The Actuary - Jan/Feb 2020

theactuary.com

Interview

Investment

Health

Modelling

Craig Turnbull on learning from our profession’s past

The role of insurers in the transition to a low-carbon economy

Have we got it wrong on genetically modiďŹ ed food?

What sports rankings could teach us about Solvency II modelling

1 COVER_The Actuary JANFEB 2020_The Actuary 1

24/01/2020 09:51

TO TRANSFORM EXCEL FILES INTO FULLY FUNCTIONING MODELS, IT TAKES MILLIMAN MIND. Run calculations in minutes, not hours, within

a secure, auditable, scalable framework. Milliman Mind is an easy-to-use cloud-based platform that automatically converts Excel spreadsheets into more powerful models with all the capabilities and controls of more expensive “black box” systems. Learn more at milliman-mind.com.

p02_ACT.JanFeb20.indd 2

Milliman Mind

23/01/2020 15:47

Contents January/February 2020

OPTIMISING MODEL PARAMETERS USING BAYESIAN METHODS

Features 14 Interview: Craig Turnbull The author of A History of British Actuarial Thought assesses the profession’s current landscape

14

18 Investment: A co-ordinated effort Travis Elsum looks at how insurers can hasten the low-carbon transition 20 Health: Top of the crops The EU has been too strict on GM crops, says Nigel Halford

Up Front 4 Editorial Dan Georgescu welcomes in the new decade – and a new editorial tenure 5 President’s comment John Taylor on ‘The Great Risk Transfer’ of recent years 6 IFoA news The latest IFoA news and events 10 After the break Managing a post-hiatus career comeback

COVER: SHUTTERSTOCK / SARAH AULD

12 Connect the dots Ashok Gupta explains how systems thinking can benefit actuaries

22 Health: Critical analysis John Ferguson drills down into critical illness data in East Asia 26 Modelling: Smoothing things over What can models learn from ICC ratings? Steve Mills explains all 28 Modelling: Mind your step Bayesian methods could improve long-term interest forecasts, says Andrew Smith

32 Health and life: Longevity bulletin Matthew Edwards dips into the forthcoming Longevity Bulletin

Did you know you can now read The Actuary magazine on any tablet or Android phone? Click through to read more online, download resources, or share on ssocial media via our links in the app. It’s an exclusive free benefit for our members.

Download on the App Store at: www.theactuary.com/ipad V Visit: www.play.google.com

3 CONTENTS_The Actuary JANFEB 2020_The Actuary 3

At The Back 36 School of thought Will technological innovation spell the end of the actuary? Elliott Cox weighs in 37 People/society news The latest news, updates and events 38 Puzzles 40 Inside story Jo Lo on what motivates him to volunteer – and why he’d go back in time to visit the 18th century

20

31 Regulation: The Italian job Silvia Dell’Acqua shares a snapshot of the profession in Italy

Get the app

www.theactuary.com

28

Web exclusive Reinsurance: IFRS17 A help, rather than a hindrance bit.ly/ReinsuranceSolution

Additional content including daily news can be found at www.theactuary.com Weekly newsletter: for all the latest actuarial news, features and opinion direct to your inbox, sign up at bit.ly/1MN3bXK JANUARY / FEBRUARY 2020 | THE ACTUARY | 3

27/01/2020 10:44

theactuary.com

PUBLISHER Redactive Publishing Ltd Level 5, 78 Chamber Street, London, E1 8BL +44 (0)20 7880 6200 PUBLISHING DIRECTOR Anthony Moran MANAGING EDITOR Sharon Maguire +44 (0)20 7880 6246 sharon.maguire@redactive.co.uk A S S I S TA N T E D I T O R Kathryn Manning +44 (0)20 7324 2792 kathryn.manning@redactive.co.uk SUB-EDITOR Kate Bennett NEWS REPORTER Christopher Seekings +44 (0)20 7324 2743 christopher.seekings @redactive.co.uk D I S P L AY SALES theactuary-sales@redactive.co.uk +44 (0)20 7324 2753 RECRUITMENT SALES theactuaryjobs@redactive.co.uk +44 (0)20 7880 6234 ART EDITOR Sarah Auld PICTURE EDITOR Charlie Hedges

EDITOR Dan Georgescu editor@theactuary.com F E AT U R E S E D I T O R S Sharad Bajla, general insurance Stephen Hyams, pensions Paul Malloy, reinsurance, life insurance VS Rajeshwarie, GI Thanuja Krishnaratna, life Contact: features@theactuary.com PEOPLE/SOCIETY NEWS EDITOR social@theactuary.com Kathryn Manning kathryn.manning@redactive.co.uk STUDENT EDITOR Jason Brett student@theactuary.com IFOA EDITOR Kate Pearce +44 (0)207 632 2118 kate.pearce@actuaries.org.uk EDITORIAL ADVISORY PANEL Peter Tompkins (chairman), Chika Aghadiuno, Nico Aspinall, Naomi Burger, Matthew Edwards, Jessica Elkin, Martin Lunnon, Richard Purcell, Sonal Shah, Nick Silver INTERNET The Actuary: www.theactuary.com Institute and Faculty of Actuaries: www.actuaries.org.uk

SENIOR PRODUCTION EXECUTIVE Rachel Young +44 (0)20 7880 6209 rachel.young@redactive.co.uk

Circulation 31,173 (July 2018 to June 2019)

PRINT Walstead Bicester Recycle your magazine’s plastic wrap – check your local LDPE facilities to find out how.

SUBSCRIPTIONS Subscriptions from outside the actuarial profession: UK: £100 per annum.

Europe: £130 per annum, rest of the world: £160 per annum.

Contact: The Institute and Faculty of Actuaries, 7th floor, Holborn Gate, 326-330 High Holborn, London WC1V 7PP. T +44 (0)20 7632 2100 E kate.pearce@actuaries.org.uk.

Students on actuarial courses may join and receive The Actuary as part of their membership. Apply to: Membership Department, The Institute and Faculty of Actuaries, Level 2 Exchange Crescent, 7 Conference Square, Edinburgh EH3 8RA. T +44 (0)131 240 1325 E membership@actuaries.org.uk Changes of address: please notify the membership department.

Delivery queries: contact Rachel Young E rachel.young@redactive.co.uk Published by the Institute and Faculty of Actuaries (IFoA) The editor and the IFoA 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, 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. © Institute and Faculty of Actuaries, January/February 2020 All rights reserved ISSN 0960-457X

4 | THE ACTUARY | JANUARY / FEBRUARY 2020

4 EDITORIAL_The Actuary JANFEB 2020_The Actuary 4

A new decade Welcome to the 2020s, and my first issue as editor of The Actuary. It is an honour and a pleasure to be here.

“Why did you apply for the role?” I am often asked at actuarial (working) parties. Partly, it’s because I have written for and volunteered at the magazine in the past, and found it to be a rewarding experience. I have also contributed to examinations and research, but in terms of being able to speak to our whole profession, this platform is second to none. Sometimes, there is a powerful message that needs to be heard. In this issue, Travis Elsum argues that insurers should support the transition to a low-carbon economy (p18), while professor Nigel Halford introduces us to the differences between GM and gene editing, and asks whether EIOPA’s catch-all terminology achieves a good outcome for food safety and sustainability (p20).

There is also no better way to meet interesting people and ask them questions. This month I interview Craig Turnbull, who has had a varied career covering both the cutting edge of modelling and writing about actuarial history (p14).

I would like to thank my predecessor Francisco Sebastian for his significant contribution during the past two years. Francisco aimed to make the magazine more global, and I intend to stay on that course.

This month, we hear from Silvia Dell’Acqua about actuaries in Italy (p31) and John Ferguson on critical illness experience in Asia (p22).

Primarily, though, we are an actuarial magazine, and I do not intend to neglect technical actuarial content. This month, for example, we have Andrew Smith writing about Markov chain Monte Carlo (p28).

As always, please write in and tell us what you think of the magazine – or even better, write an article. Enjoy the issue and have a wonderful 2020.

DAN GEORGESCU EDITOR editor@theactuary.com

www.theactuary.com

27/01/2020 12:49

J O H N TAY LO R

The Great Risk Transfer

M

ost actuaries work in industries and organisations that help to protect people against various risks. But will this continue to be true in an age of freedom, choice and individualism? As we enter a new decade, the IFoA is taking stock of the previous decades’ significant shift of actuarial risk from institutions to individuals. Where institutions such as employers, insurers and the state once offered guarantees that protected individuals from longevity and investment risk, these appetites have reduced. As a result, individuals are directly exposed to more actuarial risk than before. We are calling this ‘The Great Risk Transfer’.

From one perspective, these choices can be seen as liberating. They give people the freedom to manage their affairs in whatever way they decide. Indeed, this was promoted as a key benefit of the UK government’s ‘freedom and choice’ initiative.

The downside, of course, is that it can be difficult for individuals to manage these risks. Mechanisms that enabled ‘pooling’ of risk might no longer be available to individuals, and individuals may lack the expertise to make good decisions.

Even as an actuary, I’m acutely aware of how difficult it will be to manage longevity

risk in my retirement, when that could last anywhere between five and 35 years.

(Coming from an area of Scotland with notoriously low life expectancy, maybe I needn’t concern myself too much!)

More generally, people’s numeracy, financial literacy and understanding of risk is low, and some social groups are better equipped to deal with the risks than others.

programmes, the increasingly granular pricing structures of general insurance, and the prevalence of non-advised decisionmaking among investment customers.

On 31 January we launched a call for evidence, open to actuaries and other experts from around the world. We want to gather as much evidence as possible from your experience in your area of work, country or region. We want to understand what is causing the problem, as well as which groups within society are affected and how. We are also interested to learn whether this trend exists on a global scale and, if so, how it differs from the UK experience.

Crucially, though, we’re looking for solutions to how the problem can be overcome, and whether there are any barriers to doing so. The aim of this campaign is to gather evidence, convene debates and ultimately engage with policymakers about the innovative ways support can be provided to those who need it most in an increasingly risky world.

Find out more about The Great Risk Transfer campaign at bit.ly/37iCmX3

“The institutions that have access to risk expertise are passing risk to a less capable group – individuals”

www.theactuary.com

5 PRESIDENT_The Actuary JANFEB 2020_The Actuary 5

This means that some groups, particularly those who are traditionally vulnerable, are disproportionately affected by this trend.

This is one of the ironies of The Great Risk Transfer. The institutions that have access to risk expertise are passing risk to a less capable group – individuals. While it’s understandable that institutions want to reduce their exposures, the consequences for individuals can be challenging.

So, this year we are launching a thought leadership campaign, The Great Risk Transfer. We’ll be looking at how this trend is manifested in the areas in which actuaries work: the shift from DB to DC pensions, the UK’s burgeoning ‘freedom and choice’ pensions agenda, global health insurance

JOHN TAYLOR is the president of the Institute and Faculty of Actuaries JANUARY/FEBRUARY AUTUMN 2017 2020 | THE ACTUARY | 5

27/01/2020 10:45

Upfront News

LIFELONG LEARNING

Proposed new CPD scheme: consultation open We are consulting on a proposed new continuing professional development (CPD) scheme, which is intended to make IFoA requirements easier to fulfil and return the focus of CPD to meaningful professional development and learning.

The proposals have been produced in response to member feedback on the existing CPD scheme.

The simplified requirements place the same obligations on all members, regardless of membership category (with an exemption for non-practising members and students).

Under the proposed scheme, a greater range of activities will count towards the hours-based requirement, allowing members to participate in more varied opportunities, learning about subjects relevant to their current or future role.

Recording and evidencing activities will no longer be required, and non-compliance won’t lead to disciplinary action (except in cases where the Actuaries’ Code has been breached).

Instead, the IFoA will focus on supporting members’ professional development in a reflective practice discussion. Learning needs and the outcomes of activities will be talked over, and suggestions made as to how members might continue to progress.

The proposed new CPD scheme is intended to make CPD a benefit of IFoA membership, a method by which the IFoA helps its members to remain relevant in this ever-evolving, dynamic industry.

Review the proposals and share your thoughts before 17 April: www.actuaries.org. uk/cpd-scheme-review-2020

IN BRIEF...

Diversity of experience: benefiting from role models Members of the IFoA can be inspired by, and gain so much from, each other: mutual support, powerful collaborations, and new and even disruptive thinking. The IFoA wants to celebrate role models within the profession. Actuaries at all stages in their careers have shared their thoughts and experiences to help and inspire others. Discover some of the ways you can learn from them at bit.ly/36woVm1

LIFELONG LEARNING

Benefiting from our CPD co-ordinators’ briefing 2019 Our CPD co-ordinator’s briefing was held on 7 November and attended by representatives from more than 60 employers of our members. It involved presentations on a range of topics, under the theme ‘Lifelong Learning – providing continuous development for our members’, and included a welcome by IFoA president John Taylor. Topics covered an update on the plans for the 2020/2021 CPD Scheme review, a presentation by Dr Helen Wright, chair of the IFoA Lifelong Learning Board, on strategic direction and adapting to your professional needs, and an update about the new Professional Skills Training resources.

The presentations were filmed, and the materials are available for members to access on the IFoA website. Log in and you can access them within the CPD co-ordinators’ annual briefing section of the virtual learning environment (bit.ly/2ZZv4ET). CPD can be claimed directly when viewing these presentations. You may also like to use the material to run a group session for colleagues or peers.

CPD co-ordinators play a key role in engagement between the IFoA and organisations that employ our members. They receive updates, key information and opportunities, which they share with colleagues. The IFoA maintains a database of all co-ordinators. Not all organisations are represented yet; if you would like to check whether yours is, or to volunteer to act as a co-ordinator for your organisation, contact Debbie Atkins, head of engagement, at debbie.atkins@actuaries.org.uk Find out what others say about the benefits of our CPD Co-ordinators’ Briefing and the benefits of becoming a CPD co-ordinator at bit.ly/2m2zxDI 6 | THE ACTUARY | JANUARY / FEBRUARY 2020

6-9 news_The Actuary JANFEB 2020_The Actuary 6

Annual Report of the Practising Certificates Committee The Annual Report of the Practising Certificates Committee is now available on the IFoA website at bit.ly/2MYbeV9 The report provides an update on the annual review of the Practising Certificates Scheme and includes current statistics and further suggestions for applicants to help their applications go smoothly. The report should be of particular interest to Practising Certificate (PC) holders, and those who plan to become PC holders.

Please direct any queries on the report to practising. certs@actuaries.org.uk www.theactuary.com

27/01/2020 10:45

Upfront News

PRESIDENTIAL VISIT TO CHINA

Connections with members and stakeholders From 4 December to 12 December 2019, IFoA president-elect Tan Suee Chieh visited Hong Kong, Shenzhen, Shanghai and Beijing. This was Mr Tan’s first visit to China in his current role. The IFoA delegation met with various stakeholders, including Ping An Insurance Group, Taiping Life, China Reinsurance, the China Association of Actuaries and the Insurance Asset Management Association of China.

At the member events in Beijing and Shanghai, Mr Tan presented awards to new qualifiers, volunteers and Sir Edward Johnston Prize

winners. The IFoA and Sunshine Insurance Group jointly hosted the Beijing member event on 12 December 2019. Mr Tan and Jihai Peng, vice president and CFO of Sunshine, co-presented the Sunshine Insurance Scholarships to the top actuarial

student members from the Central University of Finance and Economics and the University of International Business and Economics.

The IFoA also held university events at Fudan University in Shanghai and the Central University of Finance and Economics in Beijing, with more than 200 students attending. At Fudan, Mr Tan signed the accreditation agreement on behalf of the IFoA with Fudan University. Fudan is the first top multidisciplinary university to be accredited in mainland China.

The nine-day visit gave the IFoA’s president-elect and executives an opportunity to engage with stakeholders. To read more information in Mandarin, please visit the IFoA Official WeChat at bit.ly/2QSjjfg

Strategic Partner:

IFoA Asia Conference 2020 24–25 June, CCEC Nexus, Kuala Lumpur

Join intellectual thought leaders, senior industry players, opinion formers, academics, actuaries and non-actuaries from across Asia and beyond at this landmark IFoA conference.

Guest of honour:

The Honourable Mr. Lim Guan Eng Finance Minister, Malaysia

Register before 1 March for early bird discount:

bit.ly/asiaconference2020

www.theactuary.com

6-9 news_The Actuary JANFEB 2020_The Actuary 7

www.actuaries.org.uk

www.actuaries.org.cn

JANUARY / FEBRUARY 2020 | THE ACTUARY | 7

27/01/2020 10:46

Upfront News ACTUARIAL PROFESSION S TA N D A R D S

APS X2 – new materials published The IFoA has published a refreshed webpage on Actuarial Profession Standard (APS) X2: Review of Actuarial Work (bit.ly/2Tl25tC) to include a host of resource materials for members, including case studies, vignettes and an APS X2 quiz. The materials have been updated following the conclusion of a post-implementation review of APS X2, which looked at how the standard is working in practice and whether it is effective and achieving its objectives.

You can find out more about the postimplementation review of APS X2 and access the full suite of materials by visiting the IFoA’s website, or by contacting the Regulation Team at regulation@actuaries.org.uk.

EVENTS AND CONFERENCES 24 02 20 Sessional: Impact of E-cigarettes Working Party R O YA L C O L L E G E O F P H Y S I C I A N S , 9 Q U E E N S T, E D I N B U R G H

This sessional meeting will be of direct interest to actuaries and others working in the health and care, life or pensions sectors, or actuaries with an interest in morbidity or mortality.

12 03 20 Data science – How actuaries can optimise usage of data science techniques within their sectors S TA P L E I N N , LO N D O N

APS X4 – Social Security Programmes Actuarial Profession Standard X4 (APS X4) was published on 27 November, along with the feedback paper to the consultation. The standard will take effect on 27 February 2020.

APS X4 applies to members carrying out actuarial work in the financial analysis of social security programmes outside of the UK Geographic Scope. Members carrying out such work within the UK Geographic Scope must apply the Financial Reporting Council’s Actuarial Statement of Recommended Practice 1 (ASORP 1). APS X4 is available at bit.ly/3aC1OsA ASORP 1 is available at bit.ly/37iPQlG

Consultation on new APS X5 The IFoA is consulting on proposals to withdraw GN30: Compensation for Professional Shortcomings (bit.ly/37IyYV1) and replace it with a new APS implementing broadly the same requirements (bit.ly/2RkEk3y). The proposed APS X5: Compensation for Professional Shortcomings requires members who are principals in organisations that provide actuarial services to external clients to ensure that appropriate arrangements are in place in relation to compensation for loss caused by professional shortcomings.

The proposed APS is not designed to impose new obligations on members; rather, it aims to provide clarification on current requirements and provide consistency. The proposal includes non-mandatory guidance to support APS X5, designed to help members meet their obligations. The consultation will close on 17 February 2020. The consultation package can be found on the IFoA’s website.

8 | THE ACTUARY | JANUARY / FEBRUARY 2020

6-9 news_The Actuary JANFEB 2020_The Actuary 8

This is a working event for delegates to share progress and exchange knowledge about what data science techniques mean for the profession and, most importantly, what we can and should be doing to engage with data science as actuarial professionals.

19 03 20 Board agenda: Why responsible investing, ESG, and climate change matters to pension fund companies

these issues matter and why they have become more relevant in recent years.

It will also discuss what this means for NEDs and actuaries when it comes to exercising their responsibilities.

25 03 20 Spring Lecture 2020, Edinburgh – Vicky Pryce A S S E M B LY R O O M S 5 4 G E O R G E S T, E D I N B U R G H

Please join us in Edinburgh for our annual Spring Lecture, presented by Vicky Pryce. Vicky is chief economic adviser and a board member at the Centre for Economics and Business Research, and will present her lecture on ‘What next in economic policy?’

View all of our workshops, seminars, webinars, events, and conferences at www. actuaries.org.uk/event

S TA P L E I N N , LO N D O N

This timely event aims to explain why

QAS

Zamara receives QAS accreditation Congratulations to our most recently accredited organisation, Zamara Actuaries, Administrators & Consultants Limited (Actuarial Division). This is the first accreditation to be awarded in Africa. See below for what the QAS accreditation means to the organisation.

“The QAS accreditation represents a huge milestone in our business and reaffirms our commitment to the highest standards of quality in our work. We are immensely proud to be the first actuarial firm in Africa to be accredited. Our clients, employees and regulators can take comfort in knowing that our actuarial division has been independently reviewed and confirmed to comply with our quality standards which uphold best international practices.” – Adil Suleman, head of Zamara Actuaries, Administrators & Consultants Limited (Actuarial Division) For more information about the Quality Assurance Scheme, please contact the QAS team at qas@actuaries.org.uk

www.theactuary.com

27/01/2020 10:46

Upfront News

I F O A S T R AT E G Y

Council update

IMAGES: ISTOCK

Council held its second meeting of the 2019/20 sessional year in London on 29 November. The afternoon prior, Council members met to discuss the progress made since our meeting in September towards developing a new strategic direction for the IFoA, focusing on two key areas: The development of our pre-qualification (Associateship) and advanced (Fellowship) curricula, to ensure that these curricula appropriately reflect the evolving profession and market demand Defining the direction in which our international strategy should evolve, and understanding both the requirements and implications of those choices.

At our regular meeting, we agreed how each of these strategic imperatives should be taken forward, and how they will take shape in the form of a final Strategic Plan, to be approved at our next formal meeting (5 March 2020) and shared with the membership soon thereafter.

On the subject of our Associateship qualification, we looked at a proposal to modernise the assessment and marking of our Associate examinations. This work, which will be led by our Lifelong Learning Board and overseen by our Management Board in the coming months, aims to improve the efficiency of these processes and, in doing so, allow us to refocus resources on the development of our educational and lifelong learning offerings in line with our strategic imperatives.

We held our annual review of our Regulation Board, which centred on: the Board’s work towards delivering its outputs as defined in the current regulatory strategy; its current priorities, challenges, and opportunities; and its engagement with www.theactuary.com

6-9 news_The Actuary JANFEB 2020_The Actuary 9

the strategic priorities set by Council. The review covered a number of important topics, including: the Kingman Review and the future of UK actuarial regulation arrangements; the IFoA’s international regulatory strategy; the ongoing review of our Continuous Professional Development Scheme; and the role of regulation in supporting and assisting members, including how we can better promote the value of being a regulated professional.

We received an update on ongoing work towards developing a value proposition for our members. We also considered an update from the chair of our Management Board on the work that it has carried out in recent months, and approved the appointment of Trevor Spires, the lay chair of our Audit and Risk Committee, as a lay non-executive member of that Board.

We approved two proposals to change our constitutional documents, which intend to help modernise the appeal of the IFoA and streamline its operations. Both of these proposals – broadening the scope of our Affiliate membership category, and simplifying the process for appointing Honorary Fellows of the IFoA – will require the approval of our members before they can be implemented. More information on each proposal will be shared with you soon, along with a third proposal (also recently approved) to change requirements around Council members’ tenure on Council.

Our next regular meeting will take place on 5 March 2020, with an extraordinary meeting to elect the president-elect of Council for the 2020/21 sessional year taking place the afternoon before. The minutes of our meetings are available at bit.ly/2u1gmx9 and you can contact us at Presidents@Actuaries.org.uk

New IFoA CEO In January, the IFoA welcomed its new chief executive, Stephen Mann. Mann originally qualified as a lawyer, and has worked extensively with the actuarial community throughout a career in financial services. He has been a board director of the Aviva Life business, responsible for strategy, business services and major capital projects. More recently he served as chief executive officer at the Police Mutual Group.

Mann has also been chair of Aviva’s With-Profits Committee and UK retail investment business, a non-executive director at ALICO UK and the independent member of the Audit and Risk Committee at The College of Policing.

He is a Fellow of the Institute of Directors and the Pensions Management Institute, and a trustee of the Police Arboretum Memorial Trust.

You can read a Q&A with Stephen Mann in the March issue of the magazine.

JANUARY / FEBRUARY 2020 | THE ACTUARY | 9

27/01/2020 10:46

Upfront IFoA

AFTER THE BREAK How to manage a career hiatus and take advantage of the benefits it may bring for your future

A

n increasing number of us will undergo a career break at some point in our working lives. This can be for numerous reasons – from having children or caring for a family member, to unemployment or taking time off to travel, 10 | THE ACTUARY | JANUARY / FEBRUARY 2020

10-11 career_The Actuary JANFEB 2020_The Actuary 10

pursue a personal goal or explore a new professional avenue. Whatever the reason or motivation, career breakers of all sorts face similar issues returning to work.

Last December, the IFoA partnered with sector-specialist recruiter Ignata to host ‘Your actuarial career: Managing career breaks’. This brought together a panel of experienced industry voices to address the

issues likely to be faced by those returning to work and the businesses hiring them.

The event was chaired by Chika Aghadiuno, chair of the IFoA Diversity Advisory Group, with an introduction from Ignata Group CEO Luke Williams OBE. The discussion raised some fascinating insights and firsthand perspectives from the panel.

Here we share some of the highlights. www.theactuary.com

27/01/2020 10:47

Rachel Vecht began her

Sarah Mathieson is the

career as a primary school teacher, and founded Educating Matters 18 years ago, during maternity leave. The mother of four is now a leading consultant and speaker, helping organisations become inclusive to the needs of parents.

IFoA’s head of research and knowledge. Over the course of her professional life to date, she has taken two career breaks – once to travel the world and then again for maternity leave.

She has also returned to work after redundancy.

What kind of practices are employers putting in place to make the return to work more pleasant?

What are the practical considerations for actuaries while they’re on a break?

Informal mentoring – if you come back to work and are partnered with someone who has been through the same things, that can give you the support and confidence you need. It’s also hugely valuable to set up internal networks for colleagues who share similar experiences. Finally, don’t forget to provide support and guidance for line managers. It’s not just the company’s culture or benefits or policies in principle that matter, it’s how they’re expressed through the person you report to. How can a line manager understand what it is to have an autistic child or care for an elderly relative?

Employers need to give them the tools to be able to have those inclusive conversations.

Your membership of the IFoA – make sure that your contact details are kept up to date on your profile. There are also subscription fees and CPD to consider. The IFoA has reduced-rate subscriptions for people below a certain income level and there are full or partial CPD exemptions available depending on your circumstances, so be sure to check the IFoA website. There’s a helpful page on career breaks covering the practical and regulatory aspects.

ILLUSTRATION: WWW.FREEPIK.COM

What are the benefits for employers?

When someone’s given an opportunity to come back into the business through, say, a returnship programme, they show incredible loyalty.

I’ve spoken to many people who’ve turned down headhunters and pay rises as a result of the empathy and understanding shown by their employer. www.theactuary.com

10-11 career_The Actuary JANFEB 2020_The Actuary 11

How can you maintain up-to-date knowledge while you’re away from the profession?

While I was on maternity leave, I used my ‘Keeping in Touch’ days to keep up a couple of my positions on various boards and committees to maintain my professional networks. Volunteering for the IFoA is another way to maintain your network, as well as giving you an opportunity to learn new skills. There are case studies on the IFoA website that demonstrate how people have used volunteering to help them get back into work.

Emily McGuire is an investment consultant, a partner at Aon and a mother of two. She has been instrumental in pioneering a ‘returnship’ programme for recruitment – designed to help career breakers of all kinds reintegrate into the workplace.

What is a returnship?

A returnship is a tailored programme that helps you regain the experience and confidence you need to get back to work – like an an internship, or an extended on-boarding process.

Lee Faulkner is a financial wellbeing actuary at First Actuarial and an IFoA council member. Since starting his actuarial career in pensions in the mid-1980s, he has worked in Spain, Mexico, Argentina and Hong Kong, and also took a five-year break from the actuarial profession while he ran his own online education business.

What advice would you give someone planning a career break?

How can organisations help career breakers get that confidence back?

I found that a lot of people in the investment industry didn’t feel that they could be a parent and have a career at the same time. Things have moved on massively during the past few years in terms of flexible working and the technology that makes that possible, but we need to talk about it more.

It’s the culture within organisations that really makes a difference. For instance, it’s key for people who have taken shared parental leave to be visible. If you can’t see examples within an organisation, it’s very difficult for the culture to change.

Consider what you will gain from the break and how you’ll communicate that to an interviewer after you return.

What did you learn? How could you apply it? The response to me moving in my career has generally been positive.

What kind of issues have you encountered during the hiring process?

Actuaries may not be very good at appreciating skill sets that they themselves don’t have, and can view other experiences as inferior or ‘flaky’. This leads to mirror-image recruiting, and is dangerous for the survival of our profession. It can be difficult to combat such short-term thinking, which typically values recent technical experience more highly than wider, less conventional skill sets.

IGNATA A sector specialist recruiter, Ignata believes the profession needs to be more agile to change, meaning those responsible for hiring need to be open to diversity of thought. Ignata has a strong commitment to promoting diversity and inclusion and, through its partnership with the IFoA, is working to break down preconceived thought and bias within hiring processes. ignata.com

JANUARY / FEBRUARY 2020 | THE ACTUARY | 11

27/01/2020 10:47

Upfront News

CONNECT the dots The Financial Systems Thinking Innovation Centre, or FinSTIC, launches this month. But what is systems thinking, and how can it help actuaries? Ashok Gupta explains

O

ne dark night, a policeman finds a drunk on his knees searching for his keys under a lamppost. The drunk explains that he lost the keys on the other side of the street, but is searching under the lamppost because “that’s where the light is”.

We all operate in silos – whether that’s a department, a business or an industry sector. Inside our silo, the light is bright and we have good visibility. Outside the silo, it’s darker, and visibility is poor – so it is easier to find solutions and identify risks inside our own silo than it is to find those from outside.

However, our silos do not operate in isolation. They form part of a network, connected to other organisations, suppliers, customers and governmental bodies, such as regulators. In an increasingly connected world, understanding the linkages between our silo and others is essential if we are to manage exogenous risks, develop sustainable organisations and products, and implement effective policy solutions.

Organisations operate in a complex, crowded, integrated and rapidly changing world, resulting in many emerging risks, some difficult to mitigate and others difficult to spot.

Consequently, it is easier for us to look for solutions within our own silos –

but are we searching for our keys on the wrong side of the street? Systems thinking may help.

What is systems thinking?

Donella Meadows, for many the doyenne of systems thinking, defined a system as “an interconnected set of elements coherently organised in a way that achieves something”.

It comprises those elements, interconnections and a function (or purpose). A company is a system; so is a tree, a factory or an economy.

However, our world consists of systems embedded within other systems. While a company is itself a system, it also resides within an industry system, which in turn resides

Podcasts Listen to FinSTIC podcasts covering a broad range of topics around systems thinking. Learn about how systems thinking has been applied

by Chika Aghadiuno and Neil Cantle to implement a new emerging process at Aviva, and how Professor Doyne Farmer at iNET has used agent-based modelling to assess the impact of Solvency II on catastrophe insurance.

“Systems thinking is an important part of the 21st century actuarial toolkit. We believe it offers a fresh perspective on traditional actuarial challenges that lets us engage constructively with the increasing complexity we see around us, rather than see it as a barrier to achieving our goals” www.theactuary.com

12-13 fintec_The Actuary JANFEB 2020_The Actuary 12

27/01/2020 10:47

Upfront News

within a national economic system.

Systems thinking is a holistic, multidisciplinary approach to analysing systems, focusing on the way elements interrelate and how systems work over time within the context of larger systems. It can be used to analyse a business or a sector, such as insurance, investment, wealth management or pensions. By focusing upon the interrelationships, you can gain insights.

How can we use systems thinking?

The use of systems thinking in finance is still quite limited; regulatory bodies used it to try and understand what happened to international banking in the aftermath of the global financial crisis. It is increasingly being used to manage risk, create sustainable, resilient companies and develop policy.

For example, policy solutions derived predominantly through political negotiation and compromise run the risk of failing to achieve the desired outcome, or of resulting in unintended consequences. One study reviewing pressures in the defined benefits pensions sector used systems thinking to identify that the principals (members and employers) have been largely disenfranchised, and that fees extracted by agents (fund managers, advisors, etc) are considerably in excess of the value provided. Levels of risk to scheme members can be concealed if investment and liability risks are not appropriately integrated with rapidly increasing levels of covenant risk. This study has led to pension scheme consolidation being adopted as government policy.

While conducting a review of long-term investment by life insurers and pension funds, a senior civil servant commented: “Everyone within the system is acting in a completely rational way based on their mandates or objectives, but the system as a whole is not delivering what it should.” This is true of many of our financial systems. www.theactuary.com

12-13 fintec_The Actuary JANFEB 2020_The Actuary 13

The insights provided through the application of systems analysis can lead to profound, beneficial solutions.

However, given that systems evolve over many years, often in an amorphous way, those seeking ‘silver bullet’ solutions may be disappointed.

The IFoA has set up FinSTIC to promote the development of systems thinking work within the financial sector. A significant number of actuaries are already applying systems thinking in their existing work; FinSTIC will act as a forum where they can share thinking, promote their work and network with likeminded practitioners. Given that systems analysis is inherently multidisciplinary, FinSTIC will be open to non-actuaries and will link with academics, businesses, regulatory and other non-profit organisations that are interested in producing more effective financial systems. In this way we can work with and learn from other professionals, and generate more opportunity for actuaries to apply their analytical skills and judgment. It will also act as a source of learning for actuaries new to systems thinking.

I would encourage people to get involved. You can sign up (via LinkedIn), engage and contribute.

If you are aware of a piece of systems work or application, you can write a case study or support a blog. If you have something of particular interest and want to record a podcast, come and talk to us.

Through their analytical skills and multidisciplinary training, actuaries can develop appropriate interventions and help ensure financial systems operate effectively.

There are ASHOK GUPTA significant is chair of FinSTIC career opportunities for actuaries to get involved in this – tell your friends and colleagues.

FINANCIAL SYSTEMS THINKING INNOVATION CENTRE What is systems thinking?

Systems thinking is a holistic multidisciplinary approach to understanding systems, focusing on the links between components in a system. When we understand agent-agent and agent-principle dynamics and their potential impacts on stocks and flows, we gain insights into the resilience of systems and how they can be made more effective.

Who is FinSTIC for?

The Resource and Environment Board wants actuaries to take the lead in adopting systems thinking approaches, becoming professional advisers with greater awareness of the systemic impacts of their work, and of the impact of system dynamics on their clients and employers. FinSTIC was established to aid this.

What is the aim?

To discuss, debate and collaborate on the application of systems thinking To connect and work with other partner organisations to further understanding of this important field To discover more information and resources on the subject of systems thinking.

What are the goals?

To provide a community that enables participation, collaboration, discussion and debate between systems thinking practitioners and those interested in the field To identify, support and collaborate on projects that address common shared defects within and of the financial sector To identify partner organisations with whom members of FinSTIC can collaborate and engage, to further our systems thinking knowledge and practice To enable members of the community to participate in the future evolution of FinSTIC, suggesting projects and collaborating on key activities

More information and resources For further information and details on podcasts, case studies, blogs and further reading, visit bit.ly/35R9IL5 JANUARY / FEBRUARY 2020 | THE ACTUARY | 13

27/01/2020 10:47

PHOTOS: RICHARD GLEED

Features Interview

Dan Georgescu talks to Craig Turnbull about his career so far, including lessons for the future that can be drawn from the study of actuarial history 14 | THE ACTUARY | JANUARY / FEBRUARY 2020

14-16 interview_The Actuary JANFEB 2020_The Actuary 14

27/01/2020 10:48

Features Interview

C

raig Turnbull has held senior industry positions in global consulting, software and asset management businesses, and has particular interest and experience in risk, capital, valuation and investment. He is the author of the 2017 book A History of British Actuarial Thought.

I meet him in London, where we discuss changes to the actuarial profession, lessons to be learned from its history, and how we should embrace the challenges on the horizon.

An actuarial career Turnbull originally planned to pursue a scientific career, but changed his mind as a teenager – in part due to an awareness that scientific theories never seemed to last forever; he didn’t want to learn about things that were going to turn out to be wrong. With hindsight, he now recognises that this is exactly what might have made such a career deeply interesting, and that this is even truer of actuarial thinking over time. In any case, he is pleased to be working in “a profession of learned experts”.

Turnbull went on to study mathematics, statistics and finance at university.

He believes his skills lie in being able to understand the actuarial problem in front of him and identify the mathematical solution that has a reasonable prospect of solving it.

He is modest about his career achievements, noting that “most of the first 20 years of professional life should probably be considered an apprenticeship”. He spent 15 of those years at Barrie & Hibbert, and reflects on the range of experiences he benefited from during that period. When Turnbull joined, it was a small company employing four other people, but eventually became a global leader in its field. This gave Turnbull the opportunity to work closely with talented senior people early in his career, to experience living overseas for a period, and to be part of the process of growing a business and selling it on to new owners (Moody’s).

Turnbull now spends his time running a consultancy business and researching his own interests. Part of this research is making its way into a planned second book about the lessons actuarial work can draw

JANUARY JANUAR JAN UARY UAR Y //FEBRUARY FEBRUA FEB RUARY RUA RY 202 20200 | THE AC ACTUA ACTUARY TUARY TUA RY | 15

14-16 interview_The Actuary JANFEB 2020_The Actuary 15

27/01/2020 10:49

Features Interview

“Transparency is going to be key to maintaining public trust in the actuarial profession in the future”

from the philosophy of science. He also volunteers for the profession, with his volunteer work including chairing the IFoA’s Equity Release Mortgages Working Party.

Learning from the past Researching A History of British Actuarial Thought gave Turnbull an appreciation of the lessons that can be learned from our past. “A lot of actuarial work deals with the long term,” he says. “It is easy to underestimate how different the long term will be to today. An awareness of history helps mitigate that natural human failing.” He adds that the history of the actuarial world is full of very smart people, and that many of their insights are timeless. When asked for the key lesson he drew from his research, he quips: “Most good ideas are simple and old!”

An example of this might be found in the topical area of asset illiquidity premia. One might have previously assumed that the actuarial argument for investing the assets backing illiquid liabilities in illiquid assets so as to access illiquidity premia was a fairly contemporary idea. However, it is expressed, fully formed, in Arthur Bailey’s 1862 paper in the Journal of the Institute of Actuaries, ‘On the Principles on which the Funds of Life Assurance Societies should be Invested’.

Reflecting on the changes to the industry since he started out, Turnbull identifies four key themes that are shaping the profession today:

Option pricing models Should option pricing models such as Black-Scholes be used, even when some of the assumptions behind them do not hold for assets which are not traded? Turnbull notes that assumptions of ideal conditions do not really hold for any asset, so what we are really talking about is a difference in degree, rather than a difference in kind.

Ultimately, good models can provide powerful insight. Options appear all over the financial landscape, and the Black-Scholes option pricing framework is valuable for understanding the nature of those options.

That also applies to the options embedded in illiquid assets, though of course we are departing further from the idealised conditions of the theory. “Does that mean the formula will deliver the right answer to us on a plate without us engaging our minds?” he asks. “Fortunately for us, it does not. The work of actuaries and other financial professionals is to explain the departures made from the solution to a theoretical problem, to make it applicable to the practical situation.”

Solvency II 1 Many of the traditional fields of actuarial application are in a state of managed decline, and so the interest in wider fields has naturally continued to grow during the past 20 years.

2 The low interest rate environment has profound implications for the financial management of actuarial financial institutions.

3 The digital and internet revolutions and the increasing availability of data provide actuaries with new tools to answer complex and interesting questions within the actuarial professional domain.

At the same time, the technology may, in the longer term, presage the increasing commoditisation and de-professionalisation of some our activities.

4 Across society, a reduced willingness to trust professionals and their judgments has resulted in a drive to increase the objectivity of actuarial modelling and increase the explicit linkage of expert judgment to those models.

New actuaries entering the profession will need to “understand the nature of these trends and embrace the implications and opportunities that they will give rise to in the coming decades”.

He also advises them to “be prepared to take risks that will allow you to do what you are good at”.

16 | THE ACTUARY | JANUARY / FEBRUARY 2020

14-16 interview_The Actuary JANFEB 2020_The Actuary 16

We turn to Solvency II, and whether it gets the principles of capital modelling right. Two of its key original aims included moving towards a market-consistent valuation balance sheet, and from a rules-based to a principles-based capital requirements assessment approach. In Turnbull’s opinion, neither of these objectives have quite been achieved to the extent that would have been hoped.

This is possibly because policymakers’ appetite for those objectives has weakened since the global financial crisis of 2007-8.

If Turnbull could make one radical reform to Solvency II, it would be to change the internal model approval process so that, instead of approval from the regulator being required through a private submission process, the model would be made publicly available to such a level of detail that actuarial peers could form an informed view of whether the model and its assumptions were reasonable.

This would alleviate the burden on the regulator, and help to circumvent the game of second-guessing what the regulator wants.

In the past, this type of approach was sometimes referred to as ‘freedom with publicity’. As Turnbull says, “Transparency is going to be key to maintaining public trust in the actuarial profession in the future and to (internally and externally) assuring the quality of our expert judgments. We need to embrace it.” www.theactuary.com

27/01/2020 10:50

FREE YOUR MIND. FIND FRESH IDEAS. p17_ACT.JanFeb20.indd 17

Old thinking sticks with the tried and tested.

Free thinking unlocks new horizons. Think value for money solutions.

Think stability and agility, backed by an impartial partnership with a leading independent UK professional services consultancy.

It’s time. Set your business free.

barnett-waddingham.co.uk/ free-thinking

23/01/2020 15:49

Features Investment

A CO-ORDINATED

EFFORT

What role could insurers play in the muchneeded transition to a low-carbon economy?

Travis Elsum investigates

Last year was a watershed in the climate change narrative – the UK parliament declared a climate emergency, schoolchildren marched en masse and devastating wildfires raged across multiple countries. The enormity of the challenge we face, and the grave consequences of any failure to arrest it, sunk in.

Global annual CO2 emissions need to halve by the end of this decade and then reach net-zero by 2050 in order to limit the increase in global average temperatures to 1.5°C. Conversely, though, emissions have increased by 4% since the Paris Agreement was struck in 2015 – and are showing no sign of falling. For every year of delay the bar is raised, with deeper net negative emissions required in the future.

The climate change problem is so pervasive and complex that it will not be solved by one person or breakthrough technology. Halting it will require an almost complete rewiring of the global economy – a co-ordinated effort from governments, experts and organisations across sectors.

Long-term investors such as insurers, pension funds and other financial companies have a major role to play.

Their actions can influence whether sustainable technologies will supplant fossil fuels.

Supporting the transition to a low-carbon economy sits squarely within the corporate social responsibility of insurers and other financial companies. It is no longer enough to solely exist to create shareholder value – companies are increasingly expected to play a more beneficent role in society.

Similarly, employees are less likely to connect with the traditional goals of churning out ever more widgets. They are searching for something more – to make a difference.

Last year, the Business Roundtable released a statement on the purpose of a corporation (bit.ly/2GhLhMo) – signed by

ILLUSTRATION: IKONIMAGES

Reasons for supporting the transition

www.theactuary.com

18-19 low carb_The Actuary JANFEB 2020_The Actuary 18

27/01/2020 10:50

Features Investment

almost 200 US companies – which commits to supporting a wider range of stakeholders and adopting sustainable practices. While a degree of scepticism is healthy, many insurers are already practising these principles. L&G’s CEO Nigel Wilson, for example, has championed and embedded inclusive capitalism, whereby shareholder value is generated through products, initiatives and investments that also have broader social and environmental benefits.

There is another, perhaps more compelling reason to support the transition – the bottom line.

Addressing climate change will drive unprecedented rates of change in the energy, transportation and food sectors, potentially stranding billions of pounds’ worth of assets. Insurers that do not engage will be poorly equipped to manage risks and seize opportunities.

It is the equivalent of investing in Kodak film during the rise of the digital camera.

Bank of England governor Mark Carney has been vocal in warning companies about the significant financial consequences of not paying heed to transition risks. Actuaries will play an essential role in helping insurers and other financial companies better understand these risks.

Engage and influence Insurers, pension funds and other financial companies own or manage trillions of pounds of assets. They can use these to engage with and influence companies on climate change. Forming coalitions can further increase their influence.

The Climate Action 100+ group (bit.ly/2Pqy8WU) is a notable example, representing more than 370 investors with over US$35trn assets under management.

The group aims to influence the largest corporate emitters to align with the objectives of the Paris Agreement. It has

their coverage of coal projects, while 35 insurers and reinsurers have adopted coal divestment policies. Swiss Re achieved the top score on restricting insurance and divestment. These initiatives appear to be having an effect, or at least provoking a reaction, with Australian prime minister Scott Morrison – who, as Treasurer of Australia, brought a lump of coal into parliament – reportedly exploring ways to ban such practices.

Wider divestment strategies are more complex. Divesting from emissionsintensive sectors can reduce the timezero emissions intensity of a portfolio, but may not recognise and support companies that plan to transition to a lowcarbon business model.

Further, insurers and pension funds may be reluctant to tilt towards green investments due to concerns around impacts on tracking error and diversification.

Actuaries are well placed to help insurers and pension funds consider forward-looking climate-related factors in asset allocation decisions using scenario analysis.

“Insurers can support a smoother transition by investing in sustainable infrastructure, influencing heavy emitters and, if necessary, divesting”

How to support the transition Insurers can support a smoother transition by investing in sustainable infrastructure, influencing heavy emitters and, if necessary, divesting. They can also offer and promote new sustainable products.

Direct investments Insurers can use their own assets to invest directly in sustainable infrastructure and technology. The lengthy investment horizons and typically stable payoff associated with these assets are well suited to long-term investors.

Several insurers have set ambitious targets for sustainable investments.

AXA is targeting €24bn of green investments by 2023, including infrastructure and real estate. Aviva has already invested £3bn in low-carbon infrastructure since 2015, exceeding its own target two years early. www.theactuary.com

18-19 low carb_The Actuary JANFEB 2020_The Actuary 19

successfully co-filed a number of climatedriven shareholder resolutions.

The level of climate change engagement varies significantly across the sector. An InfluenceMap report (bit.ly/35qxNJj) on asset managers found that Allianz, AXA, L&G and UBS led on climate engagement, while large US-based managers trailed.

In particular, BlackRock voted against 89% of climate-driven resolutions.

There may ultimately be a limit to the power of investors to influence heavy emitters, especially in the US. The US Securities and Exchange Commission set a precedent by granting ExxonMobil’s request to block a climate change-related shareholder resolution on the grounds that it amounted to micromanagement.

Divestment Divesting or restricting services can be effective where engagement fails and for investments that are inherently incompatible with the Paris Agreement, such as new coal mines and coal-fired power stations. Divestment adversely impacts the valuations and funding costs of target companies. General insurers and reinsurers can further affect the viability of new projects through the restriction of cover.

The 2019 Unfriend Coal scorecard found that reinsurers representing almost 50% of the market have either ended or limited

New products Demand for sustainable investments has driven a surge in the growth of investment funds that consider environmental, social and governance (ESG) factors. This is set to continue as campaigns such as Make My Money Matter (bit.ly/35sfB1I) encourage people to invest their pension sustainably.

Investors’ ESG preferences are likely to become stronger and more nuanced over time, creating demand for a wider range of ESG funds. For example, some investors may opt for a portfolio aligned with the Paris Agreement, while others may seek to exclude fossil fuel investments altogether.

Innovative solutions will also TRAVIS ELSUM be needed to help is group internal individuals finance model controller at and insure new Legal & General. zero-carbon technology at home. A wealth of opportunities will be available as insurers embrace this decisive decade.

JANUARY/ FEBRUARY 2020 | THE ACTUARY | 19

27/01/2020 10:51

Features Health

Has the EU got it wrong on genetically modified and gene edited crops?

Nigel Halford investigates

THE CROPS

T

he genetic modification of plants is not a new technology: the first genetically modified (GM) plant was reported in 1984, the first commercial GM variety (a tomato with improved shelf-life) was launched in 1994, and the first major GM commodity crops were in the field in 1996. ‘Genetically modified’ refers to a plant whose genome, comprising several tens of thousands of genes, has been changed by the artificial insertion of an additional gene or small number of genes. Moving single genes into a plant cannot be done via conventional breeding, and genetic modification also allows plant breeders to use genes from any source in nature – or even genes that have been made in a test tube.

Since the mid-1990s, the use of GM crops by farmers around the world has risen rapidly, and by 2018 they were cultivated on more than 190m hectares, or about 12% of global crop land. Genetic modification is now a well-established technique in plant breeding, and GM crops have had an excellent safety record through a generation of consumption. GM cotton and soybean varieties have become so popular with farmers that approximately 80% of these crops are now GM. In contrast, the area of GM crop cultivation in the EU has hovered around the 100,000 hectare mark since the 1990s – a tiny fraction of the global total. That is not 20 | THE ACTUARY | JANUARY / FEBRUARY 2020

20-21 GENES_The Actuary JANFEB 2020_The Actuary 20

to say that the EU does not use GM crops: in the first 12 weeks of the 2018-2019 marketing year, for example, the EU imported more than 2.8m tonnes of soybeans, almost all supplied by countries that cultivate predominantly GM varieties. These soybeans would almost certainly have been used for animal feed; indeed, EU animal feed production has been heavily

dependent on imported GM crop products since the early 2000s.

How did we get into this situation?

The EU GM approval process is based on Food and Feed Regulation (EC) No 1829/2003 and Regulation (EU) No 503/2013, drawing on Directive (EC) No 2001/18, which defines a genetically modified organism (GMO) as an organism in which the genetic material has been altered in a way that does not occur naturally. The authorisation procedure comprises risk assessment by the European Food Safety Authority (EFSA)’s GMO Panel and risk management by the European Commission. Once EFSA has issued its opinion, the European Commission makes a draft decision that is then voted on by the Standing Committee on Plants, Animals, Food and Feed (PAFF). The representatives on PAFF are not scientists, and the qualified majority voting system means that

By 2018, GM crops were cultivated on more than 190m hectares of land worldwide

www.theactuary.com

27/01/2020 10:51

ILLUSTRATION: ISTOCK

Features Health GENETIC MODIFICATION

Results in a plant that contains an additional gene in its genome; this gene can be sourced from anywhere in nature, or synthesised in a test tube. GM plants have been used commercially since 1994

CHEMICAL OR RADIATION MUTAGENESIS

Result in plants with tens of thousands of mutations induced at random positions in the genome. Thousands of seeds are treated and the resulting plants screened for useful traits. Used in plant breeding since the 1950s

GENE EDITING

Results in a plant with a single mutation in a target gene. The first gene edited crop plant was approved for commercial use in Canada in 2014

proposals can be blocked relatively easily.

As a result, only two GM crop varieties have been authorised for cultivation within the EU to date. The first is a GM maize (MON 810) that carries an insect-resistance trait, which was authorised in 1998 and has been cultivated ever since, predominantly in Spain. The second is the Amflora potato, which produces a type of starch that has improved performance in some industrial processes. Amflora was authorised for cultivation in 2010 but is no longer available because its maker has withdrawn from crop biotechnology in Europe. Meanwhile, new GM crop varieties are being developed elsewhere that benefit from herbicide tolerance, insect resistance, disease resistance, drought tolerance, improved shelf life, reduced bruising, better nutritional properties and storage characteristics, and even improved food safety. Many of these traits make the crop more resilient, less likely to fail, and less likely to suffer loss of value due to, for example, a late season weed infestation and contamination of the product with weed seeds. This means peace of mind for the farmer and the farmer’s insurer. The EU is lagging behind: no GM crops are being developed specifically for European conditions or the European market, while the agricultural biotech industry is focused on obtaining consent for import of more GM crop products into the EU (difficult but not impossible to obtain) rather than for cultivation within the EU (close to impossible to obtain).

GM was not the last gene-related revolution to sweep through plant breeding.

The next was gene (or genome) editing, which is already in full swing. Gene editing is an umbrella term for several techniques that make targeted changes (mutations) to an organism’s DNA. The best known of these techniques is CRISPR, but there are several others. In the simplest use of the technology, a gene is knocked out, although other more complex applications continue to be developed. It is different from GM in that, by www.theactuary.com

20-21 GENES_The Actuary JANFEB 2020_The Actuary 21

the end of the process, a gene edited plant has a mutation in its DNA – but does not contain any additional genes.

Mutagenesis is not novel: it occurs naturally, of course, and since the 1950s scientists have used chemical and radiation treatments to induce mutations in crop plants. The difference between these older techniques and gene editing is that tens of thousands of mutations are induced in each plant, and the mutations occur in random positions. Thousands of seeds are treated and the plants that result are screened for

CONCLUSIONS The ECJ ruling on gene edited crops cannot be allowed to be the basis of the EU’s or UK’s policy. If it is, there will be no investment in gene editing techniques for crop improvement, the competitiveness of the EU and UK plant breeding industry will fall even further behind, and there will be a loss of scientists who want to work with the latest techniques. My own team is using gene editing to reduce the potential for acrylamide, a carcinogenic processing contaminant, to form in wheat-based foods. This should be of interest to actuaries working in life and health fields. If the current regulatory situation prevails, it is highly unlikely that the products of that research could ever be brought to market. As we are already seeing with GM crops, therefore, the EU’s position is actually hampering efforts to improve food safety.

CRISPR and related gene editing tools are precise, easy-to-use techniques that will transform plant breeding and other sectors of the biomedical sciences. This will happen around the world regardless of what the EU and UK decide to do. The EU and UK should recognise that fact and work towards policy alignment with other countries, based on sound science.

useful changes. Varieties carrying mutations induced by chemical or radiation mutagenesis had been in use for decades when EU GMO regulations were being drawn up. They are clearly GMOs as defined

by Directive 2001/18, but were granted a ‘Mutagenesis Exemption’ (Annex IB of Directive 2001/18), meaning that they do not have to go through the GM risk assessment process before cultivation and marketing.

To exempt or not to exempt?

There has been much debate within the EU over whether gene edited plants should be considered GM or not. This is the wrong question: gene edited plants are clearly GMOs according to the EU’s broad definition. The correct question is: should gene edited plants get the same exemption from the GM risk assessment process as plants produced by chemical or radiation mutagenesis? For scientists, the answer is yes, because making a single mutation in a target gene is clearly no riskier than introducing tens of thousands of random mutations. Unfortunately, in July 2018 the European Court of Justice (ECJ) came to a different conclusion. The ECJ was issuing an opinion (Opinion Case C-528/16) on proceedings brought by Confédération Paysanne, a French farmers’ union, and others, who sought an annulment of the ‘Mutagenesis Exemption’. The judges rejected an annulment but stated that the exemption did not apply to organisms obtained by gene editing.

The EU still has no formal policy on gene edited crops, and the ECJ judgment represents the legal position. In contrast, the US Department of Agriculture has stated PROFESSOR it will not regulate NIGEL gene edited crops at HALFORDORD all unless a plant pest is a principal is involved. The basic research scientist in application of editing the Plant Sciences to knock out a gene Department of will also be Rothamsted unregulated in Research Argentina, Brazil, Canada, Chile, Colombia, Australia, Israel and Japan, and many other countries are developing similar policies.

JANUARY/ FEBRUARY 2020 | THE ACTUARY | 21

27/01/2020 10:51

Features Health

CRITICAL

John Ferguson looks at the critical illness experience in Asia and what insurance claims tell us about future trends in the area

G

en Re has been conducting surveys of critical illness for nearly 30 years.

The first study looked at experience from 1990-1994 and analysed 4,600 claims. The most recent study, covering experience from 2012-2015, involved analysing more than 1.2m claims, reflecting the large growth in critical illness products in Asia. In total, 39 companies participated, from Hong Kong, Singapore, Malaysia and China. The survey focused mostly on traditional acceleration critical illness products – acceleration meaning that the benefit is paid either on death or on earlier diagnosis of a critical illness.

ILLUSTRATION: IKON IMAGES

ANALYSIS

22 | THE ACTUARY | JANUARY / FEBRUARY 2020

22-24 critical illness_The Actuary JANFEB 2020_The Actuary 22

27/01/2020 10:52

Features Health

1

Sum assured

3

Figure 1 shows the average sum assured (denominated in US$ for comparison), by issue year.

Claim by disease type

Figure 3 shows the percentage of claims by disease for males, together with how each disease ranks in terms of frequency of claim. Note that that not all products cover the same causes.

FIGURE 1: Average sum assured (US$) by issue year FIGURE 3: Claim causes by market and disease type – males

80,000 70,000

CHINA

HONG KONG MALAYSIA SINGAPORE

47.3% 1

56.9% 1

38.7% 1

45.2% 1

50,000

Cancer

16.1% 2

9.3% 3

19.1% 2

25.2% 2

40,000

Heart attack

0.1% 25

9.9% 2

2.0% 8

2.5% 7

30,000

Angioplasty and related procedures

6.2% 4

1.2% 9

8.5% 3

3.2% 5

20,000

Accidental death

11.6% 3

7.0% 4

7.7% 4

6.8% 3

10,000

Stroke Coronary artery bypass graft

2.2% 8

1.8% 6

4.8% 5

3.7% 4

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

60,000

Other serious artery disease

0.1% 27

2.6% 5

4.7% 6

3.1% 6

Chronic kidney failure

3.3% 5

1.8% 8

4.7% 6

1.9% 8

CHINA

Suicide

0.5% 16

1.8% 6

0.7% 11

0.8% 11

Sudden death

2.9% 6

0.4% 15

0.2% 25

0.2% 21

Possible suicide

2.3% 7

0.5% 12

1.4% 9

0.3% 16

Heart valve surgery

0.6% 14

1.0% 10

0.9% 10

1.2% 9

Sudden death – cardiac

1.1% 9

0.1% 24

0.6% 13

0.2% 20

Liver failure

0.9% 10

0.4% 13

0.7% 12

0.4% 15

Parkinson’s disease

0.1% 31

0.2% 22

0.3% 19

0

KEY:

HONG KONG

MALAYSIA

SINGAPORE

Even in developed Asian markets such as Singapore and Hong Kong, the average sum assured is not particularly large compared with regions such as the UK or Australia.

It’s also worth noting that the average sum assured in China has increased six times in just 15 years, from a fraction under US$3,000 to just under US$18,000. One can also see a large increase in sum assured since 2011 in Hong Kong. Much of this can be attributed to cross-border sales – for example, people from mainland China may purchase cover in Hong Kong, where it is cheaper and the currency is freely convertible.

2

Claims declinature rates

Declinature rates are the proportion of claims submitted by customers that are rejected. Figure 2 looks at claims declinature rates by claim type and by market. Claims for major diseases are more likely to be rejected than death claims, but the highest declinature rate is for claims for minor diseases, such as pre-cancerous carcinoma in situ.

We also found that declinature rates varied significantly by company, and did not appear to relate to company size.

93.8%

93.4%

92.6%

94.0%

TOP 20

98.4%

97.1%

97.6%

98.3%

We note that cancer is by far the most common claim cause, followed by heart attack and heart-related procedures (such as angioplasty or coronary artery bypass surgery).

Accidental death claims are significant in China and Malaysia but less so in Singapore and Hong Kong. We examined the accidental deaths in more detail and noted that the first and second policy years had significantly worse experience. Suicide would normally be excluded in the first one or two policy years, so it may be that these accidents are undetected suicides. We looked into accidental death claims where the cause may be associated with suicide, including ‘falling from a great height’, ‘accidental drowning’ and ‘gas poisoning’.

Drilling down at this level for the Chinese market data seemed to suggest that many of these extra accidental deaths could be due to suicide.

FIGURE 4: Claim causes by market and disease type – females

CHINA FIGURE 2: Claim declinature rates by market and type of claim 40%

30%

20%

1.1% 10

TOP 10

HONG KONG MALAYSIA SINGAPORE

Cancer

73.6% 1

83.4% 1

79.0% 1

82.9% 1

Stroke

7.7% 2

3.4% 2

5.3% 2

4.9% 2

Chronic kidney failure

2.4% 5

0.8% 8

3.4% 3

1.8% 4

Heart attack

4.9% 3

1.1% 6

2.7% 4

3.5% 3

CIS of breast

0.1% 24

2.0% 3

0.0% 61

0.0% 31

Accidental death

2.5% 4

0.5% 9

2.6% 5

1.0% 5

CIS of cervix

0.2% 17

1.8% 4

0.0% 61

0.0% 48

Angioplasty and related procedures

0.0% 36

1.4% 5

0.5% 7

0.4% 12

Coronary artery bypass graft

0.9% 8

0.1% 21

0.8% 6

0.3% 13

Heart valve surgery

0.7% 9

0.4% 11

0.4% 10

0.6% 6

Sudden death

1.1% 6

0.0% 49

0.0% 39

0.0% 48

Other serious artery disease

0.0% 39

0.3% 14

0.5% 7

0.4% 11

Possible suicide

0.9% 7

0.1% 23

0.4% 11

0.1% 17

Parkinson’s disease

0.1% 29

0.1% 25

0.3% 14

0.6% 7

Suicide

0.5% 11

1.0% 7

0.2% 17

0.5% 10

10%

0 CHINA KEY:

DEATH CLAIM

HONG KONG MAJOR DISEASE CLAIM

www.theactuary.com

22-24 critical illness_The Actuary JANFEB 2020_The Actuary 23

SINGAPORE

TOP 10

95.3%

95.9%

95.6%

96.8%

MINOR DISEASE CLAIM

TOP 20

98.4%

98.2%

98.1%

99.0%

JANUARY / FEBRUARY 2020 | THE ACTUARY | 23

27/01/2020 10:52

Features Health

Claim causes for females (shown in Figure 4) are dominated by cancer in all four markets. The second most common claim cause, stroke, accounts for less than one tenth of claims. Claims from heart attack and heart-related diseases are less important than for males.

This is partly because most exposure still comes from women under the age of 50. We would expect to see more claims from these causes over time as the insured female population ages.

4

Female cancer claims

We looked at a breakdown of female cancer claims in more detail (Figure 5), since this is the dominant claim reason.

FIGURE 5: Cancer claims by sites for different markets – females 100% 90% 80% 70%

since thyroid cancer is not a particularly common cancer elsewhere.

Figure 6 (below left) shows the large increase in female thyroid cancer during the past decade in China. This was also seen in Korea a few years previously (not shown in the figure). The cause does not appear to be related to diet, lifestyle or any particular genetic factors, and the increase may actually be due to improved diagnostic technology in China, where screening can be included as an employment benefit. Studies show that thyroid cancer, in particular papillary carcinoma of the thyroid, could have a 10-30% prevalence in the Asian population, even at younger adult ages. However, the great majority of these will not have any symptoms, as the cancer remains small and slow-growing, and may even disappear. A sufferer could live to an old age and die of other causes, never knowing that they had thyroid cancer. Since the standardised disease definition used in China currently does not exclude the very small papillary carcinomas, improved diagnosis has driven the increase in thyroid cancer claims.

60%

5 50% 40% 30% 20% 10% 0 CHINA KEY:

HONG KONG

NASOPHARYNGEAL

COLORECTAL BREAST

LYMPHOMA

SINGAPORE

OESOPHAGUS AND STOMACH

LIVER AND BILE

UTERUS

MALAYSIA

OVARY

PANCREAS

KIDNEY

MULTIPLE MYELOMA

LUNG

BRAIN

BONE

THYROID

LEUKAEMIA

Body mass index (BMI)

For the first time in this survey, we received information from companies that enabled us to calculate claim rates

by BMI band (Figure 7). There is a clear upward trend, starting from the lowest BMI band.

We also looked at the effect of BMI on different diseases.

For cancer, the highest BMI band had incidence rates 50% higher than the lowest band. Differences were even more marked for cardiovascular diseases. For stroke, the highest BMI category was 170% higher than the lowest, while for heart attack the difference was around 300%.

FIGURE 7: Age standardised claim rates (per thousand) by BMI

OTHER 7.00 6.00

Breast cancer is the most common type of cancer in each of the four markets, making up more than 40% of cancer claims. In China, thyroid cancer is the second most common cancer in females. This is surprising,

5.00 4.00 3.00 2.00

FIGURE 6: Trend in thyroid cancer claims rates (per thousand) for females

1.00

28-30

27-28

26-27

25-26

24-25

23-24

21-23

19-21

17-18

0.50

18-19

0

0.60

0.40 KEY:

0.30 0.20 0.10

KEY:

CHINA

HONG KONG

MALAYSIA

SINGAPORE

24 | THE ACTUARY | JANUARY / FEBRUARY 2020

22-24 critical illness_The Actuary JANFEB 2020_The Actuary 24

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

0

FEMALE

MALE

JOHN FERGUSON is life/health regional chief actuary, Shanghai at Gen Re. He would like to thank Dr Jianbo Xiang and Ryan Tian for managing the survey.

This article highlighted some of the findings from Gen Re’s 2012-2015 critical illness survey. While we have been able to show common trends and differences at a market level, there will be significant variation within each market, at a company level, which we did not have space to explore in this feature. www.theactuary.com

27/01/2020 10:52

The magazine of the Institute and Faculty of Actuaries

FEATURES LIST 2020 PLEASE NOTE THE THEMES FOR EACH ISSUE ARE NOT EXCLUSIVE. The schedule is subject to occasional revisions.

Please check with the features team prior to contributor deadlines for further details. Contact: features@theactuary.com

ISSUE

DEADLINES

SUBJECT THEMES

April 2020

Published: Contributor deadline: Ad booking deadline:

09 April 2020 17 February 2020 20 March 2020

■ Health and care ■ Lifelong learning/education ■ General insurance

May 2020

Published: Contributor deadline: Ad booking deadline:

07 May 2020 16 March 2020 17 April 2020

■ Finance/investment ■ Life insurance ■ Environment/sustainability

June 2020

Published: Contributor deadline: Ad booking deadline:

04 June 2020 15 April 2020 14 May 2020

■ Regulation/Solvency II/IFRS ■ General insurance/reinsurance ■ Pensions

July 2020

Published: Contributor deadline: Ad booking deadline:

09 July 2020 20 May 2020 19 June 2020

August 2020

Published: Contributor deadline: Ad booking deadline:

06 August 2020 15 June 2020 17 July 2020

September 2020

Published: Contributor deadline: Ad booking deadline:

03 September 2020 13 July 2020 13 August 2020

October 2020

Published: Contributor deadline: Ad booking deadline:

08 October 2020 10 August 2020 18 September 2020

November 2020

Published: Contributor deadline: Ad booking deadline:

05 November 2020 14 September 2020 16 October 2020

■ Life insurance ■ Pensions ■ Finance/investment

December 2020

Published: Contributor deadline: Ad booking deadline:

03 December 2020 12 October 2020 13 November 2020

■ Modelling ■ Risk management ■ General insurance/reinsurance

FURTHER INFORMATION For further information and advice please contact features@theactuary.com JULY 2019 theactuary.com

AUGUST 2019 theactuary.com

Interview John Taylor

The magazine of the Institute and Faculty of Actuaries

The incoming IFoA president sets out his agenda

Investment

Interview Douglas Anderson

The magazine of the Institute and Faculty of Actuaries

Why it’s time to turn your attention to China

FINANCE

WRITING FOR THE ACTUARY See terms and conditions at www.theactuary.com/contribute

Changing directions in longevity

Life The mortality experience of Irish insured lives

Asia A growing middle class demands coverage

■ Regulation/Solvency II/IFRS ■ Investment ■ Modelling ■ General insurance/reinsurance ■ Risk management ■ Health and care

MORE CONTENT ONLINE Additional content can be found at www.theactuary.com DECEMBER 2019 theactuary.com

NOVEMBER 2019 theactuary.com

Interview Deborah Ashby

The magazine of the Institute and Faculty of Actuaries

Is sleep a risk factor and what does it mean for insurers?

Risk

■ Environment/sustainability ■ Health and care ■ Life insurance

OCTOBER 2019 theactuary.com

SEPTEMBER 2019 theactuary.com

The magazine of the Institute and Faculty of Actuaries

Health

Forecasting global insolvency rates

■ Technology/Big Data/analytics ■ Careers/professional development ■ Risk management

The magazine of the Institute and Faculty of Actuaries

On her leadership roles in public health and statistics

The magazine of the Institute and Faculty of Actuaries

Centenary Interview Charles Counsell The man behind automatic enrolment

Technology Fighting insurance fraud in the digital age

Recruitment roundtable

Risk

The trends transforming today’s job market

New climate risk reporting guidelines

Reinsurance

ACROSS FRONTIERS

How to improve customised solutions

100 years of the Government Actuary’s Department

Risk Weathering the adverse affects of climate change

Pensions Are cash equivalent transfer values set at the right level?

Opening up a world of new opportunities in emerging markets

peopllee help peop caan help ningg thumb can of thum plaannin ion plan rules of siion ow rule How H their pens ement h thei nt with ge with engaage for retir to prepare

How psychology models could help us predict policyholder behaviour

Interview Mahidhara Davangere Taking leaps of faith and making an impact

Standards Tips to streamline IFRS 17 implementation

www.theactuary.com

25 FEATURE LIST_The Actuary JANFEB 2020_The Actuary 25

Antibiotic resistance: a ticking time bomb?

Pensions Is de-risking always the right course of action?

Risk Why it’s crucial actuaries understand the threats posed by climate change

Sh Should houlld we b bee using new mapping technology technollogy gy to assess environmental risks?

Interview

Pensions

Modelling

Risk

Ray Hammond on the future of money, work and healthcare

How do we divide pension pots fairly during divorce?

Assessing eligibility for the variable fee approach

Scenarios that help firms get to grips with climate change

JANUARY / FEBRUARY 2020 | THE ACTUARY | 25

27/01/2020 10:52

Features Modelling

SMOOTHING THINGS OVER

I

was looking at the FIFA rankings back in August 2018, as you do. It was a list of all the world’s international football teams in order of strength.

Compared to the previous ranking, two months earlier, there had been some big movements. Croatia had jumped from 20th to 4th;

26 | THE ACTUARY | JANUARY / FEBRUARY 2020

26-27 solv 2_The Actuary JANFEB 2020_The Actuary 26

Germany had fallen from 1st to 15th.

Why were there such big movements?

Well, France was at the top of the list at the time because its overall rating of 1,726 was higher than that of all the other countries. Every time France plays in an international, it is given a rating for that match. This rating depends on the result, the rating of the opposition and (possibly) the importance of the match.

The determination of this individual

Cricket The ICC cricket player rankings are much better behaved. They are also derived by ordering by overall ratings, with these being derived from bowling or batting ratings that have been calculated on an innings-byinnings basis. The overall ratings vary more smoothly over time, meaning that players tend to drift slowly up or down within the rankings rather than making big jumps.

How does the rating system achieve this?

Whereas FIFA gives equal weightings to all match ratings within a four-year window and no weightings outside it, the ICC ratings are weighted averages. A player’s rating after an innings is set equal to x times his rating for that innings plus (1-x) times his rating before that innings for some fixed x between 0 and 1. The result is that his rating after the innings is the weighted average of all his innings ratings during his entire career, with the size of the weightings decaying exponentially as the data gets older.

This not only smoothes out overall ICC ratings (and therefore positions in the ranking order), but also makes them more up to date, placing more weight on the most recent data. If FIFA used this methodology, Germany would have slowly drifted down the ratings during the past five years, with

ILLUSTRATION: IKONIMAGES

Steve Mills finds out what Solvency II models can gain from looking at sports player ratings

match rating isn’t important here; what is important is that France’s overall rating of 1,726 was the average of the ratings that France scored for each match during the previous four years.

That’s why weird things happen in the FIFA rankings. Germany’s rating fell sharply in just two months not just because they had a poor 2018 World Cup, but also because they had had a great 2014 World Cup, putting seven past Brazil in the semi-final and ending up as the winner.

All of those results in the 2014 World Cup dropped out of the calculation in 2018, as they were now more than four years old.

As far as the FIFA rankings are concerned, everything during the past four years is 100% relevant, whereas everything before it is 100% irrelevant.

www.theactuary.com

27/01/2020 10:53

Features Modelling

“The more data you use, the more accurate your calibration will be – but that’s only if the characteristics of the risk have not changed over time”

the memories of 2014 gradually fading rather than being wiped out overnight like Snowball’s heroics in Animal Farm.

It’s an interesting approach. And that brings me on to Solvency II internal models.

Internal models In calibrating internal models, companies will tend to fit probability distributions to historic data. There will be a lot of thought put into how far back the calibration data should go. The more data you use, the more accurate your calibration will be, but that’s only if the characteristics of the risk have not changed over time. There will be strong arguments for not using the oldest data because it’s starting to look out-of-date and irrelevant. It’s a tough call.

Companies have made those calls, though, and calibrated their models using data from a carefully chosen time window.

What happens when they recalibrate their models, though? If they calibrated using x years of data and then need to recalibrate the model one year later, will they just add on an extra year’s data? Maybe, but I expect they’ll eventually find that the oldest data is increasingly irrelevant. At some point they’ll start chopping off some of the earliest data, and that’s when they’re in

danger of seeing their solvency capital requirement (SCR) move around like Germany’s FIFA rating when significant historic events drop out of the calibration data.

So, are there alternative calibration methodologies that can take a lead from the ICC, with calibration parameters estimated using exponentially decaying weighted averages of the underlying data?

Would firms (and regulators) rather see SCRs that behave like FIFA ratings, or SCRs that behave like ICC ratings?

Experiment To see how this might work, I put together a simple experiment. I used some Dow Jones Industrial Average index data going right back to 1900, and fitted a normal

FIGURE 1: Evolution of 1in 200 equity stress 70%

60%

50%

40%

30%

20%

10%

0% 1920

1930

1940 All data

1950

1960

1970

Rolling data window like FIFA

www.theactuary.com

26-27 solv 2_The Actuary JANFEB 2020_The Actuary 27

1980

1990

Smoothed like ICC

2000

2010

2020

distribution to log returns for each of the last 100 years, estimating the mean and standard deviation three different ways: Using all data from 1900 to the calibration date Using a 20-year rolling calibration window (akin to FIFA ratings) Allowing the estimates to evolve smoothly over time by using exponentially decaying weightings with a weighting of 0.05*0.95n applied to the data from n years ago (akin to the way ICC ratings work) The results are presented in a graph.

Some features to notice are: The all-time calibration in green produces the highest capital requirements today, as a result of continuing to use data from the first 40 years of the 20th century – data that is given little or no weighting in the other two methodologies The size of the 1 in 200 stress plummets in the early 1950s, when the impact of the 1929 Wall Street Crash drops out of the rolling calibration window (blue line) – would today’s regulators have been comfortable with this if they were transported back in time? Instead, the brown line shows how the 1 in 200 stress would reduce smoothly using the ICC methodology.

The oil crisis in the 1970s and financial crisis in 2008 would have caused bigger increases in capital requirements for firms using rolling data windows than for those that adopted a smoothed approach. Would firms be comfortable with such potential volatility within STEVE MILLS is the owner and their capital director of SSC requirements?

Actuaries Does an approach similar to that used by the ICC sound like one that would appeal to both firms and regulators?

JANUARY/ FEBRUARY 2020 | THE ACTUARY | 27

27/01/2020 10:53

In-depth Modelling

Andrew Smith asks: can Bayesian methods give better long-term interest forecasts?

MIND YOUR STEP ANDREW SMITH is an assistant professor in the School of Mathematics and Statistics at University College Dublin.

T

he idea of a long-term interest rate is embedded in actuarial thought and practice. While market interest rates fluctuate, we think about long-run averages driven by economic fundamentals.

Tasks ranging from budgeting for pension contributions to the ultimate forward rate in Solvency II require assessments of long-run average returns.

Estimation of long-run returns involves a mix of judgment and, sometimes, intricate quantitative models. Bayesian statistics gives us a framework for combining these elements: the judgment corresponds to a prior distribution of parameters, while the forecast is based on a posterior parameter distribution given some data.

However, that is not how judgment is typically applied in

28 | THE ACTUARY | JANUARY / FEBRUARY 2020

28-30 in depth_The Actuary JANFEB 2020_The Actuary 28

actuarial problems. The most conspicuous use of judgment comes in the selection of parameters, by choosing (or not) to modify parameters emerging from a mechanical model fitting exercise.

Less visibly, judgment is involved in the selection of data and models.

Since the 1990s, sampling-based methods such as the Metropolis– Hastings algorithm (MHA) have transformed Bayesian statistics in fields as diverse as agriculture, medicine and statistical physics.

If we wanted to, we could now implement Bayesian methods to incorporate long-term return estimation. Do we want to? Why are so few actuaries doing this?

The interest rate modelling problem: Classical solution The Bank of England publishes a data set of yield curves, based on gilts, with month-end nominal curves

available from January 1970. Figure 1 shows the history of five, 10 and 15-year spot interest rates.

Statistically, a long-term average arises from a stationary stochastic process, such as an AR1 model.

However, the path of interest rates in many countries since the 1970s looks more like a random walk with steady downward drift, which is not stationary and has no long-term average. To cover both cases – the stationary and random walk models – we propose a model for the 10-year yield yt in month t using a discrete Pearson process:

yt = αyt-1+ c+ σ2+ β2(yt-1-λ)2 εt This model class allows for mean reversion leading to stationary models, but also includes random walks with drift. The volatility term allows for constant conditional variance, but can also allow conditional variance to fall as yields www.theactuary.com

27/01/2020 10:54

In-depth Modelling

TABLE 1: Fitted maximum likelihood estimation parameters Parameter

Maximum likelihood estimate

Interpretation

α

1.0016

This model is very slowly mean-averting

c

-0.0002

Downward drift of two basis points per month

λ

0.0667

Yield at which volatility is lowest

σ

0.0019

Monthly volatility when yields are equal to λ

β

0.0574

Additional volatility when yields are higher or lower than λ

FIGURE 1: Historic interest paths 20% 18%

fall, behaviour associated with some popular stochastic interest rate models such as Cox–Ingersoll– Ross or Black–Karasinski. The errors εt are independent standard normal random variables.

ILLUSTRATION: SHUTTERSTOCK

Fit by conditional maximum likelihood A maximum likelihood optimiser applied to the discrete Pearson process based on monthly data gives the parameters in Table 1.

We show 20 paths from the model in Figure 2.

Statistically, these are plausible extrapolations of the history we have.

A striking feature of the fitted model is the high frequency of large negative interest rates – much more frequent than some would consider acceptable from an economic scenario generator. Furthermore, thanks to the quadratic form in the Pearson process definition, rates become more volatile as they drift into large negative territory. This is a mirror image of what happened in the 1970s and 1980s.

The question is: are these statistically plausible paths economically credible? Even before we apply MHA, the Pearson www.theactuary.com

28-30 in depth_The Actuary JANFEB 2020_The Actuary 29

16% 14% 12% 10% 8% 6% 4% 2% 0% 1970

1980

1990 Five-year

2000

2010

2020

10-year

FIGURE 2: Simulated paths 10% 5% 0% -5% -10% -15% -20% -25% -30% -35% 2010

2018

2026

2034

2042

2050

JANUARY/ FEBRUARY 2020 | THE ACTUARY | 29

27/01/2020 10:54

In-depth Modelling

Since the 1990s, sampling-based methods such as the Metropolis– Hastings algorithm (MHA) have transformed Bayesian statistics in fields as diverse as agriculture, medicine and statistical physics

scenarios are wilder than those produced by commercial scenario generators. We might ask if it is legitimate to use judgment to tame those negative scenarios.

All is not as it seems with the maximum likelihood fit, either.

The optimiser has found a local maximum likelihood, but not a global maximum. Indeed, globally, the likelihood is unbounded, which you can see by setting λ equal to one of the observations and letting σ become small. The optimiser has failed to solve the problem posed, yet we have no warning because the algorithm has wrongly converged to a suboptimal but plausible set of parameters. The difficulty of unbounded estimation is common in financial models with nonconstant volatility, and is not special to the Pearson model we have fitted here.

Prior parameters and Metropolis–Hastings The 1990s saw the widespread use of Markov chain Monte Carlo sampling-based methods, of which MHA is one of the most popular. The idea of MHA is to build a random walk model to

describe parameter values.

However, each step of the random walk is subject to an acceptance test. If a proposed new parameter value is much less plausible than the previous value (as measured based on a combination of data likelihood and prior distribution), the step is cancelled. The result is a constrained random walk that spends more time in more plausible parameter regions. We are free to choose the standard deviation of the random step size, but not the direction that has to be governed by the acceptance rule. There is a theorem saying that, over many steps, the distribution of random walk observations converges to the Bayesian posterior distribution.

There are some practical obstacles in the case of interest rates time series. Our likelihood function has a long ridge around the local maximum, which complicates how we set the step size in the random walk in MHA. In theory, we are free to choose whatever step size we want. Set the step too large and you keep falling off the ridge (and the step is rejected, meaning you are back where you started). If the steps are too small, you hardly move along the ridge at all. With many steps, the MHA mathematically converges to a limiting distribution, but that convergence may be so slow as to be useless in practice. We can fix the slow convergence in this case by mapping out the ridge around the maximised likelihood. Then we adjust MHA to make large steps parallel to the ridge but small steps orthogonal to it.

Once we got the MHA working, we found in the context of interest rates that allowing for parameter error, and imposing a judgment that yields should be stationary, had an imperceptible or only modest impact on interest percentiles over horizons up to 10 years.

30 | THE ACTUARY | JANUARY / FEBRUARY 2020

28-30 in depth_The Actuary JANFEB 2020_The Actuary 30

THE ‘UNCERTAINTY ONION’ Uncertainty matters in modelling long-term returns. If we say we know the long-term return, we are kidding ourselves and mispresenting long-term investment risks. We should consider different paths with different long-term returns, rather than assume all future paths are driven with the same parameters. Algorithms such as MHA can help us incorporate parameter uncertainty.

There are several layers of uncertainty, like unpeeling an onion. The outer layer is the stochastic uncertainty, as described by a model whose parameters we know. This model might be fitted mechanically to available data. What we usually call stochastic modelling does not penetrate all the layers of uncertainty, just the outer one.

The next layer is parameter uncertainty, in which we vary our model choices, testing alternative plausible parameters. In this layer, we still assume a single set of parameters for each future path and, more significantly, we assume the same set of parameters held throughout the historic data.

The constant historic parameters are important because this is how we judge what constitutes plausible future values. We can use Bayesian methods to penetrate the second layer. The advent of algorithms such as MHA has made it more feasible to unpeel this second layer, and this is common practice in other areas of statistics.

There are further layers of uncertainty to explore.

We should consider whether markets in the 1970s could have operated with different parameters to today, or whether data may have been cherrypicked or wilful blindness employed to direct us away from painful scenarios.

Compared to many other statistical applications, actuarial problems can have a thin second layer, due to large amounts of data that may not be relevant if parameters were not constant. It would be wrong to claim that the Bayesian methods we have applied penetrate the inner layers of the uncertainty onion, and it’s not clear that actuarial judgment does, either. www.theactuary.com

27/01/2020 11:06

Features Regulation

The

job

Silvia Dell’Acqua, head of actuarial reserving at Eurovita SpA and lecturer in actuarial mathematics at Politecnico di Milano, talks to Dan Georgescu about the profession in Italy

In Italy, insurance professionals can only call themselves actuaries if their names appear in the National Register (Albo Nazionale), meaning that they have passed a state examination. Until that point, actuarial education is university-based and restricted to a few specific degrees. A public institution supports actuarial professionals, maintaining quality standards, a code of ethics, and a professional development programme. There are just under a thousand registered Italian actuaries, and there are reciprocal agreements and mutual recognition with other associations.

The role of the actuary in Italy seems more limited than in the UK. Are actuaries in Italy finding their way into management positions?

How has Solvency II changed actuarial work in Italy?

Solvency II has highlighted the need to measure risk in a forward-looking manner, moving the focus away from the immediate profit and loss position and on to how this position will emerge over time. The new regulation has raised the importance of the risk functions and created opportunities, particularly in consultancy roles. It has also opened the insurance market to many non-actuaries, who bring other skills to the industry. This is not necessarily a bad thing, speaking as someone with a background in mathematical engineering. Actuaries are more prepared than mathematicians and engineers when it comes to looking at the balance sheet and understanding insurance regulation, but dedicated mathematicians may feel more at home specifying a financial model that the engineers can build into a process.

Venice, Trieste and other coastal towns have recently been flooded by the highest tides seen in more than 50 years.

Should actuaries be doing more about climate change?

The flooding has brought attention to the increased frequency of extreme weather events. Part of the public anger concerns the fact that the defence system of movable underwater barriers, MOSE, is running a decade behind schedule, having been beset by corruption, cost overruns and delays.

Actuaries may be helpful in assessing the risks of floods and earthquakes, but there is still a lack of political will directing their skills. The Italian parliament has discussed, but failed to pass, legislation to improve insurance cover for major risks and the availability of insurance for disaster damages, such as compulsory contribution to a seismic fund by individuals living in areas prone to earthquakes. Retail seismic insurance remains uncommon; this needs to improve. At the moment, the driver in this area is the European Insurance and Occupational Pensions Authority, with its agenda of sensitivity-testing the climate risks embedded in insurance companies’ portfolios.

ILLUSTRATION: IKONIMAGES

It can be hard to find an Italian actuary who is a CRO, CFO or CEO, though this may become more widespread in the future.

Historically, the actuary has been seen as a specialist who calculates reserves or performs some other well-defined, specific task. However, Solvency II is changing this.

I see the CRO as a natural possible step in the career of a risk actuary, but the CFO position may require a deeper knowledge

of assets, finance and accounting, and the CEO role additionally requires experience in marketing and relationship management.

If an actuary spends too many years carrying out the same traditional routine tasks, it can be hard to get the breadth required for these roles. That said, the Italian Institute for the Regulation of Insurance is asking for technical competence on companies’ boards of directors, which will be good news for actuaries.

IMAGE: ALAMY

How does one become an actuary in Italy?

www.theactuary.com

31 Italy_The Actuary JANFEB 2020_The Actuary 31

JANUARY / FEBRUARY 2020 | THE ACTUARY | 31

27/01/2020 10:56

Features Health and life

LONGEVITY BULLETIN:

RESEARCHING RESEARCH: THE UPS AND DOWNS OF EPIDEMIOLOGY

PHARMA ISSUE

Readers of articles summarising medical studies might assume that the combination of rigorous study design, impartial analysis and independent peer review would make the output ‘cast iron’.

Why, then, do we read statements such as: ‘Much of the scientific literature, perhaps half, may simply be untrue’ (Richard Horton, editor, The Lancet, April 11, 2015) ‘It is simply no longer possible to believe much of the clinical research that is published, or to rely on the judgment of trusted physicians or authoritative medical guidelines’ (Dr Marcia Angell, former editor of the New England Journal of Medicine).

From epidemiology to polypharmacy, Matthew Edwards provides a selection of highlights from the IFoA’s forthcoming Longevity Bulletin

T

he forthcoming issue of the Longevity Bulletin looks at the issue of ‘pharma’.

In this feature, I summarise the main points of an article about epidemiology (written by Dan Ryan and myself ), likely to be of interest to readers working in data analytics. I also highlight a fascinating article on polypharmacy

by Dr Malcolm Kendrick, which asks whether more medicine is making us worse, not better.

MATTHEW EDWARDS AND DAN RYAN

What has driven these concerns? And if they are well-founded, how can we assess the validity of any published research? How did epidemiology come to be in this position?

Early epidemiology Epidemiology became a promising field of medicine in its own right in the 1950s, with well-known studies relating to smoking and the discovery of the harm caused by tobacco, as well as hypertension. How, in the field’s infancy, would one interpret or judge epidemiological results?

In 1965, Bradford Hill (whose work with Richard Doll helped determine the link between smoking and lung cancer – see Figure 1) published ‘The Environment and Disease: Association or Causation?’ in the Proceedings of the Royal Society of Medicine. In this paper, he introduced what have been known since as ‘the Bradford Hill criteria’ (see box). They have remained the standard criteria for distinguishing association and causation ever since, with a much wider scope than just medicine.

FIGURE 1: Richard Doll and Bradford Hill’s 1954 paper

The rise and fall of epidemiology?

For some time, there has been a ‘diminishing returns’ problem: each decade has felt less illuminating than the previous decade. Far from the aforementioned ground-breaking studies on 32 | THE ACTUARY | JANUARY / FEBRUARY 2020

32-34 longevity_The Actuary JANFEB 2020_The Actuary 32

www.theactuary.com

27/01/2020 10:56

Features Health and life

Consistency (reproducibility): Consistent findings observed by different persons in different places with different samples strengthens the likelihood of an effect.

Specificity: Causation is likely if there is a very specific population at a specific site and disease with no other likely explanation.

Temporality: The effect has to occur after the cause.

Biological gradient (ie dose–response relationship): Greater exposure should generally lead to greater incidence of the effect.

Plausibility: A plausible mechanism between cause and effect is helpful (although knowledge of the mechanism is limited by current knowledge).

ILLUSTRATION: IKONIMAGES

Consistency between epidemiological and clinical findings increases the likelihood of an effect.

Experiment: Do preventive actions taken on the basis of an assumed causal association alter the outcomes?

Analogy: What are the effects of similar factors?

www.theactuary.com

32-34 longevity_The Actuary JANFEB 2020_The Actuary 33

Hierarchy of evidence The hierarchy of medical evidence is often expressed in the pyramid shown in Figure 2.

Higher layers represent increasing internal validity as the risk of bias is reduced (if not eliminated). The efforts taken to allow for confounding factors increase the likelihood that the phenomena observed are likely to result from the causative mechanism of interest.

However, the dividing lines are not always clear cut. For example, while a cohort study tracks the experience of many individuals over time to assess the longitudinal impact of risk factors or treatment, carefully selected pairwise comparisons in a case–control study may provide

“Modern epidemiology seems more concerned with continually conflicting claims about aspirin, broccoli, coffee and so on” stronger explanatory power. One problem with very carefully designed studies, though, is that the results will hold true only if the selected population from which participants are drawn is representative of the population to which the treatment or intervention is applied (this issue is explored further in the article on polypharmacy).

The importance of sense checking While epidemiology remains a vital field of exploration, all claims need to be properly ‘sense checked’ (given the unreliability of the peer review system). The Bradford Hill criteria are an excellent reference point, but there are other points for actuaries to consider: Impact – what is the all-cause mortality impact if the results are correct? For many findings published in recent years, the impact on life expectancy is negligible

FIGURE 2: The hierarchy of medical evidence pyramid

Meta analysis Systematic reviews

Cochrane Database of Systematic Reviews DARE TRIP Database Systematic review/meta analysis filters in PubMed, CINAHL, PsycINFO etc.

Critically appraised sources

UpToDate Dynamed Clinical Evidence ACP JournalClub Essential Evidence + Evidence Updates

APPRAISED / FILTERED

Strength (effect size): The larger the association between ‘dose’ and response, the more likely that it is causal.

smoking and hypertension, modern epidemiology seems more concerned with continually conflicting claims about aspirin, broccoli, coffee and so on (the list could be extended alphabetically to Z without much difficulty).

And quantification of the reputed harms or benefits – with typical risk factor effects shown of the order of 10-20% for particular causes of death – shows life expectancy impacts of the order of a few weeks, compared with the massive life expectancy impact of five-10 years (for a 50-year old) implied by the smoking studies.

Randomised controlled trials

Cohort studies

PubMed CINAHL PsycINFO CENTRAL TRIP Web of Science

Case control studies

UNFILTERED

THE BRADFORD HILL CRITERIA

Case reports/case series

Background information and expert opinion

ClinicalKey AccessMedicine Other clinical textbooks

JANUARY/ FEBRUARY 2020 | THE ACTUARY | 33

27/01/2020 10:57

Features Life and health

POLYPHARMACY: IS TOO MUCH MEDICINE REDUCING LIFE EXPECTANCY?

The labelling of more and more conditions as diseases that require medication has led to an increasing DR MALCOLM KENDRICK number of drugs being prescribed – and this can be seen in many countries.

Polypharmacy refers to the prescription However, in the UK, another factor has of multiple medications. An increasing exacerbated the polypharmacy problem. number of people feel that we are This is the Quality Outcomes in danger of doing more harm than Framework (QOF), which regulates good, with an increasing number of payments to GPs. medical interventions.

QOF incentivises GPs to prescribe Part of the problem is the continual in accordance with the guidelines. lowering of the ‘normal versus high’ However, these guidelines are based thresholds for measures such as on evidence relating to drugs in blood pressure and cholesterol. isolation. There have been limited Along with the many millions attempts to establish whether of people ‘diagnosed’ About combining medications with hypertension, more creates an additive benefit than 60% of the adult – but prescription drugs population is now patients in the US and are powerful agents that considered to have Europe die from should be used with a raised cholesterol level. prescription drugs each year.

328,000

Data bias – how might bias be present in data selection, or in the operation of confounding factors?

Commercial bias – given the penalties of $38bn applied to pharma firms since 2000, it is clear that questionable approaches have often been adopted Association or causation – few study types allow us to safely infer causation, although association may be sufficient in a typical insurance underwriting context Biological plausibility – are the results plausible regarding the underlying biological or realworld process involved and, similarly, are they consistent with clinical evidence?

Proper appreciation of models requires us to give attention to the real world underlying the models, as Bradford Hill warned us many years ago. Epidemiology is more likely to be misleading when it becomes a purely statistical enterprise, divorced from its underlying reality.

Case study: Bias risk in observational studies An interesting question is the degree of bias present in observational studies, where studies are constructed ‘retrospectively’ through the analysis of historical datasets rather than set up on a prospective basis. The study would typically split records according to patients’ apparent use of a particular medication or treatment – but adhering 34 | THE ACTUARY | JANUARY / FEBRUARY 2020

32-34 longevity_The Actuary JANFEB 2020_The Actuary 34

caution, as this 2014 study from Harvard University makes clear: About 128,000 people [in the US] die from drugs prescribed to them. This makes prescription drugs a major health risk, ranking 4th with stroke as a leading cause of death. The European Commission estimates that adverse reactions from prescription drugs cause 200,000 deaths; so together, about 328,000 patients in the US and Europe die from prescription drugs each year.

The conclusion of a study in Israel which looked at reducing the number of medications given to elderly and disabled patients showed reduced costs, improved quality of life and a reduction in overall mortality. It could be said that stopping drugs is the single most effective drug treatment currently available.

to that medication is likely to be a sign of a ‘doing what I can to be healthy’ attitude, and hence associated with other healthy behaviours.

The most famous (or rather, infamous) example of this bias relates to advice recommending hormone replacement therapy (HRT) following the results of the 1985 Nurses’ Health Study. This was an observational study that found a 42% reduction in cardiovascular risk associated with HRT, while an equivalent randomised controlled trial conducted some years later showed a 29% increase in cardiovascular risk from HRT. The difference was seen as largely attributable to other healthy behaviours of those women who had opted for HRT. Other studies have looked at this issue from the perspective of adherence within the placebo groups of randomised controlled trials – ie what is the mortality of ‘placebo MATTHEW taking’ versus ‘placebo EDWARDS neglecting’ individuals? is editor of the Such studies have shown Longevity Bulletin very striking differentials and a consulting actuary at Willis of the order of 50% risk Towers Watson. reduction in respect of placebo adherence – which is acting here purely as a marker for general healthy behaviour, independent of the treatment being studied.

OTHER SUBJECTS COVERED IN THE BULLETIN The forthcoming issue of the Longevity Bulletin also contains articles on: Diabetes and pharma: How pharma is both helping diabetes (metformin) and exacerbating it (statins),

by Nicola Oliver Opioids in the UK: A medical analysis

by Dr Chris Martin Opioids in the US: A statistical overview

by Dr Magali Barbieri Juvenescence: How pharma applies in the anti-ageing space,

by Simon Pavitt

www.theactuary.com

27/01/2020 10:57

INSIDE P36 Student Elliott Cox examines the implications of a more technological profession

www.theactuary.com

35 INTRO_The Actuary JANFEB 2020_The Actuary 35

P37 People and society news A round-up of actuarial and social news

P38 Puzzles

P40 Inside story

Brain teasers for your coffee break

Jo Lo on volunteering, geocaching and Lloyd’s Coffee House

JANUARY / FEBRUARY 2020 | THE ACTUARY | 35

27/01/2020 10:57

At the back School of thought

Student Adapt or adopt Elliott Cox asks whether improvements to advanced learning will push actuaries out of work

ILLUSTRATION: SIMON SCARSBROOK

D

uring the past decade, technology has transformed the way we work. Calculations that were previously completed by hand can now be run through Excel models to produce reliable answers in a fraction of the time, with the actuary’s role shifting to independently checking and verifying these results. I’m sure very few of us would complain about this; we can now spend our time on more interesting work, refining actuarial techniques and developing new solutions for clients.

As the industry continues to develop, however, will previously accepted methods become too ‘primitive’ and imprecise to justify? Computers and modellers become more sophisticated as the general workforce gains experience in model-building, and it’s now commonplace for workers in the financial sector to use powerful software and tools that are capable of much more than we currently use them for. In other areas, we’re seeing the introduction of ‘robo-advisors’, which provide personalised advice by following mathematical rules or algorithms. The asset management market has led in this space, given the limited impact of ‘softer facts’ that fall into this advice, but it’s conceivable that future 36 | THE ACTUARY | JANUARY / FEBRUARY 2020

36 STUDENT_The Actuary JANFEB 2020_The Actuary 36

developments will widen the range of behaviour we can model and code.

Do we really need these ‘overpowered’ tools, though? In some cases, the processes we rely on today are as precise as we would reasonably need them to be – and where there is limited precision, it’s often a conscious choice. Much of what we do takes account of the available data, and where we don’t or can’t know exact values (for example, financial data at future dates), we make assumptions based on our current expectations. No amount of modelling will remove the inherent randomness of the future events that affect these figures, and unless we can use advanced learning tools to observe trends in the data that we haven’t identified from conventional modelling, there is little to gain from overcomplicating things. It might be one of the few examples where an actuary accepts the adage ‘if it ain’t broke, don’t fix it’.

How would advanced learning tools impact errors and omissions? We would expect reduced human error to be a benefit, but this relies on a robust underlying model, which is only possible if an appropriately experienced person can correctly create these tools. Will it be necessary for actuaries to have coding experience, or will actuaries be replaced by non-actuarial coders to meet this need? We’re beginning to see statistical modelling appear in the earlier exams, but there is still a long way to go before these tools will be commonplace in our work.

Actuaries aren’t coders by nature, and there will always be different generations of actuaries that have qualified under different syllabuses.

At its heart, our work relies on producing sensible numbers – and questioning why the results we have come to could be justifiable when things look strange. This latter aspect is something an automated process cannot do. What do you do when the sense check breaks down?

Separately, many of us work as advisers to clients. Consultancy is deeply entrenched in human interaction, and involves building relationships, keeping up with topical (not necessarily ‘codeable’) developments, cutting through the details of technical information, and relaying all of this in a digestible manner to ensure clients receive the solutions they need. When we over-rely on modelling, there is arguably no recourse for recipients of our work when the process breaks down. It seems reasonable that there would be market apprehension around the reliability of such new tools – will clients trust significant advice from a robo-advisor if they can’t ‘see the whites of their eyes’?

Ultimately, though, we would expect technological improvements to translate to efficiencies. Better models, reduced human involvement and tools that can easily reproduce results (without the need for detailed expertise) will undoubtedly cut costs. Pressures from the market dictate that we need to continually adapt and improve if we are to provide a better service to those we work for and with.

Will future technological innovations revolutionise the industry? In the longer term, quite possibly. There would be a lot of detail to work through in the short term, not least convincing users of our work that the technology is trustworthy – would you be comfortable receiving pensions advice from a robo-advisor, with technology in its current state? Furthermore, will actuaries be replaced by coding experts or online tools? It’s perhaps more likely that the focus of our work will shift, with some actuaries primarily spending their time building new processes and others remaining in more ‘traditional’ advisory or specialist roles.

ELLIOTT COX is a student editor. www.theactuary.com

27/01/2020 10:58

At the back Society news MARRIAGES Congratulations to Georgina Crowe and Kevin Hyden, who work at Aviva and were married on 13 July.

WCA

FREE-WHEELING In October 2019, David Collinson received the Phiatus Award and a £500 cheque from the Worshipful Company of Actuaries Charitable Trust for his work on the Wild Wheelchairs Project.

David and motivational speaker Alex Lewis set up the project two years ago, with the aim of ascending Ethiopia’s highest mountain, Ras Dashen, which has an elevation of 4,550m. They also wanted to create a wheelchair manufacturing facility in Ethiopia and produce a documentary about the project.

Alex (www.alex-lewis.co.uk) is a quadruple amputee, so getting up a high mountain represents a challenge. David managed and funded the project, producing the handcycle and undertaking the expedition and seed capital for the wheelchair workshop before the fundraising started. The wheelchair factory is now up and running, producing wheelchairs in the Ethiopian city of Bahir Dar. In October, the team undertook a 14-day expedition to ascend Ras Dashen, successfully reaching the summit on 6 October. You can read their blog following the expedition at www.wildwheelchairs.com or at bit.ly/wildWheelchairs The expedition team included Winchester Hospital’s intensive care specialist Dr Geoff Watson, who saved Alex’s life six years ago and was the one to help him up the final stretch to the summit, as well as 20-year-old Ethiopian wheelchair basketball player Emebet Ale Dires. The team used a specially designed solar-powered, battery-assisted handcycle to allow Alex and Emebet, who has no legs, to transport themselves through the foothills and up to just below the summit of the mountain. This handcycle was developed by a team of masters students from the University of Southampton.

Director Simon Ratigan filmed the expedition and will release a documentary on the project and expedition soon.

WCA

AN EVENING WITH OLYMPIAN CATH BISHOP 10 February 2020, 6pm-10pm Join Cath Bishop, Olympic silver medallist, for drinks, canapés and a fascinating talk entitled ‘The Long Win: How our obsession with coming first can get in the way of achieving success’.

This is a fantastic opportunity to hear from world-class speaker Cath who is a former

www.theactuary.com

37 society news_The Actuary JANFEB 2020_The Actuary 37

Olympic rower, conflict diplomat and regular at Radio 4’s Broadcasting House (www.cathbishop.com).

The evening will take place at The Oriental Club, Stratford Place, W1C 1ES at 6pm for 6.30pm. The dress code is smart casual and the cost is £50 a head. Contact the WCA for more details.

Call for your news…

We would be delighted to hear from you. If you have any newsworthy items for these pages, please contact us at: social@theactuary.com

TA N C

LIFESPAN AND THE GENOME

By Ioannis Kyriakou, TANC executive advisor, Cass Business School On 21 November, Peter Joshi, Chancellor’s Fellow at the University of Edinburgh and an actuary and genetic researcher, gave a talk as part of The Actuarial Network at CASS’s (TANC) series of events on the genetics and genomics of human lifespan.

Peter went through recent developments in our understanding of DNA and how it affects lifespan.

Studies show that lifespan runs in families with a typical slope of 8%, which translates to someone living longer by 0.75 years if either the mother or the father lived longer than average by 10 years.

Until now, genetic analysis has been restricted to rare, very large effects within affected families and screening applied during IVF for rare large-effect familial disease. Now, from his work on a very large dataset of a million parents, Peter has found 12 loci associated with lifespan. He concluded that genomic revolution is presenting opportunities and deep ethical challenges to society, some of which are actuarial.

JANUARY / FEBRUARY 2020 | THE ACTUARY | 37

27/01/2020 10:58

At the back Puzzles

iQ

www.mensa.org.uk

Driving range Mensa puzzle 772 Two vehicles set off from the same point, at the same time, to travel the same 190-mile journey. If the first vehicle travels at 50 mph and the second vehicle travels at 45 mph, what will be the difference between the arrival times of the two vehicles?

Word fragments Mensa puzzle 774

Wheel of fortune Mensa puzzle 773 What number should replace the question mark in the circle?

3

ATR SOT KLE ALB OSS DON

5

1

3

4

1 ?

4 1

4

9

8

5

5 7

Place together three word bits to give a nine letter word.

What is it?

4 7

9

8

2 2

6 3

1

38 | THE ACTUARY | JANUARY/FEBRUARY 2020

38-39 puzzles_The Actuary JANFEB 2020_The Actuary 38

www.theactuary.com

27/01/2020 10:59

At the back Puzzles

Tricky tiles Mensa puzzle 775 Answers: 772: 25 minutes and 20 seconds. 773: Eight. In each sector, the sum of the two outer numbers is placed in the centre of the next sector, in a clockwise direction. 774: Albatross. 775: D 776: Cherry, banana, lychee and orange.

777: 14:30 or 2:30pm.

Which one is dierent from the other three?

Clockwatching Mensa puzzle 777 Clock A was correct at midnight. From that moment it began to lose three and a half minutes per hour. The clock stopped two and a half hours ago showing clock B. What is the correct time now?

The clock runs for less than 24 hours.

Horsing around Mensa puzzle 776 A knight is positioned on the shaded square of this chessboard.

Move the knight to each square once only, collecting letters to spell out four sixletter fruits.

What are they?

R C R N H

A A E Y O

00:00 A H R E C A

www.theactuary.com

38-39 puzzles_The Actuary JANFEB 2020_The Actuary 39

N N B E L

Y E A G

11:18 B JANUARY / FEBRUARY 2020 | THE ACTUARY | 39

27/01/2020 10:59

At the back Volunteer

Inside story What volunteer role(s) do you do for the IFoA? I am in my second year of being chair of the new GI Research and Thought Leadership (GIRTL) Committee, a subcommittee to the GI Board.

How long have you been volunteering?

I started volunteering when I was a student in 2006-2007, contributing to the Best Estimate and Uncertainty Working Party.

Since then I have been a member of other IFoA research working parties on a variety of topics. I was on the GIRO Committee for a number of years, before being one of the first members on the GIRTL Committee last year.

What’s involved in your role(s)?

Listening must come first. This could involve short informal free-flowing meetings with individual members of the committee, or pop-up calls between the more formal meetings.

What motivates you to volunteer for the IFoA? I enjoy working with actuaries from different backgrounds with a variety of insights. Diversity is a good ingredient for yielding solutions to tricky challenges.

IMAGES: ALAMY / ISTOCK

What have you/do you hope to achieve in your volunteer role?

It is great to be part of an effort to energise the GI actuarial community on collective research. For several decades, this has been a key pillar for the community, adding value to our clients. We risk forgetting about this in our hectic professional lives. It was

JO LO Head of actuarial research and development at Aspen Re, based in London, UK

“There are many different styles when you look at how actuaries apply their skills to solve problems” fantastic to engage with a thoughtful group at GIRO on steering research.

Has this assisted your lifelong learning?

It has led me on to interesting CPD tasks.

I have reviewed a number of fascinating research papers. Helping researchers at various stages of their work gives me a deeper insight into their final output.

Do you think volunteering has helped you in your day job?

When you look at how actuaries apply their skills to solving problems, there are many different styles. Volunteering on research working parties and committees has kept me in touch with these approaches in a way that just attending conferences would not.

Have there been any memorable moments?

I was asked to make closing remarks for a sessional last year on managing uncertainty.

It was wonderful to see the thoughtful research presented and how well received it was. It was a good example of why the GI

actuarial community needs member-led research initiatives.

How do you relax away from the office?

I love geocaching. It is a worldwide treasure hunt that takes me to interesting places, doing lots of steps and solving puzzles.

What would you say to others considering a volunteer role?

Find something interesting and be generous with your time.

Do you prefer a staycation or holiday abroad?

Staycation. The UK has beautiful countryside, and London has so much to see.

If you were locked in a famous building for one night...which would it be and why?

Lloyd’s Coffee House in the 18th century – seeing how insurance deals were underwritten, how they worked out premiums, and feeling the buzz.

What would you consider to be the most brilliant moment of your career to date?

31 December of every year since I have been involved in reinsurance pricing. It is an amazing feeling when we have gone through yet another 1/1 renewal season!

To share your volunteer involvement or find out about volunteering for the IFoA, contact: debbie.atkins@ actuaries.org.uk

40 | THE ACTUARY | JANUARY/FEBRUARY 2020

40 inside story_The Actuary JANFEB 2020_The Actuary 40

27/01/2020 10:59

At the back Appointments

Jobs

To advertise your vacancies in the magazine and online please contact: theactuaryjobs@redactive.co.uk or +44 (0) 20 7880 6234

Grow your actuarial career with Capita At Capita Regulated Services we provide WUXVWHG DQG à H[LEOH DFWXDULDO VXSSRUW WR our clients across the life and pensions LQGXVWU\ &DSLWD KDV EHHQ KHOSLQJ OHDGLQJ OLIH FRPSDQLHV IRU D QXPEHU RI \HDUV DQG RXU FRQWLQXLQJ JURZWK PHDQV ZH¡UH H[SDQGLQJ RXU DFWXDULDO WHDP RI 7KLV RIIHUV DQ H[FHOOHQW RSSRUWXQLW\ IRU H[SHULHQFHG DQG NQRZOHGJHDEOH DFWXDULDO candidates to join us.

:H¡UH RIIHULQJ SHUPDQHQW UROHV DW D YDULHW\ of levels, from mid-level students through WR WKRVH ZKR KDYH UHFHQWO\ TXDOLÀHG 6WURQJ WHFKQLFDO DELOLW\ LV HVVHQWLDO DQG ZH YDOXH EURDG SUDFWLFDO H[SHULHQFH RYHU TXDOLÀFDWLRQV DORQH

<RX PD\ EH ORRNLQJ IRU PRUH YDULHW\ D EHWWHU ZRUN OLIH EDODQFH RU SHUKDSV \RX¡UH considering a move away from contract roles due to IR35 changes. Regardless, if you have ZKDW ZH ² DQG RXU FOLHQWV ² DUH ORRNLQJ IRU WKHQ WKHUH¡V D SODFH IRU \RX WR PDNH DQ LPSDFW and help shape our future at Capita. ,I \RX¡UH LQWHUHVWHG LQ ZRUNLQJ GLUHFWO\ ZLWK clients, are happy to travel and enjoy a variety RI ZRUN WKHQ JHW LQ WRXFK WR VHH KRZ \RX FDQ H[SDQG \RXU KRUL]RQV ZKLOH KHOSLQJ WR FUHDWH EHWWHU RXWFRPHV IRU RXU FOLHQWV Contact actuarialsolutions@capita.com to learn more and arrange a call with one of our team.

JANUARY / FEBRUARY 2020 | THE ACTUARY | 41

ACT recr JanFeb20.indd 41

27/01/2020 11:59

At the back Appointments

Permanent and Contract Opportunities at APR Permanent roles for entry-level (school leavers and graduates), mid / senior students and qualified actuaries Positions based in London and Edinburgh, with the option for locating to Dublin Contracting opportunities across UK for actuarial professionals at all levels of experience

Join our growing team - opportunities for a range of placement and consulting projects Drawing on the high quality of the solutions we are providing to clients, whether individuals on placement or delivering project-based services, our business is continuing to grow. Our permanent actuarial staff gain exposure to a wide range of clients and projects, while benefiting from our highly-regarded training and support. Those who contract through APR enjoy our professional, focused approach to finding suitable roles and supporting our contractors on placement. We currently have the following opportunities: Graduate Actuarial Associate

Actuarial Contractor Roles

Our well-established graduate training programme is based on comprehensive initial training and exposure to project roles selected with your development in mind.

We are suppliers to most of the UK’s largest insurance firms, giving you access to a wide range of contracting opportunities. Our actuarial expertise and targeted approach to filling roles maximises your chances of securing contracts that suit your skills and preferences.

Our exam pass rate far above the UK average gives you maximum chance to qualify quickly as you launch a successful and varied actuarial career.

We continue to support contractors to meet the challenges presented by the upcoming IR35 changes.

Actuarial Analyst (CAA)

Actuarial Associate / Senior Actuarial Associate

Drawing on our experience and strength in training actuarial students, we have now been recruiting Actuarial Analysts for three years.

We are looking out for high-quality actuarial students and qualified actuaries to supplement our team.

As well as giving you experience across a range of client projects we support our analysts to take the CAA qualification, hopefully as a first step towards full FIA qualification.

Those attracted to an associate role at APR are often looking for a broader range of actuarial experience or an increased level of responsibility through working for a smaller firm.

For further information see: https://aprllp.com/working-for-apr/ https://aprllp.com/actuarial-contracting-with-apr/

Or contact: recruitment@aprllp.com

www.aprllp.com

The magazine of the Institute and Faculty of Actuaries

PAVE A NEW PATH theactuaryjobs.com is the official job board for the Institute and Faculty of Actuaries.

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

www.theactuaryjobs.com

42 | THE ACTUARY | JANUARY / FEBRUARY 2020

ACT recr JanFeb20.indd 42

27/01/2020 11:59

At the back Appointments

actuarial@ipsgroup.co.uk / 020 7481 8111 / www.ipsgroup.co.uk GENERAL INSURANCE – UK

HEAD OF C A P I TA L

This role is with a long established Lloyd’s Syndicate and will involve leading a small team with responsibility for maintaining and running, and where necessary upgrading the capital model, and providing support to the Board and the CRO in matters relating to capital requirements. It will also involve providing capital modelling information to support assessment of potential reinsurance purchases and syndicate strategic matters such as SBF assumptions and new business / acquisition decisions.

– To £100,000 + Package – City of London

You will need to be a qualified actuary with detailed capital modelling knowledge, including both Lloyd’s and PRA requirements and Solvency II requirements. You must have, or rapidly develop, sufficient leadership and management skills to manage a small team of skilled staff and operate as a peer in a senior team. You will also need strong written and face to face communication skills, including presenting at Board level, as well as good IT skills.

Contact: Jeremy.Cross@ipsgroup.co.uk

Tel: 020 7481 8111 Ref:TAM141357JCC

Senior Actuary, Capital Modelling

Pricing Data Scientist

Up to £120,000 + Benefits – City of London This is a high profile role with one of the world’s largest insurers and will involve considerable autonomy with monitoring the adequacy of reserves and capital, calculations of capital requirements, model development and ensuring SII compliance. You will need to be a qualified actuary with non-life insurance experience and extensive capital modelling expertise. In addition you will need effective communication skills and have the ability to manage work areas within the Capital Modelling Team.

Contact: Jeremy.Cross@ipsgroup.co.uk 020 7481 8111 Ref: TAM141401 JCC

Up to £80,000 Base Salary + Bonus – City of London We are exclusively working with a growing Personal Lines MGA who are seeking an individual to lead their Pricing and Data Science department.

The role reports directly into the CUO, you will be key in the development of pricing strategies and the statistical analysis of the portfolios. The individual will need to have significant experience within a Pricing or Data Science role within a Personal Lines Insurer. You will need to have strong programming skills with a knowledge of machine learning techniques.

Contact: Gary.Ahern@ipsgroup.co.uk 020 7481 8111 Ref: TAM141302GA

Pricing Actuary – HNW

Senior Actuarial Analyst

Up to £80,000 Base Salary + Bonus – City of London A Global Insurance company are in the process of building out their HNW Pricing team and are searching for their next key hire to help grow the European book of. This is an excellent role for a Personal Lines pricing individual who feels they have learnt all that they can from the world of Personal Lines pricing and it will allow you to build on any of the experience you currently have. They will need you to be a qualified actuary who has had at least 5 years’ worth of pricing experience within a Personal Lines insurer.

Contact: Gary.Ahern@ipsgroup.co.uk 020 7481 8111 Ref: TAM140610GA

Up to £55,000 Base Salary + Bonus & Study Support – City of London An established International Insurance group are in the process of building out their Reserving and Capital Modelling function, so are searching for a part qualified Actuary who is seeking a Mixed Actuarial opportunity, where you will get exposure to both Reserving and Capital. This position will have a focus on purely London Market business and you will have the opportunity to learn from highly skilled and experienced individuals. You will need to have had at least a years’ worth of GI Actuarial experience.

Contact: Gary.Ahern@ipsgroup.co.uk 020 7481 8111 Ref: TAM141400GA

Reinsurance Pricing Actuary

Pricing Analyst

Up to £75,000 Base Salary + Bonus – City of London A prestigious Reinsurance company are currently searching for a Pricing Actuary to join their growing Pricing function. The role will be working closely with the Head of Pricing and the Head of Casualty. You will be a key individual of a team who is heavily involved in the growth and development of the company, so this is an important role and great for someone looking to take a step up. You will need to have at least 3 years of General Insurance Pricing experience and be an advanced user of Excel and VBA. Contact: Gary.Ahern@ipsgroup.co.uk 020 7481 8111 Ref: TAM140974GA

Up to £50,000 Base Salary + Bonus and Study Support – City of London A Global Insurance Group are currently searching for an Analyst to join their growing Pricing function and help to develop and improve their pricing models. They are requiring an individual to be nearly or newly qualified, highly technical, with some programming experience and also be an excellent communicator, both verbally and written. You will need to have at least 1 years of General Insurance Actuarial Pricing experience and be an advanced user of Excel and VBA. Contact: Gary.Ahern@ipsgroup.co.uk 020 7481 8111 Ref: TAM140533GA

LONDON ACT recr JanFeb20.indd 43

-

CHICAGO

-

HONG

KONG

-

JANUARY / FEBRUARY 2020 | THE ACTUARY | 43

SHANGHAI

-

ZURICH 27/01/2020 12:00

At the back Appointments [EXCLUSIVE] CAPTIVE PRICING ACTUARY

SENIOR PRICING ACTUARY (18 MONTH FTC)

London, up to £110.000 + bonus + benefits

London, up to £100,000 + bonus + benefits

A global reinsurer are currently seeking a qualified actuary to support pricing across their captives market.

A London Market insurer is looking for an actuary to join their pricing team and assist in their pricing transformation project.

The role will it within the underwriting division and provide case pricing and actuarial modelling support to a range of corporates, covering direct, reinsurance and non-traditional risks.

Ideally candidates will have strong London market pricing experience and be interesting in working within a non-traditional role.

Contact: james.rydon@eamesconsulting.com | 0207 092 3239

This role will be working with the project manager implementing the pricing transformation programme. The role will be working with the analytics team developing end to end MI. It is anticipated it will be around a 2 year project.

The ideal candidate will have previous 5+ years commercial lines pricing experience and be qualified. Strong systems skills are adventitious.

Contact: rafaela.fakhre@eamesconsulting.com | 0203 846 5909

EXPOSURE MANAGER

PRICING ACTUARY (CONTRACT)

London, up to £80,000 + bonus + benefits

London, up to £1,000 per day

A top-tier Lloyd’s syndicate are currently seeking an exposure manager. The role will be responsible for overseeing all communication reading exposures and will work closely with the underwriters to support efforts surrounding mitigating emerging risks. In addition the role will be heavily involved in wider exposure management tasks whilst leading a team.

A leading Lloyd’s syndicate are seeking a qualified actuary to join them on a 6 month assignment to support a large transformation project within their pricing function.

Candidates will need significant London market pricing experience be immediately available to start..

Contact: james.rydon@eamesconsulting.com | 0207 092 3239

Candidates will need to have significant exposure management experience ideally from within the Lloyd’s market.

Strong people management and communication skills are essential.

Contact: james.rydon@eamesconsulting.com | 0207 092 3239

CONSUMER LINES PRICING ACTUARY

RESERVING IMPLEMENTATION MANAGER

London, up to £85,000 + bonus + benefits

London, up to £90,000 + bonus + benefits

A large international P&C insurer are seeking a qualified actuary to support pricing across their consumer lines business.

A Lloyd's syndicate is currently looking to hire a qualified actuary to support the implementation of a market-leading reserving infrastructure.

The role will be responsible for the development of risk based pricing models across their home and motor lines of business.

The role will support the Chief Actuary in the development and implementation of new process/techniques within reserving. The role will be heavily involved in shaping the strategic direction of the function.

The ideal candidate will be a qualified actuary with strong GLM modelling skills. Technical proficiency in Emblem and Radar is essential.

Contact: james.rydon@eamesconsulting.com | 0207 092 3239

Ideal candidates will have significant London Market Reserving experience.

Contact: rafaela.fakhre@eamesconsulting.com | 0203 846 5909

CAPITAL MODELLING ANALYST

REINSURANCE PRICING ANALYST

London, up to £60,000 + bonus + benefits

London, up to £55,000 + bonus + benefits

One of the top London Market Syndicates is looking for an Actuarial Analyst to assist their Capital Modelling Team.

The actuarial team in a leading global insurer is looking for a Reinsurance Pricing Analyst to join them across all lines of business. This role will primarily support the syndicate with actuarial pricing.

The candidate will be responsible for capital modelling and solvency II requirements.

The role involves developing stakeholder relationships across the business therefore requires a high level of communication as well as very strong analytical ability and logical approach to problem solving.

Key responsibilities will include individual pricing assessment of large or unique risk, communicating the impact of results to the underwriters and analysis of data from pricing models.

Assistance of the building, review and maintenance of pricing models and business planning will also be within the candidates remit.

The ideal candidate will have at least 1 year of non-life insurance Capital experience, knowledge of internal model and regulatory standard formula. You should also be studying towars the actuarial exams.

The suitable candidate will have at least 1 year of experience in general insurance.

Contact: rafaela.fakhre@eamesconsulting.com | 0203 846 5909

Contact: rafaela.fakhre@eamesconsulting.com | 0203 846 5909

Our team work on both permanent and contract opportunities across life and non-life insurance and the pensions and investment markets. If you are looking for your next career move or to discuss other opportunities we may have, get in touch with a member of our team today for a confidential discussion. Alternatively, please visit our website for more information on the opportunities our consultants are working on.

44 | THE ACTUARY | JANUARY / FEBRUARY 2020

ACT recr JanFeb20.indd 44

27/01/2020 12:00

At the back Appointments

REINSURANCE PRICING ANALYST

PRICING & RESERVING MANAGER

London, up to £50,000 + bonus + benefits

London, up to £85,000 + bonus + benefits

The actuarial team in a leading global reinsurer are looking for a Pricing Analyst.

A Lloyd's managing agency are currently seeking a qualified actuary to work in a mixed role covering both pricing and reserving.

Key responsibilities will include individual pricing assessments of large/unique risks, communicating the impact of results to the underwriters, and analysing pricing models. In addition the role will also focus on building new pricing models to support a wide range of business lines.

This is a project based role and will lead ongoing initiatives aimed at developing both the reserving and pricing infastrure to support all lines of business. The role involves strong interaction with team members so you will have strong communication and interpersonal skills.

The suitable candidate will be part-qualified have experience within the general insurance market. Previous pricing experience is not a required.

Candidates from a consultancy background looking to develop in-house are encouraged to apply.

Contact: rafaela.fakhre@eamesconsulting.com | 0203 846 5909

Contact: rafaela.fakhre@eamesconsulting.com | 0203 846 5909

SNR PERSONAL LINES PRICING ANALYST

RESERVING ACTUARY

London, up to £65,000 + bonus + benefits

London, up to £75,000 + bonus + benefits

A leading personal lines insurer are seeking a nearly/newly qualified actuary to join their Pricing function.

A London Market insurer seeks Senior Reserving Actuary to join their wider Actuarial function. The role will primarily focus on reserving, though, there will also be a pricing and capital element too.

The role will predominantly focus on home and motor lines of business. You will be responsible for monitoring, reviewing and helping to improve the pricing models.

Good machine learning/ so ware skills are highly desirable and strong knowledge of Emblem and Radar is required.

Contact: celine.golding@eamesconsulting.com | 0207 092 3250

You will cover a diverse number of tasks, including but not limited to quarterly reserving forecasts, business development modelling and profitability analysis. The ideal candidate will be nearly/ newly qualified (11 exams+) with strong academics, communication and so ware skills. Good knowledge of Solvency II and IFRS is also required.

Contact: celine.golding@eamesconsulting.com | 0207 092 3250

RESERVING ACTUARY

CAPITAL MODELLING ACTUARY

London, up to £75,000 + bonus + benefits

London, up to £100,000 + bonus + benefits

A Lloyd's/London Market insurer is looking to bring a Reserving Actuary to join their syndicate.

A leading Lloyd's insurer is looking to bring on a Capital Actuary to join their team.

The candidate will be giving support to the Head of Reserving in their reserving reviews in respect to their P&C business written across Energy, Marine, Property, Treaty, Accident & Health, Credit, Surety, Professional Indemnity and Liability lines.

The role will involve providing leadership and guidance on the ongoing development of their internal capital model. This is a vital role in one of the best-renowned Lloyd's insurers and would offer significant career progression.

The role involves developing strong relationships with senior professionals so excellent communication and interpersonal skills is essential. The ideal candidate will have experience in Reserving and be nearly/newly qualified.

Capital modelling experience is essential and there is a slight preference for previous Lloyd's exposure. This is a very visible role within the business, so an exceptional level of communication is also needed for the front-facing aspects of the role.

Contact: rafaela.fakhre@eamesconsulting.com | 0203 846 5909

Contact: rafaela.fakhre@eamesconsulting.com | 0203 846 5909

JANUARY / FEBRUARY 2020 | THE ACTUARY | 45

ACT recr JanFeb20.indd 45

27/01/2020 12:00

At the back Appointments

The best from The Actuary Jobs To view all of these vacancies and many more please go to www.theactuaryjobs.com

Actuarial Analyst Chelmsford, Essex Up to £45,000 base + bonus + benefits

Capital Modelling Actuary London £70,000 - £95,000 per annum + benefits

Property Portfolio Reserving Actuary – Non-life Dublin Competitive Salary

Statistical Developer London Competitive Salary

Actuary St Albans, Hertfordshire £50,000 - £100,000 pa + excellent benefits

Senior Actuary, Capital Modelling City of London Up to £120,000 + benefits

46 | THE ACTUARY | JANUARY / FEBRUARY 2020

ACT recr JanFeb20.indd 46

27/01/2020 12:00

At the back Appointments

“If a woman never lets herself go, how will she ever know how far she might have got?”

- Germaine Greer

...make 2020 the year of change?

sophie@orangemalone.com www.orangemalone.com 0771 363 7998 / 01932 782 119

JANUARY / FEBRUARY 2020 | THE ACTUARY | 47

ACT recr JanFeb20.indd 47

27/01/2020 12:00

At the back Appointments

KEEPING YOU IN THE LOOP

As a professional, you’ll no doubt want to keep up with the latest industry developments, people and news?

That’s why The Actuary’s weekly email alert brings you a handy round-up of only the most relevant news stories and comment, straight to your inbox every Thursday.

48 | THE ACTUARY | JANUARY / FEBRUARY 2020

ACT recr JanFeb20.indd 48

Register for weekly email newsletters at www.theactuary.com Browse www.theactuaryjobs.com and www.theactuaryjobsasia.com the official jobsites of the actuarial profession.

www.theactuaryjobs.com

The magazine of the Institute and Faculty of Actuaries

27/01/2020 12:00

At the back Appointments

Jacqui van Teutem

Susan Bradley

Ireland’s Leading Actuarial Recruitment Agency Senior Life Actuarial Manager A fast growing life reinsurer with operaƟons in Europe and the USA has a vacancy in its European HQ in Dublin.

The Senior Actuarial Manager will lead a team of actuaries and part-qualiĮed actuaries within the Actuarial OperaƟons FuncƟon. SuiƟng a strong, technical actuary with c 4 years post qualiĮcaƟon experience in a life or pensions area the role involves leading the development and producƟon of new and exisƟng studies on mortality, lapse and claims experience. Managing a team and building relaƟonships across stakeholders both within and outside the organisaƟon, the successful candidate requires excellent wriƩen and verbal communicaƟon skills and an ability to gain trust at all levels.

Non-Life Reserving Actuary An excellent opportunity has arisen for a qualiĮed reserving actuary within the non-life team of this global insurance player based in Dublin city centre. This candidate will play a key role within the Įnancial reporƟng team and should have signiĮcant reserving experience. ResponsibiliƟes include delivering quarterly Įnancing reporƟng covering both reserves and Solvency II technical provisions, compleƟng actual vs expected valuaƟon analysis on a biannual basis, regular proĮtability analysis for strategic planning and porƞolio management.

The successful actuary will also support projects related to the actuarial Įnancial reporƟng funcƟon. Key skills require an ability to lead and think strategically, a strong communicator and collaborator with good planning and organisaƟonal skills.

Modelling Analyst Are you a recently qualiĮed or nearly qualiĮed non-life actuary with 2/3 years’ experience working in non-life/ life roles? We have an opening in Dublin for a modelling analyst in this European insurance company which has consistently won awards as a Great Place to Work. Working on quarterly and annual Solvency II reporƟng this actuary will be Ňuent in English, have experience in Prophet and SAS, excellent knowledge of MicrosoŌ Excel and preferably have some knowledge of creditor insurance, database management and project management.

For further information on these and other opportunities in Ireland please contact us at jobs@raretec.ie If you are a company looking for permanent or contract actuarial resources then call us on +35315311400 We look forward to hearing from you www.raretec.ie

JANUARY / FEBRUARY 2020 | THE ACTUARY | 49

ACT recr JanFeb20.indd 49

27/01/2020 12:00

ACTUARIAL POST RECRUITER OF THE YEAR 2012 . 2013 . 2014 . 2015 . 2016 . 2017 . 2018 At the back

Appointments

EX IV US CL

CAPITAL ACTUARY - LONDON MARKET

CAPITAL SUPERSTAR - OFFSHORE

CASUALTY & SPECIALTY ANALYST

E

Qualified

Qualified

Lloyd’s Syndicate

Global Reinsurer

Part-Qualified

Leading Reinsurer

NON-LIFE LOCATION UPON APPLICATION STAR5854

NON-LIFE LONDON

Take up this fantastic opportunity to develop and parameterise our client’s internal capital model, ensuring compliance with Solvency II guidelines. Experience of capital modelling software (e.g. Remetrica, Igloo) is essential.

A unique offshore opportunity for a candidate with advanced knowledge of capital management. This varied role is central to the business and offers exposure to senior management.

Take responsibility for analysis and modelling of risks across casualty and specialty lines, whilst working closely with senior actuarial and underwriting colleagues. Casualty treaty pricing experience advantageous.

SENIOR TECHNICAL PRICING MANAGER

DATA SCIENCE EXCELLENCE

LONGEVITY RISK ACTUARY

NON-LIFE LONDON

STAR6060

Part-Qualified / Qualified

Specialist Insurer

NON-LIFE LONDON WITH TRAVEL

Data Scientist

STAR6070

Major Insurer

NON-LIFE SOUTH EAST

Drive technical pricing strategy, using a variety of models to support profitable growth. You will lead on additional value-adding analyses, and identify and review the delivery of pricing and underwriting proposals.

STAR6078

Part-Qualified / Qualified

STAR6075

Financial Services Group

LIFE LONDON

STAR6076

A key role for a candidate with a clear understanding of risk management to forecast demographic behaviour with a particular focus on longevity assumptions. SQL, VB.Net and VBA experience advantageous.

LIFE ACTUARY - IFRS17 REPORTING

IFRS17 IN DUBLIN

Qualified

Qualified

EX

Build innovative end-user data and analytics solutions as Lead Data Scientist. You will take ownership of the maintenance, evaluation and evolution of predictive algorithms and models and establish best practices.

I US CL

CLIENT FOCUSED ACTUARY

VE

Part-Qualified / Qualified

Global Reinsurance Leader

LIFE LONDON / EUROPE

STAR6079

Major Insurer

LIFE LONDON

STAR5968

Major Global Insurer

LIFE DUBLIN

STAR6095

In this transaction-focused role, you will travel extensively and use your expert market knowledge to deliver cutting-edge capital management and reinsurance solutions to leading clients.

A crucial role, leading the technical development and implementation of the IFRS17 reporting methodologies, systems and processes.

Knowledge of bulk and individual annuity products, and the assets backing them, required.

Build, test and maintain the tools to meet IFRS17 requirements, performing modelling to support the related policy decisions. You will also lead the efficient production of inputs for the necessary financial statements.

LEAD SYSTEMS ACTUARY

SENIOR PRICING ACTUARY

CALLING PENSIONS ACTUARIES

Qualified

Major Insurer

LIFE SOUTH COAST

Qualified

STAR6087

Global Reinsurer

Part-Qualified / Qualified

Leading Consultancies

STAR6046

PENSIONS NATIONWIDE

STAR6092

LIFE HEALTH ZURICH / DUBLIN

A unique opportunity. You will lead a team of actuaries in the design and delivery of technology systems and solutions for all actuarial platforms.

This is a great time for pensions actuaries to explore the market. We have multiple opportunities across the UK at all levels up to manager, and select opportunities at a more senior level. Contact us now to move in 2020.

IN-HOUSE PENSIONS ACTUARY

IN-HOUSE INVESTMENT

CL

EX

Lead actuarial pricing exercises and support the deal underwriter, performing experience analyses, developing assumptions and modelling cashflows. You will also follow-up on and analyse the in-force portfolio.

E

IV

US

NICHE PENSIONS

Specialty Pensions

Part-Qualified / Qualified

Global Leader

PENSIONS YORKSHIRE

STAR6025

PENSIONS SOUTH EAST

STAR6014

A unique and interesting vacancy, working in a small team on a niche area of pensions.

Areas of work range from divorce settlements and unfair dismissals to personal injury and professional negligence claims.

An exciting opportunity to join a specialist in-house pensions team. Longevity swap experience would be beneficial. Our client offers excellent benefits and flexible working arrangements will be considered.

Qualified

Leading Client

INVESTMENT LONDON

STAR5866

Seeking an investment actuary or CFA, with strong technical and communication skills and a proactive approach, to take up this new role, which can be shaped to the successful candidate.

Irene Paterson FFA

Lance Randles MBA

Peter Baker

Jan Sparks FIA

PARTNER +44 7545 424 206 irene.paterson@staractuarial.com

PARTNER +44 7889 007 861 lance.randles@staractuarial.com

PARTNER +44 7860 602 586 peter.baker@staractuarial.com

PARTNER +44 7477 757 151 jan.sparks@staractuarial.com

Paul Cook P

Jo Frankham

Adam Goodwin

Clare Roberts

A ASSOCIATE DIRECTOR +44 7740 285 139 +4 paul.cook@staractuarial.com pa

ASSOCIATE DIRECTOR +44 7950 419 115 jo.frankham@staractuarial.com

ASSOCIATE DIRECTOR +44 7584 357 590 adam.goodwin@staractuarial.com

ASSOCIATE DIRECTOR +44 7714 490 922 clare.roberts@staractuarial.com

Satpal Johri

Diane Anderson

Sarah O’Brien

ASSOCIATE DIRECTOR +44 7808 507 600 satpal.johri@staractuarial.com

SENIOR CONSULTANT +44 7492 060 219 diane.anderson@staractuarial.com

SENIOR CONSULTANT +44 7841 025 393 sarah.obrien@staractuarial.com

Antony Buxton FIA

Louis Manson

Joanne O’Connor

+44 20 7868 1900

MANAGING DIRECTOR +44 7595 023 983 louis.manson@staractuarial.com

OPERATIONS DIRECTOR +44 7739 345 946 joanne.oconnor@staractuarial.com

staractuarial.com

MANAGING DIRECTOR 50 | THE ACTUARY JANUARY / FEBRUARY 2020 +44 7766 414| 560 antony.buxton@staractuarial.com

ACT recr JanFeb20.indd 50

P L E A S E CONTACT US AT ANY TI ME TO DISC USS YO UR RE CRUI TME NT NE E DS

Star Actuarial Futures Ltd is an employment agency and employment business

Part-Qualified / Qualified

27/01/2020 12:00

At the back Appointments

Time for a new challenge this year?

Try your hand at our new Mensa puzzle for a chance to win one of the following prizes:

2019 Apple Airpods | Sonos One SL Speaker | Fortnum and Mason Luxury Hamper

A

B

00:00

18:50

Clock A was correct at midnight. From that moment it began to lose three and a half minutes per hour. The clock stopped 90 minutes ago showing clock B. What is the correct time now? The clock runs for less than 24 hours.

All you need to do is send your answer to competitions@ojassociates.com *Terms & Conditions apply

292

LIVE UK JOBS

FEATURED ROLES:

LIVE GLOBAL JOBS

/LHK VM (J[\HYPHS :`Z[LTZ ¶ 3PML 6ɉJL London/South Coast | £80,000-120,000

Senior Pricing Actuary – Reinsurance London | £80,000-100,000

Mixed Reserving/Capital Student London | Up to £80,000 basic

Senior Structurer – Reinsurance Europe | Negotiable DoE

London Market Pricing Actuary City of London £700 - £1,000 per day

Prophet Developers / Testers / Modelling Team Leads UK Wide | £700 - £1,000 per day

Natalie Lightfoot +44 (0) 203 861 9185 natalie.lightfoot@ojassociates.com

Richard Howard +44 (0) 203 861 9191 richard.howard@ojassociates.com

Ross Anderson +44 (0) 203 861 9206 ross.anderson@ojassociates.com

Ani Pannell +44 (0) 203 861 9163 ani.pannell@ojassociates.com

760

Jessica Harkin +44 (0) 203 861 9259 jessica.harkin@ojassociates.com

Laura Sharkey +44 (0) 203 861 9149 laura.sharkey@ojassociates.com

+44 (0) 203 861 9200 ojassociates.com/theactuary *TERMS & CONDITIONS: Competition open to UK-based actuaries only. One winner chosen at random may choose one prize from the list above.

Competition closes at midnight on Saturday 29th February. You will be contacted directly via email if your entry is successful. Prizes are subject to availability. There is no cash alternative.

We will contact you to ask if you are happy for your name & employer to be shared, should you be selected as the competition winner.

JANUARY / FEBRUARY 2020 | THE ACTUARY | 51

ACT recr JanFeb20.indd 51

27/01/2020 12:00

ACTUARIAL POST RECRUITER OF THE YEAR 2012 . 2013 . 2014 . 2015 . 2016 . 2017 . 2018 At the back

Appointments

C U R R E N T UK VACAN CIES* NORTH EAST & YORKSHIRE

SCOTLAND PENSIONS

6

INVESTMENT

4

PENSIONS

6

LIFE

5

INVESTMENT

1

LIFE

2

NON-LIFE

1

MIDLANDS NORTH WEST

PENSIONS

3

PENSIONS

6

INVESTMENT

3

INVESTMENT

2

LIFE

4

LIFE

4

NON-LIFE

4

NON-LIFE

4

EAST ANGLIA NON-LIFE

1

SOUTH WEST & WALES PENSIONS

7

INVESTMENT

3

LIFE

6

NON-LIFE

4

LONDON PENSIONS

25

INVESTMENT

7

LIFE

39

NON-LIFE

58

SOUTH EAST SOUTH COAST PENSIONS

1

LIFE

7

NON-LIFE

5

PENSIONS

16

INVESTMENT

3

LIFE

9

NON-LIFE

14

*at time of writing

CONTACT STAR TODAY TO DISCUSS THESE ROLES 52 | THE ACTUARY | JANUARY / FEBRUARY 2020

Antony Buxton FIA MANAGING DIRECTOR ACT recr JanFeb20.indd 52

+44 7766 414 560 | antony.buxton@staractuarial.com

staractuarial.com 27/01/2020 13:15