The Actuary May 2013

MAY 2013 theactuary.com

Interview: Mansel Aylward

The magazine of the actuarial profession

A vision for a healthier, happier nation

Health Engaging products for consumer protection

General insurance

The Actuary

A known unknown: defining and measuring claims inflation

Arts The golden years of a glam rock megastar

COMING OF AGE Cost casts shadow over longer life expectancy

May 2013

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What’s underneath?

We look below the surface to spot trends early and show you what is really happening. Whether your need relates to risk management, capital, or strategy, our cutting-edge analysis techniques can help you see deeper than the competition.

Get new insights on your business at uk.milliman.com.

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MAY 2013

Contents CHRIS DUNN

“Future public expenditure policy has to reflect the numbers of people who will be needing support, so collaboration across sectors, and particularly with actuaries, is vital”

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18

36 UP FRONT

FEATURES

AT THE BACK

10 Profession news

18 Interview: Professor Sir Mansel

36 Arts

14 Industry news 16 People/society news 21 SIAS events

OPINION 5

Editorial Deepak Jobanputra believes we all hold the key to defusing the time bomb of an ageing population

6

Letters Welcoming all efforts on the right to reply

7

President’s comment Philip Scott reviews the many elements of work and research undertaken by the Life PEC

8

Soapbox Dr Wilson Carswell asks if medical research could help insurers predict income protection claims

38 Book review Anti-Fragile by Nassim Nicholas Taleb

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

Aylward CB Sarah Bennett and Richard Purcell hear of a vision for a healthier, happier nation

26 Health: Consumer confusion Ronnie Bowes reviews the findings of a report into consumer understanding of protection insurance

28 Health: Terms of engagement Providing enticing, transparent products is key to understanding protection insurance. Richard Purcell and Blair Sievering report

Natalie Li unravels the many guises of a glam rock megastar in sound and vision

39 Puzzles Win a £50 Amazon voucher

40 Actuary of the future Mark Heller of Austin Professional Resourcing LLP

41 Student Jessica Elkin battles the elements at a careers fair in the hope of a free umbrella

42 Appointments and moves

30 GI: A known unknown Markus Gesmann, Raphael Rayees and Emily Clapham on a consistent framework for claims inflation

32 Regulation: New dawn Nick Ford and Rob Spiers examine what the recent introduction of the Prudential Regulation Authority means for insurers

35 Spotlight Jens Perch Neilsen defends existing actuarial knowledge of granular reserving against the onslaught of technology. Maria Dolores MartínezMiranda and Miranda Thomas report

ONLINE In the news Visit www.theactuary.com for up-to-date news on all the most important issues facing the actuarial profession today, including Solvency II, auto-enrolment, pension scheme funding and much more.

You can also sign up to our weekly e-newsletter, bringing together all the week’s most important news stories, when you visit the website.

WRITER OF THE MONTH Dr Wilson Carswell wins a £50 book token for his article on income protection claims, courtesy of the Staple Inn Actuarial Society

May 2013 • THE ACTUARY www.theactuary.com

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Editorial DEEPAK JOBANPUTRA Redactive Media Group 17-18 Britton Street, London EC1M 5TP +44 (0)20 7880 6200 Editor, Redactive finance division Mike Thatcher Publishing director Joanna Marsh Chief sub-editor Caroline Taylor News editor Nick Mann +44 (0)20 7324 2794 nick.mann@theactuary.com Recruitment and display manager Katy Eggleton +44 (0)20 7324 2762 katy.eggleton@redactive.co.uk Recruitment sales Gill Rock +44 (0)20 7880 6234 gill.rock@redactive.co.uk Digital sales Leila Serlin +44 (0)20 7324 2787 leila.serlin@redactive.co.uk

Managing editor Sharon Maguire +44 (0)20 7880 6246 sharon.maguire@redactive.co.uk

Opinion

Editor Deepak Jobanputra editor@theactuary.com Editorial team Sarah Bennett health, international Jeremy Lee pensions, investment, ERM, banking

Deepak Jobanputra believes we all hold the key to defusing the time bomb of an ageing population

Richard Purcell Richard Schneider, life, Solvency II, mortality/longevity, modelling and software

Health in your hands

Helen Lau, GI, reinsurance, environment, careers (UK) Aoife Martin, GI, reinsurance, ERM, Solvency II

Art editor Gene Cornelius Picture editor Akin Falope Production manager Jane Easterman +44 (0)20 7880 6248 jane.easterman@redactive.co.uk Print Southernprint Ltd Internet The Actuary website: www.theactuary.com

Profession news editor Alison Jiggins +44 (0)20 7632 2172 alison.jiggins@actuaries.org.uk People/society news editor Yvonne Wan social@theactuary.com Student page editor Jessica Elkin student@theactuary.com Arts page editor arts@theactuary.com

SIAS website: www.sias.org.uk

SIAS representative Alvin Kissoon

Actuarial Profession website: www.actuaries.org.uk

Editorial advisory panel Peter Tompkins (chairman), David Campbell, Matthew Edwards, Martin Lunnon, Marjorie Ngwenya, Sherdin Omar, Richard Purcell, Andrew Smith, Nick Silver

Circulation 22,733 (July 2011 to June 2012)

Subscriptions For subscriptions from outside the actuarial profession: UK, Eire and Europe: £55 a year/£5 a copy. For the rest of the world: £80 a year/£7.50 a copy. Please contact: Alison Jiggins, The Actuarial Profession, Staple Inn, High Holborn, London WC1V 7QT T +44 (0)20 7632 2100 E alison.jiggins@actuaries.org.uk Students on actuarial science courses at universities may join the Staple Inn Actuarial Society for £6 a year. They will receive The Actuary as part of their membership. Apply to: Membership Department, The Actuarial Profession, Maclaurin House, 18 Dublin Street, Edinburgh EH1 3PP. T +44 (0)131 240 1325 E membership@actuaries.org.uk Changes of address should be made known to the membership department as above. For delivery queries, please contact: Jane Easterman E jane.easterman@ redactive.co.uk Published by the Staple Inn Actuarial Society The editor, The Institute and Faculty of Actuaries and Staple Inn Actuarial Society are not responsible for the opinions put forward in The Actuary. No part of this publication may be reproduced, stored or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the copyright owners. While every effort is made to ensure the accuracy of the content, the publisher and its contributors accept no responsibility for any material contained herein.

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

The world is faced with a number of choices and, in many cases, severe challenges in managing healthcare. In developed nations, there is frequent mention of the demographic time bomb of an ageing population allied with low birth rates and obesity and other lifestylebased diseases. However, while these issues are well reported in the media, they are not entirely understood by the public.

Without understanding the impact on society, it is difficult to get people to take any real action. To be told when you are, say, 35, that you may have to work not until age 65 but instead to age 68 or 70 will not resonate as strongly as the short-term pressures that are likely to exist at earlier life stages.

With medical and socio-economic developments, we are living longer, but this is accompanied by more time spent in ill health at the later stages of life. However, there is a great opportunity to improve healthy life expectancy. We are regularly told to invest financially for a pension in later life. But if we take that one step further and invest in our health and wellbeing from a young age, it has been shown that this can delay the onset of serious illnesses.

If we are required to work a few extra years, it is clearly more possible to achieve this in good health.

Smoking is an obvious lifestyle choice that has a damaging effect on health. But if we can influence society to also invest in other healthy behaviours, such as regular exercise and eating healthily, this can have a significant effect on individual lives while addressing global issues.

Actuaries can help develop preventative solutions by encouraging and rewarding healthy behaviours. Providing access to healthy activities can change risk outcomes for insurers and providers of healthcare and create a healthier society. My personal drive is to encourage my children to eat healthily and exercise beyond the virtual games they play on their consoles. I have a long way to go on this, but had better not be too harsh as one day they’ll be choosing my care home!

‘Investing in healthy behaviours can have a significant effect on individuals while addressing global issues’

Deepak Jobanputra editor@theactuary.com

© SIAS May 2013 All rights reserved ISSN 0960-457X

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May 2013 • THE ACTUARY www.theactuary.com

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Opinion Letters letters@theactuary.com

LETTER OF THE MONTH

— ER RIT THE WLETTER E OF TH E MONTH OF TH EIVES A REC AZON M £25 A CHER VOU —

Limits to growth only a starting point In response to the letter from Geoff Dunsford (Earth is Room Enough, April, p6), the motivation for the limits to growth research was to examine issues of resource scarcity, which the Resource and Environment Group (REG) feels have not been sufficiently examined. The intention was to start a debate on this difficult subject, not to attempt to provide all the answers. We welcome a discussion and recognise that there are many points of view. As Mr Dunsford points out, one of our strengths as actuaries is to base our thinking on data. Sometimes this means questioning conventional wisdom, when the data suggests this is a wise thing to do.

Also, I would like to clarify REG’s role. The limits to growth research project was carried out by a team of experts including an economist and led by Dr Aled Jones at the Global Sustainability Institute at Anglia Ruskin University. REG members reviewed the report, but did not have a right of veto over any part of it. One of the research team members was an actuary and REG member, but was acting in an independent capacity, not as a representative of the Institute and Faculty of Actuaries. The report contains a large volume of data on resource availability and we hope it will be a useful contribution to thinking. But it is not, and should not, be REG’s role to justify every part of a piece of commissioned research. This project is only a first step on the road to investigate these issues, and much further work is needed.

Hopefully, in time, actuaries will be experts in the critically important areas of resources, growth and sustainability.

Tracey Zalk, REG managing committee member, 19 April

Good, bad and ugly theory I was interested in Jessica Elkin’s article (Student, p39) in the March edition of The Actuary. This has been a subject close to my heart for a number of years since reading a proposal by one of the Big Four accountancy firms for ‘product placement’ of accountants in movies – as is done by certain watch and car manufacturers in James Bond films! I wondered if this would work for actuaries and since then have looked out for portrayals of actuaries in the movies.

Many of those who have qualified in the past 15 years will be aware of the use in the new qualifiers’ professionalism course of the video of The Billion Dollar Bubble as an example of unprofessional behaviour. In this 1970s’ TV movie, James Woods played an actuary who got caught up in a scandal involving reinsurance on (fictitious) life policies to shore up the corporation’s finances. He is definitely not a good role model, although probably the second most famous actor to play an actuary after Jack Nicholson in About Schmidt.

In many ways, given the lack of public knowledge of actuaries, it is surprising how often they feature. I believe that Double Indemnity (1944) was the first film to feature an actuary. The plot revolves around a murderer who seeks to gain advantage from a rather peculiar insurance policy. An insurance investigator, Edward G Robinson, knows the actuarial statistics and becomes suspicious.

Other movies to note, apart from those mentioned in the article, include The Apartment, Sweet Charity, Tron (featuring an actuarial programme named Ram), Thirteen Conversations About One Thing, and Along Came Polly, where Ben Stiller is a risk assessment expert, who, though not explicitly stated, performs the job of an actuary.

I would agree that most of the actuaries presented are not role models – could it be the association with mortality?

Keith Miller 7 April

Have your say online

A selection of comments posted online about news stories published on www.theactuary.com.

Have your say by heading over to www.theactuary.com/news now.

DC pension plans ‘badly designed and poorly modelled’ (Full story at bit.ly/10hCHjl)

apparently bottomless pension pot, the principles seem great, but rather scary for the person in the street.” – David Nunns, 29 March

“I never realised that DC pensions were ever meant to be well designed, just a low-cost pension provided by employers that stood virtually no chance of providing a decent pension, unless the employee paid around three times as much as their employer. From a self-employed viewpoint, or a director with an

EU pension rule changes ‘could push up UK deficits to £450bn’ (Full story at bit.ly/ZkxHsr) “These are worryingly large numbers, but shouldn’t the Institute and Faculty of Actuaries be approaching this with its ‘public

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

interest’ hat on? We are quite used to advising trustees and sponsors, but perhaps we should be talking directly to members here. The fact that there is a deficit on the ‘holistic balance sheet’ acknowledges the very significant risk that members’ benefits will not be paid in full. The report acknowledges that (at least on this basis) schemes ‘have in principle exhausted the possibility to use sponsor support to recover the present deficit’. The report also shows how inadequately UK

schemes are funded relative to the rest of Europe (except Ireland) There is a legitimate public policy debate around whether this is the best approach to valuation, and about what action should be taken. However, we need to avoid the impression that this is all about presentation: there is a very real risk the fund assets prove wholly inadequate to pay promised benefits.”

– Derek McLean, 10 April

The editorial team welcomes readers’ letters but reserves the right to edit them for publication. Please email letters@theactuary.com. The deadline for receiving letters for the June issue is 17 May 2013.

ILLUSTRATION: PHIL WRIGGLESWORTH

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THE ACTUARY • May 2013 www.theactuary.com

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Opinion President’s comment

Philip Scott is the president of the Institute and Faculty of Actuaries

PHILIP SCOTT

Challenges in Life Actuaries working in the life area are facing challenging times ahead to balance the requirements of increasing regulation and the needs of consumers. A recent visit to the Life Practice Executive Committee (PEC) gave me an insight into how the committee is tackling these current issues.

Members of the committee have met regularly with the Financial Services Authority (FSA), now split into the Prudential Regulatory Authority and the Financial Conduct Authority, to discuss issues of mutual interest and future policy.

The committee is also providing significant input in the following areas: ● the forthcoming Memorandum of Understanding between the PRA and the FCA, in particular around aspects relevant to the management of with-profits business; ● the evolution of ICA+ as the current ICA regime evolves towards Solvency II; and ● the potential introduction of a recovery and resolution plan regime for insurers.

The PEC, with the support of its subcommittees, has helped the Institute and Faculty of Actuaries (IFoA) respond to many of the 80-odd consultations for which responses were submitted in 2012.

The assistance requested by and provided to the regulator here has been welcome. Good relationships have been established with the FSA and it is important that this is maintained with the PRA and the FCA to ensure that we influence the successful regulation of the life insurance industry – from a prudential and a customer perspective, both of which are important for consumers.

The annual Life conference in Brussels in November last year attracted around 800 delegates and included original papers from the extreme events, life solvency and capital management and longevity catalysts working parties. There were many successful sessions and workshops covering current issues for life assurance companies, which offered significant opportunities for continuing professional development. Topics included: ● resolution planning and living wills for insurance companies; ● insurance accounting; ● PS12/04; ● Solvency II implementation; ● post Retail Distribution Review.

Philip Scott reviews the many elements of work and research undertaken by the Life PEC and its support network The PEC is also considering how best to support overseas members. As part of this, PEC member Nick Dexter, in conjunction with the Actuarial Society of South Africa, has given presentations in both Cape Town and Johannesburg.

The Life Research Committee encourages research by volunteers into areas of particular interest to actuaries working in this practice area. For some time, it has sponsored research supporting the assessment of financial adequacy and capital requirements, particularly with a view to the introduction of Solvency II. This includes understanding the issues around extreme event modelling and recently, following a suggestion by a volunteer, how policyholder behaviour may be expected to change in extreme situations. The Life Research Committee has set up several new research working parties in recent months, covering: ● liquidity premiums; ● stress and scenario testing; ● policyholders’ behaviour in extreme conditions; ● the role of actuaries in Life offices; ● management and run-off of with-profits funds.

Volunteering is thriving as 27 candidates applied to join the working party to research the management and run-off of with-profits

funds and more will be developed on this topic in coming months Going forward, the Life Research Committee is about to advertise for a working party to look at different ways of meeting customer needs that may emerge and which might challenge existing operating models.

Another of the PEC’s aims for the session is to decide how to support members to perform influential risk management roles within the actuarial and risk functions. There is considerable overlap between Life and enterprise risk management (ERM), with many common skill sets required within risk and actuarial functions in life companies. It is envisaged that the Life PEC will continue to support the technical skill requirements with the ERM PEC, contributing some of the more cultural aspects of risk management.

One initiative is to give members access to the thoughts of both the actuaries who work in a risk management area and their customers.

From any perspective within the life assurance industry, there is still a huge demand for the valuable work done by the Life PEC, its sub-committees and the volunteers that provide such strong support for actuaries working in this field. I would encourage those within the life areas to look for opportunities to participate in, and influence this work. a

“It is important we maintain a good relationship with the PRA and the FCA to ensure we influence the regulation of the life insurance industry”

MAY 2013 • THE ACTUARY www.theactuary.com

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Opinion Soapbox

J WILSON CARSWELL

Anticipating ailments Most actuaries would like to live in a world where all significant events are known years in advance. Annoyingly, events tend to happen in an apparently random fashion. This makes life difficult for actuaries, who are reduced to making intelligent guesses based on limited or absent information.

This absence of accurate ‘advanced information’ is commonly seen in the income protection (IP) insurance market. There, individuals or groups seek protection from the expense of a serious illness causing long-term loss of income. As the chance of this happening is quite low, insurance premiums reflect this, making it a popular product to sell.

However, should a claim be made it is expensive. Yet recent studies unrelated to the insurance industry show that some IP claims may actually be predictable.

This seems an unlikely claim. However, a 2010 paper in the BMJ, by Will Whittaker et al, does just that. Researchers looked at people attached to GP surgeries and the past medical history of those who had made claims for incapacity benefit (IB). This is payable to those who have had 28 weeks of certified medical absence for work. The study found that two separate measures were helpful in predicting future IB claimants.

The first measure used a self-scoring psychometric score, General Health Questionnaire 12 (GHQ 12). This was created more than 40 years ago by David Goldberg, a psychiatrist at the Maudesley Hospital in London. It has since been refined and is used widely as a measure of current mental health.

It takes only a few minutes to answer the 12 questions it contains. There are a number of different scoring systems, but if there is an abnormal or raised score, it suggests that the person has a mental health problem.

The second factor related to future IB claimants was frequency of GP consultations.

In this study, the cut off was more than 10 in one year. In summary, IB claimants were more likely to have a raised GHQ 12 in the two years prior to an IB claim, and increased medical consultations in the three years before.

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Dr J Wilson Carswell asks whether medical research could be used by the insurance industry to predict those likely to make IP claims

This study strongly suggests that some long-term illnesses, associated with prolonged absence of work, can be predicted to some extent. The question for actuaries is: “Would similar results be found in (six-month) deferred-period IP claimants?” Both IP claims and IP claimants, with a six-month deferred period, have some similarities as both have experienced a long period of ill health before an actual claim is made.

The payment, in both instances, once established, is likely to be long lasting and thus costly to the insurer, whether state or private. On the other hand, there may not be a close overlap of social and other factors of these two claimant groups.

Only a well-conducted, randomised control trial (RCT) could answer the question posed above. Such trials are lengthy, expensive and the hoped for outcome cannot be guaranteed in advance. Properly conducted RCTs often lie in the province of academic departments, outside the immediate reach of insurers.

The Whittaker study raises the more interesting question: “If future disease/ absence from work can be predicted, even in part, can it be prevented?”

The answer is a tantalising “Probably”.

If that were the case, could IP insurers offer their policy holders, who might be at risk of receiving payments in the future, treatment to prevent this outcome? Unfortunately, we don’t know and it will remain unanswered unless and until high-quality evidence is produced to answer this question.

No one, except the insurance industry at large, is likely to commission such studies, but it would be one of the main beneficiaries of a positive outcome of such an initiative. Could the insurance industry, guided by actuaries, effectively modify such behavioural patterns for those who take out IP policies? Would a healthier workforce result? Additionally, if preventive treatment proved less costly, IP premiums could become lower.

Admittedly, there are a lot of ‘ifs’ and ‘buts’.

However, at some time in the future there is the prospect of IP capitalising on Whittaker’s findings to everyone’s benefit. And the future is what actuaries are all about, surely.

“It seems unlikely… but recent studies unrelated to the insurance industry show that some income protection claims may actually be predictable”

Dr J Wilson Carswell, OBE FRCS, is medical director of Moving Minds

THE ACTUARY • May 2013 www.theactuary.com

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The worldwide demographic shift, progressive globalisation and continous improvements in living standards are significantly impacting the life and health reinsurance market. Thanks to our leading specialist expertise we are able to fulfil individual client requirements in the longevity sector and hence give fresh impetus to the constantly changing market requirements.

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News Profession NEWS UPDATES FROM THE ACTUARIAL PROFESSION

Upfront Opinion CEO’s comment

Help shape our website

Derek Cribb reports on the work undertaken on the international stage

After listening to members’ opinions, we are now redeveloping the Institute and Faculty of Actuaries (IFoA) website with Precedent, a leading digital agency. There will be opportunities for members to get involved in research and testing sessions throughout the year. If you are interested please contact emma.pegg@actuaries.org.uk. A huge thank you to members who offered views and comments about the website in the focus groups and telephone interviews held throughout March and April. Those who have taken part are welcome to get involved in further research.

Leaders’ tour of duty Derek Cribb is the chief executive of the Institute and Faculty of Actuaries

membership: indeed our international strategy points to China and South East Asia, India and Africa as priority areas owing to the growth in demand for actuaries in these areas. But how are we ensuring that our members are being appropriately served by their professional body?

There is nothing quite like meeting members face to face to get an understanding of their priorities and concerns. As you read this, I will be travelling around China and south-east Asia with David Hare, president-elect and Trevor Watkins, director of education, to meet our members and representatives from local actuarial associations and universities. We will be introducing our contacts to Wen Li, a Fellow of the Institute and Faculty of Actuaries, who we have appointed as our lead representative in Asia. This exciting development will help to ensure our members in the region are fully supported and feel part of our global community.

In April, Trevor and I also visited India. This productive trip highlighted the significant demand from students and employees in the region who could benefit from our proposed certified actuarial analyst membership category. Local employers in India and the Institute of Actuaries of India are keen to find a way to professionalise many of the actuarial support roles, and also help those professionals that work alongside actuaries but do not wish to take the path to fellowship.

Research we have undertaken indicates that introducing the certified actuarial analyst membership category and associated qualification will meet this demand, not just in India but globally.

It will also help us achieve the objectives in our royal charter by ‘promoting matters relevant to actuarial science’ and is in the public interest by bringing such people into a sound regulatory framework.

These changes will help to protect the future of your membership body by ensuring that we remain relevant to the developing needs of the users of actuarial services globally. a

DEREK CRIBB

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I’ve spoken before about the global nature of our

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R E SE AR C H E VEN TS The research team is putting the final touches to two forthcoming events at Staple Inn Hall, London:

21 May (17.00-19.00) MSc presentations: students from Imperial College London will present their dissertations on general insurance. See bit.ly/103z5j7 for details and to book.

17 June (17.00-19.00) Mortality Research Seminar Series: Exploring The Future, Defining The Questions will deliver the findings of three research projects funded by the Profession: ● Bayesian modelling of mortality projection uncertainty (University of Southampton and Barnett Waddingham LLP) ● Mortality models for multiple populations using covariates (Heriot-Watt University) ● Genetic risk profiling for common diseases (King’s College London) Online booking will be available shortly at www.actuaries.org.uk/events

THE ACTUARY • May 2013 www.theactuary.com

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Actuarial education fit for the 21st century Actuaries of the future will need a wider range of skills than ever before to succeed in a changing financial world. The decline in defined benefit pensions, the advent of Solvency II, competition from other qualifications, especially in investment, and the growth of the risk management function all mean that actuaries need more than technical skills, important as these are.

Business skills, especially communication, and teamworking with non-actuaries will be needed, along with professionalism and ethics. So how do we ensure qualifying actuaries are fit for purpose in this challenging environment?

The qualification process, whereby The Actuarial Education Company (ActEd) provides tuition and the Institute and Faculty of Actuaries (IFoA) provides assessment, is well regarded, as shown by the growing number of student members joining the IFoA from around the world.

In the financial year to the end of February 2013, a record number of students joined, topping 2,400. We now have some 12,000 students in all, with more than half from outside the UK – around 100 countries are represented. The apprenticeship model is not the only model for training actuaries. In France, for example, actuaries undertake undergraduate and then specialist masters programmes in one of a few highly-rated universities, followed by practical experience, before being considered fully qualified.

In the UK, following the Morris report in 2005, we introduced an accreditation process for universities that could demonstrate excellent actuarial education to give high performers exemptions from our examinations.

We now have 17 accredited universities.

Employers now have more choice; they can hire numerate graduates with up to eight core technical exemptions from undergraduate programmes or from one-year conversion

masters programmes, including a distance learning option from Leicester University.

Exemptions from two core application and two specialist technical subjects are available from four UK Universities.

Of these, the Imperial College Business School course is offered only on a part-time basis and plays to its strength in actuarial finance and risk management. It has been developed in conjunction with some of the leading consultancies who have found it to provide rounded actuaries with the business capacity to contribute significantly to their business both before and after qualification.

We know that employers are more accepting of exemptions granted through university programmes, because the average number of exemptions per new student member continues to increase.

We are conducting a benchmarking exercise with the Society of Actuaries to compare the skill sets of qualifying actuaries. Interestingly, many of the skills cover a range wider than mere technical ability.

There is no definitive answer to the ‘correct’ content of the qualification process and the balance between technical and other skills. It is a matter of continual development based on feedback from stakeholders, especially employers, to make sure we meet their needs.

New membership proposal for analysts An innovative proposal to introduce a new membership category is being developed by the Institute and Faculty of Actuaries (IFoA). The certified actuarial analyst membership category will offer a career route for those with an interest in the financial sector and the work actuaries do, but who do not wish to become actuaries themselves.

The IFoA Council, which has endorsed the strategy, believes the new membership category would help achieve the objectives in the royal charter by promoting matters relevant to actuarial science, through bringing people working in support roles into a sound regulatory framework, in the public interest.

The qualification would make the profession more accessible and relevant to those looking at a career working alongside actuaries. It would expand the range of potential candidates,

helping to equip those in financial roles around the world with a broad range of skills acquired from a respected membership body.

Six modules would need to be passed, focused on the technical aspects of actuarial science. The first module will be open to non-members, just as CT1 is for the Fellowship pathway.

The membership may be suitable for post A-level students with strong maths skills who are looking at alternative options to university, as well as those who have left university and are looking for a career in the financial sector.

It will particularly suit employees in support functions or those who are not working in the mainstream actuarial function, both in the UK and internationally. Often there is demand for a formal qualification for those working

in technical roles, particularly in locations such as India, where many of these positions are based.

Students would secure a prestigious association with the IFoA, which would give them an internationally recognised qualification and enrich their skills and CVs. One attraction for employers is that it gives a challenging but attainable professional qualification for those for whom Fellowship is not appropriate, and would develop skills and expertise.

The new qualification is specifically designed not to compete with Fellowship, which will continue to be recognised and promoted internationally.

Certified actuarial analysts would receive benefits similar to other IFoA members but will be non-voting members.

To introduce the new membership category there will

need to be a change to our byelaws, which will require a vote from our members.

Therefore the proposal will be put to the membership this summer. If members vote in favour, the amendments must then be approved by the Privy Council, opening the way for the new membership category to be launched towards the end of this year.

In advance of this vote, we want to give members an opportunity to get a better understanding of the plans and to put across their views.

We are therefore running an information-sharing exercise (including a survey) via the IFoA website over a three-week period.

This is your opportunity to find out more about the IFoA’s plans, so we would encourage you to get involved.

May 2013 • THE ACTUARY www.theactuary.com

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News Profession NEWS UPDATES FROM THE ACTUARIAL PROFESSION

What’s in a name?

Philip Scott reports Presenting the Institute and Faculty of Actuaries (IFoA) – our new brand. In 2010, the Institute of Actuaries and the Faculty of Actuaries merged, creating the Institute and Faculty of Actuaries. At the time of the merger, it was agreed that for marketing purposes this newly merged, chartered professional body would retain the trade name ‘The Actuarial Profession’, in place since 2000. Following a major rebranding project, in 2013 we are adopting the Institute and Faculty of Actuaries as our formal brand or trade name, or IFoA for short.

Why are we doing this?

The answer is brand. A brand can be defined as ‘a trademark or distinctive name identifying a product or a manufacturer’, but it is much more than this. A brand is about the personality of a business, product or service, which is represented by a logo and embodied by the brand name. But it is also about a brand promise, which states who the company is and what it stands for, and it is about values and the tone of voice used in communications with stakeholders.

Strong brands elicit emotional responses.

It is the cornerstone of all marketing activity, because it represents the thoughts, feelings, and psychological relationships between a business and a customer.

In the years since the merger, research with our key stakeholders has shown that there is a great deal of confusion about the identity of the Institute and Faculty of Actuaries and how

the IFoA relates to the Actuarial Profession.

Many find ‘Profession’ a broad term that defines the membership as a whole, rather than the body that governs the membership.

Since merging in 2010 a great deal has been happening at the Institute and Faculty of Actuaries. New teams have been put in place to improve services and re-engage with our members and our volunteers. Work has been undertaken to improve our standing in the public affairs arena and raise the profile of the important work and high professional standards that our members undertake and adopt among peers, employers and policymakers. We have taken the time to understand better the challenges that our members face.

In an increasingly globalised financial services market, it is perhaps unsurprising that 40% of our members live or work outside the UK. They work in a range of roles and industries globally. The traditional areas of pensions and insurance remain, but there are new roles in healthcare, public policy, global policy, regulation, finance, investment and risk management.

The challenges that our members face differ across sectors and regions. However, they share a high level of professionalism, reinforced through continual professional development and the code of conduct to which all members must adhere. This professional focus is what makes our members stand out and highlights the value they bring to their work and to their employers. This is what our new brand represents.

The Institute and Faculty of Actuaries aims to be recognised globally as a chartered international professional body whose word can be trusted, whose members are wise and act with integrity, and as a body that collaborates with others to progress the profession, to influence and inspire. By association, a member of the Institute and Faculty of Actuaries embodies these values.

Our brand personality can be defined as classic with a modern twist. As you can see from the new logo, there is a blend of the traditional and the new. This is a reflection of the legacy that the IFoA draws from both the Institute of Actuaries and the Faculty of Actuaries. What really counts are the values that the new brand represents. By dropping the trade name of the Actuarial Profession, we will be removing confusion and improving clarity among the people we wish to influence.

China representative boosts regional aims The Institute and Faculty of Actuaries has recently appointed a permanent representative in China and the south-east Asia region. Wen Li (pictured right), a Fellow of the Institute and Faculty of Actuaries, will be based in Beijing and Hong Kong but will also be looking after the profession’s interests in Singapore and Malaysia.

Commenting on the appointment, Derek Cribb, IFoA’s chief executive, said: “I am delighted to welcome Wen Li onto the team. She brings a wealth of knowledge and experience that will help us to deliver on our strategic objectives in the region.”

Li said: “I have always been very proud that I qualified with the IFoA, even more so in this part of the world. We are an actuarial profession of the longest history; an international body whose training and professional standards are

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recognised for excellence. Now, with the help and support of my colleagues, I want students, employers, actuarial associations, regulators as well as the stakeholders in China and south-east Asia to know about us – to know about our education standards, our technical abilities, our professionalism and our willingness to share.

Li’s immediate priorities include working with the IFoA’s director of education, Trevor Watkins, to develop links with universities in the region; encouraging a vibrant member community and supporting students, as well as seeking opportunities to build links with employers and local regulators. Wen will also play a key role in ensuring the strategy of ‘proactive engagement’ is delivered through member support, education, regulation and public affairs.

THE ACTUARY • May 2013 www.theactuary.com

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Heart of the matter: member communications a good reputation and a set of standards that an organisation should strive to maintain or surpass. The new logo aims to reflect our brand’s personality – ‘classic with a modern twist’ – by combining a simplified version of the IFoA’s armorial bearings with the professional body’s name in a modern Gotham font. The intention is to reflect a young profession with a modern, progressive image, while retaining its traditional heritage.

As the new brand and values of the Institute and Faculty of Actuaries (IFoA) are launched, we meet the member communications team, who helped develop them.

So, who works within the team?

Barbara Beebee, head of member communications and brand, and Alison Jiggins, communications leader, manage all aspects of marketing and communications.

Jenni Hughes, careers marketing leader, manages promotion of actuarial careers to potential members.

Stephen Little, head of digital services, and Emma Pegg, digital editor, head up the digital team that manages the IFoA’s digital strategy.

The new brand launched on 29 April, but what was the purpose of the change?

Our trade name, the ‘Actuarial Profession’ has been in existence since the year 2000. Recent research indicated a lot of confusion between this and our Royal Charter name, the ‘Institute

Left to right: Alison Jiggins, Barbara Beebee and Jenni Hughes and Faculty of Actuaries’. By adopting the Royal Charter name as our new trade name, we focus attention on the UK institution that operates in the public interest to educate, develop and regulate actuaries on an international scale.

What does the new logo represent?

The brand is fundamental – not only to achieve audience recognition but also to build

After the launch, what key challenges will the communications team face?

The brand roll-out will not stop after the launch on 29 April. There is plenty for the team to do, from mapping the brand out into a slightly different look and feel for careers material, to implementing changes on the website, to how we are seen at events and conferences and in the many publications that the IFoA publishes each year. The brand marks an exciting stage for the team and the profession and we look forward to seeing how the brand can be implemented next.

EVENTS AND CONFERENCES 2013 Health and Care Conference 2013 15-17 May

General Insurance Pricing Seminar 2013 11 June

Celtic Manor Resort, Newport For further information and to book your place, visit: bit.ly/10ztfgb

Hilton Paddington, London For more information and to book your place visit: bit.ly/11mi1WN

Pensions Conference 2013 5-7 June

Risk and Investment Conference 2013 17-19 June

Celtic Manor Resort, Newport This conference covers a broad range of current issues, technical matters, business skills and professionalism topics. The minister of state for pensions, Steve Webb MP, will close the conference and take questions from the floor. For further information and to book, visit bit.ly/11mhvYN

The Grand, Brighton The premier conference for actuaries with an interest in risk and investment management.

Speakers/topics include: ● Professor Eddie Oberg ● Communicating risk ● Tim Harford, the FT’s Undercover Economist ● Actuarial discipline

● Liquidity in economics, risk and investment ● Credit spreads.

For more information on the programme, sponsorship or to book your place visit: bit.ly/14zbRtO

Reserving Seminar 20 June

Master Class: Develop your Presence – How to be More Memorable, Have More Impact and Create Stronger Relationships 28 June Staple Inn Hall, London For more information and to book your place visit: bit.ly/175YEX7

Grange Tower Bridge Hotel, London For more information and to book your place visit: bit.ly/11DteF0

May 2013 • THE ACTUARY www.theactuary.com

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News Industry news@theactuary.com

EU pension rules changes could inflate UK funding shortfall to £450bn Preliminary findings of quantitative impact study flag up potentially damaging results for defined benefit schemes UK companies could see their defined benefit (DB) pension scheme deficits soar by £150bn to a total of £450bn under proposed changes to European Union pensions legislation, the European Insurance and Occupational Pensions Authority (EIOPA) has revealed.

EIOPA has published the preliminary findings of the quantitative impact study that it ran in eight countries to assess the impact of planned changes to the Institutions for Occupational Retirement Provision Directive.

In the UK, the Pensions Regulator calculated the impact of the plans against three scenarios using data from 6,432 DB pension schemes, with additional information provided by some of the largest UK schemes. Together, these schemes had a deficit of £300bn at the end of December 2011.

Under the European Commission’s plans for sponsors to hold additional capital to protect their schemes from uncertainty – the solvency capital requirement – the funding shortfall increased to 24%, or £450bn.

While EIOPA stressed the preliminary nature of the results and the need to treat them “with caution”, CBI director of employment Neil Carberry said they showed just how damaging the proposed changes could be.

For more on this story, visit bit.ly/ZkxHsr

MPs on select committee call for fresh look at cost of state pension shake-up Early implementation of single state pension threatens both employers and industry with ‘significant burden’ The government should provide an updated assessment of the costs of creating a single-tier state pension after bringing forward the date for the change by a year, MPs have said.

The work and pensions select committee said the plans to introduce the new single state pension in April 2016, and not April 2017 as originally planned, could have “significant implications” for the public, pensions industry and employers. The decision to bring forward the reforms was announced by Chancellor George Osborne in his March Budget.

The move to a single state pension will bring an end to workers being able to contract out of the second state pension and instead receive payments through their workplace scheme. Both the employee and employer then pay lower National insurance contributions.

Having one less year to prepare for this would impose a “significant burden” on employers and the pensions industry, MPs said.

“We believe it is therefore the government’s clear responsibility to work with these key stakeholders to ensure that the transition to the ending of contracting-out is as smooth as possible,” the committee’s report explained.

For more on this story, visit bit.ly/Za2xne

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

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New record for reinsurer capital The amount of capital held by reinsurers worldwide increased to a record $505bn (£330.5bn) last year as reinsurance companies more than recovered from the record catastrophe losses seen in 2011, Aon Benfield has said. The consultancy detailed a $50bn (£32.7bn) increase in reinsurers’ capital last year from the total recorded at the end of 2011 – equivalent to 11% growth. bit.ly/16KnRpR

Buy-in and -out deals hit £4.5bn Pension schemes shifted almost £4.5bn of their liability risk onto insurers last year using buy-in and buy-out deals, according to figures published by Hymans Robertson.

The consultancy’s latest quarterly Managing Pension Scheme Risk report shows that almost half of this activity was recorded in the final quarter of 2012. bit.ly/XbcJzn

One in four has ‘lost’ pension pot Almost a quarter of UK adults have lost track of at least one of their pension schemes, according to research published by Age UK. In total, 23% of respondents to the charity’s survey on people’s attitudes to and plans for retirement said they had no idea what had happened to at least one of their workplace pension pots. The problem was particularly prevalent among younger savers, with 37% of 18- to 44-yearolds having lost track of at least one scheme. bit.ly/10VsPN3

First quarter of 2013 brings highest deaths since 2005 The first three months of this year saw the most deaths registered in a quarter for eight years, according to an analysis of official figures published by Towers Watson.

Provisional estimates from the Office for National Statistics indicate that 144,299 deaths were registered during the first 13 weeks of 2013. This is 6% higher than the 135,583 recorded over the same period last year, the consultancy’s analysis shows.

Most of the 8,716 increase occurred, like most deaths in general, among the older sections of the population, with a 7,444 (6%) increase in deaths among people aged 75 or older, and a 5,277 (10%) increase among those aged 85 or more.

Matthew Fletcher, a senior consultant at Towers Watson, said that the increase in deaths among older groups could not be blamed entirely on the prolonged cold weather in light of the overall population growing in size and age. But the cold start to the year did appear to have had a “significant impact”, he added.

For more on this story, visit bit.ly/Zxu4QE

Focus on risk management boosts resilience of SMEs Five years of economic stagnation and volatility have forced small- and mediumsized enterprises (SMEs) in the UK to significantly change their approach and attitude to risk management, according to research published by insurer Zurich.

Adapting in Tough Times: The Growing Resilience of UK SMEs details a major shift in how insurers manage risk, with 53% of businesses surveyed spending more time on their business strategy and risk management than they did before the financial crisis.

More than one-third (35%) of those questioned are doing more long-term financial planning and 33% are considering their business continuity plans more frequently than five years ago, such as by planning for the failure of key suppliers.

According to the report, which was written by the Economist Intelligence Unit, this shift is “a hugely positive step for the long-term resilience and sustainability of SMEs and the UK’s SME economy”.

However, the research also found that SMEs had become more conservative in their approach to risk taking, with 25% rating themselves as risk-averse compared with other companies in their industry.

For more on this story, visit bit.ly/15md5s7

THE ACTUARY • May 2013 www.theactuary.com

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› GENERAL INSURANCE

NEWS ROUND-UP

Caribbean fund adds rain cover The Caribbean Catastrophe Risk Insurance Facility (CCRIF) is expected to add extreme rainfall insurance to its portfolio this year. “We are currently in discussions with a number of countries in the Caribbean to encourage them to purchase this coverage in addition to hurricane and earthquake coverage,” said the chief executive officer earlier this year. “We’re also in discussions with countries that are not at risk for hurricanes or earthquakes.” He also told Best’s Insurance News Service: “It’s different from traditional insurance, which is based on assessing the damage after an event, which can take months or up to a year.”

Losses associated with heavy rainfall are not covered by hurricane coverage – this includes wind and storm surge damage. Swiss Re has worked with the CCRIF to develop a trigger to invoke coverage for the extreme rainfall insurance. The facility transfers some of its risk to the reinsurance market by purchasing traditional reinsurance and is also looking at catastrophe bonds.

CCRIF has experienced significant rain-related losses in the region, including from the Dominican and Haiti earthquakes and Hurricane Ike.

Consumer Insurance Act update The Consumer Insurance (Disclosure and Representations) Act 2012 come into force on 6 April. This will change over 100 years of industry practice and replace parts of the Marine Insurance Act 1906.

The act removes the consumer’s duty to volunteer material facts to their insurer or broker when taking out a policy, replacing it with a responsibility to take reasonable care when answering questions relating to the policy. The onus has shifted to the broker or insurer to ask the right questions for them to obtain the information they need.

central fund, which pays claims if an insurer fails, rose 4.1% in 2012 to US$4.05bn (£2.7bn), while investment returns were up 31% to US$2.08bn (£1.4bn) compared with 2011. Gross written premium income in 2012 reached a record high of US$40.5bn (£26.6bn). Lloyd’s combined ratio improved to 91.1% from 106.8% in 2011.

PRA sets out objectives The Prudential Regulation Authority (PRA) has published its approach document setting out how it will regulate insurers, following the replacement of the Financial Services Authority by the PRA and the Financial Conduct Authority on 1 April. The document, released on the day the ‘twin-peak’ regime was formally introduced, was revised from the version published in October 2012. Changes were made to several areas, including: recovery and resolution planning for insurers (a description of the gaps that may exist in the current insolvency framework); amendments to reflect revisions to the approved persons regime; updates to reflect the introduction of ICAS+; the approach to allow insurers to use their Solvency II internal models to meet current individual capital adequacy standards; and updates reflecting the PRA’s new duties in relation to external auditors (see feature, p32-34).

LARGE LOSSES

Motor insurance peaks too soon Early analysis of the 2012 annual results released from two-thirds of the UK motor insurance industry suggests that the market will return its best result in five years. However, despite the Net Combined Ratio (NCR) improving by almost 20 percentage points, the NCR is expected to reach only 102, rather than below 100, a result that would produce an underwriting profit.

The results also show that many companies are expected to reduce prices during 2012 and 2013, meaning that profitability has already peaked. Catherine Barton, partner in Ernst & Young’s financial services practice, commented: “These early results show that the market has turned too soon, well before many players have managed to break even.

To buck this trend, less profitable insurers should be looking to maintain underwriting discipline in order to improve their performance – but this does not seem to be supported by the pricing actions we are seeing in the market.”

She added: “There is a clear pattern emerging between the results of the past three years and the shape of the market a decade ago. The preliminary results this year confirm that, again, the market has softened before most players have become profitable outside of ancillary income.

This time, however, we believe that insurers will need to face up to the reality of performance deterioration more quickly, as the pressures being put on ancillary income by regulation and the Competition Commission will force insurers to address the shortfall in profits more quickly.”

Lloyd’s returns to profit Lloyd’s of London posted a US$4.5bn (£3bn) pre-tax profit last year, following a loss of US$800m (£525m) in 2011. Lloyd’s posted “a strong result, despite incurring US$16bn (£10.5bn) of total net claims in 2012, including Superstorm Sandy”, said CEO Richard Ward in a press release. Total claims were down from US$20.6bn (£13.5bn) in 2011, which was Lloyd’s worst year on record for natural catastrophes. Lloyd’s

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economic losses from the hail, winds and US$443m Estimated tornadoes that hit China during March

Europe winter weather – 12-31 March

Severe weather, Asia – 9-13 March

Late winter weather affected Europe throughout March, bringing heavy snowfall, sub-freezing temperatures, high winds, ice and flooding. The hardest-hit areas were found in France, Germany and Ukraine.

Total economic losses were preliminarily estimated at €1.4bn (£1.2bn), including €706m (£608m) in France alone. More than 100,000 insurance claims were filed in France, with automotive claims surpassing €101m (£87m).

Severe weather was also prevalent in Asia, highlighted by a strong tornado that left at least 35 people dead in Bangladesh’s Brahmanbaria district. In China, an extended stretch of hail, damaging winds and isolated tornadoes left 29 people dead, 331,250 homes damaged or destroyed and an estimated US$443m (£290m) in economic losses during March. Several days of hail also left heavy damage in central and northern Vietnam.

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

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News People & Society

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

Actuarial As part of a programme to boost development of actuaries in Ghana, the Institute and Faculty of Actuaries (IFoA) and the Worshipful Company of Actuaries are supporting Kwame Nkrumah University of Science and Technology (KNUST) in launching a master’s degree course in actuarial science. The aim is to provide a qualification comparable to at least the UK core technical (CT) exams.

A number of employers have signed up to release actuaries for up to two weeks to assist in the teaching programme. Six actuaries from Barnett Waddingham, Aon Hewitt, Canopius, Pacific Life Re and Punter Southall Transaction Services will be travelling to Ghana to run lectures.

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Minute-long masterpiece

Lucky strike

Michael Hall, an actuarial analyst at Broadstone Corporate Benefits, reached the top five UK entries for the Done in 60 Seconds category of the Jameson Empire Awards 2013, a short film competition run

by Empire magazine and Jameson Irish Whiskey.

Michael created a spoof version of the memorable 1987 sci-fi action film RoboCop that lasted just a minute. He directed filming over two weekends in early January at friends’ houses and local businesses, and took two weeks to edit the video down to its current length and complete the visual effects. Michael’s version of the film has all the action of the original crammed into just a minute of running time, with jokes, car chases, shoot-outs and killer robots.

In the past three years, Michael has created minute-long spoofs of The

The Worshipful Company of Actuaries (WCA) held its fifth annual ten-pin bowling event at the All Star Lanes in Holborn, London, on 12 March with eight teams competing for the trophy, including, for the first time, Charles Taylor & Co. The average score of the 24 players was 101, with half of them achieving over 100.

Top individual scorers were Mike Lawson (194), Oliver McCulloch (186) and Mark Paxton (158), all from Barnett Waddingham’s ‘Snakes Alive’. Mike and Oliver beat the previous record of 169.

But ‘Snakes on a Lane’ from Amersham was the winning team, with Mike, Jo Loder and Oliver producing a new record total of 449 to lift the WCA ten-pin trophy for the first time. Barnett Waddingham’s London team came second with 330 and last time’s winners, SwissRe’s ‘Size 16 Balls – Bigger and Rounder’ were third with 310.

Top five: Michael’s homegrown RoboCop spoof Ladykillers, The Towering Inferno and Where Eagles Dare for the competition. His three previous entries all made the UK top 20, but didn’t attract enough votes from the public to make it through to the final five – until this year.

This year’s winner was Blade Runner.

Go End to End with Deloitte

Could you boost your local area?

The annual Deloitte Ride Across Britain event sees over 700 cyclists take on the legendary ‘End to End’ route from John O’Groats to Land’s End. The cyclists set off on 8 June 2013 and cover over 960 miles in nine days. This year the contingent will include Deloitte actuaries Rachel Malpass-Brown and Ken Starr, who are raising money for the British Paralympic Association. This money will help disability sport in the UK build on the fantastic momentum created by last summer’s Olympic and Paralympic Games and inspire the next generation to take part.

To find out more or make a donation, please visit http://uk.virginmoneygiving.com/ RachelMalpassBrown http://uk.virginmoneygiving.com/KenStarr

By Bryan Judson In 2009, the Malvern Small Business Forum (MSBF) was established to provide a meeting place for people starting their own businesses who would welcome the opportunity to share ideas with like-minded people. If you are a retired actuary, would you consider starting a Forum to provide a small boost to your own local economy?

If so, your local council’s economic development department may be able to offer a venue and publicity for your first few meetings.

For information about the Malvern Forum, please explore our website www.msbf.biz, particularly the download section.

THE ACTUARY • May 2013 www.theactuary.com

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initiative in Ghana Barnett Waddingham volunteers Tracey McManus and Mark Norquay (pictured left) were the first to fly out on 14 February and taught classes in Accra and Kumasi covering financial mathematics (CT1) and business economics (CT7).

The intensive weekend classes, which attracted between 25 and 35 students, started at 7am and finished at 4pm on Saturdays and Sundays.

Speaking about the experience, Mark said: “Many of our students worked during the week and travelled from far afield to attend. There are not many qualified actuaries in Ghana, so they were particularly keen to hear more about our experiences as actuaries in the UK.”

Tracey and Mark also met the vicechancellor of the university, the dean of the distance learning centre and the head of mathematics, who are all keen to develop the programme. In particular, they will continue to support lecturer Derrick Owusu, who is co-ordinating the initiative, to develop the course and structure exams.

The volunteers recorded tutorials for students to view in their own time and will set exam papers and mark them using the UK CT standards as a benchmark.

The next volunteers will be teaching financial reporting (CT2), statistical methods (CT6) and contingencies (CT5). Another six volunteers will travel to KNUST in the second half of 2013.

No stopping marathon man You may remember that Andrew O’Brien had set out to run 12 marathons in 12 months to raise money for The ISIS Foundation after visiting Kiwoko Hospital in rural Uganda, home to many of the projects that the charity supports. Sadly, after months of relentless training he succumbed to injury and was unable to begin his once-in-alifetime challenge as planned.

After weeks of physiotherapy, he has overcome his injuries. The challenge will now kick off in June with the Midnight Sun Marathon in the Arctic Circle and continue with a further 11 marathons over the following 12 months.

The ISIS Foundation works side by side with communities and children in remote areas in Nepal and Uganda to improve their lives through health, education and other development projects. They help communities to help themselves, working towards enabling them to become self-sufficient.

Andrew would like to say a special thanks to his friends and colleagues at Star Actuarial for their kind words and generous donation.

For more details of Andrew’s gruelling challenge and to show your support, visit www.12in12forISIS.com. You can also enter his running vest competition there by liking his Facebook page.

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Obituary David Wilson Died 2 March 2013, aged 67 David Wilson (FIA, 1967), who has died after a short struggle with cancer, was an actuary who lent lustre to our profession in Canada, Ireland and the US, while always basing himself in England.

David trained at the Prudential, enteringg ght the profession straight ng from school. Qualifying rapidly, he was soon assigned to the Prudential in Canadaa and reached a seniorr position. When he returned to the London head office, he rose first in the conventional actuarial departments and later in marketing, with an intermediatee assignment as chieff off staff to the group chief executive, Sir Brian Corby. The Pru’s greatest debt to him may have been his promotion of the model office, which had been earlier nurtured by Ernest Cooper and would be later perfected by Simon Margutti as an essential tool for all meaningful management decisions – a groundbreaking departure at that time.

What David regarded as his second career started when he took early retirement from the Pru. He was engaged by NatWest as CEO of its Irish reinsurance subsidiary, and achieved a very effective turnaround of a business that had had an uncertain start; he also learnt that in his Irish colleagues he had met worthy competition in oral debate. He followed this with chairmanship of Old Mutual Re, also in Ireland but focused on the US, where his role continued until his untimely death. David showed mastery in chairing an Irish reinsurer in the context of British ownership and an American primary client; helped by an earlier period of secondment with the DTI, then the UK’s primary insurance regulator, which gave him a good feel for offshore reinsurance.

Well connected within the profession and the financial services industry, David was a pleasure and inspiration to all those who met him. The team compiling this magazine was fortunate to benefit for some years from his professional overview of submitted articles.

David realised his good fortune throughout his career to have the support of his wife, Virginia, and their two daughters, Henrietta and Sarah.

Written by Guy Barker 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

May 2013 • THE ACTUARY www.theactuary.com

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On my agenda features@theactuary.com

Professor Sir Mansel Aylward CB, chair of Public Health Wales, tells Sarah Bennett and Richard Purcell how self-esteem affects health and why happiness is a constant

ION FOR A HEALTHIER HAPPIER NATION SIMON RIDGWAY/UNP

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Professor Sir Mansel Aylward CB is chair of Public Health Wales, a unified NHS Trust responsible for the delivery of public health services at national, local and community level in Wales. As director of the Centre for Psychosocial and Disability Research at Cardiff University, he is also continuing his renowned research into the obstacles to returning people to work after illness.

How did your career develop from medical practitioner to public health expert and professor?

My background is in rheumatism and because of my interest in pain I became interested in the placebo effect, psychological medicine and the power of belief. That eventually brought me into public health. In terms of my research career, I have focused on longevity, working life, disability-free years, resilience, attitudes to returning to work after a period of absence and the impact of socioeconomic differences.

What would you describe as a highlight of your career?

First, the work I led to ensure that people with a terminal illness received their state disability benefit quickly. Second, introducing the ‘all work’ test in the 1990s, which was an objective approach to measure whether someone could do their own work or any other work. People expect me to say that my career highlight was being knighted by the Queen, but the Queen knighted me because of this work.

What do you think are the main factors affecting health and well-being?

It is worth defining what we now mean by ‘healthy’. It is no longer whether or not you are suffering from a particular illness, but if you are able to adapt and cope when faced with physical and emotional challenges.

There is a strong correlation between health and how much control people have over their life.

Certainly we have to try to stop smoking, drink less and improve our diet in order to be healthier.

But for poorer sections of society their circumstances mean they have less control over their life and are more likely to have lower self-esteem, which is a major problem. We should be looking at the social determinants of ill health.

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On my agenda features@theactuary.com

Epigenetic effects brought about by the environment and behaviours of the mother are important determinants in the development of children. This means that individuals’ circumstances are often inherited. Education is key to helping families and children to change and improve their circumstances.

The Cardiff Health Experiences Survey suggests that psychosocial factors are most significant in preventing people from returning to work. Are these variables consistent throughout life and, if so, could they predict long-term disability?

Research shows that we all have a ‘set point’.

We maintain the same levels of happiness throughout our lifetime. A traumatic experience will depress our levels of happiness for a short period and then they will bounce back to their long-term set point. We have developed a tool to measure a person’s psychosocial score (negative influences on returning to work), which could be as powerful as a genetic test and could accurately predict disability in 80% of cases. But if it is as powerful as we think, it should be excluded as a rating factor in the same way as genetic testing. We do not want it used to prevent people from being insured.

So is it fair to charge the same premium for people with different set points?

Yes. That is what insurance is for – to pool risk.

In January the UK government gave its response to Health at Work – an Independent Review of Sickness Absence, published in November 2011.

Did you find the response encouraging?

The government response was not as well thought through as it could have been in several areas, first in relation to the health and work assessment and advisory service. When I was medical director of the Department for Work and Pensions we introduced the all work test, and made a lot of assumptions about the number of medical professionals needed to support it. With hindsight, we needed two or three times more.

The second issue is that people will be picked up who are off for four weeks or more,

and if the GP has not dealt with it, the patient will be referred. We know that GPs are not comfortable with fit for work assessments; only 40% are happy to conduct them. About 5% have been assumed to refer cases. What if 50% refer?

Third, I am concerned that all the benefit of educating GPs will be lost, which will be an obstacle to achieving the outcome we want. It is important for the GP to manage the patient through the system and it worries me that this responsibility is being taken away.

Fourth, case management is a critical skill we need to recognise as it creates a pathway back to work. The continuity and motivation it provides builds confidence and means people will return to work more quickly. We have seen in some cases that increased confidence can even offset a further deterioration in health.

There has been negative publicity on ‘activities of daily living’ definitions of disability because the objective tests have been strictly applied.

What are your views on functional assessment tests (FATs) as a measure of disability?

I do not support formalised, machine-driven functional capacity tests. I support functional assessments as elaborated in the all work test, personal capability assessment and as now modified in the work capability assessment.

The all work test that we designed in the 1990s lasts 45 minutes and the results need to be interpreted along with other medical evidence. The assessment must be impartial and independent and the focus should be on the individual’s ability to return to work.

‘Activities of daily living’ definitions are not the same as a functional assessment of body and mind. Any test of this nature is not completely objective.

What are your views on the new universal credit state benefit system?

The universal credit system is a good development as I think it encourages people to return to work. I am a supporter of means-tested benefits and so I have no problem with the concept, but we need to look at the detail and the unintended

“We maintain the same levels of happiness throughout our life. A traumatic experience will depress our levels for a short period and then they will bounce back to their long-term set point” 20

consequences. For example, while means testing and conditionality makes sense for a single person, we need to look at the impact beyond that for dependants.

Clearly, where people are able to work then they should not be receiving benefits. On the other hand, if you start reducing the level of benefits for households on the edge of poverty you run the risk of moving people onto a downwards trajectory, resulting in mental health issues and other health problems.

Does the inevitable trend to reduce state benefits create an opportunity for insurance companies?

Changes to state benefits do not necessarily have an impact on insurance. This is because these people do not think about or are not able to buy insurance anyway. Perhaps there is an opportunity to extend group income protection cover to blue-collar workers, but this is expensive for employers.

What are the challenges for insurers?

People predict the future based on false beliefs – having children, getting married or winning the lottery doesn’t necessarily make us happy.

Research shows we are more optimistic than realistic and believe that ‘it won’t happen to me’.

How do you find working with actuaries?

Very difficult. In my experience, actuaries are very conservative and resistant to change. We can’t do without actuaries and I value what actuaries do, but they have a poor image.

I would like to second some actuaries into the unit and work more closely with them.

When I speak at an actuarial conference I am asked questions that I can’t answer. It would be useful to have an actuary’s perspective.

What advice can you give to actuaries working in health and care?

Actuaries need a better understanding of health and care and a better grasp of the impact of demographic changes. For example, the impact of ageing may not be as great a burden on society as it first appears. People are more health conscious than ever before, and older people play an active role in society.

What are your views on working in old age? Does your mantra ‘work is good for you’ apply above age 65?

I believe that working in old age is a good thing, but it must be voluntary. I would hate to live in a country where there were no benefits for a lifetime of work. If people want to continue work, the evidence is there that it’s good for health, even in old age. a

THE ACTUARY • May 2013 www.theactuary.com

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23/04/2013 08:53

SIAS Events

Furniss takes prize as SIAS poker players ‘go hard or go home’ MONDAY 13 MAY

Assumption-setting process for estimating annuity liabilities

On the Thursday before Easter, a subset of the actuarial community descended on The Loose Cannon for the annual SIAS poker evening.

Turnout and demand was high, as always.

With 10 tables accommodating 10 players each, the room was awash with excitement, adrenaline, happiness and despair. There were also many theories and musings about “luck” regarding who did or did not have it. However, it was unclear whether there was a statistically significant correlation between those proposing such theories and their respective success in the tournament.

As is often the case, many participants took the view to “go hard or go home” – sadly many of these were knocked out before the food break that followed an initial hour of poker. However, some non-competition tables were put on to ensure

nobody was forced to sit and twiddle their thumbs while a final session of poker was played to decide the winners.

As the night came towards its crescendo, many crowded around the final table to watch the most successful players of the evening battle it out for the much coveted first-place bragging rights.

Eventually, Matt Furniss from Pensions First won in what was a tight final shootout. Sholto Moore from Catlin took second place and Jacob Sapwell from Towers Watson came third. Congratulations to Matt, Sholto and Jacob on their success! All 10 players that made the final table won cash prizes.

Many thanks to all participants and The Loose Cannon for making the evening such a success!

Report by Mark Gorman

PROGRAMME EVENT

Stochastic mortality models, such as the Lee-Carter and Cairns-Blake-Dowd models, are commonly used to model future mortality rates and the evolution of these under ‘run-off ’. However, we are increasingly seeing firms attempt to model longevity risk over a one-year horizon.

John Kingdom, FSA Staple Inn, High Holborn, London WC1V 7QJ 5.30pm

This presentation discusses a high-level view of the assumption-setting process for estimating annuity liabilities and the range of risks that need to be considered when modelling longevity risk under a one-year value-at-risk (VaR) framework. We also compare this approach to using a standard run-off approach, and illustrate, via a simplified numerical simulation, why simple ‘0.995^n’-type approaches used to approximate a one-year stress from a standard run-off approach are not necessarily appropriate.

This presentation will help younger members understand the assumption-setting process for estimating annuity liabilities, and the risks that are related to this process in a one-year VaR context.

Refreshments will be served from 5.30pm and the talk will start promptly at 6pm. There is no need to register in advance for this meeting.

THURSDAY 23 MAY

SOCIAL EVENT

Mystery event

Consider yourself the next Poirot or Miss Marple? Then why not take on the role of the butler, the crazy aunt or even the police inspector as murder, mystery and mayhem unravel around you. For the first time, SIAS are offering the chance to participate in a fascinating plot of mystery, double-dealing, bribery, blackmail and intrigue. It’s not just for watching, you will be participating in the wheeling and dealing.

Can you keep your dark secret quiet and unmask the murderer?

Venue TBC 7pm

The plot will be shared prior to the evening along with background information on characters and evidence. Fancy dress is optional, but strongly recommended! Food will also be provided to help you keep your cunning wits about you all night.

Please refer to the SIAS website (www.sias.org.uk) for further information on venue and price. Places are limited and will be offered on a first come, first served basis. Email social@sias.org.uk to register. Once your place has been confirmed, payments need to be received into the SIAS bank account within five working days.

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

May 2013 • THE ACTUARY www.theactuary.com

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22/04/2013 15:57

Health Long-term care features@theactuary.com

COMING OF AGE Life expectancy has hit record levels, but public age-related spending is likely to have to follow suit.

Emma McWilliam and Richard See Toh report

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CHRIS DUNN

23/04/2013 08:54

EMMA MCWILLIAM is a

consulting actuary at Milliman and editor of Longevity Risk.

RICHARD SEE TOH is a consulting actuary at Milliman.

Consequently, measures such as labour market-adjusted old-age dependency ratios are key to governments building public policy that stimulates employment and reflects both demographics and the needs of every generation.

Increasing time spent in good health arguably negates some of the financial costs associated with increased life expectancy – especially for healthcare and long-term care.

It also opens up the possibility of working longer to help offset such costs.

However, in reality, absolute increases in healthy life expectancy generally lag behind total life expectancy. Morbidity increases place upward pressure on health-related spending, which is clearly linked to the number of years spent in ill health.

Therefore, perhaps a more revealing measure to target is years spent in ill health Longevity projections (see Figure 2). Dying older but with fewer Life expectancy at birth in the UK has years in ill health may, over time, improve increased significantly and is now at a record level for anyone born in 2013 – 91 years for men quality of life and lead to cost reductions.

According to a fiscal sustainability report and 94 years for women, according to figures from the Office for Budget Responsibility in for cohort life expectancies from the Office for July 2012, total annual age-related spending National Statistics (ONS). in the UK is projected to rise from 21.3% to Population projections see the size of the silver generation (65+ age group) increasing at a 26.3% of GDP between 2016-2017 and greater annual growth rate than younger age groups (15-64), causing unprecedented demographic shifts. The 2012 Ageing Report Figure 1: EU Comparison of Old-Age Dependency Ratios from the European Commission (EC) indicated 70% that the old-age dependency ratio, which 2060 measures the number of elderly people as a proportion of those of working age, will move 2030 60% 2010 from around four working-age people for every person over 65, to around two by 2060.

50% Bittersweet comfort, perhaps, that the UK and Ireland sit favourably within the European 40% Union (EU) (see Figure 1).

To maintain current average old-age 30% dependency ratios across the EU, the retirement age would need to increase to 20% around 75 years by 2060, directly affecting

Medical advancements and improved living standards mean many of us will celebrate living a long life. The stereotypes of elderly people knitting in Eastbourne have long been replaced by images of a generation that is busy, engaged, economically active and, in general, healthy.

While this presents opportunities for many, it also raises significant challenges around how individuals manage their wealth and how society continues to provide social and financial support in the form of pensioner benefits, healthcare and long-term care.

To further the debate on this important issue, the Institute and Faculty of Actuaries and the International Longevity Centre (ILC-UK) have joined forces to host a series of events and research as part of their report, The Cost Of Our Ageing Society.

Age-related spending Pensioner payments (including state pensions, pensioner benefits and publicsector pensions), healthcare and long-term care costs are all projected to increase, while education remains flat (see Figure 3).

Healthcare costs contribute to the greatest increase in age-related spending, equivalent to £36 billion in today’s terms.

Demographic pressures and potentially more years spent in ill health will place significant pressure on healthcare demand.

Creating a framework that fosters healthcare innovation and efficiency should help to deliver higher-quality treatment and services more cheaply. Directing attention to preventative medicines or programmes could also lead to long-term savings by preventing the onset of chronic diseases. Such measures may give rise to greater immediate costs but, without these improvements, healthcare spending in future could increase dramatically.

10%

lan d De UK nm B ark Lu elgiu xe m m Sw borg ed e Ne Fra n th nc erl e an Fin ds la Cy nd pr Au us str Cz ia ec hR ep EU ub Es lic ton i Ma a lta Sp Gr ain ee ce Lit Ital hu y Po ania rt Slo ugal v Hu enia ng Ge ary rm Bu any lg Slo aria va Po kia l Ro and ma La nia tvi a

0%

Ire

many of today’s younger working population.

Simple old-age dependency ratios fall short of telling the full story, as low levels of economic activity within the working population result in lower contributions to age-related spending. High levels of youth unemployment mean that intergenerational collaboration is vital to finding a solution.

2061-2062. This 5% increase may not appear large over time, but the report from ILC-UK, The Cost Of Our Ageing Society, illustrates that it is equivalent to around £80 billion in today’s terms.

SOURCE: EUROPEAN COMMISSION, 2012 AGEING REPORT

May 2013 • THE ACTUARY www.theactuary.com

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Health Long-term care features@theactuary.com

“Future public expenditure policy has to reflect the numbers of people who will be needing support, so collaboration across sectors, and particularly with actuaries, is vital”

Figure 2 UK Health Expectancies at Age 65 Males

Females

Life Expectancy

17.8

20.4

Health Expectancy

10.1

11.6

Years in Ill Health

7.7

8.8

% Time in Ill Health

43%

43%

SOURCE: ‘HEALTH EXPECTANCIES AT BIRTH AND AT AGE 65 IN THE UNITED KINGDOM,’ OFFICE FOR NATIONAL STATISTICS, 2008-2010

Figure 3 UK Age-Related Annual Spending as a Percentage of GDP

Baroness Sally Greengross, chief executive of the ILC-UK 12 2016-17 2061-62

10

% of GDP

8 6 4 2 0 Pensioner payments

Health

Long-term care

Education

SOURCE: OFFICE FOR BUDGET RESPONSIBILITY, FISCAL SUSTAINABILITY REPORT, JULY 2012

Figure 4 Survey Results from The Cost Of Our Ageing Society: Policy Options: Encourage phased retirement/part-time work Improve employability of older people Mandatory pensions for individuals

Experts must rally together

Increase retirement age Means testing for long-term care Other Increase in taxes Allow greater inward migration Encourage higher birth rates 0% 20%

40%

60%

SOURCE: ILC-UK AND MILLIMAN SURVEY

24

According to the EC’s 2012 Ageing Report, age-related spending across the EU is projected to rise from an average cost of 25% of GDP to 29.1% between 2010 and 2060.

Many countries are gravitating toward a combination of public and private provision of healthcare and long-term care, and the insurance industry has an important role to play. Whatever framework is in place, a safety net is required for vulnerable individuals, particularly given potentially greater levels of frailty and disability at older ages.

The UK government proposed a cap of £75,000 on what individuals will have to pay for long-term care costs from April 2017, over which level the state will step in. In addition, means-testing thresholds will increase from £23,250 to £123,000 in England and Wales.

80% 100%

According to the EC’s Annual Growth Survey 2013, several policy approaches are possible: aligning retirement ages with changes in life expectancies, restricting access to early retirement and supporting longer working lives. Creating better conditions for healthcare innovation and development offers more possibilities. No single policy is a magic pill, however, and reforms should be holistic, considering the implications for every generation.

Ahead of The Cost Of Our Ageing Society report, The ILC-UK and the profession jointly surveyed a number of individuals across a

range of professions and disciplines. In particular, we sought views on which policy initiatives should be adopted (see Figure 4).

The highest support was for policies that recognise the value and positive contribution of older generations. Some 90% of respondents supported phased retirement and part-time working, showing a strong appetite for frameworks that allow individuals, if they wish, to make a smoother transition into a later retirement and enable society to further benefit from their experience.

The lowest support was for policies encouraging higher birth rates, possibly because they are not so much solutions as ways to move costs from one generation to another.

Lastly, the survey revealed that while the UK is generally ahead of other EU countries in its plans to increase the retirement age to 68 by 2046, more than one-third of respondents thought that retirement ages should increase further and faster.

Longevity investigations help to fine-tune projections and highlight key issues, but they cannot change the fundamental challenges facing society. The employment landscape will need to evolve and the care costs conundrum must be solved through a set of policies that are fair for every generation.

The debate surrounding The Cost Of Our Ageing Society is just one step towards a more unified approach across professions, which will enable individuals and society to enjoy the gift of living longer. a

THE ACTUARY • May 2013 www.theactuary.com

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23/04/2013 08:54

Big enough to fill this chair?

With a growing print readership of approximately 25,000 and an increasing online presence (http://www.theactuary.com/), The Actuary is a key platform for news, views and jobs in the actuarial community and the leading publication for the actuarial profession in the UK. The current editor is due to step down this year, so SIAS is looking for a highly motivated and enthusiastic successor to lead the editorial team of the magazine going forward. Do you think you have the energy and dedication to take a role in guiding an expanding specialist production team? Do you have the creative flair yet the eye for detail to preside over a high-quality publication?

This is a challenging role and we require a volunteer with strong communication skills, an ability to work under the pressure of meeting publishing deadlines and the commercial awareness to take the magazine forward. However, the editor will be working with a strong team of experienced publishing staff and specialist editors.

A more detailed description of the role may be found in the following link http://www.theactuary.com/news/2013/04/editor-role If you think you have got what it takes, and would like to find out more, please express your interest, including a CV, by emailing Alvin Kissoon at actuarymagazine@sias.org.uk no later than 30 June 2013.

Going the distance in Capital Modelling As Solvency II faces further delay to 2016 or even later, firms are looking to reap the benefits from their significant investments in capital modelling.

Calculation Kernel

This trend is changing the game for capital modeling actuaries: before, it was like a 200m steeplechase with companies investing to meet a series of deadlines; now, it is more similar to a 5,000m distance run. Capital modellers still need to cover the distance but must become leaner and more efficient as management expects more reporting on a continuous basis with less resource.

A few years ago companies produced results four times a year.

Now companies are running up to 500 capital calculations a year.

This increase in throughput has, up until now, been achievable with the extra resource made available from Solvency II programme streams. Today, one of the key challenges facing capital modellers is how to maintain the same level of analysis throughput when operating as business as usual.

Introducing TeamCentre This is driving a need for industrialisation of much of the modeling process — in particular the automation of data into and out of the calculation kernel. In response, Aon has introduced TeamCentre for ReMetrica. This provides data and analysis management tools to help companies manage the huge volume of input parameters, models and results required. It offers a controlled, centralised environment for the various roles and responsibilities of an efficient and well-organised modelling team.

Analyst

Data and Model Governance

Data Provider

ReMetrica

Audit

TeamCentre Manager

For a demo, visit: aonbenfield.com/remetrica_demo

Empower Results®

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23/04/2013 09:19

Health Consumer trends features@theactuary.com

CONSUMER Ronnie Bowes reviews the findings of a report into consumer understanding of protection insurance. It seems that product knowledge is in short supply When it comes to insurance, we need to be much better at supporting the customer journey. This is the stark message from a report produced by The Syndicate, a research initiative for the UK life and health industry.

It is entitled Where Are We On The Consumer’s Radar? Navigating A Route For Protection Insurance and it focuses on four themes: the consumer psyche, education and engagement, the role of the employer, and technology.

To support the report, a survey was commissioned of 3,000 adults in the UK. The findings show that consumers are confused and lack clear guidance on their financial planning, particularly when it comes to insurance. When asked what type of insurance was the biggest priority for them, half said it was life insurance. However, 80% of respondents could not accurately identify the correct description of how a basic life insurance policy works. On the positive side, critical illness (CI) and income protection (IP) were considered more important than mobile phone and pet insurance.

Lack of understanding When consumers fail to understand or interpret our products it can result in purchasing decisions that don’t meet their needs, a lack of trust and a reduced value in the products we offer. This is exacerbated by too much choice, similarity of products and a lack – or overload – of information.

Consumers doubt whether they have chosen the right product. A complex and timeconsuming purchasing process also adds to their insecurity. Nearly a third of respondents were stressed by the choices available when researching protection policies.

Having shed some light on where people’s priorities lay in terms of insurance, the research then explored how much consumers really understood about the products that they

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were considering. Respondents Overall, what consumers Please choose one of the following descriptions that you feel best describes what a were given a number of want from the industry is 25-year term assurance policy would provide: holders versus non holders definitions for the same product ‘easy-to-understand product and asked to choose the correct information’ Never held A lump sum paid if you die or one. First, they were asked to and ‘ability to view paid on diagnosis of heart Used to hold attack, stroke or cancer consider a 25-year termpolicy benefits and Holders assurance policy (see right). exclusions online’ (50%) A lump sum paid if you This is often perceived as the to support them in their die or at the end of the policy simplest of personal insurance decision process. if you don’t die products, with the highest A third of consumers penetration figures and a high believe that our products A lump sum paid if you don’t die before the end level of importance, but the are a luxury they cannot of the policy term results were surprising. Overall, afford. Looking for effective more people selected the wrong engagement will increase answer (confusing the product the level of trust and value Don’t know with an over-50s whole-of-life consumers have for product) or didn’t know. Only protection products.

0% 10% 20% 30% 40% 50% 60% 20% picked the correct Some people will always SOURCE: THE SYNDICATE, ‘WHERE ARE WE ON THE CONSUMER’S RADAR?’ definition. The issue here may be willing to take a risk – be that we need to make almost half believe that state product titles much more benefits will provide a safety self-explanatory. net in times of long-term sickness, reason – 54% of holders and a third of To gain further insight, the responses of unemployment or disability and it’s a truism non-holders identified the correct definition. those who held insurance products were that people tend to be more optimistic than The lengthy and protracted sales process may compared with the responses of those who realistic. As a 2012 study by Dr Tali Sharot on also have a positive effect on the long-term did not. Logic would suggest that somebody ‘optimism bias’ reveals: “People hugely understanding of the product. who has bought a product would know what underestimate their chances of getting What the findings highlight is that a they have purchased. However, only 29% of divorced, losing their job or being diagnosed product’s simplicity is no guarantee that a those who held life insurance selected the with cancer and overestimate their likely life consumer will necessarily understand it, or right definition. A further 25% said that they span – sometimes by 20 years or more.” recall the benefits offered. Engagement and didn’t know what it was and 35% selected the involvement at the point of purchase, as well definition that suggested that they would as post-purchase, are vital to raise consumer Here and now receive some sort of payment regardless of awareness, reinforcing the value of the Also, when consumers are confused by a whether they died. products. We may also need to think about choice of products, they look for other the way benefits are explained, reviewing the features, such as brand. Finding ways to use of jargon and, in particular, the names of relate products to people’s day-to-day Cause for concern products. ‘Term assurance’ is clearly not a concerns would help them to evaluate the For people who don’t hold a product, it is name the public identify with. need for protection. Consumers live in the understandable that their product knowledge The research also found that consumers here and now and discount things that are in is lacking, but, with only 11% identifying the want informal information from family, the future, preferring to worry about them correct definition, it is cause for concern. friends and even independent consumer later. Communicating ways to project the Effectively, nine out of 10 non-holders have bodies, such as Which? (62%). This is benefits for the long term, adding certainty no idea about the product or its benefits and particularly so for the younger generation. and removing doubt will help improve the therefore every reason not to make a purchase.

Surprisingly, given this knowledge gap, customer journey. a Results for critical illness were fairly evenly there appears to be no lack of confidence split, which suggests consumers did not know among consumers to make purchases. Almost the correct answer. By age, 35- to 44-year-olds FURTHER INFO three quarters (73%) agreed that they had ‘a had the highest understanding. Yet the The Syndicate is a research partnership between sound knowledge and confidence to make a challenge remains; if people don’t understand Hannover Re UK Life Branch and the Protection decision when taking out a protection what a product offers; would they be inclined Review. Established in 2011, its aim is to monitor product like CI or IP cover’. to buy it, particularly given other financial consumer trends and to share observations and commitments? Once again, the results showed ideas among a membership drawn from across that even those holding a critical illness plan In the driving seat the industry. Key members include PruProtect, did not necessarily understand the product, Consumers are happy to research products Zurich and Ageas or the likely benefits at the point of claim. (dominantly online) along with discussing with Only 32% of holders understood this product, trusted friends and family. They also want to a figure that dropped to 16% for non-holders. feel in control of their purchasing decision.

RONNIE BOWES Income protection, often regarded as the However, only 31% said they were comfortable is head of marketing product least understood by consumers, fared buying life, critical illness and income at Hannover Re better. Some 45% of respondents identified protection online, which reflects a need for UK Life Branch the correct definition – higher than all other industry support. The younger generation, products. This was the most consistently although lacking experience of insurance, recognised product, regardless of age, sex and expect to be in the driving seat; demand a good socioeconomic factor. This suggests that its deal; and want the options of face-to-face and more self-explanatory name may be the remote channels to support their purchases.

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May 2013 • THE ACTUARY www.theactuary.com

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23/04/2013 08:55

Health Protection claims features@theactuary.com

Bringing consumers on side with enticing, transparent products provides the key to boosting understanding of protection insurance. Richard Purcell and Blair Sievering report When it comes to insurance, what you don’t know definitely can hurt you. Sadly, it is becoming increasingly clear that there is a lack of understanding among consumers of what protection insurance does, as flagged by a report produced by The Syndicate, a research partnership between Hannover Re UK Life Branch and the Protection Review (see ‘Consumer Confusion’, p26).

The same research, entitled Where Are We On The Consumer’s Radar? Navigating A Route For Protection Insurance, highlights a number of areas where, as an industry, we could better engage with consumers, both before a policy is sold and once a consumer has bought cover.

The Syndicate research shows that ‘easy-tounderstand product information’ is a key factor for consumers when buying personal insurance, second only to price. Efforts have already been made to simplify marketing and sales, but perhaps more intuitive product naming and labelling is also needed to boost consumer appeal and increase understanding.

Many consumers also have a price ceiling for protection products, with 46% willing to spend up to a maximum of £20 per month. A full, holistic needs assessment is a good way for consumers to determine the level of cover they need. However, not all will be able to afford the level of premium this implies. For

Terms of

engagement 28

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RICHARD PURCELL is head of technical marketing at PruProtect. BLAIR SIEVERING is manager, actuarial pricing, at Hannover Life Re Ltd.

these consumers, some cover may be better than none. So a basic form of cover could be made available, with clear, straightforward opportunities to upgrade the level or quality of cover if and when budget allows.

Some may say that engaging with consumers post-sale is a bad idea. It will remind them of how much they are paying each month, making them more likely to review and even cancel their policy. But instead of thinking of a protection policy as something that sits in a drawer for years on end, shouldn’t we engage more to reinforce the value of the policy and build understanding?

Communicate the value In recent years, providers have started to intervene at the point of lapse to ensure that policyholders know the options available to them to amend the policy rather than simply cancelling it. However, this approach is reactive and is often too little too late. We can do far more to engage with customers before they reach the decision to cancel cover.

The introduction by some providers of annual statements that summarise the type and level of cover is a positive step. This should also help address the concerning level of ‘imaginary cover’ that consumers believe they have in place. The Syndicate research shows that the level of cover consumers believed they held was far in excess of the level shown by market statistics.

To further reinforce value, there are a lot of positive messages we could include in regular communications with clients. For example, real-life claim case studies could be included along with transparent information on the amount of claims the provider has paid. But the emphasis here should be to reassure the policyholder that valuable cover is in place, not to scaremonger.

We could also be more creative about the way we communicate, taking a more personalised approach. For example, why not send a birthday card each year – it is life insurance, after all.

Communication alone may not offer consumers the reward they expect for their loyalty. The Syndicate research shows that 65% of policyholders and potential policyholders alike would be less likely to cancel a policy if their loyalty were rewarded.

When thinking about engagement models, perhaps the best place to start is the retail sector and its use of loyalty cards. Retailers have used these cards to engage with

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customers in a new way; allowing customers to earn points they can spend in store, creating discounts on repeat purchases, or giving product recommendations based on what similar consumers have bought. Done well, loyalty schemes have significantly improved retailers’ understanding of their customers, improved loyalty and increased sales. Some may argue that this only works where repeat purchases are commonplace and that a long-term insurance policy is fundamentally different. But protection policies allow consumers to lapse at any point, so loyalty and understanding the value of the policy remains crucial.

As loyalty models have become more widespread, consumers have developed an expectation that loyal custom should be rewarded. Assuring an existing policyholder that their loyalty has already been allowed for in the calculation of their premium probably won’t meet this expectation!

Examples of rewards from other industries include cashback, premium discounts and premium holidays that start after a certain period of time or level of spend. Including rewards like these within protection policies will naturally have costs that would need to be factored into the premium calculation. In a competitive market where price is still a key factor, even a small increase in premium can significantly affect competitiveness.

Change in the expected behaviour of policyholders will also need to be allowed for; and increasing persistency assumptions to reflect the effect of rewards can lead to increases or decreases in levelised premiums.

Perhaps discounts could also be provided on other financial products, presented as part of a VIP club, or as gifts to friends and family. A recommendation from family or a friend may provide reassurance that is equally as valuable as the financial discount.

A significant source of frustration across multiple industries is when deals are reserved solely for new customers. It is common for protection products to be enhanced over time – the development of critical illness cover is a prime example – and, in most cases, only new policyholders benefit from this. We may consider a new product launch as a different generation that has its own pricing assumptions and underwriting processes, but this won’t always be appreciated by existing customers. Where possible, it is a strong positive message to tell customers that their cover is being enhanced at no extra cost.

A more mutually beneficial solution is to design features that influence behaviour to benefit both consumer and provider. An example is the use of telematics to reward careful driving. By tracking policyholders’ cars, insurers have been able to assess individual risk of claim and reflect this in the premiums they charge. We can do something similar in protection insurance, by rewarding people who reduce their risk of claim – for instance, by exercising regularly and eating more healthily. These rewards could be reduced premiums or discounts on other products and services that consumers value or that also encourage healthy lifestyles.

Attractive incentives In this digital age, there are more and more opportunities to communicate with policyholders after the initial sale. The use of apps on mobile devices is just one example that allows two-way communication between provider and policyholder. One option could be to develop an app that is made available to the policyholder once the policy is bought.

This could first act as an additional communication channel, providing policyholders with crucial policy information and allowing them to send queries or requests directly to customer services. But, more than this, it could also contain lifestyle information and education such as healthy eating tips, first-aid basics or gym plans.

The real value to providers, in addition to increased engagement and brand awareness, is the level of data that could be captured to refine our understanding of how lifestyle affects policyholder behaviour. By offering the functionality to track calories, diet plans and exercise routines, granular data would potentially be available for providers to better understand individual risks. Incentives could also be offered to encourage policyholders to use such tools. Indeed, just offering such an app or scheme could attract consumers who believe they could use the healthy living tools or benefit from the rewards on the product.

Creating more engaging protection products, rewarding loyalty, encouraging certain behaviour and improving the way we communicate can help unlock more value for today’s consumer. This could help us better serve existing customers or attract brand-new ones that have never considered buying protection. Either way, more engaging products could be pivotal in helping to close the UK’s growing protection gap. a

May 2013 • THE ACTUARY www.theactuary.com

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22/04/2013 14:51

General insurance Claims inflation features@theactuary.com

A KNOWN UNKNOWN Markus Gesmann, Raphael Rayees and Emily Clapham point the way towards a consistent framework for defining and measuring claims inflation In the current time of globalisation, faced with questions over commodity supply, security and price volatility and potential fluctuations in currency rates, claims inflation constitutes a serious threat to the profitability and security of insurers worldwide. Despite this, there are a plethora of views on the extent, and even the existence, of claims inflation.

First, an interesting fact: the Claims Inflation Working Party published its research report on Claims Inflation – Uses and Abuses at the GIRO Conference in 2005. Eight years have passed since then, five of them in a downturn, and yet this document is still the first result that comes up today when googling ‘Claims inflation in insurance’.

We put the question ‘What is claims inflation?’ to several of our colleagues and practitioners of the Lloyd’s Market. The majority of participants responded “somewhere between 3% and 5%”, yet none had a definitive explanation of how to define or measure it. Despite this, inflation is regarded as a risk and a challenge for insurers, and they are certainly not alone.

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The 2011 Lloyd’s Risk Index, a survey of global corporate risk priorities and attitudes, listed inflation, together with changes in prices of material inputs, changes in legislation and currency fluctuations, in the top 10 concerns of business leaders. Insurers also understand that claims inflation is an important metric, particularly for pricing long tail lines of business, as well as an influential factor in reserving, planning and capital setting.

With the obvious exception of motor insurance, high levels of claims inflation have not been a big issue for other lines of business in recent years. Unfortunately, in the current litigious and economic environment, inflation and claims inflation are likely to head only one way from today’s levels – north.

In a recent analysis, Milliman showed that an increase in claims inflation of 1% could increase liabilities disproportionately. As a rule of thumb, the authors approximated the effect of claims inflation on liabilities by multiplying the change in inflation with the number of payment years. Hence, a change of claims inflation by 2% could have an impact

of 16% on a book that takes eight years to settle. It is difficult to hedge this risk in today’s environment, exemplified by the dynamics brought about by periodical payment orders (PPO) claims awards.

The Milliman analysis shows how necessary it is to allow for claims inflation; but for many this is easier said than done.

Measuring any type of inflation is complex; recent discussions in the media around the differences between the Retail Price Index (RPI) and the Consumer Price Index (CPI) highlight this. While subtle differences in coverage and calculation may appear small in the incremental data, they can have a material impact over a longer time period.

The difficulties of measuring inflation were seen again following the creation of the eurozone currency union, which forced countries to agree upon a standard methodology to measure inflation centrally.

This resulted in harmonised CPI (HCPI), which, despite its shortcomings, has set a standard to monitor inflation like-for-like.

This concept of measuring inflation sounds natural; the same methodology is used to

THE ACTUARY • May 2013 www.theactuary.com

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Left to right: Markus Gesmann leads the analysis team at Lloyd’s, with a focus on performance analytics.

Raphael Rayees was on the graduate programme at Lloyd’s, working between the analysis and treasury & investment management teams. Emily Clapham is currently undertaking a placement with Beazley

Where to start?

The industry needs a similar, consistent framework for defining claims inflation. As with price inflation, claims inflation comes with its own set of complexities; it is not measurable through direct observation, it can only be estimated using statistical techniques applied to historical data that is not necessarily relevant to future trends. That being said, the Lloyd’s rate monitoring approach, along with the methodology behind established indexes such as the HCPI, may still prove insightful in achieving this framework.

There are a few available sources on the subject to consult. The paper of the Claims Inflation Working Party from 2005 still provides valuable insight; it outlines the key drivers of claims inflation and provides an overview of methods to estimate claims inflation. Towers Watson publishes a US claims cost index, which is based on the seminal work by Norton Masterson of the 1960s. The index is based on a selection of inflation factors for the US market and faces the same challenges as any other index – coverage and calculation. However, it also provides a blueprint to create an inflation index based on macro-economic data, which is tailored to specific portfolios. The Statistical Office Of The European Communities (Eurostat) provides a wealth of data and the inflation dashboard allows users

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Figure 1: Cumulative impact of measurements of inflation 160 RPI Index CPI Index

140

120

100 1996 1998 2000 2002 2004 2006 2008 2010 2012 SOURCE: ONS

to extract the inflation factors most relevant to a business.

Of course, none of these macro-economic metrics measure either change in frequency of claims or social inflation. The RAND Corporation published a detailed review of the dramatic increase in claims frequency and severity of medical malpractice claims in the US in the early 1970s. Its model suggested that the single most powerful predictor of claims frequency and severity is urbanisation.

Note also that claims inflation can vary by the size of claims and its impact can be amplified in excess of loss layers.

Consider the volatility of expected claims inflation, noting that inflation is more likely to go up than down, and use stress testing to establish what effects a spike or a shift in inflation levels would have on both profitability and solvency levels.

Historical loss triangles contain implicit information on claims inflation. Consulting the papers of Barnett and Zehnwirth and

Christofides offers ideas on how changes in the payment year trends, reflecting claims inflation, can be modelled. With modern statistical software, it is now relatively straightforward to implement these models; as demonstrated in a blog post by Markus Gesmann using R earlier this year.

Indeed, a better understanding about how to extract historical claims inflation from historical data can provide a good starting point for measuring and mitigating claims inflation, and form a basis for future strategies to navigate it.

Engaging with colleagues, particularly those in the actuarial, underwriting and claims functions, can help to establish a consistent framework that will work across different lines of business. So, too, will considering which data should be captured and at what level of granularity, plus how assumptions on claims inflation could be back-tested or, in the future, be compared against actual experience.

This brings us back to the first principles.

Define the use cases for claims inflation, and acknowledge that assumptions and time horizons may differ between pricing, reserving, planning and capital modelling.

By doing so, we may be in a much better position to answer that elusive question: “What is claims inflation?” Only then we can consider how to measure, monitor, manage and potentially mitigate inflationary effects. a

Full article with references available online.

The authors would like to thank Tom Bolt, Henry Johnson, James Orr and Sush Amar for their valuable feedback and comments. All views and opinions outlined are the authors’ own.

Figure 2: Change in year on year RPI inflation (1949-2012) 12

100%

10

80%

8 60% Frequency

adjust inflation indices following consumer price changes and to construct stock indices.

However, when the Lloyd’s market sought to establish a consistent framework to monitor rate movements of renewal business, an initial survey revealed that people, even within the same organisation, had a different understanding of what relative price movements on the same risk could mean.

Just like measuring inflation, the crucial aspect here was to agree a standard approach to ensure a like-for-like comparison year on year across syndicates and lines of business.

The decision taken by Lloyd’s was to measure rate changes on a risk-adjusted basis, which means underwriters have to estimate how much they could have charged a year ago for this year’s policy on this year’s terms and conditions and expected loss costs.

The relative difference between these two prices is termed the risk adjusted rate change (RARC). Therefore, RARCs are net of claims inflation and focus on the year-on-year impact in expected loss ratio.

6

Frequency Cumulative %

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2 0

0% -80%

SOURCE: ONS

-40%

0%

40%

80%

120%

160%

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280%

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23/04/2013 08:55

Regulation Prudential Regulation Authority features@theactuary.com

NEW DAWN Nick Ford and Rob Spiers examine what the recent introduction of the Prudential Regulation Authority means for insurers

The Prudential Regulation Authority (PRA) issued a document1 in October 2012 outlining the approach it would follow when it took over as the prudential regulator of insurance companies in April 2013. In the document the PRA stated its overall objectives as promoting financial safety and soundness, and protecting policyholders.

Although these objectives are aligned with Solvency II, and the work insurers have done to meet Solvency II developments will act as a good foundation for the work needed to meet PRA objectives, there are additional areas companies will need to consider. The PRA will regulate at both a solo and group level so companies must be mindful of impacts on the Insurance Group as well.

To concentrate effort on the insurers that could cause the most risk to meeting the PRA’s objectives, companies will be allocated to one of five categories. These categories consider (1) the potential disruption that an insurer could cause to the wider UK financial system; and (2) the capacity of the insurer to cause disruption to the interests of a substantial number of policyholders.

The categorisation will be performed using simple criteria such as size, complexity and business type. However, it will also reflect the degree that the company is connected with the rest of the sector (eg, via derivatives or reinsurance); vulnerabilities in the financial position and deficiencies in risk management /governance; and what plans the firm has in place to return to a stable position after a stress event.

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The category assigned to a company will determine the intensity and frequency of PRA supervision and the degree of individual examination and interaction. For smaller firms, individual examination is only likely when automated tools used to analyse regulatory submissions identify outliers or adverse trends. As a result, PRA visits to smaller firms will not be on a fixed schedule.

However, the PRA could still perform on-site work, with some period of notice, at any time.

Although the PRA will be undertaking the categorisation of companies (and will have done so for most firms by the time this article is published), it is important for planning purposes that insurers get a feel for the likely level of scrutiny they will be under.

Risk management The PRA will expect insurers to have a strong control framework and system of governance including risk management, actuarial, finance and internal audit functions that have adequate access to the board.

Insurers will need to be able to articulate their own risk appetite and this should be consistent with the PRA’s objectives of financial safety and soundness, and policyholder protection. It should also have direct links to the insurer’s strategy and business model. In order to articulate the risk appetite (and to monitor it), an insurer should consider how they identify, measure and control high impact/low frequency risks.

This requires firms to have a robust risk management framework in place that is

SAM KESTEVEN

23/04/2013 08:56

May 2013 • THE ACTUARY www.theactuary.com

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Regulation Prudential Regulation Authority features@theactuary.com

consistently implemented across the business.

To support this, insurers will be required to perform a detailed analysis including: ● forecasting future capital and liquidity requirements; ● consideration of the impact of scenarios on the capital and liquidity requirements (ie, stress and scenario testing); ● recovery and resolution planning; ● assessing the robustness of the business model and the assumptions it depends on.

By scrutinising the business in this way, a company will have greater knowledge of the risks that may impact its strategy. Coupled with an analysis of the risks to the business plan, this will feed into the company’s own assessment of the level of capital and liquidity buffers it needs.

Business model analysis The key area of development for companies under the PRA regime is the business model analysis. The business model can be defined at a high level as the approach undertaken by a firm to generate economic value, together with the associated risks that the firm is exposed to while generating that value.

Business models vary significantly between companies, but it is important to realise the analysis required is more than a business plan

NICK FORD is senior manager and ROB SPIERS a manager in the life actuarial team at KPMG

Sustainability Companies will also need to show that their strategy is well defined and that the business model is sustainable over the long term. This can be demonstrated by considering how measures such as profits, solvency, new business contribution and so on are affected by changes in the market and operational events. However, it also looks at the drivers and sources of future profits and how this links to the strategy. For example, current profits may stem from a certain product line but the strategy may be to grow in a different product line, so it must be considered what the drivers of this new source of profit will be.

Drivers of future profits are often examined as part of regular business planning exercises.

Output from these exercises could be used as evidence of sustainability, provided there is appropriate governance around the assumptions and processes. This should ensure that all material assumptions are justifiable and not overly optimistic. For example, firms may find it difficult to justify any increase in the market share of a product without considering the impact on other assumptions such as profitability. Companies should therefore also highlight the interaction between various assumptions. For example, a high rate of market share growth may only be

“Companies will need to show that their strategy is well defined and that the business model is sustainable over the long term” projection and some qualitative analysis. The PRA’s supervisory approach will include a detailed consideration of the viability and sustainability of future profits, new business sales, solvency and many other metrics.

Viability Viability largely considers the here and now.

A company will need to consider its current financial performance, where profits are coming from (eg, are they from legacy books or new sales?), how diversified the portfolio is (both by product and distribution channel) and how all of these relate to the business model and strategy of the firm as well as the capital position and the quality of capital held.

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sustainable through weakened underwriting and the associated increase in reserves.

Companies with a good track record of meeting their business plan targets could use this to support their plans, while new firms will need to prove they have the skills and expertise to generate the forecast profits.

Vulnerability Once a company has understood the viability and sustainability of the business model, it should be able to understand the risks. Firms should consider vulnerabilities specific to their books of business (such as catastrophe or longevity risk). Stress and scenario testing can form an important component of this analysis,

with management actions and trigger points clearly identified and documented.

Profits of insurers are also susceptible to changes in the economy. One current concern is the impact of a long-term low interest rate environment. The effect of this on future investment returns and the cost of options and guarantees should be quantified.

The key for the PRA will be that there is a full understanding of what the target profit is from the business, what factors drive that profit, the level of risk the firm is prepared to take to generate the profit and a degree of sensitivity. If the target profit is increased, how do the risks change? Does the business remain within risk appetite? In this way, any assessment needs to be dynamic.

The PRA may use business model analysis to understand the insurer’s ability to generate future profits and the medium-term risks this involves. Alongside peer comparisons and qualitative analysis, this may inform the level of capital that the PRA feels the firm should be holding and the risk management system it should have in place. It is therefore vital to provide evidence of a business model that is robust and has controls and governance built in. This should include consideration of the impact the business model will have on other participants in the system.

Conclusion The PRA requirements focus on many concepts that are familiar to insurers through the Solvency II ORSA process, including stress and scenario testing, projections of capital requirements, and recovery and resolution planning, plus some of the validation requirements that are well known to Solvency II internal model firms. The requirements of the business model analysis go further than the basic Solvency II requirements.

Although the Solvency II delays have made many insurers consider ‘downing tools’, the PRA requirements will ensure that the Solvency II Pillar 2 developments remain high on the agenda. The question for insurers is how to best utilise the developments they have made to date and combine these into a single risk management framework that considers all the areas identified by the PRA. a

REFERENCES 1 ‘The PRA’s approach to insurance supervision’ http://www.fsa.gov.uk/static/pubs/other/praapproach-insurance.pdf

THE ACTUARY • May 2013 www.theactuary.com

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23/04/2013 08:56

Cass Business School Granular reserving

Spotlight have much to offer when tackling the old actuarial reserving problem.

With his academic colleagues, he has set out to rephrase chain ladder methodology so it makes sense to mathematical statisticians. He has achieved this in three co-authored ASTIN Bulletin papers from 2010, 2011 and 2012, which propose a double chain ladder – representing the old chain ladder but in a sophisticated, modern mathematical vocabulary.

Using these papers to rephrase the classical chain ladder technique as a method of mathematical statistics, Nielsen argues that “the sky is the limit” in terms of future developments. He believes the chain ladder as a granular method has enormous consequences produced a “technical Wild West”, with every new for the way the profession reinvents and technological development hailed as the answer. improves reserving methodology while Nielsen encouraged caution on this front. What preparing for Solvency II. Delegates also heard from Malcolm Cleugh, if, he suggested, all the tacit knowledge of a hundred-plus years of daily work by thousands of group reserving actuary at RSA, who explained how the company has been working with intelligent actuaries has created a breadth of Nielsen for nine years to apply this research in a useful knowledge? What if the best approach to summer internship programme with students developing new methodology is to first from Oxford University. understand what we already have?

The interns applied the research to real-life He argued that actuaries’ vast pool of RSA reserving data, to assess the validity of the knowledge has not been linked to recent scientific developments in other academic fields. methodologies developed. In 2012, the research reached the point where meaningful results Rather than jumping on the latest technology were generated. The methods can be used to bandwagon, they need to reformulate what they do so that appropriate scientists can work with it. test the validity of prior selections made by reserving actuaries. a According to Nielsen, mathematical statisticians

Maria Dolores Martínez-Miranda and Miranda Thomas report on a recent talk on granular reserving given by Jens Perch Neilsen, where he advised against abandoning our existing pool of practical actuarial knowledge in favour of the technological Wild West

DON’T THROW BABY OUT WITH THE BATH WATER An enormous amount of old methodology dominates one of the single most important numbers in the risk-related financial sector.

Non-life insurance accounts for 5% of UK gross national product and this number, the reserve, is perhaps the single most important number on the balance sheet.

At a recent Cass Consulting event, Jens Perch Nielsen, professor of actuarial science at Cass Business School, argued that the most important thing for future developments in reserving is the practical knowledge that actuaries already have. He began by describing the history of chain ladder methodology. There is a growing belief that this method needs to be re-invented, he said. However, this has

Jens Perch Nielsen joined Cass Business School as professor of actuarial science in 2012. He gained his doctorate at UC Berkeley and has worked at various financial companies, including RSA. He contributes regularly to a number of actuarial science and mathematical statistics papers. He is also an entrepreneur, a co-owner and a board member of two Copenhagen based companies. For more examples of Professor Nielsen’s work, see www.cassknowledge.com/research/author/jens-nielsen Report by Maria Dolores Martínez-Miranda, Marie Curie senior research fellow, and Miranda Thomas, communications manager, at Cass Business School

May 2013 • THE ACTUARY 35 www.theactuary.com

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23/04/2013 08:56

At the back Arts arts@theactuary.com

From Brixton to Berlin, Natalie Li unravels the many guises of a glam rock megastar

Arts “I was diversifying all over the place,” says

SOUND AND VISION 36

David Bowie through my headset in one of his interviews as I wonder around the Victoria and Albert Museum’s retrospective exhibition, David Bowie Is. His words are an understatement. Bowie was, and is, something to everyone across the globe.

Diversifying transformed him into a legend who held power to stir intrigue, shake up the traditional and cause controversy through his music and celebrated style.

My earliest memory is of Bowie walking up those winding, topsy-turvy staircases in the 1986 Jim Henson film Labyrinth. Bowie planted dark and sinister images in my head, resulting in nightmares as a young child. But as I grew older I began to appreciate the bold and innovative Bowie, with all his weird and wonderful eccentricities.

To some, Bowie is the epitome of glam rock pop – a gender-bending mystery who treads a fine and inconsistent line between fantasy and reality. To others he is elusive, complicated and at the moment, an omnipotent music legend.

The V&A offers an extraordinary glimpse into Bowie’s glitzy controversial career through this lively exhibition, which transports you into the heart, mind and soul of the freakish pop star who rose to fame after the invention of his spangly, lipstick-wearing stage persona – Ziggy Stardust. Ziggy’s androgynous appearance had a powerful influence on pop culture and signified changing times.

“It’s taken me a long time to admit, even to myself, let alone you, that it was the vision and not yet the sound that hooked me up,” said actress and lifelong Bowie fan Tilda Swinton, in a touching speech at the opening of the exhibition in March. Swinton appeared in the video for Bowie’s latest single ‘The Stars (Are Out Tonight)’.

Addressing an absent Bowie, she said: “You have remained the reliable mortal in amongst all the immortal shapes you have thrown.

“Yet, I think the thing I’m loving the most about the last few weeks is how clear it now is

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23/04/2013 08:56

The exhibition traces Bowie’s creative journey from David Jones to Ziggy Stardust, the Thin White Duke and beyond

– how undeniable – that the freak becomes the great unifier.”

A great unifier he is too – the V&A sold more than 42,000 tickets before the exhibition had even opened, the fastest-selling exhibition for the museum and a clear testament to Bowie’s universal appeal. The exhibition coincides with the release of Bowie’s 24th album, The Next Day, after almost a decade of him being out of the spotlight.

It is a privilege to be up close and personal to Bowie’s early creative processes, as the V&A exhibition allows us to join him on his epic journey. Visitors can almost crawl into his mind and piece together the stages of his career from his days as scrawny David Robert Jones, born in Brixton, to his transformation into a psychedelic glam rocker.

The journey begins with a display of Japanese designer Kansai Yamamoto’s flamboyant striped bodysuit worn for Bowie’s ‘Aladdin Sane’ tour in 1973. As you make your way through the maze of memorabilia visitors will come across scrawled lyrics of the 1972 hit song ‘Starman’, through to a glittering Top of the Pops stage where Freddie Burretti’s Ziggy Stardust jumpsuit shines under the spotlight.

This visual feast is accompanied by Bowie’s music, which is endlessly played throughout the exhibition as you weave your way through more than 300 objects on show – an array of handwritten lyrics, original costumes, photography, film, set designs, music videos, Bowie’s own instruments and album artwork.

Video installations and innovative floor-toceiling set designs wonderfully set the scene for an exciting era of music, and the invention of the pioneering Bowie. A headset plays interviews and songs to match the video footage. The music also plays outside of the headsets, creating an aural overload. It is a chaotic assault of the senses, but this immersive experience gives a sense of his eclecticism and depth.

VICTORIA AND ALBERT MUSEUM, LONDON

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Co-curator Geoffrey Marsh said the team wanted to “embrace the theatrical nature of the exhibition”. It certainly achieves that and much more, citing many of Bowie’s influences and collaborations from Andy Warhol and Marcel Duchamp to inspiration from Stanley’s Kubrick’s 1971 film adaptation of A Clockwork Orange.

Music videos such as ‘Boys Keep Swinging’ and set designs created for the ‘Diamond Dogs’ tour (1974) are projected from the walls while album sleeve artwork by Guy Peellaert and Edward Bell fill the exhibition. Other artists such as Gary Kemp from Spandau Ballet offer their thoughts in candid interviews projected onto screens.

Bowie gave the V&A freedom to choose and sift through these objects to create this revealing show. He, however, remained clear of any other input. In fact, on the day the world’s press descended upon the exhibition, the V&A’s theatre and performance curator Victoria Broackes urged journalists to convince Bowie to come and see it all for himself. Whether he has remains a mystery.

We might not see Bowie in the flesh, but this exhibition certainly allows us to reach the heart and soul of this arguably unrivalled musical genius.

David Bowie Is is at the V&A in London until 11 August 2013

“To some, Bowie is the epitome of glam rock pop – a gender-bending mystery who treads a fine and inconsistent line between fantasy and reality”

May 2013 • THE ACTUARY www.theactuary.com

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23/04/2013 08:57

BOOK REVIEW

Anti-Fragile by Nassim Nicholas Taleb PUBLISHER Allen Lane ISBN -10: 1846141567 RRP £25

“In a world where ‘stuff happens’, it is not enough to be robust; systems, firms or individuals need the ability to thrive from events that are normally perceived as bad” Ingenuous visitors to Istanbul may make the mistake of wandering into (or worse, being ushered into) one of the large carpet emporiums, where, after being seated and refreshed with apple tea and baklava, a procession of impressive carpets seems to fly before their eyes, followed by intense selling. Resistance is countered by a procession of smaller carpets, and harder selling; further resistance, and we see drapes, runners, coverings, spreads, pillows… and yet stronger persuasion.

Reading Nassim Nicholas Taleb’s book Anti-Fragile is a similar experience: an extraordinary variety of colourful ideas is paraded before us, accompanied by insistent patter. As soon as we pause for breath, Taleb starts the hard sell again, but in a different direction.

Taleb himself describes the work as being not so much one book but a collection of seven, all generally

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connected by the unifying concept of anti-fragility. The basic idea of Anti-Fragile is this: that in a world where ‘stuff happens’, it is not enough just to be robust, ie able to survive adverse happenstance; to be successful, systems, firms or individuals need to be ‘anti-fragile’, by which Taleb means the ability to thrive from events that might normally be perceived as bad.

In discussing anti-fragility and how we can strive to be anti-fragile, Taleb ranges across a number of interesting areas. Non-linearity, asymmetry and optionality feature, of course. But Taleb goes deeper and further, striding across domains financial, sociological, pedagogical, philosophical, medical and theological.

One core problem, in his view, is our assumption that we understand the fields we operate in, and so seek to build predictions from this assumed understanding.

Fragile systems need predictions, but predictions in turn reinforce the mindset that leads to the proliferation of the fragile.

The idea that we understand our environment often leads to the notion that we ought to do something, and what Taleb calls ‘naïve interventionism’ in an economic/ political context, or ‘iatrogenics’ in a medical context (etymologically, ‘caused by the healer’ – but referring to harm, not cure). In our instant-gratification, rolling-news culture full of ‘proactive’ decision makers, there is a tendency to do rather than to sit and observe; furthermore, whole managerial or professional bands have a vested interest in activity for the sake of activity.

Hence the problems caused, on the one hand, by the ‘too big to fail’ institutions accompanied by detailed regulation that misses the point, and on the other hand, pharmaceutical innovations such as thalidomide (an extreme example, but the underlying point holds).

A related topic, particularly with reference to the fragilista’s need for prediction and presumption of understanding, is that of data overload and our obsession regarding the need for more data and more data analysis. Taleb contrasts this bottom-up theoretical approach with the top-down empirical approach of finding techniques that work – heuristics – and applying them, without being paralysed by uncertainty as to their theoretical underpin. An amusing example is provided regarding ‘green lumber’, about a successful trader who knew almost nothing about what he was trading (he thought it was emerald-hued wood) but was very successful given his instinct for the market.

Two chapters I was particularly sympathetic to concerned the general awfulness of novelty for novelty’s sake, contrasted with the anti-fragility of what has survived for long periods; and second, the importance of ‘stressors’ in engendering anti-fragility. At a personal level, Taleb shares my taste regarding violent exercise, fasting and avoiding non-emergency medication; the first two are stressors which help one’s health more than regularity would do, while the medical scepticism derives from a concern about asymmetry (in health matters, there is no point risking a large problem for the sake of small gains).

Those of you who enjoy gazing at a variety of finely woven topics, and who can withstand the frequent authorial self-indulgence, are likely to find this book an engaging and thought-provoking read. ● Matthew Edwards is a senior consultant at Towers Watson. He is a former editor of The Actuary

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At the back Coffee break puzzles@theactuary.com

Puzzles —

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Old MacDonald had a...

Mensa puzzle 543

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ETE

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Lines of inquiry Mensa puzzle 545

If AML = 5, VNE = 1 and IKT = 2 What does WHZ = ?

ONA

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GER

What number should replace the question mark in the grid?

Place two three-letter groups together to make a six-letter animal. What is it?

For a chance to win a £50 Amazon voucher, please email your solution to puzzle 543 to: puzzles@theactuary.com by Friday 17 May 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.

H

C

A

K

W E K W

The missing link Mensa puzzle 546

R O

I

L K

T

A

Flight of fancy Mensa puzzle 544

R

The top half and the bottom half are on interlocking rotating systems. When they move round they will realign so that four associated words are read downwards.

What are they?

8 3 9 1 7

7 2 6 4 8

2 9 3 7 1

4 5 3 7 5

6 5 7 3 ?

Heart of the defence Bridge puzzle 32 1 ♠ QJ10 ♥63 ♦ Q1097 ♣J743

2 ♠76 ♥63 ♦ 7543 ♣KQJ84

3 ♠76 ♥QJ3 ♦ 10975 ♣J1087

4 ♠QJ10 ♥Q63 ♦ 10975 ♣865

5 (Contract 3 ♠) ♠76 ♥63 ♦ AQ75 ♣86543

The Bidding S N 1♠ 3♠ 4♠*

North ♠ A985 ♥742 ♦ KJ8 ♣A92

You are East. Partner leads A♥, meaning he holds ♥AK plus some small cards. With each of the hands above, which card do you play? Your system is to encourage with a high card, and discourage with a low one. (* Except Hand 5 where South passes and the contract is 3♠ .)

Bridge puzzle provided by David Lampert

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May 2013 • THE ACTUARY 39 www.theactuary.com

23/04/2013 08:58

HAVE YOU GOT WHAT IT TAKES? Membership of Mensa is open to anyone who can demonstrate an IQ in the top 2% of the population. For information on IQ testing in your area, visit www.mensa.org.uk or call 01902 772771, option 1

At the back Coffee break puzzles@theactuary.com

SOLUTIONS FOR MARCH 2013 Pick up the pace Mensa puzzle 539 A cyclist is on a five-day expedition. On the first day, she covers a quarter of the total distance. The next day she covers a third of what is left. The following day she covers a quarter of the remainder and, on the fourth day, half of the remaining distance. The cyclist now has 16 miles left. How many miles has she travelled?

ACTUARY OF THE FUTURE

Mighty milometer Mensa puzzle 540 How many miles should it be to Miami on this strange signpost?

ANSWER: 23. The first digit in the miles is the number of consonants and the second digit is the number of vowels.

Philadelphia 75 Indianapolis 66

C O A O

Move from square to touching square to find the longest possible word.

R R S N

What is it?

P A T I

ANSWER: PROCRASTINATION

T I N

A bank cashier transposed the pounds for pence and vice versa on a cheque, giving the customer far too much money. After the customer had spent £6.23 he still had exactly ount of the h three times thee amount e e. original cheque. e What was the amount of the original cheque?

A NS NSWER: £7.28 ANSWER:

Spadework Bridge puzzle 31 ♠6534 ♥10 ♦432 ♣AK1096 ♠KQJ1098 ♥Q653 W ♦A ♣J7

N

S

♠A72 ♥42 E ♦8765 ♣Q832

♠♥AKJ987 ♦KQJ109 ♣54 Bidding: Game All W N 1♠ P P P

40

E 2♠ P

THE ACTUARY • May 2013 www.theactuary.com

p39_40_may_puzzles_FINAL•CT.indd 40

S 4♥

What motivates you? My unceasing quest to bestride the actuarial profession like a colossus for centuries after my death.

Name five dream guests you would invite to a dinner party? Chris “The Big Dog” Makomereh

Cash in hand Mensa puzzle 542

Swallow the dictionary Mensa puzzle 541

How would your best friend describe you?

The fount of all knowledge.

Keep up the good work.

Dallas 42

Congratulations to this month’s winner – Kirk Bevins at Aviva

Employer and area of work Austin Professional Resourcing LLP and life insurance.

What would be your personal motto?

Miami ?

ANSWER: 69.3333

MARK HELLER

Justifiably unwilling to defend, you punt 4♥ . West could bid 4♠ but fancies his chances of beating 4♥ . West leads K♠. You ruff with 7♥ and draw 2 rounds of trumps, both defenders following.

Plan the play. Whenever the defence wins a trick, they will continue to play spades.

ANSWER: You have 3 trumps; West has 2. If you play another round, West will win and play another spade. When you ruff, this reduces you to 1 each. If you draw it and then play K♦, West will win and will have spades to cash.

You can afford to lose 2 trumps. Don’t draw any more.

Simply play K♦. West will play spades again but you are in control. Ruff. This gives you and West 2 trumps each.

Let West have his 2 trumps. Simply play your minor suit winners. West only makes his 2 trumps and the A♦.

– my actuarial inspiration; Silvio Berlusconi, to add some gravitas and class to proceedings; the late Kim Jong-Il, so he can give me tips on my golf swing; and Vicky Pryce and Chris Huhne, to teach us the secret of a happy marriage.

What’s your most ‘actuarial’ habit?

My hard partying lifestyle

Favourite Excel function? ‘CUBEKPIMEMBER’, no contest. It’s got me out of a few sticky situations I can tell you.

How do you relax away from the office? When in Edinburgh I relax by attending my favourite local nightspot, The Hive. I revel in the exclusive and rarefied atmosphere of the place and have realised my dream of becoming a gold card holder.

Alternative career choice? Editor of The Actuary.

Tell us something unusual about yourself I was a (surprisingly unsuccessful) contestant on X Factor in 2012. It’s a fix, and not at all like what you see on television.

Greatest risk you have ever taken? I put £100k on red in a Las Vegas casino last summer.

I regret nothing. It would have been a hell of a night if it had come up.

What’s your most treasured possession?

My razor-sharp wit.

What are the top 3 things you would like to achieve in your lifetime? See Tottenham Hotspur win the league, marry a supermodel, win the lottery.

If you ruled the world, what would you change first? Nothing. Nobody likes change.

Do you know an actuary destined for greatness?

You can nominate an Actuary of the Future by emailing

aotf@theactuary.com

Bridge puzzle provided by David Lampert

SHUTTERSTOCK

23/04/2013 08:58

At the back Student student@theactuary.com

Student Jessica Elkin battles dull crisps and dry sandwiches as she searches for aspiring actuaries, and possibly a free umbrella, at the careers fair…

FAIRGROUND ATTRACTION CAN BE ALMOST PERFECT If you’re a helpful and conscientious sort, or if you like to skive work now and again, chances are you might have participated in the odd careers fair. This is where you take on responsibility for persuading the next generation that the actuarial profession is an alright gig with good pay and reasonable hours and so on. It’s a tiring sort of day, but once you get into arranging your table/stand presentation with almost maternal pride, and also competing against opposing firms and companies to steal the best candidates, it can be quite absorbing.

Window shopping My feelings of achievement and success after a long careers fair correlate strongly with what goodies it was possible to come away with – that is, which freebies you were able to nab from other companies at the end when they have too much left over.

Pens and notebooks are obvious fodder, but I have also proudly obtained earphones and umbrellas in my time.

Food is another barometer. My favourite fair experience so far offered a proper cooked meal. No matter that standing up and talking charismatically was a five-hour shift, because what I really took away from that experience were fond memories of stuffed butternut squash and Eton mess.

me a chance to refresh my memory as to how good I have it. Actuaries have stable jobs, good pay and hours that are difficult to fault. Those who know what we do seem to have quite a lot of respect for us, and the qualification is recognised worldwide.

I recently met an actuary who has worked in Australia, Hong Kong and the US. The Staple Inn Actuarial Society’s social events are pretty good as well – roller discos and everything.

So when I’m explaining to hopefully interested parties the reasons they should consider actuarial work, my inner monologue is nodding vigorously and going, “Oh, yeah!” The same applies when pitching why my employer is great. I end up getting all moony. Don’t get me wrong: I am still an enthusiastic and diligent profession-promoter, even when the sandwiches are a bit dry and they don’t have any of the good crisp flavours. That being said, I sometimes feel that my actuarial fervour is close to being outshone by that of students eager for a foot in the door.

Bees to honey Self-affirmation Freebies and food aside, one of my favourite things about careers fairs is that they give

ILLUSTRATION: PHIL WRIGGLESWORTH

p41_may_students_FINAL•SS.indd 41

At my first ever fair, I had quite a few students come up

and give me business cards or list CV items at me. I felt slightly guilty that they clearly did not realise how unlikely I was to be able to get anyone a job, but also questioned the efficacy of approaching jobs in consulting with a box-ticking approach rather than being a bit more conversational. Still, I was impressed by their commitment to their future careers.

On the other side of the coin, I went to a secondary school recently and found that parents were much more enthusiastic listeners than their kids. At one point I had a circle of interested parents around me while their daughters cringed at each other. I took this in my stride and decided that if I could convince one side of the advantages of an actuarial career, it might persuade the other.

The real difficulty is explaining what actuaries do on a day-to-day basis. You’d think that doing it yourself every day would make this a bit easier, but packaging it up in a neat nutshell for the purpose of baiting bright young things is rather tricky. One father was told that actuaries are “like bookies” and asked me to explain why this was, but I didn’t get too far with that one.

I suppose that if you want to get technical about it, the real success of an outing to a careers fair is really whether you or I persuade anyone to join our ranks. But since a measurement of that sort is difficult to find, I am happy to focus on stuffed butternut squash and earphones.

Next time I’m angling for a Rubik’s Cube.

And the answer is …

As a follow-up to last month’s riddle, I can now reveal that 100 blue-eyed people leave the island on the 100th night. If that makes no sense to you, start off by thinking about the island with only one blue-eyed person, then two of them, then three, and so on. I promise it makes sense. Eventually. a

May 2013 • THE ACTUARY www.theactuary.com

41

22/04/2013 15:56

SPONSORED BY

At the back Appointments peoplemoves@theactuary.com

Moves Aon Hewitt has appointed Dan Morris (above) to its investment consulting team. Morris joins Aon Hewitt as a partner after five years with Towers Watson, where he was a senior investment strategy consultant and led the London investment strategy team. Prior to this, Morris worked at PricewaterhouseCoopers and HSBC Actuaries and Consultants.

Milliman has announced the hiring of a senior insurance consultant, Ger Bradley (below), to lead the expansion of the firm’s non-life consulting activity in Ireland from the Dublin office. Bradley was previously responsible for the Solvency II programme for Royal

& Sun Alliance (RSA) in Ireland. In addition, he was underwriting director for RSA Reinsurance Ireland and director of

p42_may_appointments_FINAL•CT.indd 42

actuarial and pricing for RSA Insurance Ireland.

He is currently chair of the general insurance committee and a council member of the Society of Actuaries in Ireland.

Pensions, benefits and actuarial firm Premier has appointed Stephanie Murphy as senior actuary and consultant. She will be based in the company’s head office in Croydon and will be advising both trustee and corporate clients. Murphy joins from Ernst & Young, where she was a senior manager in the pensions advisory team. She has previously held roles at the Pensions Regulator and Mercer.

Buck Consultants has appointed Marcus Hurd (below) as principal and senior consulting actuary to further strengthen its presence in the defined benefit pensions arena.

Hurd will have a number of responsibilities, including developing business strategy, thought leadership and market profile for the organisation. He joins Buck Consultants after 11 years at Aon Hewitt,

where he held various positions, including head of corporate solutions for Aon Consulting and head of technical for its fiduciary management offering. Hurd is a regular speaker on the conference circuit and a visiting researcher at the University of Leeds.

He is a specialist in risk financing, as well as being a highly experienced scheme actuary and employer adviser.

Barnett Waddingham has appointed Simon Taylor (above right) as an associate in its corporate consulting practice to enhance and strengthen its senior-level capabilities. Taylor, who

is a Fellow of the Institute and Faculty of Actuaries, started in the pensions industry in 1990 at Bacon & Woodrow. He stayed there, through the merger with Hewitt Associates, until 2006, when he left to join the actuarial consulting arm of HSBC. When that was sold to JLT in 2009, Simon was head of corporate consulting.

He subsequently joined Barnett Waddingham in 2013.

23/04/2013 13:58

www.theactuaryjobs.com

Appointments

A P PO I N TME N TS To advertise your vacancies in the magazine and online please contact: Gill Rock +44 (0) 20 7880 6234 or gill.rock@redactive.co.uk

How to blow your own trumpet CV advice from HFG As a consultancy firm a key part of our service is advice around how to structure and present your CV, please visit our website for more information

www.highfinancegroup.co.uk

General Insurance Roles Casualty Pricing Actuary

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

£100k - £135k + Basic, London

Leading Lloyd’s syndicate is looking for a qualified Pricing Actuary to work closely with the expanding Underwriting team across the Casualty division. The right person will be confident building relationships with the Underwriting, Claims and Reinsurance teams. Previous Pricing experience is essential and understanding of Casualty lines is a big advantage. This is a superb opportunity to join a leading Actuarial and Underwriting team in the Lloyd’s market. William@highfinancegroup.co.uk

Leading General insurer is looking for a qualified Actuary to work across Pricing and Reserving whilst managing an expanding team. The work will cover a variety of lines of business and the right person should be happy getting their hands dirty. There is potential for this to grow into the Chief Actuary role. William@highfinancegroup.co.uk

Risk Analytics Manager

Reinsurance Pricing Actuary Up to £80k Basic, London

Up to £85k Basic, London A rare chance to join a company in it’s second line of Actuarial defence.

Reporting directly to the Chief Risk Actuary you will be responsible for managing a small team. The team will be accountable for extracting actuarial feeds from across the business and presenting them to different areas of the Risk function. The ideal candidate will have a traditional Actuarial background, with experience in Pricing, Reserving or Capital. James@highfinancegroup.co.uk

A fantastic opportunity to join a Global Reinsurer in their London hub.

The company boasts a strong pedigree in the Reinsurance market with around half it’s business being P&C Treaty and the other half being Speciality Lines. You will be working in a supportive team and will liaise with international teams in the United States and Far East. The ideal candidate will be nearly / newly qualified with previous Reinsurance experience although strong candidates with a London Market Pricing background will also be considered. James@highfinancegroup.co.uk

Syndicate Analyst

P & C Pricing Actuary £50k - £65k Basic, London

This successful US Insurer is looking to add a talented Senior Analyst to their Lloyd’s syndicate, taking over Pricing responsibilities within the Marine division. You will gain early responsibility whilst building on your Pricing knowledge, creating career certainty for you within the Lloyd’s market. To be successful you will have previous commercial lines pricing experience and be close to qualification.

Chanelle@highfinancegroup.co.uk

£45k - £60k Basic, London Join this leading international Insurer in their London based commercial lines function. Predominantly focused on Pricing, there will be additional involvement with the reserving function. This is the chance to broaden your Actuarial skill set whilst gaining valuable exposure to Commercial lines within a successful and growing business. You will be a part-qualified Actuary with significant non-life Pricing experience.

Chanelle@highfinancegroup.co.uk

Head of Actuarial

JAMES KITT Consultant - GI

CHANELLE ROSENBAUM Consultant - GI

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

+44 (0) 207 337 1202 james@highfinancegroup.co.uk

+44 (0) 207 337 8827 chanelle@highfinancegroup.co.uk

WILLIAM GALLIMORE

+44 (0) 207 337 8800

www.highfinancegroup.co.uk May 2013 • THE ACTUARY 43 www.theactuary.com

ACT.05.13.043.indd 43

23/04/2013 13:48

Appointments

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www.theactuaryjobs.com

Capital Modelling Analyst - London 6HQLRU 3 & $FWXDU\ *HUPDQ\ $WWUDFWLYH 6DODU\ %HQH¿WV 3DFNDJH $WWUDFWLYH 6DODU\ %HQH¿WV 3DFNDJH This leading London market insurer is looking to enhance their team with a Capital Modelling Analyst. The main remit is to deal with actuarial models and processes. You will assist in providing appropriate capital management at all levels within the company and work closely with various internal and external stakeholders. You will have input into reinsurance, asset management, risk aggregation and capital modelling.

The ideal candidate will have 1-3 years experience in the London market, and strong VBA and SQL skills. Prior experience with Igloo would be an advantage. &RQWDFW SKX QJRF#LSVJURXS FR XN +44 207 481 8686

This leading multinational insurance company is looking to enhance their team with a Senior Actuary. The main remit is to provide actuarial support to the management and various stakeholders. Reporting to the Head of Reserving, the senior actuary will be involved in reserving, business planning, cycle management and review of technical provisions.

7KH LGHDO FDQGLGDWH LV D IXOO\ TXDOL¿HG 3 & DFWXDU\ ZLWK H[SHULHQFH LQ reserving and Solvency II. Very good communications skills are required and prior international experience would be a plus. &RQWDFW LYDQ FODUNH#LSVJURXS FR XN +44 207 481 8686

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May 2013 â&#x20AC;¢ THE ACTUARY 45 www.theactuary.com

23/04/2013 13:52

High Finance Group

Appointments

Life Insurance Roles Head of Insurance Risk

M&A Actuary £90k - £130k Basic, London

£80k - £140k Basic, London

This is an exceptional opportunity to become an integral member of the Senior Management team leading M&A Valuations. Sitting within the Group function, you will have extensive interaction with the CEO, CRO and Group Chief Actuary playing a key role in strategic development.

A proven track record working on M&A and influencing stakeholders up to Board level are key to success in this position. Graeme@highfinancegroup.co.uk

An exciting opportunity to join a leading UK Life Insurer.

You will develop the oversight of insurance risk management across the Group and play a key role in their overseas subsidiaries. Here you will support their implementation of the group's risk management framework and support their actuarial teams. You will be a qualified Actuary with significant post qualified experience ideally from a consultancy or Group level background. Graeme@highfinancegroup.co.uk

Capital Reporting Manager

With Profits Actuary £80k - £120k Basic, London

£70k - £90k Basic, South West Large UK Life Insurer requires a Manager for their Economic Risk Capital Team. With 6 direct reports (Qualified and Part Qualified) this management role requires experience in generating the Financial Reporting numbers for ICA, MCEV and RBS. A Qualified Actuary with extensive management experience is essential for this challenging and rewarding position. Jack@highfinancegroup.co.uk

A unique team is seeking a consultative and market facing With-Profits Actuary. You will have extensive knowledge of large with-profits funds, previous senior stakeholder management experience and excellent communication skills. This is a fantastic opportunity to advance your career and diversify your knowledge within a innovative industry leading environment. Graeme@highfinancegroup.co.uk

Capital Management Actuary

Pricing Actuarial Analyst

£60k - £80k Basic, London This multinational Life Insurer requires a commercially minded Actuary looking for a multi-discipline role. This newly created position will manage and advise on the capital and risk framework and assess the actuarial function. You will have exposure to senior stakeholders in the business and there is significant opportunity for progression in line with the teams’ growth. Sophia@highfinancegroup.co.uk

£30k - £50k Basic, South Coast A prestigious Life Insurer is looking to expand their international pricing team. They will consider part to nearly qualified Actuarial students with prior life Insurance experience and a highly commercial outlook. This is an excellent opportunity to gain valuable pricing experience with a competitive salary, and the chance to develop your actuarial skills and continue towards qualification.

Sophia@highfinancegroup.co.uk

Contract Roles Lloyd’s Contractor £700 - £1000 a day, London

Modelling Contractor £600 - £850 a day, London

Small Lloyd’s syndicate with a growing actuarial team is looking for a contractor for 6 months. The right person should have the ability to work across pricing, reserving and capital and be happy to get involved in any work. William@highfinancegroup.co.uk

A fast growing annuities provider requires a strong modeller capable of modifying and improving existing reporting and pricing models. Strong projects experience is essential. MoSes, Prophet and VIPitech will all be considered at this stage. Jack@highfinancegroup.co.uk

Reserving Contractor

Longevity Contract £800 - £1100 a day, London

FTC £60k - £80k, South East

World renowned Insurer is looking for a reserving actuary for 6 months to work closely with the Chief Actuary. The right person should have the ability to present to Board members if and when required. Strong reserving background essential. William@highfinancegroup.co.uk

This market-leading Longevity Risk Team seeks a nearly / newly qualified Actuary to join their team for a 12 months fixed-term contract.

This role requires experience in assessing mortality rates, setting longevity risk assumptions and contributing to UK longevity assumptions. Jack@highfinancegroup.co.uk

Pensions & Investments Roles Investment Strategy

Pensions Specialist

46

Up to £80k Basic, Nationwide

Up to £100k Basic, South East

This highly regarded consultancy requires a pensions specialist to work across their impressive portfolio of trustee and Corporate clients and advise senior stakeholders on a range of issues, including risk and liability management and funding strategy. You will be supported in developing your skills in less traditional areas of work.

Miranda@highfinancegroup.co.uk

An exciting opportunity to shape the multi asset portfolio of this well known Insurer. Possessing a strong understanding of market movements and risk frameworks, you will be responsible for the Group Investment strategy. This will include high levels of interaction up to Board level and provides the chance to work on all facets of the investment piece. Miranda@highfinancegroup.co.uk

GRAEME BRAIDWOOD

SOPHIA CROSSMAN

Consultant - Life

Consultant - Life

+44 (0) 207 337 8820

+44 (0) 207 337 1207

graeme@highfinancegroup.co.uk

sophia@highfinancegroup.co.uk

THE ACTUARY • May 2013 www.theactuary.com

ACT.05.13.046.indd 46

JACK SNAPE Consultant - Life Interim & Perm

MIRANDA WILKINSON Consultant - Pensions & Investments

+44 (0) 207 337 8810

+44 (0) 207 337 8815

jack@highfinancegroup.co.uk

miranda@highfinancegroup.co.u k

23/04/2013 13:53

www.theactuaryjobs.com

CAPITAL MODELLING ACTUARY London £50k to £65k + bonus & benefits

theactuaryjobs.com is the official job board for SIAS and The Actuarial Profession.

To register for our Jobs by email service simply go to theactuaryjobs.com

In this role you will provide actuarial support and input to the process of running the internal model. Within this remit, you will work to ensure the continued Solvency II compliance of both the model and process. If you’ve got knowledge of the commercial general insurance business and preferably of the London Market or Lloyd’s, then this is truly a unique opportunity. Your responsibilities will include: • Providing actuarial support to the manager of the Internal Model.

• Run the internal model to produce the capital requirement, both under ICAS and Solvency II. • Provide update to the parameterisation of the model.

• Review the results, including analysis of change.

• Support and promote the internal models uses in the wider business.

• Ad hoc analyses, e.g. in the wake of major loss events.

• Be involved in discussions of the continuing development of the internal model.

• Discuss responses to FSA questions and issues.

• Ensure that the documentation of the model is up to date and complies with regulatory requirements.

• Liaise with the reserving team to ensure that member capital reflects the latest position with regards to Technical Provisions.

Parvinder Matharu Newton Recruitment t +44(0)1689 862937 e parvinder@newtonrecruitment.com w www.newtonrecruitment.com Contact

theactuaryjobs.com

May 2013 • THE ACTUARY 47 www.theactuary.com

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Appointments

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PERFECT CANDIDATE ACCESS TO JOB SEEKERS PRINT ONLINE EMAIL ONLINE JOB SEEKERS & INSTITUTE MEMBERS CALL THE RECRUITMENT TEAM NOW 48

www.theactuaryjobs.com Contact the recruitment team on 020 7880 6234

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www.theactuaryjobs.com

Big enough to fill this chair?

With a growing print readership of approximately 25,000 and an increasing online presence (http://www.theactuary.com/), The Actuary is a key platform for news, views and jobs in the actuarial community and the leading publication for the actuarial profession in the UK. The current editor is due to step down this year, so SIAS is looking for a highly motivated and enthusiastic successor to lead the editorial team of the magazine going forward. Do you think you have the energy and dedication to take a role in guiding an expanding specialist production team? Do you have the creative flair yet the eye for detail to preside over a high-quality publication?

This is a challenging role and we require a volunteer with strong communication skills, an ability to work under the pressure of meeting publishing deadlines and the commercial awareness to take the magazine forward. However, the editor will be working with a strong team of experienced publishing staff and specialist editors.

A more detailed description of the role may be found in the following link http://www.theactuary.com/news/2013/04/editor-role If you think you have got what it takes, and would like to find out more, please express your interest, including a CV, by emailing Alvin Kissoon at actuarymagazine@sias.org.uk no later than 30 June 2013.

Overseas Opportunities Head of Risk

Actuarial Modelling (Life) Up to HKD 1m package, Hong Kong

Dependent on Experience, Malaysia

Lead Risk management role for a risk focused actuary to join this internationally recognised Insurer. Reporting directly to the CRO, you will be responsible for the assessment and monitoring of internal and external financial and operational risks. Strong communication skills in English is essential (and ideally Malay) for the Risk reporting to the Senior Executive.

Experience in reviewing risk management frameworks, knowledge of Solvency 2 and an appreciation of the changing regulatory environment in Asia will all be key to your success in the role. Collette@highfinancegroup.co.uk

Market leading Insurer with an expanding product portfolio is searching for an experienced financial modeller to join their Modelling team in Hong Kong. This role provides an excellent opportunity for a nearly qualified actuary with experience knowledge of Prophet, MoSes or AFM to design, build and operate models for financial reporting, pricing, economic capital and stress-testing. Good communication and interpersonal skills are important. If you want to be part of this dynamic and growing team, please contact us.

Clare@highfinancegroup.co.uk

International Reporting Actuary - MCEV

Capital Modelling Specialist

Up to SGD 120k base + bonus, Singapore

Up to HKD 1.2m + Bonus, Hong Kong

Global Reinsurer with a wide geographical reach, seeks to appoint a technically strong and experienced MCEV specialist to join their Regional financial reporting team in Singapore.

This is a new role reporting to the Chief Actuary and has the scope to be shaped to the strengths and experience of the successful candidate. If you are a qualified Life actuary or have significant MCEV experience and are looking for a role where you will be communicating directly with Senior Management at Group and Regional level we would be keen to hear from you.

Collette@highfinancegroup.co.uk

Exciting opportunity to transition the Capital Modelling skills you have gained in Igloo or Remetrica to the rapidly developing markets of Asia. This globally renowned company is seeking a person to lead capital modelling development for Greater China. The role can be based out of the Hong Kong, Shanghai or Beijing office and will offer the opportunity to build a team beneath you. Your experience in capital modelling will be crucial to your success in this role and your ability to speak Chinese at business level (Mandarin or Cantonese) is vital. Clare@highfinancegroup.co.uk

Clare Bethell, Senior Consultant Collette Edwards, Consultant

clare@highfinancegroup.co.uk collette@highfinancegroup.co.uk

+44 (0) 207 337 8829 +44 (0) 207 220 0174 May 2013 • THE ACTUARY 49 www.theactuary.com

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Appointments HEAD OF PRICING & RESERVING London £100k to £120k + bonus + benefits

UK Solutions Strategist Investment Management

London Competitive base & excellent bonus potential

Combining a quantitative and ¿nancial background with your knowledge of derivatives structuring and strategic asset allocation, you will be responsible for designing, developing and delivering investment solutions for a portfolio of key institutional clients.

This position provides the opportunity to manage solutions for pension funds and insurance companies throughout Europe, working closely with the sales team to develop solutions for both new and existing clients.

Please contact us directly to discuss this opportunity in more detail or for an informal discussion regarding your career aspirations.

A great opportunity to lead the Pricing & Reserving work for this relatively small organisation where you’ll also work with other teams and interact with senior management. Suitable candidates need to be a qualified actuary with strong reserving experience and demonstrable people management and influencing skills.

Rob Bulpitt

Head of Actuarial, Pensions & Insurance Risk Management 020 7092 3237 rob.bulpitt@eamesconsulting.com

Rupert Rickard

Manager of Actuarial Non-Life and Insurance Risk Management 020 7092 3219 rupert.rickard@ Offi eamesconsulting.com

For current opportunities please visit www.eamesconsulting.com

Pensions & Investments | Non-Life | Life & Health UK | Europe | Asia PDFL¿F

The primary role is to provide pricing and reserving expertise for Lloyd’s Syndicates, MGAs and owned businesses specifically: • •

• • • •

•

Management of the pricing and reserving team.

IBNR Reserving for client portfolios and providing the required reports (including bad debt analyses, expense and cash flow projections).

Exposure analyses where appropriate.

Actuarial support as required for any litigation.

Reserving due diligence on potential acquisitions.

Interaction with Lloyds, Senior Management, Underwriting, Claims, Finance and Risk Management to ensure that the pricing and reserving models continue to appropriately reflect the business and meet the SII requirements.

Application of the Actuarial Standards as set out by BAS (i.e. TASR).

Parvinder Matharu Newton Recruitment t +44(0)1689 862937 e parvinder@newtonrecruitment.com w www.newtonrecruitment.com Contact

www.eamesconsulting.com

Actuarial Business Leader PwC Bermuda are looking for an exceptional candidate to lead our Actuarial and Insurance Management Solutions team, providing actuarial services to our property and casualty (re)insurance clients. The successful candidate will continue to develop and grow the actuarial consulting practice, while also supporting our market leading audit practice. This Director - level position would suit an ambitious, goal - oriented Actuary, looking for challenges in an exciting and dynamic market.

To fulfill this role, the Director will: • Lead sales by driving new business proposals and extending the range of services currently provided to our (re)insurance clients, with an emphasis on establishing long-term relationships.

• Assist with the expansion of our existing client base by matching intellectual capital generated within the PwC network to the issues faced by (re)insurance groups based in or with significant operation in Bermuda.

• Serve as lead consultant on new and existing clients, partnering with other PwC offices and lines of business to deliver high quality, client-focused solutions.

• Provide audit support services to a range of (re)insurers, from SEC registrants to single parent captives.

• Maintain knowledge of industry, market, and competition; anticipate external market trends, internal and client needs.

• Lead the business unit, including setting and delivering against financial and operational objectives.

• Act as a mentor and coach, motivating a team to deliver a high standard of work within given timeframes and budgets, thereby creating an environment that encourages both individual and team accomplishments.

The successful candidate will have the following skills and experience: • Credentialed Fellow of the Institute of Actuaries or Casualty Actuarial Society (or equivalent) with at least 12 – 15 years practicing experience.

• Proven business development skills and excellence in building and maintaining senior client relationships.

• Demonstrated track record delivering high quality consulting and actuarial audit support work to clients, leading to maintenance and growth of a client portfolio.

• Knowledge of, experience in and access to a broad range of actuarial consulting services.

• Understanding and, ideally, recent experience of US GAAP for (re)insurance companies.

• Experience with leading teams and in people management, including coaching and developing staff.

• Excellent verbal and written communication skills in English.

• Reserving or pricing experience across a wide range of lines of business, with property catastrophe experience a significant advantage.

• Experience with the Bermuda regulatory market, or with similar regulators in other jurisdictions would be an asset.

Please forward a detailed CV in confidence to: Johanna Elder, PricewaterhouseCoopers Human Capital Consulting Ltd Email: johanna.elder@bm.pwc.com Tel: +1441 298 9703 50

THE ACTUARY • May 2013 www.theactuary.com

ACT.05.13.050.indd 50

23/04/2013 14:06

More stimulating risks.

More satisfying rewards.

www.theactuaryjobs.com

Pricing Analysts and Managers Ipswich & City of London s £Competitive and exclusive benefits package We’re proud to be one of most successful insurance companies in the world and things are evolving rapidly here in AXA Commercial Lines and Personal Intermediary. We’re a unique business within the insurance sector, created with the needs of our brokers and customers at front of mind. As the UK personal lines market is one of the most competitive and advanced insurance markets in the world, we’re looking for only the best people to join our personal lines pricing teams.

We’ve set ourselves some ambitious goals for the next few years; we want to grow profitably by continuing to refine existing products as well as extending our reach into new market segments. As our market becomes increasingly more complex, we need highly skilled pricing and analytics experts to calculate and manage risk, and shape our financial success.

Right now, we’re looking for a number of high calibre Pricing Analysts and Pricing Managers who thrive on challenges, who can respond quickly to market developments and find effective solutions to the most complex issues. Joining our market leading team of pricing actuaries and underwriters, you’ll have an integral role to play in helping us to achieve our goals.

Your knowledge and expertise will be critical to the development of pricing models and optimisation techniques for our substantial home and motor portfolios. We want you to influence our business strategy and ensure that we’re leading the way with the most innovative pricing abilities.

What’s in it for you? Why AXA? Not only will we offer significant financial support for your continued professional development, you’ll also enjoy our UK and global development programmes and benefit from our internal promotion policy. And as well as incredible growth and progression opportunities, you’ll be rewarded with a generous bonus scheme, up to 28 days’ holiday, a joint contribution pension and free life assurance, and for the manager roles a company car or cash allowance, private health insurance and much more.

To become part of our highly successful business, head to our website for more details.

www.axa.co.uk/careers

ACT.05.13.051.indd 51

May 2013 • THE ACTUARY 51 www.theactuary.com

23/04/2013 14:07

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 52

THE ACTUARY • May 2013 www.theactuary.com

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www.theactuaryjobs.com

LIFE PENSIONS INVESTMENTFUTURES HEAD OF INVESTMENT CONSULTING

HEAD OF ACTUARIAL MODELLING

LONDON

BRISTOL

up to £115k + bonus + benefits

Our client seeks a high calibre investment consultant with the knowledge and skills to take its successful practice to the next level. You will develop new and existing clients and grow the team and its capabilities.

Ref: Star1368

We have a diverse and exciting opportunity for a qualified actuary to lead, manage, motivate and develop an actuarial modelling team, creating and maintaining a strategic modelling platform to meet business needs.

Ref: Star1433

MODELLING ACTUARY

THOUGHT LEADER

INVESTMENT

LONDON

£ excellent + bonus + benefits

BRISTOL

LIFE £ excellent + bonus + benefits

Due to business growth our client seeks an investment actuary with a strong technical and modelling background.

Good communication skills are required to present at client meetings. Banking experience desirable.

Ref: Star1441

Seeking an actuarial consultant to establish, maintain and strengthen relationships, identify business opportunities and create innovative commercial insights for clients, whilst contributing to thought leadership.

Ref: Star1467

STRATEGIC CORPORATE ADVISOR

SCHEME ACTUARY

BIRMINGHAM

PENSIONS

up to £75k + bonus + benefits

MIDLANDS

PENSIONS £ excellent + bonus + benefits

Seeking a part-qualified or qualified actuary with excellent technical skills and a focused commercial attitude to provide strategic advice to corporates on all aspects of designing, operating & financing pension schemes.

Ref: Star1410

Leading pensions consultancy seeks a qualified actuary with a scheme actuary certificate to lead client and non-client activities, including chairing a technical sub-committee and developing and delivering training courses.

Ref: Star1447

INTERNATIONAL BENEFITS

BEYOND TRADITIONAL BOUNDARIES

ZURICH, SWITZERLAND

PENSIONS CHF Excellent + bonus + benefits

DUBLIN, IRELAND

LIFE

€ excellent + bonus + benefits

Seeking a pensions expert to join an international team within a global leader. In this varied role, you will provide cuttingedge advice to multinational clients with complex pension plans.

Ref: Star1456

Leading Dublin based consultancy seeks both part-qualified and qualified life actuaries to join its expanding life practice where you will apply your skills in projects reaching beyond traditional actuarial boundaries.

Ref: Star1452

EEV VALIDATION MANAGER

ANALYSE LIFE BY THE SEA

EDINBURGH

LIFE up to £55k + bonus + benefits

SOUTH COAST

LIFE up to £50k + bonus + benefits

Our client offers this excellent opportunity to take the lead in predicting and delivering the product level results for Realistic Balance Sheet (RBS) and European Embedded Value (EEV) reporting purposes.

Ref: Star1459

If you are a part-qualified actuary with a good understanding of the changing life insurance market and a thirst for providing technical expertise and advice in a specialist actuarial area, then this is the perfect role for you.

Ref: Star1445

PRODUCT INNOVATION

ACTUARIAL TRAINEE

EDINBURGH

PENSIONS up to £40k + bonus + benefits

Working in pensions and looking for a different slant to your career? In this exciting role, your focus will be on innovation, documenting, testing and communicating new functionality for a market-leading product.

Ref: Star1462

BIRMINGHAM

PENSIONS up to £35k + bonus + benefits

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

Ref: Star1458

Star Actuarial Futures Ltd is an employment agency and employment business

£ excellent + bonus + benefits

LIFE

www.staractuarial.com

Antony Buxton FIA

Louis Manson

Irene Paterson FFA

MANAGING DIRECTOR

MANAGING DIRECTOR

PARTNER

M +44 7766 414 560 E antony.buxton@staractuarial.com

ACT.05.13.053.indd 53

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

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

Lance Randles MBA ASSOCIATE DIRECTOR May 2013 • THE ACTUARY 53 www.theactuary.com M +44 7889 007 861 E lance.randles@staractuarial.com

23/04/2013 14:09

Appointments

NON-LIFEFUTURES SPECIALTY LINES ACTUARY LONDON

NON-LIFE £ excellent + bonus + benefits

Leading client seeks a high-calibre actuary with specialty lines pricing experience, particularly in marine and energy, and a commercial focus to make deals happen.

Ref: Star1463

STRATEGIC ACTUARY

NON-LIFE € excellent + bonus + benefits

DUBLIN

LONDON

NON-LIFE £ excellent + bonus + benefits

Market leader seeks casualty pricing actuary with a commercial perspective to work closely with brokers and big ticket clients in one of the most sought after roles in the general insurance arena.

Ref: Star1465

RESERVING. PRICING. CAPITAL SOUTH EAST

NON-LIFE up to £120k + bonus + benefits

Award-winning employer seeks a non-life actuary to join its expanding team. This role offers an excellent opportunity to influence the development of the practice and to contribute to clients at a strategic level.

Ref: Star1460

Fantastic opportunity to join a specialist (re)insurance group as the first actuary within a growing business unit. You will lead the reserving process, provide pricing support and calibrate the internal model.

Ref: Star1392

HEAD OF PRICING AND RESERVING

TECHNICAL LEADER

LONDON

NON-LIFE

up to £120k + bonus + benefits

Contact us regarding this fantastic opportunity to take up a key position in a global, non-life specialist business with growth on its mind.

Ref: Star1224

SYNDICATE PRICING & RESERVING EXPERT

NON-LIFE

£ excellent + bonus + benefits

LONDON

A varied role for a part-qualified or qualified non-life actuary with experience in the London market. Strong communication skills required to mentor students and interact with regulators.

Ref: Star1472

SPECIALTY CAPITAL LONDON

NON-LIFE £ excellent + bonus + benefits

A specialty insurance and reinsurance provider seeks an actuarial expert to run its model validation team. You will have strong communication and technical modelling skills (including Remetrica).

Ref: Star1346

INTERNATIONAL RESERVING & RISK MIDLANDS

NON-LIFE

up to £80k + bonus + benefits

An excellent career opportunity for a part-qualified or qualified actuary to work in a team responsible for reserving a wide range of business across an international group, including commercial and personal lines.

Ref: Star1471

Antony Buxton FIA 54

CASUALTY PRICING ACTUARY

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

ACT.05.13.054-55.indd 54

SOUTH EAST

NON-LIFE up to £100k + bonus + benefits

Lead a wide variety of cutting edge pricing projects for an innovative company with great ambition. An excellent opportunity for an outstanding candidate to develop your technical and softer skills.

Ref: Star1312

SOUTH AFRICAN ADVENTURE LONDON AND SOUTH AFRICA

NON-LIFE £ excellent + bonus + benefits

A fantastic opportunity for a part-qualified actuary with non-life experience looking to move to South Africa.

Communication skills and a strong personality are fundamental requirements.

Ref: Star1466

COMMERCIAL PROPERTY & CASUALTY PRICING LONDON

NON-LIFE

up to £80k + bonus + benefits

Seeking a part-qualified or qualified actuary with experience in commercial property and casualty insurance or reinsurance, to provide actuarial pricing support to various underwriting departments.

Ref: Star1469

MOTOR PRICING ANALYST LONDON

NON-LIFE £ excellent + bonus + benefits

Seeking a part-qualified actuary with motor pricing experience to assist with research, develop technical pricing capabilities and work on a wide range of exciting projects.

Ref: Star1470

Lance Randles MBA

Paul Cook

Clare Roberts

ASSOCIATE DIRECTOR

SENIOR CONSULTANT

SENIOR CONSULTANT

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

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

M +44 7714 490 922 E clare.roberts@staractuarial.com

23/04/2013 14:14

www.theactuaryjobs.com

NON-LIFEFUTURES

BERMUDA

NON-LIFE BMD $ excellent + bonus + benefits

This represents a great opportunity for a non-life actuary with proven history of business generation and leading a team/practice to make their mark in Bermuda.

Ref: Star1449

FROM THE GROUND UP LONDON

NON-LIFE £ excellent + bonus + benefits

HEAD OF INTERNATIONAL RESERVING SOUTH EAST

NON-LIFE

up to £100k + bonus + benefits

Experience key international markets. Provide strategic direction. Solve complex problems. Develop and support a high-performing team. Please contact us to discuss this exciting opportunity.

Ref: Star1265

NON-LIFE

RISK CONSULTING LONDON

up to £100k + bonus + benefits

Our client is seeking a talented capital modelling actuary with strong communication skills to take up a high profile and challenging role with the opportunity to innovate and develop new models and processes.

Ref: Star1376

Our client seeks a technically proficient part-qualified or qualified actuary to generate innovative solutions to complex risks for a variety of clients, including banks and insurers.

Capital modelling experience desirable.

Ref: Star1186

CAPITAL MODELLING ACTUARIAL MANAGER

RISK AND CAPITAL CONSULTANT

SOUTH EAST

NON-LIFE

up to £80k + bonus + benefits

LONDON

NON-LIFE up to £80k + bonus + benefits

Market-leading insurer seeks a number of actuaries to manage the delivery, documentation and maintenance of the Solvency II Internal Capital Model, both from a technical and business relationship management perspective. Ref: Star1212

An exciting opportunity for a non-life expert to be involved as lead actuary on a number of UK general insurance clients.

You will have specialist expertise in risk and capital including models under Solvency II. Ref: Star1166

HELICOPTER VIEW

PERSONAL LINES PRICING

SOUTH EAST

NON-LIFE up to £80k + bonus + benefits

SOUTH COAST

NON-LIFE £ excellent + bonus + benefits

Our client has a new and challenging role in its actuarial audit function offering an unparalleled view of a market leading insurance company across multiple departments and business areas.

Ref: Star1442

Our client has an exciting opportunity for a part-qualified or qualified actuary to join its team of specialists. Working closely with internal stakeholders you will focus on market-leading Home and Motor portfolios.

Ref: Star1457

CAPITAL MODELLING ANALYST

ANALYSE THIS - RESERVING BY THE SEA

SOUTH WEST

NON-LIFE up to £60k + bonus + benefits

SOUTH COAST / SOUTH WEST

NON-LIFE

up to £60k + bonus + benefits

Contribute to all aspects of capital modelling whilst building your technical and soft skills within a high-performing team.

Join a company that offers unparalleled personal development opportunities.

Ref: Star1401

This is a key role with a growing insurer where you will provide analysis and insight to senior management. The successful candidate will have a proven track record of working independently to a high standard.

Ref: Star1439

CONTRACT - COMMERCIAL LINES PRICING

CONTRACT - SOLVENCY II ACTUARY

NON-LIFE

up to £1,000 per day

LONDON

Seeking an experienced commercial lines pricing contractor for 3-6 months. This London based role with an immediate start requires regular liaison with underwriting and ideally someone with management experience.

Ref: Star1450

SOUTH WEST

NON-LIFE £ market rates

Seeking a non-life actuary with experience of Solvency II documentation to start a 3 month contract in May. Call now for more details.

Ref: Star1461

Star Actuarial Futures Ltd is an employment agency and employment business

ACTUARIAL DIRECTOR

www.staractuarial.com

Louis Manson

Irene Paterson FFA

Joanne Young

MANAGING DIRECTOR

PARTNER

OPERATIONS DIRECTOR

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

ACT.05.13.054-55.indd 55

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

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

Peter Baker SENIOR CONSULTANT May 2013 • THE ACTUARY 55 www.theactuary.com M +44 7860 602 586 E peter.baker@staractuarial.com

23/04/2013 14:24

United Kingdom

United Kingdom General Insurance Casualty Pricing Actuary London (City) Paul Francis £130,000 + Bonus + Benefits Leading client in the Lloyd’s market is seeking an experienced Pricing Actuary to support a new Casualty underwriting team.

Knowledge of D&O is an advantage. You will be an independent thinker that is commercially-minded.

Syndicate Actuary London Rick Davis £85,000 + Bonus + Benefits A strong Lloyd’s Syndicate requires a nearly / newly qualified GI Actuary. Reporting to the Chief Actuary you will complete Pricing, Reserving & Capital duties. You will also work closely with senior underwriters on a daily basis.

Senior Capital Actuary London Sarah Robins £85,000 + Bonus + Benefits I have an exciting opportunity to work in a market leading business. You will be a senior Actuary in the Capital function and report directly to the Head of Capital. Knowledge of Igloo is advantageous.

Capital Modelling Analyst London Ben Pitt £55,000 + Bonus + Benefits World renowned London market insurer has a vacancy for a capital modelling analyst to join their impressive organisation. You will gain exposure to market leading software, cutting edge modelling techniques and excellent long term career opportunities.

Contracts - GI Actuarial Reserving Contractor London Stewart Cherry Up to £900 / day Our client is looking to bring on an Actuarial Reserving Contractor to cover a secondment for 3 - 6 months. The role will focus on Reserving, BAU and technical provisions projects. Previous Syndicate experience is essential.

Actuarial Pricing Manager London Stewart Cherry Up to £800 / day Our client is looking to bring on an Actuarial Pricing Manager for a 6 month contract. The role will focus on liaising with underwriters, managing the Pricing team, delivering development of analytical and statistical pricing models.

Life Insurance Chief Actuary South East Rachel Kelly Up to £140,000 + Bonus + Benefits Chief Actuary required - shape the growth and strategy of a major insurer in this key senior hire. You will play an influential role in commercial and strategic projects and have oversight for all actuarial activities. Strong technical and leadership experience essential.

Commercial Lead London (City) David Parker £120,000 + Bonus + Benefits A leading financial services organisation seeks an experienced commercial life Actuary for a newly created position. Regularly liaising with senior stakeholders demands excellent communication and management skills.

Pricing Actuary London Clare Nash £90,000 + Package EXCLUSIVE APPOINTMENT: - A top tier client seeks a commercial figure to join a brand new team. You will ideally come from a primary insurance background and be competent in identifying new growth areas.

Reporting Actuary Bristol Rachel Kelly £70,000 + Bonus + Benefits A leading life insurer seeks a nearly / newly qualified Actuary for a key reporting role in an expanding team. Previous reporting experience and a good understanding of the UK regulatory environment is desirable.

Contracts - Life Senior Actuary - Sol II, Capital, Risk Reporting South Kaylash Kukadia £700 - £900 / day A leading composite insurer is looking to bring on an expert in Sol II emerging regulations to develop, challenge and lead ORSA processes & reports. A good understanding of economic performance across Life and GI is required.

Actuarial Modelling Manager Midlands Rob Bentham Up to £800 / day Our client is looking to bring on an Actuarial Modelling Manager to cover a secondment for 3 - 6 months. The role will involve managing three analysts as well as high level model work. Previous management experience is essential.

General Insurance - UK

Contracts - Life & GI - UK

Paul Francis Rick Davis Sarah Robins Ben Pitt Richard Howard

Clare Nash 0207 649 9350 Rob Bentham 0207 649 9351 David Parker 0207 310 8649 Kaylash Kukadia 0207 310 8581 Rachel Kelly 0207 310 8579 Stewart Cherry 0207 310 8651 Please contact one of the team for further information on any of the opportunities above or visit www.ojassociates.com/jobs

0207 649 9469 0207 649 9353 0207 310 8552 0207 310 8719 0207 649 9356

Life Insurance - UK

Ben

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United Kingdom

Europe Zurich Senior Pricing Actuary, Reinsurance CHF 130,000 - 170,000 Audrey Dresen Senior Pricing role covering all P&C business lines, including specialty for European business. Working closely with Underwriters, Brokers & clients. Role involves ERM & capital allocation. Pricing and tool development skills are a must.

Dublin, Ireland Health Actuaries €40,000 - €125,000 + Bonus + Benefits Patrick McMahon I am working on a number of opportunities within the health insurance sector in Dublin. These roles range from graduate level up to a Chief Actuary role. Previous experience in health pricing, PD or Reporting is advantageous.

P&C Consulting The Netherlands Julien Fabius €80,000 + Secondary Benefits Exclusive assignment for a Senior P&C Actuary to join the growing P&C team in The Netherlands. Projects will be focused on Pricing, Reserving, Rate Making, Solvency II and Capital. Dutch speakers only.

Non - Life Actuary North Rhine - Westphalia Emina Biscevic €€€Competitive Reinsurance company seeking a Non-Life Actuary to join their unit Corporate Actuarial services. You will calculate and monitor reserves in the international P&C. Professional experience with a reinsurer is desirable.

Prophet/MoSes developers The Netherlands Helger Wiese Up to €1000 / day - 3 Months + Extensions The Dutch market is in development and the demand for specialist modellers is growing. Please get in contact if you are skilled in IGLOO, MoSes or Prophet and open to contracting projects in the Netherlands.

Actuarial Contractors Mainland Europe & Ireland Varying Rates Ben Moses A number of market leading clients are looking to acquire additional actuarial contract resource across a number of actuarial disciplines. Both Life and General Insurance backgrounds are applicable. Local language skills not required.

Asia

Director of Modelling Hong Kong £££Flexible Jonny Plews

European insurer seeks an experienced actuary from the UK to project manage all modelling across the region (Solvency II, economic capital, Prophet/ALS, risk, IFRS4 Phase 2…). You will work closely with the board, analysing real life business issues and then creating solutions through actuarial models. You must be technically superb, though the gravitas and commercial astuteness to work with C-suite management is also essential. No Asian experience or languages required - a very rare opportunity for a UK qualified to make the transition to Asia in top level management.

Life - Marketing Actuary Hong Kong Gary Rushton £££Competitive Truly unique opportunity for a commercial Actuary to gain unrivalled exposure across Asia building strong relationships with CFO’s and Chief Actuaries providing bespoke capital optimisation solutions to the market.

Management Consultant Hong Kong Alex Ince £££Competitive A leading management consultancy is seeking senior candidates to join their advisory business. Only Actuaries with exceptional communication skills and a strong commercial awareness should apply.

GI - RI Pricing Actuary Singapore Toby Weston £££Competitive Global reinsurer seeks a pricing Actuary to cover the APAC region.

You need strong technical skills & an ability to communicate with clients & underwriters. A great opportunity to price some of the most complex reinsurance treaties in Asia.

Senior Strategic Actuary Thailand Alex Ince £££Competitive A leading life insurer is seeking to recruit a top percentile Actuary to join their elite strategic team. This role sits outside of actuarial and will work closely with the CFO and Managing Directors for the country and region.

Asia Jonny Plews Alex Ince Gary Rushton Toby Weston Philip Chau

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General Contact Details

Europe +852 5804 9200 +852 5804 9224 +852 5804 9223 +852 5804 9042 +852 5804 9287

Benjamin Moses Helger Wiese Emina Biscevic Patrick McMahon Audrey Dresen Julien Fabius

+49 (0)89 2206 1068 +31 (0)20 262 0280 +49 (0)89 3803 8965 +353 (0)1 685 2413 +41 (0) 43 508 0444 +31 (0)20 716 8450

Email:

actuary@ojassociates.com

Web:

www.ojassociates.com

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

23/04/2013 09:47

-

OJ Launches Catastrophe Risk Division

Career Advice for Actuarial Students

By Paul Francis

By Ben Pitt

Oliver James Associates are the global market leader within the Actuarial marketplace. After a significant period of research and development, we are pleased to announce the launch of our new Catastrophe Risk and Exposure Management team.

With the first of 2013’s exam periods firmly behind us we are now facing our most active time in working with part, nearly and newly qualified actuaries.

We know that accurate management and forecasting of catastrophe risk is an important tool in the armoury for many re/insurers. As well as the obvious underwriting risk mitigation, it also enables an insight into better capital usage and optimisation, as well as planning. In itself, this is invaluable with the potential restrictions on R.O.I under the SII framework.

Trends indicate that the tools utilised are becoming more sophisticated, models more diverse and research into new territories and hazards are at the cutting edge of development. The need for those that can speak the language of risk and underwriting in the same breath as geological and meteorological terminology has never been more acute. Consequently, the need for a supplier that truly understands the needs of clients and candidates in this area has never been more pressing.

This new Catastrophe Risk and Exposure Management team has been set up to fulfil this need and will compliment, and continue, the success we have achieved in the actuarial marketplace.

Whether you’re eagerly awaiting results day or trying to forget about exams altogether (for another few months at least), now is the ideal time to discuss your longer term career objectives with someone who really knows the market.

Many people are under the impression that recruitment consultants are only interested in speaking to you when you’re looking for a new role. However, for those that take this approach it can be a very long and drawn out process, with no clear path to follow and a more ‘reactive’ feel for the market.

Around 90% of the people we speak to are not actively looking for a new role, rather they are taking a more open minded approach to their future career options. Having a consultant you know and trust can make this process much less painful as they will have discussed, in detail, what type of position would be right for your professional development and will ultimately aid you in tailoring your search to reach a much swifter and more meaningful conclusion.

We have a trusted team of consultants who specialise in advising on all aspects of actuarial career development. Some of the key questions we face at this time of year are around study support policies, salary benchmarking and developing a well rounded skill set before specialisation, amongst other things.

If you wish to have a confidential discussion about your future career plans please contact one of our consultants using the details provided below.

Our team of international consultants are experienced within the insurance market and are recruiting currently for Lloyd’s syndicates, Brokers and Reinsurers. We recruit at all levels on a contingent, exclusive or campaign basis.

Our Student Appointment Specialists Ben Pitt - Managing Consultant GI Actuarial ben.pitt@ojassociates.com +44 (0)207 310 8719

If you are interested in discussing how we are able to help you recruit or work in this space, please get in touch with a member of the team.

UK Switzerland Asia

Paul Francis Audrey Dresen Toby Weston

+44 (0)207 649 9496 +41 (0)43 508 0444 +852 5804 9042

General Contact Details

Follow us

Email

actuary@ojassociates.com

LinkedIn: oliver-james-associates

Web

www.ojassociates.com

Twitter:

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David Parker - Senior Consultant Life & Investments Actuarial david.parker@ojassociates.com +44 (0)207 310 8649

@OJAssociates

23/04/2013 09:50

United Kingdom

Meet some of the team...

Clare Nash - Life & Investments - Actuarial & Risk clare.nash@ojassociates.com +44 (0)207 649 9350

Rachel Kelly - Life & Investments rachel.kelly@ojassociates.com +44 (0)207 310 8579

Paul Francis - GI Actuarial, Risk, Compliance & Cat Modelling paul.francis@ojassociates.com +44 (0)207 649 9469

Stewart Cherry - GI - Contract stewart.cherry@ojassociates +44 (0)207 310 8651

Rick Davis - GI Actuarial & Cat Risk rick.davis@ojassociates.com +44 (0)207 649 9353

Rob Bentham - Contract & Interim rob.bentham@ojassociates. com +44 (0)207 649 9351

Oliver James Associates has the largest and most integrated Actuarial team in the marketplace.

Our team of over 30 consultants covers the major insurance hubs in Europe and Asia.

Europe

Audrey Dresen - Switzerland - Actuarial, Risk & Compliance, audrey.dresen@ojassociates.com +41 (0)43 508 0444

Julien Fabius - Benelux Actuarial julien.fabius@ojassociates. com +31 (0)20 716 8450

Ben Moses - European Actuarial ben.moses@ojassociates.com +44 (0)207 310 8793

Manuel Lovell - Germany Actuarial manuel.lovell@ojassociates. com +49 (0)8922 061 003

Jonny Plews - Director, Asia jonny.plews@ojassociates. com +852 5804 9200

Gary Rushton - Asia - Head of Actuarial gary.rushton@ojassociates. com +852 5804 9223

Philip Chau - Asia - Actuarial

Carl Chan - Asia - Actuarial

philip.chau@ojassociates.com +852 5804 9287

carl.chan@ojassociates.com +852 5804 9070

Asia Our consultants have developed an in-depth technical understanding of the intricacies of the actuarial profession and can offer sound and conďŹ dential career advice. On this page you can take a closer look at some of our team, however for a full list of consultants and more detail on their individual specialisms please visit our website. www.ojassociates.com/actuarial-team.

Alex Ince - Asia - Actuarial alex.ince@ojassociates.com +852 5804 9224

Toby Weston - Asia - GI Actuarial toby.weston@ojassociates. com +852 5804 9042

General Contact Details

Follow us

Email

actuary@ojassociates.com

LinkedIn: oliver-james-associates

Web

www.ojassociates.com

Twitter:

ACT.05.13.058-59.indd 59

@OJAssociates

23/04/2013 09:50

www.the-arc.co.uk

The Actuarial Recruitment Company

A fresh approach

Head of Pricing London

General Insurance £Competitive

Capital roles London

General Insurance £Various

This senior pricing role will manage a small team and provide pricing support for large London Market type risks. The team is involved with individual case pricing as well as development of new rating tools for use by underwriters. Pricing involvement is across a range of property, liability, energy and marine business. The role will involve interaction with other areas of the business and with senior management. Some foreign travel will be required. Demonstrable pricing, team management and communication skills will be needed.

Ref: ARC26215

We are recruiting for a number of capital positions for London Market companies at the moment with clients particularly interested in candidates from general insurance consulting backgrounds, either who are currently working in consultancy or who started in consultancy. A detailed capital knowledge will be needed and strong interpersonal and communication skills to deal with various areas in the business. Remetrica and Igloo backgrounds will be considered.

Ref: ARCCapital

Pricing Actuary London

Pricing Analyst South

Life To £90K

An excellent opportunity for an actuary interested in a varied role in the London team of this major market player. The successful candidate will be involved in pricing and reporting and also be involved in business development aspects of the product portfolio.

Hence as well as a good technical background from a life insurer / reinsurer or consultancy, you will also need excellent communication and negotiation skills. Ref: ARC26216

Life £Attractive

This large global insurer is looking for a part qualified or nearly qualified actuary to join their pricing team. The role will cover a wide range of product related responsibilities including pricing maintenance, interaction with account teams, product development / testing and new product launches. The successful, candidate should be making good progress towards qualification and have good communication skills combined with some solid life actuarial experience. Ref: ARC26217

Call us anytime including evenings and weekends on 020 7717 9705 or email enquiries@the-arc.co.uk General Insurance Andy Clark BSc FIA General Insurance & Contracts Roger Massey BSc MBA FIA New Entrant (All) & Life/Pensions Chris Cannon BA CFI DAT

0781 333 7891 0781 398 9016 0771 122 8449

andy@the-arc.co.uk roger@the-arc.co.uk chris@the-arc.co.uk

The Actuarial Recruitment Company is an employment agency

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