Published in London by the Staple Inn Actuarial Society The www.TheActuary.com ActuaryTHE MAGAZINE FOR THE ACTUARIAL PROFESSION November 2011 Sense of adventure Explore new opportunities in risk and investment Plus: The changing shape of capital management at Lloyd’s Inside: Pension swaps • Employee health risk • Solvency II modelling • Elegant English • Latest jobs ©2011 Conning & Company. All Rights Reserved. GEMS® is a registered trademark of Conning Services (Ireland) Limited. When you can see what others can’t, you enjoy a natural advantage. See more of what could unfold with GEMS® Economic Scenario Generators, built on one of the most comprehensive simulation platforms on the market. See more “what ifs” using the proven economic and financial modeling capabilities of GEMS. With more accurate tail-risk modeling, a broad set of asset classes and the ability to model at the security level, GEMS provides cutting-edge global economic simulations for managing your business. 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Hartford | New York | London | Dublin | Cologne | Hong Kong GEMS® – Best ESG Software Xxxxxxxxxxx Xxxxxxxxx TheActuary See page 5 for the editorial team Incisive Financial Publishing Editorial 32-34 Broadwick Street, London W1A 2HG T +44 (0)20 7316 9000 November 2011 Publisher/display sales Philip Harding T +44 (0)20 7316 9393 E [email protected] Managing editor Sharon Maguire Call to action T +44 (0)20 7316 9016 E [email protected] Recruitment sales manager Having recently attended one of the Profession’s volunteer recognition Melanie Jacob events, I was quite inspired by the number of people giving up their T +44 (0)20 7316 9618 E [email protected] spare time to better our profession. Designer Nicky Brown I am often asked by student actuaries how they can get more involved in Profession activities and how to gain the support from their employers. Senior sub-editor Sam Robson I am a believer that most employers are supportive of activities that improve the morale of their staff but do not detract from their business Production manager Jennifer Holmberg aims. A number of volunteering activities need not consume office hours T +44 (0)20 7316 9766 and the feeling of being able to make a difference motivates the extra E [email protected] curricular effort. Certainly, those are my sentiments and, having read Group editor-in-chief Jonathan Swift around the subject, the benefits of volunteering are not solely altruistic. Others give up their time to make an economic impact, to network, Group publishing director Mark Burton to develop personally and to enhance employability. Print and distribution Polestar Colchester, Essex Naturally, there are a host of areas where your time could be of great value, and Kenneth Donaldson illustrated that so well in his stories of Subscriptions For subscriptions from outside African pachyderms in The Actuary’s September edition. If, however, you the actuarial profession: UK, Eire feel that your calling is within the actuarial profession or you wish to find and Europe: £50 a year/£5 a copy. For the rest of the world: £75 a out more, then visit the list of volunteer vacancies www.actuaries.org.uk/ year/£7.50 a copy. Please contact: members/pages/volunteer-vacancies Alison Jiggins The Actuarial Profession, Staple Inn, High Holborn, The Actuary’s editorial team seeks new volunteers from time to time and London WC1V 2QT T +44 (0)20 7632 2100 currently we are looking for a self-motivated individual to take on the role E [email protected] of people/society news editor from Kelvin Chamunorwa, who plans to step Students on actuarial science courses down presently. For more information, please contact Kelvin on at universities may join the Staple [email protected]. Elsewhere, I am pleased to introduce Inn Actuarial Society for £6 a year. They will receive The Actuary as Sarah Bennett to the features team. Sarah will focus on part of their membership. Apply health- and international-related features. to: Membership Department, The Actuarial Profession, Maclaurin House, 18 Dublin Street, Edinburgh In our penultimate edition of the year, we share EH1 3PP. T +44 (0)131 240 1325 articles on Solvency II, pensions and actuaries in E [email protected] wider fields. With the Solvency II effective date Changes of address should be continuing to be under threat of delay until 2014, made known to the membership the issues surrounding practical implementation are department as above. set to be discussed for some time to come. For delivery queries please contact: Manisha Khanduri E [email protected] Marjorie Ngwenya Internet Editor The Actuary website: www.TheActuary.com [email protected] SIAS website: www.sias.org.uk Actuarial Profession website: www.actuaries.org.uk Like The Actuary on Facebook Circulation 21 764 (July 2010 to Follow @TheActuaryMag on Twitter June 2011) Join The Actuary’s LinkedIn group www.TheActuary.com November 2011 3 With its new updated interface, powerful modelling engine, and flexibility to meet all future financial modelling needs, Mo.net is now even further ahead of the competition. Modellers and actuaries can now achieve outcomes within their modelling environment that they never thought possible. Built upon a modern software platform and designed by actuaries, Mo.net provides a highly productive, controlled and auditable modelling experience to meet the challenges of stochastic and Solvency II modelling. Ease of integration with existing data warehouse systems, and the ability to export models for use within other areas of a business, makes Mo.net the right choice for Solvency II implementation. Mo.net 6.0 will be launched at The Actuarial Profession’s Life Conference 2011. Visit us there, or contact us now to arrange a demonstration. For more information Darren Richards +44 (0)20 7278 9500 [email protected] www.oac-mo.net Follow us at twitter.com/OACnews Xxxxxxxxxxx Xxxxxxxxx TheActuary Editorial advisory panel Peter Tompkins (chairman), Contents John Batting, Margaret de Valois, Matthew Edwards, Martin Lunnon, November 2011 Richard Purcell, Andrew Smith, Chris Sutton, Sherdin Omar, Nick Silver News Editor Marjorie Ngwenya 12 Education and research E [email protected] Profession news T +44 (0)7794 031 225 13 Features editor 16 Industry news Tracey Pritchard Lane Clark & Peacock LLP, 18 People/society news E [email protected] T +44 (0)20 7432 3071 20 SIAS events Deputy features editors Adam Jorna 40 Appointments and moves Sonal Shah E [email protected] Profession news editor Comment Alison Jiggins E [email protected] 3 Editorial T +44 (0)20 7632 2172 Marjorie Ngwenya is inspired by the Industry news editor Terren Friend Profession’s volunteers E [email protected] People/society news editor Careers: Sense of adventure Kelvin Chamunorwa 6 Letters Towers Watson Kirsten MacLeod discusses In which actuaries discuss run-outs, religion and E [email protected] opportunities for ambitious actuaries T +44 (0)7502 107 322 risk-return relationships Student page editor in the wider fields of risk and Matthew Welsh investment President’s comment E [email protected] p29 8 Arts page editor Jane Curtis discusses the Profession’s central role Richard Elliott Scottish Life in sharing its expertise with relevant stakeholders E [email protected] T +44 (0)7814 509 081 10 Soapbox Puzzles editor Danny McMillan David Worsfold picks his way through recent Towers Watson EU proposals E [email protected] Features Published by the Staple Inn 21 Communication: Elegant English 39 Book review Actuarial Society. Sonal Shah looks at homophones — words with the same The Trouble with Markets: saving capitalism from The editor, The Institute and pronunciation but different meanings itself by Roger Bootle Faculty of Actuaries and Staple Inn Actuarial Society are not responsible for the opinions put 22 Pensions: Forward thinking Regulars forward in The Actuary. No part of Nisha Khiroya compares the efficacy of using spot or this publication may be reproduced, 36 Arts stored or transmitted in any form forward swaps to hedge pension scheme liabilities Clare Whitelam sets the scene for the or by any means, electronic, mechanical, photocopying, recording highly anticipated film, My Week with Marilyn or otherwise, without prior written 25 Healthcare: Healthy options permission of the copyright owners. While every effort is made to Mike Tyler and Sharon Allaway take a look at the 37 Puzzles ensure the accuracy of the content, theories concerning employee health risk the publisher and its contributors Win a £50 Amazon voucher in our prize puzzle accept no responsibility for any Financial services: A fresh vision material contained