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The Actuarial Standards Board - An Update

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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 February.

Exposure Drafts

Two exposure drafts have been published since February. One that I’d mentioned in February as almost ready deals with a substantial revision of part 6000 on post-employment benefit plans. The designated group, chaired by Ellen Whelan, is now reviewing the comments received.

The other exposure draft arose from a notice of intent (NOI) also published since February, thanks to some fast work by Michael Banks’ designated group and some helpful comments received in response to that NOI. The proposed revisions would 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. The comment deadline for this exposure draft is June 30, and our intent is to approve the final standard in August, with early implementation permitted for any report not yet completed.

Notices of Intent

We’ve issued three other notices of intent since February. One that affects all practice areas would result in greater consistency in external user reporting requirements across practice areas and additional disclosure of certain items. 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, has already received some useful comments on certain aspects of the proposals, and looks forward to more, by the comment deadline of July 31.

In the pension area, we’ve issued an NOI to tackle certain issues in dealing with the pension standards revised two years ago that practitioners have brought to the attention of the Committee on Pension Plan Financial Reporting (PPFRC) and the ASB. Comments are due by July 31. Former ASB member Stephen Butterfield chairs this designated group.

A designated group chaired by Ty Faulds prepared an NOI regarding the narrowing of the range of practice in certain areas of insurance company valuation. It was approved by the ASB in March and published with a comment deadline of May 31. Several comments have been received, including some suggesting a look at certain other issues not anticipated in the NOI.

Other Activity on Standards

An NOI previously issued dealt with a proposed standard on life insurance costing, analogous to the ratemaking standard recently approved for the property and casualty insurance area and drawing on a 2008 research paper on this topic. Based on the points made in the comments received, the designated group recommended that the ASB not proceed with a standard in this area, and instead additional support for actuaries through webcasts, educational notes, and research should be recommended to the CIA. Based on the group’s findings, the ASB agreed and published its decision in June.

A similar decision was taken in the pension area, regarding an earlier notice of intent regarding assumptions used for hypothetical windup and solvency valuations. On the designated group’s recommendation based on the comments received, the ASB agreed, in its decision published in April, to not proceed with a revised standard at this time, although as the PPFRC considers possible additional guidance in this area, there may be a further notice of intent with more limited changes if deemed necessary.

The relevant designated groups continue working on standards arising from previously published notices of intent, and we expect to be considering and publishing exposure drafts in the upcoming months on the actuarial evidence standards (other than marriage breakdown), on insurance dividends, and on modelling. We will soon publish a promulgation of a revised set of calibration criteria for models used in the valuation of insurers’ segregated fund guarantees, as discussed in our "initial communication" earlier this year.

Other Activity

Taking into account the comments received on the draft revisions to our due process published in October, as well as input from the Actuarial Standards Oversight Council, we’ve approved an enhanced due process. It, along with a memo to the CIA membership detailing how the various comments were dealt with, was published in April.

We have also developed internal guidelines on the effective operation of our designated groups and on when re-exposure of proposed revisions to standards should be considered.

In a joint session with the Actuarial Standards Oversight Council, the ASB considered its future strategic direction and the environmental issues that will drive it. This was very useful input for the ASB as it now goes through its annual process of strategic plan development.

ASB Membership

Both Richard Gauthier and Normand Gendron attended their final meeting as ASB members on May 31. Richard was "the lonely P&C guy" for two of his years on the ASB until we found another to keep him company, and Normand was eagle-eyed in catching inconsistencies in our work, particularly but not only between English and French versions. Both have been excellent contributors, and we thank them for that.

We’re pleased to welcome Conrad Ferguson onto the ASB, effective July 1; the wide range of practice experience that Conrad brings will be very valuable to us.

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

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