About this event
The Life Conference 2016 is taking place in Edinburgh from 2 - 4 November 2016.
The Life Conference is the premier event for professionals interested in life insurance. Offering a wide range of workshops and plenary sessions it’s the perfect opportunity to discover what’s hot and current in life insurance.
Whether UK based or international, the conference is open to anyone with an interest in the life sector. It offers an ideal forum to meet and exchange ideas with a broad range of professionals. If you want to get up to date on the latest thinking and innovation, this is the event for you.
- Registration Wed, 02/11/2016 - 18:00 - 19:30 Registration
Registration will be open in the Strathblane Hall.
- Dinner Wed, 02/11/2016 - 18:00 - 19:45 Welcome Buffet and Exhibition
An informal buffet dinner will be served. The exhibition will be open and there will be plenty of opportunities to network.
- Plenary session Wed, 02/11/2016 - 19:45 - 20:00 Welcome to the Conference
Speaker: Aditi Parekh, Chair of Life Conference 2016 Programme Committee
- Plenary session Wed, 02/11/2016 - 20:00 - 21:00 Plenary 1: The New Normal - Evolution or Revolution?
The world is changing at a phenomenal pace – shifting demographics, the advent of new business models and expectations of a new workforce all play their part.
Many companies and industries commit to creating more diverse and inclusive workplaces that work for everyone as well as strategies at the highest level to respond to this only to fall at the first hurdle – turning words into action!
We will uncover why this is so important for the Insurance industry, the impact on our colleagues and our clients as well as unravelling the critical steps required to turn a great vision and aspiration into a reality, sharing practical experiences along the way.
Speaker: Charlotte Sweeney, Founder, Creating Inclusive Cultures
- Social Wed, 02/11/2016 - 21:00 - 23:00 Drinks reception and Networking
An opportunity to network and visit the Exhibition stands.
- Registration Thu, 03/11/2016 - 09:00 - 09:30 Registration
For those who did not register the night before.
- Plenary session Thu, 03/11/2016 - 09:30 - 10:30 Plenary 2: Innovation out of Africa – A New Approach to Diabetes
AllLife recently won the prestigious Prince of Wales Unilever Global Business Development Award for their initiatives in the South African market to provide insurance cover for previously uninsurable lives. The protection AllLife has provided to diabetics and HIV+ clients is based on a revolutionary approach to the use of data, algorithmic pricing and health management.
Ross will discuss AllLife’s path and the creation of its innovative underwriting and business approach to life insurance and their aspirations and expectations regarding bringing this protection model to diabetics around the world.
Joan will take us through some of the ways long term insurance / reinsurance relationships drive supportive innovation and will discuss some of the key considerations when externalising AllLife’s product and processes into foreign markets (with particular reference to the UK environment).
Speakers: Ross Beerman, AllLife and Joan Coverson, Gen Re.
- Plenary session Thu, 03/11/2016 - 10:30 - 10:45 Presidential Update
Speaker: Colin Wilson, President, Institute and Faculty of Actuaries
- Refreshments Thu, 03/11/2016 - 10:45 - 11:15 Morning Refreshments
- Workshop Thu, 03/11/2016 - 11:15 - 12:05 Workshop Session A
A1: Asset Valuation - Creating Certainty out of Uncertainty
Valuing illiquid assets can prove challenging and may have a range of plausible outcomes. This ‘valuation uncertainty’ is significant for structured products and illiquid securities. In the context of Regulation, accounting requirements and practical experience, Mike and Obaid provide insights and practical examples of developing the governance, controls and procedures to assess valuation risk and uncertainty for illiquid portfolios.
Speakers: Michael Ashcroft, Lloyds Banking Group and Obaid Khawaja, EY
A2: Reinsurance of Persistency Risk
Solvency II introduces explicit capital requirements for persistency risk across Europe for the first time. This has triggered insurance companies to seek ways to mitigate this risk. This talk will cover:
- How reinsurers think about persistency risk.
- Is it an "insurable" risk?
- Examples of existing reinsurance methods to transfer this risk
- How these are changing post Solvency II.
Speakers: David Horley and Oliver Gingell, Swiss Re
A3: SII across Europe: How will the Analysts look at it?
Fulin Liang is an Insurance Sector Equity Analyst at Morgan Stanley and will outline the way Analysts use key features of SII including the implications for dividends, and how Analysts may make use of the new QRT disclosures amid different market sentiments. Nick Ford will give an overview of the timeline and upcoming disclosure challenges before diving into the most price sensitive disclosures yet to be published. John Jenkins will Chair the session and Q&A. The session will cover:
- Communication strategies for Investor Relations
- Impacts of SII on Continental Europe vs. the UK
- Capital generation under SII
- The key balance sheet adjustments made by analysts.
Speakers: John Jenkins and Nick Ford, KPMG and Fulin Liang, Morgan Stanley
A4: Positive Policyholder Outcomes - Are With-Profits Funds Doing all They can on Investment Returns?
We present the results of Barnett Waddingham’s research into the investment performance of 70 with-profits funds ranging from large, proprietary companies to small friendly societies, covering:
- Drivers of performance differences
- Investment trends
We consider the findings in the context of the FCA’s review of performance of closed funds and what firms can do to demonstrate they are ensuring positive policyholder outcomes.
Speakers: Scott Eason and Vivienne Maclure, Barnett Waddingham
A5: Consumer Risk Metrics
The Consumer Risk Metrics Working Party aims to develop a simple risk metric that will allow consumers to understand risk in a consistent way. In this session we will introduce and discuss:
- customer’s understanding of risk
- development of Consumer Risk Metrics
- practical applications for such metrics
- conclusions the Working Party has drawn so far.
Speakers: Lewis Fogden and Bhavin Bharadwa, Members of theIFoA's Consumer Risk Metrics Working Party
A6: Model Error Risk
Model error risk represents one of the major inherent operational risks and one which is experiencing a growing level of focus and attention. Modelling can be a complex process. A single mistake in an input parameter or a coding error has the potential to cause significant financial error. Assessing model error risk needs to consider all areas of an organisation with a role in developing, governing and using model results. Any framework needs to reflect this enterprise wide scope in its approach and any assessment process should not underestimate the eventual reach and impact.
Speakers: Andrew Wood, Roger Simler, Deloitte and Mark Pibworth, Legal & General
A7: What we learnt from the SII BS Assurance Audits
In this talk we look at the key findings that we have learnt across the market from our SII BS Assurance audits. Think that you already have this covered? How have you:
- Treated your planned enhancements?
- What’s your contract boundary interpretation?
- Calculated your tansitionals?
Come along to hear more about what common issues, difficulties with the calculations and the pitfalls to avoid.
Speakers: Michelle Lister and Andrew James, PwC
A8: Capital Optimisation under Solvency 2
How the Capital Manager can optimize the Solvency 2 position to gain competitive advantage:
- Designing products with low capital requirements
- Choosing the size of portfolio retained before the deciding how to invest the assets
- Reinsurance and risk transfer solutions which are effective for risk and capital management
- Different interpretations of S2 by national regulators
- Issuing capital as an option to reducing risk
- Optimising diversification benefit.
Speaker: Alan Rae, Achmea
A9: Changes to the FRC's Technical Actuarial Standards - How they Affect You
The FRC has published a consultation on changes to its Specific TASs and its feedback on its consultation “A new Framework for FRC technical actuarial standards” which proposed a new generic standard TAS 100. Ann Muldoon, who leads the FRC’s actuarial policy team, will cover:
- The revised TAS framework including TAS 100
- The risk assessement process used to set the scope of the Specifiic TASs
- The specific TAS consultation including the revised insurance TAS.
Speaker: Ann Muldoon, Financial Reporting Council
A10: Masterclass: Communciation - Conflict Resolution
Explore he power of speaking up. How to have difficult conversations, learn a process for conflict resolution and tips for managing upwards and managing peers.
Speaker: Simon Paine, Pop-Up Business School
- Transfer time Thu, 03/11/2016 - 12:05 - 12:20 Transfer time
- Workshop Thu, 03/11/2016 - 12:20 - 13:10 Workshop Session B
B1: Cloud computing and elevating performance. A case study with Legal and General
Commercial pressures are driving insurers to consider public cloud computing as a means to save money and deliver faster. Looking beyond these issues, Legal and General saw other important opportunities in their decision to adopt cloud capabilities for its actuarial operations. This session discusses the specific business agility challenges that drove L&G’s decision, and how their public cloud migration allows them to achieve more, more quickly. Looking ahead, we will also discuss the implications for cloud technology for other insurers and actuaries, as operational expectations and pressures continue to evolve.
Speakers: Mark Brown, FIS and Scott Woodrow, Legal & General
B2: IFRS 4 Phase II is Happening, has the Wait Been Worth it?
After nearly 20 year in the making, the new IFRS accounting standard for insurance contracts is expected to be published in late 2016 or early 2017. The Financial Reporting Group of the profession will provide:
- A summary of the key components of the final standard, notably for annuities, unit linked and with profits contacts.
- An assessment of the implications for insurers, the interactions with Solvency II and what insurers should be doing now.
- The perspectives of an analyst on the impact that the new standard and the proposed disclosures will have on the insurance sector.
Speakers: Anthony Coughlan, Richard Olswang, Kamran Foroughi and Anthony Silverman, Members of the IFoA's Financial Reporting Group
B3: Secondary Annuities Market Research – Results from IFoA Commissioned Research
Members of the profession’s Secondary Annuity Scoping Group will provide analysis and commentary on the consumer research they conducted through YouGov earlier this year. This will provide insights into the potential demand by consumers to assign their annuities and the likely issues facing those consumers and prospective players in the market. We also expect to comment on how the expected regulation and conduct requirements interact with these results. In addition to the consumer research the presenters will bring out some key findings of a separate research project into relevant international markets, including what lessons can be learned from that experience.
Speakers: David Gulland and Stuart McDonald, Members of the IFoA's Secondary Annuity Scoping Group
B4: Risk Management in the New World Order
Solvency II is one of several material regulatory changes that are being implemented over the period 2016-2019, other changes to marketplace include; EMIR and Basel III, which have significant implications for the asset/risk management for UK Insurers. We will discuss the implications of the following:
- Tools for Reconfiguring Asset Classes - to be better aligned to the Solvency II ruleset, such as SPV Re-packs, reinsurance transformation etc.
- Liquidity Management - in a marketplace where cash is increasingly becoming the only form of eligible collateral for derivative positions, we assess how Insurers should quantify and manage such contingent liquidity outflows.
Speakers: Michael Eakins, Goldman Sachs and Neil Snyman, Aviva Investors
B5: The Role of Actuaries in Achieving the Sustainable Development Goals
The world has started working towards a set of 17 Sustainable Development Goals which have been adopted by 193 UN members to make our world more prosperous, inclusive, sustainable and resilient. Goals require innovation and collaboration to expand health and life insurance in emerging markets, increase climate resilience, and unlock long-term investment in renewable energy and other infrastructure. Serena Brown is part of the Global Development Initiative developing strategy to 'put our skills to work in pursuit of the Sustainable Development Goals'. This session will examine the opportunities for actuaries to help transform our world for people, planet and prosperity.
Speaker: Serena Brown, KPMG
B6: Negative Rates - The New Norm, and Implications for Capital Models
- The low and negative interest rate environment has focussed attention on allowance for negative rates in capital models.
- Companies have struggled to develop models that capture potential severity of negative interest rates given lack of historical data.
- We will discuss alternative models available and operational implications for the business, drawing insights from NFU Mutual’s implementation.
Speakers: David Honour, KPMG and Andrew Hague, NFU Mutual
B7: Models Models Everywhere
Models play a vital role in effective risk and capital management in all financial institutions – just think of their role in Solvency II, for example. But as well as being helpful for managing risk, models also create risks. Drawing parallels with nature and science, with real-life examples from finance, this session gets under the lid of model risk.
- How can we identify, measure, communicate, and manage it?
- What role do biases, especially confirmation bias, play in creating model risk?
- What do Boards need to know?
- And what should we, as individuals and as a profession, be doing about it?
Speakers: Stephen Makin, Hymans Robertson and Rob Andrew, Standard Life
B8: Insurance vs. Banking: Battle of the balance sheets
Regulations are key to pricing risk, making it more optimal for banks to hold some risk and for insurers to hold others. RWAs vs. SCR is one starting point, but additional constraints over leverage, systemic add-ons and requirements for liquidity and stable funding may have more subtle implications for markets, while matching adjustment restrictions alter the economic landscape for insurers.
Speakers: Stuart Morris, Deloitte MCS Ltd, Robin Thompson and Andrew Kenyon, RBS
B9: Is C3PO your Next Life Insurance Agent?
Robots are coming to life insurance. But what does this really mean for life insurance products, producers and intermediaries? We think humans will still have a key role in relationships and complex decisions, but technology will affect all parts of the life insurance value chain, in particular the advice market. We’ll explore current trends in the auto-advice industry, as well as what it means to move toward an outcome based advice model.
Speakers: Carl Ghiselli and Jason Whyte, EY
B10: Masterclass: Leadership - Leading in Uncertain Times
Uncertainty arises in situations where there is imperfect and/or unknown information. With Brexit, populations on the move and the rate of change in technology and industry, the future has never been more uncertain in our lifetimes. In this interactive MasterClass we will look at Leadership through the lens of uncertainty; different leadership styles for different contexts, case studies of the impact achieved by leaders adopting collaborative styles and evolving culture to engage and inspire employees.
Speaker: Simon Paine, Pop Up Business School
- Refreshments Thu, 03/11/2016 - 13:10 - 14:10 Lunch
- Refreshments Thu, 03/11/2016 - 13:10 - 14:00 President's lunch
Join IFoA President Colin Wilson for an informal lunch where he is keen to hear your views on the IFoA’s thought leadership activity, which he is championing during his Presidential year.
Colin is enthused by the breadth and depth of thought leadership within the global actuarial profession. As actuaries we have great value to add in areas affecting wider society such as climate change, ageing society and long-term investment, particularly in collaboration with other professions. Utilising our thought leadership will enable us to seek out new opportunities for our skills, to drive discussion on the big issues, and to help create rather than just respond to the external environment. This will contribute to the long term sustainability of our profession.
Colin would love to hear your views on how the profession should be doing this, and what success might look like in years to come.
If you are interested in joining Colin Wilson, President of the Institute and Faculty of Actuaries for a working lunch, please contact Rebecca Goreham to book your place. Please note spaces are limited.
- Workshop Thu, 03/11/2016 - 14:10 - 15:00 Workshop Session C
C1: The New Bottom Line: Environmental Social and Governance (ESG)
Bank of England and World Bank have warned that climate change is the ‘tragedy on the horizon’ and G20 has asked International Financial Stability Board to investigate. But it’s not all doom and gloom: ESG presents a significant opportunity for growth. How do each of the players in the financial system seek to navigate these risks and take advantage of these opportunities?
Our panel of experts will cover the following topics:
- Understanding long term risk: measuring carbon risk and ESG
- The link to performance: ESG and returns – do they correlate?
- Fiduciary duty: Is pursuing ESG in the interest of beneficiaries?
Speakers: Christina Larkin and Anthony Plotnek, EY; Nico Aspinall, Chair IFoA Resource and Environment Board; Alex Wharton, Natixis Asset Managment; and Don Gerritsen, Principles for Responsible Investment (PRI)
C2: Sharing the Benefits of Mutuality
Royal London has taken mutuality to a new level. Since 2016, all new unit-linked pension plans come with a ProfitShare account, effectively turning the plan into a form of with-profits, but without the guarantees and smoothing that policyholders do not seem to value. What was particularly striking about Royal London’s move was the extension of ProfitShare accounts to a large part of the unit-linked back book. This case study will tell the story of this significant development and also describe the challenges encountered in the independent review of the proposals that was required.
Speakers: David Hare, Deloitte and Brian Murray, Royal London
C3: Evolution or Revolution: Critical Thinking about CI
With a global perspective and international case studies we consider the development and current state of Critical Illness Cover. We explore how the product needs to evolve to meet the changing needs and expectations of customers. Analysing the product from distribution through to claim we consider innovations for each stage, including the impact of advances in wearables and mobile technology. What could, and more importantly, should, the next generation of Critical Illness product look like?
Speakers: Mohamed Faye, PartnerRe and Niamh Murphy, EY
C4: How well has Solvency II met its Objectives for the Life Insurance Industry?
The “Retrospective on Solvency II working party” is focusing on the implications for long term business and will be sharing its findings in this workshop. Attendees will have their chance to agree with or challenge the working parties draft conclusions before it looks to produce its finished report. This is your chance to inform and influence the debate on just how well Solvency II has done in achieving its objectives and to discuss where and how changes could be made to improve it further.
Speakers: Members of the Retrospective on Solvency II Working party
C5: The Future of the Risk Function
Are risk functions where they need to be to support effective business and risk decision making?
We look at practical experiences and discuss:
- the current position of many risk functions
- how these may develop in the future
- how certain tools, processes and the underlying risk framework and governance structure can facilitate effective decision making.
Speakers: Kirsty Leece, Willis Towers Watson and Liz Ryan, Zurich UK
C6: Assets: Are you Stressed Enough?
This talk will consider the valuation, capital treatment, risk management and associated matters of modelling non-traditional asset classes in the internal model. The talk will consider the valuation of unusual assets, as well as how they should be valued under stress. For firms with matching adjustment, firms will need to assign a fundamental spread to this asset in the base case, but also under stress. How do firms go about this when there is little regulatory guidance available, and limited public data for these illiquid assets.
Speakers: Neil Farmer, PwC and Daniel Blamont, The Phoenix Group
C7: Divvying up the Bill: Allocating Capital and Diversification Benefits across Branches, Business Units and Products, a Practical Case Study
The challenges and pitfalls of attempting to allocate capital requirements between branches, across products and between new business and in-force. A walk-through of a successful effort to (reasonably) fairly allocate Solvency II capital across MetLife’s complex European structure, focussing not on mathematical theory but the practical challenges and solutions. The talk will cover:
- Why did we want to allocate the capital?
- The challenges presented by MetLife’s European structure
- Allocating Standard Formula SCR shocks for insurance, market and operational risks
- Sharing diversification benefits
- Allocating capital to new business
- The question of negative capital
- Divergence between theory and practice.
Speakers: Patrick Rowland, KPMG and Simon Dunsby, MetLife
C8: Still Delivering Insight? The Future of Embedded Value Reporting in a Solvency II World
An examination of the trends in embedded value reporting in a Solvency II world and what this will mean for the future:· The changing market practices in embedded value reportingfollowing the move to Solvency II;· Case study of UK insurer and the drivers behind their chosen reporting strategy;· The future of embedded value reporting and the implications on investor/analyst expectations and the M&A market.
Speaker: Alan Rankine, Deloitte and Louise Wherity, Prudential
C9: Economic Scenario Generators: Lessons Learned from History
Some UK insurers have been using real-world economic scenarios for more than thirty years. Popular approaches have included random walks, time-series models, arbitrage-free models with added risk premiums or one-year distribution fits. Based on interviews with experienced practitioners, this workshop traces historical model evolution in the UK and abroad. We examine the possible catalysts for changes in modelling practice with a particular emphasis on regulatory and socio-cultural influences. We apply past lessons to provide a non-technical perspective on the direction in which firms may develop real world multi-period economic scenario generators in future.
Speakers: Members of the Extreme Events Working Party
C10: Regulatory Round Up
The session will be presented by members of the IFoA Regulation team and will provide an update on the latest issues in the Life environment. This will include the latest position on the Actuaries' Code review, the Practising Certificate Review as well as a discsussion around the IFoA's Risk Alerts.
Speaker: Christine McConnell, Institute and Faculty of Actuaries
- Transfer time Thu, 03/11/2016 - 15:00 - 15:15 Transfer time
- Workshop Thu, 03/11/2016 - 15:15 - 16:05 Workshop Session D
D1: Machine Learning Applied to Lapse Management
The insurance industry is a good example of a sector that relies heavily on expert judgments to assess and manage the risks, employing insurers, underwriters, claim handlers and actuaries. This has worked well, but there is no doubt that there is significant scope to instil more data-driven decisions across the insurance value chain.
Machine Learning, a form of predictive modelling which uses a broad range of algorithms to automate the prediction of key business outcomes, can significantly improve the quality and speed of decision making.
We recently worked with the customer service department of an insurance company with increasing lapses in a profitable product line. The anti-lapse campaigns had been based on dealing with cancelling customers in a reactive ad-hoc way. By collecting historic data and using Machine Learning to make predictions about the ‘likelihood of’ and ‘reason for’ lapse for each customer, we were able to help intercept before a customer lapsed, and improve retention.
Even in a mature data-rich industry there is still significant potential to improve the quality and speed of decision making. Increased prediction awareness and the emergence of more accessible Machine Learning technology will make the difference.
Speakers: Michel Abbink and Fabrice Ciais, PwC and Amalia Mofori, Eurolife
D2: The Future of Social Care Funding – Who Pays?
In the session, we will provide an update from the Product Research Group of the Pension and Long Term Care Working Party covering:
- A summary from the paper we published in April 2016 – including:
- a review of financial products which can fund Long Term Care costs
- case studies to demonstrating the complexities of the care funding system
- analysis of the means testing system and how it potentially impacts the incentive for individuals to save for care costs.
- An update on the current research be undertaken by the group in 2016/17.
Speakers: Thomas Kenny, JRP Group and Ailsa Dunn, Members of the IFoA's Pensions and Long Term Care Product Research Group
D3: 50 Shades of "de Grey" - International Drivers of Longevity Outliers
Individuals that live to an age where non-Gompertzian mortality rates are seen could be considered “longevity outliers”. However, more and more people are reaching these ages and the gerontologist, Aubrey de Grey, sees no reason why humans shouldn't live to be 1000. We perform an international comparison of the drivers of longevity, including a detailed international comparison of cause of death, and consider the prospects for future improvements. What would be the impact on society and insurance products if longevity outliers become the longevity norms?
Speakers: Nick Owen and Chris Reynolds, PartnerRe
D4: Tax, the Beast that won’t Lie Down
‘Tax, the Beast that won’t Lie Down’ will outline the current round of developments in Life Taxation. To include recent consultations, legislative developments and associated implications for the UK Life assurance industry:
- Budget 2016 restrictions on carried forward losses and implications for the UK Life industry;
- Tax efficiency and the relative attractiveness of BLAGAB;
- Tax deductibility of corporate interest expense;
- VAT on claims management; and
- Tax Update and Current Issues.
The session will include an update of the latest and most current issues, ensuring that the audience is aware of current tax related issues relevant to the Life insurance industry.
Speakers: Andrew Rendell, Matthew Taylor and Joseph Collins, Members of the IFoA's Tax Working Party
D5: Solvency II and Credit Ratings
- How rating agencies use Solvency II when rating insurance companies
- Solvency II capital vs rating agency capital
- How Solvency II is affecting insurers’ credit profiles
- Why credit ratings still matter in a Solvency II world.
Speakers: Sam Mageed and David Prowse, Fitch Ratings
D6: Proactive ALM: How an Innovative, Well-integrated Finance Function Could Unlock Economic Value
- Deployment of assets in line with strategy:
- Supply issues, competitive pressures and potential business impacts
- Setting a capital efficient hedging strategy
- Which balance sheet and risks should be hedged?
- Handling non-hedgeable risks
- Asset hypothecation
- Extracting maximum value and identifying opportunities
- Incorporating real-time information
- Pricing new business
- How proactive ALM can increase competitiveness and profitability.
Speakers: Gareth Mee and Samuel Tufts, EY
D7: The Crossover Between Insurance Risk and Operational Risk
- Understanding the crossover between risk categories lies at the foundation of developing mature risk management practice.
- If there is a lack of clarity around whether an operational risk loss event impacts another type of risk exposure, such as insurance risk, then management responses may not adequately reflect the risk and any risk measurement activities may misrepresent the risk exposure.
- ORX is the world's leading operational risk loss data association for the financial services industry and has partnered with KPMG to conduct research into the operational risk – insurance risk boundary with a view to setting an industry-wide definition.
Speakers: Peter Watson, KPMG and Suzanne James, ORX
D8: Analytics and Predictive Modelling across Customer Lifetime Journey
- Development in alternative channels: DM, TM, Digital
- The importance of understanding the customer lifetime journey
- Global direct channel customer insights
- Add value by using statistical predictive modelling in key customer lifetime stages: buy, lapse, claim
- Why a good model is only a job half done.
Speaker: Mandy Luo and Sean Rowley, ReMark
D9: UK and European Deals: Past, Present and Future
- Recent trends and pricing in M&A including insights into the increasing investment rationale of Private Equity and Far Eastern buyers
- Drivers of future M&A activity including why Solvency II is leading to changes in risk appetite and price
- Outline of typical deal process, how to make it successful and how to deal with uncertainty.
- Focussing on both deal upside and risk mitigation;The critical role of actuary in an insurance deal.
Speakers: Julie Pallister, Stephen Harris and James Tye, PwC
D10: 2016 – Weathering the Perfect Storm of Significant Financial Market Volatility and a New Regulatory Balance Sheet
The start of 2016 has seen significant volatility in financial markets. And with the EU referendum looming, this volatility shows no signs of letting up. This has had profound impacts on insurance company balance sheets.In this session we look back at the lessons learned from the Solvency II baptism by fire:
- Real life examples of the volatility we’ve seen through balance sheets
- Levers firms have had at their disposal, and in some cases pulled, to navigate the turbulence
- Some of the difficult decisions firms have had to make through along the way
- The questions that, as yet, remain unanswered.
Speakers: Emily Penn, LV= and Ross Evans, Hymans Robertson
D11: Retention and Development of Female Talent – The WISE Ten Steps
The WISE Campaign empowers, encourages and energises employers and individuals to ensure that more women than ever before are represented in the STEM workforce.
At this workshop you will have the opportunity to learn about the Ten Steps. A framework developed with and for employers to help them retain and develop female talent in male dominated workforces. The Ten Steps diagnostic will be used to help you understand the areas that your organisation needs to focus on in order to make an impact on workplace culture and diversity.
Speaker: Suzy Firkin, WISE Campaign
- A summary from the paper we published in April 2016 – including:
- Refreshments Thu, 03/11/2016 - 16:05 - 16:35 Afternoon Refreshments
- Plenary session Thu, 03/11/2016 - 16:35 - 17:35 Plenary 3: The Secret World of Cybercrime
From back bedrooms to boardrooms, Graham Cluley describes how viruses and trojan horses turned from a schoolboy prank into a threat which could cost businesses millions of dollars, steal secrets from governments, disrupt nuclear facilities in Iran, and even help secret agents assassinate their opponents.
Graham Cluley draws on his 25 year history in the computer security industry to explain who the hackers are, how the nature of the attacks are changing, and the steps that organisations need to take to prevent themselves from becoming the next victim.
Speaker: Graham Cluley
- Other Thu, 03/11/2016 - 17:35 - 19:00 Free time
- Social Thu, 03/11/2016 - 19:00 - 19:30 Drinks Reception
Drinks reception and dinner will take place at the EICC.
- Social Thu, 03/11/2016 - 19:30 - 23:55 Conference Dinner at the EICC
Enjoy a three course dinner followed by after dinner speaker: Dara O'Briain
- Plenary session Fri, 04/11/2016 - 09:00 - 10:00 Plenary 4: The Professional Actuary – This Means You!
The IFoA Governance Manual includes the comment:
It is important to us that all audiences have a consistent, positive experience of the IFoA as a high quality, credible, sustainable and international professional body.
So what should we be doing to ensure that is the experience?
It isn’t just “Doing the Maths”. It is how we act and behave and much more if we are to be considered professional.
A multimedia experience with the opportunity to express your views.
Speakers: Malcolm Slee, Chair of the Professional Content Development Working Group, Ann Muldoon, FRC, Christine McConnell, IFoA and Matt Saker, Aviva
- Transfer time Fri, 04/11/2016 - 10:00 - 10:15 Transfer time
- Workshop Fri, 04/11/2016 - 10:15 - 11:05 Workshop Session E
E1: Key Finding of the IFoA’s Recalculation of the Transitional Measure on Technical Provisions working party
The IFoA’s Life Board has established a Transitional Measures on Technical Provisions (TMTP) working party to look at the practical challenges associated with the recalculation of the TMTP now that Solvency II has gone live.
In this session the working party will present their key findings in what will be a highly topical session for Life actuaries.
Particular areas of focus will include a focus on the practical challenges for recalculation including issues in relation to ICAS and Solvency II technical provision differences, issues concerning the ability in meet the Financial Resources Requirement test, implications on ALM strategies and issues related to communication.
Speakers: Jamie Cooke, Andy Rogan and Anthony Plotnek, Members of the TMTP Working Party
E2: Generation Pf (Pensions Freedom) – 18 months later. What does the Landscape Look Like?
- We plot the outcomes for those who’ve retired since April 2015
- Challenge some commonly held retirement income assumptions –with more realistic projections on sustainable income levels
- Discuss later life impacts culminating in the Lean Years Index – where the probability of running out of money falls short of the probability of living.
Speakers: Barry Cudmore, AEGON Ireland and Mark Grimes, eValue
E3: The CMI Model and High-age Mortality
An update from the CMI on two areas of current research:
- The CMI is consulting on the CMI Model in 2016 ahead of possible changes to CMI_2016, due to be published in 2017. We will summarise our research, responses to the consultation, and plans for CMI_2016.
- The CMI presented at the 2015 Life Conference on the topic of high-age mortality, and continues to investigate this topic. We will describe our further research in this area.
Speakers: Tim Gordon, Chairman of CMI Mortality Projections Committee and Andrew Gaches, CMI High Age Mortality Working Party
E4: IFRS 4 Phase II - Time to Act
The IASB is expected to publish the IFRS 4 Phase II Insurance Accounting standard by the end of 2016 with a go-live date three years from publication. In response, 2016 has seen insurers taking more active steps to prepare for the coming changes. This talk discusses steps a major international insurer, HSBC, has taken to begin to understand the financial and business impacts on its business and the extent of the developments required. This talk will also provide an update on the standard drafting process, and highlight practical challenges and lessons learnt applying IFRS 4 to a global business.
Speakers: Roger Simler, Prashanth Ariyam and Naadira Ebrahim, Deloitte and Omar Malik, HSBC
E5: Accessing Diversification Under Solvency II: Is Reinsurance the Answer?
Solvency II recognises diversification between risks, and different solutions can be considered to increase diversification benefits. After a quick overview of possible approaches, we will focus on reinsurance as a capital optimisation tool. We will present in more detail one of the most innovative solutions explored by international reinsurance groups: an internal reinsurer. We will explore the benefits of this structure, as well as challenges and considerations around implementation and discuss the case study of AXA’s central reinsurer.
Speakers: Nora Brauch and David Burton, EY
E6: Are Insurance Companies Rransforming into Rating Agencies?
The PRA has requested firms with unrated assets in their matching adjustment portfolio seek independent reviews for the internal credit rating framework used to assign ratings to these assets. Industry best practice now includes comprehensive documentation on policies, procedures and methodologies and an expert credit committee. The PRA has suggested firms should not be wholly reliant on ratings of external credit rating agencies. If insurers have to give a rating to every asset in their portfolio, are they conflicted? What would be the impact on industry balance sheets if all portfolios ratings were increased by one notch?
Speakers: Nicola Kenyon and Scott McNeill, PwC and Stefan Augustin, Rothesay Life
E7: Hedging Practices in the UK Life Industry
The Dynamic Hedging Working Party will summarise the main results and findings of the survey completed at the end of 2015 on hedging practices in the industry. In particular the discussion will focus on dynamic hedging and implications of Solvency II.
Speaker: James Cadman, Legal & General and Gregor Zavadlal, Pension Corporation
E8: Longevity Swap Markets – Why Just the UK?
The UK has the most advanced longevity swap market in the world.
Questions this presentation aims to cover:
- Why is this?
- What are the main drivers behind having a sustainable longevity swap market?
- Where have other countries fallen down?
- Could markets in other countries open up?
The presentation will cover case studies on the US, Canada, Holland and Japan.
Speakers: Christopher Pigott, Munich Re UK Services Ltd and Michael Walker, Aon Hewitt
E9: A.I. FIA – Exploring the Growing Role of Technology in the Actuarial World
- Exploring opportunities where technology enables specialists to make better decisions faster:
- Robotics improves automation and speed up processes
- Machine learning automates decisions and provides insight
- Cognitive computing transforms processes so that integration of data can be wider, including natural language recognition
- Case studies on how to get real-time information, improve behavioural segmentation, and implement humanitarian overrides.
Speakers: David Alison, KPMG UK Actuarial and Andrew Morgan, Byte Sumo
E10: Masterclass: Time and Priority Management
Many people in business now struggle to fit everything in they need to do – often staying late and sometimes suffering from stress. Their performance suffers as a result. But it doesn’t have to be that way. When you have effective time-management strategies you can get everything done without compromising standards. This session explores ways of managing priorities better and enhancing personal effectiveness. You’ll learn how to eliminate your time bandits, how to juggle competing commitments without feeling overwhelmed and how to work smarter not harder – so you get more done in less time.
Speaker: Steve Bavister, Speak First
- Refreshments Fri, 04/11/2016 - 11:05 - 11:40 Morning Refreshments
- Workshop Fri, 04/11/2016 - 11:40 - 12:30 Workshop Session F
F1: Global Capital Standards and Implications for the Insurance Industry
The International Association of Insurance Supervisors, following a mandate from the G20 and FSB, is in the process of developing a global Insurance Capital Standard (ICS) that would apply to c. 50 International Active Insurance Groups. A first version of the ICS is due to be implemented for confidential reporting in 2017. We will discuss:
- Background and drivers for ICS development, including implementation timetable and ongoing development process;
- Comparisons between current ICS proposals and the SII regime in Europe, and other regimes globally;
- Regional perspectives and what firms across the globe are lobbying for;
- Expected impact of ICS on insurers.
Speakers: Loic Belletre, EY UK and Bouke Evers, EY Netherlands
F2: Behavioural Finance for Actuaries
Based on findings from primary research with 961 actuaries, this session looks at:
- What biases actuaries demonstrate
- Are actuaries more or less biased than other people?
- How to minimise the impact of biases
- How to communicate effectively with users of actuarial work.
Incorporation of behavioural finance into actuarial work can enhance the actuary’s role and achieve more effective decision making.
Speakers: Kathy Byrne and Paul Cook, Members of the The Behavioural Finance for Actuaries Working Party
F3: Group Business – Filling the Individual Gaps
Employer-provided benefits have become increasingly important as part of individuals’ insurance coverage, which is driving innovation in the field. This talk will cover two topical examples:
- EY has developed a Financial Wellness Index, which helps describe the employee’s coverage needs and identify gaps
- PartnerRe is using individual-level analytics to improve risk selection for group insurance at portfolio and scheme level. Both of these are intended to provide the best value for employer and employee.
Speakers: Alexis Iglauer, PartnerRe and Carl Ghiselli, EY
F4: Audit in a Solvency II World
With the advent of Solvency II there are also significant changes set out by the PRA in respect of audit requirements. In this session an audit partner and an actuarial auditor will cover:- Changes to audit requirements as set out by PRA- How we approach audit under Solvency II an how this differs from the current year- Key issues for consideration this year end- Common themes from assurance work completed to date.
Speakers: Dominic Veney and Phil Watson, PwC
F5: Lapses in Concentration
Anticipating future lapse trends based on current conditions is problematic. The sheer number of contributing factors including policyholder behaviour, company procedures and market conditions makes it difficult for firms to establish patterns in their lapse trends. This presentation will demonstrate a cutting edge solution to this problem, using advanced analytical techniques that help you find the information you need to set your lapse assumptions. Knowing how to spot early warning signals makes it easier to anticipate changes in future lapse trends, allowing firms to make highly-informed lapse rate assumptions specific to the product, company and climate.
Speakers: Jennifer Smith, Milliman and Paul Fell, St James' Place
F6: Driver-based Models for Longevity Best Estimates and Trend (new information) Risk
This session describes an approach to constructing driver-based models of longevity risk. Such models quantify the longevity impact of major drivers such as NHS expenditure and smoking reduction. This helps with the development of meaningful Solvency II 1-year VaR frameworks as well as informing best estimates and facilitating scenario analysis. The speakers draw on their experience of developing such models during IMAP.
Speakers: Richard Marshall and Matthew Edwards, Willis Towers Watson and Caroline Roberts, The Phoenix Group
F7: Optimising Annuities under Solvency II
Solvency II presents a new range of issues for European insurance companies, from reducing capital requirements (SCR) to reducing capital volatility in difficult market conditions.This presentation will focus on how reinsurance solutions have evolved to manage the complexities of the new regulatory landscape, including annuity reinsurance solutions, financial reinsurance and asset based risk transfer. The presentation will include case studies of how reinsurance solutions have helped insurance companies manage their Solvency II balance sheet from both the insurer and reinsurer perspective.
Speakers: Ian Carey, Cario Consulting and Cormac Galvin, RGA
F8: Alternative Investments and the Matching Adjustment – A Case Study on Lifetime Mortgages
Insurers are increasingly exploring alternative assets in their search for improved investment returns. The Matching Adjustment requirements have also introduced a range of new challenges for the market to consider, with increased regulatory scrutiny.Within this discussion, we will look at the implications of this on the market for lifetime mortgages, including:The market, trends and how the range of market players is changing.The recent challenges associated with insurers holding these assets, including ways in which they are being managed by the market as a whole. A case study of a specific insurer’s experience around dealing with these issues.
Speakers: Raj Saundh and Michelle Tsang, EY and Andrew Dobinson, Lloyds Banking Group
F9: Credit Hedging: The Good, the Bad and the Ugly
The purpose of the presentation is to set out and assess the relative merits (including financial benefits and costs) of using various different instruments to hedge credit risk arising in different parts of life insurers books, e.g. within annuity books as well as across other books. The presentation will:
- Assess different hedging motivations, e.g. capital relief and cashflow stabilisation, and establish how these play a part in determining the most suitable hedge structure for a given risk.
- Assess a range of hedging instruments including total return swaps, index tranches and CDS options Asset retained risks (including basis and roll risk).
Speakers: Henrik Wijkander, Prudential and Ben Mabley, Citi
F10: Masterclass: Developing Mental Toughness
Mental toughness – the ability to push through in the face of adversity, bounce back from set-backs, and perform at your best when under pressure – is a highly valued trait in the business world. Some people thrive when the going gets tough but others struggle with the demands placed upon them. This practical session will give you a powerful insight into how to develop you mental toughness, allowing you to manage difficult situations and deal with challenging people more effectively. You’ll learn how to have emotional resilience, be able to deal with negative emotions, handle pressure more effectively and keep going when all seems lost.
Speaker: Steve Bavister, Speak First
F11: Actuaries and Banking
The PRA's evolving approach to prudential regulation, and new technologies including open APIs, present challenges for banks. They also present opportunities for actuaries across a broad range of areas from product profitability to stress testing.
Iain Allan will give an overview of opportunities for actuaries in banking. John Young will focus on linking existing insurance concepts to banking: Basel and Solvency, provisions and reserves, treasury and ALM, credit scoring and underwriting .
Speakers: John Young, RBS and Iain Allen
- Refreshments Fri, 04/11/2016 - 12:30 - 13:30 Lunch
- Workshop Fri, 04/11/2016 - 13:30 - 14:20 Workshop Session G
G1: Key findings of the IFoA’s Matching Adjustment working party
The IFoA’s Life Board has established a Matching Adjustment (MA) working party to look at key practical issues emerging in relation to insurers’ abilities to manage their annuity portfolios now that Solvency II has gone live and MA approvals are in place.
In this session the working party will present their key findings in what will be a highly topical session for Life actuaries.
Particular areas of focus will include practical guidance for firms on how to bring new assets and liabilities into existing MA portfolios, and also a detailed look at some of the potential implications and challenges posed by the PRA’s prescribed cash flow matching tests.
Speakers: Ross Evans, Michael Henderson and Stephan Erasmus, Members of the MA Working Party
G2: Price Optimisation: A Case Study of New Pricing Techniques
Price optimisation techniques are standard practice in the motor insurance market, but are new to the life insurance market. This session starts by exploring the theory behind price optimisation: increasing the value of new business by analysing the propensity of individual advisers/customers to recommend/purchase an insurer's product, and setting prices accordingly. The majority of the session focuses on a ground breaking real life case study of implementing price optimisation for a protection portfolio, considering both the benefits and the practicalities of implementing these techniques.
Speakers: Alastair Black, Willis Towers Watson and Alan Clarkson, Royal London
G3: Insurance Business Transfers in a Solvency II World
The coming of Solvency II has stimulated a high level of insurance business transfers and it has had a significant impact on how insurance business transfers (IBT) are undertaken. The presentation will cover:
- A brief refresh on how IBTs have operated
- Regulatory developments from the PRA and FCA on IBTsRecent legal developments for IBTs (with case studies)
- How Solvency II is impacting IBTs, including the treatment of permissions, assets and ring fenced funds.
- How will the independent Expert review a transfer?
- What are the new key metrics?
- Will the court change its approach?
- Alternatives to Part VII transfers.
Speakers: Philip Simpson, Milliman and Adam Levitt, Ashurst
G4: Highlights of the International Mortality and Longevity Symposium 2016
The session will provide highlights of the sessions at the International Mortality and Longevity Symposium 2016 - covering workshops, plenaries and evening talks. We will focus on the presentations that generated the most positive feedback and interesting debate, and include in our summaries some indication of audience views and contributions during the event. Our session will therefore allow conference attendees interested in the latest developments and thinking around longevity to enjoy a 'proxy immersion' in the original Symposium!
Speakers: Joseph Lu, Legal & General and Matthew Edwards, Willis Towers Watson
G5: Capital Management and Optimisation in a Solvency II World
Solvency II is now well up and running and the insurance industry has seen its first round of market reporting under the new regime. There has been a lot of focus on the strength of insurer’s balance sheets and surplus capital as well as how insurers can ensure an attractive return for stakeholders and satisfying regulators. In this presentation we'll look back at the themes from the first round of reporting and what the implications are for balance sheet management, capital optimisation and risk management aspects such as setting and managing capital within risk appetite.
Speakers: Brian Paton, PwC and Michael Aitchison, Prudential
G6: Investment Challenges for Small(er) Insurers
Implementing investment strategy can be a daunting exercise for smaller insurers managing resource constraints, competitive pressure and onerous regulatory requirements. We will be presenting a joint case study by an insurer and an asset manager on:
- Defining risk appetite and assessing risk/return
- Asset allocation and investment decisions
- Managing capital requirements
- Meeting regulatory requirements (risk monitoring and Prudent Person Principle)
- Practical implications of strategy implementation.
Speakers: Clara Yan, Schroders and Stewart Batchelor, Simply Health
G7: Comparing Rating Methodologies to Internal Models
Credit ratings and internal models are both concerned with modelling rare events, particularly those that may precede insolvency or default.However, the modelling approaches have historically been quite different. Credit rating agencies have made heavy use of deterministic stress tests, while capping ratings where one entity’s financial woes could link to related entities. Insurance internal models are typically fully stochastic, with explicit correlation assumptions between risks. As rating agencies place increasing reliance on internal model output, Grisha Spivak and Andrew Smith explore how the two modelling worlds may be able to learn from each other.
Speakers: Andrew Smith, Deloitte and Grigory Spivak, Legal & General
G8: Big Data: Unexplored Blue Ocean in the Life Industry
- There is a large ocean of data relevant to the life industry waiting to be explored.
- New technologies and algorithms create the opportunity to exploit this resource for more sophisticated pricing, performance management and targeted marketing. But with this comes not just cyber risk but also ethical considerations.
- We explore this new ocean with real examples, with due respect for the real challenges they bring.
Speakers: David Brown and Nicole Pang, KPMG
G9: Survival of the Fittest – Fending off the Threat of New Entrants into the Life Market
UK life insurers are vulnerable to new entrants, especially around new forms of advice and risk taking. According to consensus, asset managers, not life insurers, will emerge as the main beneficiaries of this disruption with recent research indicating that UK life insurers could lose up to a quarter of profits by 2025.We explore how life insurers can respond to changes in the market by proactively operating across a variety of management levers, including M&A to reposition the business portfolio, digitisation and updating operating models to build retail marketing and risk management skills.
Speakers: Richard Baddon, Deloitte and Speaker TBC
G10: Emotional Intelligence - An Introduction
As financial services professionals we (rightly) spend a lot of time learning about the technical aspects of our roles. This session is aimed less at the 'what' we do, and more at the 'how' we do it, based on the premise that the 'how' we do things is as important as what we do. Aimed at people who haven’t studied the subject in detail before, the session will cover a range of areas including an introduction to the subject, self-awareness, effective listening and move on to how to approach difficult conversations in an empathetic manner. Oh, and there may be monkeys, cats and dogs too.
Speakers: Peter Heffernan, PwC and Philip Tervit, AEGON UK
G11: Basis Risk in Index Based Longevity Hedges: A Guide For Longevity Hedgers
We will consider the economic capital calculations for longevity risk under Solvency II, and discuss how to calculate the capital relief for an index based longevity hedge that accounts for basis risk.
Using a Dutch case study, we consider the issues involved in calculating regulatory capital and the basis risk arising from liability valuation:
- How is this assessed?
- How to account for company/portfolio specific features?
- How to account for it in the capital charge assuming an index hedge?
- How to use consistent models for valuation and basis risk assessment?
- How to simulate the payoffs of different hedging instruments?
- How to assess the impact of index hedges on economic capital?
The talk will present a step by step guide building on recent published work that ensures clarity and precision in the calculation of economic capital with and without a hedge in place. We will also highlight which elements of the process are generic, and which are likely to be country specific.
This talk introduces a key strand of work in the IFoA funded research programme:
"Modelling, Measurement and Management of Longevity and Morbidity Risk".
Speaker: Andrew Cairns, Heriot-Watt University, Director of the Actuarial Research Centre, Institute and Faculty of Actuaries and Heriot-Watt University
- Transfer time Fri, 04/11/2016 - 14:20 - 14:35 Transfer time
- Plenary session Fri, 04/11/2016 - 14:35 - 15:35 Plenary 5: The Implications of Brexit
Speaker: Dr Andrew Sentance, Senior Economic Advisor, PwC
- Plenary session Fri, 04/11/2016 - 15:35 - 15:45 Conference close