CIA (e)Bulletin/(e)Bulletin de l'ICA
CIA (e)Bulletin/(e)Bulletin de l'ICA
Volume 1, Number 9, June 2009
Canadian Institute of Actuaries/Institut canadien des
actuaires
YOUR INSTITUTE
Your Institute
By Bob Howard, FCIA
We are continuing the practice of having a column from the President in the eBulletin . I have chosen to entitle my column, "Your Institute." I did this for two
reasons. First, it is a reminder to me that my presidency is not fundamentally
about me but about you, the members of the Institute; my role is to serve you
and to move your Institute forward. Second, it is a reminder to you that the
Institute is yours; it exists to support your work, and it needs your involvement
to be effective.
Before I talk about how I will serve you the members, as President, it is
appropriate to comment on my predecessor, Mike Hale, who has done such a
great job that he's made it tough for me to look good.
There are two of Mike's achievements, in particular, that seem little short of
miraculous. The first is our Future Education Model, to recognize university
education as an alternative to examination for some of the preliminary
exams. The second is the establishment of a common global Enterprise Risk
Management (ERM) designation. Mike saw them as very important for the future
of the actuarial profession, not just in Canada, but worldwide. In the last couple
of months, such a strong spirit of co-operation has developed in all the
organizations involved that we have secured commitments to proceed on both
of these initiatives. I believe that we would not be here, not even close, without
the positive influence that Mike Hale brought to the negotiations.
Several people have asked what I hope to achieve as President. The first and
best answer is that I came to serve the needs of the members, not to get them
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The second answer is that we are currently working on a revised Strategic Plan,
which will set the agenda for several years to come. It also seems pretty clear to
me that three areas among our top priorities are pension reform, implementing
International Financial Reporting Standards (IFRS) and establishing ERM as an
actuarial specialty. I expect these to figure prominently in the Strategic Plan and
until it is finalized, these are good things to keep in the forefront.
I want to say clearly and emphatically that actuaries did not engineer the
financial crisis. But the financial crisis has highlighted the contribution that
actuaries can make and has elevated the concerns that we were already
expressing.
The financial crisis has done nothing to invalidate ERM. What it has done is to
show the difference between ERM and Risk Management (RM). The "E" must
stand for Enterprise because management of the risk of a subset of the
enterprise, no matter how good, can still leave the enterprise exposed to a risk
that could wipe it out. The financial crisis has shown that actuaries have the
most robust approach to ERM. The ERM body of knowledge is still developing,
but clearly the development of a global ERM credential could not come at a
better time.
IFRS has been developed by the International Accounting Standards Board
and founded on a number of accounting principles applied consistently to all
enterprises. Actuaries have been concerned from the start that the long-term
nature of life insurance and pensions did not fit well with the same principles
used for grocery stores and publishing companies. The financial crisis has led to
widespread doubts about fair value and the disconnection between assets and
liabilities. Actuaries can't make volatility in earnings go away, but we can offer
actuarial principles for financial reporting which result in appropriate
volatility. Because of the financial crisis we may find more willingness to
consider our alternatives.
During the bull market, Defined Contribution (DC) pensions looked like they
could deliver more for less. The market meltdown has shown DC pensions to
have an inherent risk too large for most individuals to be able to bear. It is clear
to people now that over the long term some will win and some will lose, but
who wants to gamble on such a large element of their retirement savings?
Defined Benefit pensions remain significantly preferable for the public. We knew
that before the financial crisis. Now everyone knows it.
Your Board has an extra challenge in dealing with pension issues. There are no
elected Board members whose primary practice area is pensions. For three
consecutive elections we have had no pension actuaries elected. There may be
a perception that the Board is uninterested in pensions at a critical time for
pensions. In reality, we are very concerned about pensions and at our June
Board meeting we discussed how we can ensure that we have the expertise we
need to be effective on pensions.
The Board agreed that the best approach is one that we have used often in the
past, and that is to appoint a task force of qualified individuals whenever we
need expertise that the Board lacks. We currently have a task force to
coordinate a number of projects on pensions. It, in turn, is advised by some
task forces that it has appointed and by some current committees. For the next
year we are likely to do this more.
The Board is keenly aware of its obligation to represent the needs and interests
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of the profession as a whole and of each of the practice areas. We are
convinced of the importance of pension matters and we will ensure that the
pension perspective is brought to the Board. That is our commitment to you.
This is a time in which the actuarial profession is facing unique challenges, and
those challenges give us unique opportunities. We have a chance to influence
the direction of pension reform to improve the retirement security of
Canadians. We have a chance to make IFRS better fit the long-term obligations
that we support. We have a chance to improve risk management not just within
Canada but also around the world. We must make the most of these glorious
opportunities, and as we work together on them, we will.
These things will be priorities for Your Institute.
If you have any questions or comments that you would like to share, please
contact me at [email protected].
Bob Howard, FCIA, is the President of the Canadian Institute of
Actuaries.
SPOTLIGHT
3-Letter Words
By Amy Pun, FCIA
One of the things that Bob Howard pointed out when he was in Vancouver a
few weeks ago to meet with the Vancouver Actuary Club, was that the CIA is an
organization fond of using 3-letter words. Actually, he says "acronyms." Since he
pointed that out, I have been noticing a lot of these 3-letter words that we
constantly throw around, at least at the Council and Board meetings. In fact, a
couple of months ago, we found ourselves trying to name a committee so that
it would make a memorable acronym for the committee.
Here is a quiz to see how many of the 3-letter words you recognize:
1.
2.
3.
4.
5.
6.
7.
8.
CIA
CPC
CPD
EEC
FEM
MSC
PEC
XRX
So how many of the above do you recognize?
Less than 2 – Hmm...
Less than 5 –You should read more of the CIA publications, or better yet,
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consider volunteering for one of the various CIA committees.
More than 5 – Good for you! If you are not already a volunteer, you
definitely seem interested in CIA business and really should volunteer.
How much do you know about the various CIA initiatives?
By volunteering on a number of CIA committees and the EEC, I have become
much more aware of the things that the CIA does. We are all busy professionals
who have to deal with an enormous amount of information that comes across
our desks each day. It is easy to ignore the announcements and bulletins that
the CIA publishes to inform us about its various initiatives. And frankly, many of
these initiatives do not have a direct impact on our day-to-day professional
work!
Whether we like it or not, the public does view the CIA as our professional
organization. The CIA's public positions and press releases will be viewed by the
public as the profession's viewpoint and some of the initiatives that the CIA is
working on will have a direct impact on the future of our profession.
It is definitely a two-way street. I think the CIA needs to figure out effective
ways of engaging the membership. As a volunteer, I have come in contact with
many actuaries who take ownership of the professional organization that we
belong to and devote much energy to making the CIA relevant to its members
and to Canadians. But these members represent a small portion of the
membership. The vast majority of members would typically pay attention to
changes to the CIA Standards and Rules and how they might impact their
professional practice, but would not necessarily have enough time to care about
research or public positions or issues like the XRX or FEM initiatives.
I wonder, as I complete my term as the chair of the EEC, whether I will
continue to pay attention to the "peripheral" things that the CIA is developing
that may be important to the profession but do not impact my day-to-day
existence as an actuary. Or will I, too, tune out these things. Having worked on
some of these initiatives, I think my outlook will change and I will be much more
in tune with the CIA initiatives whether I am directly involved or not.
I believe that participating as a volunteer on a CIA committee is the easiest way
for a member to gain an appreciation for the scope of the CIA. While it does
take some time and energy, it is a very rewarding experience. I also sincerely
hope that the CIA will devote more energy into developing the membership's
sense of belonging and ownership of their professional Institute.
Answers to the Quiz:
1.
1.
1. CIA - Obviously stands for the Canadian Institute of Actuaries. I hope you
at least know this one!
2. CPC - Stands for the Committee on Professional Conduct. This is the
committee that reviews complaints and applies the disciplinary process.
3. CPD - Stands for Continuing Professional Development. We should all be
familiar with this term since most of us have completed our CPD filing
earlier this year. It is encouraging to see that very few members have
failed to submit the required information. The Secretariat and the
Committee on Continuing Education have done an excellent job in building
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4.
5.
6.
7.
8.
the filing and recording tools and assisting members in dealing with their
filing requirements.
EEC - Stands for the Eligibility and Education Council. This council deals
with all things related to eligibility to join the CIA as well as education
matters (before Fellowship and continuing education for Fellows).
FEM - Stands for Future Education Model. This is an initiative to utilize
accredited universities to provide technical actuarial education. More
information on this initiative will be coming later this year or early next
year.
MSC - Stands for Member Services Council. This council deals with
research, volunteer services and CIA public positions and consultations.
PEC - Stands for the Practice Education Course. You will probably know
this term if you became a Fellow after 1999. Passing the PEC is an
eligibility requirement for Fellowship.
XRX - I don't think this is a direct acronym for a term, and it may evolve
into a different name. XRX is the current name for the global ERM
designation under discussion with actuarial organizations around the world.
Amy Pun, BMath, FCIA, FSA is the Chairperson of the Eligibility and
Education Council.
INSTITUTE NEWS
CIA Election Results
CIA Board Discontinues General Meeting
At its meeting on March 18, 2009, the Board reviewed the recommendations of
the Meetings Task Force and passed a motion to eliminate the General Meeting,
starting with the fall 2010 event.
To help the CIA fulfill its responsibility to provide CPD opportunities, the task
force also found support for its proposals that more webcasts be organized to
supplement the formal meetings and that all sessions be recorded and made
available, along with their presentation materials, shortly after the meetings.
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The task force was convened by the Eligibility and Education Council in late
2008. Its mandate was to "examine the frequency, content and timing of
meetings to ensure the effective delivery of continuing education to members,
bearing in mind governance and efficiency issues as well as alternative delivery
mechanisms."
The task force was chaired by Amy Pun (Chairperson of the Eligibility and
Education Council) and had representation from the organizing committees of
the various specialty seminars, the Annual and General Meeting Organizing
Committee, the Eligibility and Education Council, the Continuing Education
Committee and the CIA Secretariat.
Following extensive discussions, the task force decided on two options:
1. Eliminate all or some of the specialty meetings and combine them as
tracks of the Annual or General Meetings, or hold them the day before or
the day after the Annual or General Meetings.
2. Maintain the specialty seminars and eliminate the general meeting.
After careful review, the Meetings Task Force selected option 2 for the following
reasons: a) the CIA bylaws call only for an Annual General Meeting to be held in
May or June; b) it is important to maintain some of the specialty seminars for
certain practice areas; and c) eliminating one physical meeting each year
demonstrates that the CIA is tuned into the current business reality that most
firms want to minimize travel expenses of their employees and make more use
of effective and efficient technological options for such gatherings.
According to Amy Pun, "Considering the vast amount of time that volunteers
and staff put into these meetings, the difficulties in finding appropriate topics
and speakers during the summer and the current business concerns with travel,
it was obvious that maintaining the status quo was not an option. I believe that
the successes we have had with recent webcasts really opened the door to an
excellent flexible solution to a difficult issue."
The Task Force also discussed whether the elimination of the fall general
meeting would present an opportunity to change the timing of some of the
specialty seminars. As a result of the discussion, the timing of the Pension
Seminar may be changed from April to November, starting in 2010.
Working in Enterprise Risk Management
An interview with Kathryn Hyland, FSA, FCIA, MAAA, CFA
Kathryn Hyland is Senior Vice President, Americas Life Risk Management with
Swiss Re Canada. Kathryn has had the benefit of having a broad experience in
many different facets of the insurance business, in several different countries.
This background has helped her to develop a deep understanding of the
insurance industry and the many interactions between different areas of the
business. Says Kathryn, "I find my current work in Enterprise Risk Management
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(ERM) allows me to draw on much of my past experience, in order to assess
and understand the various types of risks to which the organization is exposed."
According to Kathryn, there are three main "pillars" supporting the effective
practice of ERM in an organization. First, there needs to be an effective risk
governance structure which shares responsibility among the board of directors,
executive management of the organization and the Chief Risk Officer (CRO).
This includes the articulation of clearly defined roles and responsibilities for risk
taking and for risk management. It also requires sound and well-documented
standards for operating, reporting and monitoring of risk limits and control
procedures. Finally, it requires an appropriate control environment, including
regulatory risk compliance and internal and external auditing of processes and
results.
The second "pillar" is quantitative risk management. This includes such diverse
components as sound valuation, accurate risk measurement, quantitative
monitoring of risk exposures against risk limits and monitoring of capital
adequacy and liquidity. Increasingly, effective quantitative risk management
requires that the company develop a consistent measure of economic capital
and use this to drive appropriate risk decisions and rewards throughout the
organization.
Last, but not least, it is critical to have appropriate risk reporting and disclosure
to both internal and external audiences. These reports need to appropriately
disclose key risks, along with financial impacts and evaluations. This presumes a
strong system of quantification, review and validation.
When it comes to actuarial involvement in ERM, Kathryn says, "Actuaries can
play a key leadership role in the modeling and analysis of this new risk
framework. Our training and background makes us sensitive to various types
and sources of current or potential risks, and we are ideally suited to analyze
and quantify current and potential exposures. I believe that the development of
economic capital frameworks and associated metrics certainly benefit from the
talents and capabilities of experienced actuaries."
Kathryn Hyland, FCIA, FSA, MAAA, CFA, is a member of the CIA's
Enterprise Risk Management Applications Committee.
ANNOUNCEMENTS
Announcements
Notice of Charges and Referral to a Disciplinary Tribunal
The Committee on Professional Conduct has filed charges against a member of
the Canadian Institute of Actuaries. This charge has been referred to a
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disciplinary tribunal.
Pursuant to new Bylaw 20.04(3.1) (in force since July 1, 2005), a notice of the
filing of charges and referral of the charges to a disciplinary tribunal of the
Canadian Institute of Actuaries is hereby provided to inform members of the
Institute and the public about a current disciplinary case involving a Member of
the Institute.
In accordance with the Bylaw, this notice includes the charge, the name and the
principal practice address of the member in question, and the specialty area in
which the Member practises, if any. The notice also includes a statement
advising that the Member has been charged, but that the disciplinary tribunal
hearing has not yet been held and its decision not yet rendered.
For more information on this notice, please access the link below.
Link: www.actuaries.ca/members/publications/2009/209047.pdf
Contact with Questions: Robert Smithen, Chairperson, Committee on
Professional Conduct at [email protected]
Submission to the Régie des rentes du Québec
The Canadian Institute of Actuaries (CIA) provided its feedback on the draft
regulation to amend the regulation respecting supplemental pension plans
published on April 1, 2009.
Link: www.actuaries.ca/members/publications/2009/209048e.pdf
Contact with Questions: Jacques Lafrance, member, CIA Board, at
[email protected]
CIA Strategic Objectives for 2010-2015
At its meeting on May 12, 2009, the CIA Board approved a process to develop a
Strategic Plan for 2010-2015. The Board also created the Strategic Planning
Steering Committee, chaired by President Bob Howard, to lead the process. As
part of the process, the steering committee is seeking stakeholder input during
the month of June from both members and selected external individuals. For
member input, the steering committee has randomly selected individuals for
interviews, but the steering committee also welcomes input from all members. If
you would like to share your views with the steering committee on the CIA's
2010-2015 strategic objectives, please contact Daniel Lapointe, CIA Executive
Director, at [email protected] who will forward a questionnaire
template for you to complete.
Exposure Draft for Revised Standards of Practice – Practice-Specific
Standards for Insurers, Subsection 2340 – Foreign Exchange
This exposure draft on foreign exchange was approved by the Actuarial
Standards Board (ASB) on April 27, 2009.
Under the current Standards of Practice, the actuary is required to assume a
continuation of the foreign exchange rates at the balance sheet date. The
Standards of Practice need to be revised to reflect the fact that there may be
significant interest rate differentials between different currencies. In such a
case, the market is expecting one currency to appreciate (or depreciate) relative
to the other currency (otherwise, if the foreign exchange rates were expected to
remain fixed at the foreign exchange rates at the balance sheet date, this would
provide an arbitrage opportunity to invest in the currency yielding the highest
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return).
Link: www.actuaries.ca/members/publications/2009/209046e.pdf
Contact with Questions: B. Dale Mathews, Chairperson, Committee on Life
Insurance Financial Reporting, at [email protected].
2009 Seminar for the Appointed Actuary – Mark Your Calendars!
The Canadian Institute of Actuaries' Seminar for the Appointed Actuary will take
place on September 17 and 18, 2009 at the Sheraton Parkway Toronto North
Hotel & Conference Centre.
Further details will be posted as program information becomes available.
Contact with Questions: Nancy Jenkinson at [email protected];
telephone: 613-236-8196 ext. 104; fax: 613-233-4552
Discipline Notices – Notice of Decision and Reprimand
Discipline notices are being provided to inform all members of the institute
about the status of charges filed against two separate members and of the
decision of a disciplinary tribunal hearing held on March 12, 2009.
Links:
www.actuaries.ca/members/publications/2009/209038.pdf
www.actuaries.ca/members/publications/2009/209039.pdf
Contact with Questions: Robert Smithen, Chairperson, Committee on
Professional Conduct at [email protected]
CALENDAR OF EVENTS
Calendar of Events
Seminar for the
Appointed Actuary
September
17-18, 2009
General Meeting
November 19- Ottawa,
20, 2009
ON
Sheraton Parkway
Toronto North Hotel
link
The Westin Ottawa
link
CIA Annual Meeting June 29-30,
2010
Vancouver, The Hyatt Regency
BC
link
Seminar for the
Appointed Actuary
Montréal,
QC
Le Centre Sheraton
Hotel
link
Ottawa,
ON
The Westin Ottawa
link
September
23-24, 2010
CIA Annual Meeting June 29-30,
2011
Richmond
Hill, ON
Additional information on all CIA meetings can be obtained at:
www.actuaries.ca/meetings/calendar_of_meetings_e.cfm or contact Nancy Jenkinson at 613.236.8196.104,
[email protected].
BOARD AND COUNCIL UPDATES
Board and Council Updates
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Board
The Board approved the membership of the Eligibility and Education
Council for 2009-2010 as follows: Barb Addie, Dave Dickson (ViceChairperson), Neville Henderson, Jim Lewis, David Oakden, Amy Pun
(Chairperson) and Mike Smith. Shiraz Bharmal, Josephine Marks, Dean
Stamp finished their terms effective June 30, 2009. The new member
being approved is Neville Henderson.
The Board approved the membership of the Member Services Council for
2009-2010 as follows: Richard Bisson, John Dark, Bruce Langstroth, MarcAndré Melançon, Catherine Shum-Adams, Michel St-Germain
(Chairperson), Christopher Townsend and Gary Walters (ViceChairperson). Scott McGaire and Jacques Lafrance finished their terms
effective June 30, 2009. Julie Chambers is taking a leave until Feb 2010.
The new member being approved is Michel St-Germain (Chairperson).
The Board approved the membership of the Committee on Professional
Conduct for 2009-2010 as follows: Bob Baldwin, Wayne Berney (ViceChairperson), Douglas Brooks, Randy Dutka (Secretary), Luc Farmer,
Normand Gendron, Jessie Shaw Gmeiner, Mike Hale ( ex officio ), Danielle
Lamarche, Mike Lombardi, Jim McCarter, Liam McFarlane, Jim Murta,
Michel St-Germain, John Tarrel, William Weiland (Chairperson) and Ashley
Witts. Conrad Ferguson, Brian FitzGerald and Rob Smithen finished their
terms effective June 30, 2009. Jim Murta finished his term as ex officio
effective June 30, 2009 and commences his term as a member. Mike Hale
commences his term as ex officio member.
In accordance with Bylaw 9.01(2), the Tribunal Panel was appointed for
2009-2010 as follows: Nicholas Bauer, Shiraz Bharmal (Chairperson),
Richard Bisson, James Brierley, Martin J. K. Brown, Marc Fernet, Neville S.
Henderson, Daniel Murphy, J. Edward Nixon (Vice-Chairperson), Owen
O'Neil, James G. Paterson, Philip Pothier, Allan Shapira, William Solomon
and Hugh White. A. Douglas Poapst, Louis-Georges Simard, Donald Smith
and Alain Thibault finished their terms effective June 30, 2009. The new
members being approved are Martin J. K. Brown, Neville S. Henderson,
James G. Paterson and William Solomon.
The Board approved the appointment of Allan Edwards as ViceChairperson of the Elections Committee.
The Board approved the appointment of Micheline Dionne to the Strategic
Planning Steering Committee.
The Board approved the membership of the Practice Council for 2009-2010
as follows: Steven Easson, Tyrone Faulds (Chairperson), Jacqueline
Friedland, Derek Gerard, Patrick Johnston, Marie-Hélène Malenfant, Ralph
Ovsec, Daniel Pellerin, Phil Rivard (Vice-chairperson), Josephine Robinson,
Thomas Schinbein and Lesley Thomson. Claudette Cantin and Jacques
Tremblay finished their terms effective June 30, 2009. The new members
being approved are Jacqueline Friedland and Derek Gerard.
The Board approved the appointment of Hugh White as the CIA liaison to
the CAS Board, effective July 1, 2009. Jim Christie finished his term as the
liaison.
Eligibility and Education Council (EEC)
Kamran Quavi and David Neaven were appointed as members of the
Organizing Committee for the Joint Appointed Actuary Seminar.
Jacques Tremblay resigned as a member of the Organizing Committee for
the Joint Appointed Actuary Seminar.
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