The Actuary March 2014

MARCH 2014 theactuary.com

Interview: Nick Hewer

The magazine of the actuarial profession

On why actuaries should be everywhere

Solvency II Will it kill traditional corporate bond management?

Soft skills Why unrealistic goals are a must

Review Risk management issues in insurance The Actuary March 2014

VIRTUAL REALITY? The future for cryptocurrency Bitcoin

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Appointments

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 uk.milliman.com.

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MARCH 2014

Contents

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22 “Bitcoin may hold long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system”

26 UP FRONT

FEATURES

AT THE BACK

10 IFoA news

18 Interview: Nick Hewer

34 Puzzles

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

In a wide-ranging interview, the PR guru and The Apprentice star tells Deepak Jobanputra that actuaries should be everywhere

Try the latest cryptic crossword and Mensa puzzles for a chance to win Amazon vouchers

37 Student 22 Coining a new phase

OPINION 5

Editorial Kelvin Chamunorwa considers the perception of actuaries and the importance of demonstrating the profession’s unique skill set

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President’s comment David Hare asks members to speak up to support the Council’s new Research and Thought Leadership Board

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Soapbox Robert Kelsey looks at the enemies of productivity and how to slay them

33 Book review Andrew Smith on Risk Management Issues in Insurance, edited by Martin Bird and Tim Gordon

MORE CONTENT ONLINE Additional content can be found at www.theactuary.com

COVER: WWW.HITANDRUNMEDIA.COM

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The decentralised virtual currency Bitcoin could revolutionise finance, says UK life insurance actuary Peter McCrudden

26 Mission impossible What would happen if you set completely unrealistic goals?

Simon Hartley says that is exactly what high achievers do

28 Is regulation still good for us?

Simon Carne asks whether current regulatory proposals by the IFoA and the Financial Reporting Council go too far and considers the potential consequences

30 Rejoice, the battle is won!

Scott Eason asks if Solvency II will kill traditional corporate bond management for insurers?

Jessica Elkin advises students without a mathematical background not to be discouraged from joining the profession

38 Actuary of the future Tom Williams of Aon Hewitt

38 Appointments and moves

ONLINE Reasons to join the risk community The Risk Board outlines its aims and potential challenges for 2014.

Visit: bit.ly/riskcommunity

ERM: catastrophe risk evolution Trevor Maynard addresses the importance of a new open framework for modelling catastrophe risks

WRITER OF THE MONTH Peter McCrudden wins a £50 book token for his feature on Bitcoin, courtesy of SIAS

March 2014 • THE ACTUARY 3 www.theactuary.com

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Appointments

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.

Sign up for weekly news alerts today Visit www.theactuary.com/email-sign-up 4

THE ACTUARY • October 2013 www.theactuary.com

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Opinion Editorial theactuary.com

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 vivienne.russell@redactive.co.uk News reporter Judith Ugwumadu +44 (0)20 7324 2794 judith@redactive.co.uk Editorial assistant Tania Forrester tania.forrester@redactive.co.uk Sales manager Chris Dooley +44 (0)20 7880 8545 chris.dooley@redactive.co.uk Divisional director of digital and recruitment sales John Seaman +44 (0)20 7880 8541 john.seaman@redactive.co.uk Senior designer Gene Cornelius Picture editor Akin Falope Production executive Rachel Young +44 (0)20 7880 6209 rachel.young@redactive.co.uk Print Polestar Colchester

editor@theactuary.com Internet The Actuary: www.theactuary.com Staple Inn Actuarial Society: www.sias.org.uk Institute and Faculty of Actuaries: www.actuaries.org.uk Managing editor Sharon Maguire +44 (0)20 7880 6246 sharon.maguire@redactive.co.uk Editor Kelvin Chamunorwa editor@theactuary.com Features editors Sarah Bennett, health, international 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: features@theactuary.com People/society news editor Yvonne Wan social@theactuary.com Student page editor Jessica Elkin student@theactuary.com Arts page arts@theactuary.com Profession news editor Catherine Murray +44 (0)20 7632 2198 catherine.murray@actuaries.org.uk SIAS representative Titas Bakanauskas Editorial advisory panel Peter Tompkins (chairman), David Campbell, Matthew Edwards, Martin Lunnon, Sherdin Omar, Richard Purcell, Nick Silver, Andrew Smith

Circulation 24,028 (July 2012 to June 2013)

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 catherine.murray@actuaries.org.uk 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 membership@actuaries.org.uk Changes of address should inform the membership department as above.

For delivery queries, contact: Rachel Young E rachel.young@redactive.co.uk Published by the Staple Inn Actuarial Society The editor, The Institute and Faculty of Actuaries and Staple Inn Actuarial Society are not responsible for the opinions put forward in The Actuary. No part of this publication may be reproduced, stored or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the copyright owners. While every effort is made to ensure the accuracy of the content, the publisher and its contributors accept no responsibility for any material contained herein.

Important information for contributors to The Actuary By submitting content for publication you confirm that: (a) You (and/or other named contributors) are the sole author(s) of the content submitted; (b) The content you submit is original and has not previously been published (unless you specifically advise us to the contrary); (c) You haven’t previously licensed the use of the content you submit; (d) So far as you are aware, the content submitted will not infringe any third-party rights, be defamatory or in any way illegal. © SIAS March 2014 All rights reserved ISSN 0960-457X

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Acting the part Kelvin Chamunorwa considers the perception of actuaries and the importance of demonstrating the value of our unique skill set to society In a sitcom I came across recently, “I want to be an actuary” was a 12-year-old boy’s response to his uncle’s question of what he dreams of becoming when he grows up. The boy’s response was met with a blank stare.

I have encountered a similar expression after saying that I’m an actuary, except once, when I received an unusually enthusiastic reception. I felt flattered – until I was then asked which type of movies I act in.

Among the better informed, I have found that actuaries’ analytical strengths are well-recognised, and this is to be celebrated. Sadly, technical prowess and the ability to interact with others are often perceived to be mutually exclusive.

Increasingly, however, our work is in areas that are not traditionally actuarial and involves collaboration with other professionals. This provides a good platform for our actions to contradict any false perceptions.

It is important to hear others’ views of us and Nick Hewer of The Apprentice fame shares his thoughts on actuaries during his fascinating interview. Hewer believes actuaries have the credibility for far greater input and influence in financial issues that affect society (pg 18).

It is equally important for us as a profession to be self-reflective. Simon Carne, an actuary who works in the field of regulatory policy, considers the current regulatory approach of the Institute and Faculty of Actuaries as well as the Financial Reporting Council and asks whether it goes too far.

Carne uses as examples the proposals for peer review and a Technical Actuarial Standard to apply to all actuarial work. I would be interested in your take on Carne’s argument (pg 28).

We can be misconstrued by some and misunderstood by others, but in our daily interactions we have the chance to demonstrate who we are and what we can do.

Each of us has a part to play to enhance the profile of the actuarial profession.

“It is important to hear others’ views of us. It is equally important for us as a profession to be self-reflective”

Kelvin Chamunorwa Editor

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March 2014 • THE ACTUARY www.theactuary.com

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Opinion Letters to the editor editor@theactuary.com

Light on the subject

Have your say online

More comments are posted online about news stories published on www.theactuary.com.

The USS deficit is model risk I want to agree with Edward Adam’s letter (The Actuary, January/February 2014) regarding the Universities Superannuation Scheme. What Mr Adam is referring to is model risk.

I advise many private-sector employers who operate defined benefit schemes. These employers are told by their pension trustees that despite lower than expected inflation (which reduces future benefit payments) and higher than expected asset returns, their pension scheme deficits have increased. Apparently, this is because the yield on an asset they don’t invest in has gone down. Employers are told to de-risk to reduce the deficit volatility (due to the yield on this unrelated asset changing). Employers can’t understand the actuarial logic.

As a profession, I fear we are guilty of lazy thinking and herd mentality. We have created an industry where we advise employers to hedge risks that do not exist. Or, we tell employers the best thing they could do is to buy-out. I’m not surprised so many insurance companies are falling over themselves to grab all this profitable business.

The liabilities are a stream of future benefit payments the scheme must pay out. It is useful to try to estimate how much money is needed today to pay these liabilities. If the assets are invested in government bonds, then it makes sense to work out the present value of these payments discounted on a government bond basis. If the assets are invested in equities, then we should discount using future expected equity returns.

So the problem comes down to: how do we estimate an equity return? We need to start with what our best-estimate for an equity return is and then knock off a ‘prudence margin’.

If we link the equity return to government bonds plus a fixed ‘premium’, then we are introducing model risk.

I refer to Paul Meins’ letter in the February edition. He referred to my article in the December edition [A force to be reckoned with, pg 31].

This article was extracted from two substantial peer reviewed papers previously presented to global actuarial audiences (including in the UK) – Nature’s Risks (bit.ly/1c7dzkU) and Grand Minimum (bit.ly/1ed8MhK).

I encourage Paul and any actuary who would like to learn more about external influences on natural risks to read those papers.

I do agree with the last part of Paul’s last sentence. Our profession should be discussing the implications and merits of different policies to adapt to or mitigate the effects of climate change. This current winter in the Northern Hemisphere seems remarkably similar to some of the winters that occurred during the last solar grand minimum that occurred around 200 years ago as well as other, more recent, prolonged periods of weak solar magnetic storm activity. This current, naturally occurring ‘climate change’, deserves much more attention from the profession. This is because, as we are now experiencing, there are human, economic and financial consequences from the changes in the jet streams that are indirectly caused by the long term reductions in solar output in the extreme ultra-violet spectrum that occurs when solar magnetic storm activity is diminished for more than one solar cycle. As the next solar cycle is expected to be at least as weak as the current solar cycle, the effects of stronger, faster jet streams flowing in a more meridional pattern are likely to periodically affect the weather for several decades to come.

Brent Walker 20 February 2014

A formula for death Actuaries are concerned with death. Unless they are investigating the incidence of dread disease, they are not concerned with how people reached the stage of death. Death is regarded as a bolt out of the blue.

It appears to me that death may be regarded as extreme ill-health.

One starts off at age 0 with a health index of one. One goes through life with declining health until one dies with a health index of zero.

Ignoring for the time being people who are unhealthy when born and people who die by violence, the health index could be represented by exp (-rt) where r is the rate of health deterioration, assumed uniform, and t is the person’s age.

Actually things don’t happen quite like that, with individuals gradually fading away to infinity. For example, the heart suddenly clogs up and one goes down vertically straightaway. This, I believe, is known as punctuated equilibrium.

It is difficult to see any advantage in knowing a health index. However, I should like to know other reader’s opinions and seek assistance on how the concept may best be formulated.

Peter Shellswell 10 February 2014 Ivor Kenna 14 February 2014

MORE LETTERS ONLINE More letters are available online at www.theactuary.com/opinion

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The editor welcomes readers’ letters but reserves the right to edit them for publication. Please email editor@theactuary.com.

The deadline for receiving letters for the April issue is 19 March 2014.

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Opinion President’s comment

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

DAVID HARE

Your voice in action The IFoA is not just a member support organisation. Our Royal Charter sets out a public interest mission to “advance all matters relevant to actuarial science and its applications” as well as regulating and promoting the actuarial profession. However, if the organisation is not effective in engaging its members in this work, then our chances of success will be much reduced.

Making sure that the member’s voice is heard, and feels heard, is a challenge that faces all professional bodies like ours. I was reminded of this recently, when I chaired the inaugural meeting of the IFoA’s new Research and Thought Leadership Board.

As an organisation we produce a great deal of research. Most of it hails from the practice boards, working parties and member interest groups. In addition, external research is sponsored or co-sponsored and, of course, there is the Actuarial Research Centre (ARC) programme, with outputs from PhD students that have a focus on creating academic research with a commercial application. All of this research is disseminated across residential conferences, sessional meetings, events, in journals, on the website and in the media. The bank of intellectual capital we preside over is one we should all be justly proud of.

However, research also presents a management challenge. As part of the review of the organisation’s governance arrangements last year, some members felt they wanted research and thought leadership to be more accountable, advocating that it should not be enveloped into the existing structure but deserved its own place. This voice was heard and responded to. A number of ideas were floated on how best to achieve and manage this and feedback from a wide range of members was sought. The solution agreed upon by the management board and Council, and widely welcomed by the volunteer research community, was to form a Research and Thought Leadership Board (RTLB) that reported directly into Council. Their remit was to ensure our research programme covered the necessary areas and was responsive to any developing needs and opportunities.

At the first meeting of the RTLB — which I will head until a part-time chair is recruited — I was able to reflect on how the board had come into being thanks to IFoA members

David Hare asks members to speak up to support the Council’s new Research and Thought Leadership Board caring enough to push for what they believed in, and the IFoA’s attention to its members’ input to alter its plans in response.

The executive’s research and thought leadership team, led by Sarah Mathieson, are supporting the RTLB and taking their cue from it. I am optimistic about the future facilitation and dissemination of the valuable research that is produced by our volunteers.

So what is the RTLB up to? Member initiative drives a great deal of our research output and will continue to do so, but it was clear that what was lacking was any oversight – a body responsible for the bigger picture — and this is what the RTLB is in place to do. It will consider questions such as: Where does the research fit? Do we have the right resources in place? Do we have enough international direction? Is it being disseminated properly?

To put this in context, David Brown’s Third Party Working Party, with its third party injury and damages motor insurance claims data, was established to help actuaries better understand the context of their own books against an industry average of pricing data. This data has a broader application, however, offering insights into the very topical issue of so called fraudulent whiplash claims that has attracted the attention of policy makers, the media, and the public in recent years. The RTLB will be

considering, among other things, where there may be other opportunities for the IFoA to inform others’ discussions, as well as ensuring we as members continue to benefit from the output of a comprehensive and high quality research programme.

We are currently advertising for a chair for the RTLB. This is a paid role requiring the individual to provide around one day a week of their time. It represents a very interesting role for one of our members and I look forward to working with them in the future. Full details will be advertised within The Actuary and on www.actuaries.org.uk in due course.

The Council is exploring many ways we can continue to communicate with you. At the last meeting in February, we were joined by representatives from a number of other professional bodies.

We wanted to learn more about how they communicate with their members and capture their responses. We need to make sure that we are capturing the views of our broader membership and it is interesting to hear ways in which other bodies do this.

It is already a busy year for the IFoA with a number of new initiatives aimed at improving the services we offer to members. Your feedback on this is always of interest, so please share any thoughts that you may have with me at presidents@actuaries.org.uk a

“It was clear what was lacking was any oversight – a body responsible for the bigger picture – and this is what the RTLB is in place to do”

March 2014 • THE ACTUARY www.theactuary.com

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Opinion Soapbox

ROBERT KELSEY

Unproductive productivity Procrastination and interruptions are the two biggest enemies of productivity. Why? Because we view the solutions to both as something beyond our responsibility.

Procrastination is an internal issue, unlike external interruptions. Yet dig deep into what generates procrastination and we hear a somewhat classic abdication of responsibility.

1) I’m (fill in nationality) – it’s part of our culture.

2) My boss is exploiting me – so I’m fighting back by refusing to work.

3) I have (fill in name of condition) – I’ve been diagnosed.

All reasons not to act, and all baloney.

The real reason we procrastinate is fear that if we try, we’ll fail. That’s it. Our self-esteem can be that toxic internal critic, telling us that it’s better not to try than to try and fail.

Procrastination extends beyond the couch or duvet. Not striving to get to the next level in your career, nor putting yourself up for promotion is procrastination.

How to get ahead So what’s the answer? First, acknowledge that your fears will not just disappear, so take them into account and act anyway. This should undermine the catastrophic, all-or-nothing thinking procrastinators indulge in. Doing nothing is failure.

Start with the motivation. What do you truly want? Think about your goals 10 years’ hence. With a 10-year goal visualised, then work backwards. Where do we need to be in five years to make the 10-year goal a reality?

Next, where do we need to be in two years to make the five-year milestone? Then a year, six months, three months, one month, one week and tomorrow. What can we do now to prepare for tomorrow’s milestone?

Of course, most setbacks will come via other people, which means we can label them interruptions: the other barrier to strong productivity.

Stephen Covey (author of Seven habits of highly effective people) created perhaps the most obvious way of determining what constitutes an interruption by dividing activities into four activity quadrants: those that are either urgent or not urgent, and important or not important. He contended

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Robert Kelsey looks at the enemies of productivity – and how to slay them

that we spend the vast majority of our time undertaking urgent activities – both that are important and those deemed unimportant.

It’s the activities in the urgent and unimportant quadrant that can be labelled as interruptions. Identifying these is the easy bit – but what about dealing with them?

Well, interruptions are either by phone, email, visitors, colleagues or meetings, and you need a strategy for dealing with each.

For example: On the phone.

Let it ring to voicemail occasionally, and don’t let unscheduled calls hijack your agenda.

Pick up messages at scheduled points, perhaps just before lunch after a productive morning.

Your voicemail message should encourage detailed explanations of needs, allowing for a prepared response.

Via email. Control your email viewing.

Make sure your day is well under way before glancing at your emails. Never reply to an emotional or angry email immediately.

With angry emails, wait for your phonezone period and pick up the phone. Only indulge in email upon completing your key tasks for the day.

Visitors. The ‘unproductive you’ may have encouraged people to drop by your desk or chat by the coffee machine. You now have a plan to execute that needs your undivided attention. You need to communicate this, so why not try to recruit them to the cause by giving them a role?

In meetings. Being a ‘meeting hostage’ is probably the biggest waste of anybody’s day.

Rather than feel offended when not included in a meeting, do the opposite. Try and get out of the meeting, perhaps by delegating or by sending information to the meeting originator beforehand.

From the boss or a colleague. No matter your place in the chain of command, the issue is the same: problems versus solution. If a ‘bottleneck boss’ is the issue – provide them with a solution and ask them to agree – giving them problems will hinder your progress. If a colleague hands you a problem – ask them politely to provide you with a solution instead. Progress is assured.

“Our self-esteem can be that toxic internal critic telling us that it’s better not to try than to try and fail”

Robert Kelsey is the author of Get Things Done: What Stops Smart People Achieving More and How You Can Change, published by Capstone

THE ACTUARY • March 2014 www.theactuary.com

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THURSDAY 20 MARCH

Poker night at The Loose Cannon, 13-16 Allhallows Lane, City of London, EC4R 3UL

SOCIAL EVENT

Following the success of last year’s event, SIAS is hosting another poker night.

The format for the main tournament will be No Limit Hold’em and separate cash tables will be available for players knocked out of the main game.

6.00pm start As a twist this year, different poker variants will be available at the cash tables.

There will be cash prizes for everyone who makes it to the final table.

No prior experience is needed and if you’re a beginner you can take part in the practice sessions beforehand. Also dealers will be on hand to explain rules.

SIAS member £30 Non-SIAS member £40 Email social@sias.org.uk to register Price includes entry to the venue and tournament plus refreshments.

Places are limited and will be offered on a first come, first served basis. Once your place has been confirmed, payments need to be received into the SIAS bank account within five working days.

TUESDAY 1 APRIL

The ECJ Gender Directive Ruling – One year on Lionel Texier and Roshni Bhudia at Staple Inn Hall High Holborn London WC1V 7QJ 5.30pm for 6.00pm start

PROGRAMME EVENT

It has been a year since one of the biggest changes in the insurance marketplace as the EU Gender Directive came into force. This talk discusses how the implementation of the new law on 21 December 2012 has affected the insurance and pensions industry.

It will combine research from several sources to provide a general overview of the impact that the Gender Directive has had on the insurer and the insured, briefly comparing the impact on neighbouring countries such as France, Belgium and Luxembourg.

The talk is based on a paper written by Mr L Texier, Miss R Bhudia and Miss M Jousset, Direct 2004/113/CE: Was it the right time to ban gender-based insurance pricing across Gender Directive the EU?? which will be made available before the talk.

Refreshm 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.

MORE EVENTS ONLINE For details of events, visit www.sias.org.uk

SIAS IS ON TWITTER! Follow us on @SIAScommittee for latest news on meetings, socials and more!

SIAS IS ON FACEBOOK! Check out the SIAS Facebook page for photos from the latest social events

March 2014 • THE ACTUARY 9 www.theactuary.com

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News IFoA NEWS UPDATES FROM THE ACTUARIAL PROFESSION

Upfront Opinion CEO’s comment Derek Cribb looks ahead to the benefits that the third year of the IFoA’s strategy will bring

Landing the strategy Derek Cribb is the chief executive of the Institute and Faculty of Actuaries

As we come to the end of the financial year, I find myself looking ahead to what’s in store for the IFoA. In the third year of delivering on our strategy, we will really start to see some of our most important projects and priorities come to fruition. Later this year, we will be running the first Certified Actuarial Analyst exams, our new professional qualification and membership category for professionals in technical roles. This initiative will facilitate the development of the profession globally.

We will also be introducing phase one of our new website, which via improved content and functionality will better meet our members’ needs, providing a single, valuable touch point for access to the IFoA. e We will be making more CPD learning material available online, with the launch on the virtual learning environment later in the year.

In addition, we will be launching the Quality Assurance Scheme, which will help us to support employers in ensuring that their staff demonstrate an appropriate level of regulatory competence, meeting their individual requirements and providing greater client assurance.

These developments will take place against a backdrop of improving our ‘business as usual’ activity. More students are taking our exams and we will maintain the high standard of service they receive, sourcing more exam centres, improving the assessment process and streamlining the support we provide wherever they are based.

At our flagship events and conferences, members will benefit from the same high-quality content with improved technology and visuals.

And we will carry on raising the profile of the profession through our public affairs activity.

All of our work is undertaken in partnership with thousands of our volunteer members, whose dedication and expertise we rely on to deliver what the actuarial profession needs to remain relevant around the world. This promises to be a busy and exciting year for the IFoA, and if you want to get involved and make a difference to your profession – through research, education or special projects – we would be delighted to hear from you.

Email debbie.atkins@actuaries.org.uk to register your interest or for details of current opportunities.

DEREK CRIBB

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VIP launch On 24 January, the IFoA launched its exciting new volunteer induction pack (VIP). Created in response to member feedback, the VIP is a new online resource that provides information and support and, for the first time, gathers together all the information available to volunteers in one place on the members’ section of our website (www.actuaries.org.uk/members/pages/ volunteer-induction-pack-vip). Within this pack please look out for a letter from the president and the chief executive of the IFoA. Whether you are thinking of getting involved in a volunteer role for the first time, or are an experienced participant iin IFoA activity, we hope y will find the VIP you useful and worthwhile.

We look forward to hearing what you think.

To request a hard copy of the introductory booklet, please contact Debbie Atkins, head of volunteer engagement.

Email debbie.atkins@ actuaries.org.uk

Letters from America The eagle-eyed among you will have noticed that the president of the American Academy of Actuaries, Tom Terry, led last month’s Contingencies magazine (www.contingencies. org) with the news that the IFoA is launching the Certified Actuarial Analyst (CAA) qualification this year; the headline – ‘Keeping up with the Brits’.

We see the CAA as an internationally recognised qualification that applies actuarial science to technical roles, professionalising and regulating individuals. In so doing, the qualification benefits the career of the individual, the reputation of employers and – by improving professional standards – also benefits the public at large. So it was nice to note that Tom sees this too. In his own words: “So, my thanks to our good friends in the UK. Your new initiative will resonate with many here in the United States. It does with me.” www.contingenciesonline.com/contingencies online/20140102#pg1

THE ACTUARY • March 2014 www.theactuary.com

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Regional focus: goings on up north In the first of a series of articles looking at what’s going on in our various regional societies, Tess Joyce, regions leader, starts at the top of the UK and sees what’s going on in Scotland and what the Scottish Board has been up to Scotland is a very busy place at the moment.

The Commonwealth Games are coming to Glasgow in July, the Ryder Cup to Gleneagles in September, not forgetting the Scottish independence referendum vote on 18 September – but then how could we!

All of that aside, Scotland is also a very busy place for actuaries. With at least 15 IFoA events scheduled to take place between March and June this year and with Scotland playing host to two of the IFoA’s residential conferences later in the year, as well as the Autumn lecture, there is a wealth of continuing professional development and networking opportunities for members.

EAAC: call for papers Once again, the IFoA will be supporting the East Asian Actuarial Conference (EAAC). Now in its 18th year, this will take place on 12-15 October in Taipei, Taiwan.

Providing speakers and delegates with an excellent opportunity to exchange ideas and showcase the latest research, the conference organisers, the Actuarial Institute of Chinese Taipei, is currently inviting actuaries and other interested parties from around the world to submit papers to this year’s conference. If any members would like to submit a paper to present at the conference, they can enter a proposal via the conference website. The closing date is 31 March. www.actuariesasia.org/

CPD reminder We are now over half-way through the current continuing professional development (CPD) reporting year (1 July 2013 - 30 June 2014) for those in Category 2. This is a reminder to all fellows and associates who are fully regulated by the UK profession to ensure that your online CPD declarations are accurate by 30 April. If you wish to change your declaration or make an application for a concession or an exemption, you must do so before 30 April by contacting cpd_ feedback@actuaries.org.uk.

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Supporting the work of the IFoA, the Scottish Board organises additional events in Edinburgh, Glasgow and Stirling and really helps to build a sense of community. It organises the monthly Knowledge Sharing Scotland programme as well as promoting the Our Changing Future sessions.

The Scottish Board continues to encourage and develop engagement with the actuaries of

You also need to ensure that your CPD activity records are up to date by 31 July to cover activity to 30 June. Full details of the CPD requirements, including failure to comply, can be found in the CPD scheme. www.actuaries.org.uk/research-and-resources/ documents/cpd-scheme-continuingprofessional-development-20132014 If you have any questions regarding the CPD scheme, please contact us at cpd_ feedback@ actuaries.org.uk

Quality assurance Further to the consultation on our proposals for a voluntary scheme of regulation for organisations last year, we will be publishing a report on the views contributed by our members and stakeholders in the course of that process.

The report, along with the revised standard, APS QA1, and guidance can be found on the Quality Assurance Scheme (QAS) page of the Regulation section of our website.

You will also be able to read more about our plans for the QAS going forward.

If you have any questions about the scheme please contact qas@actuaries.org.uk

Professional skills The IFoA has arranged some breakfast events for experienced members – please keep an eye out for further details on the events page of the

the future through a number of initiatives, including sponsorship of the Enterprising Maths challenge and the hugely popular Highland Senior Maths weekend.

Raising the profile of actuaries and the actuarial profession in Scotland is one of the three key responsibilities of the Scottish Board, along with encouraging and developing the actuarial community and encouraging and advancing actuarial academic developments.

By supporting the actuaries of today and those of the future, the Scottish Board and the IFoA in Scotland is ensuring a thriving actuarial community now and moving forward.

For more information on the Scottish Board and the various activities taking place in Scotland, please visit the regional actuarial activities pages within the members section of the IFoA website. www.actuaries.org.uk Knowledge Sharing Scotland bit.ly/1f0pF3N Our Changing Future bit.ly/1hinpZ3

website. The sessions will be suitable for actuaries working in any area and may be counted towards meeting the mandatory professional skills training requirement under the IFoA’s professional skills training regime. www.actuaries.org.uk/regulation/pages/ professional-skills-experienced-members

Actuaries in the limelight The work of actuaries is on display at an exhibition at the Royal Society in Carlton House Terrace, near London’s Piccadilly.

‘Life beyond measure: a short history of longevity’ opened at the end of January and runs until June this year.

It considers the medical and scientific breakthroughs made by many of the fellows of the Royal Society that improved medical care and social conditions to extend lives, along with the work of actuaries in measuring them since the profession was first chartered in 1868.

The exhibition casts a spotlight on longevity: what was, what is and some thoughts on what yet may be.

The IFoA is proud to host the exhibition in collaboration with the Royal Society and we hope that visitors to London will take the opportunity to view it. www.royalsociety.org

March 2014 • THE ACTUARY 11 www.theactuary.com

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News IFoA NEWS UPDATES FROM THE IFOA

Disciplinary Tribunal Panel At a hearing of the Institute and Faculty of Actuaries’ Disciplinary Tribunal on 14 January, the respondent, Mr Michael Nairne McShee (former FFA), was charged with failure to complete the required amount of continuing professional development (CPD) and failure to maintain an online record of CPD undertaken as required by the CPD Scheme of the Institute and Faculty of Actuaries for the year 1 July 2010 to 30 June 2011 and failure to respond appropriately to requests for information from the case manager and investigation actuary.

The charge relating to the failure to respond to the requests of the case manager and investigation actuary was withdrawn by the Institute and Faculty of Actuaries. The tribunal found the remaining two charges proven and determined that they amounted to misconduct.

The tribunal imposed the following sanctions: ● A reprimand and a fine of £2,000 for the failure to complete the required CPD. ● A reprimand and a fine of £1,000 for the failure to maintain an online record of CPD undertaken.

A full copy of the Tribunal’s determination can be found at www.actuaries.org.uk

Telomeres to testosterone Issue 5 of the Longevity Bulletin is now available on the research section of our website. The latest issue includes a thought-provoking piece

by Ross Matthews, consultant at Punter Southall, on gender and longevity. His article considers a number of factors that affect longevity – from cigarettes, alcohol and obesity to telomeres and testosterone. With the IFoA Mortality and Longevity Symposium in Birmingham on 15-17 September, this issue of the bulletin offers members a sample of some of the research in the longevity and mortality area that can be applied to our day-to-day work.

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Reasons to join the risk community The Risk Board aims to generate a sense of Some of our risk management working parties community for actuaries working in risk are presenting their research at the conference. management, whether in the context of life Our practice area has working parties looking insurance, general insurance, pensions or wider at qualitative topics, such as operational risk, fields; to ensure that continuing professional to more quantitative topics, such as model risk development (CPD) and education meet the and proxy modelling. requirements of that community; to take part There is much ongoing work on consultations: in consultations and actively engage in public ● FRC’s consultation paper on ‘Risk Reporting affairs; and to ensure that suitable conferences for Listed Companies’, provides exciting new and research move forward the profession’s opportunities for actuaries in risk management. involvement in enterprise risk management.

The Risk Board, chaired by Andrew Hitchcox, The creation of the Risk Board in 2008, has sponsored the establishment of a working along with a specific ‘risk community,’ helps party, with Colin Ledlie as chair, reporting to ensure we focus our resources and energies to the Management Board. The profession on promoting the role actuaries can play in the has also prepared a written response to the risk management arena. To keep up to date consultation in partnership with the IRM. with our activities and education opportunities, ● IFoA’s review of its own approach to subscribe to our newsletter by updating your risk management. preferences in the IFoA website. ● FRC’s ‘actuarial risk project’: following To ensure we deliver what the risk meetings with representatives of the FRC, we community requires and are consistent with have established a joint forum for actuarial other practice areas, we are undertaking regulation with the PRA, FRC and TPR to reach a survey of our members. This will gauge a shared view of the risk to public interest whether respondents agree with our stated relating to actuarial work, in order to build a cogoals and priorities and whether ordinated approach to mitigate and the community as a whole feels manage these risks. involved. ● FSB consultations on risk culture All residential courses and risk appetite frameworks. sponsored by the IFoA now Our challenge for 2014 is to include a risk management maintain the momentum created element. The IFoA’s main event for over the past few years, by building actuaries and other professionals engagement between the risk operating in the risk management management community and space is the Risk and Investment our education, research and other Conference, which had well over activities.

A full version of this article can be 250 attendees last year. This year’s Andrew Hitchcox read online at www.theactuary.com event is already open for bookings. Risk Board chair

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25/02/2014 11:18

Scottish independence debate

EVENTS Sessional Research Event: LongTerm Care – A Review of Global Funding Models 17 March 2014, Royal College of Physicians 16.30 to 19.00 For more information, visit: bit.ly/1cD33BV

Current Issues in Pensions seminars 13 March Bristol 25 March London 03 April Manchester 10 April Edinburgh For more information, visit: bit.ly/1j72RCt

Highlights of Life seminars 11 March London

26 March Bristol 02 April Dublin For further information visit: bit.ly/1jLOeSv

Pensions Conference 2014 18-20 June Radisson Blu Edwardian Heathrow Hotel Full programme details will be available shortly, but bookings are now open.

For more information, visit: bit.ly/1eIQR6D

Current Issues in General Insurance seminar 20 May London Pricing seminar 10 June London

On the evening of 20 March, the IFoA is hosting a Question Time-style debate: ‘The Implications of the Scottish Independence Referendum for Financial Services’. This debate, to be held at The Hub in Edinburgh, will be chaired by Bill Jamieson, former executive editor of The Scotsman.

Speakers will include Secretary of State for Scotland Alistair Carmichael MP, the Scottish government’s cabinet secretary for finance, John Swinney, and Rachel Homes of Business for Scotland.

At this high-profile event members and non-members, will have the opportunity to ask questions and contribute to the debate.

For details, go to the Events pages at www. actuaries.org.uk/events or email petrina.parnell@ actuaries.org.uk To learn more about our engagement in this debate, please see the Scottish Board pages at www. actuaries.org.uk/members/pages/scottish-board

Risk and Investment Conference 2014 Health and Care Conference 2014

The Risk and Investment Conference is the premier conference for actuaries with an interest in risk and investment management.

The Health and Care conference offers a wide ranging programme designed to cover all of the areas required by insurance industry professionals. Due to its size and scope, the conference has additional focus on areas that drive the development of our key products, covering product design, pricing, underwriting/claims and distribution.

The theme of this year’s event is ‘The New Normal’ and the conference, which now attracts over 200 actuaries from the Risk Management and Finance & Investment communities, aims to bring together the most up to date thinking and relevant speakers over three days including Nick Leeson, the former Barings Bank derivatives trader who will be speaking on the subject of institutional risk as well as giving insights into his story.

21-23 May, Radisson Blu Edwardian Heathrow Hotel

1-3 June, Hilton Glasgow Hotel

Speaking this year: David Smith, Economics Editor of The Sunday Times Phil Smalley, Senior Vice President and Chief Medical Officer, EMEA/Asia Jules Constantinou, Gen Re’s Regional Manager for the UK and Ireland

Jo Causon, Institute of Customer Service An after dinner talk from Robert Peston, Business Editor for the BBC

BOOK BEFORE 26 March to receive the early bird fee: http://bit.ly/actuary2014-3

BOOK BEFORE 1 April to receive the early bird fee: http://bit.ly/actuary2014-2

March 2014 • THE ACTUARY 13 www.theactuary.com

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News People & Society

If you have any newsworthy items for these pages please email social@theactuary.com

Another year chalked off

By Mark Gorman On the evening of 24 October at Riley’s pool bar in Victoria, London, close to 100 members of the actuarial community met to inject some light frivolity into what was a damp, dark and thoroughly autumnal evening.

Spirits were high as actuaries do what they do best – coming up with puns and jokes on the evening’s activities. The best I heard was: What do you call a woman playing pool with a pint of

beer on her head? Answer: Beatrix Potter.

With 47 pairs across 12 tables, the pool bar was packed to the rafters. We started with group stages. The winner from each table went through to the knockout stages along with four of the ‘best runners up’. To decide which runners up to put through, some actuarial expert judgment was used which inevitably led to strong challenge from some competitors.

After this, a straight knockout tournament

began. Most last 16 matches were hotly contested with competition strengthening further for the quarter finals. These matches were decided over a single frame and so there was plenty of ‘pot luck’. For the four teams strong enough or lucky enough to make it to the semi-finals, the remaining games had some risk diversification with each match being decided over three frames.

At around 22:15 the final began between two of the hot favourites – Chris Pritchard (Barnett Waddingham) and Michael O’Akuwanu (Sanlam) faced off against Dom Nunns (Hamish Wilson) and Tom Oxley (non-actuary).

Dom and Tom won the first frame quite comfortably and looked like they were storming away to victory in the second frame with Chris and Michael having five spots left on the table while Tom had a chance to pot the black.

However, a character-filled response from Chris and Michael led to just one spot being left on the table, but in an attempt to pot the final spot, they were very unfortunate to pot the black instead and so Dom and Tom were declared the SIAS 2013 pool tournament champions.

Congratulations to Dom and Tom and Chris and Michael on their triumph and many thanks to all the participants and Riley’s pool bar for making the evening such a success.

If anyone has comments they would like to share to help make next year’s tournament even better, then please email Mark Gorman at social@sias.org.uk.

Prizes for high SCORers

By Jamie Leitch On 18 November 2013, at its annual Chairman’s dinner, reinsurance company SCOR presented its 2013 Actuarial Prizes. The event featured a presentation from Jack Straw, the former Labour cabinet minister, on the topic ‘Currency Union leads to Monetary Union’ and was followed by a lively discussion, overseen by Mishal Husain from the BBC. The prizes are awarded for the best dissertations submitted by students studying for Masters degrees in actuarial or related subjects. The winners were Hang Ping Cher for his paper entitled Underinsurance in the UK and Chariya Rangruangpatanakul for her dissertation Micro Life Insurance: a panacea to the problems of the Thai pensions system. Congratulations to both.

Cass Business School course director Chris Parsons collected the papers on their behalf. The papers were selected by a panel of judges including Chris Daykin (panel chair), Peter England, Stavros Christofides and Tim Birse, to whom SCOR are indebted to for their time, knowledge and views.

SCOR is committed to the development of actuarial research and insurance expertise, and these annual awards support that aim.

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From left to right: Denis Kessler (chairman – SCOR), Jack Straw, Stavros Christofides, Chris Parsons and Mishal Husain

SHUTTERSTOCK

25/02/2014 11:19

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Zimbabwe seeks support from actuaries

Rain fails to dampen spirits at maths march

By Brian Ridsdale The Lord Mayor’s Show, an annual event that has been taking over the streets of London for nearly 800 years, had a particular significance for Actuaries in 2013. Adrian Waddingham CBE was participating as non-aldermanic Sheriff, and the Worshipful Company of Actuaries brought along a float named ‘Maths is Fun’.

After a pleasant morning’s preparations, the weatherman’s forecasted rain started spot on at 10.30am, along with the procession. Beginning with an RAF flypast, the parade featured over 6,000 soggy people, military marching bands, Chinese acrobats, a procession of decorated floats and the Lord Mayor’s gilded State Coach.

Towards the head of the procession were two wicker giants, Gog and Magog, the traditional guardians of the City of London.

The Actuaries float, number 57 out of 155, comprised a crew of actuaries alongside teachers and pupils from Reed’s School, Cobham, and from Surrey Square and St. Peter’s

schools. (The Company of Actuaries Charitable Trust is supporting Reed’s in a Primary Maths Forum whereby they help primary schools, of which these are two, improve maths education.)

Marching with the float was Johnny Ball.

The whole team, 50 in all, shrouded in blue plastic macs, cheerily plodded though the streets following a giant inflated hourglass, symbol of actuarial forethought. Ball led the pupils with shouted questions. Enthusiastically they replied, giving a firm impression that maths, or at least arithmetic, really can be fun.

Following much later in the procession came the many VIPs, including the carriages of the Worshipful Company of Actuaries with Master Charles Cowling accompanied by Wardens and g , and the Clerk, of Sheriff Adrian Waddingham, y gold 18th-century State Coach of Lord ndon, Mayor of London, Alderman Fiona Woolf.

The recently re-launched Th Act Actuarial Society of Zim Zimbabwe (ASZ) would lik to call on all like a actuaries and actuarial s students affiliated to Zimbabwe tto register their support and becom become members of ASZ. With your participation, they expect significant progress can be made in developing the actuarial mandate within the country up to a level where actuaries will play a pivotal role in the transformation of Zimbabwean financial markets as well as providing input into the development of a sound supervisory framework.

The objectives of ASZ are as follows: ● Education of actuaries in Zimbabwe, through part-time teaching by actuaries at the National University of Science and Technology/University of Zimbabwe to enhance credibility and re-establish full exemption status from Actuarial Society of South Africa and Institute and Faculty of Actuaries ● Provide tutorial assistance to students writing professional examinations ● Further development of the actuarial profession in the traditional fields as well as wider fields within Zimbabwe ● Harmonise the standard of actuarial work done in industry for regulatory purposes.

At this stage, there is scope for many foreign-based actuaries to transfer their skills over to Zimbabwe as the market develops.

In the long-term the ASZ aims to have its own local certification. This will start with practice modules for Zimbabwe and finally a curriculum will be developed as has been done by other professionals working in the country.

Please note that participation is on a voluntary basis. For further information contact the following committee members: David Mureriwa (President of the ASZ):

dmureriwa@aaczim.co.zw Deaths Mr James CAMPBELL died recently, aged 89. He became an Affiliate of the Faculty in 1975.

Mr Philip John RYAN died recently, aged 98. He became a Fellow in 1952.

Birth Congratulations to Anna (Zurich) and Stuart (Zurich) on the birthh of their son Cameron James Penney on 25 January 2014.

Big sister Lauren is very excited!

Sandra Makoni (Co-ordinator):

smakoni@aaczim.co.zw Tawanda Chituku (Secretary):

tchituku@atchison.co.zw We would be delighted to hear from you if you have any newsworthy items for these pages. Please contact Yvonne Wan at social@theactuary.com

March 2014 • THE ACTUARY 15 www.theactuary.com

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› GENERAL INSURANCE

NEWS ROUND-UP

Which? demands transparency on insurance premium quotes

Insurers’ flood response under control, ABI says after ‘constructive’ talks Insurance bosses assured ministers that the industry’s response to England’s flooding crisis is under control, but warned that the country faces a long road to recovery.

February’s Insurance Industry Flood Response Summit at Downing Street took place after Prime Minister David Cameron urged insurers to ensure the flood claims process was as “quick and simple as possible”.

Following the talks, Otto Thoresen, director of the Association of British Insurers trade body, said: “Insurers emphasised the long recovery process ahead and their commitment to helping customers through this difficult time. Insurers assured ministers the situation is under control and that customers have been helped speedily and effectively since the flooding and bad weather began in December.”

For the government, flooding minister Dan Rogerson described discussions as “positive and constructive”. He said: “We were reassured that [insurers] have already put in place a range of measures to look after their customers, and we have agreed with them further steps to help the recovery process including providing a team of experts to advise on delivering the new repair and renew grants and a commitment to reviewing the cost of 24-hour flood helplines.”

See more at: bit.ly/1eXP3mm

ABI: car insurance premiums continue to fall The average cost of a comprehensive motor insurance policy decreased to £370 in 2013, down 9% on the previous year, according to the Association of British Insurers.

This reflected a downward trend in the average premium paid over the past eight quarters from £415 in the first quarter of 2012 to £370 in the fourth quarter of 2013, a drop of £45 or 11% per policy.

James Dalton, ABI’s head of motor insurance, said: “The 9% fall in the average comprehensive motor premium last year shows insurers are fulfilling the commitment they made to the government to pass savings from changes to the civil litigation system to hard-pressed motorists through lower car insurance premiums.” However, he added more needed to be done to get premiums even lower and urged the government to press ahead with tackling fraudulent whiplash claims.

Meanwhile, AA Insurance’s latest Premium Index said over £100 had been slashed off car premiums in just two years. But the firm predicted that the “boon for motorists will soon end”.

See more at: bit.ly/1gMsmGM

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General insurers should provide clearer information on previous year’s premiums and renewal quotes to empower customers to shop around, a Which? survey has suggested.

The consumer body has launched a campaign calling on insurance companies to show last year’s premium alongside renewal quotes and explain any differences.

Without this information people lack the incentive to shop around as they cannot see if they are paying more and why, claimed Which?.

Two-thirds (68%) of the 2,065 UK adults polled said having last year’s premium would prompt them to look for a better deal with other insurers, and a similar proportion (64%) said they would be more likely to haggle for a discount with their current insurer if they had this information.

Which? executive director Richard Lloyd said: “People have told us that if insurers made it easy to find out the cost of their old premium it would prompt them to look for a better deal or haggle for a discount.”

Which? also asked insurers to provide customers with their numbers of years of no-claims-bonuses and make sure renewal letters are received by the customer at least three weeks before the insurance is due to renew.

See more at: bit.ly/1glqQc2

LARGE LOSSES

£500m

Cost in insured losses from UK winter storms, say consultants

Storms, UK UK insurers are expected to foot a £500m bill following the storms and flooding of December and January, PricewaterhouseCoopers estimated.

As well as insured losses of £500m, wider economic losses are expected to be £630m, said PwC insurance partner Mohammad Khan.

He said it was too early to determine if the weather would have an impact on insurer results for next year.

“Last year, the weather was very benign from January to October and insurers’ results from household and commercial property business were positive, even allowing for the December storms and floods,” he said.

Meanwhile, Deloitte said £500m seemed a likely figure for insurers to pay out if the accumulation of extreme weather claims went on into February.

Deloitte insurance partner James Rakow said the recent run of extreme weather, starting with the St Jude storm that hit in October last year, threatened to dent insurers’ profits and could potentially force a number of firms to recover costs by increasing property insurance premiums.

As The Actuary went to press, no estimates of the costs of the February flooding had emerged.

See more at: bit.ly/1d56PUW

MORE GI NEWS ONLINE For further GI news, visit www.theactuary.com/news/

PA IMAGES

25/02/2014 12:07

News Industry news@theactuary.com

FCA slams ‘disorderly’ annuities market The annuity market is “not working well” for consumers who seek to convert their defined contribution pension pots into fixed income, the Financial Conduct Authority concluded after an extensive review.

As a result, the watchdog is launching a competition market study to assess the difference in income provided by sticking with a current provider when buying an annuity, or switching to an alternative.

In its first in-depth and industry-wide review of the annuity market, the FCA found that a pension pot of £17,700 would buy an average annuity of £1,030. However, this income could increase by 6.8% by shopping around for a better rate and switching provider. One in six people could increase their retirement income by more than 10% if they changed provider, the watchdog claimed.

FCA chief executive Martin Wheatley said: “There should be competition across the entire market, not just for those with the most money. That is why we will be using our new remit to conduct a competition market study and a review of sales practices in pension providers. This is a very significant piece of work for the FCA.” Interim findings will be published in the summer. Otto Thoresen, director general of the Association of British Insurers, acknowledged that the annuities market was not working as well as it might, but said the insurance industry had already taken action. “The compulsory Retirement Choices Code goes beyond what the current rules ask providers to do to help customers get good outcomes,” he said.

For more on this story, visit bit.ly/1bOIg3U

Collective pension model gains ministerial support Pension minister Steve Webb will back Dutch-style collective defined contribution pension schemes in the UK as part of his proposals for reshaping the pension market.

The Department for Work and Pensions ‘defined ambition’ consultation last year put forward CDCs as one possible way to provide savers with more certainty over their retirement income, while taking some of the risk away from employers.

According to The Times, Webb, and Work and Pensions Secretary Iain Duncan Smith, want the plan to be the ‘centrepiece’ of a Pension Bill, to be included in the coalition’s final legislative programme before the election in May 2015.

“Some of the best pension schemes in the world are run on a collective basis. I would like to see British workers have access to schemes run on this basis,” Webb said. A DWP spokeswoman added: “CDCs are already running successfully in Denmark and the Netherlands – two countries whose pension systems are ranked among the best in the world”.

Barnett Waddingham told The Actuary it backed the introduction of CDC schemes in the UK as they offered a higher degree of risk sharing than other models.

Partner Danny Wilding said: “Various recent studies have demonstrated that CDC schemes can provide better, more stable outcomes than ordinary defined contribution schemes due to greater freedom of investment and lower charges once scale is achieved.”

For more on this story, visit bit.ly/1fbKg4i

MORE BREAKING NEWS ONLINE Visit www.theactuary.com for up-to-date news and to register for weekly news alerts

Former Lloyds risk chief to lead OFT legacy DC audit Carol Sergeant, former Lloyds Banking Group chief risk officer, has been appointed to oversee the Office of Fair Trading’s audit of high-cost and legacy defined contribution workplace pensions. David Hare, president of the Institute and Faculty of Actuaries, will also sit on the independent project board. bit.ly/1eaCkfV

IFS calls for pension tax reforms Reforms to end the “extraordinarily generous” tax treatment of pensions could raise £10.8bn a year for the Treasury, according to the Institute for Fiscal Studies. In its annual Green Budget, the IFS said it was hard to justify the regime in the current austerity period. bit.ly/1bE5G6v

2013 deaths highest for five years Death rates in England and Wales reached more than half a million during 2013, official figures revealed.

Actuaries Towers Watson said 2013 was the second successive year in which mortality rates had exceeded pension scheme projections. bit.ly/1h0kDnV

Bernardino heralds Solvency II stress test A new supervisory tool for Solvency II will be launched in April to “stress test” the resilience of insurers regarding market risk, the chair of the European Insurance and Occupational Pensions Authority has said.

In a speech on 14 February, Gabriel Bernardino said good regulation was just the first step – the real challenge was to ensure Solvency II was implemented in a consistent way. The regulator has been using a number of tools, such as participation in the colleges of supervisors and peer reviews, to support a consistent analysis and validation of the implementation of Solvency II. “This year we will make use of... the stress test for the insurance sector,” Bernardino revealed. “The aim of the exercise in 2014 will be to test the resilience of insurers regarding market risk under a combination of historical and hypothetical scenarios.

“Additionally, insurance risk will be tested and, as a follow-up to its Opinion on Supervisory Response to a Prolonged Low Interest Rate Environment, EIOPA will also include a low-yield element in the exercise.

The exercise will be launched on April 30 and in November we intend to release its results.”

For more on this story, visit bit.ly/1d4AwFJ

Risk-averse attitudes undermining savings UK workers would rather lose out on their retirement income than take a risk to generate potentially larger returns, the Pensions Institute said as it urged people to pay more attention to their long-term financial goals.

An institute survey found savers do not tend to think about risk in an integrated way, especially when it comes to the long term.

More than half (52%) of the 154 Britons polled failed to think through their savings needs and would prefer to suffer an income shortfall than take a risk. Only 10% said they would be prepared to increase risk for potential greater reward.

The Pensions Institute argued that investment risk was an unavoidable feature of any long-term savings plan and branded these attitudes ‘reckless conservatism’.

It recommended that savers consider the trade-offs they would need to make while saving for their retirement and urged advisers to help savers better understand risk and savings holistically.

For more on this story, visit bit.ly/1fftEuU

March 2014 • THE ACTUARY 17 www.theactuary.com

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On my agenda features@theactuary.com

“‘Get actuaries on TV and in the newspapers because in many ways you are futurologists’”

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DEBBIE ROWE

25/02/2014 11:34

Firing

on all

cylinders Famed for his caustic comments on The Apprentice, Nick Hewer is on a charm offensive when The Actuary catches up with him.

In a wide-ranging interview, he tells Deepak Jobanputra why actuaries should be everywhere

Nick Hewer admits to being pleasantly surprised as he mingled with students at the Institute and Faculty of Actuaries’ Momentum conference. Asked to speak at the event, Hewer expected to come across a group of “domeheaded” mathematicians.

“How wrong I was,” the Countdown presenter and assistant to Lord Sugar on The Apprentice tells me. Having never met an actuary before, Hewer didn’t know what to expect. But he was surprised to come across delegates who were young, lively and entertaining.

It’s fair to say that Hewer, who is renowned on The Apprentice for his eye-rolling and critical comments, is also not quite what I was expecting. Relaxed and chatty as we meet in his suite at the Celtic Manor resort in Wales, he exudes energy and youthfulness. He’s at the tender age of 69, but gives the impression of someone in his fifties.

Hewer came late to TV following a successful career in PR. Having joined The Apprentice from its first series in 2005, he succeeded Jeff Stelling as the host of Countdown in 2012 and has appeared on programmes such as Have I Got News for You, Room 101 and Who Do You Think You Are? We discuss how actuaries can overcome stereotypical views and how the profession can use PR to become more influential. And, of course, he gives me an insight into working with Lord Sugar and whether he practises his famous facial expressions.

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25/02/2014 11:35

On my agenda features@theactuary.com

“Why would BBC’s Newsnight want someone like me sitting across from Jeremy Paxman talking about pensions? Yet that’s exactly what happened. Actuaries are clearly better suited to such topics”

What was your expectation when you were invited to speak to actuaries?

These were the first actuaries I’d ever met and I was quite daunted by the prospect. I was expecting a highly aloof group of individuals – a stereotype often associated with very bright people who struggle socially because of their mighty brains. The general view of mathematicians is that they recede into themselves and can be uninteresting. But I was pleasantly surprised with the group. These young actuaries were charming, amusing and ebullient. There was clearly a lot of talent beyond the actuarial skills – there was confidence and great communication skills being displayed.

How can we change the stereotypical view of actuaries?

There is a great opportunity for members and the profession to modernise. There needs to be a stronger promotion of actuaries across wider society with a programme for change. Why would BBC’s Newsnight want someone like me sitting across from Jeremy Paxman talking about pensions? Yet that’s exactly what happened. Actuaries are clearly better suited to such topics.

What is required are figureheads from the membership to put themselves forward. This could be massive – actuaries are incredibly bright and credible. You should have an actuary on hand for every topic, every newspaper, every TV programme to give the expert view. Strong PR and marketing can really make a big difference in promoting the ‘actuary’ brand.

What advice would you give younger actuaries to be successful?

I would suggest they volunteer for anything. It is critically important to get noticed and to gain experience. There is also an element of luck and timing and, hence, getting involved in lots of different areas can increase your chances of success. Getting to the top requires dedication and a huge amount of focus on goals. There is also the need to deal with difficult decisions and some of the politics that come with business. What I believe makes a strong and effective leader and one that tends to avoid the politics is the ‘servant leader’ – someone who emerges in a group and is not appointed nor forces their way to the top. They prove themselves to have strong ability and people believe in them. They don’t pose

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a threat to the people around them and are highly collaborative. This type of leadership requires patience.

Given the cerebral nature of actuaries, this would make a good route to success.

Tell us about your own success I wouldn’t say I have been successful for myself. I have never been money-focused and that was never a driver for me, though I have always been profitable with my PR business that I started in the 1960s. I’d say that I have been successful for my clients. My aim was to be ‘unsackable’ by the age of 30. I always had a fear of being replaced over time; as we age there’s always that risk that the next generation will come in at a much lower price.

This was a key influence of me starting my own business. I’d say that if success did come at any time it was when I’d started employing people and taking responsibility for them and making money. Moving into television was big and gave a huge boost to my confidence.

What can actuaries learn from this?

Are they held back from the front-office crowd? Actuaries can be more than actuaries – sales, marketing and PR are just some areas in which actuaries can lead. Public speaking is great for growing confidence. It doesn’t apply uniquely to actuaries, as we know from that famous saying that people would rather be burgled than speak in public, but there’s a lot of development to be gained from public speaking – not least of all in reducing burglaries! Get actuaries on TV and in the papers because in many ways you are futurologists. The future is all about trends and that’s what businesses are looking for to be successful.

Good God, you guys should be everywhere!

What’s the secret to surviving in The Apprentice boardroom?

It is a scary experience for most candidates, and that’s because it is a life or death situation – it is about survival.

Everyone is best friends outside of that room, but when it comes to the boardroom it is dog-eat-dog and, of course, it is encouraged because it is television. It happens in real life too, but in a much gentler fashion; when the results aren’t good, someone has to take the responsibility. The candidates are very decent folk and some are very focused and obsessive about business. Since the prize has become an investment in a business idea, the winners are all making money. They have people working for them, which is very positive.

How would you describe Lord Sugar?

It is great working for him. He can be very tough and very demanding, but he is fair. Honesty, loyalty and integrity are incredibly important to him. If anyone crosses any of these they’re out. He is clearly very bright and very fast with it. There are times when we think he’ll be wrong but he is always proved right. He seems to be wired differently to most. He is always looking to the future and his timing

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is exceptional. He is always thinking, never stops, and is always calculating and calibrating. Maybe he should have been an actuary. He was the first into PDAs and they had voice and handwriting recognition. He was spot on with word processors, PCs and probably the last businessman to make money in football.

You are well known for your unique facial expressions – do you practise these?

I must have one of those ‘mobile’ faces.

Nothing is re-shot; the television crew are everywhere and they catch everything, particularly my reactions to the often naïve actions and statements of some of the inexperienced candidates. Body language and facial expressions are clearly important in communication. It’s knowing how best to use them and when. The hardest part is not showing any of it.

For example, in a hard negotiation having the ability to give nothing away can make the difference between winning and losing.

Education can be a valuable attribute for individuals and society. Does Countdown help support interest in education?

We are very proud of Countdown. It is surprisingly one of the few game shows that has no real prize. It is intellectually very tough and the core audience are students, children and a lot of older people. The timing of the show isn’t ideal at late in the afternoon and I’m sure it would be more successful at a later time slot. I believe the programme does promote literacy and numeracy skills and really gets people thinking. We are dazzled by the contestants and I’m sure actuaries would do incredibly well, particularly at the numbers game. Interestingly, we get a lot of contestants who are good at both the numbers and letters games. It could be so much more powerful with increased reach. I hope it is helping our audience to sharpen their thinking skills.

What future trends do you anticipate?

Technology will clearly continue to develop and become an even more important part of our lives. You clever folk use past data to predict future behaviours. You should promote this more strongly and show the positive effects on society. The other big shift I anticipate is more working from home and for it to become more acceptable. We’re already seeing this happen, but I do think the next generation will embrace it more strongly. The current issues that exist and may last some time are access to credit and investment – this does make it hard for the next generation. The trend that I’d like to see reversed is the dreadful cult of drink and obsession with celebrity, which can be very damaging. That’s not something you bright actuaries would fall for. a

March 2014 • THE ACTUARY www.theactuary.com

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25/02/2014 11:35

Finance Virtual currency features@theactuary.com

COINING A NEW PHASE The decentralised virtual currency Bitcoin could revolutionise finance, says UK life insurance actuary Peter McCrudden

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Be your own bank. This is the promise touted by advocates of Bitcoin, a new form of money that underwent a surge in value and popularity in 2013. The technology allows individuals to transfer money online and in person, without the involvement of third parties such as banks, credit card companies or payment processors.

The claimed benefits include increased privacy and faster, cheaper transactions for businesses and consumers. With Bitcoin it is possible to transfer millions of pounds across the world instantly for close to zero cost.

Critics maintain that the currency’s volatility makes it unfeasible as a store of value and that it is too complicated for the average person to understand and use.

The cryptocurrency was launched in January 2009 by its pseudonymous creator Satoshi Nakamoto. There has been much speculation over the inventor’s true identity, with theories ranging from a lone Japanese computer scientist to a team of ideologicallymotivated hackers. Crucially however, the identity of Nakamoto is irrelevant to the security and stability of the platform – the software code is entirely open-source, which has enabled thousands of sceptics worldwide to analyse the programme and verify that it cannot be manipulated by any single party.

Even Bitcoin’s many detractors concede that it is an impressive technological achievement.

Indeed, the common consensus is that the greatest obstacles to Bitcoin’s success are not technical, but political and economic in nature. The technology was designed to be decentralised, to ensure there is no single point of failure. This means that there is no corporate entity upon which governments can impose money-laundering regulations and ‘know your customer’ guidelines, as they do

with existing payment processors. This anonymity has sparked some concerns and led to the belief that heavy regulations will be imposed where users seek to convert Bitcoin to national currencies and vice-versa, negating many of the system’s benefits.

Additionally, proponents of Keynesian economics – the school of thought favoured by central banks – maintain that the limited rate at which Bitcoins are created makes it ill-suited to adoption as a mainstream currency. They argue that as economies grow, so too should the money supply to ensure a sufficient volume of currency to facilitate the growth in the value of transactions. Without an increasing money supply, the value of the currency would increase relative to goods and services, disincentivising spending (why buy a car for £10,000 today when I could buy the same car for £9,000 in six months’ time?), which would curtail economic growth.

The counterargument is that this ‘hoarding’ theory is ill-founded – consumers will buy a car today as the benefits of immediately acquiring the vehicle outweigh any potential saving from delaying the purchase. There are numerous real-world examples of this being the case, for example, the falling prices of laptop computers and mobile phones over the past two decades has not hampered their sales.

It is worth noting however, that Bitcoin does not have to replace the pound or the dollar as the primary currency of a leading economy in order to massively impact international finance. Its utility as a payment system could see it supplant PayPal as the medium of choice for online person-to-person transactions. It also has the potential to transform the international remittances market, estimated by the World Bank to be worth $514 billion in

THE ACTUARY • March 2014 www.theactuary.com

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March 2014 • THE ACTUARY www.theactuary.com

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Facts about the currency

Peter McCrudden

What is a Bitcoin?

is an actuary currently working in the pricing department of a large UK life insurance company

Bitcoin is an internet-based, decentralised currency with a built-in payment system. They are stored in a digital ‘wallet’ – a computer file containing the information required to spend the balance. A public ledger of all Bitcoin balances and transactions is stored by millions of Bitcoin users worldwide.

If they have a sufficient balance, users can initiate a transaction by sending any number of whole or partial Bitcoins to another user’s ‘public key’ – a string of 130 characters, commonly represented using smartphone-readable QR codes.

How are Bitcoins created?

Bitcoins are created by active participants in the Bitcoin network, known as ‘miners’. These miners use computer processing power to find solutions to computationally intensive mathematical algorithms. In return for solving algorithms, miners receive Bitcoins that are usually sold on the open market to cover the miners’ equipment and energy costs.

The number of Bitcoins rewarded is designed to fall by 50% every four years. This means that Bitcoins are created at an ever-diminishing rate and their number will never exceed 21 million.

Chart 1: Change in value of Bitcoin over time

1,400 Price per bitcoin (USD)

1,200 1,000 800 600 400 200

r 13 Ap r 13 Ma y1 3 Ju n1 3 Ju l 13 Au g1 3 Se p1 3 Oc t 13 No v1 3 De c1 3

13

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Feb

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2012, by massively undercutting existing providers. This could have positive implications for developing countries, many of which rely heavily on remittances to support their economies. Bitcoin could also be used as a store of value in countries such as Argentina, where annual inflation now exceeds 20%.

Bitcoin has the potential to deliver wider benefits. Advocates claim that a decentralised currency is simply the first application of the technology, and that the independentlyverifiable open-ledger system that Bitcoin provides could revolutionise more than just our monetary system. Decentralised stock exchanges, derivatives, book-keepers, and even provably-fair elections are all possible applications of the technology. This could bring significant benefits to those who use these services, as the settlement and auditing are carried out automatically by the Bitcoin network, reducing frictional costs.

Data source: CoinDesk Bitcoin price Index: www.coindesk.com/price

Investment opportunity or speculative bubble?

It is easy to see that a revolutionary change in the finance system would massively impact the insurance and pensions industries, and thus the work carried out by actuaries.

However, in the short term at least, Bitcoin’s impact is likely to be much less dramatic. It is more likely to be for small internet purchases, rather than denominating insurance and investment contracts. In the longer term, its finite supply means the currency could eventually be seen as an alternative to gold as a safe-haven investment. Bitcoin shares many properties with precious metals – it is finite, scarce, and impossible to counterfeit. It does however lack gold’s track record of thousands of years as a store of value, and thus is viewed with suspicion by many potential investors.

Despite this, Bitcoin was one of the best-performing assets of 2013. During what

was one of the best years in history for equity market growth, Bitcoin returns far exceeded even the strongest-performing stocks, with the value of a single Bitcoin increasing by 6,000% over the year (see Chart 1). In addition, a UK-based company called Elliptic recently announced that Bitcoin balances deposited with them would be fully insured by an established London underwriter, which should allay some of the concerns around theft and loss which have deterred many potential investors.

One of the greatest barriers to entry for consumers has been the difficulty associated with acquiring and spending Bitcoins. Mining is beyond the technical capabilities of the average consumer, so the most popular way to acquire the currency is to purchase existing Bitcoins from other users. This can be done on a number of websites, but the process is cumbersome and slow compared to the online virtual currency exchanges. However, due to the regulatory uncertainty surrounding the fledgling currency, banks are reluctant to do business with any companies involved in the Bitcoin exchange markets, which has stunted the growth of these services. This could change significantly over the coming months – the New York Department of Financial Services met with Bitcoin entrepreneurs in January this year to discuss plans to implement a regulatory framework for virtual currency firms by 2015. Notably, the panel was convened by Wells Fargo, the world’s largest bank by market capitalisation.

With growing adoption by merchants, and recent steps by regulators to co-operate with Bitcoin start-ups to provide a legal framework for the currency, 2014 is widely considered to be a make-or-break year for Bitcoin. For a technology which reached its fifth birthday in January this year, Bitcoin has come a long way.

The Prudential Regulation Authority is unlikely to advocate holding Bitcoins to back insurance liabilities yet, but if the technology continues to progress at its current rate, the finance industry would do well to keep a watchful eye on developments to ensure it is

“[Bitcoin] may hold long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system” Ben Bernanke, former chairman of the US Federal Reserve

24

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25/02/2014 12:51

Soft skills Setting goals features@theactuary.com

Mission impossible?

What would happen if you set completely unrealistic goals?

Simon Hartley, author of Could I Do That?, says that is exactly what high achievers do

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THE ACTUARY • March 2014 www.theactuary.com

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“What if our ‘why’ was based on DUMBER goals? What if our imagination was allowed to run wild, in the way that Walt Disney’s did when he conceived the idea of the Disney World castle in the middle of a swamp?”

Do you sit down and systematically set goals?

Over the years I have read a plethora of books and heard countless personal development ‘gurus’ explaining the importance of goal setting. Conventional wisdom suggests that successful people set goals and that if we want to be successful, we ought to set some too.

During my early years practising as a sport psychologist, I used to help athletes and teams set goals too. Having read the textbooks, I followed the principle of setting ‘SMARTER’ goals. There are several versions of the acronym. One of the more common suggests that goals should be Specific, Measurable, Attainable, Realistic, TimeBound, Evaluate-able and Relevant. On the face of it, that all sounds very reasonable. But, is that the way that the world’s best actually set goals? If you were planning to take on an enormous challenge, would SMARTER goals really help? What if you were setting out to attempt something that nobody had done before?

Dreams accomplished I’ve just finished writing a book that describes the way people take on challenges. I interviewed some incredible people who have taken on some astonishing challenges. Steve Williams, for example, took the challenge of becoming an Olympic rower. Interestingly, he showed relatively little sporting talent at school, finishing either last or second from last in the cross country. He’s also considerably shorter than most elite rowers at just over six feet tall. Despite these apparent disadvantages, Steve won two gold medals for Great Britain in the men’s coxless four crew, in Athens and Beijing. After retiring from rowing, and to stop him getting bored, he also skied to the North Pole and reached the summit of Everest in back-to-back expeditions.

Andy Reid’s challenge was very different.

His challenge began when he was severely injured by a Taliban IED in Helmand Province. Andy not only had to learn to walk again, he also had to rebuild a life. Robyn Benincasa, on the other hand, set out with a pretty audacious challenge to break the 24-hour kayak world record on the Yukon. These are all undoubtedly extraordinary challenges.

There are some challenges that might actually appear to be impossible by conventional standards. For example, in 2007, Lewis Pugh swam a kilometre in the Arctic Ocean at the North Pole. It took him 18

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minutes and 50 seconds. Conventional wisdom tells us that hypothermia takes effect when our body temperature drops below 35 degrees Celsius. The water temperature at the North Pole for Lewis’ swim was 1.7 degrees below zero! That’s impossible, right? If you think that sounds bizarre, John Evans balanced a car (yes, a real live 159kg Mini Cooper) on his head for 33 seconds; no hands.

Amazingly, it’s a Guinness World Record, not an April Fool. On 30 April 2008, David Blaine held his breath underwater for a world record breaking 17 minutes and 4.4 seconds, live on the Oprah Show. Wow! I wonder how many of the world’s great inventors or creators have heard the words, “it simply can’t be done”, or “that’s impossible, you’ll never do it, you’re wasting your time”. Did anyone ever tell Thomas Edison that perhaps, after 9,000 failed attempts, he ought to give up on this daft ‘light bulb idea’ of his? The history of the world shows us countless examples of people who have been the first to break new ground.

These people have turned the ‘impossible’ into the ‘possible’. I am sure that they were also told they were insane for attempting their harebrained schemes.

It’s tempting to think the people that achieve these things are in some way innately different from us. Maybe they are supremely talented or were born with unique abilities that we don’t have. Are they immune to pain, fatigue and discomfort? Perhaps they have a rare form of super-fuel coursing through their veins? Or, maybe they simply think differently to us. Is it possible that they also set goals differently to most people?

Dumb and dumber While listening to them, it struck me that they don’t start out by setting SMARTER goals at all. In fact, I suspect that they probably set DUMBER goals: Daft, Unrealistic, Mental, Bonkers, Exciting, Ridiculous. I wonder if Walt Disney followed SMARTER principles when he conceived of the idea to build the Disney World theme park. He decided to take a swamp, several miles outside of Orlando, and invested millions of dollars building a giant fairy-tale princess castle on it. Imagine the conversations that he must have had when he positioned the idea with his bank manager. Apparently he was rejected 302 times when he attempted to secure a loan for Disney World. Does his idea appear SMART? How many people would have described it as ‘attainable’ or ‘realistic’?

The same could be asked about President Kennedy’s goal to put a man on the moon, or Martin Luther-King’s goal of equality for black Americans. But the mind-set doesn’t just apply to globally historic events. Which of our genuinely life-changing goals are SMART and which are a little DUMB? Just for interest, which one sounds more engaging to you? Which one is more likely to ignite your passion?

Smart processes I have also reflected on my own thought process while taking on a significant challenge. Interestingly, I found a pattern when I attempted a challenge that seemed ‘mammoth’ and ‘daunting’. Ironically, it struck me that I was engaged in a form of ‘SMART’ goal setting. I was breaking down my challenge into ‘specific’, ‘measurable’, ‘achievable’ and ‘realistic’ chunks. Maybe I had been too hasty in judging those SMART goals after all. Perhaps there is a place for both the DUMBER and the SMARTER processes.

Is it possible for SMARTER and DUMBER goal setting to live happily together? Can we have ‘daft’. ‘bonkers’ and ‘unrealistic’ goals as well as ‘specific’, ‘measurable’ and ‘achievable’?

What if our ‘why’ was based on DUMBER goals? What if our imagination was allowed to run wild, in the way that Walt Disney’s mind did when he conceived the idea for his fairy-tale princess castle in the middle of a swamp? If we let our mind run free, without the need for sensible, SMART thinking, what would we dream up? How exciting would that be? Once we have our DUMBER goals, we need to find a way to help us get there. Maybe this is where those SMARTER goals could come in handy. Maybe they help us with the ‘how’.

SMARTER goals might be a way of helping us to understand each of the steps takes us towards achieving our aspirations.

DUMBER goals may be the way to make sure we have dreams worth achieving. a

SIMON HARTLEY is

author of Could I Do That? published by Capstone, April 2014

March 2014 • THE ACTUARY www.theactuary.com

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25/02/2014 11:46

Regulation High standards features@theactuary.com

IS

REGULATION STILL GOOD FOR US? I have been working with regulators for 20

Simon Carne asks whether current regulatory proposals by the Institute and Faculty of Actuaries and the Financial Reporting Council go too far?

28

years now, so it is not often that one of them says something that takes my breath away. That is exactly what happened at a regulatory dinner I attended at the end of last year.

A representative of the Legal Services Board, the oversight regulator for the legal profession, told me they were increasingly sceptical about excellence as a regulatory objective. They didn’t like it when the regulatory body for solicitors argued recently that it is “essential that [legal] services are of the highest possible quality”.

I wondered how much more than “excellence” a regulator could reasonably demand? But I was looking in the wrong direction. The Legal Services Board sets a lower regulatory standard: “competence”. The rationale for this is that if the market can sustain higher quality or higher prices, so be it, but if the regulator pushes quality to levels of excellence, this pushes prices higher and excludes people from the market.

This got me wondering about the regulatory regime for actuaries. Actuaries do not face the same challenge that dominates the legal market, where access to justice is barely affordable for the man in the street, as we seldom sell services to individual consumers. The dominant focus of the Financial Reporting Council (FRC), the oversight regulator for the Institute and Faculty of Actuaries (IFoA), is not affordability or access: it is the ‘reliability’ of actuarial information. This is an aim I support, but could it be one that can also be taken too far?

Current indications from the FRC and the IFoA are that they may each be exploring the extremities of what could be the reasonable bounds of professional regulation.

Peer review Consider the IFoA’s proposals for a standard that requires actuaries to consider peer review for all actuarial work. I do not doubt that peer review enhances the quality of advice, nor do I

THE ACTUARY • March 2014 www.theactuary.com

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“Is the FRC ahead of the game in realising that technical standards are necessary across the range of actuarial work?

Or has it fallen into the trap of thinking that standards encourage excellence, so why limit them?”

challenge the implicit premise that peer review is to be encouraged. However, is the need to consider peer review enough to justify a regulatory intervention?

Doctors give advice with life-changing, potentially life-ending, consequences if they get it wrong, but peer review is an exception rather than the rule. Barristers are sole practitioners, which severely limits the scope for peer review.

Solicitors draw on peer review more frequently because their practices are structured as firms but it is not a regulatory requirement. It is also not a regulatory requirement for accountants.

What is different about actuarial work that should cause a deviation from the approach taken by other professions?

The IFoA states in its regulatory strategy that it has a test to determine when the need for regulatory intervention has been triggered, but that test does not seem to have been met in this case. The five central principles for the approach to regulation are shown in Table 1.

Three of these principles are that: 1 Regulatory action should be focused on identified problems, so as to minimise the side effects 2 Intervention should be undertaken only to the extent necessary and appropriate to the risk 3 The IFoA should be ready to justify its regulatory action.

What is the “identified problem” that the proposed peer review standard seeks to address? What is the evidence or analysis that demonstrates that the proposal intervenes only to the “extent necessary”? Above all, why does the IFoA believe that it needs to introduce peer review regulations when other professions do not have an equivalent?

Maybe there is a credible case for the proposals. I certainly do not argue that peer review is never needed, but the proposal has been put forward without, so far as I can identify, any attempt to address the key questions.

Peer review is by no means an isolated example of regulation without an established

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need, nor is the IFoA the only organisation deserving of challenge.

Technical Actuarial Standards The FRC’s most recent annual report told us: “… as part of our planned review of the TASs in 2014, we will develop and seek views on proposals to restructure the TASs [to include] high-level principles which are recognised as applicable across all professional actuarial work …” [My emphasis].

The proposals have yet to emerge, so it is too soon to complain that we have not been told what has been identified as the problem for which high-level principles across all areas of actuarial work are a necessary solution.

However, it is not too early to point out that once again, this is a step that other leading professions have not found necessary to take.

Accountants are the closest profession to our own in terms of technical standardsetting, but their standards apply only to the preparation and auditing of accounts. No other areas of accounting work are subject to technical standards.

Lawyers do not have technical standards governing their work. They restrict themselves to ethical standards. The same is true for doctors. The National Health Service in the UK has rules governing what it will pay for, as do the private health insurers, but the medical regulators do not have technical standards directing the form or content of the advice doctors are permitted to give.

Is the FRC ahead of the game in realising that technical standards are necessary across the entire range of actuarial work? Or has it fallen into the trap of thinking that standards encourage excellence, so why limit them to only some aspects of actuarial work? The FRC’s annual report certainly suggests the latter, and that worries me.

I am worried enough to test my own hypothesis. What is the harm in having more regulation? If the actuarial market is not in

Table 1: IFoA Principles for Regulation (policy set out in paragraph 3.3 of the IFoA’s Regulatory Strategy, April 2012) The Principles of Good Regulation, published by the Government’s Better Regulation Task Force in 2003 and accorded statutory recognition by section 21 of the Legislative and Regulatory Reform Act 2006 require that regulation is: 1 Proportionate: such that regulatory intervention is undertaken only to the extent necessary and appropriate to the risk 2 Accountable: the profession should be ready to justify regulatory action (and inaction) and should be, and be seen to be, open to scrutiny by the public 3 Consistent: regulatory action (and inaction) should be coherent, according to a clearly defined and comprehensible policy 4 Transparent: regulation should be clearly articulated and readily comprehensible to non-actuaries 5 Targeted: regulatory action should be focused on identified problem(s), such as to minimise side effects.

danger of becoming unaffordable, why not allow a body as august as the FRC to decide where to draw the line? If they draw it on the wrong side of the Principles of Good Regulation mentioned in Table 1, maybe it is the Principles that need re-thinking, not actuarial standards.

The answer is a simple one: if clients or employers have a choice between hiring an actuary restricted in their decision-making by FRC or IFoA standards and hiring someone else just as bright and just as ethical, but unrestricted in the form and content of their advice, clients and employers will choose the latter more often than not. Experience shows that, when people are free to choose, they select advisers they trust, not advisers tied down by a bunch of rules. That applies even more so when recruiting employees.

Conclusion Just as setting excellence as a regulatory minimum in legal services would risk making justice more inaccessible than it already is for those of modest means, extending standards for actuaries risks driving users away from the profession for everything except the narrow base of work reserved to actuaries by law.

Throughout my career, I have watched in dismay as those who regulate professions behave as though raising the quality bar was self-evidently a good thing. It took my breath away to discover that the legal profession is now blessed with regulators who have seen the light.

If only some of that thinking could be applied to our own profession. a

SIMON CARNE is an actuary working in the field of regulatory policy, and has consulted in industries including telecoms, pharma, actuarial and the press

March 2014 • THE ACTUARY www.theactuary.com

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25/02/2014 11:47

Solvency II Investments features@theactuary.com

Rejoice the

battle won!

Will Solvency II kill traditional corporate bond management for insurers, asks Scott Eason

is

( for now )

The battle is indeed won! Subject to an imminent confirmation vote in the European Parliament, annuity writers will be able to apply a matching adjustment to the discount rate used for calculating liabilities under Solvency II when it comes into force on 1 January 2016.

The matching adjustment will allow insurers to use a discount rate similar to that currently used under Solvency I regulations for annuity business, reflecting a ‘liquidity premium’ that it is argued is present in the yield of the long-term credit assets insurers hold to back annuities.

If the matching adjustment hadn’t been granted, technical provisions would have shot up on existing business, threatening insolvency for large swathes of the UK insurance market.

Annuity rates would have fallen even further from their current historic low levels, impacting many future generations of pensioners.

It is no surprise, therefore, that there was so much political and industry lobbying to get the matching adjustment included and the attaching conditions eased. Various forms of the matching adjustment have been considered throughout the consultation process, including consideration of the types of business that it should apply to.

The conditions for use set out in the Omnibus II text agreed by the Trialogue parties are summarised in Table 1 (page 32).

The benefits of being able to use the matching adjustment are significant, and accordingly, the proposed penalties for

30

non-compliance are tough. The text states that “Where such undertaking is not able to restore compliance with these conditions within two months it shall cease applying the matching adjustment to any of its ... obligations and shall only be able to apply the matching adjustment again after a period of 24 months”.

Previous versions of the matching adjustment limited the amount of assets held that were BBB rated and did not allow for lower rated bonds to be held. Under such conditions, bonds that fell below BBB rating would have had to be sold within two months. Now, though, under a strict interpretation of the rules, such assets may largely need to be held until maturity to meet the matching adjustment conditions, even if the default and spread risk of doing so has increased. One thing seems clear though – the ability to trade the annuitybacking assets is heavily restricted. This may have significant consequences.

Investing for the long term Typically, corporate bond portfolios backing annuity business are held on a ‘buy-andmaintain’ basis. This aims to improve the ‘buy-and-hold’ approach, whereby bonds are held to maturity to capture the excess spread perceived to exist to compensate for the liquidity and associated transaction costs that other investors typically require. By contrast, the ‘buy-and-maintain’ approach incorporates regular credit screening to remove and replace bonds that are likely to default or fall below

certain rating levels. Such mandates are fiercely competitive, and a fund manager’s track record in avoiding these ‘fallen angels’ is a key differentiator.

If an insurance company is now unable to take advantage of credit screening, and has to hold the bonds to maturity regardless of their view on the issuer, this may have significant knock-on effects.

When asset managers decide whether they are going to buy particular bonds, they will carry out initial credit assessments. However, these are short-term assessments of issuers, as macro and micro factors change over time.

Under a ‘buy-and-hold’ model, insurers will need a credit assessment that lasts 20 years or more, which is impossible. Who would have predicted the demise of Lehman’s at the beginning of the century? Therefore, credit screening and underwriting becomes a futile exercise, except for perhaps protecting against potential losses in the first couple of years of holding a particular bond. The existing ‘buy-and-maintain’ approach is therefore challenged, and a new wave of passive bond index funds may become the norm.

Unlike with equities, where index investment is common, virtually all corporate bond management is done on an active basis, so it is clearly believed in the market that a passive approach is sub-optimal. By implication, a move to a buy-and-hold basis may lead to lower profits or lower annuity levels if lower investment returns result from this change in

THE ACTUARY • March 2014 www.theactuary.com

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JASON BENNION

p30_32_mar_corp.bonds_FINAL.indd 31

March 2014 • THE ACTUARY www.theactuary.com

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25/02/2014 11:48

Solvency II Investments

SCOTT EASON is MD,

insurance and pension advisory, at Société Générale and is a qualified actuary, having worked in life insurance and consulting

features@theactuary.com

Table 1: Conditions for use of the matching adjustment ● No future payments

Allowed contracts

● Only underwriting risks connected to the contracts are longevity, expense, revision and

limited mortality risk ● No options for the policyholder, including surrender unless the surrender value does not

exceed the value of assets at the exercise date of the surrender option

● Assets must be bond-like

Backing assets

● The expected cashflows of the assets must match each of the expected cashflows of

the liabilities in the same currency and any mismatch must not create a material risk ● Assets must be held until the maturity of the liabilities unless correcting any material

mismatch between the expected asset and liability cashflows ● Assets must be ring fenced and not used to meet other liabilities ● No optionality for asset issuers (eg call options) unless make-whole clauses exist ● Fixed cashflows are required (although inflation-linked assets can be used to replicate

inflation-linked liabilities)

strategy. Clearly, we would also expect investment fees on such mandates to reduce, which will impact the business models for asset managers.

We may even see a change in the assets being held. While the assets held on a ‘buy-andmaintain’ basis do benefit from a liquidity premium, this is more reflective of the cost of selling such bonds rather than suggesting that these bonds cannot be sold at any price. Clearly, the manager needs to be able to sell any bonds

it feels it needs to, and so there has to be a minimum level of liquidity in holdings. If managers are not able to sell the assets, they might feel truly illiquid assets, such as private placements or loans, are more attractive.

Not as good as it looks In addition to the investment considerations above, insurance companies currently maintain risk limits in respect of the credit quality of the bonds held, in line with their risk appetites.

Chart 1: Sample company bond holdings and expected credit shocks

60% 50% 40% 30% 20% 10%

d Un

ra

te

C CC

B

BB

B BB

A

AA

A AA

pp ra he Ot

UK

go ve r

nm

en

ro ve d

t

0%

Aviva

Prudential

Scottish Widows

LTGA Spread shock

These are normally defined in respect of maximum levels of holdings in various rating levels, and usually permit only a small holding, say less than 5%, in sub-investment grade (lower than BBB-) assets. This also restricts the maximum level of spread capital that has to be held, as this is dependent on the ratings of the assets held. This can be seen in Chart 1, which shows the proportion of bonds held at 31 December 2012 by rating category, by three of the biggest writers of annuity business in their stand-alone annuity companies, along with the pre-diversification credit spread shocks assumed for a bond with a duration of 10 years in the standard formulae calculations for the Long Term Guarantee Assessment.

One of the possible scenarios under the proposed regime is that the quality of a ‘buy-and-hold’ portfolio could fall below the risk limits allowed. In this situation, the company would be faced with the unpalatable choice of exceeding its risk limits and holding greater levels of capital than anticipated, or, as the rules appear to suggest, coming out of the matching adjustment process for at least two years, with the corresponding increase in technical provisions.

Neither of these circumstances would have been priced into the annuity business when it was written, and is therefore likely to cause losses. Companies that have priced assuming a downgrade cost (the cost of maintaining a constant rating mix by selling downgraded assets and replacing them with higher rating bonds) may be able to use this now defunct margin to partially offset these losses, or subsidise the yield on new business to allow higher quality assets to be purchased.

Perversely, the company may prefer distressed assets to default, so they can take the loss and replace the cashflows with the bonds of a higher rated company to reduce capital and risk levels.

For new business, these scenarios will need to be considered when pricing, and are likely to lead to less beneficial rates for pensioners, and an increased likelihood of retirement burden falling onto government.

On the face of it, the battle may have been won, and certainly, it would have been bloodier if no matching adjustment had been proposed.

However, on closer inspection, it appears that even the victors may have been wounded, and the impacts on those who rely on annuity providers, namely active bond managers, the working population and the government, may be more complex than anticipated. a

Source: FSA Returns / Long Term Guarantee Assessment Technical Specification

32

THE ACTUARY • March 2014 www.theactuary.com

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BOOK REVIEW

Risk management issues in insurance Editors: Martin Bird and Tim Gordon PUBLISHER: Bloomsbury Information Ltd ISBN-13: 978-1849300650 RRP: £30

“The book’s main substance relates to the management of longevity risk. Several chapters explain how risk can be transferred into capital markets” Martin Bird and Tim Gordon have pulled together a collection of brief essays on several aspects of insurance risk, with a particular focus on the risk of pensioners living longer than expected.

Recent years have seen an avalanche of technical risk management texts, often stimulated by new rules such as Solvency II, Basel III or International Financial Reporting Standards. This collection is not like these.

Largely free of formulas, and without prescribing particular methodology, the book instead raises issues that the thinking risk manager should consider.

Several chapters are of general interest. An essay on emerging risks analyses three failures in some detail: Long Term Capital Management, AIG and the Bhopal disaster. Another chapter on firms’ own risk

ALAMY

p33_mar_book_review_FINAL•CT.indd 33

and solvency assessment describes the use of cognitive mapping techniques to harness expert input, alongside the application of complex systems theory to identify the underlying causes of loss events. These chapters are well written – but also strangely familiar. A quick search revealed that one chapter has previously appeared as a 2010 GIRO paper, while substantial parts from another appeared previously in The Actuary. This is not plagiarism, as the authors are recycling their own work, but it is disappointing to see whole paragraphs lifted verbatim from other sources.

The book’s main substance relates to the management of longevity risk. Several chapters explain how risk can be transferred into capital

markets, via longevity swaps or insurance linked securities. One chapter suggests that governments should step in to issue bonds as an insurer of last resort. The book contains perceptive analysis of historic trades as well as estimates of total potential market size. There is scant coverage, however, of other aspects of longevity risk, especially the rise of price segmentation by occupation or postcode, the risk of adverse selection or even the more mundane question, with an internationally mobile pensioner population, of ensuring those in receipt of a pension are still living.

A chapter on managing market risks summarises familiar themes of risk identification, modelling, monitoring and management, but the proposed solutions of using futures and options are hardly revolutionary. Given the subtitle “trends in best practice”, I expected more on current topical derivative issues, including: the price impact of collateral support, proposals for centralised clearing of over-the-counter derivatives, impact of financial repression or the manipulation of market indices such as Libor.

The book does not claim to be comprehensive, and many risks relevant to insurers are not considered at all. There is little mention of profitsharing business, or savings business with other forms of embedded guarantees that give rise to special risk management issues. There is no consideration of term assurance or unit linked savings, while discussion of general insurance is limited to a chapter on catastrophe bonds. More surprisingly, there is no discussion of credit risk, despite the increasing focus of insurers and regulators in the wake of the recent financial crisis.

This book is likely to be of interest to those working in insurance companies, although it is not a manual of current practice. It is most useful to actuaries advising pension schemes or insurance funds who wish to reduce their exposure to longevity improvements.

The book’s structure as 15 short essays means that no subject is covered in great depth, and it is hard to pick out any unifying theme. On the other hand, little prior knowledge is assumed and each chapter is self-contained. Actuaries may enjoy dipping in and out of this book, picking up some new and interesting perspectives, especially in relation to longevity risk. ● Andrew Smith is a partner at Deloitte

MORE ONLINE Latest reviews at www.theactuary.com/ opinion

March 2014 • THE ACTUARY www.theactuary.com

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25/02/2014 11:49

At the back Coffee break

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

puzzles@theactuary.com

Puzzles

— RD SWO CROS IZE PR E PUZZL

For a chance to win a £25 Amazon voucher, please email your crossword solution to: puzzles@theactuary.com by Wednesday 19 March

—

THERE’S NO PLACE LIKE HOME To paraphrase Confucius:

“The strength of a profession derives from the integrity of the home” 1

2

3

Across

13

1 4

15

Before church, Sister takes a hint (6) Block containing animal shelter about to be taken away from mice (6) Ring, with a lover providing accommodation (4) Mechanical device carried by truck and crane (10) What actuaries hope will be successful race? (6) Writing implement with label placed upon the upper surface of shape (8)

9 10 11 12

4

4

5

6

16 17 21 22 24 25

7

26 8

8

27 9

10

Down

10

11

1 2

12

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13

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3 5

15

14

16

17

16

17

18

18

19

6 7 8

20

20

24

14 22

21

23

16

25

24

25

© Nylfia

18 19

27

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Charlie with hollow back, nursed irritating acne so scratched (9) Fast food eaten at both ends due to impulse (4) Pitch the standard “OK” in text (4) Typified natural surroundings for car to park in (9) Memorial built out of church, denying latent losses (8) Island that I confused with 1 down below (6) Success footballer brought to agent (10) Found beside radius when it’s taken from lunar eclipse? (4) Mathematician discovering Pi – presented in near confusion (6) Teachers blow top when finding bloomers (6)

26

27

20 23

Art is cut short once more – return falls (7) Sailor led verse in many places for FIAs herein? (5) Essential to recent rallyings! (7) Power nominally obtained from railways backed in volume (6) Urinal cam devised by mathematician (9) Ugly situation when angry after survey? (7) Tudor building damaged in lethal plans (6,3,4) Ron Weasley, perhaps, in vehicle with Harry, returning – “E’s lost, nothing’s gained in place” (6,3) Common programme to preserve electronic flat constant (7) Heavenly body, one exotic from astern? (7) Condition causing brown appearance in fat back (7) Fertilizer Nylfia found in ground (6) Cover obtained by everyone in tights (5)

THE ACTUARY • March 2014 www.theactuary.com

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25/02/2014 11:50

HAVE YOU GOT WHAT IT TAKES? For information on IQ testing in your area, visit www.mensa.org.uk

A M L M O R D A D I L O K A O O N S S R I Y M A U A H R C L O O

—

Sector dissector Mensa puzzle 575 For a chance to win a £25 Amazon voucher, email your solution to puzzle 571 to: puzzles@theactuary.com by Wednesday 19 March

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.

Bird with brains Mensa puzzle 576

A useful convention, when Partner opens 2NT, is 5-card ‘Puppet’ Stayman. You bid 3♣. You need to be holding at least one 4-card major to bid this, and enough points for Game. Partner bids 3♥/3♠ with 5 cards in the suit. With 4 cards in one or both majors, Partner bids 3♦.

With no 4 or 5-card major, Partner bids 3NT.

On each row place a five letter word that will link the two given words (i.e. LUNCH – BREAK – THROUGH). When completed the centre letters of the added words will give a type of bird reading downwards.

Partner You 1NT

3♣

3♦

?

—

Pair the sectors to find four associated names. What are they?

Bridge puzzle 40 The Puppeteer

When Partner bids 3♦, you bid the major you HAVEN’T got. The idea is that the very strong hand is not exposed and therefore always plays the contract. On each of these hands, the bidding goes:

A MENSE PRIZ E PUZZL

What is it?

BROWN SHORT BATH GOOD GOAL BRAIN PARK

_ _ _ _ _ _ _

_ _ _ _ _ _ _

_ _ _ _ _ _ _

_ _ _ _ _ _ _

_ _ _ _ _ _ _

THIN BOARD GAME SCHOOL ORGAN CARE MARK

Name that number Mensa puzzle 577 What number should replace the question mark in the grid?

On the hands below:

3

1

7

3

4

2

8

1

3

2

6

8

7

9

8

4

5

3

8

6

2

3

4

1

?

1. Should you have bid 3♣?

2. What do you bid next?

1

2

♠KJ65

♠KJ65 ♠7

♠KJ65 ♠7632

♥3

♥842

♥QJ75

♥QJ75 ♥9432

♦96

♦Q74

♦KJ642 ♦74

♦104

♣AQ2

♣J65

♣QJ942 ♣1065

3

4

♣J104

5

Bridge puzzle provided by David Lampert

SHUTTERSTOCK

p34_35_mar_crossword_puzzles_FINAL•CT.indd 35

Coining it in Mensa puzzle 578 In your pocket you have £13.77. It is made up of four different denominations of coins and the largest denomination is £1. There is exactly the same number of each coin in your pocket.

How many of each coin is there and what are their values?

March 2014 • THE ACTUARY www.theactuary.com

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B

puzzles@theactuary.com

V

SOLUTIONS FOR FEBRUARY 2014

O M

O C A P R O G L S

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Tasty teaser Mensa puzzle 571

A MENSE PRIZ E PUZZL

—

Find food items to fit the clues. Each group of crosses should be replaced with the same three letter word. What are the food items?

_ _ _ _XXX

A fruit

_ _ _ _ XXX

A bean

Congratulations to this month’s winner – Douglas Hood

A A E F F L L E A F A

F A E F E F F F E A L

L E L A A E E F L L A

A E F F A L A F E E L

E E A E F L A F L A E

E A F L F L L F L E A

L F F L F E F E E E F

F F F A L A E F A E F

E A F E F F L A F F A

M A S M S S M A M A L

L M A M M A M A L M M

S M S A S S L L A L A

A S S L A L S M A L A

S S S M L M M L M M S

A S S A A A S S A L A

L M M L L S A L S L M

A L M S A A A M A L S

L L M L M M S M A A A

S L A M S M A A L A S

A M L S A S A S M S M

E A S T T S E S A S T

T S A E T E A A T E E

E A A S E E A E E T S

A S S T S T S E A A E

T S T S E S T S T A A

A E S T A A E E E A A

T E A S E T A T S E T

S A T T S A S E T A A

S T A S E S T E T S S

S A E S E T A A E E T

A S T E T E A E E S A

E C N N S E E E E S S

S N N S S S C S C S S

E S E S E E N C N C N

N S E S C S E N E S S

C S S E S E C E C C E

S S N E E E E N S S N

N C E S C N N N E S E

E S N E E N N C N E N

C E E N C S E N E C E

S C N S S C E C S S N

E S C N E C N N C N S

At a college, the law course has 39 students enrolled on it, a drama course has 42 enrolled, the beauty course has 80 people and the textiles course has 122 enrolled.

How many students are enrolled on the clerical course?

Answer: 71. The total of the alphabetical values plus the number of letters in the course gives the number of students.

36

THE ACTUARY • March 2014 www.theactuary.com

p36_mar_puzzle_solution_FINAL•CT.indd 36

Y S S S L F S

Four letters Puzzle 573 Three of these grids contain at least two seven-letter words.

Find all of these, as well as the longest word in the fourth grid.

Answer: ALFALFA FALAFEL MAMMALS MASALAS SALAAMS ESTATES SESTETS SETTEES TESTATE SENESCENCE

Bridge puzzle 39 Line of best fit 1

2

3

4

♠A73

♠Q62

♠8732

♠K85

♥AKQ84 ♥AJ1076 ♥A10865 ♥AKQJ ♦-

♦4

♣AQ842 ♣AQ83

Study in numbers Mensa puzzle 574

S T A C R A N N R L S F E L L O W A U E E M P L A R A O R P H A N A E M U T U A U R R A L Y A F O O U E S C U E R E T Y

A L L E L E A E A A L

Answers: Apricot, haricot, butterscotch.

Congratulations to this month’s winner – Carol Smurthwaite

A car has travelled 100 miles at 70mph. It started its journey with 10 gallons of fuel but its tank has been leaking throughout the journey and is now dry. The car completes 40 miles per gallon.

How many gallons of fuel does it leak per hour?

Answer: 5.25.

W D C A I N I E R D N E T O O D D W S I E S S A T U S S T E R Y O A E A N M A P N A R U D E N T I F I O O R I A R O C I

E E F E L L F F L F L

_ _ _ _ _ _ _ X X X _ _ A sweet

Tricky slicky Mensa puzzle 572

F R I E N D L Y

© Nylfia

At the back Coffee break

5 ♠J86 ♥AQ84

♦-

♦6

♦K5

♣AK74

♣109876 ♣AQ72

You are N South 1♥ and the bidding 2♣ has gone: 2♠

S 1♠ 2♥

Which of South’s hands above best fits South’s bidding, and how would you bid with the other 4 hands?

1. Not this one. After 1♥-1♠, you should bid 3♣. You expect to end in at least a game, possibly a slam.

2. This one. Partner is giving simple preference to hearts and may only have two. Partner may well have five spades and if so you have an eight-card fit. Also, Partner’s bidding implies a weak hand and it is better to play in the suit of the weaker hand.

3. Not this one. You should support spades immediately. With six losers, jump to 3♠. (Although there are some refinements to the system, generally the LTC looks at the first three cards in each suit counting A, K, and Q as winners and all others losers).

4. Not this one. Length before strength open 1♣, not 1♥. If Partner responds 1♠, raise to 2♠.

5. Not this one. With 16 points balanced, your rebid is 1NT, not 2♣. Even if you were 3-4-2-3 with 16 points and 2 little diamonds, you should still bid 1NT. Bridge puzzle provided by David Lampert

SHUTTERSTOCK

25/02/2014 11:50

At the back Student student@theactuary.com

Student Jessica Elkin advises students without a mathematical background not to be discouraged from joining the profession

REBEL WITH A CAUSE I have this attitude problem – a personality disorder you could call it – whereby I want something more when I’m told I cannot have it.

Not very original, you might say, but there it is.

This spirit of rebellion would, I’m sure, make me some sort of revolutionary hero given the right circumstances. However, my life is quite ordinary, so it usually manifests itself in wanting the Monopoly piece someone else chose, or deciding I fancy someone only after they’ve moved on to someone else.

I’d hate to give the impression that I pursued my career in such a way. My path of choice was naturally judicious, well-researched and carefully planned. But perhaps I was spurred on a bit by the notion that the job was something I couldn’t have.

You see, I was studying a discipline considered ‘non-traditional’ in this field – one of those pleasantly woolly subjects that is sometimes disparaged due to lack of tangible applicable knowledge. At one memorable careers event I was told by a professional that I would ‘struggle’ to get my foot in the door. Yet I’d always loved maths, and I was interested in this specialist, stimulating and technical line of work. So I persevered. Some would call this pig-headedness.

Right brain, wrong brain I have long sensed that many people like to split brains into two types, ‘scientific’ and ‘arty’, and prefer to categorise themselves and others as one or the other. This has always seemed a little short-sighted to me; many people have skills on both sides of the coin. An impressively quick qualifier and all-round smarty-pants at my firm studied music and maths at university, and completed a music

PHIL WRIGGLESWORTH

p37_feb_student_FINAL•CT.indd 37

performance Masters before pursuing an actuarial career. He’s in a band and always accompanies at office Christmas carols.

In The Actuary in 2000, Rob Guthrie expressed some benefits of employing a diverse range of actuaries, suggesting that “initiative, problem solving, teamwork, and communication skills” would be found in abundance in graduates from non-mathematical backgrounds.

He pointed out that while a good level of mathematical understanding is required to pass the exams, “mathematical ability is not the be-all and end-all any more”.

I agree. Actuaries are dealing with widening demographics, now that our field of practice is expanding, and communication of complicated concepts is just as important as understanding the concepts in the first place.

Once the ‘maths’ box has been ticked, employers are often looking at other abilities

that will allow one to work with others, manage projects and meet deadlines.

Of course, highly mathematical graduates will always be sought-after for certain roles. As with pure mathematicians that go into actuarial work having not studied applied statistics, the point is technical skills are useful, but equally important are the transferable skills that can be applied in performing the role.

Information asymmetry In my day, it was difficult to find much information on the possibility of becoming an actuary from an arts background. I remember hearing a rumour that a prominent actuarial consultancy had hired a music graduate to be a trainee actuary, but I couldn’t find verification anywhere. Perhaps it was a freak occurrence, or not true, I thought at the time.

Skipping a few years down the line, things feel very different. There is a music technology graduate training at my firm. I’ve heard of a law graduate going into the profession, and I know a qualified actuary who studied geography.

And eventually I made it in, too.

Reading Guthrie’s article when I was still at university gave me some much-needed encouragement, and when I contacted him to express appreciation he kindly responded with some great tips. Having been thus encouraged in my day, I am always keen to pay it forward and advise those in similar positions if I can.

On starting this month’s page, I intended to impart words of wisdom for that purpose.

However, on reflection, I’ve realised that my advice would be the same for graduates from arts and science backgrounds alike. You know: do your research. Be enthusiastic. Consider taking CT1 to bolster your CV. Make sure you want to be an actuary for the right reasons and not because of its sex appeal and glamour! Or because you were told not to.

It is reassuring to know that non-traditional graduates needn’t take extraordinary measures. If each individual can be considered on merit, and not on the basis of black-andwhite criteria such as their chosen degree, the industry will find the best recruits, and others like me will have a chance to prove themselves.

It is hard to convey extreme wisdom in one page. If you are an applicant from a ‘nontraditional’ background, feel free to email student@actuary.com with any questions.

And good luck! a

March 2014 • THE ACTUARY www.theactuary.com

37

25/02/2014 11:51

At the back Appointments

SPONSORED BY

peoplemoves@theactuary.com

Moves Hymans Robertson senior partner John Dickson has been appointed chairman of the board, replacing Ronnie Bowie with immediate effect.

JLT Employee Benefits (JLT EB) has recently announced the promotion of James Auty (above) to managing director of The Annuity Bureau.

Auty has worked in the pensions industry for 25 years, and he has been a scheme actuary and corporate advisor with JLT EB for 11 of those years.

His appointment is subject to the usual formal regulatory approvals.

BBS Consultants & Actuaries have announced that Jude Bennett (below) is to join their board as investment director from 1 April 2014.

The internal promotion follows a highly successful year for the

Bristol based firm.

The investment division has grown significantly since Bennett joined as an investment actuary in 2009.

Sarah MacDonnell (right), a leading expert on periodical payment orders (PPOs), has joined consulting actuaries LCP as a senior consultant.

MacDonnell has 20 years’ experience in general insurance actuarial consulting.

Her particular areas of interest are PPOs,

industrial disease claims and reserve uncertainty. She has written and presented widely on the subject of PPOs and has been a core member of the PPO working party since its inception in 2010. This year she is chairing the actuarial profession’s GIROC

TOM WILLIAMS Employer and area of work

Leading legal expenses insurer DAS UK has appointed Richard Percy (right) as chief actuary. Percy will lead the actuarial department, which specialises in all types of legal expenses insurance in

the UK, Canada and Norway.

Before joining DAS, Percy was head of commercial & corporate partnership pricing with Lloyds Banking Group General Insurance. Prior to this, he worked as an actuary for Lloyd’s of London.

ACTUARY OF THE FUTURE

Aon Hewitt, pensions consulting.

If you could learn one random skill, what would you learn?

If you could go back in history, who would you like to meet?

How would your best friend describe you?

A good first touch would help my faltering football career enormously.

Crikey, it would have to be Steve Irwin.

Favourite Excel function?

My ‘Tough Mudder’ sweatband is worn with pride after suffering through a half marathon, electrocution and ice baths to earn it.

A bit of a lightweight.

What motivates you?

To be the best I can be, and all of the fan mail I am likely to receive after this.

What would be your personal motto?

Be yourself because everybody else is taken (I might have stolen that off Mr Wilde).

iferror() manages to hide all my mistakes.

How do you relax away from the office?

In the day I like to watch the Arsenal strive to end their trophy drought and at night throw some shapes on the dance floor.

Alternative career choice?

Name five dream guests you would invite to your dinner party?

I was going to say the band 5ive but then found out there are now only four members mbers so I will go with Arsene Wenger, Derren Brown, Barack Obama, Peter Kay and Mila Kunis.

t?

What’s your most ‘actuarial’ habit?

For the last World Cup I built a model to try and make money when betting ting but it turned out to be less successfull than Paul the octopus.

38

Reserving Practice Survey working party.

Before joining LCP, MacDonnell worked for Towers Watson for 16 years and prior to that was with General Accident in Hong Kong.

I have always wanted to be a teacher, something about having a quarter of the year off appeals to me.

Greatest risk you have eever taken?

I have done the stand standard adrenaline sports su such as sky diving and bungee jumping, but the questionab questionable kebabs I have eaten after a night out certainly presente presented a greater risk to my health.

What’s your most treasured possession?

What are the top three things you would like to achieve in your lifetime?

Get my weekends back (ie qualify), learn to play the guitar as well as David Brent, get a tan.

If you ruled the world, what would you change first?

Introduce a scheme that would give all young people the opportunity to see different parts of the world.

Do you know an actuary destined for greatness?

You can nominate an Actuary of the Future by emailing

aotf@theactuary.com

THE ACTUARY • March 2014 www.theactuary.com

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www.theactuaryjobs.com

Appointments

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 emmanuel.nettey@redactive.co.uk

Refresh this Spring...

HFG’s Actuarial team are based globally across three offices, enabling them to find the perfect match for your next career move. With specialist consultants in Life, General and Risk, each member of the team has an indepth knowledge of their specific market, and how it is developing.

If you are looking for career advice, CV writing training, or simply want to know what’s happening within the actuarial recruitment market this Spring, get in touch with a member of our team on actuarialteam@hfg.co.uk or +44 (0) 207 337 8800.

General Insurance Roles Head of Capital

Chief Actuary £100k - £130k Basic, London

£100k - £130k Basic, London

Growing International Insurer is looking for a Chief Actuary to lead its Actuarial team, the role will work across reserving, pricing and capital modelling. The role requires someone who is happy to roll up their sleeves and get stuck in with the technical work as well as the ability to grow a team under them. The role will suit someone who has experience across all areas and is looking for the step up in their career. william@hfg.co.uk

Growing Lloyd's syndicate is looking for a strong capital Actuary to lead their capital function whilst reporting to the CRO. The right person should have a consultative approach with the ability to do the technical work whilst also liaising and working closely with senior management. This role will suit someone who is looking to advance their career. Opportunity to build a team around them. william@hfg.co.uk

Broking Actuary

Head of Reserving £90k - £125k Basic, London

£80k - £130k Basic, London Leading Insurance broker is looking for a qualified Actuary with a strong pricing background to help lead the team. The right person should have a consultative approach and ideally a London market pricing background.

This is a challenging role and will suit someone looking for a unique opportunity. william@hfg.co.uk

Lloyd’s syndicate is looking for a qualified Actuary to lead their reserving team. The right person should have previous reserving experience and be looking for a challenge where they can report to the Chief Actuary.

Previous managerial experience would be beneficial but is not essential. william@hfg.co.uk

Pricing Actuary

Actuarial Consultant £60k - £85k Basic, London

£55k - £75k Basic, London

This mid sized Lloyd’s syndicate is looking for a nearly/newly qualified pricing actuary to promote growth in the pricing function. You will work across all lines of business, leading projects in model sophistication and development whilst mentoring actuarial students. You will need a solid grounding within the London Market and good pricing experience. ben@hfg.co.uk

This dominant actuarial consultancy is looking to further increase their London Market presence. They are seeking a number of talented individuals to strengthen both their technical abilities and client services, offering actuaries the chance to gain real involvement in both client facing and practical projects. Successful candidates will have a strong grounding in reserving or capital modelling, and ideally Solvency II. ben@hfg.co.uk

Capital Modelling Analyst

Pricing Actuarial Analyst £50k - £65k Basic, London

Top performing Lloyd’s syndicate is seeking a senior actuarial student to expand their capital team. You will have the opportunity to work with market known professionals across a number of exciting projects, with exposure to both the actuarial and risk functions. To be successful you will need a strong capital background and motivation to pursue this work as a long term career path. ben@hfg.co.uk

£35k - £50k Basic, London The pricing team of this leading personal lines insurer is going through a period of rapid growth, across numerous lines of business. Working within this team, you will gain experience from industry leaders and be involved with the development and implementation of innovative pricing techniques. Personal lines pricing experience is essential, as well as an eagerness to learn and develop in a dynamic team. ben@hfg.co.uk

WILLIAM GALLIMORE

RUPA PITHIYA

BEN HICKEY

Director

General Insurance Contract

General Insurance

+44 (0) 207 337 8826 william@hfg.co.uk

+44 (0) 207 337 1200

+44 (0) 207 220 1106

rupa@hfg.co.uk

ben@hfg.co.uk

+44 (0) 207 337 8800

www.hfg.co.uk March 2014 • THE ACTUARY 39 www.theactuary.com

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Appointments

We can help you

FIND YOUR PERFECT JOB

JOBS BY EMAIL CV UPLOAD TAILORED SEARCHES MORE JOBS THAN ANY OF OUR COMPETITORS OR YOUR PERFECT CANDIDATE ACCESS TO JOB SEEKERS PRINT ONLINE EMAIL ONLINE JOB SEEKERS & INSTITUTE MEMBERS

40

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THE ACTUARY • September 2013 www.theactuary.com

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London : Chicago : Hong Kong : Singapore : Shanghai

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P&C Reserving Manager - Germany Senior Life Actuary - Germany $WWUDFWLYH 6DODU\ %HQHÂżWV 3DFNDJH $WWUDFWLYH 6DODU\ %HQHÂżWV 3DFNDJH A large insurance organisation is looking for a experienced actuary to OHDG D WHDP RI KLJK SHUIRUPLQJ TXDOLÂżHG DQG SDUW TXDOLÂżHG DFWXDULHV with the responsibility for the reserving methodology and the technical development/implementation of reserving processes. The manager will oversee the reserving function for different lines of business and regions.

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September 2013 • THE ACTUARY 41 www.theactuary.com

25/02/2014 14:52

Appointments

Investment and actuarial consultants Bristol Highly motivated self-starters are invited to apply for positions in our investment, consulting and actuarial teams.

Due to the continued expansion of our client base we are looking to recruit individuals who are able to demonstrate professional excellence along with the outstanding communication skills necessary for client-facing roles.

If you are interested in furthering your career in a friendly, forward thinking, client focused organisation, send your CV to our HR Manager, Caroline Taylor at caroline.taylor@bbs-actuaries.co.uk or call 0117 937 8798 for a confidential conversation.

Closing date for applications: 31 March 2014

Mansion House is delighted to announce that our actuarial recruitment coverage now extends to continental Europe, with experienced sector specific bi-lingual consultants focusing on France, Germany, and Switzerland.

This European group complements our existing team of experienced UK consultants, serving both the interim and permanent markets across Insurance, Reinsurance, Pensions and Investments.

Every member of our team is a specialist; dedicated to their vertical market within the actuarial sector. This gives Mansion House the ability to provide you with unrivalled insight into the market, and current opportunities, specifically those that are not widely advertised.

For a confidential career discussion please contact us on 0207 332 5870 or actuarial@mansionhouse.co.uk

bbs-actuaries.co.uk dcpensions.co.uk

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THE ACTUARY • March 2014 www.theactuary.com

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Life Insurance Roles Solvency II Actuary

Financial Risk Actuary

£60k - £95k Basic, London

£60k - £90k Basic, England A large UK Life insurer is looking for a qualified Actuary to lead the audit of the of the Financial Risk team. A strong audit background is sought with a good technical understanding of current financial regulations. This would suit an ex-consultant or actuarial auditor with prior experience of leading the Actuarial audit of a large insurer. jack@hfg.co.uk

A multinational life insurer is looking for a Solvency II expert to join their actuarial team. This exciting opportunity will involve working closely with the Chief Actuary and making key decisions in the lead up to 2016. Knowledge of Solvency II regulation and the current regime is preferred along with the technical capability to understand the model. sophia@hfg.co.uk

Investment Actuary

Financial Reporting Actuary £45k - £70k Basic, South East

£55k - £75k Basic, South West England

A large composite insurer requires an experienced Investment Actuary to join their Investment team. You will be responsible for leading and delivering capital modelling for specific areas of the portfolio, to meet both the current and future regulatory requirements. A strong background in investments is essential and experience in undertaking multiple projects at once is desirable. jack@hfg.co.uk

A leading life insurance company wants to strengthen their financial reporting team by bringing in an experienced Actuary to lead the them.

You will gain full exposure across the business and liaise with senior stakeholders, making key decisions within the company. This team is evolving and you will have the opportunity to the help mould the team and work with other departments. sophia@hfg.co.uk

Pricing Actuarial Analyst

Actuarial Analyst £35k - £50k Basic, London

This life insurer is looking for a part to nearly qualified actuarial analyst to join their evolving team. This role will be working with a number of different projects, along with gaining exposure to the market and monitoring competitors. If you are looking for a change and would like to enhance your career prospects before qualification, this is the perfect opportunity. sophia@hfg.co.uk

£35k - £45k Basic, London A niche life insurer is restructuring their actuarial systems team and looking for ambitious students to join them . Previous life insurance experience is essential as well as a good understanding or interest in modelling. You will gain exposure to a variety of different systems as well as pricing and reporting. Good communication skills are key as well as good progress with exams. sophia@hfg.co.uk

Contract Roles Solvency II Actuaries

Reserving Contractor

£750 - £1,200 per day, 6 months, London

£700 - £900 per day, 6 months, London

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. rupa@hfg.co.uk

This leading Lloyd’s syndicate is looking for a qualified reserving contractor for 6 months. The role will work closely with both the Capital and Pricing function. To be successful you must be able to communicate with non Actuaries as you will be working closely with other departments. rupa@hfg.co.uk

Forecasting Analyst

Risk & Capital Actuary £80k FTC, 12 months, London

£500 - £800 per day, 6 - 12 months, South West

A global insurer is looking for a contractor on a fixed term basis to help develop various models used for capital modelling, strategic planning, stress testing and tools for data preparation. To be successful you must be able to build a database , hence SQL experience is a must, and given that it works closely with finance you must be able to understand how a P&L and a balance sheet work. rupa@hfg.co.uk

An experienced Risk and Capital Actuary is sought for a 6-12 month contract to develop the Capital team of a large muliti-national insurer.

Experience in communicating with senior stakeholders is essential and commercial experience is desirable. Good technical experience is important but team development is key. jack@hfg.co.uk

Risk Roles Risk analyst

Credit Analyst £60k - £85k Basic, South East England

£45k - £60k Basic, London

This leading provider of enhanced annuity products requires an individual with Credit Risk experience to advise on the firms investment strategies. You will gather, interpret and present credit related information and advise on investment strategy with respect to the credit risk implications. Investments or Insurance experience is a must, as well as expertise in the credit risk field. Strong communication skills are required to interact with internal stakeholders. james@hfg.co.uk

An excellent opportunity for a Risk Analyst to join a leading Lloyd’s syndicate. You will be involved with the implementation of the risk management framework, maintaining the risk register and having exposure to the Board risk committee. The ideal candidate will have previous experience in risk assessments, risk monitoring and assisting in the delivery of the internal model deliverables. erin@hfg.co.uk

JACK SNAPE

SOPHIA CROSSMAN

JAMES KITT

ERIN O’DONNELL

Life Insurance

Life Insurance

Risk Management

Risk Management

+44 (0) 207 337 1202

+44 (0) 207 337 1207

+44 (0) 207 337 1202

+44 (0) 207 337 1202

jack@hfg.co.uk

sophia@hfg.co.uk

james@hfg.co.uk

erin@hfg.co.uk

0207 337 8800

www.hfg.co.uk

actuarialteam@hfg.co.uk September 2013 • THE ACTUARY 43 www.theactuary.com

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Appointments

Investment Risk Manager Asset Management London Senior investment strategist required to work with a city based global asset management group. The ability to structure mathematically complex solutions using appropriate modelling systems is a key part of the value that this team add for high pro¿le clients. With a focus on object orientated solution development and implementation for institutional clients the role provides excellent exposure to a broad selection of asset classes.

As part of client facing solutions team, you will regularly manage multiple initiatives and reassign activities/resources to meet clients’ requirements and expectations, as well as those of the overall business to achieve its tactical and strategic goals. Expertise in liability modelling and strategic asset allocation highly desirable.

Contact Rob Bulpitt

Rupert Rickard Ian Povey

Director Actuarial, Pensions Head of of Actuarial, Insurance & Insurance RiskManagement Management Pensions Risk 020 7092 3237

Actuarial,of Pensions Insurance Risk Manager Actuarial&Non-Life and Management Insurance Risk Management 020 7092 3219 3265

rob.bulpitt@eamesconsulting.com

rupert.rickard@eamesconsulting.com Ian.povey@eamesconsulting.com

Office Number

For current opportunities please visit

www.eamesconsulting.com

+44 (0)20 7092 3200

www.eamesconsulting.com

3HQVLRQV ,QYHVWPHQWV _ 1RQ /LIH _ /LIH +HDOWK 8. _ (XURSH _ $VLD 3DFL¿F

Head of Pricing, Hong Kong

Actuarial Analyst, Singapore Up to SGD $80,000

HKD $900,000 – $1,000,000

A Hong Kong based client is seeking a senior Pricing Actuary as part of an emerging and growing team. With specific focus on product development and market innovation you will play a key role in identifying significant sector trends and exploiting crucial opportunities in the Life industry. Reporting to the Chief Actuary you will have dedicated resources and genuine ownership.

A commercially minded Actuarial student who has developed strong technical skills and has good business acumen is sought to join a notable Life Insurer in Singapore. The role covers a variety of Actuarial work as well as Strategy Planning and involvement in decision making. Prophet experience and knowledge of the Asian Insurance market will be an advantage.

Senior Actuary, Singapore

Senior Capital Actuary, China Dependent on Experience

Up to SGD $200,000 plus package and bonus

Leading broker is seeking to hire a talented Actuary to lead an Analytics team and get involved in wider Actuarial project work for clients. A background in capital modelling, re-insurance portfolio management and pricing will be seen as distinct advantages as well as the ability to deal with multiple stakeholders at any one time. Proven leadership skills are also required.

Brand new role in Top 5 Insurer. They are seeking a Senior Actuary (FSA, FIA, FIAA) who has a global outlook, to act on the companies behalf to develop the capital framework, lead regulatory initiatives for the Group’s Life, Heath, P&C and pension subsidiaries as they implement Solvency II and equivalent RBC regulations. This is an exceptional opportunity with worldwide travel.

Capital Modelling Actuary, Singapore

Actuary – Insurance Risk, Hong Kong

SGD $150,000 plus package and bonus

This insurance client is seeking a qualified Actuary to join their expanding capital modelling team. Ideally you will be able to demonstrate broad modelling experience and will also enjoy the challenge of getting involved in wider Actuarial project work.

Non-life experience is strongly preferred and a track record of using either Igloo or ReMetrica will be seen as distinct advantages.

Jason Sykes, Managing Director Clare Bethell, Director Graeme Braidwood, Senior Consultant Hallie Chin, Consultant

44

Up to HKD $800,000 per annum + bonus

New role for a Life Actuary wanting to specialise in Risk to join the Regional risk function of this global insurer. The role requires a nearly/newly qualified Actuary with a thorough appreciation of what risk means for a Life Insurer. They are looking for a proactive Actuary to lead initiatives, interpret local RBC requirements and Solvency II for their offices throughout Asia.

jason@hfg.com.sg clare@hfg.com.sg graeme@hfg.com.sg hallie@hfg.com.sg

+65 6829 7154 +65 6829 7153 +65 6829 7160 +65 6829 7159

THE ACTUARY • March 2014 www.theactuary.com

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INSURANCE iWORKS PROPHET - GENERAL INSURANCE OPPORTUNITIES

EXPANDING SUNGARD’S TEAM DELIVERING INNOVATIVE MODELLING SOLUTIONS TO THE GI INDUSTRY To meet increasing demand for its products and services across all regions and to support its long-term strategy, SunGard is recruiting additional highly skilled and motivated individuals to join its global teams. Strong experience in General Insurance capital modelling and/or reserving is required.

We have a number of new vacancies at various levels in the following areas:

›

›

General Insurance Actuarial Development – an opportunity to join the GI model development team to help design and architect future releases of SunGard’s next-generation capital modelling and reserving solutions.

General Insurance Pre-Sales – working closely with the consultancy and sales teams to articulate the solution and its benefits to prospective clients.

› ›

General Insurance Sales – developing and fulfilling business opportunities with existing customers and prospective clients.

General Insurance Risk and Actuarial Consultancy – SunGard aims to grow its consulting practice to serve its expanding customer base, helping clients implement solutions and derive maximum value from them.

SunGard is committed to offering a good work-life balance, full study support where applicable, excellent career prospects, and a competitive salary and benefits package.

For full details of these roles, please visit the webpage below, selecting the Chertsey or London offices. financialsystems.sungard.com/careers More than 9000 users in over 730 locations across more than 65 countries rely on iWorks Prophet to model their firms’ financial business. www.sungard.com/insurance/risk

PLAN YOUR NEXT MOVE

ON THE MOVE

pfJobs

See latest job listings Create job alerts by email Save and email jobs from mobile Apply for jobs by saving your CV to your profile Keep track of your activity

Go to www.theactuaryjobs.com March 2014 • THE ACTUARY 45 www.theactuary.com

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Appointments

Fresh Thinking For the latest news and views, visit theactuary.com. With high quality content, useful tools and easy navigation, you will find a wealth of actuarial resources at your fingertips.

Register for weekly email newsletters Read the latest features and opinion and add your comments Read about actuaries stepping into new frontiers Browse theactuaryjobs.com, the official jobs board of the UK actuarial profession

Visit www.theactuary.com 46

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

January/February 2014 • THE ACTUARY 47 www.theactuary.com

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Appointments NON-LIFE £ excellent + bonus + benefits

£ excellent + bonus + benefits

£ very attractive package NON-LIFE SOUTH EAST

HEAD OF MODELLING - MOTOR

NON-LIFE MODEL DEVELOPMENT

PRICING ACTUARY STAR1787

NON-LIFE SOUTH EAST

STAR1542

NON-LIFE LONDON/SOUTH EAST

STAR1782

Our client is seeking a high-calibre pricing actuary with a track record of building strong relationships to lead, manage and develop a team within a fast-growing business.

Our client is seeking a qualified actuary to develop its capital and reserving capability. A natural and gifted communicator, you will have hands-on experience of building and coding capital models.

This is a fantastic opportunity for a modelling expert to take up a key role with a leading insurer.

Set the direction of all technical pricing developments and help the business realise its targets.

COMMERCIAL CHIEF ACTUARY

COMMERCIAL LINES PRICING

RESERVING ACTUARY

£ very attractive package

£ excellent + bonus + benefits

up to £80k + bonus + benefits

NON-LIFE LONDON

NON-LIFE SOUTH EAST

NON-LIFE SOUTH EAST

STAR1799

STAR1725 & STAR1786

STAR1776

Niche insurer has an exciting opportunity for a qualified actuary to provide actuarial input into the financial management of a specialist book of Property & Casualty business. Excellent career path.

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.

Develop your career with this expanding organisation who require an experienced reserving expert to lead a team of analysts. You will have a track record of building and maintaining productive relationships.

LONDON MARKET PRICING

LONDON MARKET CAPITAL

LONDON MARKET RESERVING

£ excellent package

up to £70k + bonus + benefits

£ very attractive package

NON-LIFE LONDON

STAR1803

NON-LIFE LONDON

STAR1714

NON-LIFE LONDON

STAR1804

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

Leading London Market underwriter seeks a non-life candidate with strong experience of capital modelling techniques and model building to focus on the enhancement of the current capital model.

Our client is seeking a part-qualified non-life actuary with strong interpersonal skills to join its leading London Market team.

NON-LIFE CONSULTANCY

LONDON MARKET ANALYST

CAPITAL MODELLING

£ excellent + bonus + benefits

up to £60k + bonus + benefits

£ excellent + bonus + benefits

NON-LIFE LONDON

STAR1659

NON-LIFE LONDON

STAR1769

NON-LIFE NORTH WEST

STAR1777

If you are a part-qualified or qualified actuary with experience of capital, reserving or pricing models, then join this leading consultancy where you will apply your skills in a wide range of exciting projects.

If you are on track to qualify, have strong technical skills and an established knowledge of general insurance, ideally within the London Market, this is a role that will expose you to the best of everything!

Play a key role in the capital modelling projects of a leading financial services company. The successful candidate will have good leadership and management capability with the ability to influence a wide range of stakeholders.

ACTUARIAL DEVELOPMENT MANAGER

PERSONAL LINES PRICING

CATASTROPHE HEDGING

up to £65k + bonus + benefits

£ competitive + bonus + benefits

up to £40k + exceptional bonus potential

NON-LIFE SOUTH EAST/LONDON

STAR1796

NON-LIFE LONDON/SOUTH EAST

STAR1806

NON-LIFE LONDON

STAR1802

We are working on a wide range of personal lines pricing roles. Opportunities exist for part-qualified pricing actuaries within household, motor (including telematics), healthcare, pet and travel.

Our client has a number of exciting opportunities for Catastrophe Modellers with treaty pricing experience to join its high-calibre team. Excellent career path.

PRICING ACTUARY

HEAD OF MODELLING - HOME

ENTERPRISE RISK ACTUARY

up to £80k + bonus + benefits

£ excellent + bonus + benefits

£ excellent + bonus + benefits

Seeking a talented individual with a solid understanding of actuarial processes to lead as a “subject matter” technical expert and deliver continuous technical improvements to actuarial data feeds, systems and processes.

STARVACANCIES NON-LIFE MIDLANDS

STAR1738

Seeking a qualified non-life actuary to take the lead on a range of Personal and Commercial lines projects for the Underwriting team. Excellent communication and people-management skills with strong technical knowledge essential.

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STAR1783

Seeking a qualified actuary to deliver on all aspects of household pricing for a major insurance group. Develop yourself and become a key player as you shape the direction of the group's technical pricing strategy.

NON-LIFE EAST ANGLIA

STAR1758

Seeking a talented financial or insurance professional to review, challenge and catalyse improvements to the management of risk within a leading insurance business.

Antony Buxton FIA Anton

Lance Randles MBA La

Paul C Cook

Joanne Young Joa

MANAGING DIRECTOR MANAG

ASSOCIATE DIRECTOR AS

SENIOR CONSULTANT

OPERATIONS DIRECTOR OPER

THE ACTUARY • September 2013 www.theactuary.com M +44 7766 414 560 E antony.buxton@staractuarial.com

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NON-LIFE LONDON/SOUTH EAST

M +44 7889 007 861 E lance.randles@staractuarial.com

M +44 7740 285 139 E paul.cook@staractuarial.com

M +44 7739 345 946 E joanne.young@staractuarial.com

25/02/2014 15:21

LIFE www.theactuaryjobs.com

HEALTH PENSIONS INVESTMENT

£ excellent + bonus + benefits

STAR1061

LIFE SOUTH COAST

STAR1811

LIFE SOUTH COAST

STAR1756

Global management consulting firm is seeking exceptional actuaries from the insurance sector to join in its success. Successful candidates will demonstrate and quantify the business impact of projects undertaken.

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

Opportunity for an actuarial leader to leverage their technical and management skills in a growing and successful business. An excellent chance to take on a management role within a growing provider.

SENIOR CORPORATE ACTUARY

INTERNATIONAL PRICING ACTUARY

RISK ACTUARY

£ excellent + bonus + benefits

£ excellent package

£ excellent + bonus + benefits LIFE SOUTH EAST

STAR1765

LIFE LONDON, SOUTH EAST

STAR1752

LIFE SOUTH EAST

STAR1785

Global financial services group is seeking a qualified actuary to be responsible for the management and leadership of unit linked monitoring, reinsurance and product management activities.

Leading life company is seeking a qualified actuary to provide pricing and actuarial expertise for the development and maintenance of all new and existing International products.

Leading insurer seeks qualified life actuary with strong risk experience and excellent communication skills. This is a fantastic opportunity to build your profile in a key role reporting to the CRO.

SOLVENCY II ACTUARY

MODELLING ACTUARY

PRODUCT DEVELOPMENT ANALYST

£ excellent package

£ excellent + bonus + benefits

£ excellent + bonus + benefits

LIFE SOUTH COAST

STAR1812

LIFE BRISTOL

STAR1813

LIFE LONDON

STAR1746

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

This is an exciting role for a part-qualified actuary within a leading product development team, working closely with marketing and sales.

Wide-ranging product experience and Prophet knowledge an advantage.

PRICING ANALYST

PRICING AND PRODUCT DEVELOPMENT

HEALTHCARE REPORTING

£ excellent + bonus + benefits

up to £45k + bonus + benefits

£ competitive package

LIFE SOUTH COAST

STAR1755

LIFE SOUTH WEST

STAR1753

LIFE & HEALTH SOUTH COAST

STAR1810

Great opportunity to leverage exceptional communication and stakeholder-management skills in a pricing role with a leading life insurer.

Seeking a part-qualified actuary to provide actuarial expertise to deliver business objectives as part of the R&D team. Apply your skills to pricing, investment propositions and business development.

A fantastic opportunity for a part-qualified or qualified actuary within this niche insurer. Our client is ideally looking for a personable candidate with health industry experience and good knowledge of Prophet.

HEALTHCARE PRICING

CORPORATE CONSULTING

PENSIONS FAST-TRACK

£ excellent + bonus + benefits

£ to attract the best

£ to attract the best

HEALTH LONDON

STAR1699

Our client seeks a rigorous and analytical partqualified actuary with strong communication skills and experience of statistical analysis and pricing reviews to assist in delivering innovative pricing solutions.

PENSIONS MIDLANDS

STAR1773

Leading consultancy seeks high-quality pensions actuary with experience of business development in the corporate pensions sector.

This is a fantastic opportunity to work closely with the practice leadership of a major firm.

PENSIONS MIDLANDS

STAR1775

Our client seeks an exceptional part-qualified or qualified pensions actuary to join its growing midlands based practice. This is a great opportunity to accelerate your development within a market leader.

Star Actuarial Futures Ltd is an employment agency and employment business

£ very attractive package

£ excellent + bonus + benefits NON-LIFE & LIFE LONDON

SENIOR VALUATIONS MANAGER

CAPITAL MODELLING

STRATEGY LEADER

www.staractuarial.com PENSIONS LEADERSHIP

DC PENSIONS LEADER

INVESTMENT ANALYST

£ to attract the best

£ excellent package

£ very attractive package

PENSIONS NATIONWIDE

STAR1788

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.

STAR1722

Seeking a pensions leader to manage a DC team, creating and implementing a strategic vision and taking responsibility for the P&L. Please contact us for further details of this exciting opportunity.

INVESTMENT SOUTH EAST

STAR1807

Our client seeks innovative investment analyst to implement the manager research process and ensure efficient portfolio construction through management of the risk budget, return target and manager selection/weights.

Louis Manson Lou

Irene Paterson FFA Ire

Peter Baker

Clare Roberts

MANAGING DIRECTOR MAN

PARTNER PAR

SENIOR CONSULTANT

SENIOR CONSULTANT

M +44 7595 023 983 E louis.manson@staractuarial.com

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PENSIONS LONDON

M +44 7545 424 206 E irene.paterson@staractuarial.com

M +44 7860 602 586 E peter.baker@staractuarial.com

September 2013 • THE ACTUARY 49 www.theactuary.com M +44 7714 490 922 E clare.roberts@staractuarial.com

25/02/2014 15:22

Appointments GENERAL INSURANCE - UK Head of Capital - Lloyd’s Paul Francis

London £120,000 + Bonus + Benefits

Group Reserving Manager Rob Bentham

London Up to £120,000

A rapidly growing London market syndicate are seeking a senior Actuary to manage their capital modelling function and their ongoing resource needs as they continue to grow. Knowledge of managing/building teams, and Igloo or Remetrica would be an advantage.

A leading London market insurer is looking for a Group Reserving Manager. You will be a qualified Actuary and have extensive reserving experience, ideally within the London market. Previous man management experience would be a benefit.

Pricing Actuary Rob Bentham

Head of Pricing Sarah Robins

London Up to £120,000

South West £100,000

A well-established London market insurer is looking for a Pricing Actuary to join their team. You will be a qualified Actuary and have extensive pricing experience, ideally within the London market. The role will be 75% pricing with capital and reserving duties as well.

My client is looking for an experienced Pricing Manager to lead and motivate their actuarial pricing function. You must be a qualified Actuary with 2+ years of post-qualification experience, you must also have extensive experience of commercial property and casualty pricing at a senior level.

Capital Analyst Rachel Kelly

Syndicate Analyst Rachel Kelly

London Up to £60,000 + Full Study Support

EXCLUSIVE ROLE: My client is seeking an ambitious, part qualified Actuary to join their capital modelling function. Exceptional career progression on offer; as the role develops you will act in a business facing capacity to help influence future business strategy.

London Up to £50,000 + Full Study Support

Excellent opportunity with a small but growing syndicate looking to recruit a part qualified Actuary. This is a varied role including both pricing and capital modelling. Strong academics and excellent interpersonal skills required - Lloyd’s experience preferred.

CONTRACTS - GENERAL INSURANCE - UK Chief Actuary Elise Salter

South East England Competitive

We are working with a small commercial lines insurer to provide an interim Chief Actuary. The role will have oversight of reserving and capital plus have responsibility for leading the development of the ORSA and Solvency II compliance.

Forecasting Analyst Elise Salter

London Fixed Term Contract

Our client, a highly regarded London market insurer is seeking a Forecasting Analyst on a fixed term contract. The role is to develop various models to be used for capital, planning and stress-testing.

Candidates must have knowledge of the SII standard formula.

LIFE INSURANCE - UK Senior Actuarial Risk Manager London (City) David Parker £130,000 + Bonus + Benefits

Head of Capital Modelling London (City) Richard Howard £100,000 - £130,000 + Bonus + Benefits

EXCLUSIVE APPOINTMENT: An ambitious growing life business is looking to bolster its CRO function with a newly created and broad position. You will be involved in second line oversight, asset management and all transactions from targeting to implementation.

The role will have oversight for the group actuarial function and be responsible for ensuring the group meet Solvency II requirements.

They are looking for a qualified Actuary with significant exposure to life and health insurance and experience in Solvency II and ICA.

Head of Pricing Clare Nash

ERM Risk Manager David Parker

London £120,000 + Excellent Package

London (City) + Flexible £80,000 - £100,000 + Package

A newly created position; my client seeks a qualified Actuary to grow an ambitious team. You will have a strong hands-on pricing background in the protection arena coupled with a strategic flair to your profile. Unrivalled career progression.

Are you a qualified Risk Actuary looking for a new challenge? A leading UK insurer has created a new position to support the head of the division with risk appetite, capital modelling and operational risk projects. An expanding organisation with a dynamic culture.

Senior Pricing Actuary London Richard Howard £75,000 - £85,000 + Bonus + Benefits

Nearly/Newly Qualified - Risk/Capital London Clare Nash £55,000 - 70,000 + Market Leading Package

London based life and pensions provider looking for a qualified Pricing Manager to lead in the pricing and product development of the company’s range of investment products. Must be a strong manmanager with strong commercial acumen.

Are you approaching qualification and starting to consider options?

We have a plethora of nearly/newly qualified appointments in central London. Skills sought are predominately risk/capital but other backgrounds considered.

CONTRACTS - LIFE INSURANCE - UK Prophet ALS Developer Benjamin Moses

London £600-£800/day

My client is looking for an experienced ALS developer with wellrounded actuarial skills to assist with a long term project. The ideal candidate will have at least 2 years of working with ALS and be familiar with the most recent updates.

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Solvency II Actuaries Benjamin Moses

London £800 - £1,000/day

Several of my clients are currently looking to bolster their Solvency II teams in order to meet the work load demands in 2014. Qualified actuaries with extensive capital, risk and regulation knowledge should get in touch.

THE ACTUARY • September 2013 www.theactuary.com

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www.theactuaryjobs.com ASIA Head of Pricing Gary Rushton

Hong Kong £££Competitive

A genuine leader within the global insurance market is currently looking for an experienced Actuary to provide strategic and technical leadership for all pricing initiatives across Asia. The role will report in to the MD and require a high degree of gravitas.

Asia Head of Capital & Reinsurance Strategy Gary Rushton

Hong Kong £££Competitive

This is an exceptional opportunity to drive the strategy and implementation of the capital and reinsurance initiatives across APAC for a tier 1 global life insurer. High profile individuals with in-depth experience of global solvency regime are highly desirable.

Head of Health Insurance Philip Chau

Hong Kong £££Competitive

Due to the aggressive growth in the health insurance market, a leading multinational insurer is currently seeking an experienced Health Actuary to spearhead their growth in Asia. You will need to be a commercial thinker with strong technical skills for the role.

Head of Capital Hamza Mush

Singapore £££Competitive

Our client is a leading multinational in the insurance sector. Due to regulatory developments in the region we are looking for an experienced Actuary with exceptional communication skills to lead and manage a team and drive capital optimisation across their Asia-Pacific business.

Consulting Actuary Toby Weston

Singapore £££Competitive

General Insurance – UK Paul Francis

0207 649 9469

Rob Bentham

0207 649 9351

Sarah Robins

0207 310 8552

Rachel Kelly

0207 310 8579

Contracts - G.I. - UK Elise Salter

0207 649 9355

Life Insurance - UK Clare Nash

0207 649 9350

David Parker

0207 310 8649

Richard Howard

0207 649 9356

Contracts - Life Insurance - UK/Europe Benjamin Moses

0207 310 8793

Asia Jonny Plews

+852 5804 9200

Our client is a top consulting practice with deep roots in the insurance sector. Due to growth in the region we are looking for an ambitious Actuary with exceptional communication skills to lead projects within economic capital, M&A, reserving and pricing.

Gary Rushton

+852 5804 9223

Toby Weston

+852 5804 9042

Head of ERM Toby Weston

Philip Chau

+852 5804 9287

Hamza Mush

+852 6086 9879

Hong Kong £££Competitive

Our client is a rapidly expanding reinsurance business writing APAC treaty business.

They are seeking a senior Actuary to establish the ERM function across the region.

Gravitas, strong knowledge of underwriting risk and Mandarin language skills required.

EUROPE Life Reinsurance Actuary Audrey Dresen

Zurich, Switzerland CHF120,000 - CHF150,000

Well established life reinsurer looking for a qualified Actuary to work in a business development role on structured reinsurance solutions. You’ll be part of a dynamic and growing team, work on sophisticated transactions worldwide and be involved in all aspects of the deal.

Valuation Actuary Katharina Wein

Zurich CHF90,000 - CHF120,000

France Emérique Opou

+33 1 76 77 46 30

Agathe Ibazizen

+33 1 76 77 46 31

Ireland Patrick McMahon

+353 1 437 0625

Benelux Niels van Nieuwkerk

+31 20 716 8327

Julien Fabius

+31 20 716 8450

Laurence Baken

+32 24 012 249

Dynamic, growing life insurer looking for a Valuation Actuary. Fluent in English (German beneficial), good knowledge of US GAAP and EVM reporting, Solvency II, Excel (incl.

VBA) as well as experience with databases such as SQL or Access.

Germany Manuel Lovell

+49 8921 093 362

Senior Pricing Actuary - Non-Life Agathe Ibazizen

Emina Biscevic

+49 89 3803 8965

English speaking experienced Pricing Actuary to join the team of a non-life insurer based in Paris. You must have technical skills in commercial lines pricing, as well as the ability to lead and grow an actuarial function. French language skills are not compulsory.

Alessio Montaruli

+49 89 2109 3339

Pricing Analyst G.I. Niels van Nieuwkerk

Audrey Dresen

+41 43 508 0444

Katharina Wein

+41 43 508 0509

Paris, France €50,000 - €65,000

Rotterdam €€€Competitive Package

This is an exciting opportunity to join a growing team of an international insurance group based in the Netherlands. You will have pricing responsibities for all products both in commerical and personal lines.

Model Validation Julien Fabius

The Netherlands £££Competitive Package

We are currently looking to attract a freelance Model Validator to work onsite with a large insurance/banking group based in Amsterdam. The project length is 6 months.

Motor Pricing Actuary Alessio Montaruli

North Italy Up to €55,000

Our client, a leading motor insurance company, is looking for a mid-junior Motor Pricing Actuary with 3-5 years of experience and knowledge of SAS for their Italian BU. Both English and Italian language skills are required.

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Switzerland

Please contact one of the team for further information on any of the opportunities above or visit www.ojassociates.com/jobs

General Contact Details:

E

actuary@ojassociates.com

W www.ojassociates.com @OJAssociates

September 2013 • THE ACTUARY 51 www.theactuary.com

oliver-james-associates

25/02/2014 15:25

Appointments www.the-arc.co.uk

The Actuarial Recruitment Company

A fresh approach

Pricing Actuary London

General Insurance £Competitive

Reinsurance Pricing Analyst London

General Insurance Circa £60K

A senior trainee up to a newly qualified actuary is needed for this pricing focused role in an established London Market business.

Covering a wide range of business lines, the successful candidate will support portfolio and transactional pricing, development of new pricing models, provide training for underwriters, provide MI, maintain pricing documentation as well as mentor junior members of the team. Pricing experience from a London Market background desirable. Ref: ARC26244

A new role exists for a reinsurance pricing analyst within the actuarial team of a well known broking house. The role will involve reinsurance pricing, account analysis, reinsurance program optimisation and various ad hoc support for clients. Ideally the successful candidate will have some prior reinsurance or insurance pricing experience with strong IT and technical skills. Excellent interpersonal and relationship development skills will be required as this will be a client facing role. Ref: ARC26235

Capital Actuary London

Reserving Analyst London

General Insurance Circa £95K

A qualified actuary with existing capital experience and ideally with Remetrica knowledge is required for this specialty insurance and reinsurance business. The role will work closely with pricing actuaries to carry out underwriting risk modelling in support of reinsurance placements. In addition there will be support for capital modelling as well as development of the pricing models within the business.

Strong statistical modelling and IT skills required. Ref: ARC26245

General Insurance To £75K

A part qualified actuary is needed for a reserving role supporting the Head of Reserving within an international P&C business. The client is looking for someone with 2 years or more of general insurance experience, ideally from either a London Market or commercial lines retail background. They are looking for someone who is technically strong and is happy to take on responsibility quickly and manage workflows. First class communication skills will be important.

Ref: ARC26243

Call us anytime including evenings and weekends on 020 7717 9705 or email enquiries@the-arc.co.uk Andy Clark BSc FIA Roger Massey BSc MBA FIA

0781 333 7891 0781 398 9016

andy@the-arc.co.uk roger@the-arc.co.uk The Actuarial Recruitment Company is an employment agency

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THE ACTUARY • September 2013 www.theactuary.com

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