1978 Year Book

When we build, let it be such work as our descen- dants qvidl thrsrrk usfor: and let us think, as we lay stone on stone,lhat the time will come when men will say as they look upon the labor and the substance, "See! this ourfathers didfor us." JOHN RUSKIN AMERICAN ACADEMY Of ACTUARIES 1978 Year Book PUBLISHED BY THE ACADEMY Executive Office Administrative Office 1775 K Street, N.W. 208 South LaSalle Street Washington, D.C. 20006 Chicago, Illinois 60604 DECEMBER 1, 1977 MADE IN THE UNITED STATE5 OF AMERICA TABLE OF CONTENTS HISTORY . 2 BOARD OF DIRECTORS . 5 ACADEMY HEADQUARTERS AND STAFF . , . 5 STANDING COMMITTEES . 6 SPECIAL COMMITTEES . 14 JOINT COMMITTEES . 15 PAST OFFICERS . 17 FUTURE ANNUAL MEETINGS , . 19 MEIvIBERSHIQ STATISTICS . 20 MEMBERSHIP, DECEMBER 1, 1977 . 22 INCORPORATION OF THE ACADEMY . 164 BYLAWS . 165 PRESCRIBED EXAMINATIONS . 176 CsUIDES TO hROFESSIONAL CONDUCT . 177 OPINIONS AS TO PROFESSIONAL CONDUCT . 180 FINANCIAL REPORTING RECOMMENDATIONS AND INTERPRETATIONS 198 PENSION PLAN RECOMMENDATIONS AND INTERPRETATIONS . 242 APPLICATION FOR ADMISSION . 263 DuEs . 264 OTHER ACTUARIAL ORGANIZATIONS . 265 ACTUARIAL CLUBS . 268 1 HISTORY OF THE AMERICAN ACADEMY OF ACTUARIES It was on October 25, 1965 that the American Academy of Actuaries was organized as an unincorporated association to serve the actuarial profession in the United States. The corresponding national body in Canada, the Canadian Institute of Actuaries, had been incorporated earl'ser in the same year. For many years the profession in North America had consisted of four bodies: the Casualty Actuarial Society, the Conference of Actuaries in Public Practice, the Fraternal Actuarial Association, and the Society of Actuaries. In 1964, the members of those four bodies, recognizing the need for a single body to represent actuaries of all specialties, approved formation of an all- inclusive organization of qualified United States actuaries, The original plan had been to obtain a federal charter as the first step toward seeking legal recognition of the profession. When it became appar- ent that this could not be promptly obtained, the Academy was dissolved as an unincorporated association and, on April 29, 1966, was reorganized as a corporation under the Illinois General Not For Profit Corporation Act. Henry F. Rood, whose presidential address to the Society of Actuaries in 1958 had voiced the first formal proposal for a national body, was elected its first Pres- ident. MEMa8xsHrP REQUiRENtErrTS. Academy membership was intended to serve as the hallmark of a qualified actuary in the United States. All residents who were Fellows (or the equivalent) of the four existing bodies on October 25, 1965, were automatically enrolled as Academy members, subject to their indicated assent by paying the dues. The number of charter members was 1,427. The Academy immediately set about making its existence known to com- petent actuaries not eligible as charter members. It was required that any such actuary demonstrate to the Admissions Committee adequate knowledge and skills. Many were admitted by this route, some after passing special proctored examinations. A requirement of seven yearsof responsible actuarial experience (five years for Fellows by examination of the existing bodies) was imposed. After January 1, 1970, educational requirements were gradually increased until the ultimate standard was reached in 1976. Non-residents of the United States can be admitted to membership if they meet the Academy's educational and experience standards, can demonstrate familiarity with United States actuarial practices, and have a need to perform actuarial duties in the United States. 2 History of the American Academy of Actuaries 3 In January 1976, an important amendment to the Bylaws created a new non-voting class of membership designated Affiliate of the American Acad- emy of Actuaries. This class is to consist of non-members of the Academy who become Enrolled Actuaries under the Federal Employees Retirement Income Security Act of 1974 (ERISA), subject to acceptance of their applications by the Academy. PROFESS]ONAL CONDUCT AND PRACTICE. Guides to Professional Conduct were first issued in December 1965, and have since been amplified and sup- plemented by Opinions. These Guides require the high standard of ethics and responsible performance expected of professionals; the Opinions aim to assist the practicing actuary in dealing with particular situations that arise. The Board of Directors is assisted by separate committees in this field. One of these, the Committee on Guides to Professional Conduct keep the Guides and Opinions current and appropriate; the other, the Committee on Dis- cipline, considers questions that arise about the conduct of any individual member. LEGAL RECOGNITION. In December 1966, the National Association of Insurance Commissioners adopted a resolution supporting recognized standards of actuarial competence and conduct and urging each commissioner to support the efforts of the Academy to gain official recognition. Many states now have regulations that recognize Academy membership as qualification for signing insurance company annual statements; some have corresponding recognition for public employee retirement systems. The first state to act was Indiana, which provided by a 1968 law for certification of actuaries by a state board. The general pattern followed in other states has been issuance of administrative orders or regulations. In 1975 the responsibility expected of actuaries was spelled out by a new requirement that the actuary who signs a life insurance company annual state- ment express an opinion on the actuarial elements including an opinion on the adequacy of reserves. The Academy responded with recommendations to the profession on how this responsibility should be met. In the pension field the 1974 legislation; ERISA, has established extensive and specific standards for actuarial reports, for disclosure and fiduciary re- lationships, and for the qualifications of actuaries in pension work. EXPRESSIONS OF PROFESSIONAL OPINION.'The first major influence of the Academy-beyond the boundaries of the profession was in its response, begin- ning in 1972, to the drafts of guides for audits of stock life insurance companies by the American Institute of Certified Public Accountants. This co- operative endeavor has led to regular and close association between the actuarial and accounting professions. The Academy is steadily promulgating Recommendations, and Interpreta- tions thereof, for use by actuaries in preparing financial reports for insurance companies and pension plans. The Guides to Professional Conduct and re- lated Opinions require that actuaries take these pronouncements into con- sideration and be prepared to support use of assumptions or methods that vary from them. 4 History of the limerican Academy of Actuaries ]oINT ACTIVITIES OF ACTUARIAL BODIES. The North American actuarial bodies cooperate in many ways, largely through joint sponsorship of actuarial examinations and through joint committees as needed, In December 1972 the Academy was instrumental in launching an informal body, the Council of Presidents, to foster even greater understanding and common purpose. In 1976 the actuarial organizations jointly formed the Actuarial Education and Research Fund to foster the growth of basic actuarial research throughout the profession and to arrange for necessary financing of such research. ADMINISTRATION. From the outset the Academy shared administrative facilities with the Society of Actuaries in Chicago, which have since been broadened to serve the Conference of Actuaries in Public Practice also. A major step to increase the value and influence of the Academy was taken in Jan- uary 1976 when Stephen G. Kellison was appointed Executive Director with headquarters in Washington, D.C. Kellison, a member of the Academy, will coordinate Academy activities in the public sector. The Washington office staff was further strengthened by the appointment of a full-time communica- tions specialist in January 1977. MEETINGS. The Academy holds its annual meeting in the fall of each year in conjunction with the annual meeting of one of the four founding organizations. Starting in 1976 the Academy and the Conference of Actuaries in Public Practice have jointly sponsored a series of special meetings for En- rolled Actuaries. These meetings have provided an organizational focus for the concerns and interests of all Enrolled Actuaries. PUBLICATIONS. The Academy continues to expand its scope of publications. In addition to the Year Book, the Academy also publishes annually a List of Members by Business Connection. During 1977 the frequency of publication of the Newsletter was increased to bimonthly. Also, the Enrolled Actvaries Report, a special section of the Newsletter, was tutned into a separate publication. Finally, the Journal is published as a record of each annual meeting since the 1975 annual meeting. EDWIN F. BOYNTON President of the Americayz Acadenzy of Actuav'ief BOARD OF DIRECTORS OFFICERS: ^p^^s EDWIN F. BOYNTON, President 1978 DALE R. GUSTAFSON, President-Elect 1978 RONALD L. BORNHUETTER, Vice President 1978 Louis GARFIN, Vice President 1978 PRESTON C. BASSET'P, Vice President 1979 CHARLES C. HpwITT, JR., Vice President 1979 DWIGHT K. BARTLETT, III, Secretary 1978 JAMES O. WEBB, Treasurer 1978 PAST-PRESIDENTS: THOMAS P. BOWLES, JR. 1978 ROBERT C. WINTERS 1979 ELECTED: JOHN C. ANGLE 1978 THOMAS P. BLEAKNEY 1978 HERBERT L. DEPRENGER 1978

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