THE OCT 15 NOV Surprise This issue has a whole new look. Check it out. 20 FROM ACTUARY TO ... ANYTHING YOU LIKE 3 6 SAVING Actuaries can use their analytical minds to be successful in many areas THE WORLD 26 IMPROVING TECHNIQUES The use of predictive analytics in the development of experience studies New data sources and modeling techniques are changing the 44 LIVE LONG AND PROSPER way actuaries analyze risk The role of actuaries in longevity risk you are earning what you’re worth? We know the actuarial marketplace and can offer you the insider’s perspective even if you aren’t looking right now. If you are ready to make a change, we’ll use our perspective to give you all the ideas, options and opportunities it takes to match your dream to the job. Call us today. R ActuAriAl cAreers, inc.® Westchester Financial Center / 11 Martine Avenue, 9th Floor / White Plains, NY 10606 Tel: 914-285-5100 / Toll Free: 800-766-0070 / Fax: 914-285-9375 www.actuarialcareers.com / E-mail: [email protected] THE OCT 15 NOV 20 26 36 44 20 FROM ACTUARY TO ... ANYTHING YOU LIKE With a little ingenuity, actuaries can use their analytical minds to be successful in many areas including politics, recruiting and information technology. FEATURES 26 IMPROVING TECHNIQUES Predictive analytics can offer a new approach to experience studies that refine assumptions, are more granular, and ultimately create more clarity around the value of new and existing business. 36 SAVING THE WORLD Actuaries are utilizing new data sources and modeling techniques to analyze risk and solve industry-specific business problems. In many cases, they’re not just focusing on business results, but also working to improve the lives of their fellow citizens at the same time. 44 LIVE LONG AND PROSPER With lower mortality rates, Mr. Spock’s greeting of “live long and prosper” is beginning to take on a different coloration. Living long seems to be a given, but where is the prosperity coming from? With this question, longevity risk starts to take on a personal dimension. The Actuary welcomes both solicited and unsolicited submissions. The editors reserve the right to accept, reject or request changes to solicited and unsolicited submissions, as well as edit articles for length, basic syntax, grammar, spelling and punctuation. The Actuary is copyedited according to Associated Press (AP) style. For more information about submitting an article, please contact Jacque Kirkwood, magazine staff editor, at (847) 706-3572, [email protected] or Society of Actuaries, 475 N. Martingale Rd., Suite 600, Schaumburg, IL 60173-2226. ©2015 Society of Actuaries. All rights reserved. No part of this publication may be reproduced in any form without the express written permission of the Society of Actuaries. SOA PRESIDENT CREATIVE SERVICES Be sure to visit our digital edition Errol Cramer at SOA.org/actuarymag. FSA, MAAA [email protected] SOA STAFF CONTACTS Patrick Gould The Actuary is published bi-monthly (February, April, June, Managing Director of August, October, December) by the Society of Actuaries, 475 Marketing & Communications N. Martingale Rd., Suite 600, Schaumburg, IL 60173-2226. [email protected] Periodicals postage paid at Schaumburg, IL, and additional mailing offices. USPS #022-627. Cheré LaRose Director of Member & This publication is provided for informational and educational Candidate Communications purposes only. The Society of Actuaries makes no endorse- [email protected] ment, representation or guarantee with regard to any content, and disclaims any liability in connection with the use or Karen Perry misuse of any information provided herein. This publication Publications Manager should not be construed as professional or financial advice. [email protected] Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Jacque Kirkwood Society of Actuaries. Magazine Staff Editor [email protected] The Actuary is free to members of the Society of Actuaries. Nonmember subscriptions: students, $22; North American $43; Int’l $64.50. Please send subscription requests to: Society of Actuaries, P.O. Box 95600, Chicago, IL 60694-5600. CONTRIBUTING EDITORS Rod Bubke, FSA, MAAA Wilbur Lo, FSA 14 62 [email protected] [email protected] Alan Cooke, FSA, FCIA, MAAA Albert Moore, ASA, MAAA [email protected] [email protected] Carl Hansen, FSA, EA, FCA, MAAA Jeffrey Schuman, FSA, MAAA [email protected] [email protected] Christine Hofbeck, FSA, MAAA Lloyd Spencer, FSA, CERA, MAAA [email protected] [email protected] Karin Swenson-Moore, FSA, MAAA [email protected] DEPARTMENTS 6 EDITORIAL A Mysterious Profession 10 LETTER FROM THE PRESIDENT End-of-Term Report 14 AROUND THE GLOBE Meeting of the Minds: A roundup of events in the international community 16 NEW & NOTEWORTHY Take Note: Your source for industry briefings and SOA news 54 TOOLBOX Take the Lead: Useful tools and resources for actuaries 56 INNOVATE Target the Learning Strategy 62 RESEARCH The Actual (and Actuarial) Applications of Predictive Analytics 66 TAKE CHARGE Get information on professional development opportunities ADVERTISING INFORMATION Inquiries about advertising M.J. Mrvica Associates, Inc. should be directed to: 2 West Taunton Avenue Berlin, NJ 08009 phone: (856) 768-9360 POSTMASTER: Send address changes to the SOA, c/o Communications Fax: (856) 753-0064 Department, 475 N. Martingale Rd., Suite 600, Schaumburg, IL 60173-2226. Email: [email protected] Opening Doors for Actuaries Globally Andover Research, Ltd. specializes in the recruitment and placement of actuaries and investment professionals worldwide. Integrity, confi dentiality, objective assessments and continuous involvement in the total recruiting process have made us leaders in the fi eld. Our clients include insurance companies, consulting fi rms, healthcare organizations, and investment banks. CCoonnttaacctt uuss ffoorr oouurr llaatteesstt eexxcclluussiivvee aanndd rreettaaiinneedd sseeaarrcchheess.. 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Despite this geophysicist, demonstrated a method all probably heard the seeming popularity, many people really to calculate a life-annuity premium above question at least don’t know what an actuary does. using a later version of this mortality once in our lives, and probably many “Tell me when I’m going to die.” table, along with the idea of compound times more. No matter how often this No, that’s a doctor … or a psychic. interest. Halley’s work is often credited question is posed to me, it’s still decid- “Actuaries work for insurance as strongly influencing the development edly bothersome that actuaries are so companies, right?” Getting warmer. of actuarial science. Both of these men often confused with Certified Public But let’s not forget about the thou- used their mathematical acumen and Accountants (CPAs). Yes, we both can sands of actuaries who work for outside-of-the-box thinking to develop add and our professions start with the consulting firms, the U.S. government groundbreaking and valuable concepts letters “AC,” but an actuary is defi- (think Social Security Administration) that completely changed the economic nitely not an accountant. CPAs attest or individual businesses. and financial landscape. to the accuracy of disclosures of what “You’re like Ben Stiller in Along In 1762, we were officially named happened in the past, while actuaries Came Polly!” Hmmm. Neurotic, “actuaries” by the founder of Equitable mitigate financial risk by calculating regimented, awkward, socially back- Life, the first life insurance company probabilities of what will likely hap- ward introverts. “You’re Ethan Hawke to use mathematical calculations to pen in the future. Please don’t ask me in Boyhood!” Aimless and deadbeat. derive premiums for multiyear poli- for tax advice. No, we most definitely are not. cies. Throughout the next 200 years, So why is the actuarial profession We actuaries actually have a rich innovative advancements in actuarial such a mystery? history of strong analytical skills, methodology such as commutation One would think that Forbes’ innovation and business expertise. functions were developed to simplify reporting of “actuary” as the No. 1 In 1662, John Graunt created our exceedingly complex manual calcu- job of 2015 might have given us a first pooled risk mortality table lations. Additional life insurance popularity boost. In fact, “actuary” based on census data he obtained on companies were established, and by 6 The Actuary theactuarymagazine.com SEND RESUMES TO [email protected] NORTHEAST USA - LIFE PRICING CALIFORNIA - SENIOR HEALTH ACTUARY Assistant Vice President Life pricing and product development Senior health actuary with Medicare experience is now sought actuary needed by Northeast USA client for Position 66169. FSA by a California insurer for Position 66429. Manage staff. FSA or with several years of product development and pricing experience ASA with 11+ years of healthcare actuarial experience preferred. preferred. Must have supervisory experience. SOUTHEAST USA - LONG TERM CARE MODELING NORTHEAST USA - BROKERAGE ACTUARY Long term care modeling actuary is needed by a Southeast USA Northeast USA insurance broker has asked Ezra Penland to find insurer for Position 66011. FSA or near-FSA with 8+ years of a health actuary for Position 66300. 5 to 12 years of health actuarial experience preferred. actuarial experience preferred. ASA or FSA credentials required. Client is in a unique, niche growth market. GEORGIA - ASSOCIATE ACTUARY ASA life actuary with long term care experience and AXIS soft- FLORIDA - ASA or Near-ASA ware experience needed in Atlanta for Position 66097. 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Must have 8 to 15 years of life actuarial Northeast USA health insurer is searching for a long term care experience. near-ASA or ASA actuary for Position 66437. Must have at least three years of actuarial experience. Strong actuarial exam support NEW JERSEY - GROUP LIFE ACTUARY program. Group life actuary with COLI / BOLI experience is now needed by a New Jersey insurer for Position 66348. Pricing, product de- MARYLAND - ASSOCIATE ACTUARY velopment, programming and valuation opportunity. ASA or FSA For Position 66335, a Maryland insurer seeks a health actuary with C++ and SQL programming skills ideal. at the ASA or near-FSA level. Must have 5+ years of healthcare MIDWEST USA - LIFE FSA actuarial experience. Exam support. Life FSA actuary with financial reporting or actuarial modeling SOUTHEAST USA - HEALTH CONSULTING ACTUARY experience is sought for Position 66253. Must have management Health actuary with Medicare Advantage experience is needed by experience. Client prefers an FSA with 8 to 18 years of life actu- a Southeast USA consulting group for Position 66436. ASA or arial experience. FSA with at least two years of Medicare Advantage experience NEBRASKA - FSA/ASA WITH 10+ YRS OF EXP preferred. Nebraska insurer seeks a life actuary at the ASA or FSA level with 10+ years of experience for Position 65596. High-profile valu- ation, financial reporting and management reporting opportunity. Work closely with Appointed Actuary. EZRA PENLAND ACTUARIAL RECRUITMENT Over 40 Years of Industry Experience (800)580-3972 [email protected] These Roles and Many Other Actuarial Jobs Can Be Found at EzraPenland.com EDITORIAL the end of the 19th century, about modeling capabilities within insur- and capabilities? Perhaps the onus to 100 actuaries were practicing in the ance organizations, I am proud to put the truth out there rests squarely United States and Canada. In 1889, 38 call myself an actuary, and would not on our own shoulders. There are 20 charter members were deemed fellows choose to be labeled as working in an times as many accountants as actuar- in the first actuarial organization—the alternative profession. ies; it is up to us to promote our value. Actuarial Society of America. (Perhaps Then again, I have often been told, I encourage you to take some time this is the origin of the “40 percent “You don’t seem like an actuary.” to think about exactly what it is that pass rate” rumor!) Really? A colleague of mine considers you do. Write it down and refine your We actuaries have developed this comment equal parts compliment thoughts, if that is helpful. Think extensive mathematical approaches and insult. And what exactly does it about how the description of your to determine the probability of risk even mean? I have been an actuary for role and your value proposition would and mitigate the financial impact over two decades. One would think differ depending on your audience. of certain events. Our skills enable that I am exactly like an actuary. Then, tell your business partners us to design new insurance prod- Recently, I was working a table at and professional contacts what you ucts, accurately calculate premiums a local high school career fair when a really do. Tell your children. Tell your and reserves, skillfully forecast asset student approached to ask me what an neighbors. Tell your spouse! Yes, the growth and longevity risk, appropri- actuary does. I mistakenly thought he wording will change depending on ately determine pension liabilities was interested in pursuing the pro- your audience, but hopefully your and required plan contributions, and fession. Instead he said, “My dad is an message will resonate. solve many other financially uncertain actuary, but when I ask him what he And one day people will approach business problems. In fact, with ded- does, he tells me it’s too complicated our most innovative, creative and ication and determination, our skills to explain. Can you please tell me?” successful mathematicians, statisti- make many opportunities possible. Given our depth of skill and span cians, data scientists and financial We should all be consistently pushing of expertise, why do we have so much business leaders and say, “You’re like the boundaries of actuarial science trouble articulating our value, work an actuary, right?” to improve and enhance not just our work, but ourselves. We must endeavor to share our value, promote our work and celebrate our capabilities. If we want to ensure future growth of our profession, guarantee our seat at the table in the most valu- able business decisions, and have our expertise requested and heard, we will all need to concentrate on thoughtfully and appropriately communicating who we are and what we do. There is a clear opportunity for us today. Key buzzwords right now are “data scientist,” “big data” and “analytics.” Actuaries fit well into each of those buckets—but can we convince everyone else of that? The Society of Actuaries (SOA) is currently exploring the role of actuaries in predictive modeling; at one time this There are 20 times as many accountants as was tentatively labeled an “alternative profession.” I would challenge that, as actuaries; it is up to us to promote our value. a professional who builds predictive 8 The Actuary theactuarymagazine.com WWaanntetedd: :a acctutuaarireiess wwitihth v visisioionn AsA as tao tpo apc atcutaurayr, yy,o yuo’vue’v geo gto vti sviiosnio ann adn d drdivreiv. eJ.o Jino iEn YE’Ys ’Isn sInusruarnacnec aen adn Ad cAtcutauraiarli al ee AdAvdisvoisroyr Sy eSrevricveicse tse taema man adn bde bceocmome e onon NN ana inn tinetgergarl aml memembebre orf o afn a inn sinusruarnacnec e ED ED d. d. prparcatcicteic feu fllu ollf o pfe poepolep lwe hwoh soh sahraer yeo yuoru r veve erer papsassiosnio fno fro hre hlpeilnpgin cgl icelnietnst rse raecahc thh tehire ir eses RR poptoetnetniatli.a Ul. nUitneit we iwthit thh teh peo pwoewre orf o ofu oru r hts hts gg lealedaindgin nga ntaiotnioanl aAl dAvdisvoisroyr tye taemam, a,n adn d All RiAll Ri wew’lel ’mll amkaek yeo yuoru cra craereere srh sinhein.e. P. P. LL LL g g FinFdin odu otu mt moroer aet a ety e.cyo.cmo/mu/su/sin/sinusruarnacnec e unun oo YY oro cro cnotnatcatc Rt iRchicahradr Dd aDnannennebnebregr agt a t & & st st ricrhicahradr.dda.dnannennebnebregr@[email protected]. . ErnErn 5 5 11 00 22 © © from the PRESIDENT End-of-term report BY ERROL CRAMER Errol Cramer, FSA, MAAA, is president of the Society of ’m frequently asked whether one year is sufficient Key themes emerging from these Actuaries. I time to make a meaningful impact as president of the meetings were: Society of Actuaries (SOA). Approaching the end of The SOA should find ways to [email protected] my term, I’m pleasantly surprised how much I’ve been work collegially with the other able to influence the course of events within a year. U.S. actuarial organizations (as perceived conflicts and Of course, the one year was not in isolation—I served two difficult relationships, regardless of cause, could harm the prior terms on the SOA Board of Directors and a year as profession). president-elect, and had the counsel and assistance of the Concern was expressed regarding the future of the Leadership Team, Board and staff—which provided me the profession and how actuaries might be valued in deep understanding to formulate an agenda. the marketplace. My priorities were: 1) strengthen member communica- More news about the SOA and transparency in tions, 2) fortify partner relationships, and 3) execute on key communications. strategic and operational initiatives. The SOA should do more to promote the value of the profession to employers. STRENGTHENING MEMBER COMMUNICATIONS Going in, I heard from members who were unclear about The Listening Tour received enthusiastic support and we the SOA’s priorities and unsure about its direction. I felt plan to keep hosting these events in 2016 and beyond. The we could do better in communicating with members and themes we’ve heard are being carefully weighed and reflected winning their trust, and efforts were undertaken this past in a variety of ways in our ongoing work. On a positive note, year to better inform members and listen to their voices. members were supportive of the SOA’s current strategic and The SOA Listening Tour (http://bit.ly/1PTVewL) was key operational initiatives once these were clearly discussed. introduced as a pilot program to inform members of the The Plain Talk letters from the President (http://bit. SOA’s key strategic and operational activities, to provide ly/1MUWIZ3) launched as a forum to speak forthrightly on contextual background, and to give them an opportunity topical issues regarding the SOA, and covered topics about to express their views. I was assisted by several current and international strategy, competition among actuarial organi- former board members, each delivering a consistent message zations and proposed bylaw amendments. Direct and to the in their respective localities in the United States, Canada point, these were well received and engendered both appre- and Asia, to a variety of groups, big and small. We were ciative comments and constructive counterpoints, resulting careful to facilitate dialogue and let members talk. in healthy dialogue. 10 The Actuary theactuarymagazine.com
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