Press release

1 July 2008

New Institute of Actuaries President, Nigel Masters FIA, highlighted the significant changes ahead for the Actuarial Profession in his Presidential Address in London yesterday.

Speaking at the Institute's Annual General Meeting, Mr Masters said globalisation, the changing role of actuaries and a proposed merger between the Faculty and Institute of Actuaries would be among the most significant issues for the profession during his term of office.

He said: "To be asked to lead the Institute at this moment is an enormous privilege and an enormous responsibility. At any time, to be President is a privilege and a responsibility, but at this time, I believe the role has more opportunities for success or failure than in recent times.

"We have reached a tipping point as the nature of the UK profession and the work of its members changes. The Institute and the wider UK profession have been through a long period of renewal, but it is in good shape to succeed in the rapidly evolving commerial environment," he said.

Areas of change Mr Masters identified in his speech included:

• Globalisation - Mr Masters said that globalisation would have a significant impact on the profession, offering new challenges and opportunities for actuaries. He said: “Production of material goods has for many decades been moving to the cheapest effective labour markets. Now, the service industries and the professional skills are also moving.” Mr Masters predicted that, as a result, more trained actuaries would spend time working outside the UK. He said: “The ease of international communications has created an intense competitive environment that is based on 24-hour connectivity and an expectation of high personal commitment from all staff. In this world, the differentiators are often innovation, speed of implementation and an ability to present information in persuasive and insightful ways. Actuaries self-select these qualities through their background and training.”
  
  
• Merger - Mr Masters said he supported the proposed merger between the Faculty and the Institute, but understood the concerns expressed by some members. He said: “For many members, myself included, merger is seen as the natural culmination of a renewed and strengthened actuarial profession in the UK, ready to prosper and flourish in the new commercial and global environment of the 21st Century. The merger is a genuine opportunity to create sustainable positive momentum which should not be missed.”
  
  
• Changes in insurers and pensions - Mr Masters spoke about the changing nature of the life insurance and pensions industries, with products being sold becoming steadily less ‘discretionary’ in nature, with regulators. He said the reduced need for actuarial management would be countered by the developing requirements for capital management and risk-based capital and the restructuring of the pensions industry towards defined contribution schemes.
  
  
• Corporate governance and quantitative risk analysis - Mr Masters spoke of the growing need for actuarial expertise in risk management for informal governance structures. He said: “Quantitative risk analysis, whether in the form of scenario planning, Monte Carlo simulation, or ‘what if’ modelling, has become commonplace in all areas of the corporate world. Recent failures in the banking world and the credit crunch have led others to recognise the value of actuarial skills – risk analysis, stochastic modelling, robust provisioning.”

Mr Masters has succeeded Nick Dumbreck FIA as President of the Institute.

For more information, tel. Fleur Morrison on 020 7632 1453 or email fleur.morrison@actuaries.org.uk

Notes to Editors

1. Actuaries provide commercial, financial and prudential advice on the management of a business’s assets and liabilities, especially where long term management and planning are critical to the success of any business venture. They also advise individuals, and advise on social and public interest issues.
2. Members of the Profession have a statutory role in the supervision of pension funds and life insurance companies. They also have a statutory role to provide actuarial opinions for managing agents at Lloyd’s.
3. The Profession is governed jointly by the Faculty of Actuaries in Edinburgh and the Institute of Actuaries in London. A rigorous examination system is supported by a programme of continuing professional development and a professional code of conduct supports high standards reflecting the significant role of the Profession in society.