Picture editor Akin Falope Production manager Jane Easterman +44 (0)20 7880 6248 jane.easterman@redactive.co.uk Print Southernprint Ltd Internet The Actuary website: www.theactuary.com
Profession news editor Alison Jiggins +44 (0)20 7632 2172 alison.jiggins@actuaries.org.uk People/society news editor Yvonne Wan social@theactuary.com Student page editor Jessica Elkin student@theactuary.com Arts page editor arts@theactuary.com
SIAS website: www.sias.org.uk
SIAS representative Alvin Kissoon
Actuarial Profession website: www.actuaries.org.uk
Editorial advisory panel Peter Tompkins (chairman), David Campbell, Matthew Edwards, Martin Lunnon, Marjorie Ngwenya, Sherdin Omar, Richard Purcell, Andrew Smith, Nick Silver
Circulation 22,733 (July 2011 to June 2012)
Subscriptions For subscriptions from outside the actuarial profession: UK, Eire and Europe: £55 a year/£5 a copy. For the rest of the world: £80 a year/£7.50 a copy. Please contact: Alison Jiggins, The Actuarial Profession, Staple Inn, High Holborn, London WC1V 7QT T +44 (0)20 7632 2100 E alison.jiggins@actuaries.org.uk Students on actuarial science courses at universities may join the Staple Inn Actuarial Society for £6 a year. They will receive The Actuary as part of their membership. Apply to: Membership Department, The Actuarial Profession, Maclaurin House, 18 Dublin Street, Edinburgh EH1 3PP. T +44 (0)131 240 1325 E membership@actuaries.org.uk Changes of address should be made known to the membership department as above. For delivery queries, please contact: Jane Easterman E jane.easterman@ redactive.co.uk Published by the Staple Inn Actuarial Society The editor, The Institute and Faculty of Actuaries and Staple Inn Actuarial Society are not responsible for the opinions put forward in The Actuary. No part of this publication may be reproduced, stored or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the copyright owners. While every effort is made to ensure the accuracy of the content, the publisher and its contributors accept no responsibility for any material contained herein. Important information for contributors to The Actuary By submitting content for publication you confirm that: (a) You (and/or other named contributors) are the sole author(s) of the content submitted; (b) The content you submit is original and has not previously been published (unless you specifically advise us to the contrary); (c) You haven’t previously licensed the use of the content you submit; (d) So far as you are aware, the content submitted will not infringe any third-party rights, be defamatory or in any way illegal. © SIAS June 2013 All rights reserved ISSN 0960-457X
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Sustainability of the earth’s resources is a crucial issue that is being considered by governments and other key stakeholders worldwide. Countries across the globe and their economies are at different stages in their evolution, with a number of them experiencing expansion while others are seeking to return to growth. This is bringing about new challenges where supply and demand factors are rapidly changing and will necessitate innovative solutions. For example, new and renewable sources of energy are being explored. This brings with it a requirement for adaptation on the part of individuals and businesses. Electric cars are a simple illustration. They may have deemed to have been reserved for niche markets, yet their presence is starting to grow. As a result, requirements for further change follow – charging stations in convenient locations, for instance. Global leaders must strongly consider the needs of future generations and sustainability. My personal belief is based on working towards creating a legacy upon which future generations can build. Without appropriate planning, the world’s natural resources could quickly become depleted. Actuaries have a great set of skills that can contribute to this diverse topic, working with other specialists in modelling a wide range of outcomes. In this month’s edition, we have a number of articles by actuaries who work in the fields of sustainability economics and the modelling of electricity markets. It is truly encouraging to know that our profession is branching into what might be called ‘non-traditional’ actuarial markets. One area of the actuarial skills base that is considered in this edition is catastrophe modelling (p29), citing an opportunity for us to grow our expertise. Continuing on the theme of skills, the CEO’s comment (p10) looks at the results of IFoA research into important qualities for actuaries – well worth a read. We are fortunate to have access to a wide range of opportunities to contribute to society while also building great careers – this is clearly driven by the skills and training required to become an actuary. We truly are debtors to our profession.
‘Actuaries can contribute to this diverse topic, working with other specialists in modelling a wide range of outcomes’
Deepak Jobanputra editor@theactuary.com
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June 2013 • THE ACTUARY www.theactuary.com
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Opinion Letters letters@theactuary.com
Scottish slip-up Have your say online
A selection of comments posted online about news stories published on www.theactuary.com. Have your say by heading over to www.theactuary.com/news now.
Solvency II ‘is an object lesson in how not to make law’ (Full story: bit.ly/10pg0bi) “1. The PRA estimated the Solvency II costs to total at least £3bn for UK companies alone. 2. Lloyds of London has already spent £300m. 3. More important, harmonisation reduces diversity and increases systemic risk.” – Fessal Bouaziz, 4 May
females, particularly [if it] would bring them a lower price. So I’m still doubting the use of this directive” – Kris Chen, 2 May
Young women’s motor insurance costs ‘up by a third’ (Full story: bit.ly/Y8xtbC) “I don’t think pricing on the base of gender would trigger discrimination to
margin above gilt yields’. There is no unavoidable problem of low gilt yields raising funding targets. Scheme actuaries are free to recommend a Pension schemes ‘face prudent funding strategy tough choices agreeing without referencing new funding plans’ gilt yields.” – Derek (Full story: bit.ly/XCGOKK) Benstead, 12 April “The premise of this article is that pension Lengthy retirement ‘is scheme liabilities are bad for your health’ valued using a discount (Full story: bit.ly/15PpcPv) rate set by reference “Thank you for the to gilt yields. Of course, ‘wake-up call’! I’m a this is not a requirement secretary for a society of the law. Advisers, of pensioners from the trustees and employers metal industry in The are under no obligation Netherlands.” – to assume that ‘their Arie Stuijt, investment strategy will 16 May always deliver the same
I have just read the latest in a series of informative public interest papers on the topical subject of the pensions implications of an independent Scotland. Who do readers think this valuable contribution to the pensions debate was published by? 1. The Institute and Faculty of Actuaries. 2. The Scottish Board of our profession, whose remit focuses on Scotland. 3. A large employer of actuaries based in Scotland. 4. None of the above. I am embarrassed to say that the answer, as ridiculous as it may seem, is 4. We consigned Scotland’s actuarial profession to history only three years ago, but let’s not surrender our natural habitat altogether and to other professions – in this case, the accountancy profession. Gerry Devenney 17 May
The editorial team welcomes readers’ letters but reserves the right to edit them for publication. Please email letters@ theactuary.com by 19 June 2013.
Big enough to fill this chair? With a growing print readership of approximately 25,000 and an increasing online presence (http://www.theactuary.com/), The Actuary is a key platform for news, views and jobs in the actuarial community and the leading publication for the actuarial profession in the UK. The current editor is due to step down this year, so SIAS is looking for a highly motivated and enthusiastic successor to lead the editorial team of the magazine going forward. Do you think you have the energy and dedication to take a role in guiding an expanding specialist production team? Do you have the creative flair yet the eye for detail to preside over a high-quality publication? This is a challenging role and we require a volunteer with strong communication skills, an ability to work under the pressure of meeting publishing deadlines and the commercial awareness to take the magazine forward. However, the editor will be working with a strong team of experienced publishing staff and specialist editors. A more detailed description of the role may be found in the following link http://www.theactuary.com/news/2013/04/editor-role If you think you have got what it takes, and would like to find out more, please express your interest, including a CV, by emailing Alvin Kissoon at actuarymagazine@sias.org.uk no later than 30 June 2013.
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THE ACTUARY • June 2013 www.theactuary.com
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Opinion President’s comment
Philip Scott is the president of the Institute and Faculty of Actuaries
PHILIP SCOTT
A year to remember During the past year, I have been looking in some detail at the work of the Institute and Faculty of Actuaries’ Practice Executive Committees (PECs) and informing you of their achievements and the forthcoming work they will be doing on your behalf. The last of these reviews covers the role of the Pensions PEC. A highlight of the committee’s recent activity has been the response to public consultations. In the 12 months to April 2013, it has issued no fewer than 20 formal responses. In March this year, the PEC responded to the Department for Work and Pensions’ call for evidence on ‘Pensions and Growth: Whether to Smooth Assets and Liabilities in Scheme Funding Valuations’. Included was the feedback received from members working in pensions. This followed a series of regional meetings with some 200 pensions actuaries, who advise trustees and also employers, to discuss the call for evidence. The response was picked up by the media, particularly by Professional Pensions magazine, and the weight of opinion was sufficient for the proposals to be dropped from the spring Budget. Pensions PEC members also attend regular meetings with representatives of government and other policymakers, including the Pensions Regulator, the Department for Work and Pensions and the Financial Reporting Council. By maintaining a continual dialogue with these authorities, we continue to be well placed to contribute to and, where appropriate, stimulate key public debate on future policies and promote the work of actuaries in the pensions industry. Jane Curtis, the immediate past-president and an experienced pensions actuary, spoke in April at the European Pensions Strategy Conference. Her talk did much to raise awareness of the public interest angle of the work of the Institute and Faculty of Actuaries (IFoA) in relation to pensions policy and encouraged attendees to consider the ‘consumer perspective’ in the work they do. Along with a number of other members, Jane has been invited to take part in further government policy groups looking at developing their flagship ‘Defined Ambition’ pension scheme and the associated policy group looking at the consumer perspective. Another theme of the Pensions PEC is to ensure that provision of continuing
In his final editorial for The Actuary as president, Philip Scott acknowledges the high-profile work of the Pensions PEC and looks back on an eventful year professional development for members is sufficient and targeted at the appropriate level and themes. The forthcoming Pensions Conference in June will cover a wide range of topics and is planned to include a keynote speech from pensions minister Steve Webb. There will also be a range of presentations. Neil Williams, chief economist for Hermes Fund Managers, will look at the global economic outlook. Carol Jagger, AXA chair of Epidemiology of Ageing at Newcastle University’s Institute for Ageing and Health, will look at healthy life expectancy and quality of life in old age. Workshops will include topics of international interest, including an alternative indexation of equities and the European Commission review of the Institutions for Occupational Retirement Provision (IORP) Directive. The pensions research subcommittee is actively considering ideas for new research working parties. It is currently overseeing the output of the Working Party on Swaps and Liability Driven Investment, which presented at the Pensions Conference in 2012. In my opening article for The Actuary last July, I explained that my task for my term as president would be to work on developing the
IFoA’s brand into one that stands out for quality and trust in financial matters. We now have a new brand, launched at the end of April, with a sound set of values that we want our members and stakeholders to associate with us – integrity, community and progress. I look forward to watching these values embed and seeing our hard work bear fruit for the benefit of our members. During the past year, at my meetings with the PECs, I have spoken about the skills I believe our members may need as demands on actuaries change and new opportunities emerge. Among these are leadership skills and a focus on the end-user of the financial products that actuaries help to design – particularly with the current lack of trust in the financial services industry. Please do get in touch if you think we can do more to highlight these issues. Lastly, this being my closing article as president of the IFoA, I would like to wish David Hare all the very best for his term as president when I hand over at the annual general meeting on 24 June. David will make an excellent president and he is very well placed to progress the exceptional work that our volunteers and staff do on behalf of our membership. a
“My task as president was to work on developing the IFoA’s brand into one that stands out for quality and trust in financial matters”
June 2013 • THE ACTUARY www.theactuary.com
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Opinion Soapbox
CLAIRE JONES
Rethinking economic growth Talk about ‘growth’ in politics and business generally means economic growth measured by real increases in gross domestic product (GDP). But is GDP an appropriate way of measuring economic performance? And should growing it be a central public policy aim? The Institute and Faculty of Actuaries recently commissioned a research report entitled Resource Constraints: Sharing a Finite World (bit.ly/limitstogrowth), highlighting the potential for resource constraints to limit future economic growth. These constraints arise because our planet is finite. As well as limiting the economy’s physical size, the research suggests that monetary measures such as GDP and asset returns will also be restricted, leaving society facing some tough decisions in the years ahead. Instead of making general calls for ‘growth’, we first need to be clear about what we’re trying to grow and why we’re trying to grow it. We then need an informed debate about the desirability, feasibility and affordability of meeting these objectives. GDP measures only a single dimension of economic performance – the scale of economic activity calculated with reference to the market prices of the goods and services produced within a particular geographic area. It does not provide any information about the social outcomes of that economic activity. For example, it includes spending on cigarettes, healthcare costs arising from obesity and the clean-up costs of environmental disasters, while excluding most voluntary and domestic work. It gives no indication of how the benefits flowing from economic activity are distributed among the population, so countries with the same mean GDP per capita can have very different levels of inequality. GDP says nothing about the manufactured, natural and social assets on which economic activity depends. We need to understand how the quantity and quality of these assets are changing over time to ensure the sustainability of economic activity. Growing the scale of the economy is a means to an end, not an end itself. Those calling for
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Claire Jones calls for an overhaul of how we measure the success of our economy and urges a move away from GDP growth as a primary goal economic growth may well have different ends in mind. Individuals may want higher GDP because they equate it with a greater chance of employment, more affordable bills and more comfortable lifestyles. Governments may want higher GDP so they can fund more public services without increasing tax rates or public-sector debt. Businesses may hope that an increase in GDP will lead to increased sales revenues and profitability. Actuaries will be mindful of the link between GDP and asset returns, and society’s structural dependence on asset returns to fund pensions and long-term care. Once these different aims are stated, it becomes clear that they won’t automatically be met by increasing GDP. Meeting them depends instead on the composition of economic activity (including activity that occurs outside markets) and the distribution of the associated income. Other aspects of wellbeing, such as health, education and personal relationships, are even less directly linked to GDP. However, GDP still holds sway in policy debates. It seems likely that we’re facing a future in which achieving real growth in GDP will
become increasingly difficult. Moreover, by focusing on maximising GDP in the short term and overlooking the state of the resources on which our economic activity depends, we risk making decisions that undermine society’s ability to deliver high quality of life in the long term. Now is the right time to rethink how we measure the success of our economy and to cease to treat GDP growth as a primary goal. Rather than simplistically trying to pursue ‘growth’, we need to be clearer about the social outcomes we wish to achieve and have an informed debate about how best to achieve these, given the constraints we face. This will help us select appropriate alternative measures of success and give these measures the legitimacy they need to gain widespread support.
“Instead of making general calls for ‘growth’, we first need to be clear about what we’re trying to grow and why we’re trying to grow it. ”
Claire Jones is a qualified actuary with an MSc in sustainability (ecological economics). She is the sustainability and economics manager at the Institute of Chartered Accountants in England and Wales. The views expressed are her own and not necessarily those of her employer. ● For more on sustainability, see also ‘Green Guardians’, p30
AKIN FALOPE
24/05/2013 16:05
ADVERTISEMENT FEATURE FOR PROFESSIONAL CLIENTS ONLY. NOT TO BE DISTRIBUTED TO RETAIL CLIENTS.
A SMARTER APPROACH TO CREDIT INVESTING BENCHMARKS WEIGHTED BY MARKET CAPITALISATION WORK WELL FOR EQUITY FUNDS, BUT THE FINANCIAL CRISIS HIGHLIGHTED THE FLAWS INHERENT IN EMPLOYING THE SAME APPROACH TO CREDIT MARKETS. Credit indices can be categorised by their broad characteristics, such as whether they are composed of investment grade corporate bonds, high-yield bonds By Adam Mossakowski or mortgage-backed securities. Credit Fund Manager, They may also be based on the Insight Investment credit rating or duration of the underlying securities. However, when it comes to deciding which bonds are included in the indices, the most common approach is to weight by market capitalisation. Market capitalisation weighting has an intuitive appeal in equity markets. The stock market is a voting machine. Companies that investors are buying have rising share prices. This increases their market capitalisation. These companies tend to be the most important businesses in an economy. But assigning the biggest weight to the largest issuers of debt is more problematic. It means investors will have the greatest exposures to companies that have the most outstanding debt. They may also be the most financially leveraged. Passive indextracking funds and managers with an index relative performance objective have little choice but to buy these names, regardless of the credit fundamentals. This problem came to the fore at the height of the financial crisis in 2008 and 2009. The weighting of bonds issued by the financial sector ballooned from less than 30% of the iBoxx Sterling Non-Gilt Index to almost 40%. This was at a time when the spreads on these bonds gapped from an average of 100bp over equivalent maturity UK government bonds (gilts) to over 800bp. Market capitalisation weighting can create unwanted exposures even in normal market conditions. These indices typically have high exposures to low-yielding sectors such as supranational bonds issued by the World Bank, European Investment Bank and others.
slavishly following an index can leave investors with sizeable exposures to the most prolific issuers. There are a number of ways this problem can be addressed. One is to invest in credit on an absolute return basis, where a fund aims to generate positive returns in excess of a cash benchmark. The fund can use directional long and short strategies as well as relative value trades (picking off-setting pairs of markets and instruments) in order potentially to benefit from both rising and falling markets. Another option is to invest in credit on a buy and maintain basis. This approach involves taking exposure to a diversified range of high-quality corporate bonds, with strict sector and issuer concentration limits. The aim is to hold the bonds to maturity, unless there is a material change in credit quality. This can allow investors such as pension schemes greater certainty in terms of the timing of their cashflows. This approach improves on both passive index tracker funds and actively-managed funds measured against a traditional benchmark by putting stock selection, the “Buy” element of the strategy, first. Long term fundamental credit quality, not benchmark weighting, drives the investment decisions. The “Maintain” element is to seek to avoid loss from default or deterioration in credit quality. It allows the manager discretion to refrain from forced sales as a result of a rating downgrade, index rebalancing, or a security leaving the index. This in turn minimises transaction costs, which can be significant for benchmarked credit portfolios. Insight has been a leader in managing buy and maintain strategies since early 2009 and currently manages more than £7bn in segregated accounts. The strategy uses income from coupons and modest secondary turnover to keep duration constant and continually refresh the portfolios to reflect the most up to date credit views of the manager. Absolute return and buy and maintain strategies are a smarter approach to credit investing, reflecting both market conditions and client needs.
With exposure to individual issuers uncapped, some names currently account for in excess of 5% of benchmarks. In short,
JUNE 2013 This document may not be used for the purposes of an offer or solicitation to anyone in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation. Issued by Insight Investment Management (Global) Limited. Registered in England and Wales. Registered office 160 Queen Victoria Street, London EC4V 4LA; registered number 00827982. Authorised and regulated by the Financial Conduct Authority. FCA Firm reference number 122259. 09309-05-13
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News Profession NEWS UPDATES FROM THE ACTUARIAL PROFESSION
Upfront
Figure 1 Results of stakeholder perception audit
Respect for professional bodies Stakeholders see them as trusted policy partners; there is an appetite for dialogue Respect for actuaries Viewed as trusted, expert and impartial
10
There is significant potential for the IFoA to become a trusted voice
Areas of public policy interest overlap with the big issues in actuarial science Ageing population, long-term care, etc Positive perception of the IFoA Those who have contact tend to appreciate it
Figure 2 Important qualities for actuaries
Co
DEREK CRIBB
Appetite for the profession to have a voice Stakeholders want someone to speak out for actuaries
he
r
100% 80% 60% 40% 20% 0%
mm
Derek Cribb is the chief executive of the Institute and Faculty of Actuaries
One of the fundamental aspects of our Royal Charter is that we work ‘in the public interest’ by advancing actuarial science through research and thoughtleadership but also by speaking as the actuarial voice on issues of public debate. This does not mean that we lobby for a certain position or that we make statements on things where we cannot add value through our expertise. However, it does mean we can provide a considered, objective and evidence-based actuarial view on the big topics facing the world today. To ensure that our voice has the greatest impact and is heard by the right people, we need to understand what our stakeholders think of us and how they want us to communicate with them. That is why we commissioned ComRes, an independent market research company, to carry out a stakeholder perception audit to provide feedback and help us design an evidence-based public affairs strategy. ComRes undertook both qualitative and quantitative fieldwork, engaging with stakeholders from across government, civil service and regulators, Parliament, media, universities and other educational institutions, national actuarial associations and peer domestic professional bodies, as well as employers of actuaries. The questions they asked were designed to measure both our reputation and our communication with key stakeholders, in order to identify areas of reputational risk and highlight where there was an appetite for an actuarial voice. What we found was that people trust the Institute and Faculty of Actuaries (IFoA) . They believe that we are acting in the public interest and that we do not have vested interests that are driving our agenda. There is a great appetite for the IFoA to enter debates, backed by evidence and objectivity, and to speak out on topics that actuaries are experts on. We found that people want to know what actuaries think and they want to hear their opinion on a range of issues. However, awareness of the IFoA is much lower than it has the potential to
Ot
Time for us to speak up
ica sk tion In ills Bu tellig sin e es nce sa cu me n ind Exp us eri try en se ce Qu ctor in ali fic ati o Pe ns rso na pa Expe lity rti rie cu n Te lar r ce in am ole wo rk ab ilit y
Derek Cribb reports on the results of the independent stakeholder perception audit
be with a number of core stakeholders. There remains a perception that the IFoA is inward-looking and avoids commenting on current affairs. It is felt that more thought leadership pieces and targeted communications would help challenge these stereotypes. Stakeholders appreciate the skill and ability of actuaries to do a complex job well but were often frustrated by an inability to communicate their views. One employer went so far as to say: “[Actuaries] don’t tend to be so good at communication... taking complicated ideas and translating them”. When we looked at what MPs thought about actuaries, we saw a not unfamiliar pattern of answers. Communication was lowest of our skills as perceived by MPs, with only 2% believing it to be a strength. However, this is the skill rated most important by employers, with 82% saying that good communication is one of the top three qualities they look for when hiring actuaries. Encouragingly for the actuarial profession as a whole, the vast majority of employers questioned (72%) said that hiring an actuary added significant value to their business. The research throws down a very real challenge to actuaries and the IFoA to grow their skill base beyond traditional actuarial tasks and to demonstrate these skills more widely. This challenge can be best summed up by one politician’s view of the IFoA: “What’s on their mind, what is top of their agenda... what are they worried about at the moment, have they any advice or suggestions? That’s what I want to hear.” a
un
Opinion CEO’s comment
SOURCE: COMRES
THE ACTUARY • June 2013 www.theactuary.com
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Gore calls for action on responsible investment Report by Therese Kieve The former US vice-president, Al Gore, who is also co-founder of asset management firm Generation Investment Management, has issued a call to action to bring sustainable investment into the mainstream. He was speaking to a packed audience at the annual lecture of ShareAction (formerly known as FairPensions) in London’s Guildhall in March. The event was introduced by the group’s chief executive Catherine Howarth, who explained that the change of name reflected the organisation’s evolving work programme and broader remit. In an engaging keynote address, Gore covered a number of topics, including how capitalism needs reform in order to address the environmental, social and economic challenges of today. He spoke about dysfunctional levels of inequality, the failure of investors to value environmental and social risks, and the imminent dangers of climate change. Characterising the current investment system as “functionally insane”, Gore focused on the role that individual pension holders can play in making sure that their savings are invested in a way that serves society and the environment. He also urged the large number of charities with investment portfolios to use their influence as
shareholders by demanding that companies address issues of environmental and social sustainability in the way they run their businesses. Incentives for pension fund investment managers should be changed, he said, to achieve a long-term focus. The former vice-president also identified the flaws in the current economic model and its obsession with GDP expansion at any cost. “Externalities” such as polluting the environment or contributing to global warming are simply not part of the valuation model applied to businesses, he said. He used the example of BP to highlight the absurdity of analysing a company’s business model without giving proper consideration to issues such as the safety of employees working in the business. Gore also used the analogy of visible light in the electromagnetic spectrum. The entire spectrum is real and contains information, yet we focus on the tiny sliver that is visible light, because it is what we can see. Gore explained that when he was vice-president he had access to intelligence agencies that gave him knowledge from the entire spectrum. This type of thinking needs to be applied to business as well, as human nature is always to use shortcuts that enable us to make quick decisions. However, these shortcuts can mask huge problems as we ignore “the gorilla in
Al Gore: current investment system is “functionally insane”
the room”, such as the issue of potentially “unburnable” carbon assets. At an estimated value of $23 trillion, he suggested this could result in a new financial crisis exceeding the sub-prime mortgage crisis. In summing up, Gore stated: “Democracy has not yet risen to the challenge; it will, but it hasn’t yet. Business leaders have tremendous power, but they are not yet using it. Change has to come from investors.” Gore recommended ShareAction as a means of achieving this change. Therese Kieve is a life actuary and a member of the managing committee of the IFoA’s Resource and Environment Group
ADJUDICATIO N PA N E L At a hearing of the IFoA’s Adjudication Panel on 14 February 2013, the respondent, Mrs Anne Elizabeth Pettifor FIA, faced allegations of misconduct for failure to communicate with her client and failure to produce a calculation within the agreed timescale. The panel determined that the failures amounted to a prima facie case of misconduct and invited the respondent to accept the following sanctions: a reprimand; a fine of £2,000; and a requirement to complete the one-day professional skills course, or the online equivalent, within 12 months. A copy of the full determination can be found at: bit.ly/13THWsG Continuing professional development (CPD) The following member has faced disciplinary action for failure to record CPD in accordance with the IFoA’s requirements: ● Mr Michael Ralph Tuohy, a reprimand and a fine of £2,000: bit.ly/125oyXA Other cases are published on the IFoA’s website. This does not reflect lesser importance.
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Quality Assurance Scheme – your opinion counts We are currently consulting on new policy proposals aimed at promoting the role and importance of the working environment in supporting actuaries and the quality of actuarial work. These include the introduction of a Quality Assurance Scheme for organisations and an Actuarial Profession Standard, which is aimed at organisations that employ actuaries. The proposals recognise the crucial role of employers in influencing the culture, policies and expectations within which actuaries work. This is an important new initiative for the Institute and Faculty of Actuaries, and we
would encourage you to read the proposals and give us your views if you haven’t already done so. A link to an online version of the consultation package and the questionnaire can be found on the IFoA website. Please note that the deadline for responses is 8 July. Members and interested stakeholders are also invited to attend consultation meetings, which will be held in London and Edinburgh during June. For details of these meetings, please visit the IFoA website or contact
karen.cross@actuaries.org.uk
June 2013 • THE ACTUARY www.theactuary.com
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News Profession NEWS UPDATES FROM THE ACTUARIAL PROFESSION
One hundred live events a year? They’re all in a day’s work for the IFoA’s events team. We catch up with the tireless individuals who keep everything running like clockwork behind the scenes
How does the team work? Amanda Davey, head of events, oversees the overall output from the entire team, which encompasses logistics, technology, production standards and improvements to format to enhance the delegate experience. The team is split between practice areas to give a dedicated account manager approach to the committees. Hannah Watson and her team, Waleed Soliman and Niki Park, deliver events for the health & care and life practice areas. Georgina Jenkins and her team, Petrina Parnell and Elisha Shepherd, deliver events for the risk management and general insurance practice areas. Danielle Reiterbund and her colleague Chantal Voisin deliver events for the pensions and finance & investment practice areas. The event managers work closely with the community managers in their respective practice areas to ensure that we meet the requirements of both the Practice Executive Committees and Continuing Professional Development (CPD) Committees. Each practice area has different demands and it is our job to guarantee that the programme of events reflects the needs of all our members. The organisation of all our events requires cross-team working and ongoing communication with our colleagues to leverage their expertise. Describe a typical day and week The events team members are masters in multi-tasking. We alternate between organising daily events and planning for future events – we are currently working on the 2014/2015 event programme alongside our day-to-day events schedule. We start the day
Meet the team and get with the programme Front row: Danielle Reiterbund, Chantal Voisin and Elisha Shepherd Middle row: Petrina Parnell, Amanda Davey and Georgina Jenkins Back row: Niki Park, Waleed Soliman and Hannah Watson
with a managers’ meeting to discuss the teams’ progress on events, and then debrief on the previous day’s activity, ensuring that we evaluate all aspects of the event and look for ways to make improvements. Member feedback is therefore critical for us. We meet as a team on a weekly basis to plan work schedules for the coming week, iron out any last-minute changes to formats and assess the marketing activity for future events. Once a month, we hold a ‘knowledge transfer’ meeting, where we exchange ideas and best practice. How are you developing the event programme? Our conferences are evolving year on year. Working alongside the volunteers on the CPD Committees and the Conference Programme
Committees ensures that we achieve our corporate objective: to provide events that are relevant, stretching and inspiring. Our stakeholders face increasing demands on their time, and we are responding to this with more efficient ways to offer them CPD. Our research shows that flexibility is key for employers sending staff to residential conferences, so we are exploring delegate package options that allow members to obtain a full day’s CPD without compromising the networking aspect of conferences that so many delegates find valuable. During 2013 we are also continuing to build on our success of filming selected events and the plenary sessions at the six residential conferences. This initiative ensures our events are accessible at any time suitable for the individual, no matter where they are based.
Professional Standards Directory: update 29 For Actuaries involved in Undertaking Work in Relation to Pension Schemes The Professional Standards Directory is designed to permit members and others to access the Institute and Faculty of Actuaries’ Actuarial Profession Standards (APSs), together with the latest version of the Financial Reporting Council (FRC) Standards. It can be found at bit.ly/IWaytE Actuarial Profession Standards APS P1: Duties and Responsibilities of
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Members Undertaking Work In Relation to Pension Schemes version 2.0 APS P1 version 2.0 was published on 29 June 2012 and takes effect from 1 July 2013. It can be found at bit.ly/Mg6kQb and includes the following revisions and updates: ● the new conflicts of interest provisions in section 5 and 6.4 to 6.8 of the APS; ● the wider scope of the APS to include all IFoA members undertaking work on pension schemes and not just qualified actuaries;
● changes to the structure of the Financial Reporting Council and the abolition of the entity previously known as the Board for Actuarial Standards; and ● new definitions as a result of the new conflicts of interest provisions. The changes have been implemented in accordance with the IFoA’s Standards Approval Process. Supporting conflicts of interest guidance may be found at bit.ly/NlVH8z
THE ACTUARY • June 2013 www.theactuary.com
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NEWS IN BRIE F Updating your contact details If you need to update your contact details, please contact the membership department on +44 (0)131 240 1325, or at membership@actuaries.org.uk You can also update them online. To log in, your user name is your ARN and your password is your date of birth. Visit www.actuaries.org.uk/user
Learn, interact, grow: ICA 2014 The International Actuarial Association and the actuarial profession in the United States invite you to register for ICA 2014 now. Join more than 2,000 actuaries at the 30th International Congress of Actuaries from 30 March to 4 April 2014. Earn up to 27 continuing professional development hours from sessions covering the latest global trends, and network with peers from around the world. Register online today at: www.ICA2014.org
Is your CPD up to date The current CPD reporting period ends on 30 June and your records must be updated by 31 July. If you are still looking to make up your hours you may be interested in our online videos at: bit.ly/WoDpIY
New professionalism CPD for experienced members The IFoA is launching new professionalism CPD for experienced members from July 2013 online as well as at events. Details of relevant content and events will be clearly signposted with the professional skills logo on the IFoA website. This new content is designed to help experienced members meet the requirements of Stage 3 of the IFoA’s Professional Skills Training to complete a minimum of two hours of verifiable professionalism CPD each year from 1 July 2013. This completes the IFoA’s revised suite of training, with the existing Stages 1 and 2 having been introduced in 2012. Stage 3 is for associates, Fellows, students who have completed Stage 2 and students who joined before 1 July 2006. You can complete the two hours by attending professionalism events, or downloading online content. This may be provided by the IFoA or another provider
such as your employer, another regulator, a local actuarial association (IAA member body), another professional body or reputable training provider, subject to meeting the criteria specified in the Professional Skills Training Handbook. If you are in scope for the purposes of the IFoA’s CPD scheme, the two hours of Professional Skills Training may also count towards the six hours of professionalism for Category 1 members or towards the 15 hours CPD requirement for Category 2 members. Full details of the IFoA’s Professional Skills Training can be found in the Professional Skills Training Handbook on the website (download at bit.ly/ProfSkills). We have updated the FAQs to reflect the launch of the Stage 3 requirements. However, if you have any additional queries on the IFoA’s Professional Skills Training, please contact us by email at professional.skills@
actuaries.org.uk
RISK AND INVESTMENT CONFERENCE 2013 17 – 19 June The Grand, Brighton The premier conference for actuaries with an interest in risk and investment management. Speakers/topics include: ● Professor Eddie Oberg; ● Communicating risk; ● Tim Harford, The Undercover Economist; ● Actuarial discipline; ● Liquidity in economics, risk and investment; ● Credit spreads.
For more information on the programme, sponsorship or to book your place, visit: www.actuaries.org.uk/events
For more information and to book your place visit: bit.ly/11DteF0
For more information and to book your place visit: bit.ly/11xItTU
Life Taxation Workshop 2013 13 June
Current issues in the Irish General Insurance Market – Networking Event 26 June,
Staple Inn Hall, London For more information and to book your place visit: bit.ly/17kpeyf
Staple Inn Hall, London For more information and to book your place, visit: bit.ly/YEnDhI
Master Class: Develop your Presence – How to be More Memorable, Have More Impact and Create Stronger Relationships 28 June
Reserving Seminar 20 June
Mortality and Longevity Seminar 2013 27 June
Grange Tower Bridge Hotel, London
Staple Inn Hall, London For more information and to book your place visit: bit.ly/175YEX7
Hilton London Tower Bridge
June 2013 • THE ACTUARY www.theactuary.com
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News Industry news@theactuary.com
Solvency II is still necessary in spite of damaging delays, says Standard & Poor’s The long run-up is eroding confidence and adding to costs, but new rules for the insurance industry remain crucial The ratings agency Standard & Poor’s (S&P) has issued a report considering the future of the Solvency II plans, based on comments made by S&P staff during a conference in Dublin last month. It noted that the existing regulatory system, Solvency I, was “virtually devoid” of incentives for good risk management. It also lacks capital requirements for asset risk, it said. This means Solvency II, which will place new capital requirements on insurers depending on the results of a risk-based assessment of their assets and liabilities, is “needed now”. However, the long run-up to Solvency II is “reducing investor confidence”, the report warned, adding: “The regulatory uncertainty is raising insurers’ cost of capital and some are deferring strategic decisions.” The rules were originally scheduled to be introduced in January 2014, but implementation is now not expected until 2016. For more on this story, visit bit.ly/11EFlWl
Pensions minister announces crackdown on auto-enrolment consultancy charges Two-pronged approach will outlaw ‘high and inappropriate charges’, promises Steve Webb Consultancy charges on pension schemes being used for auto-enrolment will be banned under plans set out by pensions minister Steve Webb. Regulations will be laid “as soon as possible” to outlaw the charges as part of a “two-pronged” approach to address “high and inappropriate” charges, he revealed. The other aspect of the plan will involve a consultation this autumn to cap the charges levied on all defined contribution (DC) default funds – the investment option used by most pension savers. This move comes in response to the Office of Fair Trading inquiry into competition in the DC market, which was launched in January and is expected to report shortly. Webb noted that the government’s own review of consultancy charges had found that measures to prevent advisers deducting high charges from members’ pension pots were inadequate. This has a disproportionately high impact on people who move jobs regularly, he added. For more on this story, visit bit.ly/15TON9u
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Deficits rise for pension funds The combined deficit of the UK’s defined benefit (DB) pension schemes increased to £256.6bn in April, according to figures published by the Pension Protection Fund. The estimated figure represents a £20bn increase from the £236.6bn deficit recorded at the end of March for the 6,316 schemes that are eligible for entry to the Pension Protection Fund. bit.ly/10VDGdn
Month’s grace for flood cover Insurers have extended their commitment to offering cover to properties at high risk of flooding by one month to the end of July. The guarantee, which is part of an agreement with government known as the Statement of Principles, was due to expire on 30 June. It will now run for another month to give more time to finalise the details of a replacement arrangement. bit.ly/18NAlyT
Five-year high for pension deals There were 14 pension buy-in and buy-out deals worth over £100m last year, the most since 2008, according to figures from consultancy LCP. bit.ly/19iLeGy
Pensions regulator warns trustees of ‘over-prudence’ The Pensions Regulator has warned trustees against being over-cautious when agreeing their pension funding plans and stressed the flexibilities available to employers struggling to close their scheme deficits. In its annual funding statement, the regulator sets out how defined benefit scheme valuations should be carried out in the current economic climate. It stresses that trustees can use the flexibility in the regulatory system to calculate future liabilities in a way that best suits the individual scheme and employer. Trustees are also urged to take into account what is “reasonably affordable” for employers when setting the contributions they need to make to the pension scheme, and to consider giving them longer to close their deficit. Michael O’Higgins, chair of The Pensions Regulator, said: “I want to see pension trustees agree long-term strategies that protect retirement savers, while also enabling viable businesses to thrive and grow. We expect them to mitigate the risks to their scheme, but this does not require them to be overly prudent.” For more on this story, visit bit.ly/YF7Bqa
Lengthy retirement ‘is bad for your health’, says IEA Ministers have been urged to remove barriers to people working longer after a study found that retirement has a detrimental effect on both mental and physical health over time. The Work Longer, Live Healthier report from the Institute of Economic Affairs (IEA) found that retiring may provide an initial health boost. But, longer term, it decreases the likelihood of someone assessing their own health as ‘very good’ or ‘excellent’ by 40%. Retirement also increases the probability of clinical depression by about 40% and of having at least one diagnosed physical condition by about 60%. Problems were exacerbated by the length of time in retirement. For more on this story, visit bit.ly/15PpcPv
THE ACTUARY • June 2013 www.theactuary.com
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› GENERAL INSURANCE
NEWS ROUND-UP
Insurer ban wake-up call for SRA The Solicitors Regulation Authority (SRA) has been criticised for its failure to address the problem of unrated insurers providing solicitors in the UK with professional indemnity (PI) insurance. Latvian insurer Balva, which is understood to be providing 1,300, mainly small, solicitor firms with PI cover, has been barred by the Latvian Financial and Capital Market Commission (LFCMC) from writing business in the UK after failing to provide the Latvian regulator with sufficient information about its UK operations. The SRA has written to the solicitors concerned assuring them that the ban applies only to new business, and that the Latvian decision does not alter Balva’s obligation to provide cover for up to 90 days after 30 September – the main renewal date – if firms cannot renew their cover. Balva offered cover in the UK through passporting rights, but the LFCMC banned Balva from writing in the UK from 1 March. Gallagher London, the speciality arm of broker Arthur J Gallagher International, said: “In recent years, we have seen both Quinn and Lemma going into administration in the solicitors’ PI space and this should serve as a wake-up call to the SRA to demonstrate stronger leadership on this issue of insurer ratings.”
Europe. France has an average of 30%, and Spain has an average of 31%. It also observed that, although between 2006 and 2011 there had been a 20% fall in injuries reported to the police, there had been a 40% rise in injury claims made by third parties. The ABI has proposed to the TSC that there should be an independent medical assessment of all personal injury claims and a “fair and transparent” method for calculating compensation levels for minor whiplash injuries. However, the Law Society has taken a different line, asserting that such a system would penalise genuine claimant accident victims.
LARGE LOSSES
Berkshire Hathaway sidecar plan Aon announced in March a new co-insurance agreement where Berkshire Hathaway would take a 7.5% ‘sidecar’ of London market placements where there is a Lloyd’s participation. The sidecar would be managed by Aon Underwriters Ltd, the managing general agency of Aon, which would have authority to underwrite business on behalf of Berkshire Hathaway Insurance Ltd. In the past weeks, there have been significant concerns that this would lead to downward pressure on pricing and the freezing out of traditional syndicates. Lloyd’s chairman John Nelson recently met with Aon leaders and stated that “I am pleased that Aon has agreed to reflect on the issues we have raised. We will be having detailed discussions to address these concerns”. Aon’s head of global relations, David Prosperi, said: “Aon remains excited about the Berkshire Hathaway sidecar and how it benefits clients, whose response overall has been very positive.”
PRA head voices Solvency II fears Andrew Bailey, head of the new Prudential Regulation Authority (PRA), has said that the EU’s Solvency II proposals are “not comprehensive enough” when it comes to insurers’ capital adequacy. In a letter dated 19 April to Andrew Tyrie, chairman of the UK Parliament’s Treasury Committee, Bailey said that PRA planned to deploy “early warning indicators” in order to avoid a repeat of the Equitable Life crisis. The potential area for conflict would appear to be Solvency II’s allowance of “internal models” rather than the one-size-fits-all base capital requirement model. Bailey said that if the PRA’s indicators showed that those internal models were being used to cut back on capital requirements, it could trigger “immediate supervisory action”. He stated that Solvency II would do little to make the insurance sector safer and had proved to be “vastly expensive”. He also said that, as there seemed no realistic timetable for Solvency II being implemented, the PRA had scaled back its work on implementation. Tyrie released the exchange of letters, saying that it was “a breath of fresh air to hear a regulator telling it as it really is”.
ABI urges halt to whiplash boom The UK has become the “whiplash capital of Europe”, according to the Association of British Insurers (ABI) in its submission to the Parliamentary Transport Select Committee (TSC). The ABI asserted that, in the UK, 78% of personal injury claims following road accidents are for whiplash, and that this was twice the average for whiplash claims across
REUTERS
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US$1.3bn
Estimated economic losses from the flash flooding and record rainfall experienced in Argentina in April
Flooding in Argentina – 2-4 April Record rainfall fell across Argentina’s city and province of Buenos Aires, prompting flash flooding that killed at least 70 people. In the La Plata region, 15.7 inches fell in two hours. The total was more than the city had ever recorded for an entire month of April. Overall economic losses were estimated at US$1.3bn (£0.86bn).
Explosion in Texas – 17 April There was a large explosion at a fertiliser plant in the town of West, near Waco in Texas. Fourteen people were killed and more than 150 injured. The explosion caused up to US$100m (£66m) in property damage to the town and surrounding area. Several homes were destroyed by fire up to a mile from the plant,
while fires were sparked at a local school and nursing home. The police said that there was no suggestion that it was anything other than an industrial accident. Reports suggest that West Fertilizer Co, the owner of the plant, carried only US$1m (£0.66m) in liability coverage. Texas does not require such companies to carry general liability cover, even where several tonnes of volatile ammonium nitrate are being stored.
Earthquake in China – 20 April A 6.6 magnitude earthquake struck Sichuan Province in China. At least 196 people were killed and more than 13,000 injured. Local government estimates suggested economic losses of US$27bn (£17.8bn), which would suggest insured losses of around US$250m (£165m).
MORE GI NEWS ONLINE For further GI news, visit www.theactuary.com/news/
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News People & Society
If you have any newsworthy rthy items for these pages please email social@theactuary.com m
Here’s to a good night all round By Anthony Wright At one of my previous workplaces, the password to access the actuarial intranet was ‘fun’. Whether the IT department meant this seriously, I shall never know. What I do know is that when actuaries and their guests gather for excellent food and fine wine in majestic surroundings, then a great time is had by all. Tuesday 23 April saw the annual banquet of the Worshipful Company of Actuaries at London’s Mansion House. On arrival, we were escorted up the grand staircase by members of the Edmonton Sea Cadets, whom the company supports, for a drinks reception, before taking our places at dinner. Those who have attended
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a recent livery dinner will have seen the company hourglass, which is overturned at the start of the proceedings and runs for the duration of a perfectly timed dinner. This occasion was no exception and, once the timer was set, the evening began, with Master Bill Smith (pictured) proposing the health of the Lord Mayor. We were entertained while we ate by spectacular pipe playing, the musicians calling and answering across the hall from either end of the gallery, high above us, and afterwards by thoughtful, erudite and very amusing speeches. All too soon, the sands of time had run out, and, filled with happy memories of the evening, we made our way home. Why not join us next year?
Swimathon’s grand result On 4 March the 20th Inter Livery Swimathon took place at its usual venue of the RAC Club, Woodcote Park, Epsom. Once again, the Worshipful Company of Actuaries participated, represented by a team of enthusiastic swimmers. The usual format is for five swimmers to each swim 1km and complete the 5km (170 lengths) swim in under two and a half hours. However, this year the WCA team comprised four swimmers: David Hager, Bill Harris, Jay Stewart and Petrea Simmons. The charities supported were the Lord Mayor’s Appeal (this year, the Appeal was raising money for the City Music Foundation, Futures for Kids, The Gifford Wood Appeal, funding the planting of trees in Epping Forest and the conservation of The Harold Samuel Collection of 17thcentury Dutch and Flemish paintings) and the Worshipful Company’s own charity, the Company of Actuaries Charitable Trust, which supports a number of causes. More than £1,000 was raised in sponsorship. After their sterling efforts, Jay, David and Petrea together with other swimmers, enjoyed a well-earned dinner in the Club. They were joined by David’s wife, Jeanette, who not only lent support but was also able to take the team photo.
Charity target drawing closer
Run for your money
Thank you to everyone who has taken part in the joint charity campaign being run by The Actuary and the Worshipful Company of Actuaries to raise £1 million through the fundraising activities of actuaries. A massive £780,000 has been raised to date. Please continue to let us know if you have been or are involved in any charitable work or activities so we can keep adding to this total. The winner of the Phiatus award, an award recognising an actuary who has made an impressive contribution to charity, will be announced shortly. Please email Yvonne Wan at social@theactuary.com or Charles Cowling at charles_cowling@jltpcs.com
Premier has an actuarial team running in the British 10K London Run on 14 July. We will be raising funds for the charities below and would much appreciate your support. Event details: www.thebritish10klondon.co.uk Cavell Nurses Trust: www.cavellnursestrust.org www.justgiving.com/premier10kcavellnurses Queen Elizabeth’s Foundation for Disabled People: qef.org.uk/about-us / uk.virginmoneygiving.com/premier-british10k-QEF Motability: www.motability.co.uk / www.justgiving.com/ teams/premiersbritish10k2013formotability
THE ACTUARY • June 2013 www.theactuary.com
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Marriage and marathons
Off to explore ‘wider fields’
Punter Southall actuary Emily Wicks is a new record holder after she and her husband clocked the fastest-ever London marathon time for a married couple. Their combined time in the London Marathon added up to four hours, 58 minutes, 22 seconds. Emily was the fourth British woman to finish that day, coming in at 164th overall with a time of 2:39:15. Husband Phil was the second British man over the line, at 15th overall and a time of 2:19:07. The previous fastest time for the event was 5:42:11, which was set by David and Claire Grima in 2011.
By Derek McLean
Rise to the challenge of abuse claim modelling By Emma Abraham The first London Market Student Group event of 2013 was a talk by Paul Murray about ‘abuse claims’. Paul has worked as an actuary in the London Market for 22 years and is a director in the risk consulting and software practice at Towers Watson. Recently, he has been involved in commutation agreements between insurers and reinsurers relating to claims arising from abuse suffered. The subject has seen much publicity of late, including the Jimmy Savile (Operation Yewtree) and Magdalene Laundries cases. Studies indicate that around 10-15% of children are abused, and around 15% of these cases are potentially ‘insured’ abuse. However, not all of these will result in a claim, as some victims will want to put the abuse behind them and move on. In addition, proving liability can be difficult
From little acorns... Congratulations to Tim Birse and Patrina Effer, who have both been awarded the Silver Acorn from the Scouts Association for the work they have done. The Silver Acorn award was first introduced in 1933 as a St George’s Day award and is given ‘in recognition of specially distinguished service’. Tim and Patrina are two of the many people involved in Scouting and Guiding. To find out more, please visit http://scouts.org.uk/home/
given delays between the event and claim. However, for successful claims, the losses for insurers can be significant, with the largest UK award to date being £621,444. After setting the scene, Paul focused on challenges actuaries meet when modelling abuse claims. Questions such as ‘What is the exposure?’, ‘Have there been any claims so far?’ and ‘How large can we expect claims to be?’ are all difficult to answer. When it comes to modelling, a stochastic model is the only option, given the low frequency/high severity nature of the claims. But this produces other challenges. Issues such as lack of aggregation of claims for reinsurance or spreading of claims over a number of years are also significant. To learn more about upcoming events, be added to the mailing list or if you are interested in speaking at or sponsoring an LMSG event, please contact our chairperson at meera.rajoo@uk.gt.com
Births Adrian Dobson (JLT) and wife Emma are pleased to announce the birth of their son, Benjamin Thomas, on 30 March at 2.30pm, weighing 8lb. Within four weeks, Benjamin has made it up to 10lb 9oz by guzzling vast amounts of milk! The couple’s first child, Alice, is very pleased with her new little brother.
I have enjoyed 30 years working in investment, most recently as head of insurance advisory at F&C, and previously at Abbey Life Investment Services. I have applied my actuarial knowledge to devising investment solutions to reduce risk and to meet a wide variety of objectives. While enjoying that role, I have also been an active member of the Methodist Church and I’ve been a local preacher (preaching and leading worship) for 10 years. Much to my surprise, I suddenly felt called to train for full-time work in the church. As a result, I have spent the past three years doing part-time study alongside my professional work. My training is just coming to an end, so I am quitting the City and taking up my first appointment as a Methodist minister in Hertfordshire in September. I will have pastoral charge of Abbots Langley, Kings Langley and Croxley Green Methodist churches. The training has thrown up some interesting challenges. Intellectually, it has been strange to study again and to address some tough theological and ethical issues. However, I’ve also been surprised how privileged I’ve felt to be alongside people as they face uncomfortable pastoral issues.
We would be delighted to hear from you if you have any newsworthy items for these pages. Please contact Yvonne Wan at social@theactuary.com
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On my agenda features@theactuary.com
THE PENSIONS REVOLUTIONARY Nick Mann meets Steve Webb, the government minister charged with managing massive changes in workplace and state pension provision There’s a revolution taking place in UK workplaces, but, outside the pensions industry or the companies and workers directly affected, few will be aware of it. Auto-enrolment has seen hundreds of thousands of people signed up to a workplace pension scheme since it was introduced in October 2012, but it has grabbed few column inches to date. According to the man responsible for making sure that the roll-out is trouble free – pensions minister Steve Webb – the fact that the vast majority of the population has little or no idea what auto-enrolment entails is a sign that everything’s going exactly to plan. “I often say that the reason you haven’t heard about this thing is because it has been a success,” Webb enthuses, when The Actuary catches up with him at the Department for Work and Pensions’ headquarters in Westminster. “Imagine the potential for the computers not to work, mass opt-outs, taking money out of people’s pay-packets when the economy’s struggling, it being really unpopular – none of that has happened.” That bullishness could seem misplaced, given that most businesses are yet to be subject to the requirements of auto-enrolment, but his confidence is tempered by realism about the task ahead. While he expects smaller firms to make use of the pension scheme set up by government specifically to meet their needs – the National Employment Savings Trust – it’s the companies “somewhere in the middle” that will be “the challenge”, he admits. The longest-serving pensions minister since the role was created in 1998, Webb has had much more than auto-enrolment on his plate
SAM KESTEVEN
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since being appointed to the post in May 2010. Enrolling millions of people into workplace pensions is one thing, but making sure the schemes they’re signed up to are of a good enough quality to deliver decent retirement incomes for savers is another issue entirely. Pension membership has dropped dramatically over the past few decades and the guaranteed income provided by defined benefit (DB) pensions has been eclipsed by the less certain future offered by defined contribution (DC). In November, Webb tried to bring together the options available for addressing this in his Reinvigorating Workplace Pensions strategy. Feedback has been largely positive. “I think people were pleased to see something concrete, something written down,” Webb says. The government has had “a lot of conversations” since then, not least around plans to find a middle ground between DC and DB. The idea of a scheme-funded Pension Protection Fund for DC is “quite an interesting one”, Webb notes. “Also, there are firms that want to keep going with something that looks a bit like DB, but clearly not with all the bells and whistles. We’re still looking at more radical options than that – for example, your private pension provision covers you for the first bit of your retirement and the state does more later.” Legislative change may be required, but Webb notes that some of the suggestions in the document could be introduced today. “I haven’t invented risk-sharing,” he smiles. “What we have to do now is narrow the field down, see which of these ideas really work for people.” That process has been given an added sense of purpose by the announcement that the new
June 2013 • THE ACTUARY 19 www.theactuary.com
24/05/2013 16:46
On my agenda features@theactuary.com
single-tier state pension will be introduced in April 2016, not April 2017 as previously stated. The state pension will be simplified to a flat payment of £144 a week, contrasting with the current situation where the basic state pension can be topped up by means-tested pension credit or the second state pension. “What’s nice – although it’s not good news for actuaries, I’m afraid – is the simplicity of this,” Webb says. To illustrate his point, he recounts a tale from his constituency, Thornbury and Yate, in Bristol. “I had a constituent come in the other day who’d had this really obscure letter about guaranteed minimum pension (GMP) and his different periods of service. He couldn’t retire early because his GMP for this didn’t add to the GMP for that, and was it a contracted-out this, or was it a contracted-out deduction, or a GMP? I said this is all going, we’re going to get rid of all of this.” That simplicity is not without its challenges, not least for the employers who have to deal with the end of contracting-out – the process where workers opt out of the second state pension and instead receive payments through their workplace scheme. Both
employee and employer then pay lower National Insurance contributions. Webb acknowledges that the single-tier state pension comes in quick succession to auto-enrolment, which has already meant British business has been “rethinking its pension provision”. He’s confident, however, that both government and businesses can cope with the changes and the time frame. ‘We’ll have to work hard to get it ready on time, although, unlike some reforms, it’s a flow. Only something like 15,000 people are reaching state pension age in a normal week – we don’t have this massive hit on a single day. From a company point of view, there are some things you have to do ahead of time, but the reconciliation for data and so on doesn’t all have to be done on day one necessarily, so there may be a bit of lead time.” Providing certainty on the state pension is key, Webb says. “We want to get the law through as fast as we can, publish draft regulations as fast as we can, so people know where they stand. We’re working full pelt on them.” The changes could also offer opportunities for actuaries. “A whole lot of firms are going to be weighing up how they recover their
“Providing certainty on the state pension is key. We want to get the law through as fast as we can, publish draft regulations as fast as we can, so people know where they stand” 20
THE ACTUARY • June 2013 www.theactuary.com
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national insurance (NI) rebate – we say you’ll claw back from your scheme accrual the NI you’ve just lost, so there will be a lot of work for actuaries working that out,” Webb says. Plans to automatically increase the state pension age in line with increased longevity also offer potential, he adds. “What about variations, what about different parts of the country, can we just jack up pension ages?” Another “crucial” actuarial role, Webb says, is giving companies a “warts and all” understanding of what state their pension fund is in. That may not make pretty reading, given the battering that reported deficits have taken since the onset of the global financial crisis pushed the yields on gilts to record lows. In March, chancellor George Osborne vetoed allowing schemes to change the way they calculate their long-term assets and liabilities by smoothing the discount rate. Instead, The Pensions Regulator will be given a new statutory objective to consider the long-term affordability of pension deficit recovery plans for sponsoring companies. “Putting it in primary legislation... is trying to provide some reassurance to trustees and to firms and to give firms a slightly stronger hand in those conversations. They can say ‘No, government says it’s OK for you to think about those things, but it isn’t just about us filling the deficit as fast as possible – you still want us here in 10 years, don’t you?’” Concerns over the impact of pension deficits have been accentuated by potential changes to the rules governing Europe’s workplace pension schemes, the Institutions for Occupational Retirement Provision Directive. By placing capital requirements on schemes similar to those being introduced for the insurance industry under Solvency II, the plans could increase the reported deficit of the UK’s DB schemes from £300bn to £450bn. Webb is adamant that the new rules should not be introduced and claims a “momentum” behind this view, shared by other EU countries. “Yes, there are things to do on Europe-wide pension provision, on information, disclosure, that kind of stuff, but this whole funding obsession... my ideal outcome is it just gets dropped from this review,” he says. Fighting a battle in Europe while overseeing a sea-change in state and workplace pension provision at home, it’s safe to say Webb’s in-box shows no sign of emptying any time soon. The mammoth task of simplifying the state scheme and achieving mass membership of workplace pensions is just phase one, he says. “With scheme quality, getting people beyond an 8% pension contribution, sorting out small pots and transfers – there’s an awful lot else we can do.” a
SAM KESTEVEN
24/05/2013 16:46
SIAS Events
TUESDAY 18 JUNE
Talk Does studying mathematics develop general reasoning skills? Dr Matthew Inglis, Loughborough University Staple Inn High Holborn, London WC1V 7QJ 5.30pm
THURSDAY 20 JUNE
Bowling Palace Superbowl, Elephant and Castle Shopping Centre, London SE1 6TE 6.45pm
PROGRAMME EVENT
The great philosopher Plato believed that studying mathematics develops students’ general reasoning skills, arguing that “we must endeavour to persuade those who are to be the principal men of our state to go and learn arithmetic”. This belief, known as the Theory of Formal Discipline, is still used by modern mathematicians to argue that mathematics should continue to hold a privileged place in the school curriculum. However, most psychologists dismiss the theory, believing that reasoning ability is highly tied to the specific domain in which it is learnt. In this talk the speaker will briefly outline the history of the Theory of Formal Discipline, discuss how to measure logical reasoning skills, and report back on a line of research that aims to test the Theory of Formal Discipline experimentally. This presentation aims to stimulate a debate on what skills are required for logical thought and whether mathematics is the best way to achieve it. It is suitable for both students and Fellows alike, so come along and express your opinion. Refreshments will be served from 5.30pm and the talk will start promptly at 6pm. There is no need to register in advance for this meeting.
SOCIAL EVENT
It’s time to get your bowling shoes ready for the annual SIAS bowling tournament. The title of ‘SIAS Bowling Champions 2013’ is up for grabs, so get practising because the competition will be tough! Teams of three should enter to compete. However, if you can’t find three people, we can allocate you to a team. Prizes will be awarded to those finishing in first, second and third places, and there will also be a prize for best team name. Don’t worry if you’re lacking the skills – everyone is welcome, and there is even a prize for the worst team! Tickets are priced at £12 for SIAS members and £17 for non-SIAS members and include food and a drink. Places are limited, however, so please ensure you apply early in order to guarantee a place in the tournament. Email social@sias.org.uk to reserve your place today.
TUESDAY 23 JULY
Panel discussion
PROGRAMME EVENT
SIAS is hosting a panel discussion and would like to ask for ideas from our audience on what topics you would like to see debated. Please email programme@sias.org.uk if you have any suggestions.
Staple Inn High Holborn, London WC1V 7QJ
FRIDAY 26 JULY
Boat Party The Golden Jubilee, Westminster Pier Victoria Embankment, London SW1A 2JH
SOCIAL EVENT
All aboard The Golden Jubilee for the biggest party of the summer. The boat will board at Westminster Pier at 6.45pm and will return at 10.45pm after a cruise along the Thames. Tickets will be available mid- to late-June. Watch this space for further details.
6.45pm
MORE EVENTS ONLINE For details of events, visit www.sias.org.uk
SIAS IS ON TWITTER! Follow us on @SIAScommittee for latest news on meetings, socials and more!
SIAS IS ON FACEBOOK! Check out the SIAS Facebook page for photos from the latest social events
June 2013 • THE ACTUARY 21 www.theactuary.com
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24/05/2013 16:46
Risk management Intangible assets features@theactuary.com
Underestimating the value of intangible assets is a costly route to irreversible
POSSESSIONS On average, some 80% of the value of companies now arises directly from intangible assets, including intellectual property (IP). As with any asset, when intangible assets are not effectively and consistently safeguarded and their risks not managed, they become vulnerable to competitive threats and so much less valuable. Interest in intellectual property management and securing value from intangible assets has grown considerably over the past decade with the recognition of their contribution to company value and of the growing threat from counterfeiting. With economic uncertainty and regulation increasing in the financial services industry, organisations in this sector need to use every tool at their disposal. Leading financial services firms are aware that IP can be helpful in differentiating themselves and that intangible assets are invaluable in raising funds and finance. According to the United States Patent and Trademark Office, the number of patent applications in the financial services sector increased to 17,213 in 2010. The number of insurance patents has increased from around 25 per year between 2000 and 2005 to about 275 per year in 2010 and 2011. Those in finance have increased by around 20 times during the same period. Any company keen to protect its intangible assets needs to consider what these are, what
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they are not, and how they can be developed to create contributory value, sources of revenue and competitive advantage. All directors should understand the increasingly sophisticated threats to intangible assets, the various ways they can materialise and what tools are effective to protect the assets. However, the challenges of establishing effective IP management within a business, financial reporting constraints and working out where responsibilities lie between functions mean that intangible assets are often misunderstood and consequently undervalued. Research from The Intellectual Property Crime Group has revealed that 40% of businesses surveyed took no practical action such as trademark registration or employee training to protect their IP. Business Action to Stop Counterfeiting and Piracy claims that the total global economic value of counterfeit and pirated products is as much as $650 billion every year.
What are intangible assets? Businesses often think that intangible assets are just about ensuring that trademarks are in place. In fact, it is about a lot more than that. IP is an important piece in the intangible asset jigsaw, encompassing the whole way in which a company does business. Intellectual property means protecting your brand name and your products and services by patents, trademarks, copyright,
designs and trade secrets. Intellectual assets are associated with the people-based assets of a company – for example, key skills, knowhow and processes: the way your people do business. The wider intellectual capital encompasses the other intangible assets of a company, including relationships, branding, reputation and contracts, which offer a route to commercialisation. All these have a value. Identifying the intangible assets within the business may not be straightforward. You may need an audit to identify them and assess which may be of significant value.
A question of value It is only recently that organisations have tried seriously to put a value on intangible assets. Valuing intellectual property accurately and putting a monetary value on it can be contentious, but is possible – and essential. Just like other assets, IP can be valued – and bought, sold or leased. Anyone involved in selling or acquiring a company or portfolio should establish what intangible assets the target company or portfolio owns, whether they are live and valid, their value, and whether they are fully protected in all jurisdictions. The financial approaches used in the valuation process are similar to those used to value many tangible assets. Examples include the cost approach, the market approach, the income approach or a combination of these.
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JACKIE MAGUIRE is
chief executive and co-founder of Coller IP
reputational damage, warns Jackie Maguire
has been secured. It is important that it is as include words, logos, sounds, colours, However, even if the assets have been robust and watertight as possible. gestures, brand names and slogans — any included on a balance sheet, IP is often not distinctive feature that can be represented on valued accurately, and the information paper and distinguish the goods or services of provided may not be sufficiently detailed to Protection game one business from another. They can even be useful. Valuation needs to rely upon sound Solid patents filings and registering consist of the 3D shape of goods or packaging. data, information and expertise, which are trademarks and designs are certainly part of Obtaining robust patents for innovative sometimes difficult to obtain. this, but a company’s value is also contained developments provides rights to stop others The Brand Finance Institute says that brand in its wider intangible assets. Written from making, selling, licensing, distributing valuation should be looked at in three parts: materials, customer contact lists and bespoke or otherwise profiting from that invention. materials can all form part of the intangible ● trademark valuation — the logo and Patents that protect the functionality of new assets and need to be fully protected in each associated visual elements, including trade significant country where they may be at risk. inventions – including processes or devices – names and symbols; can add value. Companies should not forget It is important to consider whether all ● brand valuation — a larger bundle of the important role that copyright, registered relevant trademarks are covered. This can trademark and associated IP rights, such as designs, database rights and trade domain names, product design secrets can also play. rights, packaging and copyrights Figure 1: The intangible asset jigsaw in colour, sound or smell, and advertising visuals; Use it or lose it LEGAL PEOPLE–BASED ROUTES TO ● branded business valuation — Intellectual property is a powerful UNDERPINNING ASSETS MARKET a holistic company or business asset, and like other assets it organisational brand that is a needs to be looked after, protected, combination of the legal rights reviewed regularly and applied as well as the culture and people. effectively. IP valuation specialists use a Senior managers, including those INTELLECTUAL INTELLECTUAL INTELLECTUAL PROPERTY ASSETS CAPITAL number of ways to evaluate the involved in finance, risk management robustness of IP. This includes and, of course, IP, need to combine assessing the company’s unique expertise to ensure that intangible Positioning Unrecorded inventions Patents position relative to existing or assets are consistently and effectively Reputation Key skills Trade marks potential competitors, while safeguarded and positioned for Branding Know-how Designs Relationships Processes Copyright identifying opportunities for competitive advantage. In most Contracts Market data Databases exploiting IP further. situations, loss of intangible assets will Information Trade secrets The value of assets is subject undermine value and frequently lead to how the protection for them to irreversible reputational damage. a © COLLER IP MANAGEMENT 2009
June 2013 • THE ACTUARY www.theactuary.com
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Environment UK electricity market features@theactuary.com
Keeping the
lights on With ever-growing demand and the push for green energy, Tom Porter assesses the risks and opportunities within the UK electricity market
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24/05/2013 16:47
“The UK electricity market is going through a period of significant change. By 2020, the target is to meet 30% of our power generation from renewable sources. In 2011, the proportion of our power from such sources was just 10%.”
Barely a week goes by without the appearance of front-page headlines highlighting the relentless rise in electricity bills, or the latest protests at the plans for wind farms or nuclear power stations. The UK electricity market is going through a period of significant change. Environmental challenges require us to move away from the use of fossil fuels, which have been our primary source of energy for the past 100 years. By 2020, the UK has a target to meet 30% of its power generation from renewable sources. In 2011, the proportion of our power from such sources was just 10%. During the next decade we expect to lose around a quarter of our existing generation capacity as old or polluting power stations close, thus threatening our ability to keep the lights on. To meet these challenges it has been estimated that £110bn of new investment is needed by the end of the decade. This is more than double the current rate of investment.
Uncertain outlook Energy infrastructure investments are subject to a wide range of risks, including market prices, construction risk, consumer demand, plant failure, legislative change, fuel prices, wind intermittency and even cloud cover. Many of these risks are changing. For example, long-term demand for electricity has, to date, been driven mainly by economic growth. In the future, it will also be driven by the development of new technologies such as electric cars. The effect of this could be huge and demand for electricity could double by 2050. This poses a real challenge for investors
GETTY
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looking to understand and manage risks over a long time horizon, which for many new investments could be more than 50 years. The market now needs new ways to model and analyse the uncertainties ahead. Understanding these risks is an issue not only for investors but also for government, regulators and network operators. The draft energy bill published in November 2012 announced a range of government policy measures designed to attract investors and reduce their risks in an attempt to bring forward the £110bn of investment required in a green and affordable way.
Opportunities for actuaries
Although analysing the risks in the energy market has not generally been carried out within the actuarial domain, the type of problem is not an unfamiliar one. Long-term financial investment that is subject to a wide range of risks poses a dilemma that actuaries are well placed to answer. There may also be opportunities closer to our traditional areas. The mechanisms used to raise the £110bn needed are likely to lead to the creation Government policies to of new financial instruments. support investment The planned ‘contracts for difference’ – which offer Contracts for difference stable, inflation-linked and Providing investors a long-term cash flows – may guaranteed income per unit be packaged into an of electricity and reducing investment that is attractive their exposure to the to pension schemes and wholesale market. insurers. Investors will also be Capacity mechanism looking to pass on or pool A new market for ensuring there some of the risks they face, is sufficient capacity available, giving issuers the in addition to simply rewarding opportunity to develop generators based on the innovative solutions. amount of power generated. A recent study by Lane Clark & Peacock Carbon price floor collaborated with the Imposing a minimum price system operator (National per tonne of CO2 to Grid), the government encourage investment away (Department of Energy and from fossil fuels. Climate Change – DECC),
June 2013 • THE ACTUARY www.theactuary.com
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Environment UK electricity market features@theactuary.com
the regulator (the Office of Gas and Electricity Markets – Ofgem) and academic institutions to investigate the increasing likelihood of power shortages in the UK during the next few years. Historically, the standard measure of system security has been the ‘de-rated capacity margin’, which is the expected percentage of spare power capacity available at peak winter demand. Figure 1 shows the Ofgem modelling results from 2012, highlighting a sharp reduction in available margins by 2015/16. This deterministic metric of system security works reasonably well when there are a large number of independent power plants whose behaviour is independent of one another in the statistical sense. However, generators of wind power, as well as other sources of power that are driven by weather, have correlated output. Understanding the correlations between energy generators is therefore becoming increasingly important, and this requires a statistical approach. There are three main risks that contribute to the possibility of supply shortage in the short term: ● power plant outages – mainly driven by the risk of large power plants failing; ● extreme demand – mainly driven by periods of low temperatures; ● wind generation levels – mainly driven by complex geographical and temporal wind dynamics.
Figure 1 Spare power capacity at peak winter demand
20% 18%
De-rated capacity margin (%)
16% 14% 12% 10%
Low demand
8% 6%
Base case
4% 2% 0%
High demand 2012/13
2013/14
2014/15
2015/16 2016/17
SOURCE: OFGEM MODELLING RESULTS 2012
“Understanding the correlations between energy generators is becoming increasingly important, and this requires a statistical approach.”
Figure 2 Probability distribution of demand and the generation from power plants and wind farms 2015-2016
Generation availability Demand Blackout risk
While the first two factors are reasonably well understood based on historical experience, wind generation is much more challenging to understand and model. Wind farms in operation in the UK currently produce around 8 gigawatts (GW), compared to the system-wide total of 70-80GW. But projections from the ‘Gone Green’ scenario in the National Grid’s UK Future Energy Scenarios document (http://ngrid. com/1816mCd) indicate that by 2030 this could rise to as much as 47GW. The new wind farms will be located in areas where there is currently little or no experience or data, such as far out into the North Sea or the Thames Estuary. The only way to understand the potential generation of these future wind farms, and how this will be correlated with the output of other generators, is therefore through the modelling of wind itself. Fortunately this is made possible through Nasa’s Merra dataset, which contains spatial data on wind speed and direction for every single hour since 1979. In principle, this dataset can be used to construct the distribution of wind generation for any theoretical future fleet of wind farms. Figure 2 shows an example of the probability distribution of demand and the generation from power plants and wind farms over a given time period. Between 50GW and 60GW, the righthand tail of the demand distribution overlaps with the lefthand tail of the generation distribution and so we can see that there is a non-zero probability of demand exceeding supply. Using this analysis, we can begin to quantify the probability and severity of any ‘unserved energy’ event in a tangible way. The results from this analysis will be used to inform government decisions on the amount of capacity we need to ensure a secure electricity system, and thus the operation of the ‘capacity mechanism’ policy instrument. This is just one example of the growing need for statistical analysis of uncertainty within the energy markets – which actuaries are well placed to support. a
TOM PORTER works in
Lane Clark & Peacock’s energy analytics practice, specialising in modelling of electricity markets 0
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SOURCE: LANE, CLARK & PEACOCK
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Reinsurance Multi-year capital relief features@theactuary.com
REINSURANCE
UNCOVERED Can we learn from Solvency II to unlock the hidden value of reinsurance for long-tail business? Victoria Jenkins and Jessica Leong report
Reinsurance on a long-tail business such as casualty provides lasting capital benefits until the complete run-off of the underlying business. It reduces not only underwriting risk but also the future reserve risk for that book of business. Yet how many companies are truly considering this multi-year capital relief in their reinsurance decision-making? Compared with the current individual capital assessment (ICA) regime, Solvency II’s one-year risk horizon has the potential to draw attention away from multi-year risk. The complexity of creating a comprehensive multi-year capital model means that many companies are not focusing on the multi-year risk of long-tail business when considering their reinsurance strategy. Reinsurance strategy decisions are often evaluated by assessing the change in economic value between the current reinsurance programme and alternative
Graph 1: Straightforward way of assessing the multi-year capital benefit of reinsurance or reserve value added
Step 1: Project reduction in reserve risk capital until run-off Step 2: Calculate reduced capital cost Step 3: Discount back at risk-free rate
Time = 0
Years
options. We define the economic value of a strategy as the difference between the expected return and the cost of servicing the risk capital required to support the strategy: economic value = net underwriting profit – (net capital required x cost of capital).
Long-term view The difference between the economic value of the current strategy and an alternative strategy is the economic value added (EVA). A positive EVA can be thought of as an improvement on the current strategy. Typically, EVA only considers the capital savings over a one-year horizon – that is, the economic value formula looks at the reduction in the required underwriting risk capital over the next year only. For short-tail property classes of business, this is often a reasonable assumption, especially for catastrophe business. From an economic capital modeling perspective, as soon as the most recent accident or underwriting year has elapsed, the risk transforms from contributing to underwriting risk and drops into the reserve risk bucket until it has completely run off. So, for casualty reinsurance, we believe that the economic value calculation should include the multi-year reduction in future reserve risk that the reinsurance provides. We call this reserve value added (RVA). If RVA is ignored, suboptimal strategies could be chosen. Calculating RVA exactly requires a complex, multi-year capital model and reserve risk model. However, we advocate a simpler approach. While Solvency II can potentially draw attention away from the multi-year view through its one-year horizon, its approach to calculating the risk margin can provide a sound framework for calculating RVA since it measures the cost of the capital required to back a book of liabilities over the entire run-off. We can use this to determine the savings in capital cost from ceding a portion of the liabilities.
June 2013 • THE ACTUARY 27 www.theactuary.com
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24/5/13 16:50:40
VICTORIA JENKINS is co-head and managing director of analytics for EMEA at Guy Carpenter and JESSICA LEONG is the lead casualty specialty actuary
Step by step The risk margin calculation requires you to: ● calculate the solvency capital requirement (SCR) at each future year to represent the capital needed to back liabilities until run-off; ● this capital has a cost of 6% above the risk-free rate; ● multiply the SCR at each point in time by the cost of capital; ● discount each year’s capital cost back to Time = 0 at the risk-free rate; ● sum the discounted values. A simplification often used in the risk margin calculation is to assume the capital required at each year end runs off in line with the payment pattern on the underlying claims. This method can be adapted to provide a straightforward way of assessing the multi-year capital benefit of reinsurance or RVA. For a single accident year, calculate the reduction in underwriting risk capital provided by the reinsurance at time zero. Assume this runs off in line with the payment pattern for the losses covered by the reinsurance to reflect the reduction in reserve risk capital over the multi-year period. Calculate the cost of capital saved over all years and discount this back to time zero. Aficionados of casualty business will recognise the simplifications of this approach. What we have looked at considers just a single accident year of loss as it runs off. The risk for casualty lines is that multiple accident years often deteriorate together. It is important to think about casualty reinsurance as a consistent strategy across multiple accident years rather than a tactical year-on-year decision. This can reveal greater hidden value that the single accident year approach cannot. Reserve deterioration is one of the most common causes of insolvency. Traditional reinsurance programmes can reduce this risk right from the start. We conclude that although the RVA method is clearly not perfect, it can at least provide a starting point for assessing the multi-year capital benefit of reinsurance. In the words of Eleanor Roosevelt: “A little simplification would be the first step towards rational living, I think.” a
“It is important to think about casualty reinsurance as a consistent strategy across multiple accident years”
Don’t let the numbers puzzle you. Fill in the gaps with ReMetrica. Aon Benfield’s new Solvency II-focused version 6 of ReMetrica is the dynamic financial analysis tool of choice for the world’s leading actuaries ReMetrica continues to evolve to help reduce model size by up to 95% when tools are becoming increasingly complex in a Solvency II world. In addition, the latest version helps insurers more accurately model credit risk in today’s uncertain economic environment. For a demo, visit: www.aonbenfield.com/remetrica_demo
aonbenfield.com/empower
The authors would like to thank Andrew Cox, head of advisory for EMEA at Guy Carpenter, for his help in writing this article
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Risk management Catastrophe models features@theactuary.com
BRIDGING THE GAP In my professional experience so far, I have had ample chance to interact with actuaries. As a matter of fact, and as strange as it may sound to the outside world, I am very proud to say that some of my best friends are actuaries. Coming into this industry about five years ago, knowing little about the actuarial profession, I was not sure what to expect in terms of the knowledge and expertise of actuaries. I was quickly impressed by their statistical skills, their keyboard-only use of Excel and their tremendous appetite for numbers, formulas and quantitative analysis, not to mention their high working standards. However, one area that the profession didn’t seem as connected to was that of catastrophe modelling. As catastrophe risk is a major driver of risk for non-life (re)insurers, I would have expected most actuaries to be true experts. This has not always been the case. Actuaries typically appreciate the intricacies of the calculation of an event loss table or a year loss table. They know how to perform Monte Carlo simulations to produce distributions and apply reinsurance terms. However, they usually stop short of further in-depth knowledge of catastrophe models. In true actuarial style, I have narrowed down the reasons for this to three components. ● Black-box mentality: cat models are complicated beasts. In the same way that fine art or classical music are perceived by some to belong to a closed elite, cat models are thought to be understood only by the few and the proud. The underlying physical processes driving these models require some formal training to understand, and the models themselves are too proprietary to be straightforward. ● The focus of the Institute and Faculty of Actuaries (IFoA) training: this has not traditionally included catastrophe risk or models as a separate subject. This is, to a
Alex Ntelekos calls for closer ties between actuaries and catastrophe modelling
certain extent, a direct consequence of black-box mentality – in contrast, there is a greater focus on economic scenario generators, where transparency is perceived to be higher. However, it does not explain all the variance. Actuarial students are being exposed to an array of subjects, but the visibility of catastrophe risk is relatively low, compared with its overall importance, and it is usually treated as part of insurance risk. ● Organisational structure: insurance and reinsurance companies may keep actuarial teams isolated from the business. Although this ensures a degree of independence and challenge, when overdone it hinders ability to make meaningful contributions.
All change The overall ability of the insurance industry to challenge and understand catastrophe models has increased during the past 10 years. Cat modelling vendors have become more transparent and documentation quality has improved. Regulatory requirements are calling for more openness and challenge around catastrophe models. An increasing number of academics are interested in cat models and open architecture platforms have been launched. The world of cat modelling is opening up and black-box mentality will be démodé. In my view, the IFoA will quickly respond to the challenge and increase the visibility of cat models within its curriculum. Extensive exam questions on cat modelling appeared after a major update of one of the vendors in 2011. This recognised the fact that cat models are becoming essential in the management of catastrophe risk within firms. It would only benefit future actuaries if the curriculum more explicitly recognised catastrophe risk as a separate subject and if training were part of continuing professional development.
Last, but not least, firms should look to further embed the actuarial function into the cat business. As the industry moves towards a more technical and analysis-based approach, firms that bring actuaries closer to the catastrophe risk, aggregate management and underwriting team to cross-pollinate expertise are likely to be winners. Actuaries should also actively look to learn more about catastrophe risk. Opportunities for a secondment to the cat team, a training programme or a seminar can only be of benefit to an actuary’s professional career and to the industry as a whole. a
ALEX NTELEKOS is a
technical specialist in the insurance division of the Prudential Regulation Authority (PRA), a subsidiary of the Bank of England
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Environment Sustainability features@theactuary.com
The
green
guardians
Can actuaries make a valuable contribution to sustainability projects? Louise Pryor and Tracey Zalk talk to four actuaries who are trying to make sustainable sense of the future Nuclear clean-up, carbon capture and electricity generation aren’t necessarily the first fields that would come to mind if you were asked what actuaries do, but at a networking event organised last autumn by the Resource and Environment member interest group, we discovered that actuaries are working in all of them. We wondered how and why traditional pensions and insurance actuaries get involved in sustainability, and spoke to four of them to find out. David Comerford, now studying for a PhD in economics, originally qualified as an actuary in 2006 and worked in the insurance sector. He believes that the primary challenge in the sustainability field is creating a policy framework capable of giving consumers and investors incentives that address the problems caused by resource constraints and environmental issues. He thinks that groups of individuals, companies and professional bodies, like the Institute and Faculty of Actuaries, have a role in arguing for this policy framework to be put in place. This is a sentiment with which Claire Jones wholeheartedly agrees. Jones originally worked in pensions for Lane Clark & Peacock, and is now sustainability and economics manager at the Institute of Chartered Accountants in England and Wales (ICAEW). She has been active in the sustainability field for about 10 years, recognising both its importance for the work that accountants do and the influence that accountants have on social and environmental outcomes. Sustainability issues are too often seen as concerns for other people, she suggests. Part of the problem is caused by gaps in background knowledge. For example, business and finance specialists may know little about ecology, so they often do not appreciate just how much
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businesses and society generally depend on the natural environment. She is particularly concerned that neo-classical economic models are inadequate when considering environmental factors. For example, the efficient market hypothesis relies on an assumption of perfect information, which is clearly a ‘nonsense’ in this field, given that most investors have only a limited understanding of environmental risks. Gail Tverberg, an environmental blogger and former insurance actuary, has similar concerns. Tverberg highlights the implicit assumption that the economy is independent of the physical resources that underlie it, and the resulting expectation that the economy can continue to grow in spite of physical resources becoming increasingly difficult and expensive to extract. She thinks the financial situation could go downhill quickly, in ways people have not been warned about, and predicts that most people will never make the connection with resource limits. Chris Gingell, who of our four interviewees is probably the closest to a ‘traditional actuary’, is also concerned about the political challenges – the difficulties governments have in investing in and supporting long-term schemes and the effect that the resulting regulatory uncertainty has on other investors. Gingell works for the Willis Global Solutions Consulting Group and has clients in the energy industry. He says that, although he doesn’t keep his actuarial background hidden, “there’s always a danger that a client might assume an actuary wouldn’t understand their industry because ‘it’s nothing to do with pensions’.” All four actuaries find the thrill of working on new and uncharted projects in sustainability a major factor in their enjoyment of their
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work. As Gingell wrote in the February issue of The Actuary, he’s involved in Climatewise, the insurance industry’s leadership group to drive action on climate change risk. He has also worked for a number of upstream oil and gas companies to enable them to understand and quantify their exposure to an offshore environmental catastrophe – a fascinating opportunity to apply actuarial techniques to new fields. Tverberg has found that her audiences are much more diverse now she’s concentrating on sustainability. “When I went to China,” she says, “a researcher put on a symposium with Chinese leaders. It was interesting to realise that they were reading the same literature and following the same (erroneous) lines of thinking regarding our current situation as US leaders.” Another event that stands out for her was being on a panel in Barcelona in front of 200 high school students.
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They asked very direct questions about how resource limits would affect their future, and she says “we had to come up with something that would not completely scare them to death”. Jones is enjoying audience diversity too, as well as the feeling that her work may make a difference. Her MSc dissertation identified areas for improvement in a model used for allocating carbon emissions to consumers (rather than producers), and has resulted in changes that will feed into advice given to government. With the ICAEW’s broad reach, she feels she has a real chance of influencing thinking. Like the others, it’s partly the opportunity to influence that excites Comerford. He believes that this field will dominate the policy agenda over the next 50 years and beyond. “It’s a good place to be professionally, as those who engage early with these issues will be seen
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Environment Sustainability features@theactuary.com
FOUR BRANCH OUT Chris Gingell models general insurance risk for the Willis Global Solutions Consulting Group. He says that resources and environment matters are increasingly important to his clients, many of whom are energy and power companies wanting to make decisions on risk transfer. Some are concerned about the risks of damaging the environment, or of new technologies such as carbon capture or fracking, while others are considering how to hedge liabilities from new regulatory regimes. Gail Tverberg, who also comes from a general insurance background, is an independent researcher and blogger (http://ourfiniteworld. com) specialising in the resources and environment field. She is particularly interested in how living in a finite world affects us; how dependent we are on fossil fuels; the connection of the economy to fossil fuel use; the relationship of debt and wages to oil prices; and what has happened in the past to economies facing similar challenges. Claire Jones started out as a pensions actuary. She became increasingly aware that the market-based assumptions she was using in her day job did not adequately reflect the effect that changes in the environment would have on financial and economic systems, and went back to university to study an MSc in sustainability. She is now the sustainability and economics manager at the Institute of Chartered Accountants in England and Wales. David Comerford, who worked as a life actuary, is currently finishing a PhD in economics at Edinburgh University. The resource and environment area is of long-standing interest to him, and he says it was the obvious choice when choosing research areas for his PhD. He studies potential barriers to investment in low-carbon infrastructure, such as the possibility that imposing climate targets would cause a collapse in asset values.
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as expert once it becomes apparent to everyone that climate change and resource constraints are the defining issues of the age.” Lastly, we were interested to know whether being an actuary was a help or a hindrance. Tverberg is clear that her actuarial experience is appealing to clients: “I am very upfront about my actuarial background. I was first known in my internet writings as ‘Gail, the actuary,’ and am still known by that name on one website.” She believes she stands out from other analysts by not starting with preconceived ideas, and is known as someone willing to investigate any possible lead. She also says that after writing so many client reports, developing graphical ways of presenting information is a doddle.
Skills transfer Comerford, on the other hand, says his background is pretty much irrelevant in academia, although his colleagues are amazed at what he can do with Excel. But his actuarial experience influences how he thinks about issues and how he approaches the modelling of problems. Similarly, Jones definitely draws on the skills and experience she gained as a pensions actuary, although she suspects it’s not obvious to others that she’s doing so. She tends to mention that she’s an actuary, “not least because otherwise people assume I’m a chartered accountant and I don’t want to mislead them”. For her, a key challenge is communicating sustainability information in a way that is useful to the target audiences and that conveys the associated uncertainty and the limitations arising from the data and methods used – a familiar task for mainstream actuaries. Gingell says that quantifying downside scenarios has been the realm of engineers or economists, who often rely on point estimates and worst-case scenarios. “The stochastic modelling skills actuaries can deploy allow organisations a far deeper understanding by showing the relative likelihood of different scenarios occurring.” So, there’s clearly no single way of getting involved in the sustainability area. Some actuaries get there through radical changes in career direction; for others, it’s simply part of their usual actuarial work, or a natural development from it. Indeed, as the recently published research project on ‘Limits to Growth’ points out, resource and environment issues are implicit in all areas of actuarial work. The four actuaries we spoke to see this as an area in which they can make a difference, and one in which there is a major long-term challenge of which many people aren’t fully aware. Could actuaries have an advantage because we are accustomed to thinking about long-term risk and uncertainty? Or is actuarial reliance on data a handicap when there’s no data to rely on? Either way, it’s an exciting area to be in. a
More information can be found on the Resource and Environment Group’s website at http://tinyurl.com/czge38g. To become a member of the group or register interest in volunteering, email migs@actuaries.org.uk. Information on the ‘Limits to Growth’ research project is at http://tinyurl.com/bl5tesb
LOUISE PRYOR (left) is an independent consultant and TRACEY ZALK (right) is a member of the Global Sustainability Institute’s Global Resources Observatory project
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BOOK REVIEW
Finance and The Good Society by Robert J Shiller PUBLISHER Princeton University Press ISBN 9780691154886 RRP £16.95 ● Life and non-life insurance actuaries might be
“Shiller addresses whether finance can be an instrumental part of the efficient and just allocation of capital for the benefit of society” Last spring I heard Robert J Shiller speak during his London book tour for Finance and The Good Society. It was a watershed experience for me as it addressed a question weighing heavily on my mind – whether finance could be an instrumental part of the efficient and just allocation of capital for the benefit of society. Shiller proposed financial innovation as a necessity to achieve this goal and backed up his assertion with a range of detailed, pragmatic ideas for implementation. This book will appeal to a much wider audience than that might suggest, however, with the easy flow, readability and wisdom that come hand-in-hand with being a bestselling author and professor of economics at Yale. Shiller demonstrated the same eloquence and clarity when he forewarned the public about the 2000 stock market and the 2008 sub-prime bubbles. At first, actuaries might be comforted not to have been mentioned specifically in the book as, although Shiller offers a balanced view of the parts played by the various actors in the financial crisis, there’s also a fair amount of constructive criticism. However, I did recall
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Oscar Wilde’s quip that “there is only one thing in the world worse than being talked about, and that is not being talked about” when noting a chapter allocated to each of the ‘other’ finance professions. Pensions and insurance are provided as historic examples of finance contributing to the good of society, and insurance features heavily in the financial innovation that Shiller hopes will develop. A few examples of this are outlined below. ● Investment consulting actuaries might be interested in the concept of bonds issued by sovereigns with GDP-linked coupons and principal repayments. This could appeal from an inflation-tracking perspective as well as being a means of investment diversification. The selection of GDP as the linked-metric might need further consideration though. A number of incongruencies between the current definition and measurement of GDP with desirable outcomes have been identified. To align long-term savers’ interests with the metric as it stands could create conflicts of interest. (For further discussion on GDP, see Soapbox, p8).
interested in the concept of long-term catastrophe insurance. Indeed, the potential advantage of ‘switching’ between longer- and shorter-term insurance products was mentioned by former Swiss Re CEO John Coomber in the November edition of The Actuary. ● Micro-insurance and public policy actuaries will likely already be aware of the enormously positive role that weather insurance against crop failure can play. ● Non-life actuaries, parents and perhaps all of us might be interested to read of livelihood insurance – a long-term policy that individuals could purchase on a career, education or a particular investment in human capital. This would pay out if demand for the skill or income from it diverged from expectations. ● Non-life insurance and finance actuaries’ skills might find an application with home equity insurance, which could compensate for a drop in market value of homes. For me, however, the description of ‘the good society’ in relation to the BP spill seemed incomplete. It painted a picture of an egalitarian society in which all people respect and appreciate each other, while the description of the BP spill touched upon the financial losses incurred by portfolio managers, those in the tourist industry and potential losses to wider society owing to earlier depletion of oil stocks. But lack of acknowledgement of the value and fundamental role of ecosystems and biodiversity as providers of goods and services to global as well as future societies seems an omission. In the section on the BP spill, insurance was equated to risk management. While insurance can pass financial effects and certainty from one party to another, financial compensation is rarely restoration and doesn’t necessarily compensate all affected parties. Perhaps lessons from the financial crisis such as the importance of fiduciary duty and connection should be taken heed of in these types of insurance contracts and engineering projects. This review has focused on insurance, but if you are interested in understanding roles and responsibilities in the financial system – regardless of whether historical, philosophical, psychological, physiological, political or economic explanations and analogies resonate – Finance and The Good Society is likely not to disappoint. ● Tracey Zalk is a finance actuary and a member of
the managing committee of the Institute and Faculty of Actuaries’ Resource and Environment Group
MORE ONLINE Latest reviews at www.theactuary.com/ opinion
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arts@theactuary.com
Arts
Alan Frost explores the wealth of world-class music and theatre on offer in the landmark year of 2013
BI(CENTENNIAL) BIRTHDAYS This year is the bicentenary of the births of
Many happy returns: 2013 is an opportune time to celebrate the works of Wagner, Britten and Verdi (pictured left to right)
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Giuseppe Verdi and Richard Wagner, considered two of the most influential composers of nineteenth century operas. Most opera houses worth their salt are producing more Ring Cycles this year than you can shake a baton at and masses of Verdi. And why not? Their music is glorious, albeit in two markedly different styles. Dorset Opera, whose board I chair, is no exception. It is staging The Flying Dutchman as well as a new production of La Traviata directed by Sir Jonathan Miller.
However, I feel a slight concern for the forgotten few also born in 1813, whose stars did not burn as brightly as Wagner’s and Verdi’s. What about the Russian Alexander Dargomyzhsky? Or the French pianist and composer Charles-Valentin Alkan? Another vital bicentenary this year is of the Royal Philharmonic Society, having mounted its first season of public orchestral concerts in 1813. The first British performance of Beethoven’s Ninth Symphony was given by the Royal Philharmonic on 21 March 1825.
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At the back Arts
Emerging British talent: The Benyounes Quartet is wowing audiences
I attended a concert recently at which the famous bust of Beethoven by Johann Schaller was lowered from the stage. This concert featured the Cello Concerto by Witold Lutosławski, born a mere 100 years ago in 1913, which was commissioned by the Royal Philharmonic Society and first performed in 1970. The hall was half full and the audience was equally split between those who loved it and those who hated it. It is very theatrical and Lutosławski places the soloist in conflict with the orchestra. The music is never dull, always virtuosic and often played ad lib. I suspect I would not have enjoyed it on the radio as one needed to see the dramatic interplay between Johannes Moser’s cello and the Bournemouth Symphony Orchestra. There aren’t that many ‘modern’ pieces I’d immediately say I’d like to hear again, but this is one. Benjamin Britten was also born in 1913 and, while virtually all international opera houses are featuring Wagner and Verdi, Britten’s contribution is less obvious. This is a great shame, but in box office terms he is not such a draw. However, one of my other interests, Bournemouth Chamber Music Society, promoted a recent recital by the Benyounes Quartet, an emerging, dynamic and engaging young British string quartet comprising Zara Benyounes (violin), Emily Holland (violin), Sara Roberts (viola) and Kim Vaughan (cello), in which we heard Britten’s Three Divertimenti. An early work, written when he was only 20, it’s fun, full of life and energy – and quite tricky! If you want to see an energetic and exciting conductor, look out for Karl-Heinz Steffens. He’s a former principal clarinet of the Berlin Philharmonic who now is music director of the Halle Opera and Staatskapelle. His performance of Brahms’ Symphony No. 1 in Poole left me and the audience breathless and exhilarated. He is travelling Europe conducting operas, including the inevitable Ring Cycle in Halle. Seek him out.
perils of neuroscience and the nature of clinical depression. Anastasia Hille, Tom GoodmanHill, Billie Piper and Jonjo O’Neill were the ensemble group of actors and gave a performance that left us drained emotionally. It deserves every award on offer. The London theatre scene is in an amazing age of excellence. After seeing Rupert Everett in The Judas Kiss only a few weeks earlier, I did not think things could get better. Just to show how wrong I can be, I saw Nicholas Hytner’s Othello at the Olivier Theatre in May. In the first half, as Rory Kinnear’s Iago weaves his spell, the audience tittered with the self-knowledge of the deceits and what was to come. When Adrian Lester showed the full power of his Othello in the second half we were all numbed into taut, quiet submission as the scale of his helpless wrath wrought its worst on Olivia Vinall’s innocent Desdemona. Such passion! This surely is the hot ticket for 2013, but there are none left! Console yourself with a visit to the National History Museum and see the Genesis exhibition by Sebastião Salgado. I defy you not to wonder at the artistry in his photographs of landscapes, wildlife and remote communities in our extraordinary world.
“Most opera houses worth their salt are producing more Ring Cycles this year than you can shake a baton at and masses of Verdi”
● Alan Frost is a former regular contributor to the arts page, but is now busy as chairman of Dorset Opera and of Bournemouth Chamber Music Society
The last act In February, I bade a fond farewell to the Cottesloe Theatre at the National, where, during the past 20 years, I’ve seen some extraordinary productions. It is being refurbished and renamed. The Effect was a new play by Lucy Prebble exploring Big Pharma, the
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At the back Coffee break puzzles@theactuary.com
Puzzles
For a chance to win a £25 Amazon voucher, please email your crossword solution to: puzzles@theactuary.com by Wednesday 19 June
— RD SWO CROS IZE PR E PUZZL
NUMERATE AND LITERATE?
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Nylfia is an actuary who solves and compiles themed cryptic crosswords. Created especially for The Actuary, this crossword should appeal to actuaries who enjoy words and numbers alike. In the puzzle, 14 solutions (7 from across clues, 7 from down) are from a familiar set. The definitions for these relate to one of each solution’s achievements; possibly the best known. The remaining clues are standard cryptic Across 1 Cut doctor a number from 24 variety (8) 5 Louse is observed primarily on seedcase (6) 9 Explorer with leading characters from Portugal leads a community abroad (8) 1
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18 Upset merchandise without pole, lever and screw (10)
10 Life annuities obtained from analysing weight with diet (6) 11 Measuring device to establish whence dodo met ermine (8) 12 Mischief-maker forgoes right for power triangle (6) 14 Theorem causing gross apathy (schoolboy’s head blown away) (10)
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22 Clubs cycle of duty posted online (6) 23 Kiss and touch tangentially for many herein (8) 24 Mulched upper parts of rampike and pine logs (6) 6
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© Nylfia
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25 School’s inflow – ramp out odd characters relating to bacilli (8) 26 European detectives collect 50 elements (6) 27 Engineer established and ready for play (5,3)
Down 1 One of us, Fellow accepts order to compile mortality tables (6) 2 Take a long time with scales (6) 3 Movement of large bodies concerned Profumo’s girl losing energy for money (6) 4 Farmers look after line with guys (10) 6 Situations in America where girl hits (8) 7 Nothing maintained by press to foster conjecture (8) 8 Bespoke deals set to be free from engagements (8) 13 Highlander with universal acceptance after one having reached the top eg Bear Grylls? (5,5) 15 The French girl uses gravity and distance in celestial mechanics (8) 16 Head signalman has care of subject relating to sight in dim light (8) 17 One king’s identity returned as PM (8) 19 Going round dropping new code breaker (6) 20 Group theory exposes French cigarettes as shorter than expected and all removed (6) 21 Iron resistance to throw marginal proposition? (6)
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HAVE YOU GOT WHAT IT TAKES?
For a chance to win a £25 Amazon voucher, please email your solution to puzzle 547 to: puzzles@theactuary.com by Wednesday 19 June
Membership of Mensa is open to anyone who can demonstrate an IQ in the top 2% of the population. For information on IQ testing in your area, visit www.mensa.org.uk
TERMS AND CONDITIONS The prize will be awarded for the first correct entry drawn at random from those received before the closing date. The winner’s name will be announced in the next edition. Please note, the puzzle editor’s decision is final and no correspondence will be entered into. We reserve the right to feature the winner’s name in The Actuary. Your details will not be passed to any third party in connection with this draw.
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All at sea Mensa puzzle 547
A MENSE PRIZ E PUZZL
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A ship is battling against a strong tide to safety. It uses 6.5 gallons of fuel every hour and sails at 17mph in still conditions. The ship is 22 miles from safety and the flow against it is 9mph. The ship has 18 gallons of fuel remaining. Will it reach safety?
Woolf in disguise Mensa puzzle 550 A quote by British writer Virginia Woolf has been split up and the groups placed in alphabetical order. What should it say?
anno avoi ceby ding dpea life tfin youc
Do you need insurance? Bridge puzzle 33 Find a friend Mensa puzzle 548 Tanya’s friends are Sara, Nicky, Leon, Gemma and Kurt. Who has friends named Lynn, Toni, Carl, Franco and Isaac?
♠KJ8 ♥98 ♦KQ1065 ♣QJ10
N W Catch-up conundrum Mensa puzzle 549 Car A and car B set off from the same point to travel the same journey. Car A has a start of four minutes before car B sets off. Car A travels at 45 km/h and car B travels at 65 km/h. How many kilometres from the starting point will the cars draw level?
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E S
♠Q109 ♥AKJ1076 ♦A ♣AK4 You are South and end up in 6♥. West leads A♠. How will you play the heart suit? Bridge puzzle provided by David Lampert
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At the back Coffee break puzzles@theactuary.com
SOLUTIONS FOR MAY 2013 Old MacDonald had a... Mensa puzzle 543 ETE
CYM
CIV
Flight of fancy Mensa puzzle 544 The top half and the bottom half are on interlocking rotating systems. When they move round they will realign so that four associated words are read downwards. What are they?
H
ONA
BAL
GER
ACTUARY OF THE FUTURE
A
C
K
W E K W
Place two three-letter groups together to make a six-letter animal. What is it?
R O
L K
I T
A
time. Anything less than 100% means I’ve wasted an opportunity.
R
Lines of inquiry Mensa puzzle 545
The missing link Mensa puzzle 546
ANSWER: 4. Add together the number of straight lines in the first two letters then minus the straight lines in the third letter
7 2 6 4 8
2 9 3 7 1
4 5 3 7 5
6 5 7 3 ?
How would your best friend describe you? Not pretty but effective!
ANSWER: Lark, kite, crow and hawk will be read when the top half rotates three places clockwise, dragging the bottom half in an anti-clockwise direction
8 3 9 1 7
Employer and area of work Friends Life, financial reporting.
What motivates you? To do my best all of the
ANSWER: Onager Congratulations to this month’s winner – Dominic Gilbert, Liberty Mutual Insurance Europe
If AML = 5, VNE = 1 and IKT = 2 What does WHZ = ?
RICHARD CRONIN
What would be your personal motto? Nobody ever wants to do things they don’t enjoy so it is best to find a way of enjoying everything. Name five dream guests you would invite to your dinner party? The chiefs of the NHS, NAO and HMRC versus Private Eye’s Ian Hislop could make for a lively discussion. For the fifth, I’d invite author and systems thinker John Seddon to talk to while the others bickered.
What’s your most ‘actuarial’ habit? Reading
What number should replace the question mark in the grid? ANSWER: 5. Every small square of four numbers totals 20
everything I write several times over to make sure it cannot be misinterpreted by anybody.
Favourite Excel function? SUMIFS How do you relax away from the office? Orienteering and fell-running. Mud, rain, snow, brambles… I’d run through anything.
Alternative career choice? Geotechnical engineering sounds fun. I could look at landslides all day.
Tell us something unusual about yourself For each census I have lived in a different but adjacent county. I now have only eight years left to decide where to move to next!
Heart of the defence Bridge puzzle 32 1 ♠QJ10 ♥63 ♦ Q1097 ♣J743
2 ♠76 ♥63 ♦7543 ♣KQJ84
3 ♠ 76 ♥QJ3 ♦ 10975 ♣ J1087
4 ♠ QJ10 ♥ Q63 ♦ 10975 ♣865
5 (Contract 3 ♠) ♠ 76 ♥63 ♦AQ75 ♣86543
The Bidding S N 1♠ 3♠ 4♠ *
North ♠ A985 ♥742 ♦ KJ8 ♣A92
You are East. Partner leads A♥ , meaning he holds ♥AK plus some small cards. With each of the hands above, which card do you play? Your system is to encourage with a high card, and discourage with a low one. (* Except Hand 5 where South passes and the contract is 3♠ .) ANSWER: 1 3♥. Only play 6♥ if you want a ruff. Here this would just remove your natural trump trick. You hope for 1 spade, 2 hearts and 1 diamond. Note that Partner is unlikely to have any other points outside AK♥. 2 Here you do want a ruff, so play 6♥. 3 You need a couple of club tricks to stand any chance of defeating this contract – or K♣ and a trump trick. However, clubs need to be led from your side of the table. Play Q♥. This either promises the J♥ or is a
singleton. Either way, Partner can underlead his K♥. 4 Here your best hope is for 3 hearts to go with your guaranteed spade trick. Play 6♥. 5 This is not that easy to defend. A ruff would be nice but that puts you on lead. You need Partner to lead a diamond. You win the diamond and return your other heart. Partner needs to make a decision from what he can see whether to lead a third heart hoping you can ruff (he may think you have a third heart) or to lead another diamond hoping for 3 diamond tricks.
Greatest risk you have ever taken? Running down a steep hill without watching my footing. Cartwheeling 100m was by all accounts quite a spectacle, but my shoulder wasn’t happy.
What’s your most treasured possession? My compass. Quite literally I’d be lost without it! What are the top three things you would like to achieve in your lifetime? Learn to speak Welsh, explore Eastern Europe and Russia to trace where my family came from, and become a top athlete – naturally!
If you ruled the world, what would you change first? I’d change the rules of succession then resign before the power corrupted me.
Do you know an actuary destined for greatness? You can nominate an Actuary of the Future by emailing
aotf@theactuary.com
Bridge puzzle provided by David Lampert
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At the back Student student@theactuary.com
Student Jessica Elkin deploys both brain and brawn in pursuing the many networking opportunities on offer from the Staple Inn Actuarial Society
MORE TO SIAS THAN MEETS THE EYE I can admit up front that I am not the world’s best poker player. Even after recalling what is meant by flush, royal flush, straight, full house, fold, blind, and other jiggery-pokery, I’m simply not very good at bluffing (or lying, as I prefer to call it). I’m just a very genuine person, that’s all. It doesn’t help that I’m highly risk-averse and fold at the first bump in the road. Same goes for roller-skating. I’ve never been very sporty or coordinated, and as a child it seemed positively bizarre to want to put on dangerously wheeled shoes when you could get around perfectly fine in a pair of trainers. And dodgems! What an unpleasant idea, being chased around by people in vehicles trying to ram you into oblivion. Enough said. Yet somehow, since becoming an actuarial student, I have voluntarily taken part in all of the above. In fact, I have paid to do it. And it’s all SIAS’s doing.
An actuarial education When the Staple Inn Actuarial Society was founded in 1910, it was known as the Institute of Actuaries Students’ Society. According to the website, its original raison d’être was “to assist students in preparing for actuarial exams and to provide a forum to practise public speaking”. Whether you might consider boat parties and winter dinners to fit into the above or not, over time the society has evolved into a body offering a healthy split of education –
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offering talks on a range of actuarial subjects, many by students themselves – and social events, which include annual bowling and pool tournaments, dance nights, roller discos, wine tasting and annual poker nights. These events are intended to allow budding actuaries to network, which is always fun. I used to be confused by the word ‘networking’ but have since realised it’s simply drinking wine with nice people and socialising as part of your job.
A veritable Smörgåsbord There’s quite a lot going on at these events. The winter dinner involved live jazz, an open bar and free dodgems. Poker night included initiation for the uninitiated (me), food for the hungry (me), and prizes for anyone who ended up on the final table (not me), as well as some additional tables where people could gamble actual money à la Casino Royale. The infamous boat party, on the same night as the opening ceremony for the Olympics, allowed everyone to celebrate in style on the Thames. I may once have had some scepticism as to the
relevance of such activities to a flourishing actuarial career, but it is surely the basis for some mutually educational experiences to discuss different practices in varying areas of actuarial work. Besides, it turns out that actuaries aren’t a bad bunch at all. At poker I was convinced I’d be faced with scowling uptight professionals who were annoyed that I didn’t ‘get’ anything and had to be constantly reminded of the rules, but they seemed not to mind my floundering. It probably helped that I wasn’t any kind of threat to them or their chance of winning. Essentially, getting to know some of your actuarial peers can be no bad thing. Also, given the size of the actuarial profession, there’s a fair chance you’ll be working with some of these people at some point in your career.
Multi-faceted organisation These days, SIAS has over 7,000 members internationally, “representing and serving the interests of younger members of the actuarial profession” (I’ll say). But let it not be suggested that socials are the extent of SIAS’s purpose. It also arranges the aforementioned talks, has a representative on the Student Consultative Forum, sponsors charities and runs a jobsite, not to mention publishing a venerable professional journal that goes by the name of The Actuary. It has a full bag of tricks. And so do I. In the end, as it turns out, I rather enjoy roller-skating and dodgems and poker. I may well invest in a pair of skates of my own, and gambling is now de rigueur on a Friday night. It’s all part of networking, isn’t it?
As an aside … Good luck to everyone receiving exam results this month – whatever the outcome, I hope you can all celebrate or commiserate in style. Remember, there will always be a next time! a
June 2013 • THE ACTUARY www.theactuary.com
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24/05/2013 17:27
SPONSORED BY
At the back Appointments peoplemoves@theactuary.com
Moves LCP has announced six promotions to partner. Michelle Butler (top left) joined LCP from Warwick University in 2006. She advises companies and trustees on risk reduction strategies, including buy-in and buy-out transactions, as a member of LCP’s buy-out practice. John Clements (top centre) joined LCP in 2004 from the London School of Economics. He has a particular focus on setting and implementing investment strategy and advises clients on a range of investment issues. James Fermont (top right) joined LCP in 2006. He has a masters in mathematics and engineering from the University of Nottingham. Fermont works in LCP’s investment team and advises clients on a range of issues concerning investment strategy. Wendy Hawes (bottom left) joined LCP’s insurance practice as principal in February 2012. Since joining, she has focused on internal model validation, board training and risk management projects.
40
Hawes spent 11 years at the FSA and was one of the designers of the current capital regime, ICAS. As part of LCP’s insurance consulting team, she provides actuarial and insurance consulting advice to Lloyd’s syndicates, non-life insurers, mutuals and public-sector insurance bodies. Helen Howell (bottom centre) joined LCP in 2008, having qualified as an actuary in 2007. She advises a wide range of clients on their pension schemes – including both sponsoring companies and trustees of pension schemes. Howell has a first-class degree from Cambridge University in mathematics and management studies. Matt Mandelbaum (bottom right) joined LCP’s investment practice in 2008. He is responsible for advising pension scheme trustees and corporate sponsors on a wide range of issues including investment strategy, manager selection, asset transfers and performance monitoring. Mandelbaum qualified as a Fellow of
the Institute and Faculty of Actuaries in 2007 and holds a first-class degree in mathematics from St Edmund Hall, Oxford University, having graduated in 2004. Hymans Robertson has promoted Richard Shackleton to equity partner and Shireen Anisuddin, Mark Baker, Jon Hatchett and Richard Warden to partner. Shackleton is a scheme actuary with over 20 years’ experience. He acts as lead consultant to a range of UK pension arrangements and is involved in all aspects of design, financial and risk consulting advice. Anisuddin joined the firm in 2009 and is lead consultant to a number of trustee clients and associate practice leader for the actuarial practice. Baker joined as a senior investment consultant in 2010, having started his career as a scheme actuary. He has worked
on a range of projects, including overseeing the initiation and exchange of ideas within the investment practice. Hatchett joined the firm in 2006 and is a strategic risk consultant specialising in scheme risk management. He helps companies and trustees manage the cost, volatility and risk associated with pension scheme funding and is also a chartered enterprise risk actuary. Warden joined Hymans Robertson in 2007 and focuses exclusively on providing advice to public-sector pension schemes. He works closely with a number of Scottish and English local government funds.
Muse Advisory has appointed Anne Kershaw (above) to its senior management team. Kershaw, who joined the firm in 2009, has played a pivotal role in investment governance. She will now be responsible for developing the firm’s thought leadership around investment governance and fiduciary management consulting while enhancing intelligence gathering capabilities. She will
also be responsible for professional standards and development. Kershaw previously worked at Mercer.
Schroders has appointed Daniel Morris (above) to the new post of LDI solutions manager to translate client objectives into effective portfolios and strategies. Morris has over a decade of actuarial and investment consultancy experience at Towers Watson and Aon Hewitt. Partnership has appointed Richard Willets (below) as director of longevity. Willets is considered a leading UK expert and is a regular author of research in the field. He joins from Friends Life, where he was director of longevity. Prior to that, he was longevity director at Paternoster, the pension buyout specialist, and ran Willets Consulting, which specialised in research into this area.
He has also chaired the Institute and Faculty of Actuaries working party that produced the CMI projection model. Royal Mail Pension Trustees Limited has appointed Chris Hogg (below) as chief executive. He joined the group from Aon in 2009 as part of the investment and funding team. He was closely involved with the pensions agreement concluded last year that resulted in the government taking on the historic liabilities of the Royal Mail Pension Plan.
Towers Watson has appointed Michael Murphy (below) as managing director of its risk consulting and software (RCS) business in Europe, the Middle East and Africa. He has more than 20 years of experience in insurance and consultancy. He was previously managing director of Aviva Insurance Europe SE.
THE ACTUARY • June 2013 www.theactuary.com
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Appointments
A P PO I N TME N TS To advertise your vacancies in the magazine and online please contact: Gill Rock +44 (0) 20 7880 6234 or gill.rock@redactive.co.uk
There are more effective ways of getting your message out there
CV advice from HFG www.highfinancegroup.co.uk
General Insurance Roles Senior Pricing Actuary
Capital Manager £90k - £120k Basic, London
£90k - £120k Basic, London
Growing insurer is looking for a qualified Pricing Actuary to lead their expanding Pricing division. This person should have the ability to do the technical pricing when required but also mentor and develop their team. Previous commercial lines pricing experience is essential. William@highfinancegroup.co.uk
Small Lloyd’s Syndicate with an increasing stamp capacity is seeking a Capital Manager to support the Chief Actuary. The role will oversee the day to day running of the model. Someone with previous capital modelling experience is required. This role can develop into a Deputy Chief Actuary. William@highfinancegroup.co.uk
Actuarial Risk Manager
Reinsurance Pricing Actuary £65k - £85k Basic, London
£60k - £90k Basic, London This medium sized Lloyd’s Managing Agent requires a Non-Life Actuary with a strong Capital Modelling background to take ownership of Risk work within a growing team. The role will interact with various areas of the business to refine risk tolerances, produce the ORSA report and integrate model outputs into the ERM framework. You will be a Nearly / Newly Qualified candidate with experience in Capital using Igloo or Remetrica. James@highfinancegroup.co.uk
A Global P&C Insurer is looking to recruit into their Property Reinsurance team. The role includes the pricing and capital modelling tasks involved with the business’ Outwards reinsurance portfolio and will be highly visible to members of the Claims and Underwriting function. The ideal candidate will be nearly Qualified and have previous Reinsurance pricing experience but those from a Direct background will be considered. James@highfinancegroup.co.uk
Senior Commercial Analyst
Specialty Lines Reserving £50k - £65k Basic, London
£45k - £65k Basic, London
This leading international Insurer is currently looking for a commercially minded Actuarial Analyst to join their London based Pricing team. This is your chance to take on early responsibility mentoring junior team members. You will gain exposure across all Commercial lines, ideally with experience in this area. To be successful you will be part-qualified and have strong General Insurance pricing experience. Chanelle@highfinancegroup.co.uk
Join the Reserving team of a leading Specialty lines Insurer where you will gain exposure across varied products and work closely with senior management. There will be high levels of interaction with the Pricing and Capital teams, whilst gaining in depth insight into the business. Good exam progress and previous experience working with General Insurance is essential, ideally within the London market. Chanelle@highfinancegroup.co.uk
Head of Actuarial
JAMES KITT Consultant - GI
CHANELLE ROSENBAUM Consultant - GI
+44 (0) 207 337 8826 william@highfinancegroup.co.uk
+44 (0) 207 337 1202 james@highfinancegroup.co.uk
+44 (0) 207 337 8827 chanelle@highfinancegroup.co.uk
WILLIAM GALLIMORE
+44 (0) 207 337 8800
www.highfinancegroup.co.uk June 2013 • THE ACTUARY 41 www.theactuary.com
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Appointments
KhZ >/ Ed^ Z '>K > ͵ E ^K Z t ƐƚĂďůŝƐŚĞĚ ŝŶ ϭϵϵϲ͕ ĂƌǁŝŶ ZŚŽĚĞƐ ŝƐ ĂŶ ĂǁĂƌĚ ǁŝŶŶŝŶŐ ƐƉĞĐŝĂůŝƐƚ ƌĞĐƌƵŝƚĞƌ ŽƉĞƌĂƟ ŶŐ ǁŝƚŚŝŶ ŶŝĐŚĞ areas of the Insurance and Finance sectors and is part of the Dryden Human Capital Group. We appoint ƉƌŽĨĞƐƐŝŽŶĂůƐ ŝŶ ĐƚƵĂƌŝĂů͕ ƌŽŬŝŶŐ Θ hŶĚĞƌǁƌŝƟ ŶŐ͕ ĂƚĂƐƚƌŽƉŚĞ ZŝƐŬ ĂŶĚ ůĂŝŵƐ DĂŶĂŐĞŵĞŶƚ͕ ĨƌŽŵ Ă ŶĞƚǁŽƌŬ ŽĨ Žĸ ĐĞƐ ŝŶĐůƵĚŝŶŐ ŽƵƌ h< ŚĞĂĚƋƵĂƌƚĞƌƐ ŝŶ ƚŚĞ ŝƚLJ ŽĨ >ŽŶĚŽŶ ĂƐ ǁĞůů ĂƐ Žĸ ĐĞƐ ŝŶ ƵƌŝĐŚ͕ DƵŵďĂŝ͕ ,ŽŶŐ <ŽŶŐ͕ ^ŚĂŶŐŚĂŝ͕ ^LJĚŶĞLJ ĂŶĚ EĞǁ zŽƌŬ͘
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THE ACTUARY • May 2013 www.theactuary.com
ACT.06.13.042.indd 42
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London : Chicago : Hong Kong : Singapore : Shanghai
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Senior Actuarial Student - London 6HQLRU 3 & $FWXDU\ *HUPDQ\ $WWUDFWLYH 6DODU\ %HQH¿WV 3DFNDJH $WWUDFWLYH 6DODU\ %HQH¿WV 3DFNDJH This multinational insurance / reinsurance company is looking to enhance their actuarial capital modelling team with the addition of a Senior Actuarial Student. Principal tasks are to undertake capital analysis and to assist in the development of the internal capital model. Other tasks include the participation in strategic projects, underwriting reviews and the development of management information. The ideal candidate is an actuarial student with relevant experience in the insurance industry and capital modelling. Good knowledge of Remetrica, VBA and 06 2I¿FH ZRXOG EH DGYDQWDJHRXV &RQWDFW SKX QJRF#LSVJURXS FR XN +44 207 481 8686
This leading multinational insurance company is looking to enhance their team with a Senior Actuary. The main remit is to provide actuarial support to the management and various stakeholders. Reporting to the +HDG RI 5HVHUYLQJ WKH VHQLRU DFWXDU\ ZLOO EH LQYROYHG LQ UHVHUYLQJ EXVLQHVV SODQQLQJ F\FOH PDQDJHPHQW DQG UHYLHZ RI WHFKQLFDO SURYLVLRQV 7KH LGHDO FDQGLGDWH LV D IXOO\ TXDOL¿HG 3 & DFWXDU\ ZLWK H[SHULHQFH LQ UHVHUYLQJ DQG 6ROYHQF\ ,, 9HU\ JRRG FRPPXQLFDWLRQV VNLOOV DUH UHTXLUHG DQG SULRU LQWHUQDWLRQDO H[SHULHQFH ZRXOG EH D SOXV
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May 2013 â&#x20AC;¢ THE ACTUARY 43 www.theactuary.com
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Appointments
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High Finance Group
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Life Insurance Roles Policy Specialist
International Pricing Actuary
£80k - £100k Basic, London
£80k - £120k Basic, London A leading Life Insurer requires a senior Product Actuary to lead the International and Emerging market team. Focusing on market entry assessment and product implementation you will identify sector trends; maximising opportunities across the Middle East, Latin American and Asia. International knowledge, senior stakeholder management and broad product experience is vital. Graeme@highfinancegroup.co.uk
This advisory team is tasked with researching and lobbying on Public Policy affairs across the industry. This is an excellent opportunity to raise your profile and network across the market, working closely with regulators, industry figures and government bodies. You will be a qualified Life Actuary with strong product and policy knowledge and excellent communication skills. Graeme@highfinancegroup.co.uk
Reinsurance Projects Actuary
With Profits Team Lead £80k - £120k Basic, London
£80k - £120k Basic, London A market leading reinsurer is seeking a talented Actuary to provide specialist support across a variety of in house development programmes. You will have responsibility across areas such as Longevity and Re-pricing strategies. Previous project based management experience, strong product/market knowledge and excellent communications skills. Graeme@highfinancegroup.co.uk
This unique team is seeking a consultative and market facing With-Profits Actuary. Extensive knowledge of large With-Profits funds, previous stakeholder management experience and excellent communication skills. This is a fantastic opportunity to advance your career and diversify your knowledge within an innovative industry leading environment. Graeme@highfinancegroup.co.uk
Financial Reporting Manager
Pricing & Product Development Actuary
£60k - £80k Basic, London
£55k - £75k Basic, London
This is a high profile role within a multinational Life Insurer, managing a team of Actuaries. Reporting into the Chief Actuary, you will play a strategic role in the Financial Reporting processes, gaining commercial visibility across the company. This role is perfect for someone looking to take the next step in their career and to be part of an integral business unit. Sophia@highfinancegroup.co.uk
This leading life insurer is looking for a nearly / newly qualified Life Actuary to join their innovative team. You will be responsible for pricing international products whilst playing a key role in the development of new products. This will accelerate your career progression, building on your previous experience pricing Life Insurance products, taking on managerial responsibilities. Sophia@highfinancegroup.co.uk
Switch to Consultancy
Senior Systems Actuarial Analyst
£50k - £80k Basic, Nationwide Interested in working in the Actuarial function of a global consultancy? The regional offices of this leading consultancy are seeking a nearly / newly qualified Life Actuary with strong academics and experience in various disciplines, including Pricing, Financial Reporting, Capital Management and Modelling. This is a real chance to develop with a great support network. Jack@highfinancegroup.co.uk
£35k - £50k Basic, South Coast A fast evolving composite insurer is keen to find an Actuarial Modeller to help develop their systems as part of a substantial change to their modelling infrastructure across Life and GI. This role would suit an Actuarial student who has previous projects experience in systems teams and a good understanding of Prophet, MoSes or VIPitech. Jack@highfinancegroup.co.uk
Contract Roles Pricing Contractor
Modelling Contractor
£800 - £1200 a day, 6-12 months, London
£600 - £800 a day, 3 months, South West
Large Reinsurer is looking for a pricing contractor for 6-12 months to work closely with the underwriters and other actuaries. The right person should be happy doing the technical pricing as well as liaising with non actuaries. Previous pricing experience is key. William@highfinancegroup.co.uk
This is a short-term contract in the systems team of a large Life Insurer. The role requires the ability to develop and amend models in Prophet and also have a good understanding of running and modelling in MoSes. The ability to communicate effectively with both the Actuarial team and the IT team is essential. Jack@highfinancegroup.co.uk
Reserving Contractor
Pricing Actuary
£600 - £800 a day, 6 months, London Lloyd’s syndicate requires a newly qualified Reserving Actuary to support their Head of. The right person should have ResQ experience and be happy supporting the pricing and capital teams when required. William@highfinancegroup.co.uk
£700 - £900 a day, 3 months, London A leading Healthcare provider seeks a qualified Pricing Actuary assist the re-pricing and review of the company’s products. This role would suit an experienced Pricing Actuary with prior experience working with Healthcare products and the ability to communicate well with the team and senior management. Jack@highfinancegroup.co.uk
Pensions & Investments Roles Pensions Advisory
Senior Investment Analyst £40k - £80k Basic, South East
Up to £75k Basic, London
This highly regarded insurer is currently seeking a nearly / newly qualified Actuary with expertise in ALM to take responsibility for a section of their asset portfolio. This will include technical modelling, analysis and strategy in addition to high levels of interaction with internal and external stakeholders. Experience of ALM within insurance is essential. Miranda@highfinancegroup.co.uk
Take the next steps in your career within this innovative and highly commercial team. Working in a cross-discipline environment you will lead the way in pensions risk management with projects including scheme funding, buyout, journey planning and M&A transactions. You will have first rate communication skills and in depth experience of the UK DB Pensions market. Miranda@highfinancegroup.co.uk
GRAEME BRAIDWOOD
SOPHIA CROSSMAN
Consultant - Life
Consultant - Life
+44 (0) 207 337 8820
+44 (0) 207 337 1207
graeme@highfinancegroup.co.uk
sophia@highfinancegroup.co.uk
JACK SNAPE Consultant - Life Interim & Perm
MIRANDA WILKINSON Consultant - Pensions & Investments
+44 (0) 207 337 8810
+44 (0) 207 337 8815 May 2013 • THE ACTUARY miranda@highfinancegroup.co.u www.theactuary.com
jack@highfinancegroup.co.uk
45
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Appointments
Overseas Opportunities Chief Risk Officer - Korea
Actuarial Director - Bermuda
Dependent on Experience, Seoul
Up to USD 250k base + excellent bonus, Hamilton A career-making role for an experienced Non-Life Actuary to lead the actuarial division of this globally recognised firm. They are looking for a business leader who can deliver, innovate and advise in this front line role which will see close co-ordination with the US and London offices. There is a huge business opportunity here as the impact of Solvency II and it’s equivalents changes the way insurers manage risk. You must be a qualified Actuary with a wide range of experience.
Unique opportunity to take your Solvency II expertise to Korea. Our client is searching for a CRO for this newly created to role to implement Solvency II in the Korean business. It is therefore essential that you are well versed in Solvency II, have a deepened understanding of the regulatory changes and can communicate this at local and Board level. If you can speak Korean that will be highly advantageous but the key will be having the cultural understanding for this part of the world.
GI Opportunities In Singapore
Actuarial Director – Asia Pacific Up to HKD 2m base + Bonus, Hong Kong
Dependent on Experience, Singapore Our Senior International Consultant will be attending the Singapore Actuarial Society General Insurance Conference in Singapore this month, where she will be speaking to clients directly about their 2013 hiring plans. If you are interested in hearing about Non-Life opportunities or you want a more general discussion on the GI actuarial market in Asia and advice on relocation, visas, timescales and where to live and work, please contact us on the number below.
An opportunity to influence and shape at the regional level as this leading Insurer continues to advance their presence in Asia. They are searching for an Actuarial Director to take ownership for capital and financial reporting metrics - Economic Capital, Solvency II, EV, IFRS and regional statutory requirements. This role requires a Qualified Life Actuary who has operated at a senior level, is confident in front of the Board, can challenge and has the drive to make a difference.
Reinsurance Actuary - Singapore
Technical Manager - India
Up to SGD 125k + bonus, Singapore This is a regional role for a Life Insurance nearly / newly qualified Actuary who can speak English and either Malay, Korean or Chinese. This is a sociable, dynamic team which is growing fast as the Reinsurer goes from strength to strength in Asia. To be considered you will already have gained Life pricing or valuations experience.
Clare Bethell, Senior Consultant Collette Edwards, Consultant
Up to INR 5 m base + bonus, Mumbai Our client is looking for a qualified or qualified through experience technical Actuary with advanced modelling skills in Life insurance to join their team. As India moves towards a risk based capital approach they will be looking to you to help interpret, design and build new modelling solutions. First class communication skills are essential.
clare@highfinancegroup.co.uk collette@highfinancegroup.co.uk
+44 (0) 207 337 8829 +44 (0) 207 220 0174
HEAD OF PRICING & RESERVING London £100k to £120k + bonus + benefits A great opportunity to lead the Pricing & Reserving work for this relatively small organisation where you’ll also work with other teams and interact with senior management. Suitable candidates need to be a qualified actuary with strong reserving experience and demonstrable people management and influencing skills. The primary role is to provide pricing and reserving expertise for Lloyd’s Syndicates, MGAs and owned businesses specifically: • •
• • • •
•
Management of the pricing and reserving team. IBNR Reserving for client portfolios and providing the required reports (including bad debt analyses, expense and cash flow projections). Exposure analyses where appropriate. Actuarial support as required for any litigation. Reserving due diligence on potential acquisitions. Interaction with Lloyds, Senior Management, Underwriting, Claims, Finance and Risk Management to ensure that the pricing and reserving models continue to appropriately reflect the business and meet the SII requirements. Application of the Actuarial Standards as set out by BAS (i.e. TASR).
Parvinder Matharu Newton Recruitment t +44(0)1689 862937 e parvinder@newtonrecruitment.com w www.newtonrecruitment.com
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Set the direction.
Influence the bottom line.
Head of P&C Risk £110k to £130k + bonus + car allowance + exceptional benefits City of London All over the world, millions of individuals and businesses rely on AXA to manage their financial assets and protect their property and health. As Head of P&C Risk, you’ll manage, direct and lead change right across AXA UK, having a tangible impact on our bottom line and our future direction. With an in-depth and up-to-the-minute understanding of the UK P&C market, you’ll be a qualified actuary with a skill set across reserving, pricing, reinsurance and capital, leading a high-performing P&C risk team as well as developing standards to identify, assess, monitor and manage P&C risks. From risk monitoring, to product approval, to local and group risk management, you’ll work closely with colleagues to ensure that we’re dealing with any risk challenges and finding the right way forward to achieving our goals. As a senior leader you’ll be influential, inspirational and you’ll actively promote a risk-based culture; sharing best practice across AXA UK. Why AXA? For the size of the challenge, for the scale of the opportunity; for the profile and the influence. And on top of a highly competitive salary, you’ll be rewarded with a generous bonus scheme, 28 days’ holiday, a joint contribution pension and free life assurance, a company car or cash allowance, private health insurance and much more. For more information on AXA and to apply, please visit
www.axa.co.uk/careers
May 2013 • THE ACTUARY 47 www.theactuary.com
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AppointmentsGuidance
throughout your career.
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www.theactuaryjobs.com Director of Capital Management Competitive Salary + Excellent Benefits, London Due to our strong growth, an exciting opportunity has arisen for an experienced Capital Management professional. Reporting to the CFO, as part of a wide-ranging remit you will closely monitor Partnership’s capital position and develop strategies to improve capital efficiency. The successful candidate will have sustained, recognised post-qualification experience in Capital Management and will be able to demonstrate a strong background in Pillar 2 and Economic Capital frameworks. Key areas of responsibility include: ● ● ● ●
Managing and monitoring capital position Developing and delivering capital strategies Anticipating capital developments Supporting broader business decisions
Company overview Partnership is a leading and fast growing writer of enhanced annuities and a specialist provider of financial products that offer better rates to individuals who suffer from shortened life expectancy. We are experts in medical underwriting and a leader in the retirement market. Partnership is one of the UK’s fastest growing insurers, having been ranked number 1 in both the 2012 and 2013 Sunday Times PwC TopTrack 100 for Britain’s private companies with the fastest-growing profits. In the 14 years since this league table has been formed, Partnership is the first company to have topped it for two years in a row, an achievement of which we are immensely proud. Partnership is a company where innovation and ideas are unlimited, and where talent is recognised and rewarded.
Applications to: recruitment@partnership.co.uk. Please quote: ref: P0570 Visit us at: www.partnership.co.uk ce Company Limited Partnership is a trading style of the Partnership group of Companies, which includes; Partnership Life Assurance gland and Wales No. 0510 (registered in England and Wales No. 05465261), and Partnership Home Loans Limited (registered in England 05108846). Partnership Life Assurance Company Limited is authorised by the Prudential Regulation Authorityy and regulated by the Fina Financial Conduct Authority d regulated by the Financial Conduct C and the Prudential Regulation Authority. Partnership Home Loans Limited is authorised and Authority. et, London EC3M 6BN. The registered office for both companies is Sackville House, 143-149 Fenchurch Street,
Head of Group Risk A leading insurance entity, based in London, is working exclusively with Eames Consulting Group LLP to recruit the Head of Group Risk. This individual will have responsibility for the development, implementation and continual review of the risk and compliance framework, working closely with the business to de¿ne the framework methodology. Analysing and challenging existing processes you will constantly strive to improve the system functionality and ensure a robust risk management and compliance framework. The successful individual will have responsibility across all business lines and geographies and will manage project plans globally to ensure a seamless implementation. You will also provide regular information to the Group Audit and Risk Committees and produce ad hoc reports for board level committees. A truly challenging and rewarding role with team management responsibility, this position requires an individual who has demonstrable experience of managing a risk management team within a ¿nancial services company, preferably within the Insurance sector. An in depth knowledge of FSA/FCA rules and experience at risk committee level are also key to the success of this person. For further information regarding this role, or for a more informal discussion regarding your career aspirations, please do not hesitate to contact us.
Contact Rob Bulpitt
Rupert Rickard
Office Number
For current opportunities please visit
Head of Actuarial, Pensions & Insurance Risk Management 020 7092 3237
+44 (0)20 7092 3200
Manager of Actuarial Non-Life and Insurance Risk Management 020 7092 3219
www.eamesconsulting.com
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May 2013 • THE ACTUARY 49 www.theactuary.com
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Appointments
NON-LIFEFUTURES HEAD OF PRICING
NON-LIFE
LONDON
up to £130k + bonus + benefits
SOUTH EAST
NON-LIFE up to £120k + bonus + benefits
Seeking a qualified non-life actuary to lead and inspire a global pricing team, developing relationships with underwriters, brokers and wider stakeholders. You will drive best practice in actuarial analysis across multiple lines. Ref: Star1477
Fantastic opportunity to join a specialist (re)insurance group as the first actuary within a growing business unit. You will lead the reserving process, provide pricing support and calibrate the internal model. Ref: Star1392
ACTUARIAL DIRECTOR
HEAD OF INSURANCE RISK
BERMUDA
NON-LIFE BMD $ excellent + bonus + benefits
BERMUDA
NON-LIFE BMD $ excellent + bonus + benefits
This represents a great opportunity for a non-life actuary with strong technical and people management skills and a proven history of business generation to lead a high quality team in Bermuda. Ref: Star1449
Fantastic opportunity for a qualified actuary to take a leading role in insurance risk management for a worldwide insurer. You will work directly with the local ERM team and drive strategic decision making. Ref: Star1434
NON-LIFE LEADER
LONDON MARKET CAPITAL
CANADA
CANADA $ excellent + bonus + benefits
LONDON
PART-TIME £ excellent + bonus + benefits
Market-leader seeks high-calibre actuary with Canadian market experience to take up the lead role in its non-life actuarial team. Contact us for more details of this fantastic opportunity. Ref: Star1518
This is an opportunity for a high-quality non-life actuary with capital modelling experience to join a true market leader. You will have strong people and project management skills. Part-time role. Ref: Star1486
CASUALTY PRICING ACTUARY
SPECIALTY LINES ACTUARY
LONDON
NON-LIFE £ excellent + bonus + benefits
LONDON
NON-LIFE £ excellent + bonus + benefits
Market leader seeks casualty pricing actuary with a commercial perspective to work closely with brokers and big ticket clients in one of the most sought after roles in the general insurance arena. Ref: Star1465
Leading client seeks a high calibre qualified actuary with specialty lines pricing experience, particularly in marine and energy and a commercial focus to make deals happen.
INVESTMENT ACTUARY
SYNDICATE PRICING & RESERVING EXPERT
LONDON
NON-LIFE up to £90k + bonus + benefits
This is a fantastic opportunity to take responsibility for running the Market Risk element of the Group Economic Capital Model within a true market-leader. The successful candidate will have strong ESG experience. Ref: Star1496
THE ITALIAN JOB LONDON & ITALY
NON-LIFE up to £80k + bonus + benefits
Leading insurance group seeks qualified non-life actuary to be responsible for the end-to-end reserving process for its Italian business. Take this opportunity to develop your technical skills and experience a different culture. Ref: Star1479
Antony Buxton FIA 50
RESERVING. PRICING. CAPITAL
MANAGING DIRECTOR THE ACTUARY • May 2013 www.theactuary.com M +44 7766 414 560 E antony.buxton@staractuarial.com
ACT.06.13.050-51.indd 50
Ref: Star1463
NON-LIFE
£ excellent + bonus + benefits
LONDON
A varied role for a part qualified or qualified non-life actuary with experience in the London or Lloyd’s market. Strong communication skills required to mentor students and interact Ref: Star1472 with a wide variety of stakeholders.
BUILD YOUR RESERVING PROFILE LONDON & SOUTH EAST
NON-LIFE
up to £55k + bonus + benefits
This role offers great visibility and is an excellent opportunity to develop your career within a small team in a market-leading insurer across both personal and commercial lines. Reserving experience preferable. Ref: Star1497
Lance Randles MBA
Paul Cook
Clare Roberts
ASSOCIATE DIRECTOR
SENIOR CONSULTANT
SENIOR CONSULTANT
M +44 7889 007 861 E lance.randles@staractuarial.com
M +44 7740 285 139 E paul.cook@staractuarial.com
M +44 7714 490 922 E clare.roberts@staractuarial.com
28/05/2013 10:25
www.theactuaryjobs.com
LIFE PENSIONS INVESTMENTFUTURES PENSIONS
LONDON
up to £300k package
MARKET-FACING SCHEME ACTUARY LONDON
PENSIONS £ very attractive
Our client seeks qualified actuaries to join a high-quality team providing project based risk solutions to flagship corporate clients. The successful candidate will design and implement a wide range of risk management strategies. Ref: Star1516
A unique opportunity for a pensions actuary with significant business development experience to build a trustee practice for a leading consultancy. Contact us for more information.
CORPORATE CONSULTING
MANAGEMENT CONSULTANCY
PENSIONS
NATIONWIDE
up to £200k package
We have a wide range of opportunities for high flying corporate pensions consultants with strong business winning credentials. These roles offer a track to partnership for the right candidate. Ref: Star1503
LIFE
HEAD OF AUDIT LONDON
up to £157k + bonus + benefits
Ref: Star1517
WIDER FIELDS
LONDON
£ excellent + bonus + benefits
Global management consulting firm is seeking exceptional actuaries from the insurance sector to join in its success. Successful candidates will demonstrate and quantify the business impact of projects undertaken. Ref: Star1061
INVESTMENT ACTUARY LONDON
up to £135k + bonus + benefits
A fantastic opportunity for a change management expert within insurance to take on a lead role building and maintaining a high performing practice, improving risk management, control & governance processes. Ref: Star1489
Due to business growth our client seeks an investment actuary with a strong technical and modelling background. Good communication skills are required to present at client meetings. Banking experience desirable. Ref: Star1441
INSURANCE RISK MANAGEMENT
LIFE (AND PENSIONS) IN CANADA
LONDON
LIFE up to £110k + benefits
$ excellent + bonus + benefits
CANADA
Global firm seeks a risk expert with project management experience to design end-to-end risk management frameworks. You will have strong consulting skills and a passion to succeed and deliver. Ref: Star1488
Leading player seeks high-quality pensions and life actuaries with Canadian market experience to join its growing team. Please contact us for further information on these exciting opportunities. Ref: Star1519
INVESTMENT SOLUTIONS
STRATEGIC CORPORATE ADVISOR
BIRMINGHAM
INVESTMENT £ to attract the best
BIRMINGHAM
PENSIONS
up to £75k + bonus + benefits
Market-leader seeks high-calibre qualified actuary to play a key role in the development of a new investment business. You will work with cutting-edge tools to design innovative solutions. Ref: Star1515
Seeking a part-qualified or qualified actuary with excellent technical skills and a focused commercial attitude to provide strategic advice to corporates on all aspects of designing, operating & financing pension schemes. Ref: Star1410
INTERNAL MODEL MANAGER
ON THE FRONT LINE
BIRMINGHAM
LIFE up to £75k + bonus + benefits
This is an exciting opportunity for a qualified actuary to lead the design, development, testing and validation of the Internal Model within a leading financial services company. Ref: Star1512
EDINBURGH
COMMERCIAL MANAGER up to £60k + bonus + benefits
This is a great opportunity for a qualified life or pensions actuary to make a real commercial difference supporting the front line business activities of a thriving corporate pensions team. Ref: Star1514
Star Actuarial Futures Ltd is an employment agency and employment business
STRATEGIC RISK CONSULTING
www.staractuarial.com
Louis Manson
Irene Paterson FFA
Carolina Emmanuel
MANAGING DIRECTOR
PARTNER
SENIOR CONSULTANT
M +44 7595 023 983 E louis.manson@staractuarial.com
ACT.06.13.050-51.indd 51
M +44 7545 424 206 E irene.paterson@staractuarial.com
M +44 7841 872 575 E carolina.emmanuel@staractuarial.com
Peter Baker SENIOR CONSULTANT May 2013 • THE ACTUARY 51 www.theactuary.com M +44 7860 602 586 E peter.baker@staractuarial.com
28/05/2013 10:26
Appointments United Kingdom
United Kingdom General Insurance EXCLUSIVE: Lead Actuary - Casualty Specialty London Paul Francis £110,000 + Bonus + Benefits Well managed global insurance firm underwriting across various lines (including Lloyd’s) requires a qualified Actuary to manage pricing, and aid capital and reserving. You will join as part of the senior management team.
Head of Italian Reserving UK (London) / Italy (Genoa) Sarah Robins £85,000 + Bonus + Benefits A multinational insurance company is looking for a newly qualified Actuary to head up their Italian Reserving function. This is fantastic opportunity to propel your career in an exciting and rare position which requires extensive travel to Italy.
Capital & Risk Actuary London Rick Davis £75,000 + Bonus + Benefits A London Market business requires an Actuary to perform a varied role. Along with capital modelling duties, you will also be responsible for modelling the investment risk profile and making strategic recommendations to the Chief Investment Officer.
Risk Management Analyst London Ben Pitt Up to £65,000 + Bonus + Benefits Global insurance business requires commercially minded part or nearly qualified Actuary to join their group risk team. Experience with ReMetrica is ideal, though not essential as excellent training will be guaranteed.
Contracts - GI Senior Reserving Actuary London Stewart Cherry £800 - £1000/day A Lloyd’s syndicate is looking for a qualified Reserving Actuary for a 6 month contract to start immediately. The ideal candidate must have experience across London Market reserving, technical provisions and be able to lead one of the business actuarial teams.
Senior Pricing London Stewart Cherry £800 - £900/day A senior pricing Actuary is required to join a London Market syndicate to assist them on a 6 month contract. The ideal candidate will have extensive pricing experience: product development, liaising with Underwriting and build, review and maintain rating tools.
Life Insurance Senior Risk Manager London (City) Rachel Kelly Up to £125,000 + Bonus + Benefits SENIOR APPOINTMENT - A qualified Actuary is sought to perform a range of strategic and operational risk management activities. Reporting directly into the CRO you will enjoy board exposure and a variety of work.
Risk & Capital Actuary London Clare Nash £90,000 + Package A world player seeks an experienced Actuary to join their expanding team. You will have a technical background, ideally in capital (although other backgrounds considered) and be comfortable in liaising with senior stakeholders.
Corporate Actuary South East David Parker £75,000 + Bonus + Benefits A leading international business seeks a qualified financial reporting Actuary twinned with strong interpersonal skills for a new opportunity. Management opportunity and personal development from the start.
Nearly/Newly Qualified Pricing Actuary South David Parker Up to £65,000 + Bonus + Benefits My client seeks a nearly/newly qualified life Actuary for their expanding commercial function. You will have had experience working in a pricing team previously with a commercially - focused outlook and a “can-do” attitude.
Contracts - Life Assistant Actuary London Rob Bentham Up to £700/day Our client is looking to bring on an Actuarial Assistant for an initial 6 month’s to assist with the development, testing and documentation of their actuarial modelling systems. Experience of a mainstream modelling package is essential.
52
Pension Risk Actuary South West Rob Bentham Up to £700/day Our client is looking for a qualified Actuary to head up the identifying, quantifying and reporting of their pension risk. Supervision of two junior staff will also be involved. The role will be 3-6 month’s initially.
General Insurance - UK
Contracts - Life & GI - UK
Life Insurance - UK
Paul Francis 0207 649 9469 Rick Davis 0207 649 9353 Sarah Robins 0207 310 8552 Ben Pitt 0207 310 8719 THE ACTUARY • May 2013 Richard Howard 0207 649 9356 www.theactuary.com
Rob Bentham Stewart Cherry
Clare Nash David Parker Rachel Kelly
0207 649 9351 0207 310 8651
0207 649 9350 0207 310 8649 0207 310 8579
Please contact one of the team for further information on any of the opportunities above or visit www.ojassociates.com/jobs
Ben
ACT.06.13.052-53.indd 52
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www.theactuaryjobs.com United Kingdom
Europe Germany Senior Reinsurance Reserving Actuary €90,000+ and Bonus Manuel Lovell You will be responsible for quarterly calculations and actuarial report writing. This global reinsurance book includes extensive exposure to corporate and large industrial business in the US and London so fluent English is needed.
Dublin, Ireland Risk/Capital Actuary Up to €80,000 Patrick McMahon I’m working on an exciting opportunity for a nearly/newly qualified Actuary in Dublin. Reporting directly to the CRO, you will get involved in the companies Solvency II programme, risk management and capital.
Bereichsleiter/in Schaden-Mathematik Emina Biscevic
Non-Life Vacancies Julien Fabius
Berlin €€€Competitive
The Netherlands €€€Competitive
Der Bereich, den Sie verantworten umfasst die Produktentwicklung, das Aktuariat, Fachcontrolling sowie die Rückversicherung für die Schaden-/Unfallversicherung des Unternehmens - Erste Fuehrungsebene.
We are experiencing a high demand for non-life Actuaries with a number of our large insurance clients based in The Netherlands. Contact Julien Fabius for more information.
Non-Life Risk Officer Brussels (Belgium) Laurence Baken €€€Competitive Top 20 International insurer & leading non-life player is looking for a GI Risk officer that will contribute to the embedding of the nonlife underwriting risk framework within the organisation and will promote a culture of risk.
International Contracting Opportunities Mainland Europe & Benjamin Moses Ireland Fantastic opportunity to gain experience in the European insurance and reinsurance markets. International businesses are looking for bespoke actuarial and risk expertise to help with project based work. Please get in touch for more information.
P & C Insurance on the rise in Belgium & The Netherlands By Julien Fabius
The non-life insurance market has always taken the place as “the little brother” of the larger, more profitable, Life & Pensions market in Belgium and The Netherlands. However there has been a change in scenery recently with our clients growing their non-life business and diversifying, entering new product lines and new markets all together. In short; there is more competition, more need for diversity in products as well as for new pricing methodology and a stronger focus on insurance risk. In a market where only 20% of the actuaries are trained in non-life, the search for talent is on! Why is this happening? Belgium: This growth was realised by the country’s favourable regulatory environment, which consists of obligatory third-party liability motor insurance and house insurance. For instance, motor insurance has, due to these regulatory changes, seen an increase of Belgian passenger car sales by 14.6% in 2010 and that figure has increased again with 4.7% in 2011 respectively, as compared to their respective previous years despite challenging economic conditions in the European region. Subsequently, this growth was further reinforced by the competitive pricing of car financing and an increase in citizen’s income levels, which helped generate a greater demand for motor insurance products during the review period.
investment products that used to dominate the Dutch insurance market are no longer allowed due to transparency issues in the investment structure. As such the major players have been looking to diversify and enter the non-life market. This has resulted in vast demand for innovative product developers, risk management functions, reserving actuaries and strong pricing actuaries to help the profitability of the products. What skills demand? We are seeing demand across reserving, pricing, product development and insurance risk. Companies are looking to diversify and win business in this highly competitive environment. If you are someone who can be innovative and help structuring new products or help implement pricing strategies or methodologies such as dynamic pricing, then you can be that expert in Belgium and The Netherlands. The experts are gaining a lot more responsibility to help grow the non-life business than a couple of years ago. If you are looking to step out of your comfort zone and become an expert instead of a number, then we are happy to explore the opportunities with you. Which businesses? Both established non-life insurers such as AGEAS, AXA, Allianz and Amlin as well as historically Life insurers such as AEGON and ING who are currently winning terrain in the non-life markets. Contact Benelux:
The Netherlands: In Holland the Life investments insurance market has been flat for the last 5 years due to a major change in regulation, meaning the
Julien Fabius Laurence Baken
Europe Benjamin Moses Helger Wiese Emina Biscevic Patrick McMahon Audrey Dresen
ACT.06.13.052-53.indd 53
+31 (0)20 716 8450 +32 (0)24 012 249
General Contact Details +49 (0)89 2206 1068 +31 (0)20 262 0280 +49 (0)89 3803 8965 +353 (0)1 685 2413 +41 (0)43 508 0444
Laurence Baken Julien Fabius Manuel Lovell
+32 (0)24 012 249 +31 (0)20 716 8450 +41 (0)44 580 3711
Email:
actuary@ojassociates.com
Web:
www.ojassociates.com
Please contact one of the team for further information on any of the opportunities above or visit 53 May 2013 • THE ACTUARY www.ojassociates.com/jobs www.theactuary.com
24/05/2013 17:43
Appointments
Asia Head of Client Management - Life Singapore Gary Rushton £££Competitive One of the leading global insurance groups is currently looking for a commercially minded Actuary with strong technical pricing experience to lead the business and pricing strategy for APAC region. No Asia languages required.
Actuarial Manager - Life Hong Kong Jonny Plews £££Competitive European insurer seeks UK or European experienced Actuaries (5-10 years’ experience) to work in FRM, Capital Management and stochastic modelling roles. Only English required. Excellent training and career progression on offer.
Senior Consulting/Development Actuary - Life HK/Singapore Alex Ince £££Competitive An exceptional opportunity for an Actuary to join a successful consultancy in an advisory and development capacity. Strong mentors are on hand to ensure your success with this role. This is a great role to expand your network and skills.
Head of Valuations - Life Hong Kong Alex Ince £££Competitive A leading global insurer is seeking a talented Actuary to head up their regional and local valuations team. You will also be involved in capital and ALM projects as the role grows and have key input into high level projects.
Regional Actuary - GI Hong Kong Toby Weston £££Competitive Our client is a leading non-life insurer in Asia and due to recent growth are seeking an Actuary to work with the Asia management team on key projects in Actuarial, Risk & Capital as well as M&A and business improvement initiatives.
Property Underwriter Singapore Chris Lee £££Competitive A leading reinsurers is looking to grow their Property Treaty team in Singapore and require prior experience in Pricing and NAT CAT modelling. This is an incredible opportunity for someone to make the move into Underwriting whilst utilising their actuarial skill set.
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Frequently Asked Questions (for HK & Singapore market) - Part 1 By Jonny Plews
As the Asian insurance markets continue to flourish, the demand and need for skilled actuaries is rising here too. At the same time economies elsewhere are struggling and with a sudden decline in UK vacancies (due to the delayed Solvency II deadline), it will come as no surprise that my team are regularly fielding questions from actuaries who are looking to relocate to Asia. I therefore thought a FAQ article would be popular! What types of opportunity are available? Similar to the UK, vacancies cover the spectrum in Asia. All the traditional roles are common here (Reporting, Modelling, Pricing…) and we are seeing an increasing demand in other areas (Risk, Finance, Strategy…). There are choices of roles in Regional offices (the HQ for Asia) or local business units - depending on the insurer, cultures will differ heavily between the two types of firm (often local firms will need Cantonese in HK). Is UK/EU experience relevant? Yes, very much so. European firms in Asia still abide by the same regulations so skills are very transferable (in fact it is the technical skill-set we are shortest of here). There are however many differences between the European and APAC markets (different cultures and local regulations lead to a huge variety of products) so there will be a steep learning curve but the advanced EU technical skills will get your foot through the door. Why is the Career Development so strong? The Asian insurance sector and hence actuarial profession is very young compared to the EU markets, and actuaries have
Asia
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Jonny Plews +852 5804 9200 Alex Ince +852 5804 9224 Gary Rushton +852 5804 9223 Toby Weston +852 5804 9042 THE ACTUARY • May 2013 Chris Lee +852 5084 9253 www.theactuary.com
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traditionally focussed on back office statutory work. It is only recently that actuaries have been required to communicate complex actuarial terms to non-actuaries, though this has quickly become the standard. This skill set is very rare in Asia though, particularly as English (the most common business language) is often people’s 2nd language. FIA qualifieds and English speakers therefore have a huge advantage, and because of that you find them climbing the career ladder very quickly. What is the market rate salary in HK/Singapore? The key here is look at NET salaries. In HK the top tax rate is 15% (after allowances is closer to 10%), in Singapore it is very similar, so take home cash is key. There is always some degree of negotiation depending on circumstances but please note; Asia does not need to pay people surplus to come here. It is the world’s most vibrant and exciting insurance sector and career development is rapid, so we expect you to want to come here. Having said that, Asia does need more actuaries so they will not be looking to short change you either - it is a mutually beneficial arrangement. Once you’re here though, salaries (like careers) move forward quickly. Are the working hours as long as people say? I could write an entire article on this question alone, but in short No. HK is a career focussed city, so people work hard, but it completely depends on your own aspirations, your time management and the time of year. I will write Part 2 to this article in July’s edition, it seems there is a lot to say! Jonny Plews +852 5804 9200
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Meet some of the team... Clare Nash - Life & Investments - Actuarial & Risk clare.nash@ojassociates.com +44 (0)207 649 9350
David Parker - Life & Investments - Actuarial & Risk david.parker@ojassociates. com +44 (0)207 310 8649
Paul Francis - GI Actuarial, Risk, Compliance & CAT Modelling paul.francis@ojassociates. com - +44 (0)207 649 9469
Stewart Cherry - GI - Contract stewart.cherry@ojassociates +44 (0)207 310 8651
Rick Davis - GI Actuarial & CAT Risk rick.davis@ojassociates.com +44 (0)207 649 9353
Rob Bentham - Life & GI Contract & Interim rob.bentham@ojassociates. com +44 (0)207 649 9351
Oliver James Associates has the largest and most integrated Actuarial team in the marketplace. Our team of over 30 consultants covers the major insurance hubs in Europe and Asia.
Europe
Audrey Dresen - Switzerland - Actuarial, Risk & Compliance audrey.dresen@ojassociates. com - +41 (0)43 508 0444
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Manuel Lovell - Germany Actuarial manuel.lovell@ojassociates. com +49 (0)8922 061 003
Asia Our consultants have developed an in-depth technical understanding of the intricacies of the actuarial profession and can offer sound and conďŹ dential career advice. On this page you can take a closer look at some of our team, however for a full list of consultants and more detail on their individual specialisms please visit our website. www.ojassociates.com/actuarial-team.
Alex Ince - Asia - Actuarial alex.ince@ojassociates.com +852 5804 9224
Toby Weston - Asia - GI Actuarial toby.weston@ojassociates. com +852 5804 9042
Jonny Plews - Director, Asia jonny.plews@ojassociates. com +852 5804 9200
Gary Rushton - Asia - Head of Actuarial gary.rushton@ojassociates. com +852 5804 9223
Philip Chau - Asia - Actuarial
Carl Chan - Asia - Actuarial
philip.chau@ojassociates.com +852 5804 9287
carl.chan@ojassociates.com +852 5804 9070
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