American Academy of Actuaries

599 Pages·2008·26.2 MB·English

AMERICAN ACADEMY
OF ACTUARIES
1984 YEARBOOK
When we build, let it be such work as our des-
cendants will thank usfor. and let us think, as we
lay stone, on stone, that the time will come, when
men will say as they look upon the labor and the
substance,
"See! this ourfathers didfor us."
,J(1F3N RUSKIN
AMERICAN ACADEMY
OF ACTUARIES
1984 YEARBOOK
PUBLISHED BYTHE ACADEMY
Headquarters MembershipAdministration
1835KStreet. N.W. 500Parlr Boulevard
Washington, D.C. 20006 Itasca. Filinofs60143
202/223-8196 312/773-4204
202/223-8316
Listings as of
NOVEMBER 1, 1983
MApEINTHEUNMCD$TATF,SOFAMEAICA
TABLE OF CONTENTS
HISTORY ............................................................ 2
STATEMENT OF PURPOSE . .. . ... . . .. .. .. .... ... . . .. ... . . . ... .... . .. .. ... 6
BOARD OF DIRECTORS. .... ........... . ... . ... . .. . .... ... ... . ... .... ... . . 7
ACADEMY HF.ADQUARTERSAND STAFF . .... .... ... .. . . .. .. ... . . . . ... . . . . .. 8
ORGANIZATION CHART... ......... . .. .... .... .... . ... . .. . ... . .. ... .... . 11
COMMITI'EES............. ............................................. 12
COMMI'I'CEE APPOINTMENT GUIDELIN6S... . ... ... .... .. . . ... .. .. . ... ... . 33
PAST OFFICERS .........................................................34
1984 MEET3NC,S OF THE ACADEMY . . ....... .... .. .. .... ... .... .... .. . .. 36
MEMBERSHIP STATISTICS . .... ..... . .. .... .... .... .... . .. .... . ...... . ... .37
MEMBERSHIP, hIOVEMBER 1, 1983 .................... ........ ....... .. 39
BYlAWS .............................................................. 441
PRESCRIBED EXAIvIINATIONS.. .... ... . .... .... ... ... .. ... ... ... . .... .. . 451
QUALIFICATION STANDARDS.. . ..... ..... .... ... ... . ... . ... .. .. ..... .. . 452
STANDARDSOF PROFESSIONAL CONDUCT AND PRACTICE. ... ... .... ... . 456
GUIDESTO PROFESSIONAL CONDUCT... ... . ... . .... .. .. .. . .. .. ... .. . .. 1360
OPINIONSAS TO PROFESSIONAL CONDUCT . . ... ... . ... . ... ... .. .. ... .. 463
FINANCIAL REPORTING RECOMMENDATIONS
AND INTERPRETATIONS.. .... ..... ... .. .. .... ... . ... .... ... .. .. ... .. . 477
PENSION PLAN RECOMMENDATIONS AND FNTERPRETATIONS....... ..... 532
DIVIDENI) $ECOMMENDATIONS AND INTERPRETATIONS . . ... ... . ... ... . 564
GUIDELINES FOR MAKING PUBLIC STATEMENTS ... .... . .. .. .. ... .. .. ... 576
APPLICATION FOR ADMISSION . .... .... ... . .. . .... .... ... ... ....... ... 581
DuEs.............. ............................. 582
OTHER ACTUARIAL ORGANIZATIONS . . .......... .... ... .... ... ... .... . 583
AcrUARInI. CLClas ............................... ..:.. .... ...... 586
1
HISTORY OF THE
AMERICAN ACADEMY OF ACTUARIES
It was on October 25, 1965 that the American Academy ofActuaries was
organized as an unincorporated association to serve the actuarial profession
intheUnitedStates.The correspondingnationalbodyinCanada, theCanadian
Institute ofActuaries, had been incorporated earlier in the same year.
For many years the profession in North America had consisted of four
hodies: the Casualty Actuarial Society, the Conference ofActuaries in Public
Practice, the Fraternal Actuarial Association, and the Society ofActuaries. In
1964, the members of those four bodies, recognizing the need for a single
body to represent actuaries ofall specialties, approved formation ofan all•
inclusive organization ofqualified United States actuaries.
The original plan had been to obtain a federal charter as the first step
toward seeking legalrecognition ofthe profession. When it became apparent
that this could not be promptly obtained, the Academy was dissolved as an
unincorporated association and, onApril 29, 1966, was reorganized as acor-
poration under the Illinois General Not For Profit Corporation Act. Henry F.
Rood, whose presidential address to the Society of Actuaries in 1958 had
voiced the first formal proposal for a national body, was elected its first
President.
In September 1980 the Fraternal Actuarial Association, one of the four
founding organizations, went out of existence. The dissolution resolution
indicated that the needs offraternal actuaries have been increasingly met by
other actuarial organizations and that the National Fraternal Congress now
provides a forum for fraternal actuaries.
A new statement of purpose for the Academy was adopted by the Board
of Directors on December 9, 1981 following an exposure process with the
membership and extensive deliberations by the Board.
MEmtBERSHip RFQUitmrrENrs. Academy membership is intended to serve as
the hallmark of a qualified actuary in the United States.
All residents who were Fellows (or the equivalent) of the four existing
bodies on October 25, 1965, were automatically enrolled as Academy mem-
bers, subject to their indicated assent by paying the dues. The number of
charter members was 1,427.
The Academy immediately set about making its existence known to com-
petent actuaries not eligible as charter members. It was required that any
suchactuary demonstrate to theAdmissionsCommittee adequate knowledge
and skills. Manywere admittedbythis route, someafterpassingspecial proc•
tored examinations. A requirement of seven years of responsible actuarial
experience(five yearsfor Fellows by examination ofthe existingbodies)was
imposed.
AfterJanuary 1, 1970, educational requirements were gradually increased
2
History ofthe.4mericcan Academy ofActuaries 3
until 1976. InJanuary 1976, an amendment to theBylawscreateda newnon-
voting class ofmembership designated Affiliate ofthe American Academyof
Actuaries. This class consisted ofnon-members ofthe Academy who became
Enrolled Actuaries under the Employee Retirement Income Security Act of
1974 (ERISA), subject to acceptance of their applications by the Academy.
Subsequently, injanuary 1979, theBylawswere further amended toeliminate
the distinction betweenAffiliates and Members of the American Academy of
Actuaries, thereby creating one class ofmembership designated Members of
theAmericanAcademyofActuaries, aswellassettingtheexperience required
atthreeyearsofresponsible actuarialwork. Subsequently, theAcademyBoard
set the basic educational requirement at Associateship in the Casualty Actu-
arialSociety ortheSociety ofActuaries orstatus asanEnrolledActuaryunder
ERISA.
Non-residents ofthe United States can be admitted to membership ifthey
meet the Academy's educational and experience standards, can demonstrate
familiarity with United States actuarial practices, and have a need to perform
actuarial duties in the United States-
PROFESSIONAt. CoNDucr. Guides to Professional Conduct were first issued
in December 1965, and have since been amplified and supplemented by
Opinions. These Guides require the high standard of ethics and responsible
performance expected ofprofessionals; the Opinions aim to assist the prac-
ticing actuary in dealing with particular situations that arise. The Board of
Directors is assisted by separate committees in this Cield. One of these, the
Committee onGuidesto ProfessionalConduct keep theGuides andOpinions
current and appropriate; the other, the Committee on Discipline, considers
questions that arise about the conduct ofany individual member.
LEGAL RECOGNI'tnON: In December 1966, the NationalAssociation ofinsur-
ance Commissioners adopted a resolution supporting recognized standards
ofactuarial competence and conduct and urging each commissioner to sup-
port the efforts ofthe Academy to on oR'iciat recognition. Many statesnow
have regulations that recognize Academy membership as qualification for
signing insurance company annualstatements; some.have corresponding rec-
ognition for public employee retirement systems. The first state to act was
Indiana,whichprovided bya 1968 lawforcertificationofactuariesby astate
board. The general pattern followed in other states has been issuance of
administrative orders or regulations.
In 1975 the responsibility expected ofactuarieswas spelled out by a new
requirement that the actuary who signs a life insurance company annual
statement express anopinion on the actuarial elements including an opinion
ontheadequacyofreserves. TheAcademyrespondedwithRecommendations
to the profession on how this responsibility should be met.
In 1980 a similar requirement was added to the property and liability
insurance company annual statement, except that the requirement is at the
discretion of the domiciliary insurance commissioner. Again the Academy
responded with appropriate Recommendations to the profession.
In 1983 astatemenr ofactuarial opinionwas added to the annual statement
4 History oftheAmericanAcademy ofActuaries
blanks for both health service corporations and health maintenance organiza-
tions.
In the pension field the 1974 legislation, ERISA, has established extensive
and specific standards for actuarial reports, for disclosure and fiduciary rela-
tionsh'ips, and for the qualifications ofactuaries inpension work.
EXPRESSIONS OF ,PxotIEssrorrnt. Ornvtorr. The first major influence of the
Academybeyondtheboundariesoftheprofessionwasinitsresponse, beginning
in 1972, tothe auditguideforstock lifeinsurancecompaniesbytheAmerican
InstituteofCertified Public Accountants. This cooperative endeavorhas led to
regular and close association between the actuarialand accounting professions.
The Academy is steadily promulgating Recommendations, and Interpreta-
tionsthereof, for use by actuaries inpreparing financial reports for insurance
companies and pension plans and in the determination of dividends under
individual life insurance policies. The Guides to Professional Conduct and
related Opinionsrequire that actuaries take these pronouncements into con-
sideration and be prepared to support use of assumptions or methods that
vary from them.
JOINTAcrrvrnmofACTUARIAL BontES. The North American actuarial bodies
cooperate in many ways, largely through joint sponsorship of actuarial ex-
aminations and through joint committees as needed. In December 1972 the
Academy was instrumental in launching an informal body, the Council of
Presidents, to foster even greater understanding and common purpose. In
1976 the actuarial organizations jointly formed the Actuarial Education and
Research Fund to foster the growth of basic actuarial researeh throughout
theprofession and toarrangefornecessaryfinancingofsuchresearch. Finally,
a number of joint committees and task forces have dealt with a number of
issues ofmutual interest to the various actuarial bodies.
ADMINISTRATION. From the outset theAcademy shared administrative facil-
ities with the Society ofActuaries in Chicago, which have since been broad-
ened to serve the Conference ofActuaries in Public Practice also. A major
step to increase thevalue and influence ofthe Academy was taken inJanuary
1976whenStephen G. Kellison was appointedExecutive Directorwith.head-
quartersinWashington,D.C. TheWashingtonofficestaffwasfurtherstrength-
ened by the appointment ofageneralcounsel in September 1979, adirector
of administration in January 1980, and a director of public information in
October 1981. The Washington office is responsible for all staff functions
other than those related to the membership data base which remain in Chi-
cago.
MEETINGS. Since its inception, the Academy has held its annual meeting in
the fall of each year in conjunction with the annual meeting of one of the
founding organizations. In 1983 the Academy held aseparate annual meeting
forthefirsttime. Scartingin 1976theAcademyandtheConferenceofActuaries
inPublicPracticehavejointlysponsoredaseriesofspecialmeetingsforEnrolled
Actuaries. These meetings have provided an organ'izational focus for the con-
Hlstory OftheAmericanAcademy ofActuaries 5
cerns and interests ofall Enrolled Actuaries. 1981 saw the introduction of a
series ofCasualty Lcrss kesecve 5eminars which are jointly sponsored by the
AcademyandtheCasualtyActuarialSocietyandwhichareofparticularinterest
toproperty and liability actuaries andother loss reserve specialists.
Pt,tst.zcATiaNa. The Academy continues to expand its scope ofpublications,
The Academy publishes annually a Yearbook and a supplementary Directory of
MembersbyBusine.rsorOtherAffiliution. In 1983 atabulation ofFnrolledActrraries
ListedAlphabetically andby State was printed updating a tabulation done three
years earlier. The frequency ofpublication of the Newsletter was increased to
bimonthly during 1977 and to monthly during 1981. In October 1982 its
name waschanged to TheAcuurial Update. Also, the EnrolledActiraries Report,
originally a special section ofthe Newsletter, has been turned into a separate
publication. pinally, thejourrtalhas been published asarecord ofeach annual
meeting since the 1975 annual meeting. SinceJanuary 1, 1977, ttheJournrsi
hasalso contained official statements ofthe Academy.
STATEMENT OF PURPOSE
(ADOPTED BY THE BOARD
OF DIRECTORS 1981)
The purpose oftheAmerican Academy ofActuaries is to:
• Establish,promote and maintain high standards ofcompetence, conduct
and practice within the actuarial profession.
• Stimulate and encourage the advancement of the knowledge and the
methods ofpractice in the actuarial profession.
s Encourage and promote public understanding ofthe nature and scope
of actuarial science.
• Provide for communication between actuaries and the public on ques-
tions ofqualification, certification or licensing, and identification ofac-
tuaries.
• Represent the actuarial profession in areas ofpublic issues and discus-
sions involving actuarial concepts.
• Coordinateandinteractwithotherprofessionsandorganizationsinareas
where joint participation can contribute to fulfillingpublic needs.
G