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

Canadian Institute of Actuaries/Institut canadien des actuaires

September 2012
Your Institute


By Simon Curtis, FCIA
CIA President


I am very excited to begin my year as President of the Institute. The past year as President-elect has reminded me how many enthusiastic and talented members we have in the CIA volunteering for the Board, councils, committees, and other roles in the Institute. It has also reminded me what a dedicated team we have within the CIA Head Office.

I am particularly excited to become President at a time when the CIA Board, following its meeting in June, has adopted a set of four specific long-term objectives. These objectives—which were developed using a 10-year-plus look-forward perspective—are designed to provide more specificity around the goals the CIA would like to achieve on a longer-term time frame than we traditionally use in our operational and strategic planning process. They are an important bridge between our mission and vision statements and our planning processes. The intention is that these objectives be actively used to provide context and criteria for our strategic/operational planning processes. We would expect to consistently validate our plans and activities for alignment with these objectives.

So, what are these objectives?
  1. Being a member of the CIA is regarded as essential for all actuaries practising in Canada. All actuaries practising in Canada are active members of the CIA and view the CIA as their primary actuarial affiliation and the body with which they are most engaged.
  2. The CIA is viewed as an educational body, not just an accreditation body. It takes full accountability for the educational path to FCIA (which may involve outsourcing) with the FCIA recognized as being a high-quality stand-alone educational designation (i.e., not having to be aligned to another designation).
  3. Building on its research on financial welfare and risks, the CIA is widely recognized by the Canadian public as the leading contributor to dialogue, analysis, and solutions in all areas related to understanding and quantification of future financial contingencies and risks.
  4. Building on their extensive role in existing practice areas, CIA members are viewed as key contributors in non-traditional fields such as health care and banking.
Of these objectives, the second has the most potential to be misunderstood. Let me assure you that the CIA is not signalling its intention to become an end-to-end provider of actuarial education. Rather, we are recognizing that it is important that the CIA takes responsibility for identifying what education and training is needed to become an actuary in Canada—and then map how different paths can satisfy this. We fully expect that traditional paths involving FSA/FCAS qualifications will remain a key path to achieving the FCIA, but, in the increasingly complex and changing environment in which we work, we need to recognize the potential for alternative paths to be a key part of our criteria. A great example of this is the University Accreditation Program (UAP), where the CIA has taken the step of allowing students to satisfy certain early exam requirements through achieving specified grade levels in specified courses in CIA-accredited actuarial programs at universities in Canada. The UAP has now been recognized by the Casualty Actuarial Society (see the separate story in this (e)Bulletin).

Through initiatives such as the UAP and the recently-introduced Associate designation, the CIA has put in place key foundations that will both increase our engagement with younger students entering the profession and with the excellent university infrastructure which educates them. Both of these are very important to the profession.

Finally, I’d like to invite you to send me comments on these objectives, or any other issues related to the CIA or our profession that are on your mind, at president@actuaries.ca.

Simon Curtis, FCIA, is President of the CIA.
 
Spotlight


By Phil Rivard, FCIA

Many practitioners may not be aware of the role of the Practice Council (PC) within the CIA or how it operates. Certainly most actuaries are more familiar with the work of the various committees of the PC. They include the:
  • Committee on Actuarial Evidence;
  • Committee on Investment Practice;
  • Committee on Life Insurance Financial Reporting;
  • Committee on P&C Insurance Pricing;
  • Committee on Pension Plan Financial Reporting;
  • Committee on Post-Employment Benefit Plans;
  • Committee on Property and Casualty Insurance Financial Reporting;
  • Committee on Risk Management and Capital Requirements;
  • Committee on the Appointed/Valuation Actuary; and
  • Committee on Workers' Compensation.
These all work under the PC to address the needs of practitioners working in the various practice areas. The guidance material developed by these committees is only released to practitioners once it has been reviewed and approved by the PC.

The PC members are selected in a fashion that ensures adequate representation across all practice areas, as opposed to the committees which are staffed with practitioners having practice-specific expertise. One of the roles of the PC is to make sure that the guidance produced by any committee follows the due process, guidelines, and quality thresholds set by the Institute. The actual mandate of the PC is:
(a) To direct and manage the development of all practice-related material other than Standards of Practice, in all areas of actuarial practice;

(b) To adopt all practice-related material other than Standards of Practice, in all areas of actuarial practice;

(c) To provide interpretative opinions on all Standards of Practice and other practice-related material, in all areas of practice; and

(d) To monitor the work of other professional standard-setting bodies and provide comments on draft professional standards issued by these bodies, where appropriate.
For obvious reasons, much of the mandate is delegated to the practice committees with ultimate responsibility and oversight remaining with the PC.

Over the past year, the PC and its committees have developed and adopted the following guidance:
 
212075
Committee on Property and Casualty Insurance Financial Reporting
Educational Note: Subsequent Events
September 2012
212066
Committee on Pension Plan Financial Reporting
Educational Note Supplement: Guidance for Assumptions for Hypothetical Wind-Up and Solvency Valuations Update – Effective June 30, 2012
August 2012
212056
Committee on Pension Plan Financial Reporting
Educational Note Supplement: Guidance for Assumptions for Hypothetical Wind-Up and Solvency Valuations Update – Effective March 31, 2012
June 2012
212032
Committee on Pension Plan Financial Reporting
Educational Note: Assumptions for Hypothetical Wind-up and Solvency Valuations with Effective Dates between December 31, 2011 and December 30, 2012
May 2012
212031
Committee on Post-Employment Benefit Plans
Educational Note: Health Care Trend Rate
May 2012
212027
Committee on Life Insurance Financial Reporting
Educational Note: Reflection of Hedging in Segregated Fund Valuation
May 2012
212012
Committee on Life Insurance Financial Reporting
Educational Note: Valuation of Universal Life Insurance Contract Liabilities
February 2012
212007
Committee on Pension Plan Financial Reporting
Educational Note Supplement: Assumptions for Hypothetical Wind-Up and Solvency Valuations with Effective Dates from December 31, 2011, to December 30, 2012
February 2012
212004
Committee on Life Insurance Financial Reporting
Research Paper: Calibration of Equity Returns for Segregated Fund Liabilities
February 2012 

While all of the committees tend to be very busy, they are always open to new ideas or suggestions of where guidance may be useful. I would encourage you to forward any such ideas or suggestions to myself at privard@segalco.com or to the committee chairs themselves. A description of each of the committees, their mandate, and the current chair can be found on the CIA website. At the bottom of each committee page, there is also an option to express your interest in joining the committee.

At any point in time, the CIA has hundreds of volunteers participating on various committees or task forces. These volunteers are aware of the invaluable role they play in maintaining our profession’s vital work in protecting the public’s interest. They are also aware that volunteering brings opportunities for personal growth and interaction with many of the Institute’s best and brightest minds. Volunteers need not be seasoned veterans or experts in their field. In fact, recently qualified actuaries and ACIAs can be integral to the development of guidance material and I would strongly encourage such practitioners to consider volunteering for a practice committee.

Participation certainly has its rewards.

Phil Rivard, FCIA, is Chair of the CIA Practice Council.

 
MOVERS AND SHAKERS


Social networking is playing an increasingly important world in today's business world, with LinkedIn bringing professionals and organizations together and Facebook offering another avenue for raising profiles. But for keeping abreast of news and updates, one website reigns supreme: Twitter.


More and more people, companies, and institutions involved in the actuarial profession are turning to Twitter to publicize their activities and opinions. For those CIA members who are new to this rapidly-changing world, here is a brief guide to some of the tweeters worth following.

Actuarial associations

The CIA
@CIA_Actuaries and @ICA_Actuaires
The Institute's tweets cover such subjects as forthcoming events, members who are featured in the media, relevant articles worth reading, and much more. Our two accounts already have almost 400 followers. Why not join them?
Actuarial Profession
(the UK Institute and Faculty of Actuaries)
@actuarynews
It may tweet less frequently than similar organizations, but the Profession does highlight interesting videos, papers, and more.
American Academy of Actuaries
@Actuary_Dot_Org
More than 1,500 people follow the academy's tweets on its members and topics affecting actuaries in America and elsewhere.
Casualty Actuarial Society
@CASact
The society tweets fairly regularly about its events and documents, and highlights its members' achievements.
Conference of Consulting Actuaries
@CCActuaries
The CCA offers updates about its forthcoming events and more.
Society of Actuaries
@SOActuaries
The society has tweeted almost 900 times, and tweets several times a day on its activities or other issues of interest to actuaries.

Industry organizations and insurance news

Actuarial Post
@actuarialpost
Describing itself as the only digital magazine for the actuarial community, it has tweeted almost 3,000 times.
Advisor Group
@advisorca
The group, which bills itself as the leading source of news about the insurance industry for investment advisors, has more than 2,000 followers.
Canadian Underwriter
@CdnUnderwriter
Canada's insurance and risk magazine is highly prolific online.
Catastrophe Modeling
@catrisky
This account offers news on catastrophe modelling and trends, plus updates on hurricanes, earthquakes, tsunamis, and other risks.
Financial Services Commission of Ontario
@FSCOTweets
The commission regularly publicizes relevant papers and articles on important issues and retweets useful messages.
Insurance Biz Daily
@insbizdaily
More than 7,700 tweets can attest to this organization's ability to stay on top of insurance industry news.
Insurance Bureau of Canada
@InsuranceBureau
The highly-prolific bureau tweets numerous times every day, demystifying insurance issues and promoting the insurance profession.
Insurance Insider
@InsuranceInside
The Insider promises that its followers will "find out first what is happening in the North American, London, and international (re)insurance markets".
Insurance Report
@InsuranceReport
More than 4,500 followers enjoy frequently-updated tweets about the global insurance industry.
Jethro Peterson
@1insurance_tip
Jethro constantly updates 2,700-plus followers on breaking news affecting insurers.
Report on Business
@globebusiness
The business section of the Globe and Mail tweets dozens of times a day.

 
Institute News

The CIA’s University Accreditation Program (UAP) has achieved a new landmark: it has gained recognition from the Casualty Actuarial Society (CAS).


The UAP, which is already being supported by 10 universities across Canada, has now been approved by the CAS board of directors, who agreed that the exam waivers granted by the Institute would be valid for CAS preliminary examinations.


Announcing the decision this month, the CAS said it had completed a comprehensive review of the program, and its backing of the UAP was the culmination of a multi-year process that involved working with and monitoring the CIA’s development of policies, procedures, academic standards, and evaluation of universities and individual courses to ensure that the standard for exam waivers would be at least as rigorous as an actuarial exam.


As part of the program, students who have successfully completed specific courses at approved universities will have the option of applying to the CIA for exemptions from writing CAS Exams 2, 3F, 3L, and C. To gain exemptions, students will submit official transcripts to the CIA showing they have achieved the minimum grade requirement (which varies by university), along with an application and 80 percent of the corresponding CAS exam fee.


The UAP, which came into effect this month in accredited universities, was launched in a bid to ensure that the profession continues to evolve and meets the needs of future generations of actuaries in Canada. Its foundations lay in research carried out several years ago under the banner of the Future Education Model (FEM), built upon by the current CIA Accreditation Committee, and in consideration of the changing actuarial landscape. While the CAS and SOA initially became involved in the FEM, they later withdrew from the project, and the CIA proceeded alone to create and implement its own Canadian university accreditation program.


Proponents of the UAP worked to create a system by which the Institute could offer students exemptions for some preliminary examinations while maintaining the strong standards of the exam-based entrance to the profession. The CIA believes that the UAP will allow for a rich and rewarding university experience that will make travel time to the FCIA designation more predictable and produce stronger, more capable actuaries for the future.


The following universities have been accredited for courses beginning in, or after, September 2012:


  • Concordia University
  • Simon Fraser University
  • Université du Québec à Montréal
  • Université Laval
  • University of Calgary
  • University of Manitoba
  • University of Regina
  • University of Toronto
  • University of Waterloo (Undergraduate and Graduate Program courses)
  • University of Western Ontario.
CIA President Simon Curtis said: "During the long process that led to the final accreditation program, many people identified that recognition from our education partners—the CAS and SOA—was a key step towards the UAP’s long-term success.

"We are delighted that the CAS has acknowledged the efforts we made to ensure that the profession would continue to evolve while never allowing standards to fall. This is a landmark decision and a vote of confidence for all those involved in developing this initiative, which will give a new generation of actuaries enhanced options for entering the profession."


Questions or comments about the UAP may be directed to: accreditation@actuaries.ca
.
 

By Jim Christie, FCIA, CIA Past President

It is hard to believe that a year has passed since I became President of the Institute. As I look back on my term, the Institute has made great strides in many areas. I am particular pleased with our actions on the following:

  • University accreditation: we now have an alternate to the traditional intensive closed book exam process for several of the earlier exams. This process builds upon the tremendous global reputations and pedagogical abilities for the actuarial programs of 10 Canadian universities.
  • Associate (ACIA) designation: we now have a recognizable and formal recognition of the efforts of actuarial candidates earlier in their careers.
  • Member Listening Group: we have started a large group (representing a cross-section of our members) who have agreed to provide informal survey feedback on questions that concern all Canadian actuaries.
  • We have increased our focus on attracting younger members to participate in Institute activities earlier in their careers.
  • The Board has adopted four long-term strategic goals which will allow the Board to better focus its energies in the coming years on those issues that are most critical to the Institute.
For anyone who may be considering standing for election as President or Board of Directors, I urge you to step forward. I had a wonderful year as President and it really is something I would gladly do again. In many ways serving as President was a culmination of my volunteer activities within the Institute. I highly recommend that all members volunteer to do something that interests you within the Institute. Without doubt, I have received much more out of volunteering than I put in.

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


 


Malcolm Hamilton is one of Canada’s leading experts on retirement planning, frequently appearing in the media to discuss how people can best prepare for life after work. But when it comes to his own retirement, he is "fairly ambivalent" about the prospect of stepping away from the office for good.

At the end of the year, he will retire from his position as a partner at Mercer in Toronto, ON, and he said: "I have no elaborate plan or clear vision of what this will mean.

"My workload has already gone from 100 per cent to about 60 per cent, which seemed easy enough to do. I’ve been reading, following the news and peer reviewing papers, which has been very pleasant. Once I retire, I imagine I will do less public speaking and more writing. I will not miss anything because I will carry on with the things I enjoy: writing, speaking, and learning. I have a high level of interest in Canada’s pension system, and this will continue."

Looking at the profession that he joined in the 1970s—he became a Fellow of the Society of Actuaries in 1977 and an FCIA a year later—Mr. Hamilton is concerned at the changing landscape for pension actuaries and other experts.

"We now know that defined benefit plans are expensive and risky for companies to sponsor, but that wasn’t apparent when we had young plans and favorable economic conditions. Defined benefit plans need to go away. Hopefully they will be replaced by target benefit (TB) plans which, I believe, have a better structure. Public sector plans are beginning to experiment with TB designs and this could be a promising source of activity for actuaries. But it will be quite some time before we see companies in the private sector moving in that direction. They will experiment first with defined contribution (DC) plans, which can and will be improved by moving to ‘smart’ defaults. We are just at the beginning of the DC learning curve now; if the experiment succeeds, companies won’t need to try TB plans. But if it fails, TB plans will be the next place for them to turn. DC and TB plans, once we learn how to design them, can do a good job for both employees and employers."

Although Mr. Hamilton gave up forecasting many years ago, he added: "It is going to be a miserable time for people trying to save for retirement. No pension plan design can prosper in this environment. We did some good things in the 1990s; for example, partially funding the Canada and Québec Pension Plans was a good move. We have done better than almost every other country in preparing for retirement largely by doing the opposite of what other countries were doing. For example, Canada was paying down its public debt between 1995 and 2008 while the rest of the G7 was heading in the opposite direction. Unfortunately, by increasing the eligibility age for Old Age Security to 67 we have apparently decided to follow the lead of countries that have consistently mismanaged their retirement systems. This is a road to nowhere."

Focusing on his own years of retirement, Mr. Hamilton—now 61—said: "People’s mental faculties decline, and there will be a time when I am not smart enough to understand what is going on, but I hope that is 20 years off. I am not planning to disengage from economic or retirement issues, just from working for money.

"I look at someone like [former University of Waterloo professor] Rob Brown, who seems remarkably busy even though he has retired. People like that don’t disappear suddenly. I hope to do the same."
 

Pictured at the University of Manitoba at the unveiling of the plaque are CIA President Simon Curtis, Michael Benarroch, dean of the Asper School of Business, and, from the Warren Centre for Actuarial Studies and Research, professor and director Jeffrey Pai and Professor Sam Cox.

One hundred years of educating future members of the actuarial profession has been recognized by the CIA with the presentation of a commemorative plaque to the University of Manitoba.

President Simon Curtis was among the Institute representatives who visited the university during the 2012 Actuarial Research Conference, which was co-sponsored by the CIA, to acknowledge the centenary of Manitoba's Actuarial Science Program.

During a presentation that highlighted the role of the CIA, Mr. Curtis praised the university and its Warren Centre for Actuarial Studies and Research, which runs Canada's second-oldest actuarial program, for producing graduates who had contributed a great deal to the profession in Canada and to the growth of the Institute.

Mr. Curtis told his audience of the challenges facing the profession, and the opportunities being created thanks to such developments as the changing landscape for health care and other social benefits, and the increase in demand for quantitative risk analysis of financial risks and contingencies in all fields.

Having set out how the Institute was working with students and academia via the University Accreditation Program and the introduction of the Associateship designation, among other initiatives, he said that the CIA and its members greatly valued the role that the University of Manitoba and other institutions played in supporting the profession in Canada. He added that the Institute hoped that these contributions, and the ties between the CIA and universities, would become even more significant in the future.
 


By Jean-Claude Ménard, FCIA

The International Actuarial Association (IAA) is the worldwide association uniting almost 100 professional actuarial organizations from 83 countries or regions. The IAA encourages the development of a global actuarial profession and promotes its acknowledgement as technically competent, professionally reliable, and serving the public interest.

One of the IAA’s strategic objectives is to promote the development and issuance of actuarial standards in the jurisdictions of all full member associations, and the global convergence of actuarial standards. As such, International Standards of Actuarial Practice (ISAPs) are currently being developed by the IAA. The Canadian Institute of Actuaries (CIA) is a full member association of the IAA, and Canadian actuaries are actively involved in the work on ISAPs.

One of the ISAPs being developed is the ISAP on Valuation of Social Security Programs. Social security actuaries play an important role in carrying out financial analyses of social security programs. Since the policy decision-making relies heavily on such analysis, it is important that it is done by actuaries in a highly professional and responsible way. Few existing professional standards and guidelines specifically apply to social security programs, and international bodies such as the International Social Security Association and the International Labour Organization have been stressing an urgent need for appropriate standards. In Canada, even if the CIA has a comprehensive set of actuarial practice standards that cover a majority of actuarial practice fields, there are no practice-specific standards for social security programs. Therefore, the ISAP on Valuation of Social Security Programs will be of a great value for Canadian actuaries working in this field.

In the social security area of practice, the IAA previously adopted Guidelines of Actuarial Practice for Social Security Programs, which became effective on January 1, 2003. Those guidelines had the effect of a practice note and will be superseded by the adopted version of the new ISAP.

In the middle of 2011, the IAA Executive Committee approved the statement of intent to issue an ISAP on Valuation of Social Security Programs. Subsequently, the draft of this ISAP was developed by the Social Security Task Force of the Interim Actuarial Standards Subcommittee (IASSC). The drafting team was led by Robert L. Brown (Canada) and Godfrey Perrott (U.S.) and included Canadian social security actuaries: Pierre Plamondon, the chief actuary of the Québec Pension Plan (recently retired) and myself (in consultation with my colleagues in the Office of the Chief Actuary). The draft was discussed at several IAA meetings and teleconference calls.

In May 2012, a draft of the ISAP on Valuation of Social Security Programs was submitted to the IASSC, which intends to expose it concurrently with ISAP 1—General Actuarial Practice. The ISAP on Valuation of Social Security Programs is expected to be the first ISAP other than ISAP 1 to be adopted; this is expected to happen at the IAA Council meeting in the fall of 2013 or the spring of 2014.

This raises the question of whether Canada will adopt this proposed ISAP on Valuation of Social Security Programs, particularly since, as mentioned earlier, our Canadian standards include no practice-specific standards in this area. My understanding is that the Actuarial Standards Board is starting to consider how to incorporate not only this ISAP but also ISAP 1 on general actuarial practice and other ISAPs as they are developed into Canadian actuarial guidance.

By their nature, social security programs cover a wide segment of the population, and, as such, economy-wide and nationwide economic and demographic assumptions are often needed in order to prepare actuarial valuations. Valuation methodologies used in social security valuations are dependent upon financing methods of these programs and upon the sustainability measures used. Finally, communication is increasingly becoming an integral part of social security actuaries’ mandate: they need to effectively convey their findings and recommendations to policymakers in order for responsible public policies to be developed. All these considerations are reflected in the ISAP on Valuation of Social Security Programs through discussion of appropriate practices as well as communication and disclosure requirements.

Canada has significant experience in the area of social security valuations. We were pleased to participate in the development of the ISAP on Valuation of Social Security Programs and to share our expertise. We are also pleased that some of the best Canadian practices were reflected in this ISAP: the guidelines with respect to the independent expert review process and the acknowledgement that a balance sheet for pay-as-you-go or partially funded social security programs should be prepared using an open group approach, under which contributions and benefits of both current and future participants are considered.

In her remarks at the 2011 CIA Annual Meeting, superintendent Julie Dickson from the Office of the Superintendent of Financial Institutions (OSFI) recognized and applauded the CIA’s involvement with the IAA in promoting and potentially developing appropriate international actuarial standards related to International Financial Reporting Standards. The CIA involvement in the development of the ISAP on Valuation of Social Security Programs is another example of sharing Canadian experience and expertise with an international audience and promoting the main guiding principle of the actuarial profession: serving the public interest.

Jean-Claude Ménard, FCIA, is chief actuary at the Office of the Chief Actuary, OSFI, and Chair of the Technical Commission on Statistical, Actuarial, and Financial Studies of the International Social Security Association.
 

Different actuaries focus on enterprise risk management (ERM) to a greater or lesser extent. But for Danny Cooper at the Office of the Superintendent of Financial Institutions (OSFI), ERM is at the core of his work.

Mr. Cooper, a Director in OSFI’s Deposit Taking Group, says OSFI’s Supervisory Framework is based on ERM, with the organization focusing on the risks faced by banks and insurance companies in such areas as compliance, internal audit, and other controls within organizations.

Although his work centres on banking, he said: "The framework is the same whether it is banking or insurance; you have new business risk, lapse risk, and so on. With insurance companies, you are looking at a variety of products with significant investment, mortality/morbidity, and expense risks. On the banking side, the deposit-raising structure is a significant risk, and you have asset risk in terms of placing mortgages and other types of assets. There are also opportunities to remove risk: insurers have reinsurance, and banks have securitization. There are differences and similarities. But corporate governance, capital requirements, legislative compliance requirements, anti-money laundering, outsourcing, and asset liability management are examples of what is important in both worlds.

"OSFI’s Supervisory Framework talks about inherent risks and controls; institutions could be taking on too much risk or not effectively controlling it. We deal with a range of activities, and our work is really about overseeing the controls that exist. We want to make sure that the public—depositors, creditors, policyholders—receive what they are promised."

Mr. Cooper, a Fellow of the CIA and Society of Actuaries who holds HBSc, MMath, and MBA degrees, said one of the keys to successful risk management is "complete risk identification. You have to identify all the risks, and then you can look at the risk appetite and develop appropriate parameters for monitoring it. You should ask: ‘What risks am I actually taking on?’

"Actuaries are one of the key parties responsible for risk management in their institutions, but the regulator can provide guidance about some of the risks they should be looking at. We do not manage the risk, but we can provide another layer of oversight. Senior Management and the Board are the primary oversight functions, and as a last resort there is OSFI or the provincial regulators."

In his current role, Mr. Cooper focuses on such institutions as domestic banks, trust companies, foreign bank branches, and merchant acquirers. He has been with OSFI for 12 years, having previously worked in pension consulting and life insurance, and said: "OSFI has allowed me to get a very broad perspective of the banking industry. The regulator is a place where you can be exposed to many different industries, and OSFI fosters this kind of development.

"I wanted to understand the risks of different institutions and how they are managed. I’ve worked in banking for approximately one year, and I’ve learned a lot, but there is still more to learn, particularly with Basel III coming in. Although there is currently no Basel equivalent for insurance companies and each jurisdiction is looking at different options, the Basel III changes for banks will be worldwide, and will eventually impact the insurance industry. Each world influences the other."

He said banking offers fresh challenges and opportunities for actuaries: "There is the same applicability of risk management skills in insurance and banking. In both industries, it is helpful for actuaries to understand the risks in existing products, and to think about the complete management of a product through the product lifecycle.

"Some large life insurance companies have established bank and trust subsidiaries, and some large banks have established subsidiaries focused on insurance. Financial institutions are seeking the best risk–reward trade-off. Over time, more and more actuaries could be migrating to the banking world."


 


Lunch break outside of Tirana during the March 2012 AWB Albania project. From left to right: Marsela Vaska, Peter Murdza (AWB volunteer), Ornela Kullolli, and Juliana Dengeri. Marsela and Juliana are the actuaries at the Financial Supervisory Authority of Albania. Ornela is the Financial Services Volunteer Corps country representative for Albania.


By Alan Cooke, FCIA

Mongolia, Kazakhstan, Ukraine, Cameroon, Azerbaijan, Albania, Vietnam, Romania, Macedonia, Ghana, Tunisia, Nepal, Sri Lanka, Turkey, Bangladesh, Tanzania, Kenya, Georgia: what do all these countries have in common? They are all countries where Actuaries Without Borders (AWB) has been approached to provide volunteers for actuarial projects.

What is AWB?

AWB is a section of the International Actuarial Association (IAA), the worldwide association of actuarial associations. Currently the IAA has 64 full members—including the CIA and Society of Actuaries (SOA)—and 26 associate members. The IAA has sections and committees similar to the SOA structure, and the AWB section was established in 2003.

What Does AWB Do?

AWB provides volunteers for projects in all areas of actuarial practice in countries with developing actuarial professions. Typical volunteer activities include speaking at actuarial seminars and courses as well as mentoring younger actuaries and regulators. AWB works closely with non-governmental organizations, government bodies, and local actuarial associations to identify, develop, and manage projects.

Volunteering for AWB Projects

In addition to having the relevant actuarial expertise, AWB volunteers should be open-minded, flexible, practical, and creative, be effective communicators, and possess a good sense of humour and spirit of adventure. The rewards of volunteering include the satisfaction of benefiting others, the intellectual stimulation from working in a different environment, the expansion of personal networks, and increased knowledge of a developing marketplace. AWB volunteers are reimbursed for their travel, food, and lodging costs for a project. You must be an AWB Section member to be eligible to volunteer for an AWB project.

AWB Section Membership

Currently the AWB Section has 282 members in 37 countries. The main countries (by the residency of the member) include the U.S. (65), France (33), Canada (25), UK (24), South Africa (14), and the Netherlands (12). The annual membership fee of CAD $50 may be remitted with your CIA or SOA dues payment or paid directly to AWB.

Examples of Recent and Upcoming AWB Projects

Some examples of past and future AWB projects may give you a better idea of whether you may want to volunteer for a future initiative.

Kazakhstan (September 2009)

AWB provided two lecturers for the Second Actuarial School organized by the local actuarial association. More than 60 attendees participated from nine countries, and the topics covered included:
  • Investment and credit risks of pension funds;
  • Analysis of the liquidity of pension assets;
  • Forecasting of payments for defined contribution plans; and
  • Liability adequacy testing for life and non-life insurance.
Kenya (October–November 2009)

AWB provided two volunteers for an education initiative with three components:
  • A two-week course on enterprise risk management (ERM) and economic capital concepts at the University of Nairobi;
  • A seminar for executives in the financial services industry; and
  • Meetings with Kenyan regulators.
Albania (March 2012)

An AWB volunteer mentored two actuaries working for the Financial Supervisory Authority of Albania (FSA) with a focus on:
  • The role of regulatory actuaries in the U.S.;
  • Problems arising from their current responsibilities with the FSA; and
  • Important property and casualty topics not covered in their previous training, e.g., loss ratio ratemaking and the use of the development triangle as a diagnostic tool.
Nepal (April 2012)

AWB provided one of the three foreign speakers at a two-day actuarial seminar for over 40 attendees on non-life topics organized by Beema Samiti, the Nepalese regulatory authority. Seminar topics included:
  • Basic pricing and data structures;
  • Exposure measures;
  • Components of rates; and
  • Pricing equation.
Subsequent discussions with the regulators included:
  • Insurance regulation in other countries;
  • Creation of an insurance database;
  • Creation of a catastrophe pool; and
  • Expense structures.
Upcoming Seminars

AWB is providing two volunteers for a two-day ERM seminar in Romania and two or three volunteers for a three-day professionalism and pensions course in Azerbaijan.

More information on these and other AWB projects may be found in Peter Murdza’s Session 41 presentation at the May 2012 SOA Symposium.

How to Become More Involved with AWB

Our website provides extensive information on how AWB is organized as well as the benefits of membership. You are also encouraged to contact me or any other AWB Section Committee members if you have questions. Our contact details may be found at the above-mentioned website.

It is an exciting time to be involved in the actuarial profession in the countries that AWB serves so we hope you will join our section.

Alan Cooke, FCIA, is a retired actuary living in Vancouver. He is the current Vice-chair of AWB and also serves as a board member of several non-profit Vancouver organizations. He recently chaired the SOA’s International Section and currently serves on both the Canadian Advisory Group and International Committee of the SOA. He may be reached at vancooke@telus.net.

 



Jeremy Bell, pictured above left, and Brendan George, above right, have combined 30 years of actuarial consulting experience to form George & Bell Consulting, which specializes in actuarial and investment advice for pension and benefit plans and is based in Comox and Vancouver, both in BC.

Mr. Bell, FCIA, FSA, has worked in the pension, benefits, and investment fields for more than 12 years, has advised lawyers, and often provides expert witness testimony. A frequent speaker at industry events, he is heavily involved in the actuarial community and serves on a number of boards and committees. Mr. George, FCIA, FIA, has worked in the pension and investment fields for 18 years, specializing in financing and actuarial analysis of pension plans and investment consulting. He has led numerous education seminars for boards, pension committees, and pension plan members.

They are joined in the Vancouver office by Gilles De Condappa, who advises clients on accounting and actuarial matters related to group benefit plans.

_______________________________________

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 (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 professionalswhether 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.

 
The actuarial profession has mourned the loss this summer of Sam Eckler, who was one of the Canadian Institute of Actuaries' oldest members. He was also a former President of the Canadian Association of Actuaries, the Institute's predecessor.

Mr. Eckler, who died at the age of 97, was the founder of Canada's preeminent actuarial consulting practice, Eckler Ltd. The company is owned and operated by its principals, and now has 200 staff members, including more than 70 actuaries – an actuary-to-employee ratio said to be unheard of in the business.


Born in 1914, Sam Eckler earned a BComm from the University of Toronto, and became a Fellow of the Actuarial Society in 1938 and CIA in 1965. He was also a member of the American Academy of Actuaries, Institute of Actuaries (UK), and Society of Actuaries, and served as Vice-president of the International Actuarial Association in the 1960s.

A former member of various CIA committees, including Emerging Issues, Qualifications and Conduct, and Professional Conduct, Mr. Eckler was a keen contributor to numerous philanthropic organizations, and a passionate sportsman who was skiing well into his eighties.

Following his death, Mr. Eckler, who believed innovative actuarial methods should always be explored, was praised for the positive impact he had on the working lives of staff at the firm that bore his name, and for the "terrific" legacy he left behind.


The many tributes from his friends and family described him as a "great man who walked softly through the world", "an encouraging supportive mentor and friend", and "a one of a kind".

 
Herbert (Herb) Beiles, who died earlier this year, was a graduate of Queen's University who went on to achieve senior actuarial positions before running his own consultancy practice.

Born in 1939, Mr. Beiles
became a Fellow of the CIA and Society of Actuaries in 1969 and a Member of the American Academy of Actuaries in 1971. He spent much of his career at Crown Life Insurance, including serving as its vice-president of Canadian and international operations. In 1993, he took early retirement from Crown Life, but he returned to actuarial science to set up Toronto-based H. N. Beiles Consulting.

Mr. Beiles, who served on the CIA's committees on public relations and education and examinations, among others, enjoyed being active in his community and was remembered by one friend as "the life of the party". For more tributes to him, please see here.
 
THIS MONTH'S PUBLICATIONS
Mortality Study: Canadian Standard Ordinary Life Experience 2009–2010 Using 97–04 Tables

This is the 61st annual report submitted by the Individual Life Experience Subcommittee of the Research Committee detailing the intercompany mortality experience for Canadian standard ordinary life insurance policies. This is the 17th year that we have collected data in a seriatim format. We calculated exposure using the "actuarial exposure" method, in which a full year of exposure is credited in the year of death.

Study: www.actuaries.ca/members/publications/2012/212070e.pdf

Tables 97-04:
Tables 2005-2010
Tables 2010
Tables by size 2010

Contact with Questions: Nikolai Serykh, Chair, Individual Life Experience Subcommittee, at nserykh@munichre.ca

Mortality Study: Canadian Standard Ordinary Life Experience 2009–2010 Using 86–92 Tables

This is the 61st annual report submitted by the Individual Life Experience Subcommittee of the Research Committee detailing the intercompany mortality experience for Canadian standard ordinary life insurance policies. This is the 17th year that we have collected data in a seriatim format. We calculated exposure using the "actuarial exposure" method, in which a full year of exposure is credited in the year of death.

Study: www.actuaries.ca/members/publications/2012/212069e.pdf

Tables 86-92:
Tables 2005-2010
Tables 2010
Tables by size 2010

Contact with Questions: Nikolai Serykh, Chair, Individual Life Experience Subcommittee, at nserykh@munichre.ca

Request for Proposals: Water Damage Risk and Canadian Property Pricing

Traditional pricing methods rely on historical claims data to project future expected losses. When past claims experience is not fully predictive of future loss potential, actuaries must investigate other methods to appropriately incorporate this risk in their pricing framework. The objective of this request for proposals (RFP) is to provide a qualitative summary of the issue as it relates to the peril of water, to point to external sources of information and to discuss potential alternatives to incorporating that information into ratemaking.

This RFP is distinguished from the Canadian Water Damage RFP released in December 2011 in the following ways:
  • This research product will be academic in nature and is not designed to result in specific analyses of company and/or industry metrics. Current practices will be surveyed but not with the objective of quantifying them.
  • Individual companies will benefit from the research insights and be able to use the information to support company-specific practices. This RFP will not generate additional costs for insurance companies.
Proposal submissions or inquiries on the research project should be sent to sc.research.pc@actuaries.ca or  marc-olivier_faulkner@avivacanada.com. The deadline for submission of an expression of interest in submitting a proposal is October 5, 2012.

Link: Request for proposal

Contact with Questions: Marc-Olivier Faulkner, Chair, P&C Research Subcommittee, at marc-olivier_faulkner@avivacanada.com

Webcast – International Actuarial Experiences

Wednesday, October 3, 2012
Noon to 1:30 p.m. (EDT)

Presenters: Alan Cooke and Kelly Rendek

This webcast will provide an insight into the experiences of actuaries working in overseas settings. Topics covered will include:
  • Unique considerations when contemplating a move to or an assignment in a different country;
  • How actuarial work in Canada differs from, and is similar to, work in other developed nations;
  • Actuarial practice and work challenges in developing countries;
  • How the profession is reaching out to other countries, e.g., through organizations such as Actuaries Without Borders; and
  • Microinsurance and why it is important in developing countries, as well as unique challenges and opportunities it may offer to actuaries.
Link: http://www.actuaries.ca/webcasts/index_e.cfm

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

Final Standards of Practice – Reporting of Incremental Cost and Sensitivity Information on a Hypothetical Wind-up or Solvency Basis – Section 2600

A revised section 2600 of the Standards of Practice was approved by the Actuarial Standards Board on August 15, 2012.

The effective date of the final standard is August 23, 2012.

Links:
Memorandum
Standards of Practice

Contact with Questions: Michael Banks, Chair, Designated Group, at michael.banks@mercer.com

Educational Note Supplement: Guidance for Assumptions for Hypothetical Wind-Up and Solvency Valuations Update – Effective June 30, 2012

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 30, 2012, which was based on a review of data collected in the first quarter of 2012. The review concluded that there was not sufficient evidence to warrant changing the guidance provided in a May 24, 2012, educational note. This guidance concluded that for valuations with effective dates on and after December 31, 2011, an appropriate discount rate for estimating the cost of purchasing a non-indexed group annuity would be determined as the unadjusted average yield on Government of Canada (GoC) marketable bonds with maturities over 10 years (CANSIM series V39062) increased arithmetically by 90 bps, in conjunction with the UP94 generational mortality tables. This guidance applies to both immediate and deferred pensions and also applies regardless of the overall size of a group annuity purchase.

Methodology

The guidance published on June 30, 2012, as to estimated purchase costs for non-indexed group annuities was partially based on quotes provided by eight insurance companies on illustrative group annuities using pricing conditions as at March 31, 2012, and supplemented by data from certain actuarial consulting firms on actual group annuity purchases during the first and early second quarters of 2012.

Analysis

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, 2012, but based on pricing conditions as at June 30, 2012 (however, it is noted that one of the eight insurers did not provide illustrative quotes at June 30, 2012). The illustrative non-indexed quotations at March 31 and June 30, 2012, may be summarized as follows:

AVERAGE OF THE THREE MOST COMPETITIVE QUOTES
(USING UP94 GENERATIONAL MORTALITY TABLES)

  Large Purchase
Small Purchase
31/03/2012
30/06/2012
31/03/2012
30/06/2012
Retirees
   
Discount rate  3.43% 2.98%
3.52%
3.05%
Spread over CANSIM V39062
+ 0.88% + 0.73%
+ 0.97%
 + 0.80%
Deferred vesteds
   
Discount rate 
3.69%
3.25% 3.70%
3.31%
Spread over CANSIM V39062
+ 1.14%
+ 1.00%
+ 1.15% 
+ 1.06%

If considered in isolation, over the three-month period, the illustrative quotes show a decrease of approximately 10 to 15 bps in the spread of the discount rates over the unadjusted average yield on GoC marketable bonds with maturities over 10 years (CANSIM V39062), in conjunction with the UP94 generational mortality tables.

The pricing information for the actual group annuity purchases for non-indexed pensions in the second quarter of 2012 that was available to the PPFRC produced an average spread which was in the range of 75 to 85 bps above the prevailing unadjusted average yield on GoC marketable bonds with maturities over 10 years (CANSIM V39062).

As a result, the PPFRC concluded that, effective June 30, 2012, a revision to the guidance contained in the educational note supplement published on June 30, 2012, is appropriate.

Guidance for Non-indexed Pensions

Based on the analysis described above, the PPFRC has concluded that, for valuations with effective dates on and after June 30, 2012, an appropriate discount rate for estimating the cost of purchasing a non-indexed group annuity would be determined as the unadjusted average yield on GoC marketable bonds with maturities over 10 years (CANSIM series V39062) increased arithmetically by 80 bps, in conjunction with the UP94 generational mortality tables. This guidance applies to both immediate and deferred pensions and also applies regardless of the overall size of a group annuity purchase.

The revised guidance on spreads applies to valuations with effective dates on and after June 30, 2012 up to December 30, 2012, pending any further guidance or other evidence of change in annuity pricing.

Example

As at June 30, 2012, the unadjusted CANSIM V39062 rate was 2.25%. This rate would form the basis for developing an appropriate underlying discount rate for valuations of non-indexed group annuities with effective dates of June 30, 2012. Prior to rounding, an applicable underlying discount rate would then be determined as 2.25% + 0.80% = 3.05%.

Guidance for Indexed Pensions

The data regarding the pricing of annuities indexed to the Consumer Price Index (CPI) continue to be extremely limited. Only one actual annuity purchase during the first and second quarters of 2012 pertained to indexed annuities. In most cases, the contributing insurers did provide illustrative quote data for the sample blocks on a CPI-indexed basis. It may be noted that the premiums quoted for the illustrative quotes on this and prior occasions are substantially higher than the guidance provided by prior educational notes. The PPFRC is in the process of conducting further research regarding the pricing of indexed annuities. This research may result in the revision of future guidance for estimating the cost of purchasing indexed annuities.

Until any revised guidance is issued, the guidance for estimating the cost of purchasing indexed annuities contained in the May 24, 2012, educational note continues to apply.

Validity of May 2012 Educational Note

With the exception of the revisions to the guidance contained in this educational note supplement, actuaries would continue to reference the May 24, 2012, educational note for guidance with respect to the selection of assumptions for hypothetical wind-up and solvency valuations with effective dates between June 30, 2012, and December 30, 2012.

Actual Annuity Pricing

The purpose of this educational note supplement is to provide actuaries with guidance related to the establishment of assumptions for hypothetical wind-up and solvency valuations. It is worth noting that the pricing for an actual group annuity purchase depends on many factors, with the result that the actual price may differ from the guidance provided herein. Some of the factors that may affect pricing of a particular purchase include, but are not limited to:
  • The duration of the pensions being purchased;
  • The proportion of deferred vested members included in the group being purchased;
  • The average pension amount for the pensions being purchased;
  • The mortality experience anticipated by the insurance companies bidding on the purchase; and
  • Competitive pressures in the group annuity market at the time of the purchase.
Link: http://www.actuaries.ca/members/publications/2012/212066e.pdf

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

Webcast – Enterprise Risk Management: When Black Swans Aren’t

Wednesday, August 29
Noon to 1:30 p.m. (EDT)

Speaker: Dr. Guntram Werther, Professor of Strategic Management, Fox School of Business, Temple University

In this webcast, Dr. Werther will look at ways of improving the forecasting of emerging global and country-level change, along with analyzing what is and is not a black swan event, and revealing the best ways to think about future events. Widely renowned as an expert of strategic management, whose dissertation was nominated as the best comparative politics dissertation in the U.S., Dr. Werther will also discuss analysis dissonance and why many models fail.

Link: http://www.actuaries.ca/webcasts/index_e.cfm

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

Congratulations and Thanks for 20 Years’ Service


The CIA would like to express its congratulations and thanks to Lynn Blackburn, who has now been with the Secretariat for 20 years.


The Institute’s longest-serving staff member, Lynn is director of member services and professional practice (formerly member services and standards development). She and her team of three are responsible for such areas as membership and eligibility issues, helping to develop the Standards of Practice, drafting changes to key documents, supporting the CIA’s volunteers, database management, and much more.

I am sure I speak on behalf of all members when I say: "Thank you, Lynn, for two decades of dedication to the profession and its members, and I wish you many more years of success at the Institute."

Michel Simard, Executive Director

Contact with Questions: Michel Simard at executive.director@actuaries.ca

Canadian Individual Annuitant Mortality Experience – Policy Years 2000 to 2009

This document contains summary results for the Canadian Individual Annuitant Mortality Experience for Policy Years 2000 to 2009. To read the study, please access the links below.

Study: http://www.actuaries.ca/members/publications/2012/212063e.pdf
Table 2007
Table 2008
Table 2009
Table 2000–2009
Zip file

Contact with Questions: Julie Chambers, Chair, Annuitant Experience Subcommittee, at julie.chambers@londonlife.com

CIA Member to be Honoured with Finlaison Medal

The UK Institute and Faculty of Actuaries’ Council has unanimously approved a recommendation to award a Finlaison Medal to CIA member Professor Mary Hardy in recognition of her service to the profession in education, research, transition of research into practice, and governance in furthering these aims.

Prof. Hardy, an Associate of the CIA who also holds FSA, CERA, and FIA designations, is the CIBC Professor of Financial Risk Management at the University of Waterloo, where she also serves as the accreditation actuary for the Institute’s University Accreditation Program. She was a member of a CIA task force charged with developing a methodology for capital requirements for segregated fund guarantees, and currently edits the North American Actuarial Journal. Two of her books have been adopted as textbooks, and she was elected Vice-President of the Society of Actuaries for 2007–2009.

The Finlaison Medal is awarded from time to time in recognition of service to the actuarial profession in furtherance of one or more of the objects set out in Institute and Faculty of Actuaries’ Royal Charter.

Link: http://tinyurl.com/8shfwhk

Contact with Questions: University of Waterloo at 519-888-4567 x33550

Member Listening Group: A Chance to Help Your Profession

Many members have already stepped forward to join the new CIA Member Listening Group (MLG), which will allow them to deliver their opinions and thinking on topics of importance to the CIA Board, Secretariat, councils, and committees through the timely completion (within 24 hours of survey distribution) of short online surveys. However, there is still space available for those keen to have their say and play their part in the profession’s future.

Only a small time commitment is required and joining is easy: simply click on the link below and answer a few questions.

Over the course of the summer, the Communications Committee will be analyzing the MLG’s composition and recruiting in specific groups to ensure that any major gaps are filled. As soon as these issues are ironed out, the first survey will be distributed.

We encourage you to take the plunge, click on the link, and sign up today.

Link: http://app.fluidsurveys.com/s/mlg-signup/

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

Highlights from the June 20, 2012 Board Meeting

The highlights from the most recent Board meeting, held on June 20, are now available. To view the document, please access the link below.

Link: http://www.actuaries.ca/members/publications/2012/212065e.pdf

Contact with Questions
: Michel Simard, CIA Executive Director, at executive.director@actuaries.ca

Submission to the British Columbia Ministry of Finance

The Canadian Institute of Actuaries presented its comments to the Ministry of Finance on British Columbia Bill 38–2012.

To read the submission, please click on the link below.

Link: http://www.actuaries.ca/members/publications/2012/212062e.pdf

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

Exposure Draft to Revoke Some Current Standards of Practice and Introduce a New Subsection Relating to Participating Policy Dividend Determination in Part 2000

The attached exposure draft was approved by the Actuarial Standards Board (ASB) on August 2, 2012. The objective of the ASB is to incorporate appropriate standards of practice relating to dividend determination within part 2000 – Practice-Specific Standards for Insurance. The proposed changes would be incorporated into the new section 2700 of the Practice-Specific Standards for Insurance.

Parties wishing to comment on this exposure draft should direct those comments to Stephen Haist at shaist@eckler.ca by September 30, 2012. A copy should also be sent to CIA resident actuary Chris Fievoli at chris.fievoli@actuaries.ca.

Link: http://www.actuaries.ca/members/publications/2012/212061e.pdf

Contact with Questions: Stephen Haist, Chair, Designated Group, at shaist@eckler.ca

100 Years of Actuarial Mathematics at University of Manitoba

CIA President Simon Curtis has helped the University of Manitoba celebrate 100 years of actuarial mathematics by presenting a plaque in recognition of this great achievement.

The presentation, accompanied by a speech from Mr. Curtis, took place during a major actuarial conference at the university, which was co-sponsored by the CIA and received coverage in the national media.

Contact with Questions: Alicia Rollo, director of education and professional development, at alicia.rollo@actuaries.ca

Notice of Charges and Referral to a Disciplinary Tribunal

The Committee on Professional Conduct has filed charges against a member of the Canadian Institute of Actuaries (CIA). These charges have been referred to a disciplinary tribunal.

Pursuant to the Bylaws, a notice of the filing of charges and their referral to a CIA disciplinary tribunal is hereby provided to inform Institute members and the public about a current disciplinary case involving a member.

In accordance with the Bylaws, this notice includes the charge, the name and the principal practice address of the member in question, and the specialty area in which they practise, if any.

To read the notice, please access the link below.

Link: http://www.actuaries.ca/members/publications/2012/212060.pdf

Contact with Questions: Wayne Berney, Chair, Committee on Professional Conduct, at wberney@shaw.ca

Research Paper—Critically Canadian: Canadian Critical Illness Standalone Base Incidence Tables

This research paper derives incidence rates from general population sources for each of the most common or significant claim triggers (impairments/conditions/procedures) found in the typical Canadian individual standalone critical illness insurance contracts.

A spreadsheet containing the final incidence rates for each claim trigger by attained age and gender is included. The spreadsheet shows the sequential development from the preliminary base incidence rates (interpolated and smoothed) to the final incidence rates.

Links:
Research Paper
Excel tables

Contact with Questions: Emile Elefteriadis, Chair, Individual Living Benefits Experience Subcommittee, at Emile_Elefteriadis@swissre.com

CIA Comments on the Régie des rentes du Québec’s Newsletter Express

The Institute held discussions with the Régie des rentes du Québec to share some concerns and obtain clarifications regarding certain positions stated in the Newsletter Express published on May 23, 2012, by the Régie des rentes. This newsletter informed the administrators of defined benefit registered pension plans in Québec of their responsibilities with regard to using and choosing margins for adverse deviations for the actuarial valuations of plans on a going concern basis.

Actuaries producing an actuarial valuation for the funding of registered pension plans in Québec should take notice of the summary of these discussions.

Links:
Newsletter Express
CIA comments

Contact with Questions: Jacques Lafrance, President-elect, at jacques.lafrance@towerswatson.com

Annual Meeting e-Report Now Available



Immediately following the CIA Annual Meeting, we were convinced that it was a success from almost every angle, and we wanted to share some of the experience with members.

The link below will take you to the 2012 Annual Meeting e-Report where you will read and see some of the highlights. Of special note, we have recorded the General Business Session and for those who would like to watch the video, a link is included inside the e-Report.

Links:
Electronic report
General Business Session video

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

Correction of Minor Error in the Standards of Practice for General Standards – Recognizing Events in Work (Subsection 1515) – French Version

A minor error was found in the French version of the event decision tree (subsection 1515). Precisely, to be consistent with the English version and the intent, the question « Le travail rend-il l’entité différente? » should be « L’événement rend-il l’entité différente? ».

Occasionally after final standards have been published, the Actuarial Standards Board (ASB) discovers that a minor error (typographical or similar) has been made. In such a situation, due process calls for the chair of the ASB, or another ASB member appointed by the chair, to work with the Secretariat to correct the error and communicate the correction to CIA members and other interested parties.

To read the memorandum, please access the link below.

Link: http://www.actuaries.ca/members/publications/2012/212057e.pdf

Contact with Questions: Josée Gonthier, French editor, CIA Secretariat, at josee.gonthier@actuaries.ca

Webcast – The International Actuarial Association and International Standards-Setting Initiatives

Tuesday, July 24, 2012
Noon to 1:30 p.m. (EDT)


Speakers:


Rob Brown, member of International Actuarial Association (IAA) Executive Committee, former President of the CIA

Dave Pelletier, Chair, Interim Actuarial Standards Subcommittee of the IAA

In order to offer this webcast to a broader audience, it is now being offered free of charge. If you have already paid for registration, we will be contacting you to arrange a refund.

This webcast will cover two major areas:

Rob Brown will present an overview of the IAA, how it operates, and the major committees and the structures supporting their operations. The IAA’s five strategic objectives will also be covered.

Dave Pelletier will present an update on the standards-setting initiatives being pursued at the international level. His presentation will cover the background and the work of the IAA’s Interim Actuarial Standards Subcommittee (IASSC), the IAA’s Task Force on a Permanent Structure for Actuarial Standards, and of the Standards-Setters Round Table (SSRT). He will also provide an overview of upcoming areas of focus for standards.

Link: http://www.actuaries.ca/webcasts/index_e.cfm

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

Your Next Job Could Be Here

Employers from across Canada turn to the CIA’s Online Classified Ads page to publicize current vacancies, and we are encouraging our members to make use of this increasingly valuable resource. In the last few weeks alone, the page has hosted advertisements for actuarial analysts, consultants, and associates at organizations like the Workplace Safety and Insurance Board, Scor Global Life, CIBC, Via Rail, and Scotiabank.

Actuarial employers rely on pages like this to attract the best candidates for coveted positions, and we have moved the advertisements to our Members Site in order to ensure that only suitably-qualified people are able to apply. Don’t miss the opportunities that frequently arise at some of Canada’s leading companies: bookmark the page today.

If your organization wishes to advertise a position, please contact Jacques Leduc, director of operations, finance, and administration, at jacques.leduc@actuaries.ca.

Link:
http://www.actuaries.ca/members/classifieds/index_e.cfm

Contact with Questions: Jacques Leduc at jacques.leduc@actuaries.ca

Casualty Actuarial Society Committee on the Theory of Risk (COTOR) Issues Request for Proposals

The Casualty Actuarial Society Committee on the Theory of Risk (COTOR) has issued a request for proposals (RFP) on Allocating The Costs of Holding Capital.

Proposals were due by August 1, 2012, and results will be available in 2013.

Link
: click here.

Contact with Questions: Richard A. Derrig, COTOR Chair, at richard@derrig.com

Final Communication of a Promulgation of Calibration Criteria for Investment Returns Referenced in the Standards of Practice for the Valuation of Insurance Contract Liabilities: Life and Health (Accident and Sickness) Insurance (Subsection 2360)

The Actuarial Standards Board is promulgating the use of new calibration criteria for equity returns, effective October 15, 2012. Early implementation is permitted.


To read the final communication, please access the link below.

Link:
http://www.actuaries.ca/members/publications/2012/212054e.pdf

Contact with Questions: Edward Gibson, Chair, Designated Group, at edward.gibson@empire.ca

Notice of Intent to Introduce Standards Relating to Appointed Actuary Opinions with Respect to Use of Internal Models to Determine Regulatory Capital for Segregated Fund Guarantees

After receiving approval from the regulator, life insurers may use internal models to determine regulatory capital for segregated fund guarantees subject to certain ongoing requirements. One of these requirements is for the Appointed Actuary to sign an opinion that the models are compliant in all material respects with regulatory requirements. This opinion may be required for a new model application, a model modification, and annual compliance.

The objective of the Actuarial Standards Board is to incorporate appropriate standards of practice relating to this internal model opinion within section 2400 (The Appointed Actuary).

Link: http://www.actuaries.ca/members/publications/2012/212055e.pdf

Contact with Questions
: Stephen Haist, Chair, Designated Group, at shaist@eckler.ca

Appointment Notice for CIA President

The appointment notice for new CIA President Simon Curtis appears today in the business section of the Globe & Mail and La Presse.

Contact with Questions: Les Dandridge, director of communications and public affairs, at 613-236-8196 ext. 114 or les.dandridge@actuaries.ca

Discipline Bulletin – Volume 18, No. 2

This Discipline Report has been prepared by the Committee on Professional Conduct to educate and inform all members of the CIA about the disciplinary process and current disciplinary activities.

Link: http://www.actuaries.ca/members/publications/2012/212050e.pdf

Contact with Questions: Wayne Berney, Chair, Committee on Professional Conduct, at wberney@shaw.ca

Submission to the Accounting Standards Board

The Canadian Institute of Actuaries presented its comments to the Accounting Standards Board on the exposure draft Employee Future Benefits.

Link:
http://www.actuaries.ca/members/publications/2012/212049e.pdf

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

IAA Colloquia in Mexico City: Registration Underway

Registration is now underway for the forthcoming colloquia in Mexico City organised by three sections of the International Actuarial Association (IAA): Actuarial Studies in Non-life Insurance (ASTIN), Actuarial Approach for Financial Risks/Enterprise Risk Management (AFIR/ERM), and Life (IAALS).

The event will run from October 1–4, 2012, and its objective is to promote the publication of papers that contribute to the betterment and enhancement of the actuarial profession.

For more details, visit the colloquia website.

Contact with Questions: Emma Izquierdo at eiviajes@prodigy.net.mx

Response to Membership: Notice of Intent Regarding Life Insurance, Health Insurance, and Annuity Product Costing

On December 12, 2011, the Actuarial Standards Board issued a notice of intent to develop practice-specific standards for the costing of life insurance, health insurance, and annuity products. The consensus response was that specific standards should not be created, and, consequently, no standard reporting language was needed for costing opinions. The comments received indicated that members felt there was no pressing need for such standards, especially considering that there are no regulations governing the costing process, and that no reserved roles exist for actuaries responsible for costing the aforementioned products.

Link: http://www.actuaries.ca/members/publications/2012/212046e.pdf

Contact with Questions
: Jacques Tremblay, Chair, Designated Group, at jacques.tremblay@oliverwyman.com

Notice of Intent – Reporting of Assumptions, Margins, Methods, and Related Rationales

Following a review of consistency between the various practice-specific standards, the Actuarial Standards Board (ASB) believes it would be in the interest of the public and the profession to revise the Standards of Practice to provide substantially uniform requirements for the reporting of assumptions, margins, methods, and related rationales for all areas of practice.

Link: http://www.actuaries.ca/members/publications/2012/212045e.pdf

Contact with Questions
: Michael Banks, Chair, Designated Group, at michael.banks@mercer.com

Notice of Intent to Revise the Practice-Specific Standards for Pension Plans (Part 3000)

The Actuarial Standards Board (ASB) established a designated group (DG) in 2011 to review the new Practice-Specific Standards for Pension Plans and to ascertain whether any amendments should be made to them. The DG consulted with the Committee on Pension Plan Financial Reporting and identified a number of issues with respect to the Pension Standards. This notice of intent provides details on the issues identified and the ASB’s proposed approach in dealing with them.

Link: http://www.actuaries.ca/members/publications/2012/212044e.pdf

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

Two Additional Universities Accredited

The Eligibility and Education Council (EEC) and Committee on Accreditation are pleased to announce that two additional Canadian universities, The University of Calgary and Concordia University, have been granted accreditation for courses beginning in or after September 2012.

Please read the accompanying memorandum provided in the link below for more information.

Link: http://www.actuaries.ca/members/publications/2012/212039e.pdf

Contact with Questions: Alicia Rollo, CHRP, director, education and professional development, at 613-236-8196 ext. 136, or alicia.rollo@actuaries.ca
 
Calendar of Events

October 10, 2012
Webcast International Actuarial Experiences
N/A
November 5, 2012 Pension Seminar Hilton Montreal Bonaventure Montréal,
Québec
November 16,
2012
Professionalism Workshop InterContinental Hotel
Toronto, Ontario
December 6, 2012 Professionalism Workshop Hilton Montreal Bonaventure Montréal,
Québec
June 20-21,
2013
Annual Meeting
Hilton Montreal Bonaventure Montréal,
Québec
June 18-19, 2014
Annual Meeting
Hyatt Regency Hotel
Vancouver, BC
June 17-18, 2015
Annual Meeting
Westin Ottawa
Ottawa, ON

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 Board has approved the membership of the Member Services Council, effective July 1, 2012, as follows: Marc-André Melançon (Chair), Jason Alleyne, Claire Bilodeau, Julie Chambers, Sylvie Charest, Dave Dickson, Marcia Gallos, Frank Grossman, Marcus Robertson, Catherine Shum-Adams (Vice-chair). Note: this replaces an item included in the Board and Council Updates in the June (e)Bulletin which was incorrect.

Eligibility and Education Council

The people named below have been appointed to the following committees:
  • Committee on Continuing Education— Lynn Grenier-Lew (Chair), retroactive to June 20, 2012.
  • Committee on Eligibility—Rémi Villeneuve (Chair), retroactive to June 20, 2012.
  • Task Force on Canadian Eligibility Requirements—Stephen Cheng, Mathieu Boudreault, Jim Christie, Thomas Hinton, Isabelle Larouche, Minaz Lalani, Rémi Villeneuve, Chris Fievoli, and Alicia Rollo (CIA Secretariat).
  • Committee on Academic Relations—Dave Dickson, effective immediately.
Jason Vary has been appointed as the CIA liaison to the Society of Actuaries’ Preliminary Examinations Curriculum Committee (PECC), effective immediately.

The Task Force on the Professionalism Workshop has been created with the mandate to work with the Secretariat to improve and refresh content and structure. Jason Vary has been appointed Chair, and Alana Farrell and Anne Vincent members.


The mandate of the Task Force on Canadian Eligibility Requirements has been approved as follows: "To define the Canadian education and eligibility criteria to become an ACIA and FCIA in Canada, and determine how the requisite knowledge will be taught and tested."

For information only:

Jason Vary has completed his term as Chair of the Committee on Eligibility and leaves with the committee’s thanks.

Angelita Graham has completed her term as Chair of the Committee on Continuing Education and leaves with the committee’s thanks.

The CPD Newsletter Subcommittee of the Committee on Continuing Education has been disbanded, with thanks.


Member Services Council

The following people have been appointed to the (sub)committees named below, effective immediately:
  • P&C Research Subcommittee of the Research Committee—Nathalie Ouellet, Étienne Plante-Dubé, Danielle Harrison, and Elaine Lajeunesse.
  • Committee on Volunteer Initiatives—Kevin Vantil (Chair).
  • Pension Advisory Committee—Michel St-Germain (Chair).
For information only:

The following people have completed their terms on the (sub)committees named below and leave with their (sub)committee’s thanks, effective immediately, except where stated:
  • Group Life & Health Experience Subcommittee of the Research Committee—Peter Douglas (Chair).
  • Individual Living Benefits Experience Subcommittee of the Research Committee—Emile Elefteriadis (Chair).
  • Pension Experience Subcommittee of the Research Committee—Robert Brown and Mary Hardy.
  • Committee on Volunteer Initiatives—Marcia Gallos (Chair). She will remain on the committee as a member until further notice.
  • Pension Advisory Committee—Monique Tremblay and Jacques Lafrance (Chair). M. Lafrance will remain on the committee as a member until further notice.
  • Research Committee—Peter Douglas and Emile Elefteriadis.
Practice Council

The people named below have been appointed to the following committees:
  • P&C Insurance Pricing—Erika Schurr (Chair) and Shams Munir (his term as chair is coming to an end, but he will remain on the committee as a member);
  • Property and Casualty Insurance Financial Reporting (PCFRC)—Isabelle Périgny (Chair), Julie-Linda Laforce (Vice-chair), Patrick Beaulieu, Anne Marie Klein-Lee and Cynthia Potts (members), and David Lim (regulatory representative);
  • Standards of Practice Editing (SPEC)—Paul Della Penna (Chair), Stephen Butterfield, Normand Gendron, and Trevor Howes, effective July 1, 2012Normand Gendron stepped down before beginning his mandate; Bruno Gagnon, effective August 1, 2012;
  • Pension Plan Financial Reporting (PPFRC)—Manuel Monteiro (Vice-chair);
  • Risk Management and Capital Requirements (CRMCR)—Robert Berendsen (Chair), Jaspal Bhatia, Marco Fillion, Kathryn Hyland, and Sylvain Veilleux.
For information only:

Pierre Dionne has completed his term as chair of the PCFRC.

Mo Chambers’ term as chair of the SPEC was completed on July 1, 2012 (he will stay on for a time to help with the transition).

Geoffrey Melbourne and Deborah McMillan have completed their terms on the PPFRC.

Ben Marshall, Louis Larochelle, Hélène Pouliot, and John Have have completed their terms on the CRMCR.

Sylvain St-Georges’ term on the CRMCR should not have been noted as having been completed. He is still serving on the committee as a regulatory representative.

Normand Gendron has resigned from the SPEC.

Jason Wiebe has resigned as the chair of the RMCR.

The terms of Denise Cheung and Cara Low have been completed on the PCFRC, and they leave with the committee’s thanks. Louis-Christian Dupuis has resigned from the committee.