CIA (e)Bulletin/(e)Bulletin de l'ICA

Canadian Institute of Actuaries/Institut canadien des actuaires

October 2011
Your Institute


By Jim Christie, FCIA

CIA President

As I travelled across Canada in my President-Elect year visiting many of the regional actuarial clubs, I could not help but be struck by Canada’s geographic diversity. I was even more impressed with the diversity of opinions within the Canadian actuarial community on virtually any issue. These opinions are often held very passionately and proponents on every side of a particular issue articulate their positions forcefully and eloquently. Reaching consensus can be difficult since each side believes its view is in the best interests of the Canadian actuarial profession. Nevertheless, I have been equally impressed by the genuine goodwill of all participants, the civil nature of the debate among actuaries, and the open-mindedness of the audience.
 

While we do not always reach consensus on an issue, the vigorous debate has generally made whatever solution is ultimately adopted an improved approach to the problem at hand. The diverse opinions on the best approach to any issue mean that adopting a solution takes considerable time and, despite all our collective best efforts, the solution is often not considered perfect.

During the last year I have had the pleasure of attending numerous meetings of the three councils, various committee and task force sessions, several special interest seminars, and occasional meetings of other actuarial bodies throughout the world, and I had dialogues with many regulators and legislators. I continue to be struck by how earnestly and diligently all of these groups approach the particular issues facing them.


While consensus in any decision-making process is valuable, sometimes outside circumstances require us to make choices more rapidly than consensus allows. At other times it is difficult to simply formulate the question in a manner that focuses debate so a solution can be crafted.


With this as background, the CIA Board spent a considerable portion of its September meeting trying to identify the issues on which the CIA should place its strategic focus in order to best harness our volunteer energies to produce results which will have the most impact on our profession in Canada. Following that meeting a task force of Board members reviewed the ideas discussed and identified three broad themes to help guide the Board through the next one to two years. These themes will be finalized at the November Board meeting. For now, I simply want to give the membership some idea of our thinking and harness the diversity of your opinions to help us consider these themes.


Theme 1: engage and attract CIA members. Our vision is that all actuaries practising in Canada will want to be CIA members and regard the CIA as their primary accreditation/professional body. To do this the Board needs to address several sub-themes, including encouraging more current members to actively participate in the CIA and finding appropriate avenues for them to volunteer within their personal interests and constraints; encouraging new actuarial candidates to bond with the Institute earlier in their careers; and attracting Canadian actuaries who are not currently enrolled in the CIA.


Theme 2: enhance the profile of the CIA with stakeholders. Our ambition is that the CIA is recognized broadly by the public and among key stakeholders as a significant contributor to public policy and dialogue. To do this the Board needs to resolve what should be the broad CIA vision in this arena. There are several potential—and occasionally conflicting—visions, including the following:
  • The objective and non-partisan advocate of the Canadian public interest on actuarial-related issues;
  • The voice of the actuarial profession in Canada;
  • The actuarial entity which is leading the eligibility, education, research and professional development in Canada;
  • The disciplinary body of the actuarial profession in Canada; and
  • A significant player on the international financial scene.
Whatever the goal(s) the Board adopts, I believe the CIA needs to raise its profile with its various external stakeholders by taking strong, constructive and balanced positions on issues of key interest to the Canadian public.
 

Theme 3: education. Our vision includes an optional or alternative path to become an FCIA through a standalone Canadian process, in addition to the traditional derived designation via Fellowship in the Society of Actuaries (SOA) or Casualty Actuarial Society (CAS). I believe it is in the long-term best interests of the CIA to move to develop an independent education/qualification process and not rely solely on the SOA/CAS to provide primary actuarial education to Canadians. We already have a number of educational initiatives underway, though they are not necessarily part of a coordinated overall education strategy. Examples of current initiatives include the Practice Education Course, the new ACIA concept, the University Accreditation Program, funding research, special interest seminars, and CPD webinars.

The themes identified above should all be regarded as focusing the current 2010–2015 Strategic Plan, not replacing it. I welcome your thoughts and comments on these themes as the Board begins to prepare for its November meeting. These themes will help the Board decide which initiatives to encourage and so help focus our volunteer efforts in the coming year.

If you have any questions or comments, please feel free to write me at president@actuaries.ca.

Jim Christie, FCIA, is President of the Canadian Institute of Actuaries.
 
Spotlight


By Dave Pelletier, FCIA

This article is an update of activity of the Actuarial Standards Board (ASB) since my previous report for the (e)Bulletin in March.

Approved Final Standards

As I prepared to write this piece, I was surprised to realize that we had approved five new or revised standards since the last article!

Probably the quickest standard ever to move through the ASB from start to finish was the addition to the insurance Standards of Practice arising from federal Bill C-57 dealing with fairness opinions given by insurers’ appointed actuaries. It moved from the notice of intent published February 14 (yes, this year) through the exposure draft stage and then on to publishing of the final standard on September 7. Thanks to Nick Bauer and his designated group for their speedy work.

One that hadn’t moved quite as quickly was that dealing with recognizing events in work. It had proved to be quite complex, in part because it crosses all practice areas, but we were pleased to approve and publish the final standard (prepared by the designated group co-chaired by Stephen Butterfield and Kevin Lee) in September.

Another standard that had taken some time to complete was that dealing with mortality improvement in the valuation of insurer liabilities. Finally it and the associated promulgated mortality improvement scale assumption were approved and published in July. Our thanks go to the Committee on Life Insurance Financial Reporting (CLIFR), which was the designated group involved in putting that together.

As well, the ASB had established a designated group chaired by John Brierley to undertake a limited-scope review of the General Standards of Practice. The result of their work, following an exposure draft in 2010, was approved and published in May.

Finally, the ASB undertook, through a designated group chaired by Jacques Tremblay, a review of the Dynamic Capital Adequacy Testing (DCAT) standard. This went through two exposure drafts, and the final was approved by the ASB at its meeting on October 19. It will be published shortly.

As well, as stated in the last article, there had been a request for review submitted to the Actuarial Standards Oversight Council (ASOC) regarding whether due process had been followed in the preparation of the revised standard for actuarial evidence work dealing with marriage breakdown that had been approved by the ASB late last year. ASOC determined that due process had been followed. During the period of the review, the ASB had deferred the original effective date of the standard; following the completion of the review, it set January 1, 2012 as the effective date.

Exposure Drafts

Three exposure drafts have been approved for publication since March. Two of them (dealing with Bill C-57 and DCAT) led quickly to final standards being approved, as discussed above. The third one was a revised exposure draft dealing with ratemaking in the property and casualty insurance area. The ASB and the associated designated group, chaired by Shams Munir, look forward to comments on that draft, but quickly—the comment deadline is October 31!

Notices of Intent

Since March, we’ve issued two notices of intent. One dealt with revisions to the actuarial evidence Standards of Practice other than those dealing with marriage breakdown. Nancy Yake is chair of that designated group. It received a number of good comments, and is commencing work on an exposure draft that the ASB expects to see in the first quarter of 2012.

The second is a proposal to add a section to our general standards on modelling. This designated group is chaired by Richard Gauthier; it too looks forward to comments very soon on the notice of intent, as the deadline there as well is October 31. Given that this is a new area of the Standards of Practice, member comments at this stage are particularly important to help shape their direction.

Our Due Process

The ASB has undertaken a review of its due process. A draft of proposed changes was run by the ASOC, CIA Board, and CIA Practice Council, and then re-discussed and further modified by the ASB at its October 19 meeting. We intend to tentatively approve (subject to final consultation with the ASOC) a revised due process at our November 30 meeting. The proposed revised due process, in both clean form and marked up relative to current due process, is available here (clean) and here (marked up).

The degree of mark-up might look intimidating at first, but the two principal themes of the proposed changes are getting the process for each proposed standard off to a good start (in part through requiring more upfront from the designated group proposing a notice of intent) and providing more definition regarding consultation throughout the process. Any further comments or suggestions from the CIA membership (it’s also undergoing legal review) are welcome by November 15.

Strategic Direction

Our terms of reference require us to review our strategic direction annually. At our October 19 meeting, the ASB approved the document on its strategic direction through 2012, and it is now available here. This approval followed consultation on a preliminary draft with the ASOC, CIA Board, the Practice Council and its committees, and the regulatory community in Canada.

ASB Membership

Rotating off the board on June 30 was John Brierley, who deserves our thanks for his strong contribution (most recently on the revisions to the General Standards of Practice) during his four years on the ASB.

Moving effective July 1 from an ex officio role into the status of voting member of the ASB is Ty Faulds, previously Chair of the Practice Council. And we were delighted to welcome effective July 1 two new members to the ASB, Jay Jeffery and Luc Farmer, both of whom have proven to be good, active participants already.

Dave Pelletier, FCIA, is Chair of the Actuarial Standards Board.
 
MOVERS AND SHAKERS


In today's business world, staying up to date with new ideas and the latest business practices is vital for any successful professional.

But with budgets shrinking and time pressures growing, it can be difficult to attend meetings, conferences and presentations where key developments and fresh approaches are being discussed.

Fortunately, there is a website that gathers more than 900 leading speakers in one place and offers videos and transcripts of their speeches free of charge.

TED.com is the website of TED (Technology, Entertainment, Design), a non-profit organization based in Vancouver and New York that is devoted to "ideas worth spreading". Launched as a conference in 1984, it has grown to include two annual TED Conferences in Long Beach and Palm Springs, and a TEDGlobal Conference in the UK each summer.

Every event brings together key thinkers, leaders and creators, who are challenged to give "the talk of their lives" in 18 minutes or less. New videos of the talks are added each week, subtitled in English and many other languages, and can be shared and reposted.

The talks cover a huge variety of topics of interest to professionals keen to expand their knowledge base. Searching under the tag of "business", for example, reveals 191 speeches from such people as:
Other topics, presented by such speakers as ex-U.S. President Bill Clinton, billionaire Bill Gates, Canadian architect Moshe Safdie and Professor Stephen Hawking, range from lessons learned during a plane crash to trying something new for 30 days, and from how to listen better to "the three A's of awesome".

Pros: the breadth of information on offer free of charge.
Cons: many speeches have yet to be subtitled in French (especially Canadian French). Some talks would benefit from being longer.

Address: www.ted.com
 
Institute News


By Anne Vincent, FCIA

Non-profit organizations like the CIA depend on volunteer boards of directors to set direction, guide them towards fulfilment of their missions and objectives, and account to a spectrum of stakeholders including members, donors, funders, clients and the public. Effective governance of these organizations is clearly in the public interest.

Governance is a process of providing strategic leadership by setting direction, making decisions, overseeing and monitoring organizational performance, and ensuring accountability.

The CIA governance model has been reviewed and updated from time to time. The last major update was in 2000 when the current board and council structure was put in place. As part of its monitoring duties, in 2010 the Board created a task force charged with identifying potential improvements to the governance model and practices. Assisted by a consultant, the task force reviewed aspects of the model including the Board’s structure, composition, practices and decision-making authority.


The task force concluded that the governance model and practices were effective but improvements could be made. It provided a report to the Board summarizing its recommendations aimed at improving the Institute’s governance best practices. Below is an outline of actions undertaken by the Board to implement some of those recommendations.


Board Structure and Composition


The Board created a Risk Management Committee to assist it in its governance role by recommending and maintaining a risk management framework for the CIA. This will help guide the Board’s strategic direction and the CIA’s ongoing operations through the management of key risks.


The Board has also initiated the steps required to amend the Bylaws to grant it the required authority to remove one of its members from office in exceptional circumstances. Further details will be provided to the membership in the coming weeks.

Board Practices


A number of Board practices have changed:
  • A policy on observer and invited guest attendance at Board meetings was adopted earlier this year (see here);
  • A code of conduct for Board members is being drafted and should be finalized this year;
  • An in-camera session is held at the end of each Board meeting, when only the elected Board members participate;
  • The Board orientation session, held once a year, has been augmented from one to three hours and the orientation package provided to Board members has been expanded to include the CIA strategic plan and annual operating plan and a summary of strategic issues facing the organization in the up-coming year and beyond; and
  • A self-assessment mechanism was created to measure performance at each Board meeting, as well as on an annual basis.
The full report of the Task Force on Governance can be found here.

This article has been prepared by the Task Force on Governance. Please do not hesitate to contact any of its members listed on the CIA website if you have any comments or questions on the above text.
 


Combining a background as a pension consultant with knowledge of investment, Patrick De Roy has spent years advising varied clients on the increasingly-important topic of risk management.

The holder of FSA, CERA, CFA and FRM designations besides his FCIA, he is a partner with Morneau Shepell in Montréal, and explained, "I am the national practice leader for the risk management practice. In that role, I work with clients, including chief risk officers and chief financial officers, to assess pension risks and develop risk mitigation strategies, using analyses such as asset liability modelling and risk attribution. For example, if the surplus/deficit volatility is 12 percent per year, I will have to give them additional information: that 12 percent is coming from what sources, and how much of it is market risk, interest rate risk, longevity risk, etc. Companies establish a risk budget as they want to take on some risks, but they need to know which ones and how much."

Patrick, who is also in charge of risk management research internally for Morneau Shepell, added, "Risk management is perceived very well here. It is not our core business, which are more traditional pension and benefits services. But other consultants in the firm are well aware of what we can do for our clients.
 
"There is more appetite now for risk management in pension funds. Clients are seeking dynamic solutions. If they have to invest a lot of money in pension funds in the next few years, at least, they do not want to face the same issues they had in the financial crisis of 2008. There is a risk, but how can we manage the volatility?

"A lot of pension funds are heavily invested in equities but with volatile markets they are facing a lot of risk. The other main risk is coming from interest rates, as not a lot of pension funds are immunized against the movement of the rates. But in the 1990s the asset returns were so good it was not easy to convince sponsors to take some of the risks off the table. It took crises in 2001 and 2008 to show them they were really in a risky position.

"Now we work with our clients to establish de-risking strategies. We will have action plans ready."

Establishing a continuous risk management framework is important, he said, as some companies might want to implement risk mitigation strategies only gradually and avoid an "all or nothing" approach. "It is not easy to convince people they have to do significant changes to their investment policy. They say, ‘We are not well funded or interest rates are too low’, so they do not want to change many things. Some even say risk management is only a buzzword for now. But I believe it is true value added for a company to put it in place. Most companies have to take pension and benefit risks into account in their enterprise risk management framework, as they face a lot of risks in contributions to pension funds."

As a profession, there are still challenges for actuaries to overcome, according to Patrick. "We are very good at risk management. We have a lot of expertise in designing complete risk management frameworks. But I do not see us as the frontrunner in the market. For example, accountants are having a lot of discussions about risk management. They have access to financial results from many lines of business with their clients, so they are well positioned. But we have all the background necessary to be more prominent in the marketplace. The CERA designation and the support for risk management will pay off over time.

"We can certainly be viewed as risk management professionals but the profession must continue to invest in that field. It will be challenging but it is not impossible for us to become No. 1."
 

Réal Bolduc, FCIA, has become investment advisor at Industrielle Alliance Valeurs Mobilières (Industrial Alliance Securities), Québec, QC. Visit his website at www.vosplacements.ca



Networking is a key part of any successful professional's career, and the CIA is offering you a fresh opportunity to inform your peers about your achievements and progress.

Our new (e)Bulletin section, Actuaries on the Move, is a chance for you to publicize your new job, title, credentials or other information. This is an opportunity to tell thousands of fellow actuaries and financial professionals - whether they are ex-colleagues, former college friends, potential employers, future clients, etc. - about, for example:

    * Your new job;
    * A change of title or area of responsibility;
    * Your new qualifications;
    * A change of contact details;
    * Awards or other recognition; or
    * Publication of academic papers or articles.

Simply send an e-mail - one line of information can be enough, but feel free to add more if you so wish - to the CIA's English Editor at andrew.melvin@actuaries.ca and we will aim to include it in the next issue of the (e)Bulletin.

Please include a daytime telephone number and, whenever possible, a colour hi-res photograph. Information must be received at least a week before the final working day of the month to be considered for inclusion in the next issue.
 
THIS MONTH'S PUBLICATIONS
Joint Risk Management Section – Call for Essays

The Joint Risk Management Section (JRMS) of the Canadian Institute of Actuaries, Society of Actuaries and Casualty Actuarial Society, in collaboration with the International Network of Actuaries in Risk Management, propose publishing a third series of essays, focusing on Risk Metrics for Decision Making and ORSA.

The National Association of Insurance Commissioners is discussing a proposal that would require large insurer groups to perform an own risk and solvency assessment (ORSA), defined as a process undertaken by an insurer or an insurance group to assess the adequacy of its risk management and current and future solvency position.

The JRMS is inviting the submission of essays that explore such issues as:
  • What questions must a company ask under an ORSA?
  • How can a company better understand its own risks?
  • Is an economic capital model required to perform an ORSA?
  • Who are the stakeholders?
Each essay should be no more than 1,500 words, written in French or English, and submitted no later than Friday, December 2, 2011 to smartz@soa.org. Awards of up to $1,000 may be presented for worthy papers.

For more information, and to read the JRMS’ first two e-books of essays, see the links below.

Further details.

First e-book, Risk Management: The Current Financial Crisis, Lessons Learned and Future Implications.

Second e-book, Risk Management: Part Two – Systemic Risk, Financial Reform, and Moving Forward from the Financial Crisis.

Contact with Questions: David Schraub at David.Schraub@avivausa.com or Robert Wolf at rwolf@soa.org

CIA Investment Seminar – Both Pension and Insurance Topics Covered

The CIA Investment Seminar is back. This year it will be held at the Doubletree by Hilton Hotel Toronto Airport on November 3, 2011.


Don’t miss this interesting and informative program, which will cover insurance subjects such as Credit Risk in Insurance Companies and Managing Insurance Assets under Solvency II, as well as pension topics. Further program details are available at the link below.

You can register by fax, by mail, or online with our secure transaction registration form.


Contact with Questions: Nancy Jenkinson, manager, meeting services, at nancy.jenkinson@actuaries.ca. Tel: 613-236-8196 ext. 104; fax: 613-233-4552

CIA Pension Seminar

The CIA Pension Seminar will be held at the Doubletree by Hilton Hotel Toronto Airport on November 2, 2011.

Don’t miss out on this opportunity to participate in informative sessions examining such topics as the Canadian annuity market, marriage breakdown and Ontario’s Bill 133, the limitations of traditional replacement rates, and accounting valuation issues.

You can register by fax, by mail, or online with our secure transaction registration form.

Link: http://www.actuaries.ca/meetings/pension/2011/program_e.asp

Contact with Questions: Nancy Jenkinson, manager, meeting services, at nancy.jenkinson@actuaries.ca. Tel: 613-236-8196 ext. 104; fax: 613-233-4552

Final Standard of Practice for General Standards – Recognizing Events in Work

The final revisions to the Standards of Practice were approved by the Actuarial Standards Board on August 23, 2011. The final standard amends the definition of subsequent event, introduces new subsection 1515, and amends subsections 1520 and 1820.

The revisions to the Standards of Practice are effective October 1, 2011.

Since the changes to the Standards of Practice do not represent substantive changes from the existing Standards of Practice, but rather are a rewriting of them to improve their clarity, early implementation of the final Standards of Practice is permitted.

Final Standards of Practice (red-lined).
Final Standards of Practice (clean).
Memorandum.

Contact with Questions: Stephen Butterfield, Chair, Designated Group, at stephen.butterfield@towerswatson.com

CIA President Before the House of Commons Standing Committee on Finance

CIA President Jim Christie and Board member Michel St-Germain will appear before the House of Commons Standing Committee on Finance for pre-Budget consultations on Thursday, September 29, 2011 at 11:30 a.m. EDT. They will discuss Pooled Registered Pension Plans (PRPPs) and potential actuarial involvement in healthcare.

Members can watch the proceedings using the link below.

Link: click here then select Play, Download or Subscribe.

Contact with Questions: Josée Racette, project manager, communications and public affairs, at josee.racette@actuaries.ca

Submission to the Department of Finance Canada

The Canadian Institute of Actuaries has presented its comments regarding the Department of Finance Canada consultation document Tax Rules for Pooled Registered Pension Plans (PRPPs).

Link: http://www.actuaries.ca/members/publications/2011/211090e.pdf

Contact with Questions: Marc-André Melançon, Chair, Member Services Council, at mamelancon@rgare.ca

Webcast: Economic Roundtable

October 19, 2011
Noon to 1:30 p.m. EDT

Speakers
  • Nadine Gorsky, moderator, Chair of the Committee on Continuing Education’s Investments Subcommittee and an actuarial specialist at OSFI
  • Allan Seychuk, vice-president, economics and institutional portfolio management, Phillips, Hager & North Investment
  • Stephen Gordon, professor, department of economics, Université Laval
  • Gavin Benjamin, Chair, Committee on Pension Plan Financial Reporting (PPFRC), and senior consultant, Towers Watson
  • Edward Gibson, Chair, Committee on Life Insurance Financial Reporting (CLIFR), and senior vice-president and chief actuary at Empire Life
More than ever, the economic environment is seen as the major risk factor for pension plans and insurance companies. In 2008 we passed through the worst financial downturn since the Great Depression. In early 2009, the CIA sponsored our first Economic Roundtable webcast to a favourable reception. Now, when the economy appears to be entering a new era of uncertainty, it is crucial that actuaries continue to explore the fundamentals driving it and the financial markets. Actuarial work has always been cross-disciplinary, so the purpose of this webcast is to develop expertise in the economics branch of our discipline. This is your chance to hear from two economists—one working in a Canadian investment management firm and the other a professor at a Canadian university—who will share their insights about recent economic circumstances and future prospects. You will also hear from the chairs of the PPFRC and CLIFR, who will explore the meaning of these circumstances in the context of pension plan and life insurance actuarial work.

Please take advantage of this exciting opportunity for an important dialogue between economists and actuaries.

Link:
http://www.actuaries.ca/webcasts/index_e.cfm (members must first log in to the members site to receive member pricing.)

Contact with Questions: Leona Campbell at leona.campbell@actuaries.ca; telephone: 613-236-8196 ext. 124; fax: 613-233-4552

Webcast: Emerging Risks of Grave Importance: Providing Clarity and Understanding

October 13, 2011

Noon to 1:30 p.m. EDT

Speaker: Alan D. Roth, chief risk officer, Advanced Fusion Systems

This webcast will offer a detailed look at emerging risks including solar storms (including electromagnetic pulse), extreme weather events, water scarcity, food scarcity, cyber threats, climate change, pandemics, and earthquakes/tsunamis.

Most of these have a black swan aspect to them. We generally just go on with life with the expectation that we will be OK. It is unlikely we will suffer the full impact from any one of these risks, at least for the near future, and we are busy with life as it is. But those who are risk averse, along with some government agencies and insurance companies, are starting to look at these more closely and are trying to assess probability. Unfortunately, such assessment is difficult as there is conflicting information and many unknowns. Also, Canada has exceptional vulnerability for some of these risks, which will be addressed.

To register for this and other CIA webcasts, please click on the link below.

Link: http://www.actuaries.ca/webcasts/index_e.cfm (members must first log in to the members site to receive member pricing.)

Contact with Questions: Leona Campbell at leona.campbell@actuaries.ca; telephone: 613-236-8196 ext. 124; fax: 613-233-4552

Webcast—Killer Risks: Torpedoes in the Water

Wednesday, September 28, 2011
Noon to 1:30 p.m. EDT

Speaker: Sim Segal, president, SimErgy Consulting

There are several killer risks that most organizations commonly overlook. In this webcast, we identify these risks, discuss their root causes and characteristics, and offer suggestions on how to mitigate them.

Link:
click here (members must first log in to the members site to receive member pricing).

Contact with Questions: Leona Campbell, coordinator, eligibility and education, at leona.campbell@actuaries.ca

Revised Exposure Draft for Standards of Practice – Ratemaking: Property and Casualty Insurance (Section 2600)

The revised exposure draft for Standards of Practice – Ratemaking: Property and Casualty Insurance (section 2600) was approved for distribution by the Actuarial Standards Board (ASB) on September 20, 2011.

The ASB is soliciting comments on the changes from the original exposure draft from members of the CIA and other stakeholders. Comments should be directed to Shams Munir at shams.munir@ca.ey.com with a copy to Chris Fievoli, CIA resident actuary, at chris.fievoli@actuaries.ca, by October 31, 2011.

Link: http://www.actuaries.ca/members/publications/2011/211089e.pdf

Contact with Questions: Shams Munir, Chair, Designated Group, at shams.munir@ca.ey.com

Key Partnership Between Natcan Investment Management and the Canadian Institute of Actuaries

Montréal, September 21, 2011 – Natcan Investment Management Inc. (Natcan) and the Canadian Institute of Actuaries (CIA) are pleased to announce their new partnership to develop an accounting discount curve.


Natcan’s CIA Method Accounting Discount Rate Curve will help support Canadian actuarial practice by providing a benchmark for the valuation of pension and benefit plan liabilities. The curve will be available on Natcan’s website: www.natcan.com.

Natcan’s collaboration with the CIA demonstrates its commitment as a leading provider of specialized investment solutions and its desire to meet the needs of pension and benefit plan sponsors.

About Natcan Investment Management Inc.

Founded in 1990, Natcan Investment Management Inc. is a National Bank subsidiary that is 14% held by its management team. Recognized as an important institutional fund manager in Canada, Natcan Investment Management specializes in portfolio management for pension funds, endowment funds, pooled funds and wealth management. As at June 30, 2011, it had approximately $26 billion in assets under management and employed over 100 employees. For more information about Natcan, please visit its website: www.natcan.com.

Information

Natcan Investment Management point of contact: Michael Quigley, senior vice-president of distribution, at mquigley@natcan.com or (514) 871-7671.

CIA point of contact: Josée Racette, project manager, public affairs, at josee.racette@actuaries.ca or (613) 236-8196, ext. 107.

Educational Note – Accounting Discount Rate Assumption for Pension and Post-employment Benefit Plans

This educational note offers advice to pension actuaries who are engaged to provide guidance to a pension plan sponsor on the selection of the discount rate for a Canadian pension plan under Canadian, U.S., or international accounting standards.


Also, Natcan Investment Management (Natcan) and the Canadian Institute of Actuaries (CIA) are pleased to announce their new partnership to develop an accounting discount rate curve. Natcan’s CIA Method Accounting Discount Rate Curve, which is available for download at http://www.natcan.com, will help support Canadian actuarial practice by providing a benchmark for the valuation of pension and benefit plan liabilities.

Links:


CIA/Natcan Accounting Discount Curve: http://www.natcan.com

Contact with Questions: Gavin Benjamin, Chair, Task Force on Pension and Post-retirement Benefit Accounting Discount Rates, at gavin.benjamin@towerswatson.com

August 2011 Risk Management Newsletter Now Available in Both Official Languages

The CIA has just produced a French version of the Risk Management Newsletter and it is now available in both official languages on the Society of Actuaries (SOA) website. The Joint Risk Management section is jointly sponsored by the CIA, the Casualty Actuarial Society and the SOA to promote education and research in the area of enterprise risk management (ERM) and establish leading risk management techniques.

Link: click here.

Contact with Questions: Les Dandridge, director, communications and public affairs, at les.dandridge@actuaries.ca

Minor Amendment to the Standards of Practice for the Valuation of Pension Plans (Subsection 3260) – French version

The revised Standard of Practice for the French version of subsection 3260 was approved by the Actuarial Standards Board (ASB) on August 23, 2011. Changes are highlighted against the current Standards of Practice [French version only].

The effective date of the revised Standard of Practice is September 1, 2011.

Link:
http://www.actuaries.ca/members/publications/2011/211083e.pdf

Contact with Questions: Dave Pelletier, Chair, Actuarial Standards Board, at dave@davep.ca

Educational Note Supplement: Guidance for Assumptions for Hypothetical Wind-up and Solvency Valuations Update – August 2011

The most recent guidance from the Committee on Pension Plan Financial Reporting (PPFRC) regarding assumptions for hypothetical wind-up and solvency valuations was provided in an educational note supplement dated June 7, 2011.

The June 7, 2011 guidance as to estimated purchase costs for non-indexed group annuities was partially based on quotes provided by six insurance companies on illustrative group annuities using pricing conditions as at March 31, 2011, and supplemented by data from certain actuarial consulting firms on actual group annuity purchases during the first and early second quarters of 2011.

In an effort to continue to monitor group annuity pricing, the PPFRC obtained illustrative quotes on a similar basis to those obtained at March 31, 2011, but based on pricing conditions as at June 30, 2011. The illustrative non-indexed quotations at March 31, 2011 and June 30, 2011 may be summarized as follows:

AVERAGE OF THE THREE MOST COMPETITIVE QUOTES
(USING UP94 GENERATIONAL MORTALITY TABLES)
  Large Purchase
Small Purchase
  31/03/2011
30/06/2011
31/03/2011
30/06/2011
Retirees
       
Discount rate
4.43%
4.05%
4.48%
4.12%
Spread over CANSIM V39062
+0.73% 
+ 0.56% 
+0.78%
+ 0.63%
Deferred vesteds
       
Discount rate
4.50%
4.14%
4.48%
4.11%
Spread over CANSIM V39062 + 0.80% 
+ 0.65% 
+ 0.78% 
+ 0.62%
   
If considered in isolation, the illustrative quotes suggest a decrease in the excess (spread) of the average of the discount rates for the insurers that provided the three most competitive quotes, in conjunction with the UP94 mortality table with generational projection (using improvement Scale AA), over the yield on Government of Canada (GoC) long-term bonds (series V39062). However, the June 7, 2011 guidance supplemented the March 31, 2011 illustrative quotes with data on recent actual annuity purchases and recommended a spread of 70 basis points (bps), which is slightly lower than the spread suggested solely based on the March 31, 2011 illustrative quotes.

The actual group annuity purchase data obtained by the PPFRC for the second and early third quarters of 2011 were very limited but, nonetheless, did not exhibit any pattern which caused the PPFRC to conclude that the June 7, 2011 guidance has become inappropriate. Accordingly, and given the relatively modest change in the spreads that may be suggested by the June 30, 2011 illustrative quotes, the PPFRC has decided that there is not sufficient evidence at this time to warrant changing the guidance provided in the June 7, 2011 educational note.

Link: http://www.actuaries.ca/members/publications/2011/211087e.pdf

Contact with Questions: Gavin Benjamin, Chair, Committee on Pension Plan Financial Reporting, at gavin.benjamin@towerswatson.com

Notice of Intent Regarding Standards of Practice for Modelling – A New Section Added to the General Section of the Standards of Practice

The creation and use of models is inherent to actuarial work. The Actuarial Standards Board (ASB) believes that developing Standards of Practice for the use of models would help to promote high-quality work and to enhance the capability of the actuarial profession in this area. The new Standards of Practice would address appropriateness, controls, reliance and disclosure issues for the use of models.

The ASB is soliciting feedback on this notice of intent from members of the CIA and other stakeholders. Comments are invited by October 31, 2011. Please send your comments, preferably in an electronic format, to Richard Gauthier at richard.gauthier@ca.pwc.com, with a copy to Chris Fievoli at chris.fievoli@actuaries.ca.

Link:
http://www.actuaries.ca/members/publications/2011/211086e.pdf

Contact with Questions: Richard Gauthier, Chair, Designated Group, at richard.gauthier@ca.pwc.com

Submission to the House of Commons Standing Committee on Finance

The Canadian Institute of Actuaries provided input to the 2011 pre-budget consultations being undertaken by the House of Commons Standing Committee on Finance.

Link: http://www.actuaries.ca/members/publications/2011/211082e.pdf

Contact with Questions: Les Dandridge, director, communications and public affairs, at les.dandridge@actuaries.ca

Draft Educational Note: Guidance on Fairness Opinions Required Under the Insurance Companies Act

With the changes made to the Insurance Companies Act as a result of Bill C-57 (2005) there are new governance requirements for boards of directors with respect to dividend policies, management of the participating accounts and changes to adjustable policies. The same legislation imposed on appointed actuaries the requirement to opine on the fairness of those policies and management practices. The CIA’s Task Force on Bill C-57 is preparing an educational note to assist the actuary in forming these fairness opinions.


A draft of this educational note is being published as a working document, currently available only on the Task Force on Bill C-57’s webpage. It will be officially published as an educational note once input has been received from members and other interested parties. A particular opportunity to comment will be provided at the panel session devoted to this topic during the upcoming Seminar for the Appointed Actuary.

Link: click here.

Contact with Questions: Nick Bauer, Chair, Task Force on Bill C-57, at nbauer@eckler.ca

Final Standards of Practice Concerning Revision of Subsection 2460, Report to the Directors, of the Standards of Practice, Part 2000, Practice-Specific Standards for Insurance, Incorporation of Standard Wording for Fairness Opinions

This final revision of subsection 2460 of the Standards of Practice was approved by the Actuarial Standards Board (ASB) on August 23, 2011.


Since the fairness opinions potentially would be available to the public, the ASB considers it desirable to standardize the language of unqualified fairness opinions. The objective is to ensure that opinions are unequivocal and uniform, that the interpretation by the public of such opinions of appointed actuaries is therefore consistent, and that the potential misinterpretation arising from minor differences in language among opinions intended to convey the same message is obviated.

The effective date for both the legislation and the final Standards of Practice is December 1, 2011. Early implementation is therefore permitted.

Links:

Final Standards of Practice.
Memo.

Contact with Questions: Nick Bauer, Chair, Designated Group, at nbauer@eckler.ca

Enterprise Risk Management Workshop: November 15, 2011: Registration Open

Registration is now open for the Enterprise Risk Management (ERM) Workshop on November 15 at the Metro Toronto Convention Centre, North Building, 225 Front Street West, Toronto.

This workshop will feature Sim Segal, president of SimErgy Consulting and a globally-recognized ERM thought leader. His book Corporate Value of Enterprise Risk Management was recently adopted for the Chartered Enterprise Risk Analyst (CERA) syllabus.

The first 30 registrants will receive a complimentary, autographed copy of Mr. Segal’s book.

Link: http://www.actuaries.ca/meetings/ERM/2011/erm_program_e.cfm

Contact with Questions: Nancy Jenkinson at nancy.jenkinson@actuaries.ca; telephone: (613) 236-8196 ext. 104; fax: (613) 233-4552

Webcast—Managing and Measuring Segregated Fund Guarantee (Variable Annuity) Risks

Tuesday, September 13, 2011

Noon to 1:30 p.m. EDT

Speakers:
  • Jonathan Edwards, senior capital markets analyst, OSFI
  • Mark Evans, vice-president and actuary, Aegon USA
  • Josh Braverman, SVP, head of derivatives, AXA Equitable
Segregated fund guarantees are a significant element of the strategy and risk profile within the Canadian life insurance industry. This webcast highlights the important considerations when managing and measuring the risks associated with these guarantees, including the following topics:

  • Governance and Oversight of Market Risk at Insurance Companies—A Regulatory Perspective
  • Market risks of variable annuities;
  • Reviewing roles and responsibilities of key stakeholders; and
  • Risk oversight, risk measurement and risk reporting.
  • Segregated Fund Hedging Fundamentals
  • Risks;
  • Hedge considerations;
  • Attribution;
  • Hedge effectiveness; and
  • Hedge objective.
  • Effective Product Design for Hedging and Hedging Volatility Exposures
Target level of expertise: moderate.

Link: click here
(members must first log in to the members site to receive member pricing).

Contact with Questions: Leona Campbell, coordinator, eligibility and education, at leona.campbell@actuaries.ca
 
Calendar of Events

November 2, 2011 Pension Seminar DoubleTree by
Hilton Hotel Toronto Airport
Toronto, Ontario
November 3, 2011 Investment Seminar DoubleTree by
Hilton Hotel Toronto Airport
Toronto, Ontario
November 10, 2011 Professionalism Royal York Hotel Toronto, Ontario
December 1, 2011 Professionalism Hilton Bonaventure Montréal, Québec
December 7-8, 2011
Business Savvy Skills Seminar
St. Andrew's Club Toronto, Ontario
February 29, 2012
Enterprise Risk
Management Workshop
Metro Toronto Convention Centre Toronto, Ontario
June 3-6, 2012 Practice Education Course Delta Ottawa Ottawa,
Ontario
June 21-22, 2012 Annual Meeting DoubleTree by
Hilton Hotel Toronto Airport
Toronto, Ontario
September 20-21, 2012
Seminar for the Appointed Actuary
Fairmont Royal York Hotel
Toronto, Ontario

Additional information on all CIA meetings can be obtained at:
www.actuaries.ca/meetings/calendar_of_meetings_e.cfm, or by contacting Nancy Jenkinson at 613-236-8196, ext.104, or nancy.jenkinson@actuaries.ca.

For information on CIA webcasts, visit http://www.actuaries.ca/webcasts/index_e.cfm.
 
 
Board and Council Updates
Board

The Pension Advisory Task Force has become a committee reporting to the Member Services Council.

Claude Ferguson has been appointed a member of the Eligibility and Education Council, effective September 21, 2011.

Claire Bilodeau, Julie Chambers, Sylvie Charest, John Dark, Marcia Gallos, Frank Grossman, Marc-André Melançon (Chair), Marcus Robertson, Cathy Shum-Adams (Vice-chair), Michel St-Germain and Chris Townsend have been approved as the membership of the Member Services Council for 2011–2012, effective September 21, 2011. Note: Richard Bisson and Gary Walters finished their terms on the council on June 30, 2011. The new members being approved are Claire Bilodeau and Frank Grossman.

Liam McFarlane has been appointed Vice-chair of the Committee on Professional Conduct, effective September 21, 2011. François Boulanger has been appointed a member of the committee, also effective September 21, 2011.

Margaret Verbeek has been appointed a member of the Committee on Finance, effective September 21, 2011.

Isabelle Larouche has been appointed as the CIA representative on the International Actuarial Association’s Education Committee.

Eligibility and Education Council

Tulio Walles has been appointed a member of the Pension Subcommittee of the Committee on Continuing Education.

Marcus Roberston has been appointed an observer member for the Society of Actuaries (SOA) on the Accreditation Committee.

Lynn Grenier-Lew has been appointed Vice-chair of the Committee on Continuing Education.

Carole Vincent has been appointed a member of the Individual Life and Annuities Organizing Subcommittee for the 2012 Practice Education Course (PEC).

Wes Foerster has been appointed Chair of the Finance and Investment Organizing Subcommittee for the PEC, and Julia Viinikka has been appointed a member of subcommittee.

A Task Force on Co-Sponsorship has been created with Dave Dickson as chair and Jim Lewis, Brian Louth, John Have, and Jason Vary as members, with the mandate of improving coordination and communications with the SOA and Casualty Actuarial Society.

A Working Group on the Feasibility of a PEC General Track has been created with the mandate of assessing the feasibility of a general track for the 2012 PEC, with Dave Dickson as chair and John Have, Paul Winokur and Thomas Hinton as members.

The Committee on the Application of Rules and Standards and the Committee on the Rules of Professional Conduct have been disbanded with thanks, effective September 1, 2011.

For information only:

Julia Viinikka has resigned as Chair of the Finance and Investment Organizing Subcommittee for the PEC.

Yanick Chainey has left the Pension Subcommittee of the Committee on Continuing Education.

Gary Walters has left the Committee on Continuing Education, and Amy Pun has resigned as its vice-chair.