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The CIA Welcomes a New Staff Fellow for Canadian Membership at the SOA

The Society of Actuaries (SOA) recently announced that Joseph De Dominicis, FCIA, FSA, has joined the SOA as staff Fellow–Canadian membership.

Mr. De Dominicis worked with Mercer Toronto for over 10 years, most recently as an actuarial consultant and manager, and had previously served in the company’s London, UK, retirement practice.

In his role at the SOA, he will be responsible for leading and guiding the organization’s professional development and research topics and content development for its Canadian membership and for advancing activities servicing its members in Canada. Based In Toronto, he will work closely with SOA staff, their Canadian advisory team, and the Canadian Institute of Actuaries to promote further engagement by Canadian members in the SOA. The staff Fellow also serves as a content consultant/advisor to the SOA’s operational departments, ensuring that the SOA’s programs, products and services are designed to address the knowledge, skills and abilities needed by its Canadian members today and in the future.

Discipline Notice – Notice of Disciplinary Tribunal Hearing

A Discipline Notice has been prepared by the Committee on Professional Conduct to inform CIA members about an upcoming Disciplinary Tribunal hearing on penalty.

In accordance with the Bylaws, a notice of a penalty hearing before a CIA Disciplinary Tribunal is hereby provided to inform members of the Institute and the public. This notice includes the date, time and place of the hearing.

Link: http://www.actuaries.ca/members/publications/2011/211116.pdf

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

Report on the CIA Survey of C-1 Provisions of Life and Health Insurance Organizations in Canada - 2010 Fiscal Year-End

This report documents the results of the Canadian Institute of Actuaries (CIA) survey of C-1 provisions for Life and Health Insurance Organizations in Canada, as at fiscal year-end 2010. Westbay Research Inc. prepared the report for the CIA’s Committee on Investment Practice using the survey data collected in June/July 2011.

The report is available in the Members Section of the CIA website. To access this report, please log into the Members Section and click on "Organization" on the top menu bar. Select "Practice Council" and under "Committees and Task Forces" select the "Committee on Investment Practice". The link to the report is under "Reports and Documents" near the bottom of the page.

Contact with Questions: Jonathan Hede, Chair, Committee on Investment Practice, at jonathan.hede@nexusrisk.com

CPD Deadline Grows Near

This is a friendly reminder that just a few weeks are left for CIA members to meet their Continuing Professional Development requirement for 2011. 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 view your total hours, see the CPD Information Tracking Tool. For more information, visit My CPD (please ensure you are logged into the Members Site).

Links:
Tracking tool: http://www.actuaries.ca/members/toolkit/update_cpd_info_e.cfm

My CPD: http://www.actuaries.ca/members/professional/my_cpd_e.cfm

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

Educational Note Supplement: Guidance for Assumptions for Hypothetical Wind-Up and Solvency Valuations Update – Effective September 30, 2011

The most recent guidance from the Committee on Pension Plan Financial Reporting (PPFRC) regarding assumptions for hypothetical wind-up and solvency valuations was provided in an educational note supplement dated September 8, 2011, which was based on a review of data collected in the second and early third quarters of 2011. The review concluded that there was not sufficient evidence to warrant changing the guidance provided in the June 7, 2011 educational note supplement. This guidance concluded that for valuations with effective dates on and after March 31, 2011, 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 70 bps, in conjunction with the UP94 mortality table with generational projection. This guidance applies to both immediate and deferred pensions and also applies regardless of the overall size of a group annuity purchase.

Methodology

The September 8, 2011 guidance as to estimated purchase costs for non-indexed group annuities was partially based on quotes provided by six insurance companies on illustrative group annuities using pricing conditions as at June 30, 2011, and supplemented by data on actual group annuity purchases during the second and early third quarters of 2011 provided by certain actuarial consulting firms.

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, 2011, but based on pricing conditions as at September 30, 2011. In addition, the PPFRC obtained limited data on the pricing of actual group annuity purchases in the third quarter of 2011 from certain actuarial consulting firms.

The illustrative non-indexed quotations at June 30, 2011 and September 30, 2011 may be summarized as follows:

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

  Large Purchase
Small Purchase
30/06/2011
30/09/2011
30/06/2011
30/09/2011
Retirees

 
Discount rate
4.05%
3.57%
4.12%
3.56%
Spread over CANSIM V39062 +0.56%
+0.89%
+0.63%
+0.88%
Deferred vesteds

 
Discount rate
4.14% 
3.59%
4.11%
3.52%
Spread over CANSIM V39062
+0.65%
+0.91%
+0.62%
+0.84%

The illustrative quotes suggest that an appropriate discount rate for estimating the cost of purchasing non-indexed group annuities be determined as the unadjusted yield on GoC long-term bonds (CANSIM V39062) increased arithmetically by 90 bps, in conjunction with the UP94 mortality table with generational projection.

The actual group annuity purchase data obtained by the PPFRC for the third quarter of 2011 were very limited. Furthermore, most of the group annuity purchases occurred during the financial market turmoil that commenced in early August, and did not display any credible pattern. Consequently, the PPFRC concluded that the illustrative quotes provided a better indicator of annuity prices going forward than the actual annuity pricing data.

As a result, the PPFRC concluded that, effective September 30, 2011, a revision to the guidance contained in the September 8, 2011 educational note supplement 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, 2011, 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 90 bps, in conjunction with the UP94 mortality table with generational projection. 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, 2011 up to December 30, 2011, pending any further guidance or other evidence of change in annuity pricing.

Example

As at September 30, 2011, the unadjusted CANSIM V39062 rate was 2.68%. 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, 2011. Prior to rounding, an applicable underlying discount rate would then be determined as 2.68% + 0.90% = 3.58%.

Validity of May 2011 Educational Note

With the exception of the revisions to the guidance contained in this memo, and the update of the recommended mortality table used to estimate the cost of purchasing indexed annuities provided in the June 7, 2011 guidance, actuaries would continue to reference the May 10, 2011 educational note for guidance with respect to the selection of assumptions for hypothetical wind-up and solvency valuations with effective dates between September 30, 2011 and December 30, 2011.

Link: http://www.actuaries.ca/members/publications/2011/211115e.pdf

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

Actuaries in the Media Today

1. CIA President Jim Christie was quoted today in a National Post news item titled "Climate change blamed for spike in home insurance premiums". Members can access the online story at the following link: http://business.financialpost.com/2011/11/17/climate-change-blamed-for-spike-in-home-insurance-premiums/.

2. On the same topic, actuary Michel Dionne is being interviewed (on radio) by Radio-Canada in Québec City. No online information is available at this time.

3. CIA Board member Michel St-Germain is being interviewed (on television) by Radio-Canada in Montréal regarding the introduction of legislation today in Parliament, implementing the federal portion of the Pooled Registered Pension Plan (PRPP) framework. To see the Finance Canada press release and backgrounders, please access the following link: http://www.fin.gc.ca/n11/11-119-eng.asp.

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

Discipline Bulletin – Volume 18, 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/2011/211114e.pdf

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

Task Force on Governance – Proposed Bylaw Amendments – Removal of a Board Member from Office

The information provided in the documents linked below is intended, first and foremost, as a briefing to the membership on proposed changes related to the CIA Board structure and composition.

Recent events in another actuarial organization have served as a lesson and prompted the CIA to undertake the necessary steps that would grant the Board the required authority to remove a Board member from office when such removal would be warranted due to exceptional actions or circumstances that would be considered detrimental to the Institute and/or to the profession.

The Task Force on Governance is seeking membership input on the proposal, prior to presenting its final recommendation to the Board for formal approval. The proposed change will require amendments to the CIA Bylaws, which will likely be presented to the Board at its March 2012 meeting, with subsequent membership confirmation of these changes, likely to be sought in June 2012 at the General Business Session of the 2012 Annual Meeting in Toronto.

The task force encourages all members to take advantage of the opportunity to review the enclosed material and to provide feedback. Comments should be sent to lynn.blackburn@actuaries.ca by January 20, 2012.

Links:
Memorandum

Appendix A
Appendix B

Contact with Questions: Anne Vincent, Chair, Task Force on Governance, at avincent@eckler.ca

Final Standards of Practice – Dynamic Capital Adequacy Testing – Section 2500

A revised section 2500 of the Standards of Practice was approved by the Actuarial Standards Board on October 19, 2011.

The effective date of the final standard is December 31, 2011. Early implementation will not be permitted.

Links:
Memorandum (with appendix) 
Standards of Practice

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

Educational Note Supplement: Guidance for the 2011 Valuation of Insurance Contract Liabilities of Life Insurers

The purpose of this educational note is to provide guidance to actuaries in several areas affecting the valuation of the 2011 year-end insurance contract liabilities of life insurers for Canadian Generally Accepted Accounting Principles (GAAP) purposes. It provides an update on recently published experience studies.

Link:
http://www.actuaries.ca/members/publications/2011/211110e.pdf

Contact with Questions: Edward Gibson, Chair, Committee on Life Insurance Financial Reporting, at edward.gibson@empire.ca
 
Educational Note: Guidance for the 2011 Valuation of Insurance Contract Liabilities and DCAT for Property and Casualty Insurers

The Committee on Property and Casualty Insurance Financial Reporting (PCFRC) of the Canadian Institute of Actuaries has prepared this educational note to provide guidance to actuaries in several areas affecting the valuation of insurance contract liabilities and dynamic capital adequacy testing (DCAT) reporting for property and casualty insurers. This educational note reviews relevant Standards of Practice and educational notes and discusses some current issues affecting the work of the Appointed Actuary.

Link: http://www.actuaries.ca/members/publications/2011/211109e.pdf

Contact with Questions: Pierre Dionne, Chair, Committee on Property and Casualty Insurance Financial Reporting, at pdionne@ccr.fr
 

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