The Actuary- September 2022 by Redactive Media Group

REGULATION Will Solvency II reform affect the bulk annuity purchase market? CAREERS How Project New Horizon is preparing the profession for future complexity ENVIRONMENT The role actuaries can play in balancing human, produced and natural capital A thosefuturebetterforwith pensionscontributiondefined INTERVIEW Catherine Howarth on encouraging the ﬁnance sector to invest responsiblymore The magazine of the Institute and Faculty of Actuaries SEPTEMBER 2022 theactuary.com

5 CEO’s comment Stephen Mann reflects on a survey about attitudes towards actuaries 6 IFoA news The latest IFoA news and events 14FeaturesInterview:Catherine Howarth

GETTYCOVER:

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Additional content including daily news can be found at www.theactuary.com Weekly newsletter: for all the latest actuarial news, features and opinion direct to your inbox, sign up at bit.ly/1MN3bXK says Matt Saker

The latest news, updates and events Inside story Lawrence Hababeh discusses how volunteering has improved his understanding of risk management

Introducing the Artificial Intelligence Ethics Risk Working Party Positivebit.ly/3AuCOlQimpact

Assessing the growing ESG landscape in India bit.ly/3QTT2KI

capitalism

34 Regulation: Show your working Wendy Walford looks at the first two standards released by the ISSB

36 Environment: A tale of three capitals How can actuaries help preserve natural capital? Ian Trim explains 38 General insurance: Post 2039 Kemi Bello on the need to build flood resilience before Flood Re ends 40 General insurance: Game on A recent competition provided useful lessons for pricing actuaries, says Juan Ignacio de Oyarbide

27 Careers: Small but mighty Lateral thinking helps actuaries in smaller nations, says Matt Attard 28 Careers: Project New Horizon Tan Suee Chieh and Nick Spencer share lessons for the future 30 Opinion: Jump start What is it like to work for a start-up? Chelsea Adler sheds some light 32 Careers: Taking the broad view Brandon Horwitz on what is involved in being a non-executive director

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The CEO of ShareAction discusses responsible investment and stakeholder A 18 Pensions: Two-part solution Decumulation pathways could boost DC outcomes, says Stephen Hyams 22 Regulation: Exchange of ideas Servaas Houben on IFRS 17 implementation in the Caribbean 24 Regulation: A bulky issue How could Solvency II reform impact bulk annuities? Brandon Choong and Claire McColl investigate 26 Opinion: Right on the money Nico Aspinall asks: are people who work with maths more right wing?

www.theactuary.com SEPTEMBER 2022 | THE ACTUARY | SeptemberContents32022

At The Back 44 Puzzles 45 Student Vrishti Goel on the government’s potential Solvency II reforms 46 People/society news

Up Front 4 Editorial Ruolin Wang assesses a changing landscape for actuarial graduates 5 President’s comment We need to be bolder if we are to be more visible,

42 Technology: A nuclear option Pratap Tambe talks about blockchain’s potential value in reinsurance 43 World view: Mauritius Mauritius’s unique history makes it a fascinating place to work as an actuary, says Bernard Yen 14 VsA

Anthony Moran MANAGING EDITOR Sharon Maguire +44 (0)20 7880 sharon.maguire@redactive.co.uk6246

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FEATURES EDITORS Kimberly Chimsasa: Pensions and investment Travis Elsum: Environment and sustainability Alex Martin: Environment and BlessingsustainabilityMbukude: Life Fiona Neylon: General insurance Yiannis Parizas: General insurance and data science Rajeshwarie VS: General insurance PEOPLE/SOCIETYNEWSEDITOR sharon.maguire@redactive.co.uksocial@theactuary.comSharonMaguire

Ruolin Wang is a Solutions Manager at Schroders. Any views are her own and not those of Schroders.

After a hot summer, we enter September – when many graduates start their new actuarial careers. With articles on hard technical topics and softer careers themes, I hope this issue will give our profession’s newest members a taste of actuarial discourse.

ADVISORYEDITORIALPANEL Peter Tompkins (chairman), Chika Aghadiuno, Nico Aspinall, Naomi Burger, Matthew Edwards, Jessica Elkin, Richard Purcell, Sonal Shah, Nick Silver INTERNET The Institutewww.theactuary.comActuary:andFacultyofActuaries:www.actuaries.org.uk

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Subscriptions from outside the actuarial profession: UK: £100 per annum. Europe: £130 per annum, rest of the world: £160 per annum. Contact: The Institute and Faculty of Actuaries, 7th floor, Holborn Gate, 326-330 High Holborn, London WC1V 7PP. T +44 (0)20 7632 2100 E kate.pearce@actuaries.org.uk.

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Changes of address: please notify the membership department. E: membership@actuaries.org.uk Delivery queries: contact Rachel Young E: rachel.young@redactive.co.uk Published by the Institute and Faculty of Actuaries (IFoA) The editor and the IFoA 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, 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. © Institute and Faculty of Actuaries, September 2022 All rights reserved ISSN 0960-457X

In this month’s interview, Travis Elsum speaks to Catherine Howarth, CEO of ShareAction, about her vision for responsible investment (p14). Our cover article (p18) sees Stephen Hyams and the Pension Decumulation Pathways Working Party set out a new approach to defined contribution pension decumulation, in a bid to improve outcomes for those who currently face the choice of buying an annuity or taking on their own longevity risk.

Staying with the pensions theme, Claire McColl and Brandon Choong explain the potential impacts of proposed Solvency II reforms on the bulk purchase annuity market (p24). Writing about the other side of the globe, Servaas Houben considers how IFRS 17 may benefit insurers in the Caribbean, and what European insurers can learn from counterparts across the Atlantic (p22). We also hear from actuaries who share their career insights. Matt Attard writes about the challenges of working in a small island nation (p27), Brandon Horwitz argues the case for actuaries as non-executive directors (p32), and Chelsea Adler takes stock of her experiences of working for a traditional insurer and an insurtech (p30). I hope you enjoy this issue.

STUDENT EDITOR Adeetya student@theactuary.comTantia IFOA EDITOR Kate Pearce +44 (0)207 632 kate.pearce@actuaries.org.uk2118

To move onto a different topic, and continuing my wellbeing theme, one of my favourite quotes on this subject comes from the 18th-century English writer Joseph Addison, who said: “Three essentials for happiness in this life are something to do, something to love and something to hope for.” This builds on the idea that people who pursue outward-looking life goals (such as family or altruism) experience greater happiness than those who pursue their own interests (such as career advancement or material gains). If you’re interested to hear more, watch this talk by Professor Ed Diener: youtu.be/7qSdZPAybf0. n previous columns, I have referred to the work done by the IFoA to move public interest debates and be the voice of our members and the profession. Of course, activity and impact are different things, and we tested the latter in an Ipsos MORI market research survey of UK stakeholders in government, the media and other areas that the profession is engaged with. The headlines are encouraging: nearly all those surveyed had heard of us (a good start!), with 60% speaking highly of us and our work being seen as trustworthy and professional. Our thought leadership activity was well received, with a majority of respondents seeing it as supporting our public interest objective – which they felt was our most important one. It was also seen as supporting the shifts we want to make in our reputation: we want to be seen as credible in new domains, as moving with greater speed, agility and imagination, and as having the courage to speak out. Behind the headlines is specific and substantive activity. In March we gave evidence to the Work and Pensions Select Committee inquiry on pensions access and take-up, working alongside members to maximise advocacy and highlight actuarial evidence. We have also engaged with the Treasury and the Bank of England concerning post-Brexit proposals for Solvency II. Actuaries are uniquely placed to give insights on balancing policyholder protection with government’s desire to free up investment, and our response to the consultation exercise on the fundamental spread methodology stood out as clearly considered from a public interest perspective. Our immediate past president Louise Pryor and I met with the chief executive of the Prudential Regulatory Authority at the end of last month to follow up the dialogue we have been having – and we were only able to have this level of access because so much of the work our members do lands well and credibly.Thesurvey’s only words of caution were reminders to ensure that we do not spread our activities too thinly, and to ensure that we don’t just engage with those who are likely to be most receptive.

STEPHEN MANN

ourRaisingprofile

AUTUMN 2022 | THE ACTUARY | 5www.theactuary.com UpfrontCEO

An viewoutside MATT SAKER art of the IFoA’s purpose is to enable the profession to make a contribution to solving society’s biggest challenges. To do this, we need to increase our profile and the impact we have on a range of stakeholders. Beyond our traditional strongholds, awareness of what actuaries do remains low. While the reasons for this are clear – our profession is small, niche and technical – our work impacts on almost everybody in some way, so it’s disappointing that our profile is seemingly only raised when negative events occur. This is partly caused by misunderstandings over what actuaries do – try typing ‘actuary definition’ into Google and see what comes back! We need to be clearer on who we are, what we do and the value we add. To achieve that, we must be bolder, both as individuals and through the IFoA. This will require us to push ourselves outside our comfort zone – for example, spending more time talking to potential future employers of actuaries about what actuaries can do for them. We also need to be more visible in the press and wider society, expressing our views and exerting influence on the relevant issues of the day. There have been great examples of this being done well during the past couple of years, including the work of the IFoA’s COVID-19 Action Taskforce and our COP 26 engagement and response. If we are to change perceptions and raise awareness, we need more of this great thinking and, if we get it right, I’m confident that opportunities for the profession to grow will quickly follow.

STEPHEN MANN is the chief executive of the Institute and Faculty of Actuaries

MATT SAKER is the president of the Institute and Faculty Actuariesof

SEPTEMBER

Upfront

As with our ﬁrst two bulletins, we have invited a range of contributions, actuarial and otherwise, to provide complementary and varying perspectives on insurance inclusion in differing contexts. This includes parliamentary progress on tackling exclusion. A fourth bulletin considering the role of innovation in tackling inclusion will be published in early 2023.

If you have any queries regarding your membership, please email memberservices@ actuaries.org.uk

The demographic mix of IFoA Council, Management Board, Regulation Board and Executive Leadership team was published for the first time in June and is available in the DEI section of the IFoA 21/22 Annual Report (bit.ly/IFoA_DEI2022).

If you want to contribute your own perspective, or give feedback on the bulletin series, contact policy@actuaries.org.uk

The City of London Corporation socio-economic diversity taskforce published its UK baseline survey results in August (bit.ly/CoL_Building_Baseline). More than 1,000 UK-based IFoA members took part in the survey, contributing data that will provide a starting point for lasting change in the financial and professional services sectors.

The IFoA also hosted a roundtable event with the taskforce’s Industry workstream. Representatives from leading employers shared their views, which will feed into the workstream’s consultation. Outcomes from this are expected in the autumn.

A project is now underway to work with our member-led communities, committees and boards to gather DEI data across our volunteer groups. This will support the development of action plans to progress representation and participation. Supporting members in their work

Since 2017 we have held ﬂat or reduced fees for most membership categories, resulting in a real-terms decrease of 16% during that period. This year, we have held IFoA subscription fees at their 2020 rates for all categories. Each year, more than 70% of our members renew their IFoA membership before the 31 October deadline. We encourage you to make payment early, where possible, as this helps us to better support you and your 33,000 IFoA colleagues in your region and around the world.

The IFoA recently relaunched its buddy scheme (bit.ly/IFoA_Buddy_System), offering members access to one-to-one, confidential and remotely-accessible peer support to help members if they have issues they want to discuss.

Improving DEI in our community

We have been working with members and employers to promote the importance of partnership working to effect change. This has included highlighting actuarial employers’ DEI work and developing informal DEI networks across employers and industry to promote best practice.

Time to renew your IFoA membership subscription

The IFoA has published the third bulletin in its series on inclusive insurance (bit.ly/3w0370P). Given the cost of living crisis, much of this edition focuses on insurance’s poverty premium – whereby those who are less well-off end up paying more for essential products and services than those who areThebetter-off.thirdinclusive insurance bulletin builds on the IFoA’s work on the poverty premium and considers how it could be tackled from a range of perspectives to help ensure everyone has access to insurance and protection products.

Christopher Cullen, actuarial senior manager and UK actuarial DEI lead at EY, says: “I think the IFoA has such a powerful role to play in being at the centre of all actuarial employers where they have members. Being able to co-ordinate literally thousands of people’s efforts to drive improvements in DEI across our industry (and society) would be hugely impactful.”

Read more about the IFoA’s commitment to champion and embody the beneﬁts of a globally diverse and inclusive profession in its DEI Strategy at bit.ly/IFoA_DEI_Strategy

DIVERSITY, EQUITY AND INCLUSION Bringing our DEI strategy to life NewsUpfront www.theactuary.com

Leadership and culture

Supporting members in their careers

IN BRIEF...

SHUTTERSTOCKIMAGES: In April’s edition of The Actuary, IFoA CEO Stephen Mann outlined some of the actions the IFoA had taken to implement its ambitious and far-reaching Diversity, Equity and Inclusion (DEI) strategy (bit.ly/DEI_Change_for_better). In the intervening months, the IFoA, working with members, volunteers and partners, has continued to progress activity and generate the momentum to deliver on its commitment to improving DEI. Here, we give an overview of some of ways the IFoA has been embedding its strategy in recent months.

The IFoA has joined Progress Together (progresstogether.co.uk) as a supporter. The membership body, launched in May this year, will build on the work of the City of London Corporation taskforce and focus on progression and retention in the financial services sector.

We hope you have received an email inviting you to renew your membership subscription. If you did not, please check your junk mail ﬁlters and your preferred contact details on your actuaries.org.uk account. Members are asked to log on and renew their subscription by 31 October.

Inclusive insurance bulletin

We have joined Neurodiversity in Business (neurodiversityinbusiness.org), an industry forum whose mission is to help develop more neuro-inclusive workplaces.

The IFoA has been evolving to help you meet the changing demands of your career and strengthen your ability to make an impact. In the coming months you will see further initiatives to create a better membership experience. Thank you for your continued membership.

DISCIPLINARY PROCESS

Cast your vote for a renewed disciplinary scheme

If you are interested in being a sponsor at this event, please contact Hannah Watson at Hannah.Watson@actuaries.org.uk

Sponsored by: Book your ticket today to hear the latest insight and research on a number of topics, including geopolitical risk, social inﬂation, microsinsurance, whiplash reforms, and more.

GIRO Conference 2022 In person, in Liverpool, 21–23 November

To book please visit: www.actuaries.org.uk/GIRO2022 Book now!

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SEPTEMBER 2022 | THE ACTUARY | Upfront7News

This month, all voting IFoA members will receive an email to our online ballot for a revised Disciplinary Scheme. The proposed new scheme is intended to be clearer and easier to follow, enabling members involved to readily understand their obligations and the options available to them. Several new measures have been proposed, allowing greater flexibility in how conduct issues are addressed without compromising the integrity of the process. These include: A shorter and clearer definition of misconductAfilterprocess so that complaints without substance will not need a full investigation The introduction of Disciplinary Orders for low-level straightforward cases where the member admits misconduct at the outset The right of the IFoA to seek a review or appeal in the public interest Extending the processexisting to recover costs from members who have committed misconduct. It is proposed that the new Disciplinary Scheme will be supported by more detailed regulations containing the operational processes and procedures. This will allow greater flexibility and will ensure the IFoA’s disciplinary processes remain agile and able to adapt to changes in best practice. While only a small proportion of the membership is likely to be involved in disciplinary proceedings, it is essential for us to uphold our standards through a robust and proportionate enforcement system if we are to maintain and protect the professionalism, reputation and public perception of our members. This will ensure that the public continues to trust our members to hold high standards, not just technically but also professionally and ethically. Members will be invited to review the proposals and vote on the new Disciplinary Scheme when the vote launches, and we strongly encourage you all to do so.

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With the introduction of the Chartered designation, members will also be able to fully benefit from the opportunities presented by our Royal Charter, and the recognition and respect that this brings worldwide.

As IFoA president, along with Council, I am fully supportive of this proposal, and believe the new designations will have a significant positive impact on the status and future success of actuaries and our profession. Given this, we encourage members to vote in favour of the proposal this November. Here, I outline why we believe this is an important step forward.

Recognition of our status

With the two new Chartered Actuary designations, everyone will benefit and nobody will lose out. Our high standards will be maintained. The proposal demonstrates the IFoA’s commitment to producing globally recognised, relevant, high-quality qualifications. These designations will enhance our prestige and visibility, to the benefit of our members and our profession around the world.

Matt Saker

Chartered

actuariesbetweendistinctionIFoAandotherswhocallthemselvesactuariesbutarenotqualified”

I n a few weeks’ time, members will be invited to vote on the introduction of two new designations for IFoA qualified actuaries – Chartered Actuary (Fellow) and Chartered Actuary (Associate). This change to our bye-laws has been discussed over many years, with contributions from viewpoints across the actuarial spectrum, and culminated in Council’s approval in June to move to a member vote.

UpfrontNews www.theactuary.com SEPTEMBER 2022 | THE ACTUARY | 9

It is important to appreciate that this change will not have any impact on where the bar is set for IFoA Associate and Fellowship member statuses. In particular, the rigour and quality of our qualifications will not change, so there are only upsides – in terms of enhanced nomenclature – with no downsides for any of our members.

“This

A step into the future

The Chartered designation will make a crucial distinction between IFoA actuaries and others who practise actuarial work, and truly reflect your status across the world. Use of the word ‘actuary’ is not currently protected; this change will create a fundamental distinction between IFoA actuaries and those who call themselves actuaries but have either lapsed their IFoA membership, are not qualified, or in some cases have had no formal actuarial training.It will protect your reputation as an IFoA member and continue to give the public confidence in our actuarial professionals.

Employers and global colleagues have told us that rebranding as ‘Chartered Actuary’ will give our qualifications more global appeal, as the term ‘Chartered’ is widely recognised as a quality mark within markets where there is an opportunity for actuarial specialists to compete with other professionals. It will therefore strengthen your position within the international market, where an increasingly large proportion of our members operate.

The new designations will also protect and support the profession for the future; this, in turn, reflects the IFoA’s strategic aim of repositioning the profession and ensuring we remain ahead of the curve. As actuaries diversify into new sectors and spheres, these designations bring recognition for the profession outside of the tight actuarial sphere.

In terms of enhancing the profession, these designations will broaden the relevance of IFoA actuaries and encourage non-traditional actuarial employers to use actuarial qualifications more flexibly in their businesses. If potential students believe that these qualifications can take them not only into traditional sectors, but also into new and exciting areas of expertise, this can only be beneficial for the profession.

I firmly believe that with the two new Chartered Actuary designations, everyone will gain – from actuaries and employers to graduates and society itself. I therefore encourage all members to support this move by voting in favour of the proposal this November. explains why status is the way forward for the profession

MATT SAKER is president of the IFoA change will create a

Reflecting our status

Our Associate members are already recognised as qualified actuaries in established actuarial sectors, but there is a lack of brand awareness around the qualification and it is less recognised in potential new employment sectors for actuaries, such as data analytics, cyber risk, health and care, and sustainability. By introducing Chartered designations, we want to establish the title ‘actuary’ more strongly for members in these sectors and highlight the relevance of their skills for the ever-changing needs of employers.

newChartingterritory

SHUTTERSTOCKIMAGE:

Lessons for a greener future

Mr KhanLiyaquatFIA

The panel considered all relevant information and was satisfied that the appropriate and proportionate sanction in this case was a reprimand and a fine of £2,000.

I nthe August 2021 edition of The Actuary (bit.ly/3QHijb0) we shared with you the development of the new IFoA course and the results of the pilot with a small group of volunteers. That pilot helped to inform the development of the final modules prior to the launch of the first cohort in March this year. The course is built around nine modules. The first five cover the key concepts around climate risk and sustainability and the final four focus on the application to actuarial practice. Each module is released weekly and is designed to require eight to 10 hours of self-paced study. There are additional resources for individuals to draw upon, depending on their interests in particular topics. These resources are designed to appeal to a range of learning styles.

NewsUpfront www.theactuary.com10 | THE ACTUARY | SEPTEMBER 2022

On 25 January 2022, the Adjudication Panel considered an allegation of misconduct against Mr Robert Henry Johnson FIA (the respondent). The allegation relates to acting as chief actuary to Company A without holding the relevant Practising Certificate from December 2019 to June 2021.

With the IFoA’s new Climate Risk and Sustainability Course now up and running, we explain what is involved – and share the thoughts of those who have already completed it

The first two cohorts, totalling some 98 IFoA members, have now completed the course, and the plan is to run three cohorts a year. Feedback from attendees has been very positive and all have seen a direct impact upon their work. Details of the next course can be found at bit.ly/IFoA_Clim_Risk With such a broad subject, the authoring team of volunteers will be working on updating the materials to ensure that the course is as relevant as possible. While individuals will have access to materials on completion, the course is designed as a springboard for further research and application.

ADJUDICATION PANEL MEETING DISCIPLINARY TRIBUNAL PANEL HEARING

Mr Robert Henry Johnson FIA

The panel found evidence to support the allegation and associated breaches of paragraph 2.1 of Actuarial Profession Standard G1: The Chief Actuary in Non-Life Insurance (version 2.0) and paragraph 1.1 of the IFoA’s Practising Certificates Scheme (versions 1, 2, 3 and/or 3.2 as applicable). It upheld that his actions were a breach of the compliance principle in the Actuaries’ Code (versions 3.0) and determined that these allegations disclosed a prima facie case of misconduct.

We are always looking for volunteers to help support the course. Details of the Facilitator roles can be found at bit.ly/IFoA_ ClimCourse_Facil. If you would like to help with the content, please get in contact at EPLLL@actuaries.org.uk

While the course is designed to allow individuals to study at their own pace and in their own time, there are two occasions when we bring all participants together during the seminars that form modules 5 and 9. These seminars allow participants to come together to share their views in a virtual format. Climate risk and sustainability in a global context will attract different perspectives, and bringing participants together allows for discussion and debate in a facilitated environment. The seminars are compulsory, and the dates are advised in advance so members can plan when to take the course. We deliberately didn’t want to set a course examination, preferring a pass or fail result. A Pass requires completion of module quizzes, some written reflective pieces, and attendance and participation in the two seminars.

Find a full copy of all the published determinations at bit.ly/IFoA_IDP_Determinations

On 19 May 2022 the Disciplinary Tribunal Panel considered a charge of misconduct against Mr Liyaquat Khan (the respondent). This was a hearing in the absence of theThrespondent.eIFoA’scharge was that he failed to comply with the requirements of the Continuing Professional Development (CPD) Scheme 2017/2018, in that he failed to provide evidence of the CPD activities completed during the 2017/2018 CPD year when asked to do so and did not fully engage with and/or adequately respond to communications from the IFoA’s Membership Department on the matter. It was further alleged that he did not comply with the requirements of the CPD Scheme 2018/2019, in that he failed to demonstrate that he had undertaken the

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“Good study text with useful links and videos, allowing a good mix of room for exploration with formal learning” – Samuel Jackman

appropriate minimum amount of Professional Skills Training or to submit a written request for exemption, and did not fully engage with and/or adequately respond to communications from the Membership Department on the matter.

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FEEDBACK

“Working with other actuaries from across the globe on the practical content for the seminars was a highlight. It opened my eyes to people living in areas that are already experiencing the consequences of climate change and how they are starting to combat the issue” – Sian Eltman

The respondent allegedly failed to fully co-operate with the investigation of the allegations, in that he failed to supply information, evidence and/or explanations when requested to do so by the case manager, in breach of Rule 4.15 of the IFoA’s Disciplinary and Capacity for Membership Schemes (effective 1 February 2018). His actions were alleged to be in breach of the compliance principle of the Actuaries’ Code (version 3.0).

The panel found all elements of the charge proved and that they constituted misconduct. It determined that the most appropriate and proportionate sanction was a reprimand and a fine of £2,000. “The course is just the beginning and has inspired me to learn as much as I can about the subject. It has provided me with a very useful framework to further my learning in my own time” – Zoe Griffith “While I already had some knowledge of the impacts of climate change, the course has helped me to clarify how climate can be integrated in the actuarial work we do and how best to put that into practice” – Caryl Embleton

“I really enjoyed the opportunity to learn and hear different perspectives from other actuaries from all over the world, and who work in varying ﬁelds outside of my own” – Caryl Embleton

Organisations across pensions, investment and insurance sectors are already accredited members of the QAS, demonstrating to stakeholders and clients both their support of their actuarial teams and their professionalism. Since the scheme’s launch in 2016, our list of accredited organisations has continued to grow, and now stands at 44. During the past year, we have worked closely with our Senior Quality improvements–QASforactuaries(SQARs)RepresentativesAssurance–theresponsibletheiremployer’saccreditationtodesigntothe

“Accreditation is used by organisations to denote commitment to professionalism and compliance with best practice” provides valuable support to actuaries in meeting their professional responsibilities. The QAS mark is also a useful marketing tool for organisations in terms of demonstrating the strength of their actuarial practice (for example, when tendering for work), and displaying the QAS mark on marketing or recruitment resources promotes trust and confidence in organisations as employers of actuaries.

QAS S

Katie Wood introduces the IFoA’s updated Quality Assurance Scheme for employers of actuaries, and explains the beneﬁts of joining KATIE WOOD is the managerAssuranceQualitySchemeattheIFoA

A Specialist Review has been introduced, which will provide enhanced review of and recommendations relating to a particular outcome or sub-outcome on an annual basis.

Supporting best practice Through independent review of policies and procedures, and checks to inclusion.engagementquality,and helpsempowerment,and staffcommunicationor gaps,identifyschemein organisations,they are embeddedensurethehelpstostrengthspromotetofosterdiversity,andFeedback

Recognition for meeting the highest standards Accreditation is used by organisations to denote commitment compliance withprofessionalism andtobest practice, and has the withinstandingat its heart.of continuousconceptimprovementQASenhancestheofactuarialteamsorganisationsand

from accredited organisations tells us that the reassurance the independent review brings in relation to current practices, and the bespoke best practice guidance, are key benefits of Representativesaccreditation.fromeach accredited organisation have access to a series of bespoke events via the SQAR Forum and the network of peers that the forum offers. Members of the scheme also receive an annual Best Practice report containing benchmarking information, analysis and useful examples. It can be a valuable tool to help a company continue to improve and is an increasingly popular way to develop targetingplanningbusiness functions,importantsuchaslong-termgoalsandareasforgrowth.

WHAT ARE OUTCOMES?THE

NewsUpfront www.theactuary.com12 | THE ACTUARY | SEPTEMBER 2022

Gold standard

The result, launched in April 2022, includes streamlined digital-first processes, access to exclusive QAS insights and incorporation of the latest diversity standards.

The QAS Outcomes have been streamlined. Organisations seeking accreditation must demonstrate that they meet standards in: Professionalism (conﬂicts of interest and quality assurance, including work review) Development and training (continuing professional development requirements, professional competence, professional development, support for new members and those seeking to become members, support for and training of individuals involved in the organisation’s actuarial work who are not members)

T his April the launched a refreshedIFoA and streamlined Assurance SchemeQuality(QAS), recognising actuarial functions that stay ahead of the latest standards.

Organisational culture (speaking up, diversity, equity and inclusion, and relationship with users).

The focus of the first review is diversity, equity and inclusion (DEI), which gives accredited organisations bespoke guidance and complements the IFoA’s DEI strategy.

QAS that enhance proportionality and constructiveness and optimise value to members.

INSIDE Interview Catherine Howarth on the work ShareAction is doingthat to encourage companies to invest more responsibly Two-part solution Stephen Hyams shares a proposal to improve pensiondeﬁned contributionoutcomes Exchange of ideas Caribbean and European insurers can learn from each other when it comes to IFRS 17, says Servaas Houben A bulky issue Brandon Choong and Claire McColl look at Solvency II’s potential impacts on the bulk annuity market Right on the money Could the neat assumptions of ﬁnancial mathematics and the beauty of its results make the mathematicallyminded more right-wing?

All QAS assessments are carried out remotely, which is convenient and supports the IFoA’s target of a net-zero carbon footprint by 2030. It also aligns with the IFoA’s new positioning as a ‘digital first’ organisation. Several other changes have been introduced to the scheme to make application and assessment simpler and smoother, and a dedicated IFoA team is on hand to support accredited organisations in all aspects of the scheme and its implementation. Find out more… If you would like to talk to us about what QAS accreditation could do for your actuarial team, please get in touch with us at qas@actuaries.org.uk

A nuclear option

SHUTTERSTOCKIMAGE: S www.theactuary.com

Small but mighty Matt Attard explains how actuaries working in small jurisdictions such as Malta overcome challenges Project New Horizon The Project New Horizon programme holds useful lessons for the future actuary, say Tan Suee Chieh and Nick Spencer Jump start Chelsea Adler compares working at a start-up versus a traditional insurer

DEI has been added as a sub-outcome, providing assurance that accredited organisations are proactive about promoting DEI, including: appreciating and understanding how DEI will impact members’ experience at work; fostering a respectful working environment; valuing all colleagues; and members feeling able to raise DEI matters without fear of retaliation. Streamlined and online

Taking the broad view Actuaries have a lot to offer in the non-executive director sphere, says Brandon Horwitz Show your working Wendy Walford gives an overview of the ﬁrst two standards released by the International Sustainability Standards Board A tale of three capitals Actuaries can play a crucial role in the preservation of natural capital, says Ian Trim Post 2039 Kemi Bello on the importance of boosting ﬂood resilience before the Flood Re initiative ends Game on A pricing game held in Saudi Arabia had some interesting outcomes, says Juan Ignacio de Oyarbide

Pratap Tambe considers the uses of in reinsuranceblockchain World Mauritiusview: Bernard Yen provides a snapshot of life as an actuary in the small island state

Catherine Howarth talks to Travis Elsum about shaping responsible investing, and the changes needed to accelerate the transition to a sustainable and ethical economy

The final measure is shareholder activism; alongside asset owners and managers, ShareAction has co-filed several high-profile shareholder resolutions on environmental, social and governance issues such as climate change, health inequalities and the Living Wage.

Howarth gives the example of redefining fiduciary investors’ legal obligations. “If acting in someone’s best interest incorporated a consideration of the impacts of investment decisions on their lives, and on the society in which they live and will retire into, that would open space for fresh thinking.” To this end, ShareAction published a model Responsible Investment Bill (bit.ly/ShareAction_RIB) to promote

The role and responsibility of finance

Shaping responsible investment Howarth continues to use the power of investors to influence social and environmental change as CEO of ShareAction, a charity that aims to “define leading practice for responsible investment and to take a range of measures to encourage adoption”, according to Howarth.

hroughout her career, Catherine Howarth has drawn on her history studies to make sense of the present and influence the future. It has given her the perspective that “change is not only possible, but always inevitable”. She is inspired by the inventive methods used in the past to bring change forward, and looks to these to help her develop creative tactics. Howarth has always been interested in driving positive change, but first realised the influence and power of investors while working as a community activist in east London some 20 years ago.

One of these measures is the regular publication of research reports and surveys that assess and compare how institutional investors measure up against best practice for responsible investing. “We’ve found that ranking investors publicly – particularly those that are in commercial competition with each other – is a productive, useful thing to do and focuses minds throughout organisations and among their stakeholders and clients,” she says.

PROGRESS

At the time, Barclays and HSBC were building new global headquarters in Canary Wharf and there was an optimistic sense that change was possible. She acquired her first shares and joined a successful campaign to pressure the two banks to commit to Living Wage standards. Barclays subsequently became the first FTSE 100 employer to do so, with HSBC following suit.

To understand the finance sector’s role in the transition to a sustainable economy and social equality, Howarth suggests we consider history.

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A second measure is actively engaging with policymakers and supervisors such as the Financial Conduct Authority to influence change and progress sustainable finance policy. A third is to engage with wider public and civil society, giving people a platform to voice their views to institutional investors and policymakers. Howarth believes that engaging with both investment industry insiders and outsiders is the best way to make progress and “collectively come up with the next generation of thinking on how we ensure that financial services serve society and meet the challenges of today and tomorrow – particularly with respect to systemic risks like climate change, biodiversity loss and social inequality”.

“Over the last 50 years, we have seen a scaling up and institutionalisation of the pension fund industry globally,” she says. “During that same period, we’ve seen an extraordinary exploitation of nature for commercial ends.”

She appreciates that investors have been aiming to maximise returns to provide the best possible financial retirement outcomes, but points out the irony that “a secure, safe and happy retirement is being put in jeopardy by activities enabled by our investment in them”. While seeing immense potential for the finance sector to “allocate capital to things that would help get us out of these problems”, she believes this “requires finance to think about its role in in a different and more purposeful way, in relation to society’s needs”.

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Freeriders and greenwashers

InterviewFeatures more enlightened long-term investment by pension schemes and their assetHowarthmanagers.believes

While redesigning the investment framework may be the long-term goal, Howarth believes in bringing about change pragmatically.

The resolution achieved a significant share of the vote, despite the Sainsbury’s Board and major proxy advisers Glass Lewis and ISS recommending investors vote against the resolution, and influenced the company to increase pay for 19,000 directly employed London staff

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Examples of good practice

ShareAction recently released a report (bit.ly/ShareAction_PowerNumbers) on Climate Action 100+ (CA100+), the world’s largest investor initiative on climate change. The initiative includes more than 700 investors, who engage with 167 companies that are responsible for up to 80% of global industrial emissions; the report found that progress on climate engagement and reporting strategies has been limited. “If you could achieve strong progress in reducing emissions from those 167 companies, you’d be well on your way to solving the climate challenge,” says Howarth. “And yet five years on from the founding of CA100+, most of those companies have made littleSheprogress.”believes such initiatives need to be redesigned and strengthened to ensure more accountability and action. “We should jettison investors that aren’t serious within the initiative. We should have minimum standards for participating investors and be clear about what investors are committing to.”

“We should have minimum standards for investorsparticipatingandbeclearaboutwhatinvestorsarecommittingto”

Stakeholder capitalism reimagined Stakeholder capitalism rose to prominence a few years ago after the Business Roundtable released a statement redefining a corporation’s purpose as serving all stakeholders. Critics, however, have pointed to the limited change in signatories’ behaviour, and the challenges inherent in a corporation being answerable to multiple stakeholders and balancing all of theirHowarthneeds. still believes in shareholder primacy, “because boards of directors should be held to account by those who have allocated capital”, but thinks the underlying concept of stakeholder capitalism can still find its expression through responsible investors. In her version, “those who have allocated capital would take an enlightened perspective on all the stakeholders of the company”. Management would then be held accountable by shareholders for appropriate management of stakeholder interests. She believes this concept is particularly relevant for pension schemes, as their members “have an interest in companies being responsible in relation to their consumers, their employees and the environment, because those pension savers are also consumers and citizens”. For example, if a supermarket tries to maximise profits by focusing on selling food that is high in fat, salt and sugar, that decision may adversely affect the health and longevity of consumers who may be invested through their pension fund in that supermarket. While Howarth acknowledges that there is no precedent for the change that is needed for us to transition to a sustainable and fair economy, she believes history is still a useful guide. It will require a collaborative effort, and she thinks that “people in all sectors of society, but crucially in financial markets, should be part of developing the ethical, technical and actuarial frameworks that we need for this new period of human history”.

creating a more holistic investment framework requires “a boldness of vision” and thinks actuaries have a lot to bring to the table, particularly given their skillset and ability to consider a wide range of risks. She is impressed that the debate is already alive and well within the actuarial community, and encourages actuaries to collaborate further with those outside the profession.

“There’s no such thing as a blueprint for perfect change – you have to inch your way forward,” she says. “The more things people do within the current constraints, the more they start to believe that you could move beyond them.” She points to the success that a significant group of institutional investors have had in pressuring listed companies to commit to the Living Wage – more than 50% of FTSE 100 companies are now accredited Living Wage employers. She also cites a recent example of active stewardship in which ShareAction, together with a coalition of retail and institutional investors, co-filed a shareholder resolution calling for Sainsbury’s to commit to paying its workforce at least the Living Wage.

Howarth admits that shareholder resolutions and responsible stewardship have limits in the current framework. “A lot of investors freeride on other people’s efforts to act as responsible owners,” she says. “Highly engaged stewardship is costly, it’s risky, and you may not quickly get the outcomes that you hope for. We have a collective action problem in capital markets when it comes to stewardship of publicly listedShecompanies.”alsohighlights the issue of greenwashing among institutional investors, particularly when it comes to stewardship. She gives the example of investors being quick to sign up to high-profile climate initiatives and promote their membership, but comparatively slow to take meaningful action.

In recent years, the pressure on companies to manage climate-related risks and reduce their greenhouse gas emissions to net zero has come from multiple stakeholders. For example: Climate change activists and net-zero industry bodies recognise the weight that insurers and pension funds have in the financial sector Customers have more options, are more aware of their options, and are making more informed decisions Analysts and investors have always considered how effective management is at seizing opportunities and managing risks for profit. Climaterelated risks are potentially significant Rating agencies are incorporating the management of climate-related risks along with wider environmental, social and governance considerations into their credit rating Regulators are concerned with stability of the market and the protection of customers, and want evidence that the risks and opportunities are being appropriately identified and managed.

The ORSA can require many iterations, investigating different combinations of scenarios (external factors) and strategies (insurer-driven actions). The report is used to determine follow-up investigations, actions and strategies that can impact all business areas, such as pricing, product features, reinsurance, capital requirements, investment choices and more. Incorporating climate change risk into the ORSA is more than just updating a single report. The ORSA relies on many other policies and processes that will need to be reviewed for climate change impacts.

Supervisoryrisks analysesreporting and consistent disclosureReporting

Why the ORSA?

Although a risk assessment is carried out to calculate the regulatory capital requirement, the ORSA is much broader. It spans all risks, not just those mitigated by capital and broader risk management activities. It also looks beyond downside risks to consider the opportunities (upside risks) and actions required to realise them. The insurer chooses the assumptions and methodologies most appropriate to its business, although in many cases the ORSA is reviewed by the regulator, so choice is not unrestricted. Typically, the exercise is carried out annually, and more frequently for some components.

Climate aware ORSA

Climate risks are impacting many aspects of an insurer’s business. One tool insurers use to assess potential impacts of risks and investigate optimisation strategies is the Own Risk and Solvency Assessment (ORSA). While the regulatory capital requirement may be determined by a metric over a shorter time period (such as a one-year risk measure), the ORSA is often broader, spanning governance and risk management practices and looking further into the future. This indicates that the ORSA could be well suited to incorporating climate-related risks.

Why now?

What is happening?

MonitoringrequirementsbyEIOPA.Insurersareusingcombinations of in-house expertise, industry data and industry/consultancy models to start to overcome these challenges. Best practice will emerge as insurers, regulators and other stakeholders learn from their ORSADownloadexperiences.thefull paper at bit.ly/ MoodysCRI. It is part of a series that focuses on climate risk topics for insurers: Climate change – the biggest risk multiplier for the insurance industry Constructing Climate Pathway Scenarios to Assess the Financial Impact of Climate Risk Incorporating ESG into P&C underwritingClimateaware Own Risk Solvency AssessmentIncorporating Climate Risk into Strategic Asset Allocation Exploring the Impacts of IFRS Sustainability Disclosure Standards on Insurers.TheMoody’s Analytics Climate Pathway Scenario Service offers a guided, step-by-step approach to help insurers develop their scenario capabilities. It provides the essential building blocks to operationalise scenarios in decision making and to meet regulation and disclosure requirements. Built on award-winning scenario generation software, the Climate Pathway Service translates climate pathways into an insurer’s financial risk variables to help them assess their climate-related risks and anticipate the future impact of climate change on asset and liability projections. Find out more at bit.ly/3HxirGQ Cassandra Hannibal, director – insurance research, presents the third executive summary in a series on climate risk topics for insurers

The European Insurance and Occupational Pension Authority (EIOPA) released its guidance to supervisors on the use of climate change scenarios in the ORSA, which included guidance on the following: Definition of climate change risk Integrating climate change risks into ORSA in the short and long term Materiality assessment of climate Rangechange risksofclimate change risk scenarios Modelling transition and physical impacts at granular level Lower precision and frequency of long-term scenario analyses Evolution of climate change

Climate Risk for Insurerswhitepaper series sponsored by SEPTEMBER 2022 | THE ACTUARY | 17www.theactuary.com

Stephen Hyams shares a proposal from the Pension Pathway Working Party that could help those with deﬁned contribution pensions to achieve better outcomes

Decumulation

www.theactuary.com18 | THE ACTUARY | SEPTEMBER 2022 PensionsFeatures

FIGURE 1: Transition to a decumulation pathway. 1

A product without a guarantee on the level of income has greater investment freedom and much-reduced reserving requirements, with the potential to achieve a significantly higher (but variable) income than the annuity for a given purchase price. It also needs to manage longevity risk.

generation of a lifetime income; the flexibility to draw money when you want; and the ability to leave some money as a legacy. These objectives are in competition, since targeting one restricts the ability to meet the others.

The ‘flexible fund’ to provide flexible access, with the option to leave some money for legacy purposes.

Suitable products would then be offered for each fund. There might be the option to switch monies between the funds over time, rather than it being a one-off decision.

To help implement a successful decumulation strategy, the IFoA’s Pension Decumulation Pathways Working Party proposes the introduction of a decumulation pathway (DP), in which the DC pot is split into two components: pension fund. However, alternatives are needed for the pension fund to cater for those who do not want to buy an annuity.

Suitable products for a DP are drawdown for the flexible fund and an annuity for the propose pathway,aintroductiontheofdecumulationinwhichthedefinedcontributionpotissplitintotwocomponents”

LifetimeDecumulationpathwayincomerequiredDC fund crystallised Ad hoc amounts may be taken Tax-freecash Pension fund Flexible fund DrawdownDrawdownDC fund www.theactuary.com SEPTEMBER 2022 | THE ACTUARY | PensionsFeatures19

The cost of an annuity reflects the need to service the guarantee, which requires the insurer to adopt a very cautious investment strategy and maintain contingency reserves.

A successful categorisedcanone’swithstrategypensioncontributiondefined(DC)decumulationshouldbeginanevaluationofobjectives.Thesebebroadlyinto:

Managing longevity risk

Consumers would choose the proportions allocated to each fund according to the importance they attach to different objectives.

Suitable decumulation products are then needed to meet those objectives. In the UK, there are currently two main options:

The importance of managing longevity risk can be seen in Figure 2 (overleaf), which shows the probability distribution of age at death for someone currently aged 67. The

CDC is new in the UK, and is expected to become usable as a mainstream decumulation option in due course.

GETTYES:IMAG

1 The guaranteed annuity. This provides a secure lifetime income, but is unpopular because it is inflexible, and commonly regarded as expensive and poor value in the event of early death.

2 Flexi-access drawdown. This provides flexible access and good value on early death, but is not well suited to provide a lifetime income because it does not adequately manage longevity risk (the risk of outliving the available monies in the DC pot) and requires complex and time-consuming ongoing management.

A product seen in various forms around the world, which we refer to as the pooled pension fund, in which individual DC pots are retained and longevity risk is pooled between participants or insured on a rolling basis. Examples of this can be found in the Netherlands and Canada, and there is growing interest in other countries.

Product development

“We

Two products that meet these criteria are: Collective defined contribution (CDC) schemes. These are trust-based arrangements in which members’ assets are pooled and longevity risk is thereby automatically pooled between members.

Decumulation pathways

The ‘pension fund’ to generate a lifetime income 2

Figure 1 shows how a consumer might transition into a DP. After taking any tax-free cash, the balance is initially transferred into drawdown. Ad hoc amounts may be withdrawn over time, but once a regular lifetime income is required, a DP can be offered.

“The introduction of

Measuring success

FIGURE 2: Probability distribution of age at death. encouragingprovidepathwaysdecumulationcouldsignificantassistancebypeopletothinkabouttheirobjectives”

Averageincome re alaluatetheatures.sticributionustededianalartile 107 ged 0on-adjusted95%Percentile75%upperquartile50%median25%lowerquartile5%tialincome%)mediatenuity(3.0%)

Figure 3 is an example of our stochastic modelling results, showing the distribution of the 30-year average inflation-adjusted income for the standard DP. The median average income is 4.1% of the initial investment, slightly above the initial income of 4.0%, while the inter-quartile range is 3.3% to 5.1%.

over 30 yrs,

Averaged over 30 yrs, inﬂation-adjustedInitialincome(4.0%)Immediateannuity(3.0%) % of pensioninitialfund7%6%5%4%3%2%

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6%5%4%3%2%1%0% 77

Standard DP We have designed a ‘standard’ DP, aimed at the typical consumer, which might be offered as a default solution. It has a modest (10%) allocation to the flexible fund, with the bulk being assigned to the pension fund and having the following features:

We devised some metrics to measure the success of the standard DP and evaluate the impact of varying some of its features.

initial DC pot needed to provide a specified lifetime income is highly uncertain, in view of the wide spread of potential pay-out periods untilOnedeath.solution is to insure the longevity risk, which is what happens with an annuity. An alternative is a mutual arrangement in which longevity risk is pooled between participants, so that those who live relatively long are subsidised by those who die earlier. This happens automatically with CDC. For the pooled pension fund, where individual DC pots are retained, an explicit mechanism is required whereby DC monies of deceased participants are transferred into a ‘longevity pool’ and reallocated to surviving members as ‘longevity credits’. In principle, this aims to be actuarially neutral, or ‘fair’, in that nobody expects to gain or lose; however, practical considerations are likely to conflict with this intention. An alternative is an insured arrangement where, for each period, the insurer pays pre-agreed longevity credits in return for receiving the DC pots of deceased members. Any form of longevity risk management has two consequences. Firstly, there is a cross-subsidy between those who die early and those who survive longer; this is most clearly demonstrated in the pooled pension fund, where DC pots are forfeited on death. There is also a reduction in the ability to exercise some ongoing management of the arrangement, such as to vary the investment strategy or the level of income taken. An annuity and CDC provide no such flexibility. With the pooled pension fund, a degree of choice could be offered, but only where pre-agreed and to a limited extent, in order to protect the pool from selection – for example, to prevent someone in poor health from withdrawing their DC pot to prevent it from being lost on their death.

FIGURE 3: Standard DP performance. Probability Age 87 97

Withdrawal strategy: Automated, with the affordable income assessed at least annually using a single-life index-linked annuity rate. This is notional in that an annuity is not actually purchased and the annuity rate uses a discount rate that reflects a best estimate of the future investment return. This approach ensures that the income lasts a full lifetime, and aims to increase each year in line with inflation.

In practice, the standard design would be tailored to reflect the needs of the target consumer group. There could also be the option to vary some of the standard features to suit personal choice, such as the flexible fund allocation or investment strategy, or the provision of a surviving dependant’s pension.

Longevity risk management: Assets are transferred from drawdown into a pooled pension fund over a five-year period from age 75. The phased transfer is to avoid a step reduction in death benefit and in flexibility. Investment strategy: One that would typically be categorised as ‘medium risk’, with a 50% equity allocation.

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The IFoA’s Pension Decumulation Pathways Working Party comprises Stephen Hyams (chair), Alec Findlater, Andrew Gilbert, Chris Squirrell, Finbarr Kiely, Huw Davies, Kevin Hollister, Oliver Warren and Tim Jablonski. Its paper was presented at a Sessional Meeting on 17 May 2022 and can be accessed at bit.ly/PenDecPath www.theactuary.com

By comparison, the income from an index-linked annuity is a constant 3.0%, so the median average income from the standard DP is 37% higher, while overall the standard DP has an 82% chance of providing We also evaluated the standard DP in terms of sustainability and stability of income; details can be found in our sessional paper, Pension Decumulation Pathways: A proposed approach (details below). Pathways Working Party standard DP has an 82% chance of a higher average income than the annuity If the pension fund instead remains in drawdown (with no longevity pooling), the median average income falls from 4.1% to 3.2%, with only a 57% chance of outperforming the annuity. This finding shows the beneficial impact of longevity credits and the limitations of drawdown in generating a lifetime income A A way forward ere has been limited innovation in the pensions industry to help DC consumers navigate the complex choices and implement robust decumulation strategies. DPs could provide significant assistance by encouraging people to think about their objectives and the relative weight attached to each one, while ensuring that suitable products are provided to achieve those objectives.

STEPHEN HYAMS is chair of the IFoA’s PathwaysDecumulationPensionWorking

shorter duration and not to match the liability duration of life companies. Mortality information can also be difficult to obtain and may be volatile due to smaller population sizes. As a result, some companies apply mortality tables from different geographies – for ENNIAexample,Aruba uses Dutch mortality tables. practiceEurope,doesworknationsdatacombiningAdditionally,mortalityfromdifferentmightnotaswellasitinWesternwheretheiscommon, because the longevity trend is less homogeneous in the Caribbean. Fortunately, IFRS 17 is a principle-based standard that allows for some leeway in implementation. The phrase “without undue cost and effort” is repeated several times in the standard; depending on the country or company’s size and circumstances, there is

OF IDEAS www.theactuary.com22 | THE ACTUARY | SEPTEMBER 2022 RegulationFeatures

GETTYES:IMAG

One of IFRS 17’s central concepts is the use of current, preferably market-based, data – for example in the setting of discount rates and the estimation of future cashflows and scenarios. Furthermore, stochastic modelling is sometimes necessary. These requirements pose less of a challenge for major economies, as access to financial markets provides information on instruments,market and they also tend to have more data available haveoutlierstendthesepopulationsInsuchinsuranceonrisksasmortality.addition,theineconomiestobelarger,tendtolessofanimpact, and there tends to be more historical data available. Collecting current data is harder in smaller countries. Financial markets either don’t exist, as there is no local stock exchange, or are highly illiquid, as provision of local government bonds to the market is irregular and rare. Bonds that are issued tend to have

standard’sCaribbeanmightimplementationbeoverkillforinsurancecompanies,buttheunderlyingprinciplesarestillvaluable”

hile some Caribbean insurance companies have expressed their IFRSto implementingcommitment17,theoverall attitude towards the standard from local actuarial and accounting professions and regulators in the region remains unclear. This can be seen in the relatively limited number of local IFRS 17 resources available, and the limited guidance from local central banks.

Servaas Houben considers how IFRS 17 principles could beneﬁt insurers in the Caribbean – and what European insurers could learn from the region when it comes to implementing the standard

Non-public insurance companies in the Caribbean are not required to report under IFRS, and some will wait for other regions’ experiences with the standard to emerge before deciding on their implementation approach. However, not implementing IFRS 17 principles might be a missed opportunity – and, equally, Europe may have a few things to learn from the Caribbean.

“Full

Challenges for the Caribbean

What can Europe learn from the Caribbean? In Europe, many firms have been preparing for IFRS 17 by building on existing Solvency II frameworks and methodologies. Given the similarities between the two frameworks, this is logical, reducing the time and cost involved in implementing IFRS 17. However, Solvency II, which started as a principle-based regime, has become rules-based over the years (particularly the standard formula). The level of detail and amount of legislation and documentation involved have become overwhelming. IFRS 17, in contrast, remains principles-based; the June 2020 standard, with amendments, stands only at 99 pages. This means judgment is required, allowing for different approaches to, for example, the IFRS 17 risk adjustment compared to Solvency II risk margin. Under IFRS 17, capital structure and risk appetite can change over time; this is not possible under the Solvency II standard formula. A mere replication of Solvency II for IFRS 17 purposes might therefore cause an insurer to miss the additional insights that IFRS 17 can bring.

A valuable exercise IFRS 17 implementation has been daunting for all insurance companies. Fortunately, its creators were mindful of companies’ different sizes and sophistication levels, and the different levels of information available to them; the phrase “without undue cost and effort” gives smaller insurance companies and countries some license to implement a version of the standard that is fit for purpose and proportionate to local circumstances. For companies that are not required to implement IFRS 17, whether to do so is up to them. Full implementation might be overkill for Caribbean insurance companies, but the standard’s underlying principles are still valuable. Local regulators, actuaries and other stakeholders should be aware of these principles and promote them for the benefits of policyholder protection and public interest, in line with the Actuaries’ Code.

Risk-based thinking: References to stochastic valuation and the use of scenarios will help companies to better consider and understand their risks, as well as the interactions between risks. IFRS 17 also requires the concentration of risks to be described and disclosed (127), which may be a new concept for some Caribbean insurance companies. These new considerations could encourage companies to consider mitigating actions, increasing policyholder protection.

For our part, European insurance companies should be careful not to interpret IFRS 17 as a ‘copy and paste’ exercise of Solvency II + profit and loss. IFRS 17 is unique as is principles-based: creating a company-specific IFRS 17 implementation could therefore give stakeholders additional insight into the company’s strategy and vision for the future.

Asset-liability management: IFRS 17 stipulates the use of current and market available data, where possible. Where market data is missing and companies are forced to use comparable information from other countries, this will result in additional insights and better risk management. For example, as most Caribbean currencies are linked to the US dollar, combining local currency and US dollar yields would enable Caribbean ﬁrms to create local yield curves, increase investment opportunities in US dollar-priced assets, and allow for more asset liability management options.

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HOUBENSERVAAS is manageractuarialat Ergo Insurance in Belgium, CommittBelgium’spresidentandofCFASocietyee

Mortality data sharing: IFRS 17 can stimulate co-operation between insurance companies or countries when it comes to sharing information on mortality trends – a co-operation that already exists in Western Europe. Data review: IFRS 17 requires assumptions to be backed up by external or internal data (B50). Undertaking an in-depth review of internal data can improve operations and help clean up any errors that have not been spotted before. What if?: IFRS 17 requires disclosure of sensitivity analyses (128), including effects on proﬁt and loss and equity. This information would provide insights on the insurance company’s level of volatility for various stakeholders, allowing central banks to identify potential issues and risks at an earlier stage and take action, resulting in improved protection for policyholders.

What beneﬁts could IFRS implementation17 bring to the Caribbean?

As Caribbean countries don’t fall under the Solvency II regime, they may be more open-minded and able to start from scratch when it comes to IFRS 17. From industry experience and looking at European thought leadership around IFRS 17, Solvency II seems to have an anchoring bias effect, with insurance companies using their Solvency II setup as a starting point and checking whether it is IFRS 17 compliant, rather than starting from an IFRS 17 perspective and checking whether one of the existing reporting frameworks (such as Solvency II, IFRS 4, local General Accepted Accounting Principles, or economic capital) could be leveraged. European insurance companies therefore face the risk of IFRS 17 becoming a ‘Solvency II + add-on’ framework, instead of a completely new framework that provides new insights.

More details on how this might be achieved can be found at bit.ly/Pricing_for_Mort. At a high level, the worldwide longevity trend is clearly present in the Caribbean. An approach that combines local and worldwide data would likely still result in a more locally suitable mortality table than many companies’ current approach of simply using mortality tables from another country, which may have a very different shape to local mortality.

room for simplifications and shortcuts. For example, when it comes to the requirement to consider the full range of possible outcomes, it is possible to make shortcuts by carrying out simple modelling or reducing the parameters used (IFRS17.B39). IFRS 17 also allows for several application approaches for current assumptions, ranging from the preferred market/public available data to company specific data and expert judgment (IFRS 17. B82). This allows similar market instruments to be used as proxies for missing market values. For example, when the local currency is pegged to a foreign country’s currency such as the US dollar, data from that foreign country could be incorporated when estimating local market and economicCombiningparameters.worldwide or regional demographic data with local data can also help.

Proposals and impacts

Brandon Choong and Claire McColl discuss Solvency II reforms and their potential implications for the UK bulk purchase annuity market

24 | THE ACTUARY | SEPTEMBER 2022 RegulationFeatures

Our own analysis suggests that this could result in a reduction to the matching adjustment of approximately 10%–30%, depending on portfolio-specific factors. This will increase the best-estimate liabilities for BPAs and, all else being equal, the price of BPAs.

The consultation explores a fundamental spread methodology that comprises the sum of the expected loss and a credit risk premium that is calculated based on an index spread approach.

The proposal also introduces credit sensitivity into the balance sheet, as the fundamental spread will be a function of an index that is potentially averaged over a short duration and of current spreads. With the loss of some of the counter-cyclicality benefit offered by the matching adjustment, firms that are managing towards a relatively stable solvency coverage ratio may have to resort to expensive measures to mitigate this exposure. This will be a drag on business profitability and is likely to result in upward pressure onwww.theactuary.comprices.

What are the key areas covered by the proposed reforms, and how could they impact BPA pricing? Risk margin The consultation has proposed a modified cost-of-capital approach, with the aim of reducing the current risk margin levels by 60%–70% for long-term life insurers, gross of transitional measure on technical provisions (TMTP).

BULKYAISSUE

O n 28 April 2022, the UK government released its consultation on Solvency II reforms, and the Prudential Regulation Authority (PRA) released Discussion Paper 2/22: Potential Reforms to Risk Margin and Matching Adjustment within Solvency II

The industry is supportive of this change, but its theoretical benefits are unlikely to be fully realised in the short term, given the TMTP’s offsetting impact. Our contacts in the industry have indicated that the level of risk margin reduction is unlikely to be sufficient to justify a reduction in the level of longevity reinsurance (the level of which has been highlighted as being of concern to the PRA), as the cost of longevity risk solvency capital requirement itself remains significant.

Fundamental spread calibration in matching adjustment calculation

While the proposed reforms are expected to have wide-ranging impacts on various segments of the UK insurance industry, one key segment that is expected to be impacted more than most is the bulk purchase annuity (BPA) market. The BPA market is significant to the UK life industry; it has seen steady growth during the past decade as defined benefit pension schemes have sought to de-risk. During the past couple of years, BPA deals have totalled around £30bn per year – and there are no signs that the market is diminishing.

www.theactuary.com SEPTEMBER 2022 | THE ACTUARY | RegulationFeatures25

Asset capabilities

If supply-side BPA activity is constrained due to the Solvency II reforms, providers might focus more on improved margin or lower volumes. This could lead to greater selectivity in scheme size, and smaller schemes may find it increasingly difficult to de-risk in a costeffective manner.

New business strain and appetite

ISTOCKIMAGES:

CHOONGBRANDON is a senior manager in the DeloittBankingInsuranceActuarialandteamate

Innovation Although we have highlighted several factors that could drive an increase in BPA prices, one need only look back to the introduction of Solvency II, when there were concerns about disruption to the BPA market. BPA volumes at Solvency II inception only decreased slightly, before rebounding strongly during the following years. The strength in the industry was maintained in part as firms innovated and moved into higher yielding illiquid assets at the time. Firms may well seek further innovative methods to counteract the financial headwinds introduced by the Solvency II reforms.

On the basis that there is a net negative financial impact from the reforms, current balance sheets will suffer a one-off adjustment that reduces the available free capital held by firms (absent any new transitional measures to phase in the reforms). Along with the higher new business strain incurred from writing new BPA deals, this reduces firms’ ability to write the same volume of business without raising additional capital. As a more extreme consequence, the reduced capacity to write new business could reduce the level of competition in the BPA space and may contribute towards rising transaction prices.

Assets such as infrastructure investments are finite in nature; firms that lack competitive sourcing capabilities and management expertise may struggle to acquire these assets, and the benefit of the greater eligibility of assets from the reforms may not be shared equitably across all firms. Some firms are likely to warehouse assets in anticipation, and we are increasingly seeing firms looking to improve their asset capabilities, although this is not solely driven by Solvency II reforms.

While the level of reinsurance being sought may not decrease from current levels, with the matching adjustment benefit in the UK potentially decreasing, it may become preferable for firms to adopt different risk transfer mechanisms. For instance, fully funded reinsurance allows companies to transfer all risk that pertains to the BPA book, including credit risk. Use of these products is increasing, and Solvency II reforms may accelerate the shift from pure longevity swaps to these types of reinsurance structures instead.

The PRA has estimated that the proposed changes to the risk margin and matching adjustment would result in a release of 10%–15% of own funds, assuming the full run-off of TMTP. However, many in the industry remain sceptical about these estimates. From our own estimates, as well as conversations with industry players, the reduction in the risk margin is expected to be muted due to the extent of longevity risk reinsurance. The PRA has stated that it has assumed 50% of longevity risk is offshored in its calculations, but industry players have suggested that the amount is significantly higher than that, particularly for new BPA business. Therefore, the reduction in the matching adjustment could potentially outweigh any savings in the risk margin, leading to a net negative impact, ignoring any offsetting TMTP impacts. Such an outcome would likely translate to an increase in BPA prices.

CLAIRE McCOLL is a senior manager in the DeloittBankingInsuranceActuarialandteamate

Second-order impacts Beyond the first-order impact of the reforms on BPA pricing, we believe that the reforms will have a bearing on other factors that could influence the BPA market and its participants.

Matching adjustment eligibility

Combined financial impacts

The consultation proposes to broaden the matching adjustment-eligible asset classes to include assets with prepayment risk, and to amend the treatment of assets with construction phases, with the objective of promoting investment in long-term productive assets. While broadening the list of matching adjustment-eligible assets will be welcomed by BPA providers, these asset classes in general have already been used by matching adjustment firms in varying degrees under the current regime, albeit with penal haircuts. Under the reforms, details will be required on the exact treatment of these assets to determine whether this will result in material benefits.

Reinsurance strategy

Selectiveness of BPA providers

Remaining engaged

While we’ve set out some potential impacts of the consultation proposals on the BPA market, it is worth remembering that the designs are yet to be finalised. With the consultation closing on 21 July 2022 and the PRA’s Data Collection Exercise due to close in September 2022, we expect that there is still significant dialogue to be had between all parties, including with the new prime minister and chancellor. In the meantime, we expect the industry to remain engaged with the consultations and to continue looking forward to understand how any reforms to Solvency II will impact their business.

MONEYRIGHTONTHE

The interrelated hypotheses of equilibrium, market efficiency and the capital asset pricing model (CAPM) provide the pillars of financial economics. If markets are in equilibrium and efficient then, it is said, no individual trader can consistently improve their returns by taking positions away from the market portfolio. Black-Scholes predicts the fair value of an option, and a myriad of portfolio construction techniques allow us to ‘optimise’ to volatility and return. But here’s the rub: markets are not perfectly efficient. Unlike a mathematical theorem, market efficiency is not a truth that you can build other theorems on. CAPM, Black-Scholes and portfolio construction work well, but not perfectly. Their beautiful proofs do not make them true. Financial economics provides assumed solutions to assumed formulations of problems, proved on their own terms but not always in reality. Keats was wrong: beauty is not always truth. Right or left? In the battle of ideas, we are attracted to simplistic narratives – and political economy is no different. Broadly, on the right of politics, we group together narratives that say the state should be small, the individual free and unencumbered by taxation and regulation, and prices generally set by the competitive market processes. On the left, we group together narratives that say the state should be large, the collective’s interest more important than

Does the beauty of economic maths make

Nico Aspinall considersargumentsthe

The left’s motivations around fairness, negotiated co-ordination and equality have not resulted in mathematical theory. Complex and nuanced starting assumptions do not lend themselves to elegant, abstract analysis. The left has even debated, and often rejected, the use of money as a medium of exchange, and has certainly rejected financial wealth as the sole measure of an individual’s or enterprise’s success. Without the unifying concept that money is the best and only measure of worth, mathematical analysis is thrown into paralysis. A heterogenous bundle of measures of progress could never be amenable to singular formulae, beautiful or not. The closest the left gets to maths is in the guise of Keynes, who explained the role of government spending in counteracting and shortening periods of slow growth in a free moretooftotheDomoremathsDoesmarket.lovingmakeusrightwing?weneedtodevelopmathsoftheleft,orabandonthebeautyfinancialeconomicsmakeouradvicebalanced?

wing?mindedmathematicallyandeconomiststhemoreright

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the individual’s, tax and regulation as high as necessary to support these aims, and prices altered to give incentives to achieve government policy. I would argue that the simple, beautiful maths of financial economics is aligned with NICO ASPINALL is chief investment officer Connectedat ManagementAsset

the right. The maths works because markets are assumed to be efficient and government is assumed not to be intervening. Companies are assumed to be profit-maximisers, not to be fulfilling some additional objectives that are added to them by society. These right-leaning assumptions produce beautiful theory. Does the beauty of the theory also produce right-leaning mathematicallyminded economists? And where are the mathematical theories of the left? Perhaps they were outcompeted by the superior theories of financial economics. However, if we look harder, we see that this cannot be the case. Financial economics is not empirically provable to any level of statistical rigour insisted upon by a hard science, so empiricism has not struck out the theories of the left. Other possibilities are that the left has no maths, or that its maths is not beautiful.

26 | THE ACTUARY | SEPTEMBER 2022 OpinionFeatures A s someone who fell in love with beautiful theorems, I’m a sucker for a great proof. Pythagoras’ theorem first showed me which way my heart lay, but it was de Moivre’s theorem that really caught me. A physics degree found me memorising equations for phonons, special relativity and fluid dynamics – gaining joy from learning the maths that explains the universe. I then discovered that economic maths could be beautiful, too. I loved the financial economics exam CT8 (now part of CM2) so much that I dived deeper with the derivatives exam, ST6 (now SP6). You know you’re getting old as an actuary when they rename your exams!

A Malta-based actuary would typically address operational issues such as the concentration of risk inherent in single large risks and counterparties for investment and banking. Local undertakings partly mitigate the former through a mixture of facultative reinsurance and co-insurance programmes, unifying with competitors. Reinsurance capacity is affected by the geographical concentrations of large sums at risk in operations such as fish farming and oil and gas exploration. This means we must make innovative use of captive or cell company insurance undertakings for self-retention and layered reinsurance programmes.

MATT ATTARD is a manager within KPMG Malta’s Risk Consulting team

Working for local undertakings writing risks in Malta, on the other hand, is a unique and enriching experience in itself. It’s always intriguing to do a deep dive into the intricacies of an insurer’s market share for a product, as well as the impact of the actions taken by the limited number of competitors at play.

Malta is also the domicile of around 62 captive (re)insurance undertakings, and the Malta Actuarial Society is a budding organisation that consists of around 52 actuarial and non-actuarial professionals –among them 10 IFoA-qualified members.

Climate change also poses an interesting challenge for Malta-based actuaries. The country has seen an evident increase in extra-tropical storm frequency and severity, and also faces possible tsunamis. This opens up an interesting avenue in which local geophysicists and actuaries could collaborate, as catastrophic models in Malta are typically only available for earthquake risk. The nature of an island nation means there is a great deal of opportunity for us to connect and synergistically collaborate with actuaries from other island nations, such as Cyprus and Caribbean countries – though we may be geographically distant, our joint realities are similar.

Matt Attard the challenges inherent working in a small island nation, and how curiosity and lateral thinking can help overcome these issues

Malta’s small population generally means that there are a very small number of loss events for actuaries to calibrate models relevant to the Maltese context on. This issue persists through examples such as the absence of a nationwide life table and reserving for large motor liability losses, where data on final court awards may not be prevalent. Variability echoes the ‘law of small numbers’ and its attaching bias of ‘hasty generalisation’. This occurs because we tend to underestimate the true variability within a small sample. Malta’s population is densely connected and heavily clustered, so information tends to spread rapidly. This clustering means our estimates are highly sensitive to changes in the behaviour and experience of one or a number of local clusters. (This was a defining issue that local epidemiologists needed to grapple with when calibrating COVID-19 infection dynamics models for the country.)

GETTYES:IMAG www.theactuary.com ard explores overcomethinkingcuriosityislandworkingchallengestheinherentinasmallnation,andhowandlateralcanhelptheseissues

“The scarcity and variability of data in Malta provide a challenge when deriving credible and robust estimates for undertakings”local

To address these issues, actuaries in Malta attempt to make adequate assumptions by adjusting the potentially limited available benchmarks, placing the right credibility weighting on own experience, and using lateral thinking.

SEPTEMBER 2022 | THE ACTUARY | Features27Careers

The Malta-based actuary’s experience tends to differ depending on whether they are working with local undertakings or with international market participants that are domiciled in Malta. One difference is the context of the actuarial problems. At times, working with international clients requires us to understand a reality that we cannot relate to. An example within the local life context is annuity business, which is yet to propagate in Malta. However, we can refresh our understanding of the concepts from our studies, and overcome the inability to relate to an example through extensive research and a motivation to ask questions.

Overcoming challenges Data is the lifeblood of any actuarial model, and the scarcity and variability of data in Malta provide a challenge when deriving credible and robust estimates for local undertakings.

MIGHTYSMALL

orking as an actuary in a small market comes with challenges –as is the case in Malta, a small island nation 191km south of Sicily. Azure beaches and historic bastions aside, Malta is a hotspot for financial services. As well as its local insurance undertakings, Malta is home to operations from several international players. These include large reinsurers and undertakings with managing general agent business, even those with origins within the London market.

Gaps in scale and speed The IFoA and many of its members have been proactive in addressing these complex and uncertain issues. This has included our responses to the climate, pandemic and other planetary emergencies, and is a key element of our role as risk professionals advising on long-term sustainable solutions. However, there are still gaps in how we address the scale of the challenge, and we are not progressing at the speed required.

Project New Horizon started by creating a shared understanding of these gaps, and four core themes emerged: As risk managers, we only tend to act within existing client and regulatory frameworks, which often fail to incorporate broader systemic uncertainties. We need to be more involved in translating these risks into practical actions, and to take more ownership and responsibility. We are only just getting started on environmental risks, and we haven’t really started on social risks. “Change can only be effective if we can enrol a group with a cohesive narrative and shared purpose that can inspire action” We often rely too much on data, working compliantly to high accuracy within the current framework. This can mask the true uncertainties and underlying systemic risks. Can we better translate broader risks and uncertainties into practical actions? Can we take more ownership and responsibility for the outcomes, not just compliance? Within the next 15–30 years, and possibly sooner, artificial intelligence will outcompete us in terms of most of our compliance functions. If we are to be a relevant and attractive profession in 15 years, we will have to engage in holistic and long-term perspectives that harness artificial intelligence computation so that we are not replaced by it. The key to our future lies in the mastery of complexity and pluralism, developing coherent pathways, and helping arbitrate between different stakeholder Individuallyinterests.andcollectively, we lack urgency and incentives to change. Actuaries are, and have always been, in high demand. In this way, we have become victims of our own success. We need to challenge the system, speak up, and be more agile and entrepreneurial. With these challenges in mind, we set out on our journey. New skillsets Project New Horizon led us through a series of stages – developing our understanding, creating a new vision, developingwww.theactuary.compractical

Tan Suee Chieh and Nick Spencer share the lessons of the Project New Horizon programme, which aims to prepare the profession for an increasingly complex future How can we maintain our premier status whilerisk-professionaddressingthe growing complexity and interconnectedness of the risks we deal with? From March to June 2022, 22 senior actuaries and four non-actuaries considered this very question while completing the Project New Horizon programme. Participants came from diverse geographic backgrounds, and had interests in sustainability, systems thinking and pluralist economics. The project aimed to build a cohort of progressive actuarial leaders to shape the future during unprecedented and systemic uncertainties. Over the next few months, the facilitators of the programme – Tan Suee Chieh, Nick Spencer, Nico Aspinall, Nick Silver and Lucy Saye – will share the skills and insights learnt, what they mean for the profession, actions to be taken and proposed next steps. A trilogy of tragedies The programme was inspired by Dr Anthony Hodgson’s July 2021 Thought Leadership lecture, in which he identified three tragedies that we, and all professionals, need to address: The tragedy of the commons – The escalating climate and environmental crises and challenges of intersecting complexities The tragedy of time horizons – Competing visions of the future colliding with near-term social and health (pandemic) crises The tragedy of consciousness –Developing responses to an everbroadening array of economic and geopolitical aggravations, with the need to apply a broader mindset and awaken our collective human capacity to act.

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Source: Dr Anthony Hodgson/Project New Horizon

Future consciousnessAGENCYH2H1 UNCERTAINTY H3 RoadmapsForecasts ScenarioScenarioScenariosPathways13Scenario 2 Scenario 4 www.theactuary.com SEPTEMBER 2022 | THE ACTUARY | Features29Careers

FIGURE 1: The Field of Transformation.

TAN SUEE CHIEH is a past president of the IFoA and was a member of IFoA Council from 2017-22 NICK SPENCER is a past chair of the IFoA investmentsustainableBoardSustainabilityandaadviser

FIGURE 2: Narrative from the transformative journey.

TRAGEDYOFTIMEHORIZONS TRAGEDY OF CONSCIOUSNESS The newglobalrealitiesThecontextualrelevancesphere professionalactuarialThesphere How to deal CONFUSINGwithFUTURES? How to deal COMPLEXITY?ESCALATINGwith How to deal with MISSING MIND CAPACITIES? Climate emergenciesenvironmentaland Pandemics and wellbeing crises

Plotting agency against uncertainty leads to four different analytical tools: forecasts, roadmaps, scenarios and pathways. New collaboration tools – One of today’s key challenges is that we live in a world of pluralism. People see problems differently and think of solutions at different levels and through different lenses. Change can only be effective if we can enrol a group with a cohesive narrative and shared purpose that can inspire action. We learnt new creative tools to help us collectively harness ideas and negotiate dilemmas. We also learnt a novel collaborative technique for listening to and engaging with different perspectives to propel collective action.

What these skills support – but is ultimately more powerful – is a mindset shift. We have been imbued with not only a clearer purpose and vision, but also a deeper sense of agency. An understanding of agency has taught us to be more comfortable with uncertainty. The future is not a given, but nor is it a statistical unknown; it is a space that we have agency over. Our agency is dependent on mindsets of courage, imagination and collaboration. You can only be a leader if you have needsfollowers.Thechallenges,andurgency of the change required for our existing horizon grew bigger in each collective discussion, and have been the guiding lights in our development of future pathways of transformations.potential The future In our next articles, we will outline the vision for actuaries that we the skillsetsdeveloped,needed to sustainably add value, how the profession can enter new domains, and institutional ways to accelerate our journey. The future is just about to start.

Geopolitical and economic aggravations but unsustainable approach (H1). Then, having created an emergent long-term vision (H3), it considers H2 –the growing active transition between H1 and H3. An understanding of agency (Figure 3), which is implicit within the three-horizon model. Agency represents the ability to effect change. It is a distinctive change HowAvoidedwe: the tsunami Found a way through the forest Climbed the mountain

GETTY/NOUNPROJECTIMAGES: actions to realise that vision, and using collaborative tools to build communality and energy to these goals. The three most important skills we learnt were: The three horizons approach (Figure 2) – This is an intellectual framework set around a long-term guiding vision of what is required. The approach starts with understanding the current predominant dimension, alongside future uncertainty.

New mindsets

FIGURE 3: Analytical tools gained by plotting agency against uncertainty.

TRAGEDYOFTHECOMMONS

First, let’s talk about culture. There are many ways to defi culture. To start, I’ll focus on the way in which work is done. When I joined an insurance carrier, I participated in a formal training programme that lasted about three to four months. In start addition to my direct supervisor, I was assigned a trainer who provided hands-on guidance to help me learn my job. This person set up time for me to meet the team and company leadership, and provided documentation for all the processes so I could get up to speed on the expectations for my role. Whenever I had questions, he was there to help. My experience on joining an insurtech was very different. On my first day, I attended one onboarding session and was then shown to my desk, handed a laptop and told to ‘Slack’ if I had any questions. Then I was left What do I do now? How do I get my computer set up with the applications I’ll need? What in the world is Slack? (A workplace messaging service, it turns out.)Thisinitial experience highlights one of the biggest differences between the start-up and traditional insurance worlds: structure versus autonomy. At an established carrier, there is often a well-defi documented process for everything. At newer companies, it’s possible that these do not exist yet; every tool and procedure must be built from scratch. Because of this, I was given the opportunity to infl and establish these processes over time. While there are benefits to both approaches, I believe the latter was more effective for my own growth. Although it was a bit daunting, it forced me to think critically like to work in an insurtech start up, and how itcompares to her experience at a traditional insurance company in terms of work life balance and innsurtecch? Manay starrt-tups offffer exciting ssuchc ass unlimitedd and freee lunch while to revolutioniise the aarchaiacc insusrarancee industry But what is it llikke too work for these DDoes itt live up to the Innitially, I wasa sceeptticiala II staratedd my careerr at a and well-establishedd UUS insurance carrier, and whenn insurtechs startedd onto the scene, I was the first to doubt their However, in 2019, I made the and an insurtech that mobile telematics private passenger motor insurance After five years at a traditional carrier and almost three years at an insurtech, I can say that my experience has been positive at each, but different in nearly every way. Both environments provide distinct benefits and as well as opportunities limitations. As for actuarial increase, it can to know which to pursue in a variety of settings. I hope that, sharing my experience, I can provide valuable as you navigate your next career move.

Chelsea Adler discusses what it’s like to work in an insurtech start-up, and how it compares to her experience at a traditional insurance company in terms of culture, work-life balance and opportunities ntrigued by insurtech? Many start-ups offer exciting perks such as unlimited holiday and free lunch while claiming to revolutionise the archaic insurance industry. But what is it really like to work for these companies? Does it live up to the hype? I started my career at a large and well-established US insurance carrier, and when insurtechs started bursting onto the rst to doubt their potential. However, in 2019, I made the leap and joined an insurtech that leverages mobile telematics for private passenger motor insurance. ve years at a traditional carrier and almost three years at an insurtech, I can honestly say that my experience has been equally erent in nearly every way. Both environments ts and challenges, as well as opportunities and limitations. As the options for actuarial employment increase, it can be tough to know which path to pursue without having worked in a variety of settings. I hope that, by sharing my experience, I can provide valuable insight as you navigate your next career move.

Jump

When I an insurance carrier, I participated in a formal training programme lasted about three to four months. In addition to my dirrectt suupervisoro,, I was a trainer who providede hanandssd-onn guidannce to helpl me learn my job This personn set up timme forr me to mmeet the team annd company and docoummenetattiono foro all the processes so I could get up to onn the expectatitons ffor my role. Whenever I had questions, he was thehre to help on an insurtech was very different On my first I attended one session and was then shown to handed a and told to ‘Slack’ if I had any questions. I was to wonder: How do I get my computer set up with the I’ll need? What in the world is Slack? (A workplace service, it between the start-up and traditional insurance worlds: structure versus autonomy. At an established carrier, there is often a well defined and documented process for everything. that these not exist yet; every and must be built from scratch. Because of this, I was given the opportunity to influence and establish these over time. While there are benefits to both I believe the latter was more effective for my own it was a bit it forced me to think www.theactuary.comcritically

30 | THE ACTUARY | SEPTEMBER 2022 OpinionFeatures

Culture First, let’s talk about culture. There are many to define company culture. To start, I’ll focus on which work is done.

SHUTTERSTOCES:IMAGK about for achieving our objectives

“You’re

Opportunities

“You’re more likely to develop a variety of skills and hone them more quickly, which can open doors to new opportunities within and outside of the company”

about why we do what we do and to come up with creative ways for e next major difference is the pace of work. When I speak with others at traditional insurance companies, the most common complaint I hear is not being able to move quickly enough due to is means the pace of work tends to be slower and potentially more predictable. On the other hand, insurtechs tend to be high-velocity environments. Decisions are made quickly and technology enables rapid execution and iteration. In addition, the rate of change is incredible. During the time I’ve been in insurtech, my team hasn’t done the same process twice. As the company grows and we learn more, the data, processes and work are constantly evolving. There’s no precedent to follow, and priorities shift almost daily. Setting realistic timelines and expectations can be one of the most challenging aspects of operating in this space. If you thrive in uncertainty, this environment can be exciting and rewarding. However, for some the dynamic pace can be overwhelming. At a large corporation, job responsibilities are oft c roles are established to align business needs wi to enable efficient completion of work. At a start-up, there tends to be an ‘all hands-on deck’ mentality. Everyone does what it takes to get the job done. Often the work spans multiple disciplines and allows for the opportunity to learn new skills while collaborating with individualserence environment, it’s common to have a very clear set of stakeholders, and collaboration outside of this core group of customers tends to be limited. In contrast, those in insurtech may engage with exibility. We’ve already covered the first pretty extensively: if you work for a start-up, you will likely be expected to produce results more quickly than you would at a more stable, established fi When a company is starting off, it’s necessary to try new things, learn, adapt and then iterate quickly. In light of this, there tends to be more focus on the actual work product and impact as opposed to the way in which the work is done. Especially pre-pandemic, insurtechs were much more informal and relaxed than traditional insurance companies. For example, many corporate campuses had dress codes that required wearing professional attire into the office, whereas when I fi insurtech, I was told I could wear anything I was comfortable in –Beyond dress, start-ups also tend to be more fl when and where people work. Post COVID-19, fl increased for all companies – but it seems that more traditional corporations are requiring some return to the offi insurtechs remain entirely remote or allow for employee choice in terms of where one prefers to work. Additionally, there tend to be less formal work hours and more freedom to fl time if needed in an insurtech environment, especially when unlimited holiday policies are provided.

For those interested in climbing the corporate ladder, paths for career progression tend to be more clearly example,defimany have robust rotation programmes that automatically expose actuaries to a variety of areas at a regular cadence, which can provide constant growth and potential for upward mobility. In addition, the number of positions available at any given level are greater, given the size of the company. At an insurtech, it may be less obvious what steps to take to move from one position to another. However, you’re more likely to develop a variety of skills and hone them more quickly, which can open doors to new opportunities within and outside of the company. One benefi seeing the impact you’ve made more clearly. Th more opportunities to interact with leadership and These statements are based onCHELSEA ADLER

Next, let’s shift into work life balance. I’ll focus on this in terms of pace of work and flexibility. We’ve the extensively: if you will expected to produce more quickly than you would at a more stable, established firm company is off, it’s necessary to try new iterate In light of this, there tends to be more focus on the actual work and impact as to the way in which the work is pre-pandemic, insurtechs were much more informal and relaxed than traditional insurance companies. For many corporate campuses had dress codes that required wearing whereas when I first joined an insurtech, I was told I could wear I was comfortable in –even pyjamas.Beyonddress, start-ups also tend to be more flexible in terms of when and where people work. Post COVID-19, flexibility has increased for all companies – but it seems that more traditional corporations are requiring some return to the office, while most insurtechs remain remote or allow for employee choice in terms of where one to work. there tend to and more to flex time if needed in an environment, especially when unlimited holiday policies provided For those interested in the corporate ladder, for career progression tend to be more defined at large companies. As an example, many have rotation programmes that automatically expose actuaries to a variety of areas at a cadence, which can constant and for In addition, the number of positions available at any given level are greater, given the size of the company At an insurtech, it may be less obvious what steps to take to move from one position to another. However, more to develop a variety of skills and hone them which can open doors to new opportunities within and outside of the company One benefit of the smaller environment is seeing the impact you’ve made more clearly There are more to interact with and influence company direction in the insurtech space. statements are on the author’s personal experience and conversations with others working in both traditional insurance and insurtech environments. They do not necessarily reflect ever y company, nor do they reflect the opinions of her current or previous employers. is a senior pricing manager and actuary at Root Inc more to a variety of more which can open doors to new opportunities within

and www.theactuary.com SEPTEMBER 2022 | THE ACTUARY | Features31Opinion

Work life balance

The next difference is the of work. When I with others at traditional insurance the most common I hear is not to move enough due to bbureaucracy and legacy systems. This to be slower and more On the other hand, iinsurtechs tend to be environments. Decisions are made and enables execution and iteration. In addition, the rate of is incredible. During the time I’ve bbeen in insurtech, my team hasn’t done the same process twice. As the cocmpany grows and we learn more, the processes work are evolving and alamost Setting realistic timelines and expectations can be one of the most challenging aspects of operating in this space. If you thrive in uuncertainty, this environment can be exciting and However, for some the pace can be overwhelming At a large corporation, responsibilities are often clearly defined SSpecific roles are established to align business needs with skillsets and tto enable efficient of work. At a there tends to be an ‘all hands-on deck’ Everyone does what it takes to get the done. Often the work spans disciplines and allows for the opportunity to learn new skills while with individuals across the organisation. These dynamics lead to the next difference I’ve observed: siloed versus broad-reaching engagement. In a traditional insurance environment, it’s common to have a very clear set of and collaboration outside of this core group customers tends to be limited. In contrast, those in insurtech may with various individuals or departments across the company, depending on the scope and needs of a particular project. Because the work is constantly evolving, one must consult experts from various functional areas to get the job done.

Anyone who regularly attends board meetings might raise an eyebrow at my description of it as ‘interesting’. Meetings are often very long, have reading packs that are hundreds of pages long, and (especially in the highly regulated financial services space) involve a large amount of responsibility (and liability) for directors in overseeing what is going on in a highly complex business. This is made even more difficult as a NED, as you will typically know a lot less about what is going on than your executive director colleagues who work in the business day-to-day.

NEDs conjure up a range of images: the industry veteran dispensing the wisdom gained over a lengthy career; the plucky young entrepreneur whose ideas have made billions, now sharing their secrets; the celebrity ex-minister with the little black book to die for. But what about the mid-career actuary who is passionate about good customer outcomes and robust governance? That latter image is me, a 40-something actuary who gets excited about value-for-money for customers and useful management information that could help govern a business effectively. I do stand out a bit in the NED world for a few reasons. First, I’m young (early 40s, if you must know). Second, I haven’t held a C-suite role, although I’ve sat on executive committees and been part of board-level discussions over my career. Third, I have a day job as a consultant.

TAKING THE www.theactuary.com32 | THE ACTUARY | SEPTEMBER 2022 CareersFeatures

However, that is exactly the challenge I relish. I found life in the executive world frustrating at times because you typically only worked in your ‘vertical’ within the business, often having deep exposure to a few things but a limited view of the whole business. On a board, you have the exact opposite experience: ‘horizontal’ responsibility for the whole business, but typically only dipping into the shallow end of the detail. For the first time in my career, I found myself not only being able to see the big picture, but also being held responsible for ensuring it made sense and hung together sensibly (as well as being compliant with relevant legislation and regulations).

Seeing the big picture

Brandon Horwitz discusses the value that actuaries can bring as non-executive directors, and how those interested can get involved

N on-executive directors (NEDs) sit alongside executive directors on the boards of firms, and are charged with specific obligations under the UK Companies Act 2006, as well as additional responsibilities when the firm operates in regulated financial services.

What made me think I would be suited to being a NED? Simply put, because it’s incredibly interesting and I believe that I add value.

Hands up, hands off I have always been known for asking questions. At school assemblies, whenever a guest speaker asked whether there were any questions, all eyes would invariably turn to me… and I was usually already bursting out of my seat with my hand in the air! I’m a curious chap, always trying to make sense of the world and never embarrassed to say that I don’t understand something. My studies of corporate failings and scandals over the years have revealed a pattern of ‘wilful blindness’ or simply a failure to ask the right questions – lessons I am keen to apply as a NED. Being an actuary brings some extraordinary strengths to the NED role, especially our high-level numeracy, our problem-solving skills, and the strong sense of duty and responsibility that comes from being part of a regulated profession. These strengths are balanced out by some potential weaknesses, such as wanting to get into the minutiae of problems, having a tendency to focus on the micro rather than the macro – and that same sense of duty and responsibility. How can being dutiful and responsible be both a strength and a weakness? The clue is in the name: ‘non-executive’ –which means being ‘hands off ’.

“Being an actuary brings some andstrengths,extraordinaryespeciallyourhigh-levelnumeracy,problem-solvingskills,strongsenseofdutyandresponsibility”

Being a NED means setting a strategic direction for an organisation and agreeing policies and high-level procedures, as well as a set of systems and controls for overseeing execution. The board’s job is to keep its eyes on what is going on at a high level, but not to manage a business day-to-day – that is the job of the executive. As frustrating as this may seem, it is actually the secret to good governance, whereby the board provides an important check and balance to how the business is beingActuariesrun. are well-suited to this role if they can reorientate their perspective to the big picture. This involves solving the problem of how to recognise what is going well and what needs attention from clues in high-level management information, and from observing the people who present to the board.

It is also worth joining professional networking groups, including the IFoA’s NED Member Interest Group to meet people who already work as NEDs and fellow aspiring NEDs. It is also worth considering formal director training, making sure to check whether a given organisation and qualification is recognised and valued on the boards in which you are interested. In addition, specialist search consultants (or ‘headhunters’) cover the NED market, so it is worth familiarising yourself with the main players and making them aware that you are in the market for roles. Finally, while there are many websites and services offering to help people secure NED roles (often for substantial fees), it is worth doing your own research on these before signing up to their services.

A different perspective Diversity on boards is a major focus, with many experts agreeing that it’s not just about ‘external’ features such as gender, age or ethnicity (while acknowledging that much work is still required to address imbalances in these areas today).

HORWITZBRANDON is an NEDconsultantindependentactuary,and www.theactuary.com

SEPTEMBER 2022 | THE ACTUARY | Features33Careers

BROAD VIEW

A big part of the value of actuaries is the simple fact that we do often think differently to other people. We can bring a different perspective due to our neurodiversity (many actuaries are on the autistic spectrum) and our training and work experience (we think about multiple possible futures all the time!). This different perspective can combat ‘groupthink’, helping to improve decision-making and manage risk more effectively.

GETTYES:IMAG

Many actuaries succeed in their careers through becoming subject matter experts and getting things done with their own two hands. While some naturally rise through the general management route in firms, many actuaries progress through technical expert routes and continue to get involved in solving problems in a ‘hands on’ way throughout their careers.

How to get involved

I was lucky enough to enter the NED world midway through my career. Traditionally, it has been seen as something to do after retirement, but there is increasing openness to younger NEDs with fresh perspectives and hands-on executive experience in key areas. Two of these areas are digital transformation and risk management, both areas that are in demand and important in regulated financial services. Given that most actuarial work involves both, actuaries may find themselves with skills that are readily transferable to board work, especially if you have been involved with change management committees or risk, actuarial and compliance committees in your executive career.

My advice for navigating this world is to network, network and network. Your first NED role is likely to be on a subsidiary board of a larger firm, and a good way to learn about these roles is to meet people who already sit on boards in these sorts of firms.

Investors increasingly seek to understand the risks and opportunities that investee companies see in climate change, and how they are adjusting their strategies to prepare for these changes. Accordingly, companies increasingly aim to show that they are responding to the challenges they will face and seeking out opportunities while managing their changing risk profile.

Wendy Walford outlines the need for consistent and comparable sustainability disclosures, and discusses why two new standards from the International Sustainability Standards Board are a step in the right direction

A global baseline for non-financial disclosures

uring the past decade we have seen increasing evidence of the scale and impact of climate change and the demands we have placed on Alongside thisnature.isincreasing recognition of the systemic change that is needed to avoid accelerating these changes.

Financial reports focusing on last year’s progress against profit targets do not provide a full picture of a business’s exposure to and management of non-financial risks. This limitation has led to a wide range of different standard-setting bodies, all bringing slightly different expectations and requirements for entities’ non-financial disclosures. While these non-financial disclosures are an improvement, global investors seek transparent, robust and, importantly, comparable information. Having a single international baseline for these standards will help both investees and investors. In 2021, to help meet this demand, the IFRS Foundation Trustees announced the creation of a new standard-settingwww.theactuary.comboard:

34 | THE ACTUARY | SEPTEMBER 2022 RegulationFeatures

In 2021, for example, the International Energy Agency (IEA), an influential intergovernmental organisation that advises on energy policies, published Net Zero by 2050: A Roadmap for the Global Energy Sector, the world’s first comprehensive study on how to transition to a net-zero energy system by 2050. This seminal report set out the sheer scale of the necessary transition by presenting the IEA’s understanding of a pathway that is compatible with a 50% probability of limiting average global temperature rise to 1.5°C above preindustrial levels.ThisIEAnet-zero scenario aims to be consistent with the Intergovernmental Panel on Climate Change’s climate change Assessment Reports, and sets out just how difficult and expensive this scenario is. For example, in order to meet net-zero by 2050, there can be no new unabated coal plants or oil and gas fields approved for development, and no new coal mines or mine extensions. Investing in these assets will therefore carry significant additional risks on returns, which will need to be incorporated into investment decision-making.IEAscenariomodelling and analysis in collaboration with the International Monetary Fund has estimated that several trillion dollars of incremental capital a year will need to be invested into low-carbon energy, energy infrastructure and energy efficiency. The radical transformation of the global energy system required to achieve net‐zero CO2 emissions in 2050 hinges on both expansion in investment and a shift in what capital is allocated to. For this capital allocation to occur, a financial services industry that is aligned with net-zero outcomes will be crucial. To support the required change and expansion of investments, it is essential for us to have robust credible data on how capital will be deployed.

As the world has experienced more frequent and severe extreme weather events, the scientific community has reached a consensus that global warming has been driven by anthropological greenhouse gas emissions. Alongside this, we have grown our understanding of the actions that the global economy needs to take to avoid the worst possible outcomes.

A successful transition to a decarbonised economy will require substantial change in the way actuaries value and assess these risks.

In the same period, the financial industry’s understanding of the risks and opportunities associated with climate change has also grown. This has been driven by several factors, from increased understanding of physical impacts to improved modelling of their economic consequences.

Good disclosures should meet a broad range of users’ needs and enable them to draw out the information that is useful for decisionmaking, while identifying the limitations of the reporting for any conclusions that they may draw. The two standards proposed by the ISSB are a step in the right direction. The new standards will help users of financial reports to explain and measure the risks faced by entities. This information can then be used to supplement a financial-based risk assessment, to understand future risks and exposures that their investments may actuariesformanagementsupportdecision-makinginformthatsourcescantheofgreaterdisclosuresindividualexposed to.beCombiningandaunderstandingtheinteractionwithsystem-widerisks,providerichofinformationmaybeusedtorisk-returnandriskoutcomestheentitiesthatworkfor.

The proposed standard is an ambitious disclosure programme. Entities have taken a long time to develop and adopt climate reporting.

The standard aims to provide a complete set of sustainability-related financial disclosures that will be useful to the primary users of general purpose financial reporting when they assess enterprise value and decide whether to provide resources to the entity. It requires entities to disclose, for each significant sustainability risk, information on: The governance processes, controls and procedures the entity uses to monitor and manage sustainability-related risks and Thopportunitieseactualand potential impacts on its business strategy and financial planning

Sustainability-related disclosures

Building out broader sustainability disclosures to the same level of quality will take time and will be challenging. Although entities have already been producing sustainability reports, this shift to integrating them with the financial reporting process and meeting additional requirements set out in the standards will be a significant but beneficial exercise. These sustainability disclosures could give investors the robust information that is needed to assess how aligned an entity’s purpose and its profit drivers are.

ISTOCKIMAGES: the International Sustainability Standards Board (ISSB). The intention is that ISSB will deliver a comprehensive global baseline of sustainability-related disclosure standards that give investors and other capital market participants information about companies’ sustainability-related risks and opportunities, to help them make informed decisions.

is head of climate risk at Legal & General and a policy co-lead on the BoardSustainabilityIFoA significant sustainability-related risks and opportunities. This standard extends existing climate disclosures to all significant sustainability risks that an entity is exposed to, such as biodiversity and its interaction with climate, and social issues such as modern slavery or diversity and inclusion.

The second standard, Climate Exposure Draft (IFRS S2), builds on TCFD recommendations and incorporates industry-based disclosure requirements derived from the SASB standards. Reflecting the greater development of climate-related financial disclosures, the requirements in the proposed standard are relatively close to existing standards.

The processes the entity used to identify, assess and manage sustainability-related Thrisksemetrics and targets used to assess and manage the relevant risks and opportunities over time.

Climate-related disclosures

For example, the level of granularity for asset reporting from asset owners is significantly greater than that currently adopted. Some areas, such as the reporting of a carbon footprint for derivative assets, will require significant developments, as there are currently no industry standards for how to calculate these metrics.

“Companies increasingly aim to show that they are responding to the challenges they will face while managing their changing risk profile”

The first proposed standard, Exposure Draft IFRS S1 General Requirements for Disclosure of informationantheExposure(GeneralFinancial InformationSustainability-relatedRequirementsDraft),setsoutoverallrequirementsforentitytodiscloseonits

A step in the right direction

www.theactuary.com SEPTEMBER 2022 | THE ACTUARY | RegulationFeatures35

The ISSB launched a consultation on its first two proposed standards on 31 March 2022. One sets out general sustainabilityrelated disclosure requirements, the other specifies climate-related disclosure requirements. These exposure drafts consolidate content from five different disclosure frameworks, including the Task Force on Climate-Related Financial Disclosures (TCFD), the Climate Disclosure Standards Board and the Sustainability Accounting Standards Board (SASB).

As with the draft sustainability standard, there are additional disclosure requirements compared to the existing voluntary frameworks. This relates in part to a drive for increased standardisation, but the exposure drafts also include additional data requests.

WALFORDWENDY

Ian Trim explores The Dasgupta Review’s ﬁndings on the importance of preserving natural capital, and the role actuaries can play in achieving this

The review refers to the overall stock of these three different capitals as our ‘inclusive wealth’. As we increase all three capitals, we increase our overall wealth. Conversely, neglecting one of these different types of capital could lead to the loss or malfunction of the services it provides, undermining the viability of other types of capital and creating unwanted economic consequences.

A tale of three capitals

he current economic system fundamentally undervalues biodiversity and natural capital’s contribution to the global economy. This is the message of last year’s report The Economics of Biodiversity: The Dasgupta Review, commissioned by the Treasury. This details how the demands we are placing on the environment are causing potentially irreversible damage to the planet’s capacity to supply the goods and services on which we depend, creating significant risks to society. It was commissioned to change the debate around the economics of biodiversity, in the same way that 2007’s landmark report The Economics of Climate Change: The Stern Review changed climate change discourse. The economy within the environment At the heart of the Dasgupta Review is the concept that the economy sits within the environment, not alongside it. Nature provides the goods and services that form the basic building blocks to support life –clean air, water, food – as well as other vital regulating services, such as nutrient and carbon cycles. As such, some economists view nature as an asset, with estimates valuing its ecosystem services at more than 1.5 times the value of GDP. The review captures this idea by describing three different types of capital – produced, human and natural – which provide different services and interact with each other to support a functioning society (Figure 1).

Produced capital, sometimes called manufactured capital, is the stock of human-made assets, such as roads, cars and houses. We normally list produced capital within a company’s balance sheet and use it, in part, to assess nations’ and companies’ economic wealth. Human capital includes knowledge, education, health and skills that can be valued economically. Natural capital is the overall stock of renewable and non-renewable natural assets, such as forests, coral reefs, fisheries and insect pollinators, which provide the ecosystem services from which we extract benefits and value.

ISTOCKIMAGES:

The Dasgupta Review stresses that we are failing to keep the three capitals in balance; we have steadily increased our produced capital stock while drastically depleting our natural capital stock. It is estimated that, between 1992 and 2014, produced capital per person doubled, human capital rose by an estimated 13% and natural capital decreased by around 40%. A range of global indicators suggest that the ecosystem’s extent and condition are declining by at least 4% per decade. When measured in 2019 they were, on average, nearly 50% below estimated natural baselines. This is stretching the limits of Earth’s environmental systems. Like produced capital, natural capital degrades and depreciates if not looked after. However, we rarely value its depreciation in our balance sheets – and perhaps more importantly, natural capital is often irreplaceable and cannot easily be

A dangerous imbalance

EnvironmentFeatures

How is this translating to real world?

The World Bank estimates that ecosystem collapse would negatively impact GDP by 2.3%, with significantly higher impacts in emerging economies. This, the modellers stress, is likely to be an underestimate, as it does not account for a full range of ecosystems or their dependencies. In other analysis, the World Economic Forum estimates that US$44trn of economic value – more than half of the world’s GDP – is moderately or highly dependent on nature that is currently at risk.

Tackling these risks involves better understanding the value of natural capital services and integrating these values into investment decisions and risk assessments.

Transforming our institutions and systems – particularly ﬁnance and education – to enable these changes and sustain them for future generations. We could do this, for example, by introducing better and more inclusive governance for natural assets, and reforming policies such as subsidies to better recognise the value of natural capital and promote more sustainable practices.

HUMAN CAPITAL PRODUCED CAPITAL NATURAL CAPITAL andPollutionwasteFood, health and coastal protection Natural resources and regulating services such as water quality Land-use, pollution and waste Goods and services, income Innovation and labour SEPTEMBER 2022 | THE ACTUARY | EnvironmentFeatures37Source: TheEconomicsofBiodiversity:TheDasguptaReview, p39

FIGURE 1: Interaction of capitals.

substituted, as produced capital can. This illustrates the importance of safeguarding against loss of or damage to natural capital, rather than relying on costly adaptation or remediation measures. One challenge is that natural capital is highly localised, so damage is often visible only to those directly affected; for example, a polluted watercourse can greatly impoverish the local community that relies on it, but its effects are not felt by the wider world. This means the damage caused to natural capital in one place can be used to increase produced capital in another place – often another country. If a watercourse is damaged by pollution from mining metals to be used in mobile phones, there is depletion of natural capital where the mine is located, but an increase in produced capital where the phones are manufactured. This dynamic is particularly important in the developing world, where natural capital is of much greater relative importance to overall economic wellbeing.

The depletion of natural capital is increasingly recognised as a significant long-term risk to society. In the World Economic Forum’s Global Risks Report 2022, environmental risks are cited as the five most critical long-term threats, and the most potentially damaging to people and the planet. These risks are not expected to take a linear form and could result in ‘green swan’ events as tipping points are breached, leading to abrupt and irreversible changes to natural capital services.

IAN TRIM conductingisa PhD focusing on natural capital risks at Anglia InstituteSustainabilityUniversity’sRuskinGlobal

Changing our measures of economic success to guide us onto a more sustainable path. Economic key performance indicators, both at company and national accounting level, traditionally focus on produced capital as a measure of success. At a national level, including non-GDP measures to look at inclusive wealth would help to focus policies and development that are better aligned with nature. At company level, initiatives such as the Natural Capital Protocol, the EU’s NonFinancial Reporting Directive and the Taskforce for Nature-Related Financial Disclosure should help to focus corporate minds.

Delivering these changes will require action from all parts of the economy, and there is a clear role for actuaries to play in promoting and valuing nature when assessing risks. If we can quickly and effectively integrate these considerations into our work, we will be helping to tackle an emerging natural crisis.

Ensuring that our demands on nature do not exceed its supply, and that we increase nature’s supply relative to its current level. We could do this, for example, by reducing waste, increasing use of circular production models and increasing restoration of degraded and depleted natural assets.

WHAT CAN WE DO?

The Dasgupta Review highlights three key areas of change:

38 | THE ACTUARY | SEPTEMBER 2022 GeneralFeaturesinsurance

Sharing the cost After 2039, it is possible that the issues which led to Flood Re’s creation in the first place will return. However, a number of measures can be taken to prevent this, both in the run-up to Flood Re’s termination and after it. Government – Properties should be designed and built with flood resilience in mind, particularly as those built on or after 1 January 2009 are not eligible to be ceded to Flood Re. The government could introduce legislation to achieve this, for instance mandating property developers to have due regard for flood risk protection. Furthermore, the government and local authorities should continue to invest in flood mitigation measures such as flood defences.

POST 2039

Kemi Bello considers how government, insurers and homeowners can usher in a new era of ﬂood resilience before the Flood Re initiative ends in 2039

F lood Re, a joint initiative between the UK insurance market and the British government, was launched in 2016 to increase the affordability of household flood cover through an annual £180m levy placed on insurers, with an element of cross-subsidisation based on council tax bands. Since its formation, Flood Re has benefited more than 350,000 UK households. Despite its achievements, it was only ever intended to be temporary, and is due to conclude in 2039. What are the likely challenges for the UK flood market after that date? And what flood mitigation measures can be taken?

Homeowners – There will need to be more active engagement on behalf of homeowners www.theactuary.comto

Charging risk-reflective flood cover may not be commercially feasible for some insurers – particularly smaller ones, which may exit the market. This would cut competition and thus reduce the incentive and pressure for the remaining insurers to keep rates competitive. Any reduced take-up of insurance in high flood risk areas is likely to increase the need for government intervention following flood events.

Drawing the line Flood Re’s cessation would end the flood-related cross-subsidisation of premiums (based on council tax bands). The resultant rebalancing of premiums may adversely affect those who are less financially able to protect themselves – and insurance is crucial for financially vulnerable individuals. A likely by-product of this rebalancing is theoretically correct premium increases in some cases, with a move to more risk-reflective pricing.

ISTOCKIMAGES: understand their properties’ flood risk, as well as uptake of mechanisms to reduce the risk. The existence of the Flood Re scheme arguably cuts the incentive for homeowners to do this. Insurers –Insurers will need to adjust their approach to tackling flood risk beyond simply reinstating properties to their current risk levels, which indemnification aims to achieve. For a given insured portfolio, it would be advisable for insurers to reduce the associated risk level, rather than maintaining it. However, in the absence of Flood Re, there may be constraints on the commercial viability of this in a competitive market. Build Back Better Flood Re’s recent Build Back Better launch is an example of going above and beyond the reinstatement of the same risk level. Since April, participating insurers have been able to offer policyholders the opportunity to have Property Flood Resilience (PFR) measures up to the value of £10,000 installed. These include raising plug sockets and using more flood-resistant materials, such as waterproof plaster. So far, several insurers have subscribed, including Ageas, Aviva and NFU Mutual. The initiative could be extended to implement measures that improve flood resistance – minimising the amount of water entering properties in the first place, as opposed to only limiting the extent of the damage once the water enters.

Flood Re is currently co-ordinating a project that tackles these issues with the Environment Agency and Middlesex University Flood Hazard Research Centre. One of the project’s aims is to develop a prototype PFR scoring system, which will be piloted with 30 properties. The scoring system would involve the issuance of performance certificates indicating the current risk levels of various types of flood, as well as key recommendations for improvement. In future, PFR ratings could form part of a property’s sales package, like Energy Performance Certificate ratings. Indeed, they could be further extended to form a more holistic ‘climatic’ package covering fire risk assessments and wider perils such as subsidence. Insurers could use PFR scoring systems to incentivise policyholders to be proactive in reducing their risk level – through discounts, for example. Changing risk Flood risk is non-static and the impact of climate change on extreme weather events exacerbates this uncertainty. Furthermore, flood intervention measures such as Build Back Better would change the flood risk associated with some properties over time. Changing flood patterns may also lead to more frequent updates of flood zones and maps and more iterations of vendor catastrophe models, as the historic data used within stochastic event sets may become less relevant.

KEMI BELLO is a member of the IFoA Flood Working Party, and contributedhasto an reserveindependentexternal,review for Flood Re as a consulting actuary

One drawback of initiatives such as Build Back Better is that the focus is on properties which have previously flooded. Due to the return periods associated with flood events, and the changing severity of such events, it is possible that a property that has never flooded before will do so in future, reducing the reliability of past claims experience.

www.theactuary.com SEPTEMBER 2022 | THE ACTUARY | Features39General insurance

Tackling the challenges that are likely to be faced after 2039, once Flood Re exits the market, will require ongoing monitoring and a collective response from homeowners, financial institutions and the government, among other stakeholders. Indeed, it will require more focus and effort to reduce flood risk significantly and/or devise an even more innovative solution than Flood Re.

PFR scoring

Nine teams participated in the competition, and their final performances were evaluated on profitability, retention and risk model accuracy (RMSE), in that order of importance. Each team had to fulfil a minimum customer retention ratio of 80% to qualify for the ranking.

10%20% %001 www.theactuary.com40 | THE ACTUARY | SEPTEMBER 2022 GeneralFeaturesinsurance ratioRetention 86%84%82%80% 1,500,000 2,000,000 2,500,000

The implemented rating strategies diverged from team to team. Some decided to solely target profitability score, squeezing the minimum retention assumption. Others went for a more balanced approach, keeping higher retention at the expense of profitability. Figure 1 shows the results for seven teams remaining after one was removed for getting negative profits and another did not qualify for the ranking.

The game in context In the Saudi Arabian motor insurance market, insurers have underwritten business with 30%–40% discounts since the pandemic outbreak. This practice, funded by a frequency drop caused by lower car usage, coincided with the disruption of online aggregators. Despite the low-price environment and increased competition, the market loss ratio declined from 73.1% to 66.6% in Nevertheless,2020. this favourable situation was only temporary. While most insurers were extending the aggressive pricing practices developed since Q2 2020, claim frequencies reverted to pre-pandemic levels by the end of 2020. This combination led to a drastic market loss ratio of 82.5% and a 78% decline in underwriting profits in 2021. Following this context, the 2022 edition of the Pricing Game recreated a third-party liability block of business written in 2020, which was onerous during 2021 and Q1 2022.

Juan Ignacio de Oyarbide discusses the outcomes of a motor insurance pricing game held in Saudi Arabia, and key lessons to emerge from it

T he addactis® motor insurance Pricing Game is a competition in which professionalsactuarialwork together to solve a problem that reflects actual market conditions. The objective is to provide loss estimates and commercial premiums for a group of policyholders.

The objective was to correct the price inadequacy in the upcoming renewal period, considering both profitability and customer retention. The competition was divided into two main parts spread over two days: first, the computation of a technical price using generalised linear models (GLMs); second, a commercial price definition implementing a simulation-based methodology.

Results and performance analysis

GAME ON

The final score was tight between two teams placed in different quadrants of the profitability versus retention map. The winning team, Beta, achieved a retention ratio of 80.5% and profits of SAR3.15m, outperforming other teams that targeted similar retention levels. Beta paid most attention to the commercial means to maximise profitability, exploring numerous strategies by analysing most rating factors, which gave it the edge. Its final decision was based on a tailored geographical segmentation and small price refinements based on vehicle body types.

FIGURE 1: Graph proﬁtability versus retention. 3,000,000 3,500,000

Proﬁt in SAR KEY: Alpha Beta Delta Gamers GlmOne Knights Sigma

The last edition, organised by addactis and Badri Management Consultancy in Saudi Arabia, involved 40 actuarial professionals representing 21 insurers and the insurance regulator Saudi Central Bank. The workshop created a new dynamic in which they could discuss pricing challenges in the local market, and the implementation of actuarial techniques to address such challenges.

The second team, Knights, secured a retention level of 86% and profits of SAR2.3m. Its approach was particularly interesting because it targeted every performance ranking. It spent more time defining the excess loss layer in the claim cost distribution, trying different cut-off points and maximising the GLM’s performance in the first distribution layer. Its commercial strategy was based on high increments to a specific sub-population of vehicle makes in the central geographical region. It found a more effective efficient frontier than other teams, which, combined with the high retention, led it to second place in theOthercompetition.alternative approaches are worth mentioning. Delta built a baseline scenario resulting from offering risk-adjusted prices to every customer, regardless of what prices were in the past. It measured the impact in terms of churn of implementing this rating strategy and then derived feasible scenarios from there. Although it could not succeed in the Pricing Game, its approach would be worth exploring in a real-life AlphaandGlmOnegotscenario. the best performance in terms of model accuracy, by meticulously working on factor-level grouping and applying precise forecast assumptions. Surprisingly, these teams achieved the lowest RMSE, but this did not materialise in terms of profitability.

strategyRatinginformationPoliciesRisk proﬁles Rating variables generatorChurngeneratorChurnExposuresgeneratorNumber of allocationpolicies CompetitiondatasetRenewaldataNewdatabusiness ThirdgeneratorclaimsSecondgeneratorclaimsFirstgeneratorclaims Out-of-sample dataHistorical data www.theactuary.com SEPTEMBER 2022 | THE ACTUARY | Features41General insurance

30% 40% 50% %07%06 %08%09 01

ISTOCKIMAGES:

JUAN IGNACIO DE OYARBIDE is a pricing actuary and addactisdeveloperbusinessat

FIGURE 2: Creating multivariate synthetic data for the Pricing Game.

Data generator: A further analysis Designing the pricing game involved creating several data generating processes that, together, could mimic real information (Figure 2). Holding the data generator allows us to derive the implicit risk that each participant assumed with the chosen rating strategy. By simulating the out-ofsample dataset several times, one can re-evaluate each team’s performance and quantify the profit variation resulting from its pricing decisions. After multiplerunningsimulations for the 2022 Pricing Game, one can see that Beta obtained not only the highest expected profits but also the lowest coefficient of variation. These results confirm the effectiveness of its rating strategy to retain good risks and win the profitability ranking.

The Pricing Game revealed how actuarial teams might take different rating decisions under the same market circumstances. Every team in the competition approached the problem in a different way, creating different pricing segmentations and targeting different levels of profitability and retention. Their proposed analyses have contributed to understanding various aspects of the current pricing inadequacy in the Saudi motor insurance market. One relevant lesson from the competition is that multivariate models are fundamental to computing more precise risk-adjusted premiums, but they are not sufficient to succeed in a competitive market. Pricing practitioners should guide decision-makers to achieve the insurer’s specific profitability and salesRegardingtargets.the future of the Saudi motor insurance market, companies are going to increase prices inexorably to improve underwriting performance. Online aggregators will keep shaping the market dynamics, creating inertia towards more advanced pricing techniques. Combining actuarial methodologies, new technologies and effective decisionmaking processes will be essential to thrive in the new market conditions.Teamratingstrategy

Frequency GLM Severity PropensityGLMLC GLM Excess layer model

KEY TAKEAWAYS

To make matters more complex, the reinsurer may then enter retrocession contracts (possibly with further retrocession of their own), and/or insurance-linked securities contracts with capital market participants.

A resilient and sustainable solution Are blockchain or DLT solutions overkill for the seemingly simple task of passing information along the reinsurance chain? I don’t think so. These solutions are uniquely resilient to climate challenges when it comes to delivering contract certainty. They automatically maintain multiple copies of the contract data and its full audit trail on the contract parties’ nodes, as well as other observer or regulator-type nodes; this decreases the risk of data loss in natural disasters. This might sound trivial, but it is not. As floods, hurricanes and extreme weather become more intense and frequent, ensuring a responsive and resilient risk transfer infrastructure for our biggest risks will be important. Centralised systems are much less resilient in this respect.

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Proof-of-work algorithms, a class of algorithms associated with blockchains, have sparked some environmental concerns. However, most market solutions for reinsurance contract certainty use permissioned blockchains networks. In essence, permissioned blockchains are more efficient and cost-effective, and maintain the advantages of decentralised storage. The price of the efficiency is trust – and these networks are run with an understanding of collaboration, reflecting existing trust relationships within the (re)insurance industry. The UK government recently announced that it will set up eight more nuclear plants. Nuclear energy is a critical part of a sustainable future, as a shock absorber for volatility in wind and solar energy supply. I have no doubt that, as climate events become more intense and frequent, other countries will also launch more nuclear plants. As the scale of nuclear risk increases in the world, the importance of contract certainty for nuclear risk transfers will increase further. The same thing applies to all pools, such as terrorism, natural catastrophe, pandemic, agriculture and energy. As risk rises globally, instantaneous contract certainty and low credit risk for risk transfer contracts across value chains is critical.

PRATAP TAMBE is head of banking, ﬁnancial services and ServicesConsultancyconsultingblockchaincyberinsuranceandatTata

A OPTIONNUCLEAR

Use case: nuclear pools Nuclear risks are notoriously large, and no single player has adequate capital to cover the magnitude of the risk. To overcome this, ‘nuclear pools’ provide a mechanism through which multiple insurers, usually within the same country, can jointly underwrite a risk. These nuclear pools exist in many major insurance markets.

When this happens, the reinsurer takes on credit risk of its own; from the insurer’s perspective, its credit risk becomes diversified and reduces. At the same time, multiple layers of retrocession also make it possible for reinsurers to enter ‘loops’ in which they end up reinsuring their own risks, which can exacerbate credit risk for other parties in theWithchain.current market technology and solutions, it is very difficult for insurers to monitor the credit risk in a transparent manner and avoid such loops. Blockchain can help, although the exact shape and nature of this solution still needs to be debated in the industry.

nsurers take on credit risk when they enter reinsurance contracts.

Inter-pool risk transfers are one option in the risk management toolkit for nuclear pools. However, the transferring country’s nuclear pool retains a high degree of credit risk unless the receiving country’s nuclear pool allocates capital to the transferred risk, or transfers the risk it cannot allocate capital for to yet another pool. At each step in the chain, the pool allocates capital to the part of the original insurance risk it retains and to its credit risk. Such onward inter-pool transfers thus increase the total capital allocated to the risk and reduce the credit risk for the original cedent.

Insurers maintain uncollectible reinsurance recovery reserves for the counterparty credit risk they face from their local nuclear pool reinsurer. Blockchain or distributed ledger technology (DLT) solutions can enable such insurers to receive instantaneous information about the credit quality of the onward reinsurance chain; with such information, if the inter-pool risk transfers have any value, they should reduce such reserves.

Pratap Tambe explains how blockchain and distributed ledger technologies may be useful in the reinsurance value chain, using nuclear risk as an example

SEPTEMBER 2022 | THE ACTUARY | WorldFeatures43viewW

www.theactuary.com hen I tell people I am an actuary working in Mauritius, they have a hard time imagining any serious work being done on the beach or by the swimming pool, wearing shorts and flip-flops. I have actually been able to do this from time to time thanks to working from ‘home’ during the pandemic!

IMAGE:SHUTTERSTOCK

The Republic of Mauritius is a group of islands in the south-west of the Indian Ocean, and is geographically part of eastern and southern Africa. The main island of Mauritius has a surface area of less than 2,000 square kilometres, but the country has over 2,300,000 square kilometres of sea, largely unexploited except for tuna and other less industrial forms of fishing. A typical postcard picture of Mauritius will show a clear blue sky, deep blue sea and white sandy beach. While tourism is the country’s most important economic sector, it has also been blessed with fertile soil and favourable climates, allowing it to grow sugarcane, tea and all sorts of fruits and vegetables. The textile and other manufacturing sectors have thrived in the past and are still going strong in a few niche or specialised areas. Making the most of its historical links to India, Europe and Africa, Mauritius is also becoming a major centre for financial services and IT.

People, languages and family A South African friend once told me that Mauritians tend to punch well above their weight wherever they go, and I can see why he said that. Our country is full of people who have come from elsewhere to make a better living: first the French, then African, Indian and Chinese workers, as well as the British and others. We like to say that while Mauritius has no ‘get-rich-quick’ natural resources, such as oil, diamonds or minerals, we do have plenty of resourceful and diverse people from three continents, speaking French, English, Creole and other languages, such as Hindi for those of Indian origin and Hakka for those of Chinese origin, like me.

Mauritius’s history as a French colony for the most part, a British colony more recently, and an butcommunicationsintheEnglishwillPowerPointtoIhabitreflcountryindependentsince1968,isectedinapeculiarofmine.Whenmakeapresentationemployees,myslidesbewritteninbecausethat’slanguageweuseofficialwritten–Iwillspeakin

Mauritius is more than a picture-postcard holiday destination, says Bernard Yen – it is also a thriving location for ﬁnancial services BERNARD YEN is directormanagingofAon in Mauritius, and a volunteer on the IFoA’s Disciplinary Panel Mauritius French, because that’s the language most people use to speak formally at work. Then, when it comes to taking and answering questions at the end, we will usually speak in Creole, because that’s our mother tongue and comes straight from the heart! Growing up in Mauritius with this mixture of languages, racial backgrounds, cultures and religions is, to me, a rare privilege in our increasingly polarised world. When my wife and I decided to return to Mauritius in 2000 with our three young sons, it was in large part because we wanted them to grow up here, close to their grandparents and cousins, with the family values that we treasure.

I have enjoyed growing our office over the years; we now have more than 40 staff and work with clients in South Africa, Botswana, Zambia, Nigeria and many other African countries – including the Francophone ones, which Mauritius is well placed to deal with due to our history and languages.

Companies sponsoring defined benefit pension or post-retirement medical plans for their employees had to recognise any surplus (rare) or deficit (typical) in their balance sheets for the first time, and you can imagine the shocks that some of them had to face. This also provided opportunities to talk about switching to defined contribution pensions, improving funding and investment performance, and so on.

WORLD VIEW

Actuarial work My move back to Mauritius was also possible because, three years earlier, my friend Yvan Legris had started a joint venture here with Bacon & Woodrow. When Hewitt acquired Bacon & Woodrow in 2001, Yvan took up a senior role in London and I was left to run our small office in Mauritius. A happy coincidence was that Mauritius had just adopted IFRS/IAS as its national accounting standards, and I had become one of Mercer’s IAS 19 experts when I left it in 2000.

Penny

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Symbolic scramble Mensa puzzle 840 www.theactuary.com44 | THE ACTUARY | SEPTEMBER 2022 At the Puzzlesback ARE YOU A MATHS & LOGIC MAESTRO? If you have a mind formaths, logical reasoning, cryptic clues and other conundrums, send them to us and we will publish the most difficult in these very pages. If you are interested, contactsocial@theactuary.com If SCIENTISTS is X $ O # } % O X % X What are the names below? # O } X % # O } $ # £ X O ! X $ / ( # < } O $ ! X ( @ X $ @ £

iQ The long and short of it Member puzzle 25 Courtesy of Aktoro 1DownAktoro’s outside: I’m in first, all follow – hardly! (9) 2 Lack a clue for silver, perhaps (8) 3 One at school – a heartless dunce – is taken in by attention grabber (7) 4 Sternutatory response (8) 5 Expect to drop one back in the city (6) 6 Get the rest during furlough –that’s vacuous (5) 9 11 in Switzerland (4) 14 William replaces Charles finally in sixfooter’s brains (9) 16 Flounders eat here (8) 18 Some fits have this more recent yucky content (8) 19 Moles love ferrymen going to River Aire serenely (7) 21 Book about tackles (4,2) 23 11 settle (4) 24 11 said how to make 2 8 (5) 7/13Across 11 buzz (5,4) 8 There’s no point until one draws power from these (9) 10 President changes one’s 11 (6) 11 Move away from laurel that’s covered in 21 spotted things (8) 12 Event around 42 27s (8) 13 See 7 15 Aware game’s not finished – United have Cup Final next! (5-2) 17 11 4 drops round like 12 (7) 20 11 pass (4) 22 Very loud sexual contortions led to flows in the past (8) 25 The Arts do love to drop like pearls (8) 26 Off – one’s missing a year off – it’s not yet arranged (2,4) 27 11 is shattered – more like the end of the night (9) 28 11 fish (5) In a jar of small change you have £10.08. It is made up of four different denominations of coins and the largest denomination is 50p. There is exactly the same number of each coin. How many of each coin is there and what are their values?

Vrishti Goel discusses the UK government’s proposed reforms to Solvency II

In addition, the government proposes to ease restrictions on assets that can be included in the MA and extend the range of liabilities – for example assets with prepayment risk for which the issuer has the option to pay at an earlier date, such as commercial real estate lending and infrastructure assets, and products that ensure morbidity, such as income protection products. To maintain policyholder protection, risk mitigation actions will also be taken.

Risk margin is the difference between the market value of liability and the best-estimate liability. The current method under Solvency II overstates the market value, particularly where interest rates are low. The government has thus proposed that the risk margin could be reduced by 60%–70% for long-term life VRISHTI GOEL is student editor

At the back School of thought

Any new reform will also entail a cost to the industry, as firms will have to overcome operational challenges and dedicate time to developing new models, collecting data, hiring staff and training resources, carrying out administration and so on. With most firms operating globally and thus having to comply with multiple regimes, will the added cost of reformed regulation be beneficial, or will it end up being just one of many requirements that companies have to follow?

However,disclosures.withthe UK having left the bloc in 2019, the government can tailor this regulation to meet the specific needs of its insurance industry. The objective of this reformation is to promote the UK’s global competitiveness, protect policyholders and support growth through investment.

further exacerbated by the fact that investment in illiquid assets rose from 31% in 2018 to 41% in 2021, and MA makes up the bulk of capital for many insurers. As per the current Solvency II regime, there is insufficient allowance for riskiness between assets, or for changing market conditions. It is proposed that MA regulations should be reformed to consider the risks.

The government is also considering reforming the fundamental spread used in MA calculation. The MA allows firms to recognise unearned future cashflows as capital upfront, by closely matching assets and liabilities. Holding assets until maturity reduces exposure to illiquidity risk, but the fundamental risks – namely, credit and residual risks – remain. These are allowed for in the fundamental spread. If this spread is high, the benefit from the MA is reduced.

II has played a key role regulatinginthe EU’s insurance industry since 2016. It sets out requirements for governance supervision,managementaccountability,andriskandreporting and public

Loosening risk margin and tightening the MA would free up a significant amount of capital. However, some insurers are concerned that these proposals would not actually result in any release of capital, as different firms have different risk exposures and the MA forms the bulk of their capital.

The government has proposed reducing the risk margin, reassessing the matching adjustment (MA) calculation, increasing investment flexibility and reducing administrative burden. This could free £90bn of investment that is tied up in reserves and thus help develop the UK economy.

SCARSBROOKSIMONILLUSTRATION:

The final proposed reform focuses on the reporting framework and aims to simplify complex templates, reducing the frequency of some while deleting others and making the templates more appropriate for market needs.

Bespoke tailoring Student insurers, and by 30% for general insurers.

This would free up capital, which could be used to write new and innovative products and reduce premiums, making products more affordable for policyholders. However, we also need to consider the impact it would have on a firm’s ability to fulfil future obligations – would insurers have sufficient capital in worst-case scenarios, such as the recent COVID-19 pandemic?

At present, the spread doesn’t properly capture the retained risk, which exposes policyholders to the risk that they will not receive their benefit. This risk has been

The Prudential Regulation Authority says it is important to ensure that the proposed reforms do not put policyholders at risk –especially pensioners who rely on the insurance sector for retirement income. This can be achieved by strengthening weak regulation and simplifying over-calibration.

SEPTEMBER 2022 | THE ACTUARY | 45www.theactuary.comolvency

HassanOBITUARY Masood Hassan Masood, who died in London on 5 January 2022, had been an Associate of the IFoA since 1978. He was part of South Asia’s first generation of actuarial professionals following the 1947 partition of British India into India and Pakistan.

Counting on you

The Foundation’s activities depend on IFoA members’ generosity, and we are grateful to all our supporters. Make a one-off donation when you renew your membership online, or at any time via Paypal at bit.ly/IFoAGiving. To set up a regular donation or discuss philanthropic giving, please contact Lindsey Berthoud at gmfoundation@ actuaries.org.uk

During the past 12 months, over 80 students were awarded Education Hardship grants. That’s four times the number we expected to benefit in our second year, and demand is rising. Grants pay for IFoA subscriptions, exams, study materials and other costs that these students may not be able to afford. They enable gifted students in financial difficulties to pursue their dream – like Moez, who left war-torn Libya to study in the UK and applied for a grant to help with accommodation. Now he is a first-class honours graduate from the University of Warwick, and has an offer of an actuarial post in London.

46 | THE ACTUARY | SEPTEMBER 2022 At the Societybacknews

A masters in applied mathematics from the University of Karachi in 1963 opened the door to actuarial science. It was a perfect fit for his rigour, attention to detail, insistence on evidence, persistence and hard work.

At the time, Pakistan did not have an actuarial professional body, but a handful of actuaries had crossed over during partition –notably Hassan’s friend and mentor Sajid Akram Zahid. Their numbers were boosted thanks, in part, to the foresight of the University of Karachi’s mathematics department, where Abdul Rauf Qureshi, a researcher in algebraic theory inspirationaland tutor, encouraged students to train in actuarial science. Three of them – Hassan, Mohammed Mazharuddin and Shahzad Ahmad Sabri –found their way to London in the 1960s and remained lifelong friends.

Kartina Tahir Thomson, IFoA Foundation chair, says: “Together, we can help many more talented young people on the path to our profession. Please join in our mission and donate when you renew your membership.”

IFoA FOUNDATION

Hassan’s first role was with Commercial Union in London. This was followed by more than a decade with Yorkshire-General Life (now Aviva), mostly at its head office in York; these were some of his happiest years. In 1978 he got the chance to return to Karachi and manage the actuarial department at Pakistan’s nationalised life insurance provider, the State Life Insurance Corporation. He mentored a new generation of actuarial trainees with his friend Mazharuddin before returning to the UK in the early 1980s. Hassan is survived by his wife of 55 years Shamsa, sister Sarwat, children Ehsan, Ayesha and Alia, and grandchildren Huda and Danyal. We miss him every day.

The IFoA Foundation is making a real difference to talented young people, in the UK and internationally, by helping them overcome ﬁnancial barriers to become tomorrow’s actuaries. When renewing membership online, you will be offered the option to donate to us – but what will be the impact?

“Without the support, I do not know if this would have been possible,” says Moez. “I aim to one day help someone in the position I was in.”

Howard is survived by his wife Pam, who was by his side for 62 years, along with three children and eight grandchildren.

Howard Gracey OBE OBITUARY

BY IAN FARR Howard Gracey, who died on 28 May 2022 at the age of 87, was a prominent consulting actuary who spent much of his professional and private life serving the Church of England. After attending Birkenhead School, he joined Royal Insurance in 1953, working in Liverpool and London. He also spent some years in Melbourne, where he helped establish the company’s ﬁrst Australian office. The rest of his career was at R Watson & Sons in Reigate, where he was a partner from 1970; he became a senior partner in 1993 and retired in 1995. Howard advised some of the UK’s largest pension funds and also sat on the Church of England Pensions Board for 27 years, spending the last 17 years of that as its chair, which led to his OBE. His advice was widely sought, for example by the CBI Pensions Panel and the Occupational Pensions Advisory Service Trust. He was also president of the Pensions Management Institute from 1983–1985 and chair of the Association of Consulting Actuaries from 1991–1993. However, to understand Howard, you have to put this inﬂuential career in the context of his 50 years as a lay reader in the Church of England, 27 years as a member of General Synod, 17 years as a church commissioner and 29 years as treasurer and then chair of the South American Mission Society, supporting the missionary work of an old school friend.

Born in 1941 in Badayun, India, the eldest of three, he tragically lost his mother in 1949. His family decided to quit India for Pakistan, joining some 14 million other people in what remains history’s largest mass migration.

Call for your news… We would be delighted to hear from you. If you have any newsworthy items for these pages, please contact us at: social@theactuary.com www.theactuary.com

storyInside

Amman, Jordan. What volunteer role(s) do you do for the IFoA?

Volunteering is a great opportunity to develop skills, not just about risk management and actuarial matters but also interpersonal skills, governance and strategic thinking skills. These importantskills areand help in running a long-term project, such as the Black Swan Insurance Working Party. Has this assisted your lifelong learning? Hearing others’ views and perspectives has improved my understanding of risk management. I am constantly learning about cutting edge topics such as climate change and biodiversity, emerging risks and systems thinking applied to risk management. I have learnt a huge amount by reading, writing, talking and thinking with the people I’ve met through the Risk Management Board and various working parties and member interest groups.

How long have you been volunteering? Six years.

Do you think volunteering has helped you in your day job? Very much. The project management, you needand strategiccommunication,leadership,governance,thinkingskillstobeaneffectivevolunteer arealsotheskillsyou needinmanymanagement andexecutivepositions.Volunteeringalsogives

you greater credibility. People get to know who you are and how you work. It has helped me to create a more international career and a brand. What would you say to volunteerconsideringothersarole?

WorkingBlackIandlong-term effscenarioslong-termto constructWorking Party,Changeframeworks, andriskgovernanceanwhich is intendedGovernance (ESG)the Environmental, Socialcoverandworkstream,tointegrateESG frameworkintoriskandenterprisemanagement(ERM)theClimateScenarioTestingwhichintendsaframeworkforclimatechangeandassesstheectsofphysicaltransitionclimaterisks.amalso thechairof theSwansInsuranceParty.

To share your volunteer involvement or ﬁnd out about volunteering for the IFoA, contact: engagement.team @actuaries.org.uk

What’s involved in your role(s)? As a Board member, I promote areas of research and support working parties that are focused on climate risk and sustainability issues pertinent to risk management. I

I am a member of the Risk Management Board, and lead the research stream for the Climate and Sustainability Working Group. I also chair the Black Swans Insurance Working Party and previously chaired the Climate Change Member Interest Group, and speak regularly at IFoA conferences and events.

Do it! It is opportunityanto meet a diverse range of people, with different backgrounds, ideas and perspectives. It will be time well spent. Do you prefer a staycation or holiday abroad? Holiday abroad – Scotland is beautiful. What word best describes you? Phoenix. What would you consider to be the most brilliant moment of your career to date? As a co-lead for the IFoA COVID-19 Action Taskforce ERM workstream, we conducted a sessional meeting on COVID-19 and the effectiveness of ERM frameworks recently. It was very successful, and well received by the risk management community. The results have justified the labour. How do you relax away from the office? I enjoy walking, cycling and reading.

What new skills or knowledge do you think you have developed?

SHUTTERSTOCKIMAGES: At the Volunteerback l, Social and ) workstream, to integrate k into risk mmehnterprise(ERM)heClimateTestingichintendsworkforchangesstheofphysicalaterisks.rof theance yg with Risk Manag and various member interest gr Do you has y day job? The management, le yancommunicationd strategicthiou needtobeavolunteer arealyou needinmamanagement anpositions.Volun

LAWRENCE HABABEH Director, Tawq consultingandmanagement,specialising(HedgeGenomic),ALMakhaterinriskquantitativestrategicrisk

www.theactuary.com SEPTEMBER 2022 | THE ACTUARY | 47

Where are you based?

| 07523

General Insurance, Syndicate, Risk Actuary, London/Hybrid, Up to £120k + Bonus & Benefits

Life Insurer, Senior Actuarial Analyst, London/Hybrid, Up to £60k + Bonus & Benefits

of the fastest

This is a great opportunity for an Actuarial Analyst with 1-2 years professional experience, who is experienced in using R, to step into a senior role within this Global Life Insurer. Situated within the companies Investment Reporting team, you will be involved in maintaining and building out the cashflow projection and discount rate models in R. This would involve helping in assumption setting and projection methodology for new assets as well as general optimising of e.nicholson@gravitasgroup.comprocesses.|07496755

Life Reinsurer, Actuarial Modelling Lead, London/Hybrid, Up to £75k + Bonus & Benefits

We are working with an established insurer who are looking for an Actuarial Analyst to join their London Reserving team. This multifaceted role will involve working Reserving and M&A, Solvency II and IFRS17. Experience in the non-life sector (preferably in the London or Lloyd’s markets) is desired. The ideal candidate is versatile, capable of working on a variety of disciplines and has strong technical reserving knowledge, being familiar with ResQ. Those with a life/ pensions background will also be considered.

One growing actuarial teams in UK - already #1 in Asia Pacific roles

j.bedford@gravitasgroup.com | 07399 328 902

MEET THE CurrentTEAM

c.wright@gravitasgroup.com | 07765 134 727

Life Insurer, Senior Actuarial Analyst, London/Hybrid, Up to £60k + Bonus & Benefits

General Insurance , Lloyd’s, Senior Actuarial Analyst, London, Up to £85k + Bonus & Benefits

Gravitas’ UK Actuarial & Insurance promoting...

the

We are collaborating with an Insurer operating frontand-center in the Lloyd’s of London Market. We are looking for part-qualified Actuaries with excellent organizational, communication and IT skills. In this role, you will be responsible for developing capital models, performing validation tests on capital models, and documenting & presenting your conclusions. You will be expected to develop an understanding of the regulatory environment and the risks associated with the Lloyd’s market. 2years of GI actuarial experience is preferred, although Life candidates and more astute juniors will be j.bedford@gravitasgroup.comconsidered. | 07399 328 902 General Insurance, Deputy Chief Actuary, London/Hybrid, Up to £170k + Bonus & Benefits

Emma Nicholson Jude Bedford

To advertise your vacancies in the magazine and online please contact: theactuaryjobs@redactive.co.uk or +44 (0) 20 7880 6224

To view our current jobs, please www.gravitasinsurance.co.ukvisit:

This market leading Life Insurer is looking for an Actuarial Analyst to join their Investment Reporting team, where you will be apart of a dynamic and supportive team of actuaries with varying levels of experience. This is a great opportunity to get your foot in the door with a prestigious insurer within the market. To be considered for the role you’ll need to be an Actuarial Analyst with 1-2 years of professional experience with knowledge of Solvency II and/or e.nicholson@gravitasgroup.comIFRS17. 07496 755 470 Life Reinsurer, Experience Analyses Analyst, London/Hybrid, Up to £55k + Bonus & Benefits

This is the perfect role for someone looking for a technical role at one of the largest Reinsurers and gain exposure to large scale projects ranging across all business functions. You will need to be a strongly analytical individual and an advanced user of Excel and Access and good knowledge VBA and SQL. Ideally you will have at least one year of actuarial experience and be making progress through your actuarial a.gryson@gravitasgroup.comexams. 342 006

470 Kirsten Quarman Charlotte Wright Alyssa GrysonRupa Pithiya REACH OUT actuarial@gravitasgroup.comTODAY!02036409800

General Insurance, Pricing Actuary, London/Hybrid, £100k + Bonus & Benefits

48 | THE ACTUARY | SEPTEMBER 2022 At the Appointmentsback Jobs

We have partnered with a well-established Lloyd’s Syndicate who are looking for a risk actuary to join their team in London. This role offers great visibility across the business with direct exposure to C-suite members of staff. This syndicate are looking for people with strong Solvency II and Enterprise Risk Management experience to compliment the current team. To be considered you must be qualified by the FIA or close to completing exams. This position provides a competitive salary and strong bonus c.wright@gravitasgroup.comscheme. | 07765 134 727

We have been asked to partner exclusively with this successful solid Lloyd’s player who seeks a Deputy Chief Actuary. This role would act as support to the current Chief Actuary in managing existing staff, but also being instrumental for the growth of the team going forward. The team is split by Reserving and Capital, therefore those who have experience in both areas are encouraged to apply. To be considered you must be a FIA, have ample Lloyd’s/LMKT experience, be hands on, have management experience and are happy to get involved with developing new processes and ideas. Experience gained in this role would comfortably act as a springboard to a future Chief Actuary position rupa@gravitasgroup.com | 07543 176 000 General Insurance, Reserving Analyst, London, Up to £60k + Bonus & Benefits

I am working with a Reinsurer looking for a skilled individual in the actuarial modelling space. You will be in charge of automation and bettering efficiency of processes and systems and delivering all the development requirements within the financial Reporting including IFRS17 and Solvency II. You will need to have a proven track record of successful process improvement, advanced use of Excel, Access, VBA and can be an exam stopper or someone qualified/ part a.gryson@gravitasgroup.comqualified. | 07523 342 006

A fantastic opportunity has arisen for an eager individual to join a progressive London Market Insurer as a Pricing Actuary to support and facilitate differentiating capabilities for Underwriting through strengthening Risk Selection, Portfolio Planning, and Portfolio Reviewing. You will be assisting in decision-making with Exposure Management, Capital Modelling, and other Actuarial teams, as well as supporting, designing, and building analytical tools and dashboards in collaboration with Data Engineers and developers. To be considered, you must have strong technical skills, such as Python, SQL, and Power BI, as well as be a Nearly/Newly qualified Actuary with at least 4 years’ experience.

SEPTEMBER 2022 | THE ACTUARY | 49 At the Appointmentsback Nasreen More than 700 Actuarial jobs availableOJthroughtoday. Take your career precisely where it needs to be!& her new role as Senior Pricing Actuary PAVE A NEW PATH The magazine of the Institute and Faculty of Actuaries theactuaryjobs.com is the oﬃcial job board for the Institute and Faculty of Actuaries. To register for our Jobs by email service simply go theactuaryjobs.comto www.theactuaryjobs.com

A global pricing & analytics consultancy is looking to hire a Pricing Engagement Manager to be a key point of contact for their clients. This role would see you work with some of the top insurers globally, from large personal/commercial lines insurers to fast-growing insurtechs. In turn, you'd have exciting travel opportunities working with clients across Europe, USA, Latin America, Asia, and South Africa. The projects you would cover include pricing transformations, optimisation and data science improvements, and advising on pricing strategy. I'm looking to speak with technically strong pricing candidates, preferably from a personal/commercial lines background. Experience in management is beneficial although not a necessity.

Contact: rafaela.fakhre@eamesconsulting.com | 0203 846 5909

50 | THE ACTUARY | SEPTEMBER 2022 At the Appointmentsback

Contact: rafaela.fakhre@eamesconsulting.com | 0203 846 5909

SPECIALTY PRICING ACTUARIES/ANALYSTS x3 London, c. £60,000-£100,000

The actuarial team in a growing London Market insurer is looking for three pricing actuaries to join their team and focus on a range of different lines of business including Marine, Energy and Aerospace. Key responsibilities will include individual pricing assessment of large or unique risk, communicating the impact of results to the underwriters and analysis of data from pricing models. Assistance of the building, review and maintenance of pricing models and business planning will also be within the candidates remit. The role will also involve some reserves reviews. Two of the roles will be part-qualified up to nearly qualified level, and one will be managerial (ideally FIA or equivalent). You will have general insurance experience.

PRICING ANALYST, London, up to £70,000 A leading insurer is looking to hire a Pricing Analyst to focus on their property business across both their Syndicate and Company Market. This role would suit an individual who has R/Python/SQL experience and who is making good progress within the IFOA exams. In this role you will be working closely with the underwriters to develop rating models and methods, and getting involved in a variety of cross-divisional projects.

Contact: hannah.turner@eamesconsulting.com | 0207 092 3249

Contact: curtis.browning@eamesconsulting.com | 0207 092 3242

RISK MANAGER, London, up to £85,000

London, £competitive market rate

A leading insurance entity is looking to hire a senior candidate to head up their emerging risk management function. This will report into the head of portfolio management and manage a team. The role will cover all emerging risks such as climate, cyber, space storm and increased geopolitical volatility.

M&A/ACQUISITIONS ACTUARY, London, c.£85,000

Contact: hannah.turner@eamesconsulting.com | 0207 092 3249

Contact: sam.baker@eamesconsulting.com | 0207 092 3230

London, up to £120,000 + bonus

Contact: sam.baker@eamesconsulting.com | 0207 092 3230

PRICING ACTUARY - HIGH NET WORTH London, up to £100,000 + bonus

PRICING BUSINESS LEAD, Surrey, £90,000 + bonus

CAPITAL ACTUARY, London, c.£85,000

A Lloyd’s Syndicate is looking to hire a Risk Manager to join their department as a result of the increased regulatory requirements, especially around climate change and ESG. This role will take the lead on the quantitative side and they are looking for the successful candidate to help with further recruitment of analysts. They are keen to speak to individuals who have experience in risk management, an understanding of the regulatory environment (ideally Lloyd’s, PRA and FCA), and who have strong analytical skills.

SENIOR PRICING ANALYST, London, £65,000 + bonus

You will face off to senior stakeholders internally and externally and also need to manage a team of senior exposure management analysts. There are a number of projects to plan out, adequately resource and drive forward. As such, an exceptional level of project management is paramount to succeeding in the role. The ideal candidate will also have had some exposure to climate risk, cyber or emerging risk in general.

SNR RESERVING ACTUARY - LLOYD’S SYNDICATE

A prominent home & motor insurtech is seeking a senior pricing analyst due to continued growth. This role offers outstanding breadth, supporting all aspects of the pricing process. This includes the building of pricing models, rate changes, portfolio reviews, and supporting the implementation of data science improvements. This is the perfect opportunity for you to broaden your pricing skill set within one of the most exciting insurtechs in the market. Candidates will ideally have a background in personal/commercial lines pricing. Experience in building GLMs and GBMs is strongly desired.

Contact: sam.baker@eamesconsulting.com | 0207 092 3230

A Lloyd's insurer is looking for an Acquisitions Actuary to join their M&A actuarial team. The candidate will have mixed responsibilities with a focus on reserve reviews, pricing for the deals and capital allocation. The role involves developing strong relationships with senior professionals so excellent communication and interpersonal skills is essential. Our client is looking to speak to candidates who part/nearly/newly, with commercial/London Market experience. They are happy to consider candidates who have stopped studying for the role.

A leading Lloyd’s Syndicate is looking to hire a qualified actuary into their reserving team. This will report into the head of reserving and manage a team. The role will cover all aspects of reserving including quarterly reserving, SII TP’s and business planning. You will face off to senior stakeholders and also work closely with capital modelling, finance, and pricing. The ideal candidate will be a qualified reserving actuary with London Market experience. You will need an excellent level of communication and the ability to lead a team.

Contact: curtis.browning@eamesconsulting.com | 0207 092 3242

HEAD OF EMERGING RISK - LLOYD’S INSURER

Contact: curtis.browning@eamesconsulting.com | 0207 092 3242

A top commercial insurer is seeking a pricing business lead to drive pricing improvements throughout the company. You will look to set a pricing template, seeking innovative improvements for each LoBs pricing function, unifying the company approach. This will involve presenting the template to key stakeholders and managing the transformation, working closely with each head of pricing. The ideal candidate is a nearly/fully qualified or equivalent through experience. A background in personal lines/commercial lines pricing is strongly desired.

Contact: rafaela.fakhre@eamesconsulting.com | 0203 846 5909

A leading Lloyd’s Syndicate is looking to hire a qualified actuary into their HNW pricing team. This will report into the head of pricing and manage a small team. The role will cover all HNW of business and focus on all aspects of pricing, including, portfolio review, case pricing and model development. You will face off to senior stakeholders internally and externally and need to manage a junior analyst. The ideal candidate will be a qualified pricing actuary with London Market or personal lines experience. You will need an excellent level of communication and the ability to lead and drive projects.

PRICING ENGAGEMENT MANAGER London (with travel opportunities), £80,000 + bonus

A Lloyd’s/London Market insurer is looking to hire a FIA Actuary to focus on their portfolio analytics. This is a great option for an individual who wants a more non-traditional role that is focused on implementing strategy – this is a managerial role. They are keen to speak to individuals with a pricing background, and ideally with predictive modelling experience.

LEAD ACTUARY, London, up to £100,000

A leading London Market insurer is looking to hire a Capital Modelling Actuary to undertake a unique role in their growing team. The role will focus on their global capital team and report directly to the London Market Capital Manager. You will be responsible for maintaining their internal model, delivering the technical provisions of Solvency II and reporting for regulatory submission. The ideal candidate is a part to nearly/newly qualified actuary with capital modelling experience, looking to take a step up.

You will currently be working as an actuary or actuarial student in industry, with an actuarial recruitment consultancy, or in-house with exposure to actuarial recruitment.

You will become part of a hard working, professional and successful team with a wealth of knowledge to share. We offer a market-leading commission structure, a supportive and ﬂexible working environment and a strong, well-respected brand. This is an exciting time to join the business in a period of growth. Please contact Louis or Joanne for a conﬁdential discussion. staractuarial.com staractuarial.com

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DIVERSITY AND INCLUSION

SEPTEMBER 2022 | THE ACTUARY | 51 At the Appointmentsback Louis Manson MANAGING DIRECTOR Joanne O’Connor OPERATIONS DIRECTOR +44 7595 023 uk.linkedin.com/in/louismansonlouis.manson@staractuarial.com983LEM +44 7739 345 uk.linkedin.com/in/joanneoconnor3joanneoconnor@staractuarial.com946LEM

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Star Actuarial Futures is seeking exceptional new consultants to expand its award-winning team.

ACTUARIAL POST RECRUITER OF THE YEAR 2012 2013 2014 2015 2016 2017 2018

You must possess a strong work ethic, the highest levels of integrity and a passion to deliver to a wide range of clients.

• Star Actuarial values a diverse work force and an inclusive culture. We recognise the importance of equality, diversity and inclusion in building successful, high-performing teams. We offer a fully inclusive and agile working environment. Flexible working options are available.

52 | THE ACTUARY | SEPTEMBER 2022 At the Appointmentsback Diane Anderson ASSOCIATE DIRECTOR +44 7492 060 diane.anderson@staractuarial.com219 D A S ddi+4 Shaneene Reid ASSOCIATE DIRECTOR +44 7517 994 shaneene.reid@staractuarial.com815 Peter Sansom AIA ASSOCIATE DIRECTOR +44 7510 385 peter.sansom@staractuarial.com604 Clare Roberts ASSOCIATE DIRECTOR +44 7714 490 clare.roberts@staractuarial.com922 Satpal Johri ASSOCIATE DIRECTOR +44 7808 507 satpal.johri@staractuarial.com600 S s+A Paul Cook PARTNER+447740285 paul.cook@staractuarial.com139 Jan Sparks FIA +44PARTNER7477757 jan.sparks@staractuarial.com151 Ja jajan+4PA Peter Baker PARTNER+447860602 peter.baker@staractuarial.com586 Antony Buxton FIA MANAGING DIRECTOR +44 7766 414 antony.buxton@staractuarial.com560 Louis Manson MANAGING DIRECTOR +44 7595 023 louis.manson@staractuarial.com983 Joanne O’Connor OPERATIONS DIRECTOR +44 7739 345 joanne.oconnor@staractuarial.com946 J j+O Irene Paterson FFA +44PARTNER7545424 irene.paterson@staractuarial.com206 Ir ir+P Sandra Lehane-Kelly ASSOCIATE DIRECTOR +44 7510 385 sandra.lehane-kelly@staractuarial.com603 staractuarial.comACTUARIAL POST RECRUITER OF THE YEAR 2012 . 2013 . 2014 . 2015 . 2016 . 2017 . 2018 +44 20 8176 0473staractuarial.com businessemploymentandagencyemploymentanisLtdFuturesActuarialStar 400+ ACTIVEVACANCIES BULK ANNUITIES MANAGER STAR7703LIFE BRISTOL Qualified Market Leader IFRS17 REVIEW ACTUARY STAR7725LIFE FLEXIBLE Qualified Large Insurer TECHNICAL MODELLING LEAD STAR7749LIFE LONDON Part-Qualified / Qualified Major Global Reinsurer REPORTING ACTUARY - BERMUDA STAR7684LIFE BERMUDA Qualified Global (Re)Insurer HEAD OF RESERVING STAR7709NON-LIFE SOUTH EAST Qualified Personal Lines Insurer SENIOR DEVELOPMENT ACTUARY STAR7718HEALTH NON-LIFE LONDON Qualified Market Leader HEAD OF CAPITAL STAR7707NON-LIFE LONDON Qualified Niche Insurer PRICING LEAD - CASUALTY STAR7689NON-LIFE LONDON Qualified Leading Global Insurer SPECIALIST ANALYTICS LEAD STAR7747NON-LIFE MANCHESTER Part-Qualified / QualifiedPersonal Lines Insurer LONDON MARKET RESERVING MANAGER STAR7744NON-LIFE LONDON Qualified Specialist Insurer SENIOR GI PRICING MANAGER STAR7745NON-LIFE LONDON Part-Qualified / QualifiedSpecialist Underwriter LONDON MARKET - SENIOR MANAGER STAR7743NON-LIFE FLEXIBLE Qualified Leading Global Consultancy PRICING ACTUARY - PROPERTY LEAD STAR7688NON-LIFE LONDON Qualified Leading Global Insurer PRICING ACTUARY STAR7700NON-LIFE BIRMINGHAM Part-Qualified / Qualified Major Global Insurer Make work work for you! Part-time, home working, hybrid working - we cover them all. INVESTMENT MANAGER - BERMUDA STAR7696INVESTMENT BERMUDA Part-Qualified / QualifiedLarge Insurance Group SENIOR CONSULTANT - DC INVESTMENT STAR7753INVESTMENT FLEXIBLE Qualified Leading Consultancy EQUITY RELEASE CREDIT ACTUARY STAR7694INVESTMENT LIFE RISK FLEXIBLE Qualified Leading Insurance Group HOME WORKING OFFICE BASED PART-TIME WORKING CONSIDEREDHYBRID WORKING INTERNATIONALUK ROLE SENIOR ANNUITY SPECIALIST STAR7683LIFE FLEXIBLE Qualified Leading Global Consultancy ACTUARIAL TECHNOLOGY STAR7726LIFE VARIOUS LOCATIONS Qualified Leading Global Organisation SENIOR REVIEW ACTUARY - REPORTING STAR7722LIFE FLEXIBLE Qualified Major Life Group REPORTING ANALYST / ACTUARY STAR7727LIFE SOUTH EAST Part-Qualified / Qualified Large Mutual SALES DIRECTOR STAR7750LIFE WIDER FIELDS LONDON Qualified Global Consultancy LONGEVITY MODELLER STAR7739LIFE PENSIONS LONDON OR SCOTLAND Part-Qualified / QualifiedLeading-Edge Consultancy SENIOR CONSULTING ACTUARY STAR7716PENSIONS BRISTOL Qualified Pensions Solutions Provider SENIOR CONSULTANT - LDI / RISK STAR7719PENSIONS INVESTMENT VARIOUS Qualified Market-Leading Consultancy HEALTHCARE ANALYTICS STAR7676HEALTH LONDON Qualified Leading Global Consultancy SUSTAINABLE FINANCE ACTUARY STAR7742LIFE NON-LIFE WIDER FIELDS FLEXIBLE Part-Qualified / QualifiedMajor Global Consultancy ASSUMPTIONS & METHODOLOGY HEAD STAR7738LIFE FLEXIBLE Qualified Major Insurance Group SENIOR RISK OVERSIGHT STAR7736LIFE SCOTLAND Qualified Major Insurer MODELLING & VALIDATION ACTUARY STAR7705LIFE LONDON Part-Qualified / Qualified Major Insurer