Session PD-2 The Appointed Actuary and Changing Times

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					SEMINAR FOR ThE APPOINTED ACTUARy (PD-2)                                                                           

Session PD-2:                     The Appointed Actuary
                                  and Changing Times
Séance TR-2 :                     L’actuaire désigné et
                                  le changement

MODERATOR / MODÉRATEUR:                                   Ralph Ovsec
SPEAKERS / CONFÉRENCIERS:                                 John Brierley
                                                          Simon Curtis
                                                          Sharon Giffen

?? = Inaudible/Indecipherable
ph = phonetic
U-M = Unidentified Male
U- F = Unidentified Female

Moderator Ralph Ovsec: Everyone, if we can take our seats, we’d like to get started with the next session,
please. Thanks.
      Good morning, and welcome to panel discussion number two. My name is Ralph Ovsec and I’m your
moderator for this morning’s session. I remember speaking last year or the year before on the changing role of the
appointed actuary. I remember mentioning in jest of course how the norm for many executives was lunch and
then golf with reinsurers. I commented that my first boss started working at 7:45 in the morning and sometimes
he’d work as late as 5:00 p.m. and how everyone at the company thought he was going to burn himself out.
I contrasted that with the work of the actuary and how that has changed. Well, that was then and this is now and
I could never imagine how our work would change yet again.
      So I’d like to show you just very briefly what has happened over the last five years. The first chart I have is
equity markets. The red is the TSX composite and the blue is the S&P 500. So let’s follow our little happy go
lucky car. He’s riding along, riding along merrily. Things are going well and then things kind of explode and the
wheels fall off the car. Earlier this morning you heard Warren and Kurt talk about crude oil prices so let’s follow
our little oil well. Oil prices going up, up, up, and then well things explode again and we have our falling price of
oil. It’s this kind of volatility you know that we’ve never seen. We’ve had massive run ups in oil prices, we’ve had
dramatic declines. These charts show three month points starting at December ’04 and you don’t see the inter-
period volatility. We know the stock market had its low point for the year in March of ’09 but this just captures
the end of quarter to end of quarter movements. Well let’s have a look at what interest rates have done. Again,
Kurt and Warren have both talked about those this morning. I don’t have any fancy dollar signs but the black
below is our Canadian government bond rates. So these are 30 year bond rates and this has been relatively stable I
guess, they’re moving within a narrow range, but I’ve overlaid on top of that the 30 year corporate spreads which
is the red piece you see on top of that. From December ’04 to lets say December ’07 things are tracking within
a narrow range and then by December ’08 there has just been a massive, massive blowout in spreads. Then all of
a sudden six months later, I guess we’re at the end of August now, there has been this incredible contraction. I
know that our own work in Q2 we saw U.S. corporate spreads contract by 160 basis points. Unheard of; those
are things that happen once in 100 years. So that’s what I’d like to set the stage with and I’d like to move on to
our presenters for today.

PROCEEDINGS OF THE CANADIAN INSTITUTE OF ACTUARIES                                       Vol. 20, September 2009
2                                                                COLLOQUE POUR L’ACTUAIRE DÉSIGNÉ (TR-2)

      They represent three very different companies. Our first speaker will be Simon Curtis. Simon is the Executive
Vice President and Chief Actuary at Manulife Financial. As you are probably aware, Manulife Financial is Canada’s
largest public insurance company and operates in Canada as well as internationally in the U.S., Japan, Hong Kong
and other parts of Asia. Our second speaker will be John Brierly who is the Senior Vice President and Corporate
Actuary at RBC Insurance. RBC Insurance is a slightly smaller insurance company than Manulife. It is owned by
Canada’s largest bank as measured by market cap. I think that’s still true John, and RBC carries on the majority
of its business in Canada. Our third speaker will be Sharon Giffen who is the Senior Vice President and CFO,
and I’m so impressed I mentioned it twice on this slide, at Foresters. Previously, she was the chief actuary there.
Foresters is a Canadian fraternal organization, regulated by OSFI, doing the majority of its business in the U.S.
with smaller operations in Canada and the UK. So that will give you three different perspectives of some of the
challenges that the actuaries have faced over the last 18 months.
      So with that, please join me in welcoming Simon Curtis to the podium.


Speaker Simon Curtis: Yeah, I was trying to work out last week, or just thinking about when did I stop enjoying
being a chief actuary and I think it was about a year ago this week or next week. But actually, I guess one comment
that I can make which is an interesting one looking back is I’ve been doing my job at Manulife for about five
years and in some sense actually having gone through the last year, it made me realize how in the role of being a
chief actuary, how important getting comfortable in the role and developing some experience and the right sort
of contacts and relationships with the regulators and your management are. As tough as the last year has been,
having been in the role five years, I actually literally couldn’t imagine what it would have been like to try and live
through the last year as a chief actuary if I’d only been in the role six months or a year. So you know even before
we get into the rest of the slides, one of the really key learnings for me has been just how really complicated the
chief actuary job can be, particularly in a tough time, and how important experience is and learning how to do
the job. So I think one of my key learnings that I would be talking about with my own management team is the
stage at which I’m looking to not do the role at Manulife anymore. It’s not a job where you just wake up one day
and say well I want to appoint a new chief actuary or new appointed actuary. I think it’s a role where you have to
have quite a long transition and management of that transition particularly in big, complex organizations.
     So anyway, I thought this was going to be a relatively straightforward presentation but then I listened to
Warren and realized I’m going to have to spend the whole day doing damage control on my own reputation.
But it’s okay; I have broad shoulders. Actually it’s not the easiest thing to do a structured presentation on what it
has been like over the last 12 months and what we’ve learned in changing times. Hopefully at the end we’ll have
a good chance for some Q&A and maybe some dialogue between us because a lot of the things are really more
points that would come up in a discussion or question and answer as opposed to structure presentation.
     I would say that myself, when I look at the nature of the work that I do, where I focus my time and where
my staff and department focus their time, the biggest switch for me and my whole area has been this switch in
emphasis. I’d say for the first four years I was the appointed actuary, I was probably spending 75 percent of my
time on earnings related items, developing earnings analysis, source of earnings, working with analysts to help
them understand the company, dealing with complicated, sometimes esoteric issues on Canadian GAAP reserving
and comparing reserving bases globally, sometimes on solvency. But you know DCAAT and MCCSR were there,
and we were doing small things but it wasn’t a huge issue until in the last 12 months when the whole game for
the appointed actuary has really become insolvency. It has totally, totally shifted around. So now when I come in,
in a day I spend maybe three quarters of my time thinking about stress testing, regulatory capital management,
how a global and local basis link worldwide, what does fortress capital mean (which is a very good question; it just
means lots of it), things like that and much less time on financial reporting and earnings analysis type issues. That
fundamentally is the biggest shift. Now, in a closet way I actually enjoy that. I like solvency issues probably more

Vol. 20, septembre 2009                             DéLIbéRATIONS DE L’INSTITUT CANADIEN DES ACTUAIRES
SEMINAR FOR ThE APPOINTED ACTUARy (PD-2)                                                                                

than earnings analysis issues. I just wish the attention wasn’t switched in the current environment. I think from
the nature of the work, for an appointed actuary working on solvency issues is something that I think inherently
they’re comfortable with because the whole world is really one that focuses on security and such.
      Much though it would be hard to believe if you saw how hard my area worked before the financial crisis. The
other big thing that I’ve noticed over the last year is just how significantly demands on time and workloads in
my sort of function have increased. One of the ways you can measure that is at Manulife we’ve I think probably
added at least a third and probably coming close to now to doubling the staff of my corporate actuarial team
in the head office in the last 12 months. You can imagine in the current environment a lot of companies are
including ourselves have hiring freezes or a downsizing but we’ve been adding staff left, right and centre in our
functions without any resistance in the organization, but that is in the context of an organization which itself has
a hiring freeze and is downsizing staff. Of course, the reason why the workloads are increasing is that we’re not
doing much less work in other areas but the volume of solvency related work has just increased dramatically and
actually doesn’t look like its going to go down any time soon. The pressing aspect of that is that as we’re looking
at our work this fall and looking forward to next year, we’ve got existing GAAP, existing reserving, existing source
of earnings, relationship management with outside parties, huge increase in solvency type demands and then we
have this new one coming along which is really gaining a lot of momentum and traction now which is IFRS. So
we’ve got huge pressures in our corporate actuarial function that is starting to cause really almost a crisis fatigue
or a workload fatigue. And I think one of the areas that actually might suffer from that is professional work for
instance. I would suspect maybe some CIA committees have already seen that and such that the energy and
enthusiasm of people to take on tasks such as professional committee work and do extra volunteer work is really
being taxed by the fact that people are being pushed to death in their current roles within the companies. So that
would be something that I think the CIA has to deal with. I don’t have an easy solution but I suspect as we go
through the IFRS implementation and we look at evolving the solvency regime in Canada, some of that energy
and enthusiasm that you might have seen 10, 15 years ago won’t be there, not because actuaries today are less
capable or less dedicated to their profession, just that people are being run dry within their existing organizations
on challenging work already.
      So just in terms of when I say why our solvency work has increased hugely, what did I mean. Well, what
I’ve noticed in my role is that I have a significantly increased amount of time that I need to be spending with our
management board, regulators and rating agencies. I always, within Manulife, spent a fair amount of time as an
interface with the regulator, had very good board access and such, spent a lot of time with our management, but
the amount of time that I am being asked to spend now is huge. I have found that the appointed actuary or chief
actuary over the last 12 months has been a bit of a lightning rod. Maybe it’s because of the statutory account-
abilities, but it’s been a bit of a lightning rod to centre a lot of solvency and capital type discussions. Therefore, the
amount of time that I need to spend with these different audiences, maybe not so much the rating agencies but
the other three has increased hugely. In terms of actually technical content of work, a lot of increase has been in
the amount of stress testing that we do. Our chief risk officer in her function always did a lot of stochastic earnings
at risk ECAR work, but there has been a huge increase in sort of more one off types stress testing. Effectively
when the Guideline E18 draft paper came out which I suspect a lot of you have already read, that paper may look
radical but if anything its just writing down what the current landscape already is. I’m sure I’m not the only chief
actuary who would say E18 three years ago might have looked really threatening in terms of what its going to ask
people to do but most of us are probably already doing that in most aspects informally if not formally just with
the amount of stress testing that has come through both internally and externally of us.
      Again, a lot more work on capital planning, capital ratio analysis and I’ve got a couple of slides on this but I
actually find this area really quite interesting. One of the key things I’ve seen is that in good times capital analysis
is quite easy, but in bad times, particularly in a complex organization, capital mobility planning when you factor in
local bases, consolidated bases, unconsolidated, in-Canada capital ratios, worldwide ratios, rating agency leverage
constraints and everyone changing their constraints and trying to put up fences around their own capital, it has
been a fascinating area to try and get involved in and manage.

PROCEEDINGS OF THE CANADIAN INSTITUTE OF ACTUARIES                                           Vol. 20, September 2009
                                                                COLLOQUE POUR L’ACTUAIRE DÉSIGNÉ (TR-2)

      So just to give a flavour in terms of what types of capital adequacy MIS and how has it increased, I’d say
before the economic turmoil began we were doing our annual DCAT projections under base and stress scenarios
focusing on our consolidated metrics and some sort of local stress testing with a net DCAT projection. DCAT
now is a much more elaborate process, and we now in gory detail for all of our DCAT scenarios drill down to
what are the implications of that on any one of the 25 or 30 local reporting bases we have for different parts of our
organization globally. We really ramped up the intensity and depth of detail on our DCAT analysis and inability
at start and as well are starting to do some sort of ad hoc DCAT type runs between our annual DCAT cycle to
supplement that with some updated analysis and what-if testing.
      Another area that has received a huge focus has been our reporting of actual capital ratios. We used to, like
everyone, report our actual capital ratios close to quarterly; we compared them three, four weeks after the quarter
end. Everyone was happy with that. We’re now at the stage that for most of our key capital ratios, particularly all
of our consolidated ones, the key consolidated ones we actually get very good estimates of them weekly and for
anything that’s relatively important we get monthly updates from all our businesses worldwide. Not just estimates
of the actual ratios but a sensitivity analysis around those ratios. Again, now that we do it, it doesn’t seem very
hard but if someone had come to me this time last year and said, “Within six months I want you to be doing
monthly updates on all your capital ratios including sensitivity analysis and maybe some weekly updates on all
your consolidated metrics for your 150 billion dollar balance sheet with 30 territories”, I would have probably
have resigned on the spot. But it’s amazing how necessity drives a lot of work, and we have got it in place. In
addition now to doing DCAT type long term projections every month we do a five quarter rolling forecast of all
our key capital ratios and sensitivity test those. So this whole new world type infrastructure in many ways is quite
consistent with where that E18 stress testing type paper is going. I think this is the new world that may be not the
weekly estimates of certain things but certainly everything else there is probably what the new world will demand
and the new sort of standard for what we’ll have to do on an ongoing basis. I don’t suspect much of this that we’re
now doing will fall away in the next little while, or even in the mid term.
      An interesting aspect that might be of interest to you but may not be relevant to a number of you is for a
company like us, we were in the past quite able to manage our capital requirements really focusing on our consoli-
dated metrics, consolidated MCCSR because the MCCSR regime has a huge focus on consolidated solvency.
I think it’s a major structural flaw in most of the other worldwide solvency regimes, but to a certain extent as is
probably natural, we didn’t pay as much attention probably to some of the silo and solo capital requirements that
you would have downstream in the good times. Those constraints didn’t really seem to really be constraints. We
had more than enough capital to move around and no issue with fungibility in terms of board approvals and such.
But it’s interesting how quickly the works can get gummed up when things get stressed both in terms of when
your capital levels go down but suddenly what was a one day exercise before becomes a 30 day strategic exercise
satisfying all sorts of people around moving capital around. So this was a really interesting exercise for us in terms
of dealing with the fact that solo entity capital constraints were much more relevant and constraining for us in
a tough market than they had been in a good market. That’s in some sense, if you actually delved into what we
have done in tears of solvency work, been most of the focus for us in the last 12 months; building better bottom
up models to understand local needs and less on the top down consolidated because for us the consolidated stuff
was already there. I think that it does run the risk of creating a bit of a competitive disadvantage for Canadian
companies, the fact that we have top down, bottom up, because a number of other regimes right now such as the
U.S. in particular still have no top down focus. So they still have what we always refer to the ability to drop things
into the ocean and pretend they’re not there.
      Okay, stress testing. I was actually just reading the E18 note this morning and last night again so I think
actually it’s a pretty accurate almost picture of the landscape of what we work with internally in terms of what we
look at and what we’re trying to do. But it has clearly emerged as an increased area of focus for our management
boards, rating agencies, regulators and is probably most germane for this audience of appointed actuaries. They
have the DCAT infrastructure in place and are really in a position to take on a large amount of that stress testing
work because a lot of that stress testing work has really been based around deterministic scenarios. Certainly in

Vol. 20, septembre 2009                             DéLIbéRATIONS DE L’INSTITUT CANADIEN DES ACTUAIRES
SEMINAR FOR ThE APPOINTED ACTUARy (PD-2)                                                                             

our organization and others, this is something that the chief actuary and appointed actuary were already doing
through DCAT and therefore probably is the logical home for most of that work. The interesting thing about
Guideline E18, and I would encourage the CIA to have a really open discussion with this, is to make the you know
OSFI would like insurers to use the DCAT structure. The paper is pretty clear the DCAT structure is something
OSFI likes. I think that therefore from a professional point of view it’s a great thing for the CIA to encourage,
and for the appointed actuaries it’s a good environment. But I do think the CIA needs to be open to potentially
considering a couple of changes in the DCAT requirements to make it more effective. Probably most materially is
that the opinion needs to change. I don’t think the appointed actuary adds a lot of value by saying that they think
that it’s a satisfactory financial condition. I think that opinion doesn’t really add a lot to the value of the DCAT
work, and in terms of having other bodies such as OSFI mandate sort of scenarios that need to be tested each year
to do the DCAT structure which I think is a good idea, that could potentially be problematic when it comes to
the opinion. Plus, I think the opinion is flawed because it’s centred around having enough assets to honour your
liabilities, whereas if you read E18 or if you talk to your board, or if you talk to rating agencies, nobody really
cares about that because really what they want to know is that your organization is viable, not that you can pay
off your policyholder liabilities. The test that your board is really expecting is that anybody doing stress testing is
not analyzing that if the organization goes insolvent will you be able to pay off your liabilities. It’s really, do you
have a viable organization. That has been something I’ve really realized over the last 12 months. As I’ve talked
with my board and I’ve talked with the regulator, there has been a fundamental misunderstanding of DCAT
and the financial condition opinion. The opinion is centred around extreme tests and the opinion says can you
honour your liabilities. The boards, and even I think the regulators to a certain extent, tend to view the DCAT as
the actuaries talking about the viability of the organization. So when I say we need to do away with the opinion,
I think it needs to be really reviewed in terms of others wanting to keep the opinion, review what the opinion is
actually saying and what the actuary is trying to achieve. By the way, I am in no way saying that DCAT should
be eliminated. I think it has been a great tool. I think it has in some sense for me been the tool that has been the
most comforting to management and the board in terms of did we understand our exposures, do we understand
our exposures as a company. I’m talking more just about the actual role of the formal opinion.
      So what about our DCAT; what are its strengths, what are its weaknesses? Well, it was actually quite a good
predictive tool. If you look at the scenarios and what their impacts have been, was our DCAT able to model accu-
rately what would happen? Yes, actually it was a good predictive tool. It was also quite good at capturing second
order effects which is what you would want from a complicated very detailed scenario based model. So in terms
of for the scenarios that were run was it predictive, did it capture second order effects? Yes, it was a very good
tool. The weaknesses, and I should add one because Warren’s comment this morning reminded me of one, is our
DCAT did look at the scenarios that were quite consistent with what happened in the last 12 months. But it’s
very interesting. Running a scenario and presenting the results, and having people believe it’s a credible scenario,
are two very different things. So when people say management didn’t contemplate those scenarios, that doesn’t
necessarily mean that they weren’t shown scenarios. Contemplating scenarios can occur and actually, or being
shown scenarios and contemplating them as realistic scenarios that need to be planned for are different animals
and that’s not something the appointed actuary can control on his own. That’s an interesting thing about scenario
testing that I’ve learned. You run deflation type scenarios year after year, take them to your board, send them to
your regulator and nobody asks questions on them until you get that scenario occurring and then everybody says
why did no one react. But the scenarios were always run and the results were there. How you create the view of a
scenario being plausible and should be planned for is an interesting exercise. I’m just looking at Nick here because
one of my key learnings when I started as an appointed actuary was that Nick always used to say to me, and I
took this a bit to heart, that you should always try to run a really extreme scenario because if something breaks
down in an extreme scenario it means there’s a flaw. Even if you don’t think it’s plausible there’s a flaw there that
you should understand and plan for. You know that DCAT is a perfect example, but once you identify the flaw,
getting people to accept that it’s something that they need to plan for is the key challenge.

PROCEEDINGS OF THE CANADIAN INSTITUTE OF ACTUARIES                                         Vol. 20, September 2009
                                                                 COLLOQUE POUR L’ACTUAIRE DÉSIGNÉ (TR-2)

      So the key weaknesses of DCAT - maybe they’re not weaknesses but they’re just things we need to accept - is
it’s not nimble. My worst case moment is always the worry that OSFI is going to come in and say, “Can you run a
DCAT scenario on this, and then I have to say that’s I’ll give the results in six months.” DCAT just isn’t a nimble
tool and I think we all have to recognize that. One of the challenges will be how to integrate DCAT with other
stress testing metrics, or use short form DCATs in the future to do more ad hoc scenario requests. You clearly
can’t have your only key stress testing tool being something that requires you know three, four or five months to
turn around and produce results. So DCAT isn’t nimble so that is a bit of a weakness.
      The second point here is something that is very related to the opinion today, which is that it’s overly focused
on the ability to discharge policy obligations whereas virtually all your audiences are interested more in orga-
nizational liability. You can imagine I get asked questions all the time about Manulife and blah, blah, blah.
90% of the questions are really people looking at it from an investment perspective, so it’s fairly easy to answer.
You can say you can make your own decisions on Manulife as an investment option. I can’t talk about that but I
can certainly say that policy obligations are very secure because they are. I think the interesting learning from the
last 12 months is that the actuary is testing ability to discharge policy liabilities where the whole world is focused
on really more the viability type question.
      So I’ll just skip this slide because that’s really just a drill down of the points I was just making. Our profes-
sional focus in DCAT is on the ability to honour obligations in stress scenarios, while the regulatory focus ia more
on the ability to meet targets in stress scenarios. Make no mistake about it, the right is a lot more onerous. When
you think abut it, it’s a double calamity type test because viability, particularly the way our capital formulas are
stressed, the capital formulas do not give a lot of flex. The crisis occurs but the required capital does not go away,
so effectively organizational viability tests are testing double catastrophes, the one that you have to cover in terms
of setting up reserves and then the second one that you still have to have required capital. So by suggesting we
need to start shifting more to a viability focus I’m certainly not suggesting anything that would weaken DCAT,
it’s really almost a tougher type of framework.
      So I have a few pet peeves or concerns coming out of the crisis. I guess peeves is the wrong word, but a few
concernsI It’s certainly not that people are ignoring these issues but concerns that I would see going forward.
One is that the capital regimes are quite volatile. There is no doubt that if you look at what happened in the last
12 months, confidence is created by stability. Most financial analysts, even rating agencies, users of financial state-
ments are not overly sophisticated and don’t understand companies nearly as well as management. So they look
for stability and as soon as any graph shows something starting to widely gyrate they get nervous. The problems
that you see in the professional world today, solvency testing, modeling, is as we introduce more risk centric or
stochastic techniques or risk based metrics, they all introduce more systemic volatility into capital ratios and such.
So they tend to be pro cyclical by nature and that therefore introduces instability into metrics and probably intro-
duces confidence issues which are just being introduced by the nature of the metric. I think my own perspective
is 20 years from now people will look back on this and say, well the problem was not the models, it’s just that the
models were too naïve in terms of not trying to calibrate to where you were in economic cycles. Now, I don’t have
a brilliant solution here for how you calibrate a model to where you are in the economic cycle, but I think that’s
probably the issue we have today. We’ve introduced a lot of good techniques but the techniques don’t really use
parameters that calibrate to where you are in an economic cycle and that’s because none of us really know how to
calibrate them. So you get this very unstable regime where in good times the models tend to release huge amount
of capital and the metrics and the regimes. At the point you go into a bad time, you suddenly have to recruit
significant capital which is a function of returning too much capital in good times and having to raise too much
capital in bad times which cannot be good for the economy. Hence, you get all G20 groups looking at this.
      The other issue I actually am a bit more passionate about is I really believe the last 12 months have shown
the flaws of the risk free discounting model that is being contemplated for Solvency II and still to a certain extent
with IFRS. I would doubt whether there is a financial institution or insurance company that would have remained
truly solvent if that regime had been in place in the last 12 months because of the fact that it sort of naively
seems to assume that the only driver of spreads over risk free rates is really nearly all credit with a little liquidity

Vol. 20, septembre 2009                              DéLIbéRATIONS DE L’INSTITUT CANADIEN DES ACTUAIRES
SEMINAR FOR ThE APPOINTED ACTUARy (PD-2)                                                                               

adjustment. I would suggest if anything the last 12 months have almost suggested the opposite. The primary driver
of spreads is peoples’ liquidity preference and it can change quite quickly. So I think the solvency implications of
what is there in IFRS Phase II and perhaps a bit in Solvency II right now are a bit scary.
      I’m running out of time here so I’ll just skip over this last slide. The thing I wanted to cover in terms of my pet
peeve is of course what you see under IFRS Phase II is a peeve in terms of the risk free rates. The assets supporting
liabilities, all the current models tend to suggest you report them at fair value capturing the risk free rates and
spread changes and for those of you familiar with IFRS Phase II it’s just totally simplistic. But I’m thinking some
people may not be overly up to speed on the issue. You get the fair value of assets, so if you have a single A bond,
you report the single A bond using single A bond rates discounted at their fair value. The liabilities meanwhile, you
discount the liability cash flows at risk free rates plus an adjustment. Now, most of the early dialogue 12 months
ago on that adjustment was suggesting it should be zero to minimal. But if that adjustment is zero to minimal
you get this huge mismatch between the left and the right side of the balance sheet because your liabilities are
effectively being adjusted say at a government bond rate with some small adjustment and then the left side of the
balance sheet is reflecting all the market asset spreads. How the dialogue ends up and where it ends up in terms
of what that adjustment is I think the critical thing that actuaries should start to be thinking about in the CIA
and others. How that adjustment gets set is so critical to really the whole viability of the insurance industry as
we know it. I mean I actually probably am not overstating things like that, but if we end up adopting a regime
where those liability cash flows are essentially discounted or risk free rates with an asset fair value model I find it
hard to believe insurance companies in terms of the products they sell today and the way they’re structured can
continue to be viable entities in the capital markets. So I think that’s a huge issue and something we should all
be focused on going forward.
      So that was really my comments. I don’t know who is up next. John is going to tell you it’s all been
smooth sailing.


Speaker John Brierly: Well I’m going to first start off by talking a little bit about what RBC Life looks like.
The first thing I have to say is the second category is actually supposed to be triple A bonds but my presentation
has already downgraded them. If you look at this what we really have is a lot of very high quality assets, triple A,
double A, single A, governments and corporates. Getting into the triple B’s and a very small sliver of double B’s,
those are actually mostly coming from private placements as opposed to downgrading from more secure securities.
We’ve got some equities in the general accounts that are not backing UL accounts. I’ll talk more about that later.
We’ve got some commercial mortgages that we’ve been putting on the books in the last little while and some loans
on policies that are mostly against the universal life accounts so there are really no default risks on those assets. So
all in all there are some pretty secure positions.
      Looking at what the liabilities look like, just to give you a flavour for the types of business that we’re in,
alarge amount of universal life mostly coming from account balances, Individual health and group LTD where
the liabilities are mostly disabled life reserves, a very tiny annuity business, a very small participating life business
and a small segregated fund business. That segregated fund is the assets under management. Just to let you know,
that’s a fairly small component. So I’m pretty sure this looks an awful lot different from a company like Manulife
where there’s really no annuity business and its mostly universal life and disability.
      So how does RBC Life fit into RBC Insurance? The components of RBC Insurance are the Canadian life
business; there is a Canadian home and auto, a Canadian travel business, a U.S. life company that is not owned
by RBC Life, the corporate structure is such that it is owned separately, U.S. travel and international reinsurance.
The assets of the Canadian life business are about five billion invested out of the eleven billion or so that is in
RBC Insurance, so it’s just a little bit under half of the assets of RBC insurance. The U.S. life company is
traditional life and annuity primarily, not very much into universal life. And international reinsurance includes
European life business, U.S. retrocession business primarily.

PROCEEDINGS OF THE CANADIAN INSTITUTE OF ACTUARIES                                          Vol. 20, September 2009
                                                                  COLLOQUE POUR L’ACTUAIRE DÉSIGNÉ (TR-2)

      So how does this fit into RBC? Well, sometimes a picture is worth a thousand words. A square peg just does
not fit into a round hole. The bank is a little unusual compared with how they think compared with insurance.
If you think of how you would normally think of risk management limits, you’d think well what’s the deviation
that you could expect from a mean. That’s not the way the bank thinks of its risk appetite. They think more in
terms of the quarter to quarter income volatility. What they’re really interested in is sustainable earnings. So they
would rather us to have two poor quarters because they’re the same number than a really good quarter followed
by a really bad quarter. The worst experience of my life was in 2007 when we had a tremendous first quarter and
a horrible second quarter and they thought the world was coming apart. The two of them combined were very
close to the plan, didn’t matter, square peg, round hole.
      The other problem we have when we’re dealing with the bank is that their focus is a little shorter term. Short
term to the bank is tomorrow, medium term is next week and long term is what’s happening next quarter. I go
in there and I talk to them that short term is really five years and they go what, medium term 10 to 20 years and
longer term well that’s what happens 30, 40, 50 years into the future. They go we’re all retired by then what are
you talking about. It’s a very different world talking to the bankers. So the other part that the bank has influenced
us on is risk limits are by the enterprise wide risk limits and then they’re delegated to the individual business units.
So if the bank says we want to stop real estate investments, if we have a business that relies on real estate invest-
ments, we’re out of business because the bank says don’t do it any more. We have very little option to fight back
on that, because as you can see they’re a lot bigger than we are. So the bank constraints have spilled over over the
last year and a half or so and have caused us a bit of grief in terms of what we can do and what we cannot do.
      So let’s look at the impacts we’ve actually seen so far. We have not had any asset defaults in the Canadian
life business. There have been some in the U.S. but I mean if you’re in the U.S. you can’t avoid it, but they’ve
been fairly minor. The equities, we have a fairly small segregated fund portfolio so it has caused a little bit of pain
but nothing like having a large business there. We did have a material impact in our equities in the traditional
life business. We used equities to back long term liabilities in Term to 100 and level cost of insurance universal
life. That was a bit of a surprise at the bank when we said oh we’ve had some losses on our equities. They say
what equities, you don’t have a segregated fund business, what are you talking about. So that was an interesting
explanation. They went okay, just don’t do it again. And disability, we thought we were going to see some adverse
experience across the board on our disability business. It’s fairly large in proportion to the company, but what we
got was something that was completely opposite to what we expected. We expected that we’d have kind of a minor
impact on the individual business and a fairly major impact on the group business. It was actually the other way
around. The group business has been fine, there’s been absolutely no deterioration in the disability experience,
on something that you’d think that if there’s going to be some kind of an economic downturn and people losing
jobs that you would think that business would have some kind of a collateral impact from the recession. We did
not see it. But the professionals, they seemed to have recessed, but that’s again temporary. We don’t think that’s
going to be a trend and we’re hoping that will turn around.
      The challenge for us is really lower interest rates. In the scenario that we actually used for our valuation we
provide for 50 percent of the excess current spread over a historical average. It’s a little bit different from the
50 percent of all of the credit spreads that is in the standard. We also keep ahead of the ultimate reinvestment rate,
reductions. We like to keep about a year or two in advance of that so that there is a little bit extra in the reserve and
that also makes up for any fluctuations that the 50 percent of the excess credit spread on the initial rate is a little
bit different from the scenario that would be 50 percent on the total credit spread. What we’ve seen is that this
looks a lot like last year’s DCAT adverse interest rate scenario. You know when you go to the management and
they say why aren’t you making money and we go well didn’t you read last year’s DCAT, this is what’s happening.
They go well that doesn’t matter; we wanted it to make plan. Okay, well we’ll try to make plan but it’s still an
adverse scenario that we’re living through. What we did do is we had an opportunity to extend our asset duration
notes primarily through swaps because of the limits that the bank imposed on us; we couldn’t invest in anything
but swaps I think, or governments. So that’s what we did which helped to reduce the interest rate risk and that

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SEMINAR FOR ThE APPOINTED ACTUARy (PD-2)                                                                            

generates some reductions in CALM. That needed to make some of the other challenges that we had a little lower
profile because when you look at the total company profit it looks pretty good.
     We actually have fairly small impact from interest rates flying all over the place. We have some excess held
for trading assets that are not used against the liabilities and they do tend to move in the opposite direction from
the changes in the initial reinvestment rate. It’s not a one to one offset because they’re at a different point in the
yield curve. The reinvestment rate that we use is primarily the long end of the curve and the excess assets are
closer to the short end of the curve. So there is some volatility created there. So we’ve tried to tell the bank that
we’re managing it as best as we can but they don’t like to see any income changes at all. What we did have is the
quarterly income volatility from the equity assets and that really was something that was unexpected at the bank
level. It was certainly expected in insurance but we set our limit as to how much we wanted to have based on the
insurance risk, not what the bank thought risk should be. What the bank really did to us were investment restric-
tions. They were imposed, as I said, by the enterprise wide limits, tight money lending conditions at the bank.
They basically stopped things like reinvest in real estate assets. They also imposed asset sector limits so that some
places we couldn’t invest in the types of assets that we wanted to. And because of the real estate limit we had to
stop rating commercial mortgages completely and so what we did was we switched to insured commercial mort-
gages instead which also have historically high spreads and it changed the way that we did business, but at least
we were able to continue some of our businesses. We’re hoping that that limitation is going to be temporary and
we can get back into making the kinds of investments we really want to make preferably next year.
     On universal life, we thought we might see some collateral impacts there, but there was really very little
change in policyholder behaviour. We thought we might see people not making their deposits but the deposits
seem to be coming in. We thought perhaps they might transfer funds into different kinds of investments. Most
people when they have equity accounts and they see equities going down you would think that they would move
into fixed interest kind of fund. We didn’t see that happening. We thought we might see some policy lapses
occurring and we haven’t seen that happen either. So from universal life we’re kind of scratching our heads and
saying okay we’ve got what we thought were collateral impacts based on a recession kind of scenario, but why
don’t we see any of these things happening. Now, we might find something happened next year. Studies might
show that something has occurred but through our earnings by source analysis this year we don’t see that’s going
to really be significant.
     So in summary, we really have had no asset defaults, no asset impacts from the recession. We’ve had the
equity market downturn. It was noticeable but manageable. Providing for interest rates is our biggest challenge
and that’s where we really have our focus in DCAT is what happens with lower interest rates, that’s the most
significant scenario. Disability experience was slightly adverse, at least in the individual business, but again, in
terms of DCAT that really would not be a substantial impact because what we’re concerned with in DCAT is
more trends where you have to change your valuation assumption and the impact that would have of deteriorating
trend experience, not just a blip of a year or two. Universal life was neutral, unexpected, we thought we would
see something adverse happening there. We’ve done some asset extension which was favourable to income which
kind of took the bite out of what was going on with equities and some of the lower interest rates so that from a
far distance it looks like everything is going well. The limitations and asset choices has caused us a bit of grief in
our business because it has stopped us from doing things that impacts the way that we price products as well. But
overall, it has really not been that bad a year. Thank you.


Speaker Sharon Giffen: So I did not prepare slides because having followed these two I figured that anything
that I put up on a slide they would have already covered and you know that’s probably pretty much true. But I do
want to pick up on some themes and I’ll provide a bit of the smaller company impact and perspective, comment
also a little bit further picking up on a theme that Simon introduced on the human impact because the topic of

PROCEEDINGS OF THE CANADIAN INSTITUTE OF ACTUARIES                                        Vol. 20, September 2009
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this session wasn’t just about what happened to our companies, but in fact what happened to our people. So that’s
sort of the context. I thought it was interesting, Simon said he stopped enjoying being chief actuary somewhere
around a year ago and it was somewhere around a year ago that I started thinking that I wanted to be a CFO.
I just don’t know what that says about me.
      Anyway, for some more context and perspective, we are a smaller company, sort of total assets in the five to
six billion kind of range, doing business in three countries. We have tremendous growth ambition though and
so trying to stay in the growth mode through this kind of era has been a particular challenge. We’re not a public
company, but we do have a board of directors that has a pretty high level of expectations of us. Our board has four
accountants and two actuaries and two former insurance company CEO’s. So it’s pretty demanding I would say,
although I’m forever grateful that I don’t have to react to analysts. So I do take that as a benefit. We were capital
rich and today we’re capital rich. Even at the end of December and at the end of March, most of the industry
would have looked at us as capital rich. Capital management is a term that probably wasn’t mentioned around
the halls of our office until something like about 18 months ago. So that’s just to put it in perspective, this is
just something that we never, ever talked about. However, the last little while of course we’ve been reminded we
cannot readily raise capital. So what we have and Manulife might consider it even beyond fortress levels, you know
it’s not inexhaustible and we’ve sort of tried to bring that to the fore with our management team.
      To quote one of our previous appointed actuaries, my predecessor, somewhere, we think it was around 2002
he made a comment about you know it’s a really interesting time to be an actuary, it was getting boring there for
a while. And you know Paul, really? I don’t think that was a good thing to say because we have lived in interesting
times, haven’t we. For my organization, Foresters, I would back up and start my remarks really around the time
when fair value reporting was introduced because really that was when we first started to react and say wow, results
can move around a fair bit. We actually, at that point, started changing how we did analysis, what we looked at,
what our tools were in order to better understand results that weren’t stable quarter to quarter because that really
had been the world that we also lived in. Because we’re a small company, we didn’t have the resources that we
could just apply to analyzing this new regime. Also, because we’re always under significant cost constraint, I can’t
go out and hire consultants to give us that extra knowledge so we’re really depending upon our own staff to do
your job and oh yes, learn all this new stuff and continue to develop our systems.
      It is really very challenging and I think Simon used the word crisis fatigue and I would echo that. In fact,
thinking about that it’s not really two, its management, it’s us, it’s at the appointed actuary level. But then you
think about the next level down because we’re putting pressure on them and they’re putting pressure down onto
if there’s another level, to the students who are doing the work. You think about those people’s lives. They’ve got
this work and they do the work and it’s fourth quarter of 2008 and the results don’t look like anything they’ve
ever seen before. So they go back and you know they check their work to make sure they did it right and they
think they did so they’re worried about that. So they’re doing extra work before they pass it on for review. Now
the reviewer is getting it and seeing results that they’ve never seen before so they send the person down at the
bottom level back to go do some more work. I’ve got questions; I need to understand this and this and this. So
those folks, they’ve done their own extra work. Now they’re doing extra work for their boss and so on and so
on. You multiply that through the many layers of an organization, right up to the point where we’re presenting
results to the board and the board has different questions that none of us have had so we’re answering even more
questions. I think it’s that more work and more work and more work and oh yeah, by the way you’re bumping
into next quarter end and now you’re having to start all over again. That really leads to that crisis fatigue because
I’m just not sure how much longer our folks can continue to multiply the amount of work. I think too when
we get to the senior management levels and our board, the other thing that we recognize is man we should have
asked that question last year and so there’s also a bit of imagination trying to be used of what could happen in
the future and what questions should I be asking for the future state. All of those things work together to make
the world pretty challenging.
      In the small company too we are certainly under a significant amount of pressure to keep our budgets down.
In fact, Simon mentioned he doubled his corporate actuarial staff. Well, I spent a tremendous amount of time

Vol. 20, septembre 2009                             DéLIbéRATIONS DE L’INSTITUT CANADIEN DES ACTUAIRES
SEMINAR FOR ThE APPOINTED ACTUARy (PD-2)                                                                          

and energy not having to cut. So while others are growing to cope with all the extra work, I manage not to have
to cut but that took time and energy just to get that. In looking at the sort of staff burnout, the only thing that I
can say is there will come a time in your careers that you will look back and this will have been a pivotal year, and
there will be textbooks written about what happened. There have been textbooks written about what happened
in 2008 and 2009. So we are living history. Don’t be stressed out about the fact that you don’t understand the
results; we’ve never seen them before. So it really is an interesting time to be an actuary.
      What were the big impacts on Foresters? Well I would say there are three things that I would emphasize.
Because we are capital rich and we invest our excess capital, let’s call it, in relatively risky because we have the
philosophy that they were long term assets. Suddenly those assets were providing as we have said volatile results.
So that was certainly a big wakeup call that even at our capital levels we, could see them decline very dramatically,
and very quickly. That caused a great deal of consternation. Another thing that we found, that I have found at
least, is that I see a need for much more integration of the various reporting mechanisms that we have. We have
the actuarial area doing DCAT and ALM. We have a risk management area that goes and does their work, and
we have capital management that goes on primarily driven out of our finance area. I think that interdisciplinary
approach to things like capital management is incredibly important. I mean that is what you need to have is a
bunch of different people looking at it. But we really do need to come together to understand how to make that
one message for our senior management and for our board of directors. I think the different approaches really
do add a lot of value but as certainly anybody on my staff would say I’m a bit of a fanatic about consistency. It
doesn’t have to be identical but we need to understand the consistency and context so that when we communicate
a number it is understood and that we all would support that number.
      The final place where I found I was getting involved that I hadn’t perhaps thought I would necessarily be
terribly involved was in the design of our staff and executive compensation plans. Because we’re not public, we
don’t have a stock price that is an indicator of the value of the company. We don’t have such a thing so we have to
make up our own. We were trying to be very sure that when we designed an incentive plan we made certain that
it actually reacted the way we wanted it to react. You know a trivial example of that is holding an underwriting
department accountable for its budget. Well, if business is 20 percent below plan, should they be allowed to spend
their budget? Probably not. So it’s just a very trivial example of how you really have to think through and make
sure that the plan design truly incense the behaviour that you want and then once you’ve got a design that makes
sense you also have to go back and make very, very sure that you understand the sensitivities on the up side and
on the down side. Both our senior management team and our board of directors have become much, much more
demanding about sensitivity testing of compensation.
      So I was going to conclude with a few remarks about what do I think we’ve learned. You know this will
be my personal perspective on it. I think we’ve learned that correlations are not necessarily what we thought
they were. So I’m not sure we would use correlation in the same way that we have in the past. I think, and this
has been mentioned I think by both Simon and John, that DCAT is not particularly well understood. We do
a lot of work, we make a great presentation, we get really, really good questions, and then when something bad
happens they said well why didn’t you tell us. Okay, I thought I did. So it is certainly something that we have to
continue to work on making sure that people understand the context of our DCAT reports. We do need to stress
test reporting regimes. I think that’s the other thing we’re living through: stress testing of almost every reporting
regime in the world right now and as we’re bringing them together under IFRS over the next, well shortly year
for the accounting side and then on the actuarial side a little bit longer perspective, but we have this opportunity
to understand what results might look like under a pretty broad range of regimes. That’s really giving a whole lot
of impetus to be able to understand and develop the very, very best when we go to IFRS. I’ll just reemphasize a
point I made earlier, we need to be really, really careful as we communicate to management and to boards that we
are consistent in how we talk about results with the other disciplines in our companies.
      I’ll wrap up with a couple of observations about what haven’t we learned because I still think there are things
we haven’t learned well enough yet. I think risk analysis is still too focused on things that have already happened.
You know it has happened so we analyze it to death. We don’t think very much about things that have never

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happened. Secondly, I think we are still collectively a little bit dismissive of adverse impacts even ones that have
happened. Have you ever heard it won’t happen again? I’ll leave you with that thought. Thank you.


Moderator Ovsec: Well thanks to Sharon, Simon and John for their excellent presentations in giving us some
food for thought. We have some time before lunch and we have two microphones set up. If you have a question
can you please come to one of the microphones, identify yourself, name and company affiliation and to whom
your question is being addressed. So please, feel free.

Mr. Louis Doiron: Louis Doiron, LDCS. I would have a lot of questions actually because it’s definitely interesting
times. Maybe I will start with the thought that Sharon left us with, maybe things that we are not thinking of.
I think we are not thinking as actuaries when we work in our individual companies enough about the impact we
can have on the entire economy of our country and the global economy in terms of macro prudential, in terms
of contagion. It’s good to hear John and Sharon talking about the other side of insurance, but nowadays we are
very focused on the Manulife and the Sun Life and the Great West and definitely I mean when you think about
AIG and how big it was and what happened there, I think it would be interesting to hear from Simon what are
his thoughts about that.
     Also, Simon mentioned about fair value accounting. It’s now going around the world that fair value
accounting gives opportunities to banks to somewhat embellish the numbers. Simon left us with the idea that
there is a discrepancy, and I agree with him, between fair value and the discounting of our liabilities and our
current methodologies. So will we embellish the insurance numbers as well or will our governance prevail? And
finally, I will leave this question, in terms of; I have two more actually. I know there is a trend towards going for
holdings. Again, Simon I’m addressing the question for you mostly; there has been a lot of DCAT work and so
on, a lot of MCCSR work, but it has been done often at the subsidiary level. I’d like to hear about what is being
done more at the holding level. Finally, in terms of John, it could be Simon a little bit too because I know they
are a small bank but definitely yours is much bigger John and I like the square peg in the round hole. So when it
comes to bank and insurance, the legislation is not aligned at all and when we talk about solvency we have to think
about insolvency as well. I would like your thoughts about what could happen there. Many people are thinking
now worldwide that it could really slow down the payment to the policyholders and so on. Thank you.

Speaker Brierly: I’ll start off because Simon doesn’t want to. In terms of bank insurance, you know right now
there’s legislation that stops the banks from doing a lot of direct contact with clients for insurance. So it’s really
mortgage insurance and credit card insurance and that sort of thing. We have put together some branches where
there’s an insurance office immediately beside the bank and they’ve been pretty successful for the P&C side of
the business but not so much for the life side of the business. People just don’t go to banks for insurance unless
they need the insurance. So I don’t see that even with the legislation there’s going to be any massive change. Plus,
the types of products that are sold through a bank has to be fairly simple. They’re going to be straight protec-
tion type products, usually typically very small amounts. I don’t see any impact on the primary life business that
large companies are doing with universal life and that type of product. There won’t be any disability unless it is
connected with some kind of a loan or debt. So from that perspective I don’t really see that the bank insurance,
even if the legislation changes, it’s not really going to have any significant impact on the life insurance business,
much more so on P&C.

Speaker Curtis: Yes, I could add a few comments. First with reference to AIG and what went wrong there. Going
back to my comment on consolidated regulation, one of the things if you look at AIG you need to understand is it
was a U.S. company. AIG had a holding company but there’s no consolidated regulation of holding companies in

Vol. 20, septembre 2009                             DéLIbéRATIONS DE L’INSTITUT CANADIEN DES ACTUAIRES
SEMINAR FOR ThE APPOINTED ACTUARy (PD-2)                                                                           

the United States in the financial services sector. So the insurance company was completely fine. You know as fine
as any other insurance company but what happened is AIG got into this financial is related to credit derivatives
but it was done through effectively an unregulated entity. In fact, I was at a conference in July with some of the
NAIC commissioners and this was a rather bizarre thing. They were complimenting themselves on the fact that
AIG originally approached them and said can we write credit derivatives through our insurance company. They
said no and they said that shows the strength of the system because you know we wouldn’t let them write them
through our company. But what it shows is the flaws of not having consolidated regulation because they went and
then did it through basically an unregulated financial company. I guess there was some thrift regulation but it was
quite weak out of London. That’s entirely what took AIG down. Actually, AIG’s insurance operations are a pretty
good operation. So that I think points to the strength of the regime in Canada, the fact that we have consolidated
regulation and that links a bit into your question about what do we do at our holding company level. Well, it’s
an interesting question because we actually do our entire DCAT at the holding company level. So our DCAT is
done through a holding company. It captures every single operation of our company worldwide, whether it’s in
a regulated operating insurance company in Canada, Japan, Bermuda, Barbados, Vietnam, it’s all captured. And
MCCSR, we do MCCSR monitoring at the holding company level as well as the operating company level and
discuss that with our regulator and board. So we have a very strong consolidated regime in Canada. I’m not sure
if the practice is totally consistent, but I think for Sun, Manulife for sure a lot of the work is done at the holding
company level.
     The third question, in terms of fair value accounting, you know my big passion is matching of the asset and
the liability base. You know I wasn’t getting on a hobby horse about a particular model there and I think you
know any model you come up with you can always say can be abused and such, but to start with a model that
really starts with a lack of matching in the accounting model is fundamentally flawed. That’s my main concern
you know. The details of the model is one thing but the model starts by having a sort of fundamental accounting
mismatch where you’re valuing the assets on one basis and the liabilities on quite a different basis. You can get
very misleading results. I mean we’ve done some analysis in terms of what IFRS Phase II risk free rates would
do to our earnings and you know if you think you might have seen very volatile Manulife earnings in the last
24 months in the public reported earnings, if we’d been on an IFRS Phase II, they would have seemed like stable
earnings. I suspect we’re not, in fact I can guarantee we would not be alone in that camp if that type of model
was what happened with interest rates.

Mr. Allan Brender: Allan Brender from OSFI. Maybe some remark more than a question but I appreciate a lot
of what you said and particularly the human element, I mean the cost to people, the pressures and so on. A lot
of people think we’re talking about what has happened in the last year and the lessons we’ve learned perhaps in
the last year and the horrible experiences. But even if any of that hadn’t happened we’d be facing a huge, huge
problem right now because IFRS is coming in, it’s a moving target. One of the big problems right now is we
know its coming and we don’t’ know what it is. For example, even we think we know how assets are valued and
we changed 3855 a couple of years ago, okay all of a sudden IAS 39 on the evaluation of financial instruments
is totally open and maybe we’re going to be back to amortized value for most of the assets we’re holding. That’s
going to change a lot of views as to what matching means and how we measure things. The IASB is talking about
margins this month and what the margins are going to be, and how they’re going to be run off is a huge question
that we don’t know what they’re going to do and they don’t know perhaps what they’re going to do. Yet everyone
is expecting results at the end of the year. Because of that, capital rules are going to change because we’ve got to
accommodate to changes in accounting. Because of the calamity we’ve blipped through there is an understanding,
and you’ve all demonstrated it, that we’ve learned lessons about risk management and things we’ve got to do in
terms of stress testing and DCAT, a lot more emphasis on risk management.
      So a huge amount of change is coming and it’s not just what we’ve gone through, it’s what we’re starting to
go into. So all this stuff about burnout and so on, let me tell you, you haven’t seen the end of it which then raises
a question which is a human question and actually involves the CIA. So as Simon pointed out there is a certain

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                                                               COLLOQUE POUR L’ACTUAIRE DÉSIGNÉ (TR-2)

reluctance for people to get involved in the CIA and I can understand totally where that’s coming from. But the
point is, with all of this change there’s going to be a huge need for developing new practices and eventually for
developing new standards and it can’t happen on its own. It’s going to need a huge amount of input and it’s in the
interest of the industry in fact and the profession to get it right. So although there’s this reluctance to commit, I
would tell you I think we need it. I don’t know exactly how everyone is going to resolve it but I think the institute
has in some sense or other been weakened in the last couple of years and we need a lot more participation and we
have a lot more work to do. Incidentally, on the DCAT opinion I agree totally. It is something that is perhaps
not necessary and it’s something which is being discussed.

Moderator Ovsec: Well, I think we have run out of time. I’d like to thank our speakers once again, from this
end, John Brierly, Simon Curtis, Sharon Giffen.


Please enjoy your lunch and we’ll see you in the afternoon.

Vol. 20, septembre 2009                             DéLIbéRATIONS DE L’INSTITUT CANADIEN DES ACTUAIRES