Published in London by the Staple Inn Actuarial Society
The www.the-actuary.org.uk ActuaryThe magazine for The Actuarial Profession April 2011 Hit for six What actuaries can learn from the world of cricket
Plus: The rise of the aggregators
Inside: A-list apps • Baroness Greengross Q&A • Insurance pricing • Apostrophe risk • Latest jobs
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See page 5 for the editorial team Incisive Financial Publishing 32-34 Broadwick Street, London W1A 2HG T +44 (0)20 7316 9000 Publisher/display sales Editorial Philip Harding T +44 (0)20 7316 9393 April 2011 E [email protected]
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Recruitment sales manager Melanie Jacob Testing times T +44 (0)20 7316 9618 E [email protected] The fi rst quarter of 2011 is behind us and, while year-end fi nancial reporting has gone into hibernation, actuarial students are ‘all hands to Recruitment sales executive Satvir Kaur the pump’ for the upcoming exam season. It has been an eventful quarter T +44 (0)20 7316 9868 with severe natural disasters in Queensland, Australia, New Zealand and E [email protected] Japan. The loss of lives has been incredibly humbling but I am once again Designer heartened to see the solidarity of fellow human beings in these situations, Nicky Brown despite political unrest stealing the headlines elsewhere in the world. Sub-editor Sam Robson In the realm of insurance, the results from the fi fth Solvency II Production manager quantitative impact study emerged, indicating a near 70% participation Matt Parle T +44 (0)20 7316 9766 rate by European insurers. It appears that the industry remains suffi ciently E [email protected] well capitalised and that, currently, only 15% of insurers would fail to Group editor-in-chief meet the minimum requirements. Anthony Gould
Group publishing director Insurers were also getting to grips with the gender discrimination ruling Mark Burton from the European Court of Justice, which could also signal changes for Print and distribution the pensions world at a later date. Meanwhile, Lord Hutton’s plans to Benham Goodhead Print Ltd, Oxon move public sector pensions from a fi nal salary to a career-average basis Subscriptions were generally well received by the industry, if not by the trade unions. For subscriptions from outside In the wider economy, the Federal Reserve, European Central Bank and the actuarial profession: UK, Eire and Europe: £50 a year/£5 a copy. the Bank of England kept interest rates unchanged in March, but there is For the rest of the world: £75 a ongoing speculation about how long that will continue. year/£7.50 a copy. Please contact: Alison Jiggins The Actuarial Profession, Staple Inn, High Holborn, In Profession news, the Council is leading a review of the strategy for the London WC1V 2QT UK Actuarial Profession and will be organising various ways for members T +44 (0)20 7632 2100 E [email protected] to contribute to the strategy development over the next few months — visit www.actuaries.org.uk to stay informed. Students on actuarial science courses at universities may join the Staple Inn Actuarial Society for £6 a year. We continue to seek your input on the content They will receive The Actuary as part of their membership. Apply to: you would like to read about in our new technology Membership Department, column and on other pages. We also welcome your The Actuarial Profession, Maclaurin House, 18 Dublin Street, views in the form of letters to the editor, which Edinburgh EH1 3PP. I am reminded are among the most interesting T +44 (0)131 240 1325 E [email protected] missives in a professional publication.
Changes of address should be made known to the membership Finally, the editorial team would like to department as above. give its thanks to James Monk who steps down For delivery queries please contact: from the features team this month. Kim Ferrara E [email protected] Marjorie Ngwenya Internet The Actuary website: Editor www.the-actuary.org.uk SIAS website: www.sias.org.uk [email protected] Actuarial Profession website: www.actuaries.org.uk
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003_Actuary_0411 Editorial_v2.indd 3 24/03/2011 16:26 Xxxxxxxxxxx Xxxxxxxxx
TheActuary
Editorial advisory panel Peter Tompkins (chairman), John Batting, Margaret de Valois, Contents Matthew Edwards, Martin Lunnon, Richard Purcell, Andrew Smith, April 2011 Chris Sutton, Sherdin Omar
Editor Marjorie Ngwenya E [email protected] News T +44 (0)7794 031 225 Hit for six Features editor p34 12 Profession news Tracey Brown Test purists grumble 16 Industry news Lane Clark & Peacock LLP, about the rise of E [email protected] 18 People/society news T +44 (0)20 7432 3071 limited-overs cricket, 20 SIAS events Deputy features editors but could actuarial life tables Adam Jorna 44 Appointments and moves Sonal Shah do with a similar makeover, E [email protected] asks Greg Becker Profession news editor Comment Michael Scanlan 3 Editorial E [email protected] T +44 (0)20 7632 1453 Marjorie Ngwenya on these testing times Industry news editor Terren Friend E [email protected] 6 Letters People/society news editor In which actuaries question equality and mortality Kelvin Chamunorwa Towers Watson E [email protected] 8 President’s comment T +44 (0)7502 107 322 Features Ronnie Bowie looks at the way the Profession Student page editor Stephen Paines can flourish within the public domain Government Actuary’s Department 22 Research: Walking a nomadic path E [email protected] Kelly Rendek offers an insight into her year in Mongolia 10 Soapbox T +44 (0)20 7211 2707 with a microinsurance development project Arts page editor Richard Fitzherbert asks whether we should Richard Elliott Scottish Life 24 Insurance: Running on empty make history studies compulsory as part of an E [email protected] George Maher, Andy Staudt and Ryan Warren analyse actuarial education T +44 (0)7814 509 081 Puzzles editor the impact of motor insurance aggregators Tom Bratcher 43 Book review Towers Watson Andrew Smith reviews The Immortalization E [email protected] 28 Insurance: Unfair trading? The OFT’s proposal to restrict insurers’ access to market Commission by John Gray Published by the Staple Inn Actuarial Society. pricing information is flawed, says Jan Iwanik Regulars The editor, The Institute and Faculty of Actuaries and Staple 29 Insurance: Cheap at half the price? 38 Technology Inn Actuarial Society are not Andrew Maclaren looks at float-based valuations The best apps for actuaries responsible for the opinions put forward in The Actuary. No part of this publication may be reproduced, 30 39 Arts stored or transmitted in any form Q&A: Baroness Greengross or by any means, electronic, Marjorie Ngwenya talks to Baroness Greengross about the Richard Elliott argues that small really is beautiful mechanical, photocopying, recording issue of ageing and her links with the actuarial profession or otherwise, without prior written permission of the copyright owners. 40 Puzzles While every effort is made to Win a £50 Amazon voucher in our prize puzzle ensure the accuracy of the content, 32 Modelling/Life: H1N1 — The swine who? the publisher and its contributors Dan Knipe explores what information can be found on accept no responsibility for any 42 Student page material contained herein. the impact of swine flu on deaths in the UK population Stephen Paines applies a familiar testing Important information for subject — to another familiar subject contributors to The Actuary 33 Elegant English: Apostrophe catastrophe By submitting content for Sonal Shah puts the apostrophe in its rightful place publication you confirm that: 43 Actuary of the future (a) You (and/or other named contributors) are the sole author(s) 36 International: Out of Africa Priya Mistry of Towers Watson of the content submitted; (b) The content you submit is Marjorie Ngwenya and Sundeep Raichura report on the original and has not previously opportunities and challenges facing actuaries in Kenya been published (unless you specifically advise us to the Writer of the month contrary); (c) You haven’t previously licensed Jan Iwanik is the editorial team’s choice the use of the content you submit; More content online (d) So far as you are aware, for April for his article on market pricing the content submitted will not ■ Life insurance: A better way? by Nick Rendle information, and receives a £50 infringe any third-party rights, be defamatory or in any way illegal. www.the-actuary.org.uk/875477 book token ■ Insurance: Part VII transfers by Bruno Geiringer courtesy of: © SIAS April 2011 All rights reserved www.the-actuary.org.uk/875483 ISSN 0960-457X
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005_Actuary_0411 Contents.indd 5 24/03/2011 15:53 Sponsored by Letters Your view Sponsored by Letters to the editor In which actuaries question equality and mortality
Your letters A question of mortality The editorial team welcomes readers’ I see that in Richard Plat’s article on letters but reserves the right to edit mortality trend that the graph of model them for publication. Please email outcomes shows Dutch male 65 year-olds [email protected]. may expect to enjoy lighter mortality than The deadline for receiving letters for the Alphabetical discrimination Dutch female 65 year-olds by the middle of May issue is 15 April 2011. I am currently scrutinising a research the 21st century. sessional meeting paper on insurance This biologically questionable outcome accounting, which is to be presented at illustrates once again that reliance on a Forward features Staple Inn on 11 April and in Edinburgh single model remains an outstanding risk on 11 May. in mortality, as in many other areas. in The Actuary The first thing I noticed was that the last Gavin Jones of the 13 authors listed alphabetically was 25 February 2011 The Actuary’s team welcomes contributions J S K Straker. This surprised me a little and from members or contacts in and around I checked the authors of the other three More equal than others the profession. sessional meeting papers I have read this I note the article ‘More equal than others’ Below is a list of themes for the next session and found that if all 26 were to be by Guy Thomas in the March issue of few months along with the deadline for listed alphabetically Mr Straker would still The Actuary. I cannot agree with his final submission. If you would like to contribute, be the last. sentence: “Is there a limit to the number please contact Tracey Brown at Is someone selecting volunteers of times that a creditable profession can [email protected] with from lists prepared alphabetically? cry wolf?” suggestions. Incidentally, I find the practice in these I would say that actuaries have not been For a full list of 2011 issue themes, papers of listing authors (other than unduly pessimistic, in fact just the reverse, visit www.the-actuary.org.uk/875190 the chairmen of working parties) and especially after various mis-selling scandals. acknowledgements in alphabetical Anthony Pepper order offensive; they should be listed in 6 March 2011 June 2011 (Published 26 May, editorial order of size of contribution and, deadline 15 April, advertising deadline failing that, randomly. 10 May) If anyone thinks that I am making a ■ Solvency II mountain out of a molehill, they may care ■ Risk management to consider the list of UK prime ministers ■ Careers/CPD training since 1902. From the later part of the alphabet we have Mrs Thatcher and July 2011 (Published 30 June, editorial Harold Wilson. By contrast, 11 (over half deadline 13 May, advertising deadline the total) comprise two As, four Bs and 14 June) five Cs. Of the balance there are one ■ Careers: working overseas each of D, E, G, H and L and three MAs. ■ General insurance I have carried out a similar analysis of ■ Pensions US presidents and Australian prime ministers and can find no alphabetical August 2011 (Published 28 July, editorial bias. Can anyone explain what the deadline 17 June, advertising deadline Americans and Australians have 12 July) done differently? ■ Investment P W Wright More letters online at www.the-actuary.org.uk/ ■ Life 1 March 2011 category/comment/letters ■ Careers: work/life balance
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006_Actuary_0411 Letters.indd 6 24/03/2011 14:24 President’s comment Ronnie Bowie
Ronnie Bowie looks at the way the Profession can flourish within the public domain Green shoots
In the northern hemisphere, spring is a not only draw attention to the work being proactive approach to media relations, time to look forward to new growth. In the done by our members (including the three we are seeking to anticipate relevant news garden ‘hardy annuals’ begin to blossom new longevity projects we are funding), but events and issue statements from the and bulbs planted in the previous months also to other advances that are being made Profession in a more timely fashion when begin to emerge. outside the profession and across the world. this is appropriate. We are seeing some similar encouraging The fi rst Bulletin is about to be published A recent example of this approach has spring-like signs within our profession, too. and will include a diverse range of topics been our response to the judgment of Readers will be aware that we have been including a comparison of international the European Court of Justice on gender ramping up our efforts in research and in forecasts and a research piece that suggests discrimination, when we issued a very public affairs. The purpose of the former is that the ‘speed of walking’ is one of the prompt news release quantifying the to advance the thinking in actuarial science most reliable indicators of future longevity potential impact. We were able to do this and the purpose of the latter is to build among the over 65s. In time this Bulletin because we planned ahead and because our infl uence, in the public interest, using should help establish the Institute and volunteers were able and willing to produce material that is well researched and well Faculty of Actuaries as the ‘go to’ place for the numbers in advance so that the evidenced. We have an increasingly strong the best thinking in longevity studies. release was both timely and effective in set of examples of early progress. demonstrating an evidence-based approach. Our research project on discount rates » We have had actuaries In response we had radio and is due to be completed by the end of June. appearing in the media television interviews and good press We have already seen the interim paper on proposed reforms coverage. The theme was that it seemed by the discount rate steering committee an odd defi nition of ‘fairness’ which did proposing a framework for the uses of to the UK state pension not charge according to clear evidence discount rates and for the language we use system and on public of risk. However, the good news for to describe them. We will seek to put our consumers was that the insurance industry fi nal conclusions into the public domain, sector reform « was resourceful and would fi nd new ways as helping actuaries and users of actuarial Our General Insurance community of making sure that risk and cost were as services converse more effectively using has an excellent tradition of research well aligned as possible. common language was one of the key projects. Most recently, our working party We have also had actuaries appearing objectives. We intend that this should be a on third-party motor insurance produced in the media on proposed reforms to the sustained effort to be of mutual benefi t to an excellent report and gave evidence to UK state pension system and on public all involved. the House of Commons Transport Select sector reform. The Profession’s journals are being Committee, which was well received. As we build our research programme re-launched in partnership with One aspect of the Working Party’s and align it with emerging issues of public Cambridge University Press (CUP), a major report was evidence which linked the interest, we will have an increasing international academic publisher, to give rapidly rising cost of settling personal number of opportunities to build the them a higher profi le. There is so much injury claims to the growing infl uence of profi le and infl uence of actuaries and their good research work going on within our claims management companies. Partly professional body. profession, it deserves the best possible as a result of our evidence, the Select As experienced gardeners will know, showcase. Annals of Actuarial Science Committee is now calling for much a few green shoots in spring does not, volume 5, part 1 was the fi rst issue to be greater transparency in the various however, guarantee a beautiful garden in published with CUP and British Actuarial referral fees so that the public can better summer. There is still much work to be Journal volume 16, part 1 is following on. understand who is gaining what from done but we are on the right track towards The Profession also collaborates with CUP whom in this process. It seems to me making the actuarial voice heard in the on the International Series on Actuarial that this is an excellent example of our public interest. Science, a series of authoritative textbooks. infl uence in the public interest. We are about to publish a new Inevitably, the media are integral to our Ronnie Bowie is the president of the Institute and six-monthly Longevity Bulletin. This will success in public affairs. As part of a more Faculty of Actuaries
8 April 2011 www.the-actuary.org.uk
008_Actuary_0411 Pres comment.indd 8 24/03/2011 15:09 Soapbox Richard Fitzherbert
Richard Fitzherbert asks whether we should make history studies compulsory as part of an actuarial education Preparation is the best defence
In 2009 my attention was drawn to the economic historians and economists such If something does not fit the data, it seems Queen’s challenge to the economists as JK Galbraith, is that the recollection natural for actuaries to improve a model by of this world — why had so few of them of events such as the Wall Street crash adding a more sophisticated mathematical seen the global financial crisis coming? of 1929, or the collapse of Long-Term feature. The issue of causation versus In reading one of the replies, written Capital Management helps prevent their correlation is largely ignored, but causation by Geoffrey Hodgson and several other recurrence. To quote from the preface of is of vital importance in the investment economists (dated 10 August 2009), the 1975 reprint of Galbraith’s classic text, field when dealing with such issues as I could not help wondering if exactly the The Great Crash 1929: “The story of the long-term rates of return when markets are same criticism could not be levelled at boom and crash of 1929 is worth telling significantly mispriced. the actuarial profession and a significant for its own sake. Great drama joined in There now seems to be a majority belief part of its education system. They wrote: those months with a luminous insanity. in the existence of an equity premium “We believe the narrow training of But there is a more caused by risk-averse economists — which concentrates on sombre purpose. » If we wish to have investor behaviour, mathematical techniques and the building As a protection actuaries in senior roles, which has partially of uncontrolled formal models — has against financial replaced an older been a major reason for the failure of our illusion or insanity, should we not hope that belief — very profession. This defect is enhanced by the memory is far those who reach such prevalent when pursuit of mathematical technique for better than law. I was completing its own sake in many leading academic When the history seniority are able to play my last FIA exam in journals and departments of economics. of the 1929 disaster a preventative role when 1973 — that equities “There is a species of judgment, failed, law and the next speculative are a hedge against attainable through immersion in a regulation no inflation. Both of literature or a history, that cannot be longer sufficed. bubble is upon us? « these propositions adequately expressed in formal models.” For protecting people were never more than It does seem to be accepted that from the cupidity of others and their own, historical regularities because the causal actuaries need relevant experience. history is highly utilitarian. It sustains links are questionable and, in consequence, Events such as the Wall Street crash of memory and memory serves the same they are dangerous assumptions to factor 1929 and the global financial crisis of purpose as [regulation] and, on the record, into mathematical models. 2008 do not happen every few years is far more effective.” Has the danger of reliance on but, when they do, their impact on the If we wish to have actuaries in senior mathematical models in investment profession’s clients is huge. If we wish roles, should we not hope that those and finance (which tend to be based on to turn out a crop of trained actuaries who reach such seniority are able to regularities) not been demonstrated? every year, with some experience of play a preventative role when the next Do we not need a major compulsory study these events, we cannot delay their final speculative bubble is upon us? Would the of investment history to help anticipate exams until they have been through study of such episodes not enhance the future financial disasters? the next bubble, so learning from history public value of the profession? is the only practicable alternative. A third point, which goes beyond Richard Fitzherbert is a retired investment actuary, Also, historical crashes have been different investment topics, is the nature of currently an honorary fellow at The University of and a broad historical study increases the historical study itself that tends to ask Melbourne likelihood (over actual experience) that why something happened, not just what the next bubble has similar characteristics and when. In What is History?, to something seen before. Would a broad EH Carr wrote “history is the study study of such events not prepare actuaries of causes”. With its emphasis better for the next one? on probability, mathematics and A second reason for including history in statistics, actuarial modelling any study of capital markets, as argued by tends to be based on correlations.
10 April 2011 www.the-actuary.org.uk
010_Actuary_0411 Soapbox.indd 10 22/03/2011 10:50 News Profession
Profession publishes whistleblowing guides Council election and If you suspected something was seriously wrong, what would you do? constituency voting All members were recently sent an email find that working through the checklist with information about preparations of questions set out within the guide will for this year’s election to the Council of help them in deciding whether they are the Institute and Faculty of Actuaries. under an obligation to take action. The In particular, the email explained the need guide also points to sources of confidential for members to keep their email addresses advice — both inside and outside the up to date as the intention is to issue Profession — which can help members ballot papers electronically for the first think their way through any difficulties time this year. they may encounter. Clarification was also given on which Although the information within the constituency members were in. At the time guide will be of use to any actuary who of merger, Institute members formed the is faced with a whistleblowing dilemma, General Constituency and Faculty it is also intended to help raise members’ members formed the Scottish Constituency. As part of the Actuarial Profession’s awareness of whistleblowing and remind Unless you have since contacted the commitment to helping its members them of the different reporting obligations Profession to ask to switch constituency, maintain the high professional standards which may apply to them. If an actuary you will still be in your original associated with actuaries, this month sees considers that he or she is under an constituency. A particularly important the Profession’s publication of two guides obligation to make a report — whether to time when the two constituencies come on the topical issue of whistleblowing. their own employer, the Profession or an into play is when voting in the Council The guides form one strand of a package external regulator — they ought to find elections. Fellows, associates and honorary of support materials — also including the the advice in the guide on the steps to take fellows are allowed under the Bye-laws to development of case studies and the regular particularly useful. vote in these elections. provision of seminars on the subject — You can only belong to one constituency produced by a working party established Whistleblowing: A guide for and you can only vote in the elections by the Professional Regulation Executive employers of actuaries for the members of the Council for that Committee (PREC) of the Profession. Alongside this guide for actuaries, the constituency. Six members of the Council The Profession recognises that, from Profession has also produced a guide representing the General Constituency and time to time, its members may be faced aimed at employers of actuaries, which a further three members of the Council with difficult decisions about reporting provides an overview of the obligations representing the Scottish Constituency will certain matters which come to their owed by members of the Profession. retire and, later this year, voting members attention. It is important that members The Profession believes this guide is in both constituencies will be issued with feel able to cope with those situations likely to be of particular use to smaller ballot papers to vote for their constituency and report relevant information, when actuarial firms, which may not have candidates to fill those vacancies. required. Ensuring that the Profession’s specific whistleblowing policies in place, You do not need to do anything members, and those for whom they work, or to organisations which employ a small unless you want to switch constituency have the tools and support to deal with number of actuaries and which are not and, for the Scottish Constituency, fulfil whistleblowing situations is not only of familiar with the obligations all actuaries the necessary criteria to move to that benefit to members and the Profession are under to report certain matters to the constituency. Contact the membership but, crucially, also helps to protect the Profession or with the specific obligations team [email protected] only if public interest. falling on reserved role holders. you want to apply to switch constituencies. Members will be advised of the deadline Whistleblowing: a guide for Application for switching constituencies in due course actuaries Neither publication imposes any new so that an ‘electoral roll’ can be taken. The first of the two guides has been obligations on actuaries. Rather it is Additionally, please remember to keep your drafted, as its title suggests, as a resource hoped that these resources will help email address up to date. for members of the Profession when the Profession’s members to navigate considering their obligations, both their way through the complex and professional and statutory, to ‘blow the difficult situations which may arise whistle’, that is to speak up or report from time to time in their professional information in certain circumstances. lives where speaking up or reporting The guide sets out the relevant legal (blowing the whistle) may be necessary and professional expectations of actuaries. in the public interest. Acknowledging that such situations are difficult and challenging, it contains ‘Whistleblowing: a guide for actuaries’ and advice for any actuary faced with a ‘Whistleblowing: a guide for employers of actuaries’ whistleblowing dilemma. Actuaries who are available to download from the Profession’s are faced with such a dilemma should website www.actuaries.org.uk
12 April 2011 www.the-actuary.org.uk
012-015_Actuary_0411 Prof news.indd 12 24/03/2011 15:47 Profession launches two new standards for pensions actuaries The Actuarial Profession has launched two Compliance%20Review%20Pensions the Profession’s APSs, the BAS’s Pensions new Actuarial Profession Standards (APSs) These new APSs mark a shift from a TAS comes into effect on 1 April 2011, as for pensions actuaries: reliance on detailed rules, to seen at www.frc.org.uk/images/uploaded/ ■ Version 1.0 of APS P1: Duties and principles-based ethical and professional documents/Pensions%20TAS%20fi nal%20 Responsibilities of Pensions Actuaries standards, and form part of the Actuarial version.pdf which is effective on 1 April 2011 can be Profession’s Guidance Note (GN) Consequently, the following BAS- found at www.actuaries.org.uk/ Transitions Project. This cross-practice-area adopted GNs are withdrawn from 31 APS%20P1%20Duties%20and%20 project is designed to replace Guidance March 2011: Responsibilities%20of%20Pensions%20 Notes containing ethical material, with ■ GN9, GN21, GN26, GN34, GN36, GN49 Actuaries, and APSs which will complement the Board Further details on the phasing out of ■ Version 1.0 of APS P2: Compliance for Actuarial Standards’ (BAS) Technical the BAS-adopted GNs can be found in the Review: Pensions, which replaces GN48 Actuarial Standards (TASs). following letter from the chair of the BAS to and sets out the circumstances in which As a result of the introduction of APS the president of the Institute and Faculty of scheme actuaries are required to seek a P1 and APS P2, the following APSs are Actuaries dated 17 February 2011 at review of their work, is effective on 1 April withdrawn from midnight 31 March 2011: www.actuaries.org.uk/sites/all/fi les/documents/ 2011 and can be found at ■ GN29, GN48 and GN51 pdf/20110217gn-transition-letter-ap-president. www.actuaries.org.uk/APS%20P2%20 Coinciding with the introduction of pdf
Forthcoming conferences — save the date Health and care Pensions conference Risk and investment conference 1–3 June, Southport conference 18-20 May, The Grand Theatre and Convention 19-21 June, Hilton Hotel, Brighton Centre, Southport Newcastle, Gateshead The Health and care conference is the leading The Pensions conference is one of the The Risk and investment conference is the market event for insurance practitioners premier professional events for premier conference for all actuaries working with an interest in the health protection pensions actuaries with UK qualifi cations. in fi nance and investment and enterprise industry. The conference will take a fresh The programme includes a range of risk management, or those with an interest look at topical industry developments and technical matters, softer skills and in these areas. In a world where it is now outline the wide-ranging implications that professionalism topics; it will also cover abundantly clear that there is no such thing they will have on the critical illness, income many wider issues affecting pensions. as a risk-free investment, and where there protection, private medical insurance and The agenda is focused on both the issues are perhaps stronger headwinds than at any long-term care markets. The sessions will of today and those that might shape the time in living memory, equipping ourselves cover a range of technical topics looking at future, covering ideas and insights across to make those investment decisions is all aspects, such as risk selection, product most aspects of pensions — all actuaries more important than ever. During the design, pricing and claims management and working in pensions should fi nd plenty of conference a range of high-profi le speakers Solvency II. The conference is designed to food for thought and opportunity for lively will depict the economic, regulatory and appeal in particular to those involved in the debate. The successful hot topics session will environmental headwinds we face and control cycle including, pricing, product return in 2011 and will include some of the provide practical insights on investment and design, monitoring experience and claims industry’s leading fi gures giving their take risk to equip ourselves to manage and take management. It is our aim to inform and on issues of the day. advantage of these. provoke discussion on current market topics, The conference is open to all For further information, visit www. and attendance professionals actuaries.org. by insurers, interested in uk/events/ reinsurers and this sector, not residential/risk- consultants just actuaries and-investment- would be who work in conference-2011 valuable. pensions. For further For further For further information information, visit information, visit on all other www.actuaries. www.actuaries. forthcoming org.uk/ org.uk/ events, please events/residential/ events/residential/ visit health-and-care- pensions- www.actuaries.org. conference-2011-1 conference-2011 uk/events
www.the-actuary.org.uk April 2011 13
012-015_Actuary_0411 Prof news.indd 13 24/03/2011 15:47 News Profession
Understanding and applying Technical Actuarial Standards (TASs) The Profession is currently looking at practitioners or who work in firms where ways in which it can support members there are few actuaries. Please send in their understanding and application any suggestions to of the Technical Actuarial Standards [email protected] (TASs) produced by the Board for Some members may be aware that a Actuarial Standards (BAS). A number TAS implementation working group of of events have already been held and a the Association of Consulting Actuaries series of events in the coming months (ACA) has produced some material on on implications of the TASs for ‘reserved work and its application to insurance actuaries, including some pensions actuarial advice’ and ‘applying being held in conjunction with regional TAS principles’. These documents, as societies, are planned for April and May. well as the terms of reference for the Further details are available via the events ACA’s working group that developed the calendar on the Profession’s website material, are available via www.aca.org.uk/ www.actuaries.org.uk/events aca-briefing_papers.html. Members may The Profession are keen to understand find the material of use when what further support members would considering applicability of, and welcome in relation to understanding and compliance with, the TASs, although applying the TASs and is particularly keen no endorsement of the material by the to hear from those members who are sole Profession should be inferred.
Getting to know the Profession’s disciplinary procedures Judith Goulden of the Actuarial Profession’s Disciplinary Panel explains how complaints are handled
So you did something wrong, something Complaint-handling similar adjudications. Lay people bring a incompetent, something unprofessional. Where a complaint is received or even, different perspective. Or perhaps you didn’t. Whatever the proactively, where no complaint is merits may or may not be, someone — received by the Profession but it Confidence in the Profession a client, another actuary, a regulator — considers it appropriate to do so in the The rationale behind the new rules is has complained to your regulatory body. interest of the public and/or the profession, that the general public must have Effective enforcement and discipline trained staff start an investigation under confidence in the profession and that is a critical component of any framework the direction of an investigation actuary. processes that deal with allegations of that relies on standards. Following the The member under investigation is wrongdoing are dealt with robustly and Morris Review — a Treasury-commissioned informed immediately. in a timely manner. report launched in May 2003, which In due course, a report is passed for Any member of the Profession can be followed Lord Penrose’s investigation determination by a separate adjudication assured that the thread that runs through into Equitable Life and which highlighted panel who meet in private. That panel a disciplinary panel hearing is that of care. serious shortcomings in the actuarial might either find no case to answer or Everyone appointed to any particular profession — the Profession established new it may sanction the member with that disciplinary panel hearing is fully aware disciplinary arrangements from 1 January member’s consent. Only the most serious of the ‘there but for the grace of God’ 2004 that removed the administration cases are referred to the disciplinary syndrome. Anyone in a professional and management of the schemes from the tribunal panel, which is advised by a capacity can be accused of wrongdoing, control of the Councils (although by law highly experienced lawyer on aspects of whether justly or unjustly. the disciplinary process remains a function law, but who has no input in the decision If not thrown out by the adjudication of the professional body). of the panel. panel as being a complaint made with The disciplinary arrangements removed Disciplinary panels now comprise not no merit, or if the adjudication panel from the Councils to the control of a only members of your own profession determines a sanction which is considered Disciplinary Board were extensive and (providing that they have no conflicts of unacceptable to the Respondent, it is for they explicitly excluded all members of the interest) but also a lay member. A balance the disciplinary panel to make a Faculty and the Institute’s Councils from any is struck between those who do exactly the determination and that determination is role in the formal disciplinary machinery, same type of work as you and the wider considered in great depth. provided management by an independently public whose interests are served by the It goes without saying that the papers chaired Disciplinary Board and introduced lay member. The lay member is a person are read with the greatest of care. Mine are lay participation at all stages of the process. from a wholly different field, perhaps usually covered in notes on points to raise This last provision had been specifically with no formal knowledge of your own with my professional colleagues. There are, included in an attempt to ensure that the profession, although probably familiar however, a few layperson’s tips which may public interest is better served. with regulation of other professions or be of assistance.
14 April 2011 www.the-actuary.org.uk
012-015_Actuary_0411 Prof news.indd 14 24/03/2011 15:47 Continuing professional development (CPD) reports now published online
Due to the consistent nature of CPD cases, Profession’s CPD requirements. Mr. Ian William Conlon FIA, these have been published on the Profession’s a reprimand and a fi ne of £200, website and are not to be taken as a refl ection Mr. Joe Brennan FIA, a reprimand and a www.actuaries.org.uk/875475 of their lesser importance under the fi ne of £400,www.actuaries.org.uk/875473 disciplinary scheme. The following members In addition, the full determinations are have faced disciplinary action for failure to Mr. Wenjian Yin FIA, a reprimand, available on the Profession’s website at record their CPD in accordance with the www.actuaries.org.uk/875474 www.actuaries.org.uk Working party set to discuss mis-selling issues misconduct complaints? ■ How will the new FCA move the Are you interested in joining a working party ■ How should the Profession work with the goalposts (for example, through ‘product looking at the next potential mis-selling new Financial Conduct Authority (FCA) and intervention’), and should we anticipate they scandal? If so, The Profession would love to risk committees of fi nancial will be enforced retroactively? hear from you as it is setting up a group — institutions to help serve the public interest ■ Is there a risk that courts will create new most likely to be cross-practice — to look at more effectively? case law to deal with future scandals — note the issue from a number of angles, beginning ■ Will managing the risk of future the $550 million SEC settlement agreed by with some broad-brush questions: mis-selling scandals also manage Goldman Sachs? ■ Should the Profession be pro-active in reputational risk, the risk of regulatory Please contact Pat Rustem helping to manage the risk of potential mis- fi nes and mandatory customer [email protected] to put forward selling scandals? compensation, and the risk of your thoughts on this issue.
Averting complaints panel is held in private. If that panel The 1994 Court of Appeal case of 1. Clients complain not only if they decides that a sanction is appropriate, Bolton v Law Society was an important feel that they are getting poor service, think whether you really want to refuse to judgement for regulatory bodies. In that but also if they feel that they may be accept it. If you do refuse (and, of course, judgement it was said that the most getting a satisfactory service, but are it is your prerogative), the next step is the fundamental purpose was “to maintain the not being kept in the loop. If telephone disciplinary panel, which is held in public. reputation of the (Defendant’s) profession calls are not taken or not returned, if Although a spokesman for as one in which every member, of whatever letters are not acknowledged and acted The Investors’ Association was quoted as standing, may be trusted to the ends of the upon within a reasonable period of time, saying, “actuaries have a deeply ingrained earth… the reputation of the profession don’t be surprised if a complaint to your culture, which is cynical, self-serving and is more important than the fortunes of professional body follows, a complaint indifferent to public interest”, from my any individual member. Membership of a which could have been avoided if proper own experience, nothing could be further profession brings many benefi ts, but that communication skills had been employed. from the truth. The members of your is part of the price”. Accepting effective No-one likes being ignored. profession with whom I sit are thoughtful, regulation is part of that price. 2. Co-operate with the investigation team. incisive and, most particularly, willing Not only is this a requirement under to listen to, and accept if substantiated, Rule 1.18 of the Disciplinary Scheme, but unpalatable views from a lay member not to do so may attract a further allegation for or against members of the actuarial of misconduct in itself under Rule 1.22 of profession. I feel that this takes a certain the Disciplinary Scheme. Although it may sort of courage. be understandable that you would not There is no formal precedent system wish to help those who you may feel are employed and therefore the profession attacking you, but consider how that would does not follow the courts in that respect, appear to a disciplinary panel. Letters from but its decisions must be consistent. investigators that are ignored by the person The standard, which is objective, is accused are not helpful. Courtesy (even considered on a case by case basis. with jaws tightly clenched) doesn’t hurt. Transparency and consistency are very 3. Stand back. Can you really say that you important, particularly because the standard are blameless or, deep down, is there a expected is broad, covering as it does any kernel of truth? If so, put your hands up. conduct carried out in the UK or elsewhere. Give full and frank reasons for what, why I have heard an actuary refer to those and how you arrived in this sorry position. members of the profession who have 4. Be careful what you write — both to been brought before their regulatory clients and to your profession. Write every body as “victims”. That is both unfair letter as if it is going to be produced at a and unjust. If any profession is brought tribunal — one day it might be. before their regulatory body, there is a Judith Goulden is lay member of the 5. Don’t forget that the adjudication reason, a concern. Disciplinary Pool
www.the-actuary.org.uk April 2011 15
012-015_Actuary_0411 Prof news.indd 15 24/03/2011 15:47 News analysis Industry
Insurers bid farewell to the gender rating factor ECJ ruling aims to remove gender discrimination from insurance pricing by end of 2012
Insurers will no longer be able to differentiate Motor Insurance Life cover premiums by gender as a result of a judgment Female drivers under the age of 25 are on Life cover rates for women are forecast of the European Court of Justice (ECJ). average much safer drivers than men of to rise whereas rates for men would fall. The change will take effect from the same age. In this age group, premiums This is because women have longer average 21 December 2012. Gender is currently for women will increase. Men may drive life expectancy. one of the rating factors used to price risks more powerful cars as their insurance Insurers have considered using proxies covered by many different types of premiums fall. such as body mass index for pricing. insurance policies. In some products it is Others have considered changing the the second-most important factor after age. Pensions product design to variable rates or shorter- Current UK gender legislation (and the EU Currently, men receive a better single life term products. Gender Directive) allows the use of gender pension income than women, due to their as a rating factor when based on actuarial shorter average life expectancy. Women are Private medical insurance (PMI) and statistical data on gender-related risk expected to gain from the changes as their The majority of private medical insurers in differences but the ECJ has ruled that this pension income increases whereas men find the market do not currently price by gender. does not comply with the EU Treaty. their pension income falls. For those providers who do price by gender, An Association of British Insurers (ABI) It is compulsory to take some defined the largest expected differences are in the research paper looked at the impact of this contribution pension pots as an annuity, 35 to 50 age group, where premiums are legislation on policyholders, insurers and therefore this prevents men from currently higher for women than for men. the insurance market. One possibility is that dropping out of the market. In other areas The opposite effect is observed in women insurers may change their marketing strategy such as personal pensions there may be above 60, where their premiums are cheaper to target the gender with the lower risk cost, greater reluctance by men to annuitise than for men. thus paying more attention to the mix of when offered the choice of income Removing gender from pricing models business. Consumers in the most affected drawdown instead. However, the charges could lead to a fall in the model’s accuracy. group may change their actions by opting for on income drawdown policies may However, PMI policies are annually lower forms of cover. The suggested impact on militate against this option for those with reviewable and the possible changes to policyholders is as follows, split by product: smaller funds. premium lower this risk.
£140 a week state Public sector unhappy EIOPA releases QIS5 report On 14 March the European Insurance and pension for all from 2016 with recommended Occupational Pensions Authority (EIOPA) The UK government is believed to be pension changes announced its results on the fifth Quantitative considering a basic state pension paying a Trade union leaders have warned about Impact Study (QIS5). In summary, the flat rate of £140 a week for everyone who strikes following recommended changes following was observed in the QIS5 exercise: retires after 2016. This is higher than the to UK pensions for state employees. n Participation increased since QIS4 from basic state pensions currently received: Lord Hutton, the former Labour cabinet 33% of companies to 70% a single person’s pension of £96.65 a week, minister, has called for an increase to the n Financial position of European insurance or up to £132.60 with means-testing pension age by five years (or more for those and reinsurance sector as a whole is sound (which would not be necessary with a with state pension ages higher than 65) and when assessed under Solvency II higher state pension). a switch from final salary pension schemes n Insurance and reinsurance groups saw The question has been raised about what to ones based on average lifetime earnings. a reduction in surplus capital available — will happen to those people who can expect George Osborne, the chancellor, will overall, €86 billion lower than in Solvency I, a higher state pension than £140 a week confirm the exact details of the decisions the a fall of 44%. QIS5 showed that this effect as a result of additional contributions they government takes. would be largely absorbed if internal models choose to make. On the one hand, there will be losers in were built The Liberal Democrat MP on the House of the public sector suffering from the later n Calibrations were generally appropriate, Commons Work and Pensions Committee, retirement age, and higher flyers in the however, EIOPA is doing more work in the Stephen Lloyd, defended the idea by saying NHS and councils (with large increases in non-life and CAT module calibrations that “provided that is the floor, most people salaries later in life) may get lower pensions n QIS5 did not directly test the areas of will build on top of that and what they get following this change. However, things could governance, risk management and reporting on top of that will precisely reflect what have been a lot worse for the public sector requirements. However, it did reveal that they’ve earned and what they’ve put in”. when considering the collapse of final salary these are important areas that the industry pensions schemes in the private sector. must prepare for Solvency II Industry news Lord Hutton did reject the idea of a cap on n EIOPA highlighted that companies need pensionable earnings, pointing out that the to manage their transitional measures from Please send newsworthy articles to higher paid also paid higher contributions on Solvency I to Solvency II; sufficient work must Terren Friend at [email protected] those higher earnings. be carried out but not an excessive amount.
16 April 2011 www.the-actuary.org.uk
016_Actuary_0411 Industry news_v2.indd 16 24/03/2011 16:41 Industry News
For more general From the world of general insurance insurance news
AIG Grange drew a parallel with the savings and More news on the following items can be AIG has completed the sale of its Japanese loans debacle of the 1980s and stressed that found on the website: life subsidiaries AIG Star and AIG Edison regulatory actions were more difficult for ■ AIG and fall-out from the global to Prudential Financial (the US Pru) for insurers than class actions. financial crisis US$4.8bn, of which US$4.2bn is in cash The rating agency Moody’s predicted in ■ Asbestos and pollution development and US$0.6bn is the assumption of third- late February that European insurers will ■ Gender discrimination party debt. The two companies will operate not be significantly affected by defaults ■ More regulatory and legal as subsidiaries of one of the purchaser’s on sovereign and bank fixed-income debt. developments Japanese companies, Gibraltar Life Insurance It emphasised that the industry had limited ■ Lloyd’s Company. AIG has stated that it intends exposure to the most affected countries ■ UK adverse weather — December 2010 to retain and expand its other Japanese such as Greece and Ireland, and only ■ UK bodily injury compensation businesses. The sale also assisted AIG in Greece had fallen below an investment- ■ Potholes in UK being able to report a net profit of US$7.8bn grade rating. However, Moody’s added that ■ Australian natural disasters for 2010, although its Chartis subsidiary the situation might change if countries such ■ Climate change did incur a reserve-strengthening charge of as Spain and Italy showed deterioration in ■ More large losses US$4.2bn, nearly a third of it in respect of their sovereign creditworthiness. its asbestos and pollution liabilities. Visit www.the-actuary.org.uk/875472 Jeff Grange, senior vice-president and Regulatory and legal developments chief underwriting officer at Torus, has The European Court of Human Rights a breach of confidence decision. The ECHR suggested that US regulatory actions related (ECHR) handed down a judgement in said that in coming to its decision, it had to the financial crisis are now beginning, and late January that conditional fee arrangement noted Lord Justice Jackson’s conclusion that that these are likely to impact significantly on (CFA) success fees are contrary to the the CFA success fee regime was “the most directors and officers policies. In particular, fundamental right of the media to freedom bizarre and expensive system it is possible he highlighted the failure of hundreds of of expression. This arose out of the House of to devise”. It is believed that this decision community banks in the US, and the fact that Lords judgement in the case between (which is binding on the UK government, the Federal Deposit Insurance Corporation Naomi Campbell and the Daily Mirror, in but not the courts) will increase pressure on has announced that it intends to pursue the which the newspaper publisher was ordered UK legislators to abolish the right of recovery directors and officers of these institutions. to pay substantial success fees in relation to of CFA success fees in civil courts.
Large losses Total insured losses are expected to exceed Pacific Ocean. The event caused significant Earthquake, Christchurch, New Zealand — the NZ$5.5-6bn estimate of September’s structural damage throughout Japan’s 22 February costs, and early estimates put the loss Honshu Island, with fires, landslides This quake, of magnitude 6.3, was the in the range NZ$8-12bn. Reinsurers in and flooding. Both the electrical and sixth significant aftershock from last Bermuda are understood to be particularly transportation infrastructures have also September’s quake and had its epicentre affected, as they were in September. been heavily affected and more than three miles below the port of Lyttelton, four million homes were without only six miles from the centre of Earthquake and tsunami, northern Japan — electricity in and around Tokyo (although the Christchurch — the original quake and each 11 March capital was nearly 400 kilometres away). of the major aftershocks is being treated as The seventh strongest quake ever There was significant damage to a major a separate insured event. It happened reported, with magnitude 8.9, had its nuclear power plant at Fukushima and, in the middle of the day, at a shallower epicentre 130 kilometres east of the although this was automatically shut down depth and much nearer the city centre, coastal town of Sendai, at a depth of immediately after the damage, there was resulting in a much higher death toll than 15.2 miles. The earthquake triggered a a serious problem caused by breakdown of the original magnitude 7.1 quake. The death tsunami that had waves up to 10 metres the cooling system, resulting in explosions toll is at least 163 and is expected to more high, which hit the coast within minutes at two of the seven reactors (so far) — than double, with over 200 remaining of the quake, destroying almost everything this has resulted in a limited escape of missing in the rubble. The property in its path, wiping out a number of radioactive material, but experts claim t damage, especially to commercial property, significant coastal communities and hat a nuclear disaster is unlikely to arise. is extremely significant and may be penetrating up to 10 kilometres inland. The death toll is expected to run into ‘tens affected by the extent to which buildings The tremors of the quake lasted for of thousands’ and the economic loss has were weakened by last year’s quakes. nearly two minutes and there have been reported at US$170bn, with possibly As in September, the older buildings been a number of aftershocks of the US$15-35bn of this insured — apparently were worst affected, being subject to less order of magnitude 6. Immediately most homes are not covered against stringent building codes. Land damage, following the initial earthquake, the Japan earthquake damage because of the cost which has been a significant contributor Meteorological Agency and the Pacific involved. All figures should be treated with to the increase in estimates of the earlier Tsunami Warning Center both issued considerable suspicion at the present time quake, is also very severe, and several tsunami watches and warnings for the as there has been very limited opportunity water and sewage systems have collapsed. majority of areas bordering along the to assess them at the time of writing.
www.the-actuary.org.uk April 2011 17
017_Actuary_0411 General Insurance.indd 17 22/03/2011 14:17 News People/Society For people moves, see page 44
Professor steers SAAX Group in better direction Thought leader talks of moral DNA and the three ethics of reason, care and obedience Around 70 Southern African actuaries external driving forces in our lives, such how to be more morally aware and thereby gathered at the Gherkin on 8 February for as nationality, gender and occupation, more mature in our actions. the Southern African Actuarial ConneXion that have an effect on our intrinsic beliefs. Professor Steare is an eloquent speaker and (SAAX) Group’s first event of 2011, where Through unique programmes and his ability grabbed the audience’s attention right from corporate philosopher Professor Roger Steare to communicate his views, he encourages the start. He ended his talk by encouraging was the main speaker. companies and government bodies to us to not only live with optimism and yearn Professor Steare’s insightful talk was understand human ethical behaviour. for a better day but, more importantly, to do based on survey data that demonstrates the The talk covered a bit of everything, what is right in order to achieve it. nature of our ‘moral DNA’. This was broadly including life, the universe and humans as SAAX is a not-for-profit, actuarial member split between the three ethics of reason, care individuals — how we behave and think and interest group whose aim is to bring together and obedience. how this is influenced by our environment. people with a common actuarial connection To begin, Professor Steare showed a video Addressing the southern Africans, he and sharing an affiliation with southern clip where the current world population compared how we behave in comparison to Africa. The event was kindly sponsored by was considered to comprise 100 people. other nationalities and, interestingly, how we Swiss Re. Some surprising statistics followed — can hold a mirror up to ourselves and learn By Kelvin Chamunorwa 14 people have malnutrition, 12 cannot read and only eight have access to the internet. If someone has food in their fridge, clothes in their wardrobe and a bed to sleep in, they are richer than 75% of the entire world population. Professor Steare is a well-respected thought leader. He has done extensive research on human character and judgment and found the ethics of reason, obedience and care as powerful tools in understanding fundamental human behaviour. He explores Worshipful Company of Actuaries’ annual golf Charity campaign competition to tee off at Effingham Golf Club Back in September 2010 the Worshipful The Worshipful Company of Actuaries’ The master, Graham Clay, is very keen Company of Actuaries and The Actuary annual golf competition, for Liverymen to welcome other actuaries and their launched a joint initiative, calling on and the Other Half Club, will take place partners as participants. members of the profession to consider at the Effingham Golf Club on 8 June. The competition will be an 18-hole charitable fundraising activities. individual Stapleford competition, playing Many actuaries have since been involved in for the Worshipful Company of Actuaries fundraising for various charities by riding, Golf Cup (for liverymen) and other prizes. climbing and skiing in a bid to reach the Effingham is one of the finest courses in £1 million fundraising target. We would like Surrey, and has been an Open qualifier to encourage more members of the profession course for the last five years. to participate in charity events, particularly Tee-off will be from 2:30pm, and there as the weather is expected to become more will be a supper and prize-giving at friendly over the coming months. 7.30pm at which non-playing partners As you participate in various activities, will be most welcome. The cost will be please let us know how much you raise so £65 each for those playing golf and £25 that we can keep a running total and provide each for those only attending the supper. support where possible. You can do this by The company is seeking to raise money emailing Kelvin Chamunorwa this year for its Charitable Trust, and [email protected] and Charles Cowling, would be grateful if players felt able to chair of fundraising for the Worshipful make an additional contribution of £20. Company [email protected] For further information please The Worshipful Company has pledged contact court assistant Bill Smith on to support, where possible, any member of [email protected] or by phone the profession who wants to embark on a on 07776 223 850. fundraising venture, whether or not they are By Brian Ridsdale a member of the Company.
18 April 2011 www.the-actuary.org.uk
018-019_Actuary_0411 People/Soc news.indd 18 24/03/2011 13:18 Follow @TheActuaryMag on Twitter Join The Actuary’s LinkedIn group
A Mauritian with lofty ambitions Worshipful Company Mauritian actuary Jaysen Arumugum is to raise awareness and to improve the welcomes climbing Mount Everest to raise money for chances of Mauritian women surviving Breast Cancer Care. He aspires to be the this terrible illness. Donald Brydon to first from his nation to climb the highest Life has been pretty busy since February annual banquet peak on each continent. Having already when the dates for the climb were set. succeeded in climbing five of the peaks “Organising the climb and the intense The Worshipful Company is pleased to (including Kilimanjaro, Elbrus, Kosciusko, training combined with a full-time job has have secured a date at Mansion House Aconcagua and Denali), Jaysen has now kept me busy for the last few months,” for its 2011 annual banquet, as not set his sights on the biggest of them all — says Jaysen. all livery companies who wish to dine Mount Everest, standing at 8,800 metres. “On 2 April I will leave on my quest at Mansion House are successful in Breast Cancer Care is just a phone call to become the first Mauritian to climb their applications. The event will be or mouse click away for anyone living Everest. The whole expedition will take on the evening of 19 April and is one with breast cancer. Its free helpline 69 days and will be one of the toughest of the highlights of the livery year and information-packed website offers challenges I have ever undertaken.” and is usually a memorable experience a friendly ear and expert guidance to He will provide more details of the for guests. people dealing with the turmoil of this actual climb on his website The principal guest will be life-threatening illness. Across the UK it www.jaysenarumugum.com Donald Brydon, CBE, chairman of also offers professional support through a This is a brief summary of Jaysen’s Royal Mail and Smiths Group plc, range of confidential, face-to-face services, training schedule over the last few who will speak on the topic ‘Post in helping people every step of the way. months: an electronic age as the Postal Services So what motivates Jaysen to take on n 200km cycling per week to work (on a Bill proceeds through Parliament’. such mammoth challenges? He explains: fixed-wheel bike) Donald spent the earlier years of his “My cousin Selina, who was actually more n One to two half-marathons career as chairman and chief executive like a sister to me, was diagnosed with n A few 50 to 100-mile bike rides of BZW Investment Management and breast cancer a few years ago. She needed n Weight training and weighted squats then Axa Investment Management. major, complex operations as a result. twice a week More recently, he has been a director This made me realise how fragile the n 5 to 12-hour weekend hikes with a and chairman of a number of companies everyday lives we lead can be. She has also weighted pack and ankle weights and organisations. shown me how strong the human spirit is n Winter climbing weekend in Scotland The Lord Mayor will be on an official and taught me that anything is possible.” in February visit to China at the time of the banquet. Breast cancer affects one in eight n 150 floors of stairs during lunchtime He will, however, be represented by the women during their lives. Jaysen will be three times a week. Lord Mayor, Locum Tenens, Alderman raising money to help women in both the If you would like to contribute to this Sir Peter Savory, who was Lord Mayor UK and Mauritius. He will also be working good cause, please do so at in 2004/5. He will be accompanied by with the Ministry of Health in Mauritius www.justgiving.com/jaysenarumugum Sheriff Richard Sermon, MBE.
Deaths Jaysen Arumugum reaches n Roger Gray, Hon FFA, died recently. his peak He became an honorary fellow in 2006. He lectured actuarial students for many years at Heriot-Watt University. He was course director for the Actuarial Science MsC from 2001 to 2006. An obituary will appear in a future issue of The Actuary. n Leon Rudolf Potgieter died on 10 January 2011, aged 48. He became a fellow of the Institute in 1988. n Gordon Harold Richard Sharp died recently, aged 81. He became a fellow of the Institute in 1960. n Zeeshan Ali died recently, aged 31. He became a student of the Institute in 2006.
people/society news
If you have any newsworthy items for these pages, email Kelvin Chamunorwa at [email protected]
www.the-actuary.org.uk April 2011 19
018-019_Actuary_0411 People/Soc news.indd 19 24/03/2011 13:18 Tuesday 17 May Programme event
Practical challenges for GI Do you find Solvency II requirements for internal will talk on the GIRO working party’s continuing actuaries under Solvency II model approval unclear? How high is the hurdle research into how firms are responding to specific, firms need to clear? How can you apply the practical modelling challenges under the internal Staple Inn, requirements in a way that adds, rather than model approval process. In particular, they will look High Holborn, detracts, value from the capital modelling process? at model validation, use of third-party catastrophe Melinda Strudwick and Gabriela Chavez-Lopez models and embedding models in the business. London 5:30pm for 6pm start
Thursday 19 May Social event
Race night After the upcoming exams SIAS will be hosting its spectacular victory on the big outsider? first ever race night. Will you be looking for steady Full details to be confirmed but please watch TBC returns from backing the favourites or for that the website and look out for further information.
Fundraising
Charity-matching Did you know that SIAS has a charity-matching programme? Any SIAS member or team of SIAS members will be able to apply to SIAS for a donation to their charity fundraising efforts. The donation will be equivalent to 25% of sponsorship monies raised by the SIAS member, excluding any corporate sponsorship, with a maximum donation of £500. The donation will be increased to 50% of sponsorship monies raised for team applications where members of the team are from more than one employer. Other restrictions apply so please see the SIAS website for more details at www.sias.org.uk
For details of events, visit www.sias.org.uk
20 April 2011 www.the-actuary.org.uk
020_Actuary_0411 SIAS events.indd 20 22/03/2011 11:29 Research Microinsurance Walking a nomadic path Kelly Rendek offers an insight into her year in Mongolia providing technical assistance to a microinsurance development project
The primary industries are mining and Tenger’s microinsurance project manufacturing, while about 13% of the The main objective of my fellowship was population are nomadic herders. Winters are to build the capacity of the microinsurance harsh and severe livestock losses over the team at Tenger and assist them with a last several years have led many herders to successful pilot. After revamping the project abandon their traditional life and move to plan, getting new members of the team in the slums on the edge of the city. place, and conducting some initial training, Many of the challenges facing modern we were ready to tackle the market research Mongolia are a consequence of its history and data collection phase. and relative isolation. Seventy years as a Market surveys and focus groups with Kelly Rendek is a communist satellite of the Soviet Union the target market helped us identify qualified actuary have left their mark. With the transition to demographic trends, income levels, and with over 20 years democracy in 1990, the government began a risk management priorities. Data from the of experience in programme of modernisation which, while National Statistics Office allowed us to insurance and creating economic opportunities, has also calculate crude population mortality rates reinsurance in both resulted in increased poverty and decreased and accidental death rates, split by gender Canada and Ireland funding for education and healthcare. and age. Analysis of accident rates indicated Private insurance is a relatively new that male accidental mortality was three to The challenge concept in Mongolia as prior to 1990 four times higher than for females; results In 2009, Tenger Insurance, a non-life insurance was entirely state-controlled. from Russia and Ukraine showed a similar company in Mongolia, received a grant from Key challenges for the insurance industry pattern. Validation against external sources the International Labour Organization’s are consumer education and reaching a was important as the experience data from (ILO) Microinsurance Innovation Facility to scattered rural population. Mongolia isn’t sufficient to be fully credible. pilot a new microinsurance product. There are currently 16 non-life We obtained summary data on Its proposal was to develop an accident insurers and one life insurer in Mongolia: hospitalisation frequency and length of and health insurance product for the all but the top five are relatively small. stay from the Ministry of Health, and low-income market in Mongolia. They also Insurance companies are regulated by detailed hospitalisation data from two applied for a fellow through the Facility’s the Financial Regulatory Commission major hospitals. Hospitalisation frequency Technical Assistance programme, specifically established in 2006 to supervise all rates were much higher than expected, requesting an actuary to assist with product non-banking financial institutions. between 15-50% depending on age group development and pricing. I knew little Regulations prohibit foreign insurance and gender, and the average length of about microinsurance when I applied companies from operating in the country, stay was 8-15 days. Investigation revealed for this position, and even less about although much of the domestic market is Mongolia, but I was intrigued: it offered an reinsured globally. The Actuarial Profession opportunity to use my actuarial skills in a in Mongolia non-traditional way and to experience a » Private insurance is a Formed in 2008, the Society of Actuaries unique part of the world. relatively new concept in of Mongolia currently has nine members. When I arrived in Mongolia in The Financial Regulatory Commission January 2010, the project had not Mongolia as prior to 1990 licenses actuaries in Mongolia and is progressed much beyond the planning stage, insurance was entirely responsible for setting professional and was competing for internal resources. state-controlled standards. The Society introduced exams Battling jet lag, sub-zero temperatures and a « from the UK actuarial syllabus in 2010 foreign language, I set out to understand my Mongolia has a government social and licensed actuaries will be required new environment: this was not going to be insurance scheme that covers pensions, to pass CT1-4 and meet work experience an ordinary actuarial assignment. social welfare, health, workers’ requirements. However, with no fully compensation and unemployment qualified actuaries currently practicing in Mongolia insurance. Participation is mandatory for Mongolia, there is little guidance available Mongolia is a vast country, with an permanent employees, and voluntary for on practical applications of the study extreme climate and topography. the self-employed. In practice, only about material, nor any official standards of Approximately 40% of the population 20% of the total population is currently practice to ensure actuarial work is done of 2.7 million lives in the capital city of enrolled and the scheme is under review consistently. This is an area where members Ulaanbaatar, with the rest scattered widely with the intent to make coverage mandatory of the global actuarial profession could over remote and often inaccessible areas. for all citizens. provide significant mentoring and leadership.
22 April 2011 www.the-actuary.org.uk
022-023_Actuary_0411 Rendek.indd 22 24/03/2011 14:25 that Mongolians had developed a practice now needs to focus on administration and Developing insurance and actuarial of regular hospital visits out of a sense of claims procedures, monitoring experience, capacity in a developing country required entitlement during the former communist and eventually expanding to additional a lot of patience and careful listening. regime. Hospitals are compensated by the branches. Sales data will be used to evaluate It was important to always keep in mind government for all in-patient days, which which benefit options are most accepted that my goal was to transfer knowledge encourages longer stays. We also found and emerging claims experience will be and to help create tools so that the project that, while the government scheme does analysed closely to determine if the pricing could continue in a sustainable way after give everyone access to hospital care, assumptions need to be revised. I had left. I was fortunate to work with a hospitals frequently charge additional wonderful project team who were eager to fees for items such as food, diagnostic tests The benefits of fellowship learn as much as possible. I was extremely or surgical supplies. My fellowship year has just ended and, in honoured to mentor our actuarial student, spite of ongoing challenges and frustrations, who became the first person sitting exams Mongolia’s first actuarial it was a very rewarding experience. in Mongolia to pass CT1. I also learned to be pricing model Microinsurance requires a different more flexible, to be innovative, to look for A further objective of my fellowship was application of actuarial skills — less focus different solutions in the face of obstacles to develop actuarial capacity and I worked on complicated models and more on good — not skills you are likely to learn while closely with our assigned actuarial student product design that meets the needs of sitting actuarial exams, but necessary ones and the project’s Mongolian consultant the low income market. It requires a bit of for working in the microinsurance field. to cover basic actuarial concepts, models risk-taking to design and price a product in Of course this is only part of the story, and standards of practice. This sub-team a completely new market, without as much as I had many adventures living and created a simple pricing model in Excel, data as you’d like, and building a process travelling in Mongolia, which I’ll never using Palisade @RISK software, to model for ongoing experience monitoring forget. It was an opportunity of a lifetime, the aggregate claims distributions based on becomes crucial. and I’m glad I took it. ■ input assumptions for product features and benefit amounts. By developing a dynamic model we were able to educate our team, partners and the insurance regulator on the trade-off between benefits and premiums, and agree on the combination that would best meet the needs of our target clients. The result was a pretty simple model: all of the project members are able to use it and understand what data is needed to update the assumptions. The final product was designed to complement the existing health system by providing a simple, flexible hospital cash benefit. The payout is a fixed amount per hospital day, after a one or two-day waiting period has been met, with a maximum number of covered days. The benefit is paid directly to the policyholder and can be used to cover not only medical expenses but indirect costs, such as transportation or childcare. The product is bundled with accidental death coverage. With the distribution partner, Xac Bank, a sister microfinance organisation, we selected two pilot branches to launch the product, making it mandatory for new microloan clients. The product was formally launched in December 2010, and so far, the response has been very positive. The project team
www.the-actuary.org.uk April 2011 23
022-023_Actuary_0411 Rendek.indd 23 24/03/2011 14:25 Insurance Motor insurance Running on empty George Maher, Andy Staudt and Ryan Warren analyse developments in the motor insurance industry and why insurers are making less profits
(clockwise, from top left) George Maher, Andy Staudt and Ryan Warren all work at Towers Watson
he UK motor insurance market is controlling market entry by only funnelling 1% of insurance had been placed online; now in a situation similar to the business to these larger firms and ignoring but in the subsequent year that airline industry where competition new entrants. number had risen to almost 10%. is making profitability elusive. However, in 1991 everything changed Currently, upwards of 40% of motor TThe situation is unlikely to improve until with Direct Line. Rather than relying on insurance is placed online, with the some consolidation occurs or someone brokers for business, Direct Line skipped the majority of that business coming from comes up with a new business model. middle man and went directly to the people. aggregator sites. However, in the next five Figure 1 plots the Herfindahl Index (HI), This allowed them to rapidly grow over the years that number will be closer to 75%. a common measure of the competitive next decade, expanding from a market share But the aggregators have cost the structure of an industry, for the UK of almost 1% in 1990 to a share of 10% in insurance industry enormously in terms of motor market over the period 1985 through 2000 and now stands at almost 16%. the unnecessary competitiveness. Figure 2 to 2009. To put this into context, The spike from 1997 to 1998 is the illustrates to what extent. Here, we have comparison points are shown for several merger of Commercial Union and overlaid the combined ratio for the UK other industries. General Accident. motor market over the Equivalently, the inverse of the index The sharp increase in » Aggregators cost the same time period. gives a rough estimate of the number competition in the industry £1 billion last Focusing on the of effective competitors in the market. subsequent period year in unnecessary period 2002 and For example, the HI of 13% for 1985 is attributable to UK subsequent years, through to 1990 implies that there were insurance and Esure price competition, the conclusion is eight main firms vying for market share entering the market while generating only obvious and rather back then; and the HI index of 6% in and Churchill, damning – the 2009 implies that there are now 16 main Groupama and £50 million in profits for aggregators have firms vying for market share. In effect, Zurich expanding a select few insurers « encouraged greater competition has doubled over the last their writings, while Aviva’s shrunk. price competition while not showing two decades. All of which brings us to 2002 and the much profitability themselves, channelling Like the rings on a tree, this graph first aggregator. revenue to advertisers in the process. tells the history of the UK motor market. Aggregators cost the industry £1 billion Prior to 1991, the majority of motor The rise of aggregators and the fall last year in unnecessary price competition, business was placed through brokers. of profitability while generating only £50 million in profits There were only a handful of firms in the The first insurance aggregator was for a select few insurers. Further, advertisers marketplace with the brokers effectively launched in 2002. Previously, only about have more than doubled their revenue with
24 April 2011 www.the-actuary.org.uk
024-025_Actuary_0411 Staudt Maher.indd 24 24/03/2011 13:25 Figure 1 — Plot of the Herfindahl Index showing the competitive structure of the UK motor insurance market 0.14 Phone (0.135) 0.12 Aggregators 0.10
0.08 Broker CU + GA = CGU dominated Auto (0.065) 0.06 Direct Line and the direct Oil (0.045) 0.04 revolution 0.02 Airline (0.015) 0.00 1991 1987 1993 1985 1992 1997 1995 1994 2010 1989 2001 1988 1986 1998 1996 1999 1990 2007 2003 2002 2005 2004 2008 2006 2009 2000
Figure 2 — The relationship between competitiveness and profitability in the UK motor market
£100+ million due to advert spends for price comparison sites. Effectively, aggregators Profitability 7% (2002-09) 6% have commoditised the motor market. 3% -1% -4% Where there was at best a tenuous Combined ratio -8%-10% -15% relationship between the market structure Profitability and profitability prior to 2002, after 2002 as competition increased, profitability 1991 1987 1993 1985 1992 1997 1995 1994 2010 1989 2001 1988 1986 1998 1996 1999 1990 2007 2003 2002 2005 2004 2008 2006 2009 decreased with a correlation of almost -96%. 2000 This is only natural as insurers are no longer competing on brand, marketing, service or other intangibles to the same extent; their capital reserves, the industry has been looks bleak. Mergers would certainly help rather, they are competing almost solely taking larger and larger P&L hits. things, as would consolidation of single on price and their position on the As Ted Kelly, CEO of Liberty Mutual, insurer brands into a single marketable aggregators’ screens. recently noted, “we’ve had no inflation for product. On the other hand, breaking In situations like this, classic economics 10 to 12 years, any idiot can make money up the various insurance arms of larger is very clear: each new entrant creates in personal motor”. Where this might multinationals is likely to do much more additional supply, driving down industry have been true for the US motor market, harm than good. profits. Although, in theory, this occurs where aggregators have been completely In the absence of any change in the until no excess profits exist, in fact the unsuccessful (and it is better for everyone market structure, the question is really: current situation is much worse. What we that they stay that way),the opposite is true what is the next big innovation? are seeing is insurers cutting prices below for the UK motor market. Pay-as-you-drive insurance is certainly a the actuarially fair rate in order to maintain With many economists forecasting several contender as it has been rapidly adopted by volume and, as a by-product of their years of high inflation much akin to that of several large US insurers and piggy-backs participation in these aggregators, writing the ‘80s, these ultra-thin/too-thin margins on the green movement. business that they previously would not that the aggregators have forced on the As the structure of the industry is have actively pursued. industry are not sustainable. outside of any one insurer’s control, and What is most worrying though is that the fundamental changes in insurance don’t last 10 years should have been extremely Future of the UK motor market happen all that often, the key is for insurers profitable with inflation steady at around Without a fundamental shift in the structure to retool their business plan with the intent 2%. But rather than several years of of the marketplace or the way business is of carving out a niche market where the profitability allowing insurers to build up done, the future of the UK motor market aggregators have no influence. ■
www.the-actuary.org.uk April 2011 25
024-025_Actuary_0411 Staudt Maher.indd 25 24/03/2011 13:25 Insurance Market pricing information Unfair trading? The OFT’s proposal to restrict insurers’ access to market pricing information is flawed, says Jan Iwanik
identifiable competition concern. But individual insurers’ interests are in The OFT’s main economic concern is conflict and it is difficult to maintain a that access to market pricing information cartel without a disciplining mechanism5. allows a common understanding of pricing I do not know of such a disciplining positions by insurers. The OFT also believes mechanism in the UK market and neither that this common understanding will lead does the OFT. Until such a mechanism to “successive rounds of signalling and develops, and there is no evidence that this responses by multiple insurers and this is happening, market information is not a could create upward pricing pressure3”. threat to competition. But this is a misunderstanding of In fact, restricting market pricing Jan Iwanik is a the market process. Profit-maximising information will make it harder to start GI actuary with companies do not increase their prices new insurance companies and for existing experience in the just because they know how much others companies to enter new market segments. Polish, US and UK charge. If they did, we would see constant This is because new companies, unlike the markets. Jan is price rises in markets for all goods where established ones, do not have historical currently working companies have this knowledge — that is, claims data and therefore need to rely on for RBS Insurance in most markets. market intelligence tools to set prices. as a pricing We would see, Commitment innovation manager. for example, an Restricting market enforced by OFT This piece expresses » upward spiral in the or any other such Jan Iwanik’s private pricing information will price of eggs, bottled restriction of market views, and not water, newspapers make it harder for existing pricing information the views of his and houses. companies to enter new will not address employer Insurance pricing market segments an identifiable is a reverse auction « competition concern. where insurers bid and the buyer, if he/she is Instead, to the extent to which it will be price-sensitive, chooses the cheapest quote. enforced, it will reduce effectiveness of Restricting market pricing information the market, increase insurance risk, reduce K motor insurance companies changes the auction from a simple English competition and increase compliance have been using detailed market auction to a less transparent one where cost and consulting fees. It will also mean pricing information to help set at each step the bidders know if they are that the seven big insurers, with the OFT’s insurance rates for many years. winning or not assistance, will collude to limit InsurersU have been able to check how much and if they are not winning they do not competition from smaller insurers and their competitors have been quoting for know who is and what the winning bid is. potential start-ups. ■ different types of vehicles and different The Revenue Equivalence Theorem4 suggests groups of drivers. Available information has that both auctions will result in the same 1 Office of Fair Trading, Notice of intention to accept been very precise and has allowed predicting price to the customer. The latter one will just binding commitments to modify a data exchange tool prices for individual quotes and up to one converge slower, will be more volatile and used by Motor Insurers, www.oft.gov.uk/shared_oft/ month ahead. hence will make the market less efficient. consultations/OFT1301.pdf The Office of Fair Trading (OFT) It is also hard to think of an intuitive is claiming that using such market reason why better access to competitors’ 2 Office of Fair Trading, www.oft.gov.uk/OFTwork/ information limits competition and it is prices makes a market less competitive. consultations/current/private-motor/qandas threatening the largest UK insurers with Telling a class of students what everybody’s a continued investigation to make them grades were in last week’s test makes top 3 Office of Fair Trading, Notice of intention to accept commit to restricting the use of market students more, not less, competitive. binding commitments to modify a data exchange tool pricing information1. This commitment will The OFT is also concerned that market used by Motor Insurers, www.oft.gov.uk/shared_oft/ be applicable to all UK insurers, including pricing information could allow a consultations/OFT1301.pdf smaller ones who are not signatories2. hypothetical cartel to monitor the market There is no valid economic case for and hence to detect deviation from a 4 McAfee R. and McMillan, J. Auctions and Bidding, restricting access to market pricing hypothetically co-ordinated strategy. If a Journal of Economic Literature, 1987 information. As a consequence the cartel existed then I suppose it would use commitments offered, or any other market information this way. It could also 5 Maniw G. Principles of Microeconomics, Chapter 16, regulatory action, will not be addressing an use other means to co-ordinate rates. Harcourt College Publishers
28 April 2011 www.the-actuary.org.uk
028_Actuary_0411 Iwanik.indd 28 24/03/2011 13:26 Float-based valuations Insurance Cheap at half the price? Andrew Maclaren looks at the float-based valuations of some insurance companies
Float-based methods provide a quick way of be around twice their respective market measuring value. capitalisation and more than twice their The float concept is lucidly explained in respective net tangible assets. the annual reports of Berkshire Hathaway. Amlin and Hiscox have grown their The net insurance liabilities in the accounts, balance sheets and enjoyed a negative cost known as the float, are similar to a loan of float on average over the last five years. that has a cost related to underwriting So a valuation based on underwriting break- losses. Consider a simplified insurer, with even and no growth might be conservative, a balance sheet comprising an investment making the shares look at least 50% portfolio of £3 billion balanced by net undervalued. On the other hand, market xxxxAndrew Maclaren is insurance liabilities of £2 billion (its float) conditions or competitive advantages could a private investor, and shareholders’ equity of £1 billion. It deteriorate, resulting in future underwriting self-employed breaks even on pure underwriting each year losses or float shrinkage or both. actuary and a trustee and is not growing. Returns to shareholders Furthermore, a significant discount could of the AQA pension will therefore be be applied to the scheme the returns on the » Float-based methods investment portfolios investment portfolio. can help to focus the to allow for potential If the investment valuation appraisal return shortfalls, future What is an insurer’s float? return is the market taxation and lack For a general insurer the major components return then the shares on the longer-term of investor access to of its float are reserves for unpaid losses, will be worth three prospects for underwriting capital. So it might be unearned premiums and other liabilities to times the asset value. and investment far-fetched to say the policyholders less premiums and reinsurance The multiple should « shares are half-price receivable and deferred acquisition costs. be even bigger if this insurer can increase fair value. No investment recommendation Usually, it is possible to work out the its float, make an underwriting profit or is being made here. However, float-based float from balance sheet information but achieve a superior investment return. If it methods can help to focus the valuation sometimes estimates are necessary. can do all three for a long time then the sky appraisal on the longer-term prospects for is the limit for valuation, a fact familiar to underwriting and investment. Float-based valuations of some long-term Berkshire Hathaway shareholders. A few insurance companies do achieve insurance companies There are two ways to do a quick and market capitalisations close to equity plus General insurance companies often trade dirty float-based valuation of an insurer float. The well-regarded US automobile at share prices around net asset value. that is expected roughly to break even on insurer, The Progressive Corporation, is Given the competitive nature of the industry, underwriting. We can add back the float growing and aims for a 96% combined ratio. this is not surprising. High returns on capital to shareholders’ equity. Alternatively, we It currently trades at over twice asset value are rare because barriers to entry are low and can deduct return-bearing liabilities and at roughly equity plus float. competition is often based on price. (such as corporate debt) from investment Perhaps more intriguing is the huge Nevertheless, a few insurers do have assets and cash. The raw valuation can then discount to equity plus float of Munich Re. reasonable prospects of superior returns. be adjusted to allow for other factors. Adding back the roughly €40 billion float Their higher profitability should justify Table 1 shows some rough calculations in its general insurance and reinsurance valuation at a premium to asset value. for two insurers at the end of 2010. operations to its equity (including equity in How high should this premium be? Their float-based valuations turn out to its large life and health businesses, which is conservatively calculated) gives a total of Table 1 — Float-based valuation of two insurers over €60 billion. This is about three times Amlin (£m) Hiscox (£m) its market capitalisation of €22 billion. Taxation of investment returns and a Market cap (March 2011) 1960 1430 deteriorating reinsurance market no doubt account for much of the gap. Equity (excluding intangibles) 1544 1202 However, it is conceivable that the shares might be undervalued. Investments + cash – debt – pension liability 4049 2775 Berkshire’s significant shareholding in Munich Re, the high dividend yield and Approximate float (row 3 – row 2) 2505 1573 the company’s continual repurchasing of its own shares might support that view. ■ Source: Preliminary reports for year-end December 2010
www.the-actuary.org.uk April 2011 29
029_Actuary_0411 Maclaren.indd 29 22/03/2011 10:15 Q&A Baroness Greengross An age-old problem Marjorie Ngwenya talks to Baroness Sally Greengross about the issue of ageing and her links with the actuarial profession
What are the main objectives of the job at Age Concern. I did not have special ILC-UK? knowledge — in fact, on the contrary, I had The International Longevity Centre — UK only worked with young people, mostly is one of 12 organisations across the world marginalised and in trouble, particularly making up the ILC Global Alliance. We are those involved in the Criminal Justice System. dedicated to addressing issues of So it was a huge change for me to work with longevity, ageing and population change. older adults. I was lucky to be there and to Therefore, we are primarily looking at ageing have had that opportunity. across society and across the generations to see how we can plan for the future, taking You have been an independent these vast demographic changes into account. crossbench member of the House of The impact of ageing does, and should, Lords since 2000 and you chair four infl uence policy, whether it is through All-Party Parliamentary Groups. One of social care, economic performance, health them is on Intergenerational Futures: or well-being. One can only measure the Old & Young Together. Tell us more impact through policy changes and hope about that. that the work we have done helps to change The challenges that the group addresses go policies and practice to meet the huge back to the main issues that the ILC-UK Baroness Sally Greengross has been challenges we face. addresses, such as planning for the future a crossbench (independent) member in the light of demographic change. of the House of Lords since 2000 and What has been your greatest We would like older and younger people to chairs four All-Party Parliamentary professional challenge to date? be closer, to do more together and not to Groups: Dementia, Corporate Social My current challenge is a long-term one in lose touch as is sadly so often the case. Responsibility, Intergenerational Futures the fi eld of ageing. It is an issue that matters Society tends to separate the generations and and Continence Care. She is the vice-chair little to many, but one that I care about there are hidden dangers in some of policies of the All-Party Parliamentary Group on deeply. The Society campaigns constantly we adopt, for example abolishing the Ageing and Older People, and is treasurer to get rid of the stigma and discrimination Default Retirement Age, which was necessary of the All-Party Parliamentary Group associated with old age. Many organisations and long overdue. However, many young on Equalities. Baroness Greengross is campaign nationally and internationally people are now unemployed leading to also chief executive of the International for the UN bodies to produce a declaration, worries that intergenerational confl icts Longevity Centre — UK, co-president of eventually leading to a Convention on could easily emerge. We try to ensure that the ILC Global Alliance and, in the Human Rights of Older Persons. I am the dangers do not materialise by adjusting December 2006, was announced as pleased to be associated with this campaign. policies and practices. We look for examples a commissioner for the Equality and However, by singling older people out we run in the areas of employment, healthcare, care Human Rights Commission. the risk of marginalising or infantilising them funding, the built environment and design, She was director-general of as being different from other adults to whom which should refl ect the mix of age groups Age Concern England from 1987 until the current Human Rights Convention and cultures in society. 2000. Up until 2000, she was joint applies. Older adults should primarily be seen Looking to the future we need to chair of the Age Concern Institute of as adults and age should ultimately become change attitudes, which tend to lag behind Gerontology at King’s College London, irrelevant. This is a dilemma we always face legislation. For example, technology has and secretary general of Eurolink Age. in our work. totally revolutionised education, so someone Baroness Greengross is also chair could be living in a remote village somewhere of the Advisory Groups for the English Many of the roles or posts that you and watch a lecture by a world-renowned Longitudinal Study on Ageing (ELSA) and have held in the past share a common academic. We could question why we need the New Dynamics of Ageing (NDA). theme of ageing. How did you come to to separate the generations in all learning She is president of the Pensions Policy specialise in this area? situations, as younger and older people could Institute and honorary vice-president of I was lecturing and doing research at the often learn together. the Royal Society for the Promotion of London School of Economics and Political Much could also be done, such as Health and a global ambassador to Science. I decided being a long-term mentoring two ways, using skills that Help Age International. She holds researcher and academic wasn’t for me. benefi t both younger and older people. honorary doctorates from seven UK Prior to that I had worked in both academia We are trying to fi nd new ways to improve universities and is an honorary fellow of and industry. I was attracted by the idea of relationships and to alert policymakers to the Institute and Faculty of Actuaries. the voluntary sector when I applied for a changes that are needed. Good examples
30 April 2011 www.the-actuary.org.uk
030-031_Actuary_0411 Q&A.indd 30 24/03/2011 11:32 of this in practice are intergenerational The actuarial profession has a role to How do you measure your success? centres where people come together to relax. play in many of the fields in which you My own success is only measurable in terms Music and theatre activities, such as arts are involved. What more could of being reassured that some things I have and cultural activities, are particularly good actuaries do to add value? been doing are infl uential in achieving a ways of bringing old and young together, I am delighted with the work that the better life for those on whose behalf we are to enhance each other’s performance. Some ILC-UK has done with the Profession. working. I am also a commissioner on the of the mixed-age recreation centres that Actuaries have the expertise which we need Equality and Human Rights Commission, already exist are quite inspiring. in much of our work. We bring a more working to protect disadvantaged or I will always remember visiting ‘social science’ approach, partly through vulnerable people and uphold their rights. one of Age Concern’s day centres economics/health and social care expertise The success of our work will be measured when I fi rst worked for the organisation. and the blend of our skills strengthens, through triennial reports, measuring fairness The organisation was small, with few I believe, both bodies. We know that across the country. ■ resources, so it was hosted in a volunteer collaborative working has a great potential. centre. Walking around, one would see a I am proud to have been an ILC-UK and the Actuarial Profession in mix of able-bodied and disabled people honorary fellow of the Institute and partnership with ESRC Joint Debate: there, also some ex-offenders and Faculty of Actuaries for a number of years Measuring Quality of Life volunteers of all ages as well as staff. I had now and, more recently, an actuary, 10 May 2011, 16:00 for 16.30 no idea who was who and from where. Colin Redman, has become a trustee of AFM_AD_Actuary Mag2011.qxd:Layout 1 2/13/11 2:11 PM Page 1 For more information, visit It was splendid and I learned a great deal the ILC-UK. This can only pave the way to www.ilcuk.org.uk/ from being there. increase collaboration. record.jsp?type=event&ID=78
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www.the-actuary.org.uk April 2011 31
030-031_Actuary_0411 Q&A.indd 31 24/03/2011 11:32 Modelling/Life Swine flu H1N1 — The swine who? Dan Knipe explores what information can be found on the impact of swine flu on deaths in the UK population
deaths in 2009 as 227, of which 149 were early 40s. Higher actual to expected deaths from avian or swine flu. To put that into at these ages are not exclusive to 2009 but perspective, the combined influenza death are also present in 2008 suggesting that they count in the three years prior to 2009 was should not be wholly attributable to the just 87. In 2009 not only did the total presence of the swine flu. In fact, the ONS number of influenza deaths dramatically rise population estimates that the middle ages but also the percentage of influenza deaths are more heavily influenced by net migration that came from the working age population estimates than other age groups so it could soared. In 2009 around half of influenza be that the increase in deaths is a result of deaths were in the working age population an understated population rather than an Dan Knipe is the life with infants and seniors accounting for just increase in mortality rates. portfolio manager at over one-third. In the three years prior to To estimate net migration in any year Leadenhall Capital 2009 over 80% of reported influenza deaths the ONS uses a stratified sample survey Partners were in seniors and infants, with the working conducted at UK points of entry and exit. population making up just over 5%. A publication from November 2010 shows n January 2010 the Health Protection Yet this published data on deaths by that estimated immigration to the UK within Agency published in its weekly update cause may not reveal the whole picture. the 25-44 age group during 2008 and 2009 that the number of deaths related to In a pandemic year we could expect the was broadly flat compared to significant swine flu in England had reached 251. deaths directly attributed to the pandemic annual increases over the prior decade. IIt took care to point out though that the to be under-reported, with there being Estimated emigration from the UK for the number “does not represent the number additional deaths for which influenza same age group during the same two-year of deaths that can be attributed to swine was not the primary cause but where its period was significantly increased compared flu” but rather “the number of deaths in presence is likely to have been a significant to prior years. An underestimation of those individuals with swine flu”. As aggregated contributing factor in the death. One way to entering the country and an overestimation national mortality statistics for 2009 become assess the impact of the influenza on death of those leaving would make population available, it is possible to get a clearer picture rates is to make a comparison of deaths estimates lower than the actual population of the impact of the 2009 H1N1 swine flu. observed in the pandemic year to those from which deaths occur. It is plausible that Late last year the UK Office for National observed in recent years. the compounded effect of any errors in net Statistics (ONS) released publication DR_09, Figure 1 uses 2006 and 2007 data as a migration estimates since the last which sets out statistics of the deaths base expectation from which to perform an population count at the 2001 census could recorded in England and Wales during the actual to expected analysis of the male lead to a fairly sizeable mis-estimation of the calendar year 2009. The ONS is among the deaths in 2008 and 2009. The red lines true population. quickest of the national statistical agencies indicate a 95% confidence interval for There is also a statistically significant around the world to report population the actual to expected ratio after allowing decrease in the deaths during 2009 at mortality statistics and its data allows the for general mortality improvements. senior ages. A level of immunity to the additional deaths in the population caused There is no statistically significant increase H1N1 strain from the last time it was in by the 2009 swine flu outbreak to be assessed. in the number of deaths in 2009 with the circulation could partially explain this The publication counts total influenza exception of people in their late 30s and decrease in deaths. In particular, the H1N1 strain may have crowded out the seasonal Figure 1 — Male deaths in England and Wales 2008-9 flu strains and caused their presence as a (base years 2006/7) secondary cause of death to be lower than 130% in a normal year. However, accelerating improvements to old age mortality could 120% 2009 actual to expected 2008 actual to expected equally explain such a movement. 110% The analysis of the data supports the
100% assertion that swine flu was responsible for surprisingly few deaths as either a primary 90% or secondary cause despite its rapid spread 80% through the population. However, the swine flu pandemic serves to remind all of us in 70% the life insurance industry that a global viral
3 to 5 3 to outbreak is a very plausible threat to capital 0 to 2 0 to 6 to 8 6 to 9 to 11 9 to 15 to 17 15 to 12 to 14 12 to 51 to 53 53 to 51 72 to 74 74 72 to 21 23 to 75 to 77 to 75 33 to 35 35 to 33 39 to 41 41 to 39 69 to 71 to 69 57 to 59 59 to 57 81 to 83 83 81 to 18 to 20 20 18 to 45 to 47 47 45 to 30 to 32 32 30 to 27 to 29 27 to 24 to 26 26 to 24 54 to 56 54 to 42 to 44 to 42 63 to 65 65 to 63 36 to 38 36 to 87 to 89 89 to 87 78 to 80 80 to 78 48 to 50 48 to 60 to 62 62 60 to 84 to 86 84 to 66 to 68 66 to and solvency. ■ Source: ONS and Leadenhall Capital Partners Age
32 April 2011 www.the-actuary.org.uk
032_Actuary_0411 Knipe.indd 32 22/03/2011 14:23 Apostrophes Elegant English Apostrophe catastrophe In her latest article on language and grammar, Sonal Shah puts the apostrophe in its rightful place
an apostrophe to only the second noun. would not say “a month’s pregnant”. For example, a project involving Ann and Bob Another function of apostrophes is is “Ann and Bob’s project” rather than “Ann’s replacing omitted letters or numbers. This can and Bob’s project” as the latter is usually be in forming contractions such as doesn’t, taken to mean separate projects. More than let’s, won’t; or for years, such as expressing one project involving both Ann and Bob are the 1980s as ‘80s; or some abbreviations, “Ann and Bob’s projects.” However, if Ann such as government reduced to gov’t. and Bob work on separate projects then their Perhaps the greatest apostrophe-based projects are “Ann’s and Bob’s projects”. confusion occurs in the battle of “it’s versus Sometimes certain phrases that have its.” The former is a contraction meaning Sonal Shah is a become commonplace do away with “it is” or “it has.” The latter is the possessive general insurance apostrophes, so it is the writer’s discretion form of “it” and belongs to this set of actuary working in the as to whether to use apostrophes, or indeed possessives of pronouns, none of which Prudential Insurance the plural form. Deterioration of reserves contain apostrophes: my, mine, your, yours, Risk Department at could be denoted as “reserves’ deterioration” his, her, hers, its, our, ours, their, theirs. the Financial Services but we usually see this described as To help with determining which of Authority “reserve deterioration”. Similar examples are “it’s versus its” it ought to be, try saying scheme members and claims handling. “it is” (or, if relevant, “it has”) in full whenever you write “it’s”, and if the » The position of an sentence makes sense, then you are using The most popular requests I have had for apostrophe is important the correct form with the apostrophe; this column have centred on apostrophes, otherwise the possessive form “its” is therefore we take a look at these in the third in differentiating required. For example, “it’s a catastrophic instalment of the Elegant English column. whether the reference event; it’s caused substantial damage; One of the main functions of apostrophes is to one entity or a its insured loss runs into billions of pounds;” is to indicate possession or association, and where the two “it’s” are contractions of “it is” the position of an apostrophe is important in number of entities « and “it has” respectively, and the “its” is the differentiating whether the reference is to one Apostrophes should not be used to possessive form referring to the insured loss of entity or a number of entities. form plurals, except when making a the catastrophe. For example: single letter plural, such as in “mind your Similar errors occur with these n Policyholder’s claim = one claim pertaining p’s and q’s” where the omission of the combinations of words: to one policyholder apostrophes would obscure the meaning. n you’re versus your n Policyholder’s claims = two or more claims Apostrophes used incorrectly in forming n who’s versus whose pertaining to one policyholder plurals are called greengrocers’ apostrophes n there’s versus theirs n Policyholders’ claim = one (joint) claim (humorously written as greengrocers n they’re versus there or their. pertaining to two or more policyholders apostrophe’s). Just as more than one banana Using the technique of saying words n Policyholders’ claims = two or more claims is written as bananas, more than one CRO with apostrophes in full will help establish pertaining to two or more policyholders. should be written as CROs and not CRO’s. whether the words should indeed be If a word in its plural form does not end Apostrophes are employed in references contractions or not. with the letter “s”, then the only time to add to time and money; for example, an hour’s Remember the story of ‘The Apostrophe “s” would be when it follows a possessive break, three months’ sabbatical and five Man of Royal Tunbridge Wells’ who took apostrophe, for example, children’s accounts. pounds’ worth. Sometimes there is confusion it upon himself to insert apostrophes on It is discretionary as to whether to insert over the use of apostrophes for plurals, missing road signs, prompting some local the letter “s” when describing the possessive such as two weeks’ notice versus two weeks authorities to issue grammar guidelines? of a proper noun ending in “s”, thus both notice; here, ask yourself how you would His cause was not in vain, so grammar Chris’s report and Chris’ report are correct. write the singular form, ie. one week’s notice, aficionados need not be afraid to put the You could ask yourself whether you would and given that this requires an apostrophe, apostrophe in its rightful place. ■ pronounce the extra “s” to determine then so does the plural (after the “s”). whether you would choose to insert it, Exceptions to this are when the time period The views expressed herein are the author’s own and though in such cases it is usually down to refers to an adjective rather than a noun, an not necessarily those of her employer. Please note personal preference. example being someone can be three months that this column is not intended to be prescriptive; When an item pertains to two or pregnant but not three months’ pregnant. its purpose is to provide suggestions to help make more nouns, the general rule is to add Again, compare with the singular where you communication clearer.
www.the-actuary.org.uk April 2011 33
033_Actuary_0411 Elegant English_v2.indd 33 24/03/2011 16:49 Stat Attack Cricket Hit for six Test purists grumble about the rise of limited-overs cricket, but could actuarial life tables do with a similar makeover, asks Greg Becker
scored so far and some measure of the ‘par score’ for the conditions of the day (refl ecting things like the pitch and ground size). A variety of simple adjustments were initially made (for example, revising a target based on run-rate ratios, or by comparing scores at a similar point in an innings), and continually developed but fl aws were identifi ed. After a fateful semi-fi nal in the 1992 World Cup2, when a counterintuitive Greg Becker is a adjustment was made using the ‘best scoring product development overs’ method, it was decided to draft in actuary at RGA the statisticians to improve the system. The D/L method was born from the efforts of two statisticians, Frank Duckworth and Tony Lewis, and the fi rst version was used in 19973. It has since been revised, most notably in 2004. The system takes into account the fi rst team’s score and overs faced, the length of the delay, which is used to estimate the revised total and overs to be faced for the second team. The Standard Edition can be ricket is a rare sport. A fi ve-day match as being to ‘score the most runs’, applied using a set of tables and a calculator, match, interrupted by tea breaks, while in limited-overs cricket, one could while the Professional Edition requires a can end in a draw because time ran argue that it is to ‘score the most runs using computer4. The target score to be calculated out. It is truly a spectator-orientated the overs available’. In an ODI, each team using the Standard Edition is based on the Csport — for spectators with plenty of time starts with 50 overs (300 balls) from which ‘resources’ that the second team has at its and opinions. While purists believe that Test they try to score as many runs. In the case disposal, which is a nonlinear combination cricket is the only sort of cricket there should of an interruption — most likely due to a of a number of wickets (0-9) in hand and be, money and television dragged cricket into rain delay — the number of balls available the number of overs remaining (0 to 50 — a shorter format with a guaranteed result. to both teams needs to be adjusted as there see Figure 1). Once one has ascertained Controversy was guaranteed with the may not be enough time for each team to the amount of ‘resources remaining’, an introduction of limited-overs cricket in the face 300 balls, and for the two teams to face estimate of their target score can be made. 1970s, and the traditionalists have had a a different number without an adjustment The Professional Edition is more complex tough time with the increasing popularity of would be unfair. While purists still carp on and beyond the scope of this article. one-day internationals (ODIs, which have about ODIs, every cricket supporter has a Many would agree that the complexities 50 overs in each innings), the introduction of memory of a victory that was ‘stolen by a of the game of cricket cannot be captured night cricket (which is played under lights in rain interruption’, and the Duckworth-Lewis into a tractable list of variables that could colourful uniforms with a ball that’s not red) method (D/L method)1 — the system used adequately refl ect the ‘nuances of the and Twenty20 (T20, which has 20 overs in today to adjust for interruptions — currently situation’ — are the batsmen in, have the each innings). gets much, often undeserved, criticism. weaker bowlers been used, are the best Cricket, played in the open is, When there is an interruption, it is very batsmen still to come, has the Powerplay5 unfortunately, weather-dependent. easy to work out how many overs are to be been taken, should all interruptions be While Test cricketers just headed for the lost: just divide the length of the delay by the treated the same irrespective of when they pavilion when the rain came down, time it takes to bowl an over. The complexity happen, should multiple interruptions be knowing there was either another day or lies in adjusting the target score to refl ect that treated differently? Not only is a that a draw is an acceptable result, one-day a different number of overs will be faced by particular match hard to translate into cricketers need to deliver a result that day. each team. There are plenty of factors to be parameters, but ODI cricket has been Thus, a solution was needed to take an taken into account, with the most infl uential changing: teams are scoring more and faster interruption into account. being the number of overs remaining, — certainly boosted by T20, specialist players A gross simplifi cation of cricket could the number of overs lost, the number of and the introduction of batting Powerplays. be to summarise the goal of winning a Test wickets remaining, the number of runs Does this mean that the D/L method needs
34 April 2011 www.the-actuary.org.uk
034-035_Actuary_0411 Becker.indd 34 23/03/2011 16:08 Figure 1 — The Standard Edition of the Duckworth-Lewis Method — Resources remaining by wickets remaining to be revised annually to take into account 100% the latest rules and trends? There is an interesting parallel with life 90% 0 tables: Over time, changes in mortality 80% 1 70% — largely due to environmental factors, 2 lifestyle and medical developments — have 60% 3 led to ‘revised’ expectations of life, which is 50% illustrated in the progression of the English 40% 4 7 Combined resources Combined 30% 5
Life Table (ELT) series . Developments have (%) and overs wickets been substantial, so much so that a new 20% 6 version has been produced every decade. 10% 7 It should be noted that the current set 0% 8 of tables — ELT 16 — does use the latest 50 45 40 35 30 25 20 15 10 5 0 graduation techniques in their development 9 Overs remaining and that it produces regional tables (for instance in Scotland). The concept of Figure 2 — Run-rate per over in ODIs (by year) — 1980-2010 for ‘mortality improvement factors’ to help keep seven leading cricketing countries6 tables current are commonly used, notably in pensions. With that said, ELT 16 is still 6 best described as ‘out of date’ if used today 5.5 without adjustment. Australia 5 Is it time for the Duckworth-Lewis England system to become more nimble, and 4.5 India able to reflect regional differences, recent Pakistan 4 developments, rule changes and trends? South Africa Do we think that the team that loses an 3.5 Sri Lanka interrupted World Cup final by a run would West Indies think of this as spurious accuracy? 3
While cricket supporters berate the 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 D/L method and arguments over suggestions for improvements proliferate, changes are Figure 3 — English Life Tables 1-16: Female (Red) and Male (Blue) made: the Professional Edition is no longer 90 (in descending order) 90 (in descending order) a table but a statistical model with a 2000-02 2000-02 80 80 computer that takes into account many 1990-92 1990-92 1980-82 1980-82 factors. Are we as critical of life tables: should 70 70 1970-72 1970-72 they be a shortcut like the D/L ‘Standard 60 1960-62 60 1960-62 Edition’, but also a thing of the past for the 1950-52 1950-52 ‘professional’ user? Are we correctly applying 50 1930-32 50 1930-32 1920-22 1920-22 actuarial judgment when using them, 40 40 1910-12 1910-12 remembering to interrogate them before 1901-1910 1901-1910 30 30 using them? Could medical advancements 1891-1900 1891-1900 1881-90 1881-90 have the same effect as T20s are having on 20 20 1871-80 1871-80 ODIs? Actuaries are meant to be prudent: 10 1838-54 10 1838-54 are we looking out for the batting Powerplays 1838-44 1838-44 0 1841 0 1841 of longevity? Are migration, urbanisation and 0 6 12 18 24 30 36 42 48 54 60 66 72 78 84 90 96 0 6 102 108 12 18 24 30 36 42 48 54 60 66 72 78 84 90 96 catastrophe risks more or less of a problem 102 108 than ball-tampering? Are we making different References 4 http://bit.ly/ePvlGw adjustments for prudence when using them for mortality or longevity business? 1 http://bit.ly/3j4StG 5 http://es.pn/ih9qip For all these questions and more, it is recommended that an actuary finds a Test 2 http://es.pn/ehS2Y0 6 http://bit.ly/gENV8Z match, and some colleagues, to explore the problem — and preferably before lunch… ■ 3 http://es.pn/hne8Iw 7 http://bit.ly/gDqMP8
www.the-actuary.org.uk April 2011 35
034-035_Actuary_0411 Becker.indd 35 23/03/2011 16:08 International Kenya Out of Africa Fresh from a recent visit, Marjorie Ngwenya reports on the opportunities and challenges facing actuaries in Kenya
he Actuarial Society of Kenya (TASK) adopting the new South African education occupational schemes. Legislation has focused was launched in 2005. It brings strategy and obtaining accreditation for the on enhancing protection of members’ benefits together qualified and trainee local university actuarial science programmes. and improving governance of schemes. actuaries in professional, educational Some of the local qualified actuaries teach Public service schemes are being re-engineered. andT research organisations with an aim of at the universities and participate in course There is a trend towards DC schemes promoting the actuarial profession in Kenya reviews and examination marking. and there are particular concerns regarding and East Africa. Sundeep Raichura is the Actuarial members are predominantly contribution rates, distribution and equity founding and immediate past chairman. employed by life insurers and consulting of allocation of returns to member accounts, TASK performs its role through its firms. Some are employed by banks, conservative investment strategies and governing council and committees and investment companies and healthcare member communication. works to a three-year strategic plan. organisations. The few consulting firms in the Its vision statement is “to position the country mainly practise in the pensions field. Challenges actuarial profession in Kenya and the region While there are many services that actuaries as the leading profession in the areas of Statutory roles in pensions and insurance can offer, most life insurance companies will modelling and management of financial risks Insurance only call upon actuaries to undertake yearly and contingent events”. An actuary is currently defined as FIA or FFA actuarial valuations and certify rates for new The society fulfilled its ambition to or other as approved by the Regulator. life products. There is a perceived high cost of become a full member of the International n Actuarial certification of long-term actuarial services Actuarial Association at the International insurance premium rates The trend towards DC schemes limits the Congress of Actuaries in Cape Town in 2010. n Annual statutory actuarial valuations of life traditional defined benefit actuarial role. With Kenya there are less than ten funds The capacity of the market to absorb qualified actuaries, including associates of n Independent actuary report on mergers actuarial science graduates in traditional both the Institute and Faculty of Actuaries and acquisitions. fields has led to frustration and and the Society of Actuaries. There are over There is no statutory actuarial role for disillusionment of actuarial graduates. 300 students registered with the Institute and non-life or healthcare currently. Wider fields are not penetrated and they are Faculty of Actuaries, although not all of them Pensions a hard sell, although some individuals have are in actuarial practice. There are further An actuary is defined as fellow member of done well in banks, investment houses and students who have graduated from local recognised international actuarial body. information technology. universities with actuarial science degrees n Triennial actuarial valuations of defined Other challenges faced are: and more actuaries of Kenyan origin working benefit schemes n Effective implementation of actuarial abroad. n Minimum funding actuarial valuations (no recommendations Many students have given up on actuarial prescribed basis) and statutory remedial plans n Actuarial education, resource and capacity examinations and have taken up other n Actuarial certifications of amendments constraints and lack of accreditation qualifications such as the CFA charter. affecting financial health n Competition from other courses or A lack of actuarial employment opportunities n Actuarial evaluation on winding up qualifications and the difficulty and length of the actuarial n Actuarial certifications of transfer values n Mentoring and training of students. qualification process are cited as reasons. and commutation terms TASK organises an annual actuarial The local universities have actuarial n Initial statutory requirement for actuarial convention in Nairobi and is promoting programmes that enrol hundreds of students. reviews of defined contribution (DC) schemes research by university students and actuaries. Among them, the University of Nairobi’s dropped in 2004 TASK worked closely with Actuaries Without programme is the most established, which n Regulations on scheme conversions Frontiers to organise a two-week forum on started in 2000. Jomo Kenyatta University being prepared. enterprise risk management in Nairobi in of Agriculture and Technology (2002), There are some provisions in income tax late 2009. TASK is also working with the Maseno University (2006) and rules on treatment of actuarial surpluses regulators and insurance companies to come Strathmore University (2010) also have and deficits. up with a formalised internship programme programmes. TASK is also liaising with the TASK is seeking recognition under the so that actuarial trainees benefit from relevant Actuarial Society of South Africa to look at insurance and pensions legislation. experience during their holiday attachments. ■
Kenya stats and facts Industry players With thanks to Sundeep Raichura for the Most companies transact life insurance and overview of the Kenyan actuarial profession Land mass 580,367 square kilometres are composite insurers. and industry information. Sundeep, a qualified Population 40,046,566 (July 2010) The pension sector comprises unfunded actuary, is managing director for Alexander GDP £20.054bn pay-as-you-go Public Service Superannuation, Forbes Financial Services (E.A) Ltd and was Source: CIA National Social Security Fund (DC) and instrumental in the formation of TASK
36 April 2011 www.the-actuary.org.uk
036_Actuary_0411 International.indd 36 24/03/2011 15:10 Sponsored by Technology Apps Apply yourself to work There’s a huge selection of apps available for modern phones and tablet computers. Anthony Dhanendran picks some of the most suitable and interesting for actuaries
LinkedIn Free Dragon Dictation Free 10 more worth browsing LinkedIn is a useful The iPhone and iPad have business tool for microphones, so why not put them to Spotfire Free — text and making contacts some use? The Dragon app does just that, graphical analysis tool and connections, recording and dictating what you type in from Tibco. but now you can for emails, memos or anything else. Works with: iPad only take it with you, A separate Blackberry Dragon For E-mail with the free app is also available. iSpreadsheet £1.79 — LinkedIn apps Works with: iPhone/iPad take your spreadsheets that allow you to with you using Google Docs access your connections and their profi les and Evernote Free Works with: iPhone/iPad updates. You can also use it to join Clip any website, article or document you The Actuary’s LinkedIn group. fi nd online for later reading and reference. Graphing Calculator £1.19 — powerful Works with: iPhone/iPad/Blackberry/Palm Either save notes directly or email them to graphical calculator with handwriting your personal Evernote email address, and recognition Bloomberg Free mark them up with photos and audio. Works with: iPhone/iPad Get business and world news on the move Works with: iPhone/iPad/Android/Blackberry/ using the company’s collection of apps. There Windows Mobile Remember the Milk Free — simple but is a version for general news and a separate effective task management one that gives access to extra feeds if you or Mensa Brain Test £1.19 Works with: iPhone/iPad/Android/Blackberry your company is a Bloomberg subscribers. Make sure your Works with: iPhone/iPad/Android/Blackberry/ mental faculties Quickoffice Connect Mobile Suite £5.99 — Nokia are still in tip-top read and edit Microsoft Office documents condition with Works with: iPhone/iPad Google Translate Free this fun IQ-testing The world becomes a smaller place with app made by the Dropbox Free — synchronise folders between this superb new, free translation tool international club. your computers and your mobile devices from the search giant. It works with over There’s a training Works with: iPhone/iPad/Android/Blackberry 20 languages, and will even read out mode and three translations in some of those, though a kinds of full-on test. UK Tax Calculator 59p — simple but effective network connection is required. Works with: iPhone/ tax and NI (PAYE) tool Works with: iPhone/iPad/Android iPad Works with: iPhone/iPad
GoToMyPC Free ZagatToGo £varies (iPhone £5.99) Sky Sports News Free This desktop programme is great for accessing Zagat guides aren’t well-known in the UK, — get live sports news a work computer from home (or vice versa). but in America they’re revered. The apps, (separate Sky football The mobile version brings that experience available for nearly all smartphone models, and cricket apps are to your iPad. Android and iPhone users can cover all the restaurants from 45 of Zagat’s also available) make use of the similar Teamviewer app. paper guide books. Works with: Works with: iPad only Works with: iPhone/iPad/Blackberry/Windows iPhone/iPad Mobile/Palm WebEx Free Chess with Friends £1.79 — play against Web conferences can be a pain but you can WineSnob £1.19 someone you know or a random opponent access them easily on your mobile device You don’t have to be a wine snob with this Works with: iPhone/iPad with the WebEx app that connects to WebEx app. Store and search for the wines you’ve conferences and allows you to join meetings, tasted, prices and tasting notes, and view your Zynga Poker Free — play cards against real view shared content and chat. wine tours in Google Maps. opponents (formerly called Live Poker) Works with: iPhone/iPad/Android/Blackberry Works with: iPhone/iPad/Android Works with: iPhone/iPad/Android
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38 April 2011 www.the-actuary.org.uk
038_Actuary_0411 Technology.indd 38 24/03/2011 11:33 [email protected] Richard Elliott Arts
Short stories Richard Elliott argues that small really is beautiful
hen was the last time you cosmopolitan future. In the summer of 2010, slipping into didacticism. This cleverness picked up a book only to set The New Yorker published a list of the 20 allows her to pull off the grotesque symbolic it down again with a gasp ‘best’ fiction writers under the age of 40, imagery of the second half of the story. once you saw the number in all of whom have written short stories, and Wexcess of 600 on the last page? I recently currently living in North America. The list Signs and Symbols — had this experience with Hilary Mantel’s included writers from Nigeria (Adichie), Peru Vladimir Nabokov (from Nabokov’s Dozen) Wolf Hall, which clocks in at a daunting (Alarcón), Latvia (Bezmozgis), China (Li), This moving story about a mentally disturbed 672 pages. Where do people find the time Ethiopia (Mengestu), Yugoslavia (Obreht) young man and his elderly parents sees the to get through such hefty tomes? On a lazy and Russia (Shteyngart). author of Lolita rein in his more mischievous holiday you might well polish it off within In contrast to a 600-page novel, a short impulses. Nabokov famously posited ‘beauty three or four days but, vacations aside, many story that doesn’t quite live up to an overly plus pity’ as a definition of art; here, the two people (myself included) would require a fervent recommendation will rob you of a combine to memorable effect. good few weeks in which to spread the mere hour (or thereabouts) of your time. 20-plus hours’ reading time. And I suspect With this in mind, I look forward to Good Country People — I’m not alone in finding the latter approach hearing what you thought about one or Flannery O’Connor (from A Good Man is to novel-reading much less satisfying than more of the following five marvellous tales. Hard to Find) the former. No excuses accepted. When the haughty and atheistic protagonist The solution? Allow me to introduce of this story encounters a simple travelling an undervalued old friend: the short story. Araby — James Joyce (from Dubliners) Bible salesman, the possibility of romance Short stories have been around in various The young narrator is besotted with seems remote. If the preceding sentence shapes and forms for just about as long as his friend’s older sister, intending to suggests a rather sentimental offering, anyone can remember. The development purchase for her a gift from a bazaar. nothing could be further from the truth. of the modern short story, however, Joyce popularised the term ‘epiphany’ In many short stories, the title will appear owes much to a 19th century Russian — in a secular context and each of the stories just once, if at all. In Good Country People, Anton Chekhov. in his collection Dubliners feature the title appears half a dozen times, as More than any writer before him, characters who arrive at a moment of O’Connor builds to an astonishing climax. Chekhov dealt with both the mundaneness revelation. In Araby, this moment comes and mysteriousness of life. He eschewed in the lyrical last sentence. A Silver Dish — Saul Bellow facile conclusions, avoided judging his (from Him With His Foot in His Mouth) characters and focused on internal emotion You’re Ugly, Too — Lorrie Moore The longest story here, A Silver Dish is still rather than external event. In 1987, when (from Like Life) easily consumed in a single sitting and never 25 eminent authors were asked to name Zoë Hendricks is an eccentric history lecturer outstays its welcome. Bellow was one of the the most crucial influences on their work, fighting against pressure from family and greatest prose writers of the last century and Chekhov received double the nominations lovers to conform. At one point in the story his warm humour is wonderfully displayed of any other writer. she concludes that “all men, deep down, in this tale about father and son. In the first half of the 20th century, wanted Heidi”. Moore deals with feminist American publications such as concerns with no little wit and without ever Aforementioned books available from all good retailers The Atlantic Monthly and Saturday Evening Post paid healthy sums for stories, attracting such luminaries as Faulkner and Fitzgerald. Post-war America boasted many of the short format’s most enthusiastic and skilled practitioners, including Eudora Welty, Flannery O’Connor and John Updike. The 1960s and ‘70s saw writers such as Borges, Barthelme and Gass attempt to shake up what they saw as conservatism in the short story’s form. However, Raymond Carver, arguably the most influential figure in the ‘80s, harked back to Chekhov with his widely admired minimalist style. Although one country — America — will most likely continue its dominant role, the short story looks set to have an exciting
www.the-actuary.org.uk April 2011 39
039_Actuary_0411 Arts.indd 39 22/03/2011 14:21 Puzzles Coffee break
April prize puzzle April fuel For a chance to win a £50 Amazon voucher, please send your answer to [email protected] by 15 April.
Arthur, Bernie and Colin are having a cycle race on a circuitous Any of the cyclists reaching the van are immediately route between Edinburgh and Fife. All three set out at 10am at seduced by its sugar-dusted fried produce and lose a different speeds from Edinburgh — Arthur is 5km/h faster than constant 20km/h in speed due to the combined effects of Bernie and 10km/h faster than Colin. having a bag full of doughnuts to carry on the handlebars Most of the time all our protagonists maintain a constant and acute indigestion. speed over the course. However, also travelling the same route The van leaves Edinburgh at 9am and arrives in Fife at 3pm; at a constant speed is a mobile catering van selling doughnuts. the race itself is a three-way tie. When does it finish?
Terms and conditions The prize will be awarded for a correct answer received before the closing date picked at random by the puzzles editor. The winner’s name will be announced in the next edition. Please note that the puzzles editor’s decision is final and no correspondence will be entered into. We reserve the right to feature the winner’s name and a photo (if supplied) in The Actuary. Your details will not be passed to any third party in connection with this draw.
Puzzle 470 Gilty pleasure 1 2 3 4 5 6 7 Across: 8 9
8. Received without common era, strangely, to deduce (6) 10 11 9. Double count, perhaps (8) 12 13 14 12. To not have one for retirement leaves one short (4) 13. Also known as rich funny place in Pakistan (7) 14. Disentangle locks (6) 15 16 17 18 15. Leave one’s shores in a semi-grateful state (8) 17. Where approximations lie (9) 19 20 19. Reserving tree inside bite (8) 20. Trial in weird date? Proven! (8) 21 22. Buffing tool found inside flank (6) 22 23 24 25 23. Currency exchange of one rand (5) 25. Counterfeiting note with family before German capital (6) 26 27 28 29 26. The way someone who is testate goes? (8) 29. Protect loud substitute (8) 30 31. The way those without crosswords live! (10) 31 32 33 33. About half a buck the monarch has when reprimanding (8) 34. Exposed side that blows from below (6) 34 35 36 37 38 36. & 11. Down. The worth of a gift? (7,5) 37. The result of many ticks OR go through when dad boards ship (4) 38. Odd pulse and one that’s in force (8) 39 40 39. One who wants to lose (6)
Down: 1. Where killer and victim are one among adolescents (7,7) 2. Underwriting arising from relative position after gamble (4,5) 3. Bring forth a pessimistic outlook (4) 4. Attempt, we hear, to find a baby’s bed with knitting fabric (6) 5. & 7. Down. Fatal for twentysomethings! (8,4) 6. They cover in more certain direction (8) 7. See 5 Down 10. Ancient common with stock, funnily enough, that’s one of 6 Down (3,6) 11. See 36 Across 16. Urged, for example, by an earthsea wizard (5) 18. It’s very dangerous for vertebrates! (9,5) 20. Pester any small number inside (5) 21. Least uniform jumble of venue sent (9) 24. Fresher for each after Rhode Island (5) 25. What one does after being patient, hopefully (4,6) More puzzles online 27. & 30. Down. Revealing garments? (8,5) 28. Final piece of mail for the sounding of the bugle (4,4) To access the puzzles archive or to play daily interactive 30. See 27 Down Sudoku, visit www.the-actuary.org.uk/puzzles. 32. Youth leader with funny slide gives rates of interest (6) The puzzles editor is pleased to receive ideas for new 35. Reserve that’s initially interesting, but not really (4) puzzles from readers at [email protected] 37. They meet when there is enough money going around (4)
40 April 2011 www.the-actuary.org.uk
040-041_Actuary_0411 Puzzles.indd 40 22/03/2011 11:28 Bridge challenge 14 Double conundrum www.ebu.co.uk/education/learning/default.htm. Please send any A useful beginners’ guide to playing bridge can be found at comments you have to Tom Bratcher at [email protected]
You are sitting in the West seat and the (natural) bidding goes as follows: The bidding: S W n e 1♥ Pass 2♦ Pass 3♥ Pass 6♥ Pass Pass
♠ 832 N 1. You pick up this almost pointless hand and can ♥J10975 hardly believe your ears as the opposition sail W E ♦108 into 6♥. They cannot make their contract, so why S ♣532 shouldn’t you double?
♠K75 ♥Q8 2. North’s hand is as follows. What should he have ♦AKQ75 bid over 3♥? ♣A84 Solutions for March 2011 Bridge challenge 13 solution March prize winner Defending the defensible Congratulations to this month’s winner, Lynne Davis The bidding: s W n e 1♠ Pass 2♣ Pass March prize puzzle Strange 2♦ Pass 3♠ Pass 1) Hamper / hamster / hamstring bedfellows 4♠ 2) Pinhole / pinion / pink 3) Unclassified / uncle / unclean You will need partner to take a couple of tricks to set the contract. 4) Peremptory / perennial / perestroika From the bidding, spades and diamonds are unlikely prospects and, 5) Loganberry / logarithm / logbook after your ace, Dummy has the top hearts. The best chance lies in 6) Bale / baleen / baleful clubs — and if Declarer has enough club losers to allow you three 7) Ordeal / order / orderly winners, then it’s likely that K♥ is a singleton and he is planning to 8) Legendary / legerdemain / legging discard his losing clubs on QJ♥. 9) Juxtapose / ka / kabaddi Therefore you must win with A♥ immediately and then lead out 10) Hobo / hock / hockey A♣ and another club — and hope you are rewarded when partner 11) Julienne / jumble / jumbo turns up with KJ♣. 12) Perceptive /perch / perchance The full hands look like this: ♠K98 13) Rack / racket / racketeer ♥QJ2 14) Skinny / skint /skip ♦J109 15) Verve / vervet / very ♣Q1072 16) Nicety / niche / nick ♠752 ♠64 17) Filibuster / filigree / filing ♥A1098 N ♥76543 18) Ibex / ibis / ibuprofen ♦632 W E ♦Q54 19) Wail / wain / wainscot ♣A64 S ♣KJ9 20) Loa / loach / load ♠AQJ103 ♥K Puzzle 468 solution 20 questions ♦AK87 A priori the probability of a student with a score of 12 having ♣853 revised is slightly less than a half, but because we know that exactly three of the six students revised, the probability that Pete Without a club switch, Declarer can discard clubs and make an revised is (slightly) influenced by knowledge of Sharon’s score. overtrick with the help of the diamond finesse. Given the information in the question we can express the probability that Pete revised as ( P (ps) + P (ps’) ) / ( P (ps) + P (ps’) + P (p’s) + P (p’s’) ) Puzzle 469 solution Circular argument where, for example, P (ps’) is the probability that Pete revised He is near the South Pole — points off if you thought he was at the and scored 12 but Sharon didn’t and scored 11. Working through North Pole, which can be walked to when frozen, but is pack ice to calculate the individual probabilities is a straightforward rather than land and so cannot support permanent buildings. combinatorial exercise in Excel; the probability that Pete revised is The building could be on any one of a set of concentric circles approximately 52.7%. slightly more than three miles away from the South Pole.
www.the-actuary.org.uk April 2011 41
040-041_Actuary_0411 Puzzles.indd 41 22/03/2011 11:28 Student page Stephen Paines Follow @TheActuaryMag Join The Actuary’s on Twitter LinkedIn group
This month Stephen Paines applies a familiar subject — to another familiar subject Subject to scrutiny
The exams we take furnish us with the HA1. CT4 is harder than the other seven. in my results. So is this study scientifically tools to tackle statistical problems. So why The same is true of CT8, simply substituting sound? An interesting point: if someone else not return the favour, and apply them to CT8 results into the formula above had made the hypothesis before looking at actuarial exams? A rather twisted take on appropriately: it is harder than the other seven. the data and came to the same conclusion, revenge, perhaps. In fact, because the sample sizes are would the result then have been trustworthy? I have a feeling that the following may so large here, it’s almost trivially the case As ever, statistics need to be interpreted be true: from looking at the averages. A quick bit of with care. The graph shows that CT8 and CT4 A. That one of the CTs is more difficult than analysis suggested that, unless the pass rates are not always harder to pass than other CTs.
the others. (Let pA1 be the pass proportion were within about 2% of one another, they When doing these tests, doing the for an individual CT, and let pA2 be the pass would be significantly different. statistics is not really that difficult. Selecting proportion for the others. Then HA0: pA1 = On closer inspection, the data suggests that the correct test is time-consuming, but not pA2. HA1: pA1 < pA2.) maybe CT4 and CT8 are as difficult as one difficult in itself. Once the test is selected, B. That September CT pass rates are higher another. The present test mixes the two up. testing for significance is straightforward,
than April CT pass rates. (Let pB1 be the pass So if we separate them out, guess what? — once the data has been collected. proportion for September CT exams, and there is no significant difference in difficulty The difficulty is in trying to conduct the
let pB2 be the pass proportion for April CTs. (as measured by the above statistical test). test in the correct, logical manner, and to Then HB0: pB1 = pB2. HA1: pB1 > pB2.) Perhaps testing hypothesis B, that do things objectively. Another fair point I will interrogate both with a simple September pass rates are higher than April is to ask whether what I’ve done has any statistical test. Please note — I make no ones, will be more controversial. predictive power? claims that this is for anything other than a Performing the same statistical test again, So next time you come across an exam bit of fun, of sorts. this time over CT results from the last six question involving statistics, it may be worth
Visual inspection of the data (Figure 1) sittings, reveals that HB0 is false. There is, in asking yourself whether you know how you suggests that CT4 and CT8 are more difficult fact, statistical significance to suggest that would get to the point where the question than the others. I’ll start by considering those April exams have a higher pass rate than was asked? But I dare say that will be the last two subjects in particular. September exams (although the results are thing on your mind if you’re sitting exams I shall use a formula, but I hope the old much less significant than for hypothesis A). this month.
publishing maxim that one can halve the So we can’t accept HB1 as it stands — the number of readers for each formula published inequality needs to be turned around. Any mistakes are the fault of the author alone. does not apply to the actuarially adept reader. But you might rightly point out that I The data was collected by the author from the It may even double the number. decided to do these tests after collecting my Profession’s website. Grateful thanks go to Greg Becker I’ll use the test to compare the ‘success data, so I am guilty of finding my hypothesis and Anton Brink for their comments and suggestions. proportions’ of two binomially distributed random variables. I took the proportion Figure 1 — CT pass rates, last six sittings of successes in CT4 in the Institute and 90% CT1 Faculty for the past six exam sittings (pA1 the CT2 proportion, nA1 the number of sittings), and 80% compared this to the proportion of successes CT3 in CTs 1, 2, 3, 5, 6, 7 and 8 in the Institute 70% CT4 and Faculty for the past six exam sittings 60% CT5 (pA2 the proportion, nA2 the number of sittings). Then, using the test statistic: 50% CT6 p 1 – p 2 CT7 A A ~ N(0,1) passed Proportion 40% p 1 (1 – p 1) p 2 (1 – p 2) A A + A A CT8 √ n 1 n 2 30% A A
20% The outcome is HA0 is false; so we accept Apr ‘08 Sep ‘08 Apr ‘09 Sep‘09 Apr ‘10 Sep‘10 Total
42 April 2011 www.the-actuary.org.uk
042_Actuary_0411 Student.indd 42 24/03/2011 10:45 AOTF/Book review People/Comment
Actuary of the future Book review Priya Mistry Andrew Smith reviews The Immortalization Commission Employer and area of work by John Gray Towers Watson, The desire for immortality is as old as Moura Budberg, pensions. humanity itself. Gray’s book explores half-sister to two attempts to escape the fi niteness of our Nick Clegg’s The Immortalization How would your life on earth. great-grandmother, Commission is best friend describe you? The immortalisation commission was twice married and published by The coolest kid on the block. established after Lenin’s death, to preserve also enjoying affairs Allen Lane. RRP £18.99 his body. The Bolsheviks had faith that one with Bruce Lockhart, What motivates you? day science would be able to restore life to HG Wells and Maxim Gorky. Bran Flakes in the morning. suffi ciently well-preserved corpses so all that Stylistically, the book is tedious. was required for Lenin’s immortality was A long string of anecdotes are individually What would be your personal that his corpse be preserved until that day. entertaining but mostly peripheral to the motto? In the meantime, the comrade’s mausoleum main thrust of the book. An account of Do unto others as you would have them is open to curious Moscow tourists. failed movements is not to be expected do unto you. A central concept of Bolshevik socialism to end in a triumphant fi nale, but this is that society progresses over long periods book disappointingly fi zzles out leaving Who do you admire most and why? of time in a way that transcends the life many loose ends. It is a book easy to put My parents for raising me so well. Well, I of any individual. Mortality affects us down and took real effort of the will to think I turned out alright. individually, while the society we build get through to the end in order to write is immortal. This provides context for this review. Read the book because it will What is your most ‘actuarial’ habit? Stalin’s terrors, in which the acceleration of improve you, not for the enjoyment. I can’t think of anything and am now society’s progress entailed a corresponding Has Gray’s writing any actuarial worried that I don’t have any… acceleration of mortality for individuals relevance? Life insurers are unlikely to avoid who stood in the way. claims on the basis that the policyholder How do you relax away from the In contrast to large-scale Soviet rejection still lives beyond the grave. Instead, it office? of religion, the book portrays Bolshevism provides an insight of how odd scientifi c Meet up with friends, watch fi lms, as religion by another name. Gray digresses endeavour can look with the passage of visit interesting new places. I generally from his main theme to provide a graphic time, when the motivations have changed. try to make the most of free time. and detailed account of these terrors. I read The late nineteenth century saw a Being a recent graduate, it has been the book on a long train journey from Lviv philosophical crisis. The concepts of hard adjusting to working life! to Mukachevo in Ukraine, so I found his self-interest and ethical behaviour account of Stalin’s forced collectivisation towards others were seen as reconcilable Tell us something unusual about and subsequent Ukrainian famine only by a belief in an afterlife involving yourself particularly poignant. retribution for unethical behaviour. My height — I’m four foot nine! The other half of Gray’s book documents Darwinism appeared to imply that humans efforts to contact the dead within the shared the same ephemeral nature as other What’s your most treasured spiritualism movement. Nowadays, we animals. The philosophical edifi ce could possession? might be inclined to dismiss the spiritualist stand only if, contrary to Darwinism, some My three-year old iPod — it is so large church as a fringe religion, undeserving proof of life after death could be found. compared to the ones that are out now, of serious scientifi c attention. The reverse, Science’s entanglement with spiritualism that I have been asked whether I am however, was the case in late nineteenth was the result of this quest. While that in construction. century England. So-called ‘automatic particular quest was in vain, the temptation writing’, received during spiritualist séances, to write the conclusions and then back-fi ll If you ruled the world, what would was interpreted as messages from beyond the research remains with us. Much of what you change first? the grave. Leading scientists and writers we now consider as actuarial science may I would make sure that all people have of the day devised elaborate experiments look as odd to our successors as automatic heard of the word ‘actuary’ and can involving sealed documents left by the writing does to us. defi ne it. That would allow me to outlaw dying, and statistical analysis applied to the question ‘what is an actuary?’ volumes recorded automatic writing. CONSIDER YOURSELF A A small cadre of intellectuals, infl uential BUDDING BOOKWORM? WHO WOULD YOU LIKE TO in both London and Moscow, form an We welcome readers’ suggestions of SEE FEATURED HERE? intricate chain that joins the two halves relevant books for our contributors to If you would like to nominate someone of the book. Gray gives a particularly review or, alternatively, if you would like for Actuary of the Future, please email entertaining account of the pivotal to submit your own reviews, then please [email protected] Russian siren and KGB agent email [email protected]
www.the-actuary.org.uk April 2011 43
043_Actuary_0411 AOTF/Books.indd 43 22/03/2011 14:20 Sponsored by Appointments People moves
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Change of address Please remember to update your details on the Profession’s website at www.actuaries.org.uk/members/ Robert Heathcoat Chris Hoffman transactions
Bradshaw Dixon Protection Fund. Moore, the actuarial All join as assistant managing director with some of JLT’s and administrative vice-presidents. in the securities larger clients. professional services Mr Furniss has division focusing on firm, has announced joined the Client ALM and solvency OAC has announced the appointment Solutions Group solutions for the appointment of City University London has announced the of John Riley as an where he will be insurance David Lechmere appointment of Professor Richard Verrall actuarial consultant helping clients firms in Europe. to the new post of pro-vice-chancellor to the newly to the firm. to manage their Prior to that he (Strategy & Planning). Professor Verrall created position of Mr Riley spent nearly pension risk and spent over twenty will join City’s executive team from its head of insurance 30 years at Sun Life evaluate years at Watson Cass Business School where he was associate consulting. Assurance Society, de-risking options. Wyatt, where he was dean (Research, Knowledge Transfer & This new position principally in Mr Heathcoat and a main partner and International). In 1999 Professor Verrall was reflects the growth marketing, product Mr Hoffman join leader of the UK life made an honorary fellow of the Institute for of OAC’s insurance development and the Professional practice, specialising services to the actuarial profession. consulting business corporate and Services team, in providing and recognises RSA plc has from Towers Watson, business planning, where they will advice to insurers Mr Lechmere’s many announced the where he advised and oversaw the be responsible on risk and value years of experience appointment companies on development of for onboarding measurement and in the life assurance of Sankar employee all the group’s assets for new management. field at a senior level. Mahalingham benefit issues. international clients adopting Mr Lechmere’s new as head of activities, directly PensionsFirst’s JLT has appointed role encompasses Group Pensions. Beazley plc has managing its web-based risk Malcolm Paul as the responsibility Mr Mahalingham announced that overseas operations. management chairman of JLT for actuarial will be responsible Andrew Pryde has Since leaving platform. Employee Benefits standards within for driving pension been appointed Sun Life in 1997, Scotland, a new role OAC. Mr Lechmere strategy globally chief risk officer he has developed Aviva plc recently underpinning JLT’s joined OAC in 2000 across the group, and has joined the his own actuarial announced the commitment to the and holds a number and aligning the management team. consultancy appointment of Scottish market. of Approved Person strategy with rewards Mr Pryde joined business. Martin Muir as Mr Paul’s previous roles within the as a whole. He joins Beazley in 2005 as its group asset role within JLT was Friendly Society group actuary. PensionsFirst has and liability as executive director sector and Life Beazley also recently announced management in the Trustee Insurance business, announced that three new senior director. Solutions business. and he has been Colm Hensman hires — Mr Muir will have Throughout his approved by the has been appointed Matthew Furniss responsibility for career, he has FSA to act as an as group actuary. and the optimisation maintained a independent expert He joined Beazley Robert Heathcoat, and strategic asset portfolio of in connection in 2005 and has who join from allocation of the scheme actuary with Transfers of been leading the Punter Southall, and Aviva investment and consulting Business under Part development of Chris Hoffman who portfolio. He joins client appointments, VII of the Financial pricing tools for previously worked from Goldman and leads the Services and Markets Sankar Mahalingham the group. for the Pension Sachs where he was relationships Act 2000.
44 April 2011 www.the-actuary.org.uk
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