The Actuary March 2011

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					                                              Published in London by the Staple Inn Actuarial Society

                          THE MAGAZINE FOR THE ACTUARIAL PROFESSION                                     March 2011

                                       Uncharted waters
                                               Navigating the murky depths
                                                        of insurance claims

 Solar cycles and their
 impact on climate

Inside: Managing emerging risks • Catherine Barton Q&A • Mortality models • Regulation • Jobs

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See page 5 for the editorial team
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Philip Harding
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                                                                                                               March 2011
Managing editor
Sharon Maguire

                                                 Actuaries of the future
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Recruitment sales manager
Aisling Durrant
T +44 (0)20 7316 9493
E              It has been a busy start to the year and despite murmurs of a double-dip
                                                 recession, activities in the business world continue seemingly unflustered.
Recruitment sales executive
Satvir Kaur
T +44 (0)20 7316 9868                              During a brief respite from Northern Hemisphere winter blues and
                                                 year-end deadlines, I spent a week in Nairobi, Kenya, as a volunteer
Designer                                         lecturer at Strathmore University. The university has recently developed
Nicky Brown
                                                 an actuarial programme, one of a few in the country. I was moved by the
Sub-editor                                       eagerness of the actuaries in the making — both at university and in the
Sam Robson
                                                 working world.
Production manager
Matt Parle
T +44 (0)20 7316 9766                              The actuarial profession in Kenya is one that is deservedly well respected
E                   and still fairly rare, with less than ten qualified actuaries in the country,
Group editor-in-chief                            though roughly ten times as many students. I am told there are, and have
Anthony Gould                                    met more, Kenyan-born or raised qualified actuaries further afield.
Group publishing director
Mark Burton                                        It struck me how, despite taking on a tough undergraduate course, in the
Print and distribution                           students’ view, graduating with an actuarial degree simply isn’t sufficient.
Benham Goodhead Print Ltd, Oxon                  Without supplementing it with a qualification such as the CFA or ACCA,
Subscriptions                                    the prospects of finding work after graduating are limited. Many take
For subscriptions from outside
the actuarial profession: UK, Eire
                                                 evening classes so that they have at least one professional qualification
and Europe: £50 a year/£5 a copy.                when they leave after the typical four years. I was heartened to see their
For the rest of the world: £75 a
year/£7.50 a copy.
                                                 widespread hardworking ethic despite a bleak actuarial job market.
Please contact: Alison Jiggins
The Actuarial Profession,
Staple Inn, High Holborn,
                                                   Their economy at large, however, looks to be expanding, and regulatory
London WC1V 2QT                                  change that will no doubt come with it seems to suggest that there will
T +44 (0)20 7632 2100
                                                 be a place for the signing actuary and, with it, more jobs for students.
                                                 My thanks go to the students and faculty members at
Students on actuarial science courses
at universities may join the Staple              Strathmore University and to the Kenyan actuaries
Inn Actuarial Society for £6 a year.             and students who made my visit one to remember.
They will receive The Actuary as
part of their membership. Apply to:
Membership Department,                             In this month’s magazine we are covering the
The Actuarial Profession,
Maclaurin House, 18 Dublin Street,               topics of ERM and pensions, and the Actuarial
Edinburgh EH1 3PP.                               Profession invites you to early bird registration
T +44 (0)131 240 1325
E                    at the Pension conference and the Risk and
                                                 investment conference to be held in June this year.
Changes of address should be
made known to the membership
department as above.                               We continue our search for a budding journalist,
For delivery queries please contact:             from any part of the globe to take on the editorial
Kim Ferrara                                      challenge of our student page. I look forward to
                                                 receiving further enquiries.
The Actuary website:
SIAS website:
                                                 Marjorie Ngwenya
Actuarial Profession website:
              20 888
              ( July 2009 to
              June 2010)

                                        Follow @TheActuaryMag              Join The Actuary’s
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                                                             We’ve broadened our view.
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The   Actuary
Editorial advisory panel
Peter Tompkins (chairman),
John Batting, Margaret de Valois,
Matthew Edwards, Martin Lunnon,
Richard Purcell, Andrew Smith,
Chris Sutton, Matthew Wheatley
                                                                                                        Contents                             March 2011
Marjorie Ngwenya
T +44 (0)7794 031 225                                        p34 Underwater underwriters                     News
Features editor                                                               Pietro Parodi considers how
Tracey Brown                                                                                                 10 Profession news
Lane Clark & Peacock LLP,                                                      actuaries can use different
E                                                     techniques in modelling
T +44 (0)20 7432 3071                                                                                        13 Education news
Deputy features editors
                                                                                         insurance claims
Adam Jorna
James Monk                                                                                                   14 Industry news
Sonal Shah
Profession news editor                                                                                       17 SIAS events
Michael Scanlan
T +44 (0)20 7632 1453                                                                                        18 People/society news
Industry news editor
Terren Friend
                                                                                                             42 Appointments and moves
People/society news editor
Kelvin Chamunorwa
Towers Watson
                                       Features                                                              Comment
                                                                                                             3 Editorial
T +44 (0)7502 107 322                                                                                           Marjorie Ngwenya on Kenyan actuaries of
Student page editor                    20     ERM: A role for actuaries                                         the future
Stephen Paines
Government Actuary’s Department
                                              David Maneval on the need to monitor emerging risks
                                                                                                             7 President’s comment
T +44 (0)20 7211 2707
Arts page editor
                                       22     Climate change: The falling apple                                 Ronnie Bowie seeks out a new
Richard Elliott                               Brent Walker looks at the potential implications of the           visionary strategy
Scottish Life                                 current solar cycle for the Earth’s climate
T +44 (0)7814 509 081                                                                                        8 Soapbox
Puzzles editor                         24     Q&A: Catherine Barton                                             Shaun Tarbuck looks at the impact of Solvency II
Tom Bratcher
Towers Watson                                 Marjorie Ngwenya speaks with Catherine Barton                     on mutuals across the globe
E                  about making her mark in the insurance industry
Published by the Staple Inn                                                                                  41 Book review
Actuarial Society.                     26     Modelling: Playing the long game                                  Matthew Edwards reviews Mobs, Messiahs and
The editor, Faculty of Actuaries,             Richard Plat describes a stochastic mortality model               Markets by William Bonner and Lila Rajiva
Institute of Actuaries and Staple             suitable for calculating capital on a one-year VaR measure
Inn Actuarial Society are not
responsible for the opinions put                                                                             Regulars
forward in The Actuary. No part of     29     Conference preview: Pensions                                   37 Arts
this publication may be reproduced,
stored or transmitted in any form             Pensions on show in the ‘Paris of the North’                      Matthew Welsh looks at art as an asset class
or by any means, electronic,
mechanical, photocopying, recording
or otherwise, without prior written    30     Regulation: More equal than others
                                                                                                             38 Puzzles
permission of the copyright owners.           Guy Thomas argues that some adverse selection                     Win a £50 Amazon voucher in our prize puzzle
While every effort is made to
ensure the accuracy of the content,           increases the societal benefit of insurance
the publisher and its contributors
accept no responsibility for any
                                       32     Conference preview: Investing in risk                          40 Student page
material contained herein.
                                                                                                                Louise Pryor discusses the link between CA2 and
                                              A look ahead to the Risk and investment conference                the TASs
Important information for
contributors to The Actuary
By submitting content for              33     ERM: Unravelling the complexity of risk
publication you confirm that:
                                              An update on one of the Profession’s ERM research              41 Actuary of the future
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contributors) are the sole author(s)                                                                            Richard Cohen of PruHealth
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original and has not previously
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                                             MORE CONTENT ONLINE                                                    WRITER OF THE MONTH
specifically advise us to the
contrary);                                                                                                        Brent Walker is the editorial team’s
(c) You haven’t previously licensed         ■ ERM: To wrap or not to wrap: sovereign credit risk and              choice for March for his article on
the use of the content you submit;
(d) So far as you are aware,                international M&As by Bernhard Bergman                                solar cycles, and receives a £50
the content submitted will not              Visit                                   book token
infringe any third-party rights, be
defamatory or in any way illegal.           ■ ERM: Actuaries and enterprise risk management by                    courtesy of:
© SIAS March 2011
                                            Malcolm Kemp
All rights reserved                         Visit
ISSN 0960-457X                                                                                                                              March 2011     5
From Complexity to Clarity.


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                                                                                                   Ronnie Bowie President’s comment

    Ronnie Bowie seeks out a new visionary strategy moving forward

    Setting course
    If a week is a long time in politics then the      Council believes that these successes       recognises the many diverse activities and
    actuarial equivalent is perhaps around five      now provide an excellent platform for          circumstances of our members
    years. The strategy set by the Joint Councils   a more ambitious, outward-looking and          ■ Marketing and public affairs — seeking
    of the Faculty and the Institute over five       international strategy. At its March meeting   to make a step change to increase both
    years ago was based around coming to terms      your Council will agree the form of a          our effort to market the actuarial skill-set
    with the world post the Morris Review.          consultation with our members on the           to employers and regulators and also our
    At the same time the number, the nature         shape of that new strategy. At the time        efforts in making the actuarial voice
    and the scope of our reserved roles,            of writing, Council has not agreed the         heard where it can make a distinctive
    especially in life assurance, was also          format but it seems likely that Council will   and authoritative contribution to the
    changing. The past was therefore only a         recommend a vision that seeks to position      public debate
    very limited guide to the future.               actuaries as trusted and sought-after          ■ Research and Learned Society —
        In such a climate the strategy was          authorities wherever there is uncertainty of   continuing the recently relaunched
    understandably cautious, consolidating          future financial outcomes. This emphasises      research effort to provide the lifeblood of
    around our core quantitative strengths          the trust and confidence that we have been      new ideas and to provide the evidence to
    in UK financial services. It emphasised          building, the breadth of the canvas on         support our public affairs stances.
    education. It sought to gain and build the      which actuaries can add value and a higher        When I have tried these five strands out
    confidence of our regulatory stakeholders,       profile in matters of public interest.          on colleagues, the responses have often

                                                    » Our education
    especially our new partners at the Financial                                                   been, “Well, of course, they are obvious,
    Reporting Council (FRC) and of the                                                             aren’t they?” In many ways they are, but
    wider-informed public. For our strategy                                                        that does not diminish their validity nor
    to be successful, education and public
                                                    remains very attractive                        their importance. However, what will make
    confidence would be key success measures.        as evidenced by the                            the difference will be our willingness to
    Our education would need to keep pace           continuing growth of new                       define stretching success measures and
    with a rapidly changing financial world.                                                        a coherent and well-resourced plan for
                                                    student members inside
    Our stakeholders would need to be                                                              achieving them. Council has considered a
    confident in actuaries, our work and in the      and outside the UK                             number of success measures across a wide
    professional body to which we belong.                                                          range from easy-to-measure exam pass
        By those measures, that strategy has           Council also seems likely to make clear     rates, more complex measures of member
    been a success. Our education remains very      its wish to provide energetic support, not     engagement levels to the aspirational
    attractive as evidenced by the continuing       just for members in the UK but its members     ‘having an actuary on the UK political
    growth of new student members inside and        throughout the world. Clearly, the             television programme Question Time’. Each
    outside the UK. Our new enterprise risk         approach in each territory will need to be     in their own way speaks of a desire to use
    management syllabus and examination             tailored around, and collaborative with, the   our base to reach out ambitiously.
    has proved a successful template for others     strengths of the local association but the        A key requirement of any plan is that
    worldwide. We have developed a                  principle of support will be unequivocal.      our members are engaged and enthused
    mutually respectful relationship with FRC          Council is likely to propose five strands    by it; after all, most of our impact comes
    (and its BAS and POB constituent parts).        to your professional body’s activities:        through the work of individual actuaries,
    To a large extent, part of this has been        ■ Education — continuing to maintain our       not their professional body.
    through the efforts of our Professional         reputation as a world leader                      We have a great opportunity to set
    Regulation Committee chaired by                 ■ Member support — continuing our              a course that will benefit not only our
    Sir Philip Mawer. There are also other          existing development plan to target            members but also the wider public. So
    encouraging relationships being built           and tailor support to an ever more             please do look out for the consultation and
    at high levels with other regulatory            diverse membership                             please do let us have your views.
    stakeholders, such as the Financial Services    ■ Licensing and regulation — developing
    Authority, the Pension Protection Fund and      a proportionate and effective system           Ronnie Bowie is the president of the Institute and
    the Pensions Regulator.                         that keeps a strong ethical core but that      Faculty of Actuaries                                                                                                                      March 2011   7
    Soapbox                    Shaun Tarbuck

     Shaun Tarbuck looks at the impact of Solvency II on mutuals across
     the globe

     Mutually accepted standards
     There is no question that Solvency II is          been at the heart of the development of                This complexity would lead to the
     needed by the insurance sector, not only          microinsurance in developing countries, with           programmed disappearance across Europe of
     to raise standards of regulation but also to      this form of insurance helping in the battle           very many companies that would arbitrarily
     standardise regulation across Europe, some        against poverty. New mutuals are starting to           be deemed either too small or too specialised.
     would say across the world, with many             appear more regularly now in the UK, USA               The question that needs to be asked in these
     countries outside Europe using Solvency II as     and Australia particularly where the existing          cases is, ‘Is the amount of time and expense
     the benchmark for best practice in regulation.    market is offering inefficient insurance.               spent on implementing Solvency II for SMEs
     Even more reason why the detail of                Mutuality is definitely getting stronger.               actually providing any additional protection
     Solvency II needs to take account of the              Against this background, and the                   for the policyholders, or is it actually just
     whole industry and not just the multinational     knowledge that there are over 7,000 mutual             costing the policyholders (owners in the case
     insurers. It also needs to ensure it focuses on   insurers in the world, any new regulation              of mutuals) significantly more for no benefit?’
     policyholder protection as its primary goal       must take account of the specificities of the           This is where a true cost-benefit analysis needs
     and does not become so prescriptive and           mutual sector. This is the major concern for           to be made and a level below which there is
     all-encompassing that the entrepreneurial         the mutual sector. Much of the regulation              no value added in protection terms should be
     spirit of insurance leaders is killed off.        for Solvency II has been drafted with big              excluded from areas of Solvency II.
     The insurance industry has been around for        multinational companies in mind. As we                    In a recent document, the European
     centuries and a strong insurance sector is a      get to the business end of the Solvency II             Commission asked the experts to reconsider
     prerequisite for a developed country.             process, the most important area for mutuals           the situation: “First of all, and most
        Mutual and co-operative insurers represent     is going to be proportionality. No regulation          important, we believe that in relation to
     24% of the world’s insurance market and           or regulator sets out with the intention of            the three pillars many measures could
     25% in Europe, so they are not a small            disadvantaging a particular sector, but if             be taken to reduce the complexity of the

                             » Mutuality is
     part of the sector.                                                         we are not careful           Solvency II regime. Second, we believe that
     Mutuality is rooted                                                         that is exactly what         simplifications could be introduced in other
                                                                                                              areas to apply the principle of proportionality.
     in the original form
     of insurance, when
                             rooted in the original                              will happen to the
                                                                                 small and medium-            Lastly, we believe that transition measures
     Italian merchants       form of insurance, when                             sized mutuals that           will be fundamental to ensure a smooth
     pooled together their   Italian merchants pooled                            service a particular         changeover to the new regime and limit the
     resources to protect                                                        affinity group with a         burden in the forthcoming years.”
     each other from
                             together their resources                            particular insurance            These observations accurately reflect the
     pirate attacks in the   to protect each other                               need. For example,           reasonable demands SMEs have been calling
     Mediterranean in
     the 12th century.
                             from pirate attacks in                              professional indemnity       for in a review of the calibration of long
                                                                                                              risks in non-life insurance, in particular in
                                                                                 insurance for medical
                             the Mediterranean in
     Commercial insurers                                                         practitioners and other      civil liability.
     did not come along      the 12th century                                    professions. This type          Solvency II needs to take account of these
     until 200 years later.                                                      of mutual exists in          demands on the European Commission,
        Mutuality today is playing a vital role in     many countries; many are over 100 years                which echo the intentions voiced by MEPs on
     the insurance industry with more than a           old and have never had a solvency problem.             several occasions, effectively translated into
     third of the market being mutual in half of       Solvency II, if it stays as it is, will cause severe   specific applications: “Solvency II must not
     the largest insurance markets, namely USA,        problems to this important sector.                     penalise and shall not penalise any insurer
     Japan, France, Germany and the Netherlands.           European mutual insurance small and                based on his size or his legal form.”
     Mutuality has also been increasing its global     medium-sized enterprises (SMEs) have
     market share over the last couple of years        responded massively to the latest impact study         Shaun Tarbuck is CEO of The International Cooperative
     as customers seek out better service and          from the Commission (QIS5). The financial               and Mutual Insurance Federation (ICMIF), a UK-based
     organisations that they can trust and are in      simulations confirmed their worries about               body representing the interests of 210 member
     tune with their community and values.             the difficulties caused by the tremendous               insurers from over 70 countries around the globe.
        Mutuals and co-operatives have also            complexity of this new mechanism.            

8      March 2011                                                                                                                        
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 News                          Profession

     Forthcoming events                             Volunteers sought for CA3 Practical Exams
     Implications of TASs for insurance             Qualified fellows required as lead assessors and assistant examiners
     actuaries                                      The Profession is looking to attract           part of the qualification, verifiable CPD
     9 March 2011, Hilton Paddington, London        volunteers to help with the CA3                hours and honoraria payments.
     20 April 2011, Hilton Caledonian, Edinburgh    Communications Practical Exam. This exam          If you would like more details or would
     15.00 (registration) for 15.30-19.00           covers both written and presentation skills    like to be considered for a role, please contact
     The Board for Actuarial Standards (BAS)        and is based on both the concepts in the       Patrina Effer
     will be completing the publication of          core technical subjects with questions being   For further details about CA3, please
     its suite of technical actuarial standards     set within a financial framework, which will    visit
     (TASs) early in 2011. With the insurance       need a knowledge of CA1.                       communications-subject-ca3
     TAS coming into force on 1 October 2011,          Qualified fellow volunteers are sought to
     much of the work performed by actuaries        act as:
     working in insurance will be covered by        n CA3 Lead Assessors. This would involve
     standards relating to the data and models      attending day two of the practical exam to
     used and the reporting of the results of the   work alongside a non-actuary to undertake
     work to clients, boards and management.        the assessment of 20 students as they
     These seminars will offer delegates the        deliver their presentations.
     opportunity to learn about the implications    n CA3 Assistant Examiner. This will involve
     of TASs for them and their work. A panel       marking the exam assignments (up to
     of speakers has been assembled including       20 scripts per exam; timescale: three to
     representatives from BAS and practitioners     four weeks) and attending an annual CA3
     who have already considered and started        Assessors Day.
     implementing the changes required and             For both of these roles you will need to
     who will share their experiences. A drinks     have the time and commitment to meet
     reception will follow. All members             the requirements and an understanding of
     working in the fields of life and health       presentation and communication skills.
     insurance will find these seminars             In return, you would be gaining additional
     informative. Please note all delegates will    skills, involvement in a new and dynamic
     be expected to have some knowledge
     of the TASs. For more information, visit           Annals of Actuarial                            Calling all existing or
     (London) or (Edinburgh)
                                                    Science Volume 5 Part I                        potential NEDs           now available                                  Are you currently working as, thinking of
     implications-tass-insurance-actuaries-0        Annals of Actuarial Science Volume 5 Part I    becoming, a non-executive director (NED)
                                                    is the Profession’s first journal part to be    — particularly of a company in the financial
     Mortality and longevity seminar                published through Cambridge University         sector? Would you welcome the opportunity
     22 March 2011, London                          Press. It is now freely available online       to network and discuss ideas and common
     09.00 (registration) to 16.50                  to members via the Profession’s website.       issues with other NEDs? If so, we would like
     Over the course of the last few years,         Contents include a guest editorial by          to hear from you. The Actuarial Profession
     mortality and longevity has become one         Rob Thomson, papers on ‘Prediction             is thinking about establishing a member
     of the hottest topics within the actuarial     uncertainty in the Bornhuetter-Ferguson        interest group for NEDs and is seeking
     profession. This seminar will bring together   claims reserving method’; ‘Mortality           expressions of interest in joining such a
     the latest thinking from those at the          projections using GA models’; ‘Smoothing       group. Member interest groups link together
     forefront of understanding longevity in a      dispersed counts’ and ‘Yet more on a           members with a common interest or focus
     practical and accessible way. The morning      stochastic economic model: Part 1’, along      and are designed to operate autonomously,
     session will cover some of the latest          with abstracts from actuarial journals         providing their own intellectual capital.
     technical thinking in the modelling of         worldwide and a book review on The decline     They do not report (in a governance sense)
     longevity and the uncertainty therein.         of the traditional pension.                    to any other body within the profession,
     The afternoon session will cover practical                                                    are open for all members to join and are
     issues and will appeal more broadly to                                                        free from bureaucracy in that they can
     those actuaries who need an appreciation                                                      determine their own organisation and ways
     of the current trends and analysis.                                                           of working. Details of the existing groups are
     Delegates are invited to attend either                                                        available via
     one of the half days or the full day.                                                         pages/member-interest-groups
     This seminar is aimed at all actuaries                                                            If you would be interested in joining a
     in the life and pensions industries.                                                          group for NEDs, or have any other ideas
     For further information, visit                                                                for a member interest group, please contact                                                          Audrey Cosens
     mortality-and-longevity-seminar                                                               Tel. +44(0)20 7632 2118.

10     March 2011                                                                                                        
    Continuing professional development requirements                                                    Investment strategy for pensions
    for reporting year 1 July 2010 – 30 June 2011                                                       actuaries
                                                                                                        5 April, London
    The current reporting year for CPD is             practising certificates who need to                The seminar will cover the following points:
    now well advanced. All fellows and                complete their records to the year of             n The economic impact of sovereign debt
    associates who are fully regulated by             their application.                                n Equities — is it the age for active
    the UK Profession are asked to ensure                Full details of the CPD requirements           managers?
    that their online CPD Declarations are            including details of the new sanctions            n Bond outlook — interesting times?
    accurate by 30 April. These members               for non-compliance can be found on the            n How fee structures affect manager
    also need to ensure that their CPD activity       Members tab on the Profession’s website.          risk taking
    records are up to date by 31 July to cover           If you have any questions regarding            n Commodities — their strategic place in a
    activity to 30 June.                              the CPD scheme, please do not hesitate to         pension scheme portfolio
       This does not apply to those who hold          contact             n Private equity — latest from the
                                                                                                        private side
                                                                                                        This seminar will be of particular interest
    Are you a sole                                    Financial risk                                    to any actuary involved in advising final
    practitioner, or working                          models workshop                                   salary pension schemes. The emphasis
                                                                                                        of the seminar will be on current
    in a small firm?                                  Registration is now open for the first             developments in asset management.
    Are you a sole practitioner or work in a          Scottish Financial Risk Academy                   For further information, visit
    small firm of actuaries? Would you welcome         workshop, ‘Financial risk models with R:
    the opportunity to network and discuss            Factor models for asset returns and               investment-strategy-pensions-actuaries
    ideas and common issues with others in            interest rate models’, which will be held in
    the same position? If so, we would like to        Edinburgh on 15 March.                            Health and care conference 2011
    hear from you. The Actuarial Profession              The one-day workshop will be led by            18-20 May, Brighton
    is thinking about establishing a member           a world expert in the fields of                    The Health and care conference is the
    interest group for sole practitioners and         computational finance and econometrics,            leading market event for insurance
    those working in smaller firms and is              professor Eric Zivot. Registration is             practitioners with an interest in the
    seeking expressions of interest in joining        now open.                                         health protection industry. The conference
    such a group. Member interest groups                 Full details, including fees and workshop      will take a fresh look at topical industry
    link together members with a common               registration form, can be found at                developments and outline the wide-
    interest or focus and are designed to               ranging implications that they will have
    operate autonomously, providing their own                                                           on the critical illness, income protection,
    intellectual capital. They do not report (in a                                                      private medical insurance and long-term
    governance sense) to any other body within                                                          care markets. The sessions will cover a
    the profession, are open for all members to                                                         range of technical topics looking at all
    join and are free from bureaucracy in that                                                          aspects such as risk selection, product
    they can determine their own organisation                                                           design, pricing and claims management
    and ways of working. Details of the existing                                                        and Solvency II. The conference is
    groups are available via                                                      designed to appeal to all professionals
    members/pages/member-interest-groups                                                                who are interested in the health and care
        If you would be interested in joining a                                                         sector and in particular those involved
    group for sole practitioners, or have any other                                                     in the control cycle, including pricing,
    ideas for a member interest group, contact                                                          product design, monitoring experience
    Audrey Cosens                                                        and claims management. It is our aim
    Tel. +44(0)20 7632 2118.                                                                            to inform and provoke discussion on
                                                                                                        current market topics and attendance by
                                                                                                        insurers, reinsurers and consultants would
    Momentum conference 2011: for actuaries of today                                                    be valuable. For further information, visit
    and tomorrow — call for speakers                                                          
    The Momentum conference is the premier            conference? This is your chance to help
    conference for recently qualified (up to five       shape the programme. Proposed sessions
    years) and soon-to-be-qualified actuaries,         can be multi-discipline or practice-specific,
    and is attended by delegates from all             technical or softer skills. The more detail
    practice areas. It allows an opportunity for      you can provide about your proposed
    delegates to learn from industry experts,         session, the more it will help the committee
    increase technical knowledge and develop          with the selection process. The deadline for
    essential softer skills to further add value to   all submissions is Friday 25 March.
    a young actuary’s skill set.                         To submit a proposal, please visit
       Would you like to be part of the 2011                                                                                                                  March 2011     11
 News                          Profession

     Risk and investment conference 2011             A good year for the International Actuarial Association
     19-21 June 2011, Hilton Newcastle, Gateshead
     Bookings are open for the conference.
                                                     President Paul Thornton outlines recent developments at the IAA
     The Risk and investment conference is           Supranational outreach                             in ERM. Their recommendations included
     the premier conference for all actuaries        The International Actuarial Association (IAA)’s    extending the AFIR Section to include ERM
     working in finance and investment and           first strategic objective is to promote the role,   topics and discussing the role of actuaries in
     enterprise risk management, or those            reputation and recognition of the actuarial        ERM with key stakeholders.
     with an interest in these areas.                profession in the international domain.               Discussions have also been taking place
     During the conference a range of high-              Much work has been done with the               around the strategic goals of the IAA in
     profile speakers will depict the economic,      International Accounting Standards                 education. This is likely to result in greater
     regulatory and environmental headwinds          Board on the Exposure Draft of IFRS4, the          availability of education programmes and
     we face and provide practical insights on       insurance contracts standard, and with             qualifications for the developing countries,
     investment and risk to equip ourselves to       the International Association of Insurance         something that the UK profession has long
     manage and take advantage of these.             Supervisors on solvency and systemic risk          espoused, along with the development of a
     The conference is attended by more than         issues. The influence of these bodies on UK         global distance learning toolkit.
     150 delegates. For further information, visit   financial reporting and solvency requirements        is considerable. We have also held meetings        Membership and engagement
     risk-and-investment-conference-2011             with the International Monetary Fund and           A milestone has been the achievement
                                                     Geneva Association and presented to the            by the China Actuarial Association of full
     Emerging trends in mortality and                Organisation for Economic Cooperation and          membership, representing the fruition of
     longevity symposium 2011                        Development (OECD) on insurance topics,            many years of support and encouragement,
     13-14 September 2011, Warwick                   held meetings with the World Bank on               not least by the Institute and Faculty.
     The Actuarial Profession will be hosting a      pensions in developing countries, attended         We also saw Kenya become a full member
     multidisciplinary symposium on research         meetings of the International Organisation         and the admission as associate members of
     in mortality, morbidity and longevity at        of Pension Supervisors and OECD on private         the associations in Azerbaijan, Mongolia
     Warwick. This is being sponsored by the         pensions, and arranged a discussion forum          and Tanzania. There are now 63 full member
     UK Mortality Research Steering Group,           in Geneva with the International Labour            associations and 26 associate member
     the International Actuarial Association         Organization, Information Systems Security         associations. The number of fully qualified
     Mortality Working Group and our                 Association and Aga Khan Foundation on             actuaries represented is around 55,000.
     multidisciplinary partners. The aim of          social security and microinsurance topics.            The IAA Council meets twice a year,
     the conference is to build on the success           In addition, we met the World Trade            along with the main committees. There are
     of the joining forces conference held in        Organization to keep up to date with               typically around 300 people involved in these
     Edinburgh in October 2009. The conference       developments on the global agreement on            meetings and the UK Actuarial Profession is
     will run adjacent to the Society of Social      trade in financial services.                        well represented.
     Medicine’s Annual Scientific Meeting
     in 2011 in hope to encourage cross-             Actuarial standards, strategic discussions Publications, working groups, sections
     disciplinary collaboration. Should you wish     A task force set up to address the strategic       The IAA has a virtual library enabling access
     to submit a paper or a workshop idea,           goals of the IAA for international actuarial       to over one million titles. In addition to the
     please visit            standards recommended a goal of ’medium            regular issues of ASTIN Bulletin, which is the
     mortalityandlongevity2011callforspeakers.       convergence‘. This means that model                official journal of the IAA, major publications
     Guidelines and further information is           International Actuarial Standards of Practice      this year were a book on stochastic modelling
     available at              (IASPs) should be developed for member             and a monograph on internal models.
     research-and-resources/pages/mortality          associations to adopt, adapt or confirm                Working groups have been established for
                                                     congruence with, on a voluntary basis over         mortality, microinsurance, population issues
     Pensions, benefits and social security          the foreseeable future.                            and, most recently, environment issues.
     colloquium 2011                                     This was agreed by Council in October          A group of experts has also been assembled to
     25-27 September 2011, Royal College of          and an interim structure is being introduced       identify the specific requirements of Takaful
     Physicians of Edinburgh                         in 2011 to develop IASPs for IFRS4, IAS19,         and other Shariah-compliant products.
     The Actuarial Profession and the                Social Security calculations and for work in          The IAA Sections cover life, non-life,
     International Actuarial Association are         enterprise risk management (ERM), together         pensions and social security, investment and
     hosting the first Pensions, benefits and        with a generic IASP to accompany them.             enterprise risk and health, as well as a section
     social security colloquium to be held in        A more permanent standard-setting structure        for consulting actuaries, the International
     the UK. This event will provide a forum for     is to be developed to replace the interim          Association of Consulting Actuaries (IACA),
     the exchange of information on the latest       structure after 2012.                              and a section for volunteers, actuaries without
     international pensions-related issues, with         The IAA also hosts a standard-setters          borders. They have around 3,600 members
     a focus on how to make both public and          roundtable, which includes the UK’s Board          overall and rising. The International Congress
     private sector provision for retirement         for Actuarial Standards, the US’s Actuarial        in Cape Town this year involved all the
     income safe and sustainable. Should you         Standards Board and other actuarial standard-      Sections and nearly 1,600 actuaries from over
     wish to submit a paper or a workshop idea,      setting bodies from around the world.              100 countries. Look on for
     please visit                A special task force addressed the question    details of 2011 Section colloquia.
     PBSScolloquium2011callforpapers                 of how to promote the role of the actuary          Paul Thornton, IAA president

12     March 2011                                                                                                             
                                                                                                              Education                         News

    Another Cass student wins prestigious actuarial prize                                              Chris Daykin, former government actuary
                                                                                                       and chairman of the prize committee, at a
    For the second year running, a Cass MSc          the prize for his MSc dissertation,               recent ceremony.
    Insurance and Risk Management student            which made out the case for an entirely              Tom, who is now part of the enterprise
    has been awarded a prestigious research          new form of insurance product to cover            risk team at specialist Lloyd’s underwriting
    prize by the major global reinsurer              credit risk.                                      firm Kiln, said: “I am delighted to have
    SCOR UK. Each year SCOR offers two                  The SCOR Awards aim to promote                 won the award and wish to thank all those
    prizes to reward the best academic papers        actuarial science, to develop and encourage       who supported me through the process.
    in the field of actuarial science and risk        research in this field and to contribute to        The MSc course at Cass was the perfect
    through its Actuarial Awards.                    the improvement of risk knowledge and             academic platform to complement the
       On this occasion, Tom Hoad received           management. Tom received his award from           skills I developed at work.”

    University of Leicester involved with mapping public attitudes to climate change
    Understanding how public attitudes to            individuals and organisations shape public           Professor Brigitte Nerlich of the School of
    climate change have been shaped by               opinion, the role of language in discussions      Sociology and Social Policy at The University
    discussions, debates and controversies is to     and the impact of social and technological        of Nottingham and Dr Nelya Koteyko in the
    be the focus of a new University of Leicester    networks on the debate.                           Department of Media and Communication
    research project involving academics from           The project will investigate public interest   at the University of Leicester have previously
    the UK and the Netherlands.                      in climate change from 1992 to 2010,              studied the linguistics of the debate
       Public debates about global warming           examining the communication of global             surrounding global warming and the impact
    have been marked by slow periods of              warming both across longer periods of time        of political labelling. From VU University
    agreement and concern on the topic,              and at specific points of intense scrutiny —       Amsterdam, the Dutch academics — led
    punctuated by peaks of intense interest          from the Rio Earth Summit of 1992 to the          by Dr Iina Hellsten — have centred their
    and, at times, scandal. Established research     aftermath of ‘Climategate’ and the United         previous work on public hype triggered by
    expertise will be examining what brings          Nation’s Conference on Climate Change in          events like the outbreak of epidemics and use
    about these phases, the way in which             Copenhagen 2009 and beyond.                       in the media of words such as ‘Frankenfood’.

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              Postgraduate Diploma/MSc Actuarial Science                                                                                                                   March 2011     13
 News analysis                 Industry

     EIOPA publishes Solvency II medium-term work plan
     Focus switches from regulatory advice drafting with Solvency II implementation less than two years away
     The European Insurance and Occupational                The work-plan contains the following        various areas by December 2011. The exact
     Pensions Authority (EIOPA) has published           milestones:                                     scope of the BTSs will need to be identified
     a Solvency II medium-term work plan.               n The results of the fifth Quantitative          in order to prioritise the work
        This is in addition to the recent               Impact Study (QIS5) will be available in        n Final Level 3 Guidelines will be
     publication of the Omnibus II Directive,           March 2011. This will help to identify the      adopted in March 2012. This follows the
     which will amend the Solvency II                   most important regulatory issues                pre-consultation period starting in the last
     Directive published in December 2009.              n In June 2011 the Commission is                quarter of 2010 with selected stakeholders
        The implementation date of Solvency II,         expected to provide an official proposal         n In the third quarter of 2011, EIOPA will
     which is now 1 January 2013, is getting            for Level 2 implementing measures, which        assess whether third-country supervisory
     closer. Supervisors and the industry are           have been discussed in consultation             systems provide for a similar level of
     getting ready to put Solvency II into              papers since the end of 2009. This              policyholder/beneficiary protection as
     practice while many regulatory decisions           is intentionally scheduled after the            under Solvency II
     are still being made. The Solvency II              conclusions of the QIS5 exercise                n EIOPA will conduct informal
     medium-term work plan shifts attention             n The Draft Omnibus II directive foresees       consultations before publication of Level 2
     from the drafting of regulatory advice to          that EIOPA will be required to draft            proposals in June 2011, and public
     the implementation.                                binding technical standards (BTSs) in           consultations afterwards.

     Investing closer to home Surge in online searches for personal lines insurance
                                                        Online shopping for insurance has grown             In natural search, MoneySupermarket
                                                        significantly in recent years, along with        was the site most visible to searchers.
                                                        other major forms of online retail business,    It secured 73% visibility, well ahead of
                                                        such as books and household goods.              its nearest rivals GoCompare (43%) and
                                                           Quarterly research by the market research    CompareTheMarket (37%).
                                                        firm Greenlight uses industry data to identify       In paid search however, the picture was
                                                        720 of the most popular search terms used       different. GoCompare was the most visible
                                                        by UK consumers to find providers of home,       advertiser, with 61% share of voice.
                                                        travel and car insurance.                       It was closely followed by MoneySupermarket
                                                           There were over 1.7 million searches made    (59%) and one insurer, Aviva (46%).
                                                        online in October 2010 for insurance-related    Greenlight observed a notable entrant into
     Nigel Yates, investment manager at NFU             products. Terms pertaining to car insurance     the top 10 of its league table, USwitch.
     Mutual, draws attention to the huge                were most popular, accounting for more          It assumed fifth position, achieving 31%
     growth in overseas exposure by investing           than half (51%) of all insurance-related        share of voice overall.
     in UK-listed companies.                            searches. Travel insurance followed with            The research also found that a
        Two-thirds of the revenues of listed            29%, then home insurance (20%).                 notable number of brands do not have
     UK companies are thought to come from                 Greenlight predicts that home insurance-     Facebook pages and therefore are isolated
     abroad, while a quarter of UK blue chips           related searches, which totalled 337,000 in     from social media interaction with
     have revenues of more than 30 per cent             October 2010, will see an increase in early     consumers, a significant issue for some
     from emerging markets, and this may well           2011, as homeowners look to reassess their      insurance websites that received negative
     continue to grow.                                  insurance options in the new year.              consumer commentary.
        The UK is home to some large-dividend-
     paying stocks, but also offers significant
     exposure to cyclical companies. So, while
     portfolios can be cushioned by defensive
                                                           Big freeze claims cost UK insurers
     companies like those in the pharmaceutical
     and utilities sector, they could also profit from
                                                           more than £38 million each day
     the rise in demand for commodities such as            Home, business and vehicle damage             heavy snow in the United Kingdom.
     gold, silver, iron ore and copper.                    caused by the big freeze in the UK at           £900 million was claimed for damage
        Mr Yates suggests that UK-listed companies         the end of 2010 cost the insurance            to homes and businesses. This was
     could also benefit from a new five-year plan            industry more than £38 million each           made up of 190,000 claims. Of these
     being introduced by China. This is likely to          day, according to ABI figures. The total      claims, £680 million was for burst pipes.
     include significant spending on affordable             amount claimed due to adverse weather         Additionally, £530 million of claims
     housing, energy and transport infrastructure.         during November and December 2010             came from insured motorists for vehicle
     UK manufacturer, Rolls Royce, could be a              was £1.4 billion.                             damage. This was made up of 278,000
     beneficiary of this through its expertise in             This is the highest payout to date for      claims. Most of these claims were for
     power generation, nuclear and aerospace.              damage caused by freezing weather and         low-speed collisions on icy roads.

14      March 2011                                                                                                         
                                                                                                             Industry                       News

    From the world of general insurance                                                            making it clear that they remain committed
                                                                                                   to meeting internationally accepted
    AIG and fall-out from the global                representative of the European Commission.     regulatory standards, amending their regime
    financial crisis                                   The new European Insurance and              if it is necessary to do so.
    In mid-January, AIG announced that it           Occupational Pensions Authority almost             The UK Financial Services Authority (FSA)
    had executed its recapitalisation plan with     immediately announced a new stress test        has revealed plans to increase its levy for
    various US government entities — the            to be conducted in co-operation with the       the implementation of Solvency II from
    Department of Treasury, the Federal Reserve     European Systemic Risk board and national      £29m to £46.4m. The levy, which comes
    Bank of New York (FRB) and the AIG Credit       supervisors. The Europe-wide test is aiming    as part as the FSA’s budget proposals for
    Facility Trust. This included the repayment     to include 50% of insurers (by premium)        2011/12, could fall back to £34.3m due to
    of its outstanding balance of approximately     in each country and is scheduled to be         an anticipated under-spend in 2010/11 and
    US$21bn on the credit facility from FRB         launched in the second quarter of 2011 — it    European Union implementation delays.
    and the conversion of various forms of          is being run in conjunction with a similar     The FSA claims that large firms will bear the
    government support into common shares.          exercise for the banking sector.               brunt of the increase.
    As a consequence, the Department of                Some amendments to the Solvency II
    Treasury now holds 92% of the equity in         regime have been put forward by the            Reinsurance premium rates at
    the company, but is expected to gradually       European Commission, which will allow          1 January
    dispose of this shareholding over time.         them to specify transitional measures          Major reinsurance brokers are agreed that
                                                    in areas such as equivalence, valuation,       rate reductions were the norm for 1 January
    Solvency II                                     governance and regulatory reporting, if        renewals in international markets and also
    In early January, the European Union (EU)       necessary to avoid market disruption.          concur that this is the result of over-capacity
    launched its new supervisory authority,         The implementation date, however, remains      in the market. In the UK, the average fall was
    the European Insurance and Occupational         31 December 2012.                              of the order of 5-10%, but in Continental
    Pensions Authority (EIOPA), which has three        Guernsey has announced that it will         Europe the reduction was somewhat less for
    main tasks. It will monitor whether national    not be seeking equivalence with                catastrophe excess of loss business (Germany
    authorities apply the EU rules correctly        Solvency II in view of uncertainty over the    perhaps 4% down and France virtually
    and could require national supervisors          treatment of captives under the new regime.    unchanged). There was some tendency for
    to take action to remedy an emergency           The Guernsey government and the island’s       primary insurers to buy less protection, but
    situation. It will also deal with the final      insurance regulator issued a joint statement   this was far from universal.
    draft rules underlying the Solvency II
    regime and, finally, it will arbitrate in the    Large losses                                    prone parts of the region may not be
    event of disagreements between authorities.     Earthquake in New Zealand — 4 September         covered by insurance, there has been a
    As part of this package of tasks, it will aim   Estimated costs continue to escalate, with      significant impact on at least 40 mines,
    to prevent insurance arbitrage within the       many insurers and reinsurers basing their       particularly in the Bowen Basin area.
    EU by ensuring standards are uniform            loss estimates on a total figure of NZ$6bn      Claims from these mines, including those
    across the Union. The authority is led          (US$4.5bn). The New Zealand Earthquake          for business interruption, are extremely
    by a board of supervisors, but day-to-day       Commission (NZEC), which covers homes           likely to penetrate international reinsurance
    executive power is vested in the eight-man      for the first NZ$100,000 of building damage     markets (especially London) after the
    management board, which consists of the         and NZ$20,000 of contents loss, estimated       mine-owners have borne the effect of
    chairman, six representative supervisors        that its involvement amounted to between        substantial deductibles. For insurance
    (initially from Austria, Denmark,               NZ$2.75bn and NZ$3.5bn, of which it had         purposes, the floods around Brisbane are
    Ireland, Italy, Poland and the UK) and a        paid around 20% by the turn of the year.        likely to be considered as a separate event
                                                    NZEC retains the first NZ$1.5bn of losses       from those caused earlier by the remnants
         FOR MORE GENERAL                           and reinsures a layer of NZ$2.5bn above         of tropical cyclone Tasha. The only estimate
         INSURANCE NEWS                             this level. An aftershock on 26 December        of insured losses to hand gives a total
      More news on the following items can be       gave rise to at least 3,500 further claims.     figure of ‘up to A$6bn’, of which a third
      found on the website:                                                                         was estimated in relation to the earlier,
      ■ AIG and fall-out from the global            Floods in Queensland, Australia —               more northerly, event and two-thirds to
      financial crisis                              late December/early January                     the losses around Brisbane from the later
      ■ Regulatory developments                     As the floods extended south from central       rains. An estimate of economic loss from
      ■ Lloyd’s                                     Queensland into the Brisbane area,              these floods and those in Victoria suggests
      ■ Marine and aviation developments            (with major devastation in the towns of         a figure in the range between A$10bn and
      ■ UK motor insurance                          Toowoomba and Ipswich), the number of           A$20bn.
      ■ Reserve levels                              people affected rose dramatically with a
      ■ Workers’ compensation surcharges            death toll believed to have reached 36
      ■ Catastrophe bonds                           and over 200,000 having to leave their
      ■ Mergers and acquisitions                    homes. The event has been described as a
      ■ Climate change                              one-in-100-year loss, and the rainfall came
      ■ Large losses                                at the end of what has been confirmed as
                                                    the wettest year in Queensland’s history.
      Visit           While homes in some of the most flood-                                                                                                               March 2011      15

Actuaries sought to serve
on AADB tribunal panel
Since September 2010 Ann Darling has been         Tribunals are lay-dominated and consist of
the Accountancy and Actuarial Discipline          a legal chair, at least one actuary and at
Board (AADB) convenor of disciplinary             least one lay person. The tribunals consider
tribunals. Ann is a former member of the          complaints of misconduct and, where the
Parole Board of England and Wales. The            allegations are proved, decide what sanctions
AADB is currently inviting applications from      should be imposed.
actuaries to serve on its tribunal panel.
                                                  The panel currently consists of lay, legal
The AADB is an operating body of the              and accountant members and the AADB is
Financial Reporting Council, the UK’s             looking to appoint a number of actuaries.
independent regulator for promoting high          Applications are welcome from all Fellows,
quality corporate governance and reporting        but Ann is particularly keen to hear from
to foster investment.                             those with a specialism in either Life or
                                                  General Assurance or Pensions. On past
The Morris Review in 2005 recommended the         experience, hearings can last from one
introduction of an independent investigation      to two days or three to four weeks. An
and discipline scheme for members of the          advertisement for these posts can be found
Actuarial Profession to consider matters          on page 47 and at the FRC recruitment page:
which raise or appear to raise issues of public
interest. Since 2007 the AADB has been
responsible for operating and administering       If you would like to discuss any aspect of
this scheme and has hitherto launched three       these appointments you can contact Ann
investigations into the conduct of members        Darling directly at
of the actuarial profession.                      Tel. +44 (0)191 536 2089.

The Board, which includes two members who                    Ann Darling OBE JP DL is a former
are actuaries, has itself appointed members                  member of the Parole Board
of disciplinary tribunals from a panel. It has               of England and Wales, a
now decided for reasons of good governance                   former Board member of the
and transparency, to give the task of selection              Immigration Advisory Service
to an independent convenor.                                  and Phoenix Futures. Latterly
                                                  she chaired the Disciplinary Committee
                                                  of the ACCA and was a member of its
                                                  Appointments Committee
       Tuesday 15 March                      Programme event

    Dynamic management actions             Realistic modelling of dynamic management actions       as the Use Test and Principles & Practices of
                                           (DMA) is critical to many areas of the financial        Financial Management)
    Staple Inn,
                                           management of a life insurance company today.               4) Illustrate how improved modelling of
    High Holborn,                             Dominic Clark, Jeremy Kent and Ed Morgan will        DMA can, under some circumstances, materially
    London                                 provide an overview of this topic. They will:           influence calculated solvency
                                              1) Explain what is meant by DMA and what                 5) Show how understanding DMA and its
    5.30 for 6pm start
                                           the main types are                                      interactions with dynamic policyholder
                                              2) Introduce the areas in which DMA is               behaviour can improve a company’s enterprise
                                           important (For example, Solvency II, MCEV, ALM,         risk management.
                                           ERM, IFRS)                                                  There is no need to register in advance for this
                                              3) Describe how DMA can be linked to                 event. Refreshments will be available from 5.30pm
                                           real expected management behaviour                      for a 6pm start. Following the meeting there will
                                           (including considerations around concepts such          be a free drink and buffet at a nearby pub.

       Thursday 17 March                     Social event

    Poker night                            To bluff or not to bluff… that is the question!             There will be cash prizes for everyone who
                                              After the success of last year’s event,              makes it to the last table.
    Loose Cannon Club,
                                           SIAS is hosting another poker night on 17 March.            There will be a bar open until late, and SIAS
    13-16 Allhallows Lane,                 No experience is needed. If you are a beginner          will provide a buffet supper, included in the
    London,                                then take part in the practice sessions beforehand      ticket price of £25 for SIAS members and £30 for
                                           and, if unlucky in the tournament, then carry on        non-SIAS members.
    EC4R 3UL
                                           the fun playing on other tables.                            Places are limited and will be offered on a
    6.00 for 6.45pm start                     Beginners’ practice sessions start from 6pm,         first-come, first-served basis. Please e-mail Alvin at
                                           while the main competition starts at 6.45pm.   to reserve your place.


    Charity-matching                       Did you know that SIAS has a charity-matching           sponsorship, with a maximum donation of
                                           programme?                                              £500. The donation will be increased to 50% of
                                              Any SIAS member or team of SIAS members              sponsorship monies raised for team applications
                                           will be able to apply to SIAS for a donation to their   where members of the team are from more than
                                           charity fund-raising efforts. The donation will be      one employer.
                                           equivalent to 25% of sponsorship monies raised             Other restrictions apply so please see the SIAS
                                           by the SIAS member, excluding any corporate             website for more details at

             For details of events, visit                                                                                                                     March 2011       17
 News                         People/Society                                                              For people moves, see page 42

                                                                                                      Actuaries urged to get
     GUD work in The Gambia                                                                           on their bikes — again!
     February’s ‘actuary of the future’ Ella Spencer recounts her                                     Calling all cyclists — you are invited to join

     latest trip as trustee of Gambia Upcountry Development                                           a bike ride and help raise money for charity.
                                                                                                         The Worshipful Company of Actuaries
                                                                                                      will be holding a sponsored bike ride to
     The dust along the roads to the village of                                                       raise money, primarily for the British
     Kanubeh coats every available surface and,                                                       Stroke Association and the NSPCC, with a
     by the time we arrive, the late afternoon                                                        portion of the sponsorship funds also
     sun pounding against our skin, we are                                                            going to the Company of Actuaries
     filthy and tired. At the side of the road the                                                     Charitable Trust.
     villagers are waiting and as our feet touch                                                         There are two bike rides in May, one in
     the cracked earth, a cacophony of drums                                                          London and the other from Manchester to
     and singing fills our ears: as always, the                                                        Liverpool. All are welcome to join either
     exhausting journey upcountry is worth it.                                                        (or both) and you are encouraged to involve
        As with much of upcountry Gambia,                                                             your colleagues.
     Kanubeh has little outside support and no                                                           London, Sunday 22 May —
     services, with most of the villagers living                                                      The Thames Bridge Bike Ride, 33 miles, 14
     in poverty (the UN’s definition of income                                                         bridges and one big challenge.
     of less than US$1 a day). When the               ideas for fundraising through sustainable          Organised by the Stroke Association and
     Gambia Upcountry Development (GUD)               business ventures, including vegetable          starting at Southwark Park, this amazing
     charity first spoke to the villagers about        gardens, a banana plantation and a video        route travels through the historic city of
     their most vital needs, the overwhelming         club — quite a challenge in an electricity-     London and along the picturesque towpaths
     response was education and a desire to           free village!                                   of the River Thames. Cyclists will enjoy
     eventually be independent of aid.                   ‘The GUD Challenge’ sees a different         the beautiful surroundings of Battersea and
        Over the course of 2008 and 2009,             fundraising event each month, including         Richmond Parks en route, before ending on
     with the support of GUD, the villagers           the inaugural London-based GUD                  a high note with a picnic in Hurst Park near
     designed, built and decorated a three-           football tournament in May, the first            Hampton Court.
     classroom nursery school. Through the            in Basingstoke raised over £2,000; the             Over 120 cyclists participated in this event
     villagers’ hard work and determination,          second GUD Quiz, the first raised over           two years ago. Actuarial employers across the
     the nursery school opened its classrooms         £2,500; and a sponsored group climb of          country were part of the Actuaries on Wheels
     for the first time in January 2010. Most of       Mount Kilimanjaro.                              team, and raised around £50,000 for charity.
     the children in the village had no previous         We are looking for people to get             The hope is to repeat that success this year.
     access to formal education but are already       involved so if you feel like revealing your     The entry price for this route is currently
     making great progress, as I can attest from      football prowess, scaling the heights of        £17 per person.
     my visit in December.                            Kilimanjaro or have ideas of your own,             Manchester to Liverpool, Sunday
        The children of Kanubeh Nursery School        then please get in touch or visit the           29 May — The Manchester to Liverpool
     are passionate, dedicated and entirely           website for more details. I recently became     bike ride, 37 miles and mostly traffic-free.
     inspiring. GUD’s main aim is for the village     a trustee of this fantastic charity and I can      The bike ride starts at Salford Quays,
     to become self-sufficient. We have                truly say that its work is both tangible and    leaving Manchester via Old Trafford and
     worked successfully with the inhabitants         life-changing. Perhaps some of you will         Stretford, where it picks up the Trans-Pennine
     to produce valuable results but there is         even join me for my next eagerly awaited        Trail. This scenic and mostly traffic-free
     much more to do. Alongside supporting the        coating of dust…                                route is ideal for cycling and takes you along
     current needs of the school, we are              By Ella Spencer                                 part of the Manchester Ship Canal towards
     building funds to support the village’s own                         Liverpool and the Mersey, which you’ll reach
                                                                                                      by travelling down the famous Penny Lane.
                                                                                                         Please note that this route is not entirely
 Marriages                                          Deaths                                            suitable for road bikes, although hybrid bikes
 n Farai Mbumbwa (Fifth Quadrant,                   n Leonard Dodworth COE died on                    should be fine. The entry price for this route
 Johannesburg) is delighted to announce his         25 December 2010, aged 96. He became a            is £15 per person.
 recent marriage to Chenesai in Zimbabwe            fellow of the Institute in 1949.                     Please e-mail Sarah Watkin for
 on 1 January.                                      n George Arnold Kingsnorth died on                application forms at
                                                    3 January 2011, aged 97. He became a    
                                                    fellow of the Institute in 1947.                  By James Williamson
                                                    n Robert J Myers died on 13 February 2010,
                                                    aged 97. He became an associate of the                    PEOPLE/SOCIETY NEWS
                                                    Institute in 1952.
                                                    n Leon Rudolf Potgieter died on                        If you have any newsworthy items for
                                                    10 January 2011, aged 48. He became a                  these pages, e-mail Kelvin Chamunorwa
                                                    fellow of the Institute in 1988.                       at

18      March 2011                                                                                                          
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    Carnival atmosphere lights up GIRO conference
    As regulars will know, the GIRO conference       unleashing the competitive spirit within.        party, then why not GIRO..? A special
    is not just about technical content and          The evening saw some rare sights from the        mention has to go to Stuart Shepley who
    making sure we receive CPD. It is also an        typically risk-averse actuarial community        gave us a glimpse of his inner diva, leading
    ideal opportunity to catch up and socialise      — never have so many been seen around            the way with Big Spender.
    with fellow general insurance actuaries.         a set of roulette and Blackjack tables,            It would be remiss of me not to
    GIRO 2010, which took place in October,          even without betting with real money.            mention the amount of socialising
    allowed us to do this in style and with that     The carnival theme continued with the            that happened on the golf course.
    all-important element of fun.                    refreshments, with candyfloss and                Having the conference at Celtic Manor
       The evening before the conference             toffee apples consumed alongside the             allowed budding golfers to try their skills
    was quiet and relaxed, allowing for time         odd alcoholic tipple.                            on the Ryder Cup course and allowed
    to mingle and catch up with colleagues              No GIRO would be complete without             those to dream of sinking the final putt
    around the diverse mix of sponsored              the conference dinner — a chance to dress        on 17, just like Graeme McDowell did one
    stands. However, it wasn’t until the second      up and let your hair down. This year’s           week earlier.
    night that revelry slipped into overdrive        dinner included entertainment by the               Finally, I would like to take this
    and a carnival atmosphere ensued.                band Kitty la Roar and The Nick of Time.         opportunity to thank the 2010 GIRO
       A funfair with a variety of interactive       Who would have thought that mixing up            Committee for arranging a fabulous
    activities was on offer, from roulette and       Peggy Lee with Nirvana or Mack the Knife         conference. Here’s looking forward to
    the coconut shy, to darts and crazy golf.        with Shaggy could be so entertaining?            socialising again in Liverpool in 2011.
    It was a unique opportunity to relax while       If it worked for Hugh Hefner’s 80th birthday     By Ruth Stephens

    Actuaries on skis                                11th overall. There was a special trophy for
                                                     the fastest team comprising three court (or
    Actuaries were well represented at the           trustee) members. The actuaries came an
    Livery Ski Championship at Morzine,              impressive third — although in fact only
    Portes du Soleil, France on 21 and 22 January.   three livery companies could meet the
       Skiers from 16 livery companies               entry requirements.
    participated in the event organised by the           The actuaries were resplendent on the
    Worshipful Company of Ironmongers with           slopes wearing bibs in the Company’s colours
    approximately 100 skiers involved, counting      with ‘Actuaries on Skis’ emblazoned on them.        Next year’s event will again be at Morzine
    team members and supporters.                     Morzine had never seen anything quite like       on 20 and 21 January 2012. The Actuaries
       As a team of risk professionals, our          it, and they did succeed in upsetting a couple   team consisted of Fiona Morrison
    actuaries assessed the snow conditions           of accountants in passing.                       (captain), George Yoxall, Jerry Staffurth,
    (plus the ages of many of the other teams)           More important than the races themselves     Richard Hawkes and Martin Miles.
    and decided that getting down the course         was the social side of the event, which             The back-up team and supporters
    in one piece was more important than             included dinner and prize-giving on the          comprised of Adrian Waddingham
    speed. The Slalom and Giant Slalom prizes        Saturday evening, and numerous informal          (chairman), Clive Grimley (coach),
    were shared between the Vintners and the         meals and mulled wine stops necessitated by      Juliet Hawkes and Sarah Miles.
    Leathersellers. The Actuaries team came          the cold weather.                                By Martin Miles

         To find out how & why – see us in the Appointments Section

                                                                                                           FIRST FOR ACTUARIES                                                                                                                  March 2011    19
 ERM                            Risk assessment

A role for actuaries
David Maneval looks at the need to routinely monitor emerging risks to identify
potential hazards

                                                        of hurricane landfalls in the US. At the           detecting any major organisational issues
                                                        time, most of these risks could have been          impeding the management of emerging risks.
                                                        considered as emerging or re-emerging.
                                                           On the horizon, new risks are emerging          Identify emerging risks
                                                        in the shape of regulatory shifts,                 A PESTEL analysis may help systematically
                                                        climate change, inflation, cyber risk,              screen the risk landscape. PESTEL stands for
                                                        nanotechnologies, ageing leap, pandemics           political, economic, social, technological,
                                                        and the incorporation of new technologies.         environmental and legislative.
                                                        As a key source of risk to reinsurers, emerging       The PESTEL analysis can be extended
                                                        risks need to be managed in an enterprise risk     to include other sub-categories such as
                              David Maneval is
                                                        management (ERM) framework.                        health, infrastructures and so on.
                              head of actuarial in
                                                           Actuaries are critical to embed the ERM         This analysis illustrates that the identification
                              Asia Pacific for Aon
                                                        framework and the profession is becoming           of emerging risks needs cross-disciplinary
                              Benfield Analytics
                                                        increasingly experienced in correlation with       inputs and contributions representative of

              he future of risk is like an iceberg.     demand. Left unattended emerging risks can         the corporation. In Table 1, a sample list of
              What we see before our naked eyes is      threaten a company’s very existence.               emerging risks briefly illustrates the steps of
              only part of the story. In fact, we are   Lastly, rating agencies and increasingly           the control cycle.
              most vulnerable to risks we haven’t       regulators are less likely to provide favourable
     prepared for. So how do we navigate the risks      opinions when insurers fail to demonstrate         Emerging risks
     that lie beyond?                                   emerging risks management processes.               An assessment of an emerging risk starts
                                                                                                           with the early detection of facts related to
     The asbestos premonition                           Risk management cycle                              that risk derived from research, observations
     Asbestos liability is a classic example of the     Risks today are primarily assessed reactively      and monitoring programmes. If the initial
     impact of claims on the insurance industry,        based on relatively recent historical data.        assessment indicates that the risk may be
     which had not anticipated such costs at the        However, regardless of the methodology             of concern, a more thorough assessment
     point of underwriting and led to a number          used, risks fundamentally require a forward-       has to be done. The evidence supporting
     of insurer insolvencies. Remarkably, data          looking approach. Actuaries and risk               the assessment of an emerging risk should
     on harmful health effects of asbestos were         managers can effectively integrate emerging        typically be in the form of an early warning
     reported as early as 1898. Asbestos exclusions     risks in the ERM framework by use of the           system or indicators. Ideally an indicator
     were introduced in the US and Canada               ordinary control cycle, a version of which is      should be reliable, sensitive, explicit and
     as early as 1918 but were forgotten in the         displayed in Figure 1.                             should provide information on the nature of

                                                        » The evidence
     following years.                                                                                      the hazard, its potential magnitude, velocity,
                                                                                                           latency, duration and the areas of the company
     What are emerging risks?
                                                        supporting the                                     likely to be affected. Regular reporting on
     An emerging risk is one resulting from a                                                              the indicator scan highlight any change in
     newly identified hazard to which a significant       assessment of an                                   the likelihood of the risk. The early warning
     exposure may occur or from an unexpected           emerging risk should                               system should integrate a blend of qualitative
     new or increased significant exposure and/                                                             and quantitative information. In addition,
     or susceptibility to a known hazard. The term
                                                        typically be in the form                           risks can occasionally be detected from
     emerging risk is used to describe risks that       of an early warning                                historical events and analysing how these have
     are poorly understood, but could potentially
     become significant.
                                                        system or indicators                 «             evolved over time through interacting factors
                                                                                                           such as demographic changes.
                                                        Establish context                                      Unlike other risks, emergent risks tend
     Why manage emerging risks?                         The objective is to establish a forward-           not to have a track record which can be
     The occurrence of emerging risks can, and          looking systematic framework to manage             used to estimate loss size and frequency.
     repeatedly does, overwhelm the community           emerging risks that could, at some point in        It is crucial for awareness of interconnections
     and the insurance industry. The last ten years     the future, impair the company’s financial          since scenarios may impact several parts
     has witnessed several large-scale emerging         strength, competitive position or reputation.      of the company like pandemics affecting
     risks, such as the 9/11 terrorism attack, a        To be successful, the framework needs              earnings, claims volume, business continuity,
     global financial crisis and an eruption of          support from management and the corporate          investment and the economy at large.
     the Eyjafjallajökull volcano in Iceland,           board, to be embedded in the organisation’s
     not to mention the SARS pandemic, an               culture and to be aligned with the company’s       Action and prioritisation
     Indian ocean tsunami and the clustering            objectives. This preliminary step also implies     The quality of the assessment is crucial in

20      March 2011                                                                                                               
         Figure 1 — Control cycle                                          Table 1 — Sample of emerging risk

                          Establish context                         Risk                Primary area of influence                Estimated           Priority
                                                                                   Assets?     Liabilities? Operations?        emergence stage

         Monitor                                   Identify risks
                                                                    Asbestos                         Yes                              Fully          High
                                                                               Issue: Asbestos is found to have caused lung-related diseases as well as other
                                                                               severe medical complications
                             risks into                                        Response: Asbestos exclusions become industry standard. Most manufacturers
                                          Risk assessment
                                                                               stop using asbestos in their products. In the past ten years, increased court
        Action and prioritisation          — Quantitative                      scrutiny due to alleged fraud cases results in many cases being dismissed
                                           — Qualitative

    order to prioritise risks and responses.                        Climate          Yes             Yes            Yes               Early          High
    The type of response depends on the nature                      change
    of the emerging risk and varies from limiting                              Issue: The potential for unprecedented natural disasters, loss of property value,
    exposure, risk sharing, hedging, product                                   life expectancy predictability challenges, agricultural impact, new diseases, etc
    design, exploiting opportunities to actively                               Response: Weather Derivatives; Severe-weather models used by insurers may
    managing an emerged risk.                                                  need to take into account the changing long term weather patterns
       First and foremost, companies should
    avoid informal response plans due to the
    potential velocity, magnitude and unusual
                                                                    Cyber            Yes             Yes            Yes             Elevated         High
    nature of emerging risks, whether identified
    or not. Preparedness includes identifying
    and allocating adequate levels of sufficiently                              Issue: Consumers and corporations become more dependent on wireless
    skilled resources to monitor emerging risks                                communication and data access, placing pressure on suppliers, particularly
    and recommending responses should the                                      during extreme events
    risk emerge. Beyond pre-existing plans, an                                 Response: Government-sponsored organisations and initiatives by
    effective response depends on the ability of                               Department of Homeland Security and others in Europe are exploring impacts.
    all concerned to react flexibly and creatively                              The International Organization for Standardization (ISO) is also reviewing
    as the situation unfolds.
       Dry runs can proactively identify risk
    control weaknesses, improve risk impact                                            Yes           Yes            Yes               Early          Medium
    estimates and support the general risk
    learning process.                                                          Issue: The use of matter on an ultra-small scale where one nanometre is
                                                                               equal to eight to ten atoms. Uncertainty as to the possibility and to what
    Monitor                                                                    extent nanoparticles can be harmful to humans, other forms of life and the
    Emerging risks should be routinely                                         environment, or their long-term stability. Issues range from intellectual property
    monitored through regular updates of                                       rights, systems failure, product liability to environmental pollution
    the risk register, dynamic assessment and                                  Response: Increased monitoring and studies conducted (including government
    responses. The management of emerging risks                                funding studies). Re/insurers may eventually apply certain exclusions related to
    will improve over time as the organisation                                 nanotechnology
    completes the control cycle and experience
    emerges. However, the management of                             Pandemic          Yes            Yes            Yes             Elevated         High
    emerging risks should not become overly                                    Issue: An epidemic that becomes widespread and affects a whole region, a
    bureaucratic or a box ticking exercise.    ■                               continent or the whole world. Pandemics can result in losses from business
                                                                               interruption, quarantines, government mandated action, contaminated property,
    David has contributed ‘Enterprise Emerging Risk                            loss of life, and so on
    Management’, presented at the 17th General Insurance
                                                                               Response: World Health Organisation develops global influenza preparedness
    Seminar organised by the Australian Institute of
                                                                               plan; Australian Prudential Regulatory Authority released a Prudential Practice
    Actuaries. The paper looks at a framework for managing
                                                                               Guide, which sets out expectations on regulated businesses and calls for
    emerging risks. See
                                                                               cross-disciplinary action to deal with pandemic if it arises; ISO developing
                                                                               exclusions for communicable diseases                                                                                                                             March 2011      21
 Climate change                Solar cycles

The falling apple
Brent Walker looks at the potential implications of the current solar cycle for the
Earth’s climate

                                                      at any moment in the recent past, present        the solar wind normally shield Earth from
                                                      and future. This is continually refined           most cosmic rays, therefore higher levels
                                                      and updated. Studies of the ephemeris            of 14C and 10Be are generated when the
                                                      have indicated that in the past specific          sun’s solar wind is reduced. The half-life
                                                      conjunctions of planets have heralded            properties of 14C enable radiocarbon dating
                                                      similar climatic changes.                        and results of measurements of 14C and 10Be
                                                          The sun is a gaseous body comprised          from ice cores, rocks, and so on, indicate
                                                      primarily of hydrogen (71%) and helium           that the sun’s activity has changed after
                                                      (27.1%) and it comprises more than 99.86%        specific conjunctions of planets.
                                                      of the mass of the solar system. The sun’s          The current, extremely quiet, solar cycle
                             Brent Walker is an
                                                      tremendous gravitational forces cause most       24 has solar scientists very interested as they
                             ex-chairman of
                                                      of it to be in the form of plasma, which         are witnessing events that will significantly
                             the International
                                                      is subject to magnetic and gravitational         expand scientific knowledge as to what
                             Association of
                                                      influences. It has a thermo-nuclear core          happens to the sun after a recent planetary
                             Consulting Actuaries
                                                      generating energy at the equivalent of           conjunction similar to one that occurred
                             and currently works
                                                      700,000 hydrogen bombs per second.               in the late 1780s. These scientists believe
                             as a health actuary
                                                      Although extremely hot at the core, the          that the Earth’s climate is entering a new

                    hy write an article about         surface is only around 5,500deg C.               cool period similar to the one that occurred
                    a falling apple? The apple        (Its diameter is 1,391,000 kilometres).          from 1790 to 1830, the Dalton Minimum.
                    watched by Sir Isaac Newton       The sun revolves at up to 34 days near the       The past two cold winters in the Northern
                    when it fell in 1666 led to the   poles and around 25 days at the equator,         Hemisphere and the extreme winter of
     theory of universal gravitation — but the        although its radioactive core does appear        2010/11 are indicative of this theory.
     learning process has not ended. Now armed        to spin evenly. The differences in spin,            Solar cycle 24 began on January 10 2008
     with modern satellites, powerful telescopes      together with solar storms and sunspots          after a relatively weak ending to solar
     and extensive computing power, solar             create turbulent magnetic forces that extend     cycle 23. Solar cycle 24 has continued
     physicists are learning how gravitational        to well beyond Pluto.                            to be very weak indeed, adjusted for
     interactions between the sun and the                 Since 1755, sunspot activity has been        changes in technology and recording
     planets affects climate.                         routinely measured and solar cycles              equipment it shows less sunspot activity
         Over the next 20 years, Sir Isaac reasoned   determined. More recently, we have also          than solar cycle 5, which commenced in
     that the sun would not be stationary but         started to measure other outputs from the        May 1798 and ended in December 1810.
     would move in orbit around the centre            sun, which include extreme ultraviolet light,    Observers are also noticing that many
     of gravity of the solar system, but as the
     movement of the planets is not uniform
                                                      various types of
                                                      radiation, solar   » Low solar outputs                              sunspots are unipolar spots
                                                                                                                          that can act as negative
     the centre of gravity of the solar system        wind, (mainly      directly cool the ozone                          sunspots, further reducing
     is in motion. Astronomers today use this         electrons,         layer and hence create                           extreme ultraviolet
     principle to search for planets orbiting far     protons and                                                         emissions, the solar wind
                                                                         additional turbulence in
     off stars.                                       helium atoms),                                                      and hence reducing the
         A simple demonstration of the                and so on.         the upper atmosphere                             magnetosphere. At this
     fundamental principle of gravity occurs          A lot of new data                                                   stage in the solar cycle,
     every day with tidal flows. Around the            about the sun is currently being obtained        the extreme ultraviolet output of the sun
     solstices, when the sun and moon are             from the Solar Dynamics Observatory              is at least 15% below normal and the solar
     aligned, their combined gravitational            satellite, which was launched by NASA in         wind is 40% to 50% slower than normal.
     forces create higher than normal tides.          February 2010. This information helps to         This means less northern and southern
     Other planets will also at times have an         determine how the sun behaves and how it         auroras and more 14C and 10Be created in
     effect on tides, but their influences are         influences Earth’s climate.                       Earth’s upper atmosphere.
     too weak to be noticed.                              Past estimates of the sun’s activity            There are many theories as to what
         The exact position of the planets            have been obtained from measurements             causes the sun to go into quieter periods
     at any point in time is important to             of Carbon 14 and Beryllium 10 (14C and           and what kick-starts higher activity —
     space exploration. In the 1970s the                 Be) in such things as ice cores, plants and   as in the last three decades of the 20th
     Jet Propulsion Laboratory (California            rocks. 14C and 10Be are produced in the          Century. There is no doubt that planetary
     Institute of Technology) produced the first       atmosphere from the interaction of nitrogen      gravitational fields affect the sun and
     ephemeris, a computerised map providing          and oxygen with neutrons produced by             its magnetic fields, but how does this
     the exact location of the sun and planets        cosmic rays. The sun’s magnetic field and         happen? Just as the angular momentum

22      March 2011                                                                                                           
    of the moon and the sun in conjunction          common La Niña and extreme weather            working life of today’s actuaries —
    cause king tides on Earth, the angular          events such as hurricanes, thunder-snow       will be population density, food and
    momentum of great planets — Jupiter,            and blizzards. La Niña weather patterns       energy security. There will be strong
    Saturn, Uranus and Neptune — cause              also predominated during previous             inflationary forces due to scarcity of
    changes in the sun’s plasma,                    Grand Minima.                                 food and energy, because of mankind’s
    particularly when in certain configurations.         Around the time of the Dalton Grand       unpreparedness for this climate change.
    Solar scientists have taken this theory         Minimum, England started colonising           There are significant implications for
    to a new level by including the angular         Australia. Early records suggest Eastern      actuaries. In particular, the general
    momentum of the dwarf planets and large         Australia was warmer and wetter for the       insurance industry must use appropriate
    asteroids and including amplifying spin         first 50-60 years of settlement even           climate models that are calibrated to
    orbit coupling forces in their calculations.    though the Northern Hemisphere was            planetary effects on the sun, using
    They have also performed similar                colder. For example, in 1788 the Thames       ephemeris data and solar physics research.
    calculations at other times of previously       was frozen for seven weeks, yet in Sydney a   Otherwise, the industry will become
    occurring similar planetary configurations.      maximum of over 100 degrees Fahrenheit        financially compromised during this solar
        Over the last three years there have been   was recorded by Watkin Tench, the captain     Grand Minimum. Apples fall today just as
    significant changes occurring in Earth’s         of the Marines, on at least one day each      they did in 1666…                          ■
    upper atmosphere. The thermosphere              week in the summers of 1788/89 and
    (90-600km above Earth’s surface) is affected    1789/90. The last Frost Fair was held on      I am indebted to Geoff Sharp who peer-reviewed this
    and this part of the atmosphere helps to        the Thames in 1814 but a short El Niño        article for me. A recent publication of his provides a
    determine the strength and direction of jet     event caused a drought in New South Wales     reference point to many other important scientific
    streams, particularly the polar jet streams.    that year. This new Grand Minimum could       works in this area. The paper is ‘Are Uranus and
    For example, the jet stream over Russia and     produce similar climatic conditions.          Neptune responsible for Solar Grand Minima and Solar
    down through Pakistan stayed stationary            As the new Grand Minimum progresses,       Cycle Modulation?’ and it is published in the Cornell
    for so long in the northern summer of           the defining issues — at least for the         University Library.
    2010, that enormous floods occurred in
    Pakistan and forest fires in Russia.
    Low solar outputs directly cool the
    ozone layer and hence create
    additional turbulence in
    the upper atmosphere
       leading to more                                                                                                                       March 2011    23
 Q&A                           Catherine Barton

Rising star
Marjorie Ngwenya talks to Catherine Barton about the paths she walked to become a partner
relatively early in her career in a male-dominated insurance industry

     What motivated you to embark upon                     I wouldn’t rule out moving to a role in         You were one of the youngest
     an actuarial career?                               industry at a later stage in my career, either     partners during your time with
     I was sponsored through university by              an actuarial role or another, possibly more        Deloitte. How would you describe
     Royal Insurance as I was studying maths.           commercially-focused, role that would make         your recipe for success?
     It placed me in its life actuarial department      use of my insurance experience.                    I think that the fact that I liked developing
     for two summers of work experience.                                                                   relationships, both with clients and within
     When it came to applying for jobs, I thought       How do you see the employment                      the business, was a big contributory factor
     I knew more at that stage about actuarial          market for actuaries changing in the               to me making partner at Deloitte relatively
     work than anything else, so thought I’d give       next 10-15 years?                                  early on in my career. I have always enjoyed
     it a try.                                          I think that many of the trends we have seen       meeting people, getting to know them and
                                                        in the actuarial employment market over            keeping in touch with them, which were all
     Was your heart always set on working               the last decade will continue over the next        things that fitted well with being successful
     in an actuarial practice or have you               10-15 years. In recent years the actuarial         within a consultancy environment. I found
     tried your hand at an industry role?               practices in the ‘big four’ audit firms have        that the relationships with colleagues were
     I decided at the outset that I wanted to work      grown significantly, many of the traditional        just as important as those with clients. It was
     in a consultancy rather than a company as          actuarial firms have been subsumed into             a concern when I moved on to Ernst & Young
     I thought it would be guaranteed to offer          other businesses and many insurers have            that my lack of an internal network would
     lots of variety and challenges, which hasn’t       significantly bolstered their in-house actuarial    mean that I might struggle to do what the
     proven to be wrong. I have never really found      teams. I think that this growth of in-house        business wanted me to. In fact, that concern
     myself in a position where I’m doing the           actuarial roles will continue, with a deepening    was needless, as I was warmly welcomed and
     same thing from one year to the next.              involvement of actuaries across insurance          quickly up and running within the business.
     I’ve also been fortunate that, for some clients,   businesses’ many functions, where the
     I have played a fairly hands-on role, including    actuarial skills are increasingly seen as adding   How has your role changed since
     one client where I worked on-site for a            value to insurers’ commercial operations.          moving to Ernst & Young?
     long-term secondment, which gave me a bit                                                             More than you would imagine in moving
     of a feel of what life is like on the other side   What has been your most memorable                  from one consultancy to another. At Deloitte
     of the fence.                                      career lesson?                                     I was focused on retail actuarial work, largely
                                                        Trusting my own instinct and judgment.             in the UK. Moving to Ernst & Young has given
                                                        Where I have had concerns about something,         me the exciting opportunity to build on my
                                                        more often than not they have proven to            previous role and establish a non-life retail
                                                        be warranted, and generally tackling issues        actuarial team across the firm’s European
                                                        sooner rather than later is better.                partnership. Previously, Ernst & Young’s
                                                                                                           actuarial practice was largely centred around
                                                        What is the biggest issue keeping your             London and Bermuda-based clients and,
                                                        clients awake at night currently?                  seeing us expand the range of clients we are
                                                        I do a lot of work in the UK motor insurance       working with is very rewarding. My role is
                                                        market, and turning around performance in          focused on making our retail market activities
                                                        that market from its very unprofitable level in     happen, so my time is split fairly evenly
                                                        2009/2010 is a major challenge for many of         between recruiting actuaries with specific
                                                        my clients. While prices have been increasing      retail experience to add to our team in
                                                        over the last year, price competition remains      the UK and Europe, business development
       Catherine Barton is a partner in Ernst           very strong with insurers wrestling to gain        and doing projects for clients. The big
       & Young’s European Actuarial Practice            ownership of the customer. At the same             difference in nature of work from my previous
       where she leads the non-life retail              time, claims inflation is motoring, fuelled         role is that pricing- and customer-analytics-
       insurance actuarial team. Catherine is           by a whole range of factors. Together with         related projects form more of our work at
       particularly experienced in the UK motor         potentially increased capital costs in a           Ernst & Young, which is an interesting area of
       and household insurance markets and              post-Solvency II world, there is plenty for        work for the team given the challenges in the
       has been a frequent commentator in the           many in the motor market to worry about.           UK motor market.
       insurance press on retail market trends          It is equally an exciting market to be working
       and experience. She was previously a             in as an actuary, for example, by helping          How do you measure your success?
       partner at Deloitte where she made               to improve profitability, understanding the         My personal measure of success is the
       Management Today’s UK Top 35                     customer better and getting a proper grip on       recognition I get from other people for
       Women List.                                      the claims trends.                                 doing a good job, whether they are clients

24      March 2011                                                                                                               
    or colleagues. If other people are happy with                       way to fit in. In terms of being successful,    Are you able to find time for it given
    what I’m doing with them, I feel rewarded.                          or rising to the top, the businesses I have    the demanding nature of your role?
                                                                        worked in have assessed and promoted           If I’d been asked this question a few years’
    You were interviewed by The Times in                                people based on merit not gender and long      ago, the answer would have been
    a feature entitled ‘Alpha females on                                may that be the case.                          ‘not enough’. I think I have often been
    the way up’. Do you believe that it’s a                                                                            my own worst enemy in terms of doing too
    man’s world in the actuarial                                        What is the greatest risk you have             much work, and there came a time when
    profession and women need to                                        taken, personally or professionally?           I realised that I needed to be much more
    behave like their male counterparts to                              Reflecting on this, I don’t think I’ve really   disciplined with myself. Starting a new role
    make it to the top?                                                 taken any big risks. Maybe that proves I was   was the perfect opportunity to reset the
    I’ve never really thought of the actuarial                          always destined to be an actuary!              boundaries, and now I typically plan to
    profession as a man’s world. The insurance                                                                         keep work-related activities to a couple of
    industry certainly is male-dominated, but                           What is your favourite pastime?                evenings a week, leaving the other evenings
    less so than when I started 15 years ago.                           Spending time with my friends and family is    free to do things outside work, which
    Likewise, it seems that there are many more                         really important to me. Photography is my      gives me a better balance than I previously
    women entering the profession as graduates                          passion, particularly wildlife photography,    had. Clearly, consultancy is demanding
    than when I started out. My experience has                          although at the moment I’m spending more       and there are times when client needs
    been that being female in the insurance                             time playing tennis and learning German.       mean that plans need to be changed, but
    world has not made any difference to my                             And at this time of year I also find myself     thankfully that is the exception more often
    role. I’ve never had to act in any particular                       hankering for the ski slopes.                  than the rule.                               ■

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 Modelling                    Value at Risk

Playing the long game
Richard Plat describes a stochastic mortality model suitable for calculating capital on a
one-year Value-at-Risk measure

                             Dr. Richard Plat
                             owns Richard
                             Plat Consultancy,
                             specialising in
                             valuation and risk
                             management for

                pcoming new regulation on             This means that a large effect on next year’s   treating the simulated mortality rates as a
                required solvency capital             realised mortality is not expected, but the     new observation, repeating the calibration
                (Solvency II) for insurers will       impact on future mortality rates can be         process of the spot mortality model, and
                be predominantly based on             significant. To adequately quantify the          then projecting the (fixed) trend forward for
     a one-year Value-at-Risk (VaR) measure.          VaR for longevity and mortality risk, both      each simulation.
     This measure aims at covering the risk of        components have to be addressed properly.           However, this means that the spot
     variation in the projection year as well as                                                      mortality model has to be calibrated
     changes in the best-estimate projection          Existing stochastic mortality models            thousands of times, while the projection
     for future years. This is not something          There is a vast literature on stochastic        of the trend in each simulation would
     for which existing stochastic mortality          modelling of mortality rates. Most of the       require further simulations if precision was
     models are designed. This article, therefore,    stochastic mortality models are so-called       necessary. Furthermore, the VaR for the
     introduces a stochastic mortality trend          spot models that only model the realised        second component would be based on the
     model that fits the purpose of determining        mortality. Examples of this include Lee         tail of the distribution of mortality rates, not
     the one-year VaR for longevity and               and Carter (1992), Renshaw and Haberman         mortality trends. Finally, the risk is possibly
     mortality risk.                                  (2006), Cairns et al (2006a, 2009) and          underestimated with this approach, because
        The Solvency Capital Requirement              Plat (2009). For projection purposes,           the impact of the next year’s realised
     will be based on a one-year VaR measure,         these models contain a mortality trend          mortality rates on the calibration of the spot
     corresponding to the 99.5% percentile.           assumption. However, in most models             model can be relatively low, depending on
     For longevity and mortality, this one-year
     risk measure consists of two components:         » To adequately quantify                        the number of historical years underlying
                                                                                                      the calibration of the model.
     ■ the risk that next year’s realised mortality   the VaR for longevity                               Probably a better alternative are the
     will be below (or above) its expectation                                                         so-called forward mortality models,
     ■ the risk of a decrease (or increase) in
                                                      and mortality risk, both                        which model the mortality trend directly.
     expected mortality beyond next year.             components have to be                           The model of Bauer et al (2008, 2009) and
        The first component is the ordinary
     stochastic variation around the ‘best-
                                                      addressed properly               «              its extension by Börger (2010) is the only
                                                                                                      forward mortality model that has
     estimate’ projection. The second component       this trend is fixed and scenarios of realised    concrete specifications, so this is the only
     reflects the risk of a change in the best-        mortality are derived as random deviations      forward model that is readily available.
     estimate projection for future years. A cure     from this trend. This means that those          However, this model is quite complex and
     for cancer is a classic example of this.         models do not account for the second            not very transparent; furthermore, the
     It would take some time before such a new        component of the longevity or mortality         calibration procedure is complex.
     medicine would be available for a large          risk. This can be overcome in a one-year            Note that insurance companies have
     enough group of people that mortality for        VaR calculation by generating thousands of      to model the mortality rates of males
     the whole population would be affected.          Monte Carlo simulations for the next year,      and females simultaneously, adequately

26      March 2011                                                                                                          
                                                                   Figure 1 — 250 simulations of projected qx for age 65,
    addressing the dependence between them.
                                                                   males and females
    Including this in the forward mortality
    models would at least double
    the complexity.                                                 0.025

    New stochastic mortality trend model                            0.020
    In Plat (2010)1 a new stochastic mortality
    trend model is proposed. The data used are                qx    0.015

    the historical initial mortality rates of the
    population of The Netherlands (males and
    females) for the years 1950-2008. The basis
    for fitting the historical trends is a relatively
    simple and well-known deterministic trend
    model, where the future trend per age is                             1950   1960   1970   1980   1990     2000    2010    2020     2030     2040     2050
    summarised in one parameter x:                                                                            Year
    (1) qx,t = x qx,t–1
       where t is the year. Using only one                                                                  Females
    parameter for the trend will allow stochastic                   0.030
    modelling of the future trends using well-
    known techniques. This model is fitted for                       0.025

    each age on subsequent blocks of 30 years
    of historically observed mortality rates,                       0.020

    beginning with 1950-1979, then 1951-1980
                                                               qx    0.015
    and so on, until the period 1979-2008.
    The reason for using blocks of 30 years is so
    that both fitting the historical trends and
    fitting the stochastic model for these trends
    will be based on enough data. The result of
    this exercise is a matrix of age by year (per                   0.000
    gender), filled with historical observations                          1950   1960   1970   1980   1990     2000    2010     2020    2030     2040     2050
    of (horizontal) mortality trends, represented
    by x. Since this form of input is similar as
    the usual format of historically observed            in mortality trend to vary between ages.             compared to the model of Bauer et al (2008,
    mortality rates and the stochastic mortality         The factor K3 is added to capture the specific        2009) are that the model and calibration
    trends are also driven by changes in                 dynamics of younger ages. The parameter              routine are less complex, the results are
    mortality rates, we can apply techniques             x is a constant that is also estimated from          easier to interpret and the techniques
    known from the substantial literature of             the data. After fitting the three-factor model        used are well known from the literature
    spot mortality models.                               for all historical years for each gender, the        on stochastic mortality models and are
       Therefore, we will use a three-factor             resulting time-series of estimated parameters        standard available in statistical software.
    version (per gender) of the spot mortality           are simultaneously modelled for males and               Note that different specifications for
    model described in Plat (2009):                      females in the form of a six-factor time             the calibration of model (1) are possible.
    (2) x ( ) = K1( ) + K2( ) (x - x) + K3( ) (x - x)+   series model.                                        For example, in Plat (2010) an alternative
       where (x - x) = max (x - x,0). The model             Using the fitted time series model,                is discussed that distinguishes between a
    has three stochastic factors but a relatively        future mortality trends can be simulated             short- or middle-term and long-term trend.
    simple structure. For countries where a clear        and the one-year mortality trend risk can               Existing stochastic mortality models are
    cohort effect in the historical mortality            be determined. Figure 1 gives the result of          not designed to quantify the one-year risk
    trend observations is observed, cohort               250 simulations of the mortality trend               that is the basis for the required solvency
    parameters could be added to (3.1), see              for a one-year horizon. Applying the                 capital of Solvency II. Therefore, in this
    Plat (2009).                                         simulated mortality trends to the qx,t’s             article a stochastic mortality trend model is
       The factor K1 represents the base level           gives simulated mortality rates for the              introduced that fits this purpose.           ■
    of the mortality trend and allows for                whole projection period, but based on a
    changes in mortality trends for all ages             one-year horizon.                                    1 ‘One-Year Value-at-Risk for Longevity and Mortality’,
    simultaneously. The factor K2 allows changes            The advantages of this approach                   Richard Plat, working paper                                                                                                                                  March 2011      27
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                                                                                                            Pensions         Conference preview

Moving ahead of the curve
Alison Tyndall previews the Pensions conference taking place on 1-3 June at the
SouthportsTheatre and Convention Centre
   sa d

                                 Chairman’s preview
    This year’s Pensions conference takes place in   schemes present, and the recent government        close with a debate on the future of the
    the seaside town of Southport in Lancashire,     announcements on annuity reform will              pensions professional, from the viewpoints
    the ‘Paris of the North’ and home to             change the landscape for pensions.                of an experienced actuary, a pensions lawyer
    Royal Birkdale championship golf course.            This sets a real challenge for all pensions    and a recently qualified actuary. This will be
    The nickname has an intriguing history.          professionals — how do we position ourselves      moderated by Jane Curtis, incoming president
    Napoleon III, nephew and heir of Napoleon I,     to be ready for whatever change will throw        of the Institute and Faculty of Actuaries.
    president then emperor of France between         at us? Consideration of this fundamental             The workshop line-up for this year’s
    1848 and 1870, spent two years in exile in       question for our industry led us to our theme     conference offers thought-provoking views
    Southport after escaping from jail in France     for 2011, ‘Moving ahead of the curve’.            from actuarial and non-actuarial speakers.
    following the failure of an attempted coup          Our four plenaries look to the future          A wide range of technical themes are
    in 1840. So taken by the broad tree-lined        of the global economy, UK pensions,               covered from different angles, from the
    boulevards, covered walkways and arcades         risk management and professionalism.              familiar topics of scheme funding and
    that characterise Lord Street, he had the        The undisputed highlight of our conference        mortality, through the challenges posed
    centre of Paris, specifically the area around     will be the opportunity to hear direct from       by funded and unfunded public sector
    Boulevard Haussman, redesigned in its style.     Lord Hutton, the architect of UK public sector    pensions, to covenant assessment, Europe,
       Our 2010 conference theme was                 reform, shortly after the completion of stage 2   the international dimension, the 2011 tax
    ‘The revolving world of pensions — adapting      of his review of public service pensions.         changes and the latest developments in
    to constant change’. If anything, the pace       We are delighted to have been able to secure      pensions risk management. The programme
    of change has accelerated since last June.       a prominent economist and former Monetary         also offers sessions on the latest thinking
    This has been driven by fundamental changes      Policy Committee member to give us his view       in DC scheme management, design and
    in the global economy, legislation, accounting   of the economic future, in conjunction with       communication. The professionalism angle
    rules and, most recently, government policy      the economics editor of the Sunday Times.         has not been neglected; in addition to
    changes. This trend shows no signs of            With pensions risk management being               our final plenary, there is a session on the
    slowing down. The management of defined           uppermost in the minds of many sponsoring         new Board for Actuarial Standards’ new
    benefit (DB) pension schemes is being driven      employers and trustee bodies, we will hear        standards. The programme also offers five
    increasingly by the need to understand           the views of two experts in the corporate         soft skills workshops, from theories that
    and manage the risks that running such           and trustee spaces. The conference will then      explain the way we live and work, to a view
                                                                                                       of what trustees want from their actuaries
                                                                                                       and that challenge for us all whatever our
       Sessions at a glance                          ■ Plenary 3: Enterprise risk
                                                     management in action
                                                                                                       management experience — ‘Making difficult
                                                                                                       conversations do-able’.
       ■ Plenary 1: Our economic future,             Speakers: Alan Smith, global head                    The popular ‘hot topics slot’ features again
       what next?                                    of Risk Strategy for HSBC and                     this year, and will offer the opportunity to
       Speakers: Dr Sushil Wadhwani,                 Catherine Redmond, director of                    hear the latest developments in the issues of
       hedge fund proprietor and former              Barclays’ UK Pension Executive Team.              the day.
       MPC member and David Smith,                   Chaired by Jim Boyle.                                All through the conference you will be able
       economics editor of the Sunday Times.         ■ Plenary 4: Our professional future              to share your thoughts on issues in pensions
       Chaired by Huw Evans.                         — different perspective                           via interactive media. And last, but not least,
       ■ Plenary 2: Our political future —           Speakers: Charles Cowling, managing               this year’s conference will offer numerous
       the balancing act for UK pensions             director of Pension Capital Strategies,           networking opportunities.
       Speakers: Lord Hutton of Furness and a        Clive Pugh, partner in Burgess Salmon
       senior spokesperson for the DWP.              and Edd Collins, consultant at                    For more information, visit
       Chaired by Ronnie Bowie.                      Towers Watson. Chaired by Jane Curtis.  
                                                                                                       pensions-conference-2011                                                                                                                   March 2011      29
 Regulation                    Adverse equality

More equal than others
Guy Thomas argues that some gender selection increases the societal benefit of insurance

                                                       not lead to difficulties for either gender in     of them, say 200, buy insurance, compared
                                                       buying insurance. I see this as very different   with 300 of the low risks.
                                                       from the proposition a few years ago that           Table 1 shows the outcome. 70 of 150
                                                       insurers should be banned from asking for        (47%) of losses in the whole population are
                                                       genetic test results, when negligible costs      compensated by insurance. This 47% ‘loss
                                                       if a ban was applied had to be weighed           coverage’ is an index of the social benefit of
                                                       against clear potential social harms if it was   insurance to the population as a whole.
                                                       not. However, a common feature of debates           Now suppose instead that risk
                                                       about both genetics and gender equality is       classification is restricted, so that insurers
                                                       that some arguments made by insurers seem        have to charge a single pooled price to
                             Guy Thomas is an
                                                       suspect. This article examines one common        both the high and low risks. One possible
                             honorary lecturer at
                                                       argument: the idea that restrictions on rating   outcome is shown in Table 2. The pooled
                             the University of Kent
                                                       may lead to adverse selection, and that this     price is expensive for low risks, so fewer of
                                                       is always a bad thing.                           them buy insurance, 230, compared with
                                                           Commentators who warn that less risk         300 before. The ‘pooled’ price is cheap for
                                                       classification may lead to adverse selection      high risks, so more of them buy insurance,
                                                       do not always spell out why they think this      260, compared with 200 before. The total
                                                       is ‘adverse’ from a public policy perspective.   number of policies sold falls, 490 compared
                                                       However, if pressed, they usually explain        with 500 before. But the shift in coverage
                                                       that adverse selection leads to more             towards high risks more than outweighs the

                ecent articles and news items          insurance purchased by high risks, and less      fall in number of policies sold: 75 of 150
                in The Actuary have criticised
                the European Court of Justice’s
                                                       purchased by low
                                                       risks, so that the      » From a public policy                            (50%) of losses in the
                                                                                                                                 whole population are
                proposition that insurers should       break-even price of     perspective, a degree                             now compensated by
     be banned from using gender as a risk factor.     insurance rises; and                                                      insurance, compared
     I agree that such a ban has costs as well as      as the number of
                                                                               of so-called ‘adverse’                            with 47% before.
     benefits, and that gender may be a                 high risks insured is   selection may often                               A moderate degree
     relatively benign and effective classification.
     Possible costs include an increase in road
                                                       usually smaller than
                                                       the number of low
                                                                               be beneficial            «                        of adverse selection
                                                                                                                                 has led to higher
     accidents from more young men driving             risks, the total number of people covered        loss coverage — a good outcome.
     powerful cars, and insurers resorting to          by insurance is likely to fall. They argue          If the adverse selection becomes too
     other, more intrusive, classifications.            that this fall is a bad outcome for society.     severe, this can lead to a bad outcome.
     Possible benefits seem modest, because             In my view this argument rests on a              However, to generate a bad outcome in this
     gender differences in risk have different signs   mis-measure of the benefit of insurance to        example, it is necessary to assume a very
     for different products, and they generally do     the population as a whole. A fall in number      large, and probably implausible, response to
                                                       of people insured can often be consistent        changes in price by low risks compared with
                                                       with a higher number of losses compensated       high risks. This possibility is shown in Table 3.
                                                       by insurance, if more of the ‘right’ people      Only 150 of the low risks and 270 of the high
                                                       (those more likely to suffer loss) buy           risks buy insurance, giving a total number
                                                       insurance. From a public policy perspective,     of policies sold of 420. The shift in coverage
                                                       a degree of so-called ‘adverse’ selection may    towards high risks is insufficient to outweigh
                                                       often be beneficial.                              the fall in number of policies sold: only 69 of
                                                           The arithmetic of this point can be          150 (46%) of losses in the population are now
                                                       illustrated with simple examples.                compensated by insurance.
                                                       Suppose that in a population of 1,000,              Which of Tables 2 or 3 represents the
                                                       half the people (say one gender) have            more likely outcome if restrictions are
                                                       twice the risk of the other half.                imposed on risk classification? The answer
                                                       Assume that everyone can buy either one          depends on the relative numbers in the
                                                       unit of insurance or none (this simplifies        high and low-risk groups, their relative
                                                       the presentation, but it is not necessary).      risks and the elasticity of demand for
                                                       If permitted, insurers will charge different     insurance in the high and low-risk groups.
                                                       prices to low and high risks. Insurance is       Simulation studies1 suggest that with
                                                       less affordable to the high risks, so fewer      plausible elasticities of demand in high and

30      March 2011                                                                                                             
                                                                Table 1 — No adverse selection
    low-risk groups, some degree of restriction                                                                         Low risk                                   High risk
    on risk classification may often increase
    loss coverage; but the converse outcome             Population                                                          500                                             500
    is also possible. Under the loss coverage
    criterion, public policy on risk classification      Risk                                                                0.1                                             0.2
    can be seen as a question of degree: what
    restrictions on risk classification are              Break-even premiums (differentiated)                                0.1                                             0.2
    required to induce the optimal degree of
    adverse selection, which maximises the              Insurance purchases                                                 300                                             200
    loss coverage?
       Loss coverage is not the only criterion          Losses compensated by insurance                                      30                                             40
    which public policymakers should consider                                            losses insured
    when setting policy on risk classification.          Loss coverage                  –––––––––––––––––––                                      47%
                                                                                           total losses
    Social attitudes to discrimination, and where
    relevant the possible moral hazard effects                  Table 2 — Moderate adverse selection, higher loss coverage
    of less risk classification (for instance, more               (good outcome)
    young men driving powerful cars) might                                                                              Low risk                                   High risk
    also be considered. However, to the extent
    that coverage effects within the insurance          Population                                                          500                                             500
    market are given weight, policymakers should
    carefully consider the metric they use to           Risk                                                                0.1                                             0.2
    measure these effects. From a public policy
    perspective, loss coverage seems a better           Break-even premium (pooled)                                                             ← 0.1543 →
    metric than conventional metric of number
    of policies sold. This is because loss coverage     Insurance purchases                                                 230                                             260
    focuses on the expected losses compensated
    by insurance (risk-weighted insurance               Losses compensated by insurance                                      23                                              52
    demand), which seems a better indicator of                                          losses insured
    the social efficacy or benefit of insurance to        Loss coverage                 –––––––––––––––––––
                                                                                          total losses                                          50%
    the whole population than number of policies
    sold (unweighted insurance demand).                         Table 3 — Severe adverse selection, lower loss coverage (bad outcome)
    Application to gender discrimination                                                                                Low risk                                   High risk
    If gender were restricted as a rating factor,
    would loss coverage rise or fall? I do not know,    Population                                                          500                                             500
    but I suspect that the effects would be modest,
    and probably different for different classes        Risk                                                                0.1                                             0.2
    of insurance. Even if the reality for some
    products corresponds to Table 3 — that is,          Break-even premium (pooled)                                                             ← 0.1643 →
    the population’s response to the change
    in prices ‘goes too far’, reducing loss coverage    Insurance purchases                                                 150                                             270
    — the ‘cost’ of the adverse selection if
    correctly measured by loss coverage would be        Losses compensated by insurance                                      15                                              54
    smaller than the ‘cost’ as commonly measured                                        losses insured
    by the fall in number of policies sold.             Loss coverage                 –––––––––––––––––––
                                                                                          total losses                                          46%
        I do not advocate a ban on gender
    rating, but nor do I think that it would be        overblown; the same could be said of                      Risk and Insurance, 32: 105-132;
    a disastrous outcome. In my view actuaries         commentary a decade earlier on AIDS.                      (2008) ‘Loss coverage as a public policy
    have a tendency to make exaggerated claims         Is there a limit to the number of times                   objective for risk classification schemes.’
    about adverse selection and the harm               that a credible profession can cry wolf?              ■   Journal of Risk & Insurance, 75: 997-1018;
    caused by restrictions on risk classification.                                                                (2009) ‘Demand elasticity, risk classification and loss
    Much of what actuaries said about genetics         1 Further reading — (2007) ‘Some novel                    coverage: when can community rating work?’
    and insurance a few years ago now looks            perspectives on risk classification.’ Geneva Papers on    ASTIN Bulletin, 39: 403-428                                                                                                                                         March 2011     31
 Conference preview               Risk and investment

Investing in risk
Marcus Bowser and Adrian Lawrence preview the Risk and investment conference taking place
on 19-21 June, at the Hilton Newcastle, Gateshead

     The 2011 Risk and investment conference is
                                                        Chairmen’s preview
                                                        We are pleased to announce that               sessions presented by working parties and
     being held at a challenging time when we are    Will Hutton, our keynote speaker, will           industry experts.
     all looking forward to doing the same thing     be kicking off this year’s conference.              The conference programme also includes
     — that is ‘investing in risk’.                  Mr Hutton is the chief executive of              five breakout sessions, each of which offers
        For some this may mean scouting for          The Work Foundation, an independent, not         the choice between risk and investment
     investments that balance the level of risk      for dividend research-based consultancy          topics. In response to your feedback, we
     accepted against the potential rewards.         which is the most influential voice on            have continued to include sessions from
     In a world where it is now abundantly clear     employment issues in Britain. He began           practitioners that detail how the latest risk
     that there is no such thing as a risk-free      his career as a stockbroker and investment       management techniques are being applied in
     investment, and where there are perhaps         analyst, before working in BBC TV and radio      actuaries’ daily roles, such as our ‘Replicating
     stronger headwinds than at any time in living   as a producer and reporter. He spent four        portfolios for value-added ALM risk
     memory, equipping ourselves to make those       years as editor-in-chief of The Observer, and    management’ workshop. As always, there will
     investment decisions is more important than     continues to write a weekly column for the       also be plenty of opportunities to socialise with
     ever. For others this may mean taking a wider   paper, winning the Political Journalist of the   your peers in the risk and investment area.
     view and, mindful of Solvency II, developing    Year award in 1993. I’m sure you will agree         Finally, we would like to thank the
     risk management frameworks that support         that he is well placed to open the conference    organising committee for their hard work in
     our businesses in making decisions on which     with a discussion on the political, regulatory   putting together a stimulating programme.
     risks to take and why.                          and economic headwinds we face.                  Marcus Bowser and Adrian Lawrence, chairmen,
        During the conference a range of high-          The Risk and investment conference            Risk and investment conference 2011 organising
     profile speakers will depict the economic,       is well known as a source of cutting-edge        committee
     regulatory and environmental headwinds          research. In 2011 we are pleased to continue
     we face and provide practical insights on       in this vein, with two sessions dedicated        For more information and to book your place, please
     investment and risk to equip ourselves to       to research sponsored by the Actuarial           visit
     manage and take advantage of these.             Profession, complemented with breakout           investment-conference-2011

       Sessions at a glance                           illustrate his straightforward brand of
                                                      thinking, advocating the philosophy of
                                                                                                      consider the features of a strong ERM
                                                                                                      framework and how such a framework
       ■ Plenary 1: The UK, Europe and China          ‘right thought, right word, right action’.      can promote better business decisions.
       Speaker Will Hutton, The Work Foundation       ■ Plenary 4: Applications of                    ■ Plenary 6: Investing in illiquid
       ■ Plenary 2: Intergenerational fairness        complexity science                              markets; the risks and how markets
       Speaker James Sefton, Imperial College,        Speaker Neil Allan, Bristol University and      reward them
       will consider the impact government            Neil Cantle, Milliman, will consider why        Speaker Andrew D Smith, Deloitte,
       programmes have on both private savings        the tools and methods we have been              will consider illiquid markets and how
       and transfers, including the challenges        relying on are failing us in what is an         markets reward illiquidity.
       posed by ageing populations and                increasingly complex and interconnected         ■ Plenary 7: Investment and risk
       consumption across the life cycle, with        world. Through the lens of systems              management — a view from off the
       comparisons between developed and              science, this session reveals new tools         beaten track
       developing economies.                          better suited to comprehending emergent         Speaker Colm Fitzgerald, Dublin City
       ■ Plenary 3: Profiting from the truth;         risks and appetite in this dynamic              University will promote debate on a
       Life, death and nothing                        environment.                                    range of topics, including investment
       Speaker BJ Cunningham will draw on his         ■ Plenary 5: A CRO’s perspective                psychology, risk intelligence Freudian
       experience as a serial entrepreneur to         Speaker Robin Spencer, Aviva, will              analysis and the financial crisis.

32      March 2011                                                                                                               
                                                                                                        Risk appetite                           ERM

Unravelling the complexity of risk
Neil Cantle provides an update on the progress so far and expected future outputs of one of
the Profession’s ERM research projects

                                                    the materials for the Open Forum held on        the information needed to understand the
                                                    21 January at Staple Inn.                       dynamics of their risk profile.
                                                       Looking at current practices in relation        This part of the research also covers
                                                    to risk appetite, we note that companies are    how to identify emerging risks, particularly
                                                    beginning to find ways of describing their       those which are hard to spot early in their
                                                    preferences and tolerances for risk, based      development. Two key features of complex
                                                    around the different risk categories used       adaptive systems are that of emergence,
                                                    in their risk framework. There are some         meaning that the ‘whole’ can exhibit
                                                    differences in the risk measures used, but      properties not held by any of the ‘parts’, and
                                                    essentially all approaches come down to         evolution. In the risk context this means
                           xxxxCantle is
                                                    describing the goals that the company has       that you cannot simply look at individual
                           a principal and
                                                    in its business plan and expressing how         performance factors — you have to also
                           consulting actuary at
                                                    much uncertainty the Board is comfortable       look at the result of their interaction and
                                                    with in relation to achieving those goals.      past dependency. Using techniques that can
                                                    If we think of the company as a system          make the dynamics of the business more
                                                    then these goals are the intended outputs,      transparent and, importantly, more readily
                                                    so the risk appetite exercise is really about   understandable, companies can be more
                                                    describing the acceptable range of those        efficient and effective in their deployment
                                                    outputs and translating that into a set of      of risk management resource.

           n October, the Profession announced      limits on input factors to ensure that actual      The research is very much focused on
           funding for several enterprise risk      outputs remain within that range.               delivering tools and ideas that firms can
           management (ERM) research projects.
           Here, we give you an update on the       » Companies are                                 actually implement, so the delivery schedule
                                                                                                    is designed to provide opportunities
    project looking at new approaches to risk       beginning to find                               for practitioners to hear about the
    appetite and emerging risks so you know
    what to expect and when. The research
                                                    ways of describing                              developments and ask questions.
                                                                                                       The project is broadly organised into four
    team is headed by myself and Neil Allan,        their preferences and                           phases. The first phase of reviewing existing
    research fellow in risk systems,                tolerances for risk, based                      approaches and developing the complex
    Bath & Bristol Systems Centre. Over the                                                         systems framework is complete. To provide
    past five years the team has worked together
                                                    around the different                            background on complexity sciences and the
    on groundbreaking research seeking to           risk categories used in                         application to risk management, there was
    frame ‘risk’ in a more insightful way.
    The partnership has successfully delivered
                                                    their risk framework               «            an Open Forum on 21 January.
                                                                                                       The second phase, taking place during
    a range of practical applications of the           The difficulty that companies face            the first quarter of 2011, develops the tools
    results to date.                                is normally at this ‘translation’ step.         and builds case studies to demonstrate
       One of the key components of modern          There are several aspects to this difficulty.    their application. At the end of the quarter,
    risk management frameworks is the risk          First, how do you know which factors            a colloquium event will be held at Bristol
    appetite. This sets the benchmark for the       are most important with respect to the          University to facilitate discussion about the
    organisation to measure against, in terms       outputs? Second, how do these factors           research and how to apply the concepts.
    of how much risk it is taking in the pursuit    interact? Third, how do you know what              The development of tools will be finalised
    of its objectives and the mix of those risks    limit to set on an input factor in order        during the second quarter with reports
    overall. Although it is relatively easy to      to be confident that the output remains          submitted to the Profession and insights
    comprehend at a high level, it has proved       within the range set? Looking at it from a      presented at the Risk and investment
    to be a difficult area for firms to get right —   systems perspective, you can see why this is    conference in June. There will also be a
    particularly setting and monitoring limits      a difficult task. For a company, uncovering      symposium at Bristol University to expose
    and knowing how to adjust them to keep          the factors that matter most to the outputs     the results outside the actuarial profession.
    within appetite overall. Underlying the         and the nature of interactions between             During the remainder of the year a series
    research being carried out on this topic is     them is a non-trivial task — relationships      of communication processes will be running
    the notion of complex adaptive systems          are non-linear, and factors keep changing       to provide web-based content, academic
    and the application of sciences that are        over time. This is a problem that has           papers, media and so on. In this way
    gradually uncovering the behaviour of such      been studied in other fields, and within         actuaries have the fullest possible access to
    systems. Those wanting to get into more         the project we have described various           them and the Profession promotes its role in
    detail on this are encouraged to reference      practical steps that firms can take to elicit    solving highly relevant risk problems.        ■                                                                                                                 March 2011     33
 Modelling                    Insurance claims

Underwater underwriters
Pietro Parodi considers how actuaries can use different techniques in modelling
insurance claims

                            Pietro Parodi is a
                            senior actuary in
                            the Structured Risk
                            Solutions department
                            of Willis Ltd in

                    hen I was a post-doctoral        However, the analogy is not incidental:        Consider a simple example: that of selecting
                    fellow at the University of      insurance companies are intelligent agents.    the appropriate statistical distribution that
                    Toronto pursuing an interest     They do have to learn from data about the      fits a set of historical losses. One way we
                    in machine vision, the head      environment. They do need to deal with an      often do that is to select from a number
     of the Department of Computer Science           uncertain environment. They do have to         of statistical distributions (perhaps using a
     was a professor, Demetri Terzopoulos,           make decisions based on limited, and often     distribution fitting tool) which fits the data
     who had built a successful career around        faulty, information.                           best. Normally, the fit is superb because some
     studying artificial fish. He designed and built      That being the case, there are a host       of the distributions that we use have three or
     mechanical fish with sensors, which he put       of methods such as computational               four parameters and we can choose between
     in an aquarium with other (equally artificial)   intelligence (the discipline that studies      20 or more distributions, which is like having
     fish. He gave them rules of behaviour in         intelligent agents1), which are little known   an extra hidden parameter. Only the weirdest
     response to external stimuli and they would     to actuaries and can be adapted for use in     data sets will not find a match made in
     then behave like real fish in a real aquarium.   our discipline2. Perhaps the most obvious      heaven under these circumstances.
        Years later, I found myself working          example has to do with how we create              If model selection was about picking
     for an insurance broker and I was struck        models from data.                              models that look nice when plotted against

                                                     » Insurance companies
     by the similarity between the problems                                                         the historic losses, we should look no
     that risk professionals face daily and the                                                     further. However, model selection is actually
     problems I had come across during my time
     in academia. On the one hand you have
                                                     are intelligent agents.                        about finding models that have predictive
                                                                                                    power when applied to data you haven’t
     ‘intelligent agents’ (for instance, artificial   They have to make                              seen (or used) before: for example, next
     fish) trying to survive and be successful in     decisions based on                             year’s losses or data you’ve set aside for
     an uncertain and competitive environment,                                                      validation purposes.
                                                     limited, and often
     trying to learn as much as possible about the                                                     The problem above is a simple but fully
     environment. On the other hand, you have,       faulty, information                            formed example of a statistical learning
     for example, insurance companies trying                                                        problem. Statistical learning is a young but
     to thrive in an uncertain environment by        What is this thing called modelling?           vigorous discipline: the 'Stanford school’
     making the right decisions on how to price      Pricing, reserving and capital modelling       of statisticians (those that created the
     their policies, how much to reserve and         in both life and non-life insurance are        bootstrap) have developed a number of
     how much capital to hold, often with very       complex activities that require knowledge      novel methods for it; Fields medallists
     limited information.                            of the markets and consideration of the        such as Stephen Smale have looked into
        The comparison between artificial fish         competition, among other things.               it and brought mathematical rigour.
     and insurance companies can, of course,         However, they all have an analytical core      There is plenty of material that we can use
     be pursued only up to a point, and there        that we could call ‘risk costing’, namely      for almost ‘off-the-shelf’ actuarial analysis.
     are aspects of the biological world that do     finding a mathematical model for the losses     More than anything else, it brings a totally
     not translate seamlessly into the               of a company based on the historical losses    different attitude to the issue of model
     insurance world: for example, insurance         of that company or on market information.      selection. It pays to know more about
     companies do not perform mating dances.         How does one select the appropriate model?     statistical learning3.

34      March 2011                                                                                                       
                                                                                                                                 Figure 1 — A model should be
                                                       be approximated by a set of cubic splines,
                                                                                                                                 as complex as necessary, but
                                                       and g(ß) = ∫(f"(x))2dx might be a term that
                                                                                                                                 not more complex
                                                       punishes excessive curvature (and therefore
                                                       irregularities), making sure that the overall
                                                       function is smooth and ‘simple’. Increasing
                                                       makes the solution smoother.

                                                                                                          Prediction error
                                                                                                                                                                 Training sample
                                                       All the maybes                                                                                            Test sample

                                                       “Do you want all the works?” Connie Sachs                                 Optimal
                                                       asks George Smiley in Smiley’s People.
                                                       “On the record. Off the record. All the                                                Model complexity
                                                       maybes,” replies Smiley, and that perfectly
                                                                                                         Increasing the complexity of the model steadily
                                                       encapsulates the predicament we actuaries         increases the accuracy of your fit with the existing
                                                                                                         data (red line), but not when you test your model
                                                       are in. Having to quantify risk, we need          against new data (green line)
                                                       to take all evidence into account, no
                                                       matter how inaccurate and speculative.
                                                                                                                                 Figure 2 — Uncertain data
       If I were to select a single key fact           After all, most of what we do is dealing
    about statistical learning, it would be this:      with uncertainty and integrating different
    increasing the complexity of your models           sources of knowledge, be it hard or soft.                                                        X1                     X1
    doesn’t always increase the accuracy of your       In the distribution fitting example, the
    predictions. Actually, if the model becomes        losses we want to fit may be estimates,                                α                          X2                     X2
    too complex, the opposite happens (see             possibly because they are not settled, or
    Figure 1).                                         because they are old and have to be revalued                                                    …
       To select your model properly, you need         to today’s conjectured value.
    a mechanism to control complexity.                    In computational intelligence there are                                                       Xn                     Xn
    One way is to avoid it altogether, by severely     three main approaches to model uncertain
    restricting the number of possible models          and soft knowledge. One is that of rule-based                                                 P(Xi|a)                P(Xj|Xj)
    and their complexity. For example, some            expert systems, the type of systems originally
                                                                                                         The Bayesian network representing the problem
    analysts will model every loss data set with       developed for, such as medical diagnostics.       of finding the parameter a of a Pareto distribution.
    a lognormal distribution. This strategy may        They were very popular in the 1980s until         XK are the estimated losses, while XK are the actual
    have its limitations, but it is not without        people realised how difficult it was to            (unknown) losses. The joint distribution of all these
    merit at all: it has certainly more predictive     maintain them. New evidence from medical          variables P (a,Xi,…Xn,Xi,… Xn) can be written as
    power than picking the ‘best’ among 20             research might not cause a simple update,         P (a)P(Xi|a)…P(Xn|a)P ([(Xi|X)]i),…P ([(Xn|X)]n).
    distributions with up to four parameters.          but an overhaul of the whole system.              The posterior probability P a|Xi,…Xn) can then be
                                                                                                         calculated by numerical integration.
    This is called empirical risk minimisation.        Knowledge accumulation is ‘non-monotonic’.
       Another method is that of punishing                Rule-based methods are routinely applied      Fuzzy set theory deals with the wrong
    complexity explicitly. Instead of                  by insurers and reinsurers in the form of        type of uncertainty: it has more to do with
    choosing the distribution f that has the           ‘underwriting guidelines’. They too suffer       linguistic vagueness than quantitative
    least ‘distance’ from the data Y, d(f,Y)           from the maintenance problem, as does            uncertainty. We don’t really care whether
    (eg. d( f, Y) = – 2 loglik), we can choose the     everybody who has wondered where an              a loss of £100,000 should be called ‘large’
    distribution that minimises the modified            exposure rating curve comes from and             or ‘not large’. What we need is to be able
    distance dm( f, Y) = d( f, Y) + p(d), where p(d)   whether it still applies.                        to model the fact that our £100,000 loss is
    is a penalty that depends on the number of            Another approach is that of fuzzy set         only an estimate: once it is settled, it might
    parameters d of the distribution. The Akaike       theory. This is a generalisation of set theory   become £50,000 or £500,000. True, fuzzy set
    Information Criterion is an example of this        in which elements may belong to a set            theory can be arm-twisted to formalise this
    type of approach, which is called structural       only to a certain degree (the membership         situation as well (by using ‘fuzzy numbers’),
    risk minimisation.                                 degree, a number from 0 to 1). So, a loss        much in the same way as the end of a fork
       The most interesting method for model           of £1, £100,000 or £1bn might have               can be used to turn screws. Well, what about
    selection is probably regularisation: this         membership 0, 0.5 or 1 respectively to the       using a screwdriver instead?
    involves minimising a regularised distance         set of large losses.                                As you may have guessed, the screwdriver
    dREG( f, Y) = d( f , Y) + g(ß), where g(ß)            Many attempts have been made to use           is provided by the probabilistic framework:

    is a function of the parameters ß of the           fuzzy set theory in insurance, but in my         more specifically, by Bayesian analysis.
    model. For example, a distribution might           view these attempts are misconceived.            Data uncertainty can be dealt with by                                                                                                                                              March 2011         35
 Modelling                     Insurance claims

»    considering available data as
     distributions rather than pointwise
     estimates. Soft knowledge can be
                                                           The goal is to find the optimal strategy
                                                          (s) that tells us the best thing to do when
                                                       we are in state s. For this problem to be well
     incorporated in the form of prior                 defined, we need a utility function that
     probabilities, which can then be updated as       maps sequences of states [s0,s1,…sn] into
     more information becomes available.               a real number U([s0,s1,…sn]). Now here’s
        The Bayesian framework also deals              an interesting fact about utility functions:
     effectively with a complex chain of               if the agent’s decision-making horizon is
     dependencies. For example, in Figure 2 we         infinite (the ultimate long-termism) and
     want to determine the parameter of a              its preferences are stationary, the utility
     Pareto distribution given a prior distribution    function must have the form:
     of the value of (possibly a range from            U([s0,s1,…sn,…]) = ∑ jR (sj) where is a

     the underwriting guidelines) and given a          number between 0 and 1.
     data set of n estimated losses, {X1,…Xn}.             This is a surprising result: without any
     We can easily solve this problem using a          reference to the time value of money, but
     Bayesian network, which is but a compact          simply assuming time invariance and an
     representation of the joint distribution of       infinite horizon, we have found that the
     all variables involved, after stripping out all   utility is the familiar sum of the present
     unnecessary dependencies.                         value of future rewards!
                                                           In our example, the insurer’s state s is the
     Decision-making                                   pair (Ct,Vt) where Ct is the capital available
     In practice, the problems identified at the        and Vt is the volume of policies in force
     start of this article of pricing, reserving and   at time t. The capital at time t+1 is given             The problem is now mathematically very
     capital modelling, are informed by the risk       by Ct+1 = Ct + VtPt – St (where Pt = policy          difficult and no exact solution is in general
     costing exercise, but ultimately involve          premium, St = losses in year t). The reward          available. An approximate solution can
     making decisions in the real world and            for year t is the net profit Rt = VtPt – St. If we    however be found by using dynamic decision
     assessing the effect of these decisions.          know the distribution of the losses St, we           networks, a generalisation of Bayesian
         Take the case of an insurance company         know the distribution for Ct+1 given Ct and          networks which incorporate the temporal
     that has to decide how much to charge for         Pt: that is, the transition probability T(s,a,s’).   element and include ‘action’ nodes.
     its policies. At the end of each month, you       The optimal strategy for our insurer is now
     look at the losses that you have incurred         simply that which maximises the expected             The Morris Review
     and the volume of policies you have sold          utility. Helpfully, there are algorithms that        Actuaries should look more closely for
     at the chosen price to calculate your profit.      find the optimal solution efficiently, with            inspiration at the methods developed by
     Based on this, you decide whether to change       the convergence speed dependent on .                 other disciplines, such as statistics, to make
     the price of the policy and by how much,              However, there is a catch. In practice,          sure they follow best practice: this was
     with a view to maximising the present             the environment is never fully observable:           one of points made by the Morris Review
     value of the profit over the long term.            St (our loss model) will have parameter              (2005). Admittedly, artificial fish were not
     Assume here that the distribution of losses       and model uncertainty and the current                mentioned in the review. However, there is
     is stochastic but fully known and that the        true financial position will not be known             much in computational intelligence that we
     relationship between price and volume sold        with certainty, eg because of incurred               actuaries would find surprisingly relevant to
     is known and deterministic.                       but not reported losses. This problem                our profession.                               ■
         This is a familiar problem in                 can be addressed by partially observable
     computational intelligence: that of an            Markov decision processes (POMDPs —                  1 SJ Russell & P Norvig, Artificial Intelligence: A modern
     intelligent agent making decisions in a           cutely referred to as ‘pom-dee-pees’ by the          approach, Prentice Hall (2009)
     stochastic, fully observable environment.         scientific community). In this framework,
     The formalism used to describe this is            the agent doesn’t know which state it is             2 P Parodi, Computational intelligence techniques
     that of Markov decision processes (MDPs).         in, but only the probability of being in a           and their applications to general insurance (2009).
     An MDP is defined by an initial state s0;          given state. Despite this, highly successful         See
     a transition model T(s,a,s’) that gives the       strategies are still possible (if you believe        documents/computational-intelligence-techniques-
     probability of reaching the state s’ if one is    that “if you don’t know where you come               general-insurance
     in state s and performs the action a; and a       from, and you don’t know where you are,
     reward function R(s), that establishes the        then you can’t possibly know where you’re            3 T Hastie et al, The elements of statistical learning,
     reward that the agent receives in state s.        going”, this is your chance to reconsider).          Springer (2009)

36      March 2011                                                                                                                                                                                                            Investing in art                                Arts

Art and actuaries
Matthew Welsh looks at art as an asset class

    Actuaries are probably not the first               number of investment firms that specialise          artisan actuaries who lift our profession to a
    people you would think of if you wanted           in allowing a layperson, seeking high              higher plane.
    to discuss artistic endeavour.                    returns, to invest in art.                            For further reading on this topic, see
    Stereotypically obsessed with spreadsheets           While I am all for leaving the valuation        ‘On the return of art investment return
    and complicated statistical formulae,             of a shark in formaldehyde to an expert            analyses’ from the Journal of Cultural
    it could be reasonably inferred that we           (although I can’t help but wonder what             Economics (Volume 19).
    wouldn’t have a great deal to offer the art       kind of formula/parameters one would use
    world. Indeed, my own artistic experience         to value this), it is clear that there are         Matthew Welsh is an actuarial trainee at Zurich
    reads as follows: I have been to a few            plenty of opportunities for actuaries to
    museums, I got a GCSE in art, and I used to
    make ‘sculptures’… out of LEGO… until
                                                      offer insight into the valuation of art as
                                                      an investment. The uncertain nature of its
                                                                                                          Seriously, you’ve
    I was five… okay, fine, until I was 15.             future value and the need to project this           never read…
        There are, however, already a number
    of ways in which actuaries contribute to
                                                      should set bells ringing in any actuary’s
                                                      mind. The potential for ‘black swan’ events
                                                                                                          Portnoy’s Complaint?
    enriching the art world. Perhaps the most         — the discovery of a previously unknown
    obvious ones are valuing art as investment        work or the record-breaking price of a              This month Cian Reynolds, actuarial trainee at
    and offering insight into the insurance of        current work of art, such as the £51 million        Lloyds Banking Group, looks at Philip Roth’s
    fine art and specie.                               Chinese vase sold at auction in November            best-known work, first published in 1969.
        I am sure that there are those who,           last year — allow us to bring expertise of
    upon seeing the words ‘art’ and                   working with extreme and tail events.               Did it live up to its reputation?
    ‘investment’ in the same sentence, would          The correlation of art with other investment        Portnoy’s Complaint was the novel that
    screw up their noses with distaste.               assets has historically been low, and this          propelled Philip Roth into the public
    Whatever your own opinion about the               trend has continued into the economic               consciousness. When originally published,
    value of art, there is no denying that it is      crises of recent years. Can actuaries               the book caused controversy over its
    often seen as an investment. Indeed, most         investigate the offered explanations behind         vivid descriptions of sexual acts and
    people who own something that they                this? Is this a genuine effect or is art another    its apparently irreverent depiction of
    regard as art do so because they bought it.       asset bubble?                                       Jewish life. The story takes the form of
    And once it’s been acknowledged that                 The value of art can be prone to the             a monologue where the eponymous
    something has some monetary value, the            vagaries of fashion, and predicting the             character relays a ’confession‘ to his
    only thing left to do is argue about the price.   ‘next big thing’ is rarely straightforward, so      psychoanalyst. In his early thirties,
    Furthermore, art may be better preserved          perhaps art as an asset class may also show         Alexander Portnoy is a lapsed Jew, gifted,
    if those who own it believe it could be a         some of the limitations of what actuaries           successful and altruistic. However, he
    significant source of wealth.                      can currently achieve. In recognising these         experiences pangs of anxiety stemming
        These days art investment isn’t just left     limitations, we should be spurred on to             from his perceived perversions and lack of
    to individuals rich enough to purchase            develop better ways of doing things.                serious relationships.
    paintings and other artworks. There are a         Art may help create the next generation of            Although I can see how the book caused
                                                                                                          quite a stir in its time, the imagery seems
                                                                                                          quite tame now when compared to
                                                                                                          contemporary forms of entertainment.
                                                                                                          I would agree, however, that it would
                                                                                                          still hold its own when it came to explicit
                                                                                                          language. I also felt that the criticism over
                                                                                                          its portrayal of the Jewish diaspora was
                                                                                                          unfair since, in my opinion, this was a clear
                                                                                                          example of astutely aimed satire.

                                                                                                          Why read it?
                                                                                                          Any book that has been censored is worth a
                                                                                                          look. Our honourable profession also gets a
                                                                                                          mention about halfway through.

                                                                                                          Who would you recommend it to?
                                                                                                          Steer clear if offended by ribald language —
                                                                                                          otherwise, go for it.                                                                                                                            March 2011   37
 Puzzles                       Coffee break

        March prize puzzle                       Strange bedfellows The following groups of definitions are for words that are placed
                                                                                  consecutively in my (reasonably large one-volume) dictionary.
        Example: Formal prohibition / trite or commonplace / yellow               How many can you identify? For a chance to win a £50 Amazon
        fruit — the answer would be ban / banal / banana; note that,              voucher, please send your answers to
        for example, “banality” does not have an entry separate from              by 15 March. Tie-breaker: devise your own question along the
        “banal”.                                                                  same lines, and provide the answer!

        1) Impede / rodent / tendon
        2) A camera / cogwheel / colour
        3) Not secret / relative / dirty
        4) Not open to challenge / long lasting / economic restructuring
        5) Red fruit / mathematical function / detailed record
        6) Bundle / whalebone / malignant
        7) Mediaeval trial / fraternity / hospital worker
        8) Immortalised in story / trickery / female clothing
        9) Place side by side / spirit / team game
        10) Tramp / wine / team game
        11) Thinly sliced / muddle / outsize
        12) Discerning / fish / possibly
        13) Destruction / sports equipment / dishonest businessman
        14) Thin / broke / gambol
        15) Enthusiasm / a monkey / in the fullest sense
        16) Subtle detail / specialised role or segment / prison
        17) Obstruct orally / metalwork / paperwork
        18) Goat / bird / painkiller
        19) Lament / wagon / panelling
        20) Voodoo god / fish / pile

        Terms and conditions
        The prize will be awarded for the most complete entry received before the closing date in the opinion of the puzzles editor, including the tie breaker.
        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 468                              20 questions                         Puzzle 469                                Circular argument
     Six actuarial students had to sit a 20-question multiple                     Stop me if you’ve heard this one before… A man leaves a wooden
     choice test today. Each question had five possible answers.                  building by the front gate and walks three miles south, then three
     Yesterday, each of them had a 40 per cent chance                             miles east and three north, arriving at his starting point. Where is he?
     (independently) of knowing the answer to any particular
     question; if they didn’t know an answer, they guessed                                  MORE PUZZLES ONLINE
     completely randomly.
       Half the class did some last-minute revision, which                            To access the puzzles archive or to play daily interactive
     increased the chances of them knowing any particular answer                      Sudoku, visit
     to 60 per cent. If Sharon scored 11 out of 20 and Pete scored                    The puzzles editor is pleased to receive ideas for new
     12, what is the probability that Pete revised for the test?                      puzzles from readers at

      Bridge challenge 13 Defending the defensible                       Please send any
      A useful beginners’ guide to playing bridge can be found at                 comments you have to Tom Bratcher at

      You are sitting in the West seat and the (natural) bidding goes as follows:                                ♥QJ2
      The bidding:                                                                                               ♦J109
      S         W          N        E                                                                            ♣Q1072
      1♠        Pass       2♣       Pass                                              ♠752
      2♦        Pass       3♠       Pass                                              ♥A1098         N
      4♠                                                                              ♦632        W     E
                                                                                      ♣A64           S
      As South has bid diamonds and you don’t fancy a lead from one of your unsupported Aces, you lead 2♠. Declarer wins in hand and
      leads K♥. How do you proceed?

38      March 2011                                                                                                                  
    Solutions for February 2011
    Bridge challenge 12 solution

    1. Perfect hand for a pre-empt in any              2. A good suit again, but you have a              game in hearts if partner can open
    position and at any vulnerability — one            four-card major as well. Pre-empting may          them, so only open with a pre-empt in
    solid suit with nothing in the other three.        mean you miss out on a perfectly good             the third position.
                                                                                                         3. A ropey spade suit despite the ace —
                                                                                                         if partner has no support, the penalty
               ♠           ♥         ♦         ♣       Yes/No?     If Yes, at which
                                                                                        If Yes, at
                                                                                          which          against you could be severe. Worth a bid
                                                                                        position?        only third in hand and non-vulnerable
                                                                                                         against vulnerable opponents.
      1     KQJ10962       653        2        64         YES            ANY              ANY            4. The excellent suit quality and
      2     AQJ8543       J1096       8         7         YES            ANY          THIRD ONLY         outside values mean that this hand is
      3     A986432        Q6        98         74        YES       FAVOURABLE        THIRD ONLY         too strong for an opening pre-empt
                                                                       ONLY                              at the three level, although there is
                                                                                                         a case for opening 4♠ third in hand.
      4     AKJ7432         6       J102       K4         NO             N/A              N/A
                                                                                                         Otherwise, bid 1♠.

    February prize puzzle                     Identity crisis              All of the solutions are characters from children’s literature or television.

    1. The troll (from the Three Billy Goats Gruff)                             8. Winnie the Pooh
    2. The Piggy-wig (from The Owl and the Pussycat)                            9. Cacofonix (from the Asterix books)
    3. Buckbeak the Hippogriff (from Harry Potter and The Prisoner of           10. Rapunzel
    Azkaban)                                                                    11. Po (of Teletubbies)
    4. The Very Hungry Caterpillar                                              12. Gnasher
    5. Baby Bear (from Goldilocks and the Three Bears)                          13. Bill the Badger (companion to Rupert Bear)
    6. Benjamin Bunny (cousin to Peter Rabbit)                                  14. Veruca Salt (from Charlie and the Chocolate Factory).
    7. The Elephant’s Child (from the Just So Stories)                          15. The Cat in the Hat.

    Puzzle 467 solution                       Field of dreams                     February prize winner
    The field is 150 square metres in area.
                                                                                  Congratulations to this month’s winner, Simon Bennett of Capita

    Solutions for January 2011
    1961.       Bay of Pigs invasion                                            1988.      Australia celebrates its bicentenary
    1962.       Beatles told “guitar groups are on the way out”                 1989.      First full-length Simpsons episode airs
    1963.       Aldous Huxley dies                                              1990.      Iraq invades Kuwait
    1964.       Nelson Mandela sentenced to life imprisonment                   1991.      Tim Berners-Lee announces World Wide Web project
    1965.       Sir Stanley Matthews, 50, plays his final First Division game   1992.      Rodney King riots in California
    1966.       David Cameron born                                              1993.      Main mirror replaced on Hubble Telescope
    1967.       The first automatic cash machine is installed in Enfield        1994.      Kurt Cobain dies
    1968.       2001: A Space Odyssey released                                  1995.      Nick Leeson precipitates the collapse of Barings
    1969.       First man on the moon                                           1996.      OJ Simpson trial begins
    1970.       Jimmy Hendrix dies                                              1997.      Grand National delayed by IRA bomb scare
    1971.       UK switches to decimal currency                                 1998.      Most recent Eurovision Song Contest held in UK
    1972.       First scientific calculator launched (priced $395)              1999.      The Euro established: first notes published three years later
    1973.       Chile’s democratic government overthrown                        2000.      Equitable Life closes to new business
    1974.       The ‘Rumble in the Jungle’                                      2001.      Dennis Tito becomes first space tourist
    1975.       The fall of Saigon                                              2002.      Queen Elizabeth the Queen mother dies
    1976.       West Germany lose a penalty shootout                            2003.      Arnold Schwarzenegger elected governor of California
    1977.       Voyager probes launched                                         2004.      Hostage crisis in Beslan
    1978.       Karol Józef Wojtyła becomes Pope                                2005.      Live 8 benefit concerts held
    1979.       Three Mile Island accident                                      2006.      Alexander Litvinenko murdered in London
    1980.       Mount St. Helens erupts, killing 57                             2007.      Romania joins the EU
    1981.       First London marathon                                           2008.      Lehman Bros files for bankruptcy protection
    1982.       Channel 4 launched                                              2009.      Sri Lankan civil war ends
    1983.       Thrust 2 sets a new land speed record                           2010.      Creation of artificial life
    1984.       Ghostbusters released
    1985.       Rainbow Warrior sunk by French secret service                     January prize winner
    1986.       Prince Andrew and Sarah Ferguson marry                            Congratulations to the January winner, Danny McMillan of Towers Watson
    1987.       First naked-eye supernova observed since 1604                                                                                                                      March 2011     39
 Student page                Stephen Paines                                   Follow @TheActuaryMag                            Join The Actuary’s
                                                                              on Twitter                                       LinkedIn group

     Louise Pryor discusses the link between CA2 and the TASs

     CA2 and what you do
                    hen you sit ‘CA2 Model         might be useful for one purpose but not          accompanying Significant Considerations
                    documentation, analysis        another: it depends on what its limitations      documents, which are available on the BAS
                    and reporting’, you may be     are. And it is important that you, the person    website. I’m sure you feel you have enough
                    surprised to find that much     building the model and providing its results     reading to do anyway, but these documents
     of the core reading consists of three Board   to others, know what it’s useful for, and that   really help set the scene for the TASs.
     for Actuarial Standards (BAS) standards:      the person using the results also understands        Why does all this matter to you, though?
     TAS D, TAS M and TAS R (Technical Actuarial   that. Which is why both CA2 and TAS M            Well, most actuarial students spend a great
     Standards relating to Data, Modelling         emphasise the need to document the model         deal of their time working on models.
     and Reporting of Actuarial Information        and to report on what it does, including         You create spreadsheets to solve problems

                                                                           » As a member of the
     respectively). Why? What is the relevance     its limitations.                                                         or to explore issues,
     of TASs to modelling? Indeed, what is the         So what makes                                                        you run big modelling
     relevance of CA2 to the modelling work        a useful model?         Institute and Faculty                            systems, and more or
     you do?                                       First of all it’s got                                                    less everything
        These two questions have the same          to be modelling         of Actuaries, you must                           in-between. As a
     answer. Both CA2 and the TASs are directed    something of            comply with the TASs if                          member of the
     towards making the models that you build      interest, that’s                                                         Institute and Faculty
                                                                           the work you are doing
     useful and worthwhile. This is good           relevant to the                                                          of Actuaries, you must
     because many students spend nearly all        problem at hand.        is within scope                                  comply with the TASs
     their time working on models of one kind      Then it’s got to be                                                      if the work you are
     or another, and would want to feel that the   modelling it in a reasonable way. And the        doing is within scope. Some work is already
     work is worthwhile.                           data that it’s using has to be reasonable.       within scope, and more will be after April
        “All models are wrong, but some are        If there are problems in any of these            (in pensions) and October (in insurance).
     useful” — the modeller’s motto, first stated   areas, then the model is less useful than it         Although you may probably report to
     by George Box in 1979. The point is that      could be, and you — and people relying           other actuaries, rather than directly to
     models, by their nature, are simplifications   on its results — need to be aware of its         clients or non-actuaries, the information
     of the real world. As simplifications, they    limitations. These are exactly the points        you generate is likely to eventually reach
     inevitably leave things out and get other     that are picked up in TAS M and TAS D,           other people in some form or another.
     things wrong. But, if well designed, they     which require that you perform checks            It’s important that those who make use
     get some things right as well, and they are   on the model and the data to assess their        of it understand where it’s coming from
     useful in as much as they get the important   fitness for purpose, and TAS R, which sets        and, of course, the actuary with overall
     things right.                                 out reporting requirements.                      responsibility for the work must ensure that
        What is important depends on what the          There is more explanation of the reasoning   it complies with the TASs.
     model is being used for, of course. A model   behind the principles in the TASs in the         So CA2, which addresses how to
                                                                                                    make models useful, should help you
                                                                                                    make a positive contribution to your team.
                                                                                                    Now that can’t be a bad thing.

                                                                                                    Louise Pryor is director, actuarial standards at
                                                                                                    the Financial Reporting Council

                                                                                                            WANT TO JOIN OUR TEAM?
                                                                                                       We are looking for a new student page
                                                                                                       editor to replace the outgoing Stephen
                                                                                                       Paines. If interested, please e-mail

40      March 2011                                                                                                          
                                                                                                         AOTF/Book review           People/Comment

     Actuary of the future                            Book review
     Richard Cohen
                                                      Matthew Edwards reviews
                                                      Mobs, Messiahs and Markets by
       Employer and
       area of work                                   William Bonner and Lila Rajiva
       PruHealth, product                             The title of Mobs, Messiahs and Markets             these people quickly
       development.                                   might lead one to expect a book of ‘three           settle on one view
                                                      thirds’, but it is in fact a book of two halves:    as if one organism.
                                                                                                                                  Mobs, Messiahs and
       How would your                                 one bad, one good. Unfortunately, the bad              Why do
                                                                                                                                  Markets is published
       best friend describe you?                      half accounts for over 90% of the pages.            crowds act so
                                                                                                                                  by John Wiley & Sons.
       Talkative, honest, genuine, funny and              This first ‘half’ consists of a general          ‘unidirectionally’,
                                                                                                                                  RRP £19.99
       probably quite eccentric and crazy.            tour through some of the many fields of              and in a direction
       But that’s only if my direct debit             life relating to delusional behaviour, from         that always seems — at least after the event
       goes through.                                  the obvious aspects of financial bubbles             — to be wrong? The problem boils down
                                                      of various types to the mass followings             to the root nature of human psychology:
       What motivates you?                            accorded various dictators, pundits and,            “man’s greatest need is not to be right; it is
       The desire to learn more about anything        more abstractly, ideologies and fashions.           to have the approval of his fellow men. He
       and everything.                                    Readers expecting any deep                      would rather be wrong following the leader
                                                      consideration or analysis of the origin             than right on his own”. This, combined
       What would be your personal                    of such phenomena are likely to be                  with the almost invariable inexpertise of
       motto?                                         disappointed, as the book tends to move             any so-called expert opining on matters
       Live life to the most every day.               from spectacle to spectacle without much            like housing markets, stock selection or the
                                                      pause for thought. Readers expecting to             security threats from suicide bombers, can
       Who do you admire most and why?                be entertained by assorted exhibitions              quickly lead to mass thinking pointing in
       To be clichéd, I would have to say my          of human folly may or may not find                   one broad, and wrong, direction.
       mum. Whenever I think about getting            themselves satisfied, depending on their                The final chapter closes the book with a
       through my studies and work at the             taste for Schadenfreude, amusement at the           more noble tone than that of the previous
       same time I remember that she did the          expense of others’ misfortunes. Many of             chapters; the Schadenfreude is gone, the
       same, but with five children running            the book’s expositions of mad mobs, mad             authors bring in their heroes for admiration
       riot around the house.                         (would-be) messiahs and mad markets                 (Jesus Christ and Muhammad Ali make an
                                                      are presented in a supercilious vein of             interesting pairing here) and conjecture on
       What is your most ‘actuarial’                  contempt for those without our benefit               the extent to which some moral dimension
       habit?                                         of hindsight. This is unedifying and                might help to deflate our bubbles.
       I can be a bit of a perfectionist.             uninspiring: I find Schadenfreude one of                So how do we attain the wisdom to
       Things need to be done a certain way.          the most contemptible of man’s attitudes,           avoid delusion and dupery? Essentially, by
       My most ‘actuarial’ feature is my              although I suppose it does serve the socially       thinking for ourselves as we travel the long,
       receding hairline at 25.                       therapeutic purpose of making the insecure          stony road of life. This sounds trite, but it
                                                      feel better about themselves.                       is not: thinking for ourselves is something
       How do you relax away from the                     Towards the end of the work, the                we do surprisingly rarely, as we tend not
       office?                                        tone changes for the better. We start to            to appreciate how much our frameworks
       By either heading out for a long run or        encounter perceptive observations about             of reference are set by the prevailing
       else grabbing a few bottles of red wine        the nature of crowd behaviour, the primary          assumptions of our peers and our culture.
       and inviting my friends over.                  driver of the mass delusions underlying the         The path to wisdom is not easy; in the
                                                      book’s title. The authors refute the recent         authors’ words, “you pay, you suffer, you
       Tell us something unusual about                contention of ‘the wisdom of crowds’:               sweat and strain; but you become wiser.”
       yourself                                       empirically with reference to such events as
       I was born on April Fool’s Day. Oh, and        the popular support for Hitler, which soon          Matthew Edwards is a former editor of
       I am a triplet.                                turned into tacit consent for the Holocaust;        The Actuary. For other reviews by him on
                                                      theoretically by considering the difference         books relating to financial crises, see
       If you ruled the world, what would             between a crowd and a group.               and
       you change first?                                  The authors distinguish crowds and    
       Education. I believe people become             groups in this way: a group comprises a
       empowered through education.                   collaborative collection of individuals who                 CONSIDER YOURSELF A
                                                      actively combine but respect the presence
                                                                                                                  BUDDING BOOKWORM?
             WHO WOULD YOU LIKE TO                    of differing views in the group, whereas                 We welcome readers’ suggestions of
             SEE FEATURED HERE?                       a crowd is simply a collection of people                 relevant books for our contributors to
           If you would like to nominate someone      who have not sought to be together,                      review or, alternatively, if you would like
           for Actuary of the Future, please e-mail   their ‘union’ resulting purely from some                 to submit your own reviews, then please
                     common feature such as nationality, but                  e-mail                                                                                                                        March 2011   41
                                                                                                         Sponsored by
 Appointments                   People moves

                                                                                                                 Have you moved?
     Ian Perera, chief         and Solvency II.        Canada where his
     financial officer of        She has worked in       background is as a                                        Please send news of moves,
     Sovereign Assurance       the life insurance      senior valuations                                         promotions, retirements and
     in Auckland’s North       market for over         manager covering                                          appointments to peoplemoves@
     Shore, was elected        10 years and has        traded fixed-income                              
     unopposed to be           in-depth knowledge      derivative products
     president of the          of managing with-       and other structured                                      Change of address
     New Zealand Society       profits business.        products. Mr Spence                                       Please remember to update your
     of Actuaries for 2011.       In the non-life      also has experience                                       details on the Profession’s website
     Council members           actuarial team,         of developing                                             at
     include Paul Rhodes       Marc Chapman            and executing            Tim Carter                       transactions
     (vice-president),         joins with 15 years’    structured capital       underwriting officer

                                                                                                           Forward features
     Linda Caradus             experience in           markets solutions        for North American
     (treasurer), John         pricing, underwriting   and alternative risk     Commercial

                                                                                                           in The Actuary
     Smith (secretary),        and risk assessment,    transfer for insurers,   Business and chief
     Bernie Higgins and        most recently with      reinsurers and hedge     underwriting officer
     Richard Beauchamp.        Insurance Australia     funds.                   for Europe with
                               Group. Mr Chapman                                Zurich. He started         The Actuary’s team welcomes contributions
     KPMG has                  has further expertise   Tim Carter               his career in Towers       from members or contacts in and around
     announced three           in products,            (pictured) has been      Watson’s general           the profession.
     senior hires this year:   marketing and           promoted to regional     insurance practice           Below is a list of themes for the next
        In the life team,      strategic redesign      chief underwriting       and joined Zurich in       few months along with the deadline for
     Jane Parker joins         and has experience      officer for North         1994 as chief pricing      submission. If you would like to contribute,
     KPMG as a principal       of the direct,          America at Zurich        actuary for UK             please contact Tracey Brown at features@
     advisor and will          aggregator and          Financial Services,      personal lines.   with suggestions.
     be based in the           broker personal lines   based in Chicago.                                     For a full list of 2011 issue themes,
     Manchester office.         insurance market.       In this role he joins    First Actuarial has        visit
     Ms Parker joins           He will be based in     the Board of the         recently announced
     from Royal Liver          the Gatwick office.      Zurich American          four new partners:         May 2011 (Published 28 April, editorial
     Assurance where              Rupert Spence        Insurance Company.       Catherine Lockyer,         deadline 18 March, advertising deadline
     her expertise is in       joins the team          Previously Mr Carter     Mark Rowlinson             12 April)
     regulatory reporting      from Royal Bank of      held roles of chief      and David Thirlwell,       ■ Regulation/Standards
                                                                                who have been              ■ Health and care
                                                                                with the firm since         ■ Banking/Financial services
                                                                                its inception, and
                                                                                Declan Keohane,            June 2011 (Published 26 May, editorial
                                                                                who joined in 2007.        deadline 15 April, advertising deadline
                                                                                                           10 May)
                                           Actuary                              Pension Corporation        ■ Solvency II

                                           of the                               recently announced
                                                                                the appointment
                                                                                                           ■ Risk management
                                                                                                           ■ Careers/CPD training
                                           future?                              of Jim Collins as
                                                                                chief actuary. He will     July 2011 (Published 30 June, editorial
                                           If you think you deserve
                                                                                report to Rob Sewell,      deadline 13 May, advertising deadline 14
                                           to appear as an Actuary of
                                                                                chief financial             June)
                                           the Future, then we would
                                                                                officer. Most recently      ■ Careers: working overseas
                                           like to hear from you.
                                                                                Mr Collins has             ■ General insurance
                                           Either ask a colleague to
                                                                                been a senior              ■ Pensions
                                           nominate you or send
                                                                                consultant at
                                           your contact details with
                                                                                Towers Watson since       and development of        and preparing
                                           a reference direct to
                                                                                1986. He will have        actuarial capabilities,   for a successful
                                                                                overall responsibility    enhancing the             implementation of
                                                                                at the Pension            financial reporting        the forthcoming
                                                                                Corporation for the       and management            Solvency II
                                                                                continued growth          framework,                framework.

42      March 2011                                                                                                             
                                                                              To advertise your vacancies in the magazine and online please contact:
                                                                Aisling Durrant, Tel: +44 (0)20 7316 9493, E-mail:

                   High Finance Group
                   Specialist Recruiters                                        
       First InHouse Actuary                                         General         Deputy Chief Actuary                                        General
       Salary: £Highly competitve package                                            Salary: £135k + Bonus + Benefits
       Location: London                                                              Location: London
       This niche Insurer is looking for a first inhouse Actuary. This is a great    This leading Lloyd's syndicate is looking for a Deputy Chief Actuary to
       opportunity to build and develop the Non Life Actuarial team under            help drive the team forward. You will lead a rapidly expanding team
       you whilst working closely with members of the Board. To be                   across pricing and reserving and liaise closely with the Underwriters
       considered you should have a strong Non Life background with the              and capital modelling function. This is an exciting opportunity to help
       abilty to explain complex concepts to external stakeholders. Ref:             lead the Actuarial function whilst working closely with the Chief
       WG1271                                                                        Actuary. Previous managerial experience preferred. Ref: WG1272

       Group Pricing Actuary                                         General         Portfolio Capital Actuary                                   General
       Salary: £Highly competitive package                                           Salary: £40k - £75k + Bonus + Benefits
       Location: London                                                              Location: London
       This leading General Insurer is looking for an experienced Pricing            This well known Lloyd’s Insurer is looking to appoint a well rounded
       Actuary to liaise across the group ensuring the other business units          Actuary to assist in the implementation of the internal model. The role
       are moving forward. The role sits with Senior Managment working               works closely with the model building team in ensuring the output is
       directly with the Senior Underwriters, overseeing the pricing teams.          fitted to the needs of the business as well presenting business
       Good pricing knowledge across commercial and / or personal lines              decisions and strategy to senior management. You will have a good
       and the ability to develop other individuals is required. Ref: WG1273         understanding of capital modelling and be confident in interacting
                                                                                     with different parts of the business. Ref: JK1026

        Syndicate Reserving Analyst                                  General         Reserving Actuary                                          Europe
        Salary: £35k - £60k + Bonus + Benefits                                       Salary: €40k - €70k + Bonus + Benefits
        Location: London                                                             Location: Dublin, Ireland
        This high growth Lloyd’s syndicate is seeking to build its Actuarial         This leading Irish Insurance company is looking for a Nearly / Newly
        function to match the demands of an expanding business portfolio.            qualified reserving Actuary with GI experience to support their strong
        You will need a grounding in reserving and be looking to continue            expansion. You will assist the reserving of insurance products and the
        this forward as well as wanting exposure to other areas such as              development of effective methodologies and strategies in support of
        pricing, capital modelling and MI. You will be personable, articulate        business objectives. The role involves Actuarial analysis, supporting
        and have a solid academic grounding. Ref: JK1025                             business units and developing plans and budgets. Ref: DB6442

        Financial Risk Management Specialist                       Europe            Head of ALM                                                General
        Salary: €40k - €60k                                                          Salary: €100k+
        Location: Madrid, Spain                                                      Location: Zurich, Switzerland
        This top 5 insurer is looking for an Actuary to run key financial risk       This global insurer is looking for a Head of ALM to determine the
        management processes. You must have MCEV experience, a good                  minimum-risk investment position based on an understanding of the
        knowledge of financial markets and instruments, life products,               liabilities prepared by Group actuaries. You must have a relevant
        Moses, Prophet or VIP projection systems and be familiar with                Masters degree, experience in an ALM-related field, and an excellent
        Economic Capital and Solvency II framework. All work conducted in            understanding and knowledge of financial products coupled with a
        English, EU citizenship required. Ref: DB6443                                strong interest in developments in the capital markets.Ref: DB6444

     General                                 General                                Europe                                 Executive Search
     William Gallimore: 020 7337 8826        James Kitt: 020 7337 1202              Damien Bernard: +44 (0) 20 7337 1206   Mark Dainty: 020 7337 8816 

                   Actuarial l Finance l Risk l Audit l Compliance l IT l Strategy & Consulting l Solvency II l Claims & Underwriting

    020 7337 8800                                                                                                                                                                   March 2011     43
               Unrivalled contract opportunities
Demand is still high for contractors of all levels, from students to senior qualified, and we continue to look for talented and ambitious
individuals who have a real interest in forging a career in this dynamic and lucrative market.A broad range of opportunities are currently
available on high-profile assignments with major clients throughout the UK.

Hazell Carr is a preferred supplier to a number of major companies and has some of the best opportunities available in the actuarial
market.We offer competitive rates and are committed to finding the most suitable match between our clients and contractors, building
rewarding, long-term relationships in the process. We continue to offer a range of benefits to our contractors through Xchange, our
on-line contractor community.

Skills in high demand include:

Solvency II and ICA
There is high demand for contractors with experience in Risk & Capital management, Economic capital, ICA, QIS 4 and
approaches to QIS 5.

Life Reporting
Demand for qualified and part-qualified actuaries with reporting experience for Solvency II projects and ‘BAU’ teams continues
to grow.The skill sets most in demand include ICA, MCEV and IFRS.

There is great demand for qualified and part-qualified actuaries with experience of model development, especially in systems
such as Prophet, MoSes and MG-ALFA.There is an immediate need for DCS Coders on a range of assignments.

Actuarial Analysts
We have a range of opportunities available for actuarial analysts and technicians to undertake work on specifying actuarial
calculations, systems testing and completing complex pension calculations.

  If you are interested in joining Hazell Carr or would just like to find out more about becoming a
   contractor, contact us in confidence on 0118 951 3817 or email us at

Internal Model Actuary                                                              Consulting Manager – Employee Benefits
£ On Experience                                                      – Surrey       Top Quartile + Bonus & Benefits Package                          – South East Asia

A number of roles for both qualified and part qualified Actuaries are               International consulting firm which advises multinational and domestic employers on their
available to work on developing and delivering the internal model                   employee benefit programmes wishes to appoint an experienced manager to lead and
application process for this insurer. The key responsibilities will be to design,   develop a team of EB consultants. This person would be responsible for leading major
develop, support, run and document the process required to ensure the               accounts and developing new business through internal referrals and external marketing.
completion of this project. This is an excellent opportunity to join an             Candidates will be qualified with at least 5 years pqe advising multinational clients on
organisation that will allow you to be autonomous and develop your career.          benefit programmes preferably in a consulting environment. Experience in the region would
There is a possibility that these roles could be short term offerings as well.      be advantageous. He/she will have a track record of managing client relationships and
Contact: – London Office               Ref: GB477653       will relish the opportunity to lead this team through the next growth phase.
                                                                                    Contact: – London Office                    Ref: Z472657

Reserving Analyst                                                                   Model Governance Manager
£40,000 + Benefits                                                  – London        £ Excellent Daily Rate                                                    – London

Lloyds Syndicate is looking for a part qualified Actuary to work in their           Insurance company requires a contract Actuary to manage the Solvency II
reserving team. The role will involve quarterly reserving on both an ultimate       Model Governance. The role will have a wide range of high level
and an earned basis; supporting quarterly assessment of best estimates on           responsibilities within this Insurance company and play a pivotal role in the
reserves; supporting group consolidation of the reserves; working on the            coordination of the Solvency II project. Supporting the Head of Solvency II and
capital model; ensuring underwriters and pricing actuaries understand the           also the manager of regulatory reporting, this person should be a qualified
reserve estimates. There are a number of other responsibilities that also go        actuary with experience of modelling and possess strong communication skills
with this position. The role offers full study support and excellent career         to liaise with various different parts of the business. An excellent opportunity for
opportunities.                                                                      an existing contractor or Actuary in a permanent role.
Contact: – London Office            Ref: GB472604          Contact: – London Office Ref: GB461982

Pricing Assistant – Life                                                            Senior GI Actuary
£45,000 + Benefits                                                  – London        To £100,000 + Benefits                                                    – London

Part Qualified Actuary required to assist in the development and setting of         General Insurance Company is looking for a qualified actuary to take
the pricing basis for the Group Risk products of this insurance company.            responsibility for their team of Actuarial assistants and provide analytical
Products include Group life, income protection and critical illness. You will       and actuarial support in delivering reserving, underwriting support,
support product development to ensure the products are fit for market, and          business planning and management information. The ideal candidate will
support the implementation of pricing changes working within their                  have at least 3 years post qualification experience working in general
governance process. You will also support the process of making the                 insurance. This role reports top the Chief Actuary and requires someone
business aware of the impact on profitability and risks involved with these         with good communication skills as well as the right technical experience.
products. This is an exciting role for an Actuary with at least 4 CT exams.         Contact: – London Office            Ref: GB476123
Contact: – London Office             Ref: GB475111

Solvency II Contractors                                                             Corporate De-Risking Consultant
To £1300 a day                                                      – London        £Competitive Packages                   – London or Leeds/Manchester

Contract & Interim roles exist with both a Life & a Non-Life Insurance              A specialist practice who focus on creating and implementing de-risking
company. Working within the Actuarial department, these roles will                  strategies for corporate clients are interested in speaking with candidates who
document the existing risk methods. The successful individuals will record the      have advised companies on their pension arrangements, and individuals who
specific details used to price the risk and the methods adopted to record that      have gained exposure to de-risking projects in particular. You will be working
data. Experience and knowledge of benchmarking and pricing is required,             within a very commercial environment so whether you are currently within a
alongside facilitation & relation management skills. You must be highly             benefit house or a big four firm this would represent a move to something
numerate but do not necessarily have to be a qualified Actuary, although a          unusual both in terms of the nature of the work and the culture of the team.
detailed understanding of the relative insurance market is essential.               Candidates will be nearly/recently FIA Qualified.
Contact: – London Office             Ref: GB475669         Contact: – Leeds Office              Ref: SA472446

                               London Office: IPS Group, Lloyd’s Avenue House, 6 Lloyd’s Avenue, London, EC3N 3ES
                                  Tel: 020 7481 8686 Fax: 020 7481 8660 Email:

                                            Leeds Office: IPS Group, 8 St Paul’s Street, Leeds, LS1 2LE
                                   Tel: 0113 202 1577 Fax: 0113 202 1598 Email:
More jobs online at

     Solvency II Strategy
 BaxterBruce is a growing niche consultancy,
    specialising in designing and delivering
 strategic Solvency II solutions for our clients.

     We are looking for a truly exceptional
    candidate who is keen to broaden their
 experience at the cutting edge of Solvency II
 developments. We will provide unparalleled
   opportunities for career progression and
    client contact, with a package to match
                   your talent.

    If you are a nearly qualified or recently
 qualified actuary looking for something a bit
   different and would like to contribute and
 share in the success of BaxterBruce, please
  get in touch at,
  or find out more at

      Flying high as an
      OAC contractor

      A refreshingly different service

      As an award-winning actuarial and financial services consultancy we pride ourselves on being different to other interim
      resourcing agencies.

      OAC supports its contractors by providing them with PII cover and offering important supplementary benefits such as paid
      release for CPD, advice from OAC actuaries at any time, and free trial access to® financial modelling software.

      As an actuarial firm we fully understand the changing needs and requirements of our contractors. We are committed to working
      with them so that they can achieve their personal and business objectives.

      Contractors are quickly realising that OAC is the preferred choice for benefits and winning contracts. Experience the difference
      yourself and register your interest on our website today.

      For more information
      Colette Lurshay | +44 (0)20 7278 9500 |

      OAC Actuaries and Consultants, a trading name of OAC plc, is a member of the Recruitment and
      Employment Confederation (REC) and offers the services of an Employment Business.

46   March 2011                                                                                                     
                              Latest jobs from The Actuary are now on Twitter

           Blue skies…
                                                                                  ...and new horizons

           Current interim assignments include (across life & non-life):
           •     Capital modelling                                                •    Audit
           •     Solvency II implementation and                                   •    With-profits governance
                 partial internal model development                               •    Reserving (P&C/home/motor)
           •     Financial reporting/valuations/ICA work                          •    Moses/Prophet developers and testers

           Are you a contractor seeking new opportunities?                        Broaden your horizons with one of the UK’s
                                                                                  leading providers of actuarial contractors.
           Do you have the skills and qualities to move
           into the consulting world?                                             To register with Mazars PGC Interims or
                                                                                  for more information please contact:
                                                                                  Joanne Young
                                                                                  T: +44 (0)20 7063 4162 M: +44 (0)7794 031 485
           MAZARS PGC INTERIMS                                                    E:

                    Accountancy and Actuarial Discipline Board
      The AADB seeks to appoint five actuaries to join its Tribunal Panel from which members of Disciplinary and Appeal Tribunals are drawn.

      The AADB is the independent investigative and disciplinary body for accountants and actuaries in the UK. Since 2007 the AADB, which is
      an operating body of the Financial Reporting Council, has been responsible for the disciplinary scheme of the actuarial profession in relation
      to important issues of public interest.

      AADB Tribunals are lay-dominated and consist of a legal chair, at least one actuary and at least one lay person. They are appointed from a
      Tribunal Panel by an independent Convener. They consider complaints of alleged misconduct and, where the allegations are proved, decide
      what sanctions should be imposed. Where leave to appeal is given, an Appeal Tribunal is convened.

      Skills and experience
      Actuary members of the Tribunal Panel must have current or recent experience of practice in the UK and be Fellows of the Institute and
      Faculty of Actuaries.

      The AADB is seeking a mix of skills and would like to appoint two actuaries with a pensions background, two with a life insurance background
      and one with a background in general insurance.

      Panel members will be appointed for a minimum of three years, renewable upon mutual agreement. The work of the Tribunals is demand
      led. A daily attendance fee and daily reading fees of £400 plus expenses are paid to actuarial members. Hearings usually take place in
      London but may take place outside London if required.

      Further information about the AADB can be found on its website at Interested candidates should e-mail their CV and a
      covering letter to Human Resources at For specific questions about the role please call the Convener, Ann Darling,
      on 0191 536 2089.

      The FRC values diversity in all appointments and welcomes applicants of any age or from any background.

      The closing date for applications is Friday 8th April 2011.
      Interviews will take place mid May.                                                                                                             March 2011     47
More jobs online at

                                             UK I Europe I Asia Pacific

     “ of the best recruitment and
     search firms I have worked with...”
     HR Manager, Amlin
                 Rob Bulpitt,                               Dennis Ball,
                  Manager                                Senior Consultant
           Tel +44 (0)20 7092 3237                    Tel +44 (0)20 7092 3286  

                 Rupert Rickard,                            Mansi Koshy,
              Managing Consultant                        Senior Consultant
             Tel +44 (0)20 7092 3219                   Tel +44 (0)20 7092 3283

                Zoe Campbell,                                 Alistair Allan,
             Senior Consultant                              Senior Consultant
           Tel +44 (0)20 7092 3208                      Tel +44 (0)20 7092 3262  

     Six Figure Salary and Bonus and Benefits (5.75% tax)

     At the Bermuda Monetary Authority we can offer the opportunity for broad exposure to international regulatory issues, special projects and a variety of work experience.
     Bermuda is a leader in the global reinsurance market, known for its strong reputation and dynamic and innovative marketplace. Make no mistake, your work will drive
     the development of Bermuda’s Insurance regulations and help to protect millions of consumers.

     Assistant Director, Actuarial Property and Casualty
     This role will be primarily focused on the regulation of Property and Casualty insurers. The Assistant Director reports to the Deputy Director and will be responsible for
     the supervision of regulated entities focusing on underwriting, reserving and risk aggregating process in actual Capital model analyses.

     You will support the department of Policy, Research and International Affairs in the development and application of statistical and financial analytics. You will also be
     responsible for the development of industry benchmarks for methodologies and assumptions used to research and develop best practice for regulatory analytics.

     Experience & Qualifications:
     • A degree in a relevant discipline plus the FCAS/FIA qualification.
     • Minimum of 10 years relevant post graduate experience of which at least 5 years should be at a senior level in the property, casualty and financial guarantee
       lines of business.
     • Knowledge and experience with insurance and reinsurance actuarial issues.

     Assistant Director, Actuarial Long Term
     This role will be primarily focused on the regulation of life insurers, with assistance on the supervision of non-life companies. The Assistant Director reports
     to the Deputy Director and will be responsible for the supervision of regulated entities writing life and other long term insurance.

     You will support the Policy, Research and Risk Assessment department in the development and application of statistical and financial analytics. You will also
     advise the Director on all relevant technical matters pertaining to the Authority’s risk assessment framework to support the supervision of regulated entities.

     Experience & Qualifications:
     • A degree in a relevant discipline plus an actuarial qualification.
     • Senior Management level relevant life insurance experience.
     • Knowledge and experience with insurance and reinsurance actuarial issues, including reserving, capital modeling, pricing and risk assessment.

     The Bermuda Monetary Authority is the integrated regulator of the financial services sector in Bermuda. The Authority develops risk-based financial regulations
     that apply to the supervision of Bermuda’s banks, trust companies, investment businesses, investment funds, fund administrators, money service businesses
     and insurance companies. It also regulates the Bermuda Stock Exchange and issues Bermuda’s national currency. If you are interested in either of the above
     positions, please email your CV and remuneration details to to apply.

     Closing date of 21st March 2011.

48      March 2011                                                                                                                                    
                              Latest jobs from The Actuary are now on Twitter

            HSBC Insurance
            HSBC Insurance manufactures and distributes protection, life investment, retirement and general
            insurance products for HSBC Bank and via the intermediary market for both personal and commercial
            We are looking for dynamic individuals to join our actuarial teams, with a variety of
            opportunities across the specialties, including pricing, capital management and financial
            reporting. Roles are based in our offices in Southampton and London Canary Wharf or could be
            available in both locations as specified below. Each role has an excellent salary and benefits package
            that can be individually tailored.

             Senior Regional Actuary                                  Capital Actuary
             A senior actuary is required for the UK, Europe and      A qualified actuary is required to take on
             Middle East regional actuarial team. The role covers     responsibility for regulatory and economic capital
             financial reporting, product approvals and strategic     reporting. This is a high profile role within the UK
             projects across the region. A strong financial           actuarial team and will support the implementation of
             reporting background is required in addition to a        Solvency II and the Group’s risk based capital
             proven ability to communicate and deliver in a           framework. This role requires deep understanding of
             dynamic environment. The role will be predominantly      the financial dynamics of life insurance business and
             based in London, with travel to business units as        would ideally suit a candidate with 3+ years post
             required.                                                qualification experience in financial reporting.

             HSBC Insurance – Regional Office - London                HSBC Insurance UK - Southampton

             Actuarial Systems Analyst                                Senior Pensions Pricing Analyst
             An actuarial student, no longer taking the actuarial     As a result of recently entering the intermediated
             exams, is required to manage systems development         group pensions market, a senior analyst is required
             and data management for HSBC Insurance. The              to manage the quotes process and with it a small
             ideal candidate would be a competent programmer in       team of analysts. This includes maintaining and
             VB or another programming language and would be          developing pricing models, developing pricing
             familiar with database packages. Excellent               strategy and providing actuarial support for all quote
             communication skills are essential.                      activity through external intermediaries. Very strong
             This role supports the actuarial and finance functions   relationship management and communication skills
             in their delivery of regular MI, actuarial reports and   are essential and previous experience in a pensions
             the implementation of Solvency II.                       environment will be beneficial.
             HSBC Insurance UK - Southampton                          HSBC Insurance UK – Southampton

             Senior Development Analyst                               Senior Actuarial Students
             This is a newly created role for students with 2+        Senior Actuarial Students, with at least 2 years
             years experience to provide actuarial pricing support    experience, are required to assist in all aspects of
             for activities in Protection, Pensions and Investment    financial reporting for HSBC Insurance. The ideal
             areas. The role supports the development of new          candidates will have knowledge of insurance
             products, the enhancements of existing products and      regulations and principles including IFRS, MCEV, SII
             other significant developments in the business. This     and RBC as well as being competent MoSes users.
             includes changes to existing processes, models and       The actuarial requirements of HSBC Insurance
             systems and as a result there will be Solvency II        include reserving calculations, implementation of
             involvement. Strong communication and relationship       Solvency II and production of MI and actuarial
             building skills are essential.                           reports.
             HSBC Insurance UK – Southampton / London                 HSBC Insurance – Southampton / London

             For more information, or to submit your
             application & CV, please contact
                                                                                                March 2011   49
There’s never been a better time to advance your actuarial career.
Demand from employers is intense and the right candidates can take their pick of
challenging, prestigious roles and excellent rewards.
Our online jobs board,, is now carrying over 700 actuarial
vacancies across all levels and sectors, a leap of 87% since January 2010, giving you a
wealth of opportunities.
It’s easy to search, select and apply, plus you can register for alerts to ensure you get
the latest, most relevant job details.
Minimum effort, maximum result. It’s time to make your move.
Current recruiters include:

          Make your next move at:
                                         Actuarial skills are always in
                                         demand at Legal & General and
                                         with the challenges and changes
                                         ahead of us, we see our business
                                         moving forward in new directions.
                                         We’re looking for focused,
                                         commercially aware professionals
                                         who want to join us on the journey
                                         our Life team is making.

  Actuaries looking for
  a new bearing
  Kingswood, Surrey
  Competitive salary and benefits package
  You may not have previous experience in the Life sector, but it isn’t
  essential as we’ll provide you with the support you need to make a vital
  contribution. In return you’ll need to be able to demonstrate solid technical
  talent, an ability to learn quickly and a positive attitude. So if you’re
  looking to set out on a new heading, now’s the time to get in touch.
  To find out more, please email to arrange an
  informal, confidential discussion.

  Find out more at

More jobs online at

     Casualty Pricing Actuary, London
     circa £120k + bonus + benefits
     This is a great opportunity to work for a leading international
     insurer/reinsurer. It’s a newly created role that involves working
     closely with the Product Heads and Senior Underwriters, hence
     you will be seen as the key contact person for all casualty pricing
     concerns internationally. You will be expected to work with
     considerable autonomy and will not have staff management
     responsibility in this role.
     This role will play a key part on placing external reinsurance
     treaty business. Hence, you will meet with external reinsurers
     and brokers as well as senior management internally, including
     reporting to the Group CEO.
     Given the seniority and high level business exposure of this role,
     excellent communication skills are a pre-requisite. Some
     international travel may be required occasionally (largely across
     Europe) to present portfolio reviews.
     To be considered for this role, please email your CV to alternatively please call for
     an initial confidential discussion. Newton Recruitment has other
     General Insurance roles open and is keen to hear from
     candidates with GI experience.

            Contact   Parvinder Matharu
                     Newton Recruitment
                +44(0)1689 862937



            Once in a lifetime opportunity?
                          Pensions and Investment Consultants
        Following substantial new investment in our company and the development of several business initiatives, BDO Investment
        Management is entering an exciting phase of growth in London and across our UK offices.

        Our Corporate Pensions and Benefits team is looking for:

        •     An Experienced Actuary, based in London, to help develop, refine and deliver our strategy. The successful applicant
              will have a proven track record in business development and previously held a senior actuarial position.
              An experienced Investment Consultant to lead our fast growing investment consulting practice in London supported
              by our actuarial and asset management teams.

        •     Ambitious Qualified Actuaries to help drive forward our business development plans and to support our senior
              team of corporate and trustee advisers. You will need top class technical skills and be confident to work with
              minimal supervision. Candidates from accounting firms or commercially minded actuaries from traditional EBCs
              are likely to be suited to this role. We have National vacancies.

        •     A self-motivated Actuarial Analyst part way through the exams and looking for high levels of client responsibility at
              an early stage. This position is based in London.

        To apply please contact us direct, either by email to or call 020 7893 3421.
        No agencies

52      March 2011                                                                                          
                                                ALL LEVELS

Competitive Salary & Benefits Packages

Permanent, Contractor & Fixed Term Contracts
Superb Location, South West Midlands (just off Junction 3, M42)

As the UK’s largest closed life and pension fund             At the heart of it sits our actuarial team – a dedicated unit,
consolidator, Phoenix is the name behind an impressive       comprising over 100 like minded professionals – operating
and extensive portfolio of highly regarded life brands. A    in an environment that offers the type of exposure and
member of the FTSE 250 index, with a premium listing         scope of work you’d be hard pressed to find anywhere
on the LSE, we’re an organisation that’s continually         else. Much of this will be based around actuarial modelling
transforming itself through acquisitions, fund mergers and   and financial projections, in a workplace where new
transition programmes, as well as actively preparing for     developments and projects are commonplace.
the arrival of Solvency II.
                                                             Whatever your sphere of expertise or the capacity in which
Fully focused on being a best in class financial and          you join us, you can look forward to early and increasing
risk management enterprise, we’ve also embarked on           responsibility, working at the forefront of the actuarial
one of the most ambitious technology transformations         reporting landscape, with the chance to apply your skills
ever attempted, as we look to simplify, rationalise and      in a unique setting. So, wherever your talents lie, whether
streamline our existing actuarial processes – which should   it’s in running the latest modelling software, reviewing and
give you some idea of the unique and exciting challenges     interpreting results, or presenting complex outcomes to
that lie ahead.                                              senior stakeholders – we’re equally keen to hear from you.

                                                             For further information and to apply, simply visit:
More jobs online at

                                          A name you can trust
                                          Pensions, Banking                                                  Life, Consultancy
                                          Mortality Actuary                                                  Senior Actuarial Consultant
                                          to £Negotiable                                                     to £130,000 + benefits
                                          Ref: 4451782                                                       Ref: 4233321
                                          A City-based investment bank requires a pensions                   You will be an expert on topics including Solvency II,
                                          Actuary from a buyout or consultancy environment                   management risk, financial reporting and modelling.
                                          to work as an internal mortality expert. This is a                 This is an outstanding opportunity for a senior level
                                          gold-plated opportunity to apply your defined benefit                candidate. Only exceptional individuals will be considered.
                                          experience within a top-performing investment house.               t: 020 7220 4774
                                          t: 020 7220 4774                                                   e:
                                          Life, Re-insurance                                                 UK - Wide vacancies
                                          Actuarial Analyst                                                  Ref: 4471364
                                          to £35,000 + benefits                                               Solvency II, Non-life, Newport, to £1,000 per day,
                                          Ref: 449164                                                        12 months - candidates from other disciplines will
                                          A well-known global reinsurer is seeking a driven                  also be considered.
                                          junior candidate who is progressing well through                   Solvency II, Life, Bristol, City, Surrey, Edinburgh,
                                          the actuarial exams. You will need previous experience             to £1,100 per day - those with reporting experience
                                          in an actuarial life department to be considered.                  will also be considered.
                                          t: 020 7220 4774                                                   t: 020 7220 4774
                                          e:                                     e:

                                          Reed Specialist Recruitment Ltd is an employment agency and employment business.


     Life Actuarial Assistant, London                                                      Financial Reporting Manager, South East
     £35,000 - £45,000                                        Ref 46632AA                  £six-figure package                                         Ref 46937
     A new company experiencing rapid growth has an opportunity                            A leading UK financial services company is looking for a qualified
     for an Actuarial Student in its finance actuarial team. You will                       Life Actuary to manage a team of four actuaries. You will lead the
     support senior actuaries to develop, maintain and operate financial                    provision of a range of advisory services and support in respect
     reporting and risk management systems, including exposure to the                      to the primary UK reporting bases - including Economic Capital
     Solvency II programme. Tasks will be varied in order to gain a broad                  (ICA, Solvency II), Peak 1 / Peak 2 Solvency Measures, and IFRS and
     level of experience. The ideal candidate will be a part qualified                      EV Performance Metrics. You will provide technical advice and
     actuary with strong communication skills and a “can do” attitude.                     insight relating to the financial reporting and capital management
     Candidates may come from either a pensions or life background.                        environment. Extensive UK Financial Reporting experience is essential.
     E: T: +44 (0)20 7324 0505                              E: T: +44 (0)20 7019 8842

     Solvency II Actuary, London                                                           Assistant Manager/Manager - Corporate Consulting, London
     £70,000 - £100,000 + bonus                                 Ref 47000                  £45,000 - £75,000                                               Ref 48546
     Excellent opportunity for a qualified Life Actuary to gain                             Due to ongoing success, my client has fantastic opportunities for
     cutting-edge Solvency II exposure, even without previous hands-on                     Actuaries and Actuarial Students with an interest in the more
     Solvency II experience. Backgrounds within related areas such as                      commercial aspects of pensions consulting. As a specialist business
     economic capital, financial reporting, ICA and QIS5 are welcomed,                      advisor to corporate bodies, you will advise on all aspects of company
     as this is a chance to transfer that knowledge to the Solvency II                     pensions and use your initiative to explore and design new & unique
     team of a major UK life insurer. You will work to implement                           solutions. You will see a great variety of work, so as well as advising on
     the actuarial and technical aspects of Solvency II, embedding it                      scheme design and benefit changes, you may find yourself advising on
     throughout the business, ensure the internal model is Solvency II                     anything from HR issues to web design. First class communication skills
     compliant and gain an unparalleled view of regulatory change.                         and a passion for business development are essential.
     E: T: +44 (0)20 7019 8842                              E: T: +44 (0)20 7019 8861

       Please contact us on 020 7336 7711 or visit
       Goodman Masson is an equal opportunities employer. Goodman Masson offers the services of an agency for permanent work and an employment business for temporary work.

54     March 2011                                                                                                                                 
                               Latest jobs from The Actuary are now on Twitter

            The insurance industry is changing and Zurich is at the forefront
            of the emerging marketplace. This is your chance to play your part
            in these exciting developments and take your place in one of the
            world’s leading global financial services organisations.

            UK General Insurance, Personal Lines (Motor and Household) – Fareham
            Technical Pricing Manager                                  Senior Pricing Analysts                               Pricing Analysts
            Salary: c. £100,000 plus an excellent                      Salary: Up to £80,000 plus an                         Salary: Up to £58,000 plus an
            flexible benefits package and car                          excellent flexible benefits package                   excellent flexible benefits package
            Working as part of the UKGI pricing management             In these roles you will play a key part in            We have a number of exciting opportunities
            team, in this role you will deliver pricing                the analysis of our Personal Lines accounts,          within our very diverse and skilled pricing team
            performance and strategy and provide inspirational         presenting analyses and recommendations               to support the development of the underwriting
            leadership to our technical pricing team. You will         to the management team and working                    and pricing strategies for our Personal Lines
            need to be Fully FIA/FFA qualified or equivalent           throughout the business. These roles would            portfolio. Educated to degree level or equivalent
            with post-qualified actuarial experience. In               suit someone from a non-life actuarial/pricing        you will be able to demonstrate a proven
            addition, we’ll expect you to be passionate                discipline who may be working towards an              analytical background and a strong desire to
            about managing and developing people, and                  actuarial qualification. In return you will receive   develop and grow within a global organisation.
            have a track record of developing processes and            unrivalled, passionate support from colleagues,       This role will give you an opportunity to gain
            procedures to enhance strategic performance.               the management team and the business.                 invaluable experience and development within
                                                                                                                             our Personal Lines division.

            UK Life Insurance – Swindon
            Product Development Actuary                                Part qualified and newly
            Salary: £55,000 – £65,000                                  qualified Life Actuaries                                If you are interested in applying for one of
                                                                       Salary: £40,000 – £65,000                               the positions, please send your CV to the
            plus an excellent flexible benefits
                                                                                                                               email reference detailed next to the role.
            package and car                                            plus an excellent flexible benefits
                             package and car                                         If you require further information please
                                                                                     call Leesa Mortemore on 07825 008335.
            Are you looking to develop your career in a
            dynamic and changing UK life business unit that            Here’s an opportunity to advance your career            Closing date for all applications is
            will give you direct responsibility for delivery?          within a global business that can offer future          11 March 2011.
            We’re looking for an ambitious individual, with            opportunities and career development. This              We do not accept unsolicited CVs from
            a proven personal performance track record to              role sits within our Life Division and requires a       recruitment agencies.
            work with the business to support its strategic            driven individual who is familiar with concepts
            and operational objectives. In this role you will          of EEV/IFRS/UK Statutory Reporting. Experience
            influence and interact cross functionally, applying        of working within a strong control framework
            technical actuarial skills to new and exciting             would also be a real advantage. This role will
            product development. This role would suit a                be both challenging and rewarding and would
            qualified actuary with poise and gravitas who              suit someone who is halfway through their
            can influence at the highest levels.                       studies or someone who has recently qualified.
                                                                       A technically strong, confident approach and
                                                                       life industry knowledge are essential.

                              As users of the disability symbol, we guarantee
                              to interview all disabled applicants who meet
                              the minimum criteria for the vacancy                                                                                                                                           March 2011   55
        Senior Manager –
        General Insurance Actuarial Practice

                                                                                                                       In return you will receive unrivalled passionate support from
            Exceptional salary plus bonus,                                                                          the partners and colleagues, a loyal existing client base and a
            supported by a strong benefits package                                                                  renowned consultancy-led approach providing client solutions
                                                                                                                    rather than ‘selling products and services’.
        Grant Thornton is the fifth largest provider of financial and                                                  There is no requirement to lead on business development,
        business advice in the UK, and one of the world’s leading                                                   with the focus being on project delivery. However, should the
        accounting and consulting firms.                                                                            successful individual wish to be involved in this area there will
           Our multi-disciplinary financial services consulting                                                     be substantial opportunity to do so.
        team provides some of the UK’s largest and best-known                                                          This is an opportunity to really accelerate your career within
        organisations with practical, commercial and innovative                                                     a supportive and fast-growing environment, developing your
        solutions to their business challenges.                                                                     skills and building your reputation for excellence.
           Our highly qualified team of actuaries and actuarial                                                        You will be a Qualified Actuary (or equivalent) with
        analysts offers market leading financial and actuarial services                                             significant general insurance experience and a combination
        to the insurance industry. Our services are targeted at helping                                             of strong communication and technical skills, and a highly
        our clients better understand the value drivers in their                                                    commercial mindset. Your ambition to develop your skills
        business, resulting in an information rich decision-making                                                  will be second only to your ability to lead on, and satisfy
        process.                                                                                                    client assignments.
           Having doubled fee income each year for the last two
        years, we have made a considerable investment in both the                                                   To apply, please submit your CV and a covering letter
        team and the infrastructure, leading to the creation of this                                                to our retained consultants Sagar Wright Search & Selection
        outstanding senior opportunity.                                                                             by email to For more detailed
                                                                                                                    information, or for a confidential discussion, please call Richard on
           As we are a small group directly integrated with a
                                                                                                                    0113 391 0044.
        renowned Risk Management team, the successful candidate
        will not be pigeon-holed into a niche, but have the
                                                                                                                    Any CVs sent either directly, or through another agency
        opportunity to work across the gamut of GI consultancy.
                                                                                                                    will be forwarded to Sagar Wright.
        Based from the City office, you will be the number two in
        the General Insurance Team, leading on a vast variety of
        assignments, including Solvency II, pricing and reserving,
        through to capital modeling and providing the internal
        actuarial function for a large insurer.

                                                                                                                                 Audit • Tax • Advisory

        © 2011 Grant Thornton UK LLP. All rights reserved.
        “Grant Thornton” means Grant Thornton UK LLP, a limited liability partnership. Grant Thornton UK LLP is a member firm within Grant Thornton International Ltd (‘Grant Thornton International’).
        Grant Thornton International and the member firms are not a worldwide partnership. Services are delivered by the member firms independently.

Actuary_v3.indd 1                                                                                                                                                                                         16/02/2011 11:10
                                                       High Finance Group is a specialist consultancy, providing Finance, Actuarial, Audit, Risk
                                                       Management, Compliance and IT Recruitment solutions to major Insurers and Asset Managers,
           High Finance Group                          professional services firms and SMEs. We aim to provide a market leading recruitment service,
           Specialist Recruiters
                                                       bridging the gap between large agencies and executive search.

  Strategy Consultant                                       Life              Investment Manager                                      Life
  Salary: Up to £125k Base + Bonus + Profit Share                             Salary: Up to £100k + Exceptional Bonus + Benefits
  Location: London                                                            Location: South East
  Role for a entrepreneurial Actuary with UK Life Insurance experience        Fantastic opportunity for an Actuary to become an Investment
  to lead the European programme for this niche Strategy Consultancy.         Manager; managing a team of analysts, developing investment
  You will be a self starter wanting to expand your experience outside        strategy and monitoring and assessing the performance of a
  of the Actuarial field in a challenging and highly commercial role that     multibillion pound with profit fund. Extensive investment knowledge
  will see you shape the strategic direction of your Insurance client's       and experience of complex LDI and / or ALM required plus excellent
  product proposition in the UK and Europe. Ref: CB7078                       people management and organisational skills. Ref: CB7092

  Solvency II – Pillar 3                                  Life                Model Development Specialist                            Life
  Salary: Up to £95k Base + Benefits                                          Salary: £30k - £55k + Bonus + Benefits
  Location: South East                                                        Location: London
  Excellent opportunity for a Life Actuary to transfer their financial        A leading International Insurer is seeking talented and experienced
  reporting, QIS5 or regulatory knowledge into this forward facing            candidates from an Actuarial background with extensive modelling
  Solvency II role. You will be interpreting and implementing Pillar 3        experience. Within the role you will be offered responsibility and
  requirements as they unfold. This high profile Group role determines        trusted to use your initiative quickly. You will receive training in the
  how the insurance provisions are calculated from a Group wide               latest modelling technology including Prophet Enterprise.
  perspective, liaising with your counterparts across the globe.              Experience with Prophet, Moses or Mo.Net is highly desirable. Ref:
  Opportunity to travel. Ref: CB7083                                          GB1678

  Supervisory Specialist                                  Life                Switch to Life / General                          Life / General
  Salary: £40k - £65k + Bonus + Benefits                                      Salary: £35k - £75k + Bonus + Benefits
  Location: London                                                            Location: Nationwide
  A fantastic opportunity to join a world leading Consultancy. Based in       Superb opportunities exist for part-qualified and newly qualified
  London or Edinburgh you will be exposed to some of the most                 Pension Actuaries to join leading Insurers. Receiving market leading
  exclusive clients in the industry and given real responsibility early       training, you will be able to work in a variety of areas across the
  on. You will gain a broad range of exposure across the entire               business. The successful applicant will be able to demonstrate a
  Actuarial sector and become an expert in your field. This is the            genuine interest in Insurance, and possess the acumen to develop
  perfect time to take the next steps in your career with a company that      quickly within this area. MW6416
  will support and challenge you daily. Ref: GB1679

  Corporate Advisory                                      Pensions            Switch to Investments                               Investments
  Salary: £35k - £75k + Bonus + Benefits                                      Salary: £35k - £60k + Bonus + Benefits
  Location: London                                                            Location: South East / Scotland
  Join this industry leading, global organisation in a client-focused         Looking to move away from traditional consulting? Join this global
  role. You will work closely with Senior Consultants on a variety of         consultancy, and benefit from working with industry experts. You
  projects, creating innovative solutions for their pensions                  will provide strategic investment advice to an impressive portfolio of
  arrangements. Projects include Buy in / Buy out, longevity swaps            clients on issues including Risk Management, LDI and Manager
  and liability management. First-rate communication skills and strong        Research. You will have a proven ability across Pensions and a sound
  technical skills are essential. Ref: MW5828                                 understanding of Investment Consulting. Ref: MW7169

  General Insurance                                       Contract            Life Insurance                                           Contract
  Salary: £400 - £2000 per day                                                Salary: £500 - £1500 per day
  Location: UK Wide                                                           Location: UK Wide
  A number of clients are in need of Solvency II Actuaries as well as         We have a number of clients looking for Actuaries with a keen interest
  Pricing Actuaries in the LMKT, Commercial and Personal Lines arena.         in Solvency II. Exposure in this area or the ability to lead programmes
  Exposure to Solvency II is required to assist or grounded GI                is ideal. However Actuaries with no prior Solvency II experience will
  experience in order to be considered. The current market is excellent       be considered to support the business in this area. This is a fantastic
  to move in to contracting. We represent contractors on Fixed term ,         time to take advantage of this growing area. Advice provided on all
  Ltd company or PAYE basis. Ref: RP108                                       areas of contracting where required. Ref: RP808

Life                                 Life                                   Pensions                                Contract
Clare Bethell: 020 7337 8829         Graeme Braidwood: 020 7337 8820        Miranda Wilkinson : 020 7337 8815       Rupa Pithiya: 020 7337 1200

  Actuarial l Finance l Risk l Audit l Compliance l IT l Strategy & Consulting l Solvency II l Claims & Underwriting

020 7337 8800                                    
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           MAKE A
           Head of Economic Capital Processes & Controls                     Head of Capital Management, London
           London, to £110,000 + bonus + benefits                             To £120,000 + bonus + benefits
           This leading insurer is seeking an experienced life actuary to    This Lloyd’s Syndicate is seeking an experienced qualified
           own the economic capital internal model and the production        actuary to provide strong leadership and direction to its
           process for the group, including the support of its usage         capital management team. You’ll be expected to develop and
           through the company. You will report directly to the group’s      deliver best practice capital management capabilities in order
           director for economic capital and S2 and have exposure            to enhance shareholder value and improve the management
           to a number of senior figures, including the CCO, CFO and          of capital. A successful track record in general insurance is a
           CRO. As a qualified life actuary with PQE and relevant             must. Experience of designing, building and running capital
           technical experience, you will have previous experience of        models coupled with a sound understanding of the ICA
           management and dealing with senior figures, both internally        standards and the S2 framework is required. Good knowledge
           and externally. Ref: 1350164                                      of risk management is also advantageous. Ref: 1355047
  or call 020 7481 9984               or call 020 7481 9984

           Solvency II Validation Analyst                                    Commercial Lines Pricing and Reserving Analyst
           London/Surrey, c.£35,000                                          London City, c.£40–50,000
           One of the largest general insurers in the UK is currently        An exciting opportunity has arisen to join this global
           utilising its extensive data to develop the actuarial teams       insurer in its London City office. You will be a part of the
           and requires an actuarial student with non-life experience        well-respected commercial lines team and gain exposure
           to join its Solvency II validation team. The role will involve    to both pricing and reserving work. At the forefront of the
           performing stress tests on the outputs of the capital             company’s activity within the GI market, you will be heavily
           modelling team in order to identify areas of improvement          involved in many different lines including fleet and aviation.
           in the business. You will gain hands-on experience with           The ideal candidate should have a successful track record
           Igloo and continually build upon your understanding of            and proven UK non-life experience. Ref: 1216813
           capital management. Ref: 1327999                         or call 020 7481 9984
  or call 020 7481 9984

           For further information or to apply for any of these vacancies,
           visit and enter the relevant job reference number.


62   March 2011                                                                                                            
                                                                                                             T:        020 8420 1818

                             Actual Search
                                        SEEKING THE             EXCEPTIONAL

International Life Pricing Actuary                                                   Pensions - Your Intro to Investments
London or Surrey                               £60-100K + range of benefits          London                                                        £30-85K + bens
Superb role leading the product pricing team. You’ll oversee the pricing of an       Pensions students & actuaries. Great chance to learn the investment sector.
exciting range of international products across many countries. New                  Major consulting firm needs p/q & qual pensions actuaries for key roles in
challenge with great career potential for an enthusiastic life actuary with          pensions / investment dept. Team has varied duties incl. liaison with investment
background in pricing, financial reporting or consultancy. Ref:1201                  mgrs, pensions valuations, client meetings, some ALM . Ref:1207

Asset Liability Modelling                                                            Lifestyle Life Compliance
London, City                                                 £35-80K + bens          London City                                           £65-150K + exc bens
2 roles – for a p/qualified & qualified actuary for the Investment & ALM team        The compliance sector is booming. This firm seeks nearly, newly & senior
at this leading insurer. You’ll get involved in risk, Solvency 2, monitoring         qual life actuaries with exp in any of: solvency II, ICA, valuation / reporting, or
liquidity & cashflow whilst liaising closely with Investment. Suit self-motivated    realistic balance sheets. Be at the cutting edge of the compliance revolution.
team players with strong ALM, analysis & problem solving skills. Ref:1202            High profile & demanding work. Flexi working arrangements poss. Ref:1208

Move Out of Life’s Comfort Zone                                                      Varied Life Role
London                                           up to £150K + exc bonuses           Midlands                                               c£40-65K + exc bens
Is your job repetitive & mundane? Same day after day? If you need a new              Award winning, niche life insurer offers varied role to aspiring, senior analyst/
challenge this award winning life consultancy needs qualified actuaries with         actuary. Duties include valuation, modelling, solvency & product development
career aspirations & can do attitudes. Duties vary from solvency to valuations       advice. Good chance to broaden your exp. Full training offered if needed.
to pricing to buyouts. Training if needed. Boring it isn’t!! Ref 1203                P/qual or qual life actuaries should apply. Relocation help poss. Ref:1209

Join the Solvency 2 revolution                                                       Change to the London Market
S West or London                            to £85K + car + share options            Surrey or London                                              £40-85K + bens
Fast moving, exciting project with leading life insurer to develop & implement       Read on for your chance to change from personal lines to commercial London
key requirements of Solvency 2. Be involved in design & delivery of the              market pricing. Prestigious roles for part & newly qualified actuaries pricing
internal model & financial reporting metrics. Part qual & qual life actuaries will   marine, aviation & property insurance & reinsurance contracts & treaties. Min.
receive excellent packages & chance to team manage if desired. Ref:1204              2 years pricing + good Excel needed. Outstanding opportunity. Ref:1210

Investment Actuary – Quant /ALM                                                      Reserving & Solvency
Surrey                                                      £60-80K + bonus          London                                                       £50-95K + bonus
Select team within FTSE 100 company seeks an individual with investment              London market insurer & reinsurer want a GI reserving analyst. Key technical
experience, strong financial modelling & Excel skills. Enjoy working on fixed        role involving ICA parameterisation & solvency provisions as well as actuarial
income from Gilts & Swaps plus development projects & deliver financial              reserving. You’ll also advise the pricing team once figures are done. Ideal role
reporting on assets. Take control of how your career evolves. Ref:1205               for a reserving analyst seeking to broaden their exp. Ref:1211

P Qual Pensions – Corporate World                                                    Life Insurance Reporting
Birmingham, Manchester, Leeds                            £30-60K + benefits          London                                                                  £45-95K
Flexible working & terrific commercial exposure will advance your knowledge          Leading global life insurer with group HQ in London seeks analysts & an actuary
in the cutting-edge world of corporate pensions. With good exam progress &           with valuations & reporting exp. You’ll prepare results on IFRS, MCEV & FSA
a minimum of 12 months pensions experience you’ll have superb variety with           bases & have involvement with the solvency II project. To apply you’ll need EV or
a mix of projects, excellent career development & flexible working (some             EEV experience & desire to learn MCEV. UK life experience essential. Ref:1212
options to work from home). Ref:1206

         To apply for any of these vacancies please phone 020 8420 1818, and speak to Peter or Norma
                  or apply online at or email

             w w w. a c t u a l s e a r c h . c o . u k                          
The Actuarial Recruitment Company

 Consultancy                                                                                                                  Consulting Actuary
 London                                                                                                                  to £120K Base + Benefits

 Our Client, is a large global blue chip consultancy and one of the world’s largest services and
 consultancy providers.

 The Role, is for the position of Consulting Actuary based in the Financial Services Business Consulting
 Practice specialising in the delivery of financial consulting and integration services to insurance clients.
 Consultants work on a variety of high profile, wide ranging programmes within Finance functions of
 major insurers covering financial strategy, finance transformation, Solvency II implementation, risk and
 compliance and performance management.
 The Successful Candidate, will be a qualified actuary, with a strong financial background and
 ideally with some project management experience and excellent client facing skills. They may have
 worked in a consultancy or perhaps have developed a broader experience within an insurer through
 working on wider finance or implementation related projects.

 For more detailed information, or a confidential discussion,
 please contact Chris Cannon on +44 (0) 7711 228449
 or email

 Senior Acturial Analyst                                            Life         Risk Consultant                                                Pensions
 Midlands                                                    £Attractive         London                                                          to £70K
 This life insurer is looking for a senior student, or nearly/newly qualified     This global consultancy requires an actuary to join their London team.
 actuary to join the life actuarial team. The successful candidate will           Candidates with relevant experience and an Investment qualification
 have actuarial experience gained within life insurer or pensions                 will also be considered. The successful candidate will have experience
 environments, and will have the opportunity to work on a broad                   from an actuarial or investment environment, good technical skills,
 range of projects, including Solvency II implementation programmes.              strong analytical skills and excellent communication skills. The work will
 A generous benefits package is offered including relocation assistance           focus on advising clients on the risk profile of their pension schemes.
 where appropriate. Ref: ARC24900                                                 Ref: ARC24824

                                                                       Life Contracts

    London – 12 mths; Solvency II; qualified; life financial reporting exposure / to £1250pd Ref ARC25243C

             Midlands – 6 mths; Part Qualified; strong actuarial modelling skills / £High pd Ref:ARC25244C

 North – 3/6 mths; Part Qualified; Prophet Developer; minimum 2 years exp / to £600pd pd Ref:ARC25245C

Call us anytime including evenings and weekends on 020 7717 9705 or
                                                                                        A fresh approach

Global opportunities and trusted advice from experienced actuaries

 Large International Insurer                                                                                             Corporate Actuary
 London                                                                                        Significant base salary plus excellent benefits

 Our Client, is an established and growing London Syndicate writing multiple lines of business and offering a broad range
 of coverages to the market.

 The Role, is for the position of Head of Actuarial, reporting directly into the Divisional Director. The roleholder will play
 a key part not only in managing, but also in contributing to the continuing development of the business. Key aspects of the
 role include:
            •      Managing the pricing , reserving and capital modelling actuarial functions
            •      Managing the Business Planning and Development function
            •      Implementing the Solvency II Programme

 The Successful Candidate, will be a natural leader and manager with strong communication skills and relevant market
 experience, from either within the market or possibly from a consultancy background looking to make a move into a senior
 management position within a dynamic environment.

 For more detailed information, or a confidential discussion,
 please contact Roger Massey on +44(0)781 398 9016 or e-mail

 Any cvs sent to The Client, either directly or through another agency will be forwarded to The ARC

 Lloyd’s Managing Agency                                                                                                       Chief Actuary

                                                                                                                                                 The Actuarial Recruitment Company is an employment agency
 London                                                                                        Significant base salary plus excellent benefits

 Our Client, Is a large Lloyd’s Managing Agency with a number of syndicates under management.

 The Role, Reports into the CEO and has responsibility for all duties carried out by the actuarial department including
 reserving, capital assessment and pricing. The roleholder will be a member of the executive board and be the executive
 co-sponsor for the implementation of Solvency II. There will be significant involvement with many stakeholders, both
 internal and external and the ability to manage multiple concurrent projects is essential.

 The Successful Candidate, Will be a qualified actuary with several years’ pqe and will have significant experience
 gained within the Lloyd’s / London Market. They may currently be working within the Market itself or from a consulting
 background. The successful candidate will be expected to have had prior exposure to at least a couple of the core areas
 of actuarial work (i.e Reserving, Capital Assessment, Pricing, Solvency II), have strong team management skills and have the
 leadership skills to be an effective contributor to the success of the business.

 For more detailed information, or a confidential discussion,
 please contact Roger Massey on +44(0)781 398 9016
 or e-mail

 Any cvs sent to The Client, either directly or through another agency will be forwarded to The ARC

GI                                                            Andy Clark BSc FIA                      0781 333 7891
Life, Pensions, Investment and Graduate                       Chris Cannon BA                         0771 122 8449
All other enquiries                                           Roger Massey BSc MBA FIA                0781 398 9016
                                                                 General Insurance

Partner GI, Big 4                                  Phu Le-Ngoc                  Chief Actuary                                         Jonny Plews
Germany                                   €200,000 + Bonus + Bens               London                                    £150,000 + Bonus + Bens
My client is looking for a partner to lead and grow the non-life team in the    Management consultancy seeks a UK qualified actuary to set up and
German office. The ideal candidate is an expert in Risk Management,             develop a team. You will add quants support to the existing offerings,
Solvency II, comes from a consulting background and speaks German.              focusing across all core actuarial duties; reserving, capital/Solvency II and
Proven track record and an established network required.                        pricing. A great long-term vacancy and something unique to the market!

Head of Capital                                      Jonny Plews                Actuarial Director                                 Jamie Howard
London                                    £150,000 + Bonus + Bens               London                                    £150,000 + Bonus + Bens
Global reinsurer seeks an experienced capital actuary to lead an established    Actuarial Director required for world leading multinational company. Scope
team. You will report into the CRO though your main duty is to communicate      of role is managing a large team of actuaries in commercial lines – both large
with the board and other key stakeholders. A very commercial role in a          scale and SME risks. You are required to have general insurance experience
company where actuaries are well respected.                                     and be a qualified actuary. Management experience preferred.

Underwriting Actuary                                 Jonny Plews                Senior Pricing Manager x 2                         Jamie Howard
London                                    £125,000 + Bonus + Bens               London or North of England £110,000 + Bonus + Bens
Global insurance group seeks two experienced pricing actuaries to work          Superb Pricing Manager opportunities for experienced actuaries looking for
within underwriting units for the casualty and property line of business. You   responsibility of a high GWP portfolio and to manage a team of actuaries.
will report into the Product Head so strong technical and product knowl-        Must be from a general insurance background and be a qualified actuary or
edge is required. A Bermudan style pricing role in London.                      statistical specialist. Flexible location and great financial incentive.

International Consultancy         Emma Gilbert                                  Group Reserving Actuary                                  Rick Davis
Zürich, Switzerland       CHF 140,000+ Bonus + Bens                             London                                    £110,000 + Bonus + Bens
Want to focus on pure actuarial advisory for international markets with a       This is a high profile role within a top London Market business. You will
great work/life balance? You will be given specific portfolios of clients,      manage all Reserving work for the Group while acting as a core member of
working on appointed actuary mandates. Exposure to Reinsurance Optimi-          numerous multi-disciplinary business planning teams. Requires a qualified
sation, Premium Calculations, ERM, Solvency II/SST and QIS5.                    actuary with GI experience and excellent communication skills.

Syndicate Actuary                                       Rick Davis              Student Pricing Actuary                                  Rick Davis
London                                     £95,000 + Bonus + Bens               London                                      £55,000 + Bonus + Bens
Lloyd’s Syndicate requires a nearly or recently qualified GI Actuary with       My client, the Syndicate operation of a leading Insurance group, is looking
strong commercial skills. Reporting to the Chief Actuary you will complete      for a talented actuarial student who wishes to gain experience in London
Pricing, Reserving & Capital duties in equal measure. You will also work        market Pricing. You must be a strong communicator with a good academic
regularly with the FD and senior underwriters in a strategic capacity.          background and an appetite for technical actuarial work.

Igloo Specialist                                   Rob Bentham                  Pricing Actuary                                     Rob Bentham
London | 6 Months                                        £1000/day              London | 9 Months                                          £900/day

Solvency II Actuary                                Gary Rushton                 ReMetrica Specialist                                Rob Bentham
London | 6 Months                                          £900/day             London | 6 Months                                           £800/day

Reserving                                                Ik Onyiah              Capital                                                   Ik Onyiah
Newport | 12 Months                                       £Competitive          Newport | 12 Months                                        £Competitive

                               General                                                                     International
Jonny Plews                                             0207 649 9467           Diane Lockley                                      +353 (0)1 685 2413                                          
Rick Davis                                              0207 649 9353           Emma Gilbert                                    +41 (0)43 508 0509                                                                       0207 310 8782
Jamie Howard                                            0207 310 8725           Phu Le-Ngoc                                      +49 (0)89 2206 1068                                                                    0207 649 8643

                                                                                   Ireland          |     Continental Europe |                            UK

                                                         Life Insurance & Investments

Head of Strategic Planning                         Harriet Hall                    Senior Mgr - Governance & Controls   Clare Nash
London                                     £150,000 + Bonus + Bens                 London                      £120,000 + Bonus + Bens
High profile role with management responsibility and Board level access. My        The regional branch of this global player is looking for an experienced
client is looking for a senior actuary with operational and external               actuary to take on an internal consultant type role. Working closely with the
stakeholder management experience to run strategy associated with risk,            Chief Actuary, you will gain group-wide exposure in a project based capacity
capital and reporting practices. Excellent career move with great rewards.         looking to assist with process improvements and policy approval.

Head of Products                                         Clare Nash                Actuary - Insurance Solutions                           Harriet Hall
Midlands                                    £110,000 + Bonus + Bens                London                                     £100,000 + Bonus + Bens
An exciting opportunity has arisen to establish and manage a product               This prestigious bank is looking to recruit an accomplished capital and
governance function for an existing book of business. This is a diverse role       reporting actuary (2-5 years PQE) to play an important role in validating
and one requiring previous leadership experience to manage a multi-                crucial investments decisions and lead the company S2 initiative. An
discipline team. Annuity product experience would be an advantage.                 extremely rare entry point to this highly respected investments house.

Reinsurance Actuary                                  Diane Lockley                 Newly Qualified?                                     Emma Gilbert
Dublin                                       €90,000 + Bonus + Bens                Zürich, Switzerland                   CHF 140,000 + Bonus + Bens
An exciting opportunity has arisen for a Reinsurance pricing actuary in a          A real chance to get exposure with Finance and ALM at Group Level. One of
Dublin based reinsurer. You will have skills in pricing reinsurance or life        the world’s leading insurers needs newly qualified actuaries for their interna-
product pricing. This is a fantastic opportunity for a qualified actuary to work   tional team. You will be working with replicating portfolios and modelling
in a technical and commercial role. Please call for more details.                  liabilities to match the asset/investment strategy of the Group.

Life Actuary                                           Phu Le-Ngoc                 Pricing Actuary                                 Patrick Flanagan
Germany                                      €80,000 + Bonus + Bens                London                                      £80,000 + Bonus + Bens
Exciting opportunities for PQ or qualified actuaries who want to take their        A number of my clients (insurers and reinsurers) are currently looking to
next career step in Germany. My client offers various positions for life actuar-   strengthen their pricing teams. Ideally already accomplished in this field
ies. Good knowledge of at least one of the following is expected: MCEV, ALM,       they will also look to consider those with transferable modelling/experience
Solvency II, IFRS, Prophet and QIS.                                                analysis skills. Senior student to 2-3 years PQE.

Solvency II Actuary                                  Diane Lockley                 Buyout – Life Actuary                          Patrick Flanagan
Scotland                                     £75,000 + Bonus + Bens                London                                      £75,000 + Bonus + Bens
Solvency II actuary required to join a team of corporate actuaries to design &     This niche buyout business requires a nearly/newly qualified life actuary to
implement a risk management framework for the business. The role will be           take on a broad role encompassing reporting, capital, investments/ hedging
heavily involved in ICA/Pillar2 work and will best suit a qualified actuary        strategy and S2. A great way to apply core actuarial skills to an exciting
from a technical background. A great opportunity!                                  entrepreneurial environment.

Capital Actuary                                       Gary Rushton                 SII Actuary                                               Ik Onyiah
North West | 6 Months                                       £1000/day              Bristol/Edinburgh | 6 Months                                 £1000/day

Solvency II Methodology                               Gary Rushton                 ESG Specialist                                       Rob Bentham
London | 6 Months                                           £1000/day              South East | 6 Months                                       £900/day

Moses                                                      Ik Onyiah               Prophet Developers                                   Gary Rushton
Edinburgh | 6 Months                                           £900/day            South East| 6 - 12 Months                                    £650/day

                                   Life                                                                         Contracts
Clare Nash                                                0207 649 9350            Gary Rushton                                             0207 310 8793                                              
Patrick Flanagan                                          0207 649 9355            Ik Onyiah                                                0207 310 8785                                        
Harriet Hall                                              0207 310 8783            Rob Bentham                                              0207 649 9351                                            
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