CILA 2017

Intro/Welcome from Chair

Andrew Chamberlain, Just

The Breakdown of Society…
…by Past and Projected Mortality Experience

Improvements in education, living standards and health have increased life expectancies in the UK, but there are marked differences in the average lifespans across the social classes.  Understanding the differences in mortality, both current and projected, is not only important for UK public policy in promoting a fairer society but is also highly informative for pricing and reserving for annuities in life companies.

Starting from the social class segments (“VitaSegments”) identified in the Longevity Model of the PLSA, a historical narrative will be presented of the trends seen together with an overview of how ‘cause of cause of death’ modelling can be applied to understand the differences in their recent mortality trends.  The projected outlook for the VitaSegments is then considered, taking into account the recent mortality trends of the social classes, how they might interact and the real world impediments (medical or otherwise) constraining further progress.

The session will close by considering the practical impact of this enhanced understanding of longevity trends on best estimate liabilities, reserving and market opportunities using case studies.

Steven Baxter, Hymans Robertson and

Alice Woolley,RMS

Liquidity risk: the Insurance Industry’s Elephant in the Room

Liquidity risk is something that insurers have historically believed is immaterial to their businesses. However regulators are increasingly focussing on firms’ liquidity management frameworks, including plans to manage the business in a crisis. We will cover:

Sources of liquidity risk for insurers

Options available to insurers for day-to-day and crisis management

Insights from EY’s 2016 global insurance liquidity risk management survey

Our view of a market leading liquidity risk management framework

Gareth Sutcliffe and Sam Tufts, EY

Products Panel and Presentations

Panel chair: Dominic Veney, PwC

Session One: Meet LISA: where does this New Product fit in the Current Market

Karen Brolly, Hymans Robertson

A discussion on the introduction of the new Lifetime ISA, looking at where it might fit from the perspective of consumers, providers, employers, advisers and regulators.  The presenters will outline the regulatory aspects of the product, the difficulties and benefits that it might raise for providers and reasons for its potential appeal to young savers.  The presentation will also draw on Hymans Robertson research which shows among other things that many people want to save into LISA alongside existing pensions.

Session Two: Retirement Adequacy – Brave New World

Gregg McClymont, Aberdeen Asset Mgt,

Sandy Trust, Grant Thornton and               

A world of change and challenge for the pensions industry but the customer needs are unchanged, critically important and simple – to ensure later life can be funded. This talk looks at pensions policy, considers what might happen next and explores the product and brand characteristics required to succeed in the brave new world.

Q&A session

Enhancing Investment Strategy; Issues and Opportunities in the Current Investment Climate

European life insurers are increasingly looking to refine their investment strategy and optimise their assets backing liabilities. We will explore three key issues and opportunities for consideration in this context:

The sustained low yield environment and the realisation that these yields are here to stay; this has triggered a wider review of firm’s strategic asset allocation, in a bid to improve investment income and profitability

Investment governance implications of changing an investment strategy; how do firms better understand their risk profile, achieve a well-integrated finance function and justify their asset allocation decisions?

Managing the business on multiple balance sheets; how can adopting a different approach to investment strategy help to meet Solvency II, IFRS, EV and local accounting requirements?

We will leverage our experience in the market to provide insights into how firms might enhance their investment strategy approach in order to meet demanding business objectives.

Ben Grainger and Ryan Allison EY

Value of With-Profits for Consumers Working Party

The value of with-profits for consumers working party has been set up to investigate whether consumers understand the value of their with-profits policies.  The working party will consider both the history of with-profits and the current issues that may impact with-profits policyholders in the future, including the impact of funds in run-off as seen from the consumer’s viewpoint .  The working party has proposed two phases of work.  Phase 1 has gathered and summarised existing research relating to this subject.  Phase 2 will then consider any gaps in this research with a view to carrying out further consumer research as required and drawing conclusions. The session will summarise the work in Phase 1 and seek views on Phase 2.

Tim Bateman, Rosalind Rossouw and

Jonathan Welsh, Work Party Members

Private Credit Investment for Insurers - Meeting the Regulatory Requirements

The investment strategy of global insurance companies is evolving, driven by the low-yield environment and the increasing introduction of risk-based capital regimes.

Increasing private credit investment (such as commercial real estate debt and infrastructure debt) has been a priority for many insurers. However, insurers need to meet a number of complex regulatory requirements before they can invest. 

The “Private Credit Investment for Insurers - Meeting the Regulatory Requirements” working party will share emerging best practice among UK insurers for:

•     Prudent Person Principle compliance, including risk assessment and on-         going monitoring requirements

•      Fair Valuation Methodologies and valuation uncertainty considerations

•      Internal Credit Rating Frameworks and Methodologies   

•      Solvency Capital Requirements for Internal Model and Standard Formula firms

•      Matching Adjustment considerations

•      Oversight of outsourced investment management

The working party are also considering how these regulatory requirements may evolve in light of the vote to leave the European Union.

Iain Forrester and Gareth Mee, Working Party Members

IFRS17 Panel

Panel Chair: Dominic Veney, PwC

Richard Oslwang, Prudential

Richard Crooks, L&G

Kirsty Ward, PwC

Nick Walker, EY

Professionalism Skills

Richard Galbraith, Aviva and

Neil Hilary, IFoA