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. e tlc~,uarial Upda e t VOLUME 17 NUMBER 4 AMERICAN ACADEMY OF ACTUARIES APRIL 1988 The Actuary of the Future: A Vision Explored In t his issue by George Soules In the March issue of Forbes magazine, sees a possible conflict : "How do we 2 From the President actuaries are called "boring all the way to broaden our perspective without weak- the bank ." The article enumerates the, ing our technical foundation?" he asks . by now, familiar "characteristics" of the The effort to determine what skills 3 Letters to the Editor profession . Actuaries are indispensable should be considered the common core to society, however, their skills are too of knowledge possessed by actuaries does esoteric for public understanding; hence not diminish the fact that these skills, 4 Legal Lines the profession is small in numbers and however defined, are well-suited for ap- likely to remain that way. The story fo- plications beyond the traditional scope 4 Standard Valuation Law cuses on Barnet Berin, chief actuary at of actuarial practice-life insurance and Committee Begins Its Work William M . Mercer, Inc ., who describes employee benefits . A return to the "glory himself as more boring than an accoun- days" of twenty-five years ago, when ac- 4 Trowbridge to Write Monograph tant . Boring but bountiful, the article tuaries literally strode atop the firma- suggests, is really not such a bad way to nent of the life insurance industry, is be. unlikely due to increased competition GAAP for Universal Life P_5 Plans Unfold for the 1989 Despite this generally rosy assessment, within the profession there is undis- guised fretting over the actuarial corpus from other professions and a shift within companies to organizations based on "business units" rather than on "func- 5 Centennial Celebration of the Actuarial Profession in and its prognosis . Editorials have ap- tions ." Yet the need for actuarial services North Am erica peared in virtually all the actuarial pub- in the relatively untapped arenas of gov- lications speaking out about the future ernment, law, public health benefits, and 6 P&C Seminar in October course of the profession . Now, under the in dealing with social problems in gen- auspices of the Society of Actuary's (SOA) eral, is considered very promising. A dif- Committee on Planning, a Task Force on ficult issue before the task force is how .j Checklist of Academy Statements February 1988 the Actuary of the Future is busy peering best to make decisionmakers in these into a crystal ball, hoping to come up areas aware that actuaries have the right Fibiger to Receive with a new vision for the profession in stuff to do the job . Should this informa- 7 UNL Award the 21st Century. Several meetings of tion "seep through" to them or should the task force have already taken place, actuaries be aggressive about convinc- and a report is due to the SOA's Board of ing the world that they are the best 8 Radio Roundup Governors in October 1988 . A major as- qualified? signment of the task force is to develop a Working on the latest frontier of actu- "vision matrix," matching skills with job arial influence, as a financial actuary on functions in areas where actuaries could (continued on page 6) provide services . Another important item Enclosures on their agenda is to pin down the na- ture of "core" actuarial skills . Included in this month's issue of The need to step back and lay a solid CENTENNIAL The Update are the following : foundation before moving into uncharted • Government Relations Watch terrain is an approach favored by Jim • In Search Of . . . Hickman, task force member and dean • Standards Boxscore of the Business School at the University • Nomination Card of Wisconsin . "We have to sort out what *Exposure Draft : Recommenda- sue- CELEBRATION is basic and fundamental," he says . "That tions and Interpretations Con- is a pre-condition ." Another leading The Actuarial Profession . North America cerning Health Rate Filings thinker on this topic, Fred Kilbourne, a • Recommendations for Measuring managing director of Mercer-Meidinger- Pension Obligations Story inside on how plans for this Hansen, concurs . "You don't have • Incurred Health Claim Liabilities grounds for cohesion unless you know event are shaping up. what is fundamental." But Kilbourne also 2 The Actuarial Update items that were in my report to the joint executive committees : (1) possible estab- lishment of an Actuarial Standa of Actuaries Board, (2) discussion of a proposal launch an actuarial magazine, (3) for- President malizing the position of Director of Gov- John A. Fibiger ernment Relations, (4) continuing edu- President-Elect cation requirements and recognition for W. James MacGinnitie enrolled actuaries and other Academy Vice Presidents members, (5) theAcademy's annual meet- Phillip N . Ben-Zvi ing schedule, and (6) the participation of Committees on Public Issues-Insurance John A. Fibiger the Academy in the ongoing debate on a Burton D . Jay national health care policy. Committees on Accreditation . But more importantly for a discussion Qualification and Communication "Not Necessarily the News" of the state of the Academy are items Joseph J. Stahl, II that would not be categorized as news . Committees on Public Issues-Employee Whether'in a company, in a professional We do not expect to see headlines like "No Benefits and Social Insurance association, or in any other human en- Planes Crashed Today" or "Today, No Mavis A. Walters deavor, good staff people can sometimes Dogs Bit Any Postmen," because that is Committees on Accounting and be a pain. This usually has nothing to do not what we call news . It is the unusual, Financial Reporting with their personality, but is related to the different, the new, that commands Secretary the fact that it is often their job to re- our attention when we read of an air- Virgil D . Wagner mind you of obligations to which you plane crash or hear about a canine en- Treasurer have already committed . Thus, I was counter of the worst kind . Daniel J . McCarthy initially less than cheerful when the note With respect to professional activities, Executive Director from the Academy's Director of Public we see no headlines such as "Insurer Stephen G . Kellison Information Erich Parker arrived, remind- Makes Scheduled Payments" or "Insurer Executive Office ing me that I owed The Update a mid- Meets All Obligations in Calendar Year ." 1720 [ Street, N .W. 7th Floor term editorial-sort of a "State of the It's expected, it's not news, and yet it Washington, D.C . 20006 Union" piece . takes the effective functioning of actuar- (202) 223-8196 Erich's reminder arrived the same day ial professionals served by an educati~ FAX (202) 872-1948 that I was preparing a draft of my report and standards-setting process to m Membership Administration of what was going on in the Academy for the system work. 500 Park Boulevard a meeting of the executive committees of Here are ten items of non-news off the Itasca, Illinois 60143 the Academy, its founding organizations, top of my head . The 1988 Yearbook is (312) 773-4204 and the Canadian Institute of Actuaries out . The Enrolled Actuaries Meeting was in Phoenix, Arizona . At this meeting, a great success . New members were ad- held once every two to three years, the mitted to the Academy last month . The leadership of these five organizations Academy Washington Briefing and Lun- meet separately and then jointly to go cheon went well . The Academy put an over topics of current and mutual inter- annual budget together. The Academy Chairperson est . There is so much going on in the sent statements on a wide variety of Committee on Publications actuarial profession these days, the meet- topics of actuarial interest to a number Carl R . Ohman ing agenda is full. Casualty Actuarial of governmental and regulatory authori- Editor Society President Dave Hartman, who ties . The Issues Digest was published. Charles Barry H. Watson won the lucky turn of the roulette wheel "Academy Alerts," are becoming an in- Associate Editor ` to be in charge of the meeting, suggested creasingly popular news service. We con- Warren P. Cooper that each president prepare a brief sum- tinued to work on qualification stan- Managing Editor mary of what was going on in that orga- dards. The Interim Actuarial Standards Erich Parker nization in case there wasn't time for us Board met recently. My list stops at ten, Contributing Editor to report verbally. but I could easily go on to two or three or George Soules When faced with an obligation, there four times that in length with the rou- Production Manager Is always a tendency to find the easy way tine activities on which the Academy is Renee M . Cox out by seeing if you can't recycle some- actively representing the public interests thing that you had already used before . of our profession. This, after all, is a time-honored actuar- By the usual criterion, an item of news ial tradition, because in many cases we is not that the Interim Actuarial Stan- American Academy of Actuaries recycle mortality tables or experience stud- dards Board met, for example, but rather 1720 I Street, N .W. 7th Floor ies when our "judgment" tells us that a that the members of the Academy Washington, D .C . 20006 new study or a new table would produce very probably soon be voting on a byl Statements of fact and opinion in this publication, including editorials and letters to the editor, are made on little additional information. amendment to accommodate its c the responsibility of the authors alone and do not necessarily Imply or represent the position of the Although my purpose is not just to Into a permanent Actuarial Standards American Academy of Actuaries, the editors, or the touch on topics of current interest, for members of the Academy. the record, here is a list of the unusual (continued on page 7) April 1988 3 Letters to the Editor espouse to Robertson workforce, making labor cheaper relative long as the U .S . retains its democratic to productivity-enhancing capital invest- system of government, one can be confi- I am responding to A . Haeworth Robert- ment . dent that the retired population will share son's analysis of the financial future of Under Robertson's scenario, as the in changes in the living standard in Social Security (The Actuarial Update, baby boom generation retires early in the equal measure with the working popula- February 1988) . Robertson's analysis fails next century, participation in the work- tion . to take into account the dynamic nature force will decline, while the rate of pro- Eric J . Klieber of the U .S . economy. ductivity improvement remains un- Cleveland, Ohio The standard of living that U .S. citi- changed . The result is a stagnant or even zens enjoy derives from two sources : the a declining standard of living . Robertson productivity of individual workers, and Throw 'Em a Herring then states the obvious : in this situation the degree of participation by citizens in the retired population will suffer along The latest version of the Issues Digest is the workforce. (This .picture is distorted with everyone else . a landmark in the way that the Academy to some degree by deficit spending, which Unless one is predicting the economic bureaucracy has got the profession to represents . in effect, an advance on fu- decline of the United States, a more likely behave like trained seals . ture production .) In the two decades fol- scenario is that employers will respond I know I belong to a profession that lowing World War II, the standard of liv- to the aging of the population by invest- has vigorous disagreement among its ing improved rapidly, primarily as a result ing in labor-saving capital improvements members . Yet in none of the "Academy of productivity increases . More recently, and by providing inducements for the Recommendations" is there other than productivity increases have flattened out, elderly to remain in the workforce . Both one-voice statements . Take, for example, but higher participation in the work- responses will mitigate the financial dif- the AIDS issue . While some conflicting force has contributed to maintaining rea- ficulties of Social Security, the first by ideas are commented on, the Academy sonable improvement in the standard of enabling workers to afford higher contri- position is utterly one-sided . One knows living . Indeed, the slow-down in the rate butions, the second by reducing the av- a position is unrealistically one-sided of productivity increase stems in large erage period of retirement. when a publication like Best's can es- ensure from entry into the workforce of Nobody can predict with assurance pouse concepts about this issue far more baby boom generation, as well as the future course of changes in the United liberal and wide ranging than the Acad- gher participation by women in the States standard of living . However, as emy's! Look at FAS 87 and FAS 88 . Both contain serious dissent on one or more aspects of their contents . Look at any Issues Digest or any formal Academy publication, and you will find not one position in which a minority have been given the opportunity to contradict the majority position . There are two places appropriate to a publication so uncom- promisingly one-sided : the trash can, or a moderate-sized political library on the same bookshelf as Mein Kampf, Das Kapital, and Mao's Little Red Book . Jan R . Harrington New York, New York Editor's reply : Contrary to Mr. Harrtng- ton's views, theAcademy welcomes dis- agreement and dissent. The basis for (continued on page 7) The Update welcomes letters from readers. Letters for publications must include the writer's name, address, and telephone number, and should be clearly marked as Letters to the Editor submissions . Letters may be edited for style and space requirements . 4 The Actuarial Update Legal Lines by Gary D . Simms Allocation of Assets: The Academy's Executive Committee has decided that the Academy should file In Search of a Definition a friend of the court (amicus curiae) The debate whether pensions represent brief and recommend that the Supreme deferred wages or promises of future Court review the case . payments was at the heart of the debate In Tilley, the key question is an intrepre- over ERISAs enactment. A series of re- tation of the plan asset allocation provi- cent cases raise that issue in the context sions in ERISA. For many years, it has been of plan terminations and reversions of understood that accrued benefits are sub- "excess assets" by plan sponsors, with ject to distribution to plan participants at employee-participants arguing that they the time of plan terminations . At first, are entitled to more of the assets than some reviewers felt that the judges in Tilley sponsors are willing to concede. and in Blessitt did not understand the In the most well-known case, Blessltt v . natureof"accrued"benefits. Butuponanal- Retirement Plan for Employees of Dixie ysis, It appeared that the judges under- Engine Co ., the U .S . Court of Appeals for stood the distinction between accrued and the 11th Circuit has recently vacated an unaccrued benefits quite well . They under- opinion that stated that participants were stood that they were expanding the ac- Charles L. Trowbridge entitled to receive all benefits promised as cepted definition of assets subject to distri- ofa normal retirement date, including unac- bution at termination considerably beyond Trowbridge to Write crued and forfeitable benefits . The court previous practice . has scheduled a rehearing en banc (all Such an expansion calls into question Monograph judges participating) on the issue. the validity of the thousands of plan But while the 11th Circuit debates the terminations that have taken place over The Actuarial Education and Resear definitions of "nonforfeitable benefits" and Fund (AERF) is pleased to annou the past decades and poses a danger to "all other benefits" contained in ERISA's that Charles L . Trowbridge has bee the stability of the defined benefit pen- allocation procedures , the 4th Circuit Court selected to write a monograph on the sion plan world . Due to the professional of Appeals has rejected a request for a intellectual foundations of the actuarial nature of the Academy's role, our brief rehearing in Tilley v. The Mead Corp., profession . Trowbridge is the retired se- will focus on the actuarial nature of the letting stand an opinion that found that nior vice president and chief actuary of questions before the court and will es- former plan participants who had worked The Principal Financial Group . chew taking a position on the ultimate more than thirty years at the time of plan During his distinguished career, Trow- question of statutory interpretation. termination were entitled to receive early bridge served as chief actuary of the While individual pension practitioners retirement benefits, even though the plan Social Security Administration, as pro- may disagree on the merits of the case, also required them to reach age sixty-two fessor of actuarial science at the Univer- those within the Academy can all agree to collect those benefits (which they had sity of Michigan, as editor of the Society on the need for a clear articulation by the not done at the time of the termination) . of Actuaries' (SOA) newsletter, The Actu- Supreme Court of its interpretation of The plan sponsor's request for rehearing ary, and as SOA president . this important statutory provision. en banc being denied , the matter is now The need to define fundamental actu- up for a writ of certiorari, a formal request arial concepts moved the Interim Actu- that the U.S. Supreme Court rule on the Sirnms is the Academy's general coun- arial Standards Board to promote such a matter. sel . monograph under the sponsorship of the AERF The monograph will be a broad- brush portraiture of the profession, and not a textbook, stressing that actuarial Standard Valuation Law Committee science derives from certain ideas or con- Begins Its Work cepts used by all actuaries . The mono- graph is intended to be a device for The reconstituted National Association of Insurance Commissioners' Special unifying and coordinating the profes- Advisory Committee of the Standard Valuation Law, chaired by John Tweedie, sion, and as a foundation upon which has received its charge from John Montgomery, who chairs the NAIC Life and actuarial standards can be built . Health Task Fbrce. It is : By May 1989, this advisory committee will develop a A distinguished panel of reviewers will draft model law and accompanying regulations that would require each com- review the manuscript at various ti pany to submit an acceptable opinion by a qualified actuary, supported by an to ensure that all areas of practice appropriate memorandum describing the basis of such opinion, as to the appropriately covered . AERF intends to adequacy of certain specified reserves and the assets supporting such reserves . publish the monograph in time for the 1989 Centennial Celebration. a April 1988 porting Recommendations and Inter- GAAP for Universal Life pretations . As a result, the Interim Actuarial Standards Board has re- Jan L . Pollnow quested and the Committee on Life Insurance Financial Reporting Princi- ance in-force or annuity benefit ples has agreed to incorporate the In a publication dated December 1987, the Financial Accounting Standards payments . changes necessitated by FAS 97. These Board (FASB) promulgated accounting changes are principally in Recommen- (6) Gains and losses that result when dations I and 5 . The committee will standards for three classes of long- life insurance contracts are replaced also attempt to replace references to duration contracts (universal life-type, limited pay, and investment contracts) . by universal life contracts, within the the Audit Guide with references to FAS It also changed the standard for report- same company, shall be immediately 60, as appropriate . The handling of ing realized gains and losses . taken into income (i .e., not deferred) . investment gains and losses will not The official title of the new publication be addressed, and a decision on (7) Realized investment gains and losses is "Accounting and Reporting by Insur- whether to address investment con- shall be reported as a pre-tax compo- ance Enterprises for Certain Long- tracts has not been made. nent of other income, rather than as Duration Contracts and for Realized It is currently envisioned that the pro- an after-tax item below operating Gains and Losses from the Sale of Invest- posed changes will be ready for distribu- income . ments," (FAS 97) . It specifically singles tion to Academy members by October out the three classes of long-duration (8) FAS 97 is effective for fiscal years 1988. contracts that are to receive treatment beginning after December 15, 1988, different from that described in FAS 60, with earlier application encour- "Accounting and Reporting by Insurance aged, The changes adopted shall be Enterprises." used to restate prior financial state- Potinow is a member of the Commit- The key items in FAS 97 are set forth ments . If restatement is not practi- tee on Life Insurance Financial Re- below. cal, the cumulative effect shall be porting, FAS 97 is aenilablefrom the included in net income in the year (1) Universal life shall be accounted for OrderDepartment, Financial Account- the statement is adopted . using the retrospective deposit ing Standards Board, HighRidgeFark, method . This essentially means the The changes will have a significant P. O. Box 3821 . Stamford, Connecticut account balance will be used as the impact on the Academy's Financial Re- 06905-0821 . liability (2) Revenues for universal life are amounts assessed against policyhold- ers (i .e ., expense charges, interest liftoff, cost of insurance, and surren- Plans Unfold for the 1989 Centennial der charges), rather than premiums Celebration of the Actuarial Profession collected, (3) Deferred acquisition expenses for uni- in North America versal life are to be amortized in pro- portion to the present value of the The actuarial profession will commemorate a century of challenge, growth, and estimated gross profits (e .g., invest- achievement on June 12-14, 1989 in Washington, D .C . Hosted by the Confer- ment income earnedless interest cred- ence of Actuaries in Public Practice, the American Academy of Actuaries, the ited to policyholder balances) . The Canadian Institute of Actuaries, the Casualty Actuarial Society and the Society estimates of gross profit shall be eval- of Actuaries-this special event is shaping up to be one meeting in 1989 you will uated regularly, and the total amorti- want to be sure to attend . zation to date shall be adjusted to The Centennial Celebration will feature : reflect actual experience . • distinguished speakers , like management consultant authority John Die- (4) Contracts that do not have signifi- bold, who is a luncheon speaker, and academician Professor Hans Buhlmann, cant insurance risk (e .g., the accu- who is scheduled to speak on the intellectual foundations of the actuarial mulation period on most deferred profession as part of a panel discussion entitled : The Challenge from Within ; annuity contracts) are called invest- ment contracts and shall be treated • honored overseas visitors , representing actuarial organizations from around in a manner consistent with interest- the world ; and bearing or other financial instru- • first -rate entertainment , including the spectacular Canadian Brass . ments . Payments received are not con- sidered as revenue . You have already received a preliminary announcement on the Centennial Limited-payment contracts shall be Celebration ; as more program details become available, you will receive a follow-up mailing . W accounted for as in FAS 60, except that any gross premium in excess of In the meantime, mark your calendar now in anticipation of this very special the net premium shall be deferred occasion . and recognized in relation to insur- 6 The Actuarial Update A VISION EXPLORED But preceding the issue of how prop- other things such as law, economics, (continued from page 1) erly to educate actuaries is an acknow- investments , and regulation ." ledgement that the profession is not at- Projecting a more dynamic , compete Wall Street, Jim Tilley, managing direc- tracting enough candidates to the field image of the actuary will not succee, tor of Morgan Stanley, believes "it is highly in the first place. The Forbes article points according to those deliberating on the presumptuous for us to put actuaries in this out in painful detail . It refers to how issue , unless the profession 's members a position where we are indispensable. Where I differ from my colleagues is that the profession's absence of glamor makes are able to communicate the extent of it difficult for companies to recruit on their abilities to employers and the pub- I don't think we can create these skills- that's not achievable ." Tilley says actuar- campus . Quoted to this effect is Patrick lics they serve . The failure to do so to ies need to "round out their skills base," Studley, a Met Life actuary who says : "We date has been ascribed to the notion that and the profession should recruit more spend half the time on a campus inter- actuaries are often poor communicators. "business-oriented" people with training view telling students what actuaries are ." As a result , actuaries are also said to lack in financial theory and economics . An- That actuaries are not as well-recognized the leadership skills necessary to com- other of Tilley's suggestions is to Include as their mathematical cousins, the accoun- pete at the top levels of corporate man- specialty tracks, such as one for invest- tants and economists, is something the agement. Can actuaries learn leadership? ment, on the examination syllabus . profession has learned to endure if not The task force is not so sure . Hickman In personal terms, Tilley's path to suc- accept. The task force is considering ways says finding good leaders is an endemic cess in investment banking on Wall Street to change this perception or, put another problem in the business world because is unconventional, involving years of prior way, It has set about figuring out how the of the downsizing of American indus- experience with mergers and acquisitions, profession can successfully lure non- tries and the poor leadership training a career track, in other words, not readily actuarial candidates such as MBAs and received in our school systems . taken by the average actuary. Tilley appears economists to the fold . If this is the case, then actuaries are in to relish being in the vanguard of change . Kilbourne points out that this effort is no different a position , or disadvantage, He refers to actuarial cohorts on Wall Street impeded because the profession does not than other professionals striving for power as zealously entrepreurial-a breed apart. have easily identifiable degree designa- and influence in a competitive business "We are not bound by what has already tions such as Ph .D, CPA or MBA. "We world. Or are they ? In a recent address that been done," he says . "We are creative . . . need to drum up the image," he says, by touched on this subject, Michael Walters, and restless ." then president of the Casualty Actuarial making the designation of FCAS or FSA, Do other actuaries have the nascent Society, pointed out that "the very analyti- for example, more recognizable . The drive and ability of a Jim Tilley, qualities cal orientation of actuarial training is length and difficulty of the examination seemingly essential to survival in the partial conflict with a basic tenet of m system is also a drawback to recruit- financial services arena? More pragmat- agement training. Management training is ment, even though the system is fair and ically, could actuaries in mid-career, for `the art of getting things done through equitable, Jim Murphy, vice president instance, be retrained so as to be able to and chief actuary of Northwestern Mu- others' and implies a certain letting go of calculate stochastic interest rates and tual Life and chairman of the task force, technical details . . . actuaries on the other deal effectively with the dynamics of Wall is concerned that the heavy math em- hand are trained to cut through to the Street? Jim Hickman fears that the"tech- phasis "frightens away" many potential heart of the problem and to try to solve it nical explosion" occurring within the in- actuarial students . He laments that "we themselves." vestment banking field is beyond the don't do as good a job as we could" in Reconciling these contradictory ele- tools of most actuaries, and he is person- attracting candidates with more diverse ments is one of the challenges that the ally "quite discouraged" about the pros- backgrounds, and he argues that the profession must come to grips with as it pect of employers initiating the job of university should play a larger role in forges into the 21st Century. retraining. Moreover, he believes the promoting the profession and in estab- middle-aged actuary is "unwilling" to un- dergo intensive retraining. His interme- lishing contacts with employers who need Next month , The Update will feature diate solution would be to expand the actuarial services . His vision of the actu- part two of SouIes ' Iook at thefuture of current two- and three-day seminars that ary of the future is someone "knowing the actuary and the actuary of the fu- are a part of the actuary's continuing the technical underpinnings, as well as ture . education into three- and four-week "ex- ecutive development" programs. One of the criticisms leveled is that the P&C Seminar in October university system does not adequately The Canadian Institute of Actuaries and the Casualty Actuarial Society are support the profession by attracting and jointly sponsoring a two-day seminar, October 3-4, 1988, on property/casualty training well-rounded individuals for ac- loss and policy liabilities . This seminar will provide discussion on principles, tuarial service . Hickman responds that current practices, and issues in Canada of interest to fairly broad audience, the university is not necessarily in the including actuaries, actuarial students, and other individuals involved in this right position to provide the training subject area. required . For example, running a semi- The seminar will be held at the Sheraton Centre in Montreal, Canada . For nar on the new Social Security integra- more information, write to Canadian Loss Reserve, c/o Canadian Institute of tion rules is not within the university's Actuaries, 360 Albert Street, Suite 405, Ottawa, Ontario, K1R 7X7, or telephone scope, says Hickman, whereas it is within (613) 236-8196 . its role to foster the study of, say, the epidemiology of AIDS . April 1988 7 emy committees strive to write state- ments that in some way re flect the views Fibiger to Receive Alumni Center. The Award of Merit is of the entire committee , which comprise made in recognition of Fibiger' s assis- a cross-section of membership . U NL Award tance to the actuarial science program at the University of Nebraska-Lincoln Numerical Errors during its early years . Fibiger was an I fear that the publishing of a report that actuary with Bankers' Life of Nebraska appears to have at least three numerical from 1959 to 1973 . During this period, errors will do little to "strengthen our he served on the Actuarial Science Chair profession" ("Chart of Actuarial Organi- Committee ; he helped recruit faculty zation Membership," The Actuarial Up- and students, and he assisted in rais- date, January 1988 .) ing funds to support the new program . The efforts of Fibiger and others in Lucian R. Lee these crucial early years provided the Taylors, South Carolina foundation for one of the country's most Managing Editor's reply : You are so right; successful actuarial science programs . the numbers are incorrect. The total Academy President John Fibiger has The program has grown from zero in Academy membership (column 2) been selected for the 1988 Award of 1957 to a current enrollment of 150 should have read 8,887 . The numbers Merit by the Alumni Association of the we printed were what our blurred tele- undergraduates and thirty graduate stu- University of Nebraska (UNL) . This award faxed original copy appeared to read . dents, participating in three degree is given once each year to recognize plans . Machines as well as people can be outstanding contributions to the uni- imperfect. Recognition of Fibiger's support is versity. especially appropriate this year, for it The Award of Merit was presented at is the program's thirtieth anniversary. the College of Arts and Sciences Alumni He remains a friend and supporter of Reception on March 31 at the Wick the UNL actuarial science program . Checklist of Academy OM THE PRESIDENT normallywould have as an Academy mem- Statements continuedfrom page 2) ber. You, the membership, can be confi- dent that these people go about their February 1988 Board . Yet what the Academy members business of not making any news, be- Copies available from the Washington really need to know, in my view, Is not so cause what should be done usually turns office . Please request statements by date much of the unusual events , but more out to be done--and done well . It may of release . that the Academy, itself, and Its commit- only be routine, but Academy members can be well satisfied by what staff does TO : Various members of Congress, Feb- tees and staff are functioning very well on their behalf, even though it's "Not ruary 4, 1988 . RE : Pension legislation . on behalf of the membership . Necessarily News ." BACKGROUND : Letter to various mem- Turning back briefly to staff, I hasten bers of Congress expressing the Aca- to amend my statement that staff people demy's concern regarding the effect of can be pains. It is not the staff people current pension policy on the private who are painful, but rather the obliga- pension system. tions that we have accrued unto our- Fibiger's next editorial will appear in selves that they remind us of . Some peo- the September edition of The Actuarial TO : Department of the Treasury, Feb- ple have a tendency to "shoot the Update . It will be his final editorial as ruary 16, 1988 . RE : Valuation of health messenger," and that can make a staff- president. and welfare plans. BACKGROUND: Out- er's life hard . Without the messages, line of a proposed valuation methodology though, the reality often becomes much as required under IRC Section 89, en- more difficult. In the case I'm citing, acted as part of the Tax Reform Act of Erich was reminding me in a timely LETTERS TO THE EDITOR 1986 . fashion of an obligation already incurred . (continued from page 3) Because he did, I didn't have to respond TO : NAIC, February 19, 1988. RE : the "Academy Recommendations "in the Health insurance reserve standards . to that obligation in a post-deadline panic . Issues Digest are the official statements BACKGROUND : Two alternative revisions This says something about the state of of the organization, as crafted by its of the previous draft of proposed reserve the Academy that I would like to close on : committees. Where a committee state- standards for health insurance, dated Academy members are well served by a ment reflects dissent, the summary rec- September 10, 1987 . pet ent, loyal, and interested group of o le in the Washington office (as well ommendation likewise reflects disagree- TO : Social SecurityAdministration, Fbb- J our membership manager in the Itasca ment. It so happens that there were not ruary 25, 1988. RE : Projected Social Secu- office) . One of the great pleasures of my other than unanimous committee state- rity benefits . BACKGROUND . Comments position has been the opportunity to ments from which to draw in putting on information contained in recently is- deal with more of these people than I together this year's Issues Digest. Acad- sued Social Security pamphlet, 0 8 The Actuarial Update 4UJ[ Q&DD110 ROUNDUP a collection of features, oddities, and helpful tips 169 WORDS, 68 SECONDS TEST YOURSELF HERE'S A QUESTION TO TEST YOUR VOCABULARY . WHICH OF THESE PEOPLE CAN ESTIMATE MOST ACCURATELY HOW LONG YOU ARE LIKELY TO LIVE? (A) AN ASPIRANT . (B) AN ASCETIC . (C) AN ACTUARY . (D) AN ACCOUNTANT . IF YOU CHOSE ACTUARY, YOU'RE RIGHT! ACTUARIES USE ADVANCED MATHEMATICS TO CONSIDER HOW FACTORS LIKE SMOKING AND BODY WEIGHT AFFECT A- PERSON'S LIFESPAN . INSURANCE COMPANIES USE MANY DIFFERENT KINDS OF ACTUARIAL STATISTICS TO DETERMINE HOW MUCH YOU SHOULD PAY INTO YOUR INSURANCEOR PENSION PLANS, SO THATTHE MONEY'S THERE WHEN YOU NEED THE BENEFITS . ACCORDING TO THE AMERICAN ACADEMY OF ACTUARIES, THERE ARE ABOUT ELEVEN THOUSAND OF THESE MATH EXPERTS IN THE WORKFORCE . COMPARE THAT TO THE NUMBER OF PRACTICING ATTORNEYS IN THE UNITED STATES, SOME SIX HUNDRED AND FIFTY-FOUR THOUSAND, AND YOU GET AN IDEA OFJUST HOW SMALLA PROFESSION IT IS . THEIR NUMBERS MAY BE SMALL, BUT THE ECONOMIC INFLUENCE OF ACTUARIES IS FAR-REACHING . The script reprinted above, issued by the Academy, was used by 246 radio stations in 40 different states, reaching over 14 million listeners . 16
"AAA_ Actuarial Update_ 198804"