The Actuary - December 2014

DECEMBER 2014 theactuary.com

Interview: Steven Mendel

The magazine of the actuarial profession

The power of social networks shaking up the insurance world

Finance Central bankers and the death of free markets

Investment Risks and gains of non-traditional assets

Risk Cyber catastrophe: how bad could it be?

The Actuary December 2014

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Appointments

What’s underneath?

We look below the surface to spot trends early and show you what is really happening. Whether your need relates to risk management, capital, or strategy, our cutting-edge analysis techniques can help you see deeper than the competition.

Get new insights on your business at uk.milliman.com.

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DECEMBER 2014

Contents

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34

22

“In our analysis, multiple perspectives on risk and modelling are considered legitimate, which market participants may not find easy to express in public”

UP FRONT

FEATURES

AT THE BACK

10 IFoA news

16 Interview: Steven Mendel

30 Puzzles

The social network entrepreneur talks to Richard Purcell and Gemma Gregson on revolutionising insurance

14 People/society news

OPINION

19 GI: Greater than the sum of the parts

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Editorial Kelvin Chamunorwa offers food for thought on the future of the actuary

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Letters

20 Finance: Rise and rise of the

Actuaries on changing times, life and death, and forecasting fallacies

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President’s comment Nick Salter believes achieving value from diversity will make you and your business succeed

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Information and knowledge sharing between actuary and underwriter can have a positive effect, says Rob Barritt

Soapbox The IFoA can guide the 21st century actuary by challenging the mindset, says Michael Tripp

central banker Detlev Schlichter explains why central bankers’ control can lead to the death of free markets

harness opportunity Gareth Mee, Gareth Jones and the non-tradional assets working party provide an update on the risks and gains of NTAs

31 Careers: Almost on board

The magazine of the actuarial profession

Colin Czapiewski considers the many functions of a non-executive director

25 12 Days of

36 Risk: Cyber catastrophe

Christmas Puzzles – enter to win n one of many prizes

We have put together 12 puzzles for you to attempt as the year comes to a close.

As an incentive, there will be a prize draw for correct entries to each puzzle. An iPad Mini is up for grabs if you submit correct answers to all 12 brain-teasers.

To enter, submit your answers at www.puzzles.theactuary.com by 5 January 2015.

Only members of the Institute and Faculty of Actuaries are eligible to win a prize.

I trust you will relish this festive challenge!

Seasons greetings to you all.

In partnership with British Mensa

38 Book review The Improbability Principle by David Hand, reviewed by Matthew Edwards

39 Student Jessica Elkin recreates her own Christmas Carol with past exam results, present swapping and future prospects after embarrassing party evidence

40 Actuary of the future Richardt Hechter of Discovery Limited

22 Investment: Navigate risk to

DECEMBER 2014 theactuary.com

EXTRA

Try the latest cryptic crossword, plus Mensa puzzles solutions

Andrew Coburn, Simon Ruffle and Louise Pryor ask how bad could it get?

ONLINE 12 Days of Christmas puzzles For your chance to win an iPad mini, and an array of other great prizes, visit: puzzles.theactuary.com

Review: Capital in the 21st century Ian Thomson and Ian Reynolds offer their own perspectives on French economist, Thomas Piketty’s best-selling book on wealth concentration and distribution.

Kelvin Chamunorwa Editor The Actuary

The IQ style puzzle content is supplied by, and is the copyright of, British Mensa Ltd. Puzzles cannot be reproduced in any format without permission from British Mensa. www.mensa.org.uk

MORE CONTENT ONLINE Additional content can be found at www.theactuary.com

COVER: VINCE FRASER

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WRITERS OF THE MONTH Colin Czapiewski wins a £50 book token for his three-part series on the role of NEDs, courtesy of SIAS

December 2014 • THE ACTUARY www.theactuary.com

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Appointments

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*

We know our markets.

* percent less throughput time in the order picking process can be ensured through automated compact picking

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Opinion Editorial theactuary.com

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Internet The Actuary: www.theactuary.com Staple Inn Actuarial Society: www.sias.org.uk Institute and Faculty of Actuaries: www.actuaries.org.uk Managing editor Sharon Maguire +44 (0)20 7880 6246 sharon.maguire@redactive.co.uk Editor Kelvin Chamunorwa editor@theactuary.com Features editors Contact: features@theactuary.com Jeremy Lee, pensions, investment, ERM, banking

In this final edition of the year, Kelvin Chamunorwa provides food for thought on the future of the actuary

Richard Purcell, life, health and care Richard Schneider, life, Solvency II, mortality/longevity, modelling and software Helen Lau, GI, reinsurance, environment, careers Gemma Gregson, pensions, GI People/society news editor Yvonne Wan social@theactuary.com Student page editor Jessica Elkin student@theactuary.com Arts page arts@theactuary.com

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For delivery queries, contact: Rachel Young E rachel.young@redactive.co.uk Published by the Staple Inn Actuarial Society The editor, The Institute and Faculty of Actuaries and Staple Inn Actuarial Society are not responsible for the opinions put forward in The Actuary. No part of this publication may be reproduced, stored or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the copyright owners. While every effort is made to ensure the accuracy of the content, the publisher and its contributors accept no responsibility for any material contained herein.

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A recent highlight at The Actuary has been hosting webinars on emerging themes in the actuarial world. This is exciting as it introduces a different mode of interaction with the magazine’s readers. Our webinar in September was about big data and analytics and the three speakers revealed practical insights into their work in this area (bit.ly/1BQ4nQf).

The panellists dispelled the analogy coined by Dan Ariely, a professor at Duke University, that big data is like teenage romance – “everyone talks about it, nobody really knows how to do it, everyone thinks everyone else is doing it, so everyone claims they are doing it”.

Enterprise risk management is another area where the actuarial profession is expanding the reach of its skill set. However, some in the profession feel that our focus should be just on pension schemes and insurance companies – actuaries’ widely renowned forte – and preserve the levels of our remuneration.

I view actuaries’ strengths to be analytical rigour, the ability to communicate uncertainty with a commercial outlook, and high professionalism. This applies to valuing the liabilities of a defined benefit pension scheme as much as it does to assessing emerging risks within the enterprise risk management framework of an online retailer.

Michael Tripp shares his opinions on the future of the actuary in this month’s soapbox and considers key questions about exams and regulation, topics which have been debated this year in The Actuary (p8).

I am optimistic about the success of the profession’s diversity agenda. Some actuaries have been successful in developing novel business models to help the public manage its risks. A case in point is our interviewee this month, Steven Mendel. He is chief executive and co-founder of Bought By Many, an intermediary which connects individuals with similar insurance needs to negotiate better terms as a group (p16).

There is power in numbers, and when coupled with diversity of background, skills and experience the possibilities for success are boundless.

“Some actuaries have developed novel business models to help the public manage its risks”

Kelvin Chamunorwa Editor

© SIAS December 2014 All rights reserved ISSN 0960-457X

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Opinion Letters to the editor editor@theactuary.com

Modelling bias

Life and death questions I have a few technical queries around the article Risks of mis-estimating mortality by Stephen Richards (The Actuary, November, bit.ly/1xP2UrG).

I thought that the article was very well written and useful, particularly around Solvency II and risk pricing.

Top 10 Forecasting Fallacies (The Actuary, November, bit. ly/1F2Puvs) was an excellent article. I have seen most of these things happening – in particular, modelling based on past experience without asking if that is relevant.

It would be a great article to re-read when involved in some

modelling. I also feel, from my experience of when I did the exams, that there was too little focus on these types of assumptions.

I hope that the exam syllabus has progressed and includes these and similar issues.

Robert Kerr 11 November

First, on the correlations between the two parameters: Were these calculated from the data? If so, do you think some of the very small values (for example -1%) are spurious and should be modified to zero?

Richards: They were calculated from the log-likelihood, which itself was calibrated to the experience data. So, the data is involved, but indirectly, via its contribution to the log-likelihood.

The small values certainly support the assertion that some parameters are uncorrelated. Whether you set these to zero, or whether you use them unmodified, will make very little difference.

●

Do you believe that correlations between the parameters would vary by scheme? It seems more intuitive to me that these correlations should be a feature of mortality, and not vary by scheme, whereas the actual parameter values themselves should vary by scheme. If so, do you think these could be set using a much larger dataset?

Richards: Yes, because different portfolios exhibit different correlations (and often different risk factors).

●

Second, on the generation of parameter sets for each portfolio valuation: ● Did you generate these assuming that the parameters formed a multi-variate normal distribution?

Richards: Yes. This assumption is well-grounded for joint maximum-likelihood estimators.

Do you think a copula-type approach, potentially allowing for tail dependence, could give different results and do you think this could be more appropriate?

Richards: It would give different results, but I don’t think it would be more appropriate. The multi-variate normal distribution assumption is a well-founded asymptotic feature of maximum-likelihood estimators.

●

Matthew Roche 17 November

MORE LETTERS ONLINE More letters are available online at www.theactuary.com/opinion

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Best of luck, SoNIA, from an old hand I am sitting reading the latest The Actuary magazine here in the English village of Abbots Leigh and have seen the article on SoNIA or the Society of Northern Ireland Actuaries (The Actuary, November, bit.ly/ 1uvGKtd). This was my first inkling of its existence and reminded me of my experience.

After a BSc in economics at Queen’s University Belfast, I trained at Standard Life, specialising in investment, qualifying in 1968. Along with David Kingston and Peter Derby, I believe we may have been the first generation of Ulster actuaries, although someone will no doubt prove me wrong. We all qualified in Edinburgh in the late 1960s.

I spent most of my career as the investment manager of Imperial Group Pension Fund, then a big conglomerate, of

which Imperial Tobacco is the last element left. My first boss was George Ross Goobey, who is famous for being the first real proponent of equities for pension funds. I am still chairman of the Pensioners’ Association, a sort of pensioners’ trade union.

At 77, my last paid role is appointed investment adviser to Cornwall Council Pension Fund.

They seem to prefer the devil they know, as I regularly suggest retiring. Anyway, please excuse these ramblings of the elderly. I was a founder member of the Bristol Actuarial Society around 1970, having been one of three actuaries in the city when I came here in 1968, so I know the problems of keeping an actuarial society going. Best of luck to this ‘young’ organisation.

Norman Ferguson 7 November

The editor welcomes readers’ letters but reserves the right to edit them for publication. Please email editor@theactuary.com.

The deadline for receiving letters for the January/February issue is 19 January 2015.

JASON BENNION

25/11/2014 15:28

›

Opinion President’s comment

Nick Salter is the president of the Institute and Faculty of Actuaries

NICK SALTER

On ducks, wheels and nails What does your grandma have to do with the way you work? Probably more than you realise. We all learned a lot from our grandparents and their lessons on life – maybe subconsciously – or from our parents, who in turn learnt from theirs – and so we find ourselves back to grandma. Her wisdom and quirky expressions shape our unconscious beliefs, as Laura Liswood, a world-renowned expert in diversity, told the IFoA Council in October. These lessons provide us with a point of view that in turn informs our perspective of others and ourselves.

But when grandmas come from different parts of the world, as many of our members do, their wisdom needs to be seen through a different lens for us as business professionals, to really understand and harness its true meaning and benefit. Take for example the loudest duck in China, the squeaky wheel in the USA, and the nail that sticks out in Japan.

Lost in translation Laura’s book, The Loudest Duck, brings grandma, the duck, the wheel and the nail to life in a way that brings home the real issues we face with diversity, and how we bring our own preconceptions into the workplace unconsciously.

Different grandmas say different things. In the US she says that the squeaky wheel gets the grease, in China the loudest duck gets shot, and in Japan the nail that sticks out gets hit on the head.

You will have probably already come to a conclusion as to what these aphorisms tell us.

You might be thinking that what they all have in common is that they ‘stand out’ and possibly, by extension in our day-to-day professional lives, the person who stands out gets recognised, listened to or promoted faster. Well yes, in a sense you could be right, they do all stand out in their own way, but do they all get recognised in the same way? I’m not sure the answer to that question is yes.

Speaking out doesn’t always get rewarded; in some cultures it is positively discouraged.

So why is this important to us as actuaries and business professionals? In the culturally diverse world in which we, as actuarial professionals work, grandma’s duck, wheel and nail are far from uncommon. We need to

Achieving value from diversity will make you and your business succeed, says Nick Salter embrace this diversity and use it to our advantage to drive success in all that we do.

You may well say: “What has this got to do with me and where I work?” The best way to explain is to recount a story told to Council by Laura, which described from the duck, wheel and nail’s perspective how a box ticking approach to diversity doesn’t work.

I am sure the story will resonate with many of you. You are a manager in a business and you have built a small team of people with diverse skills, personalities and from very different backgrounds.

Some might argue that you’ve metaphorically ticked the diversity box, but you need to recognise that perhaps what you have done is employed a duck, a wheel and a nail.

You and the team are hard at work solving the problem of the day. Now, I’m not a betting man, but the chances are that the wheel is getting all the attention because they are doing all the talking. Meanwhile, the duck and the nail are quietly getting on with the task in hand without joining in the verbal gymnastics because grandma told them not to speak up.

As the manager, you have probably unconsciously listened to all the wheel’s great

ideas, and come to the conclusion that the duck and the nail have nothing of value to contribute, and ultimately promote the wheel for all his or her good ideas.

So having carefully hired the diverse groups, all you are getting are the wheels talking and everyone else listening. At best, you haven’t achieved the real cognitive diversity that your business needs to truly succeed, and at worst the ducks and the nails are likely to be unfairly evaluated and probably disadvantaged.

And that’s my point.

As a profession we need to not only listen to grandma, but listen to what she says through a different, diversity lens, if we are to attract, motivate and benefit from the wheel, duck and the nail sitting on one of our volunteer committees and boards.

Equally, as a professional body, we need to promote the value that each can bring to the businesses in which they currently work, and may expand into in the future.

My most profound thanks go to Laura Liswood for such an excellent presentation to Council, which brought all this to light in such an innovative and engaging way. a

“In the culturally diverse world in which we work, grandma’s duck, wheel and nail are far from uncommon”

December 2014 • THE ACTUARY www.theactuary.com

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Opinion Soapbox

MICHAEL TRIPP

Bridging the gap Since 1981, I have watched with interest the changing nature of GIRO as my employment has varied between actuarial consulting and senior insurance leadership. In 33 years, the overall membership of the IFoA has grown from 3,500 Fellows to around 12,000.

Where the actuarial profession progresses next is a topic all corporate boards should be discussing at least once a year. The focus on mathematics associated with the actuary’s key role is being affected by technology, analytical logic tools and the overall desire to chart the risk profile of the global consumer. So will the perfect future actuary be a double first in maths, or would an Oxbridge philosophy, politics and economics (PPE) student or PhD in computer sciences have a more rounded understanding of the unknown risks on the horizon?

The IFoA can guide the 21st century actuary by challenging the mindset, says Michael Tripp

Where are we now? ● Currently, the IFoA base is focused on the

domains of pensions, life insurance and general insurance, with some investment interests and a broadening enterprise risk skill set. ● Following the Morris review, there is a robust governance structure, with clear professional standards and a quality assured framework that accepts peer review as normal. ● Mathematics remains the core discipline, and aspects of financial modelling and predictive tools are critical. ● The reputation of an actuary remains high, and with corporate governance more prevalent at board and non-executive director levels, actuaries play an important part in the regulatory framework of all companies. ● Actuaries remain relatively diverse personality types. Although, in terms of the Myers-Briggs personality indicator, they are typically slightly introverted, analytic and orderly thinkers, many are highly strategic.

Where do we want to be?

A narrow scenario could see the profession 20 years from now consisting of 20,000 Fellows still focused on pensions, life and general insurance. Some would dabble in the risk management space, but clearly domain expertise would remain vital. Occasionally an actuary would become a chief executive or other C-suite member. Exams and CPD would be technical and target specific subject areas, underpinned by targeted research.

Actuaries would comment publicly on a limited range of topics but in a manner admired

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and trusted by the public, and there would be investment in research to deepen the analytic skill base for specific financial modelling.

A wider scenario might see the profession double in size to 40,000 Fellows, and the IFoA would be part of a clear global alliance with two or three other actuarial bodies.

The actuarial domain would stretch well beyond insurance to any industry where financial and predictive modelling are key.

The profession’s reputation would be built on deep-seated mathematical and technological skills coupled to process engineering; and there would be soft-skill development. Creating two streams of qualification, one based on maths and one on analytic logic skills, may be the answer.

Whichever of these future visions is considered – narrow or wide – the gap between where we are and what we want to achieve varies.

The IFoA needs an ambitious vision and this poses major questions. ● Where does maths lie in the future vision – should the profession be pursuing deeper, forward-looking techniques? ● Is maths the only bedrock? Actuaries have a penchant for critical thinking, yet there are analytic minds who just don’t do maths! ● Is our modelling skill base adequate? ● Is the balance right between being a learned society and a business-based profession?

● Is the profession too risk averse? ● Should the IFoA become more active in public

debates? ● Is domain expertise a strength or restriction? ● Should the IFoA have a purely regulatory role? ● How does the profession move faster without

compromising standards?

Diversity It is an overused word but, in this profession, it means protecting our mathematical skill base and investing in it, while at the same time widening beyond it.

At our core could be risk and financial modelling, but including behavioural expertise and wider process engineering skill sets.

Actuarial disciplines can be developed through the learned society approach, with more planned research using a variety of tools in the new social media channels. Regular comments on a variety of topics can be expressed.

Yes there is a risk – actuaries could lose their technical reputation, but there is also a risk in not changing.

Competition is high from technology and new platforms – it’s up to the IFoA to fight to remain active and relevant.

“Competition is high from technology and new platforms – it’s up to the IFoA to fight to remain active and relevant”

Michael Tripp is partner and head of actuarial services at Mazars

THE ACTUARY • December 2014 www.theactuary.com

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25/11/2014 15:36

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News IFoA NEWS UPDATES FROM THE ACTUARIAL PROFESSION

Upfront Opinion CEO’s comment Derek Cribb evaluates the IFoA’s activities in 2014 and looks at what the new year has in store

Series of firsts in a successful year Derek Cribb is the chief executive of the Institute and Faculty of Actuaries

hardly believe that 2014 is already drawing to a close. The year has flown by, and as we reach the end of another busy year for the IFoA, as usual I’d like to highlight some of the key activities we’ve undertaken to support our strategic objectives.

On education, we held the first Certified Actuarial Analyst (CAA) exam session, which saw entries from 20 countries. Financial firms and regulators increasingly rely on having strong technical skills embedded within staff at many levels of their organisations, and the CAA will ensure that these professionals have access to a qualification – and professional body – which is relevant to their career needs.

We have piloted the new Quality Assurance Scheme, which promotes greater engagement with actuarial firms and has attracted attention from many national actuarial societies around the world. While it is exciting to do something completely new, we will listen carefully to the feedback from the pilot to ensure that we get this right.

It is hard to highlight just one of our member events over the year, so I’ll double up with the Life and GIRO conferences. Securing great speakers and content, aligned with expert execution, resulted in having around 2,000 attendees across the pair, and feedback from delegates confirms that the conferences continue to go from strength to strength.

Our work with UK regional actuarial societies continues to gain momentum. A recent survey of committee members within these found that, while there’s more to be done, most felt supported by the IFoA. We continue to build our public affairs profile. We were approached

by Chatham House, the Royal Institute of International Affairs, to partner on its global climate change conference. This is a real step forward for the IFoA, as it demonstrates how leading groups in the public affairs arena are recognising the contribution that actuarial knowledge can make to their work.

I am delighted that we have been able to appoint Professor Mark Cross as the first lay chair of the new Research and Thought Leadership Committee. His extensive experience of research and its application will be invaluable as we drive our agenda forward.

Highlights of 2015 promise to include the IFoA’s first cross-practice residential conference, in Beijing in May, and the launch of our new website.

Wishing you all the best for the festive season.

DEREK CRIBB

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As I write this month’s article, I can

Friend of profession honoured for EC dialogue boost We were delighted to present Professor Karel Van Hulle (pictured below) with his Honorary Fellowship at the Life Conference in November.

Professor Van Hulle received his Honorary Fellowship in recognition of his contribution to the actuarial community. Through his work at the European Commission he has ensured that regulators across Europe adopt approaches that reflect a quantifiable risk-based approach that is consistent with an actuarial assessment of risks.

A friend of the actuarial profession in the widest sense, he has ensured that there is a good dialogue between the European Commission and actuaries across Europe, which has helped ensure that, at its heart, regulation reflects the public interest that is part of the IFoA charter.

Symposium highlights new mortality insights In September, the IFoA Mortality Research Steering Committee welcomed world-class experts to the International Mortality and Longevity Symposium to highlight research and exchange views on mortality projection.

Delegates had the opportunity to hear from eminent speakers in the fields of biogerontology, longevity, health and health data, and mortality forecasting. One delegate captured the aims of the symposium perfectly, saying: “A new language is emerging to explain the transition from expert knowledge to dependable assumptions for the future.”

A publication summarising the emerging themes, plenaries and workshops is available at bit.ly/1xrTjHU

THE ACTUARY • December 2014 www.theactuary.com

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Fiona Layton: from ‘guinea pig’ to chair of examiners ‘Guinea pigs’, unlike their small furry namesakes, play a vital part in the IFoA exam process. Each year, 100 members are needed to test, review and provide feedback on new exam papers. In 1994, Fiona Layton was one such volunteer, but at that time did she have her sights set on becoming chair of the Board of Examiners? Here she discusses her journey from ‘guinea pig’ to the chair person’s role Q. What enticed you into applying for the guinea pig role?

A. I was asked, and having had some unhappy exam times while qualifying I was keen to try and improve the system. It was strange seeing things from the other side, but I can confirm what many examiners say: some students don’t read the questions carefully enough!

Q. What did you do next and why?

A. There was a natural transition to become an assistant examiner, which involved marking scripts, followed by ‘promotion’ to an examiner, which added question setting to my role. As a pensions consultant it was fun to convert my clients’ problems into questions for the applications exam. Later, with this experience, I became principal examiner for the pensions exams.

Q. Which of your professional development and responsibility (PDR) roles prepared you most to become chair of the Board of Examiners?

A. The principal examiner role; it involved me directly in the work of the Board of Examiners beyond my ‘own’ subjects, maintaining standards, reviewing the syllabus and core reading for the subjects.

Q. How do you balance work and volunteering?

A. I couldn’t have managed things without the support and good humour of other examiners, the Registry teams in Oxford and the education actuaries, and, of course, my employer.

Q. So what sold the role of chair of the Board of Examiners?

A. It’s an honour to chair such a dedicated board of volunteers. Their willingness to work hard so that there is a continuing supply of qualified actuaries never fails to impress me.

This area is about being a part of the future, influencing change that will determine the pathway of the members of the IFoA. Q. Describe a typical day as chair of the Board of Examiners A. I’m pleased to say that there isn’t such a thing as typical day. I can be attending meetings with students or the Education Board or other interested parties, reviewing future exam papers, reacting to exam-related issues that arise or just generally keeping up to date with education matters. It is a much more varied role than I had anticipated.

Q. What do you hope to achieve in your two years as chair?

A. To maintain the standards and integrity of the current exam systems and to support its adaptation to reflect the changing role of actuaries both in the UK and overseas.

Q. What advice would you give to others considering taking on a PDR role?

A. It is a brilliant way to meet people at other organisations and pleasing to be part of the team that ensures the future supply of

actuaries; but it is not all down to altruism.

In my professional life, this is the most rewarding thing that I have done, everybody says thank you; it is so nice to receive this recognition. Did I mention there are even opportunities to gain some CPD! Q. Looking to the future, what next for a retired chair of the Board of the Examiners?

A. I could stay with the exam system I know and get involved in exam counselling, or look to help the profession by being a link with one of the IFoA’s accredited universities, which offer courses leading to exemptions. For this, independent examiners are used to ensure that the standard is equivalent, and I believe it is important that these standards are maintained.

Over 500 PDR volunteers support education in a variety of roles. If you are one of the 2014 guinea pigs, where will your journey take you? For further information, email educationpdr@actuaries.org.uk or visit bit.ly/10QSdIQ

CPD and professional skills audit: what to expect The IFoA’s membership team will begin their annual audit of continuing professional development (CPD) records this month. For the first time, however, completion of the Stage 3 professional skills training (PST) requirement will also be monitored.

The membership team will randomly select from the following categories: ● 10% of all Category 2 members; and ● 10% of all members who were expected to complete Stage 3 of the PST requirement in the 2013/2014 reporting year.

If selected, you will be asked to provide written evidence of your participation in activities that meet your minimum requirements. If you have recorded more than your minimum hours, you will not be expected to produce evidence for each activity.

Some examples of acceptable evidence are: ● a signed register of attendance; ● a communication from the organiser of an event, which confirms your attendance; ● a certificate vouching for completion of a course or activity;

● hard copies of lectures or presentations

delivered by you; ● articles or papers written for publication; ● written note from another Fellow of the IFoA

vouching for your attendance at or completion of an activity; and ● confirmation from the provider of an online resource.

If you have any questions about the monitoring process or acceptable forms of evidence, please email the membership team. cpd_feedback@actuaries.org.uk

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News IFoA NEWS UPDATES

Hollywood stars come to Life 2014 The IFoA Life Conference 2014, which took place at the ICC in Birmingham, was a roaring success, with 978 delegates and speakers in attendance. It began with Nigel Wilson, chief executive at Legal & General, sharing his thoughts on recent budget announcements and other regulatory changes.

On day two, the UK economy and the outlook for bond yields was discussed by Andrew Roberts, co-head of European economics, rates and CEEMEA research at RBS, and Ross Walker, senior UK economist

at RBS. The Professional Content Development Working Group saved the day, when it stepped in for Plenary 3 and presented an entertaining and thoughtprovoking Professional Skills session to ensure the audience received one of their required CPD hours.

Delegates received technical updates from workshops that included: Solvency II; the Budget and its implications for the retirement income market; with-profits issues; annuities; and asset management and investment.

Professional Standards Directory updated The Professional Standards Directory (bit.ly/ IWaytE) is designed to permit members and others to access the IFoA Actuarial Profession Standards, together with the current Financial Reporting Council Standards. Update 32 was issued to members on 24 October.

Actuarial Profession Standard X3: The Actuary as an Expert in Legal Proceedings The IFoA consulted upon a proposal to introduce a new Actuarial Profession Standard (APS) relating to actuaries instructed as expert witnesses or expert advisers in legal proceedings. We have now approved the introduction of the standard and the accompanying guide.

Version 1.0 of APS X3 (bit.ly/1tySzL5) comes into effect on 1 January 2015. This replaces the

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existing Information and Assistance Note: The Actuary as an Expert Witness, which will be withdrawn at the same time.

The APS is accompanied by a detailed guide (bit.ly/1uWJ2oz), which is intended to assist those who are instructed as expert witnesses or expert advisers, as well as those thinking about accepting such instructions. The guide is focused primarily upon UK legal proceedings, but we anticipate that the guidance might be useful in other jurisdictions as well.

If you have any questions about the introduction of APS X3, please email regulation@actuaries.org.uk

There was more excellent content on day three, with Jasmine Birtles, nancial journalist and founder of fin Money Magpie, giving her views on Mo personal finance. Steve Webb MP, pe minister of state for pensions, closed the conference with an honest and engaging con session on the Budget reforms and changes to pension policy. All in all, it was a packed, thought-provoking programme.

A diverse range of companies supported the event by sponsoring or taking an exhibition space. Many attracted delegates to their stand with interactive competitions and prize draws. Roulette, jet skiing and golf putting were among the stand activities, which encouraged networking and healthy competition! Three of these companies have positively endorsed their experience by booking to exhibit at Life 2015.

The Hollywood-themed conference dinner was a night of glitz and glamour that saw LA’s finest out in force. From Sinatra to Marilyn, our conference delegates were transported back in time for an evening of enchanting elegance and sparkling style. In true Hollywood tradition, Oscars were presented to the best-dressed male, Jonathan Goold, and best-dressed female, Rhian Brown.

They were also awarded to the table with the best film knowledge after completing the cinema-inspired quiz.

Congratulations to the Life committee and IFoA events team for a fantastic event.

To view the photographs of the conference dinner, visit bit.ly/1udNCI4 Save the date: Life Conference 2015 will take place from 18-20 November at the Convention Centre, Dublin.

Annual subscription fee reminder Members who have not yet paid their annual subscription fee for 2014/2015 are reminded the fee is due and should be paid by 31 December 2014 to avoid default of membership. You can pay your subscription fee by logging onto the member’s area of the website or contacting the membership team at membership@actuaries. org.uk or on +44 (0)131 240 1325. If you wish to cancel your membership, please ensure you let us know, as allowing your membership to default could affect future reinstatement costs.

Overseas members who haven’t submitted their yearly application for partial regulation (bit.ly/18xetu2), should send their completed certificate of eligibility (bit.ly/1qACbdh) to the membership team without delay.

Members who intend to apply for a reduced rate subscription should return their completed reduced rate application (bit.ly/1u25Z7M) as soon as possible.

THE ACTUARY • December 2014 www.theactuary.com

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Your call: who will you nominate?

CAA exemptions window now open

Nominations for IFoA Honorary Fellowships and for the Gold and Finlaison medals are now being sought. The closing date is 19 December.

The IFoA opened an exemptions window on 3 November to allow those students who have relevant passes in the Fellowship exams to gain exemptions from modules on the Certified Actuarial Analyst (CAA) pathway.

This is in recognition of the fact that the career aspirations of some students on the Fellowship pathway may be better served by the IFoA’s new CAA qualification.

Qualifying as a Certified Actuarial Analyst will provide you with a professional qualification from the IFoA, equipping you with strong technical skills and knowledge and opening the door to a wide range of career options.

The CAA will help you to stand out from the crowd in a competitive financial job market. If you work in the wider field of financial services it will allow you to develop analytical skills that can be added to your current business knowledge.

If you have any questions or would like further information about the CAA, please email caa@actuaries.org.uk or visit bit.ly/1Ext4Ch

Honorary Fellowship Members are invited to nominate for an Honorary Fellowship candidates who have made a significant contribution to the profession, and who have an active and ongoing involvement with the IFoA. Notable Honorary Fellows include former parliamentary commissioner for standards Sir Phillip Mawer and economist Sir Andrew Dilnot and, stepping back into the mists of time, eminent persons such as computer science pioneer Charles Babbage and medical statistician William Farr.

For more information and to complete the nomination form, visit: bit.ly/1ufH3JL Gold and Finlaison medals The IFoA is also seeking nominations for the Gold and Finlaison medals. The Gold Medal has been awarded to IFoA members in recognition of work “which is of pre-eminent importance, either in originality, content or consequence, in the actuarial field” since 1919 and it is our most prestigious and long-established award. The Finlaison medal was first awarded in 1985, and recognises services to the actuarial profession, in furtherance of the objectives set out in our Royal Charter: “… in the public interest, the advance of all matters relevant to actuarial science, and to regulate and promote the actuarial profession”.

For details and to nominate a member for a Gold or Finlaison medal, visit bit.ly/S7ZLuV

Now is your chance to nominate a modern-day figure to follow in the footsteps of Charles Babbage and become an Honorary Fellow, or to put them forward for a Gold or Finlaison medal

Legal changes reduce motor insurance claims For the first time in 10 years, IFoA research shows a reduction in third-party motor insurance injury claims. This reduction in claim frequencies appears to directly correspond with legal changes that were enforced in 2013 – most significantly, the Legal Aid, Sentencing and Punishment Offenders Acts (LASPO) – and a 35% reduction in the number of claims management companies (CMC).

Research shows that there continues to be a link between claims hotspots and CMC locations. Our research has also shown that, on average, the cost of a third-party motor insurance premium has dropped by 19%, the frequency of third-party injury claims has fallen by 10%, and there has been a 5% reduction in the average cost per claimant – from £5,000 to £4,750.

EVENTS AND CONFERENCES Influencing Others

Masterclasses are a series of live events that have been created to help actuaries achieve success in all areas of the business world. Developed by experts within the field, these classes are aimed at supporting those who would like to improve specific business skills that are not always covered in formal training. Book all four Masterclasses and receive a £100 discount.

9 December, London 09.00-13.15 Great communication is all about the power to influence – not the influence of power. Learn how to influence different people in different situations and add several more strings to your bow as a communicator. Book your place online: bit.ly/1EDZE3s

Difficult Conversations 9 December, London 13.00-16.45 Difficult news can be even more difficult to deliver, requiring you to

manage emotions and information sensitively. This course teaches you how to clearly convey an important message while maintaining the relationship with the other person.

Book your place online: bit.ly/1EDXf8Y

Public speaking/presenting 13 January 2015, London 09.00-12.45 Take the pain out of presenting with simple and practical techniques that will enable you to come across as articulate, prepared, confident and intelligent. Book your place online: bit.ly/1pZ26R2

Motivating and Inspiring Others 13 January 2015, London 13.00-16.45 Great speakers and leaders provoke energy and commitment because they inspire and motivate their audience into action. Here you will learn techniques to help you be an inspirational leader. Book your place online: bit.ly/1sMvBRK

2015 Call for Speakers See details of upcoming events and submit your proposals online: bit.ly/1iqhmRO

December 2014 • THE ACTUARY 13 www.theactuary.com

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News People & Society

If you have any newsworthy items for these pages please email social@theactuary.com

Remembering a summer feast

By Patrick Byrne On Thursday 14 August, the Student Society held its annual BBQ in the beer garden of DTwo, on Harcourt Street. A crowd of 140 students were in attendance and good weather added to the atmosphere. This event was run in conjunction with Acumen Resources, who kindly donated an iPad as a spot prize.

The excellent food on offer on the night included steak burgers, pork sausages and was supplemented by a salad bar, all washed down with a few complimentary drinks.

On arrival each member was given a raffle token, and eight lucky people were chosen at random to battle it out in a question round to decide the lucky winner of the iPad. The questions provided the finalists with a tough test of their knowledge; sample questions

A great pool of talent

tournament for their team.

For those eliminated at the group stage, this did not mean the end of the night as many made a trip to the bar, enjoyed a variety of burgers, and played friendly games of pool while the tournament progressed.

As the population of best ‘pool-playing actuaries’ was slowly whittled down, we entered the best-of-three cup final. This was a tense affair where Liam Hollywood and Mark Hoare from Premier were up against Shareen Patel and Ben Sheldon from Catlin.

Sh It was w a high-quality game, but after about an hour, the boys from Catlin were crowned as this year’s worthy winners. cr Thanks to all the entrants and spectators for another enjoyable s tournament.

In particular thank you to t Adrienn from Rileys for helping to organise the event. I look forward to seeing all of you at the next SIAS Pool Tournament for a re-match.

Tourn

By Anique Buddhdev The ever-popular SIAS pool tournament was held on Thursday 23 October at Riley’s in Victoria, with 44 teams battling it out to win the pot of glory. The first round involved a group stage where each team competed to be crowned table-winner and proceed to the next stage. It did not take long before the action heated up with the rule book being brought into question on many occasions.

The night became more intense as the knockout stage followed, with each player in contemplation for several minutes before taking a shot, as one mistake could end the

Join the annual Christmas carol service

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The Company of Actuaries’ Annual Carol Service, which is open to all actuaries and their families, is at 6.15pm on Wednesday 17 December at St Lawrence Jewry Church in Gresham Street.

The service is free.

There is no need to book.

We look forward to seeing you there.

If you wish you can join us for supper afterwards in Armourers Hall, just a few

included “How many zeros in a googol?” and the equally challenging “How many goals were scored in the 2014 World Cup?” At the end David Coulter (left) proved a worthy winner and became the proud recipient of the iPad. Jenny Johnston of Acumen Resources was in attendance to present the prize.

With the formalities completed, it was left to the members to enjoy the rest of the night.

A great night was had by all, and it was fantastic to see the annual event so greatly supported by such a large number of the student body.

The current committee would like to thank all its members for their support over the year. Keep a watch out for upcoming events after the exams from the new committee.

minutes’ walk away.

The supper costs £70 per person with wine included, children of 12 and under are half price.

Following the meal, a talented trio will provide n entertainment and lead us in more carol singing. For further details please email David Johnson at:

Births: P Greenwood: Paul (RSA Insurance) and Susan Greenwood (Mercer) would like to announce the birth of their daughter Ellen Alice, on 24 September.

clerk@actuariescompany. co.uk or Martin Miles at martinwmiles@yahoo.co.uk

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25/11/2014 15:33

LIKE US ON FACEBOOK www.facebook.com/ TheActuaryMagazine

FOLLOW US ON TWITTER @TheActuaryMag @ActuaryEditor

JOIN US ON LINKEDIN www.linkedin.com/groups/Actuarymagazine-UK-Group-3751335

Meaningful work

By Mandi Kupakuwana

A cavalcade of events

By Martin Miles (Master 2014-15) It has been a busy month for the Actuaries Livery Company. I represented the Company at the Garden of Remembrance Service in the Churchyard of St Paul’s Cathedral on 3 November – a magnificent occasion – marking the centenary of the start of the Great War. As well as representatives of the Armed Forces and various military bands, the Masters of 102 livery companies were there, all planting crosses of remembrance. Only 101 of the Masters had remembered to bring a coat or umbrella, but luckily for me the rain held off until just before the end. A few days later, actuaries with family and friends were kindly invited to watch the Lord Mayor’s Show from the balcony of Barnett Waddingham’s Cheapside office.

Peter Thompson and Michael Tripp joined me to represent the Actuaries Company along with representatives of other livery companies on Float 100 – an interesting number, being the smallest perfect square which can be expressed as the sum of nine consecutive primes.

I suspect we were not the main attraction of the show, even for those on BW’s balcony, as we heard several people in the crowd asking, “What’s an actuary?”.

Then on 12 November Sir David Spiegelhalter accepted our invitation to give the annual Company of Actuaries Lecture.

Sir David is the Winton Professor of the Public Understanding of Risk at the University of Cambridge, and many senior members of the City dined with us at Staple Inn to hear him.

He first came to the public’s attention with the BBC documentary Tails you Win, and he spoke very amusingly on common misconceptions in risk and statistics. If only we had had the lecture in 2007, perhaps the banking crisis might have been averted.

Also in the audience was one of our honorary members, Johnny Ball. Johnny is one of the few other mathematicians to have tasted TV fame. Some of the older readers might remember his Think of a Number series from about 30 yearss ago.

Football win for JLT EB

By Ant Hart On the 30 October, a JLT EB team took part in the Risk First five-a-side football tournament.

The team, led by James Melsa, beat PwC, Punter Southall, Xafinity, SEI and Risk First to take home the trophy.

Although they started slowly, finishing third in their group, the team came alive in the knockout stages, beating Punter Southall 4-2 in the quarter finals. They then set their sights on SEI and demolished them in a 6-1 semi-final victory.

The final against First Risk, which was rather

one sided in JLT EB’s favour, r eventually ended in a 1–1 draw and sudden death penalties.

James and Phil scored, and First Risk missed their second penalty, leaving JLT EB to slam home the winner, and cue the wild celebrations.

The winner’s shield is being engraved with the team name, which they will get to keep until they defend it again next year. The team, made up of James Melsa, Karl Moln Page, Chris Gawke, Phil Greenland and Jonathan West were truly superb, and worked extremely hard to ensure the JLT EB victory.

On 13 October, the London Market Student Group (LMSG) hosted Susan Dreksler, director at PWC, and the current chair of the Solvency II Technical Provision (TP) working party.

In her presentation: Being Meaningful, Diversity and Solvency II Technical Provisions, Dreksler described the state of the market in 2010 when she joined the TP working party: “The industry was spending a lot of time and resources focusing on capital modelling, while arguably the biggest most uncertain number on an insurer’s Solvency II balance sheet is most likely to be TPs,” she explained.

In light of this, the TP working party was formed with the mandate to raise awareness and shift some of the industry’s focus towards TPs, given they are “probably the most important part of the Solvency II calculation”, according to a CEIOPS QIS5 presentation.

The working party’s directive included devising pragmatic ways of implementing the various principles and rules that form the Solvency II directive for TPs. Dreksler’s talk focused on the challenges faced by the industry when calculating TPs. Up to 2014, EIOPA had not provided clear guidance on how to make allowances for future RI recoveries and future RI renewals on obligated business at the valuation date.

This was challenging for the Lloyd’s market, and not allowing for future RI recoveries on existing and future RI policies would result in major strains on a syndicate’s balance sheet.

She then explained how, in May 2014, EIOPA published updated guidance that requires insurers to take full credit for the cost of future RI renewals, but prohibits them from taking full credit for the inuring RI recoveries on all future business.

This new approach goes against the ‘fair value’ principle underpinning the Solvency II Directive as full recognition cannot be taken for future RI recoveries.

To learn more about the LMSG or attending events, email: cian.ocriodain@xlgroup.com.

New year pub quiz To help SIAS members get over their postChristmas blues, the 2015 pub quiz is due to be held on 29 January 2015.

Tickets will be released on 5 January 2015.

Look out for more information at:

www.sias.org.uk.

We would be delighted to hear from you if you have any newsworthy items for these pages. Please contact Yvonne Wan at social@theactuary.com

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On my agenda features@theactuary.com

crowding

glory Mendel is not your conventional

Steven Mendel is leading the way in harnessing the powers of social networks and big data to shake up the insurance industry. The actuary turned ‘social insurance’ trailblazer shares his story with Richard Purcell and Gemma Gregson

actuary. So it seemed fitting that our meeting with him was a little out of the ordinary too. Making the most of the unusually warm October weather, he invited us up to the rooftop gardens of his office in Farringdon. Basking in the autumn sunshine, he spoke to us about his early career as an actuary, his former roles at Close Brothers, Barclays Wealth and Christie’s, and the start-up of his latest venture, the pioneering online insurance resource, Bought By Many.

Mendel also outlined his ambitions for the company, and offered some tips for aspiring entrepreneurs.

You have had an interesting and varied career, but you started out as a more ‘traditional’ actuary. Can you tell us how it all started?

It was an article in The Sunday Times about being an actuary that first caught my attention when I was just 14 years old.

So when I was a bit older I did a summer internship at an actuarial firm, Duncan C Fraser, which is now part of Mercer.

I found that I enjoyed it and so decided to do maths at university. When I graduated I then found an actuarial position in pensions at Clay & Partners, now part of Aon Hewitt.

You have worked in strategy consulting, banking and art financing. What took you into these different roles?

At Aon we saw an opportunity to offer asset-based advice to pension funds worth tens to hundreds of millions of pounds, a segment of the market that we thought was not really being

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catered for. I led the newly created function and it was this experience that opened my eyes to the different possibilities out there.

After a time I considered an MBA. But one piece of advice I was given was that it’s better to get some first-hand experience if you can. So I ended up joining McKinsey. It gave me great exposure and I travelled lots.

Ultimately I thought consulting wasn’t what I wanted to be doing in the long term, so after a spell as a director at Barclays Wealth, I got involved with setting up an art finance business for Christie’s. Basically, we were focused on any form of finance centred on art, whether it was insuring art works or helping people looking to borrow against pieces of art. It was an interesting time and unusually I found the wealthier the clients got, the more I dealt with them. That’s probably the opposite of the corporate world, where the wealthier people become, the more they are surrounded by advisers. I think that’s due to art being a real passion for such clients, and it meant I met some really interesting people along the way.

After a time at Close Brothers you then decided to go into business for yourself. What led you to set up Bought By Many?

I looked at the insurance industry and thought that there has been no real innovation for a long time. My grandfather was a door-to-door salesman for Pearl for more than 40 years and when you think about it we are still buying largely the same products today. Not only has the industry not innovated but

AKIN FALOPE

25/11/2014 15:37

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On my agenda features@theactuary.com

“We need to be bold and hire people that work in a different way to us and have different skills” it’s also not good at putting the customer first or at using data effectively. If you think about your experience with retailers, we now expect them to use what they know about us to provide more discounts or offers relevant to us. I think there is an opportunity to use data more smartly in the insurance industry.

Can you tell us about the Bought By Many business model?

Does this model appeal to customers and insurers?

We have seen a lot of interest from potential customers since we started in 2012, with about 35,000 members registered on our site and about 5,000 new members every month. We are also working with an increasing number of insurers as they see the value of being able to find specific groups of risk to write on their books. For them, it can be a distribution channel and a risk management tool.

We help people to find insurance that they can’t get on their own, or to negotiate a lower price. We do this by pooling similar people or risks together. If, for example, you have a pug as a pet, then getting pet insurance for this breed of dog can be expensive because of the high risk of theft associated with this breed. However, by grouping similar risks together, an insurer can more effectively underwrite and manage the risk, so it can provide insurance at a lower cost to the consumer. We can also use this approach to identify demand for insurance products that may not even exist today.

Where do you see the business in five years?

Do customers come to you or do you find them?

With traditional insurers there is a real nervousness to change, and a fear of the unknown and getting things wrong.

Recruitment is an issue. We are not trained to recruit, so we tend to just hire people ‘similar’ to us in the way we think.

This makes for a lack of diversity of thought within the industry. We need to be bold and hire people that work in a different way to us and have different skills.

We find it’s a bit of both. Using our own analysis of internet search data and social media groups we uncover pools of demand for different things, for example, student gadget insurance. So using this information we may set up groups which people will then come across when searching online.

Some customers also set up their own groups.

Providing the groups are large enough, we then pair them up with insurers who then can offer better terms than they could to individuals.

I hope that we will have grown the scale of the business. Not just in the UK, but also operating in international markets, offering a wider range of insurance. I also hope we can form a market place for insurers to ‘buy risk’. Where we can’t find ways of filling the demand from the various groups by working with traditional insurers, we may consider trying to insure them ourselves.

Why do you think insurers don’t operate like this themselves?

Would you say that your actuarial skills have come in useful when setting up Bought By Many?

It’s difficult to differentiate between my actuarial grounding and my experience as a management consultant at McKinsey.

For example, my time at McKinsey helped hone my skills in being able to simplify complex problems. However, being an actuary certainly gives you the training to think through problems logically. I’ve also found being an actuary opens doors – it gives you the permission and authority to talk about insurance with some people, and that has been important when talking to insurers about what we are doing here at Bought By Many.

What would be your tip to anyone thinking about starting their own business?

Setting up your own business is really, really hard so you have to really want to do it. There are a lot of logistical hurdles to overcome; even setting up a bank account for a new business can be difficult. Plus there are the financial pressures it can create. But it can be very rewarding. In order to be successful I think you need persistence and the experience to harness the opportunities that are presented to you. a

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AKIN FALOPE

25/11/2014 15:37

General insurance Underwriting features@theactuary.com

GREATER THAN THE SUM OF THE PARTS Actuaries and underwriters operate differently, but the positive effect of their complementary skills is undeniable, says Rob Barritt In the late 1980s and early 1990s, non-life insurance actuaries mostly held reserving roles.

Since then, however, areas of involvement have expanded – particularly following the soft market of the late 1990s, events of 9/11 and now Solvency II. Actuaries are employed in underwriting, financial reporting, business planning, risk and capital management.

Numeracy, technical modelling, ability to interpret large quantities of data, and a rigorous, logical thought process are also skills ascribed to actuaries. Underwriters are likely to be considered more entrepreneurial and instinctive, with their strengths lying in the assessment of individual risks, wider market and commercial awareness, communication and negotiation. It is arguable that all of these skills are needed in the process of risk selection, product design, portfolio construction and strategy. The market is changing and those who do not adapt risk being left behind, or selected against. Clients and brokers are now sophisticated in understanding risks to their businesses, and wanting to address ever-more complex risk transfer requirements with flexible, value-for-money products.

We recently conducted an internal prediction survey that broadly found, given a generic insurance-related problem, both actuaries and underwriters used similar thought processes and rationalisation. There was no statistical evidence that either group tended to be more pessimistic

Philby Illustration / Ikon

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or optimistic. Indeed, the outcomes were more closely related to individual interpretation of the data.

Collaboration Changes in business mix, underlying exposure, policy coverage, claims handling or case reserving philosophy are often important to factor into projection analyses. The results of this work should also be challenged and validated; underwriters can apply sense checks based on broader market knowledge, alternative estimation methods and common-sense logic.

It is of great benefit to companies where underwriters and actuaries are able to work together in a constructive way. The challenge for actuaries is to build these relationships and demonstrate their ability to add value – particularly in areas where they have traditionally been met with scepticism.

Personal lines and SME businesses have been quicker to incorporate statistical pricing methodologies given the extensive data available. By contrast, specialty lines business is neither high volume nor tightly defined and in many cases pricing may attempt to incorporate potential causes of losses that have never occurred. The characteristics of the more instinctive, technically minded specialty underwriters operating in the London Market are also different with their strong

entrepreneurial traits. Successful outcomes in this market are dependent on actuaries tailoring their approach. This involves a bigger picture vision together with greater flexibility and pragmatism, as well as a focus on the areas where they can be most effective.

Actuaries can help to increase value by focusing on stakeholders’ requirements in the decision-making process. It is important for actuaries to explain the risks and uncertainties in their estimates and projections. Any projected result will rely heavily on the data inputs, assumptions and the quality of the underlying models. Giving an answer that is not sufficiently qualified can be damaging if it causes overconfidence in the result. It is healthy for both actuaries and users of actuarial work to have a level of scepticism over the results of any model – the natural tension between actuaries and underwriters can be of benefit as it stimulates wider debate.

Actuarial inclination London Market specialty business is inherently volatile, skewed by the potential for extreme outcomes. An actuarial ‘mean best estimate’ is intended to represent the average of all possible outcomes, even those which may be considered highly unlikely. It will not necessarily be the single outcome that is most likely to happen (the mode), or the mid-point of an ordered list of outcomes (the median). Actuaries consider the mean to be a more appropriate way of averaging because it explicitly allows for the shape and size of all other possible outcomes.

Management of insurance companies will seek to avoid shocks, particularly in terms of quarterly performance, though given the volatility it is clear that specialty business is better assessed over a longer time horizon. A sudden material erosion of and/or a significant under-pricing issue can dramatically affect results and raise questions of actuarial techniques. There is also a detrimental effect if, conversely, cautious reserving leads to an over-capitalised company, or conservative and uncompetitive pricing leads to a loss of profitable business. There will always be differences in the way that actuaries and underwriters operate within insurance companies, but the two disciplines offer complementary skill sets and different perspectives which, when combined, should have a much greater positive effect than the two operating in isolation. a

ROB BARRITT is

a general insurance reserving and pricing actuary at Aspen

December 2014 • THE ACTUARY 19 www.theactuary.com

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Rise and

RISE of the central banker After years of unlimited fiat money, central bankers are firmly in control of the world’s financial systems.

Detlev Schlichter explains why this is leading to the death of free markets

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GETTY

25/11/2014 15:38

Finance Central banking features@theactuary.com In the 1980s and 1990s, bond traders and investment bankers appeared to be the ‘masters of the universe’, but today the undisputed rulers of the financial cosmos are central bankers.

They have become, without doubt, the most powerful people in the financial system, the ultimate pullers of strings, setters of trends and movers of markets. Their decisions directly and indirectly affect the pricing of trillions of dollars worth of assets, and their every word is scrutinised for the slightest hint at what may come next. The new power elite may not as be as colourful and glamorous as its predecessors, who featured in such bestsellers as Liar’s Poker and Bonfire of the Vanities. Usually modest in demeanour and less lavishly paid, these civil servants make less suitable targets for envy and gossip. But their power and influence is truly immense. They have even started to coin their own iconic phrases. If Gordon Gekko’s “Greed is good” defined the 1980s, Mario Draghi’s “We will do whatever it takes” may yet be the motto for the new era of central-bank-managed markets.

The rise of the central banker began long before the recent crisis, but the crisis greatly accelerated the process. After housing bubbles in various countries popped in 2007 – bubbles that, some critics say, had been inflated by ‘easy money’ from the same central banks in the early 2000s – all felt compelled to cut interest rates to zero and flood the banking system with vast amounts of new liquidity. The generally accepted view was that without these measures we may have faced an even worse crisis, maybe even the collapse of the banking system. None of the policy measures taken were new in principle, but certainly in degree. The crisis is over, but the influence of the central banker has stayed – and expanded.

Purchasing large chunks of previously privately held assets with newly printed money and transferring them to the central bank’s balance sheet is now known as ‘quantitative easing’ (QE). At first, this policy was intended to stabilise the banks, but once the worst of the crisis was over, QE was redeployed as a tool for managing the wider economy. Lifting prices of specific assets via targeted QE, and changing their yields and risk premiums boosts lending and thus overall growth. The latest round of QE by the US Federal Reserve was officially aimed at lowering the unemployment rate. Every major central bank has introduced some form of QE. Of course, fixing certain interest rates, in particular those at which banks lend to each other, has always been the prerogative of the central bank. But their influence now extends much further than would have been imaginable just 10 years ago. The US-Federal Reserve and the Bank of England are now the largest holders of their respective country’s government debt.

Their massive buying has reduced the available supply of high quality, long-duration assets for

private investors, and has forced insurance companies and pension funds into corporate bonds, equities and other, riskier, instruments.

More recently, the Fed has become one of the biggest active participants in the repo-market, a market for collateralised, short-term lending among financial institutions. Under its new ‘targeted’ lending facility, the European Central Bank tells banks who to lend to, and the central bank’s new QE programme is big enough to acquire practically all outstanding eurodenominated asset-backed securities.

Central banks have made it their remit to target the shape of the yield curve, the risk margin on mortgage loans, the borrowing costs of the government, and the size and liquidity of specific credit markets. Their policies of zero interest rates and ample liquidity have

I consider this unlikely. These phenomena are ultimately systemic in nature, not cyclical.

Having replaced gold as an anchor at the core of the monetary system with unlimited fiat money under the control of central banks, we have exchanged a fairly inelastic but stable system that constrained money creation and enforced a strict discipline on borrowers and lenders alike, with an entirely elastic system, allowing for extended periods of ‘easy money’, in which interest rates are artificially low and extra bank credit creation is encouraged. As we have seen many times, this type of credit creation may boost growth in the short term but only does so by mispricing various assets and misallocating capital, which in due course must cause a recession. ‘Easy money’ does not lead to lasting growth but to boom and bust.

“‘Easy money’ does not lead to lasting growth but to boom and bust” meanwhile been the dominant force behind booming asset markets globally.

What we are observing is nothing short of the bureaucratisation of finance and the socialisation of capital markets. As Sir Michael Hintze, founder of hedge fund CQS, put it to the Financial Times: “The beauty of capital markets is they are voting systems, people vote every day with their wallets. Now voting is finished. We’re being told what to do by central bankers – and you lose money if you don’t follow their lead.”

The rise of pseudo-markets Such a situation is evidently no longer capitalism.

Government-directed markets are not real markets. The free market is, if correctly understood, a powerful tool – the only tool available to society – for effectively co-ordinating the economic activities of a multitude of people with diverse personal goals, frequently conflicting and constantly shifting. Uninhibited price formation is essential for the market to work, and any form of price fixing or price manipulation, however well intended, is ultimately poison for any functioning market.

Yet, criticism of the kind that Hintze expressed so well appears to be rare in the financial industry. One reason is that the first concern about ultra-easy money, namely that it would cause inflation, does not appear to have materialised yet. Or rather, easy money has lifted the prices of financial assets and real estate more than those of consumer goods, and such asset price inflation is conveniently called a ‘bull market’. Furthermore, many observers still seem to expect that present policies only constitute cyclical measures taken in response to the Great Recession, and that once self-sustaining growth has returned, the central banks will retreat.

Such business cycles may also occur under gold standard arrangements whenever private banks expand credit, but the inelasticity of the monetary core – gold – means these cycles are shorter, and any imbalances are liquidated more or less completely during occasional recessions.

This is different in a system of unlimited, fully elastic fiat money. Central banks can always shorten or abort the correction by injecting more money and by suppressing interest rates further.

Instead of periodic painful liquidation, the economy experiences an apparently neverending boom, but at the price of growing underlying imbalances and an increasing dependence on the drug of cheap money.

After 43 years of unlimited fiat money globally, we have reached a point where central bankers around the world have to plug their fingers in a growing number of holes to stop the bloated and overly indebted system from leaking to maintain the appearance of stability. Every market sell-off now has the potential to turn into an existential crisis. Plus the accumulated imbalances and the system’s fragility make it harder to generate meaningful growth. A lasting ‘normalization’ of policy and lessening of central bank interference appears unlikely. Elastic fiat money and modern central banking are fundamentally incompatible with capitalism – and worryingly, capitalism is losing. a

DETLEV SCHLICHTER

is the author of Paper Money Collapse – The Folly of Elastic Money

December 2014 • THE ACTUARY 21 www.theactuary.com

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Investment Non-traditional assets features@theactuary.com

Navigate risk to harness

opportunity Ahead of a sessional paper release early next year on the potential risks and gains of non-traditional assets, Gareth Mee and Gareth Jones give an update from the IFoA working party to address these questions The choice of assets used by life insurers to

Available assets

back their liabilities is a key driver of firms’ profitability, capability to price new business attractively and financial strength.

Historically, relatively ‘vanilla’ investment strategies proved sufficient for success, however insurers now increasingly need to broaden their horizons in order to maintain their ability to price business attractively, and maintain returns to shareholders.

In the past few years – partly driven by regulation – traditional bank lenders have

The working party has considered the universe of potentially interesting assets to UK insurers, and has attempted to identify common features, where possible, to group similar investments. The sub-groups considered are set out in Table 1 (left) with examples of specific assets within them.

become increasingly reluctant to tie up liquidity by lending for long durations. This reduced supply of long-dated credit has tended to increase the returns available in the market on some asset classes, with which insurers may hitherto have had little involvement. Insurers are typically subject to less pressure on liquidity than banks, which may allow them to fill the void in the long-term debt market, taking advantage of attractive pricing.

As more insurers adopt such strategies, the pressure on others increases to match levels of profitability or Table 1: Broad asset classes considered by the working party competitive pricing of products, such as annuities.

Sub-group Examples While the opportunity to ■ Utility companies Infrastructure generate further yield is ■ Airport/port companies debt clear, the risks of managing ■ Private finance initiatives some non-traditional assets are not trivial, and need to ■ Loans against residential and commercial property Real estatebe carefully considered as ■ Equity release mortgages backed debt ■ Student housing loans part of the investment appraisal process.

■ Residential and commercial mortgage-backed Other assetA working party on securities (UK and overseas) backed debt ‘non-traditional assets’ was ■ Collateralised loan obligations set up in late 2013 to ■ Transport financing research both the ■ Emerging market debt Unsecured debt opportunities and the ■ Private placements potential risks.

■ High-yield bonds The working party aims ■ Insurance-linked securities Other assets to release a sessional paper ■ Hedge funds in early 2015, a taste of ■ Private equity which is provided here.

22

THE ACTUARY • December 2014 www.theactuary.com

p22_23_dec_NTAssets_FINAL•CT.indd 22

Potential returns While there are many potential reasons for insurers wishing to invest in non-traditional assets, including increased diversification or increased security/collateral, the opportunity for potential return is a key factor.

Some sample returns for the broad asset categories listed, which demonstrate the potential attraction for insurers in exploring the opportunities further, are illustrated in Figure 1 on page 24.

Specific considerations for creating cashflow certainty There are a number of options available to insurers wishing to transform investments in order to make them more favourable in some way. An obvious consideration is eligibility for the matching adjustment, which is likely to be a key focus for annuity writers. Some may have options within the group, whereas smaller stand-alone insurers will have to rely on third parties.

In considering such options, an insurer

IAN NAYLOR / IKON

25/11/2014 15:41

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Investment Non-traditional assets features@theactuary.com

Figure 1: Indicative returns on alternative asset classes

6%

EM debt High yield bond

CREloans Equity release mortgage loan

Returns p.a.

5%

Ground rent

Private placement loan Social housing loan Aviation bond 4% Residential Infrastructure loan mortgage loan Student housing loan 3%

Par gilt curve

CMBS AAA 2% UK RMBS AAA 1% 0% 0

5

10

15 20 Indicative modified duration

25

30

As of 31 March 2014. Source: IFoA Non-Traditional Working Party, PIMCO

Table 2: Key considerations for investment in non-traditional assets Consideration

Reason

Sourcing

Sourcing illiquid assets can be a difficult job in itself, and often the availability of an asset will drive analysis of its suitability rather than the search being made after a selection process.

Lot size has a large impact as, for example, small insurers are unlikely to be able to make significant direct infrastructure investments. On the other hand, large insurers may view some deals as too small to make a genuine impact on their balance sheet. Assets to back new business will need to be continuously, or at least periodically, available for investment otherwise insurers will be required to ‘warehouse’ assets in advance with implications for capital.

Management

Ongoing management includes valuation capability, likely to require bespoke model development as no, or little, liquid market will exist in similar structures. There will also be a need to monitor and respond to other actions bespoke to the asset class such as changes in credit ratings, changes in borrower circumstances, borrower optionality or changes to loan terms.

Currency matching

Some assets will be denominated in foreign currencies. Given the potential for default in the assets there is no risk-free way to hedge this. Choosing to remain unhedged leaves the insurer open to the currency risk, whereas a full hedge with each future expected cashflow converted into domestic currency at outset provides the necessary risk mitigation but creates a contingent exposure to currency shifts in the event of default.

Certainty of cashflows

Some assets may prove attractive economically but provide challenges from a capital and reserving viewpoint, although there are options for insurers to restructure cashflows as discussed in the article.

Format

Non-traditional investments are generally in loan format, which gives rise to the challenges set out above. Bond and equity formats are sometimes available which can alleviate the challenge of ongoing management, as can the use of third-party fund managers with dedicated resources.

Liquidity

The liquidity of these assets tends to be very low. While the premium received for illiquidity is sought, insurers are being asked to more carefully manage liquidity risk through the implementation of recovery and resolution plans as well as through Solvency II.

Capital charges

24

By its nature, the Solvency II Standard Formula represents a generic approach to setting capital requirements that does not cater well for the nuances of non-traditional assets.

On the other hand, internal model firms have the opportunity to properly reflect the risks on the assets.

needs to think about the following factors. ● The impact on the annuity insurer. ● The impact on the insurance group – for example, does the solution still help when the annuity insurer is consolidated into the group? ● The impact on the counterparty – is the counterparty a suitable holder of the risks, and what will be its capital treatment?

There are a number of potential structures currently being looked at in the industry.

Many rely on transferring the assets to an SPV that issues a blend of equity and debt, the latter of which is intended to be matching adjustment eligible. The split between them is balanced to maximise the value in the debt while retaining a sufficient credit quality.

Alternatively, some have looked at leaving the assets on the balance sheet with an overlay derivative or reinsurance to provide greater certainty of cashflow.

While there is potential in such solutions, final interpretation of the regulations has not been confirmed at the time of writing and great care needs to be taken.

In addition to all this, emergent risks can be hard to predict on long-term business – property-backed lending in Scotland could possibly end up being secured by an overseas asset, despite it being domestic when the contracts were first written.

Flooding in one part of the country could affect assets disproportionately if proper geographic diversification wasn’t in place, which can be a challenge for large-scale infrastructure projects.

There can be significant value released by investing in non-traditional illiquid assets, but the care and management needed should not be overlooked.

We hope this article, presentations at recent and forthcoming conferences, and the upcoming sessional paper on this topic will go some way to shedding light on both the opportunities and challenges involved. a The views expressed in this article are the views of the members of the working party, and not of their employers

GARETH MEE chairs the IFoA non-traditional

assets working party and is a director at EY. GARETH JONES is a member of the working

party and a senior actuarial manager at MGM Advantage.

THE ACTUARY • December 2014 www.theactuary.com

p22_23_dec_NTAssets_FINAL•CT.indd 24

25/11/2014 15:41

DECEMBER 2014 theactuary.com

The magazine of the actuarial profession

We have put together 12 puzzles for you to attempt as the year comes to a close.

As an incentive, there will be a prize draw for correct entries to each puzzle. An iPad Mini is up for grabs if you submit correct answers to all 12 brain-teasers.

To enter, submit your answers at www.puzzles.theactuary.com by 5 January 2015.

Only members of the Institute and Faculty of Actuaries are eligible to win a prize.

I trust you will relish this festive challenge!

Seasons greetings to you all.

In partnership with British Mensa

Kelvin Chamunorwa Editor The Actuary

The IQ style puzzle content is supplied by, and is the copyright of, British Mensa Ltd. Puzzles cannot be reproduced in any format without permission from British Mensa. www.mensa.org.uk

p25_29_actuary_christmas_puzzles_in_mag.indd 25

25/11/2014 15:41

DAY 1

DAY 2

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How many cards are the five people sending in total?

What number should replace the question mark?

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DAY 3 ROUTE RIDDLE Two minibuses are ferrying employees to the seasonal office party.

They both set off from the same point, at the same time, to travel the same 35-mile route. If minibus A travels at 50 mph and minibus B travels at 35 mph, how many minutes' difference will there be between their arrival times?

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25/11/2014 15:42

DAY 4

DAY 5

STAR OF WONDER

CANDLE CONUNDRUM

Use the letters given to complete the star so that two five-letter words, one four-letter word and two words of two letters can be will read. When completed, what letter wi uestion mark mark? replace the question

You have 209 candles and each candle will burn for an hour, leaving a small stub. If you save the stubs they can be moulded into new candles. Nine stubs are needed to make each new candle. What is the total number of hours of candlelight possible?

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DAY 6 CAROL CONFUSION What letter should appear next in this sequence?

P P T T DF H C B G ?

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25/11/2014 15:42

DAY 7

DAY 8

SALES STUMPER

ILLUMINATE THE CODE

A market stall had 80 Santa outfits to sell. The average amount paid for them was £9 but 30 of them had to be sold at the reduced price of £4. What was the amount paid for the first 50 outfits?

If 246517 spells out CANDLE, 65738 spells out DANCE and 7639 spells out DALE,

what would be the code for the word LAND?

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Actuarial | Audit | Broking | Change | Claims | Compliance | Finance | Investment | Legal | Risk | Strategy | Technology | Underwriting

p25_29_actuary_christmas_puzzles_in_mag.indd 28

25/11/2014 15:42

DAY 10 DAY 11 HOLIDAY HUMDINGER HOME FOR CHRISTMAS A survey revealed the following figures for favourite places to spend the Christmas vacation:

BEACH HOLIDAY – 825 COUNTRY RETREAT – 2520 FOREIGN SHORES – 1419 CITY BREAK – ?

A group are making their way home for the holiday season. In the first hour they cover one-fifth of the total distance. The next hour they cover one third of what is left. The following hour they cover one-quarter of the remainder and in the fourth hour half of the remaining distance. The group are still 12 miles from home.

How many miles have they travelled?

How many chose a city break?

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DAY 12 TIME TEASER As the countdown to New Year begins, the Town Hall clock has started playing up. It was correct at midnight but from that moment it began to lose three and a half minutes per hour.

The clock stopped 120 minutes ago showing clock B (18:50). What is the correct time now? The clock runs for less than 24 hours.

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ELEGANT SOLUTIONS TO YOUR 2014 RECRUITMENT PUZZLES LIFEHEALTHNON-LIFEPENSIONSINVESTMENT

HEAD OF ACTUARIAL MODELLING CONSULTING ACTUARY

HEAD OF PRICING RESERVING ACTUARY

RISK ACTUARIAL LEAD BULK ANNUITIES ACTUARY

PRICING ACTUARYACTUARIAL PRICING CONSULTANT

HEAD OF RISK HEAD OF LONGEVITY SENIOR MANAGER - PENSIONS LEAD CONSULTANT

RISK PRICING MANAGER

DIRECTOR - INVESTMENT BANK MANAGEMENT HEAD OF EXPOSURE MANAGEMENT CONSULTANT

PRINCIPAL HEALTHCARE ACTUARY

DIRECTOR OF GIPRICING ACTUARY SYSTEMS ANALYST

ACTUARIAL PRACTICE LEADER

CATASTROPHE ANALYST FINANCIAL MARKETS RISK MANAGER PENSIONS & INSURANCE MANAGER RISK PRICING ANALYST

DIRECT ENTRY PARTNER MANAGER - INVESTMENT

A

SOLVENCY II ACTUARY INVESTMENT ACTUARY - FIDUCIARY MANAGEMENT

HEAD OF MODELLING

RESERVING ACTUARY STRATEGIC RISK CONSULTANT

RESERVING ACTUARY SENIOR CORPORATE ACTUARY SENIOR MANAGER - INSURANCE INVESTMENT

ACTUARIAL ANALYTICS MANAGER

B

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p25_29_actuary_christmas_puzzles_in_mag.indd 29

25/11/2014 15:42

Nylfia is an actuary who solves and sets cryptic crosswords created especially for The Actuary

Puzzles 1

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SOLUTIONS FOR NOVEMBER 2014

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For a chance to win a £25 Amazon voucher, please email your crossword solution to: puzzles@theactuary.com by 19 January

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1 Award raised after, for example, drink (3,3) 4 Embargo covering language losing Third Estate (8) 9 Product that brings a smile (6) 10 Jewel fencing Latin caught after trial with family jewel? (8) 12 Asian captain is confused, about to be replaced by knight (9) 13 On this no eastern bird (5) 14 Drift on beach while nude – indecent (4) 15 Is flank barely seen when clothes lacking below waist? (9) 18 Musical drama or let it go badly (9) 20 Margin shown in accounts centrally (4) 23 Small bit of English ardour? (5) 24 Gradually reduced joint in modern times (9) 26 Deer entranced our Becks (8) 27 Tells the truth: could be snow but ends reversed? (4,2) 28 Service level upholds delta more full of currents (8) 29 One minces more for the audience (6)

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THE ACTUARY • December 2014 www.theactuary.com

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Congratulations to this month’s winner – Louisa Coughtrey

Mensa puzzle 607 ANSWER 25. The sum of the two numbers on the left is squared to give the number on the right.

Congratulations to this month’s winner – Melvin Brandman

Mensa puzzle 608 ANSWER They are all nuts – cashew, peanut, almond and pecan.

Mensa puzzle 609 ANSWER Five. On each row the first number multiplied by the second number, minus the third number, divided by the fourth number gives the fifth number.

Mensa puzzle 610 ANSWER 23 and a third.

Bridge puzzle 48 ANSWER ♠ Q6 ♥ J95 ♦ AQJ6 ♣ KJ76

♠ K102 ♥3 ♦ K7542 ♣ AQ43 ♠ AJ9543 ♥6 ♦ 963 ♣ 852

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♠ 87 ♥ AKQ108742 ♦ 10 ♣ 109

Bridge puzzle provided by David Lampert

SHUTTERSTOCK

15/12/2014 11:53

Careers Non-executive directorship features@theactuary.com

Almost on board In his last article in the series, Colin Czapiewski considers the many functions of the actuary in the new role as a non-executive director Previous articles in this series introduced the concept of a non-executive director (NED) and highlighted the areas where actuaries have not been involved traditionally. Now we consider the actuary in his or her most likely scenario as a NED in more detail. Before starting out on this role, I would emphasise that a discussion with an experienced NED is essential to obtaining a fuller understanding about what is involved in practice. I was extremely lucky in this regard.

Duties and responsibilities In their individual role and as a member of the team of directors on the board, the NED must understand the main tasks that they should be doing. The board should determine the strategy and objectives of the company, and monitor the progress in achieving these. In addition, the board will be accountable to various parties for its activities, such as shareholders and regulators. Finally, the board is responsible for ensuring that all financial information is accurate and that the systems and controls of the company are adequate, particularly in relation to risk management.

More specifically, the NEDs should monitor the performance of the executive management. The role involves a balancing act of encouragement, participation and constructive criticism. They should ensure there is sufficient succession planning and that the remuneration is appropriate.

The performance of the board and the board committees must be scrutinised regularly and objectively, and improved upon to attain the required standards. Self assessment is a necessity and a fundamental role of boards and particularly for NEDs. There are also statutory duties in respect of the company in general, but also in a personal capacity as a NED. The Companies Act 2006 sets out generic duties of directors, including that they: ● act within the constitution of the company; ● promote the success of the company; ● exercise independent judgement, reasonable care and skill; ● avoid conflicts of interest; ● decline benefits from third parties; ● declare any interests.

Approval It is necessary to be approved before becoming a NED. The increasing importance of NEDs is highlighted by the regulators’ growing interest in them. Both the PRA and the FCA are likely to interview prospective candidates, and more specialised regulators such as Lloyd’s may also become involved when a NED joins the board of a managing agency.

Many actuaries will be familiar with the approval process in relation to controlled functions under the Financial Services and Markets Act 2000 (FSMA 2000). These relate to individuals that have significant influence function

(SIF) roles within firms, and some can have more than one.

Work style and commitment It often appears at first sight that the number of hours required to perform a NED role is low.

Board meetings may be four per annum and the numbers of other board committees are limited.

Do not be fooled. To perform the role of a NED efficiently, much time is needed.

It would take another article to describe the different roles of the committee in detail, but a brief description is outlined below.

Audit committee Appointing external auditors, monitoring their activities and performing the statutory audit-related roles seems fairly basic, but the committee must watch the audit process carefully, and the NEDs should hold a private meeting with the audit partner once a year.

Risk committee This is an absolutely ideal role for actuarial NEDs. Assessing the risk-related aspects of the business is right up our street.

Investment committee In financial companies the investment return may comprise a significant area of the profitability of the company. The balance of risk and return must be carefully managed.

Remuneration committee A difficult role not usually involving actuarial skills, but actuaries sometimes get involved.

Others Various other board committees are dependent on the types of business involved.

Preparation for the role Is the above what you expected a NED to do ?

Clearly, more reading is necessary, but this should give you a flavour. If you are still keen to enter this field, then seek out a helpful NED and listen to him or her. The role of a NED really can be very satisfying. a

COLIN CZAPIEWSKI

is an independent actuarial, insurance and risk management consultant

December 2014 • THE ACTUARY www.theactuary.com

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24/11/2014 16:35

Risk Modelling features@theactuary.com

The IFoA’s Model Risk Working Party reflects on the cultural aspects of model risk The practice of modelling can enlighten

SPERSONALITIES PLIT 34

and frustrate us in equal measure. We are pleased by our insights and technical advances. But the more we use and reflect on our models, the more we become aware of their limitations – the roughness of approximations to complex problems, the sensitivity of results to assumptions that cannot be validated, and the reliance on past data when our concern is the future.

A stock response to such frustration is: “Well, a model is just a model; you cannot expect it to be always right!” The Federal Reserve’s guidance on model risk management warns against inappropriate use of models and emphasises the need to understand limitations and assumptions. The authors of The Dog And The Frisbee paper, presented by Bank of England executive director Andrew Haldane in 2012, went further, arguing that the complexity of financial risk requires simple and robust metrics, rather than elaborate models.

Such reasoning, while justified, does not settle the argument. It implicitly assumes model outputs drive decisions in a straightforward manner, such that errors in assumptions directly translate to errors in decisions. But this is not necessarily how, in our experience, decisions happen. As for restricting the use of models to those applications where likely errors are insubstantial: that should reasonably

THE ACTUARY • December 2014 www.theactuary.com

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“In our analysis, multiple perspectives on risk and modelling are considered legitimate, which market participants may not find easy to express in public” exclude the calculation of ‘1 in 200 year’ losses – an actual requirement under Solvency II – from the scope of internal models. And that is not something we would bet on happening!

In fact, a variety of responses to models and uncertainty can be observed. Figure 1 shows the mean and 99.5th percentile of an annuity value distribution for seven different models, each fitted to the same data. It is clear the sensitivity to model choice dominates the variability reflected within any given distribution.

Faced with such uncertainty, different responses are plausible, each rational in its own way. Business cannot just stop; some will say “let’s pick the likeliest model and run with it”. Others may find that one particular model corroborates their intuition and legitimises their plans. There will also be those who solemnly declare that “more research is needed on this important topic”. Meanwhile, the sensitivity to model choice will confirm the beliefs of some, that “longevity is just too hard to model” and that “we should not have taken on such risk in the first place”. They all have a point and they will never agree.

Alternative perceptions Different ways in which modelling and its use in decision making are perceived within an organisation are categorised in the image on page 34 (left). The horizontal axis reflects the perceived legitimacy of modelling: in the right half-plane, models should be used in decision making; in the left half-plane, they should not. The vertical axis reflects concern with uncertainty: stakeholders in the top half-plane are confident in their processes leading to good decisions; in the bottom half-plane they are not so sure.

Using, or indeed not using, models in a way consistent with each quadrant generates different sorts of risks. At top-right, Confident Model Users are keen to optimise decisions, a process that can and should be driven by modelling. But such agents are likely to ignore for too long evidence discordant with their models. In this quadrant, the main risk consists of model inaccuracies driving wrong decisions.

This is indeed the kind of model risk that the Federal Reserve’s guidance seeks to address.

At bottom-right, we find Conscientious Modellers, for whom technical expertise and professionalism are of paramount importance.

Model uncertainty can be quantified and the fitness for purpose of models clearly defined.

But such agents can be obstructive in putting models to business use, by delaying model

VINCE FRASER

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Figure 1: Mean and 99.5th percentile of annuity value for a 70 year old male, discounted at 3% p.a, for seven different models

We believe that all four perspectives need to be represented in – and 14.0 responded to by – model Mean 99.5th percentile governance, with each required to challenge and 13.5 respond to the others.

Hegemony of a single 13 perspective is self-defeating.

Conscientious Modellers, 12.5 possibly to their chagrin, need the operational focus of 12.0 Confident Model Users (to attract investment in the 11.5 model), the scenarios CBD CBD PAPC 2DAP LC DDE LC(S) imagined by Uncertainty Gompertz spline Avoiders (to challenge long-held wisdoms) and the releases or limiting the scope of their survival instincts of Intuitive applications. Furthermore, the overall scientific Decision Makers (to ensure model use does not paradigm they use – no matter how necessary lead to commercial disadvantage). for their deliberations – may be flawed.

At the same time, Conscientious Modellers Uncertainty Avoiders populate the bottomcan use the model to challenge Intuitive left corner. In their view, all risks that matter Decision Makers, by demonstrating “what you are ever-changing and interconnected. have to believe” for the model to be consistent Paradigms constantly shift and modellers are with intuition. Such a challenge reveals like the proverbial “general fighting the last management’s implicit assumptions and war”. Decisions should be robust to model enhances accountability. uncertainty; but such decisions will usually be In our analysis, multiple perspectives on risk highly suboptimal. The position of Uncertainty and modelling are considered legitimate, which Avoiders can become difficult in an market participants may not find easy to organisation focused on delivering profit, but express in public. they may find a friendly home in, say, an For instance, would the following statement emerging risks committee. ever be acceptable in the context of regulatory Lastly, Intuitive Decision Makers don’t see model review? “Assumptions are consistent with why models should be used in the first place. empirical evidence and best modelling practice.

Gut instinct and market knowledge will always Model uncertainty remains high. The precise trump mathematical abstraction. Whether a model calibration is such that standard outputs model is correct or not is for them an issue of are also consistent with senior management’s no relevance. The immediate risk with such an perspective of a commercially reasonable capital attitude arises from ignoring the information requirement.” For many, that may be too much and insight that a model can bring; human candour to stomach. But when uncertainties are intuition cannot always cope with the full deep and stakes are high, risk can no longer be complexity of the problems that we often have the exclusive domain of technical experts. to tackle.

By pretending that modelling is a purely Intuitive Decision Makers may, nevertheless, scientific exercise, we create conditions of feel compelled to demonstrate the use of a self-censorship and unaccountability. Good model (by perceptions of best practice or by governance, as well as good science, requires regulatory stricture). Then they will show strong transparency. For this we need more, not less, preference towards a model whose results align politics, with all the noise and uneasy with their views and corroborate their position. compromises that engaged dialogue involves. a Modellers may be given incentives to generate the ‘right results’. The major risk here is loss of Model Risk working party accountability: if intuition fails, will it be The working party group members include recognised as such — or will models, and Andreas Tsanakas, M Bruce Beck, Tim Ford, modellers, take the blame?

Michael Thompson and Ivy Ye

December 2014 • THE ACTUARY 35 www.theactuary.com

25/11/2014 15:48

Risk Technology features@theactuary.com

Andrew Coburn, Simon Ruffle and Louise Pryor are developing frameworks for cyber catastrophe analysis. They explain how mapping the cyber economy enables risk modelling of systemically important IT providers Cyber attacks are featured as one of the top technological risks in the World Economic Forum’s 2014 Global Risks Report, but understanding the risk of cyber-inflicted damage on businesses and economies is still in its infancy.

The benefits of investing in increased levels of IT security cannot be measured unless the risk can be assessed. Cyber risk management needs a proper risk framework.

Insurers are still reluctant to offer commercial cyber attack coverage because the risk is not well understood. What concerns insurers most is not at the level of individual loss events, such as disgruntled employees, targeted security penetrations or technology accidents that damage the afflicted company. Rather, it is whether individual loss events are manageable across a whole portfolio of policies if they occur.

Cyber catastrophes have the potential to be large correlated loss events, and it is the uncertainty over which portfolios have the potential for a large loss across multiple policies, as well as how to segment books of business into aggregation silos to manage the risk, that concerns insurers. Insurers are still haunted by the multi-billion-dollar asbestos claim losses that ruined the profitability of general liability insurance in the 1980s. So, to offer commercial cyber insurance, insurers must understand the full potential of the risk to be able to assess its probable maximum loss, and must know which sectors of its insured portfolio are at risk of a single cyber event.

One way of evaluating cyber risk is to adapt well accepted catastrophe-modelling methodologies. The insurance industry is already using catastrophe models to manage the risk of correlated property and casualty loss from natural catastrophes. For cyber risks, experts at the Centre for Risk Studies, Cambridge University, supported by RMS, have begun to provide a robust scientific foundation to understand how models could be used to manage cyber risk.

The fundamental anatomy of a catastrophe model is derived from the earthquake and hurricane engineering risk frameworks of the 1980s. These have been successfully applied to model extreme weather events, such as hurricanes, floods and windstorms, in addition to terrorism risk, infectious disease pandemics, and other tail-risk perils. The framework of the models is made up of a large taxonomy of both historical and simulated scenarios of varying magnitudes and frequencies, a hazard model that provides the footprint of each scenario, and the vulnerability of the assets at risk, which together generates an estimate of the potential financial loss.

However, while a similar framework can be applied to model cyber catastrophe risk, developing an overall risk framework for assessing cyber threats is not easy. Part of the challenge is the limited data on cyber loss experience.

Geography of cyber economy Cyber threats have only existed for a few decades and so data is sparse, particularly for extreme events. Few companies are willing to publicise security breaches to their IT systems unless required to do so by law. In addition, developing a catalogue of past events is made more difficult because a definitive loss figure cannot be applied to a disruptive incident.

What is the true cost of a virus that infects millions of computers, or of having a denial-ofservice attack on popular websites? And to compound the challenge there is a constant stream of new insights into threats, security measures, and vulnerabilities that must be continually incorporated into the framework.

The major challenge however is the complexity of cyber risk – it is highly interconnected. Shocks to one part of a network can quickly cascade throughout the whole system. Further, there is no commonly agreed magnitude scale for a cyber event. The footprint of a cyber scenario is not a geographical region;

it is a set of relationships and commonalities of businesses and government organisations. The chief ‘geography’ of cyber correlation risk comes from the common IT technology platforms that share the potential for exploitation and are used by businesses across many industries.

The technology companies that provide these common IT platforms have become so embedded in global business productivity that they could be termed ‘systemically important technology enterprises’ (SITEs) to the global economy. This is analogous to the term ‘systemically important financial institutions’ (SIFIs) in the world of financial risk, which identifies banks that are so interconnected to others that their failure would cause problems to the whole network.

Any cyber attack that exploits vulnerabilities in the products and applications of these SITEs will permeate the global economy.

To fully understand how a cyber catastrophe could affect the balance sheet of many companies, we need to map the cyber economy to track how the SITEs could affect international corporate productivity.

A network model of the cyber economy which has been developed by the Centre for Risk Studies shows how the big name suppliers like Microsoft, IBM, Oracle and SAP permeate the corporate economy with their IT products and software applications. The way in which these companies connect to other parts of the economy is represented by commerce value connections between them.

The size of the attack The scale of a cyber catastrophe is dependent on how many companies are penetrated by a single attack, such as an ‘exploit’ (as in a vulnerability) in a commonly used technology platform, combined with the severity of damage from the penetration.

Figure 1 summarises these two dimensions.

Some attacks could result in a high degree of penetration across corporations – for example,

CYBER CATASTR 36

THE ACTUARY • December 2014 www.theactuary.com

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A mapping of the cyber economy shows the leading corporations and their value connections, with an example of the footprint of their relationship to Oracle, a systemically important technology enterprise. Other big providers of software systems and business technology can be mapped in a similar way

Severity of loss to an affected company

Figure 1: Attack and severity of penetration Targeted kinetic attacks

Insidious logic bombs

Internal employee attack Corrupted standard database

Power grid disruption

Botnet DOS attacks Manual website hacking

Worms and viruses

Microsoft Windows exploit

Number of companies affected

a vulnerability in the Microsoft Windows operating systems that run on over 90% of corporate computers. Most IT departments are prepared for this scenario, however, and the breach would result in only mild disruption.

Other attacks can be extremely destructive if they are targeted on specific control systems; however, each dedicated system is only used by a handful of specialist companies. The vulnerability of IT systems to specific attacks is reasonably well understood, but not the overall vulnerability of an organisation’s balance sheet to the consequences of cyber security failure.

The exact mechanisms for potential failures are less important than the penetration levels of common IT applications, and there are various types and severity levels that could result from different types of technology failures. While many cyber attacks to date have not been malicious – data compromises, algorithmic errors, process defects and other information technology problems – some of them have still resulted in multi-billion-dollar losses.

In the future, there is a real possibility of a

severe correlated cyber loss across thousands of corporate giants. If we are to truly understand how badly society would be affected by a severe cyber attack then fundamental questions must be answered. For example, how severe could a major event be? What could it do to the global economy? How would it affect a portfolio of cyber insurance policies?

The Cambridge Centre for Risk Studies explores some of these questions in its recent report Sybil Logic Bomb Cyber Catastrophe Stress Test Scenario, and proposes a stress test scenario that can be used for cyber insurance accumulation management.

Cyber catastrophe is a concentration risk.

Companies need to employ a robust diversification strategy to mitigate this risk to their business. By reducing the reliance on ‘industry standard’ software applications with diversity and competition in IT providers, companies can be better fortified against the threat of cyber disruption. Developing risk models that identify how these commonalities can be used to structure accumulation limits will make it possible for insurers to safely increase their capacity for cyber insurance, and provide the risk protection that companies are looking for from the insurance market. a

Left to right: ANDREW COBURN, senior vice-president at RMS, SIMON RUFFLE, director of technology research and innovation, and LOUISE PRYOR, risk researcher, both at the Cambridge University Centre for Risk Studies

OPHE HOW BAD COULD IT GET? December 2014 • THE ACTUARY www.theactuary.com

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BOOK REVIEW

The Improbability Principle by David Hand PUBLISHER: Bantam Press ISBN-10: 0593072812 RRP: £20

“The law of the probability lever deals with how slight changes to circumstances can have disproportionately large consequences” Bookshop browsers will have noticed the emergence of a completely new section over the past few years – ‘smarter thinking’. The shelves are the habitat of books such as those by Kahneman – Thinking Fast and Slow, Taleb – The Black Swan, and Malcolm Gladwell – Outliers, The Tipping Point. These books generally take an unusual and interesting subject, and shed new insights on its underlying dynamics.

The choice of subject is clearly key to the success of the bestsellers mentioned above, but a major contribution is made by the atmosphere generated by the authors: the reader feels brought into a small group of ‘illuminati’, where only a few well-informed initiates know the secrets unveiled on those gilded pages. There is a subtle and constant flattering of the reader’s intelligence.

The Improbability Principle by David Hand, emeritus professor of mathematics at Imperial College, is a recent addition to this range of books.

Its primary objective is to demonstrate that

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incredibly improbable events happen much more often than would intuitively seem likely.

Hand explains this by setting out five laws related to probability. He starts with the “law of inevitability, or “something must happen”. For instance, somebody – not previously specified – will win a particular lottery. Next is the “law of truly large numbers”. Given enough opportunities, something apparently extraordinary is likely to happen, such as somebody winning a lottery twice.

Then we have the “law of selection”, whereby retro-fitting your analysis completely distorts the apparent likelihood of the event – for instance, the selection bias involved in publishing the results of pharmaceutical trials.

The “law of the probability lever” deals with how slight changes to circumstances can have disproportionately large consequences, especially where the assumed independence of events is violated – as in, for instance, the heart-rending case

of Sally Clarke’s imprisonment for her sons’ cot-deaths. Finally, the “law of near enough” considers the assumed equality of very slightly different events.

Hand generally writes clearly, but his explanations are, understandably, aimed at those with little mathematical knowledge. Most readers of The Actuary will find this assumed starting point irritatingly low. Much of the material in the book consists of examples of Hand’s various ‘laws’, for example, cases involving the same set of winning lottery numbers reappearing, or individuals hit by lightning more than once.

Of all the incidents described, the most astonishing is that recounted in the first page of the book. In the summer of 1972, the actor Anthony Hopkins (left) was signed to play a leading role in a film based on George Feifer’s novel The Girl from Petrovka, so he travelled to London to buy a copy of the book. Unfortunately, none of the main London bookshops had a copy.

Then, on his way home, waiting for an underground train at Leicester Square tube station, he saw a discarded book lying on the seat next to him. It was a copy of The Girl from Petrovka.

As if that was not coincidence enough, more was to follow. Later, when he had a chance to meet the author, Hopkins told him about this strange occurrence. Feifer was interested. He said that in November 1971 he had lent a friend a copy of the book, but his friend had lost the copy in Bayswater, London. A quick check of the annotations in the copy Hopkins had found showed that it was the very same copy that Feifer’s friend had mislaid.

After this incredible story, all the subsequent coincidences related feel rather humdrum. For instance, the book’s epilogue – which is not really an epilogue, but simply a three-page summary of the whole work – provides as a supposedly extraordinary coincidence, somebody drawing the letters of their surname in a game of scrabble (what is the opposite of OMG?). The Improbability Principle unfortunately shares one other characteristic of many ‘smarter thinking’ books – by the end, it leaves the reader, at least this one, thinking little more than ‘so what?’. ● Matthew Edwards is a senior consultant at Towers Watson

MORE ONLINE Latest reviews at www.theactuary.com/opinion

PHOTOSHOT

25/11/2014 15:52

At the back Student student@theactuary.com

Student Santa’s little Elkin on past exam results, present swapping and future prospects of facing up to embarrassing party evidence

’TIS THE SEASON Christmas time, mistletoe and wine. It’s a time for ice skating, cracker hats and ‘quality family time’. Curling up with a hot cocoa as the windows steam up and all our favourite TV ads on tap. The time for Pete from the office to receive yet another ‘I heart spreadsheets’ mug to add to his collection.

Not to mention the traditional gifts of ‘unmentionables’, of course.

As a special Christmas present this year, some exam results are out earlier than usual.

They haven’t arrived in November since I joined the profession, and the later results day is usually only a week before Christmas, but the nice people at the IFoA have seen fit to gift us with their availability early.

The release of exam results has been a contentious issue. Many have wondered why it takes so long – although a look at the IFoA’s website will explain just how much is involved in the post-exam process.

The actual time of day when they are released has changed over time.

Recently, it switched from 8pm to 5pm, ostensibly for the reason that no one wanted to wait around to press the button. But the idea that results would come out while many of us were sitting at our desks was a little unappealing, so following feedback it has now been moved back to 6pm.

The surprisingly early release date this session may well be the result of online marking, which was introduced to expedite the movement of papers between markers

PHIL WRIGGLESWORTH

p39_dec_student_FINAL•CT.indd 39

by removing the need to physically courier them around. It has the added bonus of improved security, although this will probably not be at the forefront of most students’ minds.

If you’re unlucky, the results will land smack bang in the middle of festive events, especially the office Christmas shindig. This season it will happen to me twice. Still, at least you have a chance to forget about any unfortunate news and celebrate the good with your colleagues, whom you hopefully like. Probably while doing some embarrassing dancing.

Getting merry Festive office events are fascinating things, ones that break etiquette boundaries in a way that might get you a disciplinary on any ordinary day. They are attended by a rare

breed of people who can simultaneously resemble professionals with sophisticated palates and teenagers drinking alcohol for the first time.

Secret Santa is a strange one as well. There is a voracious collective thirst for presents that are offensive or just embarrassing, particularly if the gift can be worn – think mankini, or ‘Santakini’ – as I witnessed a while back. If you have to buy for someone you don’t know, there is the risk of pushing things too far. I once had to buy a gift for a pregnant colleague. Others recommended I buy her some condoms, but I wimped out and gave her chocolates and a face mask. Now, that’s not going to lead to any hilarious escapades or memorable photos, is it?

Collateral damage There is a tradition at my firm for the new graduates to organise the departmental Christmas party. It’s a nice way of team building that introduces them to the company and puts them on the social map.

In my year, we did a deal with the party venue that meant we had a bottle of wine per person, spread out amongst heavy drinkers and responsible one-glass types alike. We did not realise how ridiculous this was until the very end of the evening, and we were left trying to consume the remaining volumes of plonk. This, unsurprisingly, did not end well.

The day after the party you have to ignore that sinking feeling and return to face your colleagues, either having seen photographic evidence of your own humiliating antics – if the owner was cruel enough to share it – or just being aware that it exists.

Some people will probably try not to look each other in the eye. There may even be apologies.

The best description of office Christmas parties appeared in The Guardian, which called them “the annual officially sanctioned opportunity for shame and ignominy”.

These occasions can be cheering, hilarious, fun, wild, embarrassing, or dangerous. Or all of the above. The biggest upside to all of this mayhem?

At least no one’s thinking about exam results any more. a

December 2014 • THE ACTUARY 39 www.theactuary.com

25/11/2014 15:52

At the back Appointments

SPONSORED BY

peoplemoves@theactuary.com

Moves of its pensions team.

He will be advising multinational clients on issues including global governance, benefit

David Kirk (above) has been appointed as managing director, Africa, for Milliman.

Kirk will be running Milliman’s first actuarial consulting practice on the continent, based in South Africa. He was previously head of actuarial at KPMG South Africa.

Hymans Robertson has appointed Matthew Fletcher (above right) as senior longevity technical

consultant. Fletcher will be responsible for the delivery and development of longevity risk solutions.

He joins from Towers Watson, where he was a senior consultant.

He is a Fellow of the IFoA and sits on both the self-administered pension schemes and mortality projections committees.

strategy, plan design, financing, valuation and monitoring. He joins from Aon Hewitt and is also the treasurer and a

former chairman of the International Employee Benefits Association.

MetLife has appointed Sue Elliott (right) as head of product for UK employee benefits.

Elliot joins from Just Retirement, where she was head of care solutions. She also worked at Towers Watson for eight years and then with M&G Re and Swiss Re in the UK and Canada.

Steve Sarjant is to join the board of Pension Insurance

Corporation as a non-executive director.

Sarjant spent 20 years as a senior actuarial consultant at Towers Watson. Latterly, he was an independent member of the withprofits committee of Prudential Assurance Company.

www.hfg.co.uk

PwC has appointed Tim Reay (above right) as a director

RICHARDT HECHTER

ACTUARY OF THE FUTURE

Employer and area of work: Discovery, technical

What’s your most ‘actuarial’ habit?

marketing – South Africa.

Underwriting.

relocating or changing jobs – all equal risks, and ones worth taking.

How would your best friend describe you?

If you could learn one random skill, what would you learn?

If you could go back in history, who would you like to meet? Tie – Leonardo Da Vinci and

An idealist, with just the right touch of pragmatism.

What motivates you?

The hunger to never stop learning, growing, exploring and ultimately succeeding.

To understand and speak any language.

Favourite Excel function? hlookup – the hipster vlookup.

whiskey, mates and a great book.

If the wind will not serve, take the oars.

Fighter pilot.

Jimi Hendrix – with his guitar slung from his shoulder, Christine Lagarde, Leonardo Da Vinci – armed with paper and pencil, Natalie Portman and, of course, William Golding.

Nikola Tesla.

What’s your most treasured possession?

The A5 Moleskine I carry with me.

How do you relax away from the office? Waterpolo,

What would be your personal motto?

Name five dream companions to be stuck on a desert island with?

40

Chris O’Brien (above) has retired from Nottingham University Business School, but he continues to research as senior associate, Centre for Risk, Banking and Financial Services.

He is also staying on three IFoA committees.

Alternative career choice?

Tell us something unusual about yourself My penchant for a good suit is limited by my size-14 shoe requirement.

Greatest risk you have ever taken? Dabbling in life’s great pleasures, be it love, the pursuit of triumph,

What are the top three things you would like to achieve in your lifetime? One, to find balance between being content and experiencing what life has to offer. Two, inspire others to be the best that they can be. Three, to look back on a life well lived.

If you ruled the world, what would you change first? I would pursue the ideal that people can be more accepting and tolerant.

Do you know an actuary destined for greatness?

You can nominate an Actuary of the Future by emailing

aotf@theactuary.com

THE ACTUARY • December www.theactuary.com

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£70 – £110k Basic, London

Competitive Package, London

After an internal restructure this Lloyd’s syndicate is seeking a qualified pricing Actuary to work within their Reinsurance team. The role will work closely with the capital and reserving Actuaries but the focus will be on Reinsurance pricing. The role will include some travel and daily interaction with the Underwriters. Contact: william@hfg.co.uk REF: WG1103

A leading consultancy within the General Insurance Actuarial market is looking for a Partner to join their practise. This person should have a proven background and the gravitas within General Insurance to lead and develop the Actuarial practise. To find out more about the team and opportunity please contact: william@hfg.co.uk REF: WG1202

Actuarial Analyst – Mixed role

Capital Modelling – Nearly Qualified

£45k – £65k Basic, London

£55k – £65k Basic, London

A London Market insurer are hiring into their team. This multipurpose role covers the reserving and pricing actuaries with the opportunity for the capital to come in house in the near future. The relevant candidates will be part qualified having successful passed exams up to CA1, and will have a strong numerical related degree from a top tier university. For more information contact: ben@hfg.co.uk REF: BH1201

This global Insurer based in the heart of London is looking for a strong capital actuary near qualification to join them. Reporting directly into the Head of Capital with a dotted line to the CRO, this individual is likely to come from a strong Igloo or ReMetrica background with a few exams to go. The successful candidates will have 2-3 years experience in capital modelling. For more information contact: ben@hfg.co.uk REF: BH1202

Calling all Non-Life Students

Graduate Actuary

£30k – £60k Basic, London I’m working on a range of different actuarial analyst roles within the London market (Re)Insurers. With a particular focus to students who come from a strong pricing or reserving background looking to move into capital modelling. A number of the London market Syndicates and Managing agents are building their capital teams in the lead up to the Solvency 2 deadline. For more information please contact: ben@hfg.co.uk REF: BH1203

£25k – £30k Basic, London A leading Lloyds Syndicate are hiring from the bottom level and looking to secure a graduate. This role will give the successful candidate exposure to pricing, reserving and capital.

Eager to speak with recent graduates from a top tier university who have achieved a high degree from a numerical subject. For more information please contact: ben@hfg.co.uk REF: BH1204

WILLIAM GALLIMORE

RUPA PITHIYA

BEN HICKEY

Director

Contract

General Insurance

+44 (0) 207 337 8826 william@hfg.co.uk

+44 (0) 207 337 1200

+44 (0) 207 220 1106

rupa@hfg.co.uk

ben@hfg.co.uk

+44 (0) 207 337 8800

www.hfg.co.uk December 2014 • THE ACTUARY 41 www.theactuary.com

p41_ACT.12.14.indd 41

25/11/2014 16:03

Appointments

Capital Analyst London Up to £65k + bonus + beneĮts We are currently recruiƟng for a globally renowned insurer who are looking for a capable Actuary to sit within Insurance Market and Credit Risk. The role will involve supporƟng the building of the capital model with regards to SII requirements as well as supporƟng the risk framework for the Group worldwide. Experience using Igloo would be beneĮcial as well as experience with any credit risk porƞolio models.

For a conĮdenƟal discussion please contact Victoria Cruickshank on 02079297667 / V.Cruickshank@darwinrhodes.com

QualiĮed Actuary either Life / Risk Background Experience London Up to £60,000 base FantasƟc opportunity for a QualiĮed Actuary to join the Risk, Modelling and ConsulƟng PracƟce within one of the UK’s leading pensions, investment and beneĮt consultancies. My client requires a high calibre, ambiƟous individual to take on a diverse role within the life insurance team supporƟng Senior Consultants across - Risk Management, Solvency II, Capital Management, Investment ALM, Internal Model Development, Reinsurance and Pricing/Product Development.

For a conĮdenƟal discussion please contact Clinton Poore on 02079297667 / C.Poore@darwinrhodes.com

With ProĮts ReporƟng Actuary Up to £80,000 This is a fantasƟc opportunity to work in a well established actuarial department that oīers the chance to develop your actuarial, professional and personal skills in a challenging, exciƟng and rewarding environment. We are looking for a QualiĮed Actuary to oversee the management of the With ProĮts business for a rapidly expanding client with oĸces in London and the North of England.

For a conĮdenƟal discussion please contact Adam Goodwin on 02079297667 / A.Goodwin@darwinrhodes.com

Quiz Time…

A Carpenter has a solid cube of wood, each edge of which is 12cm long. He wishes to cut th the block in two, in such h a way way that the h new face on each of the two pieces can then be trimmed to a square of maximum posssible size. Whe ere sho sh uld he e ma make ke the cu cut? t?

For your chance to win, please submit your answers to London@darwi rw nrhodes.com

Assistant Manager - Consulting Hong Kong, Salary dependent on experience

Assistant Manager - EV Reporting

A global consulting firm is looking for a nearly qualified non life actuary to join their team as an Assistant Manager. The candidate must have solid reserving or pricing experience with a good track record to actuarial qualification. You will be working on regional projects across Asia and developing a well-rounded skill sets. Asian language skills are highly desirable. Contact tong@hfg.co.uk REF: TY1201

Hong Kong, Up to HKD 700K package Join the EV regional reporting team of this market leading life insurer in Asia at the Assistant Manager level. You will be actively involved in all aspects of Embedded Value reporting for the region and undertake ad hoc projects. The candidate will already have gained EV reporting skills and preferably Prophet experience. Local market knowledge is desirable Contact tong@hfg.co.uk REF: TY1202

Modelling Architect- Asia

Regional ERM Specialist Singapore, SGD 140,000 – 180,000 base + bonus

Hong Kong, Up to HKD $1.5m package Opportunity to lead a global Prophet modelling project. Liaising with senior internal and external stakeholders worldwide, this role requires a technically astute, commercially aware actuary who has deepened expertise in Prophet. You will be instrumental in the architecture, development and delivery of each phase as it rolls out to each market they operate in. Contact clare@hfg.com.sg REF: CB1201

The Regional ERM Specialist is integral to the senior risk management team of this international Life insurer. Reporting to the Regional Chief Actuary you will be responsible for the development & implementation of the region wide ERM framework and best practices process.

Responsibilities include reporting to the Risk committee and liaising with the CROs in Asia. Contact graeme@hfg.com.sg REF:GB1201

Strategy and BD Actuary

Regional Actuary (GI)

Singapore, SGD 170,000 - 230,000

Hong Kong HKD $1m - $1.3m+ bonus

As the key regional strategy and business development Actuary this global reinsurer offers a genuinely rare opportunity. Working closely with the top tiers of senior management you will take the lead on key client engagement, regional strategic development and driving the diversification as well as growth of market share across the South East Asia region. Contact graeme@hfg.com.sg REF: GB1202

This exciting and varied role has a regional focus and will utilise a broad actuarial skill-set of pricing (personal lines), capital modelling and reserving. Representing one of the leading European insurers this opportunity will require the candidate to travel around the APAC region and act as an internal consultant for the business, therefore requiring superb stakeholder management and communication skills.

Contact jason@hfg.com.sg REF: GB1201

Jason Sykes Clare Bethell Graeme Braidwood Tong Yu

42

Managing Director Director Senior Consultant Consultant

EA Reg: R1333193 EA Reg: R1434590 EA Reg: R1434568

www.hfg.com.sg +65 6829 7153 EA Licence Number: 14C7034

THE ACTUARY • December 2014 www.theactuary.com

p42_ACT.12.14.indd 42

25/11/2014 16:04

London : Chicago : Hong Kong : Singapore : Shanghai

www.theactuaryjobs.com

Senior Pricing Analyst - London Senior Life Actuary - London Â… Â… %HQHÂżWV Top quartile salary package My client, one of the leading global insurers, is looking to recruit a talented and ambitious Senior Actuarial Analyst to join their team. You will provide case pricing for large risks within International Liability, together with the development and support of pricing models, portfolio analysis/ segmentation and interaction with the business planning process. Reporting directly to a senior manager, this is a great opportunity, which will give exciting development opportunities as well as exposure to a wide variety of work.

Previous pricing experience – ideally London Market - is required. You will have made good progress through the actuarial exams and great communication skills in addition to actuarial and statistical pricing skills.

Contact phu.ngoc@ipsgroup.co.uk +44 207 481 8686

Our client, an established and successful international insurance company, is looking to develop its life/ KHDOWK EXVLQHVV VLJQLÂżFDQWO\ +HQFH LW LV ORRNLQJ WR grow actuarial expertise at senior management level.

Based in London, key responsibilities are to lead and manage the reserving process in line with Solvency II governance; price new products; support statutory reporting; contribute to the management and leadership RI WKH WHDP 7KH LGHDO FDQGLGDWH LV D TXDOLÂżHG DFWXDU\ with at least 5 years experience of managing a broad range of responsibilities within a growing life actuarial team. Familiarity with UK Gaap, US Gaap, Solvency II and good communication/commercial skills are essential.

Contact anthony.chitnis@ipsgroup.co.uk +44 207 481 8686

Senior Actuary / Structurer - Switzerland Institutional CRM - London &+) &+) %RQXV %HQHÂżWV ÂŁ80,000-130,000 + 100% target Bonus Our client, a multinational property and casualty reinsurer, is looking to enhance their team with a Senior Actuary to develop new business and solutions. As the senior team member you will have a responsible role in deal teams and a focal point for internal and external stakeholders. Pricing and non-life reinsurance experience DUH H[SHFWHG 7KH LGHDO FDQGLGDWH LV D TXDOLÂżHG DFWXDU\ Knowledge of either risk management or reserving would be a plus. Programming skills and experience with software such as Remetrica or IGLOO would be EHQHÂżFLDO 3OHDVH FRQWDFW XV IRU D FRQÂżGHQWLDO GLVFXVVLRQ

Contact phu.ngoc@ipsgroup.co.uk +44 207 481 8686

Leading asset manager, looking to further enhance service to its largest clients, is seeking an experienced investment professional to manage all aspects of these complex relationships. Must be technically strong with a deep understanding of the needs of large funds and IDPLOLDU ZLWK FRPSOH[ SURGXFWV SDUWLFXODUO\ Âż[HG LQFRPH and LDI. Exceptional client skills and a real commitment ensuring the highest levels of service are essential. This is a hugely varied role, where you are empowered to do everything possible to give the clients the outcomes they want in a fast growing business with huge potential for DGYDQFHPHQW :RXOG EH DQ LGHDO ÂżUVW VWHS LQWR DVVHW management for an investment consultant.

Contact david.higgo@ipsgroup.co.uk +44 207 481 8686

/RQGRQ 2I¿FH IPS Group, Bevis Marks House, 24 Bevis Marks, London EC3A 7JB 7HOHSKRQH 020 7481 8686 Email: actuarial@ipsgroup.co.uk November 2014 • THE ACTUARY 39 www.theactuary.com

p43_ACT.12.14.indd 39

25/11/2014 10:14

Appointments We are a recruitment consultancy with a difference Bringing Talent Together

Head of Corporate Actuarial (Life) Location: London

Salary: £110,000 - £125,000 base

This is a senior position within the UK senior management structure of a global reinsurance group co-ordinating key actuarial activities across the group and will therefore need to build relationships with stakeholders around the world. The role will involve the management of a team of quali¿ed and student actuaries as well as carrying out regular analyses of the performance of the business and communicating that to the group head of¿ce.

Contact Rob Bulpitt

Ian Povey

rob.bulpitt@eamesconsulting.com

Ian.povey@eamesconsulting.com

Head of Actuarial, Insurance Pensions Risk Management 020 7092 3237 Of¿ce Number +44 (0)20 7092 3200

Pensions & Investments | Non-Life | Life & Health

theactuaryjobs.com is the official job board for SIAS and The Actuarial Profession.

To register for our Jobs by email service simply go to theactuaryjobs.com

theactuaryjobs.com 44

UK | Europe | Asia Paci¿c

Actuarial, Pensions & Insurance Risk Management 020 7092 3265

For current opportunities please visit www.eamesconsulting.com

www.eamesconsulting.com

Your specialist actuarial recruiter in the UK, Mainland Europe, and Asia-Pacific, with dedicated sector specific consultants covering; Non-Life Life Pensions and Investments For a confidential career discussion please contact us on +44 (0)207 332 5870 or actuarial@mansionhouse.co.uk

THE ACTUARY • December 2014 www.theactuary.com

p44_ACT.12.14.indd 44

25/11/2014 16:05

www.theactuaryjobs.com

Life Insurance Roles Capital Management Salary dependent on experience with excelllent bonus potential, London The focus on Capital is evolving in the industry and developing very quickly. The role of the Capital Actuary plays a key role in the management of the balance sheet of the firm. Understanding the capital framework, capital strategy and subsequent delivery against objectives provides superb exposure for any ambitious individual.

Working closely with the executive team, finance, risk and actuarial functions the Capital team are looking at possible transactions, strategies and regulatory developments in order to pursue appropriate opportunities when they arise. Under the new Solvency II regime this team will need to be close to the developing regulatory regime and undertake a capital optimisation plan that fits into the new requirements of the regulator along with the strategic ambition and direction of the organisation. To move into a capital focused role you will need to be technically strong and a good communicator who is comfortable assessing and managing the requirements of multiple stakeholders. Insurance, Credit and Market risk considerations will all need to be monitored and considered while looking to secure transactions that will move the balance sheet to a better and optimal position. A focus on Capital is a perfect opportunity for future CFO’s and the ideal background is a blend of actuarial, insurance and banking expertise with a commercial mindset. For more information please contact: mark@hfg.co.uk REF: MD1201

Calling all Life Actuarial Students!

Capital Actuary £55k - £70k per annum basic, London This niche life insurer is looking for a qualified life actuary to help support the Capital Management team. You will be working closely with the manager looking at the wider Capital implications in the business as well as Solvency II, Investment Risk and Regulatory Capital. The ideal candidate will have previous capital and risk exposure, although this isn’t essential. Contact: sophia@hfg.co.uk REF: SC1201

As you all know, the market is thriving across the Life insurers and consultancies and now could be your chance to move into a new team where you can try something new. Our clients across the market are looking for ambitious students who want to get exposure in a different area. If you are looking for a change and want to find out more about the opportunities, please let me know. sophia@hfg.co.uk REF: SC1202

Senior Actuarial Analyst

Prophet Developer £700 - £900/day, 6 months, Bristol

£800 - £1000/day, 6 months, Reigate A life insurance company based in Reigate are looking for two senior actuarial contractors to join their team.

The ideal candidate will have excellent reporting skills and a good working knowledge of the reporting process and associated metrics.

Contact: george@hfg.co.uk REF: GB1201

A market-leading life insurer is looking for a hands-on Prophet developer to code their internal model. This is a great opportunity for an experienced Prophet Developer to gain exposure across the entirety of the model. The ideal candidate will have in excess of 3 years coding experience in Prophet, working on models as well as some valuations work. Contact: george@hfg.co.uk REF: GB1202

Contract Roles Pricing Contractors

Solvency II Contractor £1000 - 1500 per day up to 12 months, West of England

£800-1000 per day, 9 - 12 months, London

This leading non-life insurer is looking to recruit various contractors, more specifically a Solvency II actuary with internal model and regulatory interpretation experience. This is a role in which you will be expected to advise, develop and implement S2, across the whole business. To be successful you must have recent S2 regulatory experience, have experience in practical application, as well as being able to review challenging the model. rupa@hfg.co.uk REF: RP1201

This leading insurer is looking for a pricing contractor for maternity cover. Working closely with the underwriters you will be involved with working across all classes, offering underwriting support, as well as developing and enhancing existing rating models.

Capital Contractors

Reserving Contractor

To be considered you must have a commercial lines pricing experience.

Contact: rupa@hfg.co.uk REF: RP1202

£700 - £900 per day, 6 months, London

£700 - £900 per day, 6 months, London This leading insurer is looking for a contractor, for an initial 6month period subject to extension to work within their actuarial team. You will be involved across the business pre-dominantly within capital modelling and be exposed to validation, parameterisation work. You will also be exposed to other teams and be expected to assist in ad-hoc risk, reserving and pricing work. Contact: rupa@hfg.co.uk REF: RP1203

This leading Lloyd’s syndicate is looking for a qualified reserving contractor for an initial 6 months.

You will be involved with quarterly reserving as well as GAAP reporting and technical provisions work. Contact: rupa@hfg.co.uk REF: RP1204

Risk Roles Risk & Capital Actuary

Head of Financial Risk

£45k - £55k per annum basic, London

Up to £100,000 per annum, London A global P&C insurer is looking to appoint a strong risk professional to lead their Financial Risk team. The successful candidate will report to the CRO and be responsible for the design and implementation of the Financial/Investment Risk framework, and work closely with the CIO to ensure the Investment Committee is run in an effective way. You will be an aspiring individual who should be comfortable managing a team and liaising with senior stakeholders. james@hfg.co.uk REF: JK1201

SOPHIA CROSSMAN

erin@hfg.co.uk JAMES KITT

ERIN O’DONNELL

Life Insurance

Risk Management

Risk Management

+44 (0) 207 337 1207

+44 (0) 207 337 1202

+44 (0) 207 337 1202

sophia@hfg.co.uk

james@hfg.co.uk

erin@hfg.co.uk

0207 337 8800

p45_ACT.12.14.indd 41

An opportunity for an actuarial student who is making good progress through the actuarial exams to join a top five Lloyd’s insurer in their risk and capital team. The ideal candidate will come from a capital modelling or validation background and be looking to diversify their experience by working within the second line of defence. The successful candidate will have a consultative personality and possess strong technical skills. erin@hfg.co.uk REF: EO1201

www.hfg.co.uk

actuarialteam@hfg.co.uk

November 2014 • THE ACTUARY 41 www.theactuary.com

25/11/2014 10:15

Appointments

4&-&$5&% 1-"$&.&/54 L IF EHEALT H N O N- L I F E P E NSI ON SI N VESTMEN T

)&"% 0' "$56"3*"- .0%&--*/( CONSULTING ACTUARY

HEAD OF PRICING 3&4&37*/( "$56"3:

RISK ACTUARIAL LEAD BULK ANNUITIES ACTUARY

13*$*/( "$56"3:ACTUARIAL PRICING CONSULTANT

HEAD OF RISK HEAD OF LONGEVITY 4&/*03 ."/"(&3 1&/4*0/4 LEAD CONSULTANT

RISK PRICING MANAGER

%*3&$503 */7&45.&/5 #"/, ."/"(&.&/5

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DIRECTOR OF GI

SYSTEMS ANALYST 13*$*/( "$56"3:

ACTUARIAL PRACTICE LEADER

CATASTROPHE ANALYST '*/"/$*"- ."3,&54 3*4, ."/"(&3 PENSIONS & INSURANCE MANAGER RISK PRICING ANALYST

%*3&$5 &/53: 1"35/&3 MANAGER - INVESTMENT

SOLVENCY II ACTUARY

*/7&45.&/5 "$56"3: '*%6$*"3: ."/"(&.&/5

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46

Antony Buxton FIA Anton

Lance Randles MBA La

Paul C Cook

Joanne Young Joa

MANAGING DIRECTOR MANAG

ASSOCIATE DIRECTOR AS

SENIOR CONSULTANT

OPERATIONS DIRECTOR OPER

THE ACTUARY • October 2014 www.theactuary.com M +44 7766 414 560 E antony.buxton@staractuarial.com

p46-47_ACT.12.14.indd 46

M +44 7889 007 861 E lance.randles@staractuarial.com

M +44 7740 285 139 E paul.cook@staractuarial.com

M +44 7739 345 946 E joanne.young@staractuarial.com

25/11/2014 10:16

www.theactuaryjobs.com "$56"3*"- 1045 3&$36*5&3 0' 5)& :&"3 t t

"$56"3*"- 3&$36*5.&/5 $0/46-5"/54 ÂŁ market-leading commission structure

-0$"5*0/ "/:8)&3&

Star Actuarial Futures is seeking exceptional new consultants to expand its award-winning team.

You will currently be working as an actuary or actuarial student in industry, with an actuarial recruitment consultancy, or in-house with exposure to actuarial recruitment.

Candidates must possess a strong work ethic, the highest levels of integrity and a passion to deliver to a wide range of clients.

You will become part of an honest, professional and successful team with a wealth of knowledge to share.

You will be rewarded with a market-leading commission structure.

This is an exciting time to join the business in a period of growth.

Please contact Louis or Antony for a confidential discussion.

We provide our employees with a market-leading commission structure, a supportive and exible working environment, access to our technical expertise and a strong, well-respected brand on which to build their relationships.

Louis Manson Lou

Irene Paterson FFA Ire

Peter Baker

Clare Roberts

MANAGING DIRECTOR MAN

PARTNER PAR

SENIOR CONSULTANT

SENIOR CONSULTANT

M +44 7595 023 983 E louis.manson@staractuarial.com

p46-47_ACT.12.14.indd 47

M +44 7545 424 206 E irene.paterson@staractuarial.com

M +44 7860 602 586 E peter.baker@staractuarial.com

October 2014 • THE ACTUARY 47 www.theactuary.com M +44 7714 490 922 E clare.roberts@staractuarial.com

25/11/2014 10:16

Appointments N ON - LI FE RI S K

N O N - L I F E L IFE R IS K P E N S IO NS I NVESTM ENT REINSURANCE PRICING - SPECIALTY LINES

SYNDICATE CAPITAL MODELLER

£ excellent package

up to £100k + bonus + benefits

NON-LIFE LONDON

NON-LIFE LONDON

STAR2140

HEAD OF PRICING £ excellent package STAR2173

NON-LIFE SOUTH EAST

STAR2227

World-leading reinsurance firm has a fantastic opportunity for a qualified non-life actuary with specialty lines reinsurance pricing experience to make an impact within a dynamic and cutting-edge team.

Lloyd’s Syndicate has a unique opportunity for a talented capital modeller to provide cutting-edge support for the ongoing development of the Group’s ReMetrica-based calculation kernel.

We have an excellent opportunity for a qualified non-life actuary to take a major role within the innovative pricing department of a leading insurance group. Contact us now for more information.

NON-LIFE CONSULTANCY

NON-LIFE ANALYTICS

EXCLUSIVE: ACTUARIAL ANALYST - PRICING

£ excellent + bonus + benefits

£ dependent on experience

up to £45k + bonus + benefits

NON-LIFE LONDON

STAR2063

NON-LIFE RISK LONDON

STAR2204

NON-LIFE SOUTH EAST

STAR2209

Leading global consultancy is seeking partqualified or qualified non-life actuaries to join its team. You will have reserving, risk or capital experience, along with strong leadership skills.

With excellent technical abilities and in-depth experience gained in non-life insurance, you will assist with the development and shaping of tools and analytical capabilities in this broad role, offering superb career progression prospects.

Exclusive to Star Actuarial! Our client is looking to recruit a part-qualified GI actuary to their pricing team. You will ideally have previous pricing experience, and will be making good progress through the actuarial exams.

NON-LIFE LEADER

RESERVING - PROPERTY AND CASUALTY

PRICING ANALYST

£ attractive package

up to £80k + bonus + benefits

NON-LIFE LONDON

STAR2205

NON-LIFE SOUTH WEST

up to £60k, depending on experience STAR2073

NON-LIFE SOUTH WEST

STAR2074

A leadership role calling for strong influencing skills, sophisticated technical knowledge and deep understanding of the non-life industry.

Please contact us for more details of this exciting opportunity.

Our client has an exciting opportunity for a partqualified or qualified actuary with GI Solvency II reserving experience to develop market-leading technical provisions methodologies and provide key actuarial business planning insights.

Our client is looking for a part-qualified actuary with commercial pricing experience to strengthen its actuarial pricing team, deriving appropriate technical premiums and underwriting analytics to support the UK business.

PRICING & RESERVING ACTUARY

LONDON MARKET CAPITAL

LONDON MARKET PRICING

up to £80k + bonus + benefits

up to £60k + bonus + benefits

up to £40k + bonus + benefits

NON-LIFE SOUTH EAST

STAR2187

NON-LIFE LONDON

STAR2211

NON-LIFE LONDON

STAR2194

High-calibre actuary sought to join a global leader in the non-life market. You will lead a team in the provision of technical pricing and reserving advice across the home and motor portfolio.

Seeking a part-qualified or qualified actuary to join the capital modelling team of a London Market insurer. Capital modelling experience preferred, but not essential. Contact us now for more information.

GI RESERVING

ACTUARIAL PRICING - NON-LIFE

LONDON MARKET RESERVING

£ excellent + bonus + benefits

up to £50k + bonus + benefits

£ excellent + bonus + benefits

NON-LIFE MIDLANDS

NON-LIFE MIDLANDS

STAR2188 & STAR2028

Our client has an exciting opportunity for a partqualified or qualified non-life actuary to provide support, solutions, recommendations and advice to the GI business on a range of reserving and other financial projects.

STAR1946

Leading insurer seeks a high-calibre, part-qualified non-life actuary to join its pricing team. A first-rate academic background is required, although previous pricing experience is not.

NON-LIFE LONDON

STAR2212

Leading financial services firm has a unique opportunity for a part-qualified or qualified actuary to provide support and solutions to the GI business on a range of pricing projects.

We have a fantastic opportunity for a part-qualified non-life actuary with strong interpersonal skills to join the reserving team of a leading London Market insurer. Please contact us for more information on this exciting role.

SENIOR MANAGER - RESERVING

MANAGER - TECHNICAL PROVISIONS

SENIOR PRICING ANALYST

£ excellent + bonus + benefits

£ excellent + bonus + benefits

£ excellent + bonus + benefits

STARVACANCIES NON-LIFE LEEDS

STAR2143

Seeking a non-life expert to ensure the GI businesses are adequately reserved by developing and implementing appropriate processes and methodologies for the Claims Control Cycle.

48

STAR2141

Our client is seeking a talented individual to be responsible for fulfilling statutory and regulatory responsibilities in respect of GI Technical Provisions, including developing and implementing best practice.

NON-LIFE LEEDS

STAR2186

Our client seeks candidates with GI pricing experience to join its customer pricing team.

You will lead pricing projects based on knowledge of demand modelling and optimisation gained within a personal lines setting.

Antony Buxton FIA Anton

Lance Randles MBA La

Paul C Cook

Joanne Young Joa

MANAGING DIRECTOR MANAG

ASSOCIATE DIRECTOR AS

SENIOR CONSULTANT

OPERATIONS DIRECTOR OPER

THE ACTUARY • October 2014 www.theactuary.com M +44 7766 414 560 E antony.buxton@staractuarial.com

p48-49_ACT.11.14.indd 48

NON-LIFE LEEDS

M +44 7889 007 861 E lance.randles@staractuarial.com

M +44 7740 285 139 E paul.cook@staractuarial.com

M +44 7739 345 946 E joanne.young@staractuarial.com

25/11/2014 17:47

LI FE www.theactuaryjobs.com

RI SK PENSI ONS I NVESTM ENT "$56"3*"- 1045 3&$36*5&3 0' 5)& :&"3 t t £ excellent + bonus + benefits LIFE INVESTMENT LONDON

MULTI-ASSET ALM LDI MODELLER

SUPERSTAR QUANTS

£ depends on experience

£ excellent + bonus + benefits STAR2120

LIFE PENSIONS INVESTMENT LONDON

STAR2201

LIFE INVESTMENT EDINBURGH

STAR2151

Leading firm seeks exceptional life actuary, ideally with reinsurance and investment experience. Please contact us for more information on this unique role.

Are you a part-qualified or qualified actuary with exceptional quantitative skills ready to commence a new phase of learning? Do you have outstanding coding and model-building skills? If so, please contact us.

Our client is seeking a talented individual with experience in asset-liability modelling to provide mathematical and modelling expertise to support risk management and optimisation of portfolios.

ALM ACTUARY

INVESTMENT SOLUTIONS

ACTUARIAL ANALYSIS MANAGER

£ excellent + bonus + benefits

£ depends on experience

LIFE INVESTMENT LONDON & SOUTH COAST STAR2156

INVESTMENT EDINBURGH

Leading insurer seeks an ALM actuary for a wide-ranging role within its investment team.

This is an excellent opportunity to become involved in, or widen your experience within, the life insurance investment space.

Large financial services group seeks a qualified actuary to join its investment solutions consulting team and develop insightful, thought-leading and influential marketing material for target insurance clients and markets.

Fantastic opportunity for an actuarial leader with strong technical and management skills to take up a key role in a growing and successful insurance business.

CONSOLIDATION TEAM ACTUARY

RISK ACTUARY

MULTI-ASSET RISK MANAGER

£ excellent + bonus + benefits

£ excellent + bonus + benefits

£ depends on experience

LIFE SOUTH COAST

STAR2157

£ excellent + bonus + benefits STAR2220

LIFE RISK SOUTH COAST

STAR2079

LIFE SOUTH COAST

STAR1756

LIFE RISK EDINBURGH

STAR2152

As Consolidation Team Actuary you will be responsible for production of Solvency II results on Internal Model and Standard Formula bases and reconciliation of these results to ICA and other relevant metrics.

Seeking a qualified life actuary and risk expert to deliver recommendations and solutions to business problems. Flexibility in approach and strong communication skills required.

Our client has an exceptional opportunity for a risk expert to provide mathematical and programming expertise to support risk management, enhance existing tools and assist in new initiatives.

LIFE IN THE FAST LANE

SOLVENCY II LIFE ACTUARY

MOVE TO LIFE

£ depends on experience

£ excellent + bonus + benefits

£ excellent + benefits

LIFE SOUTH WEST

STAR2169

LIFE RISK LONDON

STAR2123

LIFE SOUTH WEST

STAR2184

One of the country’s fastest growing firms is looking for high-calibre life actuaries with a broad skill set to build on its international expansion.

Take this opportunity to raise your industry profile. Our client is seeking a proactive and highly-motivated qualified Solvency II Life Actuary with knowledge and understanding of financial and insurance risks.

Amazing opportunity for high-calibre part-qualified and qualified pensions actuaries to move to life insurance with a leading firm.

Please contact us for further information.

SENIOR CORPORATE ACTUARY

INTERNAL MODEL MANAGER - LIFE

SYSTEMS ACTUARY

£ excellent + bonus + benefits

£ excellent + bonus + benefits

£ excellent + bonus + benefits

LIFE SOUTH EAST

STAR2182

Our client is seeking to hire a qualified actuary to manage and be responsible for the daily operations of its reporting team. Significant industry experience is required, along with proven team leadership skills.

LIFE MIDLANDS

STAR2219

Take the lead in the design, development, testing, validation and documentation of the Internal Model at this large life insurance company.

LIFE LONDON

STAR2203

Our client would like to hire a qualified life actuary with Moses development experience and a proven track record in managing teams.

Excellent analytical, technical and IT skills are required. Contact us now for more information.

Star Actuarial Futures Ltd is an employment agency and employment business

LIFE ACTUARY - BANKING

www.staractuarial.com PENSIONS ANALYTICS

STRATEGIC RISK CONSULTING

INVESTMENT RISK SOLUTIONS

£ excellent + bonus + benefits

£ excellent + bonus + benefits

£ excellent + bonus + benefits

PENSIONS LONDON

STAR2202

Leading consultancy seeks a part-qualified pensions actuary with a strong modelling background and excellent knowledge of computer programming and/or statistical platforms. Contact us now for more information.

STAR2165

Leading pensions consultancy seeks part-qualified and qualified actuaries to join a high-quality team providing project-based risk solutions to flagship corporate clients.

INVESTMENT LONDON

STAR2185

Global consultancy seeks a high-calibre qualified actuary with investment consulting experience to join its market leading team. Please contact us for more information on this role.

Louis Manson Lou

Irene Paterson FFA Ire

Peter Baker

Clare Roberts

MANAGING DIRECTOR MAN

PARTNER PAR

SENIOR CONSULTANT

SENIOR CONSULTANT

M +44 7595 023 983 E louis.manson@staractuarial.com

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PENSIONS LONDON / MIDLANDS

M +44 7545 424 206 E irene.paterson@staractuarial.com

M +44 7860 602 586 E peter.baker@staractuarial.com

October 2014 • THE ACTUARY 49 www.theactuary.com M +44 7714 490 922 E clare.roberts@staractuarial.com

25/11/2014 17:47

Appointments GENERAL INSURANCE - UK Capital Roles - Various London Graham Anderson Up to £150,000 + Bonus + Benefits

Risk Modelling Actuary Paul Francis

I’m recruiting for several capital opportunities at a leading Consultancy. The roles provide exposure to a broad range of projects with leading clients and excellent potential for career progression. Please get in touch to find out more.

My client is a large commercial risk bearer requiring an actuary with good knowledge of capital/risk modelling. This is an extremely lean organisation so you will have diverse duties from hands-on modelling through to strategic M&A and pre due-diligence work.

Senior Actuary Rob Bentham

London (City) Up to £130,000

G.I. Pricing Analysts - Managers UK Wide Sarah Robins Up to £120,000 + Bonus + Benefits

An eminent London market business is seeking a Senior Actuary to join their expanding team. The individual will get exposed to a mix of pricing, reserving and capital work, as well as having management responsibility for a junior actuary. Lloyd’s experience very desirable.

We are currently working with a number of well-known personal lines insurers across the UK. Opportunities exist for part qualified Actuaries and Statisticians. Emblem and SAS is desirable. Please get in touch for more information.

Capital Actuary Ross Anderson

London Up to £60,000 + Bonus + Benefits

London Personal Lines Pricing – London Market Up to £45,000 + Bonus + Benefits Rachel Kelly

Exclusive opportunity for a Capital Actuary to join a market leading London market insurer. You will be part qualified to nearly qualified.

Capital and risk management experience would be preferred and Igloo exposure advantageous. Excellent career progression available.

This is an exciting opportunity for a part qualified actuary to use their personal lines pricing skills in a London market environment.

You will work on a new, high profile project to improve pricing sophistication across high net worth business lines.

London £130,000 + Bonus + Benefits

CONTRACTS - GENERAL INSURANCE - UK Capital Actuaries Elise Ogden

UK Wide £800 - £1,200/day

A number of our clients are nearing submission of their internal models; as a result we are seeking actuaries with previous experience of IMAP and also Standard Formula. Previous experience producing the ORSA is also useful.

Risk Actuaries Elise Ogden

London £800 - £1,100/day

A number of our clients are seeking actuaries with experience of model validation and risk modelling to assist with short-term regulatory work. Suitable candidates will have knowledge of financial risk, insurance risk and ERM.

LIFE INSURANCE - UK Business Development Director - BPA South East Natalie Lightfoot £115,000 + Package

Capital Projects Actuary Clare Nash

Fantastic opportunity for an experienced actuary to join the bulk purchase annuity team as a Business Development Director. You will negotiate longevity insurance transactions and support/develop new and existing products. The ideal candidate will have consultancy experience with a strong understanding of DB pensions and/or bulk annuities.

I am currently undertaking a retained search for a City based client.

They are seeking to recruit two qualified actuaries to work on market leading capital related projects. You will have sound technical ability and enjoy a highly visible role across the group.

Senior Manager - Actuarial Analysis Edinburgh Natalie Lightfoot Up to £95,000 + Package

Life Consultant Hugo Chambers

Looking for an experienced actuary to join a newly created position within the insurance financial planning and analysis team. You will interact with senior directors and offer a high level review of the business. Fantastic opportunity for an ambitious reporting actuary with strong influencing capability.

An excellent opportunity to join a fast-growing, niche consultancy in central London. My client is seeking a nearly / newly qualified actuary with a strong commercial background to support their continued growth. Strong knowledge of specialist area is essential, along with first-rate communication skills.

Senior Reporting Actuary Surrey Richard Howard Up to £70,000 + Bonus + Benefits

LIFE CONFERENCE & EXHIBITION 2014

Excellent opportunity for a qualified actuary to join the capital management team of this leading life insurer in the South East. The role will focus on economic capital metrics and involve interaction with the risk management team. Must be a qualified life actuary.

London (City) £100,000 + Excellent Package

London Up to £80,000 + Package

Clare Nash

It was a pleasure to meet many of you at the Life Conference in November. The winners of our prize draw are as follows: Stephen Baxter from Hymans Robertson - iPhone 6 Heather Ryde from Wesleyan - BOSE Speakers Saurabh Agrawal from Prudential Group - Fortnum & Mason Hamper

CONTRACTS - LIFE INSURANCE - UK Solvency II Capital Actuary Kaylash Kukadia

South East £800 - £1,000/day

I am looking for three NNQ + one Qual Actuary with Solvency II experience to join my clients Solvency II project. Skills: Stochastic Modelling of Assets and Liabilities.

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Solvency II Actuaries Benjamin Moses

London £800 - £1,000/day

Several of my clients are currently looking to bolster their Solvency II teams in order to meet the workload demands in 2014 and 2015.

Qualified actuaries with extensive capital, risk and regulation knowledge should get in touch.

25/11/2014 10:18

www.theactuaryjobs.com ASIA Asia Head of Structuring Gary Rushton

Hong Kong HKD$2million - 2.5 million + Bonus + LTI’s

General Insurance – UK Paul Francis

0207 649 9469

Rob Bentham

0207 649 9351

Sarah Robins

0207 310 8552

Rachel Kelly

0207 310 8579

Exceptional opportunity to join a leading multinational insurer as their chief actuary to drive their newly created HK operations. Due to the startup nature of the role, you must have both technical and commercial skills to develop actuarial functions for the office.

Ross Anderson

0207 649 9357

Graham Anderson

0207 649 9353

Executive Director Hamza Mush

Contracts - G.I. - UK

Highly commercial and senior individuals with extensive experience of structuring complex financial solutions from IB or ins required. The role will have full P&L and strategic oversight across Asia.

Hong Kong HKD$1.8million - 2.2million + Bonus

Chief Actuary Philip Chau

Hong Kong/Singapore HKD$1.5million - 2million + Bonus + Benefits

The largest and fastest growing reinsurance business globally and here in Asia is seeking a senior commercial and qualified actuary to join their high calibre business development team to further develop the company’s client base, harness new business opportunities, and drive efficient execution of transactions.

Director, Pricing - Health Rhoda Rivera

Hong Kong Up to HKD$1.4 million

Top global life insurer seeks a qualified actuary to work within their regional pricing team.

Candidates must have at least 10 years’ experience in pricing, product development, reinsurance, valuation and reporting. Must have A&H or Life & Health (protection) background.

Pricing Actuary Toby Weston

Hong Kong HKD$660k

Elise Ogden

0207 649 9355

Life Insurance - UK Clare Nash

0207 649 9350

Richard Howard

0207 649 9356

Natalie Lightfoot

0207 310 8547

Hugo Chambers

0207 310 8642

Contracts - Life Insurance - UK/Europe Benjamin Moses

0207 310 8793

Ani Pannell

+353 144 75975

High-growth MNC insurer in Hong Kong seeks a pricing expert with strong GLM and SAS. Reporting to the chief actuary, this person will assist their emerging market entities across the region on pricing of both personal and commercial lines.

Kaylash Kukadia

0207 310 8581

Head of Actuarial Toby Weston

Gary Rushton

+852 5804 9223

Toby Weston

+852 5804 9042

Philip Chau

+852 5804 9287

Hamza Mush

+852 5804 9048

Rhoda Rivera

+852 5804 9225

Malaysia RM420k + Bonus + Benefits

My client is a major European insurer with a strong G.I. book in Malaysia, due to changing regulations they are seeking an experienced actuary to oversee all actuarial duties. Strong communications, technical skills and team management required.

EUROPE Non-Life Actuary (Team Lead) Audrey Dadon

Zurich From CHF130,000

International and well-established player in the insurance market is looking for a qualified actuary to manage a project team. You will work on Solvency/ SST, reserving, capital and strategic projects within this non-life insurance firm.

Group Head of Best Estimates Analysis Alessio Montaruli

Germany €100,000 +

Our client, a top tier insurance group, is looking for a senior life actuary to lead – at group level – the team responsible for the analysis of Best Estimate results submitted by the local business units according to SII framework. Working language is English.

General Insurance Opportunities Patrick McMahon

Dublin, Ireland Up to €95,000 + Bonus + Benefits

I have a number of excellent opportunities in Dublin for actuaries with general insurance experience. These roles are across reserving, pricing, Solvency II and advisory work and range from part qualified to experienced hires. These roles offer the opportunity to progress your career and also obtain new skills and experiences.

Solvency II Actuary Ani Pannell

Dublin, Ireland €700 - €850/day

Asia

France Emérique Opou

+33 1 76 77 46 30

Agathe Ibazizen

+33 1 76 77 46 31

Ireland Patrick McMahon

+353 1 437 0625

Rick Davis

+353 1 685 9059

Benelux Niels van Nieuwkerk

+31 2090 0033

Britt Ootes

+312 0290 0035

Germany Manuel Lovell

+49 89 2109 3362

Emina Biscevic

+49 89 3803 8965

Alessio Montaruli

+49 89 2109 3339

My client, a global insurer, require a nearly/newly qualified actuary to bolster their Solvency II team. The successful actuary will have strong Solvency II reporting experience and a good knowledge of Solvency II regulations within a life company.

Switzerland

Senior Pricing Actuary Audrey Dadon

Please contact one of the team for further information on any of the opportunities above or visit www.ojassociates.com/jobs

Zurich £££Competitive

Fast-growing reinsurer looking for Long-Tail Actuary to work on all types of casualty treaty lines of business. In addition to pricing you will design and implement the necessary tools, work closely with underwriters and attend client visits when needed.

Senior Casualty Pricing Actuary Agathe Ibazizen

Paris £££Competitive

My client, an international reinsurance company is looking for an experienced non-life actuary. You will provide actuarial pricing support to the casualty underwriting teams internationally. English is the required language and French would be a plus.

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Audrey Dadon

+41 43 508 0444

General Contact Details:

E

actuary@ojassociates.com

W

www.ojassociates.com October 2014 • THE ACTUARY 51 @OJAssociates www.theactuary.com

oliver-james-associates

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Appointments www.the-arc.co.uk

The Actuarial Recruitment Company

A fresh approach

Reinsurance Pricing London

General Insurance To £100K

Reserving Actuary Bermuda

General Insurance Circa $240K plus benefits

Working for this blue chip Lloyd’s business, this role will be the main

This Bermuda reinsurer is looking for a qualified actuary with a

point of call with underwriters for the reinsurance pricing in London.

background in London Market reserving, particularly reinsurance

The roleholder will work alongside other actuaries in the pricing

lines, to report into the Chief Actuary on the island. Knowledge of

team and will be involved with case pricing, rate monitoring and

GAAPs and IFRS accounting beneficial as well as Solvency II including

pricing model development. Prospective candidates must have a

experience of technical provisions. Good communication skills

background in London Market pricing, particularly of the reinsurance

and proactive personality needed as well as ability to work to tight

market. Ref: ARC26268

deadlines. Ref: ARC26265

Capital Actuary London

General Insurance Circa £130K

A qualified actuary with ideally Igloo experience is needed to support capital modelling for an international insurance and reinsurance business. The role will involve development and maintenance of elements of the internal model, working with reserving and pricing actuaries to improve the model, liaison with the business for model parameterisation, assisting with regulatory submissions and support for model validation. Significant capital experience from a London market or other equivalent environment required. Ref: ARC26253

Nearly/Newly Reserving London

General Insurance Circa £75K

A nearly/newly qualified reserving actuary is required for this Lloyd’s Managing Agency. The role will cover a range of property, casualty and specialty reinsurance lines. Involvement will include production of quarterly reserves and financials, analysis of reserve risk for the internal capital model and Technical Provisions, development of new reserving and reporting tools and ensuring compliance with regulatory requirements. Strong communication and technical ability required.

Ref: ARC26269

Call us anytime including evenings and weekends on 020 7717 9705 or email enquiries@the-arc.co.uk Andy Clark BSc FIA Roger Massey BSc MBA FIA

0781 333 7891 0781 398 9016

andy@the-arc.co.uk roger@the-arc.co.uk The Actuarial Recruitment Company is an employment agency

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25/11/2014 10:19