The Actuary June 2014

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JUNE 2014

Interview: Martin Pike

The magazine off the actuarial profession

Thriving in challenging times

Pensions The evolution of medical underwriting

Environment Water as an investment commodity

Review The Actuary

Unlocking Lovelock at the Science Museum

A NEW, NEW WORLD Defined contribution investment strategy and the effects on the pensions market

June 2014

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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.

Get new insights on your business at


THE ACTUARY • May 2013

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JUNE 2014



“Understanding the future supply-demand balance of water at a regional level requires significant modelling effort in the near term if local economies and industry are to avoid challenges”





10 IFoA news

18 Interview: Martin Pike

31 Book review

14 People/society news 16 General insurance news 17 Industry news

The chairman of SIAS talks to Richard Purcell about the challenges of running a large consultancy and how actuaries can get ahead and on the board

21 Pensions: A new, new world


Editorial In areas of growth, the right education is essential to seize the benefits, says Kelvin Chamunorwa


Letters Readers’ views on maths-oriented exams and public communication


President’s comment David Hare says it is vital actuaries recognise that what they do now will impact their future


Soapbox Chris Curry asks if there is any future for annuities after fundamental change to the UK retirement system

MORE CONTENT ONLINE Additional content can be found at


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Dan Mikulskis comments on defined contribution investment strategy in the wake of this year’s Budget and changes to the pensions market

24 Pensions: Multi-employer schemes David Davison looks at the need for change to legislation governing multiemployer pension schemes and the effects on charitable organisations

26 Environment: Liquid asset As the trend towards water as an investment asset grows Aled Jones and Michael Green explain how the actuarial profession could play a vital role

28 Pensions: Evolution or revolution? Costas Yiasoumi looks at the rise of medical underwriting in the pension risk transfer market

Eleanor Beamond-Pepler on 2052 – A Global Forecast for the Next Forty Years

34 Arts Helen Lau and Sharon Maguire review the Unlocking Lovelock exhibition

34 Puzzles Try the latest cryptic crossword and Mensa puzzles

37 Student Jessica Elkin advises on giving and receiving feedback diplomatically

38 Appointments and moves

ONLINE Risk: Great expectations Lars Koopman and Erwin Fransen asses the impact of modelling assumptions on the holistic balance sheet

Risk: Bubbling under the surface Kiran Kamath and the Emerging Risks Working Party explain why actuaries and senior management should care about emerging risks

WRITER OF THE MONTH Aled Jones and Michael Green win a £50 book token for their feature on water, courtesy of SIAS

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Business Critical As a self-respecting actuarial professional, you’ll no doubt want to keep up with the latest industry developments, people and society updates and professional news. But you’re also busy being an actuarial professional. Right? That’s why The Actuary’s weekly email alert brings you a handy round-up of only the most relevant news stories and comment, straight to your inbox, every Thursday.

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Opinion Editorial

Publisher 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 Sub-editors Kathryn Manning Caroline Taylor News editor Vivienne Russell +44 (0)20 7324 2788 News reporter Judith Ugwumadu +44 (0)20 7324 2794 Editorial assistant Tania Forrester Sales manager Chris Dooley +44 (0)20 7880 8545 Divisional director of digital and recruitment sales John Seaman +44 (0)20 7880 8541

Internet The Actuary: Staple Inn Actuarial Society: Institute and Faculty of Actuaries: Managing editor Sharon Maguire +44 (0)20 7880 6246 Editor Kelvin Chamunorwa Features editors Jeremy Lee, pensions, investment, ERM, banking Richard Purcell Richard Schneider, life, Solvency II, mortality/longevity, modelling and software Sonal Shah, GI, reinsurance, environment, careers (UK) Helen Lau, GI, reinsurance, environment, careers Contact: People/society news editor Yvonne Wan Student page editor Jessica Elkin Arts page

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Subscriptions For subscriptions from outside the actuarial profession, UK: £90 per annum/£8.50 per copy. Europe: £110 per annum, rest of the world: £130 per annum. Contact: Catherine Murray, The Institute and Faculty of Actuaries, Staple Inn, High Holborn, London WC1V 7QT. T +44 (0)20 7632 2100 E Students on actuarial science courses may join and they will receive The Actuary as part of their membership. Apply to: Membership Department, The Institute and Faculty of Actuaries, Maclaurin House, 18 Dublin Street, Edinburgh EH1 3PP. T +44 (0)131 240 1325 E Changes of address should inform the membership department as above. For delivery queries, contact: Rachel Young E 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 2014 All rights reserved ISSN 0960-457X

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Learn from the future In areas of growth, the right education is essential to seize the benefits, says Kelvin Chamunorwa Six of the 10 fastest growing economies in the world are in Africa, and the continent boasts the youngest population, projected to double to two billion by 2050. These statistics demonstrate the remarkable potential of Africa. Foreign investment into the continent is at a peak as institutional investors and multinational corporations take positions on the ground, in anticipation of attractive returns in the long term. The sentiment is of an Africa that is rising – and, with it, burgeoning consumer demand, including for insurance and savings products. Such tremendous growth presents challenges to be overcome. For me, these were aptly summed up by last month’s World Economic Forum on Africa. Its theme, ‘Forging inclusive growth, creating jobs’ highlighted how crucial it is to ensure that economic prosperity benefits all of Africa’s citizens. Its location, Abuja in Nigeria, a short distance from the school where 200 girls were abducted from their classrooms, was a poignant reminder of the threat of forces that oppose an educated youth. It is easy to take one’s education for granted, but I have been heartened by the engagement from readers who have written in with strong views of the mathematical content in our actuarial exams. I think the challenge extends beyond ensuring that the balance of mathematics and communication is right today. It requires a longer-term view to identify the lucrative areas in which actuaries should be influential in future, and then equipping ourselves with the knowledge and skills required to meet the growing need. For example, the recent UK Budget presented an overhaul to pensions, indicating the new direction of travel. The pensions articles this month explore some of the specific issues. The public will need education and support to make financial decisions for retirement. Actuaries will have a different role to play than they do today. I received a thought-provoking letter (pg. 6) from Trevor Llanwarne, the UK Government Actuary, where he looks at a topical area he thinks actuaries might contribute more, and uses this to make similar points. Please send in your answers to the questions that Trevor poses. I reassure you, there’s no pass mark.

“It requires a longerterm view to identify the lucrative areas in which actuaries should be influential in future”

Kelvin Chamunorwa Editor

FOLLOW US ON TWITTER @TheActuaryMag @ActuaryEditor


June 2014 • THE ACTUARY

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27/05/2014 17:18

Opinion Letters to the editor


Have your say online

More comments are posted online about news stories published on

Let’s talk about maths In Rizwan Majeed Khan’s letter (The Actuary, April 2014), he calls for more mathematically oriented exams. Over the past 20 years, I have built up some sympathy with this view – at least from the UK perspective – and believe a proper debate is needed. Mathematicians (including statisticians, operational research and computer scientists) who work in the field of ‘big data’, perhaps more technically labelled as ‘data analytics’ or ‘data science’, seem to have mathematical ability which is often stronger than that of many actuaries. And it seems to be these areas where there has been ‘big growth’ over the last decade (I hear stories of one mature organisation increasing numbers of data analysts from 30 to 200 people in two years and they are by no means alone). Yet outside some insurance applications on pricing, I have been told this is an “actuary-free” zone and I’m not aware of any material counterevidence. This is one of the reasons for suggesting a proper analysis, since actuaries have the potential and should, in my view, be positively getting into new highly valued and rewarding fields. To those who argue we need to have actuaries who can also communicate and write reports, I would agree. But I would ask for evidence that the essay style required in some of the exams, has done anything to make actuaries better at communicating than other mathematicians not taking actuarial exams. I am conscious of what a senior civil servant once said to me: “Actuaries come across as stuck in their ways and wanting to avoid change.” Consistent with this message, and on some scenarios for the long-term effects of changes in UK private sector pensions, there is clearly an option to keep the exams broadly as they are and simply

welcome the long-term goal of a future expectation of life and general insurance. While this option has a lot going for it, I know many do not share this goal including those, like me, who support the sentiment in Kelvin Chamunorwa’s April editorial that actuaries should critically inform wider business decisions. But outside insurance and DB pensions, what is the evidence on our reputation for this? The long-term future for actuaries in the profession’s home UK base is at a crossroads. Mr Khan’s letter seems to be a good trigger for reviewing options. We should ask what we expect actuaries of the future to need by way of mathematical ability, to ask what should be in the exams and ask how long it should take to qualify once ability is proven. We should ask what the best answers to these questions are in the competitive world for quality graduates while maintaining a proper sense of realism. Looking at the exams is a necessary step. Try answering the following questions to see how you measure up to the booming work for mathematicians: 1. Who was Thomas Bayes and what is he famous for? 2. What is the GLM? 3. What is boot strapping? 4. What sort of software is R and can you use it? 5. What are the four Vs? 6. In the context of this letter, what can fire hose deliver? 7. What is Nate Silver famous for? 8. Name the leading actress in Zero Dark Thirty and what is the relevance of this question? 9. What is the difference you might get in newspaper headlines if you issue a press release saying: (a) up to 100,000 people may die; or (b) the chances of there being more than 100,000 deaths is very small 10. Have you ever tweeted? Trevor Llanwarne 28 April Answers will be published in the next issue of The Actuary

MORE LETTERS ONLINE More letters are available online at


There is an old senior-common-room joke that while everyone else is carrying on a variety of discussions, the mathematicians are often off in the corner ‘Pi/ Lambda-ing’. That, I suggest, is what we see in the Society of Actuaries’ report discussed in Charles Cowling’s article (Dire states, The Actuary, April 2014). I suggest that this report deserves study by both American and British actuaries: it is a classic example of how not to communicate with the public. It fails to communicate or even suggest that the prime problem of private pension plans (the possibility of the plan sponsor going out of business leaving pensions unfunded and, therefore, undeliverable) does not exist in the same way for public plans. Except for some small political units, public employers are not going out of business; more precisely, if they do we will have more to worry about than pensions. We need to address the problem up to, but not beyond, the following: The major problem which can, and often in the US does, arise in public plans, is that there is no long-term balance between inflow and outflow. If total outflow valued on an open-group basis is not balanced by future expected contribution inflow, we obviously face serious trouble: either increased contributions or a Detroit-style collapse. It is not true, however, that some magic actuarial principle up in the sky suggests that accrued liabilities however defined must be funded in the same way, and for the same reasons, as in a private plan. “Pension obligations should be funded … for employees over their public service career” says the report, without explaining what this means or even noticing that in many public plans there are unfunded obligations in place for employees who are already on pension. Elsewhere it tells us “intergenerational equity [requires] fully funding pension benefits over the average future service period of public employees”. Should public plans be brought to full funding at some future point so that contributions fall significantly after that point? If so, why? Cui bono? I understand that if this is not done in a private plan, future retirees may lose out; there is no such problem in a public plan if it is in the kind of long-term balance described above. It is worth noting that if we have a major political disaster, even any public plans which are well enough funded to gladden the SoA’s heart will be swept away. The pre-funding which produced that happy situation will be wasted. Intergenerational equity? I suggest not. The report notes one member dissented from the Pi/Lambda-ing, but it is not clear why. I think the profession and the general reader should be told. Having recently promoted myself from retired SoA member to former SoA member for reasons some of which are obvious from the above, I guess I now fall into the general-reader category. Brian A Jones 7 May

The editor welcomes readers’ letters but reserves the right to edit them for publication. Please email The deadline for receiving letters for the July issue is 18 June 2014.

THE ACTUARY • June 2014

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Opinion President’s comment

David Hare is the president of the Institute and Faculty of Actuaries


The final curtain In this my last article as president of the IFoA I want to reflect on what we have achieved over the past 12 months and highlight some of the issues that have emerged that we will continue to work on if we are to remain relevant in this ever-changing world. At the start of my presidential term, one of my primary aims has been to raise awareness of the relevance of the IFoA, of actuaries, and the relevance of the world on the work of the IFoA and its members. Supported by a committed and enthusiastic network of some 3,000 volunteers, stretching from Birmingham to Beijing, we have taken positive steps forward to raise the profile of the IFoA and the offering we provide our members no matter where they are located. What is clear though is that this is just the start. We need to continue our work to make the IFoA and our high quality qualifications more relevant to our members and to the environments within which they work. As I said in the March issue of The Actuary: “I want us to experience that being a member of the IFoA is helpful to our careers, the work that we do and the issues we are grappling with.” If we continue along this path, we will succeed in reaching this goal – in ramping up our relevance! Great strides have been made in our public affairs work with significant contributions to the pensions and Scottish independence debates at home, and we continue to work closely with our sister organisations around the globe to promote the development of actuaries and actuarial science. No review of the past 12 months would be complete without mention of the Certified Actuarial Analyst (CAA) qualification. I am extremely proud of the work we have done in this area, demonstrating that the IFoA is an innovative and forward-thinking organisation that is leading the way in responding to changes in the market. As a public interest body we are providing real thought leadership through our research and links with universities around the world. A wide variety of themes is being researched and key collaborative projects have been established with external partners. The Actuarial Research Centre (ARC), now in its second year, is sponsoring five PhD students to deliver academic research that has

David Hare says it is vital actuaries recognise that what they do now will affect their future commercial application. In addition, through new initiatives such as the Sir Edward Johnstone prize for the best graduating student in actuarial science in South East Asia, we aim to continue to attract, recognise and reward the brightest students coming through our ranks. Being president is hard work. It has been a truly fantastic, enjoyable yet exhausting experience, which would not have been possible without the understanding and support of my family, friends and colleagues. I have met actuaries at all stages of their careers and I have been particularly struck by the enthusiasm of students and new qualifiers. As president, I get to meet people I would never usually see. I have met senior regulators both in the UK and overseas, and attended functions that I normally would not have the pleasure of attending. Being president is not a one-man show – it’s a team effort. So I would like to thank all those on Council who elected me, the current Council and the executive staff who have supported me, and the loyal network of committed volunteers who dedicate their valuable time to the IFoA.

Lastly, at a recent event, I found myself in conversation with a senior executive from a major financial services organisation. He was telling me, with pride, how his firm’s financial strength was continuing to benefit from risk management decisions made 20 years ago. It reminded me of the work I did in the early 1990s on the then Faculty of Actuaries Bonus and Valuation Research Group. We were undertaking stochastic modelling of withprofits offices and experimenting with various new business and bonus rate scenarios. We coined the phrase the ‘flywheel effect’ to refer to how the outcomes in later years of many of the projections were dominated by the nature and amount of the liabilities assumed to be taken on in the early years. So you see, what you do today really can affect things years in the future. As with the presidency, I hope I have sown the seeds of the importance of being relevant. I leave you with a question – what decisions should you, your firm or the IFoA be making now that, in 20 years’ time, will enable others to reap the benefits that you or we will have sown? a

“I have been particularly struck by the enthusiasm of students and new qualifiers”

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27/05/2014 17:19

Opinion Soapbox


A guide to freedom and choice? The announcement made by George Osborne in the 2014 UK Budget, introducing freedom and choice for retirement incomes from Defined Contribution (DC) pension funds, will lead to fundamental changes for individuals, employers and for the pensions industry. In just five years, the UK retirement system will have been completely turned on its head. Until 2010 it was compulsory for every DC pension to be converted into an annuity by age 75. 2011 saw the removal of this compulsion. But in reality annuities remained the only option for the vast majority of people taking income from their DC pension savings, unless they had very small pots or could secure an income from other sources of £20,000 a year or more. From April next year this is all expected to change again, particularly for this majority as they will, in theory, be free to take their money however they wish. It is certainly a very popular move with the public. But is it a good thing? As with many things, especially in the pensions world, there is not a simple answer. Flexibility is not inherently a bad thing. Pensions Policy Institute research in recent years has highlighted how individual needs tend to fluctuate during retirement, suggesting that some flexibility in income and assets can help individuals cope with the changes they encounter as they age. But the challenge for individuals now is twofold. What products will individuals need, and want, as alternatives to annuities? And how will they choose which is right for them? This is why perhaps the most important aspect of the announcement made in the Budget was the belated recognition of the importance of people being helped to make decisions. Be it ‘advice’ in the regulated sense or more generic ‘guidance’, people will need help. Ideally this should be much earlier than the point at which they have to rely on their pension fund for income to live on, and to cover much more than just how to


Chris Curry asks if there is any future for annuities after fundamental change to the UK retirement system

use their fund. For example, it should also cover other assets and potential sources of income, such as housing wealth or working until older ages. Once the new system is in place, there will undoubtedly continue to be debate about whether individuals are better off or worse off than before. But how can you determine a good outcome from a bad outcome? And what is good or bad might be different depending on whether you look at it from the viewpoint of an individual or society. For example, consider the level of retirement income. If an individual decides to take their pension fund and place it on deposit, it is likely overall incomes will be lower. But if incomes are held in higher returning investments than annuities, income could increase (albeit with greater risk). Given the increasing length of retirement, holding at least some riskier assets for longer may not be such a bad idea. Is retirement income the only consideration in determining whether outcomes are good or

bad? Would the individual holding all their pension money in a building society be happier than someone with an annuity, even if their income was lower? I suspect the answer to these questions might vary significantly between individuals, with some valuing the security of an annuity but others enjoying the flexibility – at least while their income lasts. So much will depend on what people actually do with the freedom and choice that they have. It seems possible that there will still be a future for annuities – perhaps just at older ages than they are currently purchased today. But a lot will depend on how the ‘process’ is designed, and what the effective default is. Currently the default is purchasing an annuity with your current provider, which has proved to be very powerful. Which brings us back to the guidance given to individuals – it really is the most important part of the puzzle. a

“What products will individuals need, and want, as alternatives to annuities? And how will they choose which is right for them?”

Chris Curry is director of the Pensions Policy Institute

THE ACTUARY • June 2014

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27/05/2014 17:20


Bowling tournament Palace Supe Superbowl, Elephant and C Castle Shopping C Centre, L London SE 6TE SE1 6.30pm start


It’s that time of year again... Get your bowling shoes ready for the annual SIAS bowling tournament. The “SIAS Bowling Champions 2014” title is up for grabs, so get practising because the competition will be tough! Teams of three people should enter to compete. If you are unable to form a team of three people we can allocate you to one. Prizes will be awarded to first, second and third placed teams and best team name. All standards are welcome, and there is even a prize for the worst team! Tickets are now available, priced at £13 for SIAS members and £18 for non-SIAS members and include refreshments. Places are limited, so please ensure you apply early in order to guarantee your place. SIAS will not offer refunds on tickets/entry fees after the payment deadline date. Refunds may be offered prior to the payment deadline date if we are able to re-sell the ticket/entry fee. Where a non-SIAS member ticket/fee is sold on to a SIAS member, only the SIAS member price will be returned. All refunds will be at the discretion of the SIAS committee.


Risk factor portfolio construction Fred Vosvenieks and Stuart Reynolds, Milliman Staple Inn Hall, High Holborn, London WC1V 7QJ 5.30pm start

WEDNESDAY 9 JULY Staple Inn Hall, High Holborn, London WC1V 7QJ Time TBC


In recent years, risk factor based investment frameworks have started to gain traction in terms of academic research and practical application. Such frameworks are based on the idea that asset returns can potentially be decomposed into different ‘risk factor’ building blocks. In this talk we will answer the question ‘What is a risk factor?’, provide examples, and look at how they are being used to improve portfolio construction. We will introduce a possible methodology for modelling risk factor-driven asset returns and present this alongside a series of use cases. Refreshments will be served from 5.30pm and the talk will start promptly at 6.00pm. There is no need to register in advance for this meeting and non-members are welcome. There will be live tweeting available via #SIASJul14 during the talk – please do get involved with any comments and questions for the speakers. VOLUNTEER OPPORTUNITY

Throughout June SIAS will be running a number of sessions in inner-city London schools aimed at increasing awareness of the actuarial profession and aiding pupils’ development and progression into the world of work. These ‘Introduction to being an actuary’ sessions are run in conjunction with The Brokerage Citylink, an independent charity providing young people in London with a ‘pathway’ of opportunities into employment. Following these school sessions, we will be running a half-day workshop at Staple Inn on 9 July. This workshop will involve a more in-depth presentation to the students on the work of actuaries followed by a business game that will give the students a taste of the day-to-day challenges faced by actuaries. We have had much interest from volunteers for the school sessions, but we are now looking for more to help out during the 9 July workshop. It would include presenting to the students on your experiences followed by networking with the students as the business game takes place. This is an excellent opportunity for actuaries to hone their presentation skills at the same time as giving something back to the community. If you are interested in helping out at the upcoming workshop please email Mark and Katie at


Boat party Temple Pier

MORE EVENTS ONLINE For details of events, visit


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The summer event of the year is fast approaching – the SIAS boat party! The Tiki gods request your presence at our Hawaiian Luau themed gathering. Please come aboard for an evening of grass skirts, Hawaiian shirts and dancing as we sail down the Thames. Further details and tickets will be available on 30 June.

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

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28/05/2014 09:50


Upfront Office move

Opinion CEO’s comment Registration has now opened for the first CAA exams. Derek Cribb explains the benefits

Qualification for a new era Derek Cribb is the chief executive of the Institute and Faculty of Actuaries

IFoA. Towards the end of May we opened registration for the first Certified Actuarial Analyst (CAA) exam session, which takes place in August. This is the first new membership qualification that the IFoA has offered in many years, and it is hoped that it will help to extend actuarial knowledge to those professionals working alongside actuaries and in wider financial services in technical and analytical roles. Why is the CAA relevant to you? Well, imagine how much easier it would be for you to do your job if those across your business and directly supporting you had a greater understanding of the work that you do. For example, you may rely on non-actuarial data analytics teams to provide you with statistics, or technical administrative support to undertake spreadsheet modelling. The CAA is targeted specifically at this group. There is another key advantage in equipping those who work within an actuarial or analytical environment, and rely on a technical and analytical skill set, with a professional qualification. As members of the IFoA, CAAs and Student Actuarial Analysts (SAAs) are brought within the IFoA’s regulatory framework, including the Actuaries’ Code, continuing professional development, professionalism requirements and our Disciplinary Scheme. This goes to the heart of the IFoA’s royal charter, where we operate in the public interest by helping to assure the quality of work undertaken by our members and by publicising the benefits of actuarial science around the globe. Registration for the first CAA exam session is open until 18 July, with the first Module 0 exam in early August. I truly hope that, as an IFoA member, you can get behind the CAA and promote it across your business. I urge you to take this opportunity to consider your nonactuarial colleagues and friends and whether the CAA is relevant to them and their teams. Candidates sit Module 0, the entry test, as non-members so they can see if it is going to meet their technical and professional needs. They too can benefit from a relevant, high-quality global membership body supporting them throughout their professional careers. If there is anything we can do to help you and your organisation’s consideration of the CAA, please email us or visit our website for more details. Email



I write this at a very exciting time for the

On 16 June, our Edinburgh office will be moving to its new home at Level 2, Exchange Crescent, 7 Conference Square, Edinburgh EH3 8RA. Our telephone numbers and email addresses will remain the same. As in London, the Edinburgh office will have a members’ lounge, which will offer relocated library resources, private booths, open tables for group work, plus tea and coffee-making facilities. Please contact libraries@actuaries. for more information. The members’ lounge is available for all members. We also now have a Beijing office, where our China and South East Asia representative, Wen Li, is based. The address is: 6/F, Tower 2, Prosper Centre, 5 Guanghua Road, Chaoyang District, Beijing, China 100020 We look forward to welcoming you soon!

Regional resumé The IFoA has a network of regional societies throughout the UK, providing events and networking opportunities for members in their local area. Each regional society is run by IFoA volunteers, who organise a range of events. These can include technical updates and professionalism talks, social events and annual dinners. The technical sessions provide an opportunity for continuing professional development as well as to find out about new topics. The social events give members a chance to network in a relaxed environment. If you are based outside London or Edinburgh, or due to travel on business, why not see if there is a local regional society in the area and go along to an event. Alternatively, if you would like to volunteer to set up a new group in your area, or offer to be a speaker at an existing group, please visit the volunteer vacancies web page for more information. On the IFoA website, you can find details of: ● our current regional actuarial societies; ● regional events and networking opportunities; ● who to contact if you are travelling to a region and would like to attend an event; ● IFoA support for members wanting to start a new regional group or society. Visit pages/regional-actuarial-activity or email Tess Joyce, regions leader, at tess.joyce@ for more details

THE ACTUARY • June 2014

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27/05/2014 17:20

Have you thought about CERA? Since the development of this highly regarded actuarial qualification in 2007, the number of chartered enterprise risk actuaries (CERAs) has grown steadily and now stands at just over 2,000 worldwide. CERA is a globally recognised and accredited qualification that was initially established in the United States by the Society of Actuaries in 2007. In 2009, 14 national associations from 12 countries joined to create the global CERA qualification, which addressed the growing need for highly qualified risk professionals, especially in the finance sector. The CERA qualification encompasses a world-class curriculum that combines actuarial

science with the theoretical, practical and professional principles of enterprise risk management (ERM). The aim of the curriculum is to instil in successful candidates the key principles underlying the implementation and application of ERM within an organisation, including governance and process as well as quantitative methods of risk measurement and modelling. Thanks to their training and experience, a CERA can assess and manage the entire risk spectrum of an organisation, including financial, operational and strategic risk and can provide a 360-degree view of an organisation’s risk profile.

something in which financial services firms have a great deal of experience. Stress testing and reverse stress testing are also explicitly covered for the first time – another familiar area for many actuaries. The guidance is wide-ranging, with many questions being raised for boards to consider. The IFoA working party is taking forward a range of activities in response to the proposed guidance. These include considering research with chief financial officers and chief risk officers to assess the expected impact and highlighting areas where most change is likely to be required, preparing material, outlining how actuaries can help firms, and planning events both within the profession and with wider audiences. An overall objective of the working party is to help actuaries make the most of this chance to expand their impact and influence.

Working party takes on FRC risk reporting The IFoA has established a new working party, the FRC and Risk Reporting Working Party, to develop the profession’s response to upcoming changes in the Financial Reporting Council’s guidance to directors on risk management and internal control, commonly referred to as the Turnbull guidance. The FRC’s recent consultation on changes ended in January, with the IFoA submitting a joint response with the Institute of Risk Management that was broadly supportive. The final guidance is expected to be issued during the summer, with the new guidance becoming effective for financial reporting years commencing on or after 1 October 2014. The changes will represent a material enhancement to guidance on risk management and may require improvements in risk management at many of the companies that fall within the scope of the new guidance. This presents an exciting opportunity for actuaries to help all listed companies – not just those in the financial services sector – to meet the challenges that will arise. The new guidance deals with a range of topics, including risk management, internal control and the going concern basis for accounting. Much about these topics was already covered by the existing Turnbull guidance, but the proposed new guidance looks at the risk management topics in more depth.


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CERAs are well qualified for more strategic risk management positions, such as risk analyst, risk manager or chief risk officer, and are contributing in a broad range of fields, including life insurance, general insurance, banking, asset management, pension funds, other financial services, technology, consulting, energy, transportation and healthcare. A CERA qualification really can take you anywhere. Find out about how to join the CERA elite by visiting www. cera

Reminder: time to update your CPD records In particular, it provides more detail on the expectations of firms and on the issues that boards should consider as part of ongoing risk management and as part of their annual review of these processes. Boards will be expected to identify and assess the principal risks that companies face, with a more explicit expectation that firms will evaluate the likelihood of risks and their potential impact. This quantification is clearly a core area of competence for actuaries and

As the continuing professional development (CPD) year end is nearly upon us, we would like to remind members to ensure that their online CPD records are updated by 31 July for all CPD activity undertaken between 1 July 2013 and 30 June 2014. If you are still looking to make up your hours, why don’t you visit our archive of recorded material, where you can top up your CPD by listening to or viewing one of our events? You can access the material at

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What you value most about your membership The 400 Club, a volunteer feedback group that provides a representative view of the IFoA’s membership on a variety of topics, was recently asked to rate what member benefits it values most highly. The results have proven interesting and will help us prioritise the services we develop further and which need more promotion. Below is a summary of the results based on the themes from the 2011 strategy. ● Professional recognition: 97% valued the professional recognition that the IFoA provides; some feel that it is the most respected and reputable actuarial body in the world and that it provides international mobility. The challenge to this is achieving greater recognition of the qualification outside the actuarial community itself. ● Regulation: while many respondents mentioned the challenges that regulation brings, 90% of respondents valued this aspect of their membership. Maintaining standards underpins the integrity of the brand and makes members recognisable as experts. The challenge is to ensure that regulation is proportionate and does not make actuaries more expensive compared with other professional groups. ● Syllabus and continuing professional development (CPD): the ability and desire to learn throughout an actuary’s career is of significant value – this is especially true of the qualification syllabus (valued by 94% ) but also for CPD opportunities (valued by 81% ). There was consensus that the rigour around the exam process helps actuaries develop a broader way of thinking and approaching problem solving. There was recognition that the IFoA has worked hard to improve the quality of CPD events as well as access through the online archive. The challenge for both areas is ensuring relevance so that members are continually progressing. ● Public affairs: 70% valued our newest area. In fact, members felt that public affairs was a very important activity for the IFoA. Many conceded that it is not easy to achieve a voice in a short time and therefore we need to keep improving. Other valued benefits include: ● topic-based newsletters ( 79%). ● The Actuary magazine (85%) ● volunteering opportunities (81%). Full survey results are available. To view log in at or contact Memoria Lewis:


Three generations of actuaries: John Wallace FFA, with son-in-law Alistair Low FFA and granddaughter Katie Low FFA

Family of actuaries celebrate longevity By Katie Low My Grandad, John Galloway Wallace, OBE, is due to turn 100 next month. Born on the eve of the First World War and qualified as a Fellow of the Faculty early in the Second World War, he is a shining example of why pension schemes have found themselves with such deficits – when he was born, average life expectancy was about 50 and he is double that! But while others bemoan the high costs of providing pensions to the older generations, I say we should remember to celebrate how wonderful it is that his four children, 10 grandchildren and 20 great grandchildren have enjoyed and are still enjoying his intelligence, subtle wit and wry smile, not to mention his stories. As he has been telling me since I first started studying to be an actuary, Grandad qualified in the last set of exams before they were suspended for the Second World War. He then went on to see Europe through the eyes of the army, having omitted to mention his qualification on his forms to join up, as actuaries were a protected profession. In his heart, he remained an actuary and took the chance to look up actuaries across Europe, making great links in Belgium and

Italy. In Belgium he found that many actuarial textbooks had been destroyed in the war, and arranged for the Faculty to send some over. However, building links was not so successful on one occasion in Italy when, wearing full British Army uniform, he knocked on the door of a prominent actuary and professor. Next thing a car was heard speeding away and he was told the gentleman was not at home. Turns out the professor thought he was about to be arrested! Back at home after the war, he became heavily involved with the Faculty, becoming president in 1973. He continued with his international focus and made a big effort to build links internationally, particularly in South Africa. Over the years, his life has contained much to be proud of – chief executive of Scottish Life, president of the Faculty of Actuaries, president of the Chartered Institute of Insurers, an OBE for services to the Sick Kids Hospital and the health service in Edinburgh, not to mention climbing all the Munros and Corbetts. The whole family is immensely proud of his long life, contributing so much to family life, the actuarial world and society in general. Happy 100th, Grandad – here’s to longevity!

THE ACTUARY • June 2014

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IFoA AGM and presidential address

Representing us? Many members sit on external committees and speak at events on behalf of the organisations for which they work and in their own name. However, sometimes, members who take on these roles are actually viewed by the external body as representing the IFoA and our collective views. It is really important for members to find out which hat they are being asked to wear and also to consider which hat others may perceive them as wearing. If you are being asked to share the IFoA’s views in instances such as on an external committee, speaking at an event, lecturing at a university or in discussions with a regulator, a trade body or a member of the press, please let us know. This will allow our public affairs team to co-ordinate our activities and to support you with well-thought-out briefing materials. If you ever have to answer a question that has not been anticipated, please alert the public affairs team. This will allow the team to bridge that gap in the briefing materials in future. Section 5 of our volunteer induction pack (VIP) sets out why we need to be aware of these activities and highlights help we can offer. We are planning training to help members acting on our behalf. If you represent the IFoA, please contact View the VIP at

Thank you to our volunteers As a token of appreciation for all their hard work and dedication, the IFoA is inviting all current volunteers for drinks and canapés at one of its annual volunteer recognition parties. The dates of this year’s parties are: ● Edinburgh: 26 June; ● London: 10 July; ● Birmingham: 10 November. The IFoA recently sent out invitations for these events, so if you are involved in activities for the IFoA and are going to be in one of these cities on these dates, please do book a place as places are limited. If you are a current volunteer, but haven’t received an e-invitation, please email Debbie Atkins, head of volunteer engagement. Email If you are interested in volunteering for the IFoA, please visit members/pages/volunteering-ifoa

The AGM and presidential address takes place on Monday 30 June at Staple Inn Hall, starting 4pm with refreshments. An AGM notice is available at: Following the close of the formal business at approximately 5.30pm, there will be a short break before Nick Salter gives his presidential address at 6pm. Details about registering for these events will be circulated shortly.

EVENTS AND CONFERENCES 2014 General Insurance Pricing Seminar 10 June Hilton Paddington Hotel, London For more information, visit:

Model Documentation Workshop 11 June Staple Inn, London For further information and to book, visit:

NED event: Challenges facing remuneration committees 16 June The theme of this discussion will be centred on the challenges facing


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non-executive directors (NEDs) who ● screening of the England v Uruguay World Cup match and find themselves as members of a networking event. remuneration committee in For more information, visit: today’s climate. For more information, visit: Reserving Seminar 2014 25 June De Vere – West One, London

Pensions Conference 2014 18-20 June Radisson Blu

For further information and to book, visit:

Edwardian Heathrow Hotel If you put one date in your CPD diary Life Taxation Workshop this year, make sure it is for the 25 June Staple Inn Hall, London annual Pensions Conference. This event is aimed at actuaries and other insurance professionals who Highlights include: are involved in life insurance ● a defined contributions-focused financial reporting and are exposed session in each workshop group; to the impact of tax on financial ● two hours of professional skills CPD available; results in both the modelling arena

and from a business planning perspective. For further information, visit:

Changes to the way you can attend conferences: In order to meet members’ needs we are being more flexible in the way you can attend a conference – be it one day, a dinner and a day or the entire conference! So if you would like to go to the Risk and Investment or the Pensions conference but do not have 2.5 days that you can spare – please join us for a day. The conferences are in easy to access locations: Glasgow and Heathrow.

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News People & Society

If you have any newsworthy items for these pages please email

Sylvester’s 200year legacy This year is the 200th anniversary of the birth of James Joseph Sylvester. Despite the restrictions of being Jewish in his era, Sylvester created beautiful mathematics. He developed the theory of algebraic invariants, matrix theory and revolutionised 19th century mathematics. His headmaster was so impressed with his mathematical ability aged 11, that he arranged for the professor of maths at the Royal Military Academy to examine him in algebra. As Jewish people were barred from receiving a degree at this time, he joined University College London – the first English university to be free from religious restrictions. Later, he went to Cambridge and would have been Second Wrangler had he been able to receive a degree. He took up a post at the University of Virginia, but after experiencing antisemitism and violence, returned to London to become an actuary and a barrister. He was elected a Fellow of the Royal Society at 25 years old. He was instrumental in founding the Institute of Actuaries in 1848 and was vice president for five years. He became professor of maths at the Royal Military Academy. When the John Hopkins University in Baltimore was founded, he was invited to be its first professor of maths. There he founded the prestigious American Journal of Mathematics. Finally he was appointed the Savillian Professor of Geometry at Oxford when he was 69. Following his death, aged 82, moves were made to establish the Sylvester Medal for research into pure mathematics, to be awarded under the trusteeship of the Royal Society.

Demolition men strike down rivals By Bill Harris and Martin Miles The Worshipful Company of Actuaries held its annual ten-pin bowling event at the All Star Lanes in Holborn, London, on 11 March 2014. Eight teams competed for the trophy, including recent winners ‘Snakes on a lane’ from Barnett Waddingham and ‘Size 16 balls’ from Swiss Re. But it was ‘Three blind demolition men” who demolished the field. Their team consisted of Bill Harris and James Teasdale from Exactval, ably supported by Charles Cowling, the current Master of the Company, and they were clear winners with a

combined score of 388. The other seven teams were very closely packed, with ‘More strikes than the London Underground’ (315) just edging out ‘Great bowls of fire’ (312) to take the silver medal. Other teams competing included ‘Lucky strike’, ‘The bowling stones’ and ‘TW strikers’. Top individual scorers were Bill Harris (157), Darren Charles (130) and James Teasdale (125). For the first time there was a prize for the top individual and Bill was presented with a rare WCA-branded ‘Poundland’ biro which he will surely treasure for some time.

A return to form for the ‘monthly marathoner’ By Andrew O’Brien The Brighton marathon, the UK’s second largest after London, was my first British marathon, coming just two weeks after my last race in Georgia. After all the travelling I’ve done over the past 10 months, a short jaunt by train proved to be a nice change of pace. The very high level of air pollution in the South East – caused by a perfect storm of dust from the Sahara and emissions from Europe mixing with British pollution – had all would-be marathoners rather vexed. But this cleared away in the nick of time, leaving runners to fret over the rain and strong winds forecast. Paula Radcliffe started the race, high-fiving hundreds of us runners as we poured across the start line. Setting


off under leaden skies at a cool nine degrees, we headed off into the centre of town before advancing east along the coast. There are a few miles where you go inland but otherwise it’s a pleasant route and mostly flat. I joined a four hour pace group led by a gentleman of advanced years, adorned in a luminous orange vest and bandana. This was the first time I’d tried such an alliance and most of the race was a blur to me as I remained firmly focused on the pace maker. Running as part of a pace group went quite smoothly. I’m grateful for the camaraderie they provided and I’m sure this helped spur me on. During the middle

section of the race we had the wind in our faces, blowing from the south west at a brisk 14 miles an hour but the rain managed to hold off. And at times, the course became narrow and we all got squashed together, although this did allow me to use the other runners as wind breaks. We had a strong tail wind for the last five miles and I decided to break away from the pace group at mile 24 and ran by myself through a massed corridor of thousands of spectators along the promenade. My shin held up and the anxiety that had plagued me in Atlanta didn’t return. I felt confident throughout and finished the race quite strongly, crossing the finish line close to Brighton Pier in 3 hours and 54 minutes, heralding a return to form for me. To donate, please visit For updates, visit www.12in12for

THE ACTUARY • June 2014

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Born to run the Brathay 10 in 10 By Charles Cowling I can now honestly say that I have run in one of the world’s toughest road races – the Brathay 10in10. This is 10 marathons in 10 days over a demanding Lake District course. Having only run one marathon in my life – even in training – I did not know how I was possibly going to manage 10 marathons in 10 consecutive days over such an arduous course, particularly with a painful calf muscle injury. I had completed over 1,000 miles in training, which was tough, particularly during the winter weather. But I was absolutely determined to beat this one. There were dark moments along the way. But we had a fabulous support team led by the wonderful Aly Knowles and all the messages of encouragement (and the generous donations) that continued to flood in kept me going when it might have been easier to quit. There was one song in particular that kept leaping in to my head during the darker times – and some of the sheep even got to hear a strange rendition from this passing excuse for an athlete: When you walk through a storm hold your head up high and don’t be afraid of the dark At the end of the storm there’s a golden sky and the sweet silver song of a lark Walk on through the wind, walk on through the rain, though your dreams be tossed and blown

h Walk on, walk on with hope in your heart and you’ll never walk alone, you’ll never walk alone. I achieved something I shall always remember with pride and along the way I met some very special people. I finished last of the 14 runners who competed in this epic challenge, but I only ever wanted to complete the event – the time and position were ir irrelevant. The final results can be seen at and the video

updates (including my tearful finish) can be seen at A big thank you to all who have sponsored me very generously already. It really helped to motivate me through some difficult (and painful) times. Your continued support has been hugely appreciated as I have been attempting to raise funds for two fantastic and very needy causes: ● The Brathay Trust is a fabulous charity with a mission to improve the life chances of disadvantaged and vulnerable children and young people. It’s a charity that makes a real improvement and it has the research to prove what a difference it makes, not only t to the children but also t their families to and communities (see ● The Udaan School in Mumbai offers children life-changing opportunities. It provides an education that would oth otherwise not be available. opportu Without the opportunities provided by the Udaan School the boys and girls would end up on the streets or in very low-paid hard manual work or married off by the age of 13. The school provides a chance for these children to realise their dreams and leads to jobs and career opportunities, such as teaching, that would be otherwise impossible. T The full day-to-day report by Charles Co Cowling can be found on the actuary we website:

C Class half full



Congratulations to Gregory Ardan (Hymans Robertson) and fiancée Claire Dudley (Towers Watson), who got married on 26 April 2014 in Sussex. Greg and Claire met at a 2009 professionalism course for new qualifieds.

Congratulations to Maggie Gwaze (AIA New Zealand) and Richard on the birth of their daughter, Sienna Thandiwe McIntosh on 2 February 2014.


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Congratulations to Owen Hewlett (Towers Watson) and his wife Samantha, on the birth of their son Hector on 7 April. His big sisters Sidney and Georgina have been super excited.

Deaths Mr Michael GWYN died recently, aged 61. He became a Fellow of the Institute in 1980.

T The Charitable Trust of the Worshipful A Actuary of Companies (CACT) has entered into a three-year partnership with the Royal Institution to expand the Ri’s Mathematical Masterclasses. These give talented youngsters age 15 to 18 enhanced m mathematical teaching. The funding from the CA CACT will double the reach of the programme across London from 400 to 800 students per annum. The Mathematical Masterclasses have been running for over 30 years and a number of actuaries have already benefited from the programme.

We would be delighted to hear from you if you have any newsworthy items for these pages. Please contact Yvonne Wan at

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Aviva highlights rise in insurance fraud

Insurers are coping with climate change risks, says S&P Insurers and reinsurers have so far coped well with climate change, Standard and Poor’s has said, but the ratings agency believes a sudden spike in the frequency and severity of weather events could test the industry. In a report, S&P concluded that the re/insurance industry was well prepared to deal with possible gradual increases in extreme weather events, even if they were not linked to climate change. “We don’t expect climate change per se to have a ratings impact over the next three to five years, unless it causes a sudden increase in the number and magnitude of extreme events,” the report stated. It added the ratings impact of weather-related natural catastrophes had so far been limited as the industry had comfortably absorbed the losses. This was attributed to risk diversification, as well as their effective underwriting skills and risk mitigation practices. S&P credit analyst Miroslav Petkov said: “Our view is that climate change is another factor contributing to the challenges of modelling extreme weather events.” See more at:

Solvency II: ‘some GIs fail to address actuarial demands’ All general insurers must have access to appropriately skilled and technical actuarial resources to make sure there is a full understanding of Solvency II requirements before time runs out, consultants OAC have warned. Key to the new Solvency II regime is the requirement for general insurers to have an actuarial function to help them assess their financial resources and solvency capital requirements as well as help with the implementation of a risk management system. However, some firms have been slow to understand what those requirements are and to implement them, Christopher Critchlow, a consultant actuary at OAC told The Actuary. He said some insurers had gone on to implement the requirements but on an “incorrect basis”. Those insurers that have been slow to act or are proceeding incorrectly could be subject to further review and scrutiny by the Prudential Regulatory Authority and European Insurance and Occupational Pensions Authority, Critchlow said. He added that general insurers had just over six months to implement a “robust” risk management system, fundamental to the success of an insurance business. Critchlow said: “I should imagine by the latter end of 2014 they need to be producing their Own Risk and Solvency Assessments and if they are not coming out in the manner that the regulators were expecting they will be reviewed.” See more at:


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Third-party insurance fraud perpetrated by non-customers and organised gangs is on the rise, insurer Aviva has claimed. The firm published data on fraud detection, highlighting a 19% rise in fraudulent claims in 2013 compared with the previous year. Of particular concern was the rise in third-party claims – that is claims by people who are not insured with Aviva but who are making a claim against an Aviva customer. Tom Gardiner, head of fraud at Aviva, said: “We are witnessing a trend towards third-party, injury and organised fraud. In 2013, we identified one-in-nine third-party injury claims.” Aviva said it was currently investigating 5,500 suspicious injury claims linked to known fraud rings, a 20% rise on the number investigated last year. Its figures also showed that a majority (54%) of bogus claims were for motor injury, which Aviva cited as the most common type of fraud in the UK. More than 50% of fraudulent motor injury claims were the result of so-called ‘cash for crash’ scams, where fraudsters stage car smashes, Aviva said. See more at:



Drop in household insurance, BIBA index shows

Household insurance prices fell by around 5.5% in the first quarter of 2014, despite large bills incurred by insurers as a result of the recent floods across Britain, according to a British Insurance Brokers’ Association (BIBA) index. The index, which is produced by BIBA and Acturis, an insurance IT service provider, showed that the price of average consumer policies dropped 5.5% compared with the beginning of 2013. The index also suggested that motor insurance premiums continued to fall by around 5.5% in the first quarter of 2014. Steve White, BIBA’s chief executive, said: “It is positive news for consumers. Premiums are continuing to drop because of progress that the industry has made with reducing uninsured driving and the reforms to the legal system, which have reduced the cost of claims.

“Insurance brokers are telling us that strong competition is also helping to drive the reduction.” The Competition Commission is investigating the £11bn motor insurance market after it concluded that the market was distorted and premiums were too high. Additionally, the index showed that premiums for small-to-mediumsized enterprises remained steady when comparing quarter the first quarter of 2014 with the same period last year. Within this it found that commercial vehicle premiums fell by 2% and commercial package premiums grew by around 3%. Theo Duchen, co-chief executive of Acturis, observed that premiums in the commercial market remained fairly flat. “Premiums also appear not to have been impacted by any major claims events recently, which helps to maintain premium levels,’ he said. See more at:

MORE GI NEWS ONLINE For further GI news, visit


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News Industry

Hymans Robertson finds cost savings in local government pensions

Single-tier state pension passed into law

IFoA: majority of pensioners won’t hit social care cap

A review of the Local Government Pension Scheme by actuaries Hymans Robertson has concluded that as much as £660m a year could be saved through reforms to its asset management regime, including greater use of common investment vehicles.

The Pensions Bill has now become law, bringing the introduction of a simple, single flat-rate state pension “a step closer”, the Department for Work and Pensions said. From April 2016, the flat-rate state pension will be set above the basic level of meanstested support, currently £148.35 per week.

Only a small minority of elderly men and women will benefit from the government’s cap on the costs of social care, the Institute and Faculty of Actuaries has warned. A £72,000 cap on an individual’s lifetime care costs is set to be introduced from 2016, but an IFoA analysis found this would only kick in for those individuals facing the highest care costs. It would also not offset or replace savings as a key means of funding care. Report author Thomas Kenny, said: “Anyone who is expecting that the cap will pay for care is in for a shock. The care cap is there to protect against catastrophic care costs and we estimate that few people entering care aged 85 years will reach it.” The IFoA recommends some regulatory and tax changes to help develop the use of pensions for long-term care provision. It also suggests that good information and advice are needed to combat diverse care needs and complex cost structures. Kenny continued: “We also found there is no silver bullet – no one product would suit everyone’s personal circumstances to help them meet care costs.” For more on this story, visit

Moving from an actively managed fund management approach for listed assets like bonds and shares to a passive arrangement through a common investment vehicle for funds would eventually save £230m a year in investment fees and a further £190m a year in lower transaction costs, the firm found. Additionally, the creation of a common investment vehicle to invest in alternative assets, such as infrastructure projects, hedge funds, private equity and property would save £240m a year. Merging LGPS funds would take longer and save less than setting up common investment vehicles, the firm said. John Wright, head of public sector pensions at Hymans Robertson, said that while mergers had seemed the likeliest route to savings, “now the story is different”. “Collective Investment Vehicles are now the government’s leading option,” he said. “These vehicles can deliver investment scale benefits across the LGPS faster than merger. They also make it possible to preserve the local accountability and decision making that would be lost by merging funds.” For more on this story, visit

Reformed annuities could offer health insurance, PPI suggests The UK annuity market could adapt to provide attractive and flexible products for consumers following the pension reforms announced in the Budget, the Pensions Policy Institute has said in a briefing note. Its Freedom and choice in pensions paper compared international retirement systems and the role of annuitisation. PPI said: “The analysis suggests that innovation in the market, for example annuities that can also provide elements of insurance for health, disability or long-term care needs during retirement, and deferred annuities that could be combined with income drawdown products to provide insurance against very long life, could provide features that consumers value as the industry responds to the new flexibilities in the Budget.” The think-tank suggested that, while demand for annuities is expected to fall in the short term as a result of the new flexibilities, improved annuity products could prove to be an attractive retirement income solution for some groups in the future. Industry and employers have a pivotal role to play in designing simple, understandable, and value-for-money products that savers can use to access their defined contribution savings at and during retirement, the PPI argued. For more on this story, visit See also Soapbox (pg.8)

MORE BREAKING NEWS ONLINE Visit for up-to-date news and to register for weekly news alerts

TPR issues first auto-enrolment non-compliance report The Pensions Regulator has published its first auto-enrolment section 89 report, warning employers struggling to meet their autoenrolment duties to raise the issue with them sooner rather than later. The report sets out problems experienced by Dunelm Soft Furnishing Ltd, which missed its staging date by four months.

Charity watchdog warns on pension deficits A majority of charities are failing to explain adequately how they are dealing with the financial risks of a pension scheme deficit, the Charity Commission has warned. Sam Younger, the watchdog’s chief executive said: “Pension deficits can pose a potentially serious risk for charities.” (See p.24)

UK state pension age rise ‘short-changes Scots’ Lower life expectancy in Scotland means the country’s pensioners will be ‘short-changed’ by as much as £11,000 if it stays tied to Westminster, Scottish ministers have claimed. The Scottish National Party administration has said an independent Scotland would establish a self-governing commission to consider the appropriate pace of any further change to the retirement age beyond 66. Its Life expectancy and the state pension report found a 65 year-old woman entitled to a total pension of £160 per week could expect to get about £11,000 (£10,000 for a man) less in Scotland than south of the border. For a woman who lives in Glasgow this pension gap increases to £22,000 for women and £29,000 for men. But the Department for Work and Pensions said spending on pensions would be more affordable for Scotland if it remained part of the UK, while shadow pensions minister Gregg McClymont called the SNP’s argument “appalling”. “If this is the extent of the nationalists’ ambition for Scotland the Scottish Government should be ashamed and immediately apologise for insulting the intelligence of Scots,” he said. For more on this story, visit

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On my agenda

Martin Pike, chairman of SIAS, talks to Richard Purcell about the challenges of running a large consultancy, the golden era of insurance, and how actuaries can get ahead – in the profession and on the board


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Martin Pike began his career at R Watson and Sons, now part of Towers Watson, where he rose through the ranks to become managing director of the risk consulting and software practice across Europe, the Middle East and Africa. He took time out from his busy schedule to sit down with The Actuary to discuss the new ventures he has taken on since leaving the firm, including life as a non-executive director, and his work in social housing.

get actively engaged in your industry. You shouldn’t wait until you qualify to start your career – getting involved in things outside your normal day job, volunteering or otherwise, is important as it gives you different perspectives.

What attracted you into the actuarial profession?

You have held a number of volunteer roles within the profession, including a stint on Council and your current role as the chairman of the Staple Inn Actuarial Society (SIAS). What would you say to those who don’t think they have the time to volunteer?

When I left university, there were plenty of jobs for graduates, so getting a position was never going to be hard. But the actuarial profession stood out as being quite special. A mathematical basis combined with a strong professional and ethical focus appealed to me. It was also safer than the international rallying that occupied much of my spare time!

I think it is a question of balancing your priorities. Meeting deadlines at work obviously comes first, but it is possible to find the time if you want to, provided you are well organised, and you communicate well with your boss! If you want to get on in any industry you need to do more than just the day job, as you need the broader perspective to get ahead of the pack.

What was life like for you as a new graduate?

During your time at Towers Watson, the firm grew quickly to become a leading consultancy in insurance. What do you think were the keys to success?

I really enjoyed the fact it was a relatively small consultancy, which meant you could get involved in a wide range of projects – life and pensions – and there was plenty of client contact. At the time the life insurance market was changing rapidly: new products, new systems, lots of new insurance companies being set up, and lots of regulatory change. The introduction of embedded values and M&A activity meant that our business was growing fast, and there was plenty of scope for learning and development as I was thrown into new projects. We were pretty stretched but the team spirit was great and somehow we always delivered.

What advice would you give to student actuaries today? Apart from the obvious – that is to work hard and get through the exams quickly – I would say it is important to

The most important factor was the emphasis we put on building strong client relationships, and putting clients first. We were able to win a large number of appointed actuary roles, and these gave us good and regular access to senior executives and the board. Our highly integrated approach meant we were very much part of our clients’ businesses. For many years it was like working for a number of different employers. By having such a deep understanding of their businesses, we were better able to respond to their emerging needs. I think the demise of the appointed actuary role means it would he hard to replicate the same success today. We were also very active in the demutualisation M&A activity that transformed the industry. To be successful over

Steering towards


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June 2014 • THE ACTUARY


27/05/2014 17:22

On my agenda

“We had to constantly review what we were doing and not be afraid to challenge ourselves to develop new thinking, new techniques and new software”

You recently became a non-executive director for Standard Life. How is this different to your previous roles? It is very different, but leverages my knowledge of the industry, of regulation and of strategic risk management (and I can understand the actuarial results). The board has a broad agenda and this stretches me well beyond the financial and actuarial aspects. I am thoroughly enjoying the opportunity for further learning and development. It has been a very stimulating experience, being part of a strong FTSE 100 board, with new challenges for me personally.

a long period of time, it was also about changing our business as the market changed, and staying ahead of the curve. We had to constantly review what we were doing, and not be afraid to challenge ourselves to develop new thinking, new techniques and new software. In many ways, I think we reinvented our business every few years.

Do you think actuaries make for good non-executive directors?

What skills do you think helped you rise to the role of managing director?

Can you tell us about the social housing project you have become involved with?

It was mainly about being comfortable with change, and having a clear strategic view on how we should move forward. Within a professional services firm there are many intelligent people, and gaining their support and buy in to strategic change was always critical. I spent many hours talking and listening.

I am working with a small group of people trying to raise a substantial amount of capital to build social and affordable housing. There is a real gap in the UK between the very high demand for this type of housing and what institutional investors are prepared to invest, due to the complexity of such projects. The headlines are frequent, but the reality on the ground is that few projects are being funded. If you think about it from the point of view of institutional investors, these are big construction projects – with construction risk – followed by a series of long-term inflationary rental cashflows which are potentially quite attractive. Unfortunately most institutional investors are averse to construction risk, and really only want vanilla bonds that fit nicely within their benchmarked portfolios. So to close this gap, we are trying to mitigate the construction risk and help institutional investors see the attractive investment opportunity. It is certainly challenging.

What were the biggest challenges of running the business? Growing the business outside the UK was the most challenging aspect, because in other markets the role of the actuary is less defined. We had to create a market for services and recruit the best talent from a relatively small pool. We learnt that every country was different and the calibre of local leadership was absolutely critical. More recently, Solvency II has been a big challenge. Although it meant large project revenues from helping clients with implementation, the projects were allconsuming and sucked budgets from other strategic developments. It is clear to me that the focus on Solvency II over the last few years has held back the strategic and commercial development of the industry (such as responding to the digital revolution), and driven actuaries back into technical roles. A more gradual evolution of the new solvency regime would have been better for the industry and the profession.

What would you change about the profession today? The world around us is changing rapidly and we need to ensure we remain in touch with the commercial and business environment on a daily basis, so that our advice is relevant and valuable to our clients or employers. We also need to make sure we don’t over-regulate ourselves so that we become difficult or too expensive to employ. The profession needs to get the right balance between the need for adequate technical training, and the need to support actuaries to develop and broaden their commercial careers.

I don’t see why actuaries shouldn’t make good non-executive directors, but they need to bring more than actuarial skills. Being a good actuary is not enough. Boards don’t necessarily need the skills of an actuary, so we have to demonstrate the broader strategic value we can add in these roles.

Your projects have a strong zero-carbon objective. Why should this be an important consideration for institutional investors looking at such projects? This isn’t about being green – although it would of course be good for the environment. We have developed a concept of long-term sustainable and low energy housing that will deliver very low energy bills for tenants. This will ensure high occupancy levels – and high rental income – as local authorities will prefer to house families in more energy efficient (hence lower cost) housing. In addition, the high sustainability is an essential feature if we want the rental estate to remain a strong investment proposition for many years. As well as being an ethical investment – and ticking a big box on social and corporate responsibility goals – it is also just good business.

Do actuaries have a role to play in such projects? Actuaries obviously have the analytical and modelling skills required on a project like this, can help in creating strong risk mitigation strategies and can help to construct assets that would appeal to institutional investors. But these skills are not unique to actuaries, and actuaries tend to ask for more money. I would love to see some more actuaries getting involved in these areas. a


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27/05/2014 17:22

Pensions Investment strategy

Dan Mikulskis comments on defined contribution investment strategy in the wake of this year’s UK Budget and the effects of change to the pensions market

Things changed significantly for defined contribution (DC) pensions in the March 2014 Budget. The extra flexibility announced for savers at the points of retirement have focused further attention on DC scheme design, including the appropriate investment strategy for default arrangements. This is an issue that was already in the spotlight following the advent of auto-enrolment and the huge expansion of the UK DC marketplace.

What impact does this have on DC investment strategies? Up to now, many DC investment strategies were set with the expectation that most members would opt for an annuity at retirement – which was consistent with experience in the pre March-2014 world. Now, retirees will have a lot more flexibility and it is hard to know how many will continue to choose to purchase an annuity (although data from Australia , where retirees have similar flexibility, shows that fewer than 8% choose to). It seems sensible then that we should allow for an investment strategy that continues through retirement. Illustratively, a typical DC member’s investment ‘journey’ might look something like Figure 1 (overleaf).


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June 2014 • THE ACTUARY


27/05/2014 17:24

“While broad objectives are easy to formulate, it is specific and quantitative objectives and constraints relating to both risk and return that are necessary” 12 0.32


Figure 1: Curve fitting process (Source: Moody’s)


Post--retirement 4


3 8 2 6 1 4



-1 -2 0








40 45 50 Member Age









Size of contributions or withdrawals (multiple of salary)

Size of Member DC account as a multiple of final salary

Figure 1: Illustration of a typical DC member investment journey

DC pot size (multiple of final salary)

Contributors or withdrawals (multiple of final salary)





Fund value 100% equity

Fund value with risk controlled lifestyle strategy

Fund value with lifestyling


20 0







Total contributions

Figure 3: Retirement drawdown scenarios – capital remaining after n years

The pre-retirement phase



130% 110%

Scenario 1 Annual returns


Scenario 2 Annual returns




50% 30%

4 10% 2

-10% -30% 1


2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Years into retirement

Annual total returns

Capital remaining as a multiple of final salary



Fund value as multiple of final salary


12 20 13




20 10


20 06


20 04


20 02




20 00








199 2





Fund value (£)

Figure 2: Illustrative DC fund value growth from 1986 to retirement in 2013

Of course, in reality, investment returns will not be earned smoothly, and this is where the investment strategy comes in. In order to earn investment returns some level of risk must be taken. In turn, this can result in fluctuations (downward moves are naturally of more concern) in the member’s savings account, or ‘pot’. The starting point for setting any investment strategy is a set of objectives. While broad objectives are easy to formulate such as, “provide sufficient income in retirement”, it is specific and quantitative objectives and constraints relating to both risk and return that are necessary. For example: ● To reduce to 5% or less the chance of having to work four years beyond 65 to ensure a replacement ratio of 65% ● To provide a steady level income in retirement, with the expectation of significant capital remaining for inheritance after 25 years. Objectives are a real challenge for those setting an investment strategy for a default fund, as it is likely to contain the assets of a large and varied group of members. It seems unlikely that we can know, or even approximate, the likely requirements of each individual in a DC scheme, so fitting an overall risk level is difficult. All we can say is that, while it may be imprudent to adopt a default strategy with excessive levels of investment risk for obvious reasons, it may also be imprudent to adopt too conservative a strategy as this may give an equally high probability of not meeting members’ objectives. Today, it seems to make sense to divide the DC investment journey illustrated in Figure 1 into two significant stages, with quite different objectives, and therefore required investment strategies.

Scenario 3 Annual returns 5.4% annual return Scenario 1 Scenario 2 Scenario 3

Investment risk is likely to be experienced (at least initially) by occasional falls in the member’s pot size from one year to the next. But what level of fall could be expected, and how frequently? In addressing the objective of year-on-year fluctuations in pot size, a key question is whether it is desirable to design a strategy that delivers a consistent level of experienced risk (at least from an asset-only perspective) or one in which the level of risk varies. The drivers of a traditional allocation to equities are likely to be relatively easy for most DC members to understand, but the level of experienced risk is variable, with infrequent but large losses in any given year. Recent history has shown, for

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co-head of ALM & investment strategy at Redington


Cash flow into pot

Investment objectives



Capital growth

Year on year falls in pot size

Controlled investment risk taking

Capital preservation closer to retirement

Chance of having to work beyond desired retirement age to generate sufficient capital

Manage drawdown of capital

Risk of partial or full loss of capital

Maintain flexibility/liquidity

Generate income

Failure to generate expected income



example, that a member investing mainly in equity could see their pot decrease by multiples of their annual salary in a severe equity bear market (see Figure 2, left). Risk-controlled investment strategies operate by varying the allocations to underlying assets dynamically in order to deliver a more consistent level of risk, or at least by limiting the exposures at times of highest risk. While the return over a long period may or may not be greater than for a similar static allocation, the year-on-year experience of the member will be smoother (see Figure 2). Applying risk control also gives an obvious lever to employ in reducing risk as the member approaches retirement – the level


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Risk measured by

of risk targeted can simply be reduced. Another argument in favour of strategies that explicitly control risk is that the pricing of guarantees on the value of savings will be much more affordable than on strategies where risk is variable. As the member approaches retirement, risk can be experienced as an increasing chance that the member will in fact have to work beyond the planned retirement age to generate sufficient capital to fund their retirement. Measuring risk in this way is complex, as a conservative investment strategy that moves into low-risk (and therefore low-return) assets too early before retirement can in fact show a higher level of risk on this measure, by locking

in low returns. Figure 2 illustrates the shortcomings of an approach of scaling linearly into cash from 10 years out from the planned retirement age. Following the 2008 market falls this approach would indeed have run a high risk of the member having to work longer to fund the planned retirement.

The post-retirement phase Setting an investment strategy for a fund that is managing a significant cash outflow each year is a challenge, as any mature defined benefit pension fund will know. The big issue is the path-dependency of the actual returns – the investment strategy becomes critical as the fund is sensitive to the timing of losses compared with gains. In Figure 3, a member is drawing down a DC pot in retirement. The member naturally wishes to receive a known amount of income each year, in this case a level 6% of the starting amount (which remains fixed). Some investment risk is taken in order to generate a level of returns that is expected to satisfy the requirement for income and leave capital left over after 25 years. The path illustrated by the grey line shows a constant investment return of 5.4% p.a. The three scenarios illustrated by the other lines all produce cumulative investment returns over the whole period that are equivalent to 5.4% annualised (in fact the three scenarios all contain the same annual returns, in different orders). However in scenario 1 initial losses and low returns mean that the capital is significantly depleted such that, despite the larger positive returns that follow, the capital runs out before initially projected. In other scenarios, large returns in the early years can result in higher than projected amounts of capital remaining after 25 years. This suggests an important role for careful modelling of the risks involved in this investment strategy in order to correctly balance the level of income paid out with the expected return of the investment strategy and the level of investment risk taken, and to ensure the risk of running out of capital is kept to a minimum. It turns out this is a much more nuanced set of constraints than in the accumulation phase, suggesting a significant role for investment strategy modelling. This also points to a role for capital guaranteed investment strategies, particularly in an environment where the desired income level cannot be easily generated by investing in liquid, income-bearing securities (as is likely to be the case now). a

June 2014 • THE ACTUARY


27/05/2014 17:24

Pensions Multi-employer schemes

THE TIMES, THEY’RE NOT A CHANGIN’ David Davison looks at the need for change to legislation governing multiemployer pension schemes and the effects on charitable organisations

Having worked in pensions for nearly 30 years, I have come to terms with what can often be the glacially slow pace of change. I am of the belief that, when change does finally come, it moves things for the better. My innate optimism is, however, being tested when it comes to multi-employer pension schemes in the UK and the undoubted harm these are inflicting on our precious charitable sector. Despite dire warnings from leading figures in the field and the unfortunate demise of some leading charities as a direct result of these pension schemes, it seems next to impossible to get commitment to finding a workable solution.


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27/05/2014 17:26


director and owner at Spence & Partners

The problem If an organisation has its own stand-alone pension scheme it can readily manage its risk exposure by closing to new entrants and ceasing future benefit accrual. In these circumstances the trustee would rightly seek some additional comfort from the employer, such as higher deficit contributions or some form of security. The scheme could continue in ‘closed’ form, securing benefits as they fall due and ultimately moving towards wind-up over what will probably be the medium to longer term. A well-worn path for many employers over recent years. But not for employers within multi-employer schemes. A single employer closing its section of the scheme to future accrual immediately triggers a Section 75 type debt. This debt will be much higher than that identified in calculating contributions or which may have been shown in financial statements, if liability values are shown at all. This is because the funding shortfall calculation when a scheme closes to accrual is carried out using much more conservative assumptions than would have been used previously. Unfortunately, in many cases this means that organisations are forced to continue to accrue liabilities they patently can’t afford and which can ultimately put benefits, and indeed even employment, for their staff at risk. The problem is further exacerbated by the ‘last man standing’ nature of many of these schemes, which redistributes any unpaid deficit as a result of insolvency to remaining participants, thereby increasing their debts. The inability of organisations to effectively manage this debt therefore also puts other unconnected organisations at risk. The requirement for remaining participants in ‘last man standing’ arrangements to meet debts left behind by insolvent employers means that the charitable sector is largely being asked to put its own pension house in order without any cross sector support from the Pension Protection Fund (PPF).

The roadblocks So while Section 75 works effectively for those it was aimed at, that is connected employers in multi-employer schemes, it seems obvious that it is entirely unsuitable for unconnected employers and, unfortunately, it is mostly charities that are impacted by this. There is however, always resistance to amending legislation without being sure that no other options exist. So what are the usual objections that are raised?

Does it really affect many organisations? Estimates vary but, for example, the Pensions Trust alone claims to provide pensions for over 2,400 organisations. If we add in other multi-employer schemes and public sector schemes such as the Local Government Pension Scheme, it does seem that between 3,000 and 5,000 charities are likely to be affected – not an insignificant number. The way scheme closure is handled in these schemes is also undoubtedly having a very material effect. Not only is it preventing legitimate risk mitigation but it is also significantly limiting corporate restructures and ultimately resulting in insolvencies, many occurring below the radar. I doubt if this issue were affecting another sector of similar size it would be accepted quite so stoically. There must be alternatives to legislative change The legislation is so unsuitable, and in some cases the financial position so desperate, organisations have looked for alternatives and some convoluted, and often expensive, options have been devised. A common solution is to reduce active membership to one member, or very few members, however, this raises the spectre of an inadvertent Section 75 debt trigger should that member leave, and not be replaced. Ultimately, organisations should not have to find complex ‘workarounds’ to an ineffective piece of legislation. Employers won’t pay in if they’re closed. There is absolutely no evidence for this, in fact my experience with schemes where employers have agreed to close is quite the reverse. Where schemes close to future accrual, employers remain committed to funding as they want to exit the scheme at some point, and because the scheme trustees retain the ultimate sanction of being able to serve a Section 75 debt. Member security will be compromised If there was a fundamental change to the ‘last man standing’ nature of these schemes then this contention may hold true, but that is simply not the case. Members’ benefits, in general, remain better protected in a ‘last man standing’ arrangement than under stand-alone schemes, as should the employer become insolvent, they’d be protected by all the other employers in the scheme, and only be required to take reduced benefits in the PPF, should all the employers fail. If organisations were allowed to fund their closed schemes on a longer-term basis and

therefore were more likely to close their DB schemes and reduce the build-up of future liabilities, it is quite clear they would also be less likely to fail, therefore also providing greater ‘covenant’ protection. Also, if we’re talking about member security, why should we be limited to purely considering pension security and not job security? If more organisations are forced in to insolvency by these schemes, members lose their jobs, their future income and indeed their future pension contributions – resulting ultimately in a lower pension. Such events also place an additional burden on the taxpayer in a number of areas. There could be unintended consequences This is always a risk. However, with careful drafting of the legislative change this can be avoided. In any case, we already have unintended consequences, particularly with local government pension schemes. Section 75 doesn’t apply within these schemes, however scheme managers based upon the advice of their actuary choose to apply a consistent approach even though there is no legislative requirement for them to do so. With a little more thought these schemes could be applying a much more practical approach for the benefit of not only charitable admitted bodies but for all of their participants.

In summary Charity Finance Group has been working tirelessly over the past few years to achieve a resolution in this area and is about to bring forward proposals that would require relatively simple changes to secondary legislation using the powers in Section 75A Pensions Act 1995. The changes are very focused and would effectively resolve the Section 75 issue. The question will therefore boil down to whether there is sufficient will to pursue the change. The initial focus needs to be on changing the legislation so that a closure to future accrual would not automatically trigger a cessation event, and this could significantly improve the situation. Such a move would have the support not only of the participating employers but also scheme trustees and administrators. They equally have no wish to see employers continue to fund liabilities that they can’t afford, and indeed will be well aware that to do so puts other employers (and members) who can currently afford their liabilities at greater risk. I can only hope that this practical proposal may mean that, at last, common sense will prevail. a

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27/05/2014 17:26

Environment Commodities

The trend towards water as an investment asset is likely to grow. Aled Jones and Michael Green explain how the actuarial profession could play a vital role in long-term risk modelling and enterprise risk management for the water sector




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DR ALED JONES is director, and MICHAEL GREEN is a researcher, at the Global Sustainability Institute, Anglia Ruskin University

There are few resources globally that are more

Water futures

complex than water. There are as many ways of setting up and managing water supplies and markets as there are risks to supply. However, one thing is clear – water management is becoming more critical to the success of economies in all regions of the world. Too much water (flooding) leads to significant economic damage. For example, the total clean-up cost of the recent UK floods could be as much as £1bn, £500m of which is likely to be incurred by the insurance industry. Too little water can be equally damaging, as shown by the recent droughts in the USA which has driven up food prices and cost the insurance industry over $10bn in each of 2011 and 2012 – although this is heavily subsidised by the US government. In many countries water utilities are in public ownership, and in almost all countries heavily regulated. However, as the need for capital investment increases, it is likely that public-private partnerships – whether formal market structures or regulatory frameworks allowing in private capital – will be needed and private investment into the water sector is increasing globally.

Investment in the water sector will need to account for potential climate change impacts, as well as a growing demand from population and industrial output increases. Understanding the future supply-demand balance of water at a regional level requires significant modelling effort in the near term if local economies and industry are to avoid challenges. In addition, extreme weather events are likely to provide significant shocks if systems are not resilient. Modelling these long-term trends and short-term events is needed to better understand the impacts on finance and economic activities. For example, recent work by Standard & Poor’s has explored the potential impact on the credit ratings of water and energy utilities in water-stressed regions. And the reinsurance industry has invested

Water as a key economic development indicator Rapid rural-urban migration and growth in global population, industry and agriculture are causing a significant increase in the water footprint of human society. In some locations of the world there is already water stress either due to low water availability or overdevelopment. The south east of England is one of the most water-stressed regions of Europe due to intensive development not matched by available water supply. Water is believed to be the primary medium through which people, ecosystems and economies will experience the effects of climate change. There are significant implications for sustainable development, economic growth and poverty reduction efforts, as well as wider implications for agriculture, energy, insurance, house building, environment and public health. Water scarcity has consequences on health, biodiversity, economic development, and the prospects of conflict between different groups of water users both locally and internationally. Although most of the planet is covered in water, there are many specific regions where it is in short supply. Perhaps the biggest geopolitical implication of this is the suggestion that water shortages in the highlypopulated north-eastern part of China may halt the currently rapid growth of China’s economy.


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“The regulatory environment associated with water exploitation is likely to create market distortions that may be difficult to manage or predict” significantly in catastrophe modelling for extreme weather events associated with droughts and flooding. Given the overwhelming uncertainty in the future climate, two categories of risk have been suggested. The first category encompasses direct and indirect risks posed by climate change. The second is associated with the concept of maladaptation. An individual or organisation could be seen as wasting a large amount of money on measures designed to mitigate potential impacts that may be less severe or never occur. The very notion of maladaptation and its negative connotations means many stakeholders are hesitant about investing in costly assets or schemes, such as building a new sea wall or installing a new irrigation delivery system, as these assets may take decades for their full benefits to be felt. Therefore, a much clearer approach to long-term risk modelling is required and enterprise risk management techniques could

be usefully deployed. The actuarial profession could play a vital role in this modelling effort.

Water as a commodity The global water sector requires annual investment of over $400bn. The largest fraction of this will be in the water utilities, which are mainly publicly owned. However, with increasing water stress private sector investment and opportunities are increasing. Over the past decade there has been an emergence of water markets and water indices such as the S&P Global Water index. Over the next decade companies across the water sector and supply chain will see huge opportunities to benefit from the need to invest in order to adapt to changing weather patterns, improve water treatment and manage water between times of too much and too little. Innovation in water efficiency technologies, treatment, reuse and desalination are all seen as potential solutions to water stress and are seeing increasing investment globally. The trend towards water as an investment asset is likely to develop. Water is not easily transportable and is vital for human life. Globally the price of water varies significantly and depends on existing infrastructure and available water supply. However, the use of price to regulate demand is not straightforward. Overseas companies operating in a poor country can afford more, so they get priority over local business and people. Those who can afford it get the water, those who can’t just to have to somehow do without. This can only be mitigated through a policy package that includes social welfare components to counter pure market pricing. The market distortion that this potentially creates translates into market uncertainty but the issue of increasing incentives for investment while protecting people’s access to water is one that is not going to go away. Therefore, the regulatory environment associated with water exploitation is likely to create market distortions (it will never be a ‘pure’ market derived price on water) that may be difficult to manage or predict. These complex regulatory issues alongside infrastructure requirements need careful modelling to better understand water as an investment asset. a This article was contributed by the Global Sustainability Institute (GSI) at Anglia Ruskin University. The GSI is part of the WE@EU European platform on water efficiency

June 2014 • THE ACTUARY


27/05/2014 17:26

Pensions Medical underwriting

EVOLUTION OR R E VO L U T I O N ? Costas Yiasoumi looks at the rise of medical underwriting in the pension risk transfer market

Over the past 12 months, two medically underwritten annuity specialists in the retail market have launched bulk annuity propositions for de-risking defined benefit pension plans. With two incumbent bulk annuity insurers now also willing to quote for medically underwritten annuities and one further insurer rumoured to be entering the market, advisers have a credible insurer pool from which to seek competitive quotations. Is this a natural evolution of the bulk annuity market or will it result in upheaval?

What is a medically underwritten bulk annuity? Key to pricing bulk annuities is life expectancy. Traditionally this is derived using rating factors such as age, gender, postcode and pension amount blended with experience analysis where credible and adjustments for aspects such as industry type. This leads to broad-based mortality projections for the pension plan or for sub-groups within it. Medically underwritten bulk annuity specialists adopt a fundamentally different approach – they additionally utilise medical and lifestyle information at individual member level. From this, tailored mortality curves are built for each member, unique by mortality

level and shape. Therefore, unlike traditional pricing, which adjusts mortality curves constructed from broad populations with inherent medical and lifestyle characteristics (for example the SAPS tables), medical underwriting specialists start from the mortality profile of a healthy individual and adjust it for medical and lifestyle factors. Pension plans with poorer medical or lifestyle characteristics get lower pricing and those with better characteristics get higher (albeit arguably fairer) pricing. Cross subsidies between pension plans are reduced. Medical underwriting has offered a compelling proposition for retail consumers seeking better value for their pension savings and has grown rapidly over the past few years – by 2013 medically underwritten annuities represented over 50% of open market retail annuity purchases (see Figure 1).

Data collection and usage Medical data collection takes the form of one or more of short or long form questionnaires, GP reports and telephone interviews. Typically the client selects an approach in discussion with insurers. A ‘hub’ collates data and passes this to insurers, the hub being either the adviser, one of the insurers or a specialist third party.

Figure 1: Evolution of longevity setting for bulk annuities

Global mortality assumption applied to all members – standard table with schemebased adjustment

Mortality assumptions for each individual member based on postcode, amount, etc...

Supplementary data on existence of spouse and date of birth of spouse

Medical and lifestyle underwriting for each individual and their spouse

More information leading to less uncertainty leading to lower costs 28

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“Medical underwriting offers a compelling proposition for retail consumers seeking better value for their pension savings and has grown rapidly over the past few years” ISTOCK

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Risk Medical underwriting


is director of defined benefit solutions at Partnership

Table 1


Size of pension plan

Lower pricing

For pension plans where traditional pricing wouldn’t give full credit for their medical and lifestyle characteristics

Applicability diminishes for larger pension plans ie ‘law of large numbers’. Over time experience will show where the size threshold sits – the largest case to date covered 440 pensioners

Different pricing

Medical underwriting specialists use a fundamentally different approach to pricing giving different pricing to traditional approaches. This introduces helpful pricing differentials in competitive processes

Applicability diminishes but is not removed once pricing is primarily driven by a credible experience analysis ie pension plans of a few hundred million pounds and larger

Individual pricing

The medically underwritten specialists are comfortable insuring single individuals. Pension plans therefore have autonomy to select lives for annuitisation allowing for factors such as risk removal and/or low pricing by virtue of medical and lifestyle factors. Traditional pricing based on broader pooling cannot accommodate this as easily

Any size. For example a £30m pension plan could choose to insure the (say) two members whose liabilities represent 10% of the total, provided the price is right. And a £1bn pension plan could target the (say) 100 members whose liabilities are (say) £100m, insuring only those whose price is deemed lowest vs a prudent technical provision assumption

This approach captures up to 250 medical and lifestyle rating factors per member. However, proportionality applies – so for example GP reports are not sought for members with smaller pensions as costs outweigh the economic impact. A cut-off date is typically agreed for data collation avoiding uncertain timescales – four weeks is normally sufficient to capture the vast majority of likely responses. Insurers can then process the data to produce medically underwritten bulk annuity pricing. Retail consumers have a strong incentive to provide medical and lifestyle data if they expect a better value annuity. Except for defined benefit pension plans winding up with a shortfall, pension plan members do not directly benefit from supplying medical and lifestyle data. Despite this, experience is that response rates are good, typically around 80% of contacted members and more than sufficient for a pension plan to be medically underwritten. Importantly, pension members do not feel such data requests are intrusive, recognition of the efforts being made to de-risk their pensions.

Top-slicing: Insuring the members with the highest pensions, for example say the 5% representing 20% of liabilities – experience data for such members is not usually credible and traditional pricing can assume life expectancies at the long end. Top slicing can be done as a standalone de-risking exercise, or incorporated within a larger bulk annuity or longevity swap exercise with any insurance saving from top-sliced members being a useful offset against the premium for insuring the remaining 95% of members with another insurer. Selective buy-in: Optimising bulk annuity spend by selecting members for annuitisation based on a combination of insurance pricing vs technical provisions and risk reduction. The broader range of member by member pricing following medical underwriting can permit superior optimisation, and as pricing is genuinely individual, the insurer is not concerned with adverse selection. This needs to be balanced against the impact of potentially increased funding reserves and future annuitisation costs if the remaining members are deemed to be longer lived.

The future The challenges?

New de-risking opportunities? Pensions Institute research (A healthier way to de-risk, February 2013) suggests medical underwriting can offer savings of up to 10% compared to traditional pricing. Some features of medically underwritten bulk annuities are shown in Table 1 above. Of course, medical underwriting doesn’t always lead to lower pricing. Should the pension plan members have good health and lifestyles, pricing may be higher than a traditional approach. As well as the universally attractive prospect of better pricing, medical underwriting opens up new de-risking options:


pricing for pension plan books that have not been medically underwritten to allow for adverse selection? And perhaps reinsurance pricing for pools of members that exclude the largest pensions (that have ended up with the medical underwriters through top-slicing) can incorporate lower risk charges as they will now form more attractive risks. Pension plan actuaries: De-risking advice will adapt to reflect the opportunities opened up through medical underwriting and bulk annuity processes will consider whether the medically underwritten route is appropriate. But there are challenges requiring careful analysis and explanation, for example, the implications and mitigations should medical underwriting lead to a higher insurance cost. Medical underwriting specialists: Medical underwriting is a welcome innovation to bulk annuities. It is important to educate the market on where and how medical underwriting adds value including how it complements traditionally priced bulk annuities, leading to better results for pension plans.

Bulk annuity insurers operating traditional pricing: If trustees that believe their members have inferior medical or lifestyle characteristics choose medical underwriting, does that mean traditional insurers will increasingly end up with ‘healthier’ pension plans? How should such selection be accommodated in pricing? In the retail market, as medically underwritten annuities became more prevalent, pricing for other annuities drifted upwards reinforcing further the move towards medical underwriting. Reinsurers taking on bulk annuity longevity exposures: Should reinsurers adapt their

To date there have been 14 medically underwritten bulk annuities. The largest was in excess of £35m but this is likely to be materially revised upwards as more and more cases successfully complete. Like the retail annuity market, medical underwriting is likely to become increasingly prevalent in the bulk annuity market. Unlike the retail market, traditional pricing approaches will also remain relevant due to the size of some pension plans and the different drivers for annuitisation. So the future holds more variation but, financially, an improved overall position for UK pension plans and their corporate sponsors. a

THE ACTUARY • June 2014

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2052 – A Global Forecast for the Next Forty Years by Jorgen Randers PUBLISHER: Chelsea Green Publishing Company ISBN-13: 978-1603584210 RRP: £17.99

“Despite the reliance on technical detail, the book is readable and provides a fascinating glimpse of a possible future”


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If the challenge we set ourselves as actuaries is to make financial sense of the future, then the author of 2052, Jorgen Randers, has set himself a much bigger challenge: to make a global forecast of how the next 40 years might unfold. Using a combination of simulations, past experience and expert opinion, the book sets out predictions for how key economic and other variables are likely to develop over the next four decades. Central to the forecasts are the evolution of GDP and population – and already the actuarial reader will begin to feel at home. Randers uses models to analyse possible future paths for these two variables as well as, for example, CO2 emissions, energy use, consumption and investment, and food production. And here is the bonus for the actuarial reader: there is also a companion website with a downloadable spreadsheet model. The breadth of Randers’ forecast is vast. Complementary to the forecasts gleaned from the various models, the book includes predictions by leading scientists, business leaders, economists and others on topics ranging from the use of robots to wage future wars, to the application of gaming skills for collective problem solving and the future for urban living. Despite the reliance on technical detail, the book is readable and provides a fascinating glimpse of a possible future.

Randers has a long track record in global forecasting: he formed part of the team that wrote The Limits to Growth for the Club of Rome in 1972. In part, then, 2052 is the sequel. This gives the clue to the 40-year forecast period. It is easy to see how we could already be on a ‘better’ path if the original (1972) forecast had been taken sufficiently seriously. Despite the interest of a book so close to many aspects of the actuarial world, 2052 makes gloomy reading in many ways. Perhaps most depressing is the prediction that we will provide ourselves with a sub-optimal scenario because our political decision-making processes are rooted in shorttermism. This is unfortunately a conclusion that is hard to quarrel with, although some actuaries may enjoy challenging the assumptions underlying the numerical forecasts. The book also includes forecasts of direct interest to pensions and investment actuaries – for example, predictions about rich countries’ response to an ageing population and about the way that the changing climate and eventual decrease in reliance on fossil fuels will impact investment choices and yields. Alert readers will have noticed that at the time of this review we are already two years into the 40-year forecast period. In my view, this adds to the interest of the book: already we can compare some aspects of the forecast against experience. For example, a section on the way Europe might evolve includes a case study on the possibility of Scottish independence. Randers has clearly engaged in a lifelong struggle to come to terms with the future he has predicted for the world. And so, 2052 closes with a chapter titled “What should you do?”. Twenty action points are suggested, covering the personal, financial and political spheres. Some readers may be looking for ways to dismiss 2052 as another hair-shirted volume of doom and gloom, and undoubtedly any suggestion that we would be better to jettison our belief in the desirability of endless growth will be met with opposition from some quarters. But the depth of analysis and breadth of expertise presented in 2052 make this book well worth serious contemplation. ● Eleanor Beamond-Pepler is currently on maternity

leave. She is manager of the recovery, resolution and redress policy team at the Prudential Regulation Authority

MORE ONLINE Latest reviews at opinion

June 2014 • THE ACTUARY


27/05/2014 17:28


Helen Lau and Sharon Maguire meet James Lovelock and review his exhibition at the Science Museum

UNLOCKING THE FUTURE Early school reports did not reveal a young mind destined for greatness. So how did James Lovelock become the world’s most controversial scientist, environmentalist and futurist? 32

THE ACTUARY • June 2014

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James Lovelock stands before us at the entrance to the Science Museum, where he is being honoured in an exhibition devoted to his 70-year career. He is most famous for his ‘Gaia’ hypothesis – that the Earth is a self-regulating living entity – or as the inventor of the electron capture detector – aiding the detection of chlorofluorocarbons (CFCs) in our atmosphere. If you are unaware of Lovelock, the man the Irish Times called “the most influential scientist and writer since Charles Darwin”, then a visit to the Science Museum’s exhibition is a good starting point. Unlocking Lovelock: Scientist, Inventor, Maverick is dedicated to celebrating his life and work and is timed to coincide with the publication of his new book A Rough Ride To The Future.

Early life Born into a working-class family in 1919, throughout much of his school life Lovelock was a self-professed reluctant pupil, later gaining employment while studying in the evenings at Birkbeck. His lack of adherence to one single science subject prevented him from becoming over-specialised, and aided the fiercely independent and free-thinking spirit that endures today. Despite having worked for organisations such as NASA – on its planetary exploration programme – and a number of academic establishments, he has always remained a feisty critic of the current scientific and ‘green’ agendas, both political and societal. He is content to take on the scientific establishment, pointing out the limitations of modern science


27/05/2014 17:28

At the back Arts

Once reviled for his theories, es, ed Lovelock’s ideas are now accepted out as part of the overall discussion about net the future of our planet

he believes to be more often compromised by financial motivations. Scientists today, he says, work on specific problems rather than seeing the bigger picture or thinking outside the box. Lovelock doesn’t recognise the box, and is therefore labelled a maverick. Yet his radical theories divide the scientific world. It is the Gaia hypothesis that is both hugely influential and controversial. While there are many doubters, it has shaped how environmental scientists view issues such as climate change. First formulated in the 1970s, its main purport was that the earth was a complex system able to self-regulate and maintain the conditions for life on the planet. It highlighted the effect of the biosphere and the evolution of life forms on the stability of global temperatures, the amount of oxygen in the atmosphere, ocean salinity, and other environmental variables affecting the habitability of the earth. It is a theory that has clearly stirred many into discussion and action from Christian theologians to new-age groups. Lovelock admits to being astonished by the correspondence he received from various religious bodies, who viewed his theories as reinforcing their belief that Gaia was an example of God’s creation. The adoption of Gaia by the new-age movement he found less appealing, as it proved no help in his battle with scientists on the validity of his theories.

Lovelock on show The exhibition offers an insight into Lovelock’s personality, inventive mind and unconventional ideas in a career that has spanned such diverse fields as environmental science, medicine and space exploration. Many of his inventions, his scientific notebooks, his surprisingly average school reports, and an array of James Bond-style stories are all on show. One of the most talked-about items on display is the electron capture detector, invented by Lovelock from home-made tools during the 1960s. It analyses microscopic gases in the Earth’s atmosphere including those responsible for pollution. When in use, gas particles are passed through the device, capturing some of the electrons. As electrons are emitted, they generate a

current for which the components of the gas can be identified. This ingenious device helped Lovelock raise awareness of the damages from halocarbons – a cause of air pollution and depletion of the stratospheric ozone – that environmentalists and climate change experts are so concerned about. The electron capture detector is now commercially developed and widely used by various industries.

from that support the vast number of column inches spent decrying nuclear.” Lovelock is not against the development of renewable energy, but he does not believe it will fill the gap in our energy requirements. He believes there is a good future for tidal power “but it will not be available soon enough for our needs”. He also sees fracking as a useful interim energy source.

Politics and nuclear energy

Artificial life

Lovelock is highly critical of the current environmental and political agendas being played out in the media. A keen advocate of nuclear energy, much to the dismay of many environmentalists, he stresses the urgency in adopting nuclear power to alleviate the fierce changes in global warming. He has stated previously “we have no time to experiment with visionary energy sources; civilisation is in imminent danger”. When critics argue that nuclear power is not cost-effective when you factor in the building and maintenance of power plants, Lovelock responds that “nuclear energy is only uneconomic when huge false safety restrictions are applied by legislation, as they are in the UK”. He is particularly damning of Tony Blair and New Labour’s “disastrous” efforts to tackle climate change and cement its nuclear policies in the mid-2000s. When pressed on whether he sees the media and public opinion eventually changing to accept the use of nuclear power as an alternative source of energy he nods, adding “it is inevitable – we have to be pragmatic about it”. He adds: “There has been an immense amount of adverse publicity against nuclear energy. I often wonder where the funds come

Instead of focusing all our energies on the planet, Lovelock believes we should put our efforts into adapting the way we live to cope with changes in the climate. The best way our descendants can survive, he suggests, is to keep Gaia going in electronic form. Mankind, as a carbon unit, would find it impossible to live on for many more millions of years owing to the Earth warming, making it uninhabitable for biological life. At this point, Lovelock’s theories sound like science fiction. Yet the development of hearing aids, artificial limbs and pacemakers with electrical impulses are now commonplace. It could be argued that this symbiotic relationship has already begun.

Tales of evolution In taking our leave, we asked how it felt seeing his life’s work laid out before him. Was it satisfying, or was there more to come? He shrugs: “I never really had a plan, I would just get pulled into projects that interested me.” For now, he says, he is content to just relax and take some time out. Those who are familiar with Lovelock’s work may find his new book a worthy read. Once reviled, his ideas are now accepted as part of the overall discussion on the future of mankind and the planet. His theories offer a controversially bleak future. Yet he balances his doom-laden assumptions with survival. He believes humanity will survive, in one form or another, as it will simply be another stage in our evolution. a Unlocking Lovelock: Scientist, Inventor, Maverick is at the Science Museum, London, until 9 April 2015

June 2014 • THE ACTUARY

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At the back Coffee break

Nylfia is an actuary who solves and sets cryptic crosswords created especially for The Actuary



For a chance to win a £25 Amazon voucher, please email your crossword solution to: by Wednesday 18 June



This puzzle is a “half and half”. The across clues are definitional with only a hint of cryptic. Most are nevertheless linked by a common, but obvious, thread. The down clues are cryptic

14 See 20


Statistical distribution, reminds one of adventurer? (8)


Statistical distribution, carriage (6)

10 Statistical distribution, duty (4) 11 Statistical distribution, give-and-take (10) 12 Commonplace, in the final analysis? (6)

15 Statistical distribution (7) 17 Statistical distribution, swimming in Tours? (7) 20 Statistical distribution (8,8) 22 Signed (anagram) (6) 23 Statistical distribution, go to pot (10)







24 Statistical distribution, county (4) 25 Statistical distribution, sound (6)




26 Statistical distribution (7,1)

Down 10




Pack animal leads trouble up in plant (8)


Friend from assembly beheaded (4)


Violent fire destroyed church (6)



4 Move freely through having mixed oil in pints (4,4) 16




MS-DOS noise reprogrammed in movement towards the solution (10)


Fruit father brought to yard, way off (6)


Greek queen involves man on Island (6)







13 Uncle Sam can cut short broken bones (10)


16 Organs for spinning copy to measure article (8) 18 Musician roasting nuts (8) 19 Account could be over two (6)

© Nylfia




21 Characters of some renown before this time (6) 22 Formal shift towards the unknown? (6) 24 Capital meal with chicken (4)

THE ACTUARY • June 2014

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27/05/2014 17:29

HAVE YOU GOT WHAT IT TAKES? For information on IQ testing in your area, visit

Think tank Mensa puzzle 587

Numbers game Mensa puzzle 590

A fire engine travels seven miles to a fire at 45 mph. Its tank holds 500 gallons of water but has been leaking throughout the journey at a rate of 20 gallons per hour. The fire engine needs 497 gallons of water to put out the fire. By how much will it be short?

What numbers should replace the question marks?

For a chance to win a £25 Amazon voucher, email your solution to puzzle 588 to: puzzles@ by Wednesday 18 June

Honeycomb quiz Mensa puzzle 588







15 29

120 ?

23 ?








What numbers should replace the question mark?

0 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.

2 5

4 2




0 3


2 3


3 1

Bridge Puzzle 43 With a little help

2 1 ?

The Bidding N E 1♣ 1♦ 2♠ Pass Pass Pass ♠AK6 ♥9865 ♦3 ♣AK842

The road to Oz Mensa puzzle 589 How many miles should it be to Australia on this signpost?


Poland 100 Australia ? Canada 90


♠J9854 ♥1073 ♦A742 ♣6

W 2♦ Pass

NB: North’s 3♠ bid is a gross overbid with only 3 trumps. Two questions:


Hong Kong 140

S 1♠ 4♠

You, as South, have 5 points and spades are not very good yet South has bid 4. Why do you think it is a good bid (if you do)? Don’t forget you can’t see partner’s hand. Disappointed to see partner only has 3 trumps, how do you play this after the Q♦ lead? Note that assuming you play clubs, East shows up with 4. Hint: Look at the title.

Bridge puzzle provided by David Lampert


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June 2014 • THE ACTUARY


27/05/2014 17:29












Co Congratulations to this month’s winner – Martin Hall of Admin A Re UK




Problem on a plate Mensa puzzle 583



How many new plates can possibly be made in total?

Answer: 65

Roundabout riddle Mensa puzzle 584

A coach has been travelling for four hours. In the first hour it covered two fifths of the total journey. The next hour it covered one third of what was left. The following hour it covered one quarter of the remainder and in the fourth hour half of the remaining distance. The coach still has 25 miles left to its destination. How many miles has it covered? Answer: 141.6666 miles. — Congratulations to this month’s winner – Marilyn Martin


The top half and the bottom half are on interlocking rotating systems. When they move round they will realign so that four associated names are read downwards. What are they? Answer: Como, Pisa, Rome and Bari will be read downwards when the top half is rotated two places anticlockwise.

Winning words Mensa puzzle 586 When each of the following words is rearranged, one of them can be used to prefix all the others to give five longer words. What are they? Answer: Designate, desirable, desirous desistance and designation.



THE ACTUARY • June 2014

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E 11









O M S A C R S E I M S I C R S T E O 27









T E U M R E S S E D C S O R I C R D I A L N I D O L S Y K C A R R S I T I C O R T R A L 17





Bridge Puzzle 42 Who has what?

A factory recycles plates for use in its canteen. Nine used plates are needed to make each new plate. If there are 521 used plates

Musing on mileage Mensa puzzle 585



© Nylfia

At the back Coffee break

Stayman is a useful convention, but it can give useful information to the defence. The bidding: S N 1NT 2♣ 2♦ 3NT (1) Stayman; 2) No 4-card major Q1: In the following hands, you, as West, lead your 4th highest card of your longest suit. Using the principles that Partner will play high but will also play the lower/lowest of touching cards, you have to determine which of the unseen cards are in Partner’s hand and which are in Declarer’s. The card led by you and played by Dummy is underlined. You Dummy Partner Declarer (West) (North) (East) (South) 1










3 ♥Q754 ♥10863 ♥J ? Q2: Why is it useful to work out the holdings? Answer: 1. If Partner had the A, he would have played it. If he had the J and 10 he would play the 10. Declarer has AQ10. Partner has J9. (NB, Declarer has denied 4 cards). 2. If Partner had either the K or Q, he would have played it, therefore Declarer has both. If he had 10 and 9, he would play the 9. Declarer has KQ9 and Partner has 10 8 7. 3. If Partner had either A or K, he would play it. If he had 9, he would play it in preference to the J (as the 10 is in Dummy). Therefore, Declarer has AK9, Partner has J2. Q2: Why is it useful? If you get in before Partner, you need to know whether it is safe to continue with the suit, or whether to put Partner in to lead through Declarer’s holding. In each case, it is not safe to continue and the next lead of the suit must come from Partner’s side. Bridge puzzle provided by David Lampert


27/05/2014 17:29

At the back Student

Student Performance appraisals can be awkward. Jessica Elkin advises on how to deal with giving and receiving feedback diplomatically

WE’RE HAVING A (STRESS) BALL “His palms are sweaty, knees weak, arms are heavy... There’s vomit on his sweater already, Mom’s spaghetti… ” Eminem was ostensibly talking about a rap battle here, but part of me wonders if he didn’t write this during a two-way feedback conversation in the office. I would certainly be able to relate to how he feels. “He opens his mouth but the words won’t come out” sounds especially familiar. Career development reviews, performance appraisals, or whatever your company may call them, can be difficult to stomach. Working out where you’d like to be in X years is challenging for many actuarial students – your default answer might be, “Er, qualified?” – and admitting to your own failings, or telling others about theirs, is not the most fun you can have in a day.

A praise-all? Feedback in particular can be tough, whether delivered orally or in a written missive. Generally, though, the anticipation of negative feedback is far worse than most of the comments you receive. Usually it will be fair, and once the session is over that feeling of openness and honesty can allow you to feel more relaxed. Far worse to feel that someone may have stashed away some negativity than to know what it is; better to know there is a mosquito under the bedsheets with you so that you can find it and inflict a horrible grisly death. Personally, I’d rather receive feedback than give it. Having your flaws laid out in front of


p37_june_student_FINAL•CT.indd 37

you is one thing, but criticising somebody else in a way that will be helpful to them without causing offence can be just as worrisome. This may especially be true because, as a student, you’re usually giving feedback to a more senior person whom you may admire, or at least hope not to displease. And then there are those you probably don’t engage with all that much and therefore don’t want to say things that, however professionally you frame them, can be taken personally. This has to be approached with care. Unfortunately there’s no escaping the fact that feedback sessions, however crushing,

joyous or invigorating, are an essential part of many firms’ career development review processes. And, despite the trepidation most of us feel about the process – “I’d rather have my tongue beaten wafer-thin by a steak tenderiser, and then stapled to the floor with a croquet hoop,” as Blackadder once said on the matter – they can function to improve working relationships with others and up your confidence.

Subjective objectives Once the feedback session is over, you should get a fuller picture of yourself and be able to think about the areas you could work on. Don’t forget to also give yourself a moment to bask in the glow of all the positive aspects of your style, charm and intellect. Good at the technical side, are you? Phenomenal spreadsheet wizard? Maybe you’re wellorganised, or you manage expectations with aplomb. Do you always think of ways to improve processes and ask the right questions? Or perhaps you’re just a hoot to work with. Whatever it is, give yourself a pat on the back. The question is then what to do with your new stash of information. Objectives can be tough to articulate, especially in terms of measurability. A methodical approach is to ascertain gaps in your development or ways you can get from where you are now, to where you’d like to be. While thinking about this abstractly can be challenging, if you look at your peers you may well see aspects you like, whether it’s the sort of work they are doing and could pass to you, or individual skills you would love to poach. What you really want is to be so good that you can elbow them out of your way. In the nicest possible way, of course. The goal of all of this is to help you formulate objectives and, on a more granular level, goals (the stepping stones to achieving the objectives). You can then consider the skills you need to achieve your objectives, how you can gain those through new projects or training, and who can help you to acquire them. Directly acknowledging your objectives to colleagues may help them to help you. Once it’s over, you can breathe a sigh of relief and know that you’ve got another nine months or so for self-improvement before it all starts again. At which point you can get revenge on all those people who badmouthed you. a

June 2014 • THE ACTUARY


27/05/2014 17:30

At the back Appointments


Moves pensions consulting experience and joins from Grant Thornton. Prior to this, he was at Towers Watson and Mercer.

KPMG has announced the appointment of David Brown as a nonlife actuarial partner in the firm’s insurance practice. He joins from Direct Line Group and will focus on advising clients in the retail general insurance sector. He brings almost 20 years’ actuarial experience to the firm.

Towers Watson has appointed Keith Goodby as a senior investment consultant in the firm’s Insurance Investment Advisory Group (IIAG). Goodby has over 15 years of investment and insurance experience and joins Towers Watson following six years at Legal & General and, prior to this, nine years at Tillinghast Towers Perrin.

BDO has announced the appointment of Shyamal Bala as senior manager to their pensions advisory team. Bala has 10 years

PartnerRe have announced that Tim McElroy (above, right) has joined their central pricing and research area (Life Solutions

Actuarial) as a senior pricing actuary. Having previously worked as a consultant, McElroy brings much experience in the development of various actuarial systems. He will be based in Zurich and will play a leading role in defining and implementing a vision for PartnerRe’s pricing tools landscape.

LCP has appointed Suzanne Taylor as a senior consultant in its pensions administration team. She has over 14 years’ experience in pensions administration and operational change management – including DB and DC pensions, accounts and payroll – gained in regional Human Resources Outsourcing roles, most recently with Aon Hewitt. Taylor will be based in LCP’s London office. The government has appointed former Prudential UK director Tom Boardman

with an impressive audit trail.

As the absent parent who occasionally nags them to contribute towards an ISA.

What motivates you? The great pride I feel

associate myself with unsightly #N/As.

What would be your personal motto? “Trust me, I’m an actuary.”

Name five dream companions to be stuck on a desert island with? Katniss Everdeen to set up shelter and scavenge for food; Yotam m Ottolenghi – if he can make eggplantt taste good, he can do anything; Buddha – I think some meditation and self-reflection ction would do us good; Lisa Simpson – she he would appreciate my actuarial references to everyday scenarios; ed we Dorothy of Oz, because if we got bored could find our way home to Kansas.

What’s your most ‘actuarial’ habit? Everything from splitting the bill at a restaurant, to arguing with our landlord over the rent, it is all justified through a spreadsheet



If you could learn one random skill, what would you learn? Finnish. Favourite Excel function? IFERROR. I refuse to

when I realise I’m cutting through complexity

David Fairs, (above, right) a partner at

KPMG, will take up chairmanship of the ACA on 1 June succeeding Barnett Waddingham partner Andrew Vaughan. Fairs is honorary treasurer of the ACA and a former member of the Society of Pension Consultants. He will continue in his role at KPMG alongside his ACA position.

ANJALI KUPERAN Employer and area of work KPMG Pensions How would your best friends describe you?

(above) as deputy chairman of Nest Corporation, the scheme’s trustee body. Boardman, who was previously director of retirement strategy at the Pru, has been a Nest trustee member since 2010.

How do you relax away from the office? I read The Actuary.

Alternative career choice? International spy. Tell us something unusual about yourself I can ite pick up small items with my toes.

Greatest G Gr eatest ris risk you have ever taken? My Mala Malaysian cousins convinced me to go on all the rides at an unregulated rural amusement unregula park las last Christmas. All warnings were w written in Malay, and my lovely ccousins assured me that ambulance with flashing the a lights was simply there as li “a “ safety measure”.

IIff you could go back in hhistory, who would you like ttoo meet? Rosa Parks.

Because our forefathers have sacrificed far too much for us to take for granted.

What’s your most treasured possession? You clearly haven’t seen my bill-splitting model. It’s far more impressive than it sounds and I suspect it earned me this nomination.

What are the top 3 things you would like to achieve in your lifetime? To change the world’s perception about actuaries; To look back on the life I’ve led and feel satisfied; Failing that... a never-ending supply of Reese’s I suppose would have to be a tolerable alternative.

If you ruled the world, what would you change first? To rid all humanity of disease. If you’re already thinking of the actuarial repercussions, I implore you to consider the grand scheme of things.

Do you know an actuary destined for greatness? You can nominate an Actuary of the Future by emailing

THE ACTUARY • June 2014

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28/05/2014 09:53


A P PO I N TME N TS To advertise your vacancies in the magazine and online please contact: Emmanuel Nettey +44 (0) 20 7880 6234 or

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Established Lloyd’s syndicate is looking for a deputy head of pricing to work closely with and support the Head of pricing. The role involves mentoring students whilst working with the underwriters across a large variety of business. Previous pricing experience is essential and London market experience is ideal.

This general insurance consultancy continues to grow and is looking for another partner. The right person should have a proven track record and the gravitas to help lead the practise. The opportunity is there to be moulded to the right person and a variety of backgrounds will be considered.

Capital Actuary

Niche Strategic Advisory Consultant £75k - £105k Basic, London

Lloyd’s syndicate is seeking a strong capital Actuary who is nearly or newly qualified. The role will work closely with the head of capital and interact very closely with the risk team as well, there is scope for this role to move into the risk department in time. The ideal person should have a proven background in capital modelling and igloo experience would put you at an advantage.

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£60k - £100k Basic, London A unique consultancy is seeking an entrepreneurial Actuary. This is a fantastic role to join a dynamic and ambitious team to provide strategic advice across a range of Lloyd’s syndicates. The work is across a variety of areas and will assist in the day to day running of the business, the right person must be ambitious and looking for a real challenge. This is an exciting opportunity to learn new skills.

Pricing Analyst Market Rate, London

Market Rate, London

My client is a mid-tier Lloyds Syndicate looking for a part-qualified analyst to join their reserving team based in central London. Reporting into the CRO, this position offers excellent exposure of reserving across a variety of commercial lines . The ideal candidate will have shown strong exam progress and London market experience.

My client is a leading composite insurer who is looking for a part-qualified student to join their pricing team in London. Reporting into the Head of Pricing, this position offers good exposure to pricing personal lines of business on a highly established platform. The successful candidate will have exhibited strong exam progress (passed all CTs) and previous pricing experience.

Capital Modelling Student

Capital Modelling Analyst Market Rate, London

My client is a leading Lloyds Syndicate who is looking for an ambitious actuarial student to join their capital modelling team based in London. Reporting directly into the Chief Actuary, this position offers excellent exposure to all parts of the model. After a recent acquisition this team is growing rapidly, this is an exciting time to join, promising rapid progression. Remetrica experience is highly desirable.

£50-60k Basic, London My client is a top tier Lloyd’s Syndicate looking for a part qualified actuarial student to join their capital modelling team. The ideal candidate will have passed all CTs and CAs and have thorough working knowledge of igloo software. London market experience is also preferential. This position offers superb exposure to the internal model and rapid progression in the team.





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+44 (0) 207 337 8800 June 2014 • THE ACTUARY 39

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Actuarial Contracts Darwin Rhodes continue to support clients on a range of live actuarial contract opportunities expected throughout 2014 /15. With over 10 years speci¿c contract recruitment experience we are always looking for new and available candidates. We have upcoming requirements for Prophet developers, Quali¿ed Life & GI experience & Solvency 2 Model development, methodology, documentation and capital management. Register your interest or request a market rate card update by emailing Adam Goodwin, Head of Darwin Rhodes

Nearly/Newly Quali¿ed opportunities – CP0910 Salary from £65k - £85k

Reinsurance Pricing Actuary – AVC0570 Salary to 140CHF

Calling all life actuaries seeking a new challenge. We are currently experiencing strong demand for nearly/newly quali¿ed actuaries who are seeking a new challenge and career advancement. Multiple opportunities across life companies and consultancies. Strong demand for Economic Capital individuals in a variety of UK locations.

My client, a leading international reinsurance organisation has an immediate need for a nearly/ newly quali¿ed actuary to be based in Zurich. Company specialises in providing reinsurance capacity on both a treaty and facultative basis structuring programs for a full range of property and casualty products, with an emphasis on speciality risks. Great opportunity for an actuary seeking career advancement within a stable company (business language is English).

For a con¿dential discussion, please contact Clinton Poore on or call 0207 929 7667

For a con¿dential discussion, please contact Victoria Cruickshank on or call 0207 929 7667

Quiz There are three jugs with capacities 11, 13 and 17 litres. Each jug contains 9 litres of water. By pouring from jug to jug, and not wasting any water, how do you measure exactly 8 litres of water? Please email your answers to for your chance to win a prize. Please quote ‘Actuarial Magazine’ Congratulations to last months winner Martin Smith!





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THE ACTUARY • June 2014

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27/05/2014 14:26

London : Chicago : Hong Kong : Singapore : Shanghai

InvestmentAnalyst /Consultant, ‘Big 3’Consultancy - London 3HQVLRQV 'H 5LVNLQJ 3URMHFW 0DQDJHU ,Q +RXVH /RQGRQ Â… Â… %HQHÂżWV 7R FÂ… %HQHÂżWV Leading global consultancy with blue chip client base and meritocratic culture is developing their London team. Responsibilities include: managing client relationships day-to-day, attending meetings/supporting the lead consutlant; recommending investment strategies and conducting manager research. Experience and Qualifications: CFA or FIA track to recently qualified; investment consulting experience preferred but actuarial pensions consultants would be considered. This is a rare opportunity to build a career in Investment Consulting in a supportive, collegial environment working with some of the country’s most complex clients. Contact +44 207 481 8686

This large FTSE 100 organisation is looking to hire a De-Risking Project Manager to work within their finance department. Responsibilities will involve taking ownership for any future DB investment de-risking exercises, project managing two complex triennial pension valuations as well as managing the covenant assessments. There will also be the need to manage relationships with a wide range of key stakeholders across the business. It is essential for the suitable individual to have a background from an actuarial or accounting practice, or similar in-house arrangement. A track record in the management of large complex de-risking projects is equally essential. You will probably be a newly qualified actuary or at least close to qualification and will be able to demonstrate project management experience. Contact +44 207 481 8686

Risk Manager - London Actuarial Analyst - London $WWUDFWLYH 6DODU\ %HQH¿WV 3DFNDJH $WWUDFWLYH 6DODU\ %HQH¿WV 3DFNDJH My client, a leading specialty insurer and reinsurer, is looking for a QHZO\ QHDUO\ TXDOL¿HG DFWXDU\ WR VWUHQJWKHQ WKHLU ULVN PDQDJHPHQW WHDP 7KLV UROH RIIHUV VLJQL¿FDQW H[SRVXUH WR H[HFXWLYH PDQDJHPHQW Main remit is to embed the risk management framework with a focus on regulatory compliance and reporting. A solid understanding of Solvency II regulation and prospective requirements both in the Lloyd’s and non-Lloyd’s environment is expected. The candidate must have exellent communication and reporting skills with a proven ability to build relationships with various stakeholders. General understanding of risk management processes and capital modelling will be an advantage.

This multinational insurer is looking to hire an Actuarial Student for their actuarial team. Principal responsibility will be reserving and the quarterly reporting process. Other tasks include portfolio analysis and performance monitoring (i.e. rate monitoring, loss trend analysis etc.) as well as planning and capital modelling. The ideal candidate is an actuarial student with relevant experience in the general insurance industry ideally London Market - and strong communication skills. Good knowledge of Excel and Access would be advantageous. Contact

Contact +44 207 481 8686

+44 207 481 8686

/RQGRQ 2I¿FH IPS Group, Lloyd’s Avenue House, 6 Lloyd’s Avenue, London EC3N 3ES 7HOHSKRQH 020 7481 8686 Email: /HHGV 2I¿FH IPS Group, 8 St Paul’s Street, Leeds LS1 2LE 7HOHSKRQH 0113 202 1577 Email: p41_ACT.06.14.indd 41

September 2013 • THE ACTUARY 41

27/05/2014 14:28

Appointments We are a recruitment consultancy with a difference Bringing Talent Together

Head of Protection Products and Pricing London This role will be accountable for all protection products across the division, including UK on-shore sales as well as International off-shore sales across the globe. Managing a team of ten across the globe with responsibility for pricing of new products, reinsurance negotiations, product launches and co-ordinating the proposition development process for the protection process.

Partnership London We are currently recruiting for a Partnership opportunity within a global consultancy. Partnership will include full P&L responsibility for the unit, and you will be responsible for the strategic direction of the practice and all hiring across it. You will lead all business development and engagement with clients and be responsible for the output of your team. You will be able to leverage off the global brand of the ¿rm and its enormously successful track record to date. This is an outstanding opportunity with a genuine market leader to signi¿cantly develop a practice.

Pensions & Investments | Non-Life | Life & Health

Your specialist actuarial recruiter in the UK, Mainland Europe, and Asia-Pacific, with dedicated sector specific consultants covering; Non-Life Life Pensions and Investments

Contact Ian Povey

Andrew Cannon

Actuarial, Pensions & Insurance Risk Management 020 7092 3265

Actuarial, Pensions & Insurance Risk Management 020 7092 3262

Of¿ce Number +44 (0)20 7092 3200

For current opportunities please visit

UK | Europe | Asia Paci¿c

Celebrating 10 years of actuarial recruitment – will your 2014 be bright?

For a confidential career discussion please contact us on +44 (0)207 332 5870 or 42

THE ACTUARY • June 2014

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27/05/2014 15:43

Life Insurance Roles Solvency II Actuary

Actuarial Life Manager

£60k - £95k Basic, South

£60k - £100k Basic, South West A technical modelling team requires a Life Actuary with strong performance and team management experience to drive the team forward through numerous projects. This team focuses on model development throughout the business so a broad spectrum of experience including modelling is important. This role would suit an Actuary with management experience.

An experienced Solvency II Actuary is required to help work across the Solvency II project including the IMAP, the ORSA and the embedding of the project into BAU. Prior experience in a part internal model, part standard formula environment would be ideal and the ability to communicate effectively with both internal and external stakeholders is essential.

International Pricing Actuarial Analyst


£30k - £50k Basic, South West A growing international team requires an Actuarial Analyst to analyse, review and investigate Actuarial models and results within the Pricing team. Prior experience in a Pricing and Product Development role is advantageous, as we as an understanding of International regulations. Good progress with the Actuarial exams is also important and will be expected until qualification.

£30k - £120k Basic, London Do you have 2-8 years experience at a Life insurer and now looking for a role that gives variety, exposure and fantastic growth potential? A fantastic opportunity has arisen within a global consultancy, world renowned for high levels of technical skills and advice, as they seek a Actuarial Analyst to Senior Managers to work across a variety of different areas and disciplines.

Contract Roles Capital Analyst

Solvency II Actuaries FTC £75k - £100k, 6 months, London

£750 - £1200 per day, 12 months, London

A leading insurer is currently looking for a capital analyst to work in their centre of excellence team. You will be a core team member helping with enhancing the model as well as documenting it. You must have strong capital modelling and methodology experience and excellent written skills for the documentation work.

This leading Insurer is looking to recruit a Solvency II actuary with Internal Model and regulatory interpretation experience. To be successful you must have up to date S2 knowledge and know how to apply them practically to the business as well as experience in reviewing and challenging the model.

Capital Contractor

Reserving Contractor

£700 - £1000 per day, 6 months, London

£700 - £900 per day, 6 months, London

This leading niche insurer is looking for a contractor to help with project based work. Reporting to the chief actuary, you will assist with the internal model development, standard formula calculation as well working on Lloyd’s submissions. In order to be successful you must have strong capital modelling experience.

This leading insurer is looking for a contractor, for an initial 6 month period subject to extension with reserving experience. You will be required to help backfill the day to day reserving work as well as help the quarterly GAAP/technical provisions under Solvency II and reserve risk parameters. In order to be successful you must have relevant GI Reserving and ResQ experience.

Financial Reporting Contractor

Risk Modelling Actuary

£600 - £900 per day, 6 months, London

£750 - £1000 per day, 6 - 9 months, South East

A nearly / newly qualified Actuary with a good understanding of Financial Reporting including MCEV and IFRS is required for this 6 month contract in London. Experience covering different international regulations and relaying key themes and ideas to different business units overseas would be highly desirable. Prior projects, consultancy or contracting experience would also be beneficial.

A Risk-Modelling expert is sought by an International composite Insurer to provide technical expertise and advice in risk modelling. You will be significantly involved in the development and implementation of the Group Risk and Capital Model to be compliant with Solvency II and TAS requirements. A Qualified Actuary is desired but Risk Modelling and Solvency II experience is more important.

Risk Roles ERM Analyst

Chief Risk Officer

£30k - £40k Basic, London

Up to £150k Basic, London/South East You are an experienced Non-Life professional with a solid grounding in Actuarial and Capital and looking to move into a senior Risk role. The role reports into the Chief Executive and will cover Risk and Actuarial functions. The ideal candidate will be a Qualified Non-Life Actuary with Capital experience and ideally an exposure to Risk Management. You will have strong communication skills and be comfortable presenting and liaising to a Company Board.




Life Insurance

Risk Management

Risk Management

+44 (0) 207 337 1207

+44 (0) 207 337 1202

+44 (0) 207 337 1202

0207 337 8800 p43_ACT.06.14.indd 43

An excellent chance for a mathematically minded risk analyst to gain a position within a Lloyd's syndicate. Supporting the Risk officer you will manage the ORSA, update the risk register and assist in the preparation of the risk appetite. Candidates will come from a risk or financial background with previous experience with working on the internal model. The chosen candidate must be quantitative with insurance experience.

September 2013 • THE ACTUARY 43

27/05/2014 14:32






Co-Founder and Director

Co-Founder and Non-Executive Director

Co-Founder and Non-Executive Director


Financial Risk Manager – Malaysia

Reinsurance Product Specialist – Hong Kong 1m – 1.3m RMB

Local Package + Relocation

Great chance to work with the CRO of this global insurer in their Malaysian office. You will be offered full scope to employ your financial risk modelling expertise and Solvency II knowledge, to embed the risk framework. You will have a Life actuarial background, first class communication skills and a desire to be at the forefront of ERM.

An impressive and highly entrepreneurial reinsurer is seeking a senior product specialist. As part of the senior management you will have full responsibility for the end to end product design, the take to market strategy and full client ownership across AsiaPac. For further information please contact Graeme at HFG on or +65 6829 7160

New Team (Life & Pensions) – Hong Kong

Solvency Specialist – China Competitive Salary in CNY

Up to HKD 60,000/month + bonus

A prestigious Insurer in Hong Kong are establishing a Global Model Review Team to work closely with their London office. You will be reviewing Life and Pension models across business units, providing solutions to improve performance. Good knowledge of Insurance and Pensions models, statutory returns and excellent communication skill are required.

My client is looking for a nearly/newly qualified life actuary to join their actuarial team in China. You can choose to be based in either Beijing or Shanghai and you must be technically strong and gained Solvency/EC related experience from either European market or local Chinese Market. Working knowledge of Prophet ALS is highly desirable!

Actuarial Consulting – Malaysia

Senior Catastrophe Modeller – Hong Kong

Market competitive

Market competitive

A niche actuarial consultancy is looking for a technical individual for a lead position in a small team. The role will involve GLM modelling, capital projects and reinsurance optimisation. The ideal candidate will be a nearly/newly qualified Actuary with strong experience in non-life reserving and pricing. Consulting experience advantageous but not essential.

An Asia Pac Insurer has created an exciting opportunity for a Senior Catastrophe Modeller in a role that will build a function from scratch. Working closely with actuaries and underwriters, you will be commercially and technically strong. APAC experience advantageous, as well as the ability to effectively manage key stakeholders and eventually a team.

HFG Singapore Office: Jason Sykes Clare Bethell Graeme Braidwood 44

Managing Director Director Senior Consultant

Hallie Chin Merri Knox Tong Yu

Consultant Consultant Consultant +65 6829 7153

THE ACTUARY • June 2014

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We can help you



27/05/2014 15:23 14:39 26/11/2013



£ excellent + bonus + benefits

£ excellent + bonus + benefits




REINSURANCE ACTUARY £ excellent + bonus + benefits STAR1875



Market-leading insurer is seeking a qualified life actuary with the ability to engage with and influence stakeholders to be responsible for the implementation of the strategic road map for its internal longevity capability.

Our client has an exciting opportunity for a talented individual with good knowledge of the life insurance industry to apply their skills on cutting edge actuarial projects in a strategic context.

World leader in reinsurance is seeking a qualified life actuary with reinsurance pricing experience and strong interpersonal skills to make a difference within its London-based team.




£ excellent package

£ very attractive package



£ excellent + bonus + benefits





Leading group seeks a qualified actuary to deliver a portfolio of audits, using a deep understanding of business strategy, controls and risks to provide reliable, independent assurance on the effectiveness of the control framework.

Our client has an exciting opportunity for a qualified life actuary to be responsible for leading and managing its asset modelling activity for both regulatory and economic capital purposes.

Our client, a leading global insurer, has a number of vacancies for qualified life actuaries seeking opportunities within the Risk and Capital Management space. Involvement with Solvency 2 workstreams a distinct advantage.




£ very attractive

up to £78k + bonus + benefits

£ excellent + bonus + benefits







Take up a key role within a market-leading and innovative insurer. Provide insight and intellectual leadership as you work with teams from across the business to ensure products are appropriately positioned.

Major life company has an exciting opportunity for a qualified actuary to manage the maintenance and development of actuarial models, people and processes, ensuring an annual team plan is regularly updated.

Seeking an expert modeller with significant experience of Prophet to be responsible for the delivery of all aspects of the maintenance and developments of the actuarial modelling systems.




£ excellent + bonus + benefits

£ excellent + bonus + benefits

£ excellent + bonus + benefits







Leading life company is seeking a qualified actuary with Prophet development experience to take responsibility for the gate-keeping and control environment for its actuarial models.

Leading insurer seeks a qualified life actuary to support the design and implementation of financial restructuring projects to optimise the Group Capital structure.

Please contact us for more details of a wide-ranging leadership role and a brilliant career opportunity for a qualified actuary with this niche insurer.




£ excellent + bonus + benefits

£ excellent package

up to £32k + bonus + benefits



Global professional services firm has an exciting opportunity for a part-qualified actuary to support a wide range of assignments from Solvency II to capital management, reserving and actuarial modelling.





Major life company has an exciting opportunity for a part-qualified actuary seeking a role with a commercial focus. You will design, build and test new actuarial pricing models.

Leading insurer seeks a talented part-qualified actuary to analyse the profitability of new protection products, reviewing reinsurance arrangements and developing pricing models.




£ excellent + bonus + benefits

£ excellent package

£ excellent + bonus + benefits



Take this opportunity to play a leading role in the development and implementation of hedging and alternative investment strategies within an innovative team for a global insurer.



Leading insurer is seeking a qualified life actuary to support senior management by providing specialist actuarial technical expertise and advice in relation to the implementation of Solvency II.



Leading financial services company is seeking a qualified life actuary to take the lead on actuarial analysis, providing support for pricing, profitability reviews and special projects.

Antony Buxton FIA Anton

Lance Randles MBA La

Paul C Cook

Joanne Young Joa





THE ACTUARY • September 2013 M +44 7766 414 560 E

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M +44 7889 007 861 E

M +44 7740 285 139 E

M +44 7739 345 946 E


£ to attract the best

£ excellent package







We are working on a variety of Senior Manager, Director and Partner level consulting roles with a wide range of clients. Please contact us for more details of these fantastic opportunities for high-flying pensions actuaries.

We are seeking a senior institutional investments specialist with an FIA or CFA background. The role requires a candidate with superb clientfacing, influencing and leadership abilities, and a strong knowledge of pensions investment.

A unique opportunity for a pensions actuary with significant business development experience to build a trustee practice for a leading consultancy.




£ excellent package

£ excellent package

£ excellent + bonus + benefits PENSIONS EDINBURGH






Seeking a qualified actuary with strong pension consulting skills (corporate, trustee or a mix) to assume responsibility for a small portfolio of clients and to increase our client’s presence in the Scottish market.

An exciting opportunity for an investment specialist to support our client’s position as a thought leader by researching strategic matters and investment trends.

Our client, a leading global firm, is looking for a consultant with strong communication skills and experience of the employee benefits and pensions industry gained within a developing market environment.




£ depends on experience PENSIONS LONDON

£ excellent + bonus + benefits STAR1846


£ excellent + bonus + benefits STAR1703



Our client has a number of exciting opportunities for qualified pensions actuaries to strengthen the practice's actuarial and consulting capability within the London Office through involvement in marketing and new business activity.

Our client is seeking a qualified actuary to develop the firm's knowledge, briefings and house views on longevity, undertake peer reviews of advice, create and develop new actuarial models and foster new business.

Leading professional services firm is seeking a qualified pensions actuary to provide leadingedge strategic advice to employers and pension schemes, taking account management responsibility.




up to £60k + bonus + benefits

£ excellent + bonus + benefits

£ excellent







Seeking a part-qualified investment actuary to lead the development of the client support strategy across the business and build processes around which client service is delivered to a high quality standard.

Global firm seeks qualified actuary to provide management consultancy services to corporate sponsors of pension schemes. You will provide specialist advice on risk solutions and scheme financing to a wide range of clients.

Specialist pensions consultancy has an exciting opportunity for a part-qualified actuary to perform a range of actuarial valuations, including scheme specific funding, solvency, PPF, and IAS19.




up to £48k + bonus + benefits

up to £35k + bonus + benefits

up to £30k + bonus + benefits



Seeking a part-qualified or qualified pensions actuary looking to take more responsibility within a well-respected consultancy where your career development is paramount.



Leading UK employee benefits consultancy seeks a part-qualified actuary of the highest quality to strengthen the practice's actuarial and consulting capability.



Leading pensions consultancy seeks a part-qualified actuary to handle the preparation of actuarial valuations, whilst producing accounting disclosures (FRS17, IAS19 and USGAAP).

Star Actuarial Futures Ltd is an employment agency and employment business




£ excellent + bonus + benefits

£ excellent + benefits

£ excellent + bonus + benefits



Leading consultancy is seeking a part-qualified or qualified actuary to develop and support a range of pension scheme asset, liability and risk models.

Seeking a qualified actuary to work within a multi-disciplinary environment across the pension scheme risk management spectrum. You must possess a strong investment background with an understanding of asset class behaviour.


STAR1914 & STAR1915

Leading financial services firm seeks part-qualified and qualified pensions actuaries to provide specialist advice to companies and private equity firms on the pensions aspects of M&A.

Louis Manson Lou

Irene Paterson FFA Ire

Peter Baker

Clare Roberts





M +44 7595 023 983 E

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M +44 7545 424 206 E

M +44 7860 602 586 E

September 2013 • THE ACTUARY 47 M +44 7714 490 922 E

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Louis Manson Lou

Irene Paterson FFA Ire

Peter Baker

Clare Roberts





THE ACTUARY • September 2013 M +44 7595 023 983 E

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M +44 7860 602 586 E

M +44 7714 490 922 E




up to £120k + bonus + benefits

£ excellent + bonus + benefits

£ excellent + bonus + benefits





Our client is seeking a talented capital modeller to take the internal model use to the next level and play a key role in the continuing development of this high profile business function.

Our client is seeking a qualified non-life actuary to lead the delivery of a wide range of capital modelling and capital management solutions.

Market leader seeks actuary with strong interpersonal skills and experience of traditional reinsurance pricing for casualty business, including exposure rating and experience rating.




£ excellent package

£ excellent + bonus + benefits



CHF excellent + bonus + benefits





Leading client seeks a high-calibre qualified actuary with significant reinsurance pricing experience, including experience and exposure rating.

Leading insurer is seeking a part qualified or qualified non-life actuary with an underwriting, pricing or capital background to be responsible for the second line oversight within its risk function.

Leading international underwriter and reinsurer seeks a qualified non-life actuary to take the lead on modelling and pricing casualty and structured reinsurance treaties across Europe.




up to £95k + bonus + benefits

up to £80k + bonus + benefits

£ excellent + bonus + benefits






STAR1725 & STAR1786

Our client has a number of exciting opportunities for talented finance or insurance professionals to review, challenge and catalyse improvements to the management/mitigation of risk within a leading insurance business.

Seeking a qualified non-life actuary or candidate with underwriting/pricing experience to contribute to the advancement of the technical and market pricing capability of our client's household business.

Seeking qualified and part-qualified non-life actuaries with proven pricing ability to contribute to the Commercial Lines pricing strategy, developing and presenting pricing recommendations to senior management.




£ excellent + bonus + benefits

up to £65k + bonus + benefits

£ excellent + bonus + benefits







Leading provider of insurance solutions is seeking a part-qualified or qualified non-life specialist to develop and produce technical guidance for actuarial and statistical pricing analysis of underwriting performance.

Seeking a part-qualified non-life actuary with personal lines pricing experience to lead on a wide range of projects, including price optimisation. Experience and understanding of a wide range of software packages is desirable.

Our client seeks a part qualified non-life actuary to take responsibility for reinsurance optimisation and design. This is an excellent opportunity for a highly driven, detail focused, and self-motivated actuary.




up to £55k + bonus + benefits

up to £50k + bonus + benefits

up to £45k + bonus + benefits



Global financial services group is seeking a part-qualified actuary to provide a second opinion on reserve recommendations, pricing and underwriting models, and capital model parameters.



Take this exciting chance for a part-qualified analyst to aid the development and implementation of telematics propositions in pricing, underwriting and wider business processes throughout the policy lifecycle.


If you are a part-qualified GI actuary with a passion for modelling, then this is an excellent opportunity to further your career with a specialist insurer by helping to develop and test the Group Internal Model.





£ excellent package

£ excellent + bonus + benefits

£ excellent package



Leading client requires a part-qualified or qualified pricing expert to join its Commercial Lines Pricing team. You will develop marketleading technical and market pricing techniques across many lines of business.



Seeking an IT specialist to support and develop in-house pricing and risk analysis applications. The successful candidate will design and build tools to optimise, monitor and support the catastrophe exposed portfolio.



We have an exciting opportunity for a high-calibre qualified or part-qualified non-life actuary with pricing experience and strong stakeholder management skills to join a leading London Market insurer.

Antony Buxton FIA Anton

Lance Randles MBA La

Paul C P Cook

Joanne Young Joa





M +44 7766 414 560 E

p48-49_ACT.06.14.indd 49


Star Actuarial Fut Futures Ltd is an employment agency and employment business



M +44 7889 007 861 E

M +44 7740 285 139 E

September 2013 • THE ACTUARY 49 M +44 7739 345 946 E

27/05/2014 14:49

GENERAL INSURANCE - UK Chief Actuary, CRO, Head of Capital London Paul Francis £150,000 + Bonus + Benefits

G.I. Chief Actuary Sarah Robins

Do you want a chance to grow a team in your own vision? I have 3 high profile roles seeking senior actuaries with good knowledge of capital, risk and SII. They have a broad set of responsibility, good autonomy and management exposure, and are well remunerated.

My client is looking for a Chief Actuary to join and lead their expanding actuarial function. You must be a qualified Actuary and you must have capital modelling, Solvency II and reserving experience. Managerial experience is also essential.

Pricing Actuary - Portuguese Speaking Brazil Paul Francis £100,000 + Bonus + Benefits

Capital Actuary Rob Bentham

A London market client has mandated me to find them a lead Pricing Actuary for their Brazilian operation. You will forge and maintain close working relationships with key underwriters. Starting in the local market, the role will extend to incorporate Latin America.

One of the most prestigious London Market insurers is looking for a Capital Actuary to join their team. You will be a nearly/newly qualified, strong Igloo modelling experience is essential and ideally you will have previous London Market experience.

London Market Pricing Analyst London Rachel Kelly Up to £65,000 + Bonus + Benefits

G.I. Pricing Manager Sarah Robins

A leading insurer seeks a part qualified Actuary to be responsible for pricing across a range of business classes and territories. Direct underwriter contact requires you to have excellent communication skills and a commercial outlook. Pricing experience is desirable.

My client is looking for a Pricing Manager to oversee their direct home insurance portfolio. You must have previous personal lines pricing experience and be able to communicate effectively with underwriters.

North West £120,000 + Bonus + Benefits

London Up to £80,000+ Bonus + Benefits

South West £60,000+ Bonus + Benefits

CONTRACTS - GENERAL INSURANCE - UK Capital Validation Actuary Elise Ogden

London £800 - £1,000/day

OJA have an exclusive assignment seeking a Capital Model Validation Actuary for a Lloyd’s client. The role requires in depth capital modelling experience with Igloo or ReMetrica knowledge an advantage. The work is likely to last to the end of 2014.

Pricing Actuary Elise Ogden

South East £600 - £800/day

We are working with a personal lines insurer to hire a Pricing Actuary on a six month contract. Candidates must have experience of home or motor pricing plus experience of other actuarial techniques including reserving and capital.

LIFE INSURANCE - UK Head of Solvency II Reporting London Richard Howard £120,000 - £130,000 + Bonus + Benefits

Capital Lead Clare Nash

Opportunity for a senior qualified Actuary to lead a team with a focus on the production of Solvency II and economic capital results. They are looking for a strong manager who has significant experience and understanding of Solvency II and economic capital.

A newly created role within a highly ambitious organisation. My client seeks an experienced Actuary with a wealth of experience in capital management and Solvency II to lead their evolving team. An exceptional opportunity to make a huge impact in the industry.

Head of Actuarial David Parker

ALM Actuary Clare Nash

North West £120,000 + Bonus + Benefits

London (City) £120,000 + Package

London (City) £80,000 + Package

EXCLUSIVE APPOINTMENT:- A highly visible and senior appointment has been created at a growing life business in the North West. Reporting to the Chief Actuary you will lead the actuarial function in a challenging and evolving environment.

Outstanding opportunity to join a prestigious player in the market. My client seeks a qualified Actuary to play a key role in technical and strategic initiatives. This is a highly visible appointment and provides incredible exposure to the industry.

Investment Reporting Natalie Lightfoot

Modelling Manager Richard Howard

South East £75,000 + Car + Package

One of the UK’s leading insurance businesses is looking to bring on board an experienced people manager for a new hire in their retirement division. This highly visible role will involve you working alongside the divisional head in a rapidly expanding organisation.

Bristol £65,000 - 75,000 + Bonus + Benefits

My client is looking for an aspiring man-manager to take the lead of a team of systems focused actuaries in Bristol. They are looking for a qualified life Actuary with team management experience. Prophet development experience is not essential.

CONTRACTS - LIFE INSURANCE - UK Product Governance Actuary Ani Pannell

Dublin €350 - €600/day

My client requires several part qualified actuaries to assist with their product governance project. The successful candidates will have at least two years of actuarial experience, good product knowledge, and have excellent communication skills.

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Internal Model Consultants Benjamin Moses

London & Europe £800 - £1,200/day

A number of my clients are currently looking for internal model validation & documentation experts to work on a variety of projects both UK and mainland Europe based. Ideal candidates will have recently worked in a group risk environment, and will be qualified actuaries.

27/05/2014 14:53

ASIA General Insurance – UK Special Projects Philip Chau

Hong Kong £££Competitive

Paul Francis

0207 649 9469

A leading insurer is seeking a relatively experienced Actuary who is able to apply their technical capabilities to a broader space. You will be managing the board meetings from an actuarial perspective and spearheading exciting projects involving Capital and ALM.

Rob Bentham

0207 649 9351

Sarah Robins

0207 310 8552

Chief Actuary / CRO Gary Rushton

Rachel Kelly

0207 310 8579

Hong Kong £££Competitive

Contracts - G.I. - UK

My client an international player within the L&H space are currently looking for an experienced Actuary to oversee all actuarial and risk functions globally for their key business line. You will also lead the development of the global risk management framework.

Elise Ogden

Head of Capital / Product Strategy Gary Rushton

Clare Nash

0207 649 9350

I would like to speak with high profile senior actuaries to lead a hugely profitable and key strategic growth area of business for one of my top tier insurance clients here in HK. The role offers commercial exposure and business management responsibilities.

David Parker

0207 310 8649

Richard Howard

0207 649 9356

Director, Pricing Hamza Mush

Natalie Lightfoot

0207 310 8547

Hong Kong £££Competitive

Malaysia £££Competitive

0207 649 9355

Life Insurance - UK

Contracts - Life Insurance - UK/Europe

A global market-leading reinsurer is looking for an experienced and qualified individual to build a team in Malaysia and provide technical pricing support, sign off quotations and work with top-tier life insurers across the region on new product development initiatives.

Benjamin Moses

0207 310 8793

Ani Pannell

+353 144 75975

Senior Manager, Modelling Hamza Mush

Kaylash Kukadia

0207 310 8581

Hong Kong £££Competitive

A well-renowned global insurance brand is seeking an experienced modelling Actuary in their regional HK office to join a high calibre international team that consults senior stakeholders and business units across Asia, Latin America, and Europe.

Asia Gary Rushton

+852 5804 9223

Consulting Actuary Toby Weston

Toby Weston

+852 5804 9042

Philip Chau

+852 5804 9287

Hamza Mush

+852 6086 9879

Malaysia £££Competitive

A fast growing independent consulting firm in KL is looking for a senior Actuary to help grow their business in SE Asia. The successful candidate will lead projects across GLM, capital, ERM, reserving and M&A, and manage a large team in the region.

EUROPE P&C Reinsurance Actuary Manuel Lovell

Germany €€€Competitive Package

France Emérique Opou

+33 1 76 77 46 30

Agathe Ibazizen

+33 1 76 77 46 31


One of the best-known companies in reinsurance is looking to hire a P&C Actuary with German language skills to work in Germany. The role will involve all activities from pricing to Solvency II and capital modelling with a range of small, medium and large clients.

Patrick McMahon

MCEV and Solvency II Modelling Actuary Manuel Lovell

Niels van Nieuwkerk

+31 20 716 8327

Julien Fabius

+31 20 716 8450

Laurence Baken

+32 24 012 249

Germany €€€Competitive Package

My client is looking for an Actuary to join their central coordination team to determine guidelines and frameworks regarding their MCEV and Solvency II modelling on a worldwide basis. You will be expected to interact extensively with different departments.

Risk and Reporting Actuary Patrick McMahon

Dublin, Ireland Up to €70,000

+353 1 437 0625


Germany Manuel Lovell

+49 89 2109 3362

My client is a small but successful operation that is part of a large international and well renowned business. They are looking to recruit a life Actuary, nearly or newly qualified, to join their team. You will get exposure to reporting, risk, ESG & Solvency II.

Emina Biscevic

+49 89 3803 8965

Alessio Montaruli

+49 89 2109 3339

SII Validation Officer Laurence Baken


Brussels £50,000 - £60,000

An excellent opportunity for a validation expert to validate SII capital models and technical provisions of a global European insurer on a group level. You will present conclusions to the model board level at group and local level.

Excellent G.I. Opportunity Patrick McMahon

Dublin - Ireland Up to €100,000

Audrey Dresen

+41 43 508 0444

Please contact one of the team for further information on any of the opportunities above or visit

This is an exciting opportunity focused on implementing Solvency II across the European region for a large insurer. You will be liaising with the group, the Chief Actuary and local teams across Europe, exp. across a number of actuarial areas would be beneficial.

General Contact Details:


Actuary Risk Reporting Niels van Nieuwkerk


The Hague €€€Competitive Package

Our client is an international insurance group with presence in 20 countries worldwide. The organisation seeks to recruit an experienced Actuary to support the risk reporting team. You will focus on high quality reports of SII and MVN results on Group level.

p50-51_ACT.06.14.indd 51

@OJAssociates oliver-james-associates

27/05/2014 14:53

The Actuarial Recruitment Company

A fresh approach

Capital Actuary London

General Insurance Circa ÂŁ90K

Reinsurance Broking London

General Insurance To ÂŁ60K

A nearly/newly qualified actuary with ideally Igloo experience is needed to support capital modelling for an international insurance and reinsurance business. The role will involve development and maintenance of various elements of the internal model, reinsurance optimisation work, liaison with the business for model parameterisation, assisting with regulatory submissions and support for model validation. Significant capital experience from a London market or other equivalent environment required. Ref: ARC26253

Supporting the specialty lines team of this major reinsurance broker this role will suit an individual with a strong personality, excellent communication skills and a proactive approach. The work will involve reinsurance pricing using cutting edge modelling techniques, involvement in the design and pricing of non-traditional reinsurance solutions, reinsurance optimisation work, support for reinsurance renewals as well as tenders for new business. Interaction with broking clients will be expected from an early stage. Ref: ARC26235

Reinsurance Actuary Zurich

Pricing Actuary London

General Insurance Circa CHF 140K

General Insurance ÂŁCompetitive

This reinsurer is looking for a nearly/newly qualified for a varied role

A senior trainee or newly qualified actuary is needed for this pricing

in a small actuarial team. The main focus will be reinsurance treaty

focused role in an established London Market business. Covering a wide

pricing across various lines of business, but there will also be a need

range of business lines, the successful candidate will support portfolio

for actuarial support for the Swiss Solvency test as well as reserving

and transactional pricing, development of new pricing models, provide

and reporting requirements. Very strong IT ability and ideally German

training for underwriters, provide MI, maintain pricing documentation as

language skills required. Candidates will need to be outgoing and

well as mentor junior members of the team. Pricing experience from a

confident communicators. Ref: ARC26254

London Market background is desirable. Ref: ARC26244

Call us anytime including evenings and weekends on 020 7717 9705 or email Andy Clark BSc FIA Roger Massey BSc MBA FIA

0781 333 7891 0781 398 9016 The Actuarial Recruitment Company is an employment agency

p52_ACT.06.14.indd 52 ARC FP.indd 1

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