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

Canadian Institute of Actuaries/Institut canadien des actuaires

January 2013
Your Institute


By Simon Curtis, FCIA, CIA President

A key role for the CIA’s Board of Directors is to set the direction and goals for the Institute. The foundations for this are the Vision Statement and Mission Statement, which ultimately drive the specific strategic and operational objectives that we set for the CIA. During the recent Board meetings we reviewed both statements—which had not been looked at in several years—and we adopted updated versions at our November 2012 meeting.

The Vision Statement is intended to look forward to where we (the CIA) want to be, and answer the question, "Why are we here?" The Vision Statement adopted by the Board (after much debate!), which is intended to be both succinct and easily communicated, is:
"Members of the CIA are recognized as trusted leaders in the quantification and management of risk and contingent events."
This vision statement is intended to emphasize several points. Our expertise, while coming from a basis of contingent events, is moving to also encompass a broader expertise in risk. Importantly, our management acumen is built off our quantitative/measurement skills. Furthermore, while recognizing that other professionals will also undoubtedly be active in these areas, our goal is to be recognized as not only leaders but trusted leaders, which implies a high degree of external confidence in the credibility of our work.

The Mission Statement is intended to outline how we will achieve our vision, and answer the question, "What do we do?" It forms the basis for developing our strategic plan and objectives. As would be expected, our Mission Statement emphasizes our role of being the face of the actuarial profession in Canada. Specifically:
"As the national organization of the actuarial profession, the CIA serves both the public interest and the profession by:
  • Promoting the advancement of actuarial science;
  • Providing for the education and qualification of current and prospective members;
  • Providing professional guidance to its members and ensuring that actuarial services they provide meet the highest standards; and
  • Advocating for the profession and providing timely and relevant contributions to the development of public policy."
While I suspect most actuaries in Canada would find little that is surprising about this mission statement, what I find most interesting is the importance of our outward engagement beyond the profession to the public, and also to current/potential users of our services, to fulfilling our mission.

I believe these vision and mission statements are important to us. As a professional body, largely governed by and resourced from its members, we can very easily become focused almost exclusively on dealing with issues of the day and the current environment. But to ensure we remain a vital and healthy profession, we must also always continue to look and move forward towards our broader goals. Having strong vision and mission statements that can be balanced against shorter-term priorities in developing our plans/objectives is vital.

Simon Curtis, FCIA, is President of the CIA.

 
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 June of last year. The timing, however, is a bit awkward in that the ASB is having its next meeting right at the end of this month, probably the date this edition of the (e)Bulletin is published. So in some cases I’ll be speculating on the outcome of that meeting.

Final Standards Approved

In the pension area, we issued a notice of intent in June to deal with certain issues arising from the pension standards revisions three years ago that practitioners had brought to the attention of the Committee on Pension Plan Financial Reporting (PPFRC) and the ASB. Former ASB member Stephen Butterfield chaired this designated group, which moved very efficiently through the stages of the exposure draft, thorough consideration of comments received, and preparation of the final standard, enabling the ASB to approve the final standard in December, with an effective date of December 30, 2012.

Also in the pension area, in August we approved revisions to the standards in order to provide exemptions for certain external user reporting requirements for pension valuations where the hypothetical wind-up valuation or solvency valuation is based on an extrapolation of results disclosed in a previous external user report. Michael Banks’ designated group moved these revisions along very effectively as well. These revisions were effective as of the date of publication in August, and early implementation was permitted such that the revisions could be applied to any report which had not been completed at the date of publication, regardless of the report’s effective date.

In the insurance area, in July we promulgated a revised set of calibration criteria for models used in the valuation of insurers’ segregated fund guarantees, to be effective October 15, 2012. We also approved, using the "minor revisions" provisions of our due process, minor changes to the wording of the Appointed Actuary opinions to better reflect International Financial Reporting Standards (IFRS) terminology.

Final Standards on the Verge of Approval

Part 6000 of the Standards of Practice deals with post-employment benefit plans, other than pensions. The designated group chaired by Ellen Whelan has completed its work on the final standard, a substantial rewrite of the existing standard, including its analysis of the numerous comments received on the exposure draft published in March. At its December meeting, the ASB reviewed the DG’s preliminary recommendations; the recommended final standard is on the ASB’s agenda for approval this month.

Another revision to standards near approval is in the area of insurance policyholder dividends. When the Consolidated Standards of Practice (CSOP) were developed, all former standards or "recommendations" of the CIA were repealed immediately or very shortly thereafter, as their content had been appropriately incorporated into CSOP, with the exception of the Dividend Recommendations. It was the intent either to have them CSOPped as well or to convert them into educational notes or both, but this never happened. As a result they are still technically in force, but parts are no longer appropriate. An exposure draft of the changes was published in August, and Steve Haist’s designated group is bringing its proposed final standard to the ASB for approval this month. The effective date of these changes will be later in 2013, following publication by the CIA of an educational note supporting this new standard, including among other matters some of the material from the former "Recommendations" not incorporated in the new standard.

A third revision to standards up for approval this month by the ASB deals with the narrowing of the range of practice in certain areas of insurance company valuation. An exposure draft was published in October. No comments were received by the designated group chaired by Ty Faulds, and we expect to approve the final standard substantially unchanged from that exposure draft.

A fourth change in standards expected to be approved this month is the provision of standard wording for Appointed Actuary opinions with respect to internal models used in determining required capital for segregated fund guarantees. Steve Haist’s designated group is submitting the proposed wording, considering the comments received on the exposure draft published in November, to the ASB’s meeting this month for approval. This is to be effective immediately on publication.

An important caveat: surprises do happen, and while the four items described above could well be approved by the ASB at its January 31 meeting, nothing can be guaranteed! Watch for developments on each of these through the CIA’s regular announcements.

Exposure Drafts

Part 4000 of the Standards of Practice covers actuarial evidence work. An exposure draft of a proposed substantial rewrite of this part (with the exception of the portion dealing with marriage breakdown) was published in September, with a comment deadline of November 30, 2012. The designated group chaired by Nancy Yake is currently considering the comments received. The targeted effective date for these revisions is December 31, 2013.

Notices of Intent

Earlier in 2012, considering the comments received on a notice of intent regarding assumptions used for hypothetical windup and solvency valuations, the ASB had agreed to not proceed with a revised standard, but stated that as the PPFRC considered possible additional guidance in this area, there might be a further notice of intent with more limited changes if deemed necessary. Indeed, the PPFRC is recommending changes to its educational note, and the ASB, on the recommendation of the reconstituted designated group chaired by Michael Banks, published a notice of intent on October 15. Given the date of publication of the PPFRC’s educational note, the comment deadline on the ASB’s notice of intent was extended to January 29.

Given that the effective date of IFRS 4 – Phase II, dealing with the financial reporting for insurance contracts, is now unlikely to be before 2018, the ASB agreed to move ahead in the meantime with some changes to the Canadian Asset Liability Method (CALM) methodology. On December 21, we published a notice of intent to revise the portion of the standards dealing with economic reinvestment assumptions for life and health insurance valuation. The aspects covered include the use of non-fixed-income assets in liability valuation, the determination of the ultimate interest rate (URR), and achieving greater consistency in the results obtained through applying stochastic versus deterministic approaches. The comment deadline is March 15, and a year-end 2013 effective date is targeted.

Other Activity on Standards

The ASB published a notice of intent with respect to a standard on modelling in September 2011. The designated group with the ASB had some difficulty in dealing with the range of comments received and determining the best way forward, and at its last meeting the ASB appointed a working group to recommend the next steps. Those recommendations will be discussed at the ASB’s meeting this month.

Some proposed changes potentially touching all practice areas would result in greater consistency in external user reporting requirements across practice areas and additional disclosure of certain items. As outlined in the notice of intent published in June, the general standards dealing with this area would be expanded, while each of the practice-specific standards would be amended to remove duplication with the revised general standards, while retaining any necessary practice-specific differentiations. The designated group chaired by Michael Banks is currently consulting with the various practice committees prior to bringing a proposed exposure draft to the ASB, targeted for its March meeting.

Other Activity

Given that the International Actuarial Association has approved its first International Standard of Actuarial Practice, the ASB established a working group, to be chaired by Jim Christie, to examine the various options available to the ASB for dealing with this and future ISAPs. An article in the February (e)Bulletin will provide more background on the role of such ISAPs and the convergence of standards internationally.

Whose Standards?

An interesting question was raised lately by an ASB member, who’d noticed a reference to "the Standards of Practice of the Actuarial Standards Board". It was agreed that, while it is the ASB that sets the standards, in accordance with the Bylaws of the CIA they are for its members, and the more appropriate shorthand reference to the standards should read "the Standards of Practice of the Canadian Institute of Actuaries".

ASB Membership


Nancy Yake attended her last meeting as an ASB member in December. Nancy has been an excellent and prolific contributor to the work of the ASB over many years, chairing and participating in several designated groups across many practice areas (most notably lately chairing the designated group revising the actuarial evidence standards) as well as the revision of our due process.

We were very pleased to welcome two new members onto the ASB since the last article. Jim Christie, a P&C practitioner and immediate Past President of the CIA, came on as Vice-chair, and will be taking the chair position on July 1 this year. Also joining the ASB was Laura Newman, of the pension practice area. We look forward to the contributions of both of them over the next few years.

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

A passion for, and expertise in, mathematics is one of the building blocks of a successful actuarial career. Yet in today’s busy workplace, it can be difficult to stay abreast of the latest scientific thinking and the most up-to-date approaches in such technical fields.

ScienceDaily aims to solve that problem by providing breaking news about theories, discoveries, and more, in areas like mathematics, statistics, and modelling. Every day it searches the internet to gather hundreds of stories on studies, papers, discoveries, and announcements, and presents them in an easy-to-read format, free of charge.

Since its launch in 1995 its strategy has proved very successful, and it now claims to have three million monthly visitors who enjoy more than 65,000 research articles, hundreds of educational videos, and thousands of encyclopedia entries and book reviews.

Actuarial-related topics are part of the Computers & Math section, but ScienceDaily also covers topics like health, psychology, the environment/climate change, education, disaster planning, and scientific legal issues. Each subject area is divided into subcategories and offers news, articles, videos, images, book reviews, and reference material. For example, the math/statistics content includes:
  • News reports on a model that explains how birds learn to sing, techniques to predict when an ecosystem might collapse, all-cause mortality risk, and "mathematical counselling";
  • Articles on what you should know about statistics, probability distribution, how poorly-presented statistics could misinform health decisions, symmetry in mathematics, and scientific methods; and
  • Videos on researchers creating a model to predict the paths of pandemics, using dance to teach mathematics, algorithms, and the mathematical details behind successful sales.
The highly-illustrated site, which is updated several times a day, links to journals and academic studies, research papers, and other material, and offers visitors a custom search function to probe its extensive archive. It is said to have links with around 2,000 contributing organizations worldwide, and its staff include a leading science editor and a teacher. Linked to or present on all the major social networks, it also provides RSS feeds and e-mail newsletters to ensure that its readers can stay up to date at all times.

Careful indexing and use of keywords means that it is easy to browse from one topic to another, and a curious visitor can quickly pass from intensive articles, on subjects like how to solve math problems non-consciously or the impact of a surprise result on taking future risks, to "water cooler conversation" topics like the mortality risks of being a solo rock star or the dangers inherent in popping a bottle of champagne.


It says it is best known for "showcasing the top science news stories from the world’s leading universities and research organizations", but for an actuary keen to keep their fingers on the pulse of mathematical thinking, it offers a whole lot more.


Pros: the scope of information; the numerous links.

Con: many of the research articles are clearly written for beginners rather than professionals.

Address: www.sciencedaily.com


 
Institute News

Marc-André Belzil, left, and Dave Dickson

By Marc-André Belzil and Dave Dickson, both FCIAs

The Research Committee is a very important CIA committee and provides opportunities for members to participate in various ways. It is always looking for new recruits and new ideas, and you could help.

But first, some background. The committee is responsible for the CIA’s research, and has an annual budget of about $300,000. Beneath it are a number of subcommittees representing the major practice areas, like life, pension, property and casualty, and group. Consequently, a large number of people are involved with the committee’s activities. As well as developing ideas for research projects and evaluating proposals from members and other sources, they work with other organizations to jointly sponsor research projects; for example, they recently helped to sponsor a major paper on climate change. The committee is also starting to sponsor projects that would be of more direct benefit to the Canadian public, such as papers on various health care topics.

The committee manages the usual actuarial research projects on mortality, critical illness experience, lapse, workers compensation disease, water damage, etc. Usually data are obtained from companies and organizations and sometimes consultants or university professors are contracted to conduct the analysis under the management of a responsible subcommittee, which develops the final report.

Subcommittee members find the work very interesting and as a result of the projects they are involved with, they are on the leading edge of topics from their practice area. As an example, subcommittee members involved with the recent critical illness morbidity experience study gained an in-depth understanding of Canadian experience. The report will be released to our membership but subcommittee members have already developed a very thorough understanding as a result of their efforts. They also benefit from being able to work on a committee with other members from the same field.

The Research Committee plans to be more proactive in reaching out to our members for additional research ideas. We would like to receive more ideas and develop a two- or three-year plan for research projects. As part of this, we want to explore having a space on the CIA’s website where members can submit research ideas and also comment on others’ ideas.

So, how can you participate? In two ways:
  • Given the size of the committee and its subcommittees we are always looking for volunteers. Have a look on the CIA’s website: under the Research Committee you can see all its subcommittees, mandates, and members. You can also read the minutes of our meetings and see what topics are discussed. If you are interested in volunteering for a subcommittee do so by going here and clicking on the appropriate one. Someone will get back to you.
  • The other way you can be involved is by providing ideas for research topics. You can do so by contacting Marc-André Belzil or Dave Dickson.
Either way it’s an opportunity for you to participate in a very important aspect of the CIA’s work.

Marc-André Belzil and Dave Dickson, both FCIAs, are the Chair and Vice-chair, respectively, of the Research Committee.

 

The subject of genetic testing, and how its results should be used, is a controversial one. Members of the CIA have already contributed to the debate, but more voices must be heard—and yours could be among them.

One of those already involved in such conversations is Stuart Wason, FCIA, a past President of the CIA. Representing the Institute, he recently participated in a round-table discussion on genetic testing and insurance, organized by the Office of the Privacy Commissioner (OPC) to hear opinions from all those interested in the question of whether Canada needs laws governing the privacy of individuals’ genetic information. You may have also noted in recent weeks a series of articles on the topic of genetic testing published in the Globe and Mail newspaper.

Some proponents of such privacy restrictions believe that if insurers discovered that a potential customer possessed the same genetic mutation that killed one of their parents (for example, Huntington’s disease), the company would not provide any coverage—so-called "genetic discrimination". Groups like the U.S. National Human Genome Research Institute also believe that without legal safeguards, managers could use genetic profiling to screen current or future employees, leading to the kind of discrimination that has already been outlawed in areas like race, age, or sexuality.

Conversely, some of those opposed to restricting the use of genetic information believe that most instances of the alleged discrimination are undocumented and may be more perceived than real. An article on the British Medical Journal website said that such prejudice from insurers would be unlikely:
". . . companies won’t be able to penalise people with a certain gene unjustly for fear of being priced out of the market . . . If some people pay a higher premium because of their genetic inheritance, then that’s not necessarily unjust: they often pay a higher premium for many insurance products because they represent a bigger risk. At the same time, a market will grow up to serve that particular section of the community, just as there are car insurance firms that specialise in different demographic groups."
Other critics of privacy regulations believe that making genetic information publicly available will enable gene science to advance faster, and thereby help patients in need. According to scientist Timothy Smith of the Human Variome Project:
"More than ever before, we’re living in a world where our individual genetic makeup will determine the course of the medical treatment we may undergo. We may all be the eventual recipient of possibly life-altering medical intervention that’s based on the insights collected from someone else’s unique genetic sequence. Without the free and open sharing of information on genetic variations, we may be withholding treatment from people who are already suffering."
The OPC has released papers on this subject, and as far as the papers’ authors are concerned, a ban on the use of genetic information by the life and health insurance industry "would not have a significant impact on insurers and the efficient operation of insurance markets."

The OPC’s views were among those presented at the round-table discussion, which included insurers and other experts. Following the debate, Mr. Wason said: "The papers were well prepared and fair in their comments, including references to actuaries. I would characterize the session as part an information-gathering process by the OPC. The questions seemed fair, although many reflected a desire to understand the fundamentals insurance systems and underwriting."

"It seemed to be well understood by the participants that there are relatively few causes of death for which a genetic marker is the prime determinant of the individual’s lifespan. For many causes of death, lifestyle and family history are a far greater determinant."

There were no significant contentious issues brought forward, although I sense the OPC is considering how other countries are addressing the use of (and possible restrictions on) genetic testing information.."

In 2000, the CIA published a statement on genetic testing and insurance, which said that "while additional genetic information may be of some assistance to insurers in accepting insurance, the vast majority of people applying for life or medical insurance would still be accepted as standard risks . . . For those risks that are not standard, much of the information that could be provided by today’s genetic testing is available through conventional questions about medical and family history, and is already being factored into traditional underwriting."

The statement concluded: "The CIA does not support mandatory genetic testing for insurance, nor the disclosure of test results without an individual’s authorization. However, the CIA believes that should genetic test results be available, the results should be shared between both parties of an insurance contract (policyholder and insurer)."

Given the ongoing development of genetic science, the development of societal values, and the implementation of privacy regulations in various jurisdictions in the 12 years since that statement was published, it is a good time for the CIA to consider the need to update its statement.

If you are interested in being involved in a potential new task force to work on a statement concerning genetic testing, please contact CIA resident actuary Chris Fievoli at chris.fievoli@actuaries.ca.
 
The Casualty Actuarial Society (CAS) Trust Scholarship Committee is once again offering scholarships of $2,000 to students preparing to enter the actuarial profession.

Up to three students will be offered the money for the 2013–2014 school year as a way of furthering their interest in the property/casualty actuarial profession, and to encourage them to pursue the CAS designations.

The scholarships are open to U.S. or Canadian citizens or permanent residents who are currently attending a U.S. or Canadian college or university as a full-time student and remaining there during the 2013–2014 academic year. They must have sat for at least one actuarial exam by March 2013, and demonstrate high scholastic achievement, strong interest in the casualty actuarial profession, mathematical aptitude, and communication skills. Preference will be given to applicants who have not yet won the CAS Trust Scholarship.


Applications, which are due by March 4, must include an application form and essay, two recommendation letters, and a current official transcript. Winners will be notified of award decisions by May 17.


If you would like to apply, or know a deserving candidate, full details can be found at the CAS Trust Scholarship website.
 

From left to right: Chris Fievoli, Raymond Li, and Minnie Green were among those promoting the CIA to students in Manitoba.


From left: Jason Vary, Mr. Fievoli and Jacques Lafrance with Gary Josephson, President of the Casualty Actuarial Society.


More than 125 students braved the cold of Winnipeg in January to enjoy the 2013 Convention of the Actuarial Students National Association (ASNA).

Although numbers were down on the previous year’s event, possibly due to the location and subsequent cost of travel for students, CIA members and staff who attended were delighted with the response they received from attendees. The Institute’s representatives included President-elect Jacques Lafrance; Jason Vary, Chair of the Eligibility and Education Council; resident actuary Chris Fievoli; members Minnie Green, Marcia Gallos, and Raymond Li; and Head Office staff Caroline Thebault, Alicia Rollo, and Josée Racette.

The Institute was among a dozen or so exhibitors who participated in a career fair at the convention, and the CIA enjoyed a prominent position in the centre of the room that attracted numerous students to learn about the Institute and how it could help them. They were also given information about the new network for students, CIAnet, which was well received with more than 60 students signing up on site. Nearby, the CIA hosted a career lounge where visitors were provided with light refreshments and could network and relax.

The following day, Mr. Vary and Ms. Rollo—director of membership, education, and professional development—presented a session to students entitled The Evolving Education Landscape in Canada. They discussed the CIA’s University Accreditation Program and long-term education strategy, and covered the essentials of becoming a member.

Later, Messrs. Fievoli and Vary and Ms. Rollo attended two sessions by the Society of Actuaries on education, and M. Lafrance served as a judge at the Student Case Competition, which was won by a team from Simon Fraser University.

M. Lafrance was also the keynote speaker during the Saturday evening gala dinner, where he gave a heartfelt presentation to the students on what a career as an actuary meant. He was very interactive and the students were fully engaged.

The CIA received excellent exposure and was thanked on many occasions, publicly and one on one for its contribution to ASNA and its support for a recent website project by the association.

Mr. Fievoli said: "When we first attended ASNA in 2011, there were a number of students that weren’t aware of the CIA or the role we would play in their professional careers. In speaking to students at the career fair this time, though, I did not have that same impression.

"Awareness of the CIA was much higher, and several students were familiar with the accreditation program and had questions about that. It seems that our efforts to reach this demographic are starting to pay off."
 

For many actuaries, an aptitude for mathematics came naturally and it is a passion they have pursued into their chosen career. But a scientific study has discovered that for as many as one in five people, just thinking about a math test has the same effect on the brain as burning their hand on a stove.

Scientists monitored students as they prepared for various mathematical tasks, and saw that the region of the brain that became active was the same area associated with visceral pain, the kind suffered by somebody who had burnt themselves.

However, this effect was not observed during the actual performance of a math task, only in the preparation stage, which suggests that only the anticipation of math is painful, not math itself.

The study volunteers were tested in an fMRI machine, which allowed researchers to examine brain activity as they did math. Volunteers were given equations to verify—for example, the validity of (12 x 4) – 19 = 29. While in the scanner, subjects also completed word puzzles, such as being shown a series of letters (e.g., yrestym) and determining if reversing the order of the letters would produce a correctly-spelled English word.

The fMRI scans showed that the anticipation of math caused a response in the brain similar to physical pain. The higher a person’s anxiety about math, the more anticipating math activated the posterior insula, a fold of tissue located deep inside the brain just above the ear that is associated with registering direct threats to the body as well as the experience of pain.

The findings by Dr. Ian Lyons—a post-doctoral fellow from the Department of Psychology at Western University in London, Ontario—and Sian Beilock—professor of psychology at the University of Chicago—are reported in the paper "When Math Hurts: Math Anxiety Predicts Pain Network Activation in Anticipation of Doing Math" in the journal PlOS One.

They believe the study indicates there can be a real, negative psychological reaction to the prospect of doing math, a reaction that needs to be addressed like any other phobia. Rather than simply piling on math homework for students who are anxious about math, they said, students need active help to become more comfortable with the subject.

Otherwise, they warned, the pain suffered by those with high levels of math anxiety would lead them to avoid math-related situations or even entire math-related career paths.
 

J. (John) Bruce MacDonald, who has died at the age of 84, was a founder member of the CIA and played an important role in the development of the Canada Pension Plan (CPP).

After graduating from the University of Toronto with a BA in 1949, he worked for Crown Life before joining William M. Mercer in 1965. He remained with the company until his retirement in 1991.

In 1995, he was commissioned by the Office of the Superintendent of Financial Institutions to write an actuarial monograph on the Canada Pension Plan (here is a précis), which concluded that the CPP was properly priced and compared very well to the pension systems of other G7 countries. It also responded to criticism of the CPP from the World Bank, and highlighted concern over the increasing costs of Canada’s entire social security system, exacerbated by the deficit, the interest that had to be paid on the accumulated debt, and the country’s high level of taxation.

Mr. MacDonald, who was presented with the CIA’s Silver Award and a Certificate of Merit for his volunteer work—which included serving on the Council and numerous committees—completed two commissioned reports on Nova Scotia’s pension requirements, wrote course material and examinations for Dalhousie University, and advised the Senior Citizens’ Secretariat of Nova Scotia. He was editor and principal author of Carswell’s Benefits Guide at the time of his death.

Geoffrey Horrocks, who died this month at the age of 82, was a member of the CIA for more than 40 years and worked for leading companies before starting his own business.

Having graduated from the University of Oxford in 1952 with a master’s degree in Mathematics, he emigrated to Canada in 1956 and spent the first 15 years of his career working in London, ON, for Northern Life Assurance. He later became a consulting actuary with Mercer, Morneau, and Alexander Consulting, and finished his working life with his own company, Horrocks and Associates.


 


KPMG in Canada has appointed Bob Tiede (pictured) as a consulting actuary in its life and pensions actuarial practice. Mr. Tiede has over 30 years of experience in the Canadian life insurance industry, including roles as the Appointed Actuary for two Canadian life insurers. He will work with others in the life and pensions actuarial practice to ensure a continuation of the high level of service to KPMG’s clients.

Bernard Dorval has joined the board of Rona, the hardware, home renovation, and gardening products retailer and distributor. Monsieur Dorval has served as group head of insurance and global development at TD Bank Financial Group, and deputy chair at TD Canada Trust, and has also worked for Laurentian Group.

Malcolm Hamilton
has been profiled in Benefits Canada magazine, which highlights his receipt of the publication's Lifetime Achievement Award for his work in pensions and investments.

Ian Markham discussed developments affecting Canada’s pension and benefits landscape in the January issue of Benefits Canada.

Josephine Marks has joined Eckler's financial services practice. She has more than 30 years' experience in the financial sector and has enjoyed senior leadership roles at insurance, banking, asset management, and consulting organizations. She previously managed pension assets for a major Canadian financial institution.

John McIntosh wrote about how companies could help their employees plan for retirement in the December issue of Benefits Canada.

Anne Meloche is the new regional vice-president of institutional business for Québec and Eastern Canada at Sun Life Global Investments. She moved to Sun Life - where she will be responsible for developing the company's asset management business in that region - from Mercer, where she had worked since 1998.

Bruce Michael was among the volunteers who helped charity Water Ambassadors Canada drill a well to provide clean water to a Guatemalan village.

Manuel Monteiro has been featured in a Financial Post article on pension plans.

Paul Rooney has been named chief operating officer and senior executive vice-president at Manulife Financial. He joined the company in 1986 as an actuarial student.

Ted Singeris has been appointed Canada market leader for Mercer, and will be a member of the company’s North America leadership team.

SSQ Financial Group has appointed Marc Trépanier as vice-president of business development – national, individual insurance and retirement.

Fred Vettese has co-written a new book: The Real Retirement: Why You Could Be Better Off Than You Think, and How to Make That Happen.

Bryce Walker
is the new Vice-chair of the Healthcare of Ontario Pension Plan's board of trustees. Mr. Walker, a former chair of boards at Wilfrid Laurier University and Ontario's Grand River Hospital, also served as senior vice-president of group benefits at Manulife Financial.


_______________________________________

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 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.

For more news of CIA members and their activities, follow the CIA on Twitter.
 
 
Highlights of CIA Board Meeting No. 73 held on Wednesday, November 28, 2012

Strategic Thinking Discussion

At the September Board meeting it was agreed that there was a need to review the vision and mission statements of the CIA to ensure these statements are aligned with the four Long-term Strategic Goals approved by the Board in June. A group was mandated to suggest a few options to the Board. After discussion, the following new vision and mission statements were approved:
Vision
Members of the CIA are recognized as trusted leaders in the quantification and management of risks and contingent events.

Mission
As the national organization of the actuarial profession, the CIA serves both the public interest and the profession by:
  • Promoting the advancement of actuarial science;
  • Providing for the education and qualification of current and prospective members;
  • Providing professional guidance to its members and ensuring that actuarial services they provide meet the highest standards; and
  • Advocating for the profession and providing timely and relevant contributions to the development of public policy.
Governance Task Force

As part of the Board’s ongoing evaluation and examination of good governance, it was agreed to appoint a Governance Task Force with the following mandate:
  • To review current policies and practices on Board member participation on Councils;
  • To review current policies and practices on Board member participation on specific Board committees (e.g., Committee on Finance, Risk Management Committee) and recommend any required changes;
  • To determine if there is a need for a standing Governance Committee and if affirmed, to propose its mandate and structure; and
  • To bring recommendations on the above issues to the Board at its March 2013 meeting.
Reserved Roles for Actuaries

The CIA wants to create an inventory of the reserved roles for actuaries; this has not been done in the past as the provinces and territories each have their own laws pertaining to insurance and financial institutions. The Board agreed that it is very important that the CIA knows where these reserved roles are and who is filling them.

A list of these roles will be posted to the CIA website and updated as necessary. The discussion of any further action will continue at the March 2013 Board meeting.

CIA Legal Services Provider

The Evaluation Task Force on Legal Services Provider reported that seven proposals were received and four finalists were invited to interviews held on November 9, 2012. Accepting the task force’s recommendation, the Board subsequently approved the appointment of Fasken Martineau Dumoulin as the CIA legal services provider.

Secretary-Treasurer's Report

A review of the financial statements for the second quarter as of September 30, 2012, was conducted and approved.

Board members were asked to suggest items for research and it was suggested we aim for the fields that will expand the horizon for actuaries.

Task Force on Retirement Age

The Task Force on Retirement Age asked the Board to discuss the preliminary outcomes of its study and advise it on the next steps once the report is ready for release by the Member Services Council. The author of the study was invited to participate in the discussion and answer questions from Board members. It was agreed that the CIA will prepare a public position statement on the paper to be released.

Casualty Actuarial Society/Society of Actuaries Levy

On behalf of the CIA, the Casualty Actuarial Society recently offered to apply a levy to its Canada-based members who do not belong to the CIA, in order to support our standards-making and discipline costs.

While it is too late to consider for this year, the CIA will further investigate this issue for next year. Areas for focus include discussions with other actuarial bodies (such as the Society of Actuaries), better understanding the demographic profile of these members, and the broader potential implications should such a fee be introduced.

Elections Committee

The Board approved the appointment of the 2013 Elections Committee members. They will start work on soliciting candidates as soon as possible.

Report on the Head Office Review of the Not-for-Profit Legal Act Opinion

A review of the legal opinion of the new Not-for-Profit Act was carried out by CIA staff. The opinion states that no changes are required by law. If we elect to follow the new act, a number of our bylaws will need changing, and there are some repercussions associated with doing so. This item will be passed to the newly formed Governance Task Force.

Practice Council Annual Report

Phil Rivard has offered his resignation as Chair of the Practice Council as of December 31, 2012, for a combination of professional and personal reasons. The current Vice-chair, Bruce Langstroth, was appointed as his successor and provided the Practice Council’s annual report on activities to the Board.

New Brunswick Health Care Report

In an effort to demonstrate that the actuarial profession could make a valuable contribution to the public health care funding debate, the CIA—in partnership with the New Brunswick Health Council, which provided the data—funded the development of a model for the Province of New Brunswick which successfully projected health care costs by year to 2020. The paper will be the object of a joint release in January 2013 and will likely be presented to health care stakeholders and the public in New Brunswick. A key follow-up activity will be how to leverage this work and report with other health care stakeholders in Canada to showcase what the profession can contribute.
 
THIS MONTH'S PUBLICATIONS
Call for Volunteers to Represent CIA on IAA Committees

The CIA is seeking volunteers to serve as its representatives on the following International Actuarial Association (IAA) committees:
  • Insurance Accounting;
  • Enterprise and Financial Risk; and
  • Pensions and Employee Benefits.
The terms of reference for these committees can be found at the IAA website.

We are looking for members who possess excellent collaboration skills, can fairly represent the interests of the Canadian actuarial profession, and can bring energy and enthusiasm to their assignment. Successful applicants will be expected to make a three- to five-year commitment to this role.

The CIA representative on each committee would be expected to perform the following roles:
  1. Participate in the work of the committee;
  2. Be prepared to travel internationally, probably twice a year, to participate in committee meetings; and
  3. Participate in conference calls in advance of and following each IAA meeting.
As well, the representative will be expected to secure a sponsor (such as an employer) to fund any travel expenses.

Interested members are asked to contact CIA resident actuary Chris Fievoli at chris.fievoli@actuaries.ca by January 31, 2013. Applicants will be reviewed by a selection committee, who will then determine who is chosen.

Contact with Questions: Chris Fievoli at chris.fievoli@actuaries.ca

Press Release: CIA Pleased Retirement Savings are Back on Agenda

In the wake of the finance ministers’ meeting on December 16–17, 2012, the CIA issued a press release concerning the importance of retirement savings.

To read the full text, please click on the link below.



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

Educational Note – Future Income and Alternative Taxes

The attached educational note was approved by the Practice Council on October 3, 2012, and applies to the insurance contract liabilities of all contracts written by life insurers. The key topics discussed are insurance contract-related tax cash flows, insurance contract-related balance sheet items, recoverability, and tax-preferred assets relevant to the valuations of both direct written business and reinsurance received.

Contact with Questions: Edward Gibson, Chair, Committee on Life Insurance Financial Reporting, at edward.gibson@empire.ca.

Draft Educational Note – Alternative Settlement Methods for Hypothetical Wind-Up and Solvency Valuations

The attached draft educational note was approved by the Practice Council on December 14, 2012. It contains guidance on alternative settlement methods for pension plans with very large liabilities, and for certain plans where it may not be possible to purchase annuities due to capacity limits in the Canadian group annuity market. The Actuarial Standards Board is proposing revisions to the Standards of Practice which would complement the methodologies proposed in this draft educational note.


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

Deadline Extended: Notice of Intent – Amendment to the Practice-Specific Standards for Pension Plans – Assumptions for Hypothetical Wind-Up and Solvency Valuations

In conjunction with the release of the draft educational note Alternative Settlement Methods for Hypothetical Wind-Up and Solvency Valuations, the Actuarial Standards Board has extended the deadline for comments on the notice of intent (NOI) entitled Assumptions for Hypothetical Wind-Up and Solvency Valuations. This NOI proposes revisions to the Standards of Practice which would complement the methodologies proposed in the draft educational note. The new comment deadline is January 29, 2013.


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

Educational Note: Determination of Best Estimate Assumptions for Investment Return (PPICP)

The attached educational note was approved by the Practice Council on October 3, 2012. It reflects relevant changes in the Public Personal Injury Compensation Plans Standards of Practice effective March 15, 2011, and is intended to assist actuaries in selecting best estimate assumptions for the investment return for the purpose of setting discount rates for the valuation of the benefits liabilities of a public personal injury compensation plan.


Contact with Questions: Stan Warawa, Chair, Committee on Workers’ Compensation, at stan.warawa@worksafebc.com

Highlights from the November 28, 2012, Board Meeting

The highlights from the most recent Board meeting, held on November 28, 2012, are now available. To view the document, please access the link below.


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

CPD Deadline Coming Fast

For those of you waiting to see what is going to happen to the world on December 21 before meeting their Continuing Professional Development (CPD) requirement for 2011-2012, this is a friendly reminder that you will have only 10 days left after that date to accrue any more necessary hours. Compliance with the Institute’s Qualification Standard with respect to CPD is a prerequisite for members to provide actuarial services, and the minimum requirement is 100 hours over a two-year calendar period, with at least the following:
  • Technical: 12 structured hours;
  • Professionalism: four hours (structured and/or unstructured); and
  • Structured: 24 hours.
To complete your CPD records, see the CPD Information Tracking Tool. For more information, visit My CPD (please ensure you are logged into the Members Site).

As you fill in your CPD record, please pay attention to the following rules of thumb:
  • The use of acronyms should be limited to those commonly known;
  • Any reading material like books or magazines should include titles to illustrate how it is relevant to your professional development; and
  • The Notes/Comments section can be used to describe any supporting documentation you have about the activity you recorded.
The Committee on Eligibility is revamping the CPD Information Tracking Tool, so any comments on how the tool could be improved are welcome and should be sent to Leona Campbell as per her contact info below.

Please note that the compliance statement filing period opens on January 1, 2013.


Contact with Questions: Leona Campbell, coordinator, eligibility and education, at leona.campbell@actuaries.ca. Tel: 613-236-8196 ext. 124; fax: 613-233-4552

2012 ERM Symposium Monograph Released


A monograph of the papers presented at the 2012 Enterprise Risk Management (ERM) Symposium has been released, featuring award-winning essays on such subjects as ERM stochastic analysis tools and an approach to analyzing the impact of risk treatment alternatives.


The monograph, which can be obtained from the Society of Actuaries (SOA) at the link below, also includes papers on topics like ERM for non-financial companies, policyholder behaviour, flaws in operational risk management for insurance, and weaknesses in regulatory capital models.

Link: click here

Contact with Questions: Barbara Scott at the SOA at bscott@soa.org

Minor Revision to Standards: Harmonization of the Appointed Actuary’s Report with IASB (IAS 1) Terminology

The attached minor revision to the Standards of Practice was approved by the Actuarial Standards Board on November 28, 2012. The wording of the Appointed Actuary’s Report (paragraph 2140.17) and the related definitions (subsection 1110, paragraphs .27.2 and .35) have been modified to reflect the terminology of the International Accounting Standards Board’s (IASB) International Accounting Standard (IAS 1) Presentation of Financial Statements. The entire Standards of Practice will be reviewed at a later date to ensure consistency with IASB terminology.


Contact with Questions: Marthe Lacroix, Chair, Designated Group, at marthe.lacroix@lacapitale.com

International Actuarial Association Section Membership Dues


The CIA is once again collecting membership dues on behalf of all sections of the International Actuarial Association (IAA): AFIR/ERM, ASTIN, AWB, IAAHS, IACA, LIFE, and PBSS. Below is a link to the 2013 IAA section dues subscription form.

Anyone wishing to join any of the IAA sections must complete the attached form and submit the appropriate amount in dues. If you have already paid your section dues for this year through another association, please do not submit them again. You may contact Lidia Frassine (see below) to ensure that your payment has been recorded.

Link: click here

Contact with Questions: Lidia Frassine at 613-236-8196 ext. 102 or by e-mail at lidia.frassine@actuaries.ca

Submission: IAA Educational Monograph on Discount Rates

The Canadian Institute of Actuaries presented its comments to the International Actuarial Association (IAA) on the exposure draft of the educational monograph Issues Associated with the Determination of Discount Rates for Financial Reporting Purposes.


Contact with Questions: Micheline Dionne, Chair, Committee on International Relations, at mdionne@rgare.ca

Educational Note Supplement: Guidance for Assumptions for Hypothetical Wind-Up and Solvency Valuations Update – Effective September 30, 2012 and Applicable to Valuations with Effective Dates between September 30, 2012, and December 30, 2012

Background: Previous Guidance

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 August 16, 2012. That guidance 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 Government of Canada (GoC) marketable bonds with maturities over 10 years (CANSIM series V39062) increased arithmetically by 80 bps, in conjunction with the UP94 generational mortality tables. That guidance applied to both immediate and deferred pensions and also applied regardless of the overall size of a group annuity purchase.

Methodology

The guidance published on August 16, 2012, as to estimated purchase costs for non-indexed group annuities was partially based on quotes provided by seven insurance companies on illustrative group annuities using pricing conditions as at June 30, 2012, and supplemented by data from certain actuarial consulting firms on actual group annuity purchases during the second quarter 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 June 30, 2012, but based on pricing conditions as at September 30, 2012. The illustrative non-indexed quotations at June 30, 2012, and September 30, 2012, may be summarized as follows:

AVERAGE OF THE THREE MOST COMPETITIVE QUOTES
(USING UP94 GENERATIONAL MORTALITY TABLES)
  Large Purchase
Small Purchase
  30/06/2012
30/09/2012
30/06/2012
30/09/2012
Retirees
       
• Discount rate
2.98%
2.86%
3.05%
2.94%
• Spread over CANSIM V39062
+ 0.73%
+ 0.64%
+ 0.80%
+ 0.72%
Deferred vesteds
       
• Discount rate 
3.25%
3.21%
3.31%
3.23%
• Spread over CANSIM V39062
+ 1.00%
+ 0.99%
+ 1.06%
+ 1.01%

If considered in isolation, over the three-month period, the illustrative quotes show a decrease which may be up to approximately 10 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 third quarter of 2012 that was available to the PPFRC produced an average spread which was approximately 70 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 September 30, 2012, a revision to the guidance contained in the educational note supplement published on August 16, 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 September 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 70 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 September 30, 2012, up to December 30, 2012, pending any further guidance or other evidence of change in annuity pricing.

Example

As at September 30, 2012, the unadjusted CANSIM V39062 rate was 2.22%. This rate would form the basis for developing an appropriate underlying discount rate for valuations of non-indexed group annuities with effective dates of September 30, 2012. Prior to rounding, an applicable underlying discount rate would then be determined as 2.22% + 0.70% = 2.92%.

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 three 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 September 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.

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

Educational Note – Guidance for the 2012 Valuation of Insurance Contract Liabilities of Life Insurers


The attached educational note was approved by the Practice Council on November 1, 2012. It provides guidance to actuaries in several areas affecting the valuation of the 2012 year-end insurance contract liabilities of life insurers for Canadian Generally Accepted Accounting Principles purposes, and includes an update on recently published experience studies.


Contact with Questions: Edward Gibson, Chair, Committee on Life Insurance Financial Reporting, at edward.gibson@empire.ca

 
Calendar of Events
February 15, 2013
Professionalism Workshop
InterContinental Hotel
Toronto, ON
February 26, 2013
Professionalism Workshop Hilton Montreal Bonaventure Montréal,
Québec
April 9, 2013
Professionalism Workshop InterContinental Hotel Toronto, ON
June 2-5, 2013
Practice Education Course
Delta Ottawa City Centre
Ottawa, ON
June 19, 2013
Professionalism Workshop Hilton Montreal Bonaventure Montréal,
Québec
June 20-21,
2013
Annual Meeting
Hilton Montreal Bonaventure Montréal,
Québec
September 20-21, 2013
Actuarial Evidence Seminar
ITHQ – Québec Tourism and Hotel Institute
Montréal,
Québec
September 26-27, 2013
Seminar for the Appointed Actuary
Hilton Montreal Bonaventure Montréal,
Québec
November 12, 2013
Pension Seminar
Metro Toronto Convention Centre
Toronto, ON
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.