f e b r u a ry 2 0 0 7 The Newsmonthly of the American Academy of Actuaries Actuarial

CRUSAP Task Force members, from left, Ken Kent, Guy King, Terri Vaughan, Fred Kilbourne, Jack Turnquist, Bob Collett, and Jim Rech

Final Report of the CRUSAP Task Force Serving the Actuarial Needs of the Public

ike most actuaries, you’ve probably devoted leagues, working with the help of a large group of consul- a lot of time, energy, and resources (not to tants and advisers and the support of the Academy. mention the occasional lost vacation or sleep- The report, available on the CRUSAP website, less night) to your profession. You are proud assesses how well the U.S. profession is currently posi- Lof its past achievements, and you care about its future tioned to serve the actuarial needs of the public and development. suggests ways to improve that position. Divided into Sound familiar? Then you’ll want to take the next six sections, the report reviews the actuarial needs of step and grab a copy of the final report of the Critical the public, the education and training of actuaries, eth- Review of the U.S. Actuarial Profession (CRUSAP) Task ics and professionalism issues, oversight and regulation Force. Released at the end of December, the report is the of the profession, actuarial communications, and the U culmination of over a year’s worth of deliberations on the structure of the U.S. actuarial profession. state of the U.S. actuarial profession by seven of your col- See final report, Page  pdate Inside Academy Spring Meeting

On Beyond CRUSAP Offers Diverse Content Task Force Chairperson he offerings at its 2007 Spring discussion of premium deficiency reserves. Fred Kilbourne reflects Meeting are as diverse as the Casualty sessions will focus on risk trans- on his experience...... Page 5 Academy’s membership. Fea- fer, property/casualty priorities in the new Reporting Workers’ Comp Data turing concurrent sessions on Congress, and unpaid claim estimates. Life Tcutting-edge issues in the health, casu- actuaries will be able to participate in a The Academy has some suggestions alty, life, and risk management areas, the session on the principles-based approach for the NAIC ...... Page 6 meeting is designed to piggyback on a and international issues. The meeting also program of interest to pension actuaries features a general session on profession- AICPA SOP 05-1 already being offered as part of the 2007 alism and actuarial standards, sponsored A draft practice note Enrolled Actuaries meeting. and conducted by the Actuarial Standards on the standard is open Specific Spring Meeting sessions Board, and the annual Academy luncheon, for comment ...... Page 7 in the health arena will cover Medicare including the presentation of the 2007 Assessing Insurer Solvency reform options, health care priorities in Robert J. Myers Public Service Award. The Academy comments the new Congress, applying principles- The invited keynote speaker for the on IAIS draft paper . . . . Page 8 based methodologies to long-term care meeting is Rob Portman, the director of and other health insurance products, and a See spring Meeting, Page  v Calendar

February Academy News Briefs 1 FASB/IASB roundtable, Norwalk, Conn. 2 Academy Life Reserves Work Group meeting, Chicago

12-13 ASB Life Committee meeting, 2007 Yearbook YEARBOOK 2007 Washington nclosed with this issue 22-23 ASB meeting, Phoenix of the Update is your copy of the 25 Academy Pension Practice Council Academy’s 2007 Yearbook. It’s a reference that’s full of handy meeting, Miami information on the Academy’s purpose, organization, leader- A m e r i c A n A c A d e m y o f A c t u 25-27 ASPPA 401(k) Summit, San Diego ship, awards, and meetings. Take a moment to flip through. A r i e s 26 Academy Pension Committee meeting, EYou’ll get a sense of the breadth of Academy involvement in topics of Miami interest to all actuaries. You’ll also find the names of appropriate Acad- March emy staff to contact if you are interested in volunteering on any of the 1-2 Academy Health Practice Council Capitol wide variety of committees and task forces the Academy supports. Hill visits, Washington 1-4 NCOIL spring meeting, Savannah, Ga. 8-9 CAS ratemaking seminar, Atlanta ASB News At its December In the News The Academy was the source 8-9 NAIC Life and Health Actuarial Task Force meeting, the Actuarial Stan- “Got C-3 Phase II?” James of longevity statistics in a meeting, New York dards Board (ASB) approved Lamson, chairperson of the Dec. 4 article that consid- 10-12 NAIC spring meeting, New York for exposure a proposed revi- Academy’s Annuity Reserve ered the strain on retirement 12-13 Actuarial Foundation Board of Trustees meeting, Rosemont, Ill. sion of Actuarial Standard of Work Group and president savings by increased life 21-23 ABCD meeting, Arlington, Va. Practice (ASOP) No. 3, Prac- of Actuarial Resource Corp. spans. First published in 25-28 Seventh annual intercompany LTCI tices Relating to Continuing in Overland Park, Kan., USA Today, the article also conference, Dallas Care Retirement Communities. does. Lamson was the prin- ran in other Gannett papers, 25-28 Enrolled Actuaries Meeting (Academy, The exposure draft, enclosed cipal source in a Dec. 1 Best’s including Florida Today, CCA), Washington with this issue of the Update Review article examining the Wilmington, Del.’s News 28 Academy Spring Meeting, Washington and available online at www. significance of the Academy’s Journal, and the Honolulu 29 Academy Tax Reform Work Group actuarialstandardsboard.org, was C-3 Phase II project. In Advertiser. meeting, Washington developed by the Task Force to addition to quoting Lamson April Revise ASOP No. 3 of the ASB’s extensively, the article featured Academy Senior Pension 4 Academy Council on Professionalism Health Committee. The dead- several graphics based on the Fellow Ron Gebhardtsbauer meeting, line for comments is April 30. Academy’s implementation was quoted in a Dec. 9 Kan- 5 Academy Executive Committee meeting, survey. The article also quoted sas City Star article analyzing Washington London Digs Through the Tom Campbell, chairperson of whether we are living longer. 13-14 North American Actuarial Council Academy’s corporate member- the Academy’s Variable Annui- Gebhardtsbauer said that it meeting, Mexico City ship in Club Quarters, Academy ties Reserve Work Group and was a matter of contention 15-18 IAA meeting, Mexico City members now have another vice president and corporate whether life expectancy will 16 CIA pension seminar, Toronto option when traveling to Lon- actuary with Hartford Life in continue to grow indefi- 16-18 SOA life insurance conference, Atlanta don. Club Quarters, a chain of Weatogue, Conn., and Tim nitely. The article also ran in 18-20 SOA retirement industry conference, Atlanta small hotels designed for busi- Gaule, a member of the Acad- a number of other papers, 18-20 SOA Investment Actuary Symposium, ness travelers, has opened a emy’s Annuity Reserves Work including the Buffalo News, New York new hotel in Trafalgar Square Group and vice president the Detroit Free Press, and the in the heart of London’s West and valuation actuary with Charlestown Gazette. May End. All Club Quarters hotels the Security Benefit Group of 3 ASPPA Great Lakes Benefit Conference, provide private, club-like facili- Companies in Topeka, Kan. A Dec. 9 National Under- Chicago ties at lower prices than com- writer Life & Health web- 5 Academy Pension Practice Council meeting, Philadelphia parable hotels. Room rates THE NUMBER edition article reported on 6 Academy Pension Committee meeting, are reduced further on most The number the new principles-based Philadelphia weekends and holidays, both 708 of words reserving system. Donna in Academy Pension 7-8 CAS reinsurance seminar, Philadelphia for members and for mem- Claire, chairperson of the Vice President Donald 10-11 SOA spring life meeting, Phoenix bers’ family and friends. For Segal’s op-ed “Don’t Academy’s Risk Management more information, go to www. Bury DB Plans Yet,” and Financial Soundness Web Interface clubquarters.com. The mem- published in its entirety Committee and president Links to documents underlined in blue are ber password for all Academy ON RIGHT in the Dec. 25 issue of of Claire Thinking in Fort included in the online version of this issue at members is “aaoa” (without the Pensions & Investments Salonga, N.Y., and Dave www.actuary.org/update/index.asp (see Page 3). quotation marks). Neve, co-chairperson of

 Actuarial Update february 2007 Media Relations Activity Report—2006 Academy News Briefs the Academy’s Life Reserves Work Group and second The numbers are in. And, no surprise really, 2006 was a big year for the Academy in the media. Much of this is the result of timing and the issues—Academy pension experts were vice president of the Princi- much in demand in the weeks surrounding the passage of the Pension Protection Act of pal Financial Group in Des 2006, for instance—but the numbers still reflect a lot of hard work and perseverance on the Moines, Iowa, were both part of Academy members and staff to provide relevant, accessible, succinct, newsworthy quoted. The article also in- information that met the needs of journalists and their audiences. cluded remarks from Larry Bruning, chief actuary with 800 794 the Kansas Department of 600 Insurance in Topeka. 560 2006 400 2005 Henry Siegel, the chairperson 200 225 49 84 158 2004 of the Financial Reporting 39 104 108 Committee and vice presi- 0 Requests Interviews Placements & Pickups dent for New York Life Insur- ance Co. in New York, was Note: A placement is an article containing an Academy reference and/or a quote or attribution from an Academy spokesperson. quoted in a Dec. 14 National A pickup is the publication of an Academy news release, media alert, statement, or letter to the editor. Underwriter Life & Health article on the Financial Ac- counting Standards Board’s plans are dead should con- profitability, and financial for Lockton Benefit Group in (FASB) decision to shelve sider the effects of the Pension pricing models within the Kansas City, Mo. Before join- a controversial bifurcation Protection Act of 2006 and property/casualty market. ing Lockton, she was vice proposal for risk transfer they shouldn’t discount the ® Shannon Demaree has been president and director of actu- and financing components contributions of actuaries in appointed vice president and arial services for Wachovia of insurance policies. Siegel the passage of that legisla- director of actuarial services Insurance Services. said he welcomed the board’s tion. The Academy also, Segal decision to move toward a wrote, “has suggested new disclosure-based approach to rules that would allow em- finite reinsurance rather than ployers to transfer unexpected to alter the entire reporting surpluses, without penalty, to basis for insurance liabilities. other qualified employee ben- However, he warned, this efit funds including employee issue might resurface in the health funds.” future. The Academy com- mented in August on FASB’s Kudos You know it, but how bifurcation proposal. ® Ohio Governor Bob Taft about the kids sitting in has appointed Susan Starr, an a classroom near you? Saul Friedman’s Dec. 23 actuarial consultant in Port T h rou g h Newsday column arguing Clinton, Ohio, to the Terra Shake, Rattle, & Roll, a new math program against the privatization of Community College Board sponsored by the Actuarial Foundation and developed and Social Security mentioned of Trustees. Starr retired in distributed by Scholastic, you can provide students and their the Academy’s Social Security 2001 after a 33-year career as teachers with math literacy-based materials that meet national Game. a senior consulting actuary standards and offer an enticing peek into the real-world situations with the Cleveland office of where actuaries’ mathematical expertise is used. Responding to a commen- Watson Wyatt. Containing lesson plans, activities, and other teaching resources, the tary by Douglas Love in the program will educate students about the impact of math upon the Dec. 11 issue of Pension & On the Move economy and their daily lives, as well as point out how events far Investments that blamed ac- ® Paul Deemer has been pro- away may have an impact on their lives in the future. The program tuaries and others for killing moted to the newly created motivates students to see just how important math is in their ability defined benefit (DB) plans, position of vice president and to navigate through life and introduces the actuarial profession to the Academy issued an op-ed chief actuary at North Pointe teachers and students in an interesting and relevant manner. that ran in the Dec. 25 issue. Holdings Corp. in Southfield, To download program materials to donate to a school in your area, Written by Donald Segal, the Mich. Before joining North go to www.actuarialfoundation.org/youth/ Academy’s vice president for Pointe in March 2006, he was Shake-Rattle-Roll.html. pension issues, the op-ed con- employed at Acuity, where tends that critics who say DB he developed underwriting,

www.actuary.org Actuarial Update february 2007  final report of the crusap task force, continued from Page 1

To complete their study, task force for further action by the profession: members surveyed and interviewed both n Define actuarial science as “the quan- actuaries and the users of actuarial ser- tification, analysis, and management of vices, consulted members of other pro- future contingent risk and its financial fessions, and sifted through a vast body consequences.” of literature on both the U.S. and for- n In order to meet all the anticipated needs eign actuarial professions. As the project of the public, make a home somewhere moved forward, the task force considered within the actuarial profession for all per- and discussed written reactions from a sons doing competent actuarial work. dozen organizations and several dozen n Encourage individual actuaries to gain individuals to preliminary and draft ver- sufficient knowledge to speak out on actu- sions of the report. arial elements of major public issues. “It’s important to remember that the n Increase the use of alternative delivery report is not the product of one or more systems to educate and examine prospec-

actuarial organizations but the supported tive actuaries. Fred Kilbourne opinions of seven independent actuar- n Require active members of the actuarial ies,” said Fred Kilbourne, chairman of profession to meet consistent continuing the CRUSAP Task Force and an indepen- education requirements. dent consulting actuary in San Diego. n Define the actuarial value proposition Although the job they took on was daunt- by the board of directors of each actuarial perform a study of the current commu- ing, Kilbourne said, task force members professional organization. nication activities of the U.S.-based actu- never knowingly compromised their goal n Promote profession-wide discussion of arial professional organizations. of helping the actuarial profession better actuarial ethics as set forth in Precept 1 of n Establish a group (task force, committee, meet the actuarial needs of the public. the Code of Professional Conduct. team) specifically charged with reviewing Other members of the task force n Sponsor research to enhance the abil- and implementing, where feasible, the rec- were Bob Collett, a former CEO of Mil- ity of the profession to meet the actuarial ommendations in the CRUSAP report. liman in Seattle; Ken Kent, a consult- needs of the public. n Establish a broad-based independent ing actuary with Cheiron in McLean, n Continue to promote the develop- group (task force, committee, conven- Va.; Roland “Guy” King, former chief ment and establishment of Actuarial tion) charged with reviewing the actions Medicare actuary and president of King Standards of Practice appropriate for the and advising the group proposed in the Associates in Annapolis, Md.; Jim Rech, emerging principles-based regulatory preceding recommendation. vice president of GPW and Associates in environment. n Establish consolidation of the U.S. Phoenix, Ariz.; Jack Turnquist, a member n Enhance the ability of the ABCD to actuarial profession as a goal of the of the Actuarial Board for Counseling and identify possible violations of the Code profession. Discipline (ABCD) and former Academy of Professional Conduct. At its fall meeting, the North Ameri- president who is retired and lives in Dal- n Establish a joint disciplinary process for can Actuarial Council (NAAC), composed las; and Terri Vaughan, former president the profession, independent of the indi- of presidents and presidents-elect from of the National Association of Insurance vidual actuarial organizations. the major actuarial organizations of the Commissioners and the Robb B. Kelley n Benchmark disciplinary processes for United States, Canada, and Mexico, estab- distinguished professor of insurance, U.S. actuaries against those of other U.S. lished the CRUSAP Response Team. The risk management, and actuarial science professions and of actuaries in other team, consisting of all U.S. members of at Drake University in Des Moines, Iowa. countries. NAAC, has been asked to respond to the Complementing the task force was a 30- n Provide for participation in the stan- report’s findings and recommendations. member advisory panel composed of 18 dards and discipline process by profes- “We’ve done what we can, and now actuaries and 12 non-actuaries. sionals who are not actuaries. it is up to others to carry the recommen- The report provides detailed analysis n Require training and demonstrated pro- dations forward,” Kilbourne said, adding, in each subject area, referring frequently ficiency in communications skills as part “I’m confident the CRUSAP Response to the 1,400 responses to the two CRU- of the basic education and qualification Team will act quickly and decisively.” SAP surveys and the more than 80 inter- of actuaries. In the meantime, Kilbourne urged all views that members of the task force con- n Develop a website specifically directed members of the profession to read the ducted with people knowledgeable about at the users of actuarial services and the report, discuss its findings with col- the actuarial profession. At its conclusion, general public. leagues, and thoughtfully consider how the report offers the following 19 recom- n Retain a firm specializing in profes- best to implement those recommenda- mendations, some of them controversial, sional organization communications to tions they support.

 Actuarial Update february 2007 final report of the crusap task force, continued from Page 1 The Baton Has Been Passed

or CRUSAP Task Force Chairperson Fred Kilbourne, there is but that it was time well-spent. “The task force was extremely satisfaction in the publication of the task force’s final report good and very responsible about tasks and meeting some tough and even greater satisfaction in seeing others step in to take over. deadlines,” Kilbourne said. “As a result, a lot got done.” It’s not that he is disengaging from the future of the An actuary for more than 40 years, Kilbourne came into the profession, Kilbourne explained, but that he’s confident it’s in project with some strong ideas about the profession. He emerged good hands. Under the direction of Bill Bluhm, the Academy’s from the experience, he said, with some of those ideas intact and president-elect, a response team formed by the North American others modified by the collaborative process. This is most evident Actuarial Council has been reviewing the report and planning in the final recommendation that consolidation of the U.S the next steps. “This is an ideal group for the purpose, since its profession be established as a goal of the profession. “The members generally have the position and the will to implement consensus process involved not only seeking compromise and those of the report’s recommendations with which they concur,” agreement among task force members but also evolution of the Kilbourne said. Moreover, the response team is keeping up the thinking of individual members, based on information— pace that was set by the task force. “I’d say it’s important to move substantially from other actuaries—and reflection,” Kilbourne quickly, and I think they are already doing that,” Kilbourne said. said. While still strongly in favor of the profession’s unification, Kilbourne estimated that he spent more than 100 hours a Kilbourne said he’s comfortable with the somewhat softer month on CRUSAP over the course of the past 20 months, recommendation that the task force finally issued.

Sam Huffman Robert Lowery Staci Palmer Amy Sullivan New Academy Members Delson Hung Gary MacGregor Hengchang Pan Charles Sutton n the second half of 2006, 241 new members Allen Irlmeier Padraic Malinowski Yan Peng Kamilla Svajgl joined the Academy. By joining, they have demon- Kamil Jasinski Luis Marques Rebecca Petersen Brett Swanson strated a commitment to ethical and responsible Jeremiah Johnson Amanda Marsh Olga Petushkov Tomoyuki Tansho actuarial conduct and an interest in keeping up with Christopher Jones Howard Marsh Achenkunju Philip Sarah Theis Ithe issues and events that shape their profession. And James Jones Therese Masiello Rebecca Picotte Anne Thomas they are in good company—as of Dec. 15, the Academy Mark Jones Rashmi Mathur James Piekut Kathy Thompson boasted 15,146 members on its rolls. Jordan Jordanov Richard May Michael Rathje Thomas Tipton Andrew Kempen Sean McAllister Zia Rehman Angela Tong Ribhi Alam Ramon Casanova Christine Fleming Gareth Kennedy Jamie Mcgee Yun Ri Michael Tuchman Michael Albino Jeffrey Catlett Robert Foskey Jessica Kierulf Kathleen McGugan Bradley Rolling Matthew Varitek Xin Allen Matthew Chamberlain Gary Fotiu Kayne Kirby Christopher McKenna Jeffrey Ross Rebecca Verhagen George Argesanu Xiyou Chen Jason Freudenberger Jonathan Knotwell Kevin Meeuwsen Chad Runchey Victor Victoriano James Ash Zhuo Chen Sara Goldberg Jeffrey Kobs Jennifer Meyer William Rusk Hilda Viidemann Dimple Asher Winnie Cheung Victoria Gomez Brenda Koenig Kathleen Middleton Corinne Russell Nicole Wagner Orlando Asuncion Nitin Chhabra Paresh Gopaldas Matthew Kuczwaj Kathleen Midgley Brent Sallay Mary Wagnon Matthew Avery Kevin Christy Rebecca Gordon Amanda Kuhl Erica Mitchell Erin Schaaf Todd Walker Bethany Axtman Colin Condie Kelly Gorst Nicolas Lahaye Erika Monroe Angela Schiebout Michelle Waluda Christine Bach Henry Corwin Stephanie Grass Mary Lareau Rebecca Moody Whitlock Paul Wang Richard Bagby Barbara Cox Anna Liza Guloy Chanho Lee Therese Morong Michael Schmuker Steven Wang Jevon Barlas Jinnah Cox Jiayu Guo Jennifer Lehman Erica Morrone James Schneider Weiyi Wang Tiffany Baron Russell Creed John Hall Christian Lemay Jonathan Mossman Jared Scholten Yan Wang Angelo Bastianpillai Lauren Cross Richard Hartman Brian Lenius J. Doug Moulton Jason Schumacher Gabriel Ware Sarah Behnke Douglas Danner Yu He Sean Leonard Brian Mullen Xianqi Shao Chandler Benson Jeannine Danner Bryan Heilman Rodney Lester Jason Mulligan James Sharkey Caroline Waxler Jianwei Bi Melisa Darnieder Ginny Hencken Shelly Lewis Eric Murray Scott Sheefel Ralph Weatherwax Nicolas Billard Mark Daulby Jason Herman Haidong Li Jamala Murray David Sherman John Winn Chris Birch Chad Dawkins Kelly Hernandez Yulin Li Coleman Naughton Daniel Siblik Ming Yang Jennifer Blackmore David Dellaripa Wade Hess Andrew Liao Jason Newkirk Scott Simms Yi Yin Peter Blouin Jennifer Demeo Scott Higginbotham Katherine Lin Michael Noble Joseph Slater Anton Zalesky Rachel Boles Michael Derr Ryan Hinchey Steven Lindblad Kevin Noll Kassie Sloss Jennifer Zebrowski Luis Bornancini Michael Donovan Hugh Hopper Ryan Little Timothy Nugent Julee Snider Juemin Zhang Ali Bukhari Mathieu Doucet Bradley Howard Joshua Liu Nigel Nunoo Yeni Son Wei Zhao Todd Burman Kelley Elliot Gerald Howard Songan Liu Tom O’Sullivan Lucas Sondelski Yue Zhao Stephanie Burmester Nicole Elliott Shawn Howell Weiyun Liu Adeniyi Olaiya Zhanxue Song Gang Zhou Eileen Burns William Erdman Bo Huang Yidong Liu Debra Olson Christina Spetch Huawei Zhu Laura Cali Christine Farley Xun Huang Yuan Long Christopher Oppliger Alan Stone Janellle Zumbrum Julianne Callaway Joshua Fishman John Hubenschmidt John Lower Brian Orr Matthew Strebeck Robert Zwick

www.actuary.org Actuarial Update february 2007  casualty news

Academy Vets Workers’ Comp Reporting Proposal

n a Jan. 15 letter to the National Association of Insurance Casualty Briefs Commissioners’ Casualty Actuarial Task Force (CATF), the Academy commented on a proposed CATF recom- ➤ Patrick Woods, assistant vice president and actuary for Insurance mendation to add state page reporting forms on large- Services Office in Jersey City, N.J., has joined the Academy’s Casualty Ideductible workers’ compensation business to company annual Practice Council. ➤ statements. Kay Cleary, an actuary with Risk Management Solutions in Tallahassee, Fla., has joined the Academy’s Property and Casualty In its letter to the CATF’s Large-Deductible Subgroup, the Risk-Based Capital Committee. Academy’s Workers’ Compensation Subcommittee raised a num- ➤ Joel Atkins, an actuary with Zurich North America in ber of issues: Schaumburg, Ill., has joined the Academy’s Natural Catastrophe n States have a variety of tax and assessment bases in place today Subcommittee. and a variety of mechanisms for collecting the data needed to ➤ Joining the Academy’s Extreme Events Committee are Alex levy them. A single reporting form is not likely to replace sources Krutov, president of Navigation Advisors in New York, and James already used for these purposes. Matusiak, a director at PricewaterhouseCoopers LLC in Chicago. n A number of states already have mechanisms in place for sup- ➤ William Dove, chief technical officer for Ace Risk Management plemental reporting of large-deductible information, and the in New York, has joined the Academy’s Flood Insurance definitions used in states’ reports may not be consistent with Subcommittee. what is being requested in the proposal. ➤ Stephen Talley, an actuary with Castlewood Ltd. in Hamilton, Bermuda, has joined the Academy’s Mass Torts Subcommittee. n Some or all of the information being sought in the proposal may already exist at the National Council on Compensation Insurance and at independent bureaus. n The definitions used in the statistical reporting of data to rating state basis. The Academy used Pennsylvania as an example of bureaus is not consistent with the definitions recommended in the a state in which large-deductible workers’ compensation busi- proposal, which may lead to confusion in the marketplace as to ness is already reported in much greater detail than the CATF what is being reported. Specifically, the proposal does not define proposal recommends. “large deductible” or “standard premium,” terms whose definition The Academy also referred the subgroup to a July letter can vary even within a state. from the Academy’s Committee on Property Liability Financial To ensure that the information being sought is not already Reporting commenting on an earlier workers’ compensation reported in other ways, the Academy encouraged the subgroup large-deductible study. Many of the points mentioned in that to take inventory of data pertaining to large-deductible business letter apply to the current proposal as well. currently being reported by insurers on an individual, state-by-  —Lauren Pachman

risk management and financial reporting news

Risk Margin Volunteers Needed

he Academy’s new Risk Margin Task Force is seek- dards Board. Since RMWG guidance would apply to life, health, ing volunteers to help it review drafts produced by and property/casualty products, the Academy is seeking volun- the International Actuarial Association’s Risk Margin teers from all practice areas. The Academy’s task force is also Working Group (RMWG) and comment on behalf of looking for a volunteer to serve as its representative at RMWG Tthe U.S. actuarial profession. The RMWG is currently producing meetings (most of which are held in Europe). guidance on how actuaries should determine best estimates of Interested? Contact Tina Getachew, the Academy’s risk liabilities and the appropriate margins for those liabilities under management and financial reporting policy analyst (getachew@ proposals being created by the International Accounting Stan- actuary.org).

 Actuarial Update february 2007 health news

CMS Asked to Reconsider Medicare RDS Rule n a Dec. 19 letter, the Academy again urged the Centers for sponsors when they test a plan for actuarial equivalence. “This Medicare and Medicaid Services (CMS) to reconsider a rule makes the one-role-per-user rule less significant when applied to that has blocked some actuaries from providing an attesta- the specific role of certifying actuary,” Schubert wrote. tion of actuarial equivalence for the retiree drug subsidy In the letter, Schubert asked the CMS to reconsider the rule I(RDS) option offered under the Medicare Part D program. before RDS actuarial attestations are due in 2007. The provision is a function of the online RDS system that allows individuals to assume only one role. While actuaries Health Briefs can assume non-actuarial roles, such as account manager or authorized representative, an actuary who assumes a non-actu- ➤ Daniel Pribe, executive director of risk management for Mercy arial role within the RDS system is precluded from signing any Health Plans Inc. in Chesterfield, Mo., has joined the Academy’s Health Practice International Task Force and its Health RBC actuarial attestation. Subgroup. Also joining the subgroup is Michael Frank, president In earlier conversations with CMS about the problem, the of Aquarius Capital in Port Chester, N.Y. Academy was told that the provision was an outgrowth of online ➤ April Choi, vice president and actuary for Wellpoint Inc. in security protocols to maintain tight control over protected data. Thousand Oaks, Calif., has joined the Academy’s Medicare Steering The Academy was further told that the CMS may reconsider Committee. the user-role rules, but only after the core RDS program system ➤ Ian Duncan, president of Solucia Inc. in Hartford, Conn., is the functionality was developed and implemented. new chairperson of the Academy’s Disease Management Work Actuaries don’t gain any access to personally identifiable health Group. data when using the RDS secure website to certify that a plan passes ➤ Laurel Kastrup, a manager for KPMG LLP in Dallas, has joined the actuarial equivalence test, Academy Health Vice President John the Academy’s Health Practice International Task Force. Schubert wrote, even though they may be given that data by plan

life Briefs life news ➤ Shawn Loftus, vice president for modeling and analysis for USAA Life Insurance Co. in San Antonio, has joined the Academy’s Life Capital Work Group. ➤ Arthur Panighetti, vice president, tax, for Northwestern Mutual in Milwaukee, has joined the Academy’s Life Financial Soundness/ Risk Management Committee and its Life Reserves Work Group. Draft Practice Note on ➤ Joining the Academy’s Invested Asset Work Group are Bryan Boudreau, managing director for Lehman Brothers in New York; AICPA SOP 05-1 Rodney Clark, director of financial services for Standard & Poor’s in New York; Dave Dowrich, vice president at Credit Suisse in New he Academy’s Life Financial Reporting Committee is York; Richard Mattison, director and actuary for Standish Mellon seeking comments on its exposure draft of a practice Asset Management in Boston; Scott Robinson, vice president and note concerning the American Institute of Certified senior credit officer for Moody’s Investors Service in New York; Public Accountants’ Statement of Position 05-1, on and Eric Sandberg, director for Aegon Institutional Markets in Taccounting for deferred acquisition costs in connection with Louisville, Ky. insurance-contract modifications or exchanges. ➤ William Brummond, vice president for Old Mutual Financial The practice note discusses issues that are both within and Network in Baltimore, has joined the Academy’s Reinsurance Work Group. outside the scope of the statement of position, including defining ➤ Joining the Academy’s Valuation Law & Manual Team are internal replacement and scope, terminating integrated versus Stewart Ashkenazy, vice president and actuary for MetLife in non-integrated issues, determining what is substantially changed Long Island City, N.Y., Robert DiRico, an actuary in the insurance and what is substantially unchanged, and which required account- risk management area for ING in West Chester, Pa., and Youri ing for transactions is covered by the statement of position. Matiounine, an associate actuary with New York Life Insurance The Academy’s practice note is currently exposed online on Co. in New York. the Academy’s website, www.actuary.org. The comment deadline ➤ Peter Bondy, a principal with Bondy and Associates in Davie, is March 2. Please send your comments to Tina Getachew, the Fla., and David Hippen, life and health actuary for the Missouri Academy’s risk management and financial reporting policy ana- Department of Insurance in Jefferson City, have joined the lyst ([email protected]). Academy’s Centralized Examination Office Team. www.actuary.org Actuarial Update february 2007  risk management and financial reporting news

Actuarial Update

Associate Editors Comments on Assessing Insurer Solvency William Carroll Patrick Collins Andrew Erman he Academy’s Risk Management and Sol- tices in such valuations—are not inconsistent with an Rade Musulin vency Committee recently submitted com- “economic” or “market-consistent” valuation as those Geoffrey Sandler ments on the third and final exposure draft terms are used in the paper. Donald Segal of a paper by the International Association The committee previously commented in Novem- Editor Tof Insurance Supervisors (IAIS) on the common struc- ber and in July on earlier versions of the draft paper. Linda Mallon ([email protected]) ture for the assessment of insurer solvency. The Academy sent its comments to both the IAIS

Design and Production Committee Chairperson Jim Rech, along with and the International Actuarial Association. BonoTom Studio Inc. committee members Ralph Blanchard, Elise Liebers,  —Tina Getachew Marketing and publication Harold Luber, and Jim Reiskytl, commented on the production manager draft that was released by the IAIS in December. They Cindy Johns stated, among other things, that the total balance sheet Risk Management and Financial Reporting Briefs American concept needed to be more clearly defined and devel- Academy oped in the paper. They also suggested changes to ➤ Godfrey Perrott, a consulting actuary for Milliman of Actuaries clarify that certain current practices for valuing liabili- in Wakefield, Mass., has joined the Academy’s Risk Management and Financial Reporting Council. President ties—such as using company specific data as a starting Steven Lehmann point and reflecting company claim settlement prac- President-Elect William Bluhm

Secretary-Treasurer spring Meeting, continued from Page 1 John Parks Vice Presidents the Office of Management and Budget. tion on Tuesday evening, March 27, for those who Robert Miccolis Allan Ryan The meeting is scheduled to run from 8:00 a.m. are attending the EA meeting or are coming in the David Sandberg to 5:45 p.m. (continental breakfast will be available at night before. John Schubert 7:00 a.m.) on Wednesday, March 28, at Washington’s For more information and to register, go online Donald Segal Timothy Tongson Marriott Wardman Park Hotel. There will be a recep- to the Academy’s website.

Executive Director Kevin Cronin

Director of communications John Schneidawind Academy 2007 Spring Meeting Assistant Director for PublicAtions Steven Sullivan March 28, 2007, 8:00 a.m. — 5:45 p.m. Managing Editor, Internet and New Media Marriott Wardman Park Hotel, Washington Anne Asplen

Executive Office Join your Academy colleagues in Washington for the The American Academy 2007 Academy Spring Meeting. The meeting will include: of Actuaries 1100 Seventeenth Street NW ® Casualty sessions on reinsurance risk transfer, property/casualty issues in the new Seventh Floor Washington, DC 20036 Congress, and unpaid claim estimates; Phone 202-223-8196 ® Health sessions on priorities in the new Congress, applying principles-based Fax 202-872-1948 www.actuary.org methodologies to long-term care, and Medicare reform;

Statements of fact and opinion in ® A life session on the principles-based approach and international issues; this publication, including editorials and letters to the editor, are made ® A general session on actuarial standards conducted by the on the responsibility of the authors Actuarial Standards Board; k alone and do not necessarily imply boo or represent the position of the the ® The annual Academy luncheon featuring invited keynote speaker e! American Academy of Actuaries, Dat the editors, or the members of the Rob Portman, director of the Office of Management and Budget, Academy. and presentation of the 2007 Robert J. Myers Public Service Award. ©2007 The American Academy of Actuaries. All rights reserved. For more information and to register, go to www.actuary.org/springmeeting/index.asp.

 Actuarial Update february 2007