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Invitation to global actuarial conference in India

The International Actuarial Association, the IAA’s Health Section and the Institute of Actuaries of India (IAI) are urging members to mark February 20-22, 2011, in their calendars.

That is the date of the 13th Global Conference of Actuaries, which will take place at the Renaissance Hotel, Mumbai, India. Further details have yet to be revealed, but the IAI hopes the event will offer "daring solutions" to emerging risks and that more than 1,000 actuaries will attend.

The five-star Renaissance Hotel is in Powai, a suburb in northeast Mumbai, and is a suitable base to explore the landmark Gateway of India monument, the dramatic Rajiv Gandhi Sea Link bridge and the Elephanta network of sculpted caves.

More information about the conference will be announced as it becomes available, but to read about the venue, which incorporates the largest conference centre in India, visit www.renaissancemumbai.com.


Guidance for the 2010 Valuation of Policy Liabilities of Life Insurers

The purpose of this educational note is to provide guidance to actuaries in several areas affecting the valuation of the 2010 year-end policy liabilities of life insurers for Canadian Generally Accepted Accounting Principles (GAAP) purposes. It provides an update on recently published experience studies.

The guidance in this educational note represents a majority view of the members of the Committee on Life Insurance Financial Reporting of appropriate practice consistent with the Standards of Practice.

Link: http://www.actuaries.ca/members/publications/2010/210080e.pdf
 
Contact with Questions: Dale Mathews, Chair, Committee on Life Insurance Financial Reporting, at Dale_Mathews@manulife.com
 

Call for Speakers for the 2011 Annual Meeting in Ottawa

You are invited to submit a proposal to speak at the 2011 Annual Meeting of the Canadian Institute of Actuaries (CIA), to be held June 29–30 in Ottawa.

The Annual Meeting attracts between 300 and 500 attendees and features approximately 36 concurrent sessions covering all areas of actuarial practice plus general business and professionalism topics.

Share your expertise with your peers and those up-and-coming in the profession. Member benefits of participating as a speaker include:
  • The opportunity to become more involved with the CIA;
  • A chance to share best practices and emerging trends; and
  • A 30 percent discount on the meeting registration fee.
Click here to submit your proposal: http://fluidsurveys.com/s/call-for-proposals/langen/
 
Link: http://fluidsurveys.com/s/call-for-proposals/langen/
 
Contact with Questions: Leona Campbell, coordinator, eligibility and education, at leona.campbell@actuaries.ca
 

Webcast – International Financial Reporting Standards Series – Canadian Standards

December 8, 2010

Speakers:
Dave Pelletier, Chair of the Actuarial Standards Board and a former CIA President
Mike Hale, former CIA President who chairs the ASB’s IFRS 4 Working Group

Previous webcasts in this series have dealt with the nature of the proposed International Financial Reporting Standards for Insurance Contracts. While recognizing the uncertainties still out there with respect to the final IFRS, this webcast will deal with the significant impact it will have on the actuarial Standards of Practice in Canada, the need for international actuarial guidance, and possible implications for regulatory capital standards.

Link: http://www.actuaries.ca/webcasts/index_e.cfm
 
Contact with Questions: Alicia Rollo, CHRP, director, education and professional development, at alicia.rollo@actuaries.ca
 

Submission to the Department of Finance Canada

The Canadian Institute of Actuaries presented its comments in regard to the August 27, 2010 updated legislation on employee life and health trusts as supplemented by the discussion in the Explanatory Notes in Respect of Legislative Proposals Relating to the Income Tax Act and Related Acts and Regulations.

Link: http://www.actuaries.ca/members/publications/2010/210083e.pdf
 
Contact with Questions: Michel St-Germain, Chair, Member Services Council, at Michel.St-Germain@mercer.com
 

25th CPP Actuarial Report tabled to Parliament

The Honourable Jim Flaherty, Minister of Finance, has this week tabled the 25th Canada Pension Plan Actuarial Report to Parliament, and it is now available at:
http://www.osfi-bsif.gc.ca/app/DocRepository/1/eng/oca/reports/CPP/CPP25_e.pdf.

It confirms that the legislated contribution rate of 9.9% is sufficient to pay future expenditures and to accumulate assets worth $275 billion (i.e., 4.7 times the annual expenditures) in 2020. Other key findings in the report include:
  • The ratio of assets to the following year’s expenditures is projected to grow from 3.9 in 2010 to 5.2 by 2050;
  • The number of contributors is expected to grow from 12.6 million in 2010 to 14.3 million by 2020, with contributions expected to increase from $37 billion to $56 billion in the same period; and
  • The proportion of retirement benefits relative to total expenditures is expected to increase from 72% in 2010 to 82% in 2050.
Therefore, the report says, despite a projected substantial increase in benefits paid as a result of an aging population, the plan is expected to be able to meet its obligations throughout the projection period and to remain financially sustainable over the long term.


2011 CAS Trust Scholarship Program

The Casualty Actuarial Society is once again accepting applications for its scholarship program for college students pursuing a career in actuarial science. The CAS Trust Scholarship program, funded by donations to the CAS Trust, will award up to three $2,000 scholarships to deserving students for the 2011-2012 academic year.

Applicants must be a permanent resident of the U.S. or Canada, or have a permanent resident visa, and admitted as a full-time student to a U.S. or Canadian educational institution to be eligible. Applicants must have demonstrated high scholastic achievement and a strong interest in mathematics or a mathematics-related field. Applicants must also have taken at least one exam prior to March 1, 2011.

Applications are due by March 1, 2011 and winners will be notified in late May.

Link: http://www.casact.org/academic/index.cfm?fa=scholarship

Contact with Questions: Megan O’Neill, CAS communications coordinator, at moneill@casact.org
 

New Co-sponsored Audiocasts

The Conference of Consulting Actuaries is pleased to announce new audiocasts co-sponsored by the American Academy of Actuaries and Canadian Institute of Actuaries. Special pricing is now available for CIA members. To find out more or to register, please click on the link below.

Hybrid Plan Regulation
Wednesday, December 1, 2010

Presenters:
Lawrence Sher, FCA, MAAA, FSA, EA - Aon Hewitt
Richard Shea - Covington & Burling LLP
Harlan Weller, MAAA, FSA, EA - Office of Tax Policy, US Dept of the Treasury

On October 18, the IRS and Treasury issued long-anticipated final and proposed regulations on PPA provisions affecting hybrid defined benefit pension plans, such as cash balance and pension equity plans. The presenters will review the regulations and address key consulting and technical issues raised by these regulations, including transition and plan amendment issues that many plan sponsors want to attend to immediately.

Qualification Standards and Proposed New JBEA Regs
Wednesday, December 15, 2010

Presenters:
Jay A. Yager, FSA, MAAA, EA - Aon Hewitt
Carolyn E. Zimmerman, FSA, MAAA, EA - Internal Revenue Service

A refresher/practicum on the Qualification Standards and a discussion of the proposed changes to the JBEA regulations.

Link: http://www.ccactuaries.org/events/seminars/2010-audiocast-schedule.html
 
Contact with Questions: Alicia Rollo, CHRP, director, education and professional development; alicia.rollo@actuaries.ca

Call for Proposals


You are invited to submit a proposal to speak at a 2011 event hosted by the Canadian Institute of Actuaries (CIA).

For the first time, the CIA is issuing a call for speaker proposals to encourage members and the general business community to help shape the future of the profession.

Member benefits of participating as a speaker include:
  • The opportunity to become more involved with the CIA;
  • A chance to share best practices and emerging trends; and
  • A 30 percent discount on that meeting’s registration fee.
Guest speaker benefits include:
  • A forum to showcase your expertise and position yourself as an expert with CIA audiences;
  • The opportunity to help the actuarial profession evolve; and
  • A chance to share best practices and emerging trends.
The call for speaker proposals for 2011 events is now available. Click here to access the form: http://fluidsurveys.com/s/call-for-proposals/langen/

Link: http://fluidsurveys.com/s/call-for-proposals/langen/
 
Contact with Questions: Leona Campbell, coordinator, eligibility and education, at leona.campbell@actuaries.ca
 

Webcast: Defined Contribution (DC) Plans

November 23, 2010

This webcast will be an introduction to defined contribution plans from a financial point of view, and how they are being affected by current developments in pension reform.

Speakers:
Neil Duffy, FCIA, Manulife Financial, and Randy Colwell, regional vice-president, group retirement services, Sun Life Financial.

Link: http://www.actuaires.ca/webcasts/webcast_download_e.cfm?intWebinarID=30
 
Contact with Questions: Alicia Rollo, CHRP, director, education and professional development, at alicia.rollo@actuaries.ca
 

Submission to the International Accounting Standards Board

The Canadian Institute of Actuaries presented its comments on the April 2010 Exposure Draft Proposed Amendments to IAS 19 from the International Accounting Standards Board.

Link: http://www.actuaries.ca/members/publications/2010/210082e.pdf
 
Contact with Questions: Tyrone Faulds, Chair, Practice Council, at ty.faulds@londonlife.com
 

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

The Actuarial Standards Board proposes to promulgate the use of the calibration criteria for stochastic models, effective March 31, 2011.

It is proposed that the calibration criteria would be used for valuations on or after March 31, 2011 and that early implementation in 2011 would be permitted.

Please read the initial communication at the link below to find out more about this promulgation. Comments on the proposed changes are invited by December 10, 2010. Please send your comments, preferably in an electronic form, to Chris Fievoli at chris.fievoli@actuaries.ca with a copy to John F. Brierley at jfbrierley@sympatico.ca.

Link: http://www.actuaries.ca/members/publications/2010/210075e.pdf
 
Contact with Questions: A. David Pelletier, Chair, Actuarial Standards Board, at dave@davep.ca
 

Educational Note: Discounting

This revised educational note on discounting has been prepared by the Committee on Property and Casualty Insurance Financial Reporting. This represents an update and replacement of the 2005 educational note Discounting to make it consistent with changes made in 2009 and 2010 to the Canadian Institute of Actuaries’ Standards of Practice related to margins for adverse deviations.

This educational note provides explicit guidance in two areas where no such guidance is provided in the Standards of Practice, namely the selection of a discount rate for the estimation of ceded liabilities, and the discounting of future costs associated with premium liabilities.

Link: http://www.actuaries.ca/members/publications/2010/210079e.pdf
 
Contact with Questions: Pierre Dionne, Chair, Committee on Property and Casualty Insurance Financial Reporting, at pdionne@ccr.fr
 

Discipline Bulletin – Volume 17, No. 1

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/2010/210081e.pdf
 
Contact with Questions: Bill Weiland, Chair, Committee on Professional Conduct at bweiland@eckler.ca
 

Guidance for Assumptions for Hypothetical Wind-Up and Solvency Valuations Update – November 2010

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 a memorandum dated August 30, 2010, which was based on a review of data collected as of June 30, 2010. The review concluded that for valuations with effective dates on and after June 30, 2010, an appropriate discount rate for estimating the cost of purchasing a non-indexed group annuity would be determined as the unadjusted yield on Government of Canada (GoC) long-term bonds (CANSIM series V39062) increased arithmetically by 70 bps, in conjunction with the UP94@2020 mortality tables. The August 30, 2010 guidance applied to both immediate and deferred pensions and also applied regardless of the overall size of a group annuity purchase.

Methodology

The August 30, 2010 guidance as to estimated annuity purchase costs for non-indexed group annuities was based primarily on quotes provided by six insurance companies on illustrative group annuities using pricing conditions as at June 30, 2010.

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, 2010, but based on pricing conditions as at September 30, 2010. The illustrative non-indexed quotations at June 30, 2010 and September 30, 2010 may be summarized as follows:

 AVERAGE OF THE THREE MOST COMPETITIVE QUOTES
(USING UP94@2020 MORTALITY TABLES)
   Large purchase
 Small purchase
   30/06/2010  30/09/2010  30/06/2010  30/09/2010
Retirees  
Discount rate
4.33% 4.46% 4.28% 4.29%
Spread over CANSIM V39062
+0.74% +1.19% +0.69% +1.02%
Deferred vesteds

Discount rate
4.31%
4.59% 4.07%
4.29%
Spread over CANSIM V39062
+0.72% +1.32%
+0.48%
+1.02%

For the retiree group of the large non-indexed purchase, there was an increase in the excess (spread) of the average of the discount rates for the insurers that provided the three most competitive quotes, in conjunction with the UP94@2020 mortality tables, over the yield on GoC long-term bonds (CANSIM series V39062) of 45 basis points (bps). The spread for the deferred vested members of the large purchase increased by 60 bps.

There was an increase in the spread of 33 bps for the retiree group of the small non-indexed purchase, and the spread for the deferred vested members of the small purchase increased by 54 bps.

The PPFRC believes that refinements to the discount rate to reflect immediate versus deferred pensions or large versus small purchases are not warranted at this time. The illustrative quotes as at September 30, 2010 suggest that, since June 30, 2010, the average spread between non-indexed group annuity purchase discount rates and the yields on GoC long-term bonds may have increased by roughly 40 to 50 bps when the illustrative quote data are considered in aggregate.

From discussions with a few insurers, the PPFRC understands that the group annuity market was not very active during the third quarter of 2010. The PPFRC has been able to obtain limited data on recent actual group annuity purchases, which seem to corroborate an increase in discount rate spreads since June 30, 2010. Overall, the PPFRC concluded that the actual purchase data did not exhibit any pattern that invalidates the information contained in the illustrative quotes, especially given the fact that the actual purchase data were limited in quantity.

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, 2010, an appropriate discount rate for estimating the cost of purchasing a non-indexed group annuity would be determined as the unadjusted yield on GoC long-term bonds (CANSIM series V39062) increased arithmetically by 110 bps, in conjunction with the UP94@2020 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, 2010 up to December 30, 2010, pending any further guidance or other evidence of change in annuity pricing.

Example

As at September 30, 2010, the unadjusted CANSIM series V39062 rate was 3.27%. This rate would form the basis for developing an appropriate underlying discount rate for valuations of non-indexed group annuities with an effective date of September 30, 2010. Prior to rounding, an applicable underlying discount rate would then be determined as 3.27% + 1.10% = 4.37%.

Validity of April 2010 Educational Note

With the exception of the revisions to the guidance contained in this memorandum and the August 30, 2010 memorandum, actuaries would continue to reference the April 13, 2010 educational note for guidance with respect to the selection of assumptions for hypothetical wind-up and solvency valuations with effective dates between December 31, 2009 and December 30, 2010. This guidance will be reviewed again with an effective date of no later than December 31, 2010.

Link: N/A

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

2009–2010 NAAC Annual Report now available

The North American Actuarial Council (NAAC) comprises the leadership of the actuarial organizations of Mexico, the United States and Canada.

Its meetings are held twice a year to share information and identify potential areas of collaboration. The 2009–2010 NAAC Annual Report is now available at the link below and I encourage members to read it. NAAC discussions and initiatives provide a unique North American perspective on many of the international issues facing our profession today. If you have questions or comments about the NAAC and the CIA’s role in international matters, don’t hesitate to contact me.

Micheline Dionne, CIA President

Link: http://www.actuary.org/naac/pdfs/NAAC_Report_2009_10.pdf
 
Contact with Questions: Mary Downs, staff liaison to NAAC at downs@actuary.org

Submission to the Ontario Ministry of Finance

The CIA presented its comments on the recently-announced proposed pension reforms for Ontario.

Link: http://www.actuaries.ca/members/publications/2010/210077e.pdf
 
Contact with Questions: Monique Tremblay, Chair, Pension Advisory Task Force, at mtremblay@dsf.ca
 


 

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