5 Questions Boards Should Ask Their Actuary

Posted on September 11, 2017

What questions should you ask your actuary?

Photo credit: iStock.com/FangXiaNuo

Over the last 20 years, I’ve presented the results of various actuarial analyses to client Boards hundreds of times. Sometimes I get asked great questions, but mostly, I don’t.

I understand why, though. The actuarial presentation is rarely the sole focus of a Board meeting, and the Board is usually moving quickly through a busy agenda with financial results, governance issues, new initiatives, marketing, etc.

I also understand that some Board members are less comfortable than others with the numbers and financial-centric presentations. The actuarial concepts and terminology can be overwhelming, and some Board members are bound to feel uncomfortable asking questions for fear of showing a lack of understanding. It is certainly not their fault – Board education on actuarial topics is not easy to find, and often Board members will be limited to one or two opportunities annually to have any actuarial discussion.

To encourage actuarial discussion at the Board level and highlight the value that the actuary can provide, I came up with a list of questions for Boards to ask their actuary. Here are my top five:

1) Is there anything as part of your work or our operations that is of concern to you?

This question opens the floor for the actuary to discuss potential concerns or simply to provide assurance to the Board that none have been identified.

The best part about this question is how general and open-ended it is. While the typical actuarial presentation might have been only focussed on one specific area, such as pricing, reserving, or stress-testing, this question allows the actuary to bring up other concerns, too.

Interestingly, it’s quite common for audit committees to meet in-camera with the auditor, but not with the actuary. Why not? Going in-camera allows the actuary to speak more freely, especially if they are bringing up concerns which aren’t part of the presentation that was requested by management.

2) We aim to be the best – is there anything being requested by regulators or your other clients that we should also consider doing?

Some organisations view the actuarial work as a pure regulatory compliance exercise and simply want the actuary to update their analysis from the prior year. Even as an actuary, I understand that it’s easier to review a report year over year when the only thing that changes is the figures.

Other organisations view the actuary as a strategic partner. They include the actuary in strategic planning and thrive on continual improvement of the actuarial reporting. The actuary (especially an actuary who has experience with other organisations or who is actively involved within the actuarial community) can often provide valuable input on what’s coming down the regulatory pipeline, what the burning issues are for other organisations, and what other analyses could be provided to deliver insights with respect to strategic goals.

3) What do you do to fulfill your financial monitoring requirements as our appointed actuary?

The appointed actuary of any company in Canada is required to perform some financial monitoring throughout the year. Asking about and understanding what your appointed actuary does to fulfill this requirement provides the Board with a better understanding of and a higher confidence in the controls in place to monitor the financial health of the entity.

4) What do you think of our strategic direction?

Your actuary understands your operations, the regulatory environment, and the current market conditions. They may be able to provide you with valuable advice.

Again, I like this question because it is very general in nature and provides an opportunity for your actuary to give a high-level response which isn’t constrained by a specific reporting item on the agenda. Depending on how dialed-in the actuary is with your strategic direction, you may get an answer immediately, or they may have to circle back to you with their input.

5) What other stress-testing of assumptions, catastrophes or scenarios should we consider as part of our risk assessment strategy? Are we focussing enough on the key risks to our business?

In my experience, this question usually allows the Board to hear the same information that management would have conveyed from another source, but in some cases, it can reveal new areas which the Board should be concerned with. Depending on the level of regulation the entity is subject to, these discussions may already be at the forefront of a Board’s agenda. For smaller organizations and organizations with less complex risks, such as captives or reciprocal insurance exchanges, the Board is often not as well-versed, for example, in operational risks.

Your actuary is an expert that analyzes your operations, understands the financial impact of rating decisions, and monitors the financial health of your organization. In my ideal world, there would always be a few minutes set aside for me at each Board meeting to discuss some of these questions. I know the Board’s agenda is full, but the discussion that ensues should be of value to the organization.

While some actuarial presentations might be gruesome, routine, or even confusing, these more general questions should be answered in plain English and allow for an exchange that builds a high level of trust and makes the most of one of the Board’s most valuable assets – the actuary.

 

Julie-Linda Laforce, FCIA, FCAS, MAAA
CFO, Principal of Property & Casualty Actuarial Services

Job Posting – Actuarial Analyst

Posted on June 8, 2017

Axxima is an independent consulting firm specializing in the provision of actuarial, insurance and risk management consulting services to public entities, commercial entities, the insurance industry, and to specialty and captive insurance facilities. We have offices in Toronto and Longueuil.

The actuarial team offers various services, including:
• Determination of funding requirements/ratemaking
• Valuation of policyholders’ liabilities
• Dynamic capital adequacy testing
• Reviews of rate adequacy
• Insurance and reinsurance strategies

The successful candidate will be located in our Longueuil office.

RESPONSIBILITIES

• Participate in actuarial valuations of policy liabilities
• Participate in ratemaking analyses
• Communicate professionally, both internally and externally
• Document the work performed
• Provide technical support on various projects

COMPETENCIES

• University degree in actuarial science
• Technical actuarial knowledge (an asset)
• Minimum of three CAS exams and pursuing ACAS/FCAS qualification
• Good knowledge of Microsoft Office
• Independent worker with initiative
• Excellent communication skills in French and English, oral and written
• Critical thinker
• Interested in learning
• Excellent time management and ability to manage various projects simultaneously
• Team player

Download PDF: Axxima Actuarial Analyst En_final

Axxima at the 2016 NABRICO Conference

Posted on July 14, 2016

Nabrico-2016-logo-200.fwAxxima CEO, Patrick Mahoney, will be a panel member for the Fast Forward: Part 2 – The Insurance Marketplace session at this year’s NABRICO conference in Vancouver. In his session, Patrick and his four fellow panel members will “crystal-ball [the legal profession’s] insurance future. First, they’ll share their views on the insurance implications of this transformed legal world. Their discussion will then move to trends in the insurance market, and the anticipated impact on LPL lines.”

Find out more about the session, the panel members, and the NABRICO conference at http://www.nabrico2016conference.com.

Go, Ryan!

Posted on April 13, 2016

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Axxima is excited to see our CIO, Ryan Durrell, featured on Trent University’s Daily News blog!

An alumni of the University, Ryan shares his success story and words of wisdom HERE.

Congratulations, Pascal!

Posted on March 11, 2016

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Axxima is very proud to announce that our very own Pascal Boucher recently became a Fellow of the Casualty Actuarial Society.

Pascal has been a valuable part of Axxima as an actuarial analyst since the company’s inception. He always brings his hard work, skill, and positive attitude to the various insurance projects he works on, including actuarial reserving, statistical analysis, and stochastic modelling. Pascal has now turned things up to 11 by obtaining his FCAS designation.

The Casual Actuarial Society boasts 7,000 members who are experts in property and casualty insurance, reinsurance, finance, risk management and enterprise risk management.

Congratulations, Pascal, from all of us at Axxima!

Celebrating Our First Anniversary

Posted on September 18, 2014

Axxima Turns OneWe are pleased to announce that Axxima celebrates its first anniversary on September 18, 2014. The past 12 months have been full of hard work and laughter, and have been unbelievably satisfying. We are truly home.

We would like to thank our fantastic clients, our hard-working business partners and our ever-supportive families for believing in us and for helping to make us a success. We would also like to thank our colleagues at Axxima, the best group we could hope to work with.

The first year was fun. But we are just getting started.

~ Patrick Mahoney, on behalf of the Board

Axxima acquires Dion Durrell’s RIMS and related actuarial practices

Posted on September 18, 2013

TORONTO – Axxima Holdings Limited, formed by five former associates of Dion, Durrell + Associates Inc. (“Dion Durrell”), announced today the management buy-out of the consulting practices managed by the former associates while they were at Dion Durrell. The acquisition includes the insurance brokerage 3303128 Canada Inc. o/a Alternative Risk Services, the Risk and Insurance Management Services (RIMS) practice of Dion Durrell, and the Montreal division of Dion Durrell’s actuarial practice.

Axxima stands for actuarial and insurance management excellence. All of the key players, including Patrick Mahoney, Joe Tontini, Julie-Linda Laforce, Norma Ibbetson, and Ryan Durrell, will be part of the new operation.

Axxima’s offices will be located at:

Toronto

36 Toronto Street, Suite 510
Toronto, Ontario M5C 2C5

Tel. 1.855.729.9462
Fax. 1.855.529.9462

Montreal

192 St-Jean Road, Suite 202
Longueuil, Quebec J4H 2X5

Tel. 450.646.2500
Fax. 1.855.529.9462

“We are very excited about serving our clients from our new platform,” said Patrick Mahoney, CEO of Axxima. “We expect a smooth transition as we have the full support of the Dion Durrell Board and all the associates currently serving our clients (about 15 in total) who are joining Axxima on day one. We look forward to continuing our long-standing client relationships, and to providing new clients with value-added strategic advice and cost effective insurance management services.”

For further information contact:
Patrick Mahoney
416.408.5293
patrickmahoney@axxima.ca