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

Canadian Institute of Actuaries/Institut canadien des actuaires

October 2013
D.W. Simpson & Company
North American Search Group
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By Jacques Lafrance, FCIA
CIA President

Believe it or not, the public can find actuaries interesting, despite their reputation as introverts focused on technicalities. Some of our members maintain a regular media presence, demonstrating that the ability to present relevant, informed, and easily-understood viewpoints is not incompatible with the actuarial profession.

It behooves members of the profession to express opinions on certain burning issues of the day. Thanks to their expertise and experience, actuaries are well positioned to influence policy-makers and the public in the search for practical, sensible solutions to important issues, such as the cost of health care plans, maintaining public confidence in financial institutions, and placing the future of pension plans on a secure footing.

Our profession deserves a higher profile, and it is in our interest that people learn more about us. We need to take targeted actions to ensure that actuaries’ talents and abilities are better understood by the public, and in particular by decision-makers and potential users of our services. Greater recognition of our skills is key if our profession is to gain a foothold in non-traditional fields and expand our enterprise risk management activities.

For the actuarial profession to gain the profile it seeks, the Institute must develop and implement an effective communications and public relations strategy. If we are to be successful, we must show that we are open to and in tune with opinions expressed in all quarters, while putting into practice the scientific rigour for which our profession is known.

Now, it may well be that implementing such a strategy will require a greater effort on the Institute’s part, including greater use of our most valuable resource: our volunteers. But what is required above all is a readiness to jump on the chance to express our opinions when the opportunities present themselves. A case in point: the Institute publishes a number of documents aimed primarily at helping our membership provide quality services. The observations, findings, or advice contained in many of these documents might also interest the public or influence decision-makers. With relatively little extra effort, we can synthesize this information and express it in plain language, so as to attract the attention of the public, decision-makers, and the media and thus provide them with value added.

I am pleased to see that a growing number of our research projects (Institute "exclusives" or collaborations with other organizations) are aimed primarily at helping us develop better-informed public position statements or offer our expertise in the search for solutions to issues of public interest. We must continue down this path.

To be sure, the Institute can and must assume a greater role in making public pronouncements on behalf of the profession. To that end, I invite you to contribute to Institute activities. But I also urge you to plunge right into public debates on a personal basis.

So let’s hope we see more actuaries or the CIA express their opinions and add their two cents through the various media outlets. Let’s speak our minds!

Jacques Lafrance, FCIA, is President of the Canadian Institute of Actuaries.

 

 
Spotlight

By Marc-André Melançon, FCIA

I am taking this opportunity to provide the membership with updates on some recent developments at the Member Services Council (MSC) and its various subcommittees.

Communication

The CIA director of communications and public affairs, Les Dandridge, plus our English editor Andrew Melvin and Communications Committee Chair Stephen Cheng, have recruited an editorial panel for the publication that will replace Beyond Risk. This new publication will be named Seeing Beyond Risk, and will be published quarterly with the first issue expected in January 2014. Stay tuned!

Social Media

The CIA has been active on Twitter for over a year and its number of followers has been increasing very steadily since its inception. It is noteworthy that a very significant number of them are non-CIA members.

CIA Website Modernization

The long-awaited new CIA website was finally launched this year. It has improved access to the many resources available to the members. It continues to be enhanced and updated, and in the last few months an extensive research section has been added along with an index of publications by year, a separate Policies and Guidelines page, and a Meeting Archives section.

We welcome any comments on the changes brought to the functionality of the website.

Research Projects

In the previous edition of the (e)Bulletin, Dave Dickson, Chair of the Research Committee, reported on the ongoing research projects. The CIA is always listening to its members, and please share with us any good, pertinent research project ideas!

Other Activities

Predictive Modelling

The MSC is looking into the opportunity of establishing predictive modelling as a non-traditional area of practice. Many of you will be aware that this field of work has been gaining traction in both the property and casualty and life insurance industries. We would welcome input from membership on this subject.

Anybody with comments or suggestions can contact me at mamelancon@rgare.ca

Marc-André Melançon, FCIA, is Chair of the Member Services Council.

 

 
MOVERS AND SHAKERS
Sadiq Adatia, chief investment officer and portfolio manager at Sun Life Global Investments, was part of an expert panel that contributed to a roundtable discussion of target date funds in the September issue of Benefits Canada magazine.

Gavin Benjamin was featured in a Benefits Canada news report on the CIA's updated mortality tables.

Alec Blundell has been appointed vice-president of individual insurance for Co-operators Life and CUMIS. In his new role, he is responsible for the development and implementation of the long-term strategic plan for the individual life insurance line of business.

Rob Brown was a keynote speaker at the 17th East Asian Actuarial Conference in Singapore, looking at old age support ratios and other topics.

CIA resident actuary Chris Fievoli was quoted in the Financial Post on re-evaluation of cancer survivors' insurance. He also provided expert advice to the author of a Montreal Gazette article on Canadians' longevity, which centred on the CIA's mortality study.

On the MoneySense website, Fred Vettese discussed the reasoning behind potential changes to the Old Age Security system.

Barbara Sanders and Karen Hall contributed to an article in the Globe and Mail on Canada's "pension crunch".

Harry Satanove, of Satanove and Flood Consulting, has joined forces with George & Bell Consulting. Mr. Satanove has 32 years' experience as an actuary and investment consultant, and his firm has clients across western and northern Canada.

Brent Simmons wrote about pension plans matching assets to liabilities in the October issue of Benefits Canada magazine.

Gary Walters was quoted in the Financial Post regarding employers extending eligibility for workplace disability benefits past 65.
______________________________________

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@cia-ica.ca and we will aim to include it in the next issue of the (e)Bulletin.

 

For more news of CIA members and their activities, follow the CIA on Twitter.
 
Institute News
On October 19 the board of directors of the Society of Actuaries (SOA) voted to decline the CIA’s request for recognition of our University Accreditation Program (UAP) exemptions towards the ASA and FSA designations. While we understand that the practical considerations of a university-based education system are significant for the society’s international strategy, we are naturally disappointed in the SOA’s decision not to recognize Canada’s program.

The CIA leadership strongly believes in the added value that UAP brings to the actuarial profession in Canada, and it is committed to continuing with the university education route as an alternative method of completing some of the preliminary education requirements for the Associate (ACIA) and Fellow (FCIA) designations. With the first year complete and the program well into year two, the CIA continues to evaluate the UAP and the accredited universities. Our belief remains strong that university education is effective for preliminary exam credits but it will not replace Fellowship-level education and exams, nor can it ever replace the practical and Canadian work experience requirements of the FCIA designation.

Ultimately, the CIA’s goal is to provide the best education and assessment methods for the qualification of actuaries in Canada, and to this end we will continue to offer various education options:
  • Regardless of the SOA’s recent decision, the society remains an important education provider to the CIA. Therefore, an existing administrative agreement with the SOA allows UAP candidates to travel seamlessly through the society’s education system to complete all additional ACIA and FCIA requirements including Fellowship-level examinations and the SOA Fellowship Admissions Course, which form part of the CIA’s eligibility requirements.
  • To satisfy eligibility requirements for ACIA and FCIA, UAP candidates can  also travel through the education paths of the following education partners who recognize CIA exemptions towards their respective designations: the Casualty Actuarial Society (CAS) and the UK Faculty and Institute of Actuaries.
  • The FCIA designation continues to be recognized by the American Academy of Actuaries (AAA) towards the MAAA designation requirements for work in the U.S., when combined with the appropriate U.S. experience.
  • CIA candidates can still choose to complete the preliminary exams of the SOA and CAS, which the CIA will continue to recognize subject to the CIA’s ongoing monitoring.
The CIA is committed to the UAP as a key component of the Institute’s strategic direction on education. In fact, the Institute is continually strengthening its position on education and taking greater accountability for developing Canadian actuaries. The CIA Board recently approved four long-term strategic goals, one of which is dedicated to education:
"The CIA is viewed as an educational body, not just an accreditation body. It takes full accountability for the educational path to FCIA (which may involve outsourcing) with the FCIA recognized as being a high-quality stand-alone educational designation (i.e., not having to be aligned to another designation)."
As an important aspect of the Canadian Education System, the UAP will be continually evaluated through university and student data collection, as well as feedback from education partners, members, employers, students, academics, instructors, Accreditation Actuaries, and External Examiners, all of which leads to the overall strengthening of the program.

For more information on the UAP or the CIA’s eligibility requirements, visit: http://www.cia-ica.ca/membership/uap. Questions or comments may be directed to accreditation@cia-ica.ca.

Jacques Lafrance, President
 

For actuaries, every practice area offers unique challenges and opportunities, and enterprise risk management (ERM) is no exception.

For Mark Struck (pictured), vice-president of ERM at Wawanesa Mutual Insurance, those challenges included convincing colleagues of the value of a risk management framework—something that is becoming increasingly important in today’s market.

He has worked in this field for three years, coming from a traditional pricing/reserving actuarial background, and said: "It wasn’t difficult for me to embrace ERM; a key responsibility for actuaries is interacting with different parts of a company. What was more difficult was changing my work regimen—I spent two years focusing on what the risk management machinery should look like, which meant stepping away from numbers. However, now we have closed the loop, and we have started to paint a financial picture of the risks we are facing.

"In my current role, I built our ERM practice from cradle to grave, and help the company manage risk on a day-to-day basis. By putting processes and assessments in place, we aim to get people thinking in terms of all the risks we face, and now they are having conversations that they would not have had two years ago.

"Implementing a risk management framework is an evolutionary process, but now we have some solid risk quantification and we can show what our balance sheet and income statement might look like under a wide variety of scenarios. We can put something concrete down on paper for people, and they develop a clearer sense of the company’s sensitivity to the range of risks we face."

The path to that finished result has not always been straightforward, added Mr. Struck, FCIA, FCAS, MAAA, who is based in Winnipeg, MB. "Modelling has been time-consuming, as the way you collect data is slightly different to normal actuarial work. To document all the risks you face, you have to enlist leaders from across the entire organization, which can be like the proverbial herding of cats.

"The core of risk management is determining those risks that could stand in the way of achieving the company’s strategies. This requires a broad perspective of the organization, and is most beneficial when people to think outside of their own silos. Given a typical corporate structure, this can be an unnatural task for some. Once leaders start to contemplate and understand how their work impacts the enterprise, they become more involved, and start to add value to the overall process."

Despite the appeal of this rapidly-expanding field and the opportunities it offered, Mr. Struck said it could still present challenges. "When you get into a room with non-actuaries, they can sometimes have this idea: ‘This is going to be a difficult conversation.’ You have to speak a different language at times. If you can make sense of the risk, and do so in a language that is familiar to your audience, it can be easier for people to understand the potential value of risk management.

"I thoroughly recommend ERM. Actuaries are very well situated to branch into it, as most actuarial work is already focusing on some of the company’s key risk factors, such as underwriting uncertainty, reserving, and market volatility. Stepping into ERM from pricing and reserving let me look holistically at the operations. Now I can add value by presenting the company’s complete risk profile."

 
 

1. Why did you become an actuary?
Because I liked maths and I wanted to get more challenges in studying at the university. I wanted to study what was supposed to be the most difficult program. I realized that the actuarial science is not so difficult but the actuarial exams make it tougher.

2. When you tell people you’re an actuary, what do they think you do?
They think I work with numbers in pension plans or that I do calculations on everything. They know sometimes we are predicting the future or that we are good in finance and accounting but they don’t fully understand the difference between an actuary, an accountant, an economist, or an MBA. Even some professionals think that actuaries have a good knowledge of maths but ignore that we also have a good knowledge of finance, and probably that we are the experts in insurance and pensions. They often think insurance and pension knowledge is acquired at work such that anyone else could do it.

3. Who has inspired you the most during your career? Did you have a mentor in your early career?
One well-known Québec actuary, Claude Castonguay, who was health minister in the Québec government in late 1960s created the interest for me to be an actuary. One very good actuary and manager (Jacques Roy, who was Superintendent of Insurance in Québec and who died at about 50 in the 1990s) was a good mentor for me.

4. What do you enjoy most about your job?
In my work, I need to consider many different elements, opinions, views, ideas, etc., and to find an appropriate solution that would work well and would be acceptable in theory and practice to many people and organizations. I also like discussing and negotiating for the solution.

5. What career would you follow if you weren’t an actuary?
I would have been an engineer or architect.

6. What are your hobbies?
Watching TV, seeing movies, boating, attending musical shows, visiting friends and regions or travelling.

7. What is your favourite music, book, and film?
My favorite musical group is Abba. I like many singers, some classical and pop, like Andrea Bocelli, Sarah Brightman, and Céline Dion. Some French singers are my favorite because of their songs, like Charles Aznavour, for example, who is a great composer and songwriter who could be compared to Elton John. I don’t read much and prefer biographies or books inspired by true stories. One of the good films that I saw was La Vie en Rose (called La Môme in France) on the life of Edith Piaf, who was a great French singer in the 1950s and died at 48 in the early 1960s.

8. Where is your dream vacation destination?
I like very much going to Europe, particularly France, Spain, Germany, Belgium, and Austria. I also like going to the Caribbean islands. I have never been to Argentina, and I would like to go there.

9. What do you do better than anyone you know?
I generally try to find the best solution to any problem and keep looking for it until I get one. I think I am good at this as I have a lot of imagination and not many prejudices about any view, opinion, or new idea.

10. If you could be anybody else, alive or dead, who would it be, and why?
Nobody is perfect and I do not generally have any idols. However, there are some great people in the world, like Mahatma Gandhi, General de Gaulle, Churchill, or Nelson Mandela. I think people working hard to help others and for peace in the world are the greatest. Maybe I would like to be the Pope or some religious leader to change a few things that could help people of different religions to better understand each other. However, I would not like to live like they do, as I prefer more freedom.

Jean-Guy Lapointe is a life insurance capital specialist at the Office of the Superintendent of Financial Institutions.



If you would like to take part in Introduce Yourself, this link will take you to an English survey form. In the upper right corner, there is a selection box where you can choose to work on the English or French survey.
 
The Pension Experience Subcommittee (PES) of the CIA Research Committee thanks all those who participated in the webcast on September 19, and those who have made submissions in response to the draft report on Canadian pensioners’ mortality released on July 31. The PES received questions and submissions from over 30 different respondents. Substantive comments were made in respect of a number of categories, including:
  • The heterogeneity of the research data and the possibility of bias;
  • The shape and magnitude of mortality improvement rates; and
  • The appropriateness and application of pension size adjustments.
The PES is reviewing these valuable and constructive comments and will assess how they might affect the results and the contents of our final report. Based on the comments received and additional information available, please be aware that the final numbers in the mortality tables and improvement scales will be different from those in our draft, and some differences may be significant. We will make every effort to finalize our report as soon as possible, but it may not be available for release before early 2014.

The PES will keep stakeholders apprised of our progress and will provide an update at the Pension Seminar on November 12.
 
Kenneth Murden

Kenneth Murden, who has died at the age of 94, became a Fellow of the UK Institute of Actuaries in 1951, four years after graduating from Cambridge University with a Bachelor of Arts degree. He later emigrated to Canada, where his career included work at Holland Life Insurance Society and serving as vice-president of GBB Associates, both in Toronto, ON. At various times he was Secretary of the Institute of Actuaries Students Society, the American Statistical Association, the Royal Statistical Society, and the Canadian Operational Research Society. He also served on the CIA's Younger Actuaries Committee.
 
THIS MONTH'S PUBLICATIONS

October's published documents:

AF1013 Application form for enrolment in the Institute (October 16, 2013 to January 15, 2014)
RFPT100LCOI Request for Proposal: Term to 100 and UL LCOI Lapse Experience Studies
213088 CIA Travel Policy for Volunteers and Staff (October 2013)
RFPHE Request for Proposals: Changing Health Expectancy and North American Insurance Organizations/Governmental Programs
MANLTRNS Letter to the Nova Scotia Chair, Bench Rules Committee: Mandates Discount Rates
213086 Highlights of CIA Board Meeting Nº77 Held on Wednesday September 25, 2013
ORG1013 Organization of the CIA Head Office
PCA053 Practice Council Agenda - Meeting nº 053 (October 1, 2013)

October's tweets from @CIA_Actuaries:

Expert Jack Mintz: "CPP reform will take place but not without first facing government resistance" (in French) http://tinyurl.com/m2uzzy9

The CIA frequently asks for proposals to complete high-profile research projects. Check out our latest requests http://tinyurl.com/ciaica296

Latest actuarial report from @OSFIBSIF on the RCMP Pension Plan has been tabled in Parliament http://tinyurl.com/ciaica295

CIA member Rob Brown makes keynote speech, covering old age support ratios, at EAAC http://tinyurl.com/ciaica294

CIA members Nigel Branker, Malcolm Hamilton, Michael Millns highlight limitations of company pension plans http://tinyurl.com/ciaica293

@FSCOTweets issues Usage-Based Automobile Insurance Pricing in Ontario Bulletin http://tinyurl.com/ciaica292

CIA resident actuary Chris Fievoli was quoted in the @financialpost on re-evaluation of cancer survivors' insurance http://tinyurl.com/ciaica291

Canada remains sixth in latest Melbourne Mercer Global Pension Index. Retirement income system "has sound structure" http://tinyurl.com/ciaica290

CIA member Rob Brown: PEI proposal to amend CPP "is carefully thought out and deserves serious consideration" http://tinyurl.com/ciaica289

Sign up today for the CIA Investment Seminar, Nov. 13 in Toronto. Unmissable sessions and much more http://tinyurl.com/ciaica288

Don’t miss the CIA Pension Seminar, Nov. 12 in Toronto, including futurist Richard Worzel. Registration is now open http://tinyurl.com/ciaica287

"Digital business incompetence" will cause 25% of businesses to lose competitive ranking by 2017, says Gartner http://tinyurl.com/ciaica286

Strategic risk is top priority for major companies: 81% explicitly manage it, says report from Deloitte and Forbes http://tinyurl.com/ciaica285

European Commission postpones application date of the Solvency II Directive to January 1, 2016 http://tinyurl.com/ciaica284

CIA member Fred Vettese on OAS proposals: make changes for fairness and tax value, not for sustainability concerns http://tinyurl.com/ciaica283

CIA member Gary Walters on disability coverage: raising max. age for everyone over 65 would have "significant" cost http://tinyurl.com/ciaica282

CIA members Barbara Sanders and Karen Hall offer expert comments in @globeandmail on Canada's "pension crunch" http://tinyurl.com/ciaica281

Actuarial analysis highlights the bleak financial future that may face severely disabled veterans: via Vancouver Sun http://tinyurl.com/ciaica280

Final estimates of 2011 Census coverage now available from StatsCan http://tinyurl.com/ciaica279

@StatCan_eng releases new Canadian life tables for 2008-2010 and 2009-2011 http://tinyurl.com/ciaica278

@OSFIBSIF releases Memorandum for the Actuary (P&C) 2013 http://tinyurl.com/ciaica277

 
Calendar of Events
CIA Pension Seminar - Toronto - November 12, 2013

CIA Investment Seminar - Toronto - November 13, 2013

Here are the top THREE reasons you don’t want to miss the CIA Investment and Pension Seminar in Toronto:

  1. The CIA Investment Seminar keynote address will be delivered by one of Canada's most influential economists. Listen to her position on macro-economic policy and the possible implications for financial markets, including long-term interest rates.
  2. Leading futurist Richard Worzel brings us "What’s Next for Humanity? The Future, and Our Place in It" at the CIA Pension Seminar.
  3. More than six hours of continuing professional development and networking opportunities per seminar to meet ­leaders in your field.

CIA 2014 Practice Education Course – Ottawa – June 1–4, 2014

CIA 2014 Annual Meeting – Vancouver – June 18–19, 2014

CIA 2014 Seminar for the Appointed Actuary – Toronto – September 22–23, 2014

CIA 2014 Pension Seminar – Montréal – November 4, 2014

CIA 2014 Investment Seminar – Montréal – November 5, 2014

CIA 2015 Annual Meeting – Ottawa – June 17–18, 2015

 
Board and Council Updates
Board

Steven Easson has been appointed Board liaison to the Joint Risk Management Section, effective immediately.

The Board has proposed the appointment of Michel Giguère as its representative on the board of the Actuarial Foundation of Canada, effective immediately, for a period of one year.

Marcia Gallos left the Member Services Council as of September 1, 2013, having completed more than three years as a member.

Practice Council

The following people have been appointed to the (sub)committees listed below:

  • Property and Casualty Financial Reporting (PCFRC): Nathalie Lavigne, effective September 25, 2013;
  • Pension Plan Financial Reporting (PPFRC): Manuel Monteiro (Chair), effective August 1, 2013, and Gus van Helden, effective September 1, 2013;
  • Life Insurance Financial Reporting (CLIFR): Michael Hayes, effective October 1, 2013;
  • CLIFR subcommittees:
  • Drafting—Julia Viinikka (Chair), Lesley Thomson, Wendy Yu, Martin Labelle, and Rebecca Rycroft;
  • Interest Rates CalibrationDavid Campbell, Sara Lang, Tracy Xing, Chong Zheng, Martin Labelle, André Veilleux, Brennan Kennedy, Nadine Gorsky, and Wally Bridel (Chair);
  • Fixed-Income CalibrationAlexis Gerbeau (Chair), Lynn Guo, Sara Lang, Martin Labelle, Brock McEwen, Ricardo Mitchell, Steven Prince, Jim Snell, Dean Stamp, Maxime Turgeon-Rhéaume, Tracy Xing, and Chong Zheng;
  • Prescribed ScenariosStephen Sullivan (Chair), Edward Gibson, Shahab Mostafavi, Saul Gercowsky, Simran Bhullar, Joan Strothard, Wally Bridel, Wes Foerster, Diana Pisanu, Sunny Oh, and Angela Jonkhans;
  • Equity Calibration—Alexis Gerbeau (Chair), Lynn Guo, Martin Labelle, Ricardo Mitchell, Christian-Marc Panneton, Steven Prince, Jim Snell, Linxin Zhang, and Chong Zheng; and
  • Mortality and Morbidity Improvements on A&S Business—Alison Begley, Emile Elefteriadis, Neil Duffy (Chair), and Michael Correa.
  • Standards of Practice Editing: Anne Vincent and François Vincent;
  • Risk Management and Capital Requirements (CRMCR): Guillaume Benoit, Patrick Douville, Jessi Gaulin, Pierre Laurin, Diana Pisanu, and Jay Zhong.

The Task Force on the Fair Market Value (FMV) of Life Insurance Policies for Ownership Transfer and Related Purposes has been disbanded with thanks, effective October 1, 2013.

For information only:

The following people have resigned from the committees named below:

  • CLIFR: Alison Begley;
  • CRMCR: Michel Dionne, Stephanie Greer, Mario Robitaille, and Julia Viinikka;
  • PPFRC: Dylan Moser; and
  • PCFRC: Andrea Sherry.